Travere Therapeutics, Inc. (TVTX) Q2 2020 Earnings Report, Transcript and Summary

Welcome to the Retrophin, Inc. Second Quarter Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the call over to Mr. Chris Cline. Sir, please go ahead.

Great. Thank you, Corey. Good afternoon, and welcome to Retrophin’s second quarter 2020 financial results and corporate update call. Thank you for joining us today and thank you for sticking with us through some of the technical difficulties we were just experiencing. I hope you all remain well. Today’s call will be led by our Chief Executive Officer, Dr. Eric Dube. Eric will be joined for the prepared remarks by our Chief Medical Officer, Dr. Noah Rosenberg; Peter Heerma, our Chief Commercial Officer; and our Chief Financial Officer, Laura Clague. Dr. Bill Rote, Senior Vice President of Research and Development will join us for the Q&A session. Before we begin, I’d like to remind everyone that statements made during this call regarding matters that are not historical facts are forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, performance and achievements to differ materially from those expressed or implied by the statement. Please see the forward-looking statement disclaimer on the company’s press release issued earlier today as well as the Risk Factors section in our forms 10-Q and 10-K filed with the SEC. In addition, any forward-looking statements represent our views only as of the date such statements are made, July 30, 2020. And Retrophin specifically disclaims any obligation to update such statements to reflect future information, events or circumstances. With that, let me now turn the call over to Eric. Eric?

Thank you, Chris, and good afternoon everyone. The needs of patients living with rare disease are greater than ever, and I am proud of our organization’s steadfast dedication to supporting our communities, advancing our development programs and delivering our approved products during this difficult time. I am pleased to report that during the second quarter, our team members maintained focus on the key priorities to best navigate the COVID-19 pandemic and continue to make meaningful progress towards our goals for the year. This was highlighted by the further advancement of our two pivotal trials for sparsentan and the continued delivery of our approved therapies to current and new patients. We were able to achieve this by maintaining a focus on the safety and well-being of our key members and our patients. For our team members, we continue to embrace a remote work environment, and I am incredibly impressed by how our teams come together every day on a virtual basis and identify innovative ways to advance our initiatives and meet the needs of our patients. For our patients, we have maintained our procedures to ensure safety, access and continuity of care during this time. As for our development programs, both the DUPLEX study of sparsentan and FSGS and the PROTECT study in IgA nephropathy continue to advance towards top line readouts, which, if positive, we expect to support accelerated approval submissions in the U.S. and Europe. We continue to work within the COVID-19-specific FDA and EMA guidance to ensure compliance with good clinical practice and maintain trial integrity during these unprecedented times. Importantly, we have been pleased with the study conduct to date for both trials. This has been driven by the strong dedication from our patients, their caregivers and investigators as well as our teams ensuring close coordination with clinical sites to maintain adequate monitoring and a clear focus on data capture and integrity. I am also encouraged by the fact that both of our pivotal programs evaluating sparsentan have regained some momentum in screening and enrollment since our last update in May. From the outset of the sparsentan program, we have been working within the global nephrology community to connect clinical sites and form a strong network that can best support our studies in FSGS and IgA nephropathy. This network has been critical for providing insights into the unique needs that clinical trial participants face so that we can provide adequate support during this time and enabling our studies to continue screening and enrollment at sites that remain open or that have reopened in this environment. Based upon what we know today enrollment of our DUPLEX study in FSGS remain in line with our prior projections. And we believe top line data from the 36-week proteinuria endpoint analysis remains achievable in the first quarter of next year. I am also pleased to report that the PROTECT study in IgA nephropathy is trending ahead of schedule. We now anticipate that top-line data from the 36-week proteinuria endpoint analysis in PROTECT are achievable in the second half of next year compared to our previous guidance of the first half of 2022. While we cannot predict the future impact of COVID-19, I am encouraged by the progress made to date and by the current trajectory of having readouts from the 36-week proteinuria analysis in both pivotal studies next year. As for our commercial performance, in the second quarter, we reported another strong period of execution. I have been pleased with our field-based team’s ability to maintain engagement with physicians and with the growth in the new treatment initiations during the initial period of the pandemic. Our teams are continuing to provide the necessary support and information to make important treatment decisions. I have also been pleased with the Total Care Hub and its continued prioritization of access and support for patients receiving our approved therapies. They have adapted as necessary to meet patient needs and ensuring continuous supply during this challenging time. This further demonstrates our capabilities to effectively serve the rare nephrology and hepatology communities. As we look ahead, we are continuing to monitor the potential impact of the pandemic on our commercial performance in the second half of the year. But we currently believe that our initial guidance of mid-single-digit growth in the net product sales for the full year is achievable. During the second quarter, we also further strengthened our financial foundation by completing a successful follow-on equity offering. The additional capital will allow us to make the necessary investments to prepare for a successful launch of sparsentan, if approved and provide additional flexibility as we evaluate potential business development opportunities to diversify our future growth potential. We believe these efforts will help fortify our position as a leader in the rare disease community, and we are grateful to the investment community for the continued support of our mission. Overall, I continue to be impressed by the resilience and commitment of our organization, patients and their caregivers, physicians and partners, all of whom have contributed to advancing our therapies during this period. Now, let me turn the call over to Noah for an update on our clinical programs. Noah?

