Hello and welcome to the Aurinia Pharmaceuticals' Second Quarter Earnings Call and Webcast. At this time, all participants are in a listen-only mode. [Operator Instructions] A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Glenn Schulman, Head of Investor Relations. Please, go ahead.

Thanks, Kevin, and thanks to all for joining us today as we discuss Aurinia's Second Quarter Financial Results. Joining me on the call this afternoon are Peter Greenleaf, President and CEO; Joe Miller, our Chief Financial Officer; Max Colao, our Chief Commercial Officer; and Neil Solomons, our Chief Medical Officer here at Aurinia. Our agenda for today: Peter will provide a review of the LUPKYNIS launch date, our outlook for the rest of the year along with our ongoing clinical and regulatory activities. From there, Joe will discuss our financial performance in more detail and then after some closing remarks and Peter, the whole team will be here and available for your questions. Note that today's press release announcing our financial results and recent operational highlights are accessible from our website at www.auriniapharma.com. It's also been filed on a Form 8-K with the SEC and SEDAR as well, and this afternoon we filed our financial statements and accompanying Management's discussion and analysis in our quarterly report on Form 10-Q. Please note that during the course of this 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 our press release and in our quarterly report and Form 10-Q and recently filed 10-K, which are publicly available on our website along with all of our recent U.S., SEC and Canadian Security authorities filings. Also note that all of the statements made today during the call are current as of today, August 5, 2021 and based upon information currently available to us at this time. Except as required by law, we assume no obligation to update any such statements as of this date. With all of that, let me turn the call now over to Peter, our CEO and President. Peter?

Hey, thanks, Glenn, and I want to thank everybody for joining us this afternoon. So, through the first half of 2021, we've made significant progress against all aspects of our company strategy. And today, we're going to walk you through the four major areas of focus for Aurinia and provide you with details on our execution and results achieved to-date. The first and by far the most important at this stage is our progress at the U.S. launch of LUPKYNIS for the treatment of patients with active lupus nephritis. We will briefly walk you through the work we are doing to expand access to LUPKYNIS, which includes our global regulatory filings and our continued focus on generating new data for patients living with LN. From there, we'll provide you with an update on our financial position and runway as a company and then lastly, we will touch on where we see Aurinia strategically and operationally by the end of 2021. After all this, will open up the microphone to you all to see what questions you may have. So, here we are, we're well into the summer and just over five months into the LUPKYNIS launch. I guess needless to say that we generated a lot of data points up to this point to supplement our prelaunch research and continue to learn more now that we actually have entered the real-world environment including lupus nephritis patient characteristics and healthcare professional attitudes and behaviors. With this ongoing understanding of the market and just under two quarters of commercial availability, our confidence with LUPKYNIS remains undiminished. Let's start with the primary key metric for the second quarter, patient start forms, which as a reminder, equates to LUPKYNIS prescriptions being written for patients. There were 415. That's up approximately 60% from the first…

Thank you, Peter, and good afternoon, everyone. As of June 30, 2021, Aurinia had cash, cash equivalents and investments of $323.7 million compared to $423 million at December 31, 2020. We are devoting the majority of our operational efforts and financial resources towards the commercialization and post-approval commitments of our approved drug LUPKYNIS. Taking into consideration the cash and cash equivalents and investments as of June 30, 2021, we believe that our cash position is sufficient to fund our current plans, which includes funding commercial activities, including our FDA-related post-approval commitments, manufacturing commercial drug supply, conducting our planned R&D programs, funding our supporting corporate infrastructure and investing in our pipeline into at least 2023. Total revenue was $6.6 million and $29,000 for the three months ended June 30, 2021 and June 30, 2020 respectively. Total revenue was $7.5 million and $59,000 for the six months ended June 30, 2021 in comparison to the prior-year period. Our revenues primarily consisted of product revenue, net of adjustments for LUPKYNIS following FDA approval in January of 2021. Cost of sales were $308,000 and $0 for the three months ended June 30, 2021 and June 30, 2020 respectively. Cost of sales were $356,000 and $0 for the six months ended June 30, 2021 in comparison to the prior year period. This increase was primarily the result of our commercial sales of LUPKYNIS. Gross margin for the three and six months period ending June 30, 2021 was approximately 95%. SG&A expenses increased to $43.8 million for the three months ended June 30, 2021 compared to $15.4 million for the three months ended June 30, 2020. For the six months ended June 30, 2021 and June 30, 2020, SG&A expenses were $83 million and $26.5 million respectively. The primary drivers of the increase for the three…

