ChemoCentryx Inc (CCXI) 2021 Q4 法說會逐字稿

Good afternoon, and welcome to the ChemoCentryx Fourth Quarter and Full Year 2021 Financial Results Conference Call. (Operator Instructions) As a reminder, this conference call will be recorded.

And I would now like to turn the call over to Bill Slattery, Jr., Vice President of Investor Relations and Corporate Communications at ChemoCentryx. Mr. Slattery, please go ahead.

Thank you, operator. Good afternoon, and welcome to the ChemoCentryx Fourth Quarter and Full Year 2021 Financial Results Conference Call. For those of you I have not yet met, I recently joined ChemoCentryx as Head of Investor Relations and Corporate Communications. My contact information can be found at the bottom of the press release we issued earlier this afternoon, providing an overview of our financial results for the quarter and year ended December 31, 2021. This press release, along with the slide deck that you may find helpful while you listen to this call are available on the Investor Relations section of our website at www.chemocentryx.com.

Joining us on the call today from ChemoCentryx are Dr. Thomas Schall, President, Chief Executive Officer and Chairman of the Board; Susan Kanaya, Executive Vice President, Chief Financial and Administrative Officer; and Tausif Butt, Executive Vice President and Chief Operations Officer. Tom and Susan will make introductory remarks before we open the call to your questions.

During today's call, we will be making certain forward-looking statements. As explained on Slide 2, these forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These risks are described in the company's filings made with the Securities and Exchange Commission, including our annual report on Form 10-K filed on March 1, 2022. We are cautioned not to place undue reliance on these forward-looking statements, and ChemoCentryx disclaims any obligation to update such statements.

In addition, this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, March 1, 2022. ChemoCentryx undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this live conference call.

I would now like to turn the call over to Tom.

Thank you, Bill. Good afternoon to everyone listening. Thank you for joining us. Please move to Slide 3 in our presentation. Today, I will cover 3 important topics that highlight our recent success and outline the significant milestones we expect throughout 2022. First, we'll take a look at our progress in the early weeks following the U.S. launch of TAVNEOS in ANCA-associated vasculitis. Second, I'll update you on our plan to broaden TAVNEOS into a pipeline in a drug, including next steps that we expect to take in lupus nephritis, severe hidradenitis suppurativa and C3 glomerulopathy. Third, we'll discuss recent progress we've made and next steps for our unique orally active, small molecule PD-L1/PD-1 checkpoint inhibitor, CCX559, for which we expect initial Phase I data this year.

Moving to Slide 4. You can see that 2021 was a historic year in our corporate journey. After over 20 years since the founding of ChemoCentryx, we've navigated the uncertain and uncharted territories at the frontiers of science and achieved our long-standing goal of bringing our first medicine to patients suffering from a devastating and debilitating disease. Following FDA approval, we launched TAVNEOS as an adjunctive treatment for use in patients with severe active ANCA-associated vasculitis on October 18, leaving us 51 business days in the quarter post-launch. As we launched, we took a final step in our vertical integration. We now constitute an integrated U.S. biopharmaceutical company that discovers, develops and now markets innovative medicines of our own devising. It was a long and arduous journey to get here with some 17 years working on the TAVNEOS program alone. But the human rewards in bringing something truly different to underserved people such as those enduring ANCA-associated vasculitis have made it all worthwhile.

January of this year brought another significant advance with the EU approval of TAVNEOS. This means that TAVNEOS is now approved in the U.S., in Europe and Japan for ANCA-associated vasculitis indications. Further, the European approval triggered a milestone payment of $45 million from our partner Vifor Pharma. We are pleased to share that Vifor launched TAVNEOS in Germany on February 15 of this year with additional territories expected in the first half of 2022. As a reminder, Vifor will pay ChemoCentryx royalties in the teens to the mid-20s on ex U.S. sales of one aggregate net sales line.

Back to the United States, as shown on Slide 5, we set out to develop our commercial infrastructure in the months leading up to approval, including the hiring and meticulous training of professionals in medical science liaison positions, as sales representatives and in other key roles. As we approach the launch, our initial marketing focus was multifaceted by design. First and foremost, we sought to educate physicians on the TAVNEOS-approved label and supporting clinical data, raising awareness through a hybrid approach of in-person and virtual meetings that provided flexibility in these times of COVID.

