Viela Bio Inc (VIE) Q2 2020 Earnings Call Transcript

Viela Bio Inc (VIE)
Q2 2020 Earnings Call
Aug 12, 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's second-quarter 2020 earnings conference call. [Operator instructions]. I would now like to turn the call over to Mr.

Mitchell Chan, chief financial officer at the Viela Bio. Please, go ahead.

Mitchell Chan -- Chief Financial Officer

Thanks. And welcome everyone, to our second-quarter 2020 earnings call. The press release reporting our financial results is available on the Investor and Media page of Veila's website at www.vielabio.com. Joining me on this call today are, Bing Yao, our chairman and chief executive officer, Jorn Drappa, our chief medical officer and head of R&D, and Bill Ragatz, vice president, head of the 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. The description of these risks can be found on our most recent Form 10-Q on file with the SEC.

Like many of our peers in the pharma, like the biopharma sector, we continue to closely monitor the situation around the COVID-19 pandemic, including the associated restrictions on travel and work that have been implemented, as well as potential impact on our business and clinical trial. The full extent to which COVID-19 may impact us will ultimately depend on the future development which of course, is highly uncertain and cannot be predicted. This includes new information that may emerge concerning the severity of the coronavirus, and the actions to contain COVID-19 are treated in among others. With that, I'll turn the call over to Bing Yao, our CEO.

Bing Yao -- Chairman and Chief Executive Officer

Thank you, Mitch. Good afternoon, everyone. Thank you for joining us today. It has been quite a busy and productive time at the Viela.

Since we reported our first-quarter earnings mid-May. Just several weeks after that call on June 11th, we announced our first U.S. FDA approval of UPLIZNA, also known as inebilizumab, which is now available for adults with NMOSD, or anti-AQP4 antibody positive. This of course would not have been possible without the investigators and the patients who participated in any momentum trial.

Shortly after their approval, we deployed a talented and experienced Commercial team under the leadership of Bill Rigatz who will provide further detail on launch progress during today's call. With the approval coming at the tail end of the second quarter, I'm pleased to say that our launch is off to a solid start. While we are ensuring brand awareness and patient access, our top priorities we're also preparing to initiate the Phase 3 trials with inebilizumab with myasthenia gravis and IgG4-related disease. Both of which are severe autoimmune diseases with unlimited treatment options.

Turning toward the rest of our pipeline. In May, we reported positive interim data from our Phase 1b study of VIB7734. Since then, we have obtained additional efficacy and biomarker data on cohort 3, which confirmed highly efficient pDC depreciate in tissues, and can have a meaningful reduction in cohorts. These results will inform our selection of SLE as the only indication for further investigation with our Phase 2 trial.  Jorn Drappa, our chief medical officer will provide further detail on this trial, and will be available to take your questions later in our call.

At this moment in time, we remain in force that the COVID-19 pandemic has had a limited effect on our operations. While we are eager to get back to our offices and give us work in Rockville, we have extended our work from home policy, and are encouraging employees to do their part by closely following health authority guidelines. As you may recall, we made a decision to temporarily pause new patient enrollment at some of our trials in order to prioritize patient health, and to that, of the investigators in our clinical trial sites. We have resumed enrollment in our Phase 2 trial in kidney transplant rejection with VIB4920, and we are planning to resume others in Q3, and Q4 of this year.

Even the recent COVID-19 remains a serious public health concern, and how it will affect us in the long term is still unclear. Given our deep understanding of the immune system and our commitment to the patients, we felt it was our duty to investigate ways how product candidates might serve those affected by the coronavirus. To that end, we plan to initiate a Phase 1b trial with VIB7734, which has clinically demonstrated or the ability to regulate key inflammatory mediators. The trial will be in patients with COVID-19-related acute lung injury.

We'll also touch on this trial later during today's call. Looking toward our objectives for the rest of the year and beyond, we are grateful to our Investor base for their strong support. We recently raised gross proceeds of approximately $169 million, underwritten public offering which will support our clinical and commercial execution, while extending our cash runway into 2023. With that, I would like to hand the call over to Bill Ragatz, vice president, head of the commercial, to provide an overview of our product launch.

Bill.

Bill Ragatz -- Vice President, Head of Commercial

Thanks, Bing. As you just heard, this is an exciting time at Viela and for NMOSD patients. Before I get started, I want to acknowledge our Launch teams who have been doing an incredible job in driving education and awareness about UPLIZNA. Despite a very trying external situation with patient visits being down, and most offices operating remotely which has made communication and coordination within the office more challenging.

The launch is progressing as expected with policies being created and formal reviews ongoing, and we will continue to adapt to the changing external environment. For those unfamiliar with NMOSD, this is a progressively debilitating and potentially fatal neuroinflammatory condition. Patients experienced unpredictable attacks or relapses that affect the optic nerve and spinal cord which can lead to permanent blindness and paralysis. Despite the relative rarity of this disorder, significant unmet needs remain.

