Aurinia Pharmaceuticals Inc
For the period ended Jun 30, 2024. Filed Aug 1, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 1, 2024
AUPH$16.46+1.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-02.
0001600620-24-000051
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0001600620-24-000091
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 65 previous paragraphs and 59 current paragraphs.
29 unchanged; 26 reworded; 4 added; 10 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
The Company is moving forward with development of its pipeline asset AUR200, a differentiated, potential next generation therapy for autoimmune diseases that targets both BAFF (B-cell Activating Factor) and APRIL (A Proliferation-Inducing Ligand). First patients are expected to enter the Phase 1 Single Ascending Dose (SAD) study of AUR200 in the third quarter of 2024. Data from the SAD study, including safety, tolerability, pharmacokinetics and biomarkers, is anticipated in the first half of 2025. The Company anticipates funding this development program with available cash flows, which are not anticipated to impact previously announced post restructuring operating expense targets. As previously reported, the Company expects to recognize $50 to $55 million in annual cost savings following the restructuring, with approximately 75% of that recognized in 2024
Current report
Total net revenue was $57.2 million and $41.5 million for the three months ended June 30, 2024 and June 30, 2023, respectively. Total net revenue was $107.5 million and $75.9 million for the six months ended June 30, 2024 and June 30, 2023, respectively.
Current report
Other Income, net
Current report
Interest income was $4.2 million and $4.1 million for the three months ended June 30, 2024 and June 30, 2023, respectively. Interest income was $8.7 million and $7.9 million for the six months ended June 30, 2024 and June 30, 2023, respectively.
Removed paragraphs (10)
Previous report
LUPKYNIS is an orally administered CNI immunosuppressant that has been demonstrated to improve near and long-term outcomes in LN when used in combination with MMF (although MMF is not currently approved as such) and steroids. By inhibiting calcineurin, LUPKYNIS reduces cytokine activation and blocks interleukin IL-2 expression and T-cell mediated immune responses. LUPKYNIS also potentially stabilizes podocytes, which can protect against proteinuria.
Previous report
Voclosporin, the active ingredient in LUPKYNIS, is made by a modification of a single amino acid of the cyclosporine molecule. The mechanism of action of LUPKYNIS has been validated with certain earlier generation CNIs for the prevention of rejection in patients undergoing solid organ transplants and in several autoimmune indications, including uveitis, keratoconjunctivitis sicca, psoriasis, rheumatoid arthritis, and for LN in Japan. We believe that LUPKYNIS possesses pharmacologic properties with the potential to demonstrate best-in-class differentiation
Previous report
Recent Developments
Previous report
Conclusion of Strategic Review Process
Previous report
Effective February 14, 2024, the Board of Directors elected to conclude its strategic review process.
Previous report
Aurinia executed a corporate restructuring in the first quarter that reduced employee headcount by approximately 25%. The Company discontinued its AUR300 research and development program and is exploring alternative approaches for AUR200. As previously reported, the Company expects to recognize $50 million to $55 million in annual cost savings, with 75% of those savings recognized in 2024, excluding a one-time restructuring charge of approximately $7 million incurred in the first quarter. The Board of Directors also approved a share repurchase program of up to $150 million worth of our common shares, affirming its confidence in the Company's growth prospects. For further discussion, refer to Note 13, Shareholder's Equity and Note 19, Restructuring.
Previous report
Total net revenue was $50.3 million and $34.4 million for the three months ended March 31, 2024 and March 31, 2023, respectively.
Previous report
This penetration can be demonstrated by a total of approximately 2,178 patients on therapy as of March 31, 2024, compared to approximately 1,731 patients on therapy as of March 31, 2023. The increase in patients was driven by 448 additional patient start forms and 148 new patients who were either restarting LUPKYNIS or receiving it through a hospital pharmacy during the three months ended March 31, 2024, compared to 466 PSFs received during the three months ended March 31, 2023.
Previous report
Other (Income) Expense, net
Previous report
Interest income was $4.5 million and $3.8 million for the three months ended March 31, 2024 and March 31, 2023, respectively. The increase is due to higher yields on our investments as a result of increased interest rates.
