Aurinia And Voclosporin In Lupus Nephritis: An Update

About: Aurinia Pharmaceuticals Inc. (AUPH)
by: First Genesis Consulting

In early Q2/2019, Aurinia appointed a new and equally experienced CEO, due to the retirement of ex-CEO Richard Glickman.

This was probably the best time to change leadership, because 2019 could be a transformational year for Aurinia, if the Phase 3 trial of voclosporin in lupus nephritis is successful.

Voclosporin is an immunosuppressive Phase 3 investigative drug candidate in clinical development as second-line therapy for lupus nephritis.

Top-line data readout will be in late Q4/2019.

A positive Phase 3 data readout could potentially make voclosporin the first FDA-approved therapeutics for lupus nephritis.

Market Assessment

2019 could be a transformational year for Aurinia Pharmaceuticals (NASDAQ:AUPH) from being a clinical-stage small-cap ($573M) to commercial stage biopharma, if the ongoing Phase 3 study of voclosporin (formerly ISA247) in patients with lupus nephritis (LN) achieves its primary clinical endpoint of improved renal response over placebo. Aurinia's scientific forte is primarily developing therapeutics for adult nephrotic diseases. Presently, voclosporin is also in Phase 2 clinical development for focal segmental glomerulosclerosis as well as dry eye syndrome.

Voclosporin is a structural analog of the calcineurin inhibitor, cyclosporin A, that has been pharmacologically altered to exert a more potent and greater immunosuppressive and anti-inflammatory effects over cyclosporin A. Its reduced toxicity and enhanced metabolic stability have been attributed to its structural alterations that reduce variability in plasma concentration.

There are currently 22 interventional clinical trials evaluating the clinical effects of diverse investigative drug candidates in a monotherapeutic or combination therapeutic approach in patients with lupus nephritis. LN is inflammation of the kidney that is triggered by systemic lupus erythematosus (SLE), with LN being a severe form of SLE. As a complex disease in which the body's own immune system attacks some of the body parts, including skin, joints, kidneys, nervous system, heart, lungs and blood, SLE is associated with high mortality.

Currently, there are no FDA-approved treatments for LN. But clinicians have taken advantage of the pleiotropic effects of a diverse array of therapeutic agents originally developed for other clinical indications to treat LN. The nephrologist may recommend oral steroids, cyclophosphamide, mycophenolate mofetil (MMF) or immunosuppressants to reduce the level of proteinuria and limit disease progression, although oral steroids carry significant side effects, rendering them intolerable to some patients, and some patients may acquire steroid resistance and do not respond to steroids.

Aurinia's thesis that voclosporin may have the potential to improve near and long-term outcomes in patients with LN when added as second-line therapy to MMF and low oral corticosteroids was preliminarily validated in the Phase 2b exploratory trial. The data readout from the Phase 2b study of voclosporin in LN demonstrated statistically-improved clinical efficacy by low-dose voclosporin versus the control arm at both 24 and 48 weeks. Remission rates at 48 weeks were doubled in the presence of voclosporin versus the control arm (49% vs 24%). Furthermore, the low-dose voclosporin patients that achieved complete response at 24 weeks were sustained up to 48 weeks, the end of the trial. No safety signals were reported.

The ongoing Phase 3 AURORA trial investigates "whether voclosporin, added to the standard of care treatment in active LN, is able to reduce disease activity over a treatment period of 52 weeks. The background therapy will be MMF and initial treatment with IV methylprednisolone, followed by a reducing course of oral corticosteroids. Efficacy will be assessed by the ability of the drug combination to reduce the level of proteinuria (as measured by urine protein/creatinine ratio (UPCR)) while demonstrating an acceptable safety profile."

Top-line data readout is expected in late Q4/2019. A positive clinical efficacy would be considered a huge scientific and clinical achievement, given the lack of FDA-approved therapeutic options for LN.

Institutional Investors, Insiders Purchase, And Analyst Ratings

The company's latest 13F filings revealed institutional ownership at 24.20%, with 68 institutional holders accounting for 22,173,050 total shares. The top 3 shareholders are FMR LLC, NEA Management Company, and Polaris Capital. Analysts from 6 firms recommend a strong buy with a 12-month consensus price target of $15.5.

At the end of Q4/2018, cash, cash equivalents, and short-term investments of $125.9M were reported. Cash burn in Q4/2018 vs. Q4/2018 was $13M, making the cash balance sufficient to fund ongoing clinical trials. In the event of a positive data readout from the Phase 3 lupus nephritis trial, a stock rally is expected. The patent application extension for voclosporin demonstrates that Aurinia believes in its clinical prospects in LN.

CEO Mr. Greenleaf on his thoughts :

"The Aurinia team has made extraordinary progress with voclosporin, which I believe to be a truly transformative drug for the potential treatment of proteinuric kidney diseases, such as lupus nephritis ("LN"), as well as a unique opportunity for the treatment of dry eye syndrome ("DES")," commented Mr. Greenleaf. "To that end, I am very excited to lead the Company at this pivotal time and through several critical data points over the next year including Phase 3 trial results by the end of 2019, followed by the planned regulatory submission and preparations for the potential commercialization of voclosporin during 2020.

Market Outlook

LN is a chronic disease that is associated with significant morbidity and mortality. A positive primary clinical outcome for Voclosporin in LN should bring therapeutic relief to patients diagnosed with this disabling disease, and possibly making voclosporin, the first FDA-approved therapeutics for LN.

Disclosure: I am/we are long AUPH. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.