Viela Bio Inc (VIE) Q3 2020 Earnings Call Transcript

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Viela Bio Inc (NASDAQ:VIE)
Q3 2020 Earnings Call
Nov 10, 2020, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen, and welcome to the Viela Bio third-quarter 2020 earnings conference call. [Operator instructions] As a reminder, this conference call is being recorded. I would now like to hand the call over to Mr. Mitchell Chan, chief financial officer at Viela Bio.

Please go ahead.

Mitchell ChanChief Financial Officer

Thanks, and welcome, everyone, to our third-quarter 2020 earnings call. The press release reporting our financial results is available on the investor and media page of our corporate website at www.vielabio.com. Joining me on this call today are Bing Yao, our chairman and chief executive officer; Jörn Drappa, our chief medical officer and head of R&D and Bill Ragatz, senior vice president, head of commercial. As a reminder, we will be making forward-looking statements regarding our financial outlook in addition to regulatory, product development and commercialization plans and research activity.

These statements are subject to risks and uncertainties that may cause actual results to materially differ from those forecasted. A description of these risks can be found in our most recent in Form 10-Q on file with the SEC. With many of our peers in the biopharma sector, we continue to closely monitor situation around the COVID-19 pandemic, including the associated restrictions on travel and work that have been implemented, as well as the potential impact on our business in clinical trials. To the full extent to which COVID-19 may impact us will ultimately depend on the future development, which, of course, are highly uncertain and cannot be predicted.

This includes new information, which may emerge concerning the severity of the coronavirus and the actions to contain COVID-19 potential treatments, among others. With that, I’d like to turn the call over to Bing Yao, our chairman and CEO.

Bing YaoChairman and Chief Executive Officer

Thank you, Mich. Good afternoon, everyone. Thank you for joining us today. I hope that everyone remains stable and well during this challenging time.

From very early on in a pandemic, we have taken the necessary steps to protect and enable our employees to work safely from home. While we continue to adapt to this ever-changing environment, I could not be more proud of our team’s resilience, productivity, and collaboration in this period. We have continued to execute commercially and operationally and have made solid progress on the clinical development front. Above all, we have remained committed to our connected mission of serving patients.

This quarter, our core focus has been on UPLIZNA, also known as inebilizumab commercial launch, which is progressing well and are largely in line with our expectations. While it is early days, we are seeing a diversified patient prescriber and payer mix, indicating that our field teams are successfully engaging with a range of targeted groups. Towards the end of Q3, we began building strong momentum, which I’m pleased to say, has continued steadily into October. The COVID-19 environment has presented many challenges, but Bill and the entire commercial team have stayed ahead of this with a well-defined strategy for reaching a broad range of community physicians and academic centers.

I believe this will enable our continued success and grow inebilizumab in the month ahead. Bill will be providing further details on our progress in just a moment, and we look forward to taking your questions at the end of today’s call. Given the current treatment landscape and NMOSD incidents, we believe that patients outside of the U.S., including many Asian countries, could potentially benefit from treatment with inebilizumab. In October, our BLA was accepted by National Medical Products Administration, NMPA, in China.

Our regional partner, Hansoh Pharma, will be responsible for marketing efforts if approved. Likewise, our partner, Mitsubishi Tanabe Pharma Corporation, has filed marketing authorization applications for inebilizumab in Japan and South Korea. As we and our partners await the potential approval of inebilizumab in several Asian countries, we continue to expand its development in the U.S. in various disease, including myasthenia gravis and IgG4-related disease, where we believe it could have a significant clinical benefit over existing therapies.

We had recently initiated pivotal trials in both of these indications. While we pursue the potential expansion of inebilizumab to additional patient populations, we continue to make solid progress across our entire pipeline. Turning to VIB7734. Yesterday, during the ACR Convergence 2020, we reported the full and the final data from our Phase 1b trial, patients with continuous lupus erythematosus, or CLE.

This data demonstrated its potential to reduce lesions in lupus patients, and we informed our decision to pursue systemic lupus erythematosus, or SLE, for our planned Phase 2 trial. As you will recall, last quarter, we announced a new trial with VIB7734 in patients with COVID-19-related acute line injury. We have since initiated that study as the patient enrollment is progressing. Additionally, we continue to enroll new patients into our ongoing trials with VIB4920, which includes Phase 2 studies in shoving syndrome, rheumatoid arthritis, and kidney transplant rejection.

And we are planning to submit on IND for a new preclinical candidate by the end of the year. So as I have briefly outlined, Jörn will cover in more detail later in the call. We have built solid momentum on the clinical front. That will take us well into the next several years.

We look forward to providing top-line data from some of these files at future metal meetings. With that, I would like to hand the call over to Bill Ragatz, senior vice president, head of commercial, to provide an overview of our product launch. Bill?

Bill RagatzSenior Vice President, Head of Commercial

Thanks, Bing. We are pleased with our progress to date. As you might imagine, these are challenging times to launch a new drug, particularly in a patient population that is immuno-compromised. Despite the external situation, which has resulted in patient visits being down, and many offices operating remotely and in reduced capacities, our launch is progressing largely in line with our expectations.

