Earnings Call Transcript - AUPH Q3 2025

Operator, Operator

Good morning. Welcome to the Aurinia Pharmaceuticals Third Quarter 2025 Conference Call. I will now turn the call over to Peter Greenleaf, President and Chief Executive Officer of Aurinia.

Peter Greenleaf, CEO

Thank you all for joining us to discuss Aurinia's third quarter 2025 update. Joining me on the call today are Joe Miller, our Chief Financial Officer; and Dr. Greg Keenan, our Chief Medical Officer. Before we begin our discussion, I'd like to direct your attention to Slide 2, which contains important information regarding forward-looking statements. Additionally, we note that on November 2, Aurinia filed a complaint against Dr. George Tidmarsh arising from his statements about voclosporin. The complaint is pending in the United States District Court for the District of Maryland and is available online. If you have questions regarding the complaint, we refer you to the complaint itself as we will not be commenting further on this matter. On today's call, we will report third quarter 2025 financial results and provide an update on recent business progress. We're pleased to report that third quarter 2025 LUPKYNIS sales experienced continued momentum following last year's inclusion in the American College of Rheumatology lupus nephritis treatment guidelines, growing at a rate of 27% for the quarter year-over-year. As a result, we're raising LUPKYNIS sales guidance for 2025 for the second time this year to $265 million to $270 million. Further, we have conducted new LUPKYNIS data analyses, which we will share shortly that reinforce LUPKYNIS' robust clinical profile in the treatment of patients with lupus nephritis. And lastly, following the positive Phase I results that were announced in June, we're excited to be advancing aritinercept toward clinical studies in 2 autoimmune diseases. I'd like to turn the call over now to Joe to review our financial results. Joe?

Joseph Miller, CFO

Thank you, Peter. For the third quarter of 2025, total revenue was $73.5 million, up 8% from $67.8 million in the same period of 2024. As a reminder, the 2024 period included a milestone payment of $10 million associated with LUPKYNIS regulatory approval in Japan. Excluding the onetime milestone, total revenue increased by 27% over the same period in 2024. Net product sales of LUPKYNIS were $70.6 million, up 27% from $55.5 million in 2024. Net income was $31.6 million, up 119% from $14.4 million in 2024. Diluted earnings per share was $0.23, up 130% from $0.10 in 2024. Lastly, cash flows from operating activities were $44.5 million, up 162% from $17 million in 2024. For the 9 months ended September 30, 2025, total revenue was $205.9 million, up 17% from $175.3 million in the same period of 2024. Again, the 2024 period included a $10 million milestone payment associated with LUPKYNIS approval in Japan. Excluding the onetime milestone, total revenue increased by 25% over the same period in 2024. Net product sales of LUPKYNIS were $197.2 million, up 24% from $158.6 million in 2024. Net income was $76.4 million, up 1,677% from $4.3 million in 2024. Diluted earnings per share was $0.55, up 1,733% from $0.03 in 2024. Lastly, cash flows from operating activities were $90 million, up 529% from $14.3 million in 2024. As of September 30, 2025, we have cash, cash equivalents, restricted cash, and investments of $351.8 million compared to $315.1 million at June 30, 2025, and $358.5 million at December 31, 2024. As previously mentioned, for the 3 and 9 months ended September 30, 2025, cash flows from operating activities were $44.5 million and $90 million, respectively. For the 9 months ended September 30, 2025, the company repurchased 12.2 million shares for $98.2 million and diluted shares outstanding were reduced from 149.8 million to 138.2 million. As a result of LUPKYNIS continued momentum, we are pleased to increase our 2025 guidance for the second time this year. For total revenue, we are increasing guidance from a range of $260 million to $270 million to a range of $275 million to $280 million. For net product sales, we are increasing guidance from a range of $250 million to $260 million to a range of $265 million to $270 million. Now I'd like to turn the call over to Greg for some scientific updates. Greg?