Thank you, Eric, and good afternoon. Both of our pivotal studies of sparsentan continued to advance despite the challenges presented by COVID-19. Over the last several months, we have seen incredible support and fortitude amongst the rare renal community. This is a testament to the significant unmet need that exists for FSGS and IgA nephropathy and the drive of patients, families, investigators and sites in the quest to find improved treatment options. It also speaks to the belief in sparsentan’s potential, if approved, to shape the treatment paradigm for patients living with these rare renal conditions. In keeping with these expectations, I have been very pleased with the performance of our clinical and operational teams over the last several months. Throughout this period, we have maintained close contact and collaboration with study sites, principal investigators and CRO partners, so that we are all aligned on the best ways to navigate the COVID-19 pandemic. Doing so has enabled us to better understand and address the evolving needs of patients during these challenging times and to provide ongoing support. And we have maintained a clear focus on the key priorities of patient safety, ensuring continuous drug supply, preserving data integrity and documentation in alignment with FDA and EMA guidance. We believe that the continued focus on these priorities, which we outlined on our last call, has helped us best mitigate the impact of COVID-19 on our ongoing trials thus far. We have also seen a remarkable dedication from patients and their families, investigators and site staff and the global clinical network supporting our programs, which has enabled our studies to adapt as needed. To-date, we have maintained continuous supply of investigational drug for sites and patients, and we have effectively utilized telemedicine, remote monitoring and other activities as needed to ensure patient safety remains paramount for those enrolled in DUPLEX and PROTECT. We also continue to focus on the key endpoint and safety data in our studies. To date, we have seen close adherence to study plans and scheduled visits. This has resulted in steady data collection in both studies, and we believe we are well positioned to deliver high-quality readouts. As we mentioned on our last update, global restrictions to combat the COVID-19 pandemic, not surprisingly, resulted in a reduction in recruitment activities for both studies. While we cannot control what may lie ahead with the pandemic, we are seeing encouraging signs of clinical restrictions easing throughout the global network. As a result, we have seen both screening and randomization rates for DUPLEX and PROTECT increase relative to the slowdown experienced in the spring. The Phase III DUPLEX study evaluating sparsentan in FSGS is progressing as expected during this time. As many of you will recall, in March, we achieved enrollment of the 190th patient in our DUPLEX study. The DUPLEX study protocol provides for a prespecified interim analysis to evaluate the proteinuria efficacy endpoint in the first 190 patients after 36 weeks of treatment. Successful achievement of this 36-week proteinuria endpoint is expected to serve as the basis for submission of filings for accelerated approval in the U.S. and Europe. We continue to believe that top-line data from the 36-week proteinuria analysis are achievable in the first quarter of next year. However, if based upon the pre-specified sample size reassessment, we elect to increase the number of patients to further support the confirmatory each of our endpoint and enrollment trends slow or do not continue to accelerate as a result of COVID-19, it could result in adjustment to the timing of the top-line readout. The Phase III PROTECT study evaluating sparsentan in IgA nephropathy has regained better-than-anticipated momentum and current enrollment trends are now ahead of schedule. Based upon our current trajectory, we anticipate achieving enrollment of the 280th patient this year, which would make top line data from the 36-week proteinuria analysis achievable in the second half of next year. If successful, the 36-week proteinuria analysis from the first 280 patients is expected to support accelerated approval filings in the U.S. and Europe. Similar to DUPLEX, if enrollment trends slow or do not continue to accelerate as anticipated for an extended period as a result of COVID-19, it could result in an adjustment to the timing of the top-line readout. Overall, I am very pleased with our progress and accomplishments during the initial stages of this challenging period. The continued advancement of our studies has positioned us for two high-quality readouts next year and moves us closer to our goal of ultimately delivering the first medicine indicated for FSGS and IgA nephropathy, if approved. Let me now turn the call over to Peter for the commercial update. Peter?

