On August 6, 2019 Aurinia Pharmaceuticals Inc. (NASDAQ: AUPH / TSX:AUP) ("Aurinia" or the "Company"), a late- stage clinical biopharmaceutical company focused on advancing voclosporin in multiple indications, reported financial results for the three and six months ended June 30, 2019 and recent operational highlights (Press release, Aurinia Pharmaceuticals, AUG 6, 2019, View Source [SID1234538319]). Amounts, unless specified otherwise, are expressed in U.S. dollars.
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"During the past quarter, the Aurinia team has taken multiple steps forward preparing the organization for the next phase of its evolution into a commercial-stage entity. In anticipation of the AURORA Phase 3 results in lupus nephritis, we are appropriately scaling the organization ahead of data, which if confirmatory, sets the stage for a NDA filing during the first half of next year. If approved, we project a commercial launch of voclosporin in early 2021 as a potentially first-line treatment, in combination with mycophenolate mofetil and low-dose steroids for lupus nephritis," commented Peter Greenleaf, President and Chief Executive Officer of Aurinia.
Michael Martin, Chief Operating Officer stated, "In parallel, we are taking all of the steps necessary to initiate a Phase 2/3 clinical trial with VOS for the potential treatment of DES. This Phase 2/3 trial follows a well-established development path for ophthalmic drugs in this therapeutic area."
Mr. Greenleaf further said, "With respect to our ongoing proof-of-concept study for FSGS, we have added additional clinical trial sites and have modified the study protocol to broaden the inclusion of patients who have received limited corticosteroids exposure prior to enrollment. We expect that these actions will lead to enhanced enrollment."
VOS Phase 2/3 AUDREY ("Aurinia Dry Eye Study") Clinical Study in DES
Based upon the VOS exploratory Phase 2a results, Aurinia has initiated plans for a Phase 2/3 study which is expected to enroll its first patient in the fourth quarter of 2019. This study will include certain critical regulatory requirements that the FDA has traditionally required for DES product approval, which include both dose-optimization along with a comparison to vehicle.
The Phase 2/3 clinical study otherwise known as, "THE AUDREY STUDY" is designed as a randomized, double-masked, vehicle-controlled, dose ranging study to be conducted in the U.S., AUDREY will evaluate the efficacy and safety of VOS in subjects with DES. Approximately 480 subjects are to be enrolled. The study will consist of four arms and in a 1:1:1:1 randomization schedule to either 0.2% VOS, 0.1% VOS, 0.05% VOS or vehicle, dosed twice daily for 12 weeks. The primary outcome measure for the study is the proportion of subjects with 10mm improvement in Schirmer Tear Test ("STT") at 4 weeks.
Secondary outcome measures, which will be assessed at multiple time points include, STT, Fluorescein Corneal Staining ("FCS"), change in eye dryness, burning/stinging, itching, photophobia, eye pain and foreign body sensation, change in Symptom Assessment in Dry Eye ("SANDE") score and additional safety endpoints.
Voclosporin for Focal Segmental Glomerulosclerosis ("FSGS")
Aurinia initiated a Phase 2 proof-of-concept, open-label study for FSGS in June 2018. The study was designed to evaluate the role of voclosporin for treatment-naïve patients diagnosed with primary FSGS. In response to slower than anticipated enrollment, Aurinia has recently opened additional clinical trial sites outside of the United States and has amended the study to allow enrollment of FSGS patients who have previously received limited corticosteroid exposure. Up to approximately 20 patients are expected to be enrolled with interim results anticipated in 2020.
Financial Liquidity at June 30, 2019
As at June 30, 2019, Aurinia had cash and cash equivalents of $131.5 million compared to $144.3 million of cash, cash equivalents and short-term investments at March 31, 2019 and $125.9 million at December 31, 2018. Net cash used in operating activities was $13.3 million for the second quarter ended June 30, 2019 compared to $12.3 million for the second quarter ended June 30, 2018.
The Company believes, that based on its current plans that it 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, initiate the AUDREY Phase 2/3 study, and fund operations into the second half of 2020.
Second Quarter 2019 Financial Results
For the three months ended June 30, 2019 Aurinia reported a consolidated net loss of $15.9 million or $0.17 per common share compared to a consolidated net loss of $15.7 million or $0.19 per common share for the same period in 2018.
Research and development expenses (R&D) increased slightly to $11.2 million for the three months ended June 30, 2019, compared to $10.5 million for the three months ended June 30, 2018. The increase in these expenses reflected higher costs incurred for the AURORA 2 extension trial, the drug-drug interaction ("DDI") study preparation costs associated with the planned NDA submission for LN and preparation costs for the Phase 2/3 DES clinical study.
Corporate, administration and business development expenses increased to $4.9 million for the three months ended June 30, 2019, compared to $3.5 million for the same period in 2018. The increase was primarily due to an increase in consulting fees related to recruitment fees and pre-commercial activities, such as market and payor research, and higher personnel and sponsorship costs.
Non-cash stock compensation expense was $2.0 million for the second quarter ended June 30, 2019 as compared with $2.0 million for the same period in 2018 and is included in both research and development and corporate, general and business development expenses.
Aurinia incurred other expenses of $720,000 during the three months ended June 30, 2019 associated with the successful defense of a proxy contest in connection with its June 26, 2019 annual general meeting. There was no similar expense in the comparable period.
Aurinia also recorded a non-cash reduction of $625,000 in the estimated fair value of derivative warrant liabilities which reduced the loss for the second quarter ended June 30, 2019 compared to an increase of $1.9 million in the estimated fair value of derivative warrant liabilities which increased the loss for the second quarter ended June 30, 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.
Financial Results for Six Months Ended June 30, 2019
For the six months ended June 30, 2019, Aurinia reported a consolidated net loss of $28.3 million or $0.31 per common share compared to a consolidated net loss of $31.2 million or $0.37 per common share for the comparable period in 2018.
R&D expenses were $21.8 million for the six months ended June 30, 2019 compared to $19.4 million for the same period in 2018. The increase in these expenses reflected higher costs incurred for the AURORA 2 extension trial, the DDI study and preparation costs associated with the planned LN NDA submission partially offset by lower AURORA trial costs as this trial nears completion.
Corporate, administration and business development expenses were $8.8 million for the six months ended June 30, 2019 compared to $7.3 million for the same period in 2018. The increase reflects the same items as noted in the second quarter corporate, administration and business development expenses.
Non-cash stock compensation expense totaled $3.6 million for the six months ended June 30, 2019 as compared with $4.1 million for the same period in 2018 and is included in both research and development and corporate, general and business development expenses.
For the six months ended June 30, 2019 Aurinia recorded a decrease of $2.4 million in the estimated fair value of derivative warrant liabilities compared to an increase of $4.6 million for the comparable period in 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 second quarter ended June 30, 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 second quarter ended June 30, 2019 financial results today, Tuesday, August 6, 2019 at 4:30 p.m. ET. This event can be accessed on the investor section of the Aurinia website at www.auriniapharma.com.