On November 4, 2021 IGM Biosciences, Inc. (Nasdaq: IGMS), a clinical-stage biotechnology company focused on creating and developing engineered IgM antibodies, reported its financial results for the third quarter ended September 30, 2021 and provided an update on recent developments (Press release, IGM Biosciences, NOV 4, 2021, View Source [SID1234594394]).

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"IGM continues to validate and expand the IgM platform through the clinical development of IGM-2323, our CD20 x CD3 T cell engager IgM antibody for the treatment of B cell proliferative diseases, IGM-8444, our Death Receptor 5 (DR5) agonist IgM antibody for the treatment of solid and hematologic cancers, and the establishment of our infectious diseases and autoimmunity and inflammation business units," said Fred Schwarzer, Chief Executive Officer of IGM Biosciences. "We plan to continue to expand our clinical development efforts, and by the end of 2022 we expect to be actively pursuing the clinical development of four oncology product candidates, led by two Phase 2 clinical studies of IGM-2323."

"We are encouraged by the emerging data from the clinical testing of IGM-2323 in our most fully explored titration dose cohort, 100 mg, where we have seen multiple complete responses in both diffuse large B-cell lymphoma (DLBCL) and follicular lymphoma (FL), and we look forward to sharing the initial data from this 100 mg dose cohort at our American Society of Hematology (ASH) (Free ASH Whitepaper) presentation in December," said Chris Takimoto, M.D., Ph.D., F.A.C.P., Chief Medical Officer of IGM Biosciences. "While the number of patients we have treated at 100 mg is relatively small, we believe that the planned Phase 2 expansion studies could potentially provide the basis for accelerated review and approval. As a first step, consistent with the spirit of the U.S. Food and Drug Administration’s (FDA) Project Optimus, we plan to test doses of 100 mg and 300 mg in two separate randomized ‘pick the winner’ Phase 2 studies of 30 patients at each dose level, one in DLBCL and one in FL. We plan to then expand the Phase 2 studies at the optimal dose, while including the prior data from that dose for purposes of potential registration. While our safety profile at 600 mg and 1000 mg is consistent with lower doses and very encouraging, we do not plan to continue to explore doses higher than 300 mg for purposes of greater efficacy in either DLBCL or FL."

Pipeline Updates

IGM-2323 (CD20 x CD3)

Plans to initiate potentially registrational Phase 2 study. IGM reported plans to commence two potentially registrational Phase 2 studies to assess the safety and efficacy of two doses of IGM-2323, 100 mg and 300 mg, in patients with DLBCL and FL, one Phase 2 study in DLBCL and one Phase 2 study in FL. Each Phase 2 multicenter, open-label study will take place in two stages. In the first stage, cohorts of 30 patients at each dose level (100 mg and 300 mg) will be randomized in a ‘pick the winner’ design in both DLBCL and FL, respectively. The optimal dose arm in each Phase 2 clinical trial will then be expanded to additional patients in the second stage, potentially providing the basis for accelerated review and approval of IGM-2323, assuming the clinical data support that expansion.
Data from Phase 1 trial evaluating IGM-2323 selected for oral presentation at 2021 ASH (Free ASH Whitepaper) Annual Meeting and Exposition, being held virtually and in-person in Atlanta, Georgia, December 11-14, 2021. The results will be presented on Saturday, December 11, 2021, at 1:15 p.m. ET, in an oral presentation titled "A Phase 1 Dose Escalation Study of IGM-2323, a Novel Anti-CD20 x Anti-CD3 IgM T Cell Engager (TCE) in Patients with Advanced B-Cell Malignancies." In the ASH (Free ASH Whitepaper) oral presentation, IGM plans to present additional safety and efficacy data collected subsequent to the April 30, 2021 data cut-off for the ASH (Free ASH Whitepaper) abstract, which was released online today in Blood, ASH (Free ASH Whitepaper)’s official journal.
As described in the abstract released today, as of April 30, 2021, 29 patients had been enrolled in the Phase 1 study of IGM-2323: 12 at 5 fixed dose levels (0.5, 2.5, 10, 20, 100 mg) and 17 at 5 dose titration levels (100, 200, 300, 600, and 1000 mg). All 29 patients received at least one dose and were evaluable for safety. There were no dose limiting toxicities (DLTs) and no neurotoxicity adverse events (AEs). No patients discontinued due to an AE. Of the 29 patients evaluable for safety, 6 patients had cytokine release syndrome (CRS), primarily Grade 1. As previously described, there were only two higher grade CRS events as of April 30, 2021, one Grade 2 and one Grade 3. As previously described, the Grade 3 patient had been treated with an experimental CAR-T and had high baseline circulating B-cells. Of the 11 evaluable patients treated in the titration dose cohorts, as of the April 30, 2021 data cut-off, there were 5 responses, 3 complete responses and 2 partial responses.

