Greetings, and welcome to the Aurinia Pharmaceuticals First Quarter 2022 Financial and Operational Results Conference Call. At this time all participants are in a listen-only mode, and a question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Dana Lynch, Aurinia's Senior Director of Corporate Communications and Corporate Affairs. Thank you. Dana, you may begin.

Thank you, James, and thank you all for joining today's call and webcast to discuss Aurinia's first quarter 2022 financial results. Joining me this morning are Peter Greenleaf, President and CEO; Joe Miller, Chief Financial Officer, who will be leading the call. Other members of the executive team, specifically, Max Colao, Chief Commercial Officer; and Dr. Neil Solomons, Chief Medical Officer, will also be available at the conclusion of our prepared remarks for the Q&A portion of the call. This morning, we issued a press release announcing our financial results and recent operational highlights and filed our quarterly report on Form 10-Q. For more information, please refer to our filings with the U.S. Securities and Exchange Commission, which are also available on our website at www.auriniapharma.com. During this call, we will 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 disclosures in our press release and our quarterly report on Form 10-Q, along with our 10-K and all of our recent filings with the U.S. Securities and Exchange Commission and Canadian Securities Authorities. Please note that all statements made during today's call are current as of today, May 10, 2022, unless otherwise noted and are based upon information currently available to us at this time. Except as required by law, we assume no obligation to update any such statements. Now please let me turn the call over to Aurinia's President and CEO, Peter Greenleaf. Peter?

Thanks, Dana. And thanks to everyone for joining us on the call today. For today’s agenda, I’ll start with a review of the commercial business including our performance in the first quarter and the positive trends we are seeing for LUPKYNIS as we move through the second quarter. After that, I’ll provide a brief update on our efforts to gain regulatory approval for LUPKYNIS in Europe and the additional clinical work ongoing to reinforce LUPKYNIS benefits for patients. And then finally, I’ll provide a quick update on our R&D pipeline and cash position before handing over the call to Joe Miller who will provide a more detailed update on the Q1 results, our expenses, and overall financial position as a company. So let’s get started on our first quarter business performance. Despite some challenges early on, we’ve had a great start in 2022. In the first quarter, we generated $21.6 million in net sales. As discussed on our year-end call in late February, we experienced a slowdown in patient start forms starting in December given the impact of COVID-19 on prescribers and patients. Many patients faced delays in refilling prescriptions and many were unable to attend physician appointments on a normalized schedule. As is typical in our industry, at the start of the new calendar year, changes in employer-covered insurance carriers and policies and patient copay resets of the new coverage year often slow down converting patients start forms to patients on treatment and affect the timing it takes for existing patients to get a new year. Exiting the quarter though, we began to see considerable improvements and encouraging trends within our commercial results. First, prescribing has increased significantly. In fact, we experienced a monthly record high for patient start forms in March, as well as notable improvements in prescription refill rates. In the quarter ending March 31, 2022, we added 461 new patient start forms compared to 257 recorded in the first quarter of 2021. With a clear upturn since the start of the year, we now stand at 647 total prescription start forms as of Friday, May 6 since the start of the year. Conversion rates and patient access to the drug also remain robust and are at the highest level since launch. Patient start form conversion rates are now at 80% after 90 days. On the access front, we have confirmed patient access to LUPKYNIS through payers in plans representing about 90% of total U.S. lives. While it's still early, we're encouraged by persistence trends. Through six months of therapy, approximately 70% of patients are remaining on treatment. Additionally, efforts to increase healthcare provider adoption of LUPKYNIS in regular practice remain consistent and positive. Each month we're adding new prescribers and growing the number of repeat prescribers; prescribing rates remain balanced between both rheumatologists and nephrologists. Beyond prescribing, we've seen an important increase in awareness of LUPKYNIS and its benefits among healthcare providers. Based on recent surveys, unaided brand awareness is over 70%, and if you add branded awareness to the equation over 90%, and most significantly, intent to use in the next three months is now over 70%, which represents the highest level since the launch of the drug. Given these progressive trends, there were approximately 1071 patients on LUPKYNIS therapy at March 31, 2022, compared with 884 patients on therapy at the end of 2021. Net realizable revenue per patient remains above our initial guidance of $65,000 per patient per year. However, as we've discussed previously, we expect to approach this figure as more patients go on and stay on therapy over time. Finally, we're pleased to report that with conditions continuing to normalize, there are more in-person opportunities to interact directly with healthcare providers and patients. Our commercial activities are ramping up accordingly. Just last month, Aurinia attended the first in-person medical meeting with our first commercial boost since we launched LUPKYNIS, with representatives from across our advocacy marketing, medical affairs, and sales teams attending the National Kidney Foundation Spring Clinical meetings in Boston. Additionally, we launched an extensive set of new healthcare provider marketing programs to further share and educate on AURORA 2 data and have begun to develop and roll out a number of patient-focused awareness and engagement initiatives, including the initiation of a LUPKYNIS patient ambassador program. With the continued return to normal healthcare practices in the United States and our plans for expanded commercial execution, we remain confident and reaffirm our guidance for net LUPKYNIS sales of $115 million to $135 million for the full year of 2022. As a reminder, our guidance does not include any milestone payments, royalty or manufacturing revenue, or anticipated ex-U.S. sales related to our licensing agreements with Otsuka to market voclosporin in the European Union and Japan. If voclosporin is approved for use by the European Medicines Agency, depending on the favorability of the approved label, we have the potential to receive up to $30 million in the second half of 2022, and potentially low double-digit royalties on sales as well as supply cost recovery to a cost-plus arrangement we have with Otsuka. We continue to work closely with Otsuka to support the European approval process. We have received a day 1 57 question document posed by the EMA, and given the ongoing interactions, we believe we remain on track with pre-EMA approval in the second half of 2022. Regarding our R&D work, next week we will present for the first time more complete results from the voclosporin AURORA 2 continuation study at the 59th European Renal Association Congress. This will be followed up by a presentation at the 2022 European Congress of Rheumatology, European Alliance of Associations for Rheumatology in June. Data from this study, which we reported in December, looked at 216 patients continuing from the 12-month AURORA study for an additional 24 months of treatment. This data reinforces the favorable risk-benefit profile of LUPKYNIS over a three-year period with safety and efficacy comparable to that seen in the original AURORA 1 trial. We still plan to submit a manuscript for peer-reviewed publication in the second half of 2022 as well as abstract submissions for presentations at additional major scientific conferences throughout both 2022 and 2023. On other research fronts, recruitment of patients and initial new sites into the vocal pediatric study and the ENLIGHT-LN REGISTRY is continuing. As a reminder, we committed to the vocal study as part of our FDA approval, while we initiated the REGISTRY to gain further knowledge about patients taking LUPKYNIS, as well as help their clinicians and payers to improve patient care and ensure access to therapy. Finally, we continue to advance IND enabling work for both AURORA 200 and AUR300, and we remain on track to submit INDs for both compounds in 2023. These are important next steps in the build-out of our pipeline to build long-term sustainable value and growth for Aurinia. As I said previously, we are well positioned relative to many of our biopharma company peers with a healthy balance sheet and no significant debt or obligations. With approximately $420 million through the quarter on hand, and continued LUPKYNIS revenue contribution, we can fund our business operations for at least the next few years and remain flexible while weathering the current weakness in the biotech market and the overall economy in the U.S. I will now turn the call over to Joe Miller for a more detailed review of our financial results. I'll then return at the end of the call for a recap and answer any questions you may have. Joe?

