Aurinia Pharmaceuticals Inc. (AUPH) Earnings Call Transcript & Summary

Hello, everyone. This is Thomas Yip from H.C. Wainwright. For our next presentation, we have Mr. Peter Greenleaf. He is the CEO and Director of Aurinia Pharmaceuticals, a commercial stage company focused on delivering treatments for serious diseases with a high unmet need. Peter, very happy to have you with us at our conference. Please go ahead.

Thanks, Tom, and I want to thank everybody at H.C. Wainwright for having us at the conference today. Good afternoon to everyone who is joining us, and I hope the conference is going well for you. I'm going to spend, I guess, about 20 minutes to walk you through who we are as a company. And if you're aware of who we are, to give you an update on the most recent events and what we've been up to as an organization. But before I do, let me point you to our forward-looking statements. And of course, all of our most recently filed filings with the SEC can be found on our website at aurinia.com. To get us started, listen, we're a company that is committed to delivering therapeutics that really do change the course of autoimmune diseases. We're doing that right now as a fully integrated biopharmaceutical company. So what that means is we have the capabilities in the organization that start at research, go all the way through the development process into where we're really starting to cut our teeth most recently is in the commercial stage of things. And we're doing that today on both small and large molecule solutions. Currently, we're marketing LUPKYNIS, so a lot of my presentation today is going to go through that. This is the first oral therapy that was approved to treat adult patients today that are living with a segment of lupus called lupus nephritis. In addition, from this point forward, where are we looking to go? Well, obviously, we're trying to drive a pipeline of innovative assets. And we want to continue to be a company that's focused on driving innovation. And we're doing that through a portfolio that's focused on rare immunologic and kidney-based diseases with high unmet medical needs. And as we target things that we're looking at because much of what we have in the past has been developed around LUPKYNIS, the future is being really developed through an external approach, which I'll talk more about. There's -- it's key for us, one, to focus on the science and innovation but also to be focused on assets that are -- have at least some level of proof of principle, if not proof of concept with the room for further differentiation. The team that we have here is a management team that's been compiled very specifically with deep expertise and experience and a successful track record in this space, but across all areas, whether that be launching therapies, developing therapies in the clinical stage or doing base research work if there's 1 consistency outside of depth across all of those areas, it's a track record for success, both in developing and launching blockbuster drugs in our space today, but as well working across both small and large organizations. And then lastly, leadership that has been driven both internally or organically through pipeline and research and development work and externally through aggressive business development. Let me shift gears now and talk about LUPKYNIS or voclosporin, which is the product that we most recently received FDA approval from in late January of this year. Our drug LUPKYNIS is indicated for the -- in combination with background immunosuppressant therapy for the treatment of patients with active lupus nephritis. Today, it's dosed twice daily. And 1 big benefit we have is the fact that the drug because of its -- the way it's comprised, there's no serum drug monitoring required. Physicians can do dose modifications based on Aurinia's proprietary patient-tailored pharmacodynamic dosing protocol, which is based upon the eGFR response that the patient is seeing with the drug. And our safety is generally in line with other immunosuppressive therapies that are used to treat the disease. I'd be remiss not to spend a little bit of time on lupus nephritis as a disease. It's obviously a very serious disease that affects disproportionately females and females of color. The disease itself is part of a larger disease called systemic lupus erythematosus or SLE. The disease is not insignificant. SLE itself affects somewhere between 200,000 to 300,000 patients in the U.S. And we believe from the data we've derived between 1 and 3 patients who are -- 1 of 3 patients who have SLE have already developed LN at the same time, they get diagnosed with SLE. So very serious. And 90% of patients with SLE will progress on or could progress on to lupus nephritis. The largest percentage of the population itself is female. And then if you look at the rates of how comparatively LN is spread across people, obviously, people of color are much more highly impacted, 4x higher in terms of the percentage of people that are from African or Asian descent and 2x higher for Hispanics or native people. If you actually look at the costs associated with the treatment of the disease, the LN is associated with significantly elevated risk of kidney failure as well as cardiac events and death. And if you just look at these percentages, 45x higher risk of kidney failure in these patients. And when you look at cardiac risk, anywhere from cardiovascular mortality and/or cardiovascular myocardial infarction or heart attacks, anywhere from a 5x to 8x risk. And if you just look at risk of potentially even premature death of 3x risk once diagnosed with lupus nephritis of premature death. Obviously, all these areas have very significant economic burden on the health care system, whether it be hospitalization, stays in hospitalizations, dialysis, kidney transplants, all very significant in terms of the potential economic burden that a lupus nephritis patient faces to the system as they progress on with their disease. Now when treating lupus nephritis, the guideline support that decreasing proteinuria is the key to the game here. And -- the numbers I have up here on the screen are taken right from both the EULAR and the ACR guidelines. Docs are targeting at least a 25% reduction in proteinuria at 3 months. And as they approach 12 months getting those levels of UPCR down below 0.5 are absolutely critical to the treatment of the disease, trying to put that disease into rapid response and then remission over time. And as you'll see whether it's the lowering of UPCR over time or how they do that in terms of the drug in combination with the other drugs that we studied, our drug fared extremely well in both our Phase II and our Phase III trials. Superior renal response rates versus the pure standard of care alone and almost twice -- doubling of the effect of complete response compared to the typical standard of care. Proteinuria reductions 2x as fast as that of the standard of care and this all being done with -- under the backdrop of reduced steroid use. Lastly, showing improvement in response rates across all parameters of patients immunoactive -- immunologically active with the disease. Last point. Obviously, the drug is orally administered, and there's no drug level monitoring with LUPKYNIS. After the FDA approval, which we received the third week in January, we've still been very busy, whether it was the actual publication of our pivotal data results in the Lancet back in May, or the submission of -- the submission of our MAA filing with Otsuka in June. And then probably most important in terms of both data display on to globalization of the product was -- starting in the May time period of this year, we actually produced the first cut of the AURORA II continuation study and we expect the full data results from that, which will extend the trial results from the original AURORA study out to 3 years expected in Q4 of 2021. Why is this important? Well, the interim analysis from the AURORA 2 was obviously very significant. This was 104 weeks of data. which takes the LUPKYNIS original AURORA study from a 52-week study out to now 2 years in this data set. And in this data set so far, and as I said, we'll show a whole another year of this by year-end. You basically showed that patients in the voclosporin arm maintained the reduction in proteinuria that we saw with no change in mean eGFR at 2 years of continued treatment. So no unexpected AEs have been seen so far through the extension study. And I think the conclusion is very simply that it supports the positive benefit-risk profile of