This is a credit to our entire team who did an incredible job leading up to the approval of UPLIZNA in driving awareness and preparing a flexible outreach strategy that accommodates both face-to-face and remote interactions with our customers. Several months into our launch, we continue to collect important insights and tweak our approach to best meet the needs of our customers. I will be sharing more about our learnings in just a moment, as well as the ways in which we have adapted, how we engage with individual practitioners and centers of excellence across the U.S. We are aware that staying flexible in this environment will be critical to our future success.

As you can see on this slide, the first prescriptions for UPLIZNA were filled in July. While the ramp was somewhat gradual at the start, as we had anticipated, we began to gain momentum toward the end of the third quarter, which continued through October. We are encouraged by the product update to date and are confident that our go-to-market strategy will enable continued success. Recent approvals of multiple new treatments for NMOSD has resulted in more options for patients and a dynamic market.

However, the unique product profile of UPLIZNA has several important characteristics that differentiate it from other therapies and supports positioning it as a first-line treatment option for aquaporin-4-positive adult NMOSD patients. These include, first and foremost, a strong efficacy profile based on the end N-MOmentum trial, in which 89% of patients with up UPLIZNA as monotherapy were attack-free at the end of the randomized control period. Equally important, UPLIZNA has a favorable safety profile with no black box warning. UPLIZNA also has a more convenient dosing schedule, requiring only a single 90-minute infusion every six months after initial doses.

And finally, UPLIZNA is the first and only B-cell depleter approved for NMOSD. No other NMOSD treatment option can offer this full set of benefits. On Slide 7, we will go into more detail around the impact of COVID-19 and how we have adapted our strategy around three core elements critical to launch success. Leading up to approval, we established solid relationships with NMOSD treaters throughout the country, in addition to the major patient advocacy organizations, and have continued to build on these relationships after launch.

This has allowed us to have meaningful discussions about NMOSD and UPLIZNA despite the challenging external environment. We have also increased our emphasis on non-personal promotion to ensure that we can continue to educate our customers even when we cannot interact with them directly. Also, with patient visits decreasing and many of them being conducted via telemedicine, we are continuing to work with advocacy organizations and increasing our outreach to patients via social media to ensure that they are getting the information they need to appropriately manage their NMOSD and understand the potential benefits of UPLIZNA. We believe this approach will be an effective means to reach our core patient population which include those newly diagnosed with NMOSD and those who are experiencing inadequate response to their current maintenance regiment.

We have also improved our outreach efforts to HCPs using advanced data techniques to help ensure we can deliver timely education. NMOSD is a rare disease with only around 10,000 active patients in the U.S. for most physicians outside the major academic institutions, they see NMOSD patients very infrequently and may not be entirely comfortable treating them. Our aim is to provide timely and ongoing support to these physicians so that they can help their patients achieve the best possible outcomes.

Finally, as access is critical to every launch, we need to ensure our hub is as user-friendly as possible and easy to use for people who are working remotely. Overall, our hub services, which include support program for patients, caregivers, and healthcare professionals offering educational resources, financial assistance, and insurance information to help them with one-on-one support have been very well accepted. We have continued to refine certain features, including streamlining the information required on the patient referral forms, enabling secure direct mail correspondence with our customers to allow for interactions to occur more easily outside of regular business hours, and development of electronic portal to further improve the usability of the hub. Our ability to remain flexible and adapt quickly to the changing external situation has been critical to our success so far and will remain so given how COVID is impacting different parts of the country and the uncertainty around potential future waves.

Moving to Slide 8. Prior to FDA approval, we conducted market research with over 75 academic and community-based neurologists who treat NMOSD to better understand their perceptions and behaviors when managing this disease, with some of these key findings presented here. We learn that close to three-quarters of physicians express a desire to reduce or discontinue off-label treatments based on the availability of approved drugs. Moreover, about 70% of physicians say they would prefer an approved treatment with proven efficacy as a first-line therapy over off-label treatment.

Lastly, about half said they would consider changing their patient’s therapy even in the absence of an attack. These perceptions laid out some significant opportunities for UPLIZNA at launch. Early into our launch, we have seen most of these perceptions play out. Based on the HCP-reported breakdown of prior therapies for patients being prescribed UPLIZNA, not counting patients converting to commercial drug from our clinical study, about half the patients have prior experience with rituximab, which is currently the most commonly used therapy for NMOSD.

We also see a group of new to treatment patients, along with those coming to UPLIZNA from other therapy options. In regards to the unknown group, it is important to note that this data was based on information provided by the physicians. When we look at the prescriber profile, we are encouraged by a near-even mix of community and academic physicians. Our team has worked very hard to reach a diverse group of academic and community doctors and has successfully established relationships with our target customers from each of these groups, which we will continue to build on in the coming months.

Regarding reimbursement and patient access, we are very pleased with our progress, which is in line with our prelaunch expectations. Our payer team has met with most of the top payers to share information about NMOSD and UPLIZNA. Though it is still very early in the launch, our payer mix is largely as anticipated, with approximately half the patients having commercial insurance and most of the rest being insured by government programs. So far, the uninsured population is small, and we will continue to track this given the external environment.