Greg Keenan, CMO

Thank you, Joe. We are pleased to share some new analyses of the results of the clinical studies that form the basis of the FDA's approval of LUPKYNIS. These analyses were recently shared with the FDA in response to an information request. As a reminder, LUPKYNIS was granted full FDA approval based on a statistically significant and clinically meaningful improvement in complete renal response at week 52 and was bolstered with the supplemental NDA with 2 additional years of evidence. New analyses, which show that LUPKYNIS also was associated with a statistically significant and clinically meaningful reduction in the risk of renal-related events or death, reinforce the robust efficacy and favorable safety profile of LUPKYNIS. As you can see from the Kaplan-Meier curve on this slide, LUPKYNIS was associated with a statistically significant and clinically meaningful 53% reduction in the risk of renal-related events or death. This analysis used the AURORA 1 Phase III population. We have included the complete tables contained in our information request response in the appendix of this presentation, which is available on our website. Turning to aritinercept. We are very excited about the potential of this novel biologic in the treatment of a wide range of autoimmune diseases. Aritinercept is a dual BAFF/APRIL inhibitor that contains a BCMA-engineered extracellular binding domain optimized for superior affinity to BAFF and APRIL and an IgG4 Fc domain with no appreciable effector function. As a reminder, BAFF and APRIL are cytokines that regulate B cell survival and differentiation with BAFF more targeted at differentiating and mature B cells and APRIL more targeted at plasma cells. By targeting both BAFF and APRIL, aritinercept depletes a broader set of B cells, including plasma cells compared to antibodies such as Benlysta that target only BAFF. In our Phase I study, we enrolled 61 healthy subjects in a standard single ascending dose study design. The study investigated aritinercept doses of 5, 25, 75, 150, 225, and 300 milligrams and placebo, administered by subcutaneous injection. The study included an expanded cohort of 150 milligrams, which will be our starting dose in our next studies. You can see our safety results on this slide. Aritinercept was well tolerated at all dose levels tested. There were no treatment-related Grade 3 or higher adverse events. There were no treatment-related serious adverse events, and there were no discontinuations due to treatment-related adverse events. Adverse events that occurred in more than one subject were injection site reactions, headaches, upper respiratory tract infections, and back pain. All injection site reactions were grade 1. While antidrug antibodies, or ADAs, were detected in the majority of subjects at dose levels of 25 milligrams and higher, the presence of ADAs was not associated with any changes in safety, pharmacokinetic or pharmacodynamic parameters. On this slide, you can see the pharmacodynamic effects of aritinercept treatment. Single doses of aritinercept led to robust and long-lasting reductions in immunoglobulins. Specifically, mean reductions from baseline to day 28 of up to 48%, 55%, and 20% were observed for IgA, IgM, and IgG, respectively. Importantly, we believe that these long-lasting pharmacodynamic effects support once-monthly dosing. With that, I will turn the call over to Peter.

Peter Greenleaf, CEO

Thanks, Greg. We're obviously very excited about these results. Aurinia is on track to initiate clinical studies of aritinercept in 2 autoimmune diseases by the end of 2025. We're very excited about the wide range of therapeutic possibilities for aritinercept and look forward to disclosing further details about our development plan in early 2026. So in summary, we continue to drive growth in the commercial LUPKYNIS business, while at the same time, advancing the clinical development of aritinercept. We want to thank you all for joining us on today's call, and we look forward to taking your questions. So now let me ask the operator to open up the line for Q&A. Operator?

Operator, Operator

Our first question is from Stacy Ku with TD Cowen.

Stacy Ku, Analyst

Congrats on the quarter. If you could put the LUPKYNIS regulatory questions to the side, just given your positive commentary around ACR guidelines and LUPKYNIS use, just hoping you could provide a few metrics around prescriber habits that you're seeing in real time. In addition, obviously, still very early days, but how are clinicians using LUPKYNIS versus Gazyva?