IGM-8444 (DR5)

Clinical development of IGM-8444 advances. IGM continues to advance the clinical development of IGM-8444, the Company’s IgM DR5 agonist, in an open-label, multicenter, Phase I study of IGM-8444 as a single agent and in combination in subjects with relapsed and/or refractory solid and hematologic cancers.
Every two-week monotherapy dose escalation cohort successfully completed. IGM announced that it has successfully cleared its highest single-agent dose escalation cohort (10 mg/kg Q2W) with no DLTs and no clinically significant liver toxicity observed to date.
Second FOLFIRI dose cohort successfully completed. IGM also announced that it has cleared the second of four planned FOLFIRI combination dose escalation cohorts (1.0 mg/kg Q2W) with no DLTs and no clinically significant liver toxicity observed to date. IGM is currently enrolling patients in the third of four planned FOLFIRI combination dose escalation cohorts (3.0 mg/kg Q2W).
No acute or chronic clinically significant liver toxicity or clinically significant anti-drug antibodies observed to date. IGM also announced today that there have been no DLTs and no clinically significant liver toxicities observed to date in the 32 patients treated with IGM-8444, of whom 11 remain on treatment. Importantly, 7 patients have been on treatment for 5 or more months without showing signs of any chronic toxicities to date. No patient has discontinued treatment for drug related safety reasons, and no clinically significant anti-drug antibodies have been observed to date.
First patient dosed in combination with birinapant. IGM announced that it has treated its first patient in a combination clinical study of IGM-8444 with birinapant, a SMAC mimetic which binds to and degrades inhibitors of apoptosis proteins (IAPs) leading to apoptotic cell death in tumors. The combination of these two apoptotic agents, IGM-8444 and birinapant, has shown strong synergy in preclinical testing, and IGM has acquired exclusive worldwide rights to manufacture, develop and commercialize birinapant. The first patient in this combination cohort was successfully treated with no clinically significant adverse events observed to date. IGM is currently enrolling additional patients in this first birinapant dose cohort. IGM is also preparing to enroll patients with chronic lymphocytic leukemia/small lymphocytic lymphoma in a venetoclax-IGM-8444 combination cohort.
Markers of on-target biological activity observed. Signs of biological activity consistent with the activation of DR5 by a DR5 agonist have been observed in some patients, both in circulating biomarkers and histological tumor samples.
"IGM-8444’s toxicity profile to date, which has not shown any clinically significant liver toxicity, differentiates it from some of the second generation DR5 agonists that have struggled to progress in the clinic due to liver toxicity," said Dr. Takimoto. "Importantly, we believe this safety profile will be critical to successful combinations with other drugs, which we believe represent by far the most exciting and promising uses of DR5 agonists for the treatment of multiple solid and hematologic cancers. For this reason, our clinical development focus continues to be on combinations of IGM-8444 with standard of care and novel agents, such as FOLFIRI, venetoclax and birinapant."

IGM-6268 (COVID-19)

IGM-6268 for the treatment and prevention of COVID-19 expected to advance into the clinic in the fourth quarter. IGM-6268 is an IgM version of an anti-SARS-CoV-2 IgG monoclonal antibody and is being developed as an intranasally administered agent for the treatment and prevention of COVID-19. It is expected to start clinical development by the end of 2021, initially in healthy volunteers.
IGM-7354 (IL-15 x PD-L1)

Phase 1 clinical testing expected to initiate in 2022. IGM plans to initiate a Phase 1 study of IGM-7354, the Company’s IL‑15 x PD‑L1 bispecific IgM antibody, in solid tumors in 2022.
IGM-2644 (CD38 x CD3)

Phase 1 clinical testing expected to initiate in 2022. IGM announced today that it plans to initiate a Phase 1 study of IGM-2644, the Company’s CD38 x CD3 bispecific IgM antibody, in multiple myeloma in 2022.
"We believe the safety and efficacy profile that we have observed to date in the clinical development of IGM-2323, our T cell engaging IgM antibody targeting CD20 on lymphoma cells, is very encouraging with respect to the future clinical development of IGM-2644, our T cell engaging IgM antibody targeting CD38 on multiple myeloma cells, as it has shown similar preclinical safety and efficacy features to those we observed with IGM-2323," said Bruce Keyt, Ph.D., Chief Scientific Officer of IGM Biosciences. "We hope to file an investigational new drug (IND) application with the FDA and begin the Phase 1 clinical development of IGM-2644 next year."

