Greetings, and welcome to the Aurinia Pharmaceuticals third quarter 2020 results. This kind of participance on only listen mode, the question in this discussion will follow in the form of presentation. If anyone should require operator assistance during this conference please press star zero on your telephone keypad. Please know that this conference has been recorded. I will now turn the conference over to our host, Dr. Glenn Schulman, head of IR. Thank you. You may begin.
Thanks, Diego. Good afternoon, everyone. Welcome to Aurinia's third quarter 2020 results conference call. Joining me on the call today from the Aurinia team are Mr. Peter Greenleaf, President, CEO; Mr. Max Colao, Chief Commercial Officer; Mr. Joe Miller, Chief Financial Officer; and Dr. Neil Solomons, Chief Medical Officer here at Aurinia. This afternoon, we issued our press release and associated financial statement package detailing the third quarter 2020 financial results, both of which are available on our website at www.auriniapharma.com and filed on a Form 6-K with the SEC as well. Before jumping into some brief remarks from the team, I'd like to remind everyone that today's call is being webcast live on Aurinia's investor relations website, and a replay of the call will be available approximately two hours after the completion of today's meeting.
Please also note that the content of today's call is the property of Aurinia. It may not be recorded, reproduced, or transcribed without prior written consent obtained from Aurinia. For approval, please feel free to reach out to me, Glenn Schulman, via email at ir@auriniapharma.com. During the course of this call, we may make forward-looking statements based on our current expectations. These forward-looking statements are subject to a number of significant risks and uncertainties, and our actual results may differ materially. For a discussion of factors that could affect our future financial results and business, please refer to the disclosure in today's press release, our most recent filings with Canadian securities authorities, and reports that we file on Form 6-K with the U.S. Securities and Exchange Commission.
Also, please note that all the statements made during today's call are current as of today, Tuesday, November 10, 2020, and are based upon information currently available to us. Except as required by law, we assume no obligation to update any such statements as of this date. As I said, this afternoon, we'll have some brief remarks from the team, after which we'll host a Q&A session. With all that, let me turn the call over to Peter Greenleaf ?
Well, thanks, Glenn, and I want to thank you all for taking the time to join us this afternoon on our third quarter update call. Since taking the reins here at Aurinia about a year and a half ago, I couldn't be more impressed with how the Aurinia team has executed across all aspects of the company. While results aren't always what we set out to realize, I'm continually impressed by the professionalism, the dedication, and the focus of our team across the globe. I know it was just a week ago we had a call with you all to discuss our AUDREY results, and we are here today to provide a broader update on our third quarter financial results, as well as a review of where things are heading as we move into 2021.
To be clear, as we've said before, we are squarely focused on voclosporin and its upcoming PDUFA date as a potentially first approved treatment for lupus nephritis. As we reported today, we ended the third quarter with cash equivalents, and investments of approximately $421 million to support our activities and are fully funded to execute on our launch plans for voclosporin following its approval. 2020 has definitely been an interesting year for all of us, but despite the broader challenges, we have been fortunate to secure the resources necessary to achieve our goals, as well as evolve the organization to meet the needs of people suffering from lupus nephritis. Strong resources, a solid strategy, and great people to execute, combined with the potential of voclosporin, is what we need to succeed. Today, all of those pieces are in place.
Over the summer, we announced our NDA filing for voclosporin was accepted by the U.S. Food and Drug Administration, granted priority review, and given a PDUFA action date of January 22nd, 2021. During the review period, we have had ongoing and collegial conversations with the agency. The review process appears to be on track, and as we've stated previously, we are not expecting to have an advisory committee meeting prior to the action date. At this point, we've completed the mid-cycle review with the agency and are awaiting confirmation on our late-cycle review meeting. All work streams at this point are lined up and as expected, heading into the PDUFA date in January. Looking beyond the U.S., we continue to advance our global regulatory and development strategy for voclosporin.
In Europe, our interactions with the EMA continue, and our expectation is to file an MAA for voclosporin during the second quarter of next year. This timeline is in sync with our previous guidance and dovetails with our ongoing ex-U.S. partnering conversations. As we head into 2021, we also plan to advance our PMDA interactions and look forward to providing additional updates and details on our timelines for Japan early next year. In addition to the regulatory process, we continue to work to differentiate the profile of voclosporin relative to older generation CNIs and other therapies that are currently in development for lupus nephritis. Voclosporin has always been strongly positioned given its characteristics as a new chemical entity.