From a market access perspective, our distribution processes have been established and are operating very smoothly with the majority of shipments going through specialty distribution. We are also pleased to see that the vast majority of UPLIZNA patients are using our hub services, which we continue to refine to better meet the needs of our customers. Finally, though it is still early and policies have not been put in place from most plans, there have not been any delays in approvals and the prior authorizations that we have seen have been consistent to the label or and momentum criteria. Looking to the year ahead, we expect to retain broad positive payer access for UPLIZNA under medical coverage with open access aligned to our label.

We have been able to share with all of our top-targeted customers, our NMOSD burden of illness presentation, and/or our clinical presentation for UPLIZNA. Already, we have over 80% of commercial lives covered, and we expect this to grow and support our position of UPLIZNA as a first-line treatment option. Our aim is to prevent future NMOSD attacks, which may lead to permanent disability, and we believe that UPLIZNA will provide significant value to the patient community in this regard. We remain committed to patient access and will continue to work with payers to establish coverage for patients given the strong value proposition UPLIZNA provides.

At this time, I would like to hand the call over to Dr. Jörn Drappa, our chief medical officer, to provide an overview of the current and future development plans of this program, as well as an overview of the rest of our pipeline.

Jorn DrappaChief Medical Officer

Thank you, Bill. On Slide 11, you can see that we have made substantial progress in advancing our clinical pipeline. Since the last earning call, we have initiated pivotal trials of inebelizumab in by myasthenia gravis and IgG4-related disease. We have also resumed Phase 2 trials of VIB4920 in Sjögren’s, rheumatoid arthritis and transplant rejection.

We are continuing to enroll the COVID-19 acute lung injury trial of VIB7734, and we had obtained final results for our Phase 1b study of 7734 in cutaneous lupus, and I will show you some of that data in the coming slides. The high-level summary of this trial is presented in Slide 12. This trial has achieved what we had set out to demonstrate, VIB7734 potently depleted plasmacyte dendritic cells, not only in the peripheral blood but also tissue residence PDCs in inflamed skin. Based on these results, we are planning a Phase 2 trial in SLE that we’ll initiate in the first half of 2021.

On Slide 13, you can see that VIB7734 quickly depleted PDCs in the peripheral blood in a dose-dependent fashion. This is consistent with the results from the Phase 1a study. On the right-side panel, you can see that PDCs were successfully depleted not only in the blood but also in the skin of patients with active cutaneous lupus. Each patient in cohorts 2 and 3 of the study had a skin biopsy before and after three months of treatment with VIB7734.

You can see that the number of PDCs is dramatically reduced following treatment with VIB7734. On Slide 14, you can see that this was also reflected in clinically significant improvements in the cloud activity score, which is a measure of the extent and severity of lupus skin rashes. A decrease of 4 points or more is considered clinically important. On the top right panel, you see that a very high proportion of patients treated with the highest dose of VIB7734 achieved this outcome.

Looking at higher hurdle endpoints, you see that there was also a high proportion of patients who achieved improvements of 50% or greater or even of 7 points or greater. These clinical improvements were also reflected in changes in biomarkers such as Type 1 interferon regulated protein expression in the skin. On Slide 15, based on these results, we have made the decision to continue development of VIB7734 in systemic lupus. There is compelling evidence that this regulated Type 1 interferon signaling is a critical part of the pathogenesis of SLE and PDCs are a dominant producer of Type 1 interferon, as well as a whole host of other cytokines and chemokines.

There remains significant unmet medical need in SLE with only one biologic treatment approved whose efficacy has substantial room for improvement. We are looking forward to start this Phase 2 trial in systemic lupus in the first half of next year. As you see on Slide 16, we started out developing inebelizumab in animal spectrum disorder, a rare disease, but we are now well under way toward moving into larger indications with high unmet medical need and also significant commercial opportunity. With that, I would like to turn it over to Mitchell Chan, our chief financial officer.

Mitchell ChanChief Financial Officer

Thanks, Jörn. I’d like to refer you to our press release issued earlier today for a summary of our financial results for the third quarter ended September 30, 2020, and take this opportunity to briefly review a few items. Over the quarter, our net sales totaled $2.3 million, with our R&D investments totaling approximately $26 million. With new clinical trials starting, as highlighted by Jörn, our R&D spend for the coming quarters is expected to incrementally increase.

For SG&A, we invested $14 million in the third quarter as we address some U.S. commercial sales team efforts into a virtual setting at an endemic continues to impact the U.S. in all, our total operating expense for the quarter was about $40 million. Together with our other income, our net loss for the quarter ended September 30, 2020, was approximately $40 million, which translate into a GAAP net loss of $0.69 per share for Q3 2020.

At the end of third quarter, we had approximately $388 million in cash, cash equivalents, and investments. We expect our cash runway to extend into 2023. The ongoing global pandemic remains a challenge for many around the world as we continue to adapt and adjust to the potential impact of the global pandemic, Viela remains in a strong and flexible position to grow UPLIZNA in the U.S. and advance our R&D pipeline.

