On February 25, 2021 Aurinia Pharmaceuticals Inc. (NASDAQ: AUPH / TSX: AUP) ("Aurinia" or the "Company") reported its financial results for the fourth quarter and year ended December 31, 2020 (Press release, Aurinia Pharmaceuticals, FEB 25, 2021, View Source [SID1234575738]). Amounts, unless specified otherwise, are expressed in U.S. dollars.
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"Over the past year, Aurinia matured into a fully-integrated biopharmaceutical company with capabilities spanning R&D, clinical, regulatory, CMC, and commercial. The recent FDA approval and immediate launch of LUPKYNIS underscores the exemplary performance and expertise of the Aurinia team," commented Peter Greenleaf, President and Chief Executive Officer of Aurinia. "During 2020, we made calculated investments following the positive AURORA clinical trial results by building out a world-class commercial team, signing a major ex-US partnership with Otsuka, and ensuring we can meet future market demand for LUPKYNIS by securing our supply chain by expanding our manufacturing agreement with Lonza. After just 30 days, we are pleased by the uptake of LUPKYNIS by the healthcare community and believe we are on track to meet our internal expectations."
"Launching LUPKYNIS within hours of our approval allows us to focus on getting LN patients who need intervention onto therapy as soon as possible," said Max Colao, Chief Commercial Officer at Aurinia. "We look forward to translating years of innovation and development work, and our early preparation and planning for launch, into commercial success for LUPKYNIS."
Recent Highlights
FDA Approval and Commercial Launch of LUPKYNISTM
On January 22, 2021, the FDA approved LUPKYNIS in combination with a background immunosuppressive therapy regimen to treat adult patients with active LN. LUPKYNIS was approved by the FDA under Priority Review and was previously granted Fast Track designation from the Agency in 2016.
Collaboration and Licensing Agreement with Otsuka Pharmaceutical Co., Ltd.
On December 17, 2020, Aurinia announced it had entered into a collaboration and licensing agreement with Otsuka Pharmaceutical Co., Ltd., for the development and commercialization of oral LUPKYNIS for the treatment of LN in the European Union (EU), Japan, as well as the United Kingdom, Russia, Switzerland, Norway, Belarus, Iceland, Liechtenstein, and Ukraine.
As part of the agreement, Aurinia received an upfront cash payment of $50 million for the license agreement, and has the potential to receive up to an additional $50 million in regulatory milestones. Aurinia will receive tiered royalties on future sales ranging from 10 to 20 percent on net sales upon commercialization, along with additional milestone payments based on the attainment of certain annual sales by Otsuka. In addition, Aurinia will provide LUPKYNIS to Otsuka via a supply agreement under a cost plus arrangement.
Agreement for Dedicated LUPKYNIS Manufacturing Capacity
On December 15, 2020, Aurinia entered into a collaborative agreement with Lonza Ltd. (Lonza) to build a dedicated manufacturing capacity within Lonza’s existing small molecule facility in Visp, Switzerland. The dedicated facility (also referred to as "monoplant") will be equipped with state-of-the-art manufacturing equipment to provide cost and production efficiency for the manufacture of LUPKYNIS, while expanding existing capacity and providing supply security to meet future commercial demand. Upon completion of the monoplant, Aurinia will have the right to maintain exclusive use of the monoplant by paying a quarterly fixed facility fee. The first capital expenditure payment was made in February 2021.
Financial Liquidity at December 31, 2020
As of December 31, 2020, Aurinia had cash, cash equivalents and investments of $423 million compared to $306 million at December 31, 2019. Net cash used in operating activities was $69.9 million for the year ended December 31, 2020 compared to $63.6 million for the year ended December 31, 2019.
The Company believes that it has sufficient financial resources to fund its current plans, which include funding commercial launch activities, manufacturing and packaging of commercial drug supply, conducting our planned R&D programs, and operating activities into at least 2023.
Financial Results for the Year Ended December 31, 2020
For the year ended December 31, 2020, Aurinia recorded a consolidated net loss of $102.7 million or $0.87 per common share.
Revenues were $50.1 million and $0.3 million for the years ended December 31, 2020 and 2019, respectively. The increase of $49.8 million in 2020 was due to the upfront license payment received from Otsuka of $50 million, recorded as licensing revenue in the fourth quarter of 2020.
Research and development (R&D) expenses decreased to $50.3 million for the year ended December 31, 2020 compared to $52.9 million for the year ended December 31, 2019. The primary driver for the decrease of $2.5 million in R&D spend in 2020 was a decrease in drug manufacturing and supply costs, lower Contract Research Organization (CRO) expenses and other third party clinical trial expenses, partially offset by an increase in regulatory related costs as Aurinia prepared for FDA approval.
Corporate, administration and business development expenses increased to $96 million for the year ended December 31, 2020 compared to $22.3 million for the year ended December 31, 2019. The primary driver for the increase of $73.6 million was the build out of commercial infrastructure in advance of approval, which included an increase in salaries and employee benefits, share based compensation expense and professional fees incurred during the year.
Financial Results for the Fourth Quarter Ended December 31, 2020
For the three months ended December 31, 2020, Aurinia recorded a consolidated net loss of $8.1 million or $0.05 per common share.
Revenues were $50 million and $0.03 million for the three months ended December 31, 2020 and 2019, respectively. The increase of $50 million in 2020 was due to the upfront payment from Otsuka of $50 million recorded as licensing revenue.
R&D expenses decreased to $13.2 million for the three months ended December 31, 2020 compared to $13.3 million for the three months ended December 31, 2019. The primary drivers for the slight decrease in R&D spend in 2020 was a decrease in drug manufacturing and supply costs, lower CRO expenses and other third party clinical trial expenses, partially offset by an increase in regulatory related costs as Aurinia prepared for FDA approval.
Corporate, administration and business development expenses increased to $38.8 million for the three months ended December 31, 2020 compared to $7.3 million for the three months ended December 31, 2019. The primary driver for the increase of $31.5 million in 2020 was the build out of commercial infrastructure in advance of approval, which included an increase in salaries and employee benefits, share based compensation expense and professional fees incurred during the quarter.
This press release is intended to be read in conjunction with the Company’s audited financial statements and the Management’s Discussion and Analysis for the year ended December 31, 2020 in the Company’s Annual Report on Form 10-K, which is 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 fourth quarter and year ended December 31, 2020 financial results today, Wednesday, February 24, 2020 at 4:30 p.m. ET. This event can be accessed on the investor section of the Aurinia website at www.auriniapharma.com.
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.