Aurinia Pharmaceuticals Inc. (AUPH) Q2 2018 Earnings Report, Transcript and Summary

Greetings. Welcome to Aurinia Pharmaceuticals Incorporated Q2 2018 Financial Results. At this time, all participants are in a listen only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to our host Celia Economides, Vice President of Corporate and Public Affairs. Thank you, you may begin.

Thank you, operator. Good afternoon, everyone, and welcome to Aurinia’s Q2 2018 earnings call and general business update. With me on the call today from Aurinia are Richard Glickman, Chief Executive Officer; and Dennis Bourgeault, Chief Financial Officer. Joining us for the Q&A will be Michael Martin, Chief Operating Officer; and Dr. Neil Solomons, Chief Medical Officer. This afternoon we issued a press release detailing our Q2 2018 financial results and corporate update. The press release and financial statement package is available on our website at auriniapharma.com and a 6-K was filed with the SEC as well. I’d like to remind you that today’s call is being webcast live on Aurinia’s Investor Relations website, and a replay will also be available following today’s call. The content of today’s call is Aurinia’s property. It cannot be reproduced or transcribed without our prior written consent. During the course of this call, we may make forward-looking statements based on current expectations. These forward-looking statements are subject to a number of significant risks and uncertainties and our actual results may make 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 the reports that we file on Form 6-K with the U.S. Securities and Exchange Commission. All of our statements are made as of today August 9, 2018 based on information currently available to us. Except as required by law we assume no obligation to update any such statements. With that, let me turn the call over to Richard. Richard?

