ChemoCentryx, Inc.

Good afternoon and welcome to the Chemocentrics fourth quarter and full year 2021 financial results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. As a reminder, this conference call will be recorded. And I would now like to turn the call over to Bill Slattery, Jr., Vice President of Investor Relations and Corporate Communications at Chemocentrics. Mr. Slattery. Please go ahead.

Thank you, operator. Good afternoon and welcome to the Chemocentrics fourth quarter and full year 2021 financial results conference call. For those of you I have not yet met, I recently joined Chemocentrics as head of investor relations and corporate communications. My contact information can be found at the bottom of the press release we issued earlier this afternoon, providing an overview of our financial results the quarter and year ended December 31st, 2021. This press release along with a slide deck that you may find helpful while you listen to this call are available on the investing relations section of our website at www.chemocentrics.com. Joining us on the call today from Chemocentrics are Dr. Thomas Schall, President, Chief Executive Officer, and Chairman of the Board, Susan Kanaya, Executive Vice President, Chief Financial and Administrative Officer, and Tasha Budd, Executive Vice President and Chief Operations Officer. Tom and Susan will make introductory remarks before we open the call to your questions. During today's call, we will be making certain forward-looking statements. As explained on slide two, These forward-looking statements are based on current information, assumptions, and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These risks are described in the company's filings made with the Securities and Exchange Commission, including our annual report on Form 10-K, filed on March 1, 2022. We are cautioned not to place undue reliance on these forward-looking statements, and Chemocentrics disclaims any obligation to update such statements. In addition, this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, March 1, 2022.

Chemocentrics undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this live conference call.

I would now like to turn the call over to Don. Thank you, Bill.

Good afternoon to everyone listening. Thank you for joining us. Please move to slide three in our presentation. Today, I will cover three important topics that highlight our recent success and outline the significant milestones we expect throughout 2022. First, we'll take a look at our progress in the early weeks following the U.S. launch of TAPNEOS, and ANCA-associated vasculitis. Second, I'll update you on our plan to broaden tabneos into a pipeline and a drug, including next steps that we expect to take in lupus nephritis, severe hydranitis supra-etema, and C3 glomerulopathy. Third, we'll discuss recent progress we've made and next steps for our unique, orally active, small molecule PD-L1-P1 checkpoint inhibitor, DCX559, for which we expect initial phase one data this year. Moving to slide four, you can see that 2021 was an historic year in our corporate journey. After over 20 years since the founding of Chemocentrics, we've navigated the uncertain and uncharted territories at the frontiers of science and achieved our longstanding goal of bringing our first medicine to patients suffering from a devastating and debilitating disease. Following FDA approval, we launched Tavneos as an adjunctive treatment for use in patients with severe active ANCA-associated vasculitis on October 18th, leaving us 51 business days in the quarter post-launch. As we launched, we took a final step In our vertical integration, we now constitute an integrated U.S. biopharmaceutical company that discovers, develops, and now markets innovative medicines of our own devising. It was a long and arduous journey to get here. With some 17 years working on the TAVNEOS program alone,

But the human rewards in bringing something truly different to underserved people, such as those enduring ANCA-associated vasculitis, have made it all worthwhile. January of this year brought another significant advance with the EU approval of TAVNEOS.