With that, I’d like to hand it back over to Bing.

Bing YaoChairman and Chief Executive Officer

Thanks, Mitch. Thank you again, everyone, for joining our call today. As you heard, our commercial launch is off to a solid start. While large success is our core focus, we have many priorities on the clinical front.

We continue enrolling patients into Phase 3 studies for inebilizumab, in addition to our trial with VIB4920 in Sjögren’s Syndrome, RA, and kidney transplant rejection. For VIB7734, we are preparing to initiate our fat Phase 2 trial in SLE in the first half of 2021, as we continue to renewal of patients in a Phase 1 trial for COVID-19-related acute lung injury. On the preclinical front, our plan is to submit on IND for VIB1116 by year-end. We look forward to providing updates on these programs throughout the remainder of the year.

With that, I would like to open the call to questions. Operator?

Questions & Answers:

Operator

[Operator instructions] And our first question comes from Seamus Fernandez with Guggenheim. Your line is open.

Seamus FernandezGuggenheim Securities — Analyst

Great. Thanks for the question. So I’m trying to get a — if you could maybe give us a sense of the continued pace of uptake, I think we’re seeing a doubling in the number of patients added per month. So just trying to get a sense if that trajectory has continued into November.

And if not, what are the sort of restrictions to seeing the increased uptake along those lines as we move forward? Is the increase in COVID infections having any impact on the uptake of the product? Second question is just in terms of relative market share. I’m sure you guys have a decent sense of the relative market share in the space. You operate is up the direct impact and split of patients that you have for UPLIZNA with your own sales and your own uptake, but how does that kind of compare to some of the other product launches, as you mentioned, there are a number of other options in the space? And then I just want to ask a quick question on 7734. Just hoping to get a better sense of perhaps when we might see that — if there was an interim look at the Phase 2 potentially planned to get a look at the efficacy after a certain number of patients have been treated, say, for let’s say, six months, particularly for the SLE patient population? Thanks.

Bill RagatzSenior Vice President, Head of Commercial

Thanks for the questions. This is Bill Ragatz, Head of Commercial. So from an uptake perspective, as you mentioned, we’re very pleased with the momentum we started at the end of the third quarter and have really built into the fourth quarter. If you look at the mix of patients, that we have a number of them switching off of rituximab, which we think is very strong.

We also do have some new patients, which is very much aligned with our positioning. Our mix of providers, a mix of solid mix between both community and academic. And importantly, from a payer side of things, the fact that we have good policies in place and good coverage in place. In fact, today, we actually did receive our J code as well too, which we think is also another very positive development on the payer side of things.

The momentum we saw in the third quarter has definitely gone through in the fourth quarter. We do not provide any specific projections for the quarter for sure. But clearly, the momentum we had is still going. In regards to market share, I think that, obviously, it’s a little bit difficult looking at kind of the competitors right now, given that Alexion, it does not really provide too many details on that.

Again, what we can say from our uptake has been very strong. We are very pleased with the mix of what we’re getting from the marketplace, a lot of rituximab patients, which we think bodes well for us in the future, along with some first-line patients, again, which is very much aligned with our positioning. Jörn, to your question on…

Jorn DrappaChief Medical Officer

Yes. I’m not sure I completely understood the question. I think you’re asking about continued efficacy beyond month 3. So we saw that data —

Seamus FernandezGuggenheim Securities — Analyst

No, Jörn, if I may. I’m asking about the start of the Phase 2 study which you plan for early next year. Is it possible that we’ll see an interim look? Or when might we see the first data from that study for 7734?

Jorn DrappaChief Medical Officer

Yes. That’s really too early to comment at this point. We are just in the process of finalizing the protocol. We are not going to be able to make accurate predictions about enrollment rates and possible times of interim analysis or final analysis until we have a much better sense as to exactly when sites are being started up and what the feasibility results show.

Seamus FernandezGuggenheim Securities — Analyst

Can you at least confirm that there will be an interim analysis in the study or no?

Jorn DrappaChief Medical Officer

I cannot.

Seamus FernandezGuggenheim Securities — Analyst

OK. And then, Bill, maybe just to go back on the payer side of things, can you help us understand the time it takes to go for a patient to receive a prescription and for basically payment to be fully received and covered?

Bill RagatzSenior Vice President, Head of Commercial

Yes. I mean, obviously, it’s a very variable process right now, early in launch because policies are not in place yet. Everything has happened on an exception basis. So what we are seeing from our hub is very positive and the fact that they can turn around the information that they’ve provided from the healthcare provider very quickly.

Oftentimes though, the insurance companies are looking for more information to validate the use of it. That gets down to how quickly can the healthcare providers give that information back over to them. So we’re seeing what starts out to be a relatively long time with the J code and with policies being put in place, we do expect that to decrease over time, but it’s still too early and too variable to give a specific expectation.

