Earnings Call Transcript - AUPH Q1 2023

Operator, Operator

Greetings, and welcome to Aurinia Pharmaceuticals Inc. First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. 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, Jamie Harrell, Investor Relations for Aurinia Pharmaceuticals. Thank you. You may begin.

Jamie Harrell, Investor Relations

Thank you, operator, and thanks everyone for joining today's call and webcast to review and discuss Aurinia's first quarter 2023 financial results and operational highlights. Joining me on the call this morning are Peter Greenleaf, Chief Executive Officer; and Joe Miller, our Chief Financial Officer. This morning, Aurinia issued a press release announcing its financial results and operational highlights for the first quarter 2023. In addition, the company filed its quarterly financial statements on Form 10-Q. For more information, please refer to Aurinia's filings with the U.S. Securities and Exchange Commission, which are also available on Aurinia's website. During this call, Aurinia may make forward-looking statements based on current expectations. These forward-looking statements are subject to a number of significant risks and uncertainties, and actual results may differ materially. For discussions of factors that could affect Aurinia's future financial results and businesses, please refer to the disclosures in Aurinia's press release and its quarterly statements on the Form 10-Q and annual report on Form 10-K, along with the 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 4, 2023, unless otherwise noted and are based upon information currently available to us at this time. Except as required by law, Aurinia assumes no obligation to update any such statements. Now, let me turn the call over to Aurinia's President and CEO, Peter Greenleaf. Peter?