And we believe UPLIZNA could potentially help thousands of patients with NMOSD in the U.S., as well as globally If approved outside the U.S. UPLIZNA is the first and only B cell depleter approved for adults with NMOSD who test positive for the AQP4 antibody. An antibody commonly associated with this disorder. AQP4 positive patients represent about 80% of the NMOSD population.

We believe UPLIZNA has a strong product profile with several factors that make it very attractive as a potential first-line treatment in this patient population. Beginning with efficacy in our momentum trial, 89% of patients treated with UPLIZNA as monotherapy were a tax-free at the end of the randomized control period, and patients of UPLIZNA had an overall reduction in hospitalizations. Importantly, UPLIZNA has a favorable safety profile and does not have a black box warning. Another key characteristic of UPLIZNA is its dosing schedule.

With UPLIZNA, patients are dosed on day one, get another dose 2 weeks later, and then come back every 6 months which is typically in line with the frequency in which many NMOSD patients see their doctor. Finally, UPLIZNA is a B cell depleter, a mechanism with which NMOSD treating physicians are familiar with, and UPLIZNA has been engineered for efficient B cell depletion via CD19. No other NMOSD treatment option can offer this full set of benefits. We know that a successful launch is contingent on having all the necessary pieces in place.

When formulating our strategy, we prioritize three components; education, access, and structure. While each plays a different role in the launch, all are essential and fulfilling our vision for UPLIZNA and delivering on our promise to patients. It starts with understanding your customers and education. We have already established solid relationships with top experts and advocacy groups.

In addition, having conducted extensive market research projects to better understand how healthcare providers, payers, and patients think about NMOSD and how they manage this condition. This strong baseline understanding has allowed us to create impactful educational programs, they're able to be deployed in both face-to-face and virtual settings. This is very important, given the changing external situation, and the different parts of the country are opening up at different speeds. For example, our peer-to-peer programs which are traditionally conducted face-to-face are now also being conducted virtually, along with a broader array of healthcare providers to understand the benefits of UPLIZNA from an NMOSD expert.

We are also working closely with several patient advocacy organizations to provide virtual education initiatives about NMOSD to their members via social media channels. For every launch, gaining access is critical to success. Our Payor team has been able to meet with most of the top payers are ready to share information about the born of NMOSD, and provide our clinical presentation of UPLIZNA, with the remainder of these payers being primarily scheduled before the end of the month. We have already filed for a hicks-picks code, and we are expecting to hear back with CMS around the end of the third quarter.

Overall, we are progressing as planned on an access front. To help patients gain access to UPLIZNA, we have established our hub, VIELA VIPs. VIELA VIPs is a support program for patients, caregivers, and healthcare professionals offering educational resources, financial assistance, and insurance information to help them with one-on-one support. Viela Bio was committed to patient access and will continue to partner with payers to establish coverage for patients, given the strong value proposition UPLIZNA provides.

Last but not least, the structure. We needed to have the right people in place and culture to support the success of the team. As this is our first product launch, we have the unique opportunity to handpick a team dedicated exclusively to NMOSD. We put an emphasis on experience, prioritized in rare and neurological diseases.

We assembled seasoned teams including market access and sales representatives, along with the medical affairs NFL team averaging over 15 years of experience. We instilled in the line vision and a strong sense of collaboration among the teams while providing each with a set of specific goals to support our launch. We believe that focusing on these three pillars has allowed us to be well set up for a successful launch. But it's early days in the launch, based on the sound efficacy and safety profile as well as twice a year maintenance dosing, we believe UPLIZNA will be an attractive first-line treatment option for NMOSD patients.

Our aim is to help prevent future NMOSD attacks which may lead to permanent disability, and we believe that UPLIZNA will provide significant value to the NMOSD community in this regard. 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. In this study, we learned that nearly all the participants view the efficacy and safety profile of UPLIZNA positively with 99% of neurologists responding fairly to the efficacy profile, and 97% responding favorably to the safety profile. Additionally, based on the same research, we learned that over 50% of neurologists already consider themselves to be very, or extremely knowledgeable about B cell depletion as a means to treat NMOSD.

With more neurologists selecting B cell depletion as the most important mechanism of action in NMOSD. At the outset of our launch, we are focusing on NMOSD patients who are newly diagnosed, and those who are experiencing inadequate response to their current maintenance regimen. Regardless that they are being treated in an academic institution, or in a community-based setting. From the market research study referenced on the prior slide, most neurologists are looking to decrease their utilization of off-label NMOSD agents, and specifically prefer to use an approved agent in a first-line setting.

Also, half of the physicians would consider changing their patient's NMOSD treatment regimen even if they do not have an attack. In fact, 79% of neurologists said they would use UPLIZNA for patients who have intolerability issues, 76% would use in patients who are having long term safety concerns with their existing regimen, and 75% would use in patients or having compliance concerns with their current regimen. Adoption is one of several important factors that we will be measuring over the coming quarters to track our success. This slide outlines what we have defined as key launch metrics around four areas for us.

Referrals, including the number of referrals and the conversion of referrals to new patient starts. Prescribers. The number of unique prescribers in the mix between academic and community-based neurologists. Patients.