Thank you, Peter, and good morning everyone. As of March 31, 2022, we had cash, cash equivalents, and restricted cash and investments of $418.8 million compared to $466.1 million at December 31, 2021. The decrease is primarily related to the continued investment in commercialization activities, payments made for ongoing post-approval obligations, advancement of our pipeline, payments associated with inventory purchases to ensure adequate supply to meet forecasted demand, and a payment for the achievement of a one-time milestone, partially offset by an increase in cash receipts from the sale of LUPKYNIS. We believe that we have sufficient financial resources to fund our current operations, which include funding commercial activities, including FDA-related post-approval commitments, manufacturing and packaging of commercial drug supply, funding our supporting commercial infrastructure, conducting plan research and development (R&D) programs, investing in our pipeline, and operating activities for at least the next few years. Total revenue was $21.6 million and $914,000 for the quarters ended March 31, 2021, and March 31, 2022, respectively. Our revenues primarily consisted of product revenue net of adjustments for LUPKYNIS, following FDA approval in late January 2021. Quarter-over-quarter revenue growth is attributed to further progress in the launch of LUPKYNIS. Total cost of sales and operating expenses at March 31, 2022, were $59.5 million in comparison to $51.5 million as of March 31, 2021. The quarterly fluctuation can be broken down as follows: Cost of Sales were $256,000 and $48,000 for the quarter ended March 31, 2022, and March 31, 2021, respectively. The increase was primarily due to the growth of LUPKYNIS sales in comparison to the prior period. Gross margins for the quarter ended March 31, 2022, and 2021 was approximately 99% and 95%, respectively. The fluctuation in gross margin is driven primarily by fixed specialty pharmacy costs in the first quarter of 2021 as a percentage of overall cost of sales. These costs were a higher percentage of overall cost of sales due to lower sales volumes in the first quarter of the launch. Selling, general and administrative (SG&A) expenses were $45.2 million and $39.8 million for the quarters ended March 31, 2022, and March 31, 2021, which is consistent with the prior quarter and represents a fully burdened quarter as the company did not have approval until late January of 2021. The increase was primarily due to an increase in employee-related expenses, professional fees related to various corporate matters, pharmacovigilance costs, and consulting-related expenses tied to the increased investment in our back-office infrastructure to support the commercialization of LUPKYNIS. Non-cash SG&A share-based compensation expense for the quarters ended March 31, 2022, and March 31, 2021 was $6 million and $6.6 million, respectively. R&D expenses were $12.6 million and $9.8 million for the quarters ended March 31, 2022, and 2021, respectively. The primary driver for the increase quarter-over-quarter was due to an increase in expenses related to AUR200 and AUR300 development, partially offset by a decrease in expenses related to the AURORA 2 continuation study which was completed during the fourth quarter of 2021 but had wind-down activities ongoing into the quarter ended March 31, 2022. Non-cash R&D share-based compensation expense for the quarters ended March 31, 2022, and March 31, 2021 was $1 million compared to $1.1 million, respectively. For the quarter ended March 31, 2022, Aurinia recorded a net loss of $37.6 million or $0.27 net loss per common share, as compared to a net loss of $50.4 million or $0.40 net loss per common share for the quarter ended March 31, 2021. With that, I'd like to hand the call back over to Peter for closing remarks here. Peter?

