Q1 2025 Aurinia Pharmaceuticals Inc Earnings Call
[inaudible]
As a reminder, this conference is being recorded.
Speaker Change: My pleasure to turn the call over to Andrea Christopher Corporate Communications and Investor Relations. Please go ahead Andrea.
Andrea Christopher: Thank you operator, and thank you to everyone for joining today's call and webcast. Joining me on the call. This morning are Peter Greenleaf, Hernias, President and Chief Executive Officer, Joe Miller Arena, as Chief Financial Officer, and Dr. Greg Keenan erroneous Chief Medical Officer Today, We will review and discuss <unk> first quarter 2025 financial results and provide an update on <unk>.
Andrea Christopher: Corporate progress as communicated in the Companys press release and quarterly report on Form 10-Q issued this morning for more information. Please refer to <unk> filings with the U S Securities and Exchange Commission and Canadian Securities authorities, which are also available on <unk> website at arena pharma Dot com during today's call Iridium may make forward.
Andrea Christopher: 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 erroneous future financial results and business. Please refer to disclosures erroneous press release quarterly report on Form 10-Q, and all other filings with the U S Securities and exchange.
Commission and Canadian Securities authorities.
Andrea Christopher: Please note that all statements made during today's call are current as of today May 12, 2025, unless otherwise noted and are based upon information currently available to us except as required by law or when he assumes no obligation to update any such statements.
Andrea Christopher: Now, let me turn the call over to erroneous President and CEO Peter Greenleaf Peter.
Peter Greenleaf: Thanks, Andrea and good morning, everyone I want to thank everybody for joining us today.
Peter Greenleaf: On this morning's call I'll provide an update on our first quarter 2025 results and provide an update on recent progress I'll, then turn the call over to Joe Miller, our CFO to provide additional details on our financial results.
Peter Greenleaf: With a continued focus on commercial execution and driving operational efficiency, we achieved strong growth in total revenue and net product sales in the first quarter.
Peter Greenleaf: For the first quarter of 2025 total revenue was 62 5 million up.
Peter Greenleaf: 24% from $50 3 million in the same period of 2024.
Peter Greenleaf: For the first quarter of 2025 net.
Peter Greenleaf: Net product sales of loop Guy that's the first FDA approved oral therapy for the treatment of adult patients with active lupus nephritis R. L. N were $60 million up 25% from $48 1 million in the same period of 2024.
Peter Greenleaf: The increase is primarily due to an increase in the number of loop kindness cartons sold to specialty pharmacies and driven by further lupus nephritis penetration.
Peter Greenleaf: For the three months ended March 31, 2025 cash flow generated from operations was $1 3 million compared to a negative $18 6 million in cash flow used in operations in the same period of 2024.
Peter Greenleaf: Excluding $11 1 million of cash payments made in connection with the November 2020 for restructuring cash flow generated from operations was $12 4 million for the three months ended March 31 2025.
Peter Greenleaf: Exiting the quarter with cash cash equivalents restricted cash and investments of $312 9 million.
Peter Greenleaf: As compared to $358 5 million in December 31, 2024.
Peter Greenleaf: For the three months ended March 31, 2025, the company repurchased $5 8 million of its common shares for $47 $4 million.
Peter Greenleaf: With our solid 25% increase in sales growth for a loop kind of us in the first quarter. We are poised for continued success in 2025. Following the recent update of the American College of Rheumatology Lupus nephritis treatment guidelines, which recommends the incorporation of drugs like loop kindness into first line therapy.
Peter Greenleaf: Our commercial organization is focused on educating rheumatologists about the benefits of initiating loop kindness earlier in the treatment paradigm.
Peter Greenleaf: We have started the year in a solid position with a highly efficient organization focused on loop kindness gross and are therefore, reiterating our total revenue guidance in the range of 250 million to $260 million.
Peter Greenleaf: And net product sales guidance in the range of 240 million to $250 million for 2025. Finally, we remain on track to report initial results from the Phase one study of our pipeline product AUR 200, a dual bass April inhibitor for the potential treatment of a range of autoimmune diseases.
