Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aurinia Pharmaceuticals Inc (AUPH, Financial) achieved a strong second quarter performance with $57.2 million in total net revenue, representing a 38% growth compared to the same period in 2023.
- Year-to-date total net revenue was $107.5 million, showing a 42% growth compared to the same period in 2023.
- The company achieved approximately $15.8 million in positive free cash flow in the second quarter, ahead of initial projections.
- Aurinia Pharmaceuticals Inc (AUPH) added 428 patient start forms and approximately 127 new patients, showing substantial year-over-year growth.
- The company sustained a high conversion rate of approximately 85% of patient start forms converting to patients on therapy, with a rapid conversion time of approximately 60% of patients starting therapy within 20 days.
Negative Points
- Despite the positive growth, the quarterly performance from Q1 to Q2 showed a slight decrease in the weekly run rate of new patients.
- The company has not yet seen a significant increase in urine screening rates, which is crucial for diagnosing lupus nephritis patients.
- Gross margin decreased to approximately 84% for the quarter ended June 30, 2024, compared to 96% for the same period in 2023, impacted by the amortization of the mono plant and lower margin sales.
- SG&A expenses, inclusive of share-based compensation, were still high at $44.9 million for the quarter ended June 30, 2024.
- The company recorded a net loss of $10 million for the six months ended June 30, 2024, despite the positive free cash flow in the second quarter.
Q & A Highlights
Q: The growth in PFS and patient restarts in 2Q came in a bit lower than one. How should we expect about the cadence in the summer months, given the typical seasonal impacts you have seen in the past and how does that factor into your adjusted guidance?
A: The quarterly performance from Q1 to Q2 and the trend going into Q3 are consistent year-over-year, showing growth. Although the weekly run rate on new patients is slightly down from Q1 to Q2, this is consistent with past trends moving into the summer months. We need to continue to grow new patients, hospital channel, and patient restarts, but the numbers are still growing year-over-year.
Q: Should we expect any potential in-licensing or assets at other business development opportunities given your strong balance sheet and free cash flow positivity?
A: We recognize the need for diversification and are open to commercial opportunities, focusing more on later-stage pipeline assets. Our balance sheet and the need for diversification are priorities, and we continue to work on that strategically.
Q: Can you help us understand how much success you've had influencing regular urine screening behavior in the LN market and how effective can you be targeting such sites with your MSLs?
A: Awareness among rheumatologists about the need for regular urine screening is up significantly. However, this has not yet translated into a higher rate of diagnosis. We have a good understanding of high prescribers and target accounts, and our new campaign initiative is focused on linking diagnosis to treatment to drive market growth.
Q: Can you talk about your decision to bring AUR200 forward again? Is this driven by strategic interest in this space?
A: We decided to move AUR200 forward based on market interest and the excitement in the space. We believe in the potential of B-cell inhibition for BAFF and APRIL pathways. We aim to target an orphan designation area and a larger indication outside of the IDN space. Preclinical data shows AUR200 is more potent compared to earlier BAFF APRIL inhibitors.
Q: Can you provide more details on the hospital channel and patient restarts? What metrics are you tracking, and how do you capture these patients and convert them into more chronic therapy?
A: The hospital channel is growing, albeit from a small base, and we are seeing growth in tens of patients per quarter. For restarts, patients must be off therapy for at least four months. We are seeing consistent growth in both new patients and restarts, which is crucial for our long-term strategy.
Q: What are your thoughts on the competitive landscape, especially with Roche's upcoming Phase 3 readout for lupus nephritis?
A: We believe our rapid and significant reduction in proteinuria gives us a competitive advantage. While B-cell depleting agents like Roche's product may work, they take longer to show results. Our positioning based on rapid response and magnitude of response early on puts us at an advantage.
Q: Can you discuss the seasonality from 1Q to 2Q and how that fits with your adjusted guidance range for the year?
A: The trends from 1Q to 2Q are consistent with historical patterns, showing growth year-over-year. We feel comfortable with our guidance range of $210 million to $220 million, assuming consistent performance. If we see a strong summer, we may adjust the guidance upwards.
Q: Can you confirm if there will be any further restructuring charges in the third quarter?
A: All restructuring activities were completed in the second quarter, and we do not anticipate any further material restructuring-related expenses going forward.
Q: Can you provide details on the share buybacks in the quarter?
A: As of July 31, we have repurchased approximately 3.4 million shares for around $18.6 million at an average cost of $5.36 per share.
Q: Regarding AUR200, what biomarker data do you expect to report in the first half of next year?
A: We will be looking at quantitative immunoglobulins (IGG, IGM, IGA) to see the percentage drop relative to baseline. This will give us an early impression of the molecule's biological activity and help shape further clinical development and differentiation from competitors.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