Thanks, Joe. And as you heard throughout the call, we're excited by the trends we've seen in recent months. The increases in prescribing and the number of patients on therapy signals more healthcare provider experience and comfort in treating their lupus nephritis patients with LUPKYNIS, which we are optimistic will result in healthcare providers providing continuing to address and therefore improving early, urgent diagnosis and treatment of the condition. Beyond the U.S. commercial results, we’re quickly moving towards possible approval in Europe, triggering the potential for additional milestones, as well as moving closer to IND submission in our two novel acids, AUR200 and AUR300. We continue to operate with a healthy balance sheet which will enable us to execute on our long-term strategy. That's all we have for today. Look forward to updating you on these items as the year progresses. And look forward to taking your questions. With that, let me turn it to the operator for Q&A.

Thank you. Our first question today is going to come from Joseph Schwartz at SVB Securities. Please go ahead.

Hi, all this is Bill on for Joe, and thank you for taking your questions today. Congrats on the recent progress. So one for us, can you just remind us on the ongoing litigation with Sun Pharmaceuticals? And has the company filed its response to the IPR? And when should we expect an update here and kind of how does this process unfold? Thank you.

Okay, thanks. And that was Joe Schwartz's team over at SVB Leerink. Sorry, a little choppy coming in. So let me repeat the question for everybody on the call. It related to any updates on the Sun pharmaceutical litigation, the IPR process, and have we submitted our response to the IPR submitted by Sun to the U.S. Patent and Trade Office? So to start with the Sun Pharma litigation, there's really no news there. The most recent update we'll have for us probably sometime in 2023 is that that litigation is ongoing. We're calling that that is the litigation where we are suing Sun for patent infringement on our ophthalmic solution that we believe their product CEQUA infringes upon our patents for voclosporin's ophthalmic solution. So no new news there, Joe, and wouldn't look for any until 2023. On the IPR process, so officially, the patent office recognized the application. The date for response, so our response back to them is in late June. And then the PTAC has, I believe, three months to review the initial filing alongside of our response. So I would look for something in the back half of the year, call it late Q3, early Q4 but nothing new. We have not submitted our response as of yet because we're still formulating it. And we have until the latter part of June to get that submission in.

Great, thank you.

Thank you, Mr. Schwartz. Our next question is going to come from the line of Olivia Brayer at Cantor Fitzgerald.

Hi, good morning, guys. And thanks for the questions. Joe, can you give us a sense for some of the different factors that drove the drag on Q1? How big of an impact did Omicron have versus some of the seasonality impacts around things like insurance changes that maybe we should think more about as a potential headwind going forward? And then I recommend it's still early days in the launch, but how are you guys seeing uptake play out between rheumatologists and nephrologists so far? I know you may be seeing more willingness initially from one group versus the other? And is there anything that you can do to help drive similar adoption between the two going forward? And then I've got one on one follow up on capital allocation.

