Good afternoon, and welcome to the ChemoCentryx Second Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this conference call will be recorded. I would now like to turn the call over to Bill Slattery of Burns McClellan. Mr.

Slattery, please go ahead..

Thank you. Good afternoon, and welcome to the ChemoCentryx second quarter 2020 financial results conference call. Earlier this afternoon, the company issued a press release providing an overview of its financial results for the second quarter ended June 30, 2020.

This press release, along with a few slides that you may find helpful while you listen to this call, are available on the Investor Relations section of the company’s website at www.chemocentryx.com. Joining me on the call today is Dr.

Thomas Schall, President and Chief Executive Officer of ChemoCentryx, who will review the company’s recent business and clinical progress.

Following his comments, Susan Kanaya, Executive Vice President, Chief Financial and Administrative Officer of ChemoCentryx, will provide an overview of the company’s financial highlights for the second quarter 2020 before turning the call back over to Tom for closing remarks.

During today’s call, we will be making certain forward-looking statements, which those of you following the slides can see if you look at 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 the company’s annual report on Form 10-K filed on March 10, 2020 and its Form 10-Q filed on May 11, 2020.

You 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, August 10, 2020.

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. With that, it is my pleasure to turn the call over to Tom Schall.

Tom?.

one, a small molecule may achieve better penetration of the tumor microenvironment, where some tumors are currently resistant to antibody therapy; two, a small molecule brings the convenience of a flexible dosing capability.

Before I turn the call over to Susan Kanaya for our financial results, let me add that during the quarter, we have further strengthened our balance sheet with a follow-on offering that yielded net proceeds of almost $326 million. We report today over $0.5 billion in cash and cash equivalents on the balance sheet as of the end of the second quarter.

This financial strength supplies many important degrees of freedom in pursuing our ultimate mission. We believe that we have the resources we need for the potential commercial launch of avacopan and ANCA vasculitis and beyond.

We can pursue the simultaneous further development of avacopan and other high-need, high-value clinical indications, as well as additional formulations. And we can follow the science and invest in other novel and highly innovative drug candidates, such as our orally-administered checkpoint inhibitor, CCX559.

My warmest thanks to all my colleagues at ChemoCentryx, especially in these difficult times, for their tireless work and advancing us to this stage and to the many clinicians involved in our clinical trials.

And I think, especially the patients and their families, who have devoted so much to our controlled-blinded trials, not knowing if an active agent was part of their personal plan, but doing so for the benefit of the community as a whole.

Susan?.

Thank you, Tom. Our second quarter 2020 financial results were included in our press release today and are summarized on Slide 11. Revenue was $49.4 million for the second quarter, compared to $7.2 million for the same period in 2019.

The increase in total revenue was primarily due to the acceleration of revenue recognition associated with CCX140 agreement with Vifor. Following the decision to discontinue development of CCX140 in FSGS, $47.2 million of deferred revenue was recognized as contract revenue.

Research and development expenses were $18.8 million for the second quarter of 2020, compared to $17.6 million in the same period last year.

This increase was primarily due to patient enrollment in the avacopan AURORA trial in patients with Hidradenitis Suppurativa, professional fees associated with the preparation of our avacopan NDA for ANCA-associated vasculitis and higher drug development or drug discovery expenses, including those associated with CCX55, our orally-administered small molecule PD-L1 inhibitor.

These increase were partially offset by lower expenses due to the full enrollment of CCX140 LUMINA-1 trial in 2019. General and administrative expenses were $10.3 million for the second quarter, compared to $5.6 million in the same quarter last year.

The increase was primarily due to higher employee-related expenses, including those associated with our commercialization planning efforts and higher professional fees. Net income for the second quarter was $20.3 million, compared to net loss of $15.2 million in the same quarter of 2019.

Total shares outstanding at June 30, 2020 were approximately 68.8 million shares. Lastly, we closed the quarter with $504.6 million and reported cash, cash equivalents and investments, including the $325.7 million in net proceeds from the June 2020 equity follow-on offering of our common stock.

Tom?.

