Earnings Call Transcript - AUPH Q3 2021

Operator, Operator

Greetings, and welcome to Aurinia Pharmaceuticals Third Quarter 2021 Results Conference 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, Dana Lynch, Aurinia's Investor Relations and Corporate Communications. Thank you. You may begin.

Dana Lynch, Investor Relations

Thanks, Latonya, and thank you to those joining today's call to discuss Aurinia's third quarter financial results. Leading the call this morning are Peter Greenleaf, President and CEO; and Joe Miller, Chief Financial Officer. Other members of the Aurinia executive team, Max Colao, Chief Commercial Officer; Neil Solomons, Chief Medical Officer; and Rob Huizinga, Executive Vice President of Research are also on the call and available for the Q&A portion of the agenda. Today, Peter will begin with an update on our progress with LUPKYNIS commercialization, review recent and anticipated clinical and regulatory milestones for voclosporin, as well as provide an update on the Aurinia pipeline. Then Joe will discuss our financial performance in more detail. After this closing remarks, participating executive team members are available for your questions. Today's press release announcing our financial results and recent operational highlights are accessible from our website at www.auriniapharma.com. It has been filed on a Form 8-K with the U.S. Securities and Exchange Commission. This afternoon, we plan on filing our financial statements and accompanying management's discussion and analysis in the quarterly report on Form 10-Q. During this call, we may make forward-looking statements based on our current expectations. These forward-looking statements are subject to a number of significant risks and uncertainties, and our actual results may differ materially. For a discussion of factors that could affect our future financial results and business, please refer to the disclosures in our press release and our quarterly report on Form 10-Q once filed along with our recent filings with the U.S. Securities and Exchange Commission and Canadian Security Authorities. Please note that all of the statements made during today's call are current as of today, November 3, 2021, 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 as of this date. Let me now turn the call over to Aurinia's President and CEO, Peter Greenleaf. Peter?