Peter Greenleaf: Later this quarter.
Peter Greenleaf: I'd like to now turn the call over to Joe Miller, our CFO for a more detailed review of our first quarter 2025 financial results.
Peter Greenleaf: Then return at the end of the call for a quick recap and to open up the line to any questions you might have Joe.
Joe Miller: Thank you Peter and good morning, everyone, let's take a few minutes to discuss the first quarter 2025 financial results for.
Joe Miller: For the three months ended March 31, 2025, total revenue was $62 5 million compared to $50 3 million in the same period of 2024.
Joe Miller: As Peter mentioned, we had cash cash equivalents restricted cash and investments of $312 9 million as of March 31, 2025, and generated cash flows from operations of $1 3 million.
Joe Miller: Excluding $11 1 million of cash payments made in connection with the November 2020 for restructuring cash flow generated from operations was $12 4 million for the three months ended March 31 2025.
Joe Miller: We are continuing to be opportunistic with our share repurchase program and expect to fund any future discussion aerie share repurchases with cash flows from operations and cash currently on hand.
Joe Miller: The company repurchased $14 5 million of its common shares for $108 $5 million since the launch the program in the first quarter of 2024 through May eight 2025.
Joe Miller: For the three months ended March 31, 2025 cost of revenue was $8 6 million compared to $7 8 million in the same period of 2024. The increase is primarily due to an increase in <unk> net sales of blip kindness.
Joe Miller: For the three months ended March 31, 2025, gross margin was 86% compared to 85% in the same period of 2024.
Joe Miller: For the three months ended March 31, 2025, total operating expenses were $40 6 million compared to $63 6 million in the same period of 2020 for.
Joe Miller: The decrease is primarily due to lower personnel expenses, including share based compensation and overhead costs as a result of our strategic restructuring efforts in 2024 couple.
Joe Miller: Coupled with a reduction in non personnel R&D expenses as a result of ceasing development of the company's EUR 300 development program and restructuring related one time charges in the first quarter of 2024 that did not recur in 2025.
Joe Miller: This was partially offset by an increase in R&D related expenses as we continue to advance our EUR 200 program and other noncash expense related to the Remeasurement of our Swiss franc denominated mono plant finance lease liability and changes in our fair value assumptions related to our deferred compensation liability for the three months ended March 31.
Joe Miller: 25, net income was $23 3 million or <unk> 17 cents of earnings per share compared to a net loss of $10 7 million or 7% of net loss per share in the same period of 2024.
Joe Miller: With that I'd like to hand, the call back over to Peter for some closing remarks Peter.
Peter Greenleaf: Thanks, Joe in summary, we're continuing to lean into our highest growth drivers for the commercial <unk> business, continuing clinical development of EUR 200, and maintaining excellent operational efficiency throughout the organization.
Peter Greenleaf: Want to thank you all for your time today, we'll now open the lines for any questions you might have operator.
Peter Greenleaf: Thank you I will not be conducting a question answer session.
Speaker Change: You'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.
Peter Greenleaf: One moment, please while we pause for questions.
Speaker Change: Our first question is coming from Stacy <unk> from TD calendar. Your line is now live.
Stacy: Hey, good morning, congrats on the solid quarter and thanks for taking our questions.
Speaker Change: First is on loop kindness can you maybe just talk about the quarterly cadence as you think about Q1 sales in your guidance for the year.
Speaker Change: I understand youre, not disclosing metrics, but if you're not willing to comment on the quarterly cadence maybe talk about what's driving sales. These days is that largely in new patient adds or is it more of the additional restarts in hospital ads.
Speaker Change: That's the first question.
Speaker Change: And then the second question is on a EUR 200, just as we near the phase one single ascending dose update Amy talk about.
Speaker Change: Base case scenarios on how you'd give an update on next steps just maybe Karen you could speak to some strategies to get to market faster and what type of regulatory pathway. You think is feasible as we think about other anti April basket. Thanks, so much.