Through our commercial team, we are initially focusing on the top prescribing physicians. We calculated that a combined field force of about 75 would sufficiently cover the approximately 3,400 clinicians comprising key external experts, top prescribers and community specialists who collectively are responsible for roughly 80% of all ANCA-associated vasculitis prescriptions in the United States. Further, we recognize the importance of working closely with patients, listening to advocacy groups and other active voices in the vasculitis community that have welcomed the arrival of a modern, orally administered and mechanistically targeted medication, which was designed from the start with their disease in mind.

Too often, orphan disease patients seem to feel that they languish in a seldom-visited treatment [backwater], receiving occasionally repurposed drugs that may provide benefits to their condition but were not designed specifically for that purpose. TAVNEOS was and is different.

Now through branded campaigns, we plan to educate appropriate patients on the TAVNEOS safety and efficacy profile while also employing unbranded campaigns to provide disease awareness. These efforts are designed to support patients in having appropriate conversations with their health care professionals. Through these mechanisms, we have activated a continuous positive feedback loop that will help inform our actions as we move forward, soliciting and obtaining prescriber and patient experiences in order to support continuous improvement of our commercial and outreach efforts.

Let us now move to Slide 6, as we reflect on our first few weeks post-U.S. launch. I am pleased to report encouraging progress. While the headline number is the top line revenue for Q4, which came in at approximately $1 million, including limited channel supply for our agreements with specialty distributors and specialty pharmacy selling TAVNEOS, we have stated before that we believe the best way to track our progress for the first few quarters is by focusing on 3 key performance indicators. Specifically, during the fourth quarter, these metrics include the following. We received 127 patient start forms or patient referrals from 102 unique prescribers. At the end of Q4, there were 90 patients on drug. The conversion rate of patient start forms to patient on drug was 71%.

The results in these key metrics mark promising progress for a rare disease, such as ANCA-associated vasculitis, especially when considering that the launch took place mid-quarter, preceding a major holiday season, and that was, of course, impacted by the arrival of an Omicron wave of COVID even before the Delta surge had finally ended. As we move through the current quarter, which will eventually be the first full quarter of commercial activity, the leading indicators are favorable for our expected upward growth curve.

Moving to Slide 7. We have superimposed the progress across key metrics from the beginning of the first quarter, i.e., through January. Accordingly, between the launch and January 31, we received 179 patient start forms from 140 unique prescribers. And there were 141 patients on drug, representing a 79% conversion rate from patient start forms or PSFs. Since we are still at quite an early stage, I will also share with you today more largely qualitative color and context than we expect to give you in future quarters when the qualitative -- I'm sorry, when the quantitative data will paint a more complete picture than it does today.

On Slide 8, for example, let's look at some of the prescribing patterns that we are seeing. Through January 31, as it relates to what types of physicians are prescribing TAVNEOS, we estimate 66% of the prescriptions are coming from rheumatologists, 28% from nephrologists and 6% from other treating physicians such as pulmonologists. As it relates to where these referrals are coming from, while we are pleased with the traction across centers of excellence, we are particularly enthusiastic about the inroads we've made within the community setting as well. This success is in part a testament to our commercial team's reach, supplemented by the unaided awareness of TAVNEOS that has continued to blossom since the ADVOCATE trial pivotal results were initially released in the New England Journal of Medicine last year.

We are also pleased to share that approximately 33% of physicians are repeat prescribers through January 31. We believe this suggests physicians are having positive first experiences, which we hope to continue to build upon. Additionally, the time it takes to convert patient start forms to patients on reimbursed medication is now tracking in line with our expectations, taking approximately 4 weeks to obtain a payer coverage decision, which we anticipate will continue to decrease over time.

What's more? Initial feedback from health care providers suggest that they are experiencing success now in obtaining reimbursement based on prior authorizations and, if necessary, appeals for appropriate patients who meet the criteria outlined in our FDA-approved label. As these patients await coverage decisions, we have provided mechanisms for immediate access to treatment for eligible patients through our support programs. While we continue to support access per plan via such patient support programs, we are now seeing an ever-greater share of paid models as the launch progresses.

Having launched into a unique environment, I'm very pleased with our progress to date. Apart from the obvious constraints on the availability of in-person as opposed to virtual visits, whether by our reps to physicians or by patients to physicians, the Omicron wave led to staff shortages amongst health care workers, which in turn means that physicians continue to face capacity challenges, seeing their patients in person. We acknowledge that this is not a phenomenon unique to ChemoCentryx. And in any case, we plan for an orderly progression in the quarters following launch rather than a bolus of early patients, which could have distorted the true growth picture. In short, we believe that TAVNEOS has the potential to become a blockbuster drug at peak in our first indication alone. In the meantime, I look forward to updating you again in a couple of months when we release our full Q1 results.