Thank you, Noah. Our commercial organization further demonstrated its unwavering commitment to supporting patients receiving our approved therapies and the capabilities necessary to support precision efforts to identify and treat new patients throughout this challenging time. We reported a strong second quarter with 8% growth over the same period last year. This was driven by underlying demand and new patient initiations for all products, a continued focus on support and access for those patients we track our products and a moderate increase in patient compliance. During the second quarter, our field-based teams maintained virtual engagement with health care professionals and found solid receptivity to the information and resources to enable further identification and treatment for patients that may benefit from our therapies. The uptake of THIOLA EC was a key driver of growth during the quarter. We remain encouraged by the continued broad usage amongst patients, including those who discontinued the original formulation and the launch continues to exceed expectations. We also saw meaningful treatment initiations with the bile acid portfolio and continue to be pleased with the utilization of our genetic panel to help study patients potentially find in earlier diagnosis. Our organization takes great pride, not just in delivering leading treatments to new patients, but also in maintaining the access and support that we know is critical. Throughout the quarter, the total care health worked with patients to ensure uninterrupted supply of medication and provide education and counseling as needed to ease the burden of living with rare disease during this time. In the first quarter, we estimated that the initial reaction to COVID-19 drove about a $1.5 million to $2 million worth of forward shipments and increased compliance. As anticipated, the forward shipments of 60- and 90-day supply normalized during the second quarter, and we resumed our normal shipping patterns. We continued to see a modest increase in patient compliance across our products during the second quarter. We believe this is a result of the desire by patients to have optimal control of their conditions during this time of added stress on the health care environment as well as a recognition of the increased flexibility that THIOLA EC may provide. Looking ahead, we are continuing to monitor the impact of unemployment changes on the patient insurance coverage. Today, we have not seen a material change. We remain committed to supporting our patients and ensuring that no one goes untreated. We also believe that patients, including those who may be candidates for our therapies, are visiting their physicians as frequently. While we have seen underlying demand to date, this could lead to fewer patients initiating treatment in the second half of the year. Nevertheless, given the strong start to the year, we believe our forecast for mid-single-digit growth over last year remains achievable. Overall, we are very pleased with the clear focus and performance of the commercial business to start 2020, especially in the phase of the COVID-19 pandemic. Through the remainder of the year, we will continue to focus on the needs of our patients as well as building upon our existing capabilities in order to support the continued organic growth of our approved products and ultimately maximize the potential of sparsentan for patients living with FSGS and IgA nephropathy, if approved. I will now turn the call over to Laura for the financial update. Laura?

Thank you, Peter. Before I go through our financial results for the quarter, please note that we will be discussing certain non-GAAP financial results. These non-GAAP results were also included in the earnings press release that we issued shortly before this call, along with the presentation of the most directly comparable GAAP financial measure and a reconciliation to GAAP. The earnings press release is located on the investors and media page of our website, retrophin.com. During the second quarter, net product sales from our commercial portfolio grew to $48.4 million, an 8% increase over the same period in 2019. We reported a GAAP net loss of $26.1 million for the second quarter of 2020. After adjusting for non-cash expenses and income tax, we reported a non-GAAP net loss of $9.9 million. On a GAAP basis, R&D expenses were $30.8 million for the second quarter of 2020. The decrease compared to the same period in 2019 is largely attributable to the discontinuation of the fosmetpantotenate development program in the fourth quarter of 2019. On an adjusted basis, R&D expenses were $28.2 million for the second quarter. Relevant non-cash expenses for the second quarter included $2.6 million of stock-based compensation and amortization. On a GAAP basis, selling, general and administrative expenses for the second quarter were $35 million. The minimal decrease over the same period in 2019 is largely attributable to lower professional fees. On an adjusted basis, SG&A expenses for the second quarter were $25.8 million. Significant non-cash adjustments for the quarter consisted of $9.2 million in stock-based compensation and depreciation and amortization. Looking ahead, our near-term operating expenses may continue to be difficult to predict as we further navigate COVID-19. Based upon what we know today, we anticipate that R&D will incrementally increase from current levels as we continue to invest in our pivotal trials. And we anticipate SG&A spend will likely be similar to modestly lower in the coming quarters. We believe our financial foundation remains strong and that we are well positioned to invest in critical areas for growth and navigate the COVID-19 pandemic as we know it today. As Eric mentioned earlier, during the quarter, we further bolstered our balance sheet through an underwritten follow-on offering of equity with approximate gross proceeds of $116 million. Including the net proceeds of the offering, we ended the quarter with cash and cash equivalents of $457.4 million as of June 30, 2020. We will remain disciplined in our use of capital. And notwithstanding any business development activity, we continue to believe that our cash on hand is sufficient to fund our operations beyond the readouts from our Phase 3 studies of sparsentan and into 2023. I will now hand the call back over to Eric for his closing comments. Eric?