Reworded paragraphs (26)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q. The information in this discussion contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended, (the Exchange Act), which are subject to the “safe harbor” created by those sections, as well as “forward-looking information” as defined in applicable Canadian securities laws. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans; objectives of management; the key potential benefits of LUPKYNIS; our estimate, based on our patient-specific estimated glomerular filtration rate (eGFR) dosing regimens, the average utilization in our clinical trials, and accounting for factors including mandatory rebates, channel discounts, and anticipated patient adherence, that we expect our average annualized net realizable revenue per patient to be approximately $70,000 to $75,000; our belief that we have sufficient financial resources to fund our current plans for at least the next few years; our potential to receive certain payments and royalties under our agreement with Otsuka Pharmaceuticals Co. Ltd., or Otsuka. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “propose,” “intend,” “continue,” “potential,” “possible,” “foreseeable,” “likely,” “unforeseen” and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. We have made numerous assumptions about the forward-looking statements and information contained herein, including among other things, assumptions about: the accuracy of reported data from third-party studies and reports; that our IP rights are valid and do not infringe the IP rights of third parties; our assumptions relating to the capital required to fund operations for the next few years; the assumption that our current good relationships with our suppliers, service providers and other third parties will be maintained; assumptions relating to the burn rate of our cash for operations; assumptions relating to the capital requir…
Excerpt shortened here; the source contains the full paragraph.
Current wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q. The information in this discussion contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended, (the Exchange Act), which are subject to the “safe harbor” created by those sections, as well as “forward-looking information” as defined in applicable Canadian securities laws. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans; objectives of management; the key potential benefits of LUPKYNIS; our estimate, based on our patient-specific estimated glomerular filtration rate (eGFR) dosing regimens, the average utilization in our clinical trials, and accounting for factors including mandatory rebates, channel discounts, and anticipated patient adherence, that we expect our average annualized net realizable revenue per patient to be approximately $70,000 to $75,000; our expectation to recognize $50 to $55 million in annual cost savings following its corporate restructuring, with approximately 75% of that recognized in 2024; our belief that we have sufficient financial resources to fund our current plans for at least the next few years; our potential to receive certain payments and royalties under our agreement with Otsuka Pharmaceuticals Co. Ltd., or Otsuka. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “propose,” “intend,” “continue,” “potential,” “possible,” “foreseeable,” “likely,” “unforeseen” and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. We have made numerous assumptions about the forward-looking statements and information contained herein, including among other things, assumptions about: the accuracy of reported data from third-party studies and reports; that our IP rights are valid and do not infringe the IP rights of third parties; our assumptions relating to the capital required to fund operations for the next few years; the assumption that our current good relationships with our suppliers, service p…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
The price of LUPKYNIS is based on one unit of 60 capsules we refer to as a “wallet”. As of January 1, 2024, the wholesale acquisition cost (WAC) of a LUPKYNIS wallet is $4,898. Based on our patient-specific eGFR dosing regimens, the average utilization in our clinical trials, and accounting for factors including mandatory rebates, channel discounts, and anticipated patient adherence, duration of therapy and compliance, we are adjusting our expected average annualized net realizable revenue per patient for us to be approximately $70,000 - $75,000. When determining the price of LUPKYNIS, we considered the burden of LN disease in the context of value that LUPKYNIS offers to patients and the U.S. healthcare system.
Current wording
The price of LUPKYNIS is based on one unit of 60 capsules we refer to as a “wallet”. As of January 1, 2024, the wholesale acquisition cost (WAC) of a LUPKYNIS wallet is $4,898. Based on our patient-specific eGFR dosing regimens, the average utilization in our clinical trials, and accounting for factors including mandatory rebates, channel discounts, and anticipated patient adherence, duration of therapy and compliance, we have adjusted our expected average annualized net realizable revenue per patient to be approximately $70,000 - $75,000. When determining the price of LUPKYNIS, we considered the burden of LN disease in the context of value that LUPKYNIS offers to patients and the U.S. healthcare system.
Previous wording
On February 15, 2024, the Company announced the conclusion of its strategic review process and actions designed to enhance shareholder value, including an exclusive focus on driving the commercial execution of the LUPKYNIS business. Aurinia executed a corporate restructuring in the first quarter that reduced employee headcount by approximately 25%. The Company discontinued its AUR300 research and development program and is exploring alternative approaches for AUR200. The corporate restructuring involved the Company reaffirming its commitment to LUPKYNIS growth, while maintaining a sharp focus on operating efficiencies and maximizing cash flows. For further discussion, refer to Note 19, Restructuring.
