Net revenue of $55.8 million for Q3 2022;
including $30.0 million milestone from Otsuka related to European
Approval of LUPKYNIS® (voclosporin)
Adjusts net product revenue guidance to
$100-105 million from sales of LUPKYNIS for 2022
Issues preliminary net product revenue guidance
for 2023 in the range of $120-140 million from sales of
LUPKYNIS
Approximately $400 million of cash, cash
equivalents, restricted cash and investments as of October 31,
2022
Conference call to be hosted today at 8:30 a.m.
ET
Aurinia Pharmaceuticals Inc. (NASDAQ: AUPH) (Aurinia or the
Company) today issued its financial results for the three months
ended September 30, 2022. Amounts, unless specified otherwise, are
expressed in U.S. dollars.
Total net revenue was $55.8 million for the three months ended
September 30, 2022, compared to $14.7 million for the same period
ended September 30, 2021. Revenues for the three months ended
September 30, 2022 included net product revenues of $25.5 million
and license and collaboration revenue of $30.3 million.
“During the third quarter, we demonstrated progress across many
key commercial metrics for LUPKYNIS, including an increased total
number of patients on therapy, improved patient start form
conversion rates and processing speed, and sustained patient
adherence, in comparison to the second quarter ended June 30, 2022.
Unfortunately, we experienced a slight decline in new patient start
forms over the second quarter ended June 30, 2022, which is
potentially the result of reduced lupus nephritis diagnoses and
patient visits in the quarter,” said Peter Greenleaf, President and
Chief Executive Officer of Aurinia. “Given these current market
dynamics, we are adjusting our net revenue guidance to $100-105
million from sales of LUPKYNIS for 2022. We are also providing
preliminary net revenue guidance from product sales of LUPKYNIS for
2023 in the range of $120-140 million.”
Mr. Greenleaf continued, “In addition to our U.S. commercial
efforts, we have also made meaningful advancement in our planned
globalization for LUPKYNIS, highlighted by the European Commission
Marketing Authorization for LUPKYNIS for the treatment of adults
with active lupus nephritis in Europe in September 2022. Working
with Otsuka, we expect to achieve continued important regulatory
milestones in additional geographies in 2022 and 2023.”
Third Quarter 2022 and Recent Highlights
- There were approximately 1,354 patients on LUPKYNIS therapy at
September 30, 2022, compared with 1,274 at June 30, 2022.
- Aurinia added 374 patient start forms (PSFs) during the third
quarter 2022, as compared to 412 in the third quarter of 2021. As
of Monday, October 31, 2022, the Company recorded 1,357 total PSFs
since January 1, 2022.
- PSF conversion rates after 90 days, adherence rates and
confirmed patient access remain at peak levels since launch.
- Persistency rates at 6 months and at 9 months remain reasonable
consistent with prior periods, at approximately, 70% and 60%,
respectively. At 12 months post-treatment-start, an average of
approximately 50% of patients remain on treatment.
- The European Commission (EC) granted Marketing Authorization
for LUPKYNIS to Otsuka for the treatment of adults with active
lupus nephritis in Europe in September 2022. The centralized
marketing authorization is valid in all European Union (EU) member
states as well as in Iceland, Liechtenstein, Norway and Northern
Ireland.
- The Company recognized a one-time $30.0 million EC
approval-related milestone in connection with its collaboration and
licensing agreement with its partner Otsuka Pharmaceuticals Co.,
Ltd., during the quarter, which was subsequently received on
October 31, 2022. In addition to the milestone, the Company began
recognizing revenue for the supply of product and certain
reimbursable collaboration activities under a cost-plus
arrangement. Going forward the Company will be eligible to receive
further payments tied to additional regulatory and reimbursement
milestones, along with low double digit royalties on future net
sales.
- Additional clinical data, including updates from AURORA 1 and
AURORA 2, are expected to be presented at upcoming conferences,
including LUPUS, the American College of Rheumatology Convergence
2022, and, the American Society of Nephrology.