Let us now turn to Slide 9, where we will look beyond our current commercial efforts. We have an exciting year ahead from a clinical development perspective as we aim to expand our patient reach by developing TAVNEOS as a pipeline in a drug and also by advancing our novel orally administered PD-L1/PD-1 checkpoint inhibitor known as CCX559. In 2021, as you know, we prioritized and focused on ANCA-associated vasculitis approval. In Q4, we were busy building up a new world-class clinical development organization, led by Dr. Rita Jain, who joined ChemoCentryx full time in October as our Chief Medical Officer, in addition to her role as a Director on our Board, a position she has held since March of 2019. Dr. Jain has enjoyed a distinguished medical, academic and corporate career and is an outstanding leader to take our development efforts to the next level. She will also oversee the post-marketing studies on TAVNEOS in ANCA-associated vasculitis, which is likely to yield useful supplementary data of interest to physicians and payers.

Moving to Slide 10. The biological rationale for TAVNEOS across several underserved inflammatory and autoimmune disorders is compelling, given its unique ability to selectively inhibit the C5a receptor, preserving other functions and components of the immune system. I will remind us. TAVNEOS was designed to be an anti-inflammatory agent based on its mechanism of action and not broadly immunosuppressive. Throughout 2022, our focus includes 3 indications: lupus nephritis, severe hidradenitis suppurativa and C3 glomerulopathy.

First, we plan to meet with the FDA to discuss our plans for lupus nephritis, a disease in which uncontrolled complement activation has been implicated in kidney destruction. Once steps have been agreed upon, we anticipate initiating a clinical development program for TAVNEOS in patients with lupus nephritis in 2022. This should be followed in close order by another meeting with the FDA to discuss our plans for a pivotal Phase III trial of TAVNEOS in patients with severe hidradenitis suppurativa or HS, which we hope to initiate in the second half of this year.

As you'll recall, in our Phase II AURORA trial in HS, TAVNEOS showed a statistically significant improvement over placebo in a prespecified subgroup of Hurley Stage III HS patients. To investigate and understand that clinical result, our research at ChemoCentryx has now provided evidence for clear differences at the molecular, the cellular and the histological levels between more moderate HS disease, for example, Hurley Stage II versus severe or Hurley Stage III HS. A key differentiating feature appears to be a greater involvement of the C5a, C5a receptor axis in Hurley Stage III disease versus milder forms of HS. Our data will be discussed at upcoming dermatology conferences this year.

As for C3G, later in 2022, we plan to meet the FDA to discuss our ACCOLADE trial results of TAVNEOS in the very rare kidney disease of C3 glomerulopathy, data from which we have shared previously. The ACCOLADE trial was the largest blinded, randomized controlled study conducted to date in this indication, and we are keen to review the effects demonstrated in the study with the FDA such as the evidence for a slowing a fibrotic progression indicated by the endpoint of the C3G histologic index of disease chronicity and other effects seen with TAVNEOS administration.

We don't propose to invest in additional large-scale clinical work in C3G in the absence of some defined path forward by which TAVNEOS might be used in this indication due to the long and costly nature of such trials involving, for example, serial kidney biopsies at baseline and other time points, along with the challenges of patient recruitment in this very rare disease. We are hopeful that the data will inform a positive discussion with the FDA in this potentially life-threatening disease, for which there are no approved therapies.

Last, let me say a few words about CCX559. Our potent, orally administered PD-L1/PD-1 inhibitor, which entered first-in-human studies in Q3 of 2021. As seen on Slide 11, after dosing multiple cancer patients, we can confirm that the drug is orally absorbed well at levels that are approximately proportional to dose and appearing generally well tolerated to date. Additionally, a number of indicators confirm that immune cell activation is occurring. Given the physical limitations of large molecules, that is, anti-checkpoint antibody therapy, for example, which may not penetrate the tumor microenvironment well, a small molecule medication has the potential to establish itself in several niches in what many believe could be a fairly short time frame, providing a beachhead from which we could substantially expand clinical development of CCX559 in this very valuable area.

We plan to present initial data from the dose-escalation phase of this CCX559 Phase I study at upcoming oncology meetings, starting with the AACR in April, and we expect to enter a Phase Ib/II clinical trial in the second half of this year.

With that, I'd like to turn the call over to Susan Kanaya to outline our healthy financial situation heading into 2022, which is sufficient to progress our TAVNEOS launch efforts and expected clinical development activities. Susan?