Current wording
On February 15, 2024, the Company announced the conclusion of its strategic review process and actions designed to enhance shareholder value, including an exclusive focus on driving the commercial execution of the LUPKYNIS (voclosporin) business. Aurinia executed a corporate restructuring in the first quarter that reduced employee headcount by approximately 25% and discontinued its AUR300 research and development program. The corporate restructuring involved the Company reaffirming its commitment to LUPKYNIS growth, while maintaining a sharp focus on operating efficiencies and maximizing cash flows. For further discussion, refer to Note 19, Restructuring.
Previous wording
We sell LUPKYNIS (voclosporin) primarily to specialty pharmacies and specialty distributors and directly to our ex-U.S. partner Otsuka. These customers subsequently distribute our products to patients and health care providers. Revenues from product sales are recognized when the customer obtains control of our product, which typically occurs upon delivery to the customer.
Current wording
We sell LUPKYNIS (voclosporin) primarily to specialty pharmacies and a specialty distributor and directly to our ex-U.S. partner Otsuka. These customers subsequently distribute our products to patients and health care providers. Revenues from product sales are recognized when the customer obtains control of our product, which typically occurs upon delivery to the customer.
Previous wording
Three Months ended March 31, 2024 compared to Three Months ended March 31, 2023
Current wording
Three and Six Months ended June 30, 2024 compared to Three and Six Months ended June 30, 2023
Previous wording
The following table sets forth our results of operations for the three months ended March 31, 2024 and March 31, 2023.
Current wording
The following table sets forth our results of operations for the three and six months ended June 30, 2024 and June 30, 2023.
Previous wording
The percentage of total revenues, net from our main customers were as follows:
Current wording
The percentage of total net revenues from our main customers were as follows:
Previous wording
Net product revenue was $48.1 million and $34.3 million for the three months ended March 31, 2024 and March 31, 2023, respectively. The increase is primarily due to an increase of sales of LUPKYNIS to our two main specialty pharmacies, driven predominantly by further penetration of the LN market.
Current wording
Net product revenue was $55.0 million and $41.1 million for the three months ended June 30, 2024 and June 30, 2023, respectively. Net product revenue was $103.1 million and $75.4 million for the six months ended June 30, 2024 and June 30, 2023, respectively. The increase in both periods is primarily due to an increase of sales of LUPKYNIS to our two main specialty pharmacies, driven predominantly by further penetration of the LN market. Additionally, we had sales of semi-finished product to Otsuka as Otsuka continues to commercialize in its territories.
Previous wording
Additionally, our 12-month persistency rate has increased to 56% at March 31, 2024 from approximately 51% at March 31, 2023.
Current wording
The U.S. penetration can be demonstrated by a total of approximately 2,336 patients on therapy as of June 30, 2024, compared to approximately 1,911 patients on therapy as of June 30, 2023. Additionally, our 12-month persistency rate has increased to 56% at June 30, 2024 from approximately 54% at June 30, 2023.
Previous wording
License, collaboration and royalty revenue was $2.2 million and $0.1 million for the three months ended March 31, 2024 and March 31, 2023, respectively. The increase is due to manufacturing services revenue from Otsuka related to shared capacity services that commenced in the third quarter of 2023.
Current wording
License, collaboration and royalty revenue was $2.2 million and $0.4 million for the three months ended June 30, 2024 and June 30, 2023, respectively. License, collaboration and royalty revenue was $4.4 million and $0.5 million for the six months ended June 30, 2024 and June 30, 2023, respectively. The increase is primarily due to manufacturing services revenue from Otsuka related to shared capacity services that commenced in late June 2023.
Previous wording
Cost of sales was $7.8 million and $0.4 million for the three months ended March 31, 2024 and March 31, 2023, respectively. The increase is primarily due to increased sales of LUPKYNIS (voclosporin), coupled with the amortization of the monoplant finance right of use asset, which was placed into service in late June 2023.
Current wording
Cost of sales was $8.9 million and $1.6 million for the three months ended June 30, 2024 and June 30, 2023, respectively. Cost of sales was $16.7 million and $2.0 million for the six months ended June 30, 2024 and June 30, 2023, respectively. The increase for both periods is primarily due to the amortization of the monoplant finance right of use asset, which was placed into service in late June 2023, semi-finished product sales to Otsuka and increased sales of LUPKYNIS (voclosporin).