Seamus FernandezGuggenheim Securities — Analyst

OK. And if I just can ask one final question for Mitch. Mitch, in terms of the dynamics, non-dilutive financing opportunities that the company is pursuing, can you just update us on areas or potential areas of non-dilutive financing that would be considered by the company? I guess that’s sort of a question for both Mitch and Bing. Thanks.

Mitchell ChanChief Financial Officer

Yeah. Thank you, Seamus. So right now, our cash position, as I kind of mentioned earlier, blasts us into the 2023 time frame, which will get to the data readout. So we’re in for positioned in terms of cash position.

But in terms of nondilutive financing, if I had to guess what you implied there, in terms of potential business development, Bing can definitely speak to that as well, too, but the conversation right now is ongoing.

Bing YaoChairman and Chief Executive Officer

Yes. In terms of puttering discussions, as you know, that we’re looking for financial partners for inebilizumab in EU, European countries. So that discussion has been ongoing as expected.

Seamus FernandezGuggenheim Securities — Analyst

Yeah. Thank you for the question.

Bing YaoChairman and Chief Executive Officer

Thank you.

Operator

Thank you. And our next question comes from the line of Jeff Hung with Morgan Stanley. Your line is now open.

Jeff HungMorgan Stanley — Analyst

Thanks for taking my questions. For UPLIZNA, what are you hearing from your sales force and clinicians regarding the impact of recent increases in COVID on reaching inadequate responders and potential new patients with NMOSD? And is intact different in academic versus community settings?

Bill RagatzSenior Vice President, Head of Commercial

Yeah. It’s a great question. Clearly, given our time of launch in June, we’ve been dealing with the COVID situation throughout the entire time of approval. And I think actually, it’s actually gotten a little bit better recently.

Obviously, we don’t know what the future is going to hold for any of this stuff. But I think physicians are getting more used to the fact that this is not going to be a short-term situation where they can continue just push people off for a few more months, and this will all kind of get fixed. So while clearly, some of the academic institutions are getting a little more difficult to see live due to restrictions, we are still having good interactions with all of our customers, both academic and community, either live or face to face, many of them are virtual — excuse me, many of them being virtual now. So we will continue to track this and adapt our approach going forward.

But we think right now, we’re being able to meet with and have meaningful discussions with all the customers we need to still.

Jeff HungMorgan Stanley — Analyst

Great. And then for the inebilizumab Phase 3 in IgG4-related disease, will you be focusing on specific patient populations within those with high-risk of flare due to multi-organ disease? And are you evaluating risk of flare from baseline lab cast results? Thanks.

Jorn DrappaChief Medical Officer

Yeah, you’re correct. We will actually focus the patient population on those who are at highest risk of flare. The best predictor of future flare is recent flare. So the patient population that we are recruiting for this study is actually patients who have experienced a recent flayer and are on active treatment with steroids for that flare.

So that is thought to be actually a better predictor of risk of flare than biomarkers such as IgG4 levels.

Jeff HungMorgan Stanley — Analyst

Thank you.

Operator

Thank you. And our next question comes from the line of Paul Choi with Goldman Sachs. Your line is open.

Paul ChoiGoldman Sachs — Analyst

Thank you and good evening and thank you for taking our questions. I wanted to ask maybe just in terms of your initial patient observations in terms of the patients that have actually received commercial drug here. Can you maybe comment on whether patients are receiving the two loading doses as indicated on the label? Or given that approximately half are rituximab-experienced, are they just getting sort of one initial dose and then waiting for the next six months down the line?

Bill RagatzSenior Vice President, Head of Commercial

Great question. What we’re hearing so far is, you’re right, we have a lot of patients coming over from rituximab. What we’re hearing is the vast majority are still using the recommended dose as our PI, so getting the two doses. Although that’s not 100%, we do hear some physicians who are just giving a single dose.

Paul ChoiGoldman Sachs — Analyst

OK. Thank you. That’s helpful context. And then I want to ask as a follow-up to some of the lupus questions that been asked earlier with regard to Phase 2 steps.

Just as you think about your takeaways from the CLE data that you presented at ACR, can you maybe talk a little bit more about any additional patient stratification or qualifications or inclusion/exclusion criteria, Jörn, that you’d consider here as you think about those who are responding best? And then based on the dosing response, do you feel like you have clarity on what the best net dose would be for the next study here?

Jorn DrappaChief Medical Officer

Yes. With respect to your first question, I think we have data from the Phase 1b that suggests that those patients who had a high Type 1 interferon signature and/or high serum levels of Type 1 interferons tended to show the best responses in terms of decrements in the CLASI score. So that would suggest that it’s actually very consistent with other clinical trials, typically, those who have high disease activity, which is associated with the interferon signature tend to have the best clinical responses. So one of the critical factors for the Phase 2 is going to be to ensure that we will enroll a population with high disease activity so that we’re in the best position to actually demonstrate a drug-related effect beyond the placebo noise.

We will not exclude patients in this Phase 2 based on the interferon signature, and that may come further down the line. But I think it’s very important to actually generate and confirm this data in Phase 2 to really ensure who is the best responder, who is less likely to respond before proceeding to exclude certain populations. With respect to the dose, we are still finalizing the modeling at this point. So I cannot give you a final answer on the dose.

