On May 10, 2018 Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH / TSX:AUP) ("Aurinia" or the "Company") reported its financial results for the first quarter ended March 31, 2018 (Press release, Aurinia Pharmaceuticals, MAY 10, 2018, View Source [SID1234526503]). Amounts, unless specified otherwise, are expressed in U.S. dollars.

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"Our first quarter has been characterized by diligently executing our clinical programs. We remain on track to complete recruitment for our Phase III trial in lupus nephritis later this year and are pleased with the trial’s progress. Start-up activities are underway for our FSGS and Dry Eye programs, and we expect to commence these in June. We continue to be well-capitalized into 2020 and look forward to a productive 2018," said Richard Glickman, Aurinia CEO and Chairman of the Board.

2018 Highlights

Our Phase III clinical trial ("AURORA") to evaluate voclosporin for the treatment of lupus nephritis ("LN"), which we initiated in May of 2017, is on track to complete enrollment in Q4 2018. We have 212 clinical trial sites activated and able to enroll patients around the globe.
A Phase II proof-of-concept study in focal segmental glomerulosclerosis ("FSGS") is expected to initiate in June 2018. This will be an open-label study of 20 treatment naïve patients. We submitted our Investigational New Drug application ("IND") to the FDA in Q1 2018. We received agreement from the FDA with regards to the guidance we provided on this study, and the IND is now active.
We also expect to initiate a Phase IIa head-to-head tolerability study of voclosporin ophthalmic solution ("VOS") versus Restasis (cyclosporine ophthalmic emulsion 0.05%) for the treatment of Dry Eye Syndrome ("DES") in June 2018, with data expected to be available by the end of 2018. This will be a four-week study of approximately 90 patients. Upon productive meetings with the FDA, we re-activated our existing IND and are aligned to proceed. We believe calcineurin inhibitors ("CNIs") are a mainstay of treatment for DES, and the goal of this program is to develop a best-in-class treatment option, and upon completion, we will look to evaluate strategic alternatives for this asset.
We strengthened the breadth and scope of our Board of Directors with the additions of Dr. Michael Hayden and Joseph Hagan in February of 2018.
Financial Liquidity at March 31, 2018

At March 31, 2018, we had cash, cash equivalents and short term investments of $159.1 million and working capital of $156.7 million compared to $173.5 million of cash, cash equivalents and short term investments and $167.1 million of working capital at December 31, 2017. Net cash used in operating activities was $14.4 million for the first quarter ended March 31, 2018 compared to $9.7 million for the first quarter ended March 31, 2017.

We believe, based on our current plans, that we have sufficient financial resources to fund our existing LN program, including the AURORA trial and the NDA submission to the FDA, conduct the planned Phase II trials for FSGS and DES, and fund operations into 2020.

Financial Results for the First Quarter ended March 31, 2018

We reported a consolidated net loss of $15.5 million or $0.18 per common share for the first quarter ended March 31, 2018, as compared to a consolidated net loss of $51.9 million or $0.92 per common share for the first quarter ended March 31, 2017.

The loss for the first quarter ended March 31, 2018 reflected a $2.6 million increase in the estimated fair value of derivative warrant liabilities compared to an increase of $40.8 million in the estimated fair value of derivative warrant liabilities for the first quarter ended March 31, 2017. An increase in estimated fair value of derivative warrant liabilities increases the loss recorded for the period.

The increases in the estimated fair value of derivative warrant liabilities were primarily the result of increases in our share prices at March 31, 2018 and March 31, 2017 compared to December 31, 2017 and December 31, 2016 respectively.

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 net loss before these non-cash changes in estimated fair value of derivative warrant liabilities was $12.8 million for the first quarter ended March 31, 2018 compared to $11.2 million for the same period in 2017.

Research and development ("R&D") expenses increased to $8.9 million in the first quarter of 2018, compared to $7.3 million in the first quarter of 2017. The increase in these expenses resulted from higher clinical patient enrollment and treatment costs for our AURORA trial and costs associated with the planning and start-up phase for the FSGS and DES Phase II trials, and the LN continuation study. R&D expenses for the first quarter ended March 31, 2017 included costs related to the AURORA planning phase and completion costs for the Phase II AURA trial.

Corporate, administration and business development expense also increased to $3.8 million for the first quarter ended March 31,2018, compared to $3.4 million for the first quarter ended March 31, 2017, primarily reflecting increased personnel costs due to the expansion of our activities.

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, 2018 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.