Peter Greenleaf, CEO

Thanks, Jamie, and good morning, everyone. I want to thank you all for joining us on today's call. It's been a solid start to 2023, and we're excited to share our company progress through the first three months of the year with you this morning. Today, we'll primarily focus on the company's first quarter, LUPKYNIS' commercial execution and our financial results. We will outline the key performance indicators and financial information for the brand alongside focused commercial activities that we've been executing on. We'll walk you through recently launched initiatives in commercial, updates from our medical team and development efforts from our regulatory group that we believe will further impact our trajectory in the U.S. and around the world. I'll then turn the call over to Joe Miller to provide additional details on our financial results. So let's get started with our first quarter 2023 business performance, and the short story is that we've seen significant progress over the last six months. I'm pleased to share that we hit our best quarter to date in terms of net product revenue, the number of new patients on therapy and the number of wallets shipped. We have also made significant progress on LUPKYNIS clinical, regulatory and intellectual property fronts. Net product revenues were 34.3 million for the quarter, up 60% over Q1 of the prior year and 21% compared to the fourth quarter of 2022. There are several factors that we attribute this performance to. The first, strong patient start form productivity in the first quarter, building off our strong PSF ramp that began in November and December of last year. We ended the quarter with PSFs approaching our highest levels ever at 466. This represents a 15% increase over the fourth quarter of 2022. As of April 28, 2023, we added an additional 138 PSFs bringing our total year-to-date to 604 PSFs. Second, our team's execution in Q4 '22 and during the early part of Q1 2023 helped to mitigate year-over-year impact as patients worked through the normal new plan year insurance transitions. As previously discussed, in the first quarter, the insurance changeover process, policy changes and patient copay resets can have a negative impact on continuity of care for patients. To attempt to counter this, we proactively deployed our support services teams towards patients and practices in order to help maintain consistent therapy. As a result of our efforts, we saw less disruption to our patients, and we believe it had a positive impact on our overall results. In addition, our commercial activities continue to see positive impact through our focus on clinical differentiation and educating physicians on the importance of screening and proper identification of patients who would most benefit from LUPKYNIS therapy. Our strong clinical message differentiating LUPKYNIS from the current standard of care is working, especially with face-to-face healthcare provider interactions, and focusing our call activity on top-tier physicians, we believe this has enabled us to gain traction in the promotionally sensitive lupus nephritis market. These efforts, coupled with the powerful three-year extension data from the AURORA pivotal study, are making a real difference. Just as a small tactical example to add to this. In the first quarter, we closed with our highest calls per day since launch. And in the month of March, we had our highest number of repeat and new prescribers in a month since launch. Obviously, once we have a PSF, we measure the percentage we convert and how quickly we convert that PSF to a patient on therapy. Over the past several quarters, we continue to improve patient access to LUPKYNIS. This has been accomplished by working closely with physicians, their office staff and patients and making meaningful strides to removing formulary barriers, step edits, and prior authorizations with the major payers and PBMs to help them with the conversion to therapy. During this period, our conversion rates, that is converting patients' start forms to patients on therapy, remained very strong, with more than 85% of patients being converted onto the drug. Even more importantly, we've made significant progress on reducing the time from PSF to conversion to drug with approximately 61% of patients on average getting on therapy in 20 days or less. This is up from a 48% average rate in the first quarter of the prior year, meaningful progress and improvements on both fronts. We believe the three-year extension data from the AURORA clinical study is also having an impact on prescribing behavior and patient persistency. At the end of the first quarter 2023, 51% of patients remained on therapy after 12 months. We are pleased to see this level of patient retention. In February we reported 45% of patients remained on therapy out to 15 months. We now see 47% of patients still on therapy at 15 months, as the number of patients across that time period continues to grow. And while we've only seen a small number of patients through 18 months of therapy, it looks like about 41% are remaining on therapy through that time. So consistent with prior periods, patients adhering to treatment regimen, which is dosing and tablets per day, remains reasonably stable to prior periods at about 80% to 85%. Through March 31 of this year, we now have a total of 1,731 patients on therapy. This represents an increase of 61% over the first quarter of 2022. So to recap, our sales performance in Q1 was driven by improvements in all major commercial areas. Our commercial teams' execution in the field, educating healthcare practitioners on the importance of screening, treating and maintaining patients on therapy continues to drive momentum. Based on everything I've just discussed, we're increasing our net product revenue guidance for 2023 from 120 million to 140 million to 135 million to 155 million. This guidance range is primarily based on assumptions regarding prescription start forms, consistent conversion rates, time and speed of conversion, as well as maintaining our current persistency rates and pricing. In addition, it also includes the impact of potential summer seasonality that we've seen in the last two years. Recently, we kicked off two new initiatives that further drive and impact our top commercial strategic imperatives around LUPKYNIS and lupus nephritis. The first was, of course, distinguishing LUPKYNIS from first generation CNIs, obviously critical. To further strengthen our clinical differentiation story, we recently announced top line data from our Renal Biopsy Sub-Study of the AURORA clinical program, which, as you all know, includes both the AURORA original study and the AURORA extension study, and this segment of study was taken out to 18 months of therapy. And this will be presented this week at the Congress of Clinical Rheumatology East region meeting. These data demonstrated LUPKYNIS-treated patients showed histologic activity improvement with stable chronicity scores similar to the active control arm of MMF and low-dose steroids alone, meaning that patients are not demonstrating any further worsening of kidney function or nephrotoxicity at 18 months. We believe these data further differentiate LUPKYNIS from first generation calcineurin inhibitors. The second area was to reinforce the need for screening, routine monitoring, and treatment by engaging and educating patients to get uncomfortable and get more involved with their healthcare practitioners about their care. On the patient front, we believe an informed patient can play a major role in their own disease management when they understand the need to actively seek out routine urine screening and treatment. Many of you may have seen Aurinia's most recent announcement that Grammy Award-winning singer Toni Braxton, who has been living with lupus since 2008, is the new spokesperson for the Get Uncomfortable campaign. Since its launch in October of 2020, the Get Uncomfortable campaign has been a high-performing component of our strategic marketing mix to activate lupus nephritis patients to prioritize their kidney health. It has generated nearly 30 million impressions across social and digital media with hundreds of thousands of visits to the campaign website. This is where patients can find a specialist in their area to complete routine testing and discuss the management of their lupus nephritis. In just the first five days of launching Toni Braxton as the new spokesperson, we have reached an audience of nearly 550 million people, over 30 online articles, and television appearances that reach our target audience. This outreach has generated pull-through engagement on social media, which is, of course, the Get Uncomfortable website and has created 20,000 website visits in just three days. Moving now to intellectual property, I would like to briefly highlight our recent progress to further strengthen our LUPKYNIS patent position. The U.S. Patent Office issued a new method of use patent, Patent No. 991, reflecting the unique and proprietary dosing regimen, and further refines the method of using LUPKYNIS in combination with MMF and corticosteroids, using eGFR as a method of pharmacodynamically dosing the product in patients with lupus nephritis from the dosing used in both the AURORA 1 and AURORA extension trial. This patent has the potential to provide an additional layer of patent protection for LUPKYNIS up to 2037. We're currently working to list this newly issued patent in the Orange Book. Closing out with our globalization effort for LUPKYNIS, our partnership with Otsuka has resulted in significant launch momentum outside the U.S. this year. As announced yesterday, NICE, the UK's governing body for value-based healthcare, issued a recommendation that LUPKYNIS can be used in combination with MMF to treat patients with lupus nephritis. The UK agency just issued their reimbursement guidance and LUPKYNIS will be soon available across the entire United Kingdom. And as a reminder, upon pricing and reimbursement approval in three of the five major EU countries, the company would be eligible for an additional $10 million milestone. In Japan, we currently are working towards a PMDA submission in the second half of 2023. We anticipate approval in the second half of 2024. The combination of these European market approvals and our pending Japanese submission further support our globalization efforts for LUPKYNIS. So I'd now like to turn the call over to Joe for a more detailed review of our financial results. I'll then return at the end of the call for a quick recap and open up the line for any questions that you might have.