The number of patients of UPLIZNA and whether they are new or have been previously treated on another immunosuppressive agent. And payers understanding the coverage and policies. These will be the key indicators of our commercial success. While our immediate focus is on the successful commercialization of UPLIZNA in NMOSD, we continue to evaluate its broader potential within the autoantibody pathway.

With that, I would like to hand the call over to Dr. Jorn 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 Drappa -- Chief Medical Officer

Thank you, very much, Bill. On Slide 13, I would like to start by covering the lifecycle indications for UPLIZNA. We are now getting close to starting two Phase 3 trials in myasthenia gravis and IgG4-related disease respectively. We currently project that patients screening for these two trials both starts in the third quarter.

Myasthenia gravis is an antibody-drug neuroinflammatory disease whose pathogenesis has many similarities to NMOSD spectrum disorder. In this disease, our antibodies against the acetylcholine receptor, or muscle-specific-kinase impact the neuromuscular junction. Meaning, the transmission of signals between nerves and muscles. This can result in a variety of motor dysfunctions ranging from eye muscle dysfunction all the way to respiratory failure.

Our 12 test whether depletion of CV-19 positive cells can meaningfully improve patient and physician assessed outcome measures in this disease. IgG4-related disease is a group of diseases characterized by infiltration of IgG4 producing CV-19 positive D cells into various organs and tissues, causing tumor-like swelling, and subsequent fibrosis resulting in organ dysfunction. Commonly involved organs include the pancreas, bile duct, kidneys, organs, and cerebral glands. We believe that the depletion of CV-19 positive cells has the potential to interrupt or reverse the accumulation of CV-19 positive cells in this disease.

There is currently no approved treatment for IgG4-related disease, and therapy largely relies on chronic administration of corticosteroids. Our trial will test whether a CV-19 positive cell depletion can stop or reverse organ dysfunction, and prevents disease recurrence or flares in the absence of concomitant steroid treatment. The third trial in highly sensitized patients awaiting kidney transplant remains on voluntary hold. As a result of the COVID-19 pandemic, this patient population on dialysis is particularly fragile and highly susceptible to infections, and we will only resume involvement when the pandemic is under much better control, but it is today.

On slide 14. Moving on to VIB7734. This our monoclonal antibody targeting plasmacytoid dendritic cells. We have an ongoing Phase 1b trial.

The design of which is shown on the top panel of the slide, and we reported interim results from column two in May. Since then, we have obtained additional results from Cohort 3. The primary endpoint of this drug was safety. Important secondary endpoints included pDC depletion and target tissues.

Meaning in skin biopsies, and improvements in a lupus specific skin score, the CLASI. Our data showed that treatment with VIB7734 resulted in a rapid and profound depletion of pDCs both in the peripheral blood and in skin biopsies taken after treatment. We also observed clinically meaningful improvements in the CLASI by a variety of measures, including a 0.04 reduction, 0.07 reduction and a greater than 50% reduction. All trial participants have now completed their follow up visits, and final safety results will become available in the next couple of months.

We intend to reports detailed results at an upcoming conference and publications that are in preparation at this time. Moving on to Slide 15. Based on these results, we have decided to advance VIB7734 into further clinical development, including a Phase 2 trial in systemic lupus erythematosus. SLE was selected as the lead indication for the following reasons.

pDCs are believed to be central to the pathogenesis of SLE. They have been shown to accumulate and inflamed tissues in lupus, and they've also been shown to redistribute from the peripheral blood into affected tissues during lupus flares. The cartoon on the right side of the slide summarizes some of the ways that pDCs drive inflammation in lupus. Some of these mechanisms are mediated by type wanted to fill the significant pathways, whereas others are thought to be independent of the interferon pathway.

This in combination with preliminary clinical results, we and others have generated targeting pDCs and SLE strengthened our conviction that this is an attractive mechanism in lupus. It's important to understand that there remains a substantial unmet need in lupus. It's only one treatment approved in the last six decades, and despite progress in the management of lupus, there is still substantial morbidity and mortality associated with these diseases. Our team is currently in the process of designing the Phase 2 study, and we aim to initiate the study early next year.

Moving on to the rest of our pipeline. This slide shows a summary of the pipeline I've already covered. You never miss a map and VIB7734 lupus. For VIB4920 or CD40L antagonist, there are three ongoing clinical trials in Sjögren's, RA, and kidney transplant respectively.

As being mentioned, we put a voluntary hold on enrollment to these trials in order to protect patients and trial staff in the setting of the COVID-19 pandemic. I'm pleased to report that we have now resumed screening and enrollment into the kidney transplant trial, and we are in the process of restarting the RA, Sjögren's trials as well. We have modified our protocols and study procedures to enable the remote assessment and site monitoring wherever possible. We've adjusted data collection procedures added with 19 screening, and designed and implemented epidemiology data-driven criteria for a safe start depending on local circumstances.