Thank you, Celia. And thank you to everyone for joining us today as we review our second quarter financial results and provide a general business update. This is been an extraordinary quarter for our company and tremendous progress we’ve made on a number of fronts and I’m excited to talk about the momentum of our organization is developing, after period what I were referred to is heavy lifting. With respect to our Phase 3 clinical program in LN, our most advanced program. We’re excited to announce the recruitment is running ahead of schedule and we foresee enrollment completion very early in Q4 this year. For me, this is an indication that the trial is progressing well. As a reminder, the primary endpoint to this trial is that 52 weeks, after which, there is a four-week follow period, before the subject officially completes the trial. Thus, we expect to have data for the trial on-time and on-schedule before the end of 2019. For a bit more granularity, we have 225 sites activated and able to enroll patients in 29 countries around the globe. As a reminder, we took a different approach in recruitment to our Phase 3 trial where we opted to initiate and activated many sites as possible from the beginning rather activating a few at a time. You may recall that patients that have active lupus nephritis are very ill. At our Phase 2 trial we enrolled some of the sickest patients ever studied in this disease. Now as previously mentioned, we have implemented several additional safety parameters in our Phase 3 trial and are monitoring these very closely in a blinded manner. The DSMB also reviews all adverse events on an ongoing basis and so far we believe the study is progressing very well. We will continue – we continue to have motivated patients and investigators participating in this trial remained very encouraged by the level of interest in the trial has been generating around the globe. Our team is working diligently with goal to assess the efficacy and safety of voclosporin LN patient and are extremely determined to potentially provide the first FDA AMA approved therapy for these patients in desperate need, just to remind that, that LN is debilitating disease, affects mostly in women of child during age. We are actively preparing an NDA and we expect to complete the rolling submission in Q2 2020. During the second quarter, we also saw the first patient rollover to the AURORA 2 blinded extension study from the AURORA Phase 3 clinical trial. The purpose of AURORA 2 is to assess the long-term safety and tolerability of voclosporin in patients with LN; however, this study is not a requirement for potential regulatory approval for voclosporin. Long-term safety and efficacy data for our unique CNI should prove to be a great value to the medical and patient community, as we’re committed to providing relevant data that could support treatment decisions in the future. That brings us to an update on new indications we are pursuing for voclosporin, the first being FSGS. Approximately 5,400 patients are diagnosed with FSGS in the U.S. alone each year accounting for the largest segment, almost 30% of patients with nephritic syndrome. FSGS is a rare disease that attacks the kidney’s filtering units, causing serious scaring which leads to permanent kidney damage and even failure. Similar to lupus nephritis, an early clinical response reduction in proteinuria is actually critical to long-term kidney health. While guidelines exist for treatment, there are currently no approved therapies for FSGS in the United States or the European Union. After productive consultation with regulators in the first quarter, we successfully initiated our study in June. This is an open label proof of concept study in 20 treatment naïve patients with FSGS. As we are essentially enrolling newly diagnosed patients and this is a rare disease we expect the enrollment could take up to 12 months. But we intend to have planned interim data readouts throughout the course of the trial in 2019. As the company has been focused on lupus nephritis since its inception, expanding our scope to include other proteinuria renal disease is synergistic with our current strategy and long-term vision of the company. And one of the most exciting aspect of this trial is that we’re assessing the potential of voclosporin at its first line of therapy for these patients and the complete absence of steroids. Not to steroid doses are often given to these patients, which predictably come with multitude of well-established final tract, an approved treatment for FSGS will be a tremendous valuable patients and furthermore to our shareholders. As I mentioned, it’s been quite good per quarter. We’ve recently initiated yet another exciting program with a new drug called voclosporin ophthalmic solution or VOS for the treatment of dry eye syndrome. This is a different formulation of voclosporin which is a unique patented aqueous preservative-free nanomicellar solution containing 0.2 voclosporin and as you know from previous disclosures voclosporin has been shown to be three or four times more potent than cyclosporine A. VOS has its own separate formulation patents with exclusivity until 2013. Dry eye syndrome is a chronic disease in which a lack of moisture and lubrication on the eye surface results in irritation and inflammation of the eye. Dry eye is estimated to affect greater than 20 million people in the U.S. alone, while there are two FDA approved products for the treatment of dry eye one of which is a customer has been – there is potential and need for improved effectiveness for the treatment for dry eye. And particularly by enhancing tolerability and the onset of action and alleviating the need for repetitive the dosing. We believe the calcineurin inhibitors will remain a mainstay for the treatment of Dry Eye and a VOS sense of potential to be the best-in-class CNI within this multi-billion dollar market. Our Phase 1 trial has previously been completed in 35 healthy volunteers and a patients with dry eye. In early July, we initiated a Phase 2 head-to-head tolerability study of VOS versus RESTASIS and we expect to complete this trial before the end of the year. Depending on phase of recruitment, data could be available at early at the end of the year or early 2019, it will be a four-week study and we will be recruiting 90 patients for this trial. The goal of this program develop a best-in-class treatment option, upon completion we will look to evaluate strategic alternatives for VOS. I believe, there’s tremendous value in this asset. That’s it for our clinical programs. Aurinia is now in a substantial growth phase transitioning from an early stage clinical company with one indication to a late-stage clinical company with multiple indications. We’re thrilled with all the progress we made so far this year and look forward to protect of second half of the year. With that, I’ll turn the call over to Dennis Bourgeault, Our CFO to review the Q2 financials with you. Dennis?