Previous wording
Gross margin for the three months ended March 31, 2024 and March 31, 2023 was approximately 85% and 99%, respectively. The decrease in gross margin is due to the increase in cost of sales.
Current wording
Gross margin for the three months ended June 30, 2024 and June 30, 2023 was approximately 84% and 96%, respectively. Gross margin for the six months ended June 30, 2024 and June 30, 2023 was approximately 85% and 97%, respectively.
Previous wording
SG&A expenses decreased to $47.7 million for the three months ended March 31, 2024 compared to $50.1 million for the three months ended March 31, 2023. SG&A expenses consisted of the following:
Current wording
SG&A expenses decreased to $44.9 million for the three months ended June 30, 2024 compared to $47.1 million for the three months ended June 30, 2023. For the six months ended June 30, 2024 and June 30, 2023, SG&A expenses were $92.6 million and $97.2 million, respectively. SG&A expenses consisted of the following:
Previous wording
The primary drivers for the decrease were lower employee costs due to the reduction in general and administrative headcount, which occurred late in the first quarter of 2024, lower corporate costs related to insurance and information technology and lower spend for travel and business meetings.
Current wording
The primary drivers for the decrease in both periods were lower employee and overhead costs due to the reduction in general and administrative headcount, which occurred late in the first quarter of 2024 partially offset by an increase in legal fees.
Previous wording
R&D expenses were $5.6 million and $13.2 million for the three months ended March 31, 2024 and March 31, 2023, respectively. R&D expenses consisted of the following:
Current wording
R&D expenses were $4.1 million and $12.7 million for the three months ended June 30, 2024 and June 30, 2023, respectively. For the six months ended June 30, 2024 and June 30, 2023, R&D expenses were $9.6 million and $25.8 million, respectively. R&D expenses consisted of the following:
Previous wording
The primary drivers for the decrease were due to a reduction in share-based compensation related to the reduction in headcount, which occurred late in the first quarter of 2024 and a decrease of clinical supply and distribution costs related to ceasing development of our AUR200 and AUR300 programs.
Current wording
The primary drivers for the decrease in both periods were lower employee costs related to the reduction in headcount, which occurred late in the first quarter of 2024, a decrease of CRO and developmental costs related to ceasing development of our AUR300 program and timing of expenses related to AUR200.
Previous wording
During the first quarter of 2024, restructuring expenses were approximately $6.7 million which includes employee severance, one-time benefit payments and contract termination expenses. The company recognized the majority of the planned restructuring costs in the first quarter.
Current wording
During the three and six months ended June 30, 2024, restructuring expenses were approximately $1.1 million and $7.8 million which is primarily due to employee severance, one-time benefit payments and contract termination expenses.
Previous wording
Other (income) expense, net was $(4.1) million and $0.3 million for the three months ended March 31, 2024 and March 31, 2023, respectively. The increase was primarily due to the foreign exchange remeasurement of the monoplant lease liability, which commenced in June 2023 and is denominated in CHF.
Current wording
Other income, net was $0.3 million and $3.6 million for the three months ended June 30, 2024 and June 30, 2023, respectively. Other income, net was $4.4 million and $3.3 million for the six months ended June 30, 2024 and June 30, 2023, respectively. The change is primarily driven by changes in the fair value assumptions related to our deferred compensation liability and the foreign exchange remeasurement of the monoplant lease liability, which commenced in June 2023 and is denominated in CHF.
Previous wording
Interest expense was $1.3 million and nil for the three months ended March 31, 2024 and March 31, 2023, respectively. The interest expense is due to the monoplant finance lease, which commenced in June 2023 and is denominated in CHF.
Current wording
Interest expense was $1.2 million and $0.1 million for the three months ended June 30, 2024 and June 30, 2023, respectively. Interest expense was $2.5 million and $0.1 million for the six months ended June 30, 2024 and June 30, 2023, respectively. The interest expense is due to the monoplant finance lease, which commenced in June 2023.
Previous wording
As of March 31, 2024, we had cash, cash equivalents and restricted cash of approximately $64.5 million and investments of $255.7 million compared to cash, cash equivalents and restricted cash of $48.9 million and investments of $301.8 million at December 31, 2023. The decrease is primarily related to the continued investment in commercialization activities and post approval commitments of our approved drug, LUPKYNIS, monoplant payments, share repurchases and restructuring related payments partially offset by an increase in cash receipts from sales of LUPKYNIS and payments from Otsuka. Cash, cash equivalents and restricted cash and investments are primarily held in U.S. dollars. As of March 31, 2024 and December 31, 2023, we had working capital of $327.2 million and $347.6 million, respectively.