Currently, we expect that some of the sites may start to come back online in the third quarter, and others in subsequent quarters. I would like to emphasize however that the safety of patients and staff will always be our number one consideration. At the bottom of the pipeline chart, you will notice a new trial of VIB7734 for the prevention of acute lung injury in patients with COVID-19, Bing, who has already briefly alluded to this. A growing body of evidence suggests that the lung inflammation observed in patients with severe COVID-19 is in part driven by the exuberant immune response to the virus.

It has been shown that in patients with severe lung inflammation in the setting of infection with coronaviruses, a slow initial ramp-up in innate defense mechanisms, including Type 1 interference is followed by a protracted and uncontrolled up-regulation of innate immune responses. That itself leads to tissue damage. In other words, severe lung injury in many cases is not the result of a direct set of pathic effects of the virus, but the result of an exaggerated hyperinflammatory response. There is a growing body of evidence that hypothetic degraded cells may play an important role in this hyperinflammatory response. The inebilizumab models of coronavirus induced lung damage.

It has been shown that pDCs are present in large numbers in the lungs. They secrete large amounts of pro-inflammatory cytokines and activates inflammatory macrophages that are believed to be a key mediator of tissue injury. Blocker Type 1 interference, or depleting pDCs and inflammatory macrophages in these nebilizumab models led to a dramatic reduction in lung injury and mortality. Based on this rationale, we are planning a Phase 1 study of a single dose of 150mg [Inaudible] of VIB7734 in patients with COVID-19 who were at risk for severe lung injury.

These are patients who are hospitalized with severe symptoms but not yet in need of intubation. The objective is to assess whether treatment was 7734 can prevent or ameliorate acute lung injury in these patients. The study will involve 48 patients, and its primary endpoint will be the prevention of death or critical illness as defined by the absence of respiratory failure, shock, or multi-organ failure. The study will be conducted in collaboration with the Cleveland Clinic Hospital System and enrollment is as is expected to start this month with an initial data readout in the first quarter of 2021.

With that, I would like to turn it over back to Mitchell Chan, our chief financial officer.

Mitchell Chan -- Chief Financial Officer

Thanks, Jorn. Please turn to Slide 18. Our electoral refers to a press release issued earlier today. First, a summary of the financial results.

for the second quarter ended June 30, 2020, and this opportunity to briefly review a few items. For the quarter, our R&D investment totals $25 million, as we continue to advance our R&D pipeline. For SG&A, we invested $14 million in the quarter and the second quarter which included our US commercial launch of UPLIZNA and NMOSD. In all, our total operating expense for the second quarter was roughly around $30 million.

Together with our other income, our operating loss for the second quarter ended June 30, 2020, was $38.9 million, which translates to a GAAP net loss per share, a stunning $0.04 for Q2 2020. As mentioned, in June 2020, Viela completed underwritten public offering was common shares, or those proceeds $159 million. As such for cash, we ended the second quarter with approximately $448.4 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. Viela will continue to monitor the potential impact of the global pandemic at any on our business, and as such we will not be providing sales or earnings guidance for the rest of 2020. With a healthy balance sheet, however, Viela is in a strong and flexible position to execute our U.S. commercialization plan.

Well, I believe now while unlocking the full value of a robust R&D pipeline. With that, I like to hand it back over to Bing.

Bing Yao -- Chairman and Chief Executive Officer

Thanks, Mitch. Thank you, again for joining our call today. Of all, we had one of our strongest quarters to date marketed by our first FDA approval, and a successful public offering. As we look toward the remainder of the year, our central focus will be the commercial launch.

We have many priorities and upcoming milestones on the clinical front. For other business map additional indications, we plan to initiate three trials in IgG4-related disease and myasthenia gravis. Well, we added in 2020, our plan is to resume presently enrollment in the  Sjögren's syndrome and RA trials. And a continual patiently enrollment in the kidney transplant rejection study.

While with VIB7734, we are preparing for the Phase 2 trial in SLE, and we plan to initiate the Phase 1 trial for COVID-19 mandated acute lung-injury. For preclinical program, our plan is to submit the VIB1116 by year-end. We look forward to providing updates on these programs throughout the remainder of the year. And with that, I'd like to open the call to questions.

Operator.

Questions & Answers:

Operator

Thank you. [Operator instructions]. Our first question comes from Seamus Fernandez with Guggenheim. Your line is now open.

Seamus Fernandez -- Guggenheim Partners -- Analyst

OK, great. Can you guys hear me. Ok, great. So just wanted to get a sense of -- I know you guys were focused on the quarter.

But is there any way you could just give us a sense of how the patient uptake is tracking through July. And if you have patients on therapy now, or if those that were on the early access program have converted over to paying patients. Any color in that regard would be very helpful. And then separately.

Bing, I just wanted to get a sense and Jorn, in terms of the preclinical data that you saw with VIB7734, just hoping to get a sense of when we might see that as an official publication. I know a lot of this is coming on very quickly. So it would be helpful to know if we might see the publication for COVID too coming soon. And then finally, will we -- In terms of the high dose for the VIB7734, when we might see the high dose data officially published.

Thanks, very much.