Thank you, Richard. At June 30, 2018, we had cash, cash equivalents and short term investments of $150.2 million compared to $159.1 million at March 31, 2018 and $173.5 million at December 31, 2017. Net cash used in operating activities was $12.3 million for the second quarter ended June 30, 2018 compared to $14 million for the second quarter ended June 30, 2017. In the second quarter ended June 30, 2018, we received proceeds of $3 million from the exercise of warrants, which were set to expire in June of 2018. We believe, based on our current plans and activities, that we have sufficient financial resources to fund our existing LN program, including the AURORA trial and the NDA submission to the FDA, conduct the Phase 2 trials for FSGS and Dry Eye, and fund operations into 2020. We reported a consolidated net loss of $15.7 million or $0.19 per common share for the three months ended June 30, 2018, as compared to a consolidated net loss of $2.4 million or $0.03 per common share for the three months ended June 30, 2017. The increase in the loss for the three months ended June 30, 2018 compared to the same period in 2017 was primarily due to the non-cash change in the estimated fair value of derivative warrant liabilities in the amount of $9.4 million. The three months ended June 30, 2018 reflected a $1.9 million increase in the estimated fair value of derivative warrant liabilities compared to a reduction of $7.5 million in the estimated fair value for the three months ended June 30, 2017. The change in the revaluation of the derivative warrant liabilities is primarily driven by the change in our share price at each period end. An increase in our share price results in an increase in the estimated fair value of derivative warrant liabilities and an increase in our loss and vice versa. 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 net loss before the non-cash change in estimated fair value of derivative warrant liabilities was $13.8 million for the three months ended June 30, 2018 compared to $9.9 million for the same period in 2017 with the increased loss amount primarily reflecting higher research and development expenses. For the six months ended June 30, 2018, the consolidated net loss was $31.2 million or $0.37 per common share compared to a consolidated net loss of $54.3 million or $0.78 per common share for the comparable period in 2017. For the six months ended June 30, 2018 we recorded an increase of $4.6 million in the estimated fair value of derivative warrant liabilities compared to $33.3 million for the comparable period in 2017. The net loss before the non-cash change in estimated fair value of derivative warrant liabilities was $26.6 million for the six months ended June 30, 2018 compared to $21.1 million for the same period in 2017. The increased loss again primarily reflected higher research and development expenses. Research and development expenses increased to $10.5 million for the three months ended June 30, 2018, compared to $7.1 million for the three months ended June 30, 2017. We incurred research and development expenses of $19.4 million for the six months ended June 30, 2018, as compared to $14.4 million for the same period in 2017. The increased research and development expenses reflected higher AURORA clinical and drug supply costs as well as startup costs for the AURORA 2 extension study, and the FSGS and Dry Eye studies. Corporate, administration and business development expenses increased to $3.5 million for the three months ended June 30, 2018, compared to $2.9 million for the same period in 2017. We incurred corporate, administration and business development expenses of $7.3 million for the six months ended June 30, 2018 compared to $6.3 million for the comparable period in 2017. The increase was primarily due to higher non-cash stock compensation expense in 2018 compared to the same periods in 2017. With that, I will turn the call back over to Richard for some closing remarks. Richard?

Thank you, Dennis. Once again I’d like to thank for team, the tremendous progress we’ve made so far this year. We’re diligently executing on our clinical programs and look forward to a very busy rest of 2018. With the completion of recruitment for our Phase 3 trial in LN, more patients rolling over to the AURORA II extension study and carrying out the FSGS and Dry Eye program successfully. 2017 was an extremely pivotal year for the company. We are now a late stage biotech company that’s diversifying its portfolio and building out its core competencies. We are a nimble and dedicated team to continue to successfully execute upon our corporate milestones. As a company, we have a drug candidate that is successful in Phase 3, has the potential to be the first approved therapy in the treatment of LN. The efficacy and safety data supporting this drug is substantial. We have a clear regulatory path forward to approval, there is a large and solid intellectual property base. And we believe the market opportunity for this drug to be significant. It is with great confidence, we continue to advance voclosporin in its final development phase for LN. With that I’d like to turn the call back over to the operator and open the line for the Q&A. Operator?

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Ed Arce with HC Wainwright. Please state your question.

Great. Thanks for taking my questions and congrats on all the progress this quarter and transitioning from one to three clinical programs. I have three questions, first, you had mentioned, the pivotal Phase 3 has appeared to accelerate recently in enrollment. Just wondering, if you could share with us your thoughts on why that might be and if there were some particular commentary from your site PIs that you could share, that could shed more light on how they see things progressing? Secondly, with AURORA 2, it sounds like from your perspective, this is really more about communicating the long-term safety with ultimately with prescribing physicians and just wondering how you see that study positioned overall and the clinical program? And then lastly, you had mentioned interim readouts next year, expected for your FSGS program, just wondering, how you see the ultimate target to move forward in that and when we could expect sort of the final readout for completion? Thanks so much.

