Aurinia Pharmaceuticals Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Financial amounts are in U.S. dollars. Aurinia is a commercial-stage biopharmaceutical company whose principal marketed product is LUPKYNIS (voclosporin), approved in the U.S. for adults with active lupus nephritis.
Financial performance and liquidity
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Total revenue | $21.6 million | $0.9 million |
| Product revenue | $21.5 million | $0.9 million |
| Gross margin | Approximately 99% | Approximately 95% |
| SG&A expense | $45.2 million | $39.8 million |
| R&D expense | $12.6 million | $9.8 million |
| Net loss | $37.6 million | $50.4 million |
| Basic and diluted loss per share | $0.27 | $0.40 |
| Operating cash used | $46.7 million | $53.5 million |
Cash, cash equivalents, restricted cash and investments totaled $418.8 million at March 31, 2022, versus $466.1 million at December 31, 2021. Working capital was $443.8 million, down from $472.7 million. Cash used in investing activities was $53.0 million, primarily reflecting investment purchases net of maturities; financing provided $0.4 million. Total assets were $506.9 million and total liabilities were $58.8 million. The filing reports no borrowing or conventional debt balance; operating lease liabilities were $8.6 million.
Changes versus the prior comparable period
- Revenue rose by $20.7 million year over year, principally as LUPKYNIS commercialization advanced; no product sales occurred before January 22, 2021.
- Operating expenses increased $8.1 million. SG&A growth reflected employee costs, professional services, pharmacovigilance and commercialization infrastructure; R&D growth was mainly tied to AUR200 and AUR300 development.
- Net loss narrowed by $12.7 million, and operating cash use declined by $6.8 million.
- Accounts receivable rose to $20.4 million from $15.4 million, and inventory rose to $26.3 million from $19.3 million. Available-for-sale securities generated a $0.8 million unrealized loss, recorded in comprehensive loss.
Outlook, risks and unusual items
- Management believes available cash and investments can fund current plans for at least the next few years, including commercial operations, post-approval obligations, manufacturing supply, R&D and pipeline investment. The filing provides no numerical revenue or earnings guidance.
- The company began enrolling patients in the ENLIGHT-LN observational registry during Q1. It expects to submit IND applications for AUR200 and AUR300 in 2023.
- Aurinia paid a $4.0 million milestone to Riptide Bioscience in Q1 for AUR300. Further development, clinical and regulatory milestone payments and potential royalties may be due.
- A dedicated voclosporin manufacturing facility arrangement is expected to be accounted for as a finance lease when it commences. Minimum payments are estimated at approximately $78 million from April 2023 through 2030; these are not included in the reported lease liabilities. A separate backup-site lease has not commenced.
- Two customers represented approximately 99% of Q1 revenue (54% and 45%) and 99% of net trade receivables at quarter-end, creating customer concentration and collection risk. No doubtful-account allowance was recorded.
- On April 15, 2022, a purported shareholder class action alleged materially false or misleading statements about financial guidance and commercial prospects. The company said it intends to defend the lawsuit; damages sought are unspecified.
- Management reported effective disclosure controls and no material change in internal control over financial reporting during the quarter. It also stated inflation had not materially affected results as of March 31, 2022.
Important facts for investors to verify
- Whether LUPKYNIS sales growth continues and how customer concentration affects revenue and receivable collections.
- Actual cash burn and the pace of commercialization, post-approval, manufacturing and pipeline spending relative to management’s multi-year runway estimate.
- Progress, costs and timing for AUR200 and AUR300, including the projected 2023 IND submissions and contingent milestone obligations.
- Timing and financial impact of the dedicated manufacturing facility and other uncommenced lease commitments.
- Developments in the shareholder lawsuit and any subsequent changes to the company’s financial outlook or risk disclosures.