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Edited Transcript of AUP.TO earnings conference call or presentation 14-Nov-19 9:30pm GMT

Q3 2019 Aurinia Pharmaceuticals Inc Earnings Call

Edmonton Dec 5, 2019 (Thomson StreetEvents) -- Edited Transcript of Aurinia Pharmaceuticals Inc earnings conference call or presentation Thursday, November 14, 2019 at 9:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Dennis Bourgeault

Aurinia Pharmaceuticals Inc. - CFO & Secretary

* Glenn Schulman

Aurinia Pharmaceuticals Inc. - SVP of Corporate Communications & IR

* Michael R. Martin

Aurinia Pharmaceuticals Inc. - Co-Founder & COO

* Neil Solomons

Aurinia Pharmaceuticals Inc. - Chief Medical Officer

* Peter S. Greenleaf

Aurinia Pharmaceuticals Inc. - CEO & Director

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Conference Call Participants

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* Alethia Rene Young

Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research

* Antonio Eduardo Arce

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

* Joseph Patrick Schwartz

SVB Leerink LLC, Research Division - MD of Rare Diseases & Senior Research Analyst

* Justin Alexander Kim

Oppenheimer & Co. Inc., Research Division - Associate

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Presentation

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Operator [1]

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Greetings and welcome to the Aurinia Pharmaceuticals Third Quarter 2019 Conference Call.

(Operator Instructions) As a reminder, this conference is being recorded.

It's now my pleasure to introduce your host, Glenn Schulman. Please go ahead, Glenn.

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Glenn Schulman, Aurinia Pharmaceuticals Inc. - SVP of Corporate Communications & IR [2]

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Thank you, Kevin. And good afternoon, everyone. Welcome to Aurinia's Third Quarter 2019 Financial Results Conference Call.

Joining me on the call today from the Aurinia team are Mr. Peter Greenleaf, President and CEO; Dennis Bourgeault, our CFO; Dr. Neil Solomons, Chief Medical Officer; and Mr. Michael Martin, our Chief Operating Officer.

This afternoon, we issued our press release detailing the third quarter 2019 financial results. The press release and the associated financial statement package is available on our website at www.auriniapharma.com, along with the 6-K that was filed with the SEC as well. I'd also like to remind everyone that today's call is being webcast live on Aurinia's investor relations website, and a replay will be available following today's call. Please note the content of today's call is property of Aurinia. It also cannot be reproduced or transcribed without our prior written consent.

Now during the course of today's call, we may make forward-looking statements based on our current expectations. These forward-looking statements are subject to a number of significant risks and uncertainties, and our actual results may differ materially. For a discussion of factors that could affect our future financial results and business, please refer to the disclosure in today's press release, our most recent filings with Canadian securities authorities and reports that we file on form 6-K with the U.S. Securities and Exchange Commission. Also note that all the statements made during today's call are as of today, November 14, 2019, and based upon information currently available. Except as required by law, we assume no obligation to update any such statements as of this date.

With all that preface, let me turn the call over to Aurinia's CEO, Mr. Peter Greenleaf.

Peter?

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Peter S. Greenleaf, Aurinia Pharmaceuticals Inc. - CEO & Director [3]

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Well, thanks, Glenn. It's a pleasure to have you all on the call with us today.

As Glenn mentioned, we issued our third quarter financial results and recapped our recent accomplishments in a press release that went out this afternoon.

So during my relatively brief tenure here at Aurinia, I have to say that I continue to be amazed by the dedication of the staff and the knowledge and expertise and focus of each team member that they bring to the advancement of voclosporin. As many of you are aware, lupus nephritis is a very serious form of SLE. It has a devastating impact on people living with the disease, their families. And the limitations of current available treatments are very well understood in the market space. Getting renal response in patients as rapidly as possible is key to preventing future end-stage renal disease and the need for dialysis and transplant. Aurinia is on the precipice of pivotal data that will -- that, when we have, we'll actively be preparing for success. Over the past few months, our team has attended events and conferences around the globe to meet with treating physicians, key thought leaders, individuals affected by lupus nephritis and patient advocacy groups, all to learn more about the needs of individuals with the disease that are not being met currently as well as the potential and important role that voclosporin could play in the patients that have this disorder and the involving treatment approach for this disease.

During today's call, in addition to reviewing our recent operational highlights and financial results, Dr. Neil Solomons will spend a few minutes to recap the history of voclosporin and the development path that has brought us to this point today. We thought that for today's call, especially while we await the unblinded and analyzed AURORA Phase III clinical trial results, it would be a great opportunity to briefly review the history of voclosporin, especially in the context of the development path the company has followed to date. Before I actually turn the call over to Neil to discuss the history of voclosporin, and our excitement leading into this data readout, I'd like to review some highlights and recent corporate events.