This means that TAVNEOS is now approved in the U.S., in Europe, and Japan for ANCA-associated vasculitis indications. Further, the European approval triggered a milestone payment of $45 million from our partner, VIFOR Pharma. We are pleased to share that VIFOR launched Tobneos in Germany on February 15th of this year, with additional territories expected in the first half of 2022. As a reminder, VIFOR will pay Chemocentrics royalties in the teens through the mid-20s on X U.S. sales off one aggregate net sales line. Back to the United States, as shown on slide five. We set out to develop our commercial infrastructure in the months leading up to approval, including the hiring and meticulous training of professionals in medical science liaison positions, as sales representatives, and in other key roles. As we approach the launch, our initial marketing focus was multifaceted by design. First and foremost, we sought to educate physicians on the Tavneos approved label and supporting clinical data, raising awareness through a hybrid approach of in-person and virtual meetings that provided flexibility in these times of COVID. Through our commercial team, We are initially focusing on the top prescribing positions. We calculated that a combined field force of about 75 would sufficiently cover the approximately 3,400 clinicians comprising key external experts, top prescribers, and community specialists who collectively are responsible for roughly 80% of all ANCA-associated vasculitis prescriptions in the United States. Further, we recognize the importance of working closely with patients, listening to advocacy groups and other active voices in the vasculitis community that have welcomed the arrival of a modern, poorly administered, and mechanistically targeted medication which was designed from the start with their disease in mind. Too often, Orphan disease patients seem to feel that they languish in a seldom-visited treatment backwater, receiving occasionally repurposed drugs that may provide benefits to their condition but were not designed specifically for that purpose. Tabneos was and is different. Now, through branded campaigns, we plan to educate appropriate patients on the Tabneos Safety and Advocacy Profile. while also employing unbranded campaigns to provide disease awareness. These efforts are designed to support patients in having appropriate conversations with their healthcare professionals. Through these mechanisms, we have activated a continuous positive feedback loop that will help inform our actions as we move forward, soliciting and obtaining prescriber and patient experiences in order to support continuous improvement of our commercial and outreach efforts. Let us now move to slide six, as we reflect on our first few weeks post-US launch. I am pleased to report encouraging progress. While the headline number is the top line revenue for Q4, which came in at approximately $1 million, including limited channel supply for our agreements with specialty distributors and specialty pharmacies selling tabios. We have stated before that we believe the best way to track our progress for the first few quarters is by focusing on three key performance indicators. Specifically, during the fourth quarter, these metrics include the following. We received 127 patient start forms, or patient referrals, from 102 unique prescribers. At the end of Q4, there were 90 patients on drug, and the conversion rate of patient start forms to patient on drug was 71%. The results in these key metrics mark promising progress for a rare disease such as ANCA-associated vasculitis, especially when considering that the launch took place mid-quarter preceding a major holiday season, and that was, of course, impacted by the arrival of an Omicron wave of COVID even before the Delta surge had finally ended. As we move through the current quarter, which will eventually be the first full quarter of commercial activity, the leading indicators are favorable for our expected upward growth curves. Moving to slide seven, we have superimposed the progress across key metrics from the beginning of the first quarter, i.e. through January. Accordingly, between launch and January 31st, we received 179 patient start forms from 140 unique prescribers, and there were 141 patients on drug, representing a 79% conversion rate from patient start forms or PSFs. Since we are still at quite an early stage, I will also share with you today more largely qualitative color and context than we expect to give you in future quarters when the quantitative data will paint a more complete picture than it does today. On slide A, for example, let's look at some of the prescribing patterns that we are seeing. Rue, January 31st. As it relates to what types of physicians are prescribing Tabdeos, we estimate 66% of the prescriptions are coming from rheumatologists, 28% from nephrologists, and 6% from other treating physicians, such as pulmonologists. As it relates to where these referrals are coming from, while we are pleased with the traction across centers of excellence, we are particularly enthusiastic about the inroads we've made within the community setting as well. This success is in part a testament to our commercial team's reach, supplemented by the unaided awareness of Tavneos that has continued to blossom since the advocate trial pivotal results were initially released in the New England Journal of Medicine last year. We are also pleased to share that approximately 33% of physicians are repeat prescribers through January 31st. We believe this suggests physicians are having positive first experiences, which we hope to continue to build upon. Additionally, the time it takes to convert patient start forms to patients on reimbursed medications is now tracking in line with our expectations, taking approximately four weeks to obtain a payer coverage decision, which we anticipate