Of course, we look to continue to build upon that. The drug's robust efficacy, rapidity of activity, overall safety and tolerability profile observed in both the AURA-LV and the AURORA clinical trials, combined with the differentiating aspects observed in vitro, including lack of impact on glucose and lipids, and even the potential for antiviral activity being evaluated through an investigator-initiated trial for COVID-19 that was just recently communicated at a study in Leiden, the Netherlands. All of this supports our belief in this molecule and its differentiated applicability for patients. Of course, should the FDA give us the approval, we look forward for rapidly launching this drug in the U.S. and markets around the world. With that intro, I'll turn the mic over to Neil for a brief update on our ongoing pipeline activities, after which Max Colao will provide some additional insight into our commercial readiness.
From there, Joe will detail our third quarter results, and then I'll come back on to close up for a Q&A. With that, let me turn it over to Dr. Solomons. Neil?
A brief update from the clinical and regulatory world. My team has been working steadfast on their goal of continuing to differentiate voclosporin from other therapies and working to enhance the overall awareness of the broad data set generated with voclosporin for lupus nephritis. Over the past weekend, voclosporin was detailed in two poster presentations during the 2020 American College of Rheumatology annual meeting. The first presentation detailed the previously announced drug-drug interaction study, which showed that voclosporin had no impact on mycophenolic acid, or MPA, the active moiety of MMF. The pooled safety and efficacy data from the AURA-LV and AURORA trials in LN, it was reported that voclosporin achieved significantly faster improvements in proteinuria. This is particularly important for people with lupus nephritis who are racing against time to achieve long-term kidney health.
As we said at Aurinia, "Time is nephrons." On the regulatory front, as Peter mentioned, we have recently completed the mid-cycle review of the voclosporin NDA with the FDA and continue our interactions as we head towards the late cycle review with the agency. All that said, the timelines are on track for our January 22nd, 2021, PDUFA date. Looking beyond the U.S., we have commenced interactions with the EMA. We've reviewed scientific discussions with the rapporteur and co-rapporteur due to occur early next year. With these activities, we are on track to file the MAA in quarter two of 2021. I just wanted to take another moment to comment on the AUDREY dry eye program, which we reported results on last week. Once again, our sincerest thanks to all the patients and investigators who participated in the clinical research.
Although the results were disappointing, the team continues to work on fully dissecting and understanding the results. As we announced last week, the VOS program remains suspended, and Aurinia does not plan to conduct any additional clinical studies. With that brief overview, I'd like to pass it along to Max for an overview of voclosporin's commercial readiness. Max?
Thanks, Neil. Good afternoon, everyone. I appreciate this opportunity to provide some additional detail on the progress we've made over the last quarter to prepare ourselves to realize the full potential this opportunity presents for patients, healthcare professionals, and the company. First, let me highlight why we see this opportunity as so significant. Lupus nephritis is one of the most serious and life-threatening complications of SLE. There are currently no FDA-approved treatments for LN, and the current standard of care typically results in suboptimal long-term health outcomes. For example, 70%-80% of people on the current standard of care treatment, these patients are typically women, and in particular, women of color of childbearing age. They fail to achieve a complete response to therapy in one year. Furthermore, these patients still show signs of active kidney disease that can lead to kidney failure.
However, in our pivotal AURORA and AURA studies, voclosporin has shown great promise as a potential treatment for lupus nephritis. Patients treated with voclosporin in combination with the standard of care achieved statistically superior and faster renal response rates when compared to the standard of care alone. These results were consistent across patient subgroups, including different races and ethnic backgrounds. As a company developing a pioneering therapy with such potential, we see ourselves as not only having a unique opportunity for people affected with lupus nephritis, but also an obligation to these patients as well. To that point, let me provide some insight on our preparedness for launch. I have no desire to come across as immodest, but I do feel it is fair to say we have now assembled a world-class rare disease commercial team at Aurinia.
This exceptional and dedicated group have their focus on highlighting the importance of early diagnosis and on improving long-term health outcomes in LN as a result of this focus, we have already undertaken initiatives with payers and clinicians. Importantly, these activities have been undertaken in collaboration with some of the most widely published and recognized lupus key opinion leaders. Already, we have reached payers covering 100 million lives. We've been highly encouraged to see that at each of our national and regional education programs, as many as 100 physicians have been in attendance virtually. As a result of these initiatives, we expect to reach the overwhelming majority of payers and more than 1,000 MDs treating lupus and LN by the end of the year. We are leveraging technology to the fullest so that our progress isn't delayed or undermined by the current pandemic.
In fact, in all areas that are critical to successful commercialization, education, promotion, access, patient services, the entire commercial team is aligned for a launch that aims for voclosporin to be quickly and widely adopted by the LN community. We are now ready to quickly launch and get voclosporin into the hands of patients if and when its approval is granted by the agency. That's quite a testament to the experience, talent, and commitment of my commercial team colleagues, particularly during these stressful times. I would like to conclude my portion of the call with a deeply sincere thank you to all of them for their inspiring commitment to making a tremendous contribution to the health of patients with LN. After approval and with the final label in hand, I look forward to providing you all with more specifics on the launch of voclosporin.