Thank you, Tom. Our fourth quarter and full year 2021 financial results were included in our press release today and are summarized on Slide 12. Total revenue for the fourth quarter and year ended December 31, 2021, were $2.3 million and $32.2 million compared to $4.4 million and $64.9 million in the same period in 2020. TAVNEOS U.S. net product sales were approximately $1 million for the fourth quarter and full year 2021. Product supply revenue contributed $1.3 million and $1.8 million for the fourth quarter and full year 2021, respectively. Collaboration and license revenue was $29.1 million for the full year of 2021 compared to $64.4 million in 2020.

Cost of sales for the fourth quarter and full year 2021 was $302,000. Costs incurred for manufacturing campaigns initiated prior to the October 2021 FDA approval of TAVNEOS were recorded as research and development expenses. Research and development expenses were $18.8 million for the fourth quarter of 2021 compared to $21.2 million for the same period last year. Full year 2021 research and development expenses were $83 million compared to $77.9 million in 2020. These increases were primarily attributable to the manufacture of commercial drug supply in anticipation of the launch of TAVNEOS in ANCA vasculitis and higher research and discovery expenses, including those associated with the development of CCX559.

Selling, general and administrative, or SG&A, expenses were $23.3 million for the fourth quarter of 2021 compared to $12.7 million in the same period in 2020. Full year 2021 SG&A expenses were $78.9 million compared to $42.2 million in 2020. These increases were principally due to higher employee-related expenses associated with commercialization planning efforts and the launch of TAVNEOS in 2021. Net losses for the fourth quarter and full year 2021 were $40.5 million and $131.8 million compared to net losses of $29.9 million and $55.4 million for the respective periods in 2020.

Total shares outstanding as of December 31, 2021, were approximately 70.4 million shares. We closed 2021 with approximately $362.3 million in cash, cash equivalents and investments. This year-end balance excludes the $45 million milestone for the EU approval of TAVNEOS received from Vifor in the first quarter of 2022.

Lastly, for 2022, we expect to utilize cash and investments in the range of $120 million to $140 million. Tom?

Thank you, Susan. Moving to Slide 13. Before opening up to your questions, let me briefly summarize where we are, after a watershed year, in which ChemoCentryx arrived upon the world stage as an integrated biopharmaceutical company. We have positive feedback from the TAVNEOS launch, and the leading indicators of further growth are favorable. We are focusing on our pipeline-in-a-drug approach for TAVNEOS, aided by a world-class clinical development function and have advances of lupus nephritis, severe hidradenitis suppurativa and C3 glomerulopathy in our sites for 2022.

CCX559 is progressing through Phase I with initial clinical data to be presented this year. And we are in a strong financial position to execute right across the scope of our enterprise. As we joined the ranks of commercially integrated U.S. biopharmaceutical companies, I am happy to report that the landmark year of 2021 has positioned ChemoCentryx well. Our enterprise has traveled far to bring the benefits of medical innovation to clinicians and especially to the patients that we serve while also aiming to provide returns for our shareholders. And as momentous as 2021 was for the company, we have only just begun.

I will now turn the call over to the operator for your questions. Operator?

(Operator Instructions) Our first question comes from Steve Seedhouse of Raymond James.

This is Ryan Deschner on for Steve Seedhouse. I just want to ask if you guys can give us any more quantitative detail on patient start forms or on the demand, in general, seen in the month of February relative to January '22, and then also, when do you expect to reach a majority proportion of paid scripts?

Yes. So thank you very much for that question. So we're not providing progress beyond the additional month in Q1 just yet. But again, to remind you, through January, the patient start forms reached 179, patients on drug reached 141, representing almost an 80% -- 79% conversion rate, and we had 140 unique prescribers. So I think we're quite happy with that conversion rate that's accelerating over where we were in Q4, which indicates to us that physicians are having success getting patients on therapy. We're also happy to see 33% repeat prescribers, which suggests to us that physicians are having a positive first experience. And further, we're -- we see the time to coverage decisions are down now to approximately 4 weeks on average, and that's down from our initial expectation of 4 to 6 weeks. So all those indicators are going in the right direction, and I think we're pleased with that.

We have an increasing number, an ever-increasing number of paid prescriptions as we go forward. And again, we imagine that early on, we were making an investment in the patient support programs appropriately to get eligible and appropriate patients on the drug as quickly as possible with as few barriers. And we think that investment will pay off. And in future quarters, I will tell you just how big that ever-increasing percentage of paid prescriptions will be.