will continue to decrease over time. What's more, initial feedback from healthcare providers suggests that they are experiencing success now in obtaining reimbursements based on prior authorizations, and if necessary, appeals for appropriate patients who meet the criteria outlined in our FDA approved label. As these patients await coverage decisions, we have provided mechanisms for immediate access to treatment for eligible patients through our support programs. While we continue to support access per plan via such patient support programs, we are now seeing an ever greater share of paid models as the launch progresses. Having launched into a unique environment, I'm very pleased with our progress to date. Apart from the obvious constraints on the availability of in-person as opposed to virtual visits, whether by our reps to physicians or by patients, The Omicron wave led to staff shortages amongst healthcare workers, which in turn means that physicians continue to face capacity challenges seeing their patients in person. We acknowledge that this is not a phenomenon unique to chemocentrics, and in any case, we planned for an orderly progression in the quarters following the launch, rather than a bolus of early patients, which could have distorted the true growth picture. In short, we believe that Tavneos has the potential to become a blockbuster drug at peak in our first syndication alone. In the meantime, I look forward to updating you again in a couple of months when we release our full Q1 results. Let us now turn to slide 9, where we will look beyond our current commercial efforts. We have an exciting year ahead, from a clinical development perspective as we aim to expand our patient reach by developing tapneosis as a pipeline in a drug and also by advancing our novel orally administered PD-L1, PD-1 checkpoint inhibitor known as CCX559. In 2021, as you know, we prioritized and focused on ANCA-associated vasculitis approval. In Q4, we were busy building up a new world-class clinical development organization led by Dr. Rita Jane, who joined Chemocentrics full-time in October as our chief medical officer, in addition to her role as director on our board, a position she has held since March of 2019. Dr. Jane has enjoyed a distinguished medical, academic, and corporate career and is an outstanding leader to take our development efforts to the next level. She will also oversee the post-marketing studies on tabneos and Inca-associated vasculitis, which is likely to yield useful supplementary data of interest to physicians and payers. Moving to slide 10, the biological rationale for tabneos across several underserved inflammatory and autoimmune disorders is compelling, given its unique ability to selectively inhibit the C5A receptor, preserving other functions and components of the immune system. I will remind us, Favneos was designed to be an anti-inflammatory agent based on its mechanism of action and not broadly immunosuppressive. Throughout 2022, our focus includes three indications, lupus nephritis, severe hydranitis superativae, and C3 glomerulopathy. First, we plan to meet with the FDA to discuss our plans for lupus nephritis, a disease in which uncontrolled complement activation has been implicated in kidney destruction. Once steps have been agreed upon, we anticipate initiating a clinical development program for topneosin patients with lupus nephritis in 2022. This should be followed in close order by another meeting with the FDA to discuss our plans for a pivotal Phase III trial of Tobneos in patients with severe hydranitis suprativa, or HS, which we hope to initiate in the second half of this year. As you'll recall, in our Phase II Aurora trial in HS, Tobneos showed a statistically significant improvement over placebo in a pre-specified subgroup of early Stage III HS patients. To investigate and understand that clinical result, our research at Hemocentrics has now provided evidence for clear differences at the molecular, the cellular, and the histological levels between more moderate HS disease, for example, early stage 2, versus severe or early stage 3 HS. A key differentiating feature appears to be a greater involvement of the C5A C5A receptor axis in early stage 3 disease versus milder forms of HS. Our data will be discussed at upcoming dermatology conferences this year. As for C3G, later in 2022, we plan to meet the FDA to discuss our accolade trial results of TAPNEOS in the very rare kidney disease of C3 glomerulopathy, data from which we have shared previously. The Accolade trial was the largest blinded randomized control study conducted to date in this indication, and we are keen to review the effects demonstrated in the study with the FDA, such as the evidence for slowing of fibrotic progression indicated by the endpoint of the C3G histologic index of disease chronicity and other effects seen with tabniose administration. We don't propose to invest in additional large-scale clinical work in C3G. in the absence of some defined path forward by which Tavneus might be used in this indication due to the long and costly nature of such trials involving, for example, serial kidney biopsies at baseline and other time points, along with the challenges of patient recruitment in this very rare disease. We are hopeful that the data will inform a positive discussion with the FDA in this potentially life-threatening disease for which there are no approved therapies. Last, let me say a few words about CCX559, our potent, orally administered PD-L1, PD-1 inhibitor, which entered first in human studies in Q3 of 2021. As seen on slide 11, after dosing multiple cancer patients, we can confirm that the drug is orally absorbed well at levels that are approximately proportional to dose, and appearing generally well tolerated to date. Additionally, a number of indicators confirm that immune cell activation is occurring.

