On November 8, 2018 Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH / TSX:AUP) ("Aurinia" or the "Company") reported that it has released its financial results for the third quarter ended September 30, 2018. Amounts, unless specified otherwise, are expressed in U.S. dollars (Press release, Aurinia Pharmaceuticals, NOV 8, 2018, View Source [SID1234531051]).

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"We achieved a significant milestone in September with the completion of enrollment for the AURORA Phase III trial ahead of schedule. Our target enrollment of 324 patients was surpassed due to high patient demand with 358 LN patients randomized in sites across 27 countries." said Richard M. Glickman, Aurinia’s CEO and Chairman of the Board. "I continue to be impressed by our clinical team which has delivered on our important milestones, and to that end, I am pleased to announce enrollment for the phase II dry eye trial will be completed in the next couple of days, and we expect top-line data in January 2019."

Clinical Highlights

Our Phase III clinical trial ("AURORA") to evaluate voclosporin for the treatment of lupus nephritis ("LN"), which we initiated in May of 2017, completed enrollment in September 2018. We expect top-line data to be available in late 2019.
A significant percentage of patients who have completed the AURORA trial are rolling over into the AURORA 2 blinded extension study ("AURORA 2") from the AURORA Phase III clinical trial. The purpose of AURORA 2 is to assess the long-term benefit/risk of voclosporin in patients with LN; however, this study is not a requirement for potential regulatory approval for voclosporin.
We initiated a Phase II 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 July 2018, and full enrollment is anticipated imminently. This four-week study of approximately 90 patients is expected to complete by the end of 2018 with data available in January 2019. 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.
We also initiated a Phase II proof-of-concept study in focal segmental glomerulosclerosis ("FSGS") in June 2018 and are currently in the process of enrolling patients. This is an open-label study of 20 treatment naïve patients diagnosed with primary FSGS.
Corporate Development

Aurinia also announced today that Richard M. Glickman, the Company’s Chairman and Chief Executive Officer, intends to retire from his position once a suitable replacement is identified and appointed. The Board of Directors will retain a search firm and initiate a search for his successor.

"Richard is a gifted entrepreneur who has established Aurinia as a leading biotech company and shepherded it to its next phase of growth. On behalf of the Board of Directors, I want to thank him for his inspired leadership and significant contribution to both the Company and patient community since Aurinia’s inception in 2012," said George M. Milne Jr, Ph.D., Independent Director and Chairman of the Governance Committee. "Under his direction, the Company has delivered on all its key milestones and evolved into a patient-centric, late-stage clinical company with investigational drugs addressing multiple indications across the global immunology market."

"Two years ago – a critical time in the company’s growth – my decision to come out of retirement to join Aurinia as CEO was fueled by my absolute belief in the potential for voclosporin to transform the lupus nephritis treatment landscape," said Dr. Glickman. "I’m incredibly proud of Aurinia’s progress over the last 21 months, and I know this is the optimal time to bring in a new CEO who will build on our clinical success as we approach commercialization. My commitment to the Company and the patients it serves is steadfast, and I plan to remain a resource to the Board and management team as it enters its next chapter."

Financial Liquidity at September 30, 2018

At September 30, 2018, we had cash, cash equivalents and short term investments of $138.9 million compared to $150.2 million at June 30, 2018 and $173.5 million at December 31, 2017. Net cash used in operating activities was $11.3 million for the third quarter ended September 30, 2018 compared to $8.5 million for the third quarter ended September 30, 2017.

We believe that our cash position is sufficient to fund our existing LN program including the AURORA clinical trial, conduct our current studies in FSGS and DES, complete the work required for the NDA submission to the FDA, and fund operations into 2020.

Financial Results for the Three and Nine Months Ended September 30, 2018

We reported a consolidated net loss of $18.3 million or $0.21 per common share for the three months ended September 30, 2018, as compared to a consolidated net loss of $13.1 million or $0.16 per common share for the three months ended September 30, 2017.

The increase in the loss for the three months ended September 30, 2018 compared to the same period in 2017 was primarily due to the non-cash change of $5.2 million in the estimated fair value of derivative warrant liabilities. The three months ended September 30, 2018 reflected a $4.8 million increase in the estimated fair value of derivative warrant liabilities compared to a reduction of $355,000 in the estimated fair value of derivative warrant liabilities for the three months ended September 30, 2017. The change in the revaluation of the derivative warrant liabilities is primarily driven by the change in our share price at each period end. An increase in our share price results in an increase in the estimated fair value of derivative warrant liabilities and vice versa. 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 the non-cash change in estimated fair value of derivative warrant liabilities was $13.5 million for the three months ended September 30, 2018 compared to $13.5 million for the same period in 2017.

For the nine months ended September 30, 2018, the consolidated net loss was $49.5 million or $0.59 per common share compared to a consolidated net loss of $67.5 million or $0.91 per common share for the comparable period in 2017. For the nine months ended September 30, 2018 we recorded an increase of $9.4 million in the estimated fair value of derivative warrant liabilities compared to $32.9 million for the comparable period in 2017.

The net loss before the non-cash change in estimated fair value of derivative warrant liabilities was $40.1 million for the nine months ended September 30, 2018 compared to $34.5 million for the same period in 2017. The increased loss was primarily due to higher research and development expenses.

Research and development expenses increased to $11.2 million for the three months ended September 30, 2018, compared to $10.8 million for the three months ended September 30, 2017. We incurred research and development expenses of $30.5 million for the nine months ended September 30, 2018, as compared to $25.2 million for the same period in 2017. The increased research and development expenses reflected costs associated with the commencements of AURORA 2 and the FSGS and DES studies.

Corporate, administration and business development expenses increased to $2.9 million for the three months ended September 30, 2018, compared to $2.7 million for the same period in 2017. We incurred corporate, administration and business development expenses of $10.2 million for the nine months ended September 30, 2018 compared to $9.0 million for the comparable period in 2017. The increase was due primarily to higher non-cash stock compensation expense in 2018 compared to the same periods in 2017.

This press release should be read in conjunction with our unaudited interim condensed consolidated financial statements and the MD&A for the third quarter ended September 30, 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.

Aurinia will host a conference call and webcast to discuss third quarter 2018 financial results today, Thursday, November 8, 2018 at 4:30 p.m. ET. This event can be accessed on the investor section of the Aurinia website at www.aurinia.com.