Peter Greenleaf, CEO

Thanks, Stacy. I’ll start by sharing some qualitative insights on our LUPKYNIS business and why we’re optimistic about it. As we’ve mentioned before, we're not going to provide patient-level metrics at this stage of the launch since we are in the fifth year on the market. The consistency of our performance speaks for itself, as seen in our revised guidance and steady year-over-year and quarter-over-quarter growth. In terms of our strategy, we're focusing more on high target, high-volume prescribers, especially in rheumatology, where we have observed consistent growth among both new and existing prescribers each quarter. Additionally, the ACR guidelines have significantly benefited us, impacting both patients and the introduction of new drugs into the market. The guidelines promote proactive screening and emphasize aggressive treatment protocols across specialties, reinforcing the urgency in managing lupus nephritis. Furthermore, our efficacy profile continues to resonate well, and we are seeing steady growth in hospital sales. Greg, do you have any insights to share, particularly from your perspective as a rheumatologist after the recent ACR conference?

Greg Keenan, CMO

Yes. Thank you, Peter. So Stacy, just to close what Peter was saying, at the ACR meeting this year, I think my takeaway was that the clinicians are that much more familiar with the lupus nephritis portion of the SLE management guidelines, and they do very much believe getting aggressive quickly with triple therapy is a key thing. They also, at least in my impression, perceive Gazyva to be something that will replace rituximab in their treatment armamentarium. I'd point out relative to B-cell-mediated treatments such as Benlysta and Gazyva, LUPKYNIS is a T cell-mediated agent as well as helps protect podocytes. So there is a complementarity there going with one doesn't exclude the other. And then finally, I think in discussions I've had with individual rheumatologists, they are increasingly impressed with the speed with which you can achieve goals with LUPKYNIS relative to B-cell modulators, which take longer and also the ability to aggressively taper steroids. So there's a lot of attributes of our drug that are increasingly being thought of as important for the management of lupus nephritis as clinicians increasingly gain familiarity with LUPKYNIS.

Operator, Operator

Our next question is from Olivia Brayer with Cantor.

Olivia Brayer, Analyst

Can you talk through some of the trends that you're seeing into 4Q so far and just overall level of confidence in continued growth from here, especially thinking through 2026 dynamics? Asking in light, obviously, of Roche's recent approval. And then what can you tell us at this point about your APRIL/BAFF program? Have you internally selected which indications you'll be moving forward with and trial design? And if you can't disclose that today, can you tell us how and when you plan to announce your strategy and timelines? And just any feedback from the agency that you've gotten so far from that program?

Peter Greenleaf, CEO

Thank you, Olivia. We are very pleased with the positive momentum of LUPKYNIS and have raised our guidance for the second time this year. We believe this momentum will continue as we enter the fourth quarter. We are excited about the progress with this product. Regarding our APRIL/BAFF program, we mentioned during our call that we anticipate sharing more details in the early part of 2026, although we have not provided specific guidance on the timing.

Olivia Brayer, Analyst

Okay. Understood. And maybe if I can just sneak in one more. Anything at ASN this year that we should be focused on from you all?

Peter Greenleaf, CEO

Greg, do you want to share anything beyond the usual LUPKYNIS updates and any new developments with aritinercept as we progress? But this year...

Greg Keenan, CMO

Yes, we have a couple of presentations discussing real-world applications. I believe nephrologists are increasingly becoming essential in managing lupus nephritis, and we are looking forward to participating in the meeting and hearing their insights. However, there isn't anything particularly noteworthy from our viewpoint as we approach ASN this year.

Operator, Operator

Our next question is from Maury Raycroft with Jefferies.

Maurice Raycroft, Analyst

Congrats on the quarter. Just wondering for the FDA information request, can you say more about what triggered that? I guess, is that related to the Tidmarsh issues or...

Peter Greenleaf, CEO

We can't speak specifically to why we received an information request from the FDA. But I think as you can see through the slide deck and through our comments through the actual commentary that we did during our actual call today, the data that we've disclosed and is out there publicly is actually quite favorable for the product. Greg, do you have any additional comments?