Peter Greenleaf, President and CEO

So thanks, Dana. And I want to thank everyone for joining us today. We're now well into the launch in the U.S., and I'm happy to report strong results for the third quarter. We continue to execute on our commercial strategy and increased access to and adoption of LUPKYNIS for the treatment of adults with active lupus nephritis. This morning, I'll take you through our performance results, as well as provide you with some LUPKYNIS clinical and regulatory updates. I'll also provide you with an overview of the two exciting pipeline assets we've recently acquired. Finally, we will report our financial position and answer any questions that you may have. So let's start with our business performance related to the launch starting first with the quarter. In Q3, we generated $14.7 million in net sales, which exceeded analyst expectations and represents a 122% increase over the prior quarter. Since the launch in late January, our total recognized revenue is $22.2 million. Based on our current metrics and anticipated year-end results, we maintain our guidance in the range of $40 million to $50 million for 2021. In the third quarter, we added 412 new patient start forms while COVID-19 challenges with the Delta variant and Southern states impacted patient start forms prescribing early in the summer. It should be noted that we saw a steady increase in prescribing rates throughout September and continuing into October. As of this week, we have now logged a total of more than 1,265 patient start forms year-to-date and remain optimistic that this upward momentum will continue. We also continue to see improvements in movement from patient start forms to patients on therapy with a conversion rate in excess of 68% currently. This was up from approximately 50% in Q2. In addition, our time to convert is shrinking. Both 30 and 60 day conversion rates have continued to improve each month. On the payer coverage front, we continue to make progress, especially with regional and local plans. As of early October, we have confirmed LUPKYNIS coverage through published payer policies for 65% of total lives in the market. Through patients gaining access to LUPKYNIS, we have now confirmed coverage and plans covering 87% of total lives. While our goal is to ensure there are specific policies in place, healthcare professionals and patients are gaining access to LUPKYNIS through medical justifications and working in conjunction with Aurinia's personalized patient support resources. We continue to work to make the access process as seamless as possible for providers and patients so that patients can quickly gain access and start our treatment. Just over nine months post launch, we're not slowing down. Our team continues to work tirelessly to educate both professional and patient audiences about LUPKYNIS and the urgent need to diagnose and treat lupus nephritis patients as quickly as possible. The most recent healthcare provider market research shows that LUPKYNIS awareness has increased significantly with both rheumatologists and nephrologists, and is on par with the competition, which by the way, this competition has been on the market for over 10 years. LUPKYNIS's remarkable clinical results continue to differentiate our product and bolster this awareness and confidence in prescribing. This week Aurinia has five presentations at two key medical meetings, The American College of Rheumatology and The American Society of Nephrology. These include data from our pivotal AURORA 1 study showing LUPKYNIS efficacy in newly diagnosed patients and patients with severe lupus nephritis. However, an oral presentation at ACR will also feature an updated analysis of the AURORA 2 continuation study, assessing the safety and tolerability of LUPKYNIS at 30 months. As a reminder, we expect to announce results from this continuation study, looking at the final data from two additional years of LUPKYNIS treatment, or three years in total, by the end of this year. This will represent the longest lupus nephritis treatment duration in recent studies. Lupus nephritis is a lifelong condition and this long-term data will provide necessary support for healthcare professionals, patients, and payers to safely continue LUPKYNIS treatment beyond one year. So let's now shift to a look at the ongoing work to establish voclosporin as a global therapy. The EMA marketing authorization application, which as you recall, was filed in June with our licensing partner, Otsuka, remains on track for review. We continue to expect the CHMP opinion around mid-2022 and a final EMA decision sometime in the third quarter of 2022. As part of this submission on October 1st of this year, Otsuka filed an MAA with the Swiss Agency for Therapeutic Products, or Swissmedic, seeking approval for the use of voclosporin in the treatment of adult patients living with active lupus nephritis. Additionally, Otsuka continues to work towards finalizing the timeline for the Japanese NDA regulatory filing with the PMDA to seek approval of voclosporin for the treatment of lupus nephritis in Japan. We continue to be pleased with this progress and look forward to supporting Otsuka and launching our therapy in these markets. And as we said before, reaching these milestones will provide us with opportunities to continue to strengthen our company's financial position as we work to globalize LUPKYNIS. Moving now to R&D updates, on August 17th of this year, we announced the acquisition of two exciting and innovative additions to our pipeline. The first of these compounds is AUR200, which is an FC protein targeting BAFF, or B-cell Activating Factor, and APRIL, or A Proliferation-Inducing Ligand. As you may know, both BAFF and APRIL play a key role in B-cell mediated autoimmune disease. And while this mechanism of action has been widely studied and we have proof-of-concept, we believe this compound has differentiated properties compared to those in development and we're eager to establish those preclinically and then, of course, advance into clinical development. The IND for AUR200 is expected to be filed in late 2022. The second compound that we acquired is AUR300. AUR300 is a novel peptide therapeutic that modulates M2 macrophages, which is a type of white blood cell via the CD206 receptor. While there's less research with this mechanism of action, it has been established that dysregulation of M2 macrophages causes fibrosis. And with AUR300, the goal will be to reduce M2 dysregulation early and decrease fibrosis and inflammation. The IND filing for this compound is targeted for the first half of 2023. These transactions allow us to leverage our existing R&D capabilities and growing commercial experience. We strive to further diversify and grow our pipeline, which is a key strategic imperative for us and our goal to provide stakeholders with long-term value. In summary, we're making significant progress as we work to expand adoption of LUPKYNIS in the U.S., as well as other parts of the world. At the same time, in parallel, our R&D teams are committed to advancing our new pipeline assets and addressing autoimmune diseases beyond lupus nephritis. I'll be back to close out the call, but for now, let me ask Joe Miller to get into more specifics regarding our financial position. Joe?

