ChemoCentryx, Inc.
Q4 2020 Earnings Call Transcript

Published: 2 Mar 2021

[Operator:]

Good afternoon, and welcome to the ChemoCentryx Fourth Quarter and Full Year 2020 Financial Results Conference Call. I would now like to turn the call over to Mr. Lee Roth of Burns McClellan. Mr. Roth, please go ahead.

[Lee Roth:]

Thank you. Thank you, Jeff. Good afternoon, and once again, welcome to the ChemoCentryx fourth quarter and full-year 2020 financial results conference call. Earlier this afternoon, the Company issued a press release providing an overview of its financial results for the fourth quarter and full year ended December 31st, 2020. This press release, along with a few slides that you may find helpful while you listen to this call, are available on the Investor Relations section of the Company's website at www.chemocentryx.com.

[Thomas Schall:]

Thank you, Lee, and good afternoon to everyone listening. Thank you for joining us on our fourth quarter and full-year 2020 conference call. As I set out on Slide 3 today, I will review three areas

[Susan Kanaya:]

Thank you, Tom. Our fourth quarter and full-year 2020 financial results were included in our press release today and are summarized on Slide 29. Revenue was $4.4 million for the fourth quarter of 2020, compared to $10.1 million for the same period in 2019. For the full year, revenue was $64.9 million, compared to $36.1 million in 2019. Revenue is recognized based on actual costs incurred as a percentage of total budgeted cost as we complete our performance obligations under our alliance agreements. The quarterly decrease in revenue was primarily attributable to lower costs incurred in 2020, due to the completion of the avacopan ADVOCATE Phase 3 pivotal trial. Year-over-year revenue was higher in 2020, driven by the acceleration of revenue recognition associated with the CCX140 agreement with Vifor. Following the decision to discontinue development of CCX140 in focal segmental glomerular sclerosis, $46.7 million of deferred revenue was recognized as revenue. This was partially offset by the impact of completing the avacopan ADVOCATE trial in 2020. Research and development expenses were $21.2 million for the fourth quarter of 2020, compared to $19.2 million for the same quarter in 2019. Full year 2020 R&D expenses were $77.9 million, compared to $70.3 million in 2019. The increases from 2019 to 2020 were primarily attributable to professional fees associated with the preparation of our NDA submission for avacopan for the treatment of ANCA vasculitis and higher research and drug discovery expenses, including those tied to the advancement of CCX559, our orally administered checkpoint inhibitor. These increases were partly offset by lower expenses due to the completion of the ADVOCATE trial and the CCX140 LUMINA Phase 2 trial in 2019. General and administrative expenses were $12.7 million for the fourth quarter of 2020, compared to $7 million for the same quarter last year. Full year 2020 G&A expenses were $42.2 million, compared to $24.2 million in 2019. The increases from 2019 to 2020 were primarily due to higher employee-related expenses, including those associated with our commercialization planning efforts and higher professional fees. These results produced a fourth quarter 2020 loss of $29.9 million, compared to a net loss of for the same period in 2019. For the full year 2020, our reported net loss was $55.4 million, in line with the 2019 net loss of $55.5 million. Total shares outstanding at December 31, 2020 were approximately 69.5 million shares. Lastly, we closed 2020 with $460.4 million in cash, cash equivalents and investments. And for 2020, we expect to utilize cash investments in the range of $145 million to $155 million. Tom?

[Thomas Schall:]

Thank you, Susan. To summarize, 2020 was a year of very strong execution for ChemoCentryx. We will build on that strong base in 2021, as you can see from Slide 30. We have the potential launch of avacopan for ANCA this year in the U.S. We believe that we have identified a clear development path to making avacopan a pipeline in a drug via two additional orphan indications those of C3G and severe hidradenitis suppurativa, as well as the imminent expansion of our scope for both avacopan and lupus nephritis and onward to entirely new efforts with orally administered checkpoint inhibitor CCX559 in cancer. Our ChemoCentryx enterprise continues to make important advances at the very frontiers of medical science. With each of these advances, we get closer to our long-stated goal of becoming a self-sustaining indeed profitable fully integrated enterprise, creating not only better lives for patients, but significant rewards for investors. Our momentum at ChemoCentryx grows stronger by the day, and we do not intend to slack in the pace until a better future is ours together. Please all of you join us to hear more at our virtual R&D Day next month, April 14. And with that, I will now turn the call back over to the operator and look forward to your questions. Operator?