Let me start and Max Colao is here with me too, so you can get into deeper detail, but as we said on the call right now, our split in terms of prescribing between nephrologists and rheumatologists is almost right down the middle. And I think therein lies the importance between both specialties. So we value them equally albeit, the caveat that a lupus patient is a rheumatologist patient first. And obviously, as we increase diagnosis, we want to put emphasis on earlier diagnosis, there's a higher intensity that needs to go against rheumatology. In terms of ongoing seasonality considerations, barring COVID being out of the equation, much like any other specialty pharma company as we enter into January, and you can look at others who have a large bulk of rare and specialty products that patients, and employers change insurance plans, patients have to reset co-pays. I think as you face January and February of every year, you're going to see some impact in that time period as things start to reset. As you move into Q2 and beyond, I think our overall analyst base out there has done a good job of distributing where the year looks, and while we don't give quarterly guidance, some we give annual guidance and I think the ramp in patient start forms and patients should be accordingly. Whether the impact will be exactly the same to January every year is TBD because, as you've mentioned, we're early on in the launch Max, what would you add?

Thanks for the question. Yes. What I would add to that is, as Peter highlighted, in just the beginning of January and beginning of February, what we saw was there was just a care impact above and beyond just your general reset of insurance. That had an impact on refill rates and also on patients being able to continue therapy. But we saw that completely normalize as things opened up in March. In fact, as we highlighted, March was a record month in terms of patient start forms, and we saw refill rates go right back to where they were in Q4. And what I would add on the physician front is that we've seen just a completely balanced intensity between rheumatologists and nephrologists. That is actually, when we look at the three-month intensive treat, it's over 70%. That's reflected in prescribing where we see balanced prescribing across both specialties.

Olivia, you had another question?

And Miss Brayer, this is the operator. If I could, could I invite you to re-signal with star and one we've lost you from the queue presently. Thank you, Miss Brayer your line is open once again.

Hey, can you guys hear me now?

Yes, ma'am.

Okay, great. Thanks, guys. And then on the M&A front, you guys obviously have a nice cash position. So is there much willingness to do a deal in the near term? And can you give us a sense of where you'd have more of a strategic interest, whether it's doing a partnership versus adding a wholly owned asset that is maybe more mid-stage development with some level of de-risking?

As we've said, historically, we firmly believe in diversification and continuous innovation, it's part of our mission as a company and part of our strategy. So business development is key to that, as evidenced through both the AUR200 and AUR300 deals that we did in 2021. It's important, but I'll emphasize that there's no magic to how these things come together. We are not going to push a higher sense of urgency just to get deals done. We want to try to get the right deals done. But the current market, the fact that valuations are where they are, and raising money is as difficult as it is right now, I think represents significant opportunity for everything from partnership programs, i.e., licensing of assets, licensing of indications of assets, and M&A are all becoming more attractive, even for our size, which obviously we are not, we are not one of the larger cash position companies out there. We have a healthy balance sheet, but we're not one of the largest. In order of priority, yes, we'd prefer to license something over acquiring a company. We most likely only acquire a company if in fact, we couldn't leverage the asset out of the company individually or the company itself had capabilities that we thought were critical to the success of a program and towards the intrinsic value of the company. But as a priority, we want to make sure everybody's clear that our number one priority is the LUPKYNIS U.S. launch and globalization of LUPKYNIS, and nothing is steering our head away from that. We’ll keep you posted on progress on the business development front.

Got it. Thanks very much.

Thank you, Miss Brayer. Our next question today will come from the line of Maury Raycroft at Jeffries. Dr. Raycroft, your line is open.

Hi, good morning. Congrats on the progress and thanks for taking my questions. Let's see. So just wondering if you can elaborate on patient discontinuations that you mentioned in your Q4 update? Are these transient compliance issues or related to how the doctor is managing the patient? Or are there any other insights or explanations you can provide at this point?

Yes, I’m going to ask Max to join me on that conversation. I think more of my answer would be it's across the board. And we're providing six months of data because we have a healthy number of patients who have crossed six months of therapy. Obviously, since we launched at the end of January, the number of patients seeing 12 months of therapy is lighter. So as we go forward, we'll start to give longer-term views on that. But Max, do you want to give any color as to why patients are discontinuing?

Sure, thanks for the question, Maury. One more point before commenting on that, which is that 30% discontinuation at six months, we've seen that now consistent for a couple quarters here. In terms of reasons for discontinuation, I would say that it's really the typical reasons that you would expect patients discontinuing. As a start, there are tolerability issues for some patients that show up early in the treatment. That’s the primary reason that patients will discontinue. I'll make one more point, Maury, which was we talked about that there was a temporary impact in the beginning of the quarter on refill rates. That was outside of the kind of discontinuation and then as I noted, that just rebounded. What we see now is consistent discontinuation with what we saw in the fourth quarter.

Got it. Okay. And so presumably, outside of the safety or tolerability, some of these patients could actually come back onto therapy, is that the right way to think about it, or?