Joe Miller, Chief Financial Officer

Thank you, Peter, and good morning everyone. As of September 30, 2021, Aurinia had cash and cash equivalents and investments of $286.4 million compared to $422.7 million at December 31, 2020. The decrease was primarily related to the commercial infrastructure spend to support the launch of LUPKYNIS, an upfront payment made as part of a collaborative agreement with Lonza to build a dedicated manufacturing capability, and an upfront license payment related to our recently acquired developmental programs. Net cash used in operating activities was $131.8 million for the nine months ended September 30, 2021 compared to $73.1 million for the nine months ended September 30, 2020. The increase was primarily due to the commercial infrastructure spend to support the launch of LUPKYNIS, payments for inventory, and a one-time payment to a related party upon achievement of specific milestones, partially offset by an increase in cash receipts. As a reminder, in the prior year, the company was still in the development phase of LUPKYNIS and was only in the beginning phase of building out its commercial and back office infrastructures. The company believes that it has sufficient financial resources to fund its current plans, which include funding commercial activities, including FDA related post-approval commitments, manufacturing and packaging of commercial drug supply, funding our supporting corporate infrastructure, conducting planned research and development programs and investing in our pipeline into at least 2023. Total revenue was $14.7 million and $29,000 for the quarters ended September 30, 2021, and September 30, 2020, respectively. Total revenue was $22.2 million and $88,000 for the nine months ended September 30, 2021, and September 30, 2020. Our revenues primarily consisted of LUPKYNIS product revenue, net of adjustments following FDA approval in January of 2021. Cost of sales was $254,000 and zero for the quarters ended September 30, 2021, and September 30, 2020, respectively. Cost of sales were $610,000 and zero for the nine months ended September 30, 2021, and September 30, 2020. The increase for both periods was primarily the result of commercial sales of LUPKYNIS. Gross margins for the three and nine months ended September 30, 2021 was approximately 98% and 97%, respectively. Selling, general and administrative expenses, or SG&A, were $44.1 million and $30.7 million for the quarters ended September 30, 2021, and September 30, 2020, respectively. For the nine months ended September 30, 2021, SG&A expenses were $127.2 million and $57.2 million for the comparable period in the prior year. The increase for both periods was due to employer related costs associated with the expansion of the commercial and administrative functions to support the launch of LUPKYNIS, which ramped up during the third quarter of 2020. Also contributing was an increase in professional fees for activities such as patient assistance programs, consulting, recruiting, legal, market research, and marketing related activities. Non-cash SG&A share-based compensation for the three and nine months ended were $6 million and $19.2 million compared to $3.8 million and $9.2 million in the same periods in 2020. Research and development expenses were $20.1 million and $12.2 million for the quarters ended September 30, 2021 and September 30, 2020, respectively. For the nine months ended September 30, 2021 and September 30, 2020, R&D expenses were $40 million and $37.2 million. The primary driver for the increase for the three months ended September 30, 2021, as compared to the same period in the prior year was the upfront license and accrued milestone expense related to our recently acquired developmental programs. In accordance with U.S. GAAP, these transactions did not meet the definition of a business combination and therefore, were recorded as asset acquisitions. The company expensed the cost of the assets as R&D related expense at the acquisition dates. The increase was partially offset by a decrease in clinical supply and distribution costs due to our new drug application and voclosporin related clinical trial expenditures in 2020 not recurring in 2021. Also contributing was a decrease in employee related expenses. The primary drivers for the increase for the nine months ended September 30, 2021 as compared to the same period in the prior year were due to the upfront license and accrued milestone related to our recently acquired developmental programs and higher CRO costs related to our new clinical programs offset by a decrease in clinical supply and distribution costs following the approval of LUPKYNIS, including a reduction in NDA preparation costs and termination of the dry eye trial during the fourth quarter of 2020. Non-cash R&D share-based compensation expense for the three and nine months ended September 30, 2021 was $1 million and $3.2 million respectively compared to $800,000 and $3.1 million in the same periods in 2020. For the quarters ended September 30, 2021, Aurinia recorded a net loss of $50.3 million or $0.39 per common share as compared to a net loss of $42.1 million or $0.34 per common share for the quarter ended September 30, 2020. For the nine months ended September 30, 2021, Aurinia recorded a net loss of $147.6 million, or $1.15 per common share, as compared to a net loss of $94.6 million, or $0.82 per common share for the previous period. With that I would like to hand the call back to Peter for some closing remarks. Peter?