That's helpful. And actually, if I could squeeze one more quick one. How many scripts does each patient receive on average? Is it sort of 1 for a 3-month supply off the bat? Or how does that work?

So essentially, we have 1-month prescription and then we renew those.

Our next question comes from Dae Gon Ha of Stifel.

I'll stick to one question but a multipart one, if I may. So with regards to the -- I guess, your market research, 66% being rheums and 28% being nephrologists, I guess, how are you thinking about marketing-wise, strategically targeting nephrologists to gain a broader following in that cohort? And also, as you think broadly about sort of the feedback you're getting from both rheumatologists and nephrologists, is there any kind of reluctance or more, I guess, stronger affinity by one group of docs versus the other?

Thank you, Dae Gon. Yes, it's true we see more rheumatologists, maybe slightly more than we might have modeled. Having said that, these are very complicated patients. And frequently, they see more than 1 specialist where -- and again, not infrequently their primary doctor is a rheumatologist. So even if they have kidney manifestations and are seeing a nephrologist, they will go back very frequently to the rheumatologist and that who writes -- that's who's writing the script. So I think that that explains in part some of that predominance in the rheumatology part of the equation.

Having said that, we're very keen on helping nephrologists as well understand the benefits of the drug. As you know, published data suggests that it has a quite marked effect on eGFR improvement. And I think that as the experience in the nephrology community expands, and we've already heard some interesting first experiences in nephrology cases, and when you start hearing about those either peer-to-peer or at major upcoming meetings in Europe and the United States, I fundamentally think you'll get a lot more attention from nephrology. I'd also say this. Look, it's quite early days, and this -- the preponderance of rheumatology script writers versus nephrology may, in fact, be somewhat exaggerated at this early point. So we'll just have to see how that goes going forward.

Tom, I'm really sorry. If I can squeeze in one more question. The January trend that you provided today does seem like there is some sense of acceleration in terms of PSFs and PODs. So can you maybe speak to what you're seeing there and the dynamics? And to what extent has Omicron been still a headwind, if you will, as you commented in -- 2 months ago at a competitor conference?

You're absolutely right. Look, I think the acceleration looks good. I mean, in January alone, what did we add, about 50 more patient start [forms 152] and about 50 additional patients on drug just in January alone. Those are really good trends, right? So those things are things that I'm very happy with. Look, let's talk about COVID. COVID is and will be a major factor for all of us and for some time to come. No matter what happens with the current wave of Omicron, even if it disappears tomorrow, nothing is going to change quickly in how COVID has impacted how we can interact in clinical settings, not just we as sponsors, but patients and physician as well. So we can't be naive about that. That's for sure.

Having said that, I think that despite launching TAVNEOS in Q4 until like a sub-quarter and major holidays and the Omicron emergence, I think we were really pleased even with the Q4 trends at the breadth of the TAVNEOS prescribers, which includes not just the so-called external experts, but the community physicians as well. And yes, both in the rheumatology and nephrology.

So look, it is impacted. COVID has and Omicron has impacted certainly MSL access and rep access to sites, especially at the large academic centers or centers of excellence. About 40% of our calls have been in person. That's even -- in January so far, it was even a bit less than 40%. But that's okay. We plan for virtual visits to continue. We planned when we were launching to have a hybrid approach. Our team has the tools needed to connect either in person or online. So we hope that we'll be able to meet providers when, how and where they need to be met. So I think, overall, we've got the situation well in hand.

We have Michelle Gilson of Canaccord Genuity.

I guess, Tom, I just wanted to clarify the numbers of patients on drug. That's not necessarily patients on paid drug, right?

That's correct. That would be all patients on drug at this point.

All right. Sounds good. And then could you just kind of walk us through the time line of patients -- of the submission of start forms to the beginning of treatment? And then did you give -- I don't think I heard you give us any numbers on like kind of the average time that you're seeing reimbursement. And could you also -- maybe, Tosh, one for you. Could you outline for us your strategy around positioning, what your core messaging is to physicians around TAVNEOS in selecting appropriate patients?

Excellent compound question, Michelle. Let's try to take it in sequence there. So we have -- you're quite correct, patients on drug includes all patients on drug, including those that benefited from our patient support programs and patient assistance programs. Now you will recall, maybe from previous discussions, that we had very carefully considered our plan to make sure we were trying to remove as many barriers as possible for early and immediate access to drug for eligible and appropriate patients, those that were eligible and early, right?