our drug seen in both our Phase II, Phase III studies and now in our Phase III study out to 2 years, and we look forward to this next kind of data coming in the fourth quarter of this year, bringing us 3 years of total data for LUPKYNIS in this patient population. So about a year ago, almost to the day, we had fully built out our commercial organization. We were prepared to launch, and we had drafted a very rapid deployment plan and commercial strategy to launch the product when given the approval. And that launch strategy basically covered 4 major pillars: One, in positioning the product, we want to work and aspire towards positioning LUPKYNIS towards the standard of care for the treatment of these patients with disease. And as we do that, ensuring that we get optimal outcomes for patients in every support tool that we use around the drug that we expand lupus nephritis diagnosis and treatment in the space. And then lastly, as patients are prescribed the product that they eventually get to a point where there's unrestricted access, both on initial prescription and as they continue to get their prescription each month moving forward. And we did this by creating a strategy that not only was aligned tactically, but also with our deployment out there and our infrastructure really is set up in a way that addresses all key stakeholders in this space, whether it be physicians today, we deploy against both nephrologists and rheumatologists with about 150 customer-facing professionals. We hired a sales force that has very deep nephrology and rheumatology experience. And we've complemented the work they're doing with field access and reimbursement folks as well as medical affairs team to support the product with clinicians. On the patient side, we created Aurinia Alliance, which is a fully integrated group that we use internally, with external support that basically supports the patient through the -- and the physician through the entire experience, dedicated nurse case managers for one-on-one dedicated support. This connects directly to our reimbursement specialists in the field that can do help with the physician. And then lastly, whatever we can in terms of online and direct patient education. Last 2 areas, payers are obviously key. So we have a field-based team that looks at both the full pharmacy benefit experience from initial prescription all the way through to payer reimbursement and financial support in terms of programs for the patient, including co-pay assistance for the uninsured and the underinsured out there today. And then our advocacy relations folks are deployed across the country as well as federally to ensure that we do everything that we can to support lupus nephritis patients as they go not only through the experience of LUPKYNIS, but also as they get treatment for their disease more broad-based. And while we've only been out there for just under 9 months doing what we're doing right now, we've been -- we've seen good results to date in a very challenged COVID market that's been out there impacting our entire industry. And just revenue to date, $7.2 million since official approval. We've had over 800 patient start forms that we've received year-to-date, at least 50 total LUPKYNIS clinical coverage policies, specific insurance policies that have been written to date. And broadly, the product sees very healthy coverage of over 110 million lives that are covered for LUPKYNIS today. Lastly, we've given, as of our last report, and that was for the first 2 quarters of the year reported in August that we are estimating about $40 million to $50 million in total net revenue for 2021. So obviously, we've been spending a lot of time focused on building our commercial capability and our launch capability getting LUPKYNIS off the ground. But as part of our longer-term strategy, we aspire to continue driving new innovation for patients. And really, the only way to do that is through new drug development. So I'm happy to report significant progress here as well through a few new pipeline deals that we recently announced and are progressing internally. So many have probably seen our most recent announcement, but if you haven't, let me just recap. We recently announced 2 pipeline asset acquisitions. While they're preclinical, we've chosen these based on proof-of-concept and proof-of-principle. That both compounds, we believe, have and the fact that they have differentiated potential to address a broad range of immunology and kidney-related indications. So while in both cases, we've not indicated specifically where we're going, they have the possibility to be across a broad range, including the areas of kidney research that we're focused on historically and currently. Our Aurinia research and development teams have the expertise to move these assets forward. And we did this in a way that not only cost less than USD 7 million for us upfront, they've not impacted our guidance over the next 2 years in terms of our cash burn and our balance sheet. And they really do supplement the ongoing work that we're doing around voclosporin and the follow-on work that we're doing for voclosporin, which leaves us today with a pipeline that addresses both LUPKYNIS today that is FDA approved, and we're working on post-marketing studies and AUR 200 and 300, the 2 most recent assets that we brought into the portfolio, which I'll talk to in a second, that are right now on IND-enabling and we look to over the next 12 to 18 months bringing them both into human clinical trials. So AUR 200 is a rapid acting B-cell drug. The mechanism, and we've not talked a lot about this yet because we have ongoing patent filings, we believe has a high potential for differentiation. It's a recombinant Fc fusion protein, and it's been designed specifically to block the B-cell side of the equation, but through B-cell activity, activating factor and a proliferation-inducing ligand or APRIL, which we know both play a significant role in B cell-mediated autoimmune disease, and these overlapping functions and receptors, regulating B cell activity. We believe that this molecule and this approach has the ability to be quite differentiated and has quite a bit of potential differentiation towards survival of B cells. Proof of concept here has been complete. This mechanism has been widely known out there and has been widely studied and are, as I said earlier, the amount that we put into this investment upfront and the future back-end royalties are quite insignificant. So we have an ability to take this forward once we do the asset remains outside of small royalty commitments are pretty unencumbered. Submission of an IND to the FDA by the end of 2022. Obviously, that would be then moving this drug into human clinical trials at that time as well. The second asset is AUR 300 as we're calling it internally. The mechanism here is using early macrophage modulation to address inflammatory or fibrotic diseases. And the drug itself is a novel peptide that modulates M2 macrophages, a type of white blood cell via the CD206 receptor. It's been said that dysregulation of M2 macrophages drives fibrosis. And the thought here and that, of course, CD206 is highly expressed on M2 macrophages, the thought is that AUR 300 acts to reduce the M2 dysregulation upstream and then hopefully can decrease fibrotic and anti-inflammatory -- or anti-inflammatory cytokines. We were secured this asset through a global research and licensing agreement with Riptide Biosciences. And here again, as I said, within the next 12 to 18 months, our hope is that we would have an IND filed and moving that into human clinical trials, hopefully in the first half of 2023. So significant work in bringing in new and differentiated innovative science into the company. And just rolling up before we move on to any questions if there are any. At Aurinia, listen, our mission is to deliver therapeutics to change the course of autoimmune disease. That starts today with our first asset that we've launched in LUPKYNIS and we're making an impact in the U.S. market with ongoing studies in support of that brand. Outside the U.S., significant work going on with Otsuka and obtaining regulatory approvals in EU, the U.K. and Japan. And then lastly, we've shown you that we're aggressively moving new innovation into our pipeline through investments in the deals that we've most recently done and look forward to leveraging Aurinia's capabilities and bringing those compounds forward for the future. I want to thank you for listening today. I look forward to any questions that you might have. Thank you.