First, as you may have read yesterday, Aurinia continues to build and strengthen the company and our Board of Directors. We have continued to attract extremely talented and experienced individuals to our Board, as evidenced by the addition of Mrs. -- Ms. Jill Leversage. Jill is a CPA who also has a wealth of cross-border financial, banking and deal experience previously serving in a number of senior leadership roles at financial institutions. Jill is filling the seat formerly held by Dr. Joon Lee, who recently resigned from our Board. On the operational front, we continue to build for success through strategic key hires across our regulatory, medical affairs and commercial groups. I'm pleased to announce that, in addition to expanding our medical science liaisons in the field, we've also brought onboard 2 new vice presidents in our commercial group focused on market access, reimbursement and the building of our base commercial operations for the company. I'm impressed by the talent and depth that -- and experience that we've been able to recruit to date.

With respect to voclosporin, we're actively working on the regulatory modules for the NDA as well as making investments in commercial drug supply that will enable us to move forward with an NDA submission during the first half of next year. We also recently announced the completion of the -- an FDA-requested drug-drug interaction study with voclosporin and MMF in patients with lupus. As expected, the study demonstrated no impact of voclosporin on the metabolism of MMF, providing additional differentiation for this compound relative to cyclosporine. As you can imagine, once we receive the report of the AURORA results and assuming positive, this will trigger a flurry of corporate activities and a companywide focus on preparing for an NDA submission during the first half of next year. From there, we continue to anticipate a projected commercial launch of voclosporin in early 2021 as a potential treatment in combination with MMF for the treatment of lupus nephritis.

Moving briefly to other ongoing programs in the pipeline. The FSGS program we're running continues to enroll patients, and we believe interim results from this study will become available during the second half of next year. Lastly, continuing on the theme of solid execution, we initiated the AUDREY Phase II/III trial design for dry eye syndrome last month. And we expect results from this trial will be available in the second half of next year.

The Aurinia team continues to execute and deliver on its milestones. And with all eyes on the pending AURORA results, we look forward to providing the results to everyone once they come available by the end of this year.

So with that stage set, I'd now like to talk -- turn the call over to Dr. Solomons.

Neil?

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Neil Solomons, Aurinia Pharmaceuticals Inc. - Chief Medical Officer [4]

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Thanks, Peter. And thanks, all, for joining.

And as mentioned, I'd like to spend just a few minutes this afternoon to recap the development path of voclosporin and our view on what we see from AURORA.

As a reminder, AURORA is a global randomized, double-blind placebo-controlled clinical trial that enrolled a total of 358 lupus nephritis patients. The trial, which is designed to be comparable to the previously completed AURA study, is evaluating the addition of voclosporin on top of mycophenolate mofetil or MMF for the treatment of LN. We are excited to see whether voclosporin can increase the

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Operator [5]

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We are experiencing technical difficulties. Please hold.

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Peter S. Greenleaf, Aurinia Pharmaceuticals Inc. - CEO & Director [6]

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Well, that was interesting. Neil, please continue.

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Neil Solomons, Aurinia Pharmaceuticals Inc. - Chief Medical Officer [7]

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Okay. The primary end point for the study is renal response, which was previously referred to as complete remission, at 52 weeks. And with the last patient, last visit taking place a few weeks ago, we are looking forward to receiving and reporting out trial results by the end of this year, which if positive will form the basis of our U.S. regulatory filing. This can result in a first FDA-approved drug in this specific indication.

As a reminder, voclosporin is a novel calcineurin inhibitor that has been tested in more than 2,600 subjects, with some patients having received several years of therapy in the renal transplant setting. We've done extensive research into the different characteristics of this molecule. This is highlighted by the results of our completed lupus drug-drug interaction study for voclosporin and MMF. Unlike cyclosporine A, which is labeled as interacting with MMF, our study demonstrates that voclosporin has no such interaction from the exposure of MMF, which leads us to believe that voclosporin can be used predictably in combination with MMF.

I'd like to comment that the execution by the Aurinia team has been exemplary. From the recruitment and outcomes observed in AURA, our successful End of Phase II meeting with the regulatory agencies and the initiation and record enrollment of patients into Phase III, our team has consistently met their milestones as we await these pivotal results. From our perspective and based on our previously completed studies in LN, our hope is that AURORA will show a treatment effect consistent with that shown in AURA. At a p-value of less than or equal to 0.05, we believe this -- with -- this would constitute a very positive treatment effect. And we think that an absolute delta of more than 10% between treatment arms would be clinically meaningful, but based on the AURA results and increasing response rates seen between 24 and 48 weeks, we hope we can see even larger delta between arms.