Thank you, Laura. Despite the challenges of the COVID-19 pandemic, during the second quarter, our organization remained aligned on our key priorities and made tangible progress on near- and long-term objectives. We advanced the development of sparsentan, such that we now anticipate top-line data from the proteinuria readouts in both our pivotal DUPLEX and PROTECT studies next year. We reached new patients with our approved products and maintain the level of support and service our patients rely on. And we further strengthened our financial foundation, which we believe will allow us to continue fortifying our position as a leader in the rare disease community. While significant uncertainties remain as a result of COVID-19, we have demonstrated a resilience and ability to execute that gives me confidence that we will continue to deliver the highest level of support for our patients. And be in a strong position to ultimately deliver sparsentan, if approved, as the first medicine indicated for FSGS and IgA nephropathy. Let me now turn the call back over to Chris to open it up for Q&A. Chris?

Thanks, Eric. Corey, can we please go ahead and open up the lines for Q&A?

Sure. [Operator Instructions] Your first question comes from the line of Joseph Schwartz with SVB Leerink. Joseph, your line is open.

Hi. Can you hear me?

Yes, hi, Joe.

Hi, guys. Congrats on all the progress. Thanks for taking my question. I was just wondering if you can talk a little bit about how the dose titration works in DUPLEX and PROTECT. How standardized has that been? And do you think that the investigators are applying in a uniform manner? And do you have any insight into whether you are – you have been able to achieve target dosing in the patients in these 2 studies?

Sure. Thanks, Joe. I will have Noah talk about the dose separation schedule and then what we are seeing to date. Noah?

Yes. Thanks, Eric. So, yes. So that’s a great question. In terms of how – historically, when we ran the DUET study, if you recall, we started patients at 200 or 400 or 800. And as a result, at the 800-milligram dose, we saw some dose-limiting blood pressure-related effects in terms of light headedness and so forth. And we are not able to achieve as many patients at that dose to differentiate between the 400-milligram dose. Subsequently, we designed the DUPLEX study, and I think that’s where you are going with a titration step. Patients are started at the 400-milligram dose. And then after 2 weeks, they then – once acclimated at that dose and stable, they come back and then they get titrated up to an 800-milligram dose in order to help us get that key differentiating data set between 400 and 800. I will say that I have been pleased with the blinded data that I have seen. Remember, I am seeing data blinded across doses, but I am seeing how many patients can achieve that highest dose. And I think that that’s been a success for us. And I am confident that we should be able to get some better sense of that question. Hopefully, that addresses your question, Joe.

Yes, that’s a very helpful insight. Thank you. And then I was wondering, you have been through a lot already with these studies, executing them to date. Have you learned any more insights about the patient community that you are willing to share, such as any new segments? Patient subsets taking shape that maybe weren’t appreciated before? Or could be especially good candidates for sparsentan?

Thanks, Joe. Let me start with that one. It certainly is very important that we understand the heterogeneity of FSGS. And that is a lot of what we are aiming to do, not just from a clinical trial perspective, but as we look to reach these patients have approved commercially. We have, I think, one example of what we are doing, to really understand that, is that we know that FSGS disproportionately affects Black flat neck patients and for IgA nephropathy patients with Asian descent and we want to make sure that we understand what is the patient journey there for all patients, including those that are disproportionately affected. And I think we do know that there are different barriers to diagnosis and treatment that exists. That’s one of the areas that we are looking at. I will ask Peter to share a little bit more about some of the work that he and his team are doing to understand who these addressable patients are and the journey that these patients are on.

