Greetings, and welcome to the Aurinia Pharmaceuticals Second Quarter 2025 Earnings Call. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Joe Miller, Chief Financial Officer for Aurinia. Thank you. You may begin.

Thank you, operator, and thank you, everyone, for joining today's call and webcast. Joining me on the call this morning are Peter Greenleaf, Aurinia's President and Chief Executive Officer, and Dr. Greg Keenan, Aurinia's Chief Medical Officer. Today, we will review and discuss Aurinia's second quarter 2025 financial results and provide an update on recent corporate progress as communicated in the company's press release and quarterly report on Form 10-Q issued this morning. For more information, please refer to Aurinia's filings with the U.S. Securities and Exchange Commission and Canadian securities authorities, which are also available on Aurinia's website at auriniapharma.com. During today's call, Aurinia may make forward-looking statements based on current expectations. These forward-looking statements are subject to a number of significant risks and uncertainties, and actual results may differ materially. For a discussion of factors that could affect Aurinia's future financial results and business, please refer to the disclosures in Aurinia's press release, quarterly report on Form 10-Q and all other filings with the U.S. Securities and Exchange Commission and Canadian securities authorities. Please note that all statements made during today's call are current as of today, July 31, 2025, unless otherwise noted and are based upon information currently available to us. Except as required by law, Aurinia assumes no obligation to update any such statements. Now let me turn the call over to Aurinia's President and CEO, Peter Greenleaf. Peter?

Thanks, Joe, and good morning, everyone. I want to thank everybody for joining us today. On this morning's call, I'll provide an update on our second quarter results and provide an update on all corporate initiatives. I'll then turn the call back over to Joe to provide additional detail on our financial results. We continue to achieve strong growth in total revenue and net product sales in the 3 and 6 months ended June 30, 2025. For the 3 and 6 months ended June 30, 2025, total revenue was $70 million and $132.5 million, up 22% and 23%, respectively, from $57.2 million and $107.5 million, respectively, in the same periods of 2024. For the 3 and 6 months ended June 30, 2025, net product sales of LUPKYNIS, the first FDA-approved oral therapy for the treatment of adult patients with active lupus nephritis, or LN, were $66.6 million and $126.5 million, up 21% and 23%, respectively, from $55 million and $103.1 million in the same periods of 2024. The increase for both periods is primarily due to an increase in the number of LUPKYNIS cartons sold to specialty pharmacies, driven by further LN market penetration. For the 6 months ended June 30, 2025, cash flow generated from operations was $45.5 million. This is compared to a negative $2.8 million in cash flow used in operations in the same period of 2024. Excluding $11.5 million in cash payments made in 2025 in connection with the November 2024 restructuring, cash flow generated from operations was $57 million for the 6 months ended June 30, 2025. As of June 30, 2025, we have cash, cash equivalents, restricted cash and investments of $315.1 million. This is compared to $358.5 million at December 31, 2024. For the 6 months ended June 30, 2025, the company repurchased $11.2 million of its common shares for $90.8 million, including commissions and excise tax. As a result of the sustained growth we've seen in the first half of 2025, we are increasing our full-year 2025 total revenue guidance from a range of $250 million to $260 million to a range of $260 million to $270 million and our net product sales guidance from a range of $240 million to $250 million to a range of $250 million to $260 million. Finally, we reported positive results from our aritinercept Phase I single ascending dose study on June 30, 2025. Aritinercept is a dual BAFF APRIL inhibitor. It contains a BCMA engineered extracellular binding domain that's optimized for superior affinity to APRIL and BAFF. We remain on track to initiate further clinical studies for aritinercept in at least 2 autoimmune diseases in the second half of this year. We are very excited about the wide range of therapeutic possibilities for aritinercept, but for competitive reasons, we will not be disclosing further detail about our future plans at this time. I'd now like to turn the call back over to Joe for a more detailed review of the second quarter 2025 financial results. I'll then return at the end of the call for a quick recap and to open up the line for any questions you might have. Joe?