[Operator:]

Your first question comes from the line of Ted Tenthoff from Piper Sandler. Your line is open.

[Ted Tenthoff:]

Great, thank you very much. Appreciate the updates on avacopan in AAV and looking forward to the preparations ahead of the PDUFA date. I wanted to pick up with respect to C3G and the data that you reported. What are your plans in terms of communicating with the FDA regarding potential registrational path? Thank you.

[Thomas Schall:]

Thank you Ted. Thank you for the question. Yes as I mentioned in my remarks this is really the largest and longest ever randomized controlled trial on C3G and obviously C3G is a kidney disorder, declining kidney function is the problem eventually leading to end-stage renal disease dialysis or need for transplant but even those do not solve the problem obviously. So I will also stress again though I didn't mention it today there are no approved therapies for C3G. So fundamentally I think we're going to go to the FDA and say we believe we've improved kidney function as evidenced by the strongest evidence that one can present which is glomerular filtration rate and I think we're going to ask them what they think about that data and frankly see if we can get a conditional approval based on the data to-date from the ACCOLADE trial which again is the most extensive data set in existence as far as I can tell.

[Ted Tenthoff:]

Good. Thank you. Look forward to hearing more about that.

[Thomas Schall:]

Thank you.

[Operator:]

Your next question comes from the line of Steven Seedhouse from Raymond James. Your line is open.

[Steven Seedhouse:]

Good afternoon. Thank you. Tom there was a lot of data in the New England Journal paper comparing steroid use between arms in the ADVOCATE study and the various reasons clarified for steroid using the avacopan. So a couple of questions that ensue from that are first what do you anticipate is going to be specified in the avacopan label with respect to either background or loading dose use of steroids and then second with respect to just how this is going to play out in the real world versus how it played out in the clinical trial given you had the randomization and the screening period where patients were on steroids, do you think the real world steroid use would be even lower than the clinical trial? And are you going to work to gather any real world data, etc. to establish potentially even better safety in the real world?

[Thomas Schall:]

Great, great questions. Thank you, Steve. Start from the basic message and what was accomplished and then everything kind of flows from there, I think. So we wanted to get -- we wanted to totally get rid of what patients complained about most and what physicians tend to hate as well. That daily oral prednisone, the need for daily oral prednisone is something that everyone hates. We designed a trial to do just that. And that was the double -- blind double-dummy trial. One arm got avacopan, the other arm got active prednisone in their daily schedule, right. And so we showed really in the simplest incarnation that with avacopan you can eliminate the need for daily prednisone dosing, upon which most of the therapy is centered in ANCA vasculitis today. So I think that's major and I think that's the message that is sinking in. Now, you're right, There's piggyback prednisone that comes in with concomitant dosing with rituximab, for example. That was not in balance between the two arms, of course. When people come in crisis, they can get bolus IV prednisone and they did in our trial again, balanced between the two arms before they were randomized and so that had to be tapered, because as most of you know, you can't just get people prednisone and then the next day stop it. It has to be tapered carefully so you don't run into adrenal insufficiency problems and other problems. So there is piggyback prednisone but again balanced between both groups. I think that the idea that again getting rid of this massive long-term chronic daily prednisone and virtually, eliminating the need for oral prednisone to get not only equivalent effects, but in fact, better effects is the message that's really hit home in this community. So in the real world, how will this play out? I hear lots from both clinicians and patients how quickly they can get access to avacopan so that they can avoid prednisone dosing as much as possible full stop. So I think that that is a sentiment that we're hearing more and more. Will we collect real-world evidence? We've already started to collect evidence about prednisone use in the world. It's actually, oral prednisone is a lot more prevalent than some of the literature might suggest and we think again that just creates a bigger opportunity for people to get away from that with avacopan. But lastly, will we collect real-world evidence going forward after the presumed license? Yes, of course, we will and we'll try to bring that evidence obviously into the sphere of the clinical practice by showing why the advantages of being on avacopan exist and what those advantages are. In fact, even as we speak now, as we look more closely at the data and in fact looked at inquiries coming as a consequence of questions from The New England Journal report, we've learned new things, important things that we were going to write up for subsequent publications that show the power of daily dosing of avacopan and staying away from prednisone and indeed other immunosuppressants.