Okay, thank you, Ed, for the question. Before I answer first question, you want to point out a mistake when I kind of put some numbers around when I'm talking about the IP for VOS, the actual trial program IP is 2031 – 2013, so I apologize for that. And Neil, did you want sort of tackle that first question about enrollment and how things are progressing?

Ed, good question and we've obviously had a lot of very, very close contact with our PIs throughout the world, they continue to be extremely enthusiastic about the study. That's about the we got and that's results and they will continuing to enroll patients, they also, obviously, highlights the unmet medical need in the very, very severe patients that we're recruiting. And obviously, that their physicians are also blinded, we have no way of knowing what therapies these patients are assign to. However, they will clearly – they see the patients overall benefiting from entering this study and I think that's probably what we can say about this at the moment, Ed.

Ed, I will say the rest. As we recruit patients, we are very focused on trying to make sure we get the right patients in the trial, the right balance of ethnicity. We haven't rushed it, it sort of naturally, sort of, habits on momentum. With that, we still turn away a lot of patients, they are probably not appropriate for the study. So we're pleased with our progress that particularly as a matter of fact, they have been very picky and how we've executed the trial. Your second question related to the long-term use of the drug and ARORA 2 study and I can just quickly comment that when you're on a calcineurin inhibitor, whether you're on for transplantation, but when you look at drug voclosporin and you look at these patients, we generally believe, the patients will be on for a fairly substantial period of time. And anything we could do to add to the safety database from the long-term use of this drug, as going to be very informative for clinician and making their decision. So it's a natural thing to do, with several year follow-up extension. I think it's going to be very valuable for us because I really do believe, there where decisions that made as to which drug to remove the patients from, whether it's completely removal of steroids or whether it's reduction of self that, but having this long-term data, it will be very, very useful. I think it also becomes useful as well, when you're start looking at registries and you start looking at other such as patients pregnancies, et cetra, where many of the drugs that have been use today are actually – a quite an issue when it comes to pregnancy. When you look at CNI, they have fair history about their usage during pregnancy. So any long-term type data we generate on this drug, it's going to be very valuable. In terms of your third question related to FSGS, we're relatively new in this disease or very new in this disease and we're looking at patients that are naïve. But we think it's really important, physician has been really demanding and patients are demanding alternative to high-dose steroids, the current therapies are let say six months versus extremely high-dose therapies. I think the – that the nature of the way this drug works, is impact on the part of site, it's impact on the immune system, and picks an ideal candidate. And we really don't know what the next steps look like. I think so we really take a look at our actual data that we generate and if I generate consistent what we expect this drug to perform, then we'll have more granularity about what the Phase 3 program would look like. And Neil, do you want to add anything to that?

No, I think you said most of it, I think the key points about this is, nobody has ever done naïve steroid-free therapy with fold, but the very fact that everybody thinks it's a great idea, I think it's key to us and I think we're going to see the benefits of this particular therapy. And then, we had performed – this study done the rigorous fashion that the amount that we tend to do these studies. I think it's very excited about that. In terms of timing and what we report when, I think when we get enough data, that gives us enough of a signal, then we will be obliged to release certain kind of results and then we'll move quickly on to discussing of further development, when we get the – as a quick amounts of data, so yes.

Okay, great. That was very helpful. Thank you, Neil, and Richard.

Thank you, Ed.

Thank you. Our next question comes from Joseph Schwartz with Leerink Partners. Please state your question.

Hi, thanks very much and congrats on the progress. So I wanted to ask question about dry eye program as well as the FSGS program. You mentioned that the dry eye program is tolerability study. It's fairly large and I would imagine if that's the partners would be interested in the clinical profile, as it pertains to efficacy. So how well suited is the Phase 2 program to demonstrate or to be able to detect the potential positive actions to be sort of product. You mentioned that – you thought that it would be better tolerated, but also maybe have improvements and signs and symptoms more trying to answer.