Jorn Drappa -- Chief Medical Officer

Thanks, Seamus. I'll start here with a commercial question and turn it over to my colleagues to answer the rest of it. So far for the launch, I think it's going largely as planned. I mean clearly, we're in a very difficult external situation with lots of uncertainty there.

But so far, our teams have done a very nice job of dealing with that uncertainty, and being able to meet with our customers. We've been very pleased with the number of customers, we've been able to meet already. We've been able to meet with most of our top customers either live or virtually, and have had really good discussions with them. Our Viela VIP program, our hub has been open and has been available since the day of launch, and have been processing patient referral forms.

Those include both of the OLE patients being converted over to commercial along with other patients who are not part of that. And we're going very well that way. I mean, we're very pleased with the uptake so far. Good discussions.

People I think are seeing the value of nebilizumab based on the complete product profile that we have.

Bing Yao -- Chairman and Chief Executive Officer

With respect to the 7734 data. I'm not quite sure whether I understood well what preclinical data you're referring to. The clinical data on 7734 for the Phase 1b study, we are currently writing this up. So we have just recently gotten the data from Cohort 3, the final safety data is still outstanding because the last patient as I said that had just recently occurred a week or two ago.

We hope to submit an abstract late-breaker for ACR. But as you know, they break and I'll never guarantee. There's a lot of competition so whether or not that's at ACR or at a subsequent meeting. I cannot promise at the same time in parallel.

We are preparing a manuscript that will detail both a lot of the preclinical experiments that led to the development of 7734, as well as the clinical results from the Phase 1a and Phase 1b study. So that's going to be in a manuscript, and our team is in the process of writing that up right there. Did I answer your question.

Seamus Fernandez -- Guggenheim Partners -- Analyst

That's perfect. Yes. Thank you.

Operator

Thank you. Our next question comes from Jeff Hung with Morgan Stanley. Your line is now open.

Jeff Hung -- Morgan Stanley -- Analyst

Thanks, for taking the questions. Can you provide an update on your seeking compendium listing for your plans are. And what the compendium listings would be for. And then for Bill, any further clarity on the specific pricing.

Thank you.

Jorn Drappa -- Chief Medical Officer

So from a compendium side of things, we were able to submit our compendium within a couple of days or weeks afterward from both the pricing and scientific perspective. So that is now available to our payer customers for them to review as part of their evaluation of UPLIZNA for policy and for coverage sake. From a price per side of things, we have announced that our price so shortly after approval of $131,000 a dose. Making it $262,000 for maintenance dosing.

Which we think really extenuates the value that it has to the marketplace in terms of efficacy, safety, dosing, and more importantly the indication that it has. So that has been relatively well accepted by our customers, and we're looking forward to continuing discussions on that front with our customers as well too.

Jeff Hung -- Morgan Stanley -- Analyst

Thank you.

Operator

Thank you. Our next question comes from Paul Choi with Goldman Sachs. Your line is now open.

Paul Choi -- Goldman Sachs -- Analyst

Hi, Thanks everyone, and good afternoon. A few for me please. Bill, can you maybe comment on what you're seeing with regard to the number of patients who are taking not planning on using -- taking or planning on using loading doses versus just switching over to maintenance dosing. And then second, can you maybe help us think about some milestones for lives covered in terms of access.

I know you talked about CMS being in 3Q and the 3Q timeframe. But just any milestones that you can layout for us in terms of covered lives over the course of 2020.

Bill Ragatz -- Vice President, Head of Commercial

Yes, definitely. Good, good questions for sure. So, as we look at policy and really start thinking about how that's going to impact us. Our J code should comment about the end of the third-quarter rate.

We'll submit that before the end of the second quarter which gets us into that window. It's been received. So things seem to be progressing very straightforward on that side of things. From a policy side of things, those are ongoing.

We know that a lot of P&T committee meeting are meeting during the third quarter. Some have happened already. We haven't heard all the outcomes yet, but what we have seen from coverage is very much in line with what we expected. We have not seen any step edits or anything of that way.

This is largely in line with what you see in the label, and we have the inclusion-exclusion criteria perspective from the clinical trial.

Paul Choi -- Goldman Sachs -- Analyst

And on the loading dose question.

Bill Ragatz -- Vice President, Head of Commercial

On the loading dose question. Yes. Sorry, about that. So as you know, our label is to have that dose a day one and day 15.

What we're seeing is for patients that have come through the system so far. That is what we're we're fulfilling on that they're getting the two doses. So still obviously, very early, but that seems to be the way. Again how we're indicated, and how it's being used right now.

Paul Choi -- Goldman Sachs -- Analyst

Okay. Great. That's helpful color. And then two for you Jorn.

Jorn, with the MG Phase 3 about to kick off in Q4 here. Can you maybe provide a little more clarity on the patient population. It wasn't quite clear to us from the slides. Will you be stratified for Muscular or just focusing on a Muscular only population.

And then second, on 7734. Given that the majority of patients were cutaneous, and you're deciding to go ahead into Phase 2 with SLE. Could you maybe just give us some color on what gives you the confidence to expand broadly into that SLE population. Thank you very much for taking our questions.