But from the data that you’ve seen, it certainly looked like the 150-milligram dose was the most active dose. We have done detailed PK/PD modeling, and so the dose for the Phase 2 will be either at or slightly above this level.

Paul ChoiGoldman Sachs — Analyst

Great. Thanks, Jörn. And my last one is for Bing with regard to your ex U.S. commercialization.

Can you maybe just provide a framework for us in terms of where penetration and diagnosis rates are for NMO in those key geographies that your partners are targeting? And just kind of how you and your partners think about what the commercial ramp and penetration might look like there in those geographies over the next couple of years. Thank you very much for taking our questions.

Bing YaoChairman and Chief Executive Officer

Yeah. I can give you some numbers, yes. First of all, we have filed in Japan already. So in Japan, we estimate that about 5,000 patients for NMOSD; and in EU, the estimate is about 8,000 patients.

I think in terms of penetration, etc., that remain to be seen. And we are in discussion with potential partners. We also filed in China. The marketing will be handled by Hansoh Pharmaceutical.

But China probably has a larger patient population, but it remains to be determined how much it can penetrate because of the pricing issues.

Paul ChoiGoldman Sachs — Analyst

Thank you.

Operator

Following question comes from the line of Joseph Thome with Cowen and Company. Your line is open.

Joseph ThomeCowen and Company — Analyst

Hi there. Thank you for taking my questions. A couple on of 7734. In the ACR update, it looks like the baseline CLASI scores for placebo and the 7734-treated patients were a little different kind of 18 for the 7734 versus 12 for placebo.

When we’re looking at sort of an absolute reduction in CLASI score or percent reduction, is there something that clinicians call out is clinically meaningful kind of what should we be looking for in there given that the baseline was a little bit different? And then on a safety perspective, it looks like there may be a little bit imbalance in infections. If you could just give us a little bit more information on kind of the severity of the infection? And is this related to the mechanism of PDC depletion? Thank you.

Jorn DrappaChief Medical Officer

Thanks. I’ll start with safety first. I don’t think that there’s really any clinically important difference in infection. So there was a numerical imbalance.

These were typically mild infections and not those exceptions that you might worry about when you think about enabling Type 1 interferon signaling or PDC. So the specific concern with this mechanism, at least theoretical concern would be viral type of infections reactivating indulgence viruses such as CMV or herpes virus and those types of infections. We did not really see that in this study, and that was reassuring. Obviously, we’ll need to keep following this in larger studies.

So this was a very small Phase 1 study with 31 patients. So it’s really not possible to give definitive assets with respect to safety and based on such a small number. And then with respect to the baseline, some differences in baseline are, unfortunately, unavoidable in tiny cohorts that include six active patients and two or three placebo patients. But if you look at the deltas, I think they speak a pretty clear language.

So if you look at each patient compared to their own baseline, you see almost 100% of patients treated with 150-milligram dose achieved at least a 4-point decrement compared to their own baseline; and about 60% or so depending on time point, even achieved a 7-point decrement. So in a way, I think it’s more meaningful to look at individual patients and they’re serving as their own control from baseline to month 3 rather than focusing on the average CLASI score across the cohort, which by necessity in this small type of study will end up at different points.

Joseph ThomeCowen and Company — Analyst

That’s very helpful. Thank you very much.

Operator

Thank you. And our next question comes from the line of Laura Chico with Wedbush Securities. Your line is open.

Kenneth ShieldsWedbush Securities — Analyst

Hi. This is Kenneth Shields on for Laura Chico. So on UPLIZNA uptake, Alexion indicated on their third-quarter update that they see no disruption in their OSD franchise. So wondering what are you seeing in terms of the mix of patient treatment experiences for patients new to UPLIZNA?

Bing YaoChairman and Chief Executive Officer

So if you look on Slide 8 in our deck, we talk about kind of what the patient profile looks like from prior therapy. Currently, right now, and this is physician-reported information. So there are some data that we don’t have here, but for patients who are being prescribed UPLIZNA, about half of them have rituximab in their history. So we’re seeing the majority of them.

Most of the patients that we know of coming from rituximab. We do see some that are also new to therapy. And then the rest are coming from other therapies, which is really a smattering of the other therapies out there approved and unapproved options from an ISP perspective.

Kenneth ShieldsWedbush Securities — Analyst

OK. Thank you. And then maybe one on 7734 for COVID. Given the fact that a couple of antibody treatments are now showing efficacy and receiving emergency use authorization, just wondering if you could comment on what is the bar for success for treatment for acute long injury indications? Thank you.

Jorn DrappaChief Medical Officer

I’m sorry I didn’t catch the question. What is the what?

Kenneth ShieldsWedbush Securities — Analyst

The bar for success?

Jorn DrappaChief Medical Officer

Oh, the bar for success. Yeah. So the endpoint in our trial is prevention of a composite outcome. That composite outcome includes death.