Thank you, Peter. Let's take a few minutes to discuss the second quarter 2025 financial results. For the 3 and 6 months ended June 30, 2025, total revenue was $70 million and $132.5 million, up 22% and 23%, respectively, from $57.2 million and $107.5 million in the comparable periods of 2024. As Peter mentioned, we had cash, cash equivalents, restricted cash and investments of $315.1 million as of June 30, 2025, and generated cash flows from operations of $45.5 million compared to $2.8 million in cash flow used in operations in the same period of 2024. Excluding $11.5 million of cash payments made in connection with the November 2024 restructuring, cash flow generated from operations was $57 million for the 6 months ended June 30, 2025. We are continuing to be opportunistic with our share repurchase plan and expect to fund any future discretionary share repurchases with cash flows from operations and cash currently on hand. The company repurchased 18.3 million of its common shares for $138.4 million, excluding commissions and excise tax since the launch of the program in the first quarter of 2024 through today. Additionally, today, we announced that the Board has approved an increase to the share repurchase plan of up to an additional $150 million of common shares over the initially approved $150 million Board authorization. For the 3 and 6 months ended June 30, 2025, cost of revenue was $7.1 million and $15.7 million, respectively, compared to $8.9 million and $16.7 million in the comparable periods in 2024. The decrease for both periods is primarily due to a decrease in sales of LUPKYNIS inventory to Otsuka, which is sold under a cost-plus arrangement and has a lower gross margin than our other LUPKYNIS sales. For the 3 and 6 months ended June 30, 2025, gross margin was 90% and 88%, respectively, compared to 84% and 85% in the same periods in 2024. For the 3 and 6 months ended June 30, 2025, total operating expenses were $49.9 million and $90.5 million, respectively, compared to $58.7 million and $122.3 million in the comparable periods of 2024. The decrease for both periods is primarily due to lower personnel expenses, including share-based compensation and overhead costs as a result of our strategic restructuring efforts in 2024. This was partially offset by an increase in R&D-related expenses as we continue to advance our development activities for aritinercept and voclosporin and other noncash expenses related to the remeasurement of our Swiss franc-denominated monoplant finance lease liability and changes in our fair value assumptions related to our deferred compensation liability. For the 3 months ended June 30, 2025, net income was $21.5 million or $0.16 of earnings per share compared to $722,000 or $0.01 of earnings per share in the same period of 2024. For the 6 months ended June 30, 2025, net income was $44.9 million or $0.33 of earnings per share compared to a net loss of $10 million or $0.07 net loss per share in the same period of 2024. With that, I'd like to hand the call back over to Peter for some closing remarks. Peter?

Thanks, Joe. In summary, we continue to drive growth in the commercial LUPKYNIS business, move forward with the clinical development of aritinercept and maintain excellent operational efficiency. I want to thank you all for your time today. We'll now open the lines for any questions you may have. Operator?

Our first question comes from the line of Stacy Ku with TD Cowen.

This is Vish on for Stacy. Congrats on a great quarter. So you reported some encouraging data for aritinercept. And I understand that you're not, for competitive reasons, disclosing any details, but could you at least guide us through how you're thinking about the potential for aritinercept? Where do you think it could generate or add the most value so that us and investors could appreciate how you're thinking about the development? And based on the PK/PD data from the SAD study, how are you thinking about maybe potentially doses to be moved forward for the POC studies? And I have one follow-up.

Yes. I mean I'll start, and I'll ask Greg to jump in where I might miss or where he sees some add-on here. Listen, I think the potential of these B-cell mediated diseases and APRIL/BAFF's potential ability to affect these B-cell mediated diseases is apparent today, obviously, in the data that's been rolled out in areas like IgAN. But we, as a company, have done our own assessment internally. We think there's upwards of 20 to north of 20 different B-cell-mediated diseases that you could look at potentially for these compounds. So while we're not disclosing exactly where we're going in our exact approach for competitive reasons at this stage, know that we see a pretty wide open field in terms of other areas that could potentially be addressed even outside of the kidney indications that have been explored to date. So we'll look forward to talking more about that in the future. But at this point, as we've said, we're not disclosing for competitive purposes, but no, we're looking at a range of indications. Greg, do you want to talk maybe a little bit about the dose side of the single ascending dose study?

Sure. Thank you, Peter. Yes, based on the evidence from the single ascending dose study, we're very confident now that a Q4-week dosing schedule is justified with evidence, especially with regard to kinetics, the pharmacokinetics and the pharmacodynamics that we've demonstrated with the single ascending dose. So we think Q4-week dosing will be something we can explore and confidently demonstrate some important evidence as we move forward into the multiple ascending dose studies.