Corporate Updates

Announced leadership appointments and formation of IGM Infectious Diseases and IGM Autoimmunity and Inflammation business units. The new business units will utilize and build upon IGM’s platform technology to create and develop novel IgM and IgA antibodies to address infectious diseases, autoimmunity and inflammation. To lead the IGM Autoimmunity and Inflammation business unit, IGM announced the appointment of Mary Beth Harler, M.D., as President. To lead the IGM Infectious Diseases business unit, IGM announced the appointments of John Shiver, Ph.D. and Tong-Ming Fu, M.D., Ph.D., as Chief Strategy Officer and Chief Scientific Officer, respectively.
Third Quarter 2021 Financial Results

Cash and Investments: Cash and investments as of September 30, 2021 were $265.6 million, compared to $366.3 million as of December 31, 2020.
Research and Development (R&D) Expenses: For the third quarter of 2021, R&D expenses were $34.2 million, compared to $15.8 million for the same period in 2020.
General and Administrative (G&A) Expenses: For the third quarter of 2021, G&A expenses were $10.0 million, compared to $4.7 million for the same period in 2020.
Net Loss: For the third quarter of 2021, net loss was $44.2 million, or a loss of $1.32 per share, compared to a net loss of $20.3 million, or a loss of $0.66 per share, for the same period in 2020.
2021 Financial Guidance

IGM reiterates its previously issued financial guidance expecting full year GAAP operating expenses to be between $175 million and $185 million including estimated non-cash stock-based compensation expense of approximately $25 million. IGM expects to end 2021 with a balance of over $200 million in cash and investments.

On November 4, 2021 Targovax ASA (the "Company") reported that regarding the resolution by the Company’s board of directors to propose that the Company carries out a share capital increase, by way of a fully underwritten rights issue, to raise gross proceeds of NOK 175 million (the "Rights Issue") (Press release, Targovax, NOV 4, 2021, View Source [SID1234594410]).

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Date on which the terms and conditions of the preferential rights issue were announced: 4 November 2021

Last day including right: 25 November 2021

Ex-date: 26 November 2021

Record Date: 29 November 2021

Date of approval: 25 November 2021

Maximum number of new shares: 350,000,000

Subscription price: Minimum NOK 0.50 and maximum NOK 10.00

Ratio preferential rights: To be announced when final number of new shares is determined

Subscription ratio: To be announced when final number of new shares is determined

Managers: Carnegie AS and DNB Markets, a part of DNB Bank ASA

Will the rights be listed: The Company will apply for listing of the preferential rights on the Oslo Stock Exchange

ISIN for the preferential rights: To be announced when clarified

Other information: The subscription price for the new shares to be issued in the Rights Issue, and thus the final number of new shares and the exact amount of the share capital increase will be proposed by the board of directors, based on a recommendation from the Managers, the day prior to the extraordinary general meeting to be held on 25 November 2021 (the "EGM"). See the stock exchange announcement containing the notice to the EGM published earlier today, on 4 November 2021, for further information regarding the Rights Issue. The rights issue is subject to approval by the EGM.

This information is published in accordance with the requirements of the Continuing Obligations.

On November 4, 2021 Illumina, Inc. (NASDAQ: ILMN) reported its financial results for the third quarter of fiscal year 2021, which include the consolidated financial results of GRAIL (Press release, Illumina, NOV 4, 2021, View Source [SID1234594426]).

