Aurinia Discloses 2023 Year-End Financial and Operational Results, Announces Corporate Actions Focused on Enhancing Shareholder Value
- Strong financial performance with total net revenue of $45.1 million for the fourth quarter and $175.5 million for the full year 2023.
- Net product revenue growth with $42.3 million for the quarter and $158.5 million for the year, reaffirming 2024 guidance of $200 - $220 million.
- Operational changes expected to drive savings of $50 - $55 million annually.
- Initiation of a share repurchase program of up to $150 million to enhance shareholder value.
- Discontinuation of future development of AUR200 and AUR300 programs to focus on commercial execution of LUPKYNIS.
- One-time charge of $11 - $15 million expected in the first quarter of 2024 due to discontinuation of AUR200 and AUR300 programs.
- Reduction in employee headcount by at least 25% by the end of the first quarter of 2024.
- Restructuring charge expected to result in cost savings of $50 - $55 million annually.
- Potential impact on commercial investment due to cost savings focus.
- Exemptive relief application submitted for share repurchase program approval.
Insights
The financial performance of Aurinia Pharmaceuticals Inc. reflects a robust growth trajectory with net product revenue increasing by 53% year-over-year. The reaffirmation of its 2024 revenue guidance suggests a confident outlook on the company's commercial strategy, particularly with its flagship product LUPKYNIS. The initiation of a share repurchase program indicates a strong balance sheet and a strategy to enhance shareholder value. From a financial perspective, the operational changes and expected annual savings of $50 - $55 million may improve the company's EBITDA margins and potentially lead to a more favorable P/E ratio, making the stock more attractive to investors. However, the one-time charge in Q1 2024 due to restructuring will impact short-term earnings, which should be considered by stakeholders.
The discontinuation of AUR200 and AUR300 development programs indicates a strategic pivot towards concentrating resources on LUPKYNIS. This decision aligns with the observed market demand, as evidenced by the increase in patient start forms and the product's sustained conversion rates. The reduction in headcount, while unfortunate, is a common practice in the industry to streamline operations and reallocate resources to high-performing areas. The share repurchase program can be seen as a signal to the market of management's belief in the intrinsic value of the company, potentially stabilizing the stock price during operational transitions.
The increase in patients on LUPKYNIS therapy indicates successful market penetration and efficacy of the company's commercial strategy, which is critical for a pharmaceutical company with a specialized product. The 12-month persistency rate improvement suggests strong adherence and potential long-term benefits for patients, which could translate into sustained revenue streams for Aurinia. The decision to focus exclusively on LUPKYNIS may also indicate a strategic alignment with the company's core competencies in addressing lupus nephritis, a chronic autoimmune disease and the confidence in its current market position and future growth potential within this specialty area.
-
Total net revenue was
$45.1 million $175.5 million $42.3 million $158.5 million -
$350.7 million -
Reaffirms 2024 net product revenue guidance of
$200 $220 million -
Announces conclusion of strategic review and details operational changes that are expected to drive savings of approximately
$50 $55 million -
Initiates a share repurchase program of up to
$150 million Canada )
Conference call to be hosted today at 8:30 a.m. ET
Effective immediately, Aurinia will discontinue its future development of AUR200 and AUR300 research and development programs and prioritize resource allocation. This will result in a one-time charge in the first quarter of 2024 of approximately
Aurinia’s Board of Directors (the “Board”) also approved a share repurchase program of up to
“Our strong performance and growth for LUPKYNIS throughout 2023 demonstrates the ongoing success of our commercial strategy. We will continue to focus on driving the upward trajectory of LUPKYNIS, while significantly reducing expenses and providing increased cash flow for 2024 and beyond. With our deeply experienced and dedicated team, we have built a strong foundation for Aurinia’s growth that will lead us into another high performing year. We are confident in the actions we have taken to drive increased shareholder value and will continue to act with urgency for the benefit of shareholders,” said Peter Greenleaf, President and CEO of Aurinia.