[Steven Seedhouse:]

Okay, thank you. And just real quick, last question from me. The dose selection in the lupus study, I just wanted to ask about your confidence in the read through that you have from ANCA vasculitis and C3G, I guess, and any necessary the modeling that you've had to do with respect to the dose selection in lupus confident with where you're at?

[Thomas Schall:]

I think we're very confident in kidney disease that the 30 mg dose that worked in ADVOCATE should really be very similar in the lupus population and obviously, with C3G, we have additional confidence in that. Every patient population is a little bit difference in their PK profiles, but from what we can tell for lupus, I think we're pretty optimistic that it's going to look a lot like the ANCA vasculitis population in terms of the drug confidence.

[Steven Seedhouse:]

Terrific. Thank you so much.

[Thomas Schall:]

Thank you Steve.

[Operator:]

Your next question comes from the line of Michelle Gilson from Canaccord. Your line is open.

[Michelle Gilson:]

Hi, thank you for taking my question. I was hoping to dig a little bit more into the export data that you guys have on Slide 9 here. I know we've spoken about this before, Tom, but can you help us understand this 14,000 hospitalizations annually for ANCA-associated vasculitis? Are those all patients with active disease or in a flare? Or would patients in remission still be coded with AAV?

[Thomas Schall:]

Yes, it's a really good question, Michelle. And so the answer is, this is anytime ANCA showed up in the code. I think the finer break down, which is important, we don't have access to immediately but we do have some information that most of those folks were hospitalized not just because that they had -- they had a condition of ANCA but ANCA was part of the causative factors. So I would say that was the majority of these people, but I don't have the stats right here with me. So -- but I think what we see is certainly most people had some sort of active disease because the rate of infections and when one digs down into those, those certainly look as infections as a consequence of immunosuppression or as a consequence, obviously, of the prednisone which is on board in most of these people. That's what some of the data show. So I don't have a precise breakdown for you. I would say that the majority of the folks in data, they are in hospital at least in part because the ANCA contributed to that. They may well also include some people newly diagnosed now that they are hospitalized because as you know, the first diagnosis sometimes involves a very tortuous journey and eventually ends up in hospital where that first diagnosis is made. So that may contribute to this as well, but I guess it's a long way of me saying, ANCA is not just incidental to their record and large majority of the cases are reported on this chart.

[Michelle Gilson:]

Got it. Thank you. And also if I can sneak in a follow-up, do you have any update on the status around your expectation for an AdCom? Are we past the point where one will likely get called, I guess, in your view?

[Thomas Schall:]

Yes. Thank you. Thank you, Michelle. I think I started saying a little while ago that we're -- we will have an AdCom, we're preparing for an AdCom and so, yes. We don't have any special topics for the AdCom. So all I can say is that we -- we are prepared for a wide-ranging -- potential wide-ranging set of discussions and the ability to make the patients' view known as well in such AdCom. So I believe that that will happen, and we are preparing very carefully for it.

[Michelle Gilson:]

Thank you Tom.

[Thomas Schall:]

Thank you Michelle.

[Operator:]

Your next question comes from the line of Yanan Zhu from Wells Fargo Securities. Your line is open.

[Yanan Zhu:]

Hi. Thanks for taking my questions. So first, I have a couple of question on lupus nephritis trial. Could you walk us through the gating factors perhaps for initiating the trial? And could you also talk about how do you anticipate the role of avacopan in this indication? Would it be a steroid sparing role, and therefore it will be on top of other immunotherapy -- other therapies versus steroid on top of other therapies or perhaps you're going to explore a different kind of role for avacopan warranting a different combination approach? And how long do you anticipate the trial to run? Thank you.

