On May 14, 2019 Aurinia Pharmaceuticals Inc. (NASDAQ: AUPH / TSX:AUP) ("Aurinia" or the "Company") reported financial results for the first quarter ended March 31, 2019 and provided an update on recent operational highlights. Amounts, unless specified otherwise, are expressed in U.S. dollars (Press release, Aurinia Pharmaceuticals, MAY 14, 2019, View Source [SID1234536340]).
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First Quarter 2019 Highlights
Fully-enrolled AURORA Phase 3 trial in lupus nephritis ("LN") continues on track with results anticipated in late 2019.
Reported results from a Phase 2a Dry Eye study with voclosporin ophthalmic solution ("VOS") that achieved statistically superior efficacy in secondary objective endpoints compared to cyclosporin ophthalmic emulsion 0.05% (Restasis), the current DES market leader. VOS did not meet the primary endpoint as both drugs were well tolerated and demonstrated less than anticipated drop discomfort
Received a Notice of Allowance from the United States Patent and Trademark Office ("USPTO") for claims which have the potential to cover voclosporin’s method of use and dosing protocol for lupus nephritis ("LN’) until December 2037.
Appointed Mr. Peter Greenleaf as Chief Executive Officer and Dr. George Milne to Chairman of the Board of Directors.
Cash, cash equivalents, and short-term investments of $144.3 million as of March 31, 2019.
Recent Director and Officer Appointments
On April 29, 2019, Aurinia appointed Peter Greenleaf as Chief Executive Officer and a Director on the Aurinia Board.
Concurrently, Dr. Richard M. Glickman, who previously announced his plans to retire on November 6, 2018, stepped down from his role as Chairman and CEO. Dr. Glickman remains an advisor to the Company for a period of 12 months.
"It is an honor to join Aurinia at this time and lead the organization through its next phase of growth to advance voclosporin toward commercialization based upon the Phase 3 AURORA results in lupus nephritis anticipated by the end of this year," commented Mr. Peter Greenleaf, Chief Executive Officer of Aurinia. "After following the Aurinia story and after conducting further due diligence, I am truly impressed with the Aurinia team, their ability to execute and advance voclosporin in a cost-efficient manner, with the ongoing goal of bringing voclosporin to help patients suffering with LN."
In conjunction with Dr. Glickman’s retirement as the Chairman, the Board elevated George M. Milne, Jr., PhD, to the position of Chairman of the Board effective April 29, 2019. In addition, the Board appointed Dr. Daniel Billen to the Board also effective April 29, 2019.
Dr. Milne stated, "With the appointment of Peter and Daniel to the board, combined with our experienced and committed employees and management team, Aurinia is strongly positioned to achieve our milestones and maximize the value of voclosporin for all of our stakeholders
VOS for Dry Eye Syndrome ("DES")
Based upon the exploratory Phase 2a results generated with VOS in a head-to-head comparison vs. the current market leader for the treatment of DES, Aurinia plans to initiate a Phase 2/3 study by late 2019. This study will encompass certain critical regulatory requirements that the FDA has traditionally required for DES product approval, these requirements include both dose-optimization requirements along with a comparison versus vehicle.
"I’m confident that the internal Aurinia team along with our key ophthalmology clinical advisors have crafted a framework of a plan that minimizes the clinical and regulatory risk for VOS and maximizes our probability of launching VOS into the multi-billion dollar DES market in due course," said Michael R. Martin, Chief Operating Officer of Aurinia.
Financial Liquidity at March 31, 2019
As at March 31, 2019, Aurinia had cash, cash equivalents and short-term investments of $144.3 million compared to $125.9 million of cash, cash equivalents and short-term investments as at December 31, 2018. Net cash used in operating activities was $13.1 million for the first quarter ended March 31, 2019 compared to $14.4 million for the first quarter ended March 31, 2018.
The Company believes, that based on its current plans that Aurinia has sufficient financial resources to fund the existing LN program, including the AURORA trial and the AURORA 2 extension trial, complete the NDA submission to the FDA, conduct the ongoing Phase 2 study for FSGS, commence additional DES studies and fund operations into mid-2020.
The increase in our cash position at March 31, 2019 was primarily the result of the following:
At-The-Market ("ATM") Facility
On November 30, 2018, Aurinia had entered into an open market sale agreement with Jefferies LLC pursuant to which the Company could from time to time sell, through ATM offerings, common shares that would have an aggregate offering amount of up to $30 million. The ATM was fully utilized in the first quarter. Aurinia received gross proceeds of $30 million and issued 4.6 million common shares. The Company incurred share issue costs of $1.2 million including a 3% commission and professional and filing fees related to the ATM offerings.
February 14, 2014 Warrant Exercises
The remaining derivative warrants outstanding from the February 14, 2014 private placement were exercised in the first quarter ended March 31, 2019. Certain holders of these warrants elected the cashless exercise option and the Company issued 687,000 common shares on the cashless exercise of 1.3 million warrants. Three holders of 464,000 warrants exercised these warrants for cash, at a price of $3.2204 per common share. The Company received cash proceeds of $1.5 million and issued 464,000 common shares.
Financial Results for the First Quarter Ended March 31, 2019
The Company reported a consolidated net loss of $12.4 million or $0.14 per common share for the first quarter ended March 31, 2019, as compared to a consolidated net loss of $15.5 million or $0.18 per common share for the first quarter ended March 31, 2018.
The loss for the first quarter ended March 31, 2019 reflected a reduction of $1.7 million in the estimated fair value of derivative warrant liabilities compared to an increase of $2.6 million in the estimated fair value of derivative warrant liabilities for the first quarter ended March 31, 2018. The derivative warrant liabilities will ultimately be eliminated on the exercise or forfeiture of the warrants and will not result in any cash outlay by the Company.
The loss before the change in estimated fair value of derivative warrant liabilities and income tax was $14.1 million for the first quarter ended March 31, 2019 compared to $12.9 million for the same period in 2018.
Research and development ("R&D") expenses increased to $10.6 million for the first quarter ended March 31, 2019 2019, compared to $8.9 million for the first quarter ended March 31, 2018. The increase in these expenses primarily reflected completion costs for the DES study and higher costs incurred for the AURORA 2 extension trial, the DDI study and the FSGS Phase 2a study as these studies had more activity in the first quarter ended March 31, 2019 compared to the same period in 2018.
Corporate, administration and business development expenses increased slightly to $3.9 million for the first quarter of 2019, compared to $3.8 million for the first quarter of 2018.
This press release should be read in conjunction with our unaudited interim condensed consolidated financial statements and the Management’s Discussion and Analysis for the first quarter ended March 31, 2019 which are accessible on Aurinia’s website at www.auriniapharma.com, on SEDAR at www.sedar.com or on EDGAR at www.sec.gov/edgar.
Aurinia will host a conference call and webcast to discuss the first quarter ended March 31, 2019 financial results today, Monday, May 13, 2019 at 4:30 p.m. ET. This event can be accessed on the investor section of the Aurinia website at www.auriniapharma.com.