Speaker Change: Thanks Stacy.
Karen: Let me start with the first one on <unk> kinase.
Karen: Obviously, we're guiding to a range of $2 40 to $2 50, I think the best way to think about the quarterly gate is to go back and look at historical lows.
Karen: And I think that will help in terms of how this business has performed consistently quarter on quarter and.
Karen: Somewhere in that <unk> range.
Karen: Storage <unk> seen some effect in the summer and then we've historically seen kind of a lift in rise into the back half of the year and that's been pretty predictive for the last several years in terms of mix and drivers what I can tell you is the full.
Karen: Complement is still driving the business everything from.
Karen: New patient adds to persistency.
Karen: Time to getting patients on drug all of those continue to show improvement for us but that improvement.
Karen: I would look at Holistically, it's not any one key driver I will tell you lastly that our goal is to continue to drive rheumatology and we've actually seen some good improvements in terms of rheumatology prescribing not that.
Karen: Our old really trying to favor one versus the other but we think it's indicative of early diagnosis and early treatment. When rheumatologists are taken the lead in treating these patients.
Karen: So a good quarter I think.
Karen: Our guidance range staying consistent gives you where we think we're going to fall out and I think that's about it on the <unk>.
Karen: 200, <unk> not to give you nothing here, but.
Karen: Between now and the end of June we intend to report out the data and I.
Karen: I would just ask you to wait until that and that'll be our single ascending dose data and we'll give more steer on the program once once we get there.
Thank you.
Speaker Change: Thanks Stacy.
Speaker Change: Thank you. Your next question is coming from Maury Raycroft from Jefferies. Your line is now live.
Maury Raycroft: Hi, good morning, congrats on the quarter and thanks for taking my questions.
Maury Raycroft: I'll ask one just on guidance too so for historically first quarter tends to be the lowest quarter. So just wondering if you're expecting second quarter to be in line or lower and what are you seeing in the initial six weeks in second quarter that informs your the rest of your outlook for the rest of the year.
Maury Raycroft: Yes, I'm not sure I'd have to go back I don't think one Q is usually our lowest quarter I think somewhere between the two Q3 Q spread because it incorporates this summer usually using history has been.
Maury Raycroft: The lower and they usually historically, we've come back to a rise in <unk>. So in terms of our guidance range. I think we are using history, probably more than anything to sort of project, where we're going into the year.
Maury Raycroft: That would include what we've seen historically as a soft summer we're only sort of one in Q3. This into <unk>. So we've got some time ahead of us and look forward to reporting <unk> when when we do that.
Maury Raycroft: In terms of drivers that kind of already talked to that more but I think if you. If you look at it last year and the year before probably that's the best way to think about quartering.
Maury Raycroft: The remainder of the year.
Maury Raycroft: Got it.
Maury Raycroft: Just wanted to ask on the Anda filers too.
Speaker Change: It seems like there's a good number of those challenging the validity of the 2037 dosing protocol patent wondering if you could just talk more about that and.
Speaker Change: What the strategy and risks are there.
Speaker Change: Well I mean, I think we've commented on this historically, so there's really nothing new outside of the fact that we've had filers.
Speaker Change: Initially come in with and as we've obviously filed patent infringement lawsuits against all of them intend to vigorously defend our patents that we have and we will keep you updated along the way, but obviously you know that through that and automatically puts these filers under a 30 month stay.
Speaker Change: Execution and.
Speaker Change: So we'll have to just see that process through and we have continued work that we're doing in the organization to.
Speaker Change: I guess I would just leave it with the longevity of Okay. This is a priority for the organization. So.
Speaker Change: So all hands on deck at not just defending our patents, but making sure that we're working hard towards keeping that that revenue stream coming in and the drugs being an important drug for us well into the future.
Speaker Change: Understood. Okay. Thanks for taking my questions I had back in the queue.