[Thomas Schall:]

Yes. Yanan, these are very important questions. I'm -- I will not divulge all the details today, but it will occur to many, and I'm sure you're well versed in this as well that what's been shown so far even with the most recent approvals, they're real contributions to be sure, but they are -- they're added to already significant con medications and already used therapies, including fairly hefty doses of daily prednisone. So, while grade advances have been made in reducing prednisone, most of these agents are used on top of prednisone-based therapy in addition to mycophenolate and so on. And so, while the ability to get responses and responses have been measured in different ways in lupus nephritis trials, usually combinatorial responses are measured with different features weighing into the combinatorial response endpoints. They are -- they have really still topped out at maybe 40% or so or low-40% response rates even with today's very best therapy that includes things that have been approved in the last couple of months frankly. So, you've got two issues with lupus to my mind. One is, yes, good progress has been made, real contributions, which is wonderful for patients. But they're still being used -- these new combinations are against heavy backgrounds of prednisone and other immunosuppressants, which are still rather limiting by toxicities. And then even with all these combinations, we're still peaking out at what somewhere in the 40s percent of benefits for patients. So, that's the backdrop against with which we are working. I fundamentally would like to do something a little bit more progressive with the avacopan program and lupus nephritis. For example, wouldn't it be wonderful if we could more mirror what we achieved in ANCA vasculitis. So, that is the crux of our plan. And it's also may reveal why it's not a terribly straightforward way to describe it at the moment because we're still working out some of the details, but let's face it, avacopan has shown some really interesting findings. It's notable that we can eliminate the need for daily prednisone in ANCA vasculitis. And I think very few people would have thought that was likely, indeed even possible, a few short years ago. And in so doing, we've been able to not just stabilize eGFR or indeed stabilization would be a great victory in most cases for most drugs, slow the rate of decline of eGFR has been the goal on kidney therapy typically, but not only we've been able to do that, we've been able to improve eGFR. And it's been done in ANCA vasculitis. It's also been done in C3G. So, I think those are all features that are playing into the design of our approach in lupus nephritis. But as you know, there is clinical, there are entrenched practices in different fields of medicine. And it is important to make sure that those entrenched practices are understood and valued for what they are and to try to see if we can get to it another step that might illuminate new areas of therapeutic benefit. So I hope to be able to shed some more light on this and put a lot more details around the answer to your questions soon, but suffice it to say, our aspiration is to try to do more for lupus than just be incremental or additional to current therapies. And if we model what we did in ANCA vasculitis on what could be done in lupus, that probably mirrors our aspiration. And that's what we're trying to realize in the design of our developmental path for LN.

[Yanan Zhu:]

Great. Thanks, Tom, for that detailed answer. Maybe another -- one more question on the AURORA study in HS. So, thanks for the new -- interesting new science presented today. The Phase 2 study AURORA is still ongoing with a -- after the 12 weeks of the randomized three-arm data readout, you still have the trial blinded and going for another six months. So just wondering what do you think we could learn? Could there be an opportunity for a findings that can strengthen your theory of the Stage 3 being an appropriate target population here. In particular, I'm thinking the 10 mg arm for example can serve as a placebo arm because to make it is essentially placebo. And so, that can be compared with the 30 mg arm for the longer term. And also, interestingly, that placebo -- the old -- previous placebo arm has now been randomized -- rerandomized to 10 mg versus 30 mg. Could there be some kind of a signal coming out of it in the Stage 3 subset, 30 mg versus 10 mg that can strengthen your theory about avacopan's role in HS? Thank you.

