On August 5, 2021 Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH) ("Aurinia" or the "Company") reported its financial results for the second quarter ended June 30, 2021 (Press release, Aurinia Pharmaceuticals, AUG 5, 2021, View Source [SID1234586047]). Amounts, unless specified otherwise, are expressed in U.S. dollars.
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"Aurinia continues to make progress toward transforming the treatment of lupus nephritis (LN) by improving access to treatment and providing disease education and care for the long underserved LN patient community," said Peter Greenleaf, President and Chief Executive Officer of Aurinia. "Our second quarter results demonstrate our momentum as COVID-related restrictions are loosened in parts of the United States with a significant increase in both revenue and patient start forms. We are confident that with this year-to-date performance and a strong balance sheet, that we are well-poised for growth as we continue our work to expand the treatment of LN and seek new opportunities that could address the needs of patients with serious autoimmune disorders."
Mr. Greenleaf further stated, "As we continue to expand patient access to LUPKYNIS across the United States, we anticipate that annual net revenue for LUPKYNIS will be in the range of $40 to $50 million for 2021, setting Aurinia up for a very strong 2022 as we recognize the benefit of patients continuing on therapy and hopefully achieving reductions in their proteinuria."
Recent Highlights
Second Quarter 2021 U.S. Commercial Activities
415 PSFs during the second quarter with over 800 PSFs received year-to-date;
As of June 30, 2021, a total of 45 LUPKYNIS-specific policies had been published by insurers representing approximately 110 million covered lives in the U.S.; and
Converted over 50% of PSFs to patients on therapy by the end of the second quarter.
Recent Operational Developments
On May 10, 2021, The Lancet, an international, peer-reviewed medical journal, published the results of the Company’s Phase 3 AURORA-1 study evaluating LUPKYNIS (voclosporin) in adults with LN.
On May 20, 2021, the Company announced that the interim analysis of the AURORA-2 continuation study showed that subjects in the LUPKYNIS treatment arm sustained meaningful reductions in proteinuria, with no change in mean estimated glomerular filtration rate (eGFR) at 104 weeks of treatment.
Effective June 14, 2021, the Company appointed Dr. Brinda Balakrishnan, M.D., Ph.D., to the Company’s Board of Directors. Dr. Balakrishnan is Group Vice President, Corporate and Business Development of BioMarin Pharmaceutical Inc.
On June 25, 2021, Aurinia’s licensing partner, Otsuka Pharmaceutical Co., Ltd., filed an initial marketing authorization application (MAA) with the European Medicines Agency (EMA) seeking approval for the use of voclosporin for the treatment of adult patients with active LN in the European Union, as well as Norway, Iceland and Liechtenstein. Upon approval the Company would be eligible for up to an additional $30 million in approval related milestones, low double-digit royalties on sales, and additional revenues for the supply of product to Otsuka under a cost-plus arrangement.
Upcoming Milestones
Aurinia anticipates reporting top-line results from the ongoing AURORA-2 two-year continuation study of voclosporin for the treatment of LN by the end of 2021.
Financial Liquidity at June 30, 2021
As of June 30, 2021, Aurinia had cash and cash equivalents and investments of $323.7 million compared to $422.7 million at December 31, 2020. The decrease was primarily related to the commercial infrastructure spend to support the launch of LUPKYNIS, payments for inventory and an upfront payment made as part of a collaborative agreement with Lonza to build a dedicated manufacturing capability (or monoplant).
Net cash used in operating activities was $91.5 million for the six months ended June 30, 2021 compared to $44.6 million for the six months ended June 30, 2020. The increase was primarily due to the commercial infrastructure spend to support the launch of LUPKYNIS, payments for inventory and a one-time payment to a related party upon achievement of specific milestones. In the prior year, the Company was still in the development phase of LUPKYNIS and as a result, did not incur any material related selling expenses.
The Company believes that it has sufficient financial resources to fund its current plans, which include funding commercial activities, including FDA related post approval commitments, manufacturing and packaging of commercial drug supply, conducting planned research and development (R&D) programs, and operating activities into at least 2023.
Financial Results for the Quarter Ended June 30, 2021
For the quarter ended June 30, 2021, Aurinia recorded a net loss of $47.0 million or $0.37 net loss per common share, as compared to a net loss of $26.5 million or $0.24 net loss per common share for the quarter ended June 30, 2020. For the six months ended June 30, 2021, Aurinia recorded a net loss of $97.4 million or $0.76 net loss per common share as compared to a net loss of $52.5 million or $0.47 net loss per common share.
Total revenue was $6.6 million and $29 thousand for the quarters ended June 30, 2021 and June 30, 2020, respectively. Total revenue was $7.5 million and $59 thousand for the six months ended June 30, 2021 and June 30, 2020, respectively. The increase for both periods was primarily the result of the commercial sales of LUPKYNIS following FDA approval in January 2021.
Cost of sales were $308 thousand and nil for the quarters ended June 30, 2021 and June 30, 2020, respectively. Cost of sales were $356 thousand and nil for the six months ended June 30, 2021 and June 30, 2020, respectively. The increase for both periods was primarily the result of commercial sales of LUPKYNIS. Gross margin for the three and six months ended June 30, 2021 was approximately 95%.
Selling, general and administrative (SG&A) expenses were $43.8 million and $15.4 million for the quarters ended June 30, 2021 and June 30, 2020, respectively. For the six months ended June 30, 2021 and June 30, 2020, SG&A expenses were $83.1 million and $26.5 million, respectively. The increase for both periods was primarily due to the expansion of the commercial infrastructure, administrative functions and patient assistance programs to support the launch of LUPKYNIS. SG&A share-based compensation expense for the three and six months ended June 30, 2021 was $6.5 million and $13.2 million, respectively.
R&D expenses were $10.1 million and $11.1 million for the quarters ended June 30, 2021 and June 30, 2020, respectively. For the six months ended June 30, 2021 and June 30, 2020, R&D expenses were $19.9 million and $24.9 million, respectively. The decrease for both periods was primarily due to lower contract research organization expenses and other third-party clinical trial expenses following the approval of LUPKYNIS, including a reduction in new drug application preparation costs, capitalization of supply costs following approval, and termination of the dry eye trial during the fourth quarter of 2020. R&D share-based compensation expense for the three and six months ended June 30, 2021 was $1.1 million and $2.2 million, respectively.
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 June 30, 2021 in the Company’s Quarterly Report on Form 10-Q, which is 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 June 30, 2021 financial results today, Thursday, August 5, 2021 at 4:30 p.m. EDT. 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 progression of systemic lupus erythematosus (SLE), a chronic and complex autoimmune disease. About 200,000-300,000 people live with SLE in the U.S. and approximately one out of three of these individuals have already developed LN at the time of SLE diagnosis. If poorly controlled, LN can lead to permanent and irreversible tissue damage within the kidney, resulting in kidney failure. Black and Asian individuals with SLE are four times more likely to develop LN and individuals with 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.