Last week we looked at development stage biotechnology company Aurinia Pharmaceuticals Inc (NASDAQ:AUPH). At the time of our coverage, the company had just put out some fresh data from its lead lupus study, and the data seemed to reinforce an approval thesis for the drug in question – Voclosporin. Aurinia ran up on the release, and that’s what drew our attention initially. This week, we’ve seen the same thing – the company ran up to the tune of more than 32% during Tuesday’s session, and on the back of a considerable amount of shares changing hands, it looks as thought the strength is set to continue throughout the remainder of this week.
So, in consideration of the latest run, what’s behind it, why is the company running up twice on a seeming single catalyst, and what does it all mean for Aurinia (and by proxy, its shareholders) going forward?
Here’s an attempt to answer these questions.
While the latest run does relate to Voclosporin, and even with it relating to the data release form last week, there’s technically a secondary catalyst that came in to play this week and re-drew (for want of a better phrase) the attention of the biotech space. Specifically, the company announced that the data in question has been accepted for a late breaking presentation he National Kidney Foundation (NKF) 2017 Spring Clinical Meetings taking place April 18-22, 2017 in Orlando, FL. For those not familiar with the late breaking side of things, it’s an attempt to allow newer data to reach the presentation stage at these events. The standard presentations are set in place nearly six months ahead of time. If the whole program was set up like this, however, the presentations would be – to some extent – out of date. The late breaking presentations allow for a mix of fresh and predetermined presentations.
The run, then, is driven by this acceptance; it’s technically two catalysts, but deriving from one dataset – one on the release, one on the promise of presentation.
Why is the presentation important?
Well, the data from the recent release derives from a phase II study, and so there’s still a pivotal to be completed before it can hit shelves. That said, the data was incredibly strong (more so than any data ever collected in the lupus indication that it’s targeting) and markets are assuming that when the asset does move into a phase III, and the patient sample scales up, it won’t have any problem replicating the efficacy readout we’ve already seen.
This is important, because it in turn suggests that this one is going to hit the shelves, and s if Aurinia can start to lay any foundations for a commercial launch, it will give the company a head start of revenue generation. And that’s what markets are looking at this presentation as. The data will be read out in front of some of the biggest names in the kidney (and by proxy, the lupus nephritis, space, and it means the name Voclosporin will already be in the sphere of consciousness for these potential prescribers while it’s undergoing phase III investigation.
So that’s why the company ran up twice, and why the presentation is important for the drug’s prospects – what about our third question, what does it mean going forward?
Well, it means that this drug (and by proxy, this company) is going to get a lot of attention over the next twelve to eighteen months. We’ve seen this sort of situation play out before, where a drug targeting an indication that is a large unmet need, and that hits headlines as a potential game changer in the space (Eteplirsen springs to mind) brings a company from under the radar and into mainstream consciousness. We think that Aurinia could be in for the same sort of buzz as the company carries Voclosporin forward into the pivotal study that the drug will need to reach commercialization, and beyond. It’s a little different from Eteplirsen, of course, not least in the sense that this one has excellent efficacy data underpinning its development program, but the concept is similar from an attention perspective.
Heading forward, then, we expect accumulation to drive this stock up moving into the pivotal study initiation, and beyond, into data readout phases.