Given the physical limitations of large molecules, that is, anti-checkpoint antibody therapy, for example, which may not penetrate the tumor microenvironment well,

A small molecule medication has the potential to establish itself in several niches in what many believe could be a fairly short time frame, providing a V-check from which we could substantially expand clinical development of CCX559 in this very valuable area. We plan to present initial data from the dose escalation phase of this CCX559 Phase 1 study and upcoming oncology meetings starting with the AACR in April, and we expect to enter a Phase 1B2 clinical trial in the second half of this year. With that, I'd like to turn the call over to Susan Kaniya to outline our healthy financial situation heading into 2022, which is sufficient to progress our TAVNEOS launch efforts and expected clinical development activities. Susan?

Thank you, Tom. Our fourth quarter and full year 2021 financial results were included in our press release today and are summarized on slide 12. Total revenue for the fourth quarter and year-ended December 31, 2021 were $2.3 million and $32.2 million, compared to $4.4 million and $64.9 million in the same period in 2020. Cadmium's U.S. net product sales were approximately $1 million for the fourth quarter and full year 2021. Product supply revenue contributed 1.3 revenue, 1.3 million and 1.8 million for the fourth quarter and full year 2021 respectively. Collaboration and license revenue was 29.1 million for the full year of 2021 compared to 64.4 million in 2020. Cost of sales for the fourth quarter and full year 2021 was $302,000. Cost incurred for manufacturing campaigns initiated prior to the October 2021 FDA approval of TADMEOS were recorded as research and development expense. Research and development expenses were $18.8 million for the fourth quarter of 2021, compared to $21.2 million for the same period last year. Whole year 2021 research and development expenses were $83 million compared to $77.9 million in 2020. These increases were primarily attributable to the manufacture of commercial drug supply in anticipation of the launch of tabneos and ankylobasculitis and higher research and discovery expenses INCLUDING THOSE ASSOCIATED WITH THE DEVELOPMENT OF CCS 559. SELLING GENERAL AND ADMINISTRATIVE, OR SG&A EXPENSES, WERE 23.3 MILLION FOR THE FOURTH QUARTER OF 2021 COMPARED TO 12.7 MILLION IN THE SAME PERIOD IN 2020. FULL YEAR 2021 SG&A EXPENSES WERE 78.9 MILLION COMPARED TO 42.2 MILLION IN 2020. THESE INCREASES WERE PRINCIPALLY DUE TO HIGHER EMPLOYEE-RELATED EXPENSES ASSOCIATED WITH COMMERCIALIZATION PLANNING EFFORTS AND THE LAUNCH OF TAGNOS IN 2021. NET LOSSES FOR THE FOURTH QUARTER AND FULL YEAR 2021 WERE 40.5 MILLION AND 131.8 MILLION, COMPARED TO NET LOSSES OF 29.9 MILLION AND 55.4 MILLION FOR THE RESPECTIVE PERIODS IN 2020. TOTAL SHARES OUTSTANDING AS OF DECEMBER 31, 2021, WERE APPROXIMATELY 70.4 MILLION SHARES. WE CLOSED 2021 WITH APPROXIMATELY 362.3 MILLION IN CASH, CASH EQUIVALENCE, AND INVESTMENTS. THIS YEAR END BALANCE EXCLUDES THE $45 MILLION MILESTONE FOR THE EU APPROVAL OF TAB NEO'S RECEIVED FROM BIFOR IN THE FIRST QUARTER OF 2022. Lastly, for 2022, we expect to utilize cash and investments in the range of $120 to $140 million. Tom? Thank you, Susan.

Moving to slide 13.

Before opening up to your questions, let me briefly summarize where we are. After a watershed year in which Chemocentrics arrived upon the world stage as an integrated biopharmaceutical company. We have positive feedback from the TAVNEOS launch, and the leading indicators of further growth are favorable. We are focusing on our pipeline and a drug approach for TAVNEOS, aided by a world-class clinical development function, and have advances in lupus nephritis, severe hydranitis superativa, and C3 glomerulopathy in our sites for 2022. TCX559 is progressing through phase one, with initial clinical data to be presented this year. And we are in a strong financial position to execute right across the scope of our enterprise. As we join the ranks of commercially integrated U.S. biopharmaceutical companies, I am happy to report that the landmark year of 2021 has positioned Chemocentrics well. Our enterprise has traveled far to bring the benefits of medical innovation to clinicians and especially to the patients that we serve, while also aiming to provide returns for our shareholders. And as momentous as 2021 was for the companies, we have only just begun. I will now turn the call over to the operator for your questions. Operator?

Thank you, sir. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, please press the pound key. Stand by as we compile the Q&A roster. Our first question comes from Steve Seedhouse of Raymond James. Your line is open.

Hi there. This is Ryan Deshner on for Steve Seedhouse. I just want to ask if you guys can give us any more quantitative detail on patient star forms or on the domain in general seen in the month of February relative to January 22? And then also, when do you expect to reach a majority proportion of paid scripts? Thank you.

Yeah. So, thank you very much for that question. So, we're not providing progress beyond the additional month of Q1 just yet. But again, to remind you, through January, the patient start forms reached 179. Patients on drug reached 141, representing almost an 80%, 79% conversion rate, and we had 140 unique prescribers. So I think we're quite happy with that conversion rate. That's accelerating over where we were in Q4, which indicates to us that physicians are having success getting patients on therapy. We're also happy to see 33% repeat prescribers, which suggests to us that physicians are having a positive first experience. And further, we see the time to coverage decisions are down now to approximately four weeks on average, and that's down from our initial expectation of four to six weeks. So all those indicators are going in the right direction, and I think we're pleased with that. We have an increasing number, an ever-increasing number of paid prescriptions as we go forward. And again, we imagine that early on we were making an investment in the patient support programs appropriately to get eligible and appropriate patients on the drug as quickly as possible with as few barriers. And we think that investment will pay off. And in future quarters, I will tell you just how big that ever-increasing percentage of paid prescriptions will be.

That's helpful. Thank you very much.

And, actually, if I could squeeze one more quick one in. How many scripts does each patient receive on average? Is it sort of one for a three-month supply off the bat, or how does that work?