Neil, did you want to address that? I – and…

Yes. I'm not to see that. And so Joe, it's, again, it's always a challenge with these relatively limited size proof of concept studies and what you again see, what you hope to see and what you expect to see. So we know – so certainly, the way we've designed the study and the assessment that we're doing the efficacy assessment, that we're doing, for example the same test, we – there is a dramatic early effect. And the study is certainly designed throughout to show that. So, for example, it's a short study, if we do see an early separation in some of the efficacy then that the study design to have see that. But of course, again, I think we have to caution the fact that, from a statistical perspective, we don't see it, it doesn't mean it's not – that be if that's not that, it's about the way we design these proof of concept studies that if we do see early differences, they will show up and in the results, but I think we have to caveat and caution on businesses if those are also not seeing, it doesn't mean that the drug is not doing its job. I think that's probably the best important thing Joe, for me from my perspective.

Clearly from the tolerability perspective, I think that one is really important. I think when you take a look at one of the biggest issues people face in using facing using risk base is the tolerability issue and I think that several – there will be several benefits of this program. I think one is this – maybe either on the eye certainly historically, when we did the Phase 1, it turns out to be that way. And then second, if you keep in mind, this drug is three times or four times more potent but you're also delivering almost four times as much drug to the eye, as you are with Restasis. That means you’re delivering somewhere between 12 times and 16 times the amount of drug. When you do look at animal experiments in this area, you do see a fairly rapid impact of the drug. And we would hope that we would see that carry through in the human clinical side. Certainly, in the limited Phase 1 experience that was seen with this drug we did see early signs and trends. This is a much larger population to do that on, so I think we’ve got a fair shot. Although, I take the caution that’s been expressed, but I do think we have a fair shot of seeing, some trending at least of early, early efficacy with this molecule.

Okay, great, thanks, that’s helpful. And then on the FSGS program in Phase 2, it's looks like you're targeting patients with more than or greater than or equal to 3 mg/mg of serum protein creatinine ratio, that seems like it's a lot higher than certainly your lupus nephritis inclusion criteria and some other FSGS inclusion criteria that we've seen, which is like 1 mg/mg to 2 mg/mg. So, I was just wondering, if there's specific reasons behind that? And are you purposefully targeting sicker patients here? And then FSGS is a pretty classification of patients with a lot of different disease. So, I think these are relatively small study to think that – that could confound the results in any way, given the wired variability and presentation that people at FSGS have.

Neil, could you?

Yeah, again one of those things that we’re really trying to find out and there is a huge amount of interest in the renal community, is the effects of specifically calcineurin inhibitors as well as other drugs on the podocyte disorders. Now, sometimes we don’t see this really disorder at podocyte effacement in patients with lower levels of proteinuria. So in some ways what we're doing is, we're trying to enrich the population of FSGS patients, to those who we believe are most going to benefit from the drug. This certainly conceivable, as we move into Phase 3. We may be able to go into lower levels of proteinuria and hence patients with the less disordered kidney biopsies. But, I really think that these are patients that we're going to see the benefits in, these are patients that the physicians are currently incredibly interested in treating with their FSGS. And the nephrotic syndrome, not just proteinuria but hyperlipidemia still represents the greatest unmet need. These are patients that do the worst. These are the patients that we believe our drug could have the greatest benefit in, Joe.

Excellent, very helpful thanks again.

Thanks, Joe.

Thank you. Our next question comes from Elemer Piros with Cantor Fitzgerald. Please state your question.

Good afternoon, gentlemen. What I’d like to understand is, if you could tell us a little bit more about AURORA II. What is the duration of the trial? What is the extension phase? And, what was the rational to keep it in a blinded fashion?

Hey, Neil, you are getting a lot of questions today.