It includes intubation, ICU admission, and a few other things. So we will need to see a very clear reduction in this outcome in the active group compared to placebo. It may not necessarily need to be statistically different because it’s a very small study, so it’s really a proof-of-concept study, but there’s got to have to be a very clear difference.

Kenneth ShieldsWedbush Securities — Analyst

OK. Thank you.

Operator

Thank you. And our next question comes from the line Derek Archila with Stifel. Your line is open.

Derek ArchilaStifel Financial Corp. — Analyst

Great. Thanks for taking the question, guys, and congrats on the progress. So first question, just on the utilization thus far, has there been any specific geographies where you’ve seen kind of the most utilization for UPLIZNA and NMOSD? And how many of these accounts have actually treated more than one patient? So that’s my first question. And then second question on 7734, just going back to one of the prior questions, is the length of the Phase 1 long enough to rule out any viral reactivation? And, Jörn, maybe is there anything else in the data so far that gets you positive on the long-term safety profile of this asset? And whether or not the study in COVID-19 could provide any additional insight there? Thanks.

Bill RagatzSenior Vice President, Head of Commercial

So from a kind of a perception of where we’re getting the prescriptions from, it really is a nice matter across the U.S. We’re not seeing anything really focused in an area the other. If you look at our three regions, they’re pretty much split evenly across the U.S. and it gets down to our mix between community and academic prescribers as well, too.

We’re really pleased that we’re getting not only the academic centers but also the community doctors. While the academics obviously have more patients, so we are seeing some multiples coming out of the academic center. Overall, the number of prescribers we have is pretty much split even-even between community and academic.

Jorn DrappaChief Medical Officer

Regarding 7734 safety, I think it’s clearly early days. So the data we have include eight patients that have received 150 milligrams of this drug compared to a number of placebo patients and that they have been treated over three months, and we’ve observed them for six months. So that’s really the extent of safety data there is. I think it’s not possible based on this to make any clear conclusions or predictions on the future safety.

So that’s why we do drug development step by step, but this was a Phase 1, and the next study will be a larger study that will give us, I think, more clarity on potential risks and adverse events. I think certainly, what the COVID may contribute additional data points because that is a situation where patients are actually being treated in the setting of an acute viral infection. So it’s going to be very interesting to see what that data will show.

Kenneth ShieldsWedbush Securities — Analyst

Great. thanks, guys.

Operator

Thank you. And the next question comes from the line of Ram Selvaraju with H.C. Wainwright. Your line is open.

Ram SelvarajuH.C. Wainwright — Analyst

Thanks very much for taking my questions. So with respect to UPLIZNA, I just wanted to get a better sense of what metrics you expect to be able to provide on an ongoing basis as we get further and further into the launch, for example, new patient starts, total patients on treatment, for example, also a number of centers that have more than one patient on treatment, if you expect to provide any of those metrics in the future on an ongoing basis or not? Secondly, I also wanted to ask whether you could provide us with some granularity regarding the contribution to ongoing UPLIZNA uptake specifically of switches from rituximab? And how important you expect that to be on a go-forward basis in the coming quarters? And lastly, on UPLIZNA, with respect to the territories outside of the U.S., if you could specifically comment on — I think you’ve mentioned specifically, Bing, Japan and South Korea, the timeline between regulatory submission and regulatory approval, that you expect to relapse? And then I have a follow-up on the pipeline. Thank you.

Bill RagatzSenior Vice President, Head of Commercial

All right. So from a metrics perspective, we will continue to track and provide information on prior therapy. I think we think that that is very important. We will also continue to look at number of prescribers and the mix of prescribers between academic and community.

And the other thing that will clearly be looking at and tracking over time is our access issues. What we have as far as coverage and things like that. Those are the key metrics that we’ll be looking at, and I think, reporting on a regular basis. In regards to your question about contribution of rituximab, rituximab clearly is the largest player in the marketplace right now, and there’s a lot of comfort with it, plus given the fact that we’re both B-cell depleters, we do see that this is a place where we will be looking for and hope to continue to get patients from rituximab switch over to UPLIZNA.

Obviously, we’ll be looking at the new-to-market patients, and we’ve heard very feedback from our customers around that as well, too. But looking at inadequate responders and looking for patients like those who are on rituximab, I think is going to be important contributors for us in the coming quarters.

Bing YaoChairman and Chief Executive Officer

OK. In terms of regulatory timeline, in Japan, we anticipate approval in the first half of next year. In China, it’s also going to be next year. The application has been accepted.

For EU, we will announce it when the application is accepted. So it is going through the process right now.

Ram SelvarajuH.C. Wainwright — Analyst

OK. And what about South Korea? Is there a potential timeline to approval in South Korea or no?

Bing YaoChairman and Chief Executive Officer

There’s a potential for it. We do not have the definitive timeline for South Korea yet, but it is filed in South Korea. Our partner, Mitsubishi Tanabe, will be responsible for that.

Ram SelvarajuH.C. Wainwright — Analyst

OK. And then just a very quick pipeline question, maybe this is probably for Jörn. On 7734, can you confirm that effectively therapy in the lead target indication and certain other target indications for which impact on plasmacytoid dendritic cells is purported to be the primary mechanism that effectively treatment with 7734 and treatment with anti-BDCA 2 antibodies would effectively be mutually exclusive? So you would not expect to see these two classes of therapy because their mechanism of action is so similar, be deployed concomitantly. Is that correct?