Thank you. So, essentially, we have one month prescription, and then we redo those. Okay. Thank you very much. You're welcome.

Thank you. Our next question comes from . Your line is open.

Good afternoon. Thanks for taking my questions. I'll stick to one question, but a multi-part one, if I may. So with regards to the separate, I guess, your market research, 66% being rooms and 28% being nephrologists, I guess, how are you thinking about marketing-wise strategically targeting nephrologists to gain a broader following in that cohort? And also, as you think broadly about sort of the feedback you're getting from both rheumatologists and nephrologists, is there any kind of reluctance or more, I guess, stronger affinity by one group of docs versus the other? Thanks.

Thank you, Dagon. Yeah, you know, it's true. We see more rheumatologists, maybe slightly more than we might have modeled. Having said that, these are very complicated patients, and frequently they see more than one specialist. We're And again, not infrequently, their primary doctor is a rheumatologist. So even if they have kidney manifestations and are seeing a nephrologist, they will go back very frequently to the rheumatologist and that's who's writing the script. So I think that that explains in part some of that predominance in the rheumatology part of the equation. Having said that, we're very keen on helping nephrologists as well. understand the benefits of the drug. As you know, published data suggests that it has a quite marked effect on EGFR improvements. And I think that as the experience in the nephrology community expands, and we've already heard some interesting first experiences in nephrology cases, and when you start hearing about those either peer-to-peer or at major upcoming meetings in Europe and the United States, I fundamentally think you'll get a lot more attention from nephrology. I'd also say this. Look, it's quite early days, and the preponderance of rheumatology scriptwriters versus nephrology may, in fact, be somewhat exaggerated at this early point. So we'll just have to see how that goes going forward.

Tom, I'm really sorry. If I can squeeze in one more question, the January trend that you provided today does seem like there is some sense of acceleration in terms of PSFs and PODs So, can you maybe speak to what you're seeing there in the dynamics, and to what extent has Omicron been still a headwind, if you will, as you commented two months ago at a competitor conference?

Thanks. You're absolutely right. Look, I think the acceleration looks good. I mean, in January alone, what did we add? About 50 more patients starformed, so it was 152, and about 50 additional patients on drugs just in January alone. Those are really good trends, right? So those things are things that I'm very happy with. Look, let's talk about COVID. COVID is and will be a major factor for all of us and for some time to come. No matter what happens with the current wave of Omicron, even if it disappears tomorrow, nothing is going to change quickly in how COVID has impacted how we can interact in clinical settings. not just we as sponsors, but patient to physician as well. So we can't be naive about that. That's for sure. Having said that, you know, I think that despite launching TABNES in Q4 into like a sub-quarter and major holidays and the Omicron emergence, I think we were really pleased even with the Q4 trend at the breadth of the TABNES prescribers, which includes not just the, you know, the so-called external experts, but the community physicians as well. And yes, both in the rheumatology and nephrology. So look, it has impacted COVID has and Omicron has impacted certainly MSL access and rep access to sites, especially at the large academic centers or centers of excellence. About 40% of our calls have been in person. In January so far, it was even a bit less than 40%. But that's okay. We plan for virtual visits to continue. We had planned when we were launching to have a hybrid approach. Our team has the tools needed to connect either in person or online, so we hope that we'll be able to meet providers when, how, and where they need to be met. So I think overall we've got the situation well in hand.

Great. Thanks for taking my questions, and congrats on all the progress.

Thank you, Dagon.

Thank you. Up next, we have Michelle Gilson of Kennecor Genuity. Your line is open.

Hi. Thank you for taking my questions. I guess, Tom, just wanted to clarify, the numbers of patients on drugs, that's not necessarily patients on paid drug, right?

No, that's correct.

Okay.

That would be all patients on drug at this point, correct?

All right, sounds good. And then could you just kind of walk us through, you know, the timeline of patients or of the submission of start forms to the beginning of treatment? And then, you know, did you give, I don't think I heard you give us any numbers on like kind of the average time that you're seeing reimbursement. And, you know, could you also, maybe Tosh, one for you, could you outline for us your strategy around positioning and, you know, what your core messaging is to physicians around tabneos and selecting appropriate patients?

