Aurinia: Redemption On Lupkynis Sales And Possible EMA Approval

Summary

  • Aurinia and its partner OPEL expect a decision from the EMA in the 2nd half of 2022 on whether or not Lupkynis (voclosporin) will be approved for lupus nephritis in the European territories.
  • About $21.6 million in net revenue was generated for Q1 of 2022, due to sales of Lupkynis; if Omicron variant doesn't resurge, then it's possible sales could improve further.
  • Two presentations of results of AURORA-2 study using Lupkynis for LN expected end of May and in June of 2022; from there, manuscript of full results expected 2nd half of 2022.
  • The global lupus nephritis market could reach $3.1 billion by 2027.
  • Looking for higher risk/reward options trading ideas? I offer this and much more at my exclusive investing ideas service, Biotech Analysis Central. Learn More »

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Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH) is a great speculative biotech stock to look into. That's because I believe it can increase sales of Lupkynis in the coming quarter, which will provide investors a good opportunity. Not only that, but a major catalyst is looming in the 2nd half of 2022, as that is when the European Medicines Agency (EMA) will decide if Lupkynis should be approved for the European territories.

What investors also have to look forward to as well would be presentation of results from the final AURORA 2 continuation study, which will be presented at the 59th European Renal Association (ERA) Congress and at the European Congress of Rheumatology at the end of May of 2022. Then, once again a similar presentation in June of 2022 at another medical conference. Lastly, the full set of results will be released later on in the 2nd half of 2022. With the potential to improve on sales for Lupkynis, plus several other catalysts that are expected in the coming months, these are the reasons why I believe that Aurinia is a great speculative buy.

Potential Pathway For Regulatory Approval Of Lupkynis For Another Territory

Aurinia Pharmaceuticals received FDA approval of Lupkynis back on January 21, 2022. It was approved for the treatment of patients with lupus nephritis. Lupus nephritis is an autoimmune disease. There are two types of lupus; however, LN is when the kidneys are affected. That's because the small blood vessels that filter your wastes glomeruli and the kidney itself have inflammation. As you can see, this disease is not good on your kidneys at all. These are some of the symptoms that are associated with the disease:

  • Proteins in the Urine
  • Blood in the Urine
  • Edema - fluid that kidneys can't remove from the body
  • weight gain from excess fluid
  • High blood pressure

The worst part of all is that eventually the disease can lead to kidney failure. That's bad because the only options are a kidney transplant or constant dialysis. It is estimated that the global lupus nephritis market could reach $3.1 billion by 2027. Sure, Aurinia has approval right now of Lupkynis for LN in North America, but it is hoping to expand the approval to the European territories. As such, there is a huge catalyst coming in the 2nd half of 2022. That is when the European Medicines Agency (EMA) will decide upon regulatory approval of this drug for the European territories. This would give the biotech the ability to expand its footprint for this patient population. Not only that, but it has already licensed out Lupkynis to Otsuka Pharmaceutical Europe Ltd. (OPEL). Matter of fact, OPEL filed the Marketing Authorization Application (MAA) to the EMA on June 25, 2021. OPEL would have the right to market Lupkynis (Voclosporin) in the European Union, Norway, Iceland and Liechtenstein.

If this approval happens, then Aurinia would obtain a $50 million regulatory milestone from OPEL. It would then be able to retrieve royalties on net sales of the drug ranging from 10% go 20%. The range of the royalties would highly depend upon net and annual sales achieved.

Lastly, there is the possibility to obtain milestone payments based on annual sales. As you can see, this European regulatory approval for voclosporin is not only important to expand the market opportunity, but to also obtain additional milestone payments as part of the agreement with OPEL.

Financials

According to the 10-Q SEC Filing, Aurinia Pharmaceuticals had cash, cash equivalents and restricted cash and investments of $418.8 million as of March 31, 2022. The cash should be good for awhile, but there is no doubt that it will have to continue to fund its commercial activities for Lupkynis in the coming years, which will decrease cash.

However, the biotech gives guidance that the current cash on hand of $418.8 million should be enough to fund its operations and finance its pipeline for the next few years. It has done pretty well with sales of Lupkynis in the United States. Consider that it generated $21.6 million in net revenue for Q1 of 2022. However, it only started off ending Q1 March 31, 2021, with net revenue of only $914,000.

It is maintaining that it should achieve total sales of Lupkynis ranging from $115 to $135 million for 2022. The thing is that sales could have been better. Management largely attributes it to the Omicron variant, which may have been a huge reason why sales didn't come out as well as they should have. Barring any other Covid-19 variant that starts to spread rapidly again, sales of Lupkynis should start to improve.

Risks To Business

The first risk to consider would be the upcoming EMA decision of Lupkynis for LN that is expected in the 2nd half of 2022. Even though this drug received FDA approval here in the United States, that doesn't automatically mean it will receive approval for the European territories. From there, Aurinia would also lose out on the $50 million regulatory milestone payment and other expected milestone payments/tiered royalties on net sales of Lupkynis.

The second risk would be sales of this drug for the United States. The hope is that, with the reduced spread of the Omicron variant, sales should start to improve even more. Another risk besides this would possibly be another Covid-19 variant coming about, or the resurgence of one of the current variants. If that happens, then that would be very bad for revenues of Lupkynis for the coming quarter.

Conclusion

I believe that Aurinia Pharmaceuticals is a great speculative biotech play to look into. That's because it has a huge major catalyst looming in the 2nd half of 2022, which is the EMA decision on whether or not Lupkynis should be approved for the treatment of patients with LN in the European territories.

Some short-term catalysts for investors to consider would be additional results from the AURORA-2 continuation study, which used Lupkynis to treat patients with LN. The first set of additional results will be released at the upcoming 59th European Renal Association (ERA) Congress at the European Congress of Rheumatology at the end of May of 2022. From there, it is expected that additional results will be presented again at the European Alliance of Associations for Rheumatology (EULAR) 2022 in June of 2022. These presentations are important, because they will showcase a longer treatment period. Interim results for LN patients receiving Lupkynis for one year from phase 3 AURORA-1 and then one year from AURORA-2 has already been released. This additional data should show a much longer treatment period to see how these patients may have improved over additional years of treatment with Lupkynis.

Lastly, another major catalyst will be at the forefront. This will be submission of a manuscript with full final results from AURORA-2, which is expected to be released in the 2nd half of 2022. With the potential for sales of Lupkynis to improve, plus many catalysts that are rapidly approaching in the coming months, these are the reasons why I believe Aurinia Pharmaceuticals is a good speculative biotech play to look into.

This article is published by Terry Chrisomalis, who runs the Biotech Analysis Central pharmaceutical service on Seeking Alpha Marketplace. If you like what you read here and would like to subscribe to, I'm currently offering a two-week free trial period for subscribers to take advantage of. My service offers a deep-dive analysis of many pharmaceutical companies. The Biotech Analysis Central SA marketplace is $49 per month, but for those who sign up for the yearly plan will be able to take advantage of a 33.50% discount price of $399 per year.

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