We've seen, even just tracking analog products like MMF and others that patients do, it's not in the guidelines, but patients do cycle on and off of products. I think one way to explain that would be a patient who stops taking therapy and finally sees their doctor, and the doctor says your proteinuria is still high, so start taking your therapy again. They can come back; it’s not like we see this as once they've seen the product, they're considered a non-responder and don’t come back. We're not receiving reasons coming back to us saying the patient's proteinuria was uncontrolled. A lot of these are patient-driven decisions. We'll have to continue to, and you heard, that we have an increase in our focus on the patient, educating the patient, and all of that pertains to education on the disease itself, the importance of staying on your medication and keeping on your medication over time.

Got it. That's really helpful perspective. And then just wondering if you can talk more about what you're seeing with pricing metrics and what your latest assumptions are?

As we said, we're giving an average net in the first year of launch at or around this $65,000 net per year per patient. As we indicated in the quarter, it's been above that. We haven't given specifics because the last thing we really want you to do is plug in a number that says variability, and then carry that forward, and then it changes. The one thing we do know is that we believe that we’ll continue to migrate towards that average net. That's why we're sticking pretty consistent to that. Adherence, once a patient goes on drug, has been at or around 80%. So if they're on the prescription, they're staying on it. And that's a good thing in terms of looking at your average monthly number of doses, etc. As we've said, the average net has been higher than 65. But we think it's a safe bet to land on 65 at this stage until we just have more data because the mix of patients depending on insurance carrier, public versus private pay, how much EGFR dosing is utilized, and adherence are all going to vary over time.

Got it. Okay. Makes sense. Thanks for taking my questions.

Thanks, Maury.

Coming up next is Stacy Ku at Cowen and Company. Your line is open. Please go ahead.

Hi, good morning. Congrats on the quarter. And thanks for taking our questions. So first, is a really specific patient start form additions. From our math and your comments from last quarter, we're seeing roughly 260 patient start forms that we added in March. So just wanted to confirm that? And what are you seeing in terms of the cadence of the kind of quarter-over-quarter patients start forms? What are you seeing in Q2 so far? How should we be thinking about the March additions? Is that a run rate? Or are you seeing more growth from that number? That's the first question. The second question is, if you could talk about repeat prescribers. So once they've kind of figured out how to use with planning different clinics or getting good, they're happy with the efficacy profile. What kind of metrics you’d be willing to provide around those that kind of have adopted versus those that are still kind of waiting? And those are two questions. Thank you.

Let me start with PSFs and had Joe Miller just make sure I'm honest with the math. What we said was we didn't give the exact number for March, but just told you that in March we had our highest peak yet. And I don't know how to count what is she said 260.

That's a little bit high, we gave kind of an average number coming into year-end earnings. It wasn't the full February through the end of the month when we did that number. So you're a little bit high on March. But overall, as you kind of look at monthly run rates, March was our highest month to date.

Yes. What I can tell you about that number, Stacy, is it is on track with growing ahead of where we were in Q4, which is what I think you want to see, you want to see consistent quarter-on-quarter growth. As we noted, we saw a slight dip from Q4 to Q1, and then we're seeing growth that’s representative of growth over Q4 so far into Q2. That's right on track with where we want to be. In terms of your question on prescriber habits and repeat prescribers, let me share just a couple of things here, and just for expedience, I'll cover off on this for Max. One, yes, prescribers are more apt to use the product once they've used it. So we do see strong secondary prescribing, and from after the initial prescription, repeat prescribing is quite high and consistent. Second, obviously, we decimal our docs, and in our top decile docs, our penetration increases and continues to grow. To put that into perspective, the top-tier docs have, in some cases, 10 to 12 times the number of patients. We’re talking about a small number of patients per doc, but then the average lower decile, and our penetration there has continued to grow. As we get, over the next couple of quarters, we'll continue to share more about both our depth and breadth of prescribers. We’ve been quite satisfied based on our deployment with our sales force and what our penetration has been in the highest deciles, the breadth of our prescribing, and more importantly, the depth. Physicians are reusing the drug after they've had success with it—more apt to once they do.

It's very helpful. Thanks for that.

Our next question today will come from Ed Arce at HC Wainwright. Please go ahead.

Hi, everyone. Thanks for taking my questions. Can you hear me? Okay.

Sure can.

Great. Few questions for me. First, I wanted to ask, well, you mentioned in the release the PSF conversion rates at about 80% after 90 days. My question is, if you could describe for us the average period from the PSF to treatment. On average, what does that look like? And then wondering now that you've had over a year of experience with patients, any lessons learned so far as you work on keeping patients on therapy, that consistency, the persistence compliance, obviously towards not just refill rates, but staying consistent. Any lessons learned there, and perspectives you could share? Lastly, regarding the $30 million potential milestones from Otsuka, potentially later this year from the EU approval, is there any details you could provide on the split and what would be required in terms of labeling and so forth? And then I have a follow-up.