2023 Fourth Quarter and Full Year Results
Net product revenue was
Total net revenue was
The Company had cash, cash equivalents, restricted cash and investments of approximately
Fourth Quarter 2023 Highlights and LUPKYNIS® (voclosporin) Product Performance
- There were approximately 2,066 patients on LUPKYNIS therapy as of December 31, 2023, compared to 1,525 at the end of 2022.
- There were approximately 438 patient start forms (PSFs) in the fourth quarter of December 31, 2023, compared to 406 PSFs in the fourth quarter of 2022.
- In addition to the 438 PSFs in the fourth quarter of December 31, 2023, there were approximately 101 new patients added in the quarter who were either restarting LUPKYNIS or receiving it through a hospital pharmacy.
- From January 1 through the end of December 2023, the Company recorded 1,791 PSFs, compared to 1,650 in the prior year.
- From January 1, 2024 through February 9, 2024, the Company added approximately 191 PSFs and approximately 40 new patients from restarts and the hospital channel.
-
Conversion rates were sustained, with approximately
85% of PSFs converted to patients on therapy. -
Time to convert has improved to an all-time high with approximately
63% of patients on therapy by 20 days. -
The overall adherence rate remained high at
86% through the fourth quarter of 2023. -
Persistency at 12 months was
55% and remained stable, with49% of patients remaining on therapy at 15 months and44% at 18 months.
Aurinia Corporate Strategy Update
The Board initiated a robust strategic review at the end of June 2023 to review all strategic options for the Company. Together with management, JP Morgan, the Company’s financial advisor in the strategic review process, engaged with more than 60 parties, receiving only one non-binding expression of interest, which included a due diligence process, but did not result in a formal offer.
Aurinia also explored potentially acquiring or licensing other entities or assets during this time. After assessing a range of alternatives over the last seven months, the Board elected to conclude Aurinia’s strategic review process. The Board ultimately determined that none of the explored opportunities that were available to it to pursue were in the best near-term interests of the Company to execute on, and that the best path forward is for management to streamline its operations as it announced today and focus on the Company’s commercial execution.
Additionally, in 2018, the Company under previous management and at the Board’s discretion, engaged a leading investment bank to conduct a confidential strategic review process. During the 2018 process, the Company received only one non-binding expression of interest to acquire the Company, which included a due diligence process, but did not result in a formal offer.
Outside of these two expressions of interest, the Company has never received an offer of any kind to acquire the Company. The Board and management remain open to exploring opportunities that are in the best interests of the Company and are open to considering any bona fide offers that the Company receives.
“The Board and management conducted a wide-ranging review of strategic alternatives for our business and determined that the ongoing commercial transformation provides the best means for enhancing near-term value for shareholders and other stakeholders. As the most recent performance update indicates, Aurinia is financially strong and is continuing to achieve commercial success with LUPKYNIS. With a clear plan to strengthen short and long-term performance and generate free cash flow by the end of this year, the Board is fully confident the Company’s current approach is in the best interests of the Company,” said Dr. Daniel Billen, Chairman of the Board of Aurinia.
The Company is reaffirming its commitment to enhancing value by driving LUPKYNIS growth, while maintaining a sharp focus on operating efficiencies and maximizing cash flows. As a result, the Company is ceasing future development efforts on AUR200 and its pre-clinical asset AUR300. Correspondingly, the Company expects to take a restructuring charge of approximately
The charge will primarily be made up of severance costs, contract termination costs and other costs associated with terminating the programs. The Company expects to recognize cost savings of approximately
In addition, the Board has approved a share repurchase program of up to
Purchases under the share repurchase program will commence on or around February 21, 2024. The expiry date of the share repurchase program is not currently known. This program may be implemented through open market or privately negotiated purchases, including under a plan intended to benefit from the affirmative defense under Rule 10b5-1, Rule 10b-18 or an automatic securities purchase plan, an accelerated share repurchase program, or other mechanisms. The timing and amount of repurchase transactions will be determined by the Company’s management based on its evaluation of market conditions, share price, legal requirements, including applicable blackout period restrictions, and other factors. The purchase price of any Common Shares will be determined in accordance with applicable
“We have a very healthy balance sheet that enables a disciplined capital deployment policy to support Aurinia’s growth, while also increasing returns to shareholders,” said Joe Miller, Chief Financial Officer of Aurinia.