Got it. And then my follow-up was on LUPKYNIS. Actually, clearly, the sales are doing well and you're raising guidance. So can you just detail some effects that you are seeing of the updated ACR guidelines on LUPKYNIS adoption? Maybe discuss how rheumatology versus nephrology prescribing is going and what that looks like right now?

Yes, we are encouraged by the guidelines and have observed some evidence of their impact, even if it's not quantifiable. We’ve noticed a significant increase in the number of rheumatology prescribers. The guidelines, combined with the two-year extension of the original AURORA study and the biopsy substudy published in a rheumatology journal, have contributed to higher prescribing rates in rheumatology offices. Additionally, our hospital business is growing, which reflects the adoption of the guidelines in academic settings and by teaching institutions. Though this isn't a quantitative measure, it illustrates the positive effect we believe the guidelines are having. Rheumatologists are using our drug more, and their rate of growth is currently faster than that of nephrologists. Our hospital business has also been experiencing healthy growth since the publication of the guidelines.

Our next question comes from the line of Maury Raycroft with Jefferies.

This is James on for Maury. Congrats on the progress. Just another question on LUPKYNIS and then I have a follow-up question. For the raised guidance, can you talk more about the drivers and what you're seeing from new patient starts and hospital restarts trends in the initial 4 weeks in 3Q and learnings from prior summer months that informs your commercial outlook for 2025?

I want to begin, and Joe, feel free to add anything I might overlook. To understand our guidance range, consider that the lower end to the midpoint suggests we would need to see either a stabilization or a downturn in our business during the summer, followed by a return to growth in the latter half of the year. The upper limit of our guidance assumes ongoing growth through the third and fourth quarters. If you examine our historical sales trends, as mentioned in past calls, we believe that history is the best indicator of our future performance. We typically observe a slowdown in some metrics during the summer, particularly with PSFs, which have tended to be lighter in those months. Our revenue has remained relatively flat compared to the previous quarter, mirroring the trends seen in the second quarter. Thus, as we assess our guidance range, the lower to mid-level reflects historical patterns, while the higher end indicates we anticipate continued quarter-on-quarter growth. We are genuinely encouraged by current business trends, which is why we are enthusiastic about raising our guidance range, and that's our perspective on the matter, James.

Got it. And then a second one for your BAFF/APRIL inhibitor aritinercept. Can you talk more about when we can see the next data update from the MAD phase and more on rare/orphan autoimmune diseases that you aim to pursue? What are the gating factors to picking specific disease settings to pursue? Are you waiting for competitor updates? Or is it more related to evolving internal strategy?

I wouldn't say we're waiting or overly contemplating this. I believe we're progressing. We're just not publicly disclosing the specifics of our strategy or the timeline for these programs. As mentioned, we intend to pursue at least two B-cell-mediated diseases and expect to begin enrollments by the end of this year. We look forward to discussing this in more detail in the future. However, for now, that's all we can share, James.

Our next question comes from the line of Joseph Schwartz with Leerink Partners.

This is Will on for Joe. Congrats on the progress this quarter. So I just have one on the B-cell program and then a quick follow-up. So on the prior data call, you had mentioned that you were doing some formulation work for AUR200. Is this work still ongoing? Or is it going to be completed prior to the initiation of these future studies later this year? And can you just help us understand the point of this formulation work? Is it specifically to do an auto-injector? Or what's the ultimate goal here? And I have a quick follow-up.

Yes. As we mentioned in our previous call, our aim is to develop the most patient-friendly formulation and device possible, which may include an auto-injector. Based on the doses we've observed so far and the molecular size we have, it seems feasible to achieve that. However, in single ascending dose studies, we haven't yet optimized those formulations. This work is progressing alongside our development efforts. Everything we've seen in the single ascending dose studies and preclinical research suggests that those goals are achievable.

Great. And then just quickly, a question for Joe. As we see the development of AUR200 ramp up, how should we be thinking about R&D spend moving forward? And can you help us put some brackets or kind of general commentary around the cost for these trials? And do you expect to remain cash flow positive during the development of this asset?