Thank you, Susan. To summarize, as you can see on Slide 12, we have filed an NDA for avacopan and ANCA vasculitis and our partner, Vifor, expects to file an MAA in Europe by the end of 2020. We continue to build our commercial capability.

We are on track to release top line results from two further clinical trials of avacopan in patients with HS by early Q4 and with C3G by the end of the year.

We are preparing for our next cycle of pipeline advancements, and we anticipate initiating clinic programs in the first-half of 2021 for our orally-administered checkpoint inhibitor, CCX559, as well as for avacopan in patients with lupus nephritis.

We have attracted the financial resources that we need, with now over a $0.5 billion on the balance sheet at the end of Q2, to drive us to the next phase of our growth as we seek to become a fully integrated pharmaceutical enterprise that brings fundamentally new medicines to patients that need them most.

This ChemoCentryx enterprise is built on biomedical innovation, on determination, on integrity, and on purposeful resilience. With science and data illuminating the path ahead, I look forward into a future based with the bright light of hope and prosperity.

With that, I will now turn the call back over to the operator, and we look forward to your questions.

Operator?.

Good afternoon. Thanks so much for taking the question. My question is on the analysis of AURORA, given the different moving parts you highlighted on the call.

So I was hoping if you could quantify the net impact of COVID, any discontinuations or patients missing their final visit versus over enrolling the study and where it leads you really with respect to study power? And also wondering, is the primary analysis here in ITT analysis or a protocol analysis on those patients that haven’t deviated from protocol? And then last, how are you treating the patients who may have missed their final study visit because of COVID impact? Are those responses imputed from prior measurements like LCOF, or are they just sensored? Thank you..

Yes, great. Great question, Steve. So it is – all of our analyses are intended as ITT, because as I said, we made this trial kind of a registration grade trial, since it’s – but even though it’s a “Phase II or Phase IIb trial.” So our intention will be to report the stats as intent to treat.

We will obviously do and have in our stats plan pre-specified various kinds of protocol analyses. So those data will be informative and meaningful as well.

Currently, we’ve been – and obviously, we and others have been really careful in documenting the effects of COVID on patients, particularly for primary endpoint determination, working very carefully with FDA and documenting in real-time, what we’re doing with those folks.

At the moment, we do not intend the last observation carry-forward necessarily for those that missed their 12-week visit owing to COVID. But they certainly will capture all the data we can from those folks, particularly if they’re still on the trial and are measured thereafter. So those might be eliminating data as well.

But I think the good news is that the first part of your question, which is the – I think, probably the most important part. Although, yes, it is clear that, that dropouts and some loss data owing to COVID is going to be higher than what we and others might have modeled.

The fortunate news is I don’t think it’s going to – it’s not going to materially impair our ability to still have very good power in this trial. So that’s, I think, for us, the excellent news. We really made a big trial with big groups.

It was very highly power to detect the differences that historically, we might be led to expect and certainly highly powdered to detect statistical differences between the groups.

So even a doubling, if you will, and I’m not saying that’s the number, but even if we had twice the number of dropouts or lost data at 12 weeks, I think, we’ve still got really good power discrimination.

So I fundamentally believe that we’ll be able to return a meaningful and clean result from the 12-week data, even with the fact that COVID has messed with some of that data a little bit. And really, the biggest impact for us is a slight delay as we get into the sites and do our data verification and collection process..

I appreciate the detailed answer. Thank you..

Thank you..

And our next question comes from the line of Dae Gon Ha with BTIG. Your line is now open..

Great. Good afternoon. Thanks for taking our questions, and congrats on all the progress. So, Tom, if we can go to AURORA protocol, I just wanted to ask, can you remind us what the protocol allows in terms of antibiotic usage? Because I mean, I guess, PIONEER 1 and 2, they did have a little bit of that antibiotic usage versus non-antibiotic usage.

And as we look forward in terms of the regulatory front, can you update us on your latest thought process with regards to maybe orphan drug designation or conditional filing/AA or accelerated approval based on AURORA date alone?.