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Third quarter consolidated results:

Revenue of $1,108 million, a 40% increase compared to the prior year period
GAAP net income for the quarter of $317 million, or $2.08 per diluted share, which included a $900 million gain from our previously held investment in GRAIL and $654 million in day one compensation expense related to the GRAIL acquisition. This compared to $179 million, or $1.21 per diluted share, for the prior year period
Non-GAAP net income for the quarter of $221 million, or $1.45 per diluted share, which included dilution from GRAIL non-GAAP operating loss of $0.19 per diluted share and incremental dilution from the 9.8 million shares issued to fund the GRAIL acquisition of $0.06 per diluted share. This compared to $150 million, or $1.02 per diluted share, for the prior year period. Non-GAAP net income excludes gain on previously held investment in GRAIL, day one compensation related expense and other acquisition-related expenses (see the "Reconciliation Between GAAP and Non-GAAP Net Income" table for a reconciliation of these GAAP and non-GAAP financial measures)
Cash flow from operations of $(272) million compared to $153 million in the prior year period
Free cash flow (cash flow from operations less capital expenditures) of $(324) million for the quarter compared to $105 million in the prior year period
"Illumina’s financial results again exceeded expectations in the third quarter led by record shipments for both clinical and research," said Francis deSouza, Chief Executive Officer. "Clinical market expansion is driving momentum in the core business, including significant demand in testing for therapy selection in oncology as we continue to advance genomics as a standard of care in the clinic. Our teams’ continued execution to meet this robust demand will enable a strong finish to an exceptional 2021."

Gross margin in the third quarter of 2021 was 69.5% compared to 66.2% in the prior year period. Excluding amortization of acquired intangible assets, non-GAAP gross margin was 71.2% for the third quarter of 2021 compared to 67.4% in the prior year period.

Research and development (R&D) expenses for the third quarter of 2021 were $436 million compared to $172 million in the prior year period. Excluding acquisition-related compensation expense, non-GAAP R&D expenses as a percentage of revenue were 21.7% compared to 21.2% in the prior year period.

Selling, general and administrative (SG&A) expenses for the third quarter of 2021 were $879 million compared to $192 million in the prior year period. Excluding day one compensation related expense and other acquisition-related expenses, and fair value adjustments on contingent consideration liabilities, non-GAAP SG&A expenses as a percentage of revenue were 26.0% compared to 24.8% in the prior year period.

Depreciation and amortization expenses were $65 million and capital expenditures for free cash flow purposes were $52 million during the third quarter of 2021. At the close of the quarter, the company held $1.3 billion in cash, cash equivalents and short-term investments, compared to $3.5 billion as of January 3, 2021.

Third quarter segment results:

Following the acquisition of GRAIL on August 18, 2021, we have two reportable segments, Core Illumina and GRAIL. GRAIL financial results are reflected for the period after the acquisition.

Updates since our last earnings release:

Closed the GRAIL acquisition to accelerate patient access to life-saving, multi-cancer early-detection tests; we are holding GRAIL as a separate entity pending EU regulatory review of the merger
Announced TSO 500 partnership with Merck to develop and commercialize tests that identify genetic mutations used in the assessment of homologous recombination deficiency (HRD)
Co-authored study published in JAMA Pediatrics reporting findings from the NICUSeq Randomized Time-Delayed Trial, demonstrating whole genome sequencing outperforms usual care by two-fold in diagnostic efficacy and clinical management of acutely-ill newborns with suspected genetic disease
Announced an agreement with Israel’s Ministry of Health for a pilot program to implement the use of whole-genome sequencing in critically-ill infants suspected of having a genetic disorder in neonatal intensive care units
Expanded presence in Latin America with the creation of Illumina Colombia S.A.S. and Illumina México Productos de Biotecnología to advance clinical business in the region and increase support for local customers and partners
Announced net zero global greenhouse gas emissions commitment by 2050, including milestone targets of 46% reduction in emissions and 100% renewable electricity by 2030
GRAIL announced Galleri was approved for prescription by the New York State Department of Health, making the test commercially available in New York, and marking a significant regulatory milestone.
NHS launched UK trial of Galleri under a commercial partnership program that aims to confirm Galleri’s clinical and economic performance in the NHS system as a precursor to its routine use by the NHS
Appointed Robert Ragusa, former Chief Operations Officer of Illumina, as Chief Executive Officer of GRAIL
Financial outlook and guidance

The non-GAAP financial guidance discussed below reflects certain pro forma adjustments to assist in analyzing and assessing our core operational performance, including our Core Illumina and GRAIL segments. Please see our Reconciliation of Non-GAAP Financial Guidance included in this release for a reconciliation of the GAAP and non-GAAP financial measures.