Yes. Thanks, Eric. And Joe thanks for the question. Indeed, I mean, I think in the segments that we are talking about, FSGS as well as IgA nephropathy, even though the gold point of the neutrals is the same, the patient population are quite diverse, in particular, when you also look at ethnicity. We are running for broad access for those patient communities. So it’s important for us to understand the patient journey, but also where those patients reside and what are access to care situations right now. And that’s a big part of our launch planning that we are looking into right now.

The mix good trend. Thanks for taking my question.

Thanks, Joe.

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

Thank you for taking my question and congrats on the quarter and the progress, I guess could you help us, I guess, understand maybe what’s driving the uptick in enrollment versus your expectation in the IgA nephropathy study? One of the things mentioned to us at ASN was just how competitive IgA trials are to enroll. So congratulations on the progress. But is there any feedback you can give us from your investigators or from the study in general that could, I guess, help us understand that?

Thank you, Michelle. And yes, that’s a very important question as we think about not just enrollment, but able to reach these patients if and when approved. Noah, why don’t you take this question about what you are seeing in the uptick?

Yes, great question, Michelle. Really, it goes back to momentum, if you recall what we saw in the first quarter this year prior to COVID. At the beginning of the year, we saw a growing enthusiasm for spars’ potential it was really around the strength of the clinical network that we built to support DUPLEX and PROTECT that helped us drive that recruitment. And I believe what we are seeing today is really a convergence of that same interest and understanding of the mechanism. It’s a non-IST. There is some advantages that this person can have in terms of resonating with sites. And it’s a great testament to the dedication from patients and investigators and the work the teams are doing to maintain, importantly, connectivity with the sites and the excitement level there.

Okay. And then just one more, if you don’t mind, you have now been cleared 3x by the DMC. Can you just help us understand this process better? This continues to come up for us. So could you just help us understand who comprises the committee? What data they are privy to? And what’s the objective? If there are any pre-specified events or signals on the safety side that they are looking for that might lead them to request more information or stop the trial. Could you just give us some color on this process?

Yes, Noah, why don’t you take that one?

Sure. So our data monitoring committee is made up of a group of experts in the field of nephrology, along with a statistician who helps advise on statistical issues. They meet periodically based on recruitment. And when they do, they – we provide them with standard data sets, demographics and any safety data that we collected and we are able to present to the group in an open session. But they also have access to un-blinded information that we don’t see and they can really ask for anything and everything under the sun that they feel is important to make a decision regarding the risk-benefit of the drug. And I think it’s critical to emphasize that it is a DUET pro steering committee. We did that. So they would be able to see the totality of data coming from both studies. And I think it’s been very encouraging as you pointed out, that we have had three meetings. The most recent was in April, and we have seen a green light to go forward and were very encouraging for us to move forward.

Great. Thank you and congrats again on the quarter.

Thank you, Michelle.

Your next question comes from the line of Maury Raycroft from Jefferies. Maury, your line is open.

Hi. This is [indiscernible] on for Maury. So, the first question is regarding, do you know what proportion of the FSGS patients in Phase 3 are actually from the U.S.? and is there anything you can say about the characteristics of the study?

Yes. Thank you for the question. I will speak briefly, and I think it’s important to – as a reminder that we continue to enroll patients. And so their – the demographics and regional makeup will continue to evolve. So I will ask Noah to give a little bit of sense about the clinical trial network that he mentioned and any further insights on the geographic makeup.

Yes. So Eric, to that point, we have a global clinical trial network across over 200 sites in 4 regions in the world. That’s U.S., Europe, South America and Asia Pacific. With regard to your question on the U.S., I can just say that evolves, but there is a substantial portion of patients coming from the U.S. And we continue to see some recruitment there even through the pandemic. We will – what we are seeing in terms of the baseline demographics, I think, are similar to what we saw in DUET. And as are pointed out, that’s an evolving data set, and we will continue to follow an update if there are any significant changes.

Okay, thank you. And for the rate that you did recently, does it change the scope of your business development plans or any licensing of new assets or large or expansion of sparsentan for new indications?

