Aurinia Pharmaceuticals, Inc. Q1 FY2024 earnings call

• Strong first quarter performance with total net revenue up 46% YOY and net product revenue up 40% YOY.
• Restructuring efforts: Reduced employee headcount by ~25%, expects to reduce operating expenses by $50M to $55M over 12 months, with ~75% recognized in 2024, and expects cash flow positive in Q2 2024 excluding share repurchases.
• LUPKYNIS commercial execution: Added 448 patient start forms and ~148 new patients in Q1, with ~2,178 patients on LUPKYNIS therapy as of March 31, 2024, up 26% YOY. Net realizable revenue per patient expected to be $70,000 to $75,000 annualized.
• Label update for LUPKYNIS: FDA approved label update removing language about safety/efficacy beyond 1 year, including long-term data from AURORA 2 extension study showing sustained complete renal response over 3 years.
• Marketing campaigns: Launched Know the Signs campaign and new campaign to increase awareness of lupus nephritis severity and drive screening among rheumatologists.
• International activities: Continued revenue from Otsuka's launch in Europe; pending regulatory approval in Japan with expected $10M milestone and low double-digit royalties on net sales upon launch.

For the first quarter of 2024, Aurinia achieved $50.3 million in total net revenue, representing growth of approximately 46% year-over-year. Net product revenue was $48.1 million, a significant growth of approximately 40%. LUPKYNIS was the key driver, with net product revenue contributing predominantly to the overall figures. The revenue from LUPKYNIS was a major component, with the company remaining on track for its net product revenue guidance range of approximately USD 200 million to USD 220 million.

• Expect to be cash flow positive, excluding share repurchases, in the second quarter of 2024 ahead of prior projections.
• Reiterated full-year net product revenue guidance of approximately USD 200 million to USD 220 million.
• Summer months are a key driver for the upper end of the $200M to $220M guidance range; performance in summer months will significantly impact the final revenue figure.
• 2Q performance will be a key driver to gauge full-year guidance.

Q: What are the implications of the updated label for LUPKYNIS and its impact on prescribers' perception?

A: The label update is a recognition of the data provided, removing the indication language about anything beyond 1 year not being studied. It is expected to help with persistency and length of therapy, aligning with treatment guidelines rather than directly impacting conversion rates.

Q: Is there lumpiness in patient start forms and what factors drove the change in April?

A: Per Peter Greenleaf, the numbers were consistent with prior periods, but the ~25% YOY improvement in April was driven by restarts and hospital patients.

Q: Evolving thoughts around patient start forms and importance of formulary purchases in the hospital channel for long-term growth?

A: Patient start forms are important as a new patient volume indicator, with 85% converting. Hospital channel formulary purchases are an emerging line of growth, but PSFs remain a major indicator of new patient growth.

Q: Why did the updated label for LUPKYNIS come earlier than expected?

A: The agency treated the data much like a supplemental new drug application, performing within the normal 9 to 12 months category, coming earlier than initially guided.

Q: Progress on the buyback and details on AUR200?

A: Yes, about $18.4 million worth of stock purchased with an average cost of $5.37. For AUR200, the IND was approved by the US FDA, ready to start SAD/MAD studies, and efforts are ongoing to move it forward either internally or externally.

Q: Impact of updated label on potential new patent claims and rebound of patients off LUPKYNIS?

A: The label change could be helpful for existing patents, but no readout from US PTO yet. On patient rebound, data is emerging, with the disease being chronic and treatment alignment with guidelines being key.