So that's why early on we knew that the patient support programs, including patient assistance, where there is the ability to get on temporary supplies of unpaid medication was so important. And one of the reasons that we continue to indicate that our metrics in the early quarters are, most importantly, patient start forms, patients on drugs and conversion rate. And then that -- the revenue line will lag a little while. But overall, we believe that line will be much higher because of these early investments through patient support programs.

So the number of paid folks as we go along grows. And that's a trend we're seeing through Q4 and into the -- as I mentioned, into the early parts of Q1, where we've analyzed the data quite closely. Now the time, therefore, to get people on drug, again, by design is as much as we can provide that support and provide services to clinics and patients can be very short because, again, patient assistance can happen before the time that a decision is made on getting the coverage inactive. So that's important.

We have noticed, again, that the time to getting coverage is now dropping as an average. It's about 4 weeks. But it's a wide range. It can be like, basically, the same day out to several weeks, but about 4 weeks. So that's a figure that I mentioned. And that's very reasonable because patient access and patient support programs are really designed around that sort of 4-week window at this early phase of the launch. So I think all of those are clicking in nicely with the program we designed and the metrics are coming out as if the performance in the real world is mirroring fairly well our model performance. And, Tosh, I will turn it over to you for the other part or parts of that question of Michelle about message points for HCPs, et cetera.

Thank you, Tom. So Michelle, thank you for your question. So look, in terms of positioning and patient types, first of all, just to reassure everybody, our positioning and promotion is in line with our FDA-approved label. So we're essentially talking to physicians about newly diagnosed patients and relapsing patients as long as they are both severe and active, and TAVNEOS could be an appropriate option to add to their existing standard of care and, at the same time, reminding them that TAVNEOS does not eliminate glucocorticoids.

In terms of the key messages, we've tried to keep it really straightforward and, hopefully, compelling for these physicians. We remind them essentially what we did in the ADVOCATE study, which is number one, we've replaced the standard glucocorticoid type that they utilize for these patients. And when we did that at 6 months, we reminded them that TAVNEOS was equivalent or noninferior to the standard of care, and at 12 months, this improved to superiority versus standard of care. And in addition to that, there were a few of other secondary benefits. There was a reduction in relapse rate, an improvement in kidney function as measured by eGFR, an improvement in quality of life, a reduction in glucocorticoid-related adverse events, and all this achieved with an 86% mean reduction in glucocorticoid load. That essentially is the nutshell of the story in 30 seconds. Now 30 we then engaged into Q&A with those physicians, but that essentially is the message that we're focusing on.

Okay. And have you been able to engage a good number of physicians in that 400 top prescriber groups that you guys have outlined, Tosh?

Yes. In terms of our reach, we have -- through January, we reached just under 6-0, 60% of those top 3,500 customers, and we continued to get more reach into the month of February. And the top 400, yes, we've interacted with the majority of those, as you know, prelaunch with our MSLs and post-launch with our MSLs and our reps.

And next we have a question from the line of Joe Schwartz of SVB Leerink.

This is Will on for Joe. Congrats on the recent progress. So one for us. From what we've seen in our own KOL checks, and as we saw in the metrics reported today, there are clearly some physicians who are very early adopters of TAVNEOS, which is great to see. So we're wondering what defines an early adopter relative to the later adopters? And what do you think the later adopters want to see in order to prescribe TAVNEOS? Any thoughts here would be appreciated.

I have some impressions. I guess, I would say, let's just call them impressions. We don't yet have enough data to have sort of granular evidence. But look, our early adopters, many of them were experienced with the drug in clinical trials. So they were very aware of the way TAVNEOS is used and has been used in those trials. They're very intimately aware of the ADVOCATE Phase III pivotal trial result, and they are very up-to-date on the findings that were published in the New England Journal of Medicine.

So I would say many, though not all, fit that profile. So some -- there is another group that is a little bit worried about -- in the era of COVID just how immunocompromised an ANCA-associated vasculitis patient may be as a consequence of their standard therapies, including B-cell depletion. So there are some that are wondering if TAVNEOS could have a role in helping these individuals, particularly in the time of COVID. And so there's a lot of outreach there.

And then there's this third group, which again is a little -- is a pleasant surprise at this point early as we are in the launch, but each of the community physicians who have a great degree of unaided awareness about TAVNEOS and what the effects of TAVNEOS may well be for their patients with severe active ANCA vasculitis. So we see a very healthy proportion from that group. And I think that that's quite encouraging.