Financial Results for the Quarter and Year Ended December 31, 2023
Total net revenue was
The market penetration can be demonstrated, in part, by 1,791 additional patient start forms (PSFs) received during the year ended December 31, 2023. Additionally, during the fourth quarter of 2023, the Company added approximately 101 new patients, which includes, restarts (patients coming back onto therapy who do not require a PSF) and an estimate of new patients beginning therapy in the hospital channel. Patient restarts and estimated patients coming through the hospital channel are newly reported in the fourth quarter since they have achieved numerical significance for the first time. Lastly, the Company’s 12-month persistency rate has increased from approximately
License, collaboration and royalty revenue was
Total cost of sales and operating expenses for the quarters ended December 31, 2023 and December 31, 2022 were
Cost of sales were
Gross margin for the quarters ended December 31, 2023 and December 31, 2022 was approximately
Selling, general and administrative (SG&A) expenses, inclusive of share-based compensation expense, were
Non-cash SG&A share-based compensation expense were
Research and Development (R&D) expenses, inclusive of share-based compensation expense, were
Non-cash R&D share-based compensation expense and income was
Other expense (income), net was
Interest income was
For the quarter ended December 31, 2023, Aurinia recorded a net loss of
Financial Liquidity at December 31, 2023
As of December 31, 2023, Aurinia had cash, cash equivalents and restricted cash and investments of
Aurinia believes that it has sufficient financial resources to fund its operations, which include funding commercial activities, including FDA related post approval commitments, manufacturing and packaging commercial drug supply, funding its commercial infrastructure, advancing its LUPKYNIS (voclosporin) related R&D programs and funding its working capital obligations for at least the next few years.
This press release is intended to be read in conjunction with the Company’s consolidated financial statements and Management's Discussion and Analysis for the year ended December 31, 2023 in the Company’s Annual Report on Form 10-K, which will be accessible on Aurinia's website at www.auriniapharma.com, on SEDAR+ at www.sedarplus.ca or on EDGAR at www.sec.gov/edgar.
Conference Call Details
Aurinia will host a conference call and webcast today, Thursday, February 15, 2024 at 8:30 a.m. ET to discuss the financial results for the quarter and year ended December 31, 2023. The link to the audio webcast is available here or on Aurinia’s corporate website at www.auriniapharma.com under "News/Events” through the “Investors” section. To join the conference call, please dial +1-877-407-9170 / + 201-493-6756 (Toll-free
About LUPKYNIS®
LUPKYNIS® (voclosporin) is the first
About Lupus Nephritis
Lupus Nephritis (LN) is a serious manifestation of systemic lupus erythematosus (SLE), a chronic and complex autoimmune disease. LN affects approximately 120,000 people in the
About Aurinia
Aurinia Pharmaceuticals is a fully integrated biopharmaceutical company focused on delivering therapies to people living with autoimmune diseases with high unmet medical needs. In January 2021, the Company introduced LUPKYNIS® (voclosporin), the first FDA-approved oral therapy dedicated to the treatment of adult patients with active lupus nephritis. The Company’s head office is in
Forward-Looking Statements
Certain statements made in this press release may constitute forward-looking information within the meaning of applicable Canadian securities law and forward-looking statements within the meaning of applicable
Forward-looking information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of Aurinia to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements or information. Such risks, uncertainties and other factors include, among others, the following: Aurinia’s actual future financial and operational results may differ from its expectations; difficulties Aurinia may experience executing its restructuring program; difficulties Aurinia may experience executing its share repurchase program; difficulties Aurinia may experience in completing the commercialization of voclosporin; the market for the LN business may not be as estimated; Aurinia may have to pay unanticipated expenses; Aurinia may not be able to obtain sufficient supply to meet commercial demand for voclosporin in a timely fashion; unknown impact and difficulties imposed by widespread health concerns on Aurinia’s business operations including nonclinical, clinical, regulatory and commercial activities; risks arising from shareholder activism; the results from Aurinia’s clinical studies and from third party studies and reports may not be accurate; Aurinia’s third party service providers may not, or may not be able to, comply with their obligations under their agreements with Aurinia; regulatory bodies may not grant approvals on conditions acceptable to Aurinia and its business partners, or at all; and Aurinia’s assets or business activities may be subject to disputes that may result in litigation or other legal claims. Although Aurinia has attempted to identify factors that would cause actual actions, events, or results to differ materially from those described in forward-looking statements and information, there may be other factors that cause actual results, performances, achievements, or events to not be as anticipated, estimated or intended. Also, many of the factors are beyond Aurinia’s control. There can be no assurance that forward-looking statements or information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, you should not place undue reliance on forward-looking statements or information.