Okay, I'll go backwards on this because, as you go through those lists, usually the last ones first one on my mind. So on the $30 million from Otsuka, here's what we've said historically. The closer we come to a match of the U.S. label, the closer we’re assured of a $30 million payment. The range of up to $30 million all comes down to how the label comes together and duration of utilization. So meaning if the product were to be by the EMA, you know, said to be a therapy that can only be used for three to six months, the payment would be lower. That's all the color I can give you on up to $30 million. But the closer it comes to matching the U.S., the closer you can be assured that $30 million is the number we would see. So far, in our conversations both at 120 days and 157 days, and in conversations with the rafter and co-rafter, we don't see any showstoppers here, so we feel good about it. The PSF conversion rate, and then let me go because I want Max's input on that. I have plenty to answer, but you asked specifically about patients; I think we should give you our color there. PSF conversion rate, on average, we are above, at 30 days, more than 50% of patients are converting onto drugs. We give you an 80% number for 90 days, which is quite favorable. We're improving. As I've said historically, we're looking at 30, we're looking at even pre-30. The important ones are 30, 60, and 90 days. We want to have as many converted within that 90-day period as possible. I think we're getting to a point of almost— I mean, not 100% perfection but we're at 80% and we want to get them on faster. To be up over 60% at 30 days is indicative that we’re on track with where we want to be. Lastly, on lessons learned with patients, I'll just emphasize that it’s critical, and because this disease presents with no physical signs and symptoms, there is no natural patient quality of life indicator that forces a patient to stay on drugs. If your joints hurt, you're more apt to stay on a biologic therapy for rheumatoid arthritis because it's helping your joints. Lupus nephritis is a quiet disease until it's not. We need the healthcare providers; we need the patients to be educated on the overall impact of the disease. We need the patients to be overly educated to stay on therapy because their kidneys, and potentially, because of what the data shows, if the disease progresses, their lives may be at risk. So patient education and patient support programs are continuing to be paramount. As you mentioned in the call script, we're increasing our investment there, Max?

Yes, I mean, what I would add and I think Peter hit the nail on the head. What I would add is that we have improved our processing speed every quarter. Having more than an 80% adherence rate is significant for this patient population. Really the key, as Peter highlighted, is education; we put significant resources in our alliance or case management team that connects with patients on a regular basis. We put significant resources in support of physician offices and academic centers to ensure that that patient’s start forms are converted quickly. Those investments are bearing fruit in speeding up conversion, and also helping patients stay on treatment.

That's great. Thank you. That's helpful. Just one more follow up for me. You mentioned the vocal pediatric study underway and enrolling patients. Just wondering if you could delineate for us any other post-approval commitments just to be aware of what's coming up down the line. Thanks so much.

Yes, as previously mentioned, dear Ed, just a reminder for everyone on the call. Our post-marketing commitments were one; the AURORA 2 extension data, which has been shared with the agency and the EMA. As part of our application in the EMA, the vocal pediatric study—which is a pediatric study, obviously, is ongoing. Then lastly, there was a lactation study and I think on drug interaction studies that one has been completed. The lactation study is ongoing, the pediatric study is ongoing, and will report out on those over time. As I said, the drug-to-drug interaction study has been completed and submitted. The AURORA 2 has been submitted, and then the vocal pediatric study will take some time obviously—that's a disease that primarily affects middle-aged females. So getting down into a younger audience will take time. We have all the belief that we can do that. So those are our commitments, and we continue to invest in further research both on the higher level like a global registry and secondarily, with individual investigator-initiated studies and things of that nature to support understanding that therapy in the real-world environment.

Great, thanks so much, Peter.

Thanks, Ed.

Next, we'll hear from the line of Sahil Dhingra at RBC.

Hi, good morning, this is Sahil for Doug Miehm. Thank you for taking my questions. My first question is, can you please elaborate on the quarter-on-quarter decline in revenues? When I look at the total number of patients on therapy, they have increased from 884 at the end of the year to 1071 by end of Q1 2022. So is it a function of refills? Or is it a function like you have more patients on the dose reduction program that's driving the revenues lower quarter-on-quarter? Can you please comment on that? And then I have a follow-up?

I'm not sure I understand the question. You're asking about the net price per patient, or you're asking the patient says accumulated patients have grown? What are you pointing at that I just need to understand?

So in the press release, it was mentioned that there were 884 patients at the end of Q4 2021 and 1071 at the end of March 2022. So there are net additions to patients, but the revenues have declined. So I just wanted to understand, is it a function of lower refills during Q1? Or is it like there are more patients on the dose reduction program? Or is it anything else?