What is really striking from the data we previously generated in AURA was that voclosporin seemed to induce a rapid reduction in proteinuria, achieving renal response as early as 12 weeks. The rapidity of effect remains one of the most important goals of LN therapy. As has frequently been reported in literature, there is a strong correlation between early control of the disease and long-term outcomes of patients with LN. Essentially, time is nephrons. In AURA, we observed continued improvement in renal response rates over the course of 1 year in both treatment arms, with increasing separation between active and comparators. This is exactly what we'd expect given the mechanism of action of voclosporin, namely its early and direct effect on the kidney with a later profound disease-modifying effect. And we hope to see similar results in AURORA.

Even with everyone focused on the upcoming AURORA results, I'd like to spend a few minutes reviewing our other development programs.

Keeping on the theme of execution, we were delighted to announce last month the start of patient dosing in our AUDREY Phase II/III clinical trial for dry eye syndrome. Following the promising pilot Phase II data with VOS reported earlier this year, which showed VOS to be well tolerated, with striking early efficacy results compared to the current market leader for DES, Restasis, we've moved quickly to build upon these results and expand the VOS program. As you'll recall, AUDREY, that's Aurinia dry eye, is a Phase II/III randomized, double-masked, vehicle-controlled dose-ranging trial evaluating the efficacy and safety of VOS in subjects with dry eye syndrome. In all, approximately 480 subjects are expected to be enrolled and randomized into 1 of 4 arms in a 1:1:1:1 randomization schedule to either 0.2% VOS, 0.1% VOS, 0.05% VOS or vehicle, with all arms being dosed twice daily for a total of 12 weeks.

The primary outcome measure for AUDREY will be the proportion of subjects with a 10-millimeter improvement in Schirmer Tear Tests or STT at 4 weeks. Furthermore, secondary outcome measures will include STT at multiple time points; Fluorescein Corneal Staining or FCS at multiple time points; change in eye dryness, burning, stinging, itching, photophobia, eye pain and foreign body sensation at multiple time points; and additional safety end points. To date, enrollment and progress in this study has been on track. And we anticipate that results from AUDREY will be available during the second half of next year, so we are very excited to advance VOS and aim to address the persistent unmet medical needs associated with this condition.

Moving briefly to voclosporin for focal segmental glomerulosclerosis or more simply FSGS. As you will recall, Aurinia initiated a Phase II proof-of-concept open-label study for FSGS back in June of 2018. The study was designed and recently updated and will evaluate the role of voclosporin for patients diagnosed with primary FSGS. A total of approximately 20 patients are expected to be enrolled, and with the recruitment back on track, we continue to anticipate interim results from this study during the second half of 2020.

And with that review of the clinical programs, I will pass over to Dennis for a review of the third quarter financial results. And we'll be happy to take any questions during the Q&A session.

Dennis?

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Dennis Bourgeault, Aurinia Pharmaceuticals Inc. - CFO & Secretary [8]

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Thanks, Neil.

For the third -- for the 3 months ended September 30, 2019, Aurinia reported a consolidated net loss of $19 million or $0.21 per common share compared to a consolidated net loss of $18.3 million or $0.21 per common share for the same period in 2018.

Research and development expenses increased to 18 -- $17.8 million for the 3 months ended September 30, 2019, compared to $11.2 million for the 3 months ended September 30, 2018. The increase in these expenses were primarily related to the manufacturing of voclosporin for commercial and investigational use. In addition, higher costs were incurred for the AURORA 2 extension study, initiation of the Phase II/III dry eye syndrome clinical trial, completion of the DDI study, preparation costs associated with the planned NDA submission for LN. And these costs were partially offset by lower AURORA clinical trial costs.

Corporate, administration and business development expenses increased to $6.1 million for the 3 months ended September 30, 2019, compared to $2.9 million for the same period in 2018. The increase reflected overall higher activity levels as the company scales the organization ahead of AURORA Phase III results in LN. The company incurred higher costs for professional and consulting fees; insurance; personnel and information technology; and precommercial activities, including market research.

Noncash stock compensation expense was $2 million for the third quarter ended September 30, 2019, as compared to $1.5 million for the same period in 2018 and was included in both R&D and corporate, general and business development expenses.