Jorn Drappa -- Chief Medical Officer

Sure, thanks. Starting with the MG. That's going to enroll a broad swath of the MG population both the COVID code receptor and lots of specific kind. There will be stratified and analyzed separately though.

So they'll be independent analysis for the COVID receptor of the population and a much more specific kind of population. Also, the endpoints will be different for the CD code be a month it will be a twelve-month endpoint, and for the lack of specific kind of a six-month endpoint. But so they will both be studied but independently so that we can evaluate for these subpopulations whether there is any differential in efficacy. With respect to 7734, I don't think there's any good reason to believe that the fundamental pathogenesis is different between patients who have the cutaneous disease with SLE, subcutaneous disease SLE versus those who have cutaneous lupus, but not meeting of the diagnostic criteria for SLE.

We have both of these in our Phase 1b trials approximately half of the patients with cutaneous lupus did meet the diagnostic criteria, and the other half did not. And we did not really observe a big difference between these two populations. So I think, the way I see our results was prevailing. Thinking in the field and the evidence is that antagonizing PDCs and interfering with those that have wanted to appear on mediated, as well as step on it appear on independent PDC biology is probably applicable across a much broader swath of the signs of symptoms that can constitute definitely.

Paul Choi -- Goldman Sachs -- Analyst

Great. Thank you for taking our questions.

Operator

Thank you. Our next question comes from Laura Chico with Wedbush. Your line is now open.

Laura Chico -- Wedbush Securities -- Analyst

Thanks very much, for taking the questions. I guess one on the IgG4-related disease opportunity and this might be splitting hairs a little bit. But you've made a change in the language from Phase 2b to Phase 3. Apologies, if I missed it.

But wondering if you could just elaborate on how you're thinking about the study design there. Has something changed. And could you just elaborate on the regulatory path forward for IgG4 for in terms of what would be necessary to secure an adequate indication claim there. And then I have just one follow up.

Jorn Drappa -- Chief Medical Officer

So to a certain extent is the semantics. The bottom line is that the trial will be designed, and will be conducted with the type of rigor that is required for the acceptable potential for a full submission. First, on how good the results are so. The data supports really convincing efficacy, and safety.

We believe that the study design will potentially support a submission. We've had the appropriate discussions with regulatory agencies in the United States, and in other parts of the world. And as usual, the guidance from regulators is that they can never promise approval based on a single trial, but it's going to be a review issue, and it's going to depend on the data. So we'll conduct the trial with the required rigor to make it a potentially submittable pivotal trial.

Laura Chico -- Wedbush Securities -- Analyst

Ok. That's helpful, Jorn. And maybe one quick follow up then. And I'm sorry for the confusion that's all on my part, but the 7734 data that is still ongoing is purely safety.

And we're not anticipating these numbers to change at all with regards to the efficacy that you're reporting tonight as a kind of my clarification. And then, with regards to the 7 point change on the CLASI going cohort 3, could you just confirm is that statistically meaningful as well. I presume. Yes, but just wanted to make sure.

Bing Yao -- Chairman and Chief Executive Officer

Yes. So, we did see a dose-dependent response of the magnitude of the response was larger in Cohort 3 than in Cohort 2. So if we just look at Cohort 3, for all ways to look at the CLASI be at a four-point decremental. The seven-point decremental or a greater than 50% improvement.

These were all clinically meaningful, and I would characterize it a fairly dramatic differences.

Mitchell Chan -- Chief Financial Officer

Mitchell here. I just want to add to that. But the study is not a power powerful statistical significance.

Bing Yao -- Chairman and Chief Executive Officer

Right. It was a small study. It was -- it has to be about 4 placebo's in each gourd and 8 active. So, no formal statistics there with respect to the efficacy results.

They are not expected to change to your right. Primarily, what's now still being put together is the final, final safety with the CLASI. A number should not change, and we're still generating additional biomarkers and things like immunogenicity exploratory analysis, and all of that is still ongoing. But the CLASI numbers are not expected to change.

Laura Chico -- Wedbush Securities -- Analyst

OK. Maybe, if I could just sneak one on some something for 7734 in COVID. Are the standard of care is dynamic in the space, to say the least. So I'm curious how do you think about what might be an appropriate placebo response in COVID.

Thanks, very much.

Jorn Drappa -- Chief Medical Officer

It's a great question. So I think the answer is different for different subpopulations right. So the population that we're targeting are patients who are hospitalized. Who have severe symptoms, especially respiratory symptoms, but are not yet required to be intubated.

So you're correct that the numbers like them are dynamic, and outcomes have somewhat improved. But we're still seeing a fairly substantial proportion of patients who are in the hospital with severe COVID either becoming intubated or even dying at the end of the day. So unfortunately that has not dramatically improved. Although, it has improved somewhat.

So we believe that with this 48 patient study, we should at least see a directional signal as to whether there is an incremental improvement in those patients who have received 7734 compared to those who have not. And of course, we're looking for, we're looking for really clinically important and meaningful effect size. So we're not looking for a small improvement in this study. We're looking for a clinically significant and large improvement.

So that's the nature of the small study.

