Market Overview

Aurinia Reports Fourth Quarter and Full Year 2016 Financial Results and Recent Operational Highlights

Share:





Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH, TSX:AUP) ("Aurinia" or the
"Company") has released its financial results for the fourth quarter and
year ended December 31, 2016. Amounts, unless specified otherwise, are
expressed in U.S. dollars.

Aurinia plans to initiate a single, Phase III clinical trial ("AURORA")
whose design is consistent with that of the ongoing AURA-LV ("AURA")
clinical trial. The totality of data from both the AURORA and AURA
trials will serve as the basis for a New Drug Application (NDA)
submission following completion of the Phase III trial. The Company
continues to focus its efforts on finalizing the study protocol and
regulatory submissions in parallel with site selection, making the
necessary investments now to ensure the team has the tools to execute a
successful clinical trial.

"I am proud of the important milestones our team has reached over the
past several months, including our most recent and significant
achievement to date, the promising 48-week results from our AURA study
of voclosporin, demonstrating significantly improved long-term outcomes
for patients suffering from lupus nephritis," said Richard Glickman,
Aurinia CEO and Chairman of the Board. "The recent news that our
late-breaking abstract for voclosporin has been accepted for oral
presentation at the National Kidney Foundation 2017 Scientific Clinical
Meetings underscores the importance of this compelling dataset. We
remain committed to advancing voclosporin with the end goal of improving
the lives of patients impacted by this devastating disease, and
potentially altering the treatment paradigm of lupus nephritis."

Recent operational highlights

AURA 48-Week Results

On March 1, 2017, the Company announced top-line results from its AURA
study in lupus nephritis (LN). At 48 weeks, the trial met the complete
and partial remission ("CR"/"PR") endpoints, demonstrating statistically
significant greater CR and PR in patients in both low dose (23.7mg of
voclosporin twice daily (p<.001)) and high dose (39.5mg twice daily
(p=.026)) cohorts versus the control group. Each arm of the study
included the current standard of care of mycophenolate mofetil (MMF) as
background therapy and a forced steroid taper to 5mg/day by week 8 and
2.5mg by week 16. No unexpected safety signals were observed and there
were no additional deaths in the voclosporin treated patients; however,
there were three deaths and one malignancy reported in the control arm
after completion of the study treatment period. Additional data analyses
for the AURA study at 48 weeks will be released at future corporate,
medical and scientific meetings, including in a late breaker
presentation at the National Kidney Foundation 2017 Scientific Clinical
Meetings April 18-22, 2017 in Orlando, FL.

The 24 and 48-week top-line efficacy results are summarized below:

Endpoint     Treatment     24 weeks     Odds ratio     P-value*     48 weeks     Odds Ratio     P-value*

Complete
Remission

    23.7mg VCS BID     32.6%     2.03     p=.045     49.4%     3.21     p<.001
39.5mg VCS BID     27.3%     1.59     p=.204     39.8%     2.10     p=.026
    Control Arm     19.3%     NA     NA     23.9%     NA     NA

Partial
Remission

23.7mg VCS BID     69.7%     2.33     p=.007     68.4%     2.34     p=.007
39.5mg VCS BID     65.9%     2.03     p=.024     71.6%     2.68     p=.002
    Control Arm     49.4%     NA     NA     48.3%     NA     NA

*All p-values are vs control

Japanese Phase I Ethnic Bridging Study for Voclosporin

On February 14, 2017, the Company announced results of a supportive
Phase I safety, pharmacokinetic (PK) and pharmacodynamics (PD) study in
healthy Japanese patients, which supports further development of
voclosporin in this patient population. Based on evaluations comparing
the Japanese ethno-bridging data vs. previous PK and PD studies in
non-Japanese patients, voclosporin demonstrated no statistically
significant differences in exposure with respect to Area Under the Curve
(AUC) measurements. Furthermore, the PK parameters in Japanese patients
were generally consistent with previously evaluated PK parameters in
non-Japanese volunteers. There were no unusual or unexpected safety
signals in the study. The Company plans to share its findings with the
Japanese Pharmaceuticals and Medical Devices Agency ("PMDA") in Q2 2017
and determine a path forward for regulatory submission in Japan.

Long-Term Manufacturing Agreement with Lonza

In Q4 2016, Aurinia announced a long-term agreement with Lonza for the
manufacture of voclosporin active pharmaceutical ingredient (API). The
agreement followed a successful multi-year clinical manufacturing
relationship where the companies had refined the process and analytical
methods to produce clinical and commercial supplies of voclosporin.
Under the terms of the agreement, Lonza agreed to produce cGMP-grade
voclosporin drug substance for use in the AURORA trial and for future
commercial use. The agreement also provides an option to have Lonza
exclusively supply API for up to 20 years.

The Company expects the following additional milestones and events in
the first half of 2017:

  • Late breaking presentation of AURA 48-week results at the National
    Kidney Foundation 2017 Scientific Clinical Meetings;
  • Outcome of European Medicines Agency (EMA) and PMDA discussions
  • AURION open label study 48-week results;
  • Initiation of Phase III AURORA trial.

Financial results for the year ended December 31, 2016

For the year ended December 31, 2016, the Company recorded a
consolidated net loss of $23.3 million or $0.66 per common share, as
compared to a consolidated net loss of $18.6 million or $0.58 per common
share in 2015.

The increase in the reported consolidated net loss was primarily
attributable to recording a non-cash gain of $1.7 million in 2016 on the
fair value revaluation of the derivative warrant liability compared to a
gain of $5.1 million in the same period in 2015.