Joe Miller, CFO

Thank you, Peter, and good morning, everyone. As of March 31, 2023, we had cash, cash equivalents, restricted cash and short-term investments of 361.5 million compared to 389.4 million at December 31, 2022. The decrease in cash, cash equivalents, restricted cash, and investments is primarily related to the continued investment in commercialization activities and post-approval commitments of our approved drug LUPKYNIS. Inventory purchases in advancement of our pipeline, partially offset by an increase in cash receipts from sales 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, advancing our research and development programs, and funding our working capital obligations for at least the next few years. Now, let's take a few minutes and go into detail regarding our financial results for the first quarter of 2023. Total net revenue increased 59% to 34.4 million for the first quarter compared to the prior year period. The increase is primarily due to an increase in net product revenue from our two main customers for LUPKYNIS, driven predominantly by further penetration in the LN market as evidenced by an increase in patients on therapy year-over-year. Net realizable revenue per patient for LUPKYNIS remains higher than our initial guidance of 65,000 per patient per year on a quarterly basis. But as we discussed previously, we expect net realizable revenue per patient to continue approaching this figure on an annualized basis, as more patients go on and stay on therapy over time, and as persistency, dosing, and payer mix evolve. Every quarter since the initial launch, this number has ranged closer and closer to our analyzed estimate. As we've said in the past, the biggest driver of this estimate is our dose adjusting and persistency. Total cost of sales and operating expenses for the first quarters of 2023 and 2022 were 64 million and 59.5 million, respectively. Let me now give a further breakdown of operating expenses, drivers, and fluctuations. Cost of sales was 421,000 and 256,000 for the first quarters of 2023 and 2022, respectively. The increase was primarily due to an increase in product-related revenue, as gross margin for the first quarters of 2023 and 2022 was approximately 99% for both periods. Selling, general and administrative expenses, inclusive of share-based compensation, were 50.1 million and 45.2 million for the first quarters of 2023 and 2022, respectively. The primary drivers for the increase in SG&A expense for the three months ended March 31, 2023, as compared to the same period ended March 31, 2022 were an increase in professional fees and services related to marketing and pharmacovigilance, non-cash share-based compensation expense and travel and related costs. Non-cash SG&A share-based compensation expense was 7.6 million and 6 million for the first quarters of 2023 and 2022, respectively. Research and development expenses, inclusive of non-cash share-based compensation, were 13.2 million and 12.6 million for the first quarters of 2023 and 2022. The primary drivers for the increase were due to an increase in salaries, employee benefits, and share-based compensation expense to further the advancement of AUR200, AUR300, and the post-approval FDA commitments for LUPKYNIS. The increase was partially offset by a decrease in contract research organization costs related to the completion of the AURORA 2 continuation study in 2022. Non-cash R&D share-based compensation expense was 1.6 million and 1 million for the first quarters of 2023 and 2022, respectively. Interest income was 3.8 million for the first quarter ended March 31, 2023, versus 262,000 for the prior year period. The increase was mainly due to higher yields in our investment, a result of rising interest rates. For the first quarter of 2023, Aurinia recorded a net loss of 26.2 million, or $0.18 net loss per common share, compared to a net loss of 37.6 million, or $0.27 net loss per common share for the prior year first quarter. Before turning the call back to Peter for some closing comments, I'd like to update you on a corporate initiative we recently undertook. I'm pleased to share that Aurinia recently published its first ESG report, which highlights the company's performance and provides baseline figures within their ESG priorities, such as energy and emissions, supply chain management, patient access and affordability, community engagement, talent management, employee engagement, diversity, equity and inclusion, and business ethics, among other topics. To learn more about Aurinia's approach to ESG and our priority topics, please look within the IR section of our corporate website. With that, I'd like to hand the call back over to Peter for some closing remarks.