[Thomas Schall:]

Yes. And that's one of the reasons we designed the trial the way we did, Yanan. And you summarized it beautifully. It's kind of a complicated trial design. But the reason we did it the way we did is to one, to very firmly establish dose. And in dermatology, especially in younger people, knowing the minimum effective dose is just as important as finding the effective dose, if you will because the FDA certainly insist on knowing what is the lowest effective dose and they want to establish safety of course. And you're absolutely right. So, we have the advantage. And then, there is maybe a counter challenge, which I'll allude to in a moment, but the advantage is, yes, no one knew what they were originally on, so no one knew their original dose condition and still don't, neither the physicians, the patients or frankly the sponsors, we don't either. So one would love to see may be a continuation and reinforcement of the high score result, if you will, and the people that were on the active 30 mg dose from the outset, maybe a deepening would be great. And you're absolutely right. Perhaps we can use the 10 mg group as a de facto placebo control, if you will, because it is essentially inert and we saw that clearly in them. The period one, the week -- the first 12 weeks of the study. And it would be interesting if there were any kind of inflections or crossovers from those that were previously on placebo and then going over to say the 30 mg. So there is a rich possibility of understanding additional data in the trial. Now the issue may well be on the challenge side. And I wanted to just say at the outset here, I have no additional data and I'm not unblinded to any additional data, so I'm completely speculating at this point other than knowing that the safety and the blinded safety database is still very pristine and I don't think we'll have any safety findings in the trial. I have no additional information beyond what I reported in the late part of last year, but it would be interesting as I said to see if we get any kind of inflection or crossover from that previous placebo patient population. Of course, the challenge is we don't have -- the data integrity is not perfect anymore, because let's face it, HiSCR is semi-subjective, maybe very subjective. And there is some word out. I mean, obviously, we released the top line 12-week data results. So, who knows? People will either have made -- they may have made a subjective judgment that they were either benefiting or not benefiting, they were either had a two-in-three chance of not having been on the effective dose from the outset, that could affect dropout rates etc., etc., it could affect the way the physicians also look at the HiSCR, maybe they're going to be more beneficial with the score. We just don't know. So that's why that first 12 weeks of pure randomization and blinding, so ultra important. But I agree with you, we ought to get some more information out of this follow-on period of 24 weeks of active dosing, and don't forget, there was an additional -- there was an additional eight-week off study drug period as well that will tally up. So I'd like to think there is lots of data richness to be yet had from that study. We'll just have to see where it comes out and I don't have any of those data yet. So I don't know. I can't make any prediction beyond, but I just speculate it.

[Yanan Zhu:]

Very helpful. Thank you Tom.

[Thomas Schall:]

Thank you Yanan.

[Operator:]

Your next question comes from the line of Ed White from H.C. Wainwright. Your line is open.

[Ed White:]

Good evening. Thanks for taking my questions. So, Susan, you had mentioned that with the Japanese New Drug Application being accepted, it triggered a $10 million milestone payment. On a dollar basis, what's left for potential milestones from Vifor, and what are the triggers for other milestone payments?

[Susan Kanaya:]

Hi, thank you for the question. Actually, I'm not sure if it was my telephone, but you stated out partly in your question, so I only heard something in reference to the $10 million milestone. But I can answer the second half of your question first if you don't mind and that what would trigger additional milestones. In the past, we have referenced to ANCA-related regulatory milestones up to $75 million and today, we announced $10 million of that. The other $65 million would be tied to further regulatory successes, i.e., approval in other territories in Vifor's -- Vifor territories. So, and I apologize, I missed the other part of your question.

[Ed White:]

That, you hit it, Susan. I was wondering how much is left and what are the triggers for the milestone payments.

[Susan Kanaya:]

Great. Alrighty.

[Ed White:]

Thank you. And Tom, just a question on CCX559. I was wondering if you could share with us anything about the design and the size of the Phase 1 trial that's going to start in the first half of this year. And then also with the potential for such a large market that could be addressed here, are you looking for partnering the drug for development down the road?