Greg Keenan, CMO

Yes. I'd just say that the FDA's prerogative is to ask for comments and questions at any time. And concurrent with that, I'll just point out to a slightly different way than we've looked at our data before. But to Peter's point, the evidence is very favorable, and that was one of the reasons why we wanted to share this specific set of results with the community as we have sent this all back to the FDA as well for their consideration.

Maurice Raycroft, Analyst

Okay. Understood. And for aritinercept, can you clarify if you're in a MAD phase with healthy volunteers? And would you report more data in early 2026 along with the selected indications?

Peter Greenleaf, CEO

As we've said, we're going into 2 autoimmune diseases, moving into 2 autoimmune diseases. And then on the back end of that, that we would disclose in early 2026 more details on those programs, Maury.

Operator, Operator

Our next question is from Joseph Schwartz with Leerink Partners.

Will Soghikian, Analyst

This is Will on for Joe. Congrats on a strong quarter here. I have one question on the FDA request and then one on AUR200. So just to start on the request, do you expect a response from the FDA? Just curious about that. And then for AUR200, I can appreciate that you guys are going to provide additional updates in early 2026 on that. But could you just help us give us a little bit more information on the process of selecting these indications and perhaps the puts and takes of choosing one or the other? Any color there would be helpful.

Peter Greenleaf, CEO

Thank you, Will. I want to emphasize again that we received and responded to an information request regarding LUPKYNIS. This data set includes our responses, which are available in the slides in your deck posted on our K, 11, 21, and 22 of today's presentation and also on our website. The data contains measurements requested by the FDA, with each measurement defined by the FDA. If you look at these slides and analyses, you'll see that we presented new data showing a 53% reduction in the risk of renal-related events and/or death. We believe this demonstrates the robust efficacy and favorable safety profile of the product. We cannot predict if the FDA will have more questions. As Greg mentioned, the FDA can ask questions at any time, but we feel that this request and response were quite favorable. Regarding disclosures about indications for aritinercept, like any company, we consider how APRIL/BAFF could fit into the disease, the unmet medical needs in these major disease areas, and how APRIL/BAFF may or may not relate to those diseases. Additionally, we think about market size and probability of success. These are typical considerations for any company when evaluating indications. I can assure you that we've taken all these factors into account, and we look forward to sharing more as we approach 2026 and beyond.

Operator, Operator

Our next question is from Arthur He with H.C. Wainwright.

Yu He, Analyst

Another strong quarter. Just a couple of quick questions. Firstly, historically, the fourth quarter is your strongest quarter. What potential challenges or risks could prevent you from exceeding expectations in the fourth quarter? Also, what are your thoughts on the impact from the ACR guidance? Do you see this as the early stages of a longer process, or is it still too early to tell?

Peter Greenleaf, CEO

Thank you for the question, Arthur. Regarding the ACR guidelines, I appreciate Greg's insights because we've implemented similar strategies with various drugs across different categories, particularly concerning rheumatologists. The guidelines are crafted based on what we believe the evidence supports and are favorable for both patients and our drug, as well as others. It's important to note that changing physician treatment behaviors takes time. We are witnessing positive momentum, and I anticipate that this will continue to improve with enhanced diagnosis and treatment rates that align with those guidelines. Your first question was about the guidance for the year, specifically for the first and fourth quarters. You are correct that historically, fourth quarter has been our strongest. We aim to provide a guidance range that we can meet or exceed, which is reflected in our guidance of $265 million to $270 million for the full year. That’s all I have to say on this matter at the moment, Arthur. Thank you for your question.

Yu He, Analyst

Maybe a quick question about the BAFF/APRIL program. Given the evolving landscape, many players have entered and approached the indication differently. Considering the company's history and strengths, have you thought about targeting a non-kidney indication? Or will you be able to provide more details later?