Peter Greenleaf, CEO

Thanks, Joe. As you heard throughout the call, we're obviously excited about our strong results for the first quarter, hitting many all-time highs across the business. We remain focused on delivering LUPKYNIS to patients in need, and driving results in the U.S. and globally. We look forward to keeping you posted along the way. I want to thank everyone again for joining us on the call today. We'll now open the call for any questions you might have.

Operator, Operator

Thank you. Ladies and gentlemen, the floor is now open for questions. And we'll take our first question from Olivia Brayer from Cantor Fitzgerald. Please go ahead, Olivia.

Olivia Brayer, Analyst

Hi. Good morning. Thank you for the questions, and congrats on the nice print. Where are you guys seeing the biggest commercial tailwind so far this year in the U.S.? I'm just trying to get a better sense for where growth acceleration is coming from, whether it's positive impact from the pre-op requirement changes or if you're starting to see some new prescribers come online? And then can you guys address the recent letter that came out from MKT Capital? Have you actually had any prior contact with them and any other comments around the letter or a strategic review process more broadly? Thanks, guys.

Peter Greenleaf, CEO

Thank you, Olivia. I’ll begin with the commercial question. As mentioned in the call, we saw numerous all-time highs, which are all contributing factors for us. For instance, we had a strong quarter for PSFs, and the effects of that will likely be felt in the next quarter; if we receive them early in January, they will also impact this quarter. The efforts we made at the end of last year had a significant effect on ensuring continuity of care for patients and helping them navigate the insurance transition process. I believe that our overall marketing approach, in collaboration with physicians, their office staff, and patients, is positively influencing patient retention as we start the year. It’s not easy to pinpoint a single metric as the primary driver since it’s a comprehensive effort. We need to keep this momentum going. The two biggest areas affecting us are the number of new patients starting therapy and the retention of those patients once they begin treatment. In the quarter, we made progress on all these fronts. Regarding your second question, I want to be explicit. Members of our management team and Board of Directors have had several meetings with MKT Capital over the past few years. Despite our efforts, these discussions have been unproductive and have not generated any valuable suggestions. Instead, they seem to be pressuring us to rush into a public process to sell the company at what appears to be any price. Today’s results demonstrate that our strategy is working and positioning us to unlock significant value for shareholders in both the near and long term. Our Board has been crucial in fostering the current momentum. It is unfortunate that MKT appears to be overlooking these facts and initiating a distracting campaign. The shareholders we’ve interacted with thus far recognize this, and we are pleased to report that both ISS and Glass Lewis have recommended that shareholders vote to reelect all eight of our incumbent directors. To clarify, our Board is open to any opportunities that enhance value. As most would recognize by reviewing the backgrounds of our directors, seven out of eight have M&A experience, and several have been involved in successful, value-creating transactions during their tenures. The Board remains focused on creating value for all shareholders. We won’t provide further comments on our interactions with this investor during the call, but I appreciate your question.

Olivia Brayer, Analyst

Excellent. Thank you.

Operator, Operator

And we'll take our next question from Maury Raycroft from Jefferies. Please go ahead, Maury.

Farzin Haque, Analyst

Hi. Good morning. This is Farzin on for Maury. Thanks for clarifying the MKT Capital issue. I wanted to ask about the guidance. We saw the 2023 draft version of the KDIGO guidelines and the AURORA 1 and 2 data. However, the LUPKYNIS risk-benefit profile is categorized with the other drugs as a class. Could you clarify if the guidance will stay the same, or is there anything planned to further address LUPKYNIS' unique data profile?

Peter Greenleaf, CEO

Yes. As you know, these guidelines reference the KDIGO guidelines, as well as those from the ACR, ASN, and other major physician organizations in nephrology and rheumatology. We are actively working on these first pass guidelines, but I believe they do not fully consider all the evidence we have. It's important to note that revising these guidelines can take many months or even years. Typically, organizations like KDIGO, ACR, and ASN base their guidelines on published literature. They may not account for recent studies, such as the AURORA extension or data that has been released but not yet published. We are confident that these guidelines will evolve over time, and we have the data to support our position that aligns us with historical CNI use. We do not view our drug simply as a first-generation calcineurin inhibitor; rather, we consider it a next-generation calcineurin inhibitor. We believe the data supports its use in a wide range of patients, both as a first-line and second-line therapy, and I think the results speak for themselves. We look forward to continuing to influence guidelines, but we understand that due to the way these guidelines are developed, much of our evidence may not have been included yet. There is still work to be done.

Farzin Haque, Analyst

What are some of the areas where you expect to see increased use of LUPKYNIS in the future, such as in patients who previously received Benlysta, those who have failed B cell therapies, or other types of patients?

