AUPH - Aurinia Pharmaceuticals: Still In The Game With Lupkynis Sales

2023-06-16 15:57:44 ET

Summary

• In the most recent earnings period of Q1 of 2023, Aurinia Pharmaceuticals Inc. reported 59% year-over-year growth in revenue of LUPKYNIS™ to $34.4 million.
• Full-year 2023 revenue guidance range was increased to between $135 to $155 million of net product sales.
• The lupus nephritis treatment market is expected to reach $5.67 billion by 2033.
• Two INDs are expected in 2023; one IND of AUR200 for autoimmune and nephrology conditions, and one IND of AUR300 for fibrotic and autoimmune diseases.

Aurinia Pharmaceuticals Inc. ( AUPH ) is a good speculative biotech play to look into. That's because it already has received FDA approval of LUPKYNIS™ as an oral treatment for adult patients with active Lupus Nephritis. Why I believe it is still a hold and worth mentioning is because in the most recent earnings period, it reported 59% year-over-year growth in revenue of $34.4 million. Not only did AUPH beat on the top and bottom lines of earnings, it also raised guidance in 2023 as well.

With an increased uptake of LUPKYNIS taking shape, I believe that this might further increase the prospects of this being a takeout candidate by another pharmaceutical company. On top of sales for this drug starting to approve, there are two other small catalysts expected in 2023 which traders/investors might be interested in. It is expected that Aurinia Pharmaceuticals might file two Investigational New Drugs [INDs] in 2023.

One IND filing would be to start a phase 1 study using AUR200 for advancement towards treating autoimmune and nephrology conditions. The second IND filing would be to start a phase 1 study using AUR300 for advancement towards treating autoimmune and fibrotic diseases. Even though IND Filings are expected in 2023, it is highly likely that results from these studies should then be available at some point in 2024.

With increased sales of LUPKYNIS, plus IND filings expected in 2023, these are the reasons why I believe that Aurinia Pharmaceuticals is a good speculative biotech play to look into.

LUPKYNIS Sales Are Starting To Improve Lately

As I stated above, Aurinia Pharmaceuticals already has an FDA approved drug by the name of LUPKYNIS. It was approved by the FDA to treat adults with active lupus nephritis [LN]. It was the first oral therapy to be approved for the treatment of this patient population. One thing to note is that LUPKYNIS was approved to be used in combination with a background immunosuppressive therapy regimen. Lupus Nephritis occurs when autoantibodies start to attack structures of the kidneys, which are responsible for filtering out waste. In turn, this causes a host of problems, such as:

• Protein in the urine.
• Impaired kidney function.
• Kidney failure.
• Inflammation of the kidney.
• Blood in the Urine.

Thus, lupus is an autoimmune disease where it causes your immune system to attack your own tissues. With respect to lupus nephritis, it is when a person's kidneys are under attack by their own immune system. The lupus nephritis treatment market is expected to reach $5.67 billion by 2033 . Thus, this is a huge market opportunity for Aurinia Pharmaceuticals.

Why I believe this biotech is worth looking at is because sales of LUPKYNIS are starting to pick up. That is, sales grew by a considerable amount in the most recently reported Q1 2023 earnings . During the first quarter of 2023, sales of LUPKYNIS grew by 59% to $34.4 million, compared to the prior year in the same period where sales only reached $21.6 million. As a result of sales starting to improve for this drug, Aurinia raised its 2023 revenue guidance range to between $135 - $155 million of net product sales.

Another point to consider is that this was the best quarter to date with respect to LUPKYNIS sales. Execution of sales for LUPKYNIS are starting to improve, so if this can continue, then the company could boost shareholder value in the coming years. I think sales can continue to come in higher and there are other things that may help with regard to this. For instance, the biotech received regulatory approval of LUPKYNIS for the treatment of patients with lupus nephritis in Switzerland in May of 2023 . As it starts to obtain regulatory approvals in other territories, I think it could help to improve sales of the drug even further.

