Development stage biotech Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) just reported its fourth quarter 2015 and full year financials, and alongside the numbers, gave us an updated 2016 outlook. After a rough opening few weeks, the company is one of the few in its position to have posted a pretty good 2016 to-date performance, and it’s up a couple of percentage points on the latest report. This isn’t what we’re here to focus on, however. As part of the operational highlights report, Aurinia announced the completion of enrollment in a phase IIB – its lead trial – in a lupus nephritis indication. We also learnt that the company expects to complete and release topline for the trial during the third quarter of this year.
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The data has the potential to inject some considerable upside into Aurinia’s market capitalization, so ahead of its release, here’s a look at the drug in question, and an outline of what to look out for at trial completion.
First then, the drug – Voclosporin. It’s what’s called a calcineurin inhibitor. In humans, there’s an enzyme called a protein phosphatase that is responsible for dephosphorylation. When our immune system recognizes something as pathogenic, these enzymes (of which calcineurin is one) activates a protein called NFATC1 by removing a phosphate form it. This activation leads to a natural upregulation of interleukin 2, which some reading might already recognize as the cytokine responsible for stimulating a T cell response.
By inhibiting the action of calcineurin, calcineurin inhibitors stop the removal of the phosphate from the NFATC1 protein, and in turn, stop the initiation of the T cell response.
In individuals with lupus (which is the condition that lupus nephritis is rooted in), the immune system attacks the body’s own cells. In lupus nephritis, the cells in question are, as the name suggests, kidney cells.
This type of treatment is already used for certain conditions, including rheumatoid arthritis (RA) and psoriasis, but in its current approved forms, has some pretty nasty side effects. Aurinia is trying to improve upon the safety and tolerability profile of these forms – tacrolimus and cyclosporine are two examples – while also expanding their indication base with the lupus target.
So what are we looking for in the trial data?
We’ve already got some preliminary analysis data, so that makes things easier from an interpretation standpoint. The data measures what’s called proteinuria, which is the abnormally high presence of protein in urine. Because the kidneys are responsible for filtering and processing urine, high protein levels are used to diagnose, and measure the response to drugs of, kidney diseases and conditions such as lupus nephritis. Primary endpoint of the trial is a reduction of proteinuria, and a 48 weeks of administration, the company showed a mean reduction of 57% – a statistically significant number. Alongside the efficacy read out, and perhaps just as importantly, adverse events were relatively low frequency. In the Q3 data, therefore, we are looking for a reiteration of these numbers at an expanded level.
What’s the market potential for Voclosporin if Aurinia can carry it through to a successful NDA? A recent report puts the market size for both systemic lupus erythematosus (SLE) and LN at $1.1 billion annually by 2022. The assumption is that if Aurinia can get an approval for Voclosporin in the latter indication (its current target) then it shouldn’t have too much of a problem expanding this approval to incorporate SLE. With this in mind, there’s a potential $1.1 billion on the table for a safe, effective treatment option. With just the LN indication, current market potential sits at between $200-300 million.
Moving forward, then, we are looking to any further interim updates (we should get one at the beginning of the second quarter) and beyond that, the topline report during third quarter, 2016. The company is not without its risks – financing will likely be raised as an issue before commercialization, if it gets to that point – but an interesting company to keep an eye on if topline reads out positive.