Peter Greenleaf, CEO

It's a good question, and I would say there's not a majority of patients today that have seen B cell therapy first. The majority of our patients, I think, have seen a course of MMF and steroids. Our goal is to get those patients treated with LUPKYNIS in combination with low-dose steroids and MMF as in earlier treatment in the treatment cycle. I do believe as more B cell therapies become available for the treatment of lupus, not lupus nephritis, that we will experience more patients that will have experienced B cell therapy first. But I want to underscore that these patients are being treated by progressive B cell therapy in the treatment of lupus. So it's not a competitive positioning for nephritis before us, but Saphnelo and Benlysta are products that are obviously approved for the treatment of lupus, and we see it as a positive if more patients are treated with newly approved therapies for the treatment of lupus. And then when they get lupus nephritis, they consider more aggressive therapies like ours that lower proteinuria much more rapidly and, of course, sustained over time. So we would assume that over time, patients having seen B cell therapies will be a natural course of just progression of new therapies in the marketplace for lupus.

Farzin Haque, Analyst

Thank you so much.

Operator, Operator

Thank you. And our next question comes from Stacy Ku from TD Cowen. Please go ahead, Stacy.

Stacy Ku, Analyst

Hi, there. Thanks for taking our questions and congratulations on the strong performance. So first question is actually on your patents, the different potential moats, in addition to your 036 and 991 patents regarding the composition of matter that you have for LUPKYNIS. Can you provide an update regarding timing or progress on the patent term extension? We understand that we have an interim patent term extension to October 2023, but any additional updates would be appreciated. And then on 036 and 991, can you just follow up on the different subtleties and the importance? So what did the examiners find surprising? So that's the first question. And then the second is going to be on the 2023 quarterly trajectory. As we follow up, you did mention the potential seasonality is implied in your guidance. But as we exit the seasonal Q1 dynamics, what base case assumptions do we have? Should we expect steady growth quarter-over-quarter or a stronger Q2 and then potential downward growth in Q3 as we think about quarter-to-quarter? Thank you.

Peter Greenleaf, CEO

Okay, why don't I guess start first on the patent side of the equation? I think as you know our composition of matter plus the benefits we get through Hatch-Waxman and through the approval of the product, and of course any extension work we do in terms of their pediatric work would take the product out to, let's call it, the end of '27, a couple months into 2028, right? We have to file for that patent term extension every year. So it's somewhat of a formality. It's a good question. But we do it annually. And we can't predict when the exact response comes in. But if you feel comfortable that these are Hatch-Waxman benefits that we get that patent term extension each year once filed is, I don't want to call it a formality, but to some degree it's a formality. To get into a little bit the differentiation between, okay, you had 036 and you filed 991, the new issued number for the most recently issued patent around our method of use, what's the difference and how should investors be thinking about those two patents? Well, first, they're in combination. 036 doesn't go away, 036 is still there, and I think represents something that a patent that when challenged, someone would have to first look at the merits of 036 and address those. And then second, what 991 does is it further refines the 036 patent. It adds more data. Remember, we submitted 036 with data from the original AURORA trials. And this adds in the AURORA trials, the AURORA extension, etc., and it narrows the scope of the patents quite significantly, specifically to lupus nephritis and refines some of the language in the patent. So I think it creates a tighter patent, a more refined patent and it's additive to 036. Lastly to the question on 2023 guidance, we don't give quarterly but I guess the one area I would just say of focus is look at two years worth of sales and what the pattern of our PSF production has been in our revenue production. As we said, we're going to need to continue to drive all fronts commercially. But if there's any level of caution, it's just we've seen two years, one year being COVID driven we believe; the next year being hard to understand, because COVID was gone. Was it more vacation dynamics and fewer patients visiting offices? We have many metrics that sort of show that it does. So I think if there's one level of caution, it's that one piece. And I would just look back to previous year's sales if you're looking to cauterize on the annual number of sales, because we haven't historically given quarterly guidance as it pertains to our annual guidance.

Stacy Ku, Analyst

Okay, very helpful. Thank you.

Peter Greenleaf, CEO

Thank you.

Operator, Operator

And our next question comes from Justin Kim from Oppenheimer. Please go ahead, Justin.

Justin Kim, Analyst

Good morning, and thank you for the questions. It's exciting to see the business developing around LUPKYNIS. Regarding the updated guidance, could you elaborate on what needs to occur in the business for us to potentially meet the midpoint? Based on our calculations from the strong performance in the first quarter, we would need that strength to continue in the upcoming quarters, while considering seasonality. Any insight into how you perceive the low end, high end, and midpoint for guidance would be appreciated.