All forward-looking information contained in this press release is qualified by this cautionary statement. Additional information related to Aurinia, including a detailed list of the risks and uncertainties affecting Aurinia and its business, can be found in Aurinia’s most recent Annual Report on Form 10-K available by accessing the Canadian Securities Administrators’ System for Electronic Document Analysis and Retrieval (SEDAR+) website at www.sedarplus.ca or the
AURINIA PHARMACEUTICALS INC. AND SUBSIDIARIES |
||||||||
CONSOLIDATED BALANCE SHEETS |
||||||||
(in thousands) |
||||||||
|
|
December 31, 2023 |
|
December 31, 2022 |
||||
ASSETS |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash, cash equivalents and restricted cash |
|
$ |
48,875 |
|
|
$ |
94,172 |
|
Short-term investments |
|
|
301,614 |
|
|
|
295,218 |
|
Accounts receivable, net |
|
|
24,089 |
|
|
|
13,483 |
|
Inventories, net |
|
|
39,705 |
|
|
|
24,752 |
|
Prepaid expenses |
|
|
9,486 |
|
|
|
13,580 |
|
Other current assets |
|
|
1,031 |
|
|
|
1,334 |
|
Total current assets |
|
|
424,800 |
|
|
|
442,539 |
|
|
|
|
|
|
||||
Non-current assets: |
|
|
|
|
||||
Long-term investments |
|
|
201 |
|
|
|
— |
|
Other non-current assets |
|
|
1,517 |
|
|
|
13,339 |
|
Property and equipment, net |
|
|
3,354 |
|
|
|
3,650 |
|
Acquired intellectual property and other intangible assets, net |
|
|
4,977 |
|
|
|
6,425 |
|
Finance right-of-use asset, net |
|
|
108,715 |
|
|
|
— |
|
Operating right-of-use assets, net |
|
|
4,498 |
|
|
|
4,907 |
|
Total assets |
|
$ |
548,062 |
|
|
$ |
470,860 |
|
|
|
|
|
|
||||
LIABILITIES |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable and accrued liabilities |
|
|
54,389 |
|
|
|
39,990 |
|
Deferred revenue |
|
|
4,813 |
|
|
|
3,148 |
|
Other current liabilities (of which |
|
|
2,388 |
|
|
|
2,033 |
|
Finance lease liability |
|
|
14,609 |
|
|
|
— |
|
Operating lease liabilities |
|
|
989 |
|
|
|
936 |
|
Total current liabilities |
|
|
77,188 |
|
|
|
46,107 |
|
|
|
|
|
|
||||
Non-current liabilities: |
|
|
|
|
||||
Finance lease liability |
|
|
75,479 |
|
|
|
— |
|
Operating lease liabilities |
|
|
6,530 |
|
|
|
7,152 |
|
Deferred compensation and other non-current liabilities (of which |
|
|
10,911 |
|
|
|
12,166 |
|
Total liabilities |
|
|
170,108 |
|
|
|
65,425 |
|
|
|
|
|
|
||||
SHAREHOLDERS' EQUITY |
|
|
|
|
||||
Common shares - no par value, unlimited shares authorized, 143,833 and 142,268 shares issued and outstanding at December 31, 2023 and 2022, respectively |
|
|
1,200,218 |
|
|
|
1,185,309 |
|
Additional paid-in capital |
|
|
120,788 |
|
|
|
85,489 |
|
Accumulated other comprehensive loss |
|
|
(730 |
) |
|
|
(1,061 |
) |
Accumulated deficit |
|
|
(942,322 |
) |
|
|
(864,302 |
) |