[Thomas Schall:]

Thank you, Ed. We'll talk a lot more about the details of the design at our R&D Day. Suffice it to say, it's a Bayesian trial design. One would first look for tolerability of our drug in people with active oncology conditions, although we won't necessarily be looking at the oncology outcomes. We will definitely look at tolerability as we dose up in a Bayesian design. So, as you may well know, that can start -- it's a range of folks that you will use based on the results of the first steps of the trial. So low end of a couple of dozen to the high end of maybe six or seven fold that depending on how we step through the trial design. More to say about that on April 14. Partnering always open to the right kind of partnership with the right kind of economics and the right doctrine guiding principles adhered to. So at this point, we've developed this on our own. We'll do our studies, so far on our own, but we don't necessarily need to shoulder all of the investment of the long-term development on this. Yes, if we can find the right kind of structure for a partnership. It's gratifying to know that because our balance sheet has been bolstered considerably and because we've already planned for the early phases of development, we have the financial wherewithal to bring it to certainly the next value inflection point or perhaps even beyond. But always open to the right deal with the right terms. That's for certain

[Ed White:]

Great. Thanks and perhaps just the last question from me. You had mentioned that the launch is progressing and you're building up and getting ready for the commercial launch and you would be ready by approval on the PDUFA date of July 7. I'm just curious would you be ready beforehand in case you have an early approval? Thank you.

[Thomas Schall:]

Yes, we've worked very hard. Our Head of Commercial has worked very hard to make sure she and her team are prepared in fact for potential of an early approval. So I think that without saying too much, we won't be caught flat-footed and will certainly -- our goal is to be absolutely ready by the PDUFA date, but obviously, it would be ready by the PDUFA date means you've got to be absolutely prepared. So I don't -- Ed, while I don't necessarily anticipate in this era of an overwhelmed agency early approval, if it happens, we won't be delayed too much in getting our drug launched.

[Ed White:]

Great. Thanks Tom for taking my questions.

[Thomas Schall:]

Thank you, Ed.

[Operator:]

Your next question comes from the line of Joseph Schwartz from SVB Leerink. Your line is open.

[Joseph Schwartz:]

Hi, thanks very much. I don't want to steal the thunder from the flashes of insight that you might share with us at your upcoming R&D day but I was hoping to just ask if you could paraphrase your hypothesis in lupus nephritis given what is known in the state of the art about complement, various complement targets in that disease. It's my understanding that the classical pathway components tend to be down regulated in lupus nephritis, although some alternative pathway targets might be upregulated. So given where C5a sits I was wondering if you could address this and I realize it might be simplistic and I'm sure you have some more thoughts. So feel free to share those with us as well. Thank you.

[Thomas Schall:]

Yes. Actually my thoughts have become very complicated than simplistic probably now to the point of theoretical and maybe therefore useless. I'm not sure but the more I look at all of these markers and these various diseases and the more we do our own research in our shop, I just, I frankly don't, I think the textbooks are grossly oversimplified and in fact I think we tend to make pathways artificially where it's really more networks and more cycles if you will. So I continue to be both in vivo models and small animals but even in the human data I'm just constantly shocked how little the classical ideas of what happens down the nanos binding pathway versus what happens on the classical versus what happens on the alternative. If you really look at all these markers and supposedly all cleanly feed into reinforce and regulate all these different distinct pathways it's a complete mismatch and I think that probably we've created diagrams and textbooks which in the real world are not that relevant if you want my absolute honest opinion. So I think ultimately when you have destruction downstream of complement activation you have to ask what is the destroyer ultimately. What's the terminal effector of destruction and time and time again you come back to those cells that have the fragment receptors on them and they're usually granulocytes not always but usually granulocytes. Eosinophils, vasoville, neutrophils especially certainly macrophages have these receptors including C5a receptor. So I don't know I just I have begun to about a year or two ago, I started to abandon hope that I could understand compliments in terms of classical lectin versus alternative and I just started looking for the culprit that I think can do damage and whether that C3a receptor on a macrophage or even on a neutrophil versus C5a receptor it ultimately activates these things then I start there with the biology and I work backwards see if there's a therapeutic intervention point. And that's kind of how we're thinking about lupus nephritis. We know you get destruction. There is look it's just there's so many parallels of ANCA-vasculitis. You have auto antibodies in lupus you have auto antibodies in ANCA. You've got deposition of complement in the kidney. You've got kidney destruction which looks for all the world when you get close looks inflammatory damage in and around the glomerulus. It's like wow it just really looks very similar and in fact for how many years did we treat those two diseases almost identically Prednisone, chronic prednisone plus Cyclophosphamide. So there's just so many parallels that I have stopped worrying about what part of compliments going up and going down and if I see evidence of activated granulocytes in the presence of complement fragments anywhere down the C5 pathway however they got there I'm all for it. It's one of the reasons I also gave a little snapshot I mean preliminary as it was on Hidradenitis Suppurativa. I mean people have just said it's come early involved well you follow C5 and Hidradenitis whether it's in the blood or at the site you're going to find it. So if C5 is there C5a is notoriously difficult to measure accurately but not impossible but if you find that then you have to ask the question is that driving neutrophils and the answer is it likely is. So I think the same is true in mechanopritis. Sorry for that maybe less than precise answer but I really think that the culprit is a cell that does destruction in the presence of activated complement and I fundamentally believe C5a is the most potent of that part of the destruction pathway.