Peter Greenleaf, CEO

Yes. Without going into too many details, we typically provide a range rather than specific numbers. It's important for us to see new patient starts. In the first couple of weeks of this quarter, we reported 138 patient start forms, which averages to about one patient per day, slightly below our Q1 performance. We need to see ongoing improvement in patient start forms, as they are crucial for the business's growth. We're optimistic about the numbers so far, but we need to maintain this momentum throughout the year. Additionally, it's essential for patients to adhere to their medication. During the summer months, we must ensure patients continue to fill their prescriptions and retain their treatment, even when they may be on vacation or unable to see their doctors. Looking at our guidance, the lower end reflects some seasonal impact, while the midpoint suggests we can maintain our current performance throughout the year. The upper end of our guidance signifies consistent quarter-on-quarter growth. While historically we have experienced some growth in the third and fourth quarters, I wouldn't expect that to be concentrated entirely in the latter half of the year. To achieve the high-end estimates, we need to see sustained growth in our guidance moving forward.

Justin Kim, Analyst

Okay, great. And maybe just one on the persistent numbers. Just wondering if there's any impact based on the cutoff point, as it relates to seasonality? Do you think that the summer months being sort of the cutoff for the 15 or 18 months or year-end start influences that number, just any granularity on how you calculate that number, if there's any impact there?

Peter Greenleaf, CEO

I believe the key takeaway for the year-end is that we need to put significant effort into Q4 to prevent patients from experiencing unnecessary discontinuations or lapses in their therapy due to changes in insurance plans. We should ensure we provide appropriate support and education to those who seek our assistance. It’s important to continue this process. However, I want to emphasize that there isn't an insurance plan policy stating that patients can only receive medications at year-end or that their therapy is limited to 12 months. We have been effective in helping patients maintain their therapy over time, and we generally don’t see plans restricting us after 12 months. Some plans may be seasonal, and it’s challenging to identify many predictive metrics regarding the overall performance of our business that indicate whether patients are dropping off more frequently. We do observe a slight decrease in office visits, diagnoses, and new patient initiation forms in those months, which contributes to our cautious outlook, impacting our revenue. Regarding the persistency rates we've reported at 15 months and 18 months, I would advise a word of caution as these sample sizes are small. Last quarter we reported a 15-month persistency of 45%, and now it's at 47%. The 18-month figure reported at 41% may fluctuate. We're still learning how the drug performs in the marketplace over time.

Justin Kim, Analyst

Great. Thanks for taking the questions and congrats.

Operator, Operator

Thank you. And our next question comes from Ed Arce from H.C. Wainwright. Please go ahead, Ed.

Ed Arce, Analyst

Great. Thanks for taking my questions. And let me add my congrats on a solid quarter in print. So firstly, just wanted to ask again, specifically around the drivers so far that you've seen, as you've mentioned, began really in November and December of last year. And now with this quarter, several of the commercial metrics are hitting all-time highs. I know you've gone through those numbers, but really what I'm trying to ascertain is if there is anything you can discuss in terms of qualitative efforts that you're making that you think in particular have an impact. You mentioned recently commercial initiatives, in particular the Get Uncomfortable campaign. I'm just wondering if there are specific aspects to newer initiatives that you think are particularly helping?

Peter Greenleaf, CEO

Thank you, Ed. I think the first point I would highlight is that the COVID situation seems to be behind us, which has improved access. However, this change isn't universal, and some centers still face challenges. Overall, we are no longer in lockdown, which has positively influenced how we operate as a business. We can meet more frequently in person, collaborate better, and engage as an organization without the constraints of lockdown. This is also true for institutions. The second point I want to emphasize is our consistent focus on our messaging to move high-performing physicians from trialing our product to more regular usage. Our highest-performing physicians are crucial, as they account for about 80% of our business, and encouraging them to transition from trial to wide adoption is essential. We're concentrating on a differentiated message that highlights patient identification and showcases the long-term data from the AURORA extension study. Lastly, while we've always had consumer support initiatives and advocated for patient organizations, we've significantly ramped up our direct-to-patient education campaigns over the past six months. This includes the launch of the Get Uncomfortable campaign, the urinalysis campaign, and our recent collaboration with Toni Braxton, who represents the lupus community and encourages people to take the disease seriously and seek aggressive treatment. It's a combination of these efforts that we need to maintain and enhance as we continue producing solid quarters moving forward.