Peter Greenleaf, CEO

What I can tell you is we take into account strategically the fact that we have a focus on rheumatology. I mean, I think often we forget lupus is treated by rheumatologists and lupus nephritis, while it is a separate condition, it is an associated condition with lupus. So our concentration is rheumatologists and nephrologists. So I think you can feel comfortable that we take into account both of those, nephrology and rheumatology. And I guess I would just conclude too, that we're not blind to the fact that an APRIL/BAFF inhibitor, we believe, has every ability to work in a multitude of different diseases. And we've mentioned historically that our internal work has shown upwards of 20-plus indications that could be affected through further development in this class and area of drugs. So we're not boxed in, Arthur, in our thinking to just rheumatology and nephrology. And as I said, we look forward to sharing more about that as we move into 2026 and beyond.

Operator, Operator

Our next question is from David Martin with Bloom Burton.

David Martin, Analyst

You did a great job of describing all the positive drivers bringing new patients on to LUPKYNIS. I'm wondering, are you seeing positive trends in persistence? Are the patients staying on it longer?

Peter Greenleaf, CEO

Yes, David, we've observed a positive trend in persistency that coincided with the release of the data regarding the extension trial and the follow-up data from the biopsy sub-study. You've been following us for a long time and understand this area well. Calcineurin inhibitors may not be new as a class of drugs, but rheumatologists typically do not use them as frequently or assertively as nephrologists. The data indicating safety and efficacy, along with the drug's tolerability for up to three years in the AURORA study, has contributed to this. Additionally, the 18-month biopsy-confirmed sub-study demonstrated no adverse effects on kidney function as measured by eGFR and histology, suggesting a potentially balancing or even improving effect for patients. These findings have significantly increased the confidence of rheumatologists and nephrologists in keeping patients on the medication for longer durations. While I don’t believe these changes have reached a material level, they have not declined and continue to show improvement over time.

Operator, Operator

Our next question is from Doug Miehm with RBC Capital Markets.

Douglas Miehm, Analyst

Congrats on the quarter. Just one question from me on aritinercept. Peter, are you contemplating bringing the 150? I want to make sure I heard that or the 225 ahead in the clinical trial program in terms of what you're going to dose?

Peter Greenleaf, CEO

Yes. We haven't announced the exact structure for these trials yet. We look forward to sharing more details in the future. Greg, do you have anything to add?

Greg Keenan, CMO

Well, that way, we were just trying to provide a little bit more color on our confidence that we have a dose that ought to be efficacious relative to what we've seen with regard to pharmacodynamic marker changes. So we indicated in our prepared statement that 150-milligram dosing will be one of the dosing levels that we'll use going forward. But of course, we're embarking on kind of multiple ascending dose studies, so we'll have higher doses as well. But what we indicated was 150 is definitely viable and we're taking that forward.

Douglas Miehm, Analyst

Okay. Because I just have a follow-up question then. So the 150 is where you had the expanded cohort, seems to be on a risk-reward basis, maybe one of the more attractive levels. I'm just wondering why then when you look at the data that you provided versus the competitive products, you were calling out the 225 versus the 150? And the 225 does look better than everything else, all measures that we can see here. But I'm just wondering why you weren't providing the 150 in terms of those data.

Peter Greenleaf, CEO

That's a great question. It addresses the need to understand how we plan to proceed with the multi-ascending dose study or studies that will clarify the dose we want to use as we advance into further clinical development. Your question is indeed valid. However, at this point, we're not revealing all the details, but we look forward to sharing them in 2026. Thank you for your question.

Operator, Operator

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Peter Greenleaf for closing remarks.

Peter Greenleaf, CEO

Thank you very much, everyone, for joining us on today's call. We're excited about the momentum we've seen now through 3 quarters of the year, and we look forward to providing details on year-end and 2026 in our next call. Have a great day. Thank you very much.

Operator, Operator

Thank you. This concludes today's conference. You may disconnect your lines at this time, and have a wonderful day.