I'll now pass it over to Joe for a recap of our financial results. Joe?
Thanks, Max. On the financial front, Aurinia ended the third quarter of 2020 with cash equivalents, and investments of $421 million, compared to $306 million at December 31st, 2019. Net cash used in operating activities was $30.3 million for the third quarter ended September 30th, 2020, compared to $11.8 million for the third quarter ended September 30th, 2019. As we detailed in today's press release, we reported a consolidated net loss of $34.1 million, or $0.28 per common share, for the third quarter ended September 30th, 2020, as compared to a consolidated net loss of $19 million, or $0.21 per common share, for the third quarter ended September 30th, 2019.
The loss for the third quarter ended September 30th, 2020, reflected a non-cash decrease of $ 2.6 million in the estimated fair value of derivative warrant liabilities, compared to a non-cash decrease of $ 4.5 million in the estimated fair value of derivative warrant liabilities for the same period in 2019. The derivative warrant liabilities will ultimately be eliminated on the exercise or forfeiture of the warrants and will not result in any cash outlay by the company. The outstanding warrants expire on December 28th, 2021. The loss before the change in estimated fair value of derivative warrant liabilities and income taxes was$ 36.7 million for the third quarter ended September 30th, 2020, compared to$ 23.5 million for the same period in 2019. R&D expenses decreased to $ 4.8 million for the third quarter ended September 30th, 2020, compared to$ 17.8 million for the same period in 2019.
The decrease is due to a decrease in activities related to clinical trials and exploratory development work, the capitalization of previously expensed inventory, and the capitalization of internal development costs. In accordance with IFRS, capitalization of inventory and internal development costs is appropriate when approval of the NDA is reasonably assured. Management believes that approval by the FDA of voclosporin as a treatment for LN was reasonably assured following the acceptance of the NDA by the FDA in the third quarter of this year. Non-cash stock compensation expense charged to R&D increased to CAD 814,000 for the third quarter ended September 30th, 2020, compared to CAD 596,000 for the same period in 2019.
The increase in stock option compensation expense for the three months ended September 30, 2020, reflected higher stock option grants resulting from the hiring of new employees and an increase in the fair value of the stock options granted due to an increase in our share price. Corporate administration and business development expenses increased to$ 31.1 million for the third quarter of 2020, compared to $ 6.1 million for the same period in 2019. The increase reflects the investment incurred to build out our commercial and administrative organizations to support the launch of voclosporin as a treatment for LN, subject to FDA regulatory approval being granted. Since the release of the positive results of our AURORA trial in December 2019, we have moved quickly to develop our commercial and administrative capabilities across the organization, including the expansion of our commercial team.
Non-cash stock compensation expense charged to corporate administration and business development increased to $ 3.8 million for the third quarter ended September 30th, 2020, compared to $ 1.4 million for the same period in 2019. The increase in stock option compensation expense for the three months ended September 30th, 2020, reflected higher option grants resulting from the hiring of approximately 135 new employees and an increase in the fair value of the stock options granted due to an increase in our share price. With that review, I'll pass it back to Peter for some closing remarks. Peter?
Thanks, Joe. With a strong balance sheet in cash and cash equivalents and investments of approximately $421 million at the end of September, we're amply funded to support the launch of voclosporin. As I said before, strong resources, a strong strategy, and great people to execute, combined with the potential of voclosporin, is exactly what we need to succeed, and I believe that all those pieces are in place. With that, operator, can you please open up to a Q&A session? Thank you, everyone.
Thank you. Our first question comes from Ken Cacciatore with Cowen and Company. Please state your question. Mr. Cacciatore, your line is open. Go ahead. You have yourself on mute. We can't hear you.
Hello, can you hear me?
Yes, go ahead. There you go.
Yep. I was just wondering if you could comment on the review and interaction in a little more detail around manufacturing, if there's been an inspection on the site? Wondering on the commercialization, just could you point to any examples of what you would say are really quality orphan or specialty launches? Kind of any of the good learnings you can take from that, share from us what they've done right and what you're trying to emulate? Thank you.
Thanks, Ken. I'll take the first one, then to give Max a little preparation time, I'll let him take the commercialization one second, and I can hopefully build upon that. On the manufacturing front, Ken, we can't really say. The FDA doesn't necessarily notify us when they're doing the inspections. Obviously, we know that there are inspections ongoing, and we know, as of our most recent interaction with our reviewer, that everything seems to be on target. I can tell you that our preparedness for those inspections, whether they be Aurinia specific facilities or our partners around the world, are right on target with where we want them to be.