Laura Chico -- Wedbush Securities -- Analyst

That makes sense. Thank you, Jorn.

Operator

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

Ram Selvaraju -- H.C. Wainwright -- Analyst

Hi. Thank you so much for taking my questions. First, for Bing, I was wondering if you could elaborate on what the nature of the virtual education platforms is that you're using in support of the UPLIZNA rollout. And what participation interest and participation you're getting so far.

And also if you expect any particularly problematic or challenging prior authorization requirements, no matter who the payer might be. What might some of those be going forward, and what strategies can you employ to potentially address those as expediently as possible. Thank you.

Bill Ragatz -- Vice President, Head of Commercial

Very good question. So from a virtual perspective, we're actually using a number of different platforms right now. And just check out of how the read results have been. We're doing LinkedIn live.

We've done Facebook live. We've done Adobe Connect. We've done Zoom. All of them seemed to work fairly well, and they've gotten fairly good responses from our audience.

We see very good engagement across the board from the participants they're invited to these programs. So while we'll continue to monitor this and see if they're ones that stand out above the rest right now. Right now, the content really seems to be driving this, and the content seems to be very well accepted regardless of what platform we're using. In terms of access and prior authorizations, and we've done our homework prior to launch to really make sure we understood how we think payors are going to react to inebilizumab, and the value proposition of inebilizumab.

We are not expecting any onerous prior authorizations to be in place. I think our team has done a very good job of talking about the value we provide across efficacy, safety, dosing, and indication here. So that -- it's not a major concern for us. Clearly, it's something that we will continue to watch and monitor, and react appropriately with clinical data to support our position.

But right now, we don't see that as a problem for us, and we hope that that won't be a problem for us in the future.

Ram Selvaraju -- H.C. Wainwright -- Analyst

Ok. And then, just a couple of quick ones for Jorn. Could you elaborate on the specific gating items that you need to see before you resume the kidney transplant desensitization trial with UPLIZNA.

Jorn Drappa -- Chief Medical Officer

Yes. I think we want to see the minimal community-based transmission. We want to see a complete resumption of elective procedures in hospitals. I think we want a fairly high level of disease control in order to proceed in this particular.

Since particularly -- since this tentative subpopulation. I think of all the trials that are -- that we're on hold or remain on hold. This is likely going to be the last one to be resumed. I would not expect it to resume this year.

Ram Selvaraju -- H.C. Wainwright -- Analyst

And then with respect to the IgG4-related disease indication. Just wanted to drill down a little bit on the Phase 3 trial design. Can you comment on whether you would use the IgG4 for related disease responder Index as the primary efficacy endpoint, or one of the principal efficacy endpoints in Phase 3. And are you going to exclude patients taking prednisone entirely, or use the prednisone cutoff.

Dosage cut off. Thank you.

Jorn Drappa -- Chief Medical Officer

With respect to the first question. Our primary endpoint in this trial is time to flare. Very similar to what's been used in the nebilizumab. As this study, we will use the index as a secondary and additional endpoint.

With respect to steroids, we actually require patients to be treated with steroids initially. We want those patients who are at the highest risk of a disease flare. Those typically do receive steroids and then there's a prescribed taper, steroid taper. So after a certain period of time has elapsed, these patients will be completely off steroids.

And then, we will compare the time to flare in between the ACT and the placebo COVID.

Ram Selvaraju -- H.C. Wainwright -- Analyst

Ok. And then just lastly on 7734. Do you have any interest in focusing on lupus nephritis within SLE, or is that really not going to be a focus here. It's really more broadly on the SLE population generally.

Jorn Drappa -- Chief Medical Officer

Yes. So for various reasons, it is very difficult to study lupus nephritis and systemic lupus together in one study. The problem is that these two populations have a very different standard of care treatment regimens. And also the outcome measures are completely different.

So whereas for SLE, we typically have these composite endpoints such as the SRI or the BILAG for lupus nephritis. The accepted endpoints relate to kidney function, craftsman clearance, and other objective measures. So you can't really do these two things in one trial. We looked at that and explored the possibility, but didn't.

At the end of the day, I think it would be likely to be successful to try to do this in one fell swoop. So for the initial Phase 2 trial, we will continue -- we will focus on SLE, excluding active proliferate of nephritis.

Ram Selvaraju -- H.C. Wainwright -- Analyst

It doesn't exclude the possibility of doing lupus nephritis in the future is that right.

Jorn Drappa -- Chief Medical Officer

It does nothing. It does not preclude the possibility that there is a substantial unmet medical need in lupus nephritis. But this would have to be a separate study, and we have not currently made any decisions regarding them.

Ram Selvaraju -- H.C. Wainwright -- Analyst

Thank you.

Operator

Thank you. Our next question comes from [Inaudible] with Guggenheim. Your line is now open.

Unknown speaker

Hey guys, thanks for taking my question. Just a couple on UPLIZNA. Could you maybe talk about how should we really think about the case of conversion for EAP patients to COVID to the commercial drug. I don't think you have commented on the size of it.

