Here’s why everyone is talking about Aurinia Pharmaceuticals actions
Actions of Pharmaceutical Aurinia (NASDAQ: AUPH) recently jumped on the back of the enthusiasm for the company’s new lupus treatment. The Food and Drug Administration recently made voclosporin (brand name Lupkynis) the company’s first commercial-stage product.
Analysts who follow Aurinia Pharmaceuticals have increased their sales estimates for Lupkynis following its approval. The general attention to the stock has gone through the roof. Here’s why.
Lupkynis is an improvement over cyclosporine, a decades-old immunosuppressive drug used to reduce the risk of organ rejection after transplantation, and the active ingredient in a popular dry eye treatment called Restasis. Voclosporin is believed to be an improvement over the old standard as it replaces one of the 11 amino acids that make up cyclosporin. Producing evidence of improvement was more difficult than the company had originally hoped for.
Aurinia Pharmaceuticals had previously tested voclosporin as a potential treatment for lupus, but changed course a few years ago to focus on a new formulation of voclosporin for the treatment of dry eye syndrome, which turned out to be a total disaster.
In theory, voclosporin requires a lower dosage than cyclosporin to do the same job, which should make it easier to tolerate. This reasoning collapsed when the results of a comparative study against Restasis did not show improvement in terms of safety in 2019. Last November, Aurinia Pharmaceuticals had to tell investors that voclosporin did not outperform a placebo as a potential treatment. for dry eyes.
After these challenges, Aurinia finally got some good news about voclosporin. On Monday, January 25, 2021, the FDA approved voclosporin capsules for the treatment of lupus nephritis. Results from clinical trials leading to approval show that patients who received voclosporin in addition to standard care were 2.7 times more likely to achieve a clinical response.
Voclosporin has been in development for a long time now, and some investors feared that it would lose its market exclusivity soon after its commercial launch. Fortunately for Aurinia, the FDA approval includes a very specific dosing protocol unique to the treatment of lupus nephritis that could prevent generic competition from entering the US market until 2037.
Systemic lupus is a rare autoimmune disease caused by an overactive immune system that attacks a variety of healthy tissue. The majority of patients with systemic lupus eventually experience progressive kidney damage, a condition called lupus nephritis.
In the United States, there are between 200,000 and 300,000 patients with systemic lupus. About a third of them had already progressed to lupus nephritis by the time they were first diagnosed with lupus.
Aurinia Pharmaceuticals has set a list price that could reach over $ 140,000 per year, although Aurinia expects net income per patient to average around $ 65,000 for a year of treatment. Some optimistic analysts believe annual sales of voclosporin could exceed $ 1 billion, but investors should consider the challenges its newly formed sales team faces before taking on stocks in this risky biotech stock.
Difficult launch ahead
Independent new drug launches fail more often than they succeed, in part because the most promising new drug candidates are licensed or acquired before they are ready for commercial launch. Aurinia Pharmaceuticals has not attracted a large partner to help commercialize voclosporin and plans to run its first launch of a new drug alone.
In smaller clinical trials than those conducted by Aurinia Pharmaceuticals with voclosporin, cyclosporine has also been shown to be safe and effective as a treatment for lupus nephritis. Aurinia’s new sales team could convince doctors to prescribe this expensive new drug to their patients with lupus nephritis, but that doesn’t mean governments and healthcare plan sponsors are going to jump to pay for it.
The lack of evidence that voclosporin can outperform inexpensive generic cyclosporin is not the only obstacle. The FDA also applied a black box warning the voclosporin label regarding increased risk of cancer and serious infections.
Security concerns could make competition with Benlysta de GlaxoSmithKline (NYSE: GSK) extremely difficult. The FDA first approved Benlysta as a treatment for systemic lupus in 2011. Last December, the agency extended the prescription label to include patients with lupus nephritis. GlaxoSmithKline medication is not hindered by any black box warnings.
Aurinia Pharmaceuticals ended September with $ 392 million in cash after losing $ 80 million in the first nine months of 2020. Investors considering this biotech move should wait to see signs of a successful launch that stop the losses before the company needs to appeal to investors again.
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