Excellent compound question, Michelle. Let's try to take it all in sequence there. So, We have, you're quite correct, patients on drug includes all patients on drug, including those that benefited from our patient support programs and patient assistance programs. Now, you will recall, maybe from previous discussions, that we had very carefully considered our plan to make sure we were trying to remove as many barriers as possible for early and immediate access to drug for eligible and appropriate patients, those that were eligible under our label, right? That's why early on we knew that the patient support programs, including patient assistance, where there is the ability to get on temporary supplies of unpaid medication, was so important. And one of the reasons that we continue to indicate that our metrics in the early quarters are most importantly patient start forms, patient on drugs, and conversion rate. And then that, the revenue line will lag a little while, but overall we believe that line will be much higher because of these early investments through patient support programs. So the number of paid folks as we go along grows, and that's a trend we're seeing through Q4 and into the, as I mentioned, into the early parts of Q1, where we've analyzed the data quite closely. Now, the time, therefore, to get people on drug, again, by design, is as much as we can provide that support and, you know, provide services to clinics and patients, can be very short because, again, patient assistance can happen before the time that a decision is made on getting the coverage enacted. So that's important. We have noticed, again, that the time to getting coverage is now dropping as an average. It's about four weeks. But, you know, there's a wide range. It can be like basically the same day up to several weeks, but about four weeks. So that's a figure that I mentioned, and that's very reasonable because patient access and patient support programs are really designed around that sort of four-week window at this early phase of the launch. So I think all of those are clicking in nicely with the program we designed, and the metrics are coming out as if the performance in the real world is mirroring fairly well our model performance. And Tosh, I will turn it over to you for the other part or parts of that question of Michelle about message points for HCPs, et cetera.

Thank you, Tom. So Michelle, I'll crack at your question. So look, in terms of positioning and patient type, first of all, just to reassure everybody, our positioning and promotion is in line with our FDA-approved label. So we're essentially talking to physicians about newly diagnosed patients and relapsing patients as long as they are both severe and active. And Tavernios could be an appropriate option to add to their existing standard of care and at the same time reminding them that Tavernios does not eliminate glucocorticoids. In terms of the key messages, we've tried to keep it really straightforward and hopefully compelling for these physicians. We remind them essentially what we did in the advocate study, which is number one, we replaced the standard glucocorticoid tape that they utilized for these patients. And when we did that, at six months, we remind them that to have needle spores equivalent or not inferior to the standard of care. And at 12 months, this improved to superiority versus standard of care. And in addition to that, there were a slew of other secondary benefits. There was a reduction in relapse rates. an improvement in kidney function as measured by EGFR, an improvement in quality of life, a reduction in glucocorticoid-related adverse events, and all this achieved with an 86% mean reduction in glucocorticoid load. That essentially is the nutshell of the story in 30 seconds. Now, clearly we then engage into Q&A with those physicians, but that essentially is the message that we're focusing on.

Okay, and have you been able to engage a good number of physicians in that 400 top prescriber groups that you guys have outlined, Tosh?

Yes, in terms of outreach, through January, we reached just under 6-0, 60% of those top 3,500 customers, and we continue to get more reach into the month of February. And the top 400, yes, we've interacted with... We have interacted with the majority of those, as you know, pre-launch with our MSLs and post-launch with our MSLs and our reps.

Okay. Thank you so much for taking my questions.

Thank you, Michelle.

Thank you. And next we have a question from the line of Joe Schwartz of SVB Learing. Your line is open.

Hi, all. This is Will on for Joe, and thank you for taking your questions today, and congrats on the recent progress. So one for us, from what we've seen in our own KOL checks, and as we saw in the metrics reported today, there are clearly some physicians who are very early adopters of TAVNEOS, which is great to see. So we're wondering what defines an early adopter relative to the later adopters, and what do you think the later adopters want to see in order to prescribe TAVNEOS? Any thoughts here would be appreciated. Thank you.

I have some impressions. I guess I would say, let's just call them impressions. We don't yet have enough data to have sort of granular evidence. But look, our early adopters, many of them were experienced with the drug in clinical trials. So they were very aware of the way typoneosis is used and has been used in those trials. They're very intimately aware of the advocate phase three pivotal trial results. and they are very up-to-date on the findings that were published in the New England Journal of Medicine. So I would say many, though not all, fit that profile. So some, there is another group that is a little bit worried about, in the era of COVID, just how immunocompromised an ANCA-associated vasculitis patient may be as a consequence of their standard therapies, including B-cell depletion. So there are some that are wondering if if tabneos can have a role in helping these individuals, particularly in a time of COVID. And so there's a lot of outreach there. And then there's this third group, which, again, is a pleasant surprise at this point, early as we are in the launch, but these are the community physicians who have a great degree of unaided awareness about tabneos and what the effects of tabneos may well be for their patients. with severe active ankylobasculitis. So we see a very healthy proportion from that group, and I think that that's quite encouraging. Fundamentally, I see a lot of interest in the nephrology community, notwithstanding what looks like a somewhat skewing to rheumatologists being the prescribers in the majority of the script so far, but nephrologists have been very interested and very vocal with some of their early experiences. So I don't know how public those are yet, but I hope that they'll be coming out in discussions at meetings for the nephrology community in Europe and in other meetings to come. And I hope you'll be hearing about some of those, certainly those case studies from some of the leading nephrologists that have used tabneos in their patients. And I think that sums up most of my impressions.