So, thanks, Joe. And again, thank you all for taking the time to join us this afternoon. In closing, we hope you have a clear picture of the early launch trajectory and our belief in LUPKYNIS and the success of this company. With our metrics across the board continuing to show positive results, we are making a difference for people with serious autoimmune diseases. We look forward to providing additional updates in the months and quarters to come and I'd now like to turn the microphone over to the operator for questions. With that, operator, please feel free to open it up to Q&A.

Thank you. We'll now be conducting a question-and-answer session. [Operator Instructions] Our first question today is coming from Alethia Young from Cantor Fitzgerald. Your line is now live.

Hi, this is Emily [ph] on for Alethia. Thanks for taking my questions and congrats on the solid quarter. I'm curious, what are the factors that you're seeing to be most helpful in driving rheumatologists and nephrologist prescribe the drug based on your education efforts and maybe as a follow-up, do you have any feedback on how physicians are thinking about duration of treatment. And if you think there are two data later this year could potentially help them make those decisions? Thank you.

Well, thank you very much. And why don't I start, and if I missed on anything I'll jump to Max Colao and see if he has anything to add. I think it's a multitude of different factors that are helping us to get initial prescriptions. One, you have to point first, the data in the compound without that, I think, you always have a challenge to market any drug. It is a data-driven itself. We have to not only walk the physician through the data that we've been able to develop and deliver through Phase II and Phase III, but I think it's also important that we have to deliver that a specific patient in mind. So, patient profiling patient identification helping a physician come up with the patient in mind is being critical. I can't emphasize enough I guess if this is a very strong clinical cell and in our reps are trained to do so, and that's probably the single biggest driver to getting a patient on the drug that in identifying the right patient. To your question on the AURORA 2 extension trial and its importance and expectations around physician dosing. I think this is something we're learning about right, and it's our expectation that when we position the product that physicians are looking to reduce their overall levels of proteinuria but to do that over time because the data that's out there shows if proteinuria is not kept in control over time that these patients have worse outcomes and can move on to more severe disease and even death if they're not treated. And that's generally that's not just with our drug but if they're not treated aggressively. So I think physicians go in with the mindset that they are putting patients on this drug, not just for induction, but to maintain the patients over time. The AURORA 2 date is going to be important, because remember our initial approval was based upon one-year data and throughout the year. We've done cuts of the data at major medical meetings and we've been able to produce data to show continued control of proteinuria as well as no negative at least through this data set. No negative impact on kidney function as it's measured by EGFR. So it's import and we think state is going to be very helpful as we move into our second year of launch and patients looking to get on another year of treatment for those early ones that we got on early in the launch. So we think it's going to be important. Max did I missed on anything there.

No, I think you've hit it perfectly. Thank you.

Your next question today is coming from Justin Kim from Oppenheimer and Company. Your line is now live.

Hi, good afternoon. Thanks for taking the questions. And congratulations on the progress. Just wanted to know if you could talk a little bit more about the 50% conversion rate, do you have any insight as to what proportion of those unconverted start forms, continue to be executed compared with sort of those having run their course. And additionally, sort of, which forms may or what proportion could be challenge that somewhat of a coverage payer level.

So on here too, let me start. I think as any initial rare disease launch, I wouldn't even call it a challenge. I think the initial process for getting a patient on drug involves some paperwork and involves a prior off in most cases and that alone is an initial hurdle. You need to get over. But on this rate Max or any color you want to give on sort of below the 50% plus conversion rate that we reported that you think is important. Go ahead Max.

As Peter highlights there is some paperwork involved to get access and that takes a little bit of time. So really at any point in time we may have 20% to 22% of the start forms that are work-in process, where the prior also being completed. There may be some appeals and need to be done. So and then there is some of the start forms that are canceled, but as Peter highlighted in the call. The cancellation rate that we've been seeing is relatively low, especially when we compare ourselves with benchmarks. So our cancellation rate is less than 20% and we see with benchmarks 25% to 35%. So I think that's a way to think about it, always some portion that's work in process. And then the rest go to patients of treatment.