AURORA (sic) [Aurinia] recorded a noncash reduction of $4.5 million in the estimated fair value of derivative warrant liabilities which reduced the loss for the third quarter ended September 30, 2019, compared to an increase of $4.8 million in the estimated fair value of derivative warrant liabilities which increased the loss for the third quarter ended September 30, 2018. The derivative warrant liabilities will ultimately be eliminated on the exercise or forfeiture of the warrants and will not result in any cash outlay by the company.

The 9-month financial results for the period ended September 30, 2019, are provided in the release issued this afternoon.

As of September 30, 2019, Aurinia had cash and cash equivalents of $134.5 million compared to $131.5 million at June 30, 2019, and $118 million at December 31, 2018. The company received net proceeds of $14.3 million upon the sale of 2.35 million common shares at a weighted average price of USD 6.40 per share pursuant to its September 13, 2019, ATM facility with Jefferies.

Net cash used in operating activities was $11.8 million and $38.2 million, respectively, for the 3 and 9 months ended September 30, 2019, compared to $11.3 million and $38 million, respectively, for the same periods in 2018.

The company believes that, based on its current plans, it has sufficient financial resources to fund the existing LN program, including the AURORA trial and the AURORA 2 extension study; complete the NDA submission to the FDA; conduct the ongoing Phase II study for FSGS; conduct the AUDREY clinical trial for dry eye; and fund operations into the fourth quarter of 2020.

With that review, I will pass it back to Peter for some concluding remarks.

Peter?

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Peter S. Greenleaf, Aurinia Pharmaceuticals Inc. - CEO & Director [9]

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Well, thanks, Dennis.

And before opening up to Q&A, I'd like to say that Aurinia is truly a unique opportunity. With continued solid execution on all fronts, we are strategically preparing and building the organization for success. We are committed to realize the full potential of voclosporin and its ability to impact patients' lives suffering from lupus nephritis. With a strong balance sheet of $134.5 million at the end of September 2019, we are well positioned to scale the organization, execute on our clinical development plans and most importantly, hopefully, submit a robust dossier for voclosporin to the FDA next year to enable voclosporin to be the first approved drug for lupus nephritis.

And with that, I'd like to turn the call back to the operator and open the line for Q&A. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question today is coming from Alethia Young from Cantor Fitzgerald.

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Alethia Rene Young, Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research [2]

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Just a couple from me. And we're all looking forward to the data by the end of the year. One, I just wonder if you can talk a little bit about the difference in your -- differences in Phase II versus Phase III, as far as clinical design, enrollment, if any. I know there are a couple. And then the second question I have for you is I just want to talk a little bit about the dry eye program and the data and the case for it. In 2020, I think people will start to turn their attention if voclosporin proves successful there. And my third is, have you given any color around kind of commercial infrastructure, how many people in sales you might need or what kind of the build-up that would look like?

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Peter S. Greenleaf, Aurinia Pharmaceuticals Inc. - CEO & Director [3]

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Yes. So why don't I kick off and then push things around the table to talk a little bit about -- so the first question was Phase II to Phase III design in lupus nephritis and differences that we have taken to account. I think from my perspective being the -- probably the youngest one around this table in terms of my tenure with the company, one of the things that was most assuring to me is the fact that there is very little changes from Phase II to Phase III, which is not always the case as you take End of Phase II results to the agency and shift into Phase III. But I'll -- maybe Neil to go a little bit deeper into that since he's been here since the genesis.

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Neil Solomons, Aurinia Pharmaceuticals Inc. - Chief Medical Officer [4]

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Yes. So as Peter said, the differences are few and far between. In terms of design, the only major difference, which we don't believe will affect the enrollment of patients very much, is that we are permitting -- we permitted a very limited amount of patients who have had a longer duration of biopsy between 6 and 24 months. This was -- is expected to constitute fewer than 10% of all patients and is not supposed to make any difference to the outcomes. In terms of the primary end point, obviously that is a year. The primary end point from AURA was at 24 weeks, but the reason for that was that the 48-week data from AURA was so much more impressive than the 24 weeks and that we actually used that to get -- to produce our 52-week primary end point. And the other, mainly operational differences, which we've said before on previous calls, is that some of the countries we're using are different -- we're not going to Bangladesh and Sri Lanka. We have a more enhanced medical monitoring in effect in the AURORA trial, but other than that, there are no -- designs are almost identical.

