Aurinia's Path Forward

On November 2, Aurinia Pharmaceuticals Inc AUPH announced the successful completion of their end-of-Phase II meeting with the FDA and plans for a single Phase III clinical trial for fast-track-designated Voclosporin. Shares are up over 30 percent since then.

There are an estimated 115,000–150,000 patients for Lupus Nephritis (LN) in the United States alone, according to Aurinia CEO Charles Rowland, and Voclosporin is the only treatment to meet all primary and secondary endpoints to date.

Bullish Analysts

On November 1, Mackie Research Capital Corporation's analyst André Uddin initiated coverage on Aurinia with a Speculative Buy rating and a bullish 12-month target price of $8 per share, representing a 47 percent upside from where the stock is currently trading.

The analyst cited Aurinia's "dream" management team, the fact that Aurinia is an idea acquisition candidate and highlighted that the deaths seen in Phase II were consistent with those seen in other LN studies.

Finding Capital

In moving forward, like most biotech companies, Aurinia’s greatest challenge will be finding a balance between diluting current shareholders and raising the capital needed to fund their pipeline, said Rowland.

”We’re sort of turning every stone over to try and see if we can find a way to balance our way through this with where the biotech index is at this point,” the CEO added.

One non-dilutive option the company is entertaining is geographic partnerships, according to Rowland

While it is a publicly traded company, and always for sale, Rowland hopes to take Voclosporin to the end of Phase III.

“That’s when your market cap will really shoot up, because you invest in the asset,” said Rowland.

Avoiding Previous Headwinds

The greatest headwind share price of Aurinia saw with Voclosporin came on August 15, after 13 deaths were reported in its Phase II study. However, according to both Rowland and Uddin, these were a result of a compromised overall standard of care and only occurred in developing countries in Asia.

In designing their Phase III study, according to Rowland, the company is taking measures to avoid similar standard of care factors from impacting results.

“What we'll do is one of two things,” explained Rowland. “Either exclude those countries, or put an additional screen in where we’ll have an independent board assess whether the patients were adequately cared for before coming into this study.”

Moreover, the demographics of the upcoming Phase III study will differ from those seen in Phase II, which had around 50 percent of its patients from Asia.

“That's going to be a very much smaller portion of the population,” said Rowland, “because we need to get a lot more patients from the US and Europe. So, by default, it eliminates having to use all those sites in Asia.”

“We’re pretty exciting about getting this drug into the clinic and getting this study completed so that these patients have something to give them a better outcome than what they have today,” said Rowland.

Aurinia is set to present at the Stifel 2016 Healthcare Conference on Wednesday at 2:15 p.m. ET.

At last check, Aurinia shares were up 12.1 percent at $3.76.