Got it. It's great to see that through number tick-up from the prior quarter. Just on the start forms. The rate at which I think the third quarter is shaping up looks to be somewhat flat. I'm just wondering is there a sort of a seasonal effect you anticipate with the summer in terms of start forms and just any thoughts there.

I didn't get the comment on where you see the rate of start forms. But I would say is what we're interested in looking at the impact of how the summer months affect both patients coming into the offices, consistency of patients staying on drug and of course the activity of physicians prescribing the drug and what I can tell you in the early start of the month, data through July, that's a little bit of color underneath those numbers we reported, is that I would say there is consistency and back half of the year numbers obviously can continue to show progressive growth in those numbers in order to achieve what we projected as our revenue range for the year.

Okay, got it. I just maybe a final question with the data that you're seeing it seems encouraging how patients are getting on therapy staying on therapy. Just wondering if the 65,000 net price per patient is something that we should still expect and how we should think about COGS as a percentage of that number.

Yes, I'll give cards to Joe, but what I would tell you is, I think our branded number is low and we're happy about that or even in this early stage. I think that's something we can track and feel good about. I think on the persistency side and that would be patients starting on prescriptions and then continuing on so the numbers are even better, but it's still early in the game that we have to watch that over time. Patients that we have to see patients under our six months a year, year and a half, two years before we really know what our ongoing persistency rate is going to be, but I can tell you early in the launch, less than 10% and that are going also drug and that's a good number even at this early stage. On the average net all I can tell you is that we are consistent or score above where our average net we projected, which was 65,000 and again there, I think we need time to continue to see how that shapes but we are not follow. And as I said we're other on or above, which I think is a good positive trend going forward. Joe, you want to take that.

Yes, I think you saw inconsistency between the margins in Q1 and Q2, let's say, if you're looking out forward there might be slight fluctuations quarter on quarter. But I would say the reason will be consistent with what you saw in the first two quarters of this year.

Okay, thanks so much and congrats on the progress.

Thanks, Justin. Our next question today is coming from Maury Raycroft from Jefferies. Your line is now live.

Hi everyone, this is Farzeen [ph] on from Maury. Thank you for taking our questions. So just to clarify, about the BD plan. So I do you have plans to explore LUPKYNIS in other proteinuric kidney indications that you have plans to in-license asset and sort of timing for those.

So a question just so my team kicked [indiscernible] little muffled the line and was our plans DB plans and how much of our, both their development and our external work revolves around loop kindness and how much of its external, I would say that, and we said this on previous calls, our intention is to invest in further understanding, further exploration and debt first in LUPKYNIS in the area of LN. And then second to that, any further work we would do, would be through probably registration work. We don't have intent to go into other broad base kidney diseases. And the reason for that is not necessarily mechanistic, it's probably more based upon our ability and our inability to continue to drive further intellectual property. If we can find ways to extend that longevity, then we might change our view there. We are doing some formulation work, which is centered around both maybe some other ways to administer the product and have some element of intellectual property around them more to report there when we have something meaningful enough to do so. At the other elements of business development center totally around diversifying our portfolio and what I would say is we said in the call. Our goal is to make start making inroads on that front in 2021. So expect to hear more from us soon there.

Great. One more question is has look I know has been prescribed newly diagnosed LN patients yet.

As we said, even on the first call and I'll repeat it here, the product has been prescribed across, I would say the continuum, so meaning earlier stage patients and later stage are tougher to treat patients. But I would say the majority of our, the patient typing we're getting right now is our patients that have seen MMF and steroids and are probably a little bit of the tougher to treat patients which was exactly what we expected when we launched the drug. Our goal over time doesn't change our positioning. We position the product. How it was studied, which is for a broad range of patients. But our goal over time is going to be to move further and further down in the treatment paradigm.

Yes, thank you so much.

Thanks. Our next question today is coming from Ken Cacciatore from Cowen & Company. Your line is now live.