Yes, so as we said, because I got it now, you're just doing the straight line math, you're asking if you had 884 and you grew a net 200 patients while the quarter would be down? What you're not taking into account there is one is a patient growth number; you also have to look at refill rates, right. As we mentioned, with patient insurer plan changes with the COVID impact and patients not picking up prescriptions due to that, as we mentioned in the call, your refill rates were lower. So even though we increased the number, the net revenue per patient in the quarter went down. I think, and we'll see that hopefully in the next quarter, but we try to keep consistent on this net revenue number because in a quarter like this, obviously, we saw a dip primarily due to refill. So the simple answer for you there is based on refill rate per patient.

And the patients on dose reduction that are consistent with the prior quarter. Is that…

Yes, we haven't seen any dramatic changes there. And yes, I would not look to Q1 as anything significant happened with dose adjusting on patients. Some we've seen pretty consistent at or around what we saw on our clinical trials so far in practice in the market.

Okay, and I have one more question. Earlier, you have mentioned that the discontinuation rate, which happens within three months, the patient is on the drug that is that was around 25% to 30%. Today, you have commented on the six months compliance rate, which is around 70%. So when we're looking at net patients, should we deduct both of them, actually, or is it combined?

No, what we've done is where we originally when we did not give data for six months or 12 months, we gave you the best grouping of data we had which was what happens at 90 days. On a go-forward basis, you should look at our persistency numbers that we give like at six months 70% of patients that get on drug remain on drug as being one number inclusive of those who have actually discontinued the drug in the first 90 days. It's not a double hit.

Great. Thank you so much for clarifying my questions. That is all from my end.

Thank you.

And moving forward our next question comes from David Martin at Bloom Burton.

Yes, good morning. Most of my questions have been asked, but I'll go back to a couple. In previous quarters, the doctors that are using our prescribing clients—are they also prescribing generally Benlysta? Or do they tend to pick one or the other? And if they're prescribing both drugs, any insight yet as to which patients they decide to give them LUPKYNIS and which they decide to give Benlysta?

Yes, thanks for the question. And the answer to that question is pretty consistent with what we've said in the past, which is, when we talk with rheumatologists, they think about Benlysta and LUPKYNIS as for different types of patients. There's almost a different positioning as they think about what the patient's manifestations are, their level of proteinuria, their lupus health state, and how they position whether to use LUPKYNIS or Benlysta. What we've also seen in nephrology is a stronger preference for LUPKYNIS than Benlysta, and that comes from just their general experience with prior generation CNIs. For us, it’s tough in the data to really break through it. Rheumatologists have the ability to use Benlysta for the treatment of lupus. Sometimes they keep a lupus patient on as they get lupus nephritis. Sometimes they initiate lupus Benlysta when the patient has lupus nephritis. It seems to us that even the rheumatologist is selecting the patients when they get lupus nephritis for a new patient as to when they use Benlysta or when they use our drug. The good thing is, in nephrology, we’re gaining preferential usage right now. So we'll keep you posted on how those numbers move moving forward.

Okay, patients with newly diagnosed lupus nephritis, are the doctors waiting until they fail nothing steroids before they put them on LUPKYNIS or is it first-line combination?

Well, I think our goal is to change the treatment paradigm—to track the number of patients who are newly diagnosed and start receiving LUPKYNIS in combination with MMF and steroids as first-line therapy. But as you can appreciate, David, the majority of these patients diagnosed and treated will be on MMF and steroids first. We are seeing growth in newly diagnosed patients, but it's a smaller percentage of the end. We're going to track it over time. The majority of our patients have seen a course or are currently on MMF and steroids, and our drug is added to the equation, which is as expected.

Okay, and last question: are doctors keeping the patients on LUPKYNIS only if they achieve complete remission, or is just a lowering of proteinuria a partial remission good enough to keep them on?

Yes, I don't know that we sort of longitudinally track proteinuria rates on a monthly or we can only give you what we hear anecdotally. I'll pitch it to Max to give you the feedback from the doctors.

Yes, and what we're hearing from the docs is that they’re looking for an overall decrease in proteinuria, and if they reach a certain level, they’re happy with a 50% decrease in proteinuria. Clearly, their goal is to get to a complete response, but they don’t stop treatment. The goal is to get proteinuria down.

Okay, and recall…

In most cases stated, they’re adding our drug to the mix. That’s providing an incremental benefit over the current standard of care for the majority of patients.

Okay, great. And I do have one other question. When you say adding it to the mix of these patients with lupus that are already on their list, are you seeing LUPKYNIS being layered on top?

We haven't we have not seen that yet, although our thought leader base talks about whether a strategy in combination with C&I and B-cell inhibition could be an approach. But that's one that's talked about hypothetically as a treatment strategy. We do not see that in practice right now, at least in our data.

Okay, got it. Thank you. That’s it.

Thanks, David.

And now we'll hear from Justin Kim at Oppenheimer.