So we continue to look externally at opportunities within rare disease. And what I would say about our business development and really diversification of our pipeline, certainly, we want to make sure that we are looking at opportunities to optimize the development of sparsentan. But we also are looking at opportunities externally. Our focus will be in leveraging the capabilities that we have in late-stage development and commercialization as well as the therapeutic expertise that we have in rare nephrology, rare hepatology and related therapeutic areas. So I would say our strategy and our area of focus hasn’t changed, and we believe that there are some interesting opportunities that exist within that space.

Thank you. And one last question. So does the time line bumps actually the final study readouts, too, like on the EGFR readout?

So it would be based on the final patients enrolled and then followed for 2 years. So really, the time line of the final confirmatory EGFR endpoint would be best estimated once we indicate that the last patient has been randomized.

Okay, makes sense. Thank you.

Thank you.

Your next question comes from the line of Tom Lugo with William Blair. Sir, your line is open. Excuse me, Tim Lugo.

Not a problem. Thanks for taking my question. And I guess to Noah, can you maybe drill down a bit on the prepared commentary and the cost of language around the DUPLEX reading time out, you’ve already had 3 DMC reviews, but it still sounds like there is kind of some cautious commentary around the Q1 ‘21 readout? Is there some sort of variability, which the DSMC has been seeing in the EGFR readouts or – and I guess how many reviews will there be between now and Q1 ‘21, which could trigger any sort of expansion?

Yes. Tim, so I think it’s a caution that you may have heard in my voice. And as you know, you followed our story very carefully. We like to be cautiously optimistic. It was related to COVID-19 and the pandemic. When you think about where we are right now, as I mentioned, we see increased momentum in both studies approaching in PROTECT, approaching pre-COVID levels and DUPLEX heading that way. And I think we have really got some very, very solid, steady progress there that makes us confident in the first quarter readout. So not so much how we’re doing now and how we expect to do. It’s more should COVID have a second wave or should we worsen, we just want to make sure that we are cognizant of that, and we’ll follow throughout the year and update you guys as appropriate.

Yes. And Tim, what I can add is a part of the aspect in Noah’s prepared remarks is around the planned sample size assessment. And that we wanted to mention, one, because it is part of the design in managing the power for the confirmatory EGFR endpoint. But that may have a knock-on effect on the FPRE, which is what we indicated or alluded to. And I think, again, we believe that the quarter 1 readout of FPRE is achievable in quarter 1 of next year. If we find ourselves in a situation where the sample size assessment does increase and there is a continued or worsening restriction of clinical trial sites due to COVID-19, we may need to adjust our time lines for that data readout. Again, that’s not what we’re seeing today, but it is something as we look forward and we’re cautious about what may happen if we do see an impact of the pandemic.

Okay. And I guess, would that also lead to PROTECT probably being pushed out as well? I’m just trying to kind of understand why PROTECT seems to be enrolling so well, but yet there’s still a little caution around DUPLEX. It seems like in FSGS, the rationale is so much more of a given. But I assume COVID would impact both trials. Is that correct?

Right, Tim. So we do see a strong momentum or momentum strengthening for both DUPLEX and PROTECT. Recall that last quarter, we did indicate that the sample size increased for PROTECT to maintain the power for the EGFR endpoint. So that change already occurred. That gives us the ability to really reflect what is that final patient enrollment target and with all of that information, as we project out, we believe that we are in a good place to be able to report that – the proteinuria endpoint next year. With DUPLEX, again, we believe based on what we see today and the final enrollment target without a sample size change, we believe that we are going to have the quarter 1 FPRE readout. The uncertainty and the difference between DUPLEX and PROTECT is because we have not yet done the sample size reassessment for DUPLEX. So we wanted to provide that transparency that, that could happen, not to say that it will, but it could happen in increasing the sample size. That may, in the context of further restrictions of COVID could have an adjustment in our timing.

Okay, understood. And given the state of the base business and the raise during the last quarter, do you still think you’re able to run the business at a relatively cash-neutral position at least until you have to build out an FSGS launch?

Thanks, Tim. Laura, why don’t you take this question?