After adjusting for the non-cash impact of the revaluation of the
derivative warrant liability, the net loss from operations for the year
ended December 31, 2016 was $25.0 million compared to $23.7 million for
the corresponding period in 2015.

The Company incurred net research and development expenditures of $14.5
million for the year ended December 31, 2016, as compared to $16.0
million for the same period in 2015. Research and development
expenditures included planning, regulatory, site selection costs and
drug manufacturing related to the planned Phase III LN clinical trial,
clinical costs related to completing the AURA trial and costs related to
conducting the Japanese PK study. Research and development expenditures
in 2015 reflected higher costs incurred for the AURA trial including
drug distribution, patient recruitment, enrollment and treatment
activities.

The Company incurred corporate, administration and business development
expenditures of $7.0 million for the year ended December 31, 2016, as
compared with $6.3 million for the same period in fiscal 2015.

Other expense (income) reflected a net expense of $2.2 million for the
year ended December 31, 2016 compared to a net expense of $128,000 for
2015. The Company recorded as other expense, a revaluation adjustment on
contingent consideration to ILJIN Life Science Co., Ltd. in the amount
of $1.6 million in 2016 compared to $337,000 in 2015. The Company also
recorded an expense of $655,000 in other expense (income) related to
share issue costs allocated to derivative warrants incurred to complete
the December 28, 2016 bought deal public offering.

Financial results for the fourth quarter ended December 31, 2016

The Company reported a consolidated net loss of $8.3 million or $0.21
per common share for the three months ended December 31, 2016, as
compared to a consolidated net loss of $4.1 million or $0.13 per common
share for the three months ended December 31, 2015. The increased loss
was attributable to increased expenditures for both research and
development and corporate activities as we were finishing the AURA trial
while also commencing set up activities for the AURORA trial including
drug manufacturing, CRO, and country and site selections.

The increase in the consolidated net loss also reflected a reduction in
the fair value adjustment gain on derivative warrant liabilities to
$658,000 in the fourth quarter of 2016 from a gain of $1.5 million in
the comparable period in 2015 and the $655,000 in share issue costs
discussed above.

Research and development expenses increased to $5.5 million in the
fourth quarter of 2016, compared to $3.7 million in the fourth quarter
of 2015 as the Company ramped up activities required for commencing the
planned AURORA clinical trial in the second quarter of 2017.

Corporate and administration expenses also increased to $2.2 million for
the fourth quarter of 2016, compared to $1.6 million for the fourth
quarter of 2015, reflecting increased activities related to investor
relations, patient advocacy and market research.

Financial Liquidity

In 2016, the Company raised net proceeds of $40.6 million from equity
financings and received $2.0 million from the exercise of warrants and
options. As a result, at December 31, 2016 the Company had cash of $39.6
million and working capital of $33.5 million.

The audited financial statements and the Management's Discussion and
Analysis for the year ended December 31, 2016, are accessible on
Aurinia's website at www.auriniapharma.com,
on SEDAR at www.sedar.com
or on EDGAR at www.sec.gov/edgar.

Forward-Looking Statements

This press release contains forward-looking statements, including
statements around Aurinia's analysis, assessment and conclusions around
the future development and commercial potential of voclosporin; the
benefits of FDA fast track designation and the timing of future clinical
trials; summary statements relating to results of the past voclosporin
trials; the timing of commencement and completion of clinical trials;
the timing of the Company's anticipated milestones for 2017; and plans
and objectives of management.

It is possible that such results or conclusions may change based on
further analyses of these data. Words such as "plans," "intends," "may,"
"will," "believe," and similar expressions are intended to identify
forward-looking statements. These forward-looking statements are based
upon Aurinia's current expectations. Forward-looking statements involve
risks and uncertainties. Aurinia's actual results and the timing of
events could differ materially from those anticipated in such
forward-looking statements as a result of these risks and uncertainties,
which include, without limitation, the risk that Aurinia's analyses,
assessment and conclusions of the results of the future development and
commercial potential of voclosporin set forth in this release may change
based on further analyses of such data, and the risk that Aurinia's
clinical studies for voclosporin may not lead to regulatory approval.
These and other risk factors are discussed under "Risk Factors" and
elsewhere in Aurinia's Annual Information Form for the year ended
December 31, 2016 filed with Canadian securities authorities and
available at www.sedar.com
and on Form 40-F with the U.S. Securities Exchange Commission and
available at www.sec.gov,
each as updated by subsequent filings, including filings on Form 6-K.
Aurinia expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in Aurinia's expectations with
regard thereto or any change in events, conditions or circumstances on
which any such statements are based.

Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors that may cause the Company's actual
results, performance, or achievements to differ materially from any
further results, performance or achievements expressed or implied by
such forward-looking statements. Important factors that could cause such
differences include, among other things, the following:

  • the need for additional capital to fund the Company's development
    programs and the effect of capital market conditions and other factors
    on capital availability;
  • difficulties, delays, or failures the Company may experience in the
    conduct of its planned AURORA clinical trial;
  • difficulties, delays or failures in obtaining regulatory approvals for
    the initiation of clinical trials;
  • difficulties the Company may experience in completing the development
    and commercialization of voclosporin;

Although the Company believes that the expectations reflected in the
forward-looking statements are reasonable, the Company cannot guarantee
future results, levels of activity, performance or achievements. These
forward-looking statements are made as of the date hereof.

We seek Safe Harbor.

View Comments and Join the Discussion!