[Joseph Schwartz:]

That's very helpful. Thank you.

[Thomas Schall:]

Thank you.

[Operator:]

Your next question comes from the line of Anupam Rama from J.P. Morgan. Your line is open.

[Anupam Rama:]

Hey, guys. Thanks so much for taking the question. Just two quick ones from me. What is your physician market research suggest about the types of AAV patients that might be early adopters of avacopan, whether it is elderly patients or maybe patients with more severe renal dysfunction at baseline? Any pockets of patients that might be more rapid adopters? And then a second question which is a little bit more confirmatory in nature to a previous question which was around an AdCom. So, Tom, you said that you're preparing for an AdCom. Is that just you're preparing for an AdCom because it may come or is it being confirmed that you will have an AdCom? Thanks so much.

[Thomas Schall:]

Sure. I'll go to the first question first. Anyone -- the early adopters, in theory, early adopters would be anyone who has organ threatening or life-threatening disease, which is of the type of person we put in the ADVOCATE trial and that's -- these are folks that have to be on some prednisone load or they're going to be in jeopardy of losing their kidney, or losing a lung potentially or worse losing their life. So in theory, that should be early adopters. But there is our primary research out there with patients and physicians reveals that there is a lot much larger population of people that never get off prednisone. And it's not just 2.5 mgs or 5 mgs a day, bad as that is, and then frankly the literature tells us that could predispose even those "low doses" or rheumatologists would say it's a non-dose, predispose as people with a cardiovascular disease at the three-fold risk year-on-year anything above 2.5 mgs, even down to 2.5 mgs and up to 20 mgs a day is a six-fold increase in cardiovascular risk and that's some really interesting and good data has been published recently. So anyway, we find shockingly -- you talk to the experts, and you are like, very few people are on a greater than maybe just this whispering doses of 2.5 mgs or 5 mgs. Not true, there is lots of people on 10 mgs, 15 mgs, 20 mgs, and they never get off. So those folks, when you talk to the patient, the patient groups, they are saying, I can't -- tell me when this is available. I won't -- we had for Rare Disease Day, the other day, we had a patient representative and from one of the foundations and I guess I shouldn't quote someone but I'll paraphrase, but this person who is really well-placed in the vasculitis community said this should take off like a rocket ship because we all hate prednisone. We got to get off steroids. So again, looking at it very conservatively and rationally, first anyone with organ or life-threatening disease for whom there is no choice, you're on prednisone plus something, but then there is this other pretty big population, I think, that is eager, anyone who is on prednisone daily, even if for whatever reason they're "on these longer-term doses" or maintenance doses for their disease is "under control" I think there is a real demand from that sector to get them off and the healthcare professionals understand that as well. AdCom, no, we've talked now with the agency. They had their mid-cycle meeting and we are -- they said, let's have an AdCom. Interestingly, again, we don't have any topic. So it -- but we're preparing for that. We think we understand generally what their interests might be and so we are planning for that AdCom to occur and we'll keep you posted on how that's proceeding and exactly when it will occur.