As we've said previously, we partner with Lonza on our API manufacturing, one of the world's largest API manufacturers, and then with Catalent here in the U.S. on our encapsulation and then through to packaging, again, one of the largest in the country and of the world for that matter. We feel really confident in the fact that these facilities get reviewed very often and for different drugs reviewed many times a year. Everything seems to be on target, and our preparedness is there. Max, on the commercialization front, anything you would point to in terms of a drug and/or an analog to say what success looks like here?
Sure. Thanks for the question. Yeah, we've been actively looking at analogs in the specialty space, analogs that have launched in COVID-19. We've looked at LN competitors, and we've also not just looking at learning from what's worked, but also looking from an underperforming. Products that we looked at specifically, specialty ONPATTRO, Ocaliva, CRYSVITA. Underperforming, Rayaldee, NUPLAZID. COVID-19, Nurtec, PADCEV. LN competitors, Benlysta, Fasenra, NUCALA. Those are kind of all the analogs we looked at. I would say some of the key learnings have been early and targeted investments, prioritized access, and patient support. From the underperforming, we saw the ineffective pre-launch payer engagement. We saw little commercial investment pre-approval. Some of the COVID-19s, we learned that the companies rapidly pivoted to digital and accelerated DTC, that they pivoted to virtual engagement. Yeah.
I would say that we've taken all these learnings and incorporated into our launch plan. Yeah, that's what we've done.
Thanks so much.
Thanks, Ken. Thanks, Max. The only thing I would add is obviously the one thing we know is we have to have metrics and measurement as we go into the launch, obviously, and we have to have a solid launch strategy and the right people. We know we have to beat expectations. If one thing the market is good about marking a successful launch is the drugs that beat expectation. Of late, recent, if you look at TEPEZZA over at the Horizon, I think they've just done an exceptional job at launching that product.
We're trying to look at those who've really not only done the right thing for the drug and patients and getting it in the hands of docs and patients, but also what market expectations are going to be, and we're making sure that we metric and measure ourselves against all of the above.
Very helpful. Thank you.
Our next question comes from Alethia Young with Cantor Fitzgerald. Please state your question.
Hey, guys. Thanks for taking my questions and congrats on the progress. A couple. Most of them are kind of high level, though. One is just, I know you guys are probably in the field doing checks, but can you just talk about how patients in lupus nephritis community have been responding to COVID-19? Are they going to the docs less frequently, et cetera? I guess the reason I ask. It's just because it feels like you may be launching when we're still dealing with COVID-19. I just wanted to try to see if you had a grasp on what those patterns look like currently.
The next question is, I get this question a lot from people, and I know you won't give up everything here, but people ask, well, hey, there's all these other bigger companies like EU Pharmas that may be having assets in the space. How can a company like yours compete? Is it by contracting or payers, or is it just a much better strategy? If you could give some high level color that would give people some comfort, I think that would be helpful as well.
Thanks, Alethia. Let me maybe start with the second one first, then I'll ask Neil and Max to come with what we may be gleaning from some field market research or what we're hearing from physicians about patient visits, et cetera. Obviously, we have field troops on the ground now, a medical affairs team that's out there talking to physicians every day, so we hopefully can give you some directional color there. Obviously, we have a near-term competitor that's a large pharmaceutical company, and no company of our size is going to be able to throw the same amount of dollar resources at a problem and/or an opportunity than a large company with very deep pockets. I can tell you that most of us come from, have been trained by, and have launched successful drugs in the environments of both small and large companies.
The characteristics of successful launches aren't just deep pockets. I mean, it's good strategy. It's the people who know what they're doing. It's having a field team that is motivated and passionate about what they want to do and what they want to drive, and a solid strategy along both of those. Last, and obviously the most important, is having the right drug, and having a drug that has an efficacy profile and one that impacts patients in a way that provides those very talented and experienced people with the tools that they need in order to go in and do what they know how to do from the learnings that they've built over years. We've echoed a lot the experience of our people and the talent that we've brought into the company.
I think that's probably because we passionately believe that people are the quotient that's going to make the difference here alongside of our strategy and this great drug. We think we can compete, and we know we've got the market research to support early pre-market, what we think we can do with this drug and the profile of this drug. We feel very confident about our prospects here. I'd say the second one is we have significant resources, and while I know it's not always the most popular thing in the world to be raising money and ensuring that you have the right level of investment capital going into a launch. I think where many companies end up falling short is coming in with a low expectation as to whether the company will ever have to launch the drug, and they under-invest.