Hi, good morning, and thanks for taking the questions. Maybe just a follow-up on Stacy’s prior questions. I’m asking to suggest a pretty stable quarterly script number between fourth quarter through even our estimate of the Q2 run rate. So just trying to understand what the team expects for maybe those numbers to shift or change as you look to maybe reach the high end of guidance. And, whether it's macro factors or sort of micro with the sort of physician practices and that the prescriptions, can you walk us through how you think about those script numbers changing or maybe not changing over the balance of the year?

Well, I think, if you look at the total number of prescriptions, a prescription start forms that were produced in Q4, and you look at Q1, it was down slightly. When I say slightly, Justin, we're talking about tens of patients; it's not like 200 patients. So as we move into Q2, we are back at least in a run rate. Again, we don't give quarterly projections on patient start forms, but directionally, we're back in a growth trajectory over Q4. That’s where we want to be, and we haven't given guidance on that. But you can probably do your own estimated math on if you believe 70% of patients honor at six months and make assumptions on where they might be at 12 months, you carry a prescription start form right into the quarter and figure back what an attrition rate could look like in a quarter, what our growth in patient start forms has to be. You also can estimate what the retenant rate could be, and maybe there are improvements there. All I can tell you is the way we think about it is the retenant rates we're working on—we want to continue to improve on, but if we held them steady, what would the prescription start form rate have to be in order to achieve growth numbers from Q4 numbers where we were into Q2? Because from a pure revenue standpoint, the numbers from Q2 have to be bigger, obviously, than where we were in Q4, not based off of where we are in Q1. So that's a grow about Q4, and then seeing that growth continue throughout the year, and multiple assumptions there around continued openings, prescription start forms, activity refills throughout our entire model in our execution. It's not one factor.

Okay, got it. And does the team have any updated observations or thinking around how LUPKYNIS is being administered beyond maybe the 12-month time point? Just having on boarded several hundred patients in the commercial setting who could have reached this point?

Yes, I mean, that's, to me, the magical question is, what's it going to be at 12 months, and what's it going to be at 18 and 24 months. We benchmark this, by the way, against biologics and other indications, other rare diseases, etc. In all honesty, just like before, we'd rather report 12-month numbers when we have a significant end of patients that are on the drug. Through this, through six months back, she had several hundred patients who had seen the drug at that point; the number is small at 12 months. Our assumption would be that if you're at 70% at six months, you're probably going to be less than that at 12 months. That's just the natural way that the biggest business over time will progress, and probably less at 18 and less at 24. It’s just a matter of what it is. So just so we can't comment on it outside to say, we'll report it when we have a sizable enough end so we can give you something that we think is going to be consistent and projectable. That generally speaking, we believe it will continue to decline. It's just a matter of at what rate.

And maybe just a final question if we can squeeze one in: taking a look at the abstract that came out at the ERA. Just kind of curious if there were any observations on the duration of therapy date and time to renal response observed commercially, just sort of curious you know with some of the data around patients taking longer to reach renal responses—is that sort of mix of patients being observed, maybe as you look at sort of those populations at later time points that maybe they are falling into one class or another?

I think you stepped right into the reason we're doing the ENLIGHT-LN study. This study is so that we can track prospectively some of those numbers, like in real world what that time to renal response actually looks like. I can't give you what the time to renal response or the ENLIGHT-LN registry. Sorry, I think I said vocal. But I can't give you what real world evidence shows in terms of time to renal response. As Dr. Solomon is on the phone, he can probably give a bit more on the abstract specifically—you’re talking about Neil; do you want to give any commentary if you heard the question?

Yes, I wasn't quite sure exactly what it was you were asking. Were you saying did you have any differential information around how quickly patients respond compared to proliferative patients? Was that the question?

So just around whether the time to respond, is and or maybe just class in general and severity of disease is observed as different among the various populations at various times. Are patients that have longer term duration therapy potentially more severe in disease and in the commercial setting? And whether there are any trends observed as to me…

I mean, yes, I see what Peter said about in the real world, and the registry is going to give us a wealth of information around that. I think that's the reason we're doing it. But there's so many things at play. Of course, when you look at the abstracts, the data has been presented; only 15% of the patients who went in, for example, should the AURORA trial also or the child workers five. We look at relatively small populations of patients. I think we just don't have enough knowledge at this point. It'll become more obvious as we do more and more cuts within our registry. Yes, I mean, that's all we have at this point.

Understood. Thanks.

Alright, so I want to thank everyone for joining us for the call today. I think with that last question, that concludes our Q1 earnings. Thank you for the time and have a good day.

Ladies and gentlemen, this does conclude today's Aurinia Pharmaceuticals first quarter 2022 financial and operational results conference call. You may now disconnect your lines and we hope that you enjoy the rest of your day.