Hey, Peter and team, congratulations on all the progress here as well. Just wondering, as you indicated, as we're getting more and deeper into the launch, one of the questions that we're often asked is, do we have a good handle on the size of the patient population still. And you are out there doing real time survey work as you indicated. So just wondering feedback and your view of the size of the market and then, wondering as you have more and more interactions anything surprising coming back to you when we talk to clinicians a little bit of the kinds of wedded to the previous products that they've been using and getting a sense that this patient, this clinician group in general kind of wants to socialize amongst each other here from key opinion leaders. Can you talk about what you're doing on that front to try to help, have to facilitate that kind of clinician to clinician interaction? Thanks so much.

Yes, thanks Ken and good questions. So I think it will stay consistent EuroChem with what we've said on the patient population from the start. But I'll provide a little bit more of a drill down. In terms of the overarching sort of diagnosed patient population we think there is probably somewhere, and of course, these are estimates 80,000 to 120,000 patients in the US and that we've said in the past, we think that number outside the US can probably be replicated through Europe and what little Japan work that we have. So it's a sizable patient population. Now there is a caveat to that as you go further down in sort of disease severity and where patients are in the continuum of their disease whether they have active lupus nephritis whether what drug therapy there on what stage of disease they have that number with down. So back to the previous question on, are you getting newly diagnosed patients. Eventually to grow this thing to the point that we're going to want to grow it, too, we're going to have to continue to press down earlier in the treatment paradigm, which I think as everybody knows, our data supports because we studied a wide range of patients. But today it feels even more like a rare disease, because the patients who are hunting for are probably more of those patients who have seen at least a course of MMF and steroids and still have active disease, which is a much smaller end. And today I would hesitate to put an exact number on that, as we learn more, we'll most likely provide more detail on what we're learning. Which I think leads a little bit into your second question, which was, is there a tendency, what we're seeing…

And what I would add to that is in our market research pulse surveys we consistently see that when we ask nephrologist or rheumatologists. We can see that more than half of them their intent to prescribe LUPKYNIS is more than 50% of them have an intent to prescribe within the next month or in the next three months. And just to add a little bit of color to the extent of our effort around education over since launch, we've run more than 500 peer to peer programs and involve healthcare practitioners as well as KOLs.

Thanks, Max.

Our next question is from David Martin from Bloom Burton. Your line is now live.

Good afternoon and congratulations. Couple of questions. Are you seeing any off-label use with cyclophosphamide.

I don't know, I don't have specifics on that, but I would say, it has not come up in our conversations in combo with cyclophosphamide but I know we have such a wide range of patients that it's probably in that mix, but if it is, it's minimal.

Okay. And you mentioned lower abandonment we're still relatively early in the adoption of the drug. In discussions with physicians do you get a sense, some any of them will treat to remission. And I would draw the patients from treatment or is this going to be chronic.

It's really too early to tell from data, but I can tell you, David, that our messaging in our positioning is centered around the data and we don't speak about or talk about the drug with physicians in a conjunction and maintenance sort of mode, we talk about the importance of controlling proteinuric over time, but it will play out in the data, we'll know more when we start to see patients six months a year, two years and I think it's kind of early to tell from just a straight data. Early data is good.

Okay. And then, what about with Benlysta launch around the same time, are you getting a sense now of what kind of patient doctors are putting on Benlysta versus LUPKYNIS or do some doctors just treat all their patients with LUPKYNIS, how is that split.

What I'm going to of pitches one to max Colao because we're just talking about it yesterday and it's something that we do look at Max, you want to take this one on.

Yes, sure. So the data we have on that is anecdotal and then also again through our market research pulse surveys. But what we hear is that with the trials are some rheumatologists both is that they do position Benlysta and kind of, it's really for different types of patients and the look kind of patient that comes to the forefront. Is that patient, as Peter mentioned, with high level of proteinuria where there a sense of urgency in terms of bringing in the proteinuria down quickly and in that patient may be on MMF and steroids, currently. In our top surveys when we look at the intent to prescribe between Benlysta and LUPKYNIS its actually, it's around the same type of intent to prescribe, but again we believe that's due to the physicians are thinking about different patient types in apportioning that out.

Okay. Next question, you had a question about the trajectory of the patient start forms the modified done and it looks like you added I think about 165 in second quarter and now you've already added 135 just a little beyond the first quarter in Q3 that looks to be accelerating. Is my math right or am I missing something here.