Not that under-investment is always a decision made to extend runway. Sometimes it's just a decision made of having a lack of capital, of which we do not have now, so we can make those right investment decisions. We feel very confident about our commercial prospects here. We only have one near-term, potentially approved competitor directly in LN. In the future, that could change, but we've got a couple of years where we can really make a strong dent. The second question about how patients are responding, visits, et cetera. Why don't I first start with maybe what Neil might be seeing through our ops team that's out there in the field on the medical side, and then see if maybe Max has anything to add to that. Dr. Neil.
Yeah. Thanks, Peter. I mean, our experience on the clinical side is limited to the follow-up visits from our AURORA 2 study, obviously we have a number of U.S. sites and a numer of patients in the U.S. Certainly what we found is aside from probably a couple of months back in March or April where some of the visits were being delayed. These lupus nephritis patients have organ-threatening disease. We find they're getting their tests, they're getting their urine analysis, they're getting their blood tests, and they're often seen in different parts of the hospital. Certainly the experience in the clinical trial setting has been relatively normal. There's been no problems with access of our clinical trial monitors to the sites.
On the medical affairs side as well, although more challenging, they're a very resourceful bunch, and they've managed to really maintain and build up a very high level of contact with the lupus prescribers. I think it's probably best if I hand over to Max to add a bit of color to what I've said. Max.
Yeah. Thanks, thanks for the question. Yeah, we've been following this closely, both in terms of just the general market trends and also through our field intelligence. There clearly has been a decline in specialty patient visits. Prior to this resurgence of COVID, though, the patient visits were about 97% of baseline about a month ago. The visits were coming back, even though about 20% of them were virtual. That is consistent with what we've been hearing from nephrologists and rheumatologists in terms of their lupus and LN patients. The follow-up is happening. Some of it is happening virtually. It may be a little less than what it's been in the past. We remain confident and encouraged by what we're seeing in terms of the patient visits and that the opportunity is successful.
Great. Thank you.
Thank you. Our next question comes from Joseph Schwartz with SVB Leerink . Please state your question.
Hi. Thanks for taking my question. I was just thinking back to the fairly rapid pace of AURORA trial enrollment, despite fairly constrained patient enrollment criteria. Or at least you were certainly more careful after AURA, and it seemed you were very selective. I was wondering if you could give us some insight into the team that executed that trial with fairly selective enrollment, how you think about the label, how it will compare to the enrollment criteria in terms of whether it's broader, I would think broader. Obviously the current environment is challenging. Lastly, you're going to have a team of sales and MSL people that are executing launch.
Can you help us think about the different levers there and how we should think about in terms of order of magnitude, the pace of launch relative to the pace of AURORA trial enrollment?
Yeah. Why don't I start and then ask Neil to build upon maybe what I'll say. I would say, I think it's one thing to talk about the difficulty of enrolling clinical trials, in both a competitive environment, an environment where you're trying to find patients globally, and compare that to necessarily what the market opportunity might be. Our trials, when we look at both the phase II and the phase III that we did, give us access to a very large percentage of those patients with active lupus nephritis, we believe upwards of north of 80% of those patients. We'll have to see where the label comes out, obviously. Our trial criteria gives us that open access point. We don't see the difficulty of trials being a direct correlation to potentially how the asset then reacts and/or what you see in terms of prescription uptake.
We can track that through ICD-9 codes and what patients are out there, what we know from the patients who are actively suffering from the disease. I think the two are separate and distinct. Let me not answer that question fully. Let me also ask Neil to build on that with me.
Thanks, Joseph, for the question. You said one thing that's not quite true, or at least perhaps I'd just like to build on. You were talking about those restrictions that we put on compared to maybe the first trial. A lot of those restrictions were kind of qualitative rather than hard fast rules in the protocol. The protocols are actually very similar. It was more, we learned a lot about the drug between the two studies, and we learned about the kind of patients and comorbidities that may result in perhaps a more difficult outcome in certain countries. If you look at the actual entry inclusion, exclusion criteria, they were very similar, and of course they parlay into the label as we move forward. Of course, when the drugs actually launch, we'll have learned even more about the drug.
I would just say that in some ways I would counter that and say actually we had a very broad bunch of entry criteria which encompass most of the patients that require treatment with lupus nephritis in the doctor's clinic, albeit in a kind of prescribed way in the protocol.
Maybe on the second part of your question, Joseph, I can ask Max Colao to join me here and give his thoughts on an early uptake. What are the key drivers of that for us? I'll see if I can add anything to that. Max.