Sure. Thank you, Dae Gon. Without going into all the details on the antibiotic use, I can tell you that we’re much closer to the PIONEER studies than we were to any other studies. We realized that concomitant antibiotic use can be a confounding feature in the short-term in ascribing effects to the HiSCR.

And so we were pretty careful about looking back at what had happened in PIONEER 1 and 2 and trying to adhere to those guidelines. And also making sure that to the extent possible, we didn’t have imbalances in antibiotic uses between the group.

So, again, I think, we’ve been very cognizant of that as a complicating feature and trying to avoid it as a complicating factor in our interpretation. Back to the regulatory strategy, so it’s – the history is clear on what’s gone before.

We’re evaluating the Hurley stage II/III patient population, as did the PIONEER studies, which were the studies as people may know, are the only Phase III pivotal trials that led to so far the single loan registration of a drug in this space, that for adalimumab, the anti-TNF drug Humira.

Hence, we want to try to avail ourselves as much as we can from information from that President. So interestingly, that sponsor got an orphan drug designation for Hurley stage II/III, because that patient population is under 200,000 people in the U.S., and that is still the case.

So we have – we’ve been attempting and continue to work on our orphan drug designation. We don’t yet have that designation yet to ChemoCentryx. But there is precedent, and we’ve been certainly working on that continuously. So we yet to know if we get that orphan drug designation. But again, there is precedent for it.

We fundamentally believe that Hurley stage II/III patients are still fewer than 200,000 in the United States at this juncture.

So with all of that in mind, getting back to the – one of the main points of the question, we set up this trial to be big enough and highly powered enough, where we got really good data with a highly differentiated agent, particularly one which at that time was not yet in registration for another indication But we had confidence that it would be.

And that’s what that has come to past that we are filed – we are actually – have a filing under review for registration of avacopan and ANCA vasculitis.

We were – we have been hopeful that with strong data, we could have an interesting discussion with the FDA about potentially a conditional registration or at least how to get to an accelerated path to registration, again, with strong data.

So, again, without going into a lot of details, and certainly, I do not at all speak for the agency and the agency will just have to see what data we have as we will, and then we will discuss from there.

I think it’s really great news, though, that there’s a huge – it seems to me a huge demand, not just for new therapy in HS, but new orally active therapy. And so, again, even COVID notwithstanding, but certainly prior to COVID, we really enrolled to this study very rapidly.

And I think that again speaks to the eagerness of folks in this community to have a new therapy options. So we’ll see how strong the data is. We’ll have discussions with the agency. And in the light of – if data are positive, we will do everything that we possibly can to bring the drug to registration in this indication as quickly as possible..

Great. Thanks for taking our questions. Look forward to the data..

Thank you, Dae Gon..

And our next question comes from the line of Michelle Gilson with Canaccord. Your line is now open..

Hi, Tom. Hi, Susan. Congratulations on the progress this quarter.

I was hoping you could expand a little bit on what might be considered a clinically significant result in HS, or perhaps what is a strong enough result that would give you confidence to move the program forward either to registration or to registration-enabling studies? And then could you also help us understand what you might report in the fourth quarter as far as data goes? Maybe what per protocol analyses you might present? And if you specifically will be breaking out Humira failures, and maybe remind us of the powering of the study, if you don’t mind as well?.

Sure. So it’s – all of those are really excellent questions, Michelle, thank you for them. We have so little precedent in the world of Hidradenitis Suppurativa in controlled trials that are informative. To really help us guide some of those answers, I’ll take some guesses.

And certainly, we have, again, for lack of a better term, an endpoint, which is a strong tool, but not a very sharp tool. It’s not a precise tool. And the element of variability and subjectivity, again, makes it a little bit difficult to always try to compare apples-to-apples, particularly when there has only been one or two apples in the bin before.

So let me say this that as a general rule, anything that gets me to a clear answer about a next step, to me is a success.

So, if we see clear separation between the groups, and if some of the secondaries look also supportive, and we say to ourselves, “Well, it’s clear that we’re having a clinical effect and need a clinical benefit.” That’s a good answer. Hopefully, we won’t get the other kind of clear answer, which is there’s nothing here, but we’ve done our best.