But if you can help us understand the size, and the pace at which you can convert this patient to commercial gain. That will be great. And I have a couple of follow-ups.

Bill Ragatz -- Vice President, Head of Commercial

Great. Good question here. The OLE conversion is something obvious, we're focusing on. But like the overall launch, we're expecting this to be a slow ramp-up over time.

With the six-month dosing period, clearly you're not going to have everyone who's even available to switch it immediately post-launch. Plus, we want to -- we need to make sure they have coverage. Our goal is to make sure that every patient who is on UPLIZNA from the OLE will be able to continue on that, and we have to go through benefits an investigation goes through the hub and make sure that we understand what the policy is going to be around that. We haven't had challenges as far as coverage on the patients that have gone through when we're starting that process already.

Although again, it is very early in the process. We'll continue to monitor that, and it changed him over to commercial drug as appropriate when they come off their last dose of trial therapy.

Unknown speaker

Got it. And then, four patients that you are able to capture to the hub, could you give us a sense of some of the time within which you are making the drug available. Just trying to get a sense from the time somebody showed up to the hub by the time they received the drug. What is that duration currently on.

Where do you want to be in the future once you sort of ramped up.

Bill Ragatz -- Vice President, Head of Commercial

Yes. That's a great question. And obviously, it's very early right now. We really don't have data to say it's any specific date.

We are expecting to be very long at this point though. Knowing that payors do not have policies in place. So this is really all done through exceptions. And while the hub is done a great job of turning forms over very quickly, it then goes back to the physician's office to fill out all these forms and answer all the additional questions that people have.

One of the challenges with COVID-19, and these offices operating more remotely is these people aren't in the same place at the same time. Traditionally, if someone had a question, they could go right down the line to different offices and get them all answered here. Now it's a game of telephone where someone answers part of within half to hand handed off, and that kind of elongated the process. So, we don't have a good date right now.

But obviously that will something we'll be monitoring and trying to shorten in the future.

Unknown speaker

And the final question. This is mostly COVID related to its impact on the prescribing for having letting your computer go to make a point on the specifically didn't make a point. But given that all the more and more of an event-driven when their launches progressing well when they compared it to masking your average. I'm just trying to get a sense from you given that the disease is so severe, it's an event happen.

You need to have a therapy onboard. So is there -- are you seeing similar dynamic in your launch that if somebody is eligible to get the drug will we get the drug even in this COVID environment.

Bill Ragatz -- Vice President, Head of Commercial

Yes. It's a great question. We did some advisory board said before launch to understand how neurologists specifically we're looking at that. And one of the things we learned is, they do prioritize NMOSD as one of the most important conditions that they deal with.

They see this as a very serious condition. They know that attacks can come off from nowhere, and can be potentially permanently disabling. So they are trying to see their patients on a regular basis. They are encouraging patients to stay on their therapies, and continue their therapies not to take medication holidays here.

So, I think that NMOSD has been less affected by then most other conditions out there. But I wouldn't say it had no effect whatsoever, but definitely lessened than what we would be sweet there sharing with us from their other conditions they're treating.

Unknown speaker

Got it. Just one final question for much of this is on the financial. Could you maybe help us -- although the expense going forward. I think you guys owed a milestone on a pool that is going to come in quickly.

What about the G&A since I came a little bit like it was just helping [Inaudible]

Mitchell Chan -- Chief Financial Officer

No. Absolutely. I think that we heard from the call, we're not going to provide guidance for the rest of 2020. Just given the pandemic environment, we want to maintain flexibility as we plan to restart as in these clinical trials here.

Regarding the milestone payment, the payment was made. Right now, we have not caught in the expense line item that should be sitting on our balance sheet at this moment times over will be advertising over, over the period -- over the next few years. So it was not captured in the P&L directly at this moment. But the payment was made.

So hopefully that kind of help. There's an SG&A enabled to continue to be very mindful. We want to flesh out where we can. We want to make sure that look commercial launch is successful.

But again, right now, the idea here is to monitor the pandemic very closely across the United States. It's not affecting every city, every state equally. In fact, every day every week, it changes quite rapidly. We'll continue to monitor the situation and hence again, the rest of the year will be a challenge.

Hopefully, that helps.

Unknown speaker

Yes. Thank you so much for taking my question.

Operator

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Bing Yao, CEO for closing remarks.

Bing Yao -- Chairman and Chief Executive Officer

We want to thank everyone for joining our call today. Have a good evening. Please reach out to us if you have additional questions. Thank you.

Operator

[Operator signoff]

Duration: 57 minutes

Call participants:

Mitchell Chan -- Chief Financial Officer

Bing Yao -- Chairman and Chief Executive Officer

Bill Ragatz -- Vice President, Head of Commercial

Jorn Drappa -- Chief Medical Officer

Seamus Fernandez -- Guggenheim Partners -- Analyst

Jeff Hung -- Morgan Stanley -- Analyst

Paul Choi -- Goldman Sachs -- Analyst

Laura Chico -- Wedbush Securities -- Analyst

Ram Selvaraju -- H.C. Wainwright -- Analyst

Unknown speaker

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