Total shareholders' equity |
|
|
377,954 |
|
|
|
405,435 |
|
Total liabilities and shareholders’ equity |
|
$ |
548,062 |
|
|
$ |
470,860 |
|
AURINIA PHARMACEUTICALS INC. AND SUBSIDIARIES |
||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||
(in thousands, except per share data) |
||||||||||||||||
|
|
Three months ended |
|
Years ended |
||||||||||||
|
|
December 31, 2023 |
|
December 31, 2022 |
|
December 31, 2023 |
|
December 31, 2022 |
||||||||
|
|
(unaudited) |
|
|
||||||||||||
Revenue: |
|
|
|
|
|
|
|
|
||||||||
Product revenue, net |
|
$ |
42,315 |
|
|
$ |
28,326 |
|
|
$ |
158,533 |
|
|
$ |
103,468 |
|
License, collaboration and royalty revenue |
|
|
2,780 |
|
|
|
109 |
|
|
|
16,980 |
|
|
|
30,562 |
|
Total revenue, net |
|
|
45,095 |
|
|
|
28,435 |
|
|
|
175,513 |
|
|
|
134,030 |
|
Operating expenses |
|
|
|
|
|
|
|
|
||||||||
Cost of sales |
|
|
5,395 |
|
|
|
1,362 |
|
|
|
14,148 |
|
|
|
5,664 |
|
Selling, general and administrative |
|
|
50,072 |
|
|
|
47,473 |
|
|
|
195,036 |
|
|
|
196,371 |
|
Research and development |
|
|
10,228 |
|
|
|
9,870 |
|
|
|
49,641 |
|
|
|
44,988 |
|
Other expense (income), net |
|
|
9,074 |
|
|
|
(2,170 |
) |
|
|
8,379 |
|
|
|
(1,523 |
) |
Total cost of sales and operating expenses |
|
|
74,769 |
|
|
|
56,535 |
|
|
|
267,204 |
|
|
|
245,500 |
|
Loss from operations |
|
|
(29,674 |
) |
|
|
(28,100 |
) |
|
|
(91,691 |
) |
|
|
(111,470 |
) |
Interest expense |
|
|
(1,310 |
) |
|
|
— |
|
|
|
(2,775 |
) |
|
|
— |
|
Interest income |
|
|
4,568 |
|
|
|
2,909 |
|
|
|
16,997 |
|
|
|
5,118 |
|
Net loss before income taxes |
|
|
(26,416 |
) |
|
|
(25,191 |
) |
|
|
(77,469 |
) |
|
|
(106,352 |
) |
Income tax expense |
|
|
459 |
|
|
|
855 |
|
|
|
551 |
|
|
|
1,828 |
|
Net loss |
|
$ |
(26,875 |
) |
|
$ |
(26,046 |
) |
|
$ |
(78,020 |
) |
|
$ |
(108,180 |
) |
Basic and diluted loss per share |
|
$ |
(0.19 |
) |
|
$ |
(0.18 |
) |
|
$ |
(0.54 |
) |
|
$ |
(0.76 |
) |
Weighted-average common shares outstanding used in computation of basic and diluted loss per share |
|
|
142,927 |
|
|
|
141,909 |
|
|
|
143,236 |
|
|
|
141,915 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240215560250/en/
Media and Investor Inquiries:
Andrea Christopher
Corporate Communications and Investor Relations, Aurinia
achristopher@auriniapharma.com
ir@auriniapharma.com
Source: Aurinia Pharmaceuticals Inc.
FAQ
What was Aurinia Pharmaceuticals Inc.'s total net revenue for the fourth quarter and full year 2023?
What was the net product revenue for Aurinia in the fourth quarter and full year 2023?
What is Aurinia's 2024 net product revenue guidance?
What operational changes are expected to drive savings for Aurinia?
What is the maximum amount of the share repurchase program initiated by Aurinia?