Fundamentally, I see a lot of interest in the nephrology community, notwithstanding the -- what looks like a somewhat skewing to rheumatologists being the prescribers in the majority of the scripts so far. But nephrologists have been very interested and very vocal with some of their early experiences. So I don't know how public those are yet, but I hope that they'll be coming out in discussions at meetings for the nephrology community in Europe and in other meetings to come. And I hope you'll be hearing about some of those -- certainly, those case studies from some of the leading nephrologists that have used TAVNEOS in their patients. And I think that that sums up most of my impressions.

Great. And if I could sneak in one quick follow-up. Are there any common questions that the sales force are getting or any kind of patterns here that you could talk about?

Well, I think, sure. I mean there's -- this is a new drug. Clearly, people are very curious about how to use it. The label is fairly broad and leaves a lot to the physician's judgment and discretion. So physicians are asking questions such as how do I use this with my current medication on this patient? How do I use it? Do I need to start glucocorticoids or reduce glucocorticoids in context of prescribing TAVNEOS? And essentially, how do I get people started on TAVNEOS? So it's -- those kind of things are questions about access as well. And I think we've been able to address appropriately all those questions.

And up next, we have Yanan Zhu of Wells Fargo Securities.

Congrats on the progress. So first of all, I wanted to understand a little bit better the conversion rate for the fourth quarter, that 71% number, obviously, that indicates 29% of patients did not convert. Could you touch upon what might be the reason for patients not go on to therapy? And then for the January number, interestingly, I think, as you alluded to, you have 50 new patient start forms and then 50 more patients on drug, suggesting perhaps 100% of the patients have converted. Could you say whether that's the correct interpretation? And what's your expectation for the conversion rate going forward?

Well, all very good questions, Yanan. Thank you. Some of it may just be from Q4 a timing issue. So there could have been folks that got patient starts sort of late in the quarter and then spilled over into the new year. So I think what we're seeing is all these kind of rolling -- basically rolling averages. So the lag time from conversion earlier, sometimes just talk is the question of, again, access, while early access was being worked out and refined, also, while early discussions around coverage were being worked out, et cetera. So we expect and we have seen a reduction in the time from the original 4 to 6 weeks down to 4 weeks as people go into the system. And I think that's reflected in increasing conversion.

I would hesitate to put a number on where we would like to be, but I can say that a conversion rate of around 80% is fairly good. And most people that get on the drug are eligible for the drug. They fit squarely in the labeled indication. Occasionally, you'll get someone who either isn't eligible for the drug or cannot get into the system and even the patient access program is not suitable for them, and those are the reasons that you might have lack of certain conversions.

Got it. And if I may ask about any initial feedbacks on efficacy that you hear from the prescribers? And how much of that 33% repeat prescribers do you think is driven by [traditionals] seeing signs of efficacy?

Well, it's too early. One, I would hesitate to speculate. Secondly, I think it's too early to say about repeat prescribers. Look, I think it's good news, obviously, that we are seeing increasing numbers of repeat prescribers. And again, that trend seems to be accelerating in the appropriate direction. So we are encouraged by that. I am very much hoping that we'll start hearing some early reports on efficacy at the upcoming nephrology meetings. And I would hope that maybe you'll hear some things that you are -- I don't know that as a fact, but I do know that a lot of the major players will be at the European -- both the European League of Rheumatology meeting and the European Renal Association meetings in a couple of months. And I would be very interested to hear what some of those folks have to say because I know they seem to have some patients on therapy.

So maybe we'll hear as early as that. Maybe there'll be some letters about case studies coming up in the not-too-distant future. It's really more up to what the investigators decide to do and how they're going to disseminate their information. So I hope that we'll hear a lot more about that in the very near future.

Great. And looking forward to those information. Congrats, again.

Thank you, Yanan.

Our next question comes from Ed White of H.C. Wainwright.

So you had mentioned the support programs, Tom. I'm just curious as to the amount of free drug given in the fourth quarter, perhaps the dollar value, if you have it or the number of patients and then what your outlook is for the year.

You're saying it. So we're not giving a lot of detail around the patient support and patient assistance programs. I think it's a little bit early to talk about that. Suffice it to say, we have said we made a considered investment in patient support, patient assistance program. And I think that it is paying off for us. I think we're seeing rapid access to drug matters. I will give you a little bit more granularity on this. So as we go through January, again, we're seeing an increasing amount of now patients on paid medication. Over 1/3 of the patients are now on paid medication, and that number in proportion seems to be increasing -- ever increasing. That is pretty much right in line where we thought it would be at this quite early stage of the launch, and we are happy with the trend lines.

