Aurinia Pharmaceuticals Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Financial figures are in U.S. dollars; amounts below are in millions unless stated otherwise. Aurinia is a commercial-stage biopharmaceutical company. The FDA approved LUPKYNIS for adult patients with active lupus nephritis in January 2021, and the company began U.S. commercialization during 2021.
Financial performance
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Product revenue, net | $14.6 | — | $22.1 | — |
| Total revenue | $14.7 | $0.03 | $22.2 | $0.09 |
| Cost of sales | $0.3 | — | $0.6 | — |
| Gross margin | 98% | — | 97% | — |
| SG&A expense | $44.1 | $30.7 | $127.2 | $57.2 |
| R&D expense | $20.1 | $12.2 | $40.0 | $37.2 |
| Net loss | $(50.3) | $(42.1) | $(147.6) | $(94.6) |
| Basic and diluted loss per share | $(0.39) | $(0.34) | $(1.15) | $(0.82) |
| Net cash used in operating activities | — | — | $(131.8) | $(73.1) |
At September 30, cash and cash equivalents were $57.6 million and investments were $228.8 million, totaling $286.4 million in cash and investments. Working capital was $291.7 million. Total liabilities were $61.9 million, including $8.9 million of operating lease liabilities; the filing reports no conventional borrowings. Shareholders’ equity was $298.2 million.
Changes and notable items
- Revenue increased with LUPKYNIS U.S. sales following FDA approval; prior-year product revenue was zero.
- SG&A rose substantially as Aurinia expanded commercial and administrative functions to support the launch. The nine-month increase also reflected higher compensation, professional services, and share-based compensation.
- Quarterly R&D increased partly due to expenses for the newly added AUR200 and AUR300 programs. The filing reports $10.0 million of upfront license and milestone expense for the nine-month period; acquired program costs were expensed as R&D.
- Cash and investments fell from $422.7 million at December 31, 2020, mainly reflecting commercial launch spending, inventory payments, and payments related to the Lonza manufacturing facility and pipeline licensing. Operating cash use increased year over year; 2020 financing included a public offering, unlike 2021.
Outlook, risks and commitments
- Management said the September 30 cash and investment position was sufficient to fund current plans for at least 12 months, including commercialization, post-approval commitments, manufacturing, and planned R&D. This is a management expectation, not a guarantee.
- Aurinia was on track with FDA-required LUPKYNIS studies and reporting commitments, including a drug-drug interaction study with a 2023 report, pediatric study reports due in 2025 and 2031, a lactation study report due in 2026, and the AURORA-2 final report by March 2022. Otsuka’s EU review was described as on track, with a CHMP opinion expected around mid-2022 and an EMA decision expected in Q3 2022. Timing and outcomes remain uncertain.
- AUR200 was in preclinical development, with an IND submission projected by the end of 2022; an IND for AUR300 was expected in the first half of 2023. No product revenue or clinical success for these pipeline assets is assured.
- Commercial revenue was concentrated: two customers accounted for approximately 59% of total revenue in Q3 and 40% for the nine-month period. The company also relies on third parties, including Lonza, for manufacturing. Lonza firm orders included approximately $25.4 million of non-cancellable commitments through 2023.
- The planned dedicated Lonza facility carries approximately $84.0 million of expected minimum lease payments beginning in 2023 and ending in 2030; these payments were not included in the reported operating lease maturity table. The company had paid $11.8 million upfront.
- The filing identifies potential COVID-19 disruption to clinical trials, commercialization, and capital-market access. Management reported no material change to previously disclosed risk factors and no pending legal matter believed likely to have a material adverse effect.
Investor verification points
- Track LUPKYNIS prescription growth, net pricing, rebates and other revenue deductions, customer concentration, and whether reported gross margins persist as sales scale.
- Compare ongoing commercial spending and operating cash use with management’s stated 12-month funding horizon and the $286.4 million cash-and-investment balance.
- Verify progress, costs, and timing for AUR200/AUR300, FDA post-approval studies, and Otsuka’s regulatory filings and potential milestones or royalties.
- Assess manufacturing commitments and the future financial impact of the Lonza facility, including the approximately $84.0 million of expected lease payments.