- Key ongoing clinical updates for LUPKYNIS include the
advancement of both the VOCAL pediatric study and the ENLIGHT-LN
registry. With the registry, which we just initiated at the
beginning of the year, we now have 38 activated sites toward our
goal of having 75 sites total. As a reminder, we plan to leverage
real-world data collected from this study to gain further knowledge
about patients taking LUPKYNIS and help clinicians and payers to
improve patient care and ensure access to therapy. We also remain
on track to meet our post approval FDA commitments.
As previously reported, on July 26, 2022 the U.S. Patent Office
Patent Trial and Appeal Board (PTAB) determined to institute an
inter partes review (IPR) petition filed by Sun Pharmaceuticals. On
October 20, 2022 the PTAB notified the Company that they have
denied our rehearing appeal for the institution decision. This
follows a prior denial of our precedential opinion panel appeal,
which was received on October 5, 2022. The IPR is related to a
patent claiming LUPKYNIS dosing protocol that extends patent
protection on LUPKYNIS in the United States to 2037. The Company is
diligently working on its defense to the IPR, which will be filed
after market on November 4, 2022. The defense will address all
challenges raised in the IPR process. A determination on
patentability, relative to the IPR, is expected on or prior to July
26, 2023.
Financial Results for the Three and Nine Months Ended
September 30, 2022
Total net revenue was $55.8 million and $14.7 million for the
three months ended September 30, 2022 and September 30, 2021,
respectively. Total net revenue was $105.6 million and $22.2
million for the nine months ended September 30, 2022 and September
30, 2021, respectively. The increase in both periods is primarily
due to the recognition of a $30.0 million regulatory milestone from
Otsuka following the EC marketing authorization of LUPKYNIS in
September 2022, coupled with an increase in product sales to our
two main customers for LUPKYNIS, which was driven predominantly by
further penetration in the lupus nephritis market.
Total cost of sales and operating expenses for the three months
ended September 30, 2022 and September 30, 2021 were $65.3 million
and $65.0 million, respectively. Total cost of sales and operating
expenses were $189.0 million and $170.2 million for the nine months
ended September 30, 2022 and September 30, 2021, respectively.
Further breakdown of operating expenses drivers and fluctuations
are highlighted in the following paragraphs.
Cost of sales were $2.4 million and $0.3 million for the three
months ended September 30, 2022 and September 30, 2021,
respectively. Cost of sales were $4.3 million and $0.6 million for
the nine months ended September 30, 2022 and September 30, 2021,
respectively. The increase for both periods was primarily due to an
increase in product related revenue, coupled with safety stock
inventory reserves.
Gross margin for the three months ended September 30, 2022 and
September 30, 2021 was approximately 96% and 98% respectively.
Gross margin for the nine months ended September 30, 2022 and
September 30, 2021 was approximately 96% and 97%, respectively.
Selling, general and administrative (SG&A) expenses,
inclusive of share-based compensation, were $52.2 million and $44.6
million for the three months ended September 30, 2022 and September
30, 2021, respectively. For the nine months ended September 30,
2022 and September 30, 2021, SG&A expenses, inclusive of
share-based compensation, were $148.9 million and $128.8 million,
respectively. The primary drivers for the increase for both periods
ended September 30, 2022 as compared to September 30, 2021 were an
increase in professional fees and services related to corporate
legal matters, and travel and sponsorships to support the
commercialization of LUPKYNIS. For the nine months ended September
30, 2022, the primary drivers were salaries, incentive pay and
employee benefits due to employee related expenses such as
increased headcount, promotions and inflation, along with an
increase in professional fees for corporate legal matters and
travel related costs, which increased once the impacts from COVID
started to normalize.
Non-cash SG&A share-based compensation expense included
above for the three months ended September 30, 2022 and September
30, 2021 was $6.6 million and $6.0 million, respectively. Non-cash
SG&A share-based compensation expense included above for the
nine months ended September 30, 2022 and September 30, 2021 was
$21.5 million and $19.2 million, respectively.