Thanks for the question, Will. We haven't provided any specific guidance on operating expenses and/or cash flows going forward. Obviously, as we are moving through 2025, the trial costs were fairly manageable, and you would expect as you kind of move from Phase I and II and on that the costs will increase. But as of right now, we're not giving any specific long-term guidance on OpEx, R&D expenses and/or cash flows.

Yes. I think that's right, Joe. And the only thing I would say is it should be evident to investors that efficient operations and cash flow from operations, however we decide to deploy it, is a priority for us as an organization. So that won't change on a go-forward basis.

Our next question comes from the line of Arthur He with H.C. Wainwright.

Congrats on the decent rise. I just had two questions regarding the 200. So Greg, do you guys plan to present the detail data at any medical conference from the SAD study?

Greg, maybe can talk to what our intentions are. I think you should just appreciate that, obviously, we have ongoing patent work, etc., with the compound. So what's publicly detailed, we would have that ability to do, but stuff that has not yet been publicly talked about, probably not. Greg, any intentions?

No, nothing more than that. It will be presented in an upcoming meeting, but we haven't determined which meeting at this point.

Okay. Got you. And the second question on the 200. So maybe, Peter, I just want to gauge like at what kind of situation or circumstance you guys would feel comfortable to disclose the information about the details of indication going after for the 200. Just curious.

Well, I mean, the obvious answer is when we move into a certain phase of development, it becomes public information and available on clinicaltrials.gov. So that would be my absolute answer. We haven't really discussed it with our Board, Arthur, or we have, and we've deduced and concluded that for competitive purposes, obviously, we've got people that are ahead of us and behind us, and we want to hold what we're doing close to the vest and ensure that we don't lead people down the path of exactly what we're doing. We haven't determined yet when we would disclose. But do realize from the line of questioning here and on our previous call, that there is a lot of appetite to understand what our plans are.

Our next question comes from the line of Doug Miehm with RBC Capital Markets.

Just with respect to Paragraph IV filers, there's no change there. No change as it stands right now in terms of the exclusivity period and adding pediatric onto that. Any updates?

No. And just to clarify that the pediatric trial work that we're doing was part of the original filing, but was not an extension body of work. So the July 2028 worst-case scenario is not inclusive of 6 months of pediatric exclusivity, Doug. No, no changes. We still have patents going all the way out to 2037. We still have our method of use patents, and we continue to do more work around both patents and other work in the company to ensure the longevity of LUPKYNIS. I would just reinforce that the longevity of this asset to us is paramount and it comes to defending the IP that we have around the compound, and it's a priority for the company. So we'll update you when we have more to talk about. But as you know, the legal process on ANDA filings and the subsequent patent infringement lawsuits is pretty protracted. So I wouldn't expect to hear weekly updates from us.

Okay. Second question just has to do with the buyback, and you're aggressive there. There's an obvious opportunity today. As we think about the future, though, given the amount that you're likely to spend on the R&D side being it's going to increase probably fairly materially, will we think that we could see scaled back buybacks as we think about beyond 2025? I'll leave it there.

Doug, as we've said, it's up to the Board's discretion as to how they deploy that cash. Obviously, management gives input to our belief as to what we should do. I wouldn't miss that LUPKYNIS continues to grow for us. And the cash flows we reported in this quarter, if you carry those forward and you carry forward continued growth of LUPKYNIS, the amount of cash flow from operations becomes fairly significant. Now we're not giving long-term or even mid- to short-term guidance on cash flows, but you can do the math. And I think it gives us a very unique position as a biotech company in this space to pay our bills. We have cash on our balance sheet. We have cash flows from operations, so we can pay for the things we want to do, continue to drive LUPKYNIS and develop our pipeline and we have the unique ability to either collect more cash on our balance sheet and grow that over time or deploy it towards buying back shares, which is positive for all shareholders. So while we're not giving anything for '26, and I don't disagree that, obviously, your R&D expenses go up as you move into further clinical trials, don't miss the fact that if LUPKYNIS, which we fully believe will continue to grow, grows, our cash flow from operations and our balance sheet are still very, very strong.

Thank you and this concludes we have reached the end of the question-and-answer session. And this also concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation, and have a great day.