Yeah, they are all good questions. I mean, so the rationale – I think such question is the durations. That we are doing two further years, so that we hope to get a – in total, I guess, three years of comparative data. And that's – that the comparative data answers the second part of your question. The only way we can get good – the best way of getting good quality safety data, is have a comparator, certainly companies with other drugs have gone into sort of open label continuation drugs and that is definitely way of doing it. We believe, it's much more powerful and continues to allow our comparison of both safety, but also some of the efficacy data as well, and by continuing patients in a blinded fashion. The other thing that would – the other big piece of part from a long-term safety data, long-term renal function effects on other aspects of lupus, is potentially assessment of readouts, as we know, lupus nephritis relapsing remitting disease, not only we getting patients intermission, but we wish to sort them going back into disease flair again. And these are some of the things that we're going to see in our continuation study. We're also going to looking at actually in parameters and where these patients non-renal and lupus flyers and again that could also trigger further clinical work in the extra renal space further down the line. So the rational, I would say, is two-fold, I think it's always good to have more safety data, even though, it's not a requirement to have all the safety data, the regulators are certainly look favorably when it comes to the NDA approval on the companies to have extra additional safety data to be able to strengthen the case. But also we can deep looking at the potential expanding the label lupus nephritis, but also in SLE with some of the extra data that we get and we believe that being in a competitive continued blinded study adds both statistical but also clinical power to our arguments.

Yes, maybe just a follow up, Neil, I understand. Is there maybe just a small concern that over a year period, it's relatively easier to keep the patient cool in the trial to experience a modest or minor response then – but when you take decided to three years, it's – wouldn't it – more likely that you would lose those patients, so the comparison between these two arms may not be as balanced?

Right, not exactly sure. I understand the – I mean, certainly over the prolonged three-year period, what you’re fighting is– what we know from the arms trial that we – that the team also performed as that over a three-year period, even though standard of care, patients do continue to go in to a mission after three years of therapy. I think it's important to have a competitor to make sure that what we’re seeing is not just a – the sort of background [indiscernible] disease over time, not exactly sure if I can answer your question, but…

I guess, I think our first thinking is – certainly, we're not using AURORA II for part of our approval process. We should clearly – which I believe we've got approval for successful on a clinical programs on the basis of the data generated in the actual Phase 3 trial. Having that additional data, I think it's beneficial, I think you’re right, there is a risk over time, you going to lose patients, the tendency though is to these patients just to stay on drug and to look to durable response, as you take a look at the Phase 2 trial, it was very curious that every single patient in the active arm of our office that Phase 2 that went into complete remission data and remissions for the duration of the trial. This is my expectation that we will see and my hope first, we’ll see the similar results in the phase – in the follow-up extension study. I think that's really important, because you will be showing really long-term stability in those patients. And I think at the end of the day, it will impact how physicians decided treat. So I think having that data is going to be valuable. I think you're right, there's a risk over time, you could lose patients. I think you more likely lose patience and end up actually flooring out of remission. It's my expectation and my hope that the patients are on the combined therapy right now and would actually likely to stay – more likely to stay in the study because they are doing better. So our time will show if that answer, but important thing is, it doesn't put our other trials at risk.

Yes. Thank you very much, Richard and Neil.

You’re welcome.

Thank you. Our next question comes from Doug Miehm with RBC Capital Markets. Please go ahead.

Good afternoon.

Hey, Doug.

I think, fairly simple questions. Number one, in terms of the patients that you’re going to end up have in this trial. How many will have been recruited by as sites that we're used in your previous trials roughly?

Interesting question, Neil, I don't.

Yes, we're – obviously, we're finish to recruiting yet, there is some overlap, one of the things that you've learned both in the oral chart but also actually free cash only back to arms trial. There’s two things. one is, site that's good recruiters that manage their patient's well, but also the flip side is there that, perhaps haven't recruited well and a more difficult to cooperate with. So it's kind of vendor, in some ways – in some sense that we will chart cherry picked, some of the better performing size from a recruitment perspective, but also from a compliance perspective. But also we've got some new signs on board, new crunches is on board that we didn't use before for a variety of reasons. So I mean, I think we've mentioned before on calls that we've attempted to get more patients in the U.S. and Europe in the study, just trying to get a kind of more [indiscernible] of population for the markets in which we're plan lowering this drug in. Other than that, I think it's probably a moving target at the moment and to lot more information when recruitments complete.

Yes, of course, so – but you will have more patients enrolled from the U.S., of course?

Yes.

Okay, good. Second question has to do with the sort of makeup, I know you made one point revision, just with respect to the time from biopsy. Maybe you can just give us a little more detail on that if you can in terms of type of patients that are being recruited right now?