Okay. Look – looking at our current run rate for OpEx, I mean, I guess we are relatively cash neutral, but we expect our R&D expenses to go up modestly from current levels, mostly because we continue to invest in the pivotal studies and that should continue through the second half of the year. SG&A should trend with current levels closely or potentially slightly down. So our use of cash will increase over prior year levels. But really, our OpEx levels throughout the rest of the year, there will be some modest net-net increase, but not significantly so. But importantly, we believe the cash with the raise and the cash we had on hand is really able to get us through the readout of both studies, DUPLEX and PROTECT, and into 2023 and again, gives us optionality for potential BD, if we should see and interesting opportunity there and also to do a solid build-out for our launch. And if we end up proceeding into the EU as part of our launch strategy, we don’t know yet. But if that is part of our go-to-market strategy, we have the flexibility to be able to invest there as needed.

Okay great. Thank you for the question.

Thanks, Tim.

Your next question comes from the line of Dae Gon Ha with BTIG. Sir, your line is open.

Great. Thanks very much for taking the questions and congrats on the progress from my end as well. So thanks for all the color regarding the time line adjustments for DUPLEX and PROTECT. I wanted to drill down a little bit given the demographic reference that you made earlier about FSGS and IgA patients. So if we look at DUPLEX and PROTECT, I would imagine for you guys to provide us with an updated time line, you have a fairly good sense of confidence in terms of meeting that renewed time line, I guess. But given that a lot of these trials that are overlapping between these two trials, do you have locations in various hotspots, if you will? And even internationally, I’m looking at Hong Kong and South Korean sites that exist in both of these trials, they do also report some resurging of cases. So can you help understand sort of your confidence level? I mean is your prepared remarks basically giving you too much confidence based on the trends so far or I guess where does the current resurgence pattern come in, in terms of your projection? And then I’ve got a follow-up.

Sure, Dae Gon. Thank you for the question. And let me first speak to the time lines, and then I will ask Noah to speak about the clinical trial sites. And yes, we did move in the – or move up the PROTECT proteinuria time line. The rest of our time lines remain the same. So I just wanted to make sure that, that was clarified. Noah, why don’t you speak a little bit about our clinical trial sites and how the team is managing through any of the changes on the pandemic and restrictions?

Yes. So I think a couple of key points to make here, our communication and connectivity are very high between our team and the sites directly and our CRO. And I think that’s really helped us through the pandemic, maintain that confidence in the sites and our commitment to this area. And when things opened up in various regions, we were able to see that acceleration. So I think that progress really puts us on track as we talked about for the pivotal study time lines for next year and gives us confidence there. I think another important point to make is we’ve got a global clinical footprint, over 200 sites in 4 regions around the world. So I think as you would expect, in the geographies where there has been less exposure or reduced spread of the virus, we’re seeing activity increase at a higher rate. So for instance, Asia Pac and Europe would be examples of this. There are also parts of the world where you are seeing adaptation, where they are using telemedicine or telepresence, use of a visiting nurse, for instance. So I think there’s this quite a bit of innovation and adaptability based on the regulatory guidance that was provided the FDA and EMA guidance. And I think overall, we have seen less of a need for this as the months have progressed and will look like it’s starting to reduce that need. But I think the caveat as said is we could go into a situation where we can get a second wave and things could worsen. So there’s uncertainties there that we can’t control. But I think right now, we feel confident in our reporting time lines and so much so that we pulled up the PROTECT time line as well.

Great. And then the second question I had was with regards to some IgAN data that’s reported expected between now and year-end. So I was wondering if you can kind of give us your thoughts on how think the market dynamics will shape up? I mean, given the sort of pull forward in the PROTECT time line, I would imagine this work is probably picking up pace in terms of understanding the market dynamics, the pushes and pulls as you consider sort of narsoplimab as well as Nefecon potentially being approved based on those data? Thanks.

Certainly. Thank you, Dae Gon. So I will share my comments, and then I will ask Noah to share what he is hearing from investigators and thought leaders. Certainly, we are focused on executing our programs to deliver sparsentan to these patients for FSGS and IgA nephropathy. And that execution, I have been very pleased with as, as we now see a significant moving up of the time lines for our IgA nephropathy program. Noah, do you want to talk a little bit about how you see the field evolving? Or perhaps what you’re hearing from top nephrologists?