Peter Greenleaf, President and CEO

Well, thanks, Joe. And I want to thank everyone again for joining us today. Let me close by saying that I'm proud of the work we've done so far this year. On the backdrop of a challenging and unprecedented global pandemic, we continue to see strong and significant progress in our efforts to drive adoption of LUPKYNIS in the U.S. Our clinical and regulatory teams are working hard to advance and achieve important milestones for voclosporin including the completion of the AURORA 2 continuation study. And we're pleased with the work achieved so far this year with our partner Otsuka to ensure regulatory approval of voclosporin outside of the U.S. And then finally, we're excited to have two new pipeline assets that will help us further our mission in changing the course of rare and autoimmune diseases. We look forward to providing additional updates in the months and quarters to come. And I'd now like to open up the line for questions. So with that operator, please feel free to open it up to the Q&A.

Operator, Operator

Thank you. Our first question comes from Alethia Young with Cantor Fitzgerald. Please proceed.

Alethia Young, Analyst

Peter, how would you characterize the difference between how rheumatologists and nephrologists treat lupus nephritis? What have you seen from both specialties in terms of patient start forms and prescribing patterns?

Peter Greenleaf, President and CEO

Thanks Alethia, let me start out and Max can build on what I might miss. Obviously, rheumatologists and nephrologists are different in this specialty and how they think about the disease. I think that the treatment goals are aligned, but obviously a lupus patient starts first at a rheumatologist's office. If you look at our market research though, in terms of both awareness and intent to treat, they're pretty close to overlap in terms of awareness of the drug and intent to treat moving forward. But in terms of our day to day, our messaging, etc., we still call on high targets, both in nephrology and rheumatology. And right now, both from our impact scores in terms of the market research we track, we're right on target with both nephrologists and rheumatologists. And Max, what would you add there, anything?

Max Colao, Chief Commercial Officer

Yes, I'd just add that our prescribing is actually pretty much split down the middle with half being nephrologists and half rheumatologists. So it kind of reflects again what Peter just highlighted, which has the intent to treat pretty much overlap as what we see in our research.

Alethia Young, Analyst

Can you discuss how you expect patient start forms to progress as we move into the holiday season?

Peter Greenleaf, President and CEO

Yes, I think it's still a little early to understand whether there's sort of a summer seasonality to this or not because the Delta variant hit right at the front end of the summer and we couldn't discern between the two. Matter of fact, I would pose the question back to you since you talk to a lot of specialty companies out there in the space and what they saw that they thought was pandemic related or more summer seasonal, but we're watching it very closely. I want to make sure that people are really clear in the message that we communicated though where we were in a quarter in terms of patient start forms and where we've trended to as we moved into September and October. We've had north of 1,265 patient start forms to date. And if you just do the backwards math on that in the month of October alone, it's approximately 160 new patient start forms in the month of October alone. So I don't want anyone to take away that we've seen a slowing down at this business. We saw impact in specifically in the Southeast as it was related to the Delta variant which was off target with what we've seen since the start of this launch. We still feel very confident in our prescription start form performance as it pertains to year-to-date and we don't know yet if the summer was something that's going to be a predictable seasonality. Sorry for the long-winded answer. Max, yes.

Max Colao, Chief Commercial Officer

And I would add to that that we did see a slowdown specifically from Texas to Florida and, to Peter's point, and that has rebounded as we've gotten into September and October.