Yes. I think the first thing to say is that, in terms of the patients that are going into the study, there is – overall, there will be very, very little difference. So in the AURORA trial, we required that to be a biopsy within the six months have entered into the study. We still expect the large majority of patients coming to the study to have a biopsy, not only within six months but actually most of them are actually within weeks of coming to the study, that's the operation that we allow in. What we found in the AURORA trial, was that some patients, especially, patients from the United States, who would have a recent biopsy, 7 or 7.5 months ago, decided not to enter the study because they didn’t wish to have another repeat biopsy, which was not going to change their management, which the physicians did not think was medically necessary for them. And so what we did we put in some very, very strict criteria, to permit under very certain circumstances. Patience through the biopsy of greater than six months to enter the study as long as they could demonstrate, that the elevated proteinuria come in to study, was actually a very recent origin. So that we [indiscernible] a very recent flaring activity rather than kind of chronic leakage of protein. I can't give the exact numbers, we have those again but – recruitment numbers is a moving target, but what we do know is that it's a very small minority of patients come into the trial.

Okay, that’s excellent. Thank you.

Thank you. [Operator Instructions] Our next question comes from David Martin with Bloom Burton. Please state your question.

Good afternoon, David.

Good afternoon and congratulations on your progress. I got a couple of questions. At one point, I think there will be discussion that there maybe a separate study or a sub-study within the larger study, with before and after biopsies. I'm wondering, if that is happening or if it's planned?

Okay, Neil, did you deal with that question as well?

Sorry, a separate study form before and after biopsies. We haven't any plans to do that, but we certainly, some physicians will be doing because of their ongoing clinical practice is do a repeat biopsies, they do that in anyway and we certainly interested in the outcomes of any of those.

So you will have access to that data as well?

We will do, should they be performed, it's not – expanded practice everywhere to do so, but obviously it's an invasive procedure.

Okay. And then there have been plans to do some preclinical work, looking at the effect of scoring on TGF data levels and in addition of calcineurin A, alpha and beta, when might we see those results?

So, those are ongoing. We have initiated several those and there is some additional ones planned. I don't have a very tight timeline, they list out the priorities for us, the clinical work has been the highest priority for us as well. And given all the new programs, we have been funding those through academic operations. I don't have – but I will get you through a better time frame and when we expect those. But I imagine some of them probably by mid-next year. We're also doing studies looking at the products right now as well in terms of mechanisms et cetera. So those things are become very important to us to have a sort of just additional knowledge of mechanism, how this drug works, so a fair question I don’t have an accurate answer. I don’t want to – I just want to – I’ll get you an accurate answer on the time frames for those studies.

Okay, thanks. Last question, you referred to the small Phase 1 up from – VOS study that was done previously. And, I guess, they were healthy volunteers as well as some patients with dry eye. The signs of efficacy that you saw, was that an end points that were subjective or objective?

Mike?

Yes, they were both on signs and symptoms, Dave.

Okay, patients – it was a patient assessment of their own systems or did the physician measure of things like cure amount and that type of thing?

Yes, test scores were used on the physician side and also – so that's on the sign side and the symptom side, the patients and the physicians filled out an OSBI questionnaire, ocular symptom disease severity score questionnaire, which is standard in the field.

Okay, thank you.

Thank you, ladies and gentlemen. There are no further questions at this time. I'll turn it back to management for closing remarks. Thanks.

Well, thank you, operator. And once again, thanks for all of you attending, thank you for your questions. It really has been an exciting quarter, when we set out at the beginning of the year to deliver a number of clinical programs and to execute the ones that particularly the lupus nephritis program. And I can't be more thrilled with how the company has performed, how we delivered against our milestones, but also not really excited, as you know, we're getting close. And it's a very time for our employees. I think it's a very exciting time for our patients too. And so look forward to the rest of this year and of course, next year we'll actually have our data. So thank you all for being on today's call. Once again, thank you.

Thank you. This concludes today's call, all participations may disconnect. Have a great day.