For fiscal 2021, the company now expects both consolidated and Core Illumina revenue growth of approximately 36%. The company now expects GAAP earnings per diluted share of $4.41 to $4.51, and non-GAAP earnings per diluted share of $5.50 to $5.60, which includes dilution from GRAIL non-GAAP operating loss of approximately $1.00 and incremental dilution from the 9.8 million shares issued to fund the GRAIL acquisition of $0.15.

Conference call information

The conference call will begin at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) on Thursday, November 4, 2021. Interested parties may access the live teleconference through the Investor Info section of Illumina’s website under the "Company" tab at www.illumina.com. Alternatively, individuals can access the call by dialing 1 (844) 200-6205 or 1 (929) 526-1599 outside North America, both using conference ID 808648.

A replay of the conference call will be posted on Illumina’s website after the event and will be available for at least 30 days following.

Statement regarding use of non-GAAP financial measures

The company reports non-GAAP results for diluted net income per share, net income, gross margins, operating expenses, including research and development expenses and selling general and administrative expenses, operating income (loss), operating margins, gross profit, other income, and free cash flow (on a consolidated and as applicable, segment basis for our Core Illumina and GRAIL segments) in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The company’s financial measures under GAAP include substantial charges such as amortization of acquired intangible assets, non-cash interest expense associated with the company’s convertible debt instruments that may be settled in cash, and others that are listed in the itemized reconciliations between GAAP and non-GAAP financial measures included in this press release. Management has excluded the effects of these items in non-GAAP measures to assist investors in analyzing and assessing past and future operating performance, including in the non-GAAP measures relating to our Core Illumina and GRAIL segments. Additionally, non-GAAP net income and diluted earnings per share are key components of the financial metrics utilized by the company’s board of directors to measure, in part, management’s performance and determine significant elements of management’s compensation.

The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between GAAP and non-GAAP results are presented in the tables of this release.

On November 4, 2021 Merrimack Pharmaceuticals, Inc. (Nasdaq: MACK) ("Merrimack" or the "Company") reported its third quarter 2021 financial results for the period ended September 30, 2021 (Press release, Merrimack, NOV 4, 2021, View Source [SID1234594443]).

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"Both Ipsen Pharmaceuticals and Elevation Oncology publicly announced updates during the last three months that indicate that the clinical programs that may result in milestone payments to Merrimack continue to move forward", said Gary Crocker, CEO and Chairman of Merrimack’s Board of Directors. "In addition, we are pleased that our sustained focus on streamlining operational expenses continues to result in overhead cost reductions."

Third Quarter 2021 Financial Results

Merrimack reported net loss of $0.5 million for the third quarter ended September 30, 2021, or $0.04 per basic share, compared to a net loss of $1.0 million, or $0.08 per basic share, for the same period in 2020.

General and administrative expenses for the third quarter ended September 30, 2021 were $0.6 million, compared to $1.0 million for the same period in 2020.

As of September 30, 2021, Merrimack had cash and cash equivalents of $14.6 million, compared to $14.0 million as of December 31, 2020. The increase in cash position was due to a decrease of $2.0 million in prepaid expense and other assets including the receipt of our federal tax refund in April 2021, as well as $0.2 million from the exercise of stock options.

As of September 30, 2021, Merrimack had 13.4 million shares of common stock outstanding.

Updates on Programs Underlying Potential Milestone Payments

Ipsen Pharmaceuticals

On October 21, 2021, as part of its Q3 2021 Results Presentation, Ipsen provided to the public an update on the RESILIENT trial of ONIVYDE as a second line treatment for Small Cell Lung Cancer, indicating that clinical data from this trial are anticipated in the second half of 2022. Ipsen also provided an update on the NAPOLI 3 trial of ONIVYDE as a first line treatment for pancreatic cancer. Enrollment is completed in this trial and Ipsen indicated that clinical data are expected in 2023.

Elevation Oncology

Elevation Oncology licensed an anti-HER3 program from Merrimack in 2019. In its September 2021 investor presentation, Elevation communicated that the ongoing CRESTONE trial is intended to be a registrational trial pending continued discussions with the FDA and that top line results from this trial will be available in H1 2023. The anti-HER3 program licensed from Merrimack continues to be Elevation’s lead clinical asset.