But again, even a good clean answer on that side of the equation just allows us to focus on other areas that we can put our time, effort and treasure.

So getting back to, we always like – people always like to say, “Well, what would an interesting difference be?” For me, any statistical separation, that’s significant? I will say, let’s look very carefully at that. And with this kind of instrument careful as we already use it as carefully as we can, that probably is meaningful.

So we would, at minimum, like to see a statistical separation, obviously, with the HiSCR. And the only precedent we have about what’s good for registration, what’s strong enough for registration, is what we’ve seen before and the one drug that’s been registered.

And somewhere a delta of between 20% and 30%, 25% to 30% with, obviously, the bigger number going to be the new agents. In that case, it was adalimumab over the background therapy. That’s the one regulatory precedent we have for registration.

So I think it could be argued that something approaching that is pretty strong data since that’s all we have so far. And again, we’ll just have to see how the agency thinks about these things. It’s pretty clear they like they want to stay with HiSCR. They’ve been very clear to the community about that. So that’s what we’re using.

We’ve – we will report essentially – and you’ll recall in this trial, we’ve committed to talking about the 12-week primary endpoint data. We also have some additional open – it’s open label, but blinded to dose of a continued dosing for 24 weeks.

So we’ve got some special challenges here in trying to preserve the integrity of this data set, while presenting top line data, which will essentially be aggregate data between the groups that will tell us whether there is a difference between any of the dose groups In the placebo.

So definitely, we’ll have that information and that will be valuable and, in fact, will tell us whether we achieve the primary endpoint of a statistical separation between drug taking folks and placebo-taking folks. The powering on that is – was established quite early on, and I think we’ve talked a little bit about it.

Originally, we were powered to see about a 90% – I’m sorry, 90% powered or greater to see the historical standard of a 20% difference. Again, I don’t think even with all of the challenges of COVID, we probably have something pretty good, still very good power in that way. So I’m not worried about a material depowering of the study in anyway.

So I think, again, we’ll get a clean answer. But the whole point is, if we get a nice strong resolve on the primary endpoint, we want to have a dataset of preserved integrity. So that when we take the follow-up phase, we can use the entirety of the data with a discussion with the FDA.

And again, ask how could this support registration or inform a registration? So that’s what we’ll be talking about sometime in Q4 when we bring the data forward..

Okay. Thank you so much, Tom..

You’re welcome, Michelle. Thank you..

And our next question comes from the line of Ted Tenthoff with Piper Sandler. Your line is now open..

Thank you for all the updates. Tim, congrats on the success. It’s been really an exciting year.

So I’m trying to understand sort of how the data – hoping that it’s positive from HS and/or C3G could impact AAV approval? So it would be supplemental filings, but would you need to wait for the AAV approval to file for the other indications? I’m just trying to sort of understand the sequence of that with respect to regulatory filings? Thanks so much..

Well, Ted, thank you. I hesitate to applying on regulatory details, since my regulatory expert is not on the phone today. We have an excellent team at ChemoCentryx, who does this work.

But my understanding is that probably while each filing and, of course, the background materials in each filing, such as the manufacturing and chemistry controls, et cetera, obviously, the cumulative databases in other ways, safety, et cetera, those support any individual filing, probably each indication would be taken in its own turn.

So – and point of fact from a pragmatic aspect, ANCA vasculitis filing will be moving along on the calendar already in its own way, in its own pace. And we’ll – we probably have that process well underway by the time the other filings got put in.

And again, without being entirely familiar with the details, because each of these indications is also at separate divisions within the FDA. I presume that those divisions while obviously cooperating extensively on the materials would, of course, have their own process.

So I think, they’re kind of quasi-independent but, of course, supported by the core technical information..

Well, again, it’s a high quality problem, hopefully, so..

No, Thank you..

Thank you. Looking forward to the data, guys. Thanks so much..

And our next question comes from the line of Yanan Zhu with Wells Fargo Security. Your line is now open. Excuse me, Yanan Zhu, your line is now open..

Sorry, I was on mute. Thanks for taking the questions. Regarding the HS study design, there is a 10 mg BID or mid – kind of a mid-dose arm. Just curious, what – why was – because other – the other studies didn’t include any those arms lower than 30 mg BID.