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Peter S. Greenleaf, Aurinia Pharmaceuticals Inc. - CEO & Director [5]

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And then, Alethia, your second question is centered on, I think, the dry eye opportunity and, as we move into actually showing sort of Phase IIb results, Phase II/III results, that how do we see that opportunity. Well, I mean I guess I could start here and see if any of my -- others have a -- from the team have thoughts. But I mean dry eye is a huge opportunity obviously. There's still a huge unmet medical need in terms of the available treatments that are out there today at the very patient and physician level. Most recent published large-scale market research reports have shown that, over the next 3 to 5 years, this market globally could be as large as $3 billion to $5 billion in total product sales, so obviously a huge opportunity to go after in terms of the business side and more importantly a huge opportunity to try to continue to provide better solutions to patients in terms of treating the challenge that they have.

I do want to underscore, I mean, we took this through the exploratory study that we did. Our secondary end point was so convincing to us. It's why we actually jumped into doing a well-designed Phase IIb study and actually engage in a full development program. The results that we saw versus Restasis were, well, quite convincing to us. And we're looking forward to taking that into the next study and actually starting to move towards a regulatory path. That's a huge market opportunity. And I think it's going to take us doing a Phase II before the market really starts to realize that this is an opportunity we're going to capitalize on. Mike, since you were sort of the brainchild behind developing this and starting this initiative, what would you add to the -- to my comments?

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Michael R. Martin, Aurinia Pharmaceuticals Inc. - Co-Founder & COO [6]

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Well, Peter, I would completely echo that, but in the data that released back in January this year, I think it's clearly apparent that this molecule is much, much different than cyclosporine and doing something, in particular the way it's delivered to the eye. And I would just urge you to go back and have a look at that data versus Restasis head-to-head.

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Peter S. Greenleaf, Aurinia Pharmaceuticals Inc. - CEO & Director [7]

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Thanks, Mike. Then the last question centered around our thinking about commercial. And well, a lot of the prework has been done in terms of what I would think as appropriate up to this time period. I think the company has also been appropriately diligent and not overshooting the work and the infrastructure build predata. So I think we're adequately prepared and where we should be in the U.S. market for lupus nephritis and hoping and seeing positive results on the data that we're going to have by the end of the year. We will then move into a much more aggressive invest-and-build mode.

To get into the particulars, first and foremost, we want to concentrate on the U.S. That's going to be where we want to put our major emphasis as a company because we think we can be successful there. Outside the U.S., we're going to continue to move the regulatory ball forward but would most likely look for partners in many of the major geographies outside the U.S. And our -- and to try to get into more detail, Alethia: We think we can do this with a sizable-enough investment to be impactful in the universe of rheumatologists and nephrologists treating the disease in the U.S., where we would most likely not have to bring on another partner support in the U.S. To give you any more specifics, I think, is probably too early in the equation. We'll see what happens post the readout of the data.

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Operator [8]

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Our next question today is coming from Joseph Schwartz from SVB Leerink.

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Joseph Patrick Schwartz, SVB Leerink LLC, Research Division - MD of Rare Diseases & Senior Research Analyst [9]

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Congrats on all the progress. I guess my first question is one on the competitive landscape since Roche recently presented positive Phase II data for their anti-CD20 drug in proliferative LN. So do you see this as a potential competitor for voclosporin? Or will there be a natural segmentation of the market? It's been a while since there's been some success in LN, so hopefully, this is the beginning of a new trend here.

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Peter S. Greenleaf, Aurinia Pharmaceuticals Inc. - CEO & Director [10]

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Yes. I mean first, progress in this disease is something that's great for patients. So as things gives, other competitive products continue to move through their development, albeit they're early in their development, we're excited for what that does to the patient community. Since Neil has been around this longer than I -- maybe we can just give sort of a few comments, Neil, on obviously there's more than just the Roche data. There is AstraZeneca produced some data in lupus, not lupus nephritis. But they have an ongoing trial. And then there are some other competitors that we're waiting to see data on, but since Gazyva is probably the most current and actually showed some data on lupus nephritis, maybe, Neil, you can give a few thoughts on that.

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Neil Solomons, Aurinia Pharmaceuticals Inc. - Chief Medical Officer [11]

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Yes. I mean obviously Gazyva is interesting from a mechanistic perspective, complementary to voclosporin [as your] data as well [but not too many of B cells rather than T cells], I believe. The data from this very small exploratory study is certainly encouraging. I think that's probably all I would say at this point. It's all you probably can say with a small study such as this. They're certainly, as you extended their exposure out towards 18 months or so, starting to see a significant treatment effect. And I think that's it's up to them how they design their Phase III study to be able to confirm this, but I mean that's what I've got to say. And I just also would echo what Peter says about all players showing any degree of success in this very difficult landscape is to be encouraged.

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Peter S. Greenleaf, Aurinia Pharmaceuticals Inc. - CEO & Director [12]

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Yes. We'll be watching it, clearly. Go ahead, Joe. Sorry.