Now we will continue to support appropriate patient access, again, with limited and temporary patient access to unpaid product. But again, we think that's the appropriate investment as that ought to translate to an ever-greater share of paid bottles as the launch progresses, and particularly, as folks then get their prescriptions refilled and repeated and they work through the system. So I think we're right on track with where we want to be. And I think the trend lines are well within our models at this point.

Next question comes from Edward Tenthoff of Piper Sandler.

My congratulations, too. Really impressed with where you are in the launch. I think it speaks to the profile of the drug. I wanted to get a sense a little bit for the patient experience. It may be early, but I'm trying to get a sense for how quickly patients are feeling better, how quickly they can actually start to see some of these kidney function improvements and/or improvements in other organ systems, how quickly they can start to actually -- a physician will actually start to reduce the steroid dose. A lot of really good questions, but I wanted to get a sense for sort of what the patient might experience on TAVNEOS.

Thank you very much. Yes. We know from our clinical work what we have been able to show in the controlled studies. Too early. We don't have enough real-world evidence, although we do have some anecdotes. But we know in our clinical work that we -- for example, if you just look at for patients with kidney dysfunction. If you look at the amount of protein in the urine as measured in a variety of ways, but just, say, urinary albumin to creatinine ratio, we have shown in many -- well, the 3 controlled studies that we ran and, certainly, the 2 where then called avacopan was used in the absence of the daily schedule oral prednisone taper. We see a really marked reduction in proteinuria within a week, certainly by 2 weeks, significantly different from those persons that are only on standard of care therapy, which includes high-dose prednisone taper. So that can happen within a couple of weeks.

And if you're a kidney patient with a nephrologist, you're probably being watched very carefully if your glomerular filtration rate is degrading because that really is the fear. And you'll be first watched for proteinuria maybe doing that at home with a simple dipstick test. So the patient is likely to see results in fairly short order if real world matches what the controlled trial tells. We also know in controlled trials that as a population, you start to see an increase in estimated glomerular filtration rate, which is based on the levels of serum creatinine. It's an equation that starts with serum creatinine. So as serum creatinine goes down, then estimated glomerular filtration rate is going up.

And what we see is, that can start happening quite rapidly as well, at least with population studies in the controlled trials. Within about 4 weeks, people start to see some inflection in their eGFR. And again, if you're a kidney patient, that's super important. Now we've also heard of the reports, and I think there's a couple of case studies where even a reverse trend of declining eGFR can happen quite considerably more swiftly than that. So we'll be -- I think there are some abstracts out there that have been published or accepted. It will be interesting to see more of those reports.

So for the patients speaking to their nephrologists, those are all very encouraging signs, and they can happen quite rapidly. We know in terms of patient-reported quality of life, again, in the Phase II studies, even by 4 weeks, we started to see improvements in patient sense of well-being, increased vitality. Certainly, those were very firmly established by week 12 in the Phase II studies, week 26 in the Phase III study and continuing improvement out to week 52.

So in short, I think the data does support the idea that patients on TAVNEOS ought to actually feel better in fairly short order. And whereas when they're on the total standard therapy, reporting -- self-reporting any improvement in how they feel about their disease is really rare. And I don't know if there are many studies -- controlled studies where it's actually been reported. So I think that's going to be an interesting feature of the program. We'll see what the real world tells us in pretty short order.

And next, we have Anupam Rama of JPMorgan.

Just a quick one from me with sub-parts, which is, you talked a lot about some of the dynamics for patient start forms, patients on drugs. You talked about some of the reimbursement trends. I guess specific to 1Q, how are you thinking about some of the seasonal dynamics around the quarter given kind of gross to net? And then it sounds like you have scripts being written for 1 month.

Yes. So Tosh, do you have any feelings about the trends in Q1 and seasonal dynamics?

Just to correct, I think the scripts are written for 1 month, but typically, they're approved for -- depending on the payout, for a period of 6 months to 1 year. So we don't have any concerns about scripting issue for 1 month. In terms of trend into Q1, look, as Tom alluded to -- not alluded, Tom has shared with you the launch to date as of end of Jan 31. You can see the continued acceleration that we see in January. And we look forward to sharing more details of that acceleration in February and March at our end of Q1 earnings. But when we look at January launch to date, we are encouraged.

And I see no further questions in the queue. I will turn the call back over to Thomas Schall for closing remarks.

Well, thank you very much, and thanks for everyone for joining our call today. Thanks also for the very stimulating and insightful questions. And you may now disconnect. Bye now.

Goodbye.

This concludes today's conference call. Thank you for participating. You may now disconnect and have a pleasant day.