So what’s the reason of including that arm and what we might learn from that arm in the HS study? And also, if you could – yes, yes, so I’ll take that. I have a follow up after that as well..

Sure, of course. In point of fact, in one of our Phase II development programs, we did include a 10 mg and a 30 mg dose against know avacopan, all of which was on the background therapy of standard of care.

So it was kind of every group got high dose glucocorticoids in daily setting in addition to the combination of either cyclophosphamide or rituximab. So the classical glucocorticoid plus x protocol, where x is either cyclophosphamide or rituximab. So every individual in that Phase II study got that.

And then we layered on either 10 mg dose or the 30 mg dose.

And while that study was mostly a safety study, to see if there would be any additional safety burdens that avacopan might impose on people, should the drug be used, not that we’re seeking to use it that way, but should someone ever use of avacopan in addition to what they’ve been doing for all these years And then thankfully, there was no safety burden that avacopan brought to that party.

We were able to look at 10 and 30 mg. Again, the power – the study was not powered for efficacy. But there were hints that what we saw with the active effective 30 mg dose in the other trials was present and apparent, even in that setting, where, of course, they were getting standard of care.

So there was that to deal with in background, whereas the 10 mg dose was not quite as potent. So we do have some experience.

And, of course, we have all of our calculations, both from pharmacological studies that are off-clinical and in the other healthy human volunteer studies to suggest that, at least for the target that we’re going for of pharmacological coverage, essentially pharmacological inertness, if you will, of the receptor at trough levels of the drug, the 10 mg dose falls short of that.

So we put it into this study as one of the arms. And essentially, this being a new indication outside the space that we were in before, we wanted to be able to speak to any questions that regulators or others might have. That would be, along the lines of, well, we see that you have some effect at this 30 mg dose.

Is that really – could you go lower and still see an effect in this indication? So we just built that in. And if nothing else, that will inform the dataset. We don’t think that 10 mg dose in that way will have the same pharmacological coverage at all. And so I would be gratifying if the dose response could be seen.

Again, given the limitations of HiSCR, that’s always a question. But we wanted to be able to demonstrate to regulators that we had explored dosing at scale in this particular indication. So that’s why we put it in the trial as we did..

Got it. That’s very helpful. Thank you. And then the remaining question is regarding any safety implication from the HS study? More specifically, I think, for the ANCA vasculitis study, the ANCA– avacopan is used on top of cyclophosphamide or rituximab.

So it’s – the safety-wise, it’s a little hard to see clearly a safety profile because of the background therapy here. I think there is a very good opportunity to demonstrate safety and it’s a large data set.

So could you share your thoughts on what – in addition to efficacy, what kind of safety leverage will this provide to the entire avacopan pipeline? Thanks..

Yes, very perceptive question, and you’re quite right. In the ANCA patient population, they’re on background therapy for their disease.

They’re on also an amazing number typically, an amazing number of concomitant medications to control other complications of the therapy prophylaxis for pneumocystis jirovecii as a consequence of being under high doses of glucocorticoids and/or cyclophosphamide and rituximab.

So – then that has its own problem, that, that concomitant, they’re trying to control their incipient diabetes and some of the bone problems with concomitant. They’re really a challenged patient population.

And one hopes going back to avacopan and ANCA vasculitis by removing some of the need for these broadly immunosuppressive therapies, we also get rid of some of these nasty [ph] conmeds that give them so many AEs and SAEs.

But even there in ANCA, we could show 40% fewer number of severe AEs in the avacopan group versus the prednisone standard of care group. So there – is seems to be, at many levels, very good safety advantages to using avacopan.

But again, we’ll let regulators and others sit through the data sets, and I won’t say any more about that since it’s under a finding right now.

But it is pretty clear to us that, that HS population is by and large notwithstanding the fact that they have this really debilitating illness, and that causes them a lot of discomfort and pain in many areas of life physically and emotionally.

They are, by and large, not under the burden of quite so many concomitant medications and the safety database, although still blinded. The suggestion is that we have far fewer across the Board safety events just in this patient population full stop.