On November 4, 2021 Aurinia Pharmaceuticals Inc. (NASDAQ: AUPH) ("Aurinia" or the "Company") reported its financial results for the third quarter ended September 30, 2021 (Press release, Aurinia Pharmaceuticals, NOV 4, 2021, View Source [SID1234594459]). Amounts, unless specified otherwise, are expressed in U.S. dollars .

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Aurinia achieved third quarter revenue of $14.7 million, with nine months ended September 30, 2021 revenue of $22.2 million and maintains its previously stated annual revenue estimate in the range of $40 to $50 million for 2021.

"We are very pleased with Q3 results as we continue to execute on our LUPKYNIS commercialization strategies," said Peter Greenleaf, President and Chief Executive Officer of Aurinia. "Despite the challenge of the COVID-19 Delta variant and a slight seasonal slowdown, we saw steady increases in patient start forms and patients on treatment toward the end of the quarter and continue to see this upward momentum through October."

"Data presentations at key medical meetings this week, including additional interim results from the AURORA 2 continuation study, will help bolster awareness of and confidence in the efficacy and safety of LUPKYNIS and we expect final results of the continuation study to be announced by the end of 2021," Greenleaf added.

"Finally, while our commercial team focused on increasing adoption of LUPKYNIS, Aurinia recently added two exciting preclinical assets – AUR200 and AUR300," said Greenleaf. "We are eager to leverage our expertise and capabilities to advance these compounds for the treatment of rare autoimmune diseases with high unmet needs."

Third Quarter 2021 Highlights & Upcoming Milestones:

Aurinia has secured 412 patient start forms (PSFs) in the third quarter and as of November 3, 2021, Aurinia has secured a total of more than 1,265 PSFs.
PSF conversion rates continue to increase with more than 68% of PSFs converted to patients on therapy. Q2 conversion rates were 50%. Time to convert continues to decrease since launch: 30- and 60-day conversion rates have improved each month.
As of early October, Aurinia has confirmed coverage for LUPKYNIS through published payer policies for 65% of total lives in the market. Through patients gaining access to LUPKYNIS, the company now has confirmed coverage in plans covering 87% of total lives.
On August 17, 2021, Aurinia announced the addition of two novel pipeline assets: AUR200, an Fc protein targeting BAFF/APRIL (B-cell Activating Factor, known as BAFF, and A Proliferation-Inducing Ligand known as APRIL) and AUR300, a novel peptide therapeutic that modulates M2 macrophages via the macrophage mannose receptor CD206. For the acquisitions, an Investigational New Drug Application (IND) filing for AUR200 is expected by the end of 2022 and an AUR300 IND filing is expected during the first half of 2023.
On October 1, 2021, Aurinia’s licensing partner, Otsuka Pharmaceutical Co., Ltd., filed an initial marketing authorization application (MAA) with the Swiss Agency for Therapeutic Products (Swissmedic) seeking approval for the use of voclosporin for the treatment of adult patients with active LN. The Swiss filing was based on the June 24, 2021 MAA submission to the European Medicines Agency (EMA).
Regulatory review of the EMA MAA remains on track with a Committee for Medicinal Products for Human Use (CHMP) opinion expected around mid-2022 followed by an EMA decision expected sometime in the third quarter of 2022. Additionally, Otsuka continues to work to finalize the timeline for the Japanese New Drug Application (JNDA) regulatory filing with Pharmaceutical and Medical Device Agency (PMDA) to seek approval of voclosporin for the treatment of LN in Japan.
This week, Aurinia will present efficacy, safety and tolerability data for LUPKYNIS at two key medical meetings. The American College of Rheumatology (ACR) Convergence 2021 meeting (November 3-6) will feature an updated analysis of the AURORA 2 continuation study and two poster presentations on the efficacy of LUPKYNIS (from AURORA 1 data) across biopsy classes as well as in recent onset LN. The AURORA 2 updated interim analysis showed patients treated with LUPKYNIS maintained meaningful reductions in proteinuria with no change in mean eGFR at 30 months of treatment. At the American Society of Nephrology (ASN) Kidney Week 2021 (November 2-7) two Aurinia abstracts were accepted including an oral presentation on the efficacy of LUPKYNIS in achieving complete renal response in severe lupus nephritis.
Data from the full AURORA 2 two-year continuation study is expected to be announced late in the fourth quarter of 2021.
Financial Liquidity at September 30, 2021

As of September 30, 2021, Aurinia had cash and cash equivalents and investments of $286.4 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, an upfront payment made as part of a collaborative agreement with Lonza to build a dedicated manufacturing capability (or monoplant) and an upfront license payment related to our recently acquired developmental program.