Two New INDs Expected In 2023 Could Provide Additional Long-Term Shareholder Value

As I noted in the beginning above, this biotech is not just focusing on increasing sales of its drug LUPKYNIS for the treatment of patients with lupus nephritis. It is also starting to advance an additional two new candidates in its pipeline. That is, it expects to file two new Investigational New Drugs [INDs] in 2023. One IND is going to be with respect to a clinical candidate by the name of AUR200, which is being developed to treat patients with autoimmune disorders and nephrology conditions. It is designed to block B-cell Activating Factor [BAFF] and APRIL [proliferation-inducing ligand]. These two proteins are responsible for promoting B-cell survival and differentiation. It is expected that Aurinia will file an IND of AUR200, so that it can initiate a phase 1 study in 2023.

Another IND is going to be with respect to a clinical candidate by the name of AUR300, which is being developed to treat patients with autoimmune disorders and fibrotic diseases. This clinical drug is being developed to modulate the dysregulation of M2 macrophages. Why is that? That's because dysregulation of such macrophages leads to inflammation. Thus, the goal is to decrease the number of inflammatory cytokines which might be roaming around in autoimmune and fibrotic diseases.

It is expected that Aurinia will file an IND of AUR300, so that it can initiate a phase 1 study in 2023. These clinical candidates will take some time to advance, but it is nice that it is at least advancing other drugs in its pipeline to reduce investor risk.

Financials

According to the 10-Q SEC Filing , Aurinia Pharmaceuticals had cash, cash equivalents, and restricted cash and short-term investments of $361.5 million as of March 31, 2023. It believes that it has enough cash to fund its operations for the next few years, therefore I don't see a cash raise being necessary in the short-term.

Despite having research and commercialization expenses, the reason for the cash position remaining stable for the most part is because it was offset by sales of LUPKYNIS. Especially, with respect to Q1 of 2023, where Aurinia had the best quarter to date in terms of sales of this drug. Again, it was able to achieve a 59% increase in net revenue of LUPKYNIS to $34.4 million in Q1 of 2023. Not only that, but it also raised its 2023 revenue guidance to a range of between $135 to $155 million of net product sales.

Risks To Business

There are several risks that traders and investors should be aware of before investing in Aurinia Pharmaceuticals. The first risk to consider would be with respect to upcoming sales of LUPKYNIS in the coming quarters. The expectation is that sales will continue to improve, especially after the best quarter yet for sales of LUPKYNIS, but there is no guarantee that this will be the case.

A second risk to consider would be with respect to the clinical candidate of AUR200, which is being advanced for the treatment of patients with autoimmune and/or nephrology conditions. There is no guarantee that this drug will work for one or both of these target market indications.

A third and final risk to consider would be for the use of AUR300, which is being developed for the treatment of patients with autoimmune and/or fibrotic diseases. There is no assurance that this drug will achieve positive results for one or both of these target market indications.

Conclusion

The final conclusion is that Aurinia Pharmaceuticals is a good speculative biotech play to look into. That's because it had its best quarter yet in terms of LUPKINYS sales. Matter of fact, in the most recent earnings period of Q1 of 2023, it reported 59% year-over-year growth in revenue of LUPKYNIS to $34.4 million.

Not only that, but because of seeing higher growth in sales with this regulatory approved drug, Aurinia Pharmaceuticals was able to give higher full year 2023 revenue guidance. Full year 2023 revenue guidance was increased to be between $135 million to $155 million.

The company may also succeed in its plans to expand LUPKYNIS to other markets as the years go by. This is proven with the recent May of 2023 Switzerland approval of LUPKYNIS for the treatment of adults with lupus nephritis. As this company starts to obtain additional regulatory approvals, I believe that its revenue growth of LUPKYNIS should continue to climb.

With increased sales of LUPKYNIS, plus a few IND filings expected in 2023, these are the reasons why I believe that Aurinia Pharmaceuticals Inc. is a good speculative biotech play to look into.

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