And again, even in the blinded dataset, nothing that seems out of the ordinary for this patient population.

So I think when the data come out, it will certainly add to – and fundamentally enhance the picture of safety around of avacopan, which we believe based on evidence today, both preclinical, off-clinical, number of species, and humans, both healthy and ANCA vasculitis population, we believe will be a very supportive data package on safety as well.

So we hope it will just further enhance that package. And if there are any outstanding questions that come out of ANCA vasculitis, which in a complex patient population, there always could be. But if there are any, we’ve got an equally large data set in Hidradenitis Suppurativa to check whether or not any of those kind events are evident in HS.

So I think it’s going to be a real benefit to our overall package and profile..

Got it. Thank you, Tom. Very helpful..

Thank you..

And our next question comes from the line of Joseph Schwartz with SVB Leerink. Your line is now open..

Thanks very much. Congrats on the progress as well.

I was wondering if you could categorize or characterize your payer interactions for us in terms of how well you’re finding that they appreciate the various sources of value that avacopan could deliver in terms of the total cost of patient management, maybe including a lot of the safety liabilities that you were just alluding to in the range of efficacy benefits? Are you finding that anything resonates more or less and how are you thinking about incorporating the feedback you’ve obtained from payers to date in your ultimate pricing decision?.

It’s a great question. We – again, without going into too many details, and my commercial team, we’re going to be presenting a lot of information at Health Economics Conferences as we get closer to launch. And so those will be very interesting things to watch.

But I’m going to say that these interactions to date have been – we’ve been very pleased with how much payers actually get it in this organ in this particular orphan indication. They totally understand, maybe totally is a bit too strong.

But let’s just say that, we’ve been impressed at how much understanding there is out there about the true cost of this kind of disease? You can go out and do the big ticket stuff like dialysis. And so the kidney data was something that was, again very pleasantly a factor in some of those conversations so far.

That’s obvious, right? I mean, end stage renal disease will bankrupt our Medicare system if we don’t do something about it overall. It’s about 9% of the total Medicare budget, far more than the entirety of the NIH budget for all medical – basic medical research, or certainly more than the NIH budget.

Just for end stage renal disease, forget everything that leads up to it. But payers – even if we have to take that out of the equation, which is not – which is a big factor not to take out, but they understand the hospitalizations are – which are just a fraction of this big pie of ANCA vasculitis care.

There’s astonishing number of hospitalizations per year in the U.S. on the order of what 13,000 or 14,000, they’re not short. It’s not a day or so. It’s seven to 11 days and costs ranging just the cost associated with the anchor codes in the diagnosis and hospitalizations ranging from 100,000 to 150,000.

And this is just part – this is a fraction of the total cost. They get that things like glucocorticoids, maybe are cheap in the bottle, but they’re super expensive to use.

They get the – all the complications and the safety consequences and the absolute diminution of quality of life and the pharmacoeconomics of having people out of work, out of the – in the healthcare system all the time. So I would say, this is one of those things that you always go into a little bit fearful of the unknown.

But so far, hats off to the payers, they’ve been a lot more knowledgeable and a lot more on message and very receptive to the data we’re presenting. So I think that’s been an encouraging part of the journey so far, ad we’ll have more to say about those details a little bit later on in the process..

That’s very helpful. Thanks for the insight, Tom..

Thank you very much, Joe..

And our next question comes from the line of Tessa Romero of JPMorgan. Your line is now open..

Hi, Tom and Susan, this is Tessa on for Anupam. Thank you for taking our question. So on C3G, there is some competitive activity in the space.

What are your thoughts around differentiation here for avacopan C5 inhibition from a mechanistic perspective? And then what is the latest thinking about epidemiology for C3G, where I think the literature can be somewhat variable? Thanks so much..

Yes, indeed, the literature is really variable. I – we have a lot of discussions, even within the enterprise about what is the most reliable idea of both incidence and prevalence, just in the U.S., let alone anywhere else in the world. It’s a rare disease that much is true. There’s no question.