Research and Development (R&D) expenses, inclusive of
share-based compensation, were $11.0 million and $20.1 million for
the three months ended September 30, 2022 and September 30, 2021,
respectively. For the nine months ended September 30, 2022 and
September 30, 2021, R&D expenses, inclusive of share-based
compensation expense, were $35.1 million and $40.0 million,
respectively. The primary drivers for the decrease were the upfront
license and accrued milestone expense for AUR300 from the periods
ended September 30, 2021 offset year to date by additional
developmental expenses related to AUR200 and AUR300 for the periods
ended September 30, 2022. In accordance with U.S. GAAP, AUR300 was
recorded as an asset acquisition during the period ended September
30, 2021 and expensed as R&D expense at the acquisition
date.
Non-cash R&D share-based compensation expense included above
for the three months ended September 30, 2022 and September 30,
2021 was $1.5 million and $1.0 million, respectively. Non-cash
R&D share-based compensation expense included above for the
nine months ended September 30, 2022 and September 30, 2021 was
$3.5 million and $3.2 million, respectively.
Interest income was $1.5 million and $0.1 million for the three
months ended September 30, 2022 and September 30, 2021,
respectively. Interest income was $2.2 million and $0.4 million for
the nine months ended September 30, 2022 and September 30, 2021,
respectively. The increase in both periods is due to higher yields
on our investments as a result of increasing interest rates.
For the three months ended September 30, 2022, Aurinia recorded
a net loss of $9.0 million or $0.06 net loss per common share, as
compared to a net loss of $50.3 million or $0.39 net loss per
common share for the quarter ended September 30, 2021. For the nine
months ended September 30, 2022, Aurinia recorded a net loss of
$82.1 million or $0.58 net loss per common share, as compared to a
net loss of $147.6 million or $1.15 net loss per common share for
the nine months ended September 30, 2021.
Financial Liquidity at September 30, 2022
As of September 30, 2022, Aurinia had cash, cash equivalents and
restricted cash and investments of $376.6 million compared to
$466.1 million at December 31, 2021. The decrease in cash, cash
equivalents and restricted cash and investments is primarily
related to the continued investment in commercialization
activities, advancement of our pipeline and a payment for the
achievement of a one-time milestone, partially offset by an
increase in cash receipts from sales of LUPKYNIS.
Aurinia believes that it has sufficient financial resources to
fund its operations, which include funding commercial activities,
including FDA related post approval commitments, manufacturing and
packaging of commercial drug supply, funding its supporting
commercial infrastructure, advancing its R&D programs and
funding its working capital obligations for at least the next few
years.
This press release is intended to be read in conjunction with
the Company’s unaudited condensed consolidated financial statements
and Management's Discussion and Analysis for the quarter ended
September 30, 2022 in the Company’s Quarterly Report on Form 10-Q,
which will be accessible on Aurinia's website at
www.auriniapharma.com, on SEDAR at www.sedar.com or on EDGAR at
www.sec.gov/edgar.
Conference Call Details
Aurinia will host a conference call and webcast to discuss the
quarter ended September 30, 2022 financial results today, Thursday,
November 3, 2022 at 8:30 a.m. ET. The audio webcast can be accessed
under "News/Events” through the “Investors” section of the Aurinia
corporate website at www.auriniapharma.com. In order to participate
in the conference call, please dial +1 (877) 407-9170 (Toll-free
U.S. & Canada). An audio webcast can be accessed under
"News/Events” through the “Investors” section of the Aurinia
corporate website at www.auriniapharma.com. A replay of the webcast
will be available on Aurinia’s website.
About Lupus Nephritis
LN is a serious manifestation of SLE, a chronic and complex
autoimmune disease. About 200,000-300,000 people live with SLE in
the U.S. and about one-third of these people are diagnosed with
lupus nephritis at the time of their SLE diagnosis. About 50
percent of all people with SLE may develop lupus nephritis. If
poorly controlled, LN can lead to permanent and irreversible tissue
damage within the kidney. Black and Asian individuals with SLE are
four times more likely to develop LN and individuals of Hispanic
ancestry are approximately twice as likely to develop the disease
when compared with Caucasian individuals. Black and Hispanic
individuals with SLE also tend to develop LN earlier and have
poorer outcomes when compared to Caucasian individuals.
