On February 28, 2022 Aurinia Pharmaceuticals Inc. (NASDAQ: AUPH) (Aurinia or the Company) reported its financial results for the fourth quarter and year ended December 31, 2021 (Press release, Aurinia Pharmaceuticals, FEB 28, 2022, View Source [SID1234609157]). Amounts, unless specified otherwise, are expressed in U.S. dollars.
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Aurinia achieved $23.4 million and $45.6 million for the quarter and full year ended December 31, 2021, respectively. These results align with the previously stated annual revenue estimate in the range of $40 to $50 million for 2021.
"In the fourth quarter 2021, we performed well against our commercial launch objectives, doubling our total revenue from the previous three quarters with increases in LUPKYNIS patient start forms and improved conversion rates and payor coverage," said Peter Greenleaf, President and Chief Executive Officer of Aurinia. "Despite unpredictable COVID realities, varying by geographic region, as well as the typical challenges we would expect to manage in the first year of a product launch, we are very pleased with the progress we have made to ensure awareness, adoption, and access to LUPKYNIS."
For fiscal year 2022, the Company is providing net revenue guidance of $115 to $135 million from sales of LUPKYNIS. This range is based on assumptions regarding the impact of COVID-19 on the current business environment and represents an increase of more than 150 to 200% in net revenue from sales of LUPKYNIS compared to fiscal year 2021.
"The positive results from the AURORA 2 two-year continuation study, announced in December 2021, will fuel our momentum and differentiate LUPKYNIS going forward as we have the first and only FDA-approved medicine for LN with three years of pivotal trial results, including long-term safety data. Outside of the U.S., we continue to work closely with our partner Otsuka Pharmaceutical Co., Ltd. (Otsuka) to secure regulatory approval of voclosporin in the EU and expand global access to this important treatment," added Mr. Greenleaf. "With a healthy balance sheet, including approximately $466.1 million of cash, cash equivalents and investments on hand as of year end, strong commercial, research and development programs, and talented, passionate employees, we are poised for continued growth and success as we work to change the course of lupus nephritis and other autoimmune diseases."
Fourth Quarter 2021 Highlights & Upcoming Milestones:
Aurinia added 477 patient start forms (PSFs) in Q4 2021, a 17% increase from Q3 2021, with a total of 1,572 PSFs received during 2021.
PSF conversion rates continue to increase with more than 70% of PSFs converted to patients on therapy. Time to convert continues to decrease since launch: 30- and 60-day conversion rates have improved each month.
Since January 2021 (launch of LUPKYNIS), the Company has secured a total of 1,773 PSFs to date.
Aurinia now has confirmed payor coverage in plans covering more than 90% of total lives in the United States.
In December 2021, the Company presented top-line data from the AURORA 2 two-year continuation study demonstrating a favorable risk/benefit profile for voclosporin over a three-year period, with safety comparable to AURORA 1, and sustained efficacy. Additional data from this study is expected to be published and presented in peer-reviewed journals and/or medical meetings throughout 2022.
Regulatory review of the European Medicines Agency (EMA) marketing authorization application (MAA) remains on track with a Committee for Medicinal Products for Human Use (CHMP) opinion expected in the second half of 2022 followed by a European Commission (EC) approval decision expected in the second half of 2022.
Further stabilized balance sheet through the utilization of an at the market offering (ATM), raising net proceeds of $196.7 million through December 31, 2021, at an average price of $19.91 and at an average discount of 2.63%. The Company has terminated the ATM sales agreement with no further sales to occur under the ATM.
Financial Liquidity at December 31, 2021
As of December 31, 2021, Aurinia had cash and cash equivalents and investments of $466.1 million compared to $422.7 million at December 31, 2020. The increase was primarily due to the receipt of net proceeds from the Company’s ATM offering, cash proceeds from the exercise of stock options and warrants and cash receipts from the sale of LUPKYNIS, offset by the commercial infrastructure spend to support the launch of LUPKYNIS. The offset also includes 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 its recently acquired developmental programs (AUR200 and AUR300).