Speaker Change: Thanks.
Speaker Change: Thank you. Your next question is coming from Joseph Schwartz from Leerink Partners. Your line is now live.
Speaker Change: Great. Thanks very much.
Joseph Schwartz: I just had a couple of questions on.
Speaker Change: Potential new.
Speaker Change: Federal government policies here and a.
Speaker Change: Hernias potential exposure to tariffs and MFN.
Speaker Change: So could you first of all just help us understand where the IP is domiciled from China.
Speaker Change: How you're importing.
Speaker Change: Any product from overseas, whether it's at Cogs or transfer prices. If you got significant drug stockpiled in the U S.
Speaker Change: And if you can grow supply within the U S overtime.
Speaker Change: And then.
Speaker Change: How should we think about any exposure iridium has two potential MSN legislation based on the amount of government reimbursement.
Speaker Change: Thank you.
Speaker Change: Yeah.
Joe Miller: A lot there Joe So let me just start with the tariff side of the equation I guess.
Joe Miller: As you know our API is.
<unk> done in Switzerland, but to be clear, we have several years' worth of product that sits on U S soil and I think that even if tariffs were depending.
Joe Miller: Depending on what the range of tariffs could be it's on a very small percentage of our overall cost of goods at the API level, we do all our fill finish work or our packaging work here in the in the U S.
Joe Miller: So we think minimal to no impact over the next several years and then TBD as too.
Joe Miller: What those tariffs would look like and what the impact would be on our API of course like most we're working hard to ensure.
Joe Miller: We have as much product in the U S as possible and as I said, we've got several years here in terms of transfer pricing et cetera.
Joe Miller: We're watching this like everybody else, obviously, we're a Canadian company that does business in the U S. A transfer pricing is part of how our economic model works. My understanding is that we've taken not an executive order butter, an act of Congress to actually go and impact that so.
Joe Miller: Our ears are open and we're kind of watching where the market goes on this and where the president and his administration goes as it relates to <unk>.
Joe Miller: Tariffs, but the element of transfer pricing for ex U S companies operating within the U S. And then lastly, the most recent executive order.
Joe Miller: Guess is as good as mine it kind of seems like there is a directive put out there under an executive order by President Trump and then where it eventually land if it lands as kind of a TBD. So we're watching that as closely as you are because obviously the entire pharmaceutical and really health care industry has affected by.
Joe Miller: The government pricing side of the business to recall, our business is pretty evenly split between <unk>.
Joe Miller: Commercial pay but public pay or excuse me private pay and the and the government side of the business. So obviously, it's something we're watching closely.
Peter Greenleaf: Very helpful. Thanks, Peter.
Thank you Joe. Thank you. Your next question today is coming from Olivia Brayer from catch up of showed your line is now law.
Olivia Brayer: Hi, Good morning. Thank you for the question. So for EUR 200 is there anything you can say or just around how many patients will see data from or how many dose levels you've studied in that trial.
Speaker Change: And maybe just overall thoughts around what kind of dosing schedule, you think you'll need to be competitive and weather.
Speaker Change: Whether at home administration is important or not.
Speaker Change: Yeah, I think those are all good questions and we look forward to its now.
Speaker Change: Almost mid May and as we've said between now and the end of June we're going to report out that said, David So we look forward to.
Speaker Change: Showing you what we've got obviously in the areas of proteinuria kidney diseases and the like there is more than one April bass ahead of us in the <unk> space So well.
Speaker Change: We'll learn what we've got as it relates to others in just a short couple of weeks.
Speaker Change: Okay. Peter anything you can say just around data disclosure.
Speaker Change: In terms of how you guys are well.
Speaker Change: Do you have to call in and kind of what level of details just in terms of next steps could we expect to.
Speaker Change: To see them.
Speaker Change: Yeah, I mean outside of the fact that we've committed to reporting out that single ascending dose data by the end of June.
Speaker Change: No we're not given any guide as to how much data and what we'll show it.
Speaker Change: In addition to that so.