Current wording
As of June 30, 2024, we had cash, cash equivalents and restricted cash of approximately $33.4 million and investments of $297.3 million compared to cash, cash equivalents and restricted cash of $48.9 million and investments of $301.8 million at December 31, 2023. The decreases are primarily related to the continued investment in commercialization activities and post approval commitments of our approved drug, LUPKYNIS, monoplant payments, share repurchases and restructuring related payments partially offset by an increase in cash receipts from sales of LUPKYNIS and cash payments from Otsuka. Cash, cash equivalents, restricted cash and investments are primarily held in U.S. dollars. As of June 30, 2024 and December 31, 2023, we had working capital of $332.8 million and $347.6 million, respectively.
Previous wording
We are devoting the majority of our operational efforts and financial resources towards the commercialization and post- approval commitments of our approved drug, LUPKYNIS. Taking into consideration the cash and cash equivalents and investments as of March 31, 2024, we believe that our cash position is sufficient to fund our current plans which include funding commercial activities, such as our FDA related post approval commitments, manufacturing and packaging commercial drug supply, funding our supporting commercial infrastructure, funding our working capital obligations and share repurchases for at least the next few years.
Current wording
We are devoting the majority of our operational efforts and financial resources towards the commercialization and post- approval commitments of our approved drug, LUPKYNIS. Taking into consideration the cash, cash equivalents and investments as of June 30, 2024, we believe that our cash position is sufficient to fund our current plans which include funding commercial activities, such as our FDA related post approval commitments, manufacturing and packaging commercial drug supply, funding our supporting commercial infrastructure, advancement of our pipeline, funding our working capital obligations and share repurchases for at least the next few years.
Previous wording
The following table summarizes our cash flows for the three months ended March 31, 2024 and March 31, 2023:
Current wording
The following table summarizes our cash flows for the six months ended June 30, 2024 and June 30, 2023:
Previous wording
Net cash used in operating activities was $18.6 million for the three months ended March 31, 2024 compared to $31.7 million for the three months ended March 31, 2023. The decrease is primarily due to an increase in cash receipts from sales of LUPKYNIS and cash receipts from Otsuka. See "Total Revenue" above for further discussion regarding our increased sales of LUPKYNIS.
Current wording
Net cash used in operating activities was $2.8 million for the six months ended June 30, 2024 compared to $34.5 million for the six months ended June 30, 2023. The decrease is primarily due to an increase in cash receipts from sales of LUPKYNIS and cash receipts from Otsuka. See "Total Revenue" above for further discussion regarding our increased sales of LUPKYNIS.
Previous wording
Cash provided by investing activities was $49.2 million during the three months ended March 31, 2024 compared to $24.9 million during the three months ended March 31, 2023. The increase was primarily related to the timing of proceeds of investments.
Current wording
Cash provided by investing activities was $10.6 million during the six months ended June 30, 2024 compared to $19.3 million during the six months ended June 30, 2023. The decrease was primarily related to the timing of purchases and proceeds of investments.
Previous wording
Cash used in financing activities was $15.1 million during the three months ended March 31, 2024 compared to cash provided by financing activities of $1.6 million during the three months ended March 31, 2023. The decrease was primarily due to share repurchases which began in February 2024 and quarterly lease payments for our monoplant finance lease, which commenced during the third quarter of 2023.
Current wording
Cash used in financing activities was $23.3 million during the six months ended June 30, 2024 compared to cash provided by financing activities of $2.8 million during the six months ended June 30, 2023. The decrease was primarily due to share repurchases, which began in February 2024, and quarterly lease payments for our monoplant finance lease, which commenced during the third quarter of 2023.
Previous wording
As of March 31, 2024, we had repurchased approximately 2.4 million of our common shares for $13.4 million (including transaction costs which consist of commissions and excise tax). The cost of repurchased shares is reported as a reduction in common stock and the repurchased shares were subsequently canceled.
Current wording
As of June 30, 2024, we had repurchased approximately 3.4 million of our common shares for $18.6 million (including transaction costs which consist of commissions and excise tax). The cost of repurchased shares are reported as a reduction in common shares and under Alberta law, the shares were cancelled and not reissued.