Sure. Thanks, Peter. Thanks for the questions. Yeah. As I mentioned, we're encouraged that the patient opportunity is accessible. At the same time, we're heading into a time where COVID-19 infections are increasing, and as COVID-19 increases, access to the actual physicians becomes more challenging geographically. I would say that's going to be a determinant to our early uptake, is just the extent of access to physicians. Again, we continue to be very encouraged, in terms of what we hear from physicians and what we've heard in market research, what we've heard about our value proposition. I suppose my guidance would be to be similar to other therapies that are launching during COVID-19 times.
The last thing I would add to that is, I think the biggest driver, Joseph, for us is going to be, one, the label and when we get it. Then we got to have motivated people that want to go out and drive this, and we think we've got that. I mean, the sales force is still the number one conduit to physicians and aiding them to understand the approval of a drug, the dosing and administration of the drug, the data on a drug. We've got a highly motivated and passionate group of people who are going to go out and drive that. If we had underfunded there, that would be a major concern of mine.
Access is still going to be an issue, to Max's point. At the end of the day, we have other tactics to try to support that, whether they be online tactics. We said in previous calls that we purposely went out and hired a sales force, a team that's highly tenured. Not only highly tenured, highly tenured in rare disease and with significant experience in the areas of nephrology and rheumatology, so that if they need access. Most of these people, if not all of these people, know the people they're calling on. There won't be people introducing themselves for the first time. Sorry, you had a follow-on question there too, Joseph. Let me let you ask that.
Yeah. Thank you so much. It's really helpful context. I was just wondering, who are the most likely patients to need the drug or be early adopters at the outset? Is it patients in a flare? If so, how often does that happen? How are you helping centers visualize which patients to want to provide the drug for first?
I think I'll start and then ask Max to catch anything I miss, but we're going to set a very aspirational target in what we ask for, dependent, of course, upon approval and what the label allows us and the sort of degrees of freedom we have that the label provides us to ask for those patients. We studied this drug in addition to the standard of care, and we ran it directly against the standard of care. Up to 80% of patients with active lupus nephritis have ability, at least from the studies that we've done, to get access to this drug. We're going to go in and challenge the standard of care.
We're also going to try to support good diagnosis, good patient education to drive more patients in, to create higher awareness and increase the total diagnosis pool of patients that might be getting an inadequate response to their current meds. I think we have a pretty wide-open field in what we can ask for, and we have tactics to support trying to gain even broader access to that, all dependent, of course, upon the label that we see and the hopeful approval we see come our PDUFA date in January. Max, anything I'm missing on there?
I think you hit the nail on the head. We see ourselves as a position to reset the standard of care with voclosporin and, as Peter said, we compared ourselves to the standard of care in our pivotal Phase III trial, and those are the types of patients that we will go after right from the outset.
That's really helpful. Thank you.
Thanks, Joseph.
Our next question comes from Maury Raycroft with Jefferies. Please state your question.
Hi, everyone. Congrats on the updates and thanks for taking my questions. You conducted the drug-drug interaction analysis with MMF, and then the analysis showing how drug monitoring is not needed when on voclosporin. Just wondering if you think these data will go into the label, and can you contextualize these data competitively and maybe talk about how important the findings are to payers, doctors, and patients?
Neil should comment on the DDI study and the particulars around that. I guess the one thing I can say is competitively, this sets us up quite well. Listen, if anybody wanted to compare us and why we might be in a different mechanism, not mechanism, but a different compound here, this is one of the main drivers of that difference. The fact that you can flat dose this product is incredibly important in terms of its competitive profile. We've done market research with physicians, and that obviously is one key area they see and one they find highly favorable. Neil, on the study itself and what our thoughts are around the label, you want to give your directional answer to that?
Yeah. The drug-drug interaction trial, in terms of getting a label, I think what we won't have is we won't have a comment saying that there's interaction with MPA. Now, of course, cyclosporine does have an interaction with MPA. It reduces the AUC quite significantly, the exposure, and hence the efficacy of MMF, and we're not going to have that. This was done in lupus patients. It was a formal drug-drug interaction study precisely to disprove the thesis that voclosporin was similar to cyclosporine. It's not. It behaves differently on the MMF. In terms of the therapeutic drug monitoring or lack of requirement for that, again, that supports our dosing. Our dosing is that we start with the flat dose, and we adjust according to GFR, and of course, there's intellectual property around that as well. In terms of commercial differentiation, that's pretty unique.
There's not many drugs that do that. Of course, the other drugs in the class require trough levels, therapeutic drug monitoring to even try to get to the right target which has not actually been determined. That's a further kind of competitive advantage for voclosporin.
Got it. I'm guessing doctors definitely appreciate these points. Can you talk about the payer perspective on some of these points?