About Aurinia
Aurinia Pharmaceuticals is a fully integrated biopharmaceutical
company focused on delivering therapies to treat targeted patient
populations that are impacted by serious diseases with a high unmet
medical need. In January 2021, the Company introduced LUPKYNIS®
(voclosporin), the first FDA-approved oral therapy for the
treatment of adult patients with active lupus nephritis (LN). The
Company’s head office is in Victoria, British Columbia, its U.S.
commercial hub is in Rockville, Maryland, and the Company focuses
its development efforts globally.
Forward-Looking Statements
Certain statements made in this press release may constitute
forward-looking information within the meaning of applicable
Canadian securities law and forward-looking statements within the
meaning of applicable United States securities law. These
forward-looking statements or information include but are not
limited to statements or information with respect to: Aurinia’s
estimates as to annual net revenue from sales of LUPKYNIS in the
range of $100-$105 million in 2022; Aurinia’s estimates as to net
product revenue for 2023 in the range of $120-$140 million from the
sales of LUPKYNIS in the United States; Aurinia’s expectations to
achieve important regulatory milestones in additional geographies
in 2022 and 2023; Aurinia’s estimates as to the number of patients
with SLE in the U.S. and the proportion of those persons who have
developed LN at time of SLE diagnosis; Aurinia being confident that
it is poised for growth and success; Aurinia’s belief that it has
sufficient financial resources to fund its current plans for at
least the next few years. It is possible that such results or
conclusions may change. Words such as “anticipate”, “will”,
“believe”, “estimate”, “expect”, “intend”, “target”, “plan”,
“goals”, “objectives”, “may” and other similar words and
expressions, identify forward-looking statements. We have made
numerous assumptions about the forward-looking statements and
information contained herein, including among other things,
assumptions about: the accuracy of reported data from third party
studies and reports; the number, and timing of receipt, of PSFs and
their rate of conversion into patients on therapy; assumptions
relating to pricing for LUPKYNIS and patient persistency on the
product; that Aurinia’s intellectual property rights are valid and
do not infringe the intellectual property rights of third parties;
Aurinia’s assumptions relating to the capital required to fund
operations; the assumption that Aurinia’s current good
relationships with its suppliers, service providers and other third
parties will be maintained; assumptions relating to the burn rate
of Aurinia’s cash for operations; the relationship between COVID
vaccinations and patient treatment; assumptions related to timing
of interactions with regulatory bodies; and that Aurinia’s third
party service providers will comply with their contractual
obligations. Even though the management of Aurinia believes that
the assumptions made, and the expectations represented by such
statements or information are reasonable, there can be no assurance
that the forward-looking information will prove to be accurate.
Forward-looking information by their nature are based on
assumptions and involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance, or
achievements of Aurinia to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking information. Should one or more of these risks and
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described
in forward-looking statements or information. Such risks,
uncertainties and other factors include, among others, the
following: Aurinia’s actual future financial and operational
results may differ from its expectations; difficulties Aurinia may
experience in completing the commercialization of voclosporin; the
market for the LN business may not be as estimated; Aurinia may
have to pay unanticipated expenses; Aurinia may not be able to
obtain sufficient supply to meet commercial demand for voclosporin
in a timely fashion; unknown impact and difficulties imposed by the
COVID-19 pandemic on Aurinia’s business operations including
nonclinical, clinical, regulatory and commercial activities; the
results from Aurinia’s clinical studies and from third party
studies and reports may not be accurate; Aurinia’s third party
service providers may not, or may not be able to, comply with their
obligations under their agreements with Aurinia; regulatory bodies
may not grant approvals on conditions acceptable to Aurinia and its
business partners, or at all; and Aurinia’s assets or business
activities may be subject to disputes that may result in litigation
or other legal claims. Although Aurinia has attempted to identify
factors that would cause actual actions, events, or results to
differ materially from those described in forward-looking
statements and information, there may be other factors that cause
actual results, performances, achievements, or events to not be as
anticipated,estimated or intended. Also, many of the factors are
beyond Aurinia’s control. There can be no assurance that
forward-looking statements or information will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
you should not place undue reliance on forward-looking statements
or information. All forward-looking information contained in this
press release is qualified by this cautionary statement. Additional
information related to Aurinia, including a detailed list of the
risks and uncertainties affecting Aurinia and its business, can be
found in Aurinia’s most recent Annual Report on Form 10-K and its
other public available filings available by accessing the Canadian
Securities Administrators’ System for Electronic Document Analysis
and Retrieval (SEDAR) website at www.sedar.com or the U.S.