I don’t know if it’s quite as ultra rare as some of the literature suggest that. My own inclination is maybe not. So I think that the treatable patient population in the United States is certainly accessible between – probably in the low number of thousands and that’s kind of what we’re looking at. But it’s hard to know, it is hard to know.

Having said that, since there is nothing available for these people, and since they go through this really dismal progression of being young people having end-stage renal disease going into dialysis, maybe getting a transplant, usually from mom or dad, but typically mom, having that transplant fail within a few short years from the same underlying condition going back in dialysis.

I mean, this is a bitty – a really bad grim cycle and very expensive, obviously, for the patients, their families and then, of course, for the healthcare system. So it’s definitely very worthwhile approaching this problem and approaching it from a couple of different angles. I fundamentally hope that we can all find even in a rare disease like that.

I think any approach that wins or any couple of approaches that wins is real progress and it will help everybody, because frankly, C3 glomerulopathy, again, one of its mysteries since it’s so rare, is it really one disorder or how many disorders is it? I mean, we keep collapsing different features of kidney disease with complement dysregulation under new titles and C3G is the latest one.

I just think of it, generally speaking, as a complement regulated – I’m sorry complement dysregulated glomerulopathy.

So as to differentiation, no one else is attacking what I think is the fundamental question is like, why does the kidney develop this massive inflammatory and eventually self destructive feature at the level of biopsy? And it’s not just that you have all these protein deposits and – in the part of C3G that used to be called dense deposit disease.

It’s not just sort of gunking up the glomeruli. I mean, there is active destruction, I think. And so we know that complement is dysregulated. There is ample evidence for C5a receptor. C5a is more difficult, in my opinion, to detect either at the level of histochemistry or even with soluble detection in the periphery.

But C5b-9 is definitely present in these patients. So there’s lots of evidence of terminal complement activation leading to what would be a C5a presence and we believe it’s there in the kidney as well, fundamentally.

So we’re the only game in town for stopping what we think is neutrophil-mediated destruction or other granulocytes mediating some of this destruction, other approaches? Yes, there are some and there’s some in the complement intervention space.

I think that our orally active drug validated at the level of another very difficult and complicated disease involving the kidneys ANCA vasculitis and validated robustly has to derisk our approach somewhat.

And the question will be, is all C3G the same kind of disorder? Or are there going to be subsets that will be more amenable to treatment with one modality versus another? And that will play out, I think, over this next year.

But make no mistake, as you know, some of these other approaches have been frustrated and it’s really difficult to understand what’s happening in this disorder. It’s one of the reasons that when we set out, we intentionally decided to do something different.

And we said, “Look, C3G is, you can have presumptive C3G and then we do have a lot of biopsy work in this area. So let’s take biopsies. Let’s confirm that you have C3G at the level of biopsy at least and then let’s look again at six months. That’s a real investment on the part of patients and clinicians.

But there’s real good evidence that you can – if you get a histological improvement in and around the glomerulus, that matters, and that may well ultimately then fall into line with reduction in proteinuria, which is sustained, as well as an improvement over time in EGFR.

And really, by bringing all these features together, including this biopsy endpoint, we think we’ll be able, for the first time in the history of this disorder, to marry all these features together from a really good blinded data set, collected, blinded, evaluated in the case of histology by a central laboratory, and this should be very powerful.

So I think we’re going to have a lot to offer in terms of just knowledge, and I hope I’m very sanguine and you need bullish about therapeutic benefit for some of these people with avacopan..

Great. Thanks, Tom, for taking our question..

Thank you, Tessa..

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

Thank you. Hi, Tom. Hi, Susan..

Hello, Ed..

So just a couple of questions. First on ACCOLADE. You’re expecting the top line data by the end of the year.

Is that only Stratum 1 or will you be seeing some Stratum 2 data as well?.

That’s a – again, a very insightful question. Ed, thank you very much for bringing that up. So I – it’s notable when we talk about the ACCOLADE trial design. And I think we alluded to that on one of the slides. I reminded people again of this biopsy. We – originally, there’s no approved therapy.