Yeah. I think to some degree, payers are going to take the base data in there. They're going to take lead from the thought leader physicians and medical directors that sit within the plans. All the research that we've done up to this point is pointing quite positive to that. The data speaks for itself. When other scenarios of step-throughs and other things are put in front of them, we feel very good about what our profile looks like going into a potential launch. Payers obviously look first at the data and then look to get advice from their physicians that advise them both directly and indirectly. Everything we've done so far, Maury, in terms of our market research with both payers, physicians, and patients has pointed to a good payer profile in terms of what the data actually shows.
We've got to go through those strokes once we have an FDA approval and we price the drug, and we have those actual conversations, but feel very, very comfortable that Max and his team are out there having those preliminary conversations in terms of education through our medical science liaisons on the data itself. I think we're right on target with where we need to be, and I can tell you things look quite favorable. I would tell you I've launched other drugs in the past that didn't have as much of an open window, so we feel really good about it.
Got it. Okay, thanks for taking my questions.
Thanks, Maury.
Our next question comes from Justin Kim with Oppenheimer . Please state your question.
Hello, good evening. Thanks for taking the questions. Just curious, have you had any conversations with KOLs on whether you expect the LN population being earlier or later candidates for a potential COVID-19 vaccine, and whether you foresee any special considerations on vaccines implemented over the course of voclosporin treatment?
Thanks, Justin. That's a great question. I actually do not have an answer to it because I have not pulsed any docs on this. I would turn to Neil, who may be hearing more of this through follow-on work with our sites. I don't have an answer to you on that one, as I wouldn't probably for any other drugs, including drugs that I or my children might be on. I don't know that any guidance has been put out there nationally or globally and specific to the LN population, I can't comment. Neil, do you know?
No
if you've heard anything?
Not specifically. In very general terms, it was a conversation we had earlier that these are obviously higher risk patients because of their condition and because their immunological kind of disordered immune system, so to speak. So I would imagine they would be higher up the ladder. But other than that, I don't know anything. I don't know, Max, whether you have any experience to these discussions.
Yeah. Hi, Neil. No, would not have any perspective on those discussions at this point.
Okay. Got it. Just curious. Dr. Rovin provided a really interesting take at ASN on how he sees the treatment landscape changing in LN. With regards to potentially reaching patients sort of beyond the eGFR status included in AURORA, can you just discuss how you see that potentially broadening over time, and what types of clinical evidence or physician experience may support that expansion?
Neil, I'm going to weigh heavy on you on this one since I, one, I haven't seen the presentation, number two, you might have more of a directional answer or idea where Brad Rovin was going with that.
Yeah. It's actually a really good question. We kind of set a cutoff of eGFR, which we kept over two studies at 45. To be honest with you, most of the patients with a worse GFR than that are those that are really not doing very well and may actually not be suitable for CNI therapy anyway. Regardless, we were in or getting into label discussions with the agency, and we don't know how they're going to pan out on what the recommendation is going to be on the label. Certainly, it's a consideration because there are some patients in our study, as you can imagine, their GFRs fluctuate wildly, whose GFRs, at least prior to steroid pulse, were actually reasonably low and did pretty well.
I think GFR as a function of disease severity may not be ultimately for a few years down the line an absolute contraindication to this class of drugs. Whether that comes from physician experience or any phase IV clinical trials that we decide to do, we're not sure yet. This is something that we have to take on board when we see how the label goes and how the drug's received in the community.
Okay, got it. Just maybe a final housekeeping sort of question. Noticing that the SG&A ramp has sort of been recognized on the P&L. Can you maybe discuss on a personnel level and sort of as an organization, how much growth we can expect sort of into 4Q and maybe whether that taps out going into 2021 or whether there would be a little bit more growth there as well? Thanks.
Yeah. We haven't given any revenue and/or expense guidance, let me try to directionally give you an answer. Maybe you can try to model it out from there. Listen, we've hired the majority of the people that we need to, and people are the majority of our costs as we end into the last quarter and into this quarter. As you see those numbers, I think a steady state around modeling sort of the people-based numbers there is probably not a bad idea. Marketing costs and elements of sales costs are going to go up over time. Our costs, at least as it pertains to voclosporin investment in the pipeline, are going to go down over time because of the recent announcement around dry eye.
We hope to find a way to fulfill that soon with a diversified pipeline, but as for now, that's the way I would model it. I think if you were to look at this quarter and the next quarter, it'll give you a good idea of what our expense base is. If you work around sales and marketing costs around averages and successful launches, you'll probably get there, Justin. As I said, we haven't really given guidance on it, especially quarterly guidance. Thank you for the question.
Understood. Thanks so much. I'll hop back in the queue.
Thanks.