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Joseph Patrick Schwartz, SVB Leerink LLC, Research Division - MD of Rare Diseases & Senior Research Analyst [13]

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Okay. And then -- great, no problem at all. So I was just curious if you could give us a sense of how many patients have elected to roll over from AURORA to AURORA 2 who have been eligible to do that.

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Peter S. Greenleaf, Aurinia Pharmaceuticals Inc. - CEO & Director [14]

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Yes, I don't think we've historically commented. Or at least for this trial we've not commented, Joe, in the public domain. So we'll know when we know, but we haven't reported on that.

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Joseph Patrick Schwartz, SVB Leerink LLC, Research Division - MD of Rare Diseases & Senior Research Analyst [15]

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Okay. Maybe then, I was wondering, if you can just walk us through the rationale to test 2 lower doses of VOS in the AUDREY trial that just began. It doesn't seem to be driven by tolerability. Was that due to anything that you saw in prior dose-ranging work or regulatory feedback or some other rationale?

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Neil Solomons, Aurinia Pharmaceuticals Inc. - Chief Medical Officer [16]

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I think our anticipation and certainly our discussions with the FDA is -- and looking at previous drugs that they've tested is that some concentration ranging is desirable. I mean they want us to cover our bases. We had a pre-IND meeting with the FDA, and certainly this [included] what's been done with other drugs. It's always good to -- good sort of clinical development practice to find the lowest effective dose. And we believe that with the concentration of 0.2% with VOS we are nowhere near that lowest effective dose, so I think it stands to reason that we would try lower doses. I mean that was our rationale.

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Operator [17]

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Our next question today is coming from Ed Arce from H.C. Wainwright.

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Antonio Eduardo Arce, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [18]

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Congrats on the continued progress through the quarter. So I have a couple, first, on the imminent readout. First -- I guess, first couple, for Neil. Just thinking back on AURA-LV with 49% complete remission or CR response at 48 weeks. This was a rigorous composite end point on UPCR of less than 0.5 but also the steroid taper, the no rescue meds and addressing no significant loss of kidney function. And with that, at 48 weeks, the delta was really about 25%, placebo adjusted. And so while I heard your comments earlier about the clinically meaningful perspective being at least 10 and hoping to see more, I just wonder how -- if you could comment on that in the context of prior data, especially since you have better site selection for the Phase III. And then the other question around the LN study is just if you could just discuss the differential competitively, now that we've got 2 other readouts in the space or close, the mechanism of voclosporin, specifically the dual-acting mechanism of both immunomodulatory, like all the others, but also its effect on the podocytes in the kidney directly, which doesn't appear to be the case with others. Then I have a couple follow-ups as well.

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Peter S. Greenleaf, Aurinia Pharmaceuticals Inc. - CEO & Director [19]

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Okay, well, thanks, Ed. I guess to start with the last part of your 2-part question here because that's where Joe went too: I mean, first and foremost, I want to reemphasize that I think this is a good thing for patients. We have more folks seeing some success here. For us to try to contextualize the success, I guess one thing I would put forward, and Neil will add onto this, I'm sure, is it's still relatively early. The study that has been done is relatively small but did see good effect. And it appears that some of these B cell inhibitors could potentially have a impact out to a longer time period and maybe potentially because we have to see this with more well-controlled trials, not the same sort of rapidity of response that you would want to see in these patients early. So to go back to something that Neil said, which is these are separate pathways, there could be complementary effects in combination drugs down the road. We don't know. It could be good for patients to have both potential pathways, depending on the genesis of the disease. I mean there could be differences in how patients respond to different drugs, but we -- but at this stage, we just don't know. These are not Phase III -- this is not a Phase III trial that's been done by Roche. And we've not seen AstraZeneca's readout in lupus nephritis specifically. While encouraging, it's still relatively early. And we have a Phase III trial reading out just here in a few short weeks and months. Neil, what would you add to...

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Neil Solomons, Aurinia Pharmaceuticals Inc. - Chief Medical Officer [20]

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Yes. No, I think that's reasonable enough. So our observation, Ed, is that the rapidity of onset for voclosporin appears to be a really almost unique feature of drugs in the treatment of this disease. We put it down to this dual mechanism, we believe there's a direct anti-proteinuric effect early, clearly a longer-term disease-modifying effect. And as far as I can see, from the small patient numbers, you don't appear to get that rapidity with Gazyva, but again, it's always dangerous comparing across trials. But mechanistically, it certainly fits in with what we believe about the targets.