Thank you very much, Peter. Perhaps a couple of quick questions from me. So as you outlined, we've already seen LUPKYNIS kind of very compelling efficacy in your Phase III trial. And you mentioned a couple of times is oral form dosing. Can you tell us some advantages of the oral dosing from a clinician standpoint and also from a patient standpoint as well?

Yes. I think originally, the thought process was to monitor eGFR just to ensure that the patient was seeing a consistent response and that they did, in fact, not need any dose monitoring like other maybe first-generation CNIs. But the benefit that we've seen despite lowering actually saw -- and this was not statistically significant, but it was directionally, they saw improved efficacy as they saw reductions in dose with these responses in patients. So as you know, we have a patent on that, and that takes our total patent portfolio all the way out to 2037. But the benefit to the end patient is hopefully improved reduction in UPCR and of course, doing that with lower drug.

Thank you, Peter. Perhaps 1 last question for me. This one on the commercial side. As you outlined since its approval earlier this year, Aurinia has a very comprehensive commercial strategy with 800 patient starts and $40 million to $50 million revenue for this year. How much further do you believe LUPKYNIS can go in the U.S. market? And what are the major steps that can take you there?

Well, I think we're at the early stages of launching the product less than 9 months into the launch now and 2 quarters reported. And we're doing it in a sort of unprecedented time period. We built our commercial organization, gained approval for the product and then launched -- subsequently launched the product all during this interesting, unprecedented time around the COVID-19 experience that the world is feeling right now. So while I think we're doing extremely well in terms of our execution out there, the market limitations that we have in terms of the impact of COVID out there are real. And I think we're just seeing the front end of what we can do. We've not given any mid- to long-term guidance on LUPKYNIS sales, but we have said we think it has all the potential to be $1 billion compound someday, and that's really the aspiration that we're working towards. But we're in the early days, and we're continuing to push it and get to physicians and patients. And as I said, we're doing that in a pretty challenging environment out there, although our success has been on target with what we expected in this environment that we're currently operating in.

That's right. Thank you very much, Peter, and we look forward to LUPKYNIS' progress. I also want to thank everyone in the audience for joining this presentation. Thank you very much, and take care.

Thank you.