Thank you. Just a reminder, to ask a question, press star one on your telephone keypad. To remove your question from the queue, press star followed by the number two. Our next question comes from Ed Arce with H.C. Wainwright. Please state your question.
Hi, everyone. Congrats on the continued progress. Thanks for taking my questions. I have three. One regulatory, two commercial. First one is, you had mentioned in your prepared remarks that you're preparing for a late cycle review with the Agency coming up. Can you tell us when that is and what specific aspects do you expect to be discussed at that meeting?
Yeah. I would say the late cycle review, Ed, is on a normal course. When we said we're waiting, if you just sort of map out when these things are expected to hit, we're right on track with what the review cycle should be. I wouldn't read into whether that's ahead of schedule or behind. It's right on the money as to when these things should come through. Neil, you want to try to take a swing? It can be so varied as to the areas that are covered in any one of those late cycle reviews. Neil, you want to, because you've been closer to the day-to-day conversations, maybe take a swing at that?
Yeah, sure. It's a statutory meeting, Ed, obviously, we knew we were going to have it and we knew the approximate date as well. What it does is it ties up. It gives the agency a further kind of opportunity to tie up their review to address any questions or see what else they need from us so that they can complete their review. It's part of the open dialogue that we have, it's kind of more formalized. We get actually written guidance about what we're required to provide them, it's done usually in a timely manner. It really is, I guess, the last odds and ends with the stretch of review before the label negotiations really start intensifying.
Okay. Great. Fair enough. Turning to commercial. As you noted in your release, you're working on being fully prepared for the potential launch by year-end. Given that the PDUFA date is only three weeks after that, just wondering, what specifically does that entail between now and year-end? What is left really to do, or is it just kind of wrapping things up? I would imagine most everything is already well underway. Just wondering specifically what is still left to do and get in place by the end of the year.
It's a good question. Without going into the absolute specifics, if I were on the call on the other side listening and the company said, "We'll be ready to launch this thing on the PDUFA date," my natural question would be, "Well, what if you have an early approval? Will you be ready?" While we're in no way projecting that we will have an early approval, we want to increase the confidence of our investors and the docs and patients out there who could be recipients of this drug if and when approved, that we'll have the ability to start not just marketing this drug and selling it with ground troops and our tactics ready to roll once we have a label, but, and more importantly, that we'll be able to start shipping product.
Too often, I think companies are caught with an approval date that is far removed from their actual "launch date" or when they start shipping. While I will agree with your statement that what else would we have to do, well, probably not a whole heck of a lot to be prepared because we're preparing almost a month ahead of what our potential action date is with the FDA. The communication is meant to be an internal battle cry to be prepared. If we end up on our PDUFA date, know that we will be even that much more prepared. It's the ticking and tying of tactics, people, and resource deployment, packaging, getting labels onto that packaging, and being ready to ship. It's all those elements, and to increase the confidence that we should be well ahead of our PDUFA date to be prepared to do that.
Okay, great. Thanks, Peter. The final question from me is related to some commentary earlier in the Q&A about some of the key factors in a competitive environment, especially when you've got a very large global pharma relative to small biotechs. Of course, one of the things that was mentioned really at the end of the day is the right drug, the best drug perhaps, especially when it comes to the actual data itself. Wondering, in your discussions, what do you find are the key points of differentiation that appear to especially resonate with payers and clinicians, especially relative to Benlysta and Gazyva? Thanks.
I wouldn't say we put together a Chinese menu of a restaurant menu of different options for physicians to choose from in terms of what attributes do you like versus approved and unapproved drugs. We do ask questions to some degree to try to get an idea of what attributes of our drug they see as being the most important, starting with first what attributes they see as being the most important in the disease state in terms of controlling patients and keeping patients out of bad outcomes. We try to obviously go back and then apply how many of those apply to our drug, and I can tell you there's a solid list there. Max, since you're closer to the day-to-day research and how we've been doing this, anything you want to add as it pertains to-
Sure. Yeah.
competitive profile, et cetera?
I would say that with payers specifically, the efficacy of voclosporin resonates very strongly, also the time to response. I would say kind of a key metric that the payers focus in on is the number needed to treat to get an additional response, which is about five with voclosporin, and that resonates strongly with payers.
Great. That's helpful. Thanks, Max, and thanks, Peter. Appreciate it.
Thanks, Ed.
Thank you. There are no further questions at this time. I'll turn it back to management for closing remarks. Thank you.
Well, thank you, operator. On behalf of the company and our board of directors, I want to thank you all for joining us on the call today. We really and truly do hope you share our excitement about what's on the horizon this year for Aurinia. We want to thank you all for your continued support, and we would like you to please have a great and safe evening. Thank you.
Thank you. That concludes today's call. All parties may disconnect. Have a great evening.