Operator, Operator

Our next question comes from Ed Arce with H.C. Wainwright and Company. Please proceed.

Ed Arce, Analyst

Hi, good morning everyone. Thanks for taking my questions and let me add my congrats on a strong quarter.

Peter Greenleaf, President and CEO

Thanks, Ed.

Ed Arce, Analyst

Could you discuss the drivers of clinical adoption and the impact of recent data on prescribing habits?

Peter Greenleaf, President and CEO

To answer your first question, Ed, I think we report the meaningful numbers that we want people to be focused on, and really that's at the top end of the funnel. It's new prescriptions or patient start forms. And then as we report, it's a conversion of those patients to getting on therapy. And you can see whether it's patient start forms from the time point of the launch to year-to-date, we continue to see strong growth there. On the conversion front, we've moved from an early stage at the front end of the launch in or around 30% to 40% to today just below a 70% conversion. So, obviously, that's a critical one. And then lastly, I would say, over the course of really this year and into next year, it's going to be tracking compliance or persistency – whatever the right word is you want to use there – how long patients stay on therapy. And obviously, our expectations aren't that 100% of patients are going to stay on therapy, that patients will fall off over time, either for their own reasons or for physicians deciding how long they want to use the therapy. And I'd say the reason we haven't reported more on that to date is because it's just too early. If you think about the max number of doses a patient could have seen if they were approved for the drug in January, it would be in and around nine months worth of doses up to this point. So just don't have enough to really point to a trend there. Max, anything you'd add?

Max Colao, Chief Commercial Officer

Yes, I would say the only thing I would add is that repeat prescribing is now becoming a better – a bigger part of our patient start forms. And I think that reflects really just the overall increase in confidence with prescribers, both from just understanding our data better as well as gaining experience in treating patients.

Ed Arce, Analyst

What is the trajectory for R&D expenses in the coming quarters?

Joe Miller, Chief Financial Officer

Thanks, Ed. In regards to the R&D expenses, I think if you trend them out and take out the one-time payments associated with the two recent acquisitions. And as I mentioned in the script, we also had an accrual of a milestone that we had to fair value as well. So our R&D related op expenses for the quarter were about just call it $20 million, just to touch above $20 million. If you look in the prior quarter, that number was around $10 million or so. So taking out those one-time upfront payments coupled with the approval of one-time milestone, and your run rate is pretty consistent around $10 million or so. And as we spoke previously, I think those numbers will continue consistently quarter-over-quarter. The nature of the expense will obviously change moving away from some of the post-approval obligations for voclosporin LUPKYNIS into more of our new early stage programs. When looking out into the outer years and outer quarters, I think, R&D burn will remain fairly consistent.

Ed Arce, Analyst

When do you expect to see normalization in gross margins?

Joe Miller, Chief Financial Officer

In regards to your second question, Ed, I think on gross margin, it will fluctuate going forward. Obviously, I mentioned we have a manufacturing facility coming online likely in 2023. Once we have exclusive manufacturing related to that plant, the margins will shift slightly, but will remain very healthy. They may move within a percentage or two, one way or the other, but they should remain fairly consistent. This product has a very nice margin associated with it.

Operator, Operator

Our next question comes from Maury Raycroft with Jefferies. Please proceed.

Farzin Haque, Analyst

Can you provide a breakdown of the dose reductions and the compliance you have seen in real-world patients so far? Is your assumption for the net pricing in line or better than what you initially envisioned?