Ed Arce, Analyst

Great. And so as a follow-up to that, you talked about how the continuity of care is a big driver in sort of mitigating the new year reset effects that we've seen in the last couple of years. And frankly, I was expecting flat to down for this quarter from the fourth quarter, and it was up pretty significantly. So I'm wondering if those efforts to mitigate that could also be applied to the summer seasonality and any commentary around qualitatively would be helpful? Thank you.

Peter Greenleaf, CEO

Yes. So if I were asked like any general specialty product business how should you think about January and February, and we would always still say use caution when thinking about any company that has a specialty product about how January and February may look due to these factors of insurance transitions, and I would still say use that caution even looking at us, because it's a tough one to predict. I think we did a great job in trying to manage that transition. I think the fruits of that labor were borne out in a quarter. Ed, all I can tell you is for the summertime, we are acutely focused on this and we're doing everything from looking at our backend patient support group, our support people and nurse case managers working directly with our patients and offices and in our field to put intense effort down over the next three to four months. So we have a plan. We have to see how it plays out. And to go back to the question around ranges of guidance, I think we're pretty clear if it plays out well for us, that's how you get to the upside if we run into some challenges, as we've seen historically that we would probably set the lower end of that guidance range. Anyway, we have a plan and it encompasses all areas of tactical support, including patient identification and support of the office through the rep, and then backend support through the Aurinia Alliance group, which is our bespoke group that works on patient support and education.

Ed Arce, Analyst

All right. Thanks, Peter. One last question, if I may sneak it in, just for Joe probably. And that is you spoke about the cash used in the quarter and obviously continuing to expand commercialization efforts. But the post-marketing requirement spend, how much more of that can we expect and what specifically is still remaining? Thank you so much.

Peter Greenleaf, CEO

Yes. So I think as most know, we have a few studies that we have ongoing. The pediatric one, VOCAL study, is probably being the largest. I think it comes down to, Ed, how long it takes to execute on the trial. And as most know, pediatric studies, especially in areas where the majority of the population is middle-aged women, or women sort of in that 40 to 58-year-old category, finding patients that are young and fall in the pediatric area will take time. So I think as you think about the commitment on pediatrics, it'll be protracted. The other is that we're working on things like the registry, etc., and the drug-on-drug interaction study. I think the DDI study, we'll continue to monitor over time. I think that's got a tail on it somewhat, but probably not as long as the pediatric study. And then other initiatives, like any investigator-initiated studies, Phase 4s and/or the registry that we intend to put commercially relevant and clinically relevant data out from will be ongoing. So I know I'm not being specific here, but I think you should think about them not in six-month increments, but they'll probably be ongoing for the next couple of years.

Ed Arce, Analyst

Very helpful. Thanks, again.

Peter Greenleaf, CEO

Thanks, Ed.

Operator, Operator

Thank you. And we'll take our next question from David Martin from Bloom Burton. Please go ahead, David.

David Martin, Analyst

Yes. Good morning, and thanks for taking my questions. First question related to the biopsy study results, I'm wondering is the sales force promoting that data with the doctors now? And what has been the feedback? And do you also plan to ask the FDA to change the wording on the LUPKYNIS label regarding nephrotoxicity beyond a year?

Peter Greenleaf, CEO

The answer to your first question is no. Our sales force is not actively promoting the biopsy data. This is new data and not part of our label. However, if a physician inquires about the biopsy study, they can be directed to a medical letter request or our medical affairs group, which can provide a detailed explanation of that data. So far, the feedback from those clinical discussions in our medical affairs group has been quite positive. When combined with eGFR data, this presents a unique narrative. It addresses some of the skepticism surrounding CNIs and prompts reconsideration. This data spans three years for eGFR and 18 months for biopsies, suggesting that some challenges may not be applicable to this product, which is encouraging. Your second question was...

David Martin, Analyst

Label.

Peter Greenleaf, CEO

Yes, the short answer is yes. However, I want to set the right expectation here. These were not additional studies conducted to support a supplemental NDA. Therefore, we owe both of these groups of data to the FDA. Our hope is that through good dialogue, the AURORA extension study and the biopsy study will be included, as we believe they are significant for physicians to understand and enhance their knowledge about the drug. It seems optimistic to expect that they will affect the drug's indication statement.

David Martin, Analyst

Okay. And a second quick question. You mentioned that daily PSFs were down versus first quarter. Can you think of a reason for that? And is it temporary?