Yes. I mean, I think especially in the COVID pandemic, what we have seen in terms of prioritization, both of clinical trial recruitment and also some emerging data sets regarding steroid or IST use has really put front and center of the need for non-IST type approaches. I think sparsentan falls nicely into that category. You mentioned a couple of compounds that are actually in the immune suppressive camp. And I think that while there is certainly patients – some patients require need steroids, it’s something that clearly there is some side effects and concerns long-term use. So I think we are in a good position there. I think we’ve heard that directly from sites. And I think that’s probably why we’re seeing the tick in recruitment now and the focus, especially during the pandemic, which the ISTs have also been in both potentially as raising risk for patients for COVID-19. So that’s a concern of patients in sites as well. So hopefully, that addresses your question.

Fair enough. Thank you very much guys.

Thank you, Dae Gon.

[Operator Instructions] Your next question comes from the line of Gena Wang from Barclays. Ma’am, your line is open.

This is David Dai on for Gena. Thank you for taking my questions and again congrats on the strong quarter, I want to have a question on the – your commercial sales. So the question is regarding the COVID-19 impact on sales. So other companies have seen large impact in April and is there a gradual improvement in May and June. Is that the trend that you are seeing as well? And how should we think about the trend going forward? Is it going to be more toward the pre-COVID-19 impact?

Thank you, David, for the question. As we have indicated, we have seen strong performance from our commercial organization in quarter 1 and in quarter two. I will ask Peter to share a little bit more detail about the trends, but again, we don’t provide further detail on a monthly basis, but have seen a strong uptake in terms of new patient acquisition during the pandemic as well as before. Peter, anything further that you would like to add?

Yes. Thanks, Eric. And thanks for the question, Dave. To Eric’s point, I think we have seen strengths for all three products, that was mainly driven by new patients so far. So I think given the nature of our business, in rare disease, we have a very experienced field force that is very closely connected to the physicians. And I think that dynamic continues to happen in a virtual world right now. But often like physicians also see our cams, our field teams as additional support system to help serve patients better. So I think that may be slightly different large organizations where it’s more focused on the sales goal in order to support. So I think in that respect, we have seen solid performance in the first half of the year. It’s difficult to say for the second half of the year with regards to the uncertainty. I think, in the preannounced script, we talked about like there could always be differences with regards to patient access and insurance rates, maybe due to unemployment rates. But so far, I think we have had solid performance. And as we said earlier, I think we are confident that we can stay within the guidance of mid-single-digit growth.

Thank you so much.

May be we can move to next question.

Sure, I was just about to ask if you wanted me to do that. Your next question comes from the line of Do Kim. Do your line is open

Hey good afternoon everyone. This is [indiscernible] on for Do. Congrats on the progress for the quarter. Mine entails be a little bit far out. But in terms of the overlap between your current relationships with nephrologists through your base business and what the potential treaters for FSGS and IgAN, if you can speak to that a little bit, given that Laura just said that SG&A is expected to kind of stay consistent, potentially be a little bit reduced there, given that you’re going to have to start ramping up for the commercial launch for sparsentan. I just kind of want to reconcile those 2. I don’t know if there’s to potential internal restructuring debts on the horizon based off of something that’s going on with the pandemic that’s kind of allows you to potentially reduce costs in that front? But if you can give some color on both of those, that would be helpful for us.

Sure. Thank you for the question. And I would say that we do not have any plans to cost cut or make any changes with regard to the pandemic. Our focus will continue to be in growing our commercial business and in progressing our plans with sparsentan for successful file and ultimately, the launch. Peter can talk a little bit about what he sees for the potential overlap in prescribers that we currently work with and those that may be prescribers for sparsentan. Peter?

Yes. Thank you for that. And I think it’s a very good question. And I think given the current footprint that we have, the established footprint, nephrology is an important for call point for us already. So I think we operate from a position of strength and we can further build our organization to really optimize the launch for sparsentan in FSGS and IgA nephropathy. I mean there’s a high unmet need in those patient populations. And I was speaking earlier like understanding the patient population. It’s an important element that we really are set up for success when we launch the product, and we really need to launch preparation for that. But like I said, it’s not like you start from scratch. I think we have a well-established commercial footprint capabilities that we can further build upon that is already for a large part focused on nephrologists.

Thank you.

There are no further questions at this time.

Great. Thank you, Corey, and thank you, everybody, for joining us today. This concludes our call. I appreciate you sticking through it with the technical issues that we ran into, and we look forward to updating you on our progress as we move through the balance of the year. Have a good afternoon.

Ladies and gentlemen, this does conclude today’s conference call. Thank you for your participation. You may now disconnect.