Peter Greenleaf, President and CEO

On the average net price, we're still in the range to support – in or above the range to support the assumption that we put out. At this stage, we've not gone deeper on that primarily because it's still early in the launch. And as a result, we're still getting an understanding of how doctors are prescribing LUPKYNIS. And the number and time to discontinuation persistency patient and payer mix, all of which really impact the actual net realizable revenue per patient per year going forward. So, looking at the results we have to date, which is about nine months post-launch, we're currently on or above the guidance we've given previously on average net. Now, regarding what we understand about dose reductions that we see out there, again, I'd say it's early, but it's getting long enough in the launch to understand it more. And as we get a little bit more data, we'll start to report on it. I would say at this stage, we're probably close and trending slightly above where the trials were. And if you remember, both in the Phase 2 and the Phase 3 trials, we were somewhere in the 25% to call it 30% of patients that saw a dose reduction. So, I'd say that we're consistent with that, but we want to see a little bit more data as patients get more experience with the drug. In terms of compliance, it's all wrapped up in what I just said. We've got to see a year's worth of data at least to really understand what the average patient persistency looks like on this drug. With only nine months under our belt it's really hard to say what's going to be realizable projectable forward.

Farzin Haque, Analyst

Are there any rumors circulating regarding potential takeover offers for the company?

Peter Greenleaf, President and CEO

We obviously can't comment or speculate on the source of the rumor or recent report, so I'll just leave it at that.

Farzin Haque, Analyst

Got it. Thank you.

Operator, Operator

Our next question comes from Ken Cacciatore from Cowen and Company. Please proceed.

Ken Cacciatore, Analyst

Can you speak to the company's overall strategy going forward in terms of partnerships or potential collaborations?

Peter Greenleaf, President and CEO

Thanks for the question, Ken. And I'll repeat what I already said. I mean, we really can't comment or speculate on the source of any of these rumors or recent reports that are circulating in the market. But I think the second part of your question, which is fair to understand where management and our board's mindset would be as it pertains to continuing to create shareholder value, drive shareholder value. And I guess what I would answer – how I would answer to that question is to reinforce what we've said in many calls before this time. We have a business plan and we have a mission as a company. And that business plan is to get this drug to as many patients suffering from autoimmune disease and lupus nephritis as humanly possible. And we remain committed to doing that in a way that drives the most shareholder value, and we remain committed to exploring any and all avenues to complete that mission in a way that is best for driving shareholder value. So I realize that that's a wide-open answer, but I think if you read between the lines, no one here at Aurinia has a boxed-in way of thinking about how we create value and expand access to this product more broadly, either in our hands or in someone else's or in partnership with someone, we remain open to all potential avenues.

Ken Cacciatore, Analyst

Okay. Thanks, Peter. That's helpful. Appreciate it.

Operator, Operator

Our next question comes from Joseph Schwartz with SVB Leerink. Please proceed.

Joseph Schwartz, Analyst

Can you quantify how important the long-term safety and efficacy data will be in the market? Are there any segments that may be reluctant to use LUPKYNIS until they see such data?

Peter Greenleaf, President and CEO

Yes, Joe, I think it's a great question. And I think the two biggest – in my mind, the two biggest swing factors that are hard to quantify for me today around the launch in the business, one has been the impact of COVID on our first year at a launch to quantify that for you would be difficult. I would say it definitely has, but to say whether it's 20% or 30%, we just don't know. The second – and by the way, COVID decreasing and seeing lower virus rates, etc., we know will have a positive impact on our business, both with physician access, patient access, access to care, patients staying on drug, we know that. The other thing we know that's hard to quantify is that obviously having three years’ worth of data both safety and tolerability data out to three years is better than having just one. And we know that it's going to help our business in lots of different ways. One, we're one of the only products that has data out this long in this patient population. So, that's an important thing to note. And with our drug in the class of CNIs, obviously we want to – while we're a new and differentiated new mechanism – a new drug, we want to continue to reinforce it; utilizing this drug over longer periods of time doesn't compromise in any way the patient's kidney function, which we're hopeful that in three years we'll actually show that. We know that's going to have meaningful impact on both prescribing behavior and probably even more importantly how payers react to reimbursing the drug over longer periods of time when as you know our label today's safety and efficacy beyond one year has not been established. So hopefully that's not a quant answer for you, and I apologize for that, but we think it's going to be really meaningful to both our patients, physicians, and our efforts in getting the drug off the ground. And we will launch this data to the market in terms of what the outcomes are as if it were an extension of a pivotal trial, which it is.