Great. Thank you. And if I could sneak in one quick follow-up. Are there any common questions that the sales force are getting or any kind of patterns here that you could talk about? Thank you.

Well, I think, sure. I mean, this is a new drug. Clearly, people are very curious about how to use it. The label is fairly broad and leaves a lot to the physician's judgment and discretion. So physicians are asking questions such as, You know, how do I use this with my current medication on this patient? How do I use it? You know, do I need to start glucocorticoids or reduce glucocorticoids in context of prescribing tabneos? And essentially, how do I get people started on tabneos? So those kind of things are questions about access as well. And I think we've been able to address appropriately all those questions.

Great, thanks again.

Thank you. And up next, we have Yenin Zhu of Wells Fargo Securities. Your line is open.

Hi, thanks for taking my questions and congrats on the progress. So, first of all, I wanted to understand a little bit better the conversion rate for the fourth quarter. That 71% number, obviously, that indicates 29% of patients did not convert. Could you touch upon what might be the reason for a patient not go on to therapy? And then for the January number, interestingly, I think, as you alluded to, you have 50 new patients start forming and 50 more patients on drugs. suggesting perhaps 100% of the patients have converted. Could you say whether that's the correct interpretation, and what's your expectation for the conversion rate going forward?

Well, all very good questions, John, and thank you. You know, some of it may just be from Q4, a timing issue. So there could have been folks that got patient starts you know, sort of late in the quarter and then spilled over into the new year. So I think what we're seeing is all these kind of rolling, basically rolling averages. So the lag time from conversion earlier sometimes just is the question of, again, access while early access was being worked out and refined. Also, while early discussions around coverage were being worked out, etc., So we expect and we have seen a reduction in the time from the original four to six weeks down to four weeks as people go into the system, and I think that's reflected in increasing conversions. You know, I would hesitate to put a number on where we would like to be, but I can say that a conversion rate of around 80% is fairly good. And, you know... Most people that get on the drug are eligible for the drug. They fit squarely in the labeled indication. Occasionally, you'll get someone who either isn't eligible for the drug or cannot get into the system, and even the patient access program is not suitable for them, and those are the reasons that you might have lack of certain conversions.

Got it. Thank you. And if I may ask about any initial feedback on efficacy that you hear from the prescribers and how much of that 33% repeat prescribers do you think is driven by physicians seeing signs of efficacy? Thank you.

Well, you know, it's too early. One, I would hesitate to speculate. Secondly, I think it's too early to say about The repeat prescribers, I think it's good news, obviously, that we are seeing increasing numbers of repeat prescribers. And again, that trend seems to be accelerating in the appropriate direction. So we are encouraged by that. I am very much hoping that we'll start hearing some early reports on efficacy at the upcoming nephrology meetings. And I would hope that maybe you'll hear some things that you are. I don't know that as a fact, but I do know that A lot of the major players will be at both the European League of Rheumatology meeting and the European Renal Association meetings in a couple of months. And I would be very interested to hear what some of those folks have to say because I know they seem to have some patience on therapy. So maybe we'll hear as early as that. Maybe there'll be some letters about case studies coming up in the not-too-distant future. It's really more up to what the investigators decide to do and how they're going to disseminate their information. So I hope that we'll hear a lot more about that in the very near future.

Great. I'm looking forward to those information. Thank you, Tom. Congrats again. Thank you, Yannick.

Thank you. Our next question comes from Ed White of HC Wainwright. Your line is open.

Thanks for taking my question. So you had mentioned the support programs, Tom. I'm just curious as to the amount of free drug given in the fourth quarter, perhaps the dollar value, if you have it, or the number of patients, and then what your outlook is for the year. Thanks.

So we're not giving a lot of detail around the patient support and patient assistance programs. I think it's a little bit early to talk about that. Suffice it to say, we have said we made a considered investment in patient support, patient assistance program, and I think that it is paying off for us. I think we're seeing Rapid access to drug matters. I will give you a little bit more granularity on this. So as we go through January, again, we're seeing an increasing amount of now patients on paid medication. Over one-third of the patients are now on paid medication, and that number in proportion seems to be increasing, ever-increasing. That is pretty much right in line where we thought it would be at this quite early stage of the launch, and we are happy with the trend lines. Now, we will continue to support appropriate patient access, again, with limited and temporary patient access to unpaid product. But, again, we think that's the appropriate investment as that ought to translate to an ever greater share of paid bottles as the launch progresses. and particularly as folks then get their prescriptions refilled and repeated and they work through the system. So I think we're right on track with where we want to be, and I think the trend lines are well within our models at this point.