So there’s no regulatory path here, by the way, and I think most people understand that. When we set up this trial, there was a – some really good literature at the time. And this is by way of Stratum 1 and Stratum 2, so that people understand this a little bit better.

There was good literature that, that suggested that if you had bonafide C3 glomerulopathy, i.e., active lesions and destruction in your kidney glomeruli, you were probably likely also to have a biomarker of high levels of C5b-9 or soluble MAC complex in your periphery, in your blood, your circulation.

And this was a biomarker that was a stable, fairly easy to measure, because C5b-9 is stable and there are good essays for it. And so it would kind of make good sense, right? You’ve got a complement dysregulated kidney disease and there’s a nice biomarker in the blood.

So maybe that’s going to be helpful for diagnosis and knowing whether we’re having a therapeutic benefit. So originally, the trial was designed just for those people that have had a relatively high level of C5b-9 in the periphery.

As we got the trial design launched and consulted with FDA, there were some other papers that came out that had a kind of opposite point of view.

It said, basically said, actually, all the actions in the kidney, don’t worry about what’s happening in the blood, because you could have C3G and have fairly low levels of confidence – of complement activation markers in the blood, including C5b-9.

So what we decided to do is actually get that second Stratum, which is low soluble MAC complex in the trial, so that in a way we could definitively answer the question.

And after all, if we had the Stratum 1 trial and got a great result, the next question would be, we’ll do another trial in people with low soluble MAC complex and see if you get the same result. And so we just thought we do it all in one.

Now why do I tell you all these things? The fact is when you have presumptive C3G and you then – and that’s what we do, we look for presumptive C3G, we screen people, we then next take – we next take their measurements on soluble MAC complex low or high. And then the last step we do is biopsy prove, because that’s the most invasive step.

And so, by the – at least by the standards of this trial design, which was done with consultation with the leading nephrologists in the world in this area, what we know is this. It seems that the original hypothesis is more correct.

If you have biopsy proven C3 glomerulopathy, you are likely to present clinically with this marker of high soluble MAC complex. And, in fact, if you have low soluble MAC complex, even if you clinically at presumptive for the C3G, you convert at the level of biopsy, which is the last step at a much smaller rate.

So all of that is by way of saying that we will have virtually all of the target of the original Stratum 1. And the Stratum 2, there will be less data only because far fewer people actually have C3G when they have low soluble MAC complex. That’s what our trial design data suggests so far.

We’ve haven’t unblinded anything other than knowing that they simply don’t come out on biopsy with C3G anywhere near as frequently when they have low soluble MAC. So we will put out all the data we have in the world, which, again, is probably the bulk of the data that we had from clinical trials on C3G.

And we’ve already answered, I think, or at least provided new information on a fundamental clinical question, which was the controversy between soluble MAC high or low, does that equate to C3G in the kidney? That’s a level of biopsy, the level of biopsy. The high soluble MAC complex is much more correlated with C3G..

Great. Thank you..

So I won’t give you the detailed numbers yet, but we’ll have all the data when we talk about that, at least, for the six-month primary endpoint..

Great, fantastic. Thanks for all the information. And maybe just a far simpler question with a short answer.

So with the expectations of 60 to 75 specialty field sales force, I’m just wondering where you are in the hiring?.

We’re doing, I think, a great job of the hiring. Again, we’ve really got a great commercial organization, young, dynamic, quite experienced and a lot of product experience and launches under their belt. So the infrastructure at the executive team level is very much in place.

And now that – now we’re just bringing on accordingly and in the appropriate time, the actual sales reps and medical science liaisons to bring them in with the appropriate timing. But the whole hiring plan is totally in effect, and we’re well on our way to bring in many of those people that will be involved in that field force..

Great. Thanks, Tom..

Thank you, Ed..

I’m now showing no further questions. And I would like to turn the call back to Thomas Schall for closing remarks..

Well, thank you, operator. And again, I wish to thank everyone who has been on the call today. Again, it’s been a very exciting, although challenging year for many of us in the industry. But we’re making good progress. I very much look forward to updating you as we execute further on these 2020 plans.

And again, thank you all for your time and attention today. You may now disconnect. Bye-bye..