Speaker Change: More to come we got to discuss if we got to see what the data is first because obviously as this trial is ongoing and then we have to sit with our board and talk about what we wanted to disclose publicly as it relates to not just a program, but where we intend to go from there. So we look forward to doing that.
Speaker Change: But it's between now and the end of June.
Okay. Thanks looking forward to that.
Speaker Change: Thank you.
Speaker Change: Thank you. Your next question is coming from say he'll doing well from RBC capital markets. Your line is now live.
Speaker Change: Hi, Good morning. This is all his pardon me. Thank you so much for taking our questions I have two.
Speaker Change: My first question is related to the SG&A expense. So that is around $20 million this quarter and it was a bit below what we were we had margins. So I wanted to know.
Speaker Change: Was there any one time item in it and how should we think about these G&A expense going forward.
Speaker Change: Alright. So the question was on SG&A, we don't give expense level guide, but maybe Joe can give a little bit on the quarter and how to think about it.
Speaker Change: As it relates to the year.
Joe Miller: Yes. Thank you for the question.
Joe Miller: We don't provide specific guidance on opex.
Joe Miller: By function, what I will say is that following our restructuring in November we are on track to achieve our previously announced cash based opex savings of approximately $40 million.
Joe Miller: So again the cash flows reported today as a result of our strong sales performance.
Joe Miller: <unk> represents the early benefit of streamlining our operations. So as you look to kind of our SG&A expense.
There was a small true up as it related to stock based compensation that ran through there you can see that in the footnotes as it relates to our equity based footnote, but outside of that there was nothing unusual embedded within that functional lines.
Speaker Change: Okay. Thanks, and then my second question is on <unk>.
Speaker Change: On Ross's gang, so you're right that as expected the Paducah dated October 25, So how do you expect the evolution of the treatment market and what impact do you think when the topline guidance adoption. Thank you.
Speaker Change: Why don't I start.
Speaker Change: Have a rheumatologist here in the room with me so it would be good to get his perspective as well.
Speaker Change: Dr <unk> <unk> Chief Medical Officer.
Speaker Change: So.
Speaker Change: Listen I'm excited to have more large pharmaceutical companies into the lupus nephritis and the lupus market to help us grow awareness. Obviously these guidelines that are most recently.
Speaker Change: <unk> by the ACR and buy you are a bike at igo all call for much more aggressive diagnosis and early treatment of the disease. If that actually happens we've got internal data to show that the market will grow and the more companies. We have educating on those guidelines will help us.
Speaker Change: We believe to expand the market. So that's number one.
Speaker Change: Number two obviously.
Speaker Change: <unk> got some.
Speaker Change: Some data and.
Speaker Change: We've seen it and obviously your file I think we feel pretty confident that they're filing will most likely be reviewed and they have a high probability of getting a getting approval.
Speaker Change: Not that we can predict that not that we're the owners of the asset and those conversations with the with the agency, but we think it's likely.
Speaker Change: It is a b cell pathway drove Greg you want to give any comment on what we see in the data as it relates to the drug in.
Speaker Change: The guidelines are thank you Peter so.
Speaker Change: First off it's a great.
Speaker Change: Great news for individuals and their citizens to care for our people.
Speaker Change: People with lupus nephritis.
Speaker Change: The data there is encouraging and certainly.
Speaker Change: Supplementing what Peter was saying.
Speaker Change: We believe that this b cell agent will have an important role. The guidelines that were just issued last year buying a place for Ben list and you can imagine the opportunity for <unk> to fit in that category to a b cell agents.
Speaker Change: We think nonetheless that look kind us with its strong evidence and the timeliness of benefit achieving goals.
Speaker Change: Therapeutic goals, some within one month and six months time.
It will have a role in helping patients and doctors meet their gold quickly, which is a key part of what the ACR guidelines emphasize all pointed out that basically our guidelines and print that Justin.
Speaker Change: This month and it is very specific in the role for <unk>.
Speaker Change