Jorn DrappaChief Medical Officer

I think that’s a fair assumption. So both of these therapies target PDCs. And as I think about your question, I can’t really see any rationale why you would want to target these cells by two different antibodies. They have a different mechanism of action, ours actually depletes the PDCs, whereas the other is not a depleter.

Nonetheless, I do not believe that they would be used concomitantly.

Ram SelvarajuH.C. Wainwright — Analyst

Thank you.

Operator

Thank you. And our next question comes from the line of Yatin Suneja with Guggenheim. Your line is open.

Yatin SunejaGuggenheim Securities LLC — Analyst

Hey, guys. Thank you for taking my question. Just a couple of questions on UPLIZNA. Can you maybe comment on — of those 39 patients, how many were EAP versus non-EAP? What is the gating factor to get the EAP patient? What the cadence we should anticipate? If you can also touch on if there was any inventory dynamic and what the gross to net was.

And then I have one more follow-up.

Bill RagatzSenior Vice President, Head of Commercial

So when we look at our mix of patients, we don’t have an EAP, we did have an open-label extension that we are converting patients who were on clinical study drug to commercial drug, although that represents a very small part of the patients that we talked about today in the first four months after launch. From an inventory perspective, since we are a medically reimbursed drugs, so we’re on the medical side, not the pharmacy side, this is primarily a buy-and-bill product. So physicians are usually buying it and utilizing it very quickly. We do not see inventory as something that is really building up anywhere in the system.

Mitchell ChanChief Financial Officer

Your last question regarding gross to net, it’s very analogous to large molecules in this space. I think for modeling purposes, most have assumed around the 20%. But for us, we, as a company, have not provided a more specific number regarding our gross to net.

Yatin SunejaGuggenheim Securities LLC — Analyst

Got it. And then with regard to the — so the next question I have is on the J-code, so far, you didn’t have. You now got it. Can you maybe help us understand how will that change the dynamic? What were the issues that you were facing without a J-code? Is there any way getting a J-code could accelerate the uptake?

Bill RagatzSenior Vice President, Head of Commercial

Yeah. Great question. With the HCPCS code, the J-code, what it really does, it gives you a specific way to get your product reimbursed. So until you get a J-code, you’re using what was referred to as a miscellaneous J-code, which means everything is handled on an exception basis.

So everything has to be reviewed. There’s limited place for input. And really what it does is provides probably more back and forth between the provider and the insurer than you normally would have. Once the J-code is in place, there is a path to do this.

There is a specific number. And basically, there is a better way to get this done quicker. So there are some places that will wait until a J-code is issued before they start really working on reimbursement. And we think that this will kind of clear a path and make it much quicker from a reimbursement perspective, which may be attractive to some offices.

Yatin SunejaGuggenheim Securities LLC — Analyst

OK. Just one financial question. With regard to the sales that you generated, can you maybe help us correlate it to how it is flowing through the P&L? Because it is our understanding that a new patient will get two doses in a month, and then it comes back after six months. So how is that working out? How many doses does these 2.3 million corresponds to? I mean, we estimate, I think it’s about 22 doses, but love to get your perspective there.

Thanks.

Bing YaoChairman and Chief Executive Officer

I’ll start off here, and then maybe Bill can also chime in. I think as Bill kind of mentioned earlier on, most physicians are prescribing to label. So many are getting to doses from the beginning. Where not some patients are only getting a single dose.

I think that represents a small minority. So I would say it’s fair to assume that the vast majority are being prescribed to label and flowing through our P&L in that manner.

Bill RagatzSenior Vice President, Head of Commercial

Yes. I would agree with that. And again, with the patients coming over clinical trial, obviously, they’d only be getting a single dose as well, too.

Yatin SunejaGuggenheim Securities LLC — Analyst

Got it. Thank you.

Operator

And I’m not showing any further questions at this time. I would now like to turn the call back to management for any further remarks.

Bing YaoChairman and Chief Executive Officer

Yes. I want to thank everyone for joining our call today. Have a great evening. Please reach out to us if you have additional questions.

Thank you.

Operator

[Operator signoff]

Duration: 56 minutes

Call participants:

Mitchell ChanChief Financial Officer

Bing YaoChairman and Chief Executive Officer

Bill RagatzSenior Vice President, Head of Commercial

Jorn DrappaChief Medical Officer

Seamus FernandezGuggenheim Securities — Analyst

Jrn DrappaChief Medical Officer

Jeff HungMorgan Stanley — Analyst

Paul ChoiGoldman Sachs — Analyst

Joseph ThomeCowen and Company — Analyst

Kenneth ShieldsWedbush Securities — Analyst

Derek ArchilaStifel Financial Corp. — Analyst

Ram SelvarajuH.C. Wainwright — Analyst

Yatin SunejaGuggenheim Securities LLC — Analyst

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