Back to your first question, about the delta. And sure. I mean we saw 25% delta in 48 weeks. And that's incredibly impressive, but I just wanted to kind of ground us all here and say that not at any point has any drug shown in 2 consecutive studies a p-value of less than 0.05. And to me, that is not just a bit of a win. That is a huge win. That is a win that the FDA may consider to be approvable. So I think we just need to take a step back sometimes and look at what we're trying to achieve here. Clearly, a -- the bigger the difference, the better. No 2 studies are alike. No 2 studies are identical. There's always some -- there's confidence intervals around every remission point, but what again I'll draw your attention to is the highly -- the very, very high bar that the FDA sets, and that's for 2 studies, to show a p-value of less than or equal to 0.05. And that to me is going to be a big win if that occurs.

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Peter S. Greenleaf, Aurinia Pharmaceuticals Inc. - CEO & Director [21]

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Okay. You had a follow-on question, Ed.

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Antonio Eduardo Arce, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [22]

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Yes, great. That's -- that detail is great. Just a couple quick questions aside from the LN study. One is on the news yesterday. I don't know if you could comment on any particular reasons why Dr. Joon Lee decided to resign. And then on the time line, given your early 2021 potential launch, do you expect 6 months priority review?

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and I'll comment on...

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Neil Solomons, Aurinia Pharmaceuticals Inc. - Chief Medical Officer [23]

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Well, priority review. It is our expectation at this point that we will get priority review, yes. That's what -- our working assumption.

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Peter S. Greenleaf, Aurinia Pharmaceuticals Inc. - CEO & Director [24]

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Yes. And Ed, on the news from yesterday. First, reinforcing the great addition of Jill to our Board. And the investment banking and financial institution experience she brings to our Board really complements and rounds out the skill sets we need to move the company into the future. And the fact that we're a Canadian company and going to be operating in other geographies, that cross-border experience is really important to where we're going in the future. As for Dr. Joon Lee, I mean, listen. There's personal reasons as to why that he resigned. It's nothing more than that. Didn't really give much color and detail, and I don't think more should be read into it than that.

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Operator [25]

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(Operator Instructions) Our next question today is coming from Justin Kim from Oppenheimer & Co.

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Justin Alexander Kim, Oppenheimer & Co. Inc., Research Division - Associate [26]

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As we think about potential filing next half, from a timing perspective, can you describe what data from the ongoing blinded extension study might be available and sort of what components may be included for the FDA's review cycle or be available at a potential commercialization in 2021?

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Peter S. Greenleaf, Aurinia Pharmaceuticals Inc. - CEO & Director [27]

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Yes. So what I've said historically is that we feel comfortable that we're going to do enough of a data dredge upfront

(technical difficulty)

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Operator [28]

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Apologies, ladies and gentlemen. It does appear the speaker line has gone silent again. One moment, please, while we're experiencing technical difficulties.

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Peter S. Greenleaf, Aurinia Pharmaceuticals Inc. - CEO & Director [29]

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Okay. Let's just see where I dropped off. Justin, where did we drop off, if you -- did you get my walk-through? Or did that cut off midstream?

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Justin Alexander Kim, Oppenheimer & Co. Inc., Research Division - Associate [30]

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I think -- I don't know if it dropped of midway...

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Glenn Schulman, Aurinia Pharmaceuticals Inc. - SVP of Corporate Communications & IR [31]

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All right. We'll start again...

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Peter S. Greenleaf, Aurinia Pharmaceuticals Inc. - CEO & Director [32]

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Well, the long and short of it, to start. And then I'm going to kick it to Neil because Neil understands the patient flow for this extension trial or probably -- not better than I, but he is close enough to it to know probably what we'll have or not have by the time we do the FDA submission. But the lead into that is we're going to have a comprehensive data package to review when we come forward to actually produce the results so that we can appropriately contextualize whatever results we see. I do not believe it was the intention to actually have the extension trial for submission but to have it to be a complementary part of as we look at the drug moving forward. But I don't think it was part of the submission. Neil?

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Neil Solomons, Aurinia Pharmaceuticals Inc. - Chief Medical Officer [33]

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So the -- our discussion with the FDA is that we will be submitting some safety data, interim safety data, from the AURORA continuation study as part of the 120-day safety update, but it's not part of the primary submission. You're right, Peter.

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Justin Alexander Kim, Oppenheimer & Co. Inc., Research Division - Associate [34]

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Okay. Great. And maybe just jumping on to some of the recent data that have come out. At ACR, the obinutuzumab data gathered some interest from investigators on what measures of extrarenal benefits were observed, if any. Can you discuss sort of what measures are being followed in AURORA and through AURORA 2?