Joseph Schwartz, Analyst

Will the long-term data be filed as a supplemental new drug application?

Peter Greenleaf, President and CEO

It's a really good question. And no, this is not a supplemental for us. We do owe this data to the agency. They didn't ask for it, but we said we're going to do it and it is part of our application, but I want to be really clear. Technically, it's not a supplemental application. We will discuss with the agency how meaningful the data is, what it tells us and see if we can get to an aligned approach as to how that may or may not be added to the label. Because, as you know, a supplemental package opens up the entire label for review. I've seen many times where you go in to get something like this added to the label and they end up changing three or four other areas. So I think we need to be smart and strategic and talk to the agency. We think it's very meaningful and there should be merit to adding it to some area of the label, but not at this stage as a supplemental package.

Joseph Schwartz, Analyst

Regarding your guidance of $40 million to $50 million in sales for this year, what do you think will be the determining factors for achieving the high-end of that range?

Peter Greenleaf, President and CEO

I think what we said when we put up any sort of guidance in the first year of the launch was that we weren't trying to softball anything. In a global pandemic situation, first year of a drug launch, we gave a $10 million range. What I said when we put it out there was we're not obviously trying to be conservative but at the same stage in the first 9, 10, 12 months of a launch, these numbers will not lay up numbers, for sure, but we remain confident that we can be in this range. And I think to me the biggest swing factor here, yes, we want new patient start forms in the court; that's critical, right. But a new patient starting in the quarter doesn't drive a lot of revenue for us. So it comes down to continuing to work, convert and keep compliant those patients that have seen the drug in quarters before. That's going to be the single biggest driver of our performance in the quarter ending out the year and the biggest driver of what we'll continue to build that base into first quarter of next year will be those patient start forms. So it comes down to compliance and conversion.

Joseph Schwartz, Analyst

Are you seeing a need for increased patient start forms to achieve the high-end of guidance?

Peter Greenleaf, President and CEO

No, I think the way you want to look at patient start forms because this is a clear example of it in the quarter is as general health and growth of our business, we need to continue to be pushing new patients into the system to effectively manage patients that may fall out of the system. If we had 100% compliance, we probably wouldn't worry about this as much, but as we continue to see compliance over time, we want to continue to drive patient start forms. The conversion now, we could – even if patient start forms were lower, like we saw in Q3, you can still achieve a financial metric as long as your patients convert and stay on drug. But I think you always got to be looking at that patient start form number because it is a general health of the business and sort of future growth metric for us.

Justin Kim, Analyst

Can you provide insights on physician behavior in terms of dosing of voclosporin as patients transition into treatment protocols beyond one year?

Peter Greenleaf, President and CEO

Yes, as we've said, it's early, so it's really hard to deduce what the trend will be going forward. We are watching both physician behavior here and patient behavior. Remember this patient population is difficult and can be pretty notoriously uncompliant. So we are looking very closely, not only at physician prescribing behavior, but at persistency as it pertains to the patient and staying compliant on the drug. I just think we're not trying in any way to walk away from this question. I just think you need more than six to nine months’ worth of data to say anything about the persistency of your drug. But, over time, this is going to be one that we can talk about when you have a year's worth of data that's out there or more. And we, as we've said on previous calls, have every belief that we'll do that. So far, things have looked good, but I don't want to falsely report that compliance will be until I have a projectable number and that's time.

Operator, Operator

Ladies and gentlemen, we have reached the end of the question-and-answer session. I would like to turn the call back over to management for closing comments.

Peter Greenleaf, President and CEO

No further closing comments here. I want to thank everybody for their time and look forward to updating you in the months and quarters to come. Have a great day.

Operator, Operator

Thank you. This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.