Securities and Exchange Commission’s Electronic Document Gathering
and Retrieval System (EDGAR) website at www.sec.gov/edgar, and on
Aurinia’s website at www.auriniapharma.com.
AURINIA PHARMACEUTICALS INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
September 30, 2022
December 31, 2021
(unaudited)
ASSETS
Current assets
Cash, cash equivalents and restricted
cash
$
86,052
$
231,900
Short-term investments
290,592
234,178
Accounts receivable, net
41,771
15,414
Inventories, net
25,320
19,326
Prepaid expenses
12,159
11,710
Other current assets
3,808
796
Total current assets
459,702
513,324
Non-current assets
Other non-current assets
13,049
11,838
Property and equipment, net
3,758
4,418
Acquired intellectual property and other
intangible assets, net
6,839
8,404
Right-of-use assets, net
4,945
5,383
Total assets
488,293
543,367
LIABILITIES
Current liabilities
Accounts payable and accrued
liabilities
40,123
34,947
Other current liabilities
724
4,640
Operating lease liabilities
918
1,059
Total current liabilities
41,765
40,646
Non-current liabilities
Deferred compensation and other
non-current liabilities
15,833
15,950
Operating lease liabilities
7,270
7,680
Total liabilities
64,868
64,276
SHAREHOLDER’S EQUITY
Common shares - no par value, unlimited
shares authorized, 142,110 and 141,600 shares issued and
outstanding at September 30, 2022 and December 31, 2021,
respectively
1,184,020
1,177,051
Additional paid-in capital
79,188
59,014
Accumulated other comprehensive loss
(1,527
)
(852
)
Accumulated deficit
(838,256
)
(756,122
)
Total shareholders' equity
423,425
479,091
Total liabilities and shareholders’
equity
$
488,293
$
543,367
AURINIA PHARMACEUTICALS INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per
share data)
Three months ended
Nine months ended
September 30,
September 30,
2022
2021
2022
2021
(unaudited)
(unaudited)
Revenue
Product revenue, net
$
25,502
$
14,638
$
75,142
$
22,113
License and collaboration revenue
30,277
29
30,453
88
Total revenue, net
55,779
14,667
105,595
22,201
Operating expenses
Cost of sales
2,447
254
4,302
610
Selling, general and administrative
52,169
44,645
148,898
128,772
Research and development
10,973
20,066
35,118
39,990
Other (income) expense, net
(311
)
55
647
859
Total cost of sales and operating
expenses
65,278
65,020
188,965
170,231
Loss from operations
(9,499
)
(50,353
)
(83,370
)
(148,030
)
Interest income
1,464
106
2,209
420
Net loss before income taxes
(8,035
)
(50,247
)
(81,161
)
(147,610
)
Income tax expense
954
8
973
34
Net loss
(8,989
)
(50,255
)
$
(82,134
)
$
(147,644
)
Basic and diluted loss per share
$
(0.06
)
$
(0.39
)
$
(0.58
)
$
(1.15
)
Weighted-average common shares outstanding
used in computation of basic and diluted loss per share
141,856
128,443
141,831
128,084
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221103005471/en/
Investor/Media Contact: Aurinia@westwicke.com
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