Peter Greenleaf, CEO

They are down on a daily basis, but it's less than one per day. This shows how closely we monitor this, which may either boost your confidence or likely increase it further. We assess daily whether there are improvements or declines. At this stage, we are not concerned about this. We are watching it carefully. Compared to where we were last year, things are looking good. When a quarter ends and a new month begins, we often observe some softness. Therefore, for Joe and me, April and May will be crucial to observe. I wouldn't classify the data from April as a trend yet; we need to see what May reveals. However, after a strong first quarter, we are still less than one patient off the trajectory we had in the first quarter each day.

David Martin, Analyst

Okay, got it. Thanks.

Operator, Operator

Thank you. And next we'll go to Joseph Schwartz from SVB Securities. Please go ahead, Joseph.

Will Soghikian, Analyst

Hi, all. This is Will on for Joe. Thank you for taking our questions today, and I'll add my congrats for the quarter. So for us, I guess could you just help us contextualize the growth a bit more in the first quarter? Specifically, you're seeing more prescriptions from certain centers and has this growth in prescriptions been consistent among the nephrologists and the rheumatologists?

Peter Greenleaf, CEO

So a couple of things, and I wouldn't call any of these trends that I would say are statistically significant, they're more leading indicators that we're looking at. So our focus has been on top decile physicians, and we're seeing more repeat prescriptions coming from decile docs, so a good sign that our focus is working. And in addition, we're seeing more new prescribers coming out of that group and new prescribers coming in the below deciles 8 to 10. So again, good metrics. More concentration on the top, because that's where our focus has been. And then while this is one that we've always said is an opportunity to crack, we are seeing lupus centers or major medical institutions, academic centers out there, opening up more. None that I would say are such a large volume that I would call it a trend break, but I would say we have seen the majority of the lupus centers actually treating patients now. And in previous quarters, that was quite limited. And I don't think that's an individual sales rep and marketing tactic impact issue. I think a lot of it has to do with COVID. And then there are some more complexities that we'll continue to need to think about as we want to crack that marketplace. So moving into academic centers and the complexities around the sale process here is quite different than a community office physician. So we are thinking about that strategically and tactically, and we've seen more prescriptions coming out of that area as well. Your last question was on the percentage break nephrologists to rheumatologists and what I would tell you is it's still pretty evenly split down the middle. But as I've said in the past, lupus patients generate first in the rheumatologist's office. So I look very acutely at the rheumatologist's office for understanding how earlier we can get in the disease. And I look at the nephrologist's office as one of these physicians who deeply understand the kidney and how is our message penetrating there, because they're the kidney experts and we need to make sure that they buy our drug and that they buy our story or our data around the drug. And I think all metrics are improving there, but in terms of the prescription base is evenly roomed in that for right now.

Operator, Operator

Excellent. Thank you. And our last question comes from Sahil Dhingra from RBC. Please go ahead, Sahil.

Sahil Dhingra, Analyst

Hi. This is Sahil for Doug Miehm. Thank you for taking the questions. I just want some incremental color from what you have already provided. So I think in the past you had highlighted that 55% of the prescribers are not repeat prescribers, and you see this as an opportunity. So given the long-term study data that you have and also the renal biopsy study, how has that evolved? And has that improved your competitive positioning versus Benlysta? Thank you.

Peter Greenleaf, CEO

So as I just mentioned, we've seen increases both in new prescribers and repeat prescribers. And I would probably put more emphasis on repeat prescribers because, as I said, we've been focused on that 8 to 10 decile, and that's where we're seeing the majority of our impact as well. In terms of persistency, I think you have to look across the total. And I wouldn't call a trend yet, 15 months persistency changing from 45% to 47%. But I think represented in the percentage of patients that we retain over that time, if you benchmark it versus other products in light categories, whether that be other rheumatoid indications like psoriatic arthritis, rheumatology, other GI indications like IBD, or even moving into areas like MS and other more specialty areas of chronic diseases, the persistency we're seeing with the drug is actually quite good. So we'll continue to keep you updated along the way. But I think you're seeing improvements in those areas, and you're seeing it through what we announced each quarter, every three-month increment that we're maintaining patients over those periods of time.

Operator, Operator

Mr. Greenleaf, that was our last question.

Peter Greenleaf, CEO

Okay. Thank you very much. I want to thank everybody for joining the call with us today. We're obviously excited about the progress we've seen in the first quarter of the year. We'll look forward to talking to you again next quarter. Have a great day.

Operator, Operator

Thank you. Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time, and have a great day.