[Anupam Rama:]

Thanks so much for taking our question.

[Thomas Schall:]

Thank you, Anupam, good to talk to you.

[Operator:]

Your next question comes from the line of Dae Gon Ha from Stifel. Your line is open.

[Dae Gon Ha:]

Hey, good afternoon, guys. Thanks for taking the questions. Just wanted to follow up on the commercial question, one, and then maybe for hidradenitis suppurativa on the second question. So, Tom, sorry if I missed this in your prepared remarks but as we think about July 7, PDUFA, you mentioned your commercial team is getting ready for potential early approval in a best-case scenario, but when you look at the market now, I guess COVID seems to be receding knock on wood but how should we think about sort of the dynamic of people coming back in for a standard of care that requires immunosuppressive regimen? So I guess any kind of sense as to it will be more sort of a gradual buildup toward the year-end when more people would be COVID vaccinated or could we anticipate more of a bolus even at the beginning part? And then secondarily on the HS part, recognizing you looked at these various histology, just wondering is there some kind of a paired diagnostic or assay that you're kind of coming up with in preparation for your Phase 3, such that you could perhaps enrich patient that could be more likely to benefit from the biological mechanisms identified? Thanks.

[Thomas Schall:]

Yes. So let's first go to the PDUFA date launch and uptake etc. Dae Gon, I'll stress that in the age of COVID, what people are freaked out about is their current regimen, rituximab, which is widely used here in the United States about in combination with steroids, typically about two-thirds of the patient population will be on rituximab at some point and maybe even on long-term rituximab. They're absolutely upset about the idea that they're on rituximab because, obviously, rituximab's sole purpose is to shut down the B-cell's ability to make immunoglobulin or to make antibody. So, boy, how is that going to work in a vaccine here. So that's one thing we hear a lot. Now, you used the word immunosuppressant. Yes, rituximab is an immunosuppressant, cyclophosphamide is, prednisone although people technically don't throw it in immunosuppressant class, of course, it causes immunosuppression. Avacopan is not an immunosuppressant. It's an anti-inflammatory. The neutrophils that we inactivate with respect to C5a receptor engaging C5a are fully functional. So that is really a big point of differentiation with avacopan and in fact, it was subtle at first. But I think the patient community has understood this fundamentally as well. So they are again saying, boy, we would love to maybe have an opportunity to get on avacopan in this era of COVID and maybe get protection against our disease and still be able to not responses to coronavirus. So I think that that's actually a boost. Now, the practicality of a launch in the era of COVID much more hybrid approach. You're absolutely right as you alluded to in your remark. Some of it will be electronic, a lot of it will be in person from our field force, but we are preparing for that as well and we are studying other drugs that are launching during this pandemic. And it's a mixed bag depending on are they for orphan drug, are they more specialty, are they follow-on drugs and it's all over the map. Some of the marketing launches almost entirely virtual, and yet then there's others where even recent launches in kidney disease, it seems like 80% of it is actually in person even in the pandemic era. So I think we'll still be pretty heavily in person, but we are absolutely preparing for a hybrid approach, virtual and in person. Now, you just talked about HS Hurley 3 and how will we enrich our patient population. We'll be presenting more data that we're analyzing from the AURORA trial. I think it's pretty clear that we're going to be able to get the right patients pretty readily in this I look some fairly straightforward ways of thinking about that in terms of baseline criteria.

[Anupam Rama:]

Great. Thanks for taking the questions.

[Thomas Schall:]

Sure. Thanks. Thank you.

[Operator:]

There are no more questions at this time. Turning the call back over to Mr. Thomas Schall.

[Thomas Schall:]

Well, thank you very much and thanks everyone for participating in this call today. Thanks to all for the insightful questions. And again, I urge you all to mark your calendar for April 14 and participate in our virtual R&D Day. With that, again, thanks very much and wishing you all a pleasant afternoon and a pleasant evening. Goodbye now.

[Operator:]

Ladies and gentlemen this concludes today's conference call. Thank you for your participation. You may now disconnect.