I think what you're doing is in those numbers you're putting quarter over quarter additional patients. So remember in quarter two, we had 415 for a total of up to date north of 800. So we been thinking about growth quarter-over-quarter. We really haven't guided to that David, not because we're trying to be tricky. It's because based upon the numbers we've projected out a lot of different scenarios can happen. We try to drive patient start forms every day. That's the number one objective and then once we get those start forms to get those patients on commercial medication as quickly as possible, but different things can happen like our average net price can be different. It can be more, it can't be less whereas to get to our forecast. Is it the variability in all the metrics that feed into that can be there. I don't think that's a bad assumption to think about is growth on top of the growth rate that we put forward in quarter two, to think about that an additive way going forward to the back end of the year because I think if you add average net on those patients and you assume a certain conversion rate. You can probably get you a good idea of how we got to the numbers we had, and I appreciate. I mean we wanted to give see this year because we get asked so often, but there still are a lot of parameters we're dealing with that are non-COVID parameters based upon persistency, average net et cetera that can all move around by the end of the year.

Okay, great. And I do have one other question if I can. You mentioned the target patient has kind of defined by at least right now have been failed MMF and steroids. From your own trial and from other trials we see MMF and steroids, you only get about 20% to 25% of patients remitting on those. So is that remaining 75% to 80% your target population right now or does a cut down smaller than that.

Well, I think there is two parts to that question in my mind, there is where we are and then there is where we want to be. I wouldn't say that our data limits us suggests those patients that are failing MMF and steroid just that back disease they can be newly diagnosed patients and once initiating MMF and steroid data into the mix for newly diagnosed patient. That's where we want to be and where we sort of position the product today but more often than not where we're ending up patients activities disease that have seen a course of those therapies already and that obviously is a smaller piece of the pie. Although we haven't really given numbers us outpaced that is because we ourselves are still working to understand that.

Okay, thanks. That's it for me.

The next question today is coming from [indiscernible]. Your line is now live.

Great, thanks for taking my question guys, and congrats on the continued progress this quarter. So circling back to some of your pulse surveys, it looks like about half the respondents indicated that they plan to prescribe LUPKYNIS, but could you provide any additional color on when these prescriptions are being made. For instance, is it occurring, mainly when patients are experiencing a flare or is it happening during the next patient visit. Is there kind of a sense of urgency here and getting patients on treatment. So, any color there would be helpful. Thanks.

Yes. And I'll ask for Max. Yes, let me add a little bit here. But I think the essence of your question is, when we see a pulse survey of intent to prescribe how rapidly are we seeing that materialize into actual prescribing behavior. And I think it's generally variable we had seen it tick up and I will tell you now that we're seeing more improvement in a COVID environment i.e. patients getting back into physician offices, and our rents, being able to get into offices that it's improving, but I'm not sure that we have an exact quantification of how quickly it takes of surveys to materialize into actual action. Max do we have anything on that.

No. And I think kind of the perspective on this as Peter highlighted. This is a rare disease right in most of the patients are in the community setting. And in that setting on average a physician may have 4 or 5 LN patients in total as of their whole practice. So it's not that they're seeing these patients on a daily basis and not even on a weekly basis. So the intend to prescribe is how they're digest in my mind is how they're digesting the data and how they're thinking about positioning. And then, it's when the opportunity comes and clearly as you highlighted the urgency clearly drives prescribing and when that if that patient is presents at the next visit with a very high level of proteinuria and by and large, most patients are with MMF and steroid. So if they present MMF and steroid high level of proteinuria, LUPKYNIS is going to be top of mind from a prescribing standpoint. From there, there is a discussion with the patient gaining agreement going through the process, the access process. So that's all kind of how it works. So you can't really tie 50% next month is going to realize this, it's a matter of the flow of the patients as they work through the practice. Operator, do we have any more questions.

[Operator Instructions] I'd like to turn the floor back over for any further closing comments at this time.

Okay, well. And with that, I will again want to thank everybody for joining us today. We're encouraged by the results we've seen to date, but we obviously have more work ahead of us and we look forward to updating you again in the near future. Have a good night, everyone.

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