Okay, great. Thanks, Tom.

Thank you. Our next question comes from Edward Sinton of Piper Sandler. Your line is open.

Great. Thank you very much for taking my question. My congratulations, too. Really impressed with where you are in the launch, and I think it speaks to the profile of the drug. I wanted to get a sense a little bit for the patient experience. It may be early, but I'm trying to get a sense for how quickly patients are feeling better, how quickly they can actually start to see some of these kidney function improvements and or improvements in other organ systems, how quickly they can start to actually, a physician will actually start to reduce the steroid dose. A lot of really good questions, but I wanted to get a sense for sort of what the patient might experience on tapio. Thanks, guys.

Thank you very much. Yes. You know, We know from our clinical work what we have been able to show in the controlled studies. Too early, we don't have enough real-world evidence, although we do have some anecdotes. But we know in our clinical work that we, for example, if you just look at, for patients with kidney dysfunction, if you look at the amount of protein in the urine as measured in a variety of ways, but just say urinary albumin to creatinine ratio, We have shown in many, well, the three controlled studies that we ran, and certainly the two where then called Avacopan was used in the absence of the daily scheduled oral prednisone taper. You know, we see a really marked reduction in proteinuria within a week, certainly by two weeks, significantly different from those persons that are only on standard of care therapy, which includes high-dose prednisone taper. So that can happen within a couple of weeks. And if you're a kidney patient with a nephrologist, you're probably being watched very carefully if your glomerular filtration rate is degrading, because that really is the fear. And you'll be first watched for proteinuria, maybe doing that at home with simple dipstick death So the patient is likely to see results in fairly short order if real-world matches what the controlled trial tells. We also know in controlled trials that as a population, you start to see an increase in estimated glomerular filtration rate, which is based on the levels of serum creatinine. It's an equation that starts with serum creatinine. So as serum creatinine goes down, then estimated glomerular filtration rate is going up. And what we see is that can start happening quite rapidly as well, at least with population studies in the control trials. You know, within about four weeks, people start to see some inflections in their EGFR. And again, if you're a kidney patient, that's super important. Now, we've also heard of other reports, and I think there's a couple of case studies where even a reverse trend of declining EGFR can happen quite considerably more swiftly than that. So I think there are some abstracts out there that have been published or accepted. It will be interesting to see more of those reports. So for the patient speaking to their nephrologist, those are all very encouraging signs, and they can happen quite rapidly. We know in terms of patient-reported quality of life, again, in the Phase II studies, you know, even by four weeks, we started to see improvements in patient sense of well-being, increased vitality. Certainly, those were very firmly established by Week 12 in the Phase II studies, Week 26 in the Phase III study, and continuing improvement out to Week 52. So, in short, I think the data does support the idea that patients on tabneosis ought to actually feel better in fairly short order. And whereas when they're on the total standard therapy, self-reporting any improvement in how they feel about their disease is really rare. And I don't know if there are many controlled studies where it's actually been reported. So I think that's going to be an interesting feature of the program. We'll see what the real world tells us. in pretty short order.

Great. Thanks for that call, Tom.

Thank you.

Thank you. And next we have Anupam Rama of J.P. Morgan. Your line is open.

Hey, guys. Thanks so much for taking the question. Just a quick one from me with no subparts, which is, You talked a lot about some of the dynamics where patients start forms, patients on drugs. You talked about some of the reimbursement trends. I guess specific to 1Q, how are you thinking about some of the seasonal dynamics around the quarter given, you know, any growth in net? And then it sounds like you have scripts being written for one month. Thanks so much.

Yeah.

So, Tosh, do you have any feelings about the trends in Q1 and seasonal dynamics?

It is a , but typically they're approved for, depending on the payout, for a period of six months to one year. So we don't have any concerns about script being issued for one month. In terms of trends into Q1, look, Tom's alluded to, or not alluded, Tom has shared with you the launch to date as of end of Jan 31. You can see the continued acceleration that we see in January. And we look forward to sharing more details of that acceleration in February and March at our end of Q1 earnings. But when we look at January launch today, we are encouraged.

Thanks so much. Thank you.

Thank you. And I see no further questions in the queue. I will turn the call back over to Thomas Schall for closing remarks.

Well, thank you very much, and thanks, everyone, for joining our call today. Thanks also for the very stimulating and insightful questions, and you may now disconnect.

Bye now.

Goodbye. This concludes today's conference call. Thank you for participating. You may now disconnect, and have a pleasant day.