Aurinia Pharmaceuticals, Inc. Q2 FY2024 earnings call

• The company achieved strong second quarter performance with growth in total net revenue and net product revenue.
• Free cash flow was positive in the second quarter, strengthening the financial position.
• Commercially, there were significant growth in patient start forms, patients under kinase therapy, and related metrics.
• Medical affairs team had interactions with top lupus nephritis experts, enrolled patients in a registry, and submitted abstracts.
• AUR200 is progressing into the clinic, with plans for a Phase one single ascending dose study in the third quarter of 2024 and data expected in the first half of 2025.
• Launched a new marketing campaign to accelerate market growth for loop kinase.
• Commercial activities outside the US continue to grow, with Otsuka's efforts in Europe and work towards approval in Japan.
• Anticipates $50 million to $55 million in annual cost savings following restructuring, with 75% recognized in 2024.

For the second quarter of 2024, Aurinia achieved $57.2 million in total net revenue, compared to $41.5 million in the same period of 2023, representing a growth of approximately 38%. Year to date, total net revenue was $107.5 million for the six months ended June 30, 2024, versus $75.9 million in the same period of 2023, a growth of approximately 42%. Net product revenue, consisting of loop kinase and voclosporin product sales, was $55 million for the three months ended June 30, 2024, compared to $41.1 million in the same period of 2023, a growth of approximately 34%. Year to date, net product revenue was $103.1 million for the six months ended June 30, 2024, versus $75.4 million in the same period of 2023, a growth of approximately 37%. The company achieved approximately $15.8 million in positive free cash flow in the second quarter. As of June 30, 2024, cash, cash equivalents and restricted cash and investments were $330.7 million. Commercially, the company added 428 patient start forms and approximately 127 new patients who are either restarting loop kinase or receiving it through a hospital pharmacy, totaling approximately 555 PSS. There was substantial year-over-year growth in PSS compared to the prior year second quarter. There was a 22% growth in total patients under kinase therapy, with approximately 2,336 patients on therapy as of June 30, 2024, compared to 1,911 patients in 2023. From April 1, 2024, through July 31, 2024, approximately 538 PSS and 155 new patients from restarts in the hospital channel were added. The conversion rate was approximately 85%, with approximately 60% of patients starting therapy within 20 days. Adherence rate was 88% and persistency rates were strong, with 56% of patients remaining on therapy at 12 months, 51% at 15 months, and 46% at 18 months.

• Narrowed full year net product revenue guidance range to $210 million to $220 million from the prior range of $200 million to $220 million.
• Expect to recognize $50 million to $55 million in annual cost savings following restructuring, with approximately 75% recognized in 2024.
• AUR200 is expected to have first patients entering the Phase one single ascending dose study in the third quarter of 2024, with data from the SAD study expected in the first half of 2025, informing subsequent development program.

Actual results may differ materially from forward-looking statements due to various significant risks and uncertainties, including but not limited to regulatory approval risks, market competition risks, and product development risks.

Q: Concerns about PFS and patient restarts in 2Q being slightly lower than expected and summer seasonality impact A: Peter Greenleaf noted that there is consistency in business trends year-over-year growth, with trends historically seen moving into summer months, and the company continues to focus on growing new patients, hospital channel, and patient restarts while seeing year-over-year growth.

Q: Potential in-licensing or assets A: Peter Greenleaf mentioned that the company is a single-product company and is open to strategic diversification of pipeline and commercial opportunities, with a focus on later-stage pipeline but considering balance sheet and diversification needs.

Q: Hospital channel progress and patient restarts A: Peter Greenleaf discussed that the hospital channel is growing with tens of patients per quarter, and patient restarts require being off therapy for at least four months, with the company focusing on converting them into chronic therapy. On competition, noted Roche's Phase three readout and SAPHNELO's progress, with loop kinase having a competitive advantage in rapidity and magnitude of response early.

Q: Decision to move AUR200 forward, preclinical data, and indications A: Peter Greenleaf explained that restructuring efforts allowed focusing on AUR200, with the decision to take it forward based on strategic interest and market check, and Greg Keenan discussed preclinical data showing AUR200 is more potent compared to earlier BAFF April inhibitors, targeting areas with high unmet need including orphan and larger indications.

Q: Share buybacks and AUR200 biomarker data A: Joe Miller provided details on share repurchases, with approximately 3.4 million shares repurchased for about $18.6 million. Greg Keenan mentioned that biomarker data for AUR200 will look at quantitative immune globulin levels (IGG, IGM, IGA) to assess biological activity from a single dose study.