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Neil Solomons, Aurinia Pharmaceuticals Inc. - Chief Medical Officer [35]

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Yes. So obviously this is primarily an acute active lupus nephritis trial. Some patients have extrarenal manifestations. Some actually have very, very few. They're almost purely renal patients. We're looking at biomarkers of extrarenal lupus such as the complement and also anti-double-stranded DNA which is, I guess, more specific for lupus nephritis. In addition, we're looking at SLEDAI scores as well. They constitute a secondary end point. And obviously, SLEDAI has not only biomarkers but also data composites going to similar -- looking at clinical manifestations of systemic lupus.

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Justin Alexander Kim, Oppenheimer & Co. Inc., Research Division - Associate [36]

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Okay. Great. My last question just is really around the recent DDI study with voc and MMF. Can you describe sort of how the minority of patients currently treated with off-label CNI are currently managed and how that might differ from a potential use with voclosporin?

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Peter S. Greenleaf, Aurinia Pharmaceuticals Inc. - CEO & Director [37]

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Well, I -- just to start: I think we basically set forward the standard of care as the control arm in the trial that we did today. Now as patients fail that, they have a host of different off-label solutions that they can go to that have varying degrees of data to support their utilization, but as we've said and I think everybody on the call knows, there is no current FDA-approved drug for the treatment specifically of lupus nephritis. So there's a cocktail of [relative] drugs that are utilized, but the base standard therapy is what we are using, which is MMF in combination with steroids; hopefully, the steroids that are tapered over time. And if patients fail that, they can bring other therapies on, whether that be cyclophosphamide, Rituxan and potentially even other therapies, but I would -- I guess I would argue, from what I've looked at in terms of literature, there's limited literature to support the utilization of some of those follow-on therapies even though they're used.

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Justin Alexander Kim, Oppenheimer & Co. Inc., Research Division - Associate [38]

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Okay. Great, great. I guess I -- maybe just from another standpoint. Those results from the DDI study, are those incorporatable into sort of the case for global use claims being filed internationally?

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Peter S. Greenleaf, Aurinia Pharmaceuticals Inc. - CEO & Director [39]

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I don't know that I can give a technical answer to that, but one of the things that I think the team here has done a very good job of, and I say the team because it predates me, is we're doing stuff with -- the DDI study was actually one that was requested by the FDA. So we did it, but we have been doing other PK/PD type work to try to better characterize how our molecule is differentiated. So I think, at the end of the day, the clinical results should be the ultimate talking point around that as to why we're different. Things like the DDI study and other PK/PD work around the different structure of the molecule will help to continue to differentiate us versus cyclosporine. Let's just be clear this drug is not cyclosporine. It is a different and new molecular entity. And that's how we've been studying it and I think the results speak for themselves. Neil?

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Neil Solomons, Aurinia Pharmaceuticals Inc. - Chief Medical Officer [40]

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Yes. I think the question was actually around if there's a patent, there's -- [as far as that].

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Michael R. Martin, Aurinia Pharmaceuticals Inc. - Co-Founder & COO [41]

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Yes. And we've got a suite of patents now for the dosing protocol that we used in our -- in the AURA study and we are using in the AURORA study. And right now those have been successfully issuing grants in the United States. We're prosecuting those in the national phase in Europe and the rest of the world. And we hope some continuation patents will follow, but as far as detail in terms of these claims, we're going to keep that between us and the patent office for now.

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Operator [42]

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Our next question today is a follow-up from Ed Arce from H.C. Wainwright.

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Antonio Eduardo Arce, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [43]

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Just a quick one. Do you have any sense or indication from the agency around a potential ad com? And if so, what could be potential areas of interest from the agency?

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Neil Solomons, Aurinia Pharmaceuticals Inc. - Chief Medical Officer [44]

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So certainly our discussions with the agency are that that's a possibility which is there has been no drug approved in lupus nephritis. There's an ad com, as you recall, for SLE. So our expectation is that we may well get one for lupus nephritis. As to what the -- what the questions will be, I'd imagine everything is potential for discussion.

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Operator [45]

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Thank you. Ladies and gentlemen, we've reached the end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.

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Peter S. Greenleaf, Aurinia Pharmaceuticals Inc. - CEO & Director [46]

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Thank you. And I want to thank everyone for joining the call at this time. We're excited about what's to come, and I want to thank you all for joining the call today. We remain very excited about the -- what's on the horizon for the company, so I'm sure we'll be in touch. And if you have any questions in the near term, Glenn or I are here. Please feel free to reach out.

Thank you very much, and have a good evening.

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Operator [47]

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Thank you. That does conclude today's teleconference. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.