Net cash used in operating activities was $131.8 million for the nine months ended September 30, 2021 compared to $73.1 million for the nine months ended September 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 partially offset by an increase in cash receipts. In the prior year, the Company was still in the development phase of LUPKYNIS.

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, funding our supporting commercial infrastructure, conducting planned research and development (R&D) programs, investing in our pipeline and operating activities into at least 2023.

Financial Results for the Quarter and Year Ended September 30, 2021

For the quarter ended September 30, 2021, Aurinia recorded a net loss of $50.3 million or $0.39 net loss per common share, as compared to a net loss of $42.1 million or $0.34 net loss per common share for the quarter ended September 30, 2020. For the nine months ended September 30, 2021, Aurinia recorded a net loss of $147.6 million or $1.15 net loss per common share as compared to a net loss of $94.6 million or $0.82 net loss per common share for the previous period.

Total revenue was $14.7 million and $29 thousand for the quarters ended September 30, 2021 and September 30, 2020, respectively. Total revenue was $22.2 million and $88 thousand for the nine months ended September 30, 2021 and September 30, 2020, respectively. Our revenues primarily consisted of product revenue, net of adjustments for LUPKYNIS, following FDA approval in January of 2021.

Cost of sales were $254 thousand and nil for the quarters ended September 30, 2021 and September 30, 2020, respectively. Cost of sales were $610 thousand and nil for the nine months ended September 30, 2021 and September 30, 2020, respectively. The increase for both periods was primarily the result of commercial sales of LUPKYNIS. Gross margin for the three and nine months ended September 30, 2021 was approximately 98% and 97% respectively.

Selling, general and administrative (SG&A) expenses were $44.1 million and $30.7 million for the quarters ended September 30, 2021 and September 30, 2020, respectively. For the nine months ended September 30, 2021 and September 30, 2020, SG&A expenses were $127.2 million and $57.2 million, respectively. The increase for both periods was due to the increase in salaries, incentive pay and employee benefits related to the expansion of the commercial and administrative functions to support the launch of LUPKYNIS which ramped up during the third quarter of 2020. Also contributing was an increase in professional fees for activities such as patient assistance programs, consulting, recruiting, legal, market research and marketing.

Non-cash SG&A share-based compensation expense for the three and nine months ended September 30, 2021 was $6.0 million and $19.2 million as compared to $3.8 million and $9.2 million for the same periods of 2020.

Research and Development (R&D) expenses were $20.1 million and $12.2 million for the quarters ended September 30, 2021 and September 30, 2020, respectively. For the nine months ended September 30, 2021 and September 30, 2020, R&D expenses were $40.0 million and $37.2 million, respectively. The primary driver for the increase for the three months ended September 30, 2021 as compared to the same period of 2020 was the upfront license and accrued milestone expense related to our recently acquired developmental programs, AUR200 and AUR300. In accordance with U.S. GAAP, these transactions did not meet the definition of a business combination and therefore, were recorded as asset acquisitions. We expensed the cost of the assets as R&D expense at the acquisition dates. The increase was partially offset by a decrease in clinical supply and distribution costs due to our new drug application and voclosporin related clinical trial expenditures in 2020 not recurring in 2021. Also contributing was a decrease in salaries, incentive pay and employee benefits due to the allocation of costs related to post approval support of LUPKYNIS to SG&A.

The primary drivers for the increase for the nine months ended September 30, 2021 as compared to the same period of 2020 were due to the upfront license and accrued milestone expense related to our recently acquired developmental programs, AUR200 and AUR300, and higher CRO expenses related to our new clinical programs offset by a decrease in clinical supply and distribution costs following the approval of LUPKYNIS, including a reduction in new drug application preparation costs and termination of the dry eye trial during the fourth quarter of 2020.

Non-cash R&D share-based compensation expense for the three and nine months ended September 30, 2021 was $1.0 million and $3.2 million as compared to $0.8 million and $3.1 million for the same periods of 2020.

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 September 30, 2021 in the Company’s Quarterly Report on Form 10-Q, which will be 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 and year ended September 30, 2021 financial results today, Wednesday, November 3, 2021 at 8:30 a.m. ET. 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.