Net cash used in operating activities was $157.7 million for the year ended December 31, 2021 compared to $69.9 million for the year ended December 31, 2020. The increase was primarily due 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 the monoplant, payments to advance clinical programs and one-time payments to a related party upon achievement of specific milestones partially offset by cash receipts from sales 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 its supporting commercial infrastructure, conducting planned research and development (R&D) programs, investing in its pipeline, executing on its business development strategy and funding its operating activities for at least the next few years.
Financial Results for the Quarter and Year Ended December 31, 2021
Total net revenue was $23.4 million and $50.0 million for the quarters ended December 31, 2021 and December 31, 2020, respectively. Total net revenue was $45.6 million and $50.1 million for the years ended December 31, 2021 and December 31, 2020, respectively. The net revenue for the quarter ended and year ended December 31, 2021, primarily consisted of commercial sales of LUPKYNIS, following FDA approval in January of 2021. Total revenue for the quarter and year ended December 31, 2020, was primarily due to an upfront payment from Otsuka of $50.0 million resulting from entering into its collaboration agreement with Otsuka.
Cost of sales were $0.5 million and nil for the quarters ended December 31, 2021 and December 31, 2020, respectively. Cost of sales were $1.1 million and nil for the years ended December 31, 2021 and December 31, 2020, respectively. In 2020, the Company did not have any drugs approved for commercial sale and the upfront payment from Otsuka did not have cost of sales associated with it. Gross margin for the three and twelve months ended December 31, 2021 was approximately 98%.
Selling, general and administrative (SG&A) expenses were $44.2 million and $38.8 million for the quarters ended December 31, 2021 and December 31, 2020, respectively. For the years ended December 31, 2021 and December 31, 2020, SG&A expenses were $171.4 million and $96.0 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 and commercialization of LUPKYNIS which ramped up during the third quarter of 2020. Also contributing was an increase in travel, trade shows and sponsorships connected with the sales activity occurring in 2021.
Non-cash SG&A share-based compensation expense were $7.2 million and $4.5 million for the quarters ended December 31, 2021 and December 31, 2020, respectively. For the years ended December 31, 2021 and December 31, 2020, non-cash share-based compensation expense were $26.4 million and $13.6 million, respectively.
For the quarters ended December 31, 2021 and December 31, 2020, research and development (R&D) expenses were $11.1 million and $13.2 million, respectively. The primary driver for the decrease was due to the decrease in salaries, incentive pay and employee benefits due to the allocation of costs related to post approval support of LUPKYNIS to SG&A.
For the years ended December 31, 2021 and December 31, 2020, R&D expenses were $51.1 million and $50.3 million, respectively. The primary drivers for the increase were due to the upfront license and accrued milestone expenses related to its recently acquired developmental programs, AUR200 and AUR300, and higher clinical research organization expenses related to its new clinical programs offset by a decrease in voclosporin development costs following the approval of LUPKYNIS.
Non-cash R&D share-based compensation expense were $1.2 million and $0.6 million for quarters ended December 31, 2021 and December 31, 2020, respectively. For the years ended December 31, 2021 and December 31, 2020, non-cash share-based compensation expense were $4.4 million and $3.7 million, respectively.
For the quarter ended December 31, 2021, Aurinia recorded a net loss of $33.3 million or $0.25 net loss per common share, as compared to a net loss of $8.1 million or $0.06 net loss per common share for the quarter ended December 31, 2020. For the year ended December 31, 2021, Aurinia recorded a net loss of $181.0 million or $1.40 net loss per common share as compared to a net loss of $102.7 million or $0.87 net loss per common share for the previous period.
This press release is intended to be read in conjunction with the Company’s consolidated financial statements and Management’s Discussion and Analysis for the year ended December 31, 2021 in the Company’s Annual Report on Form 10-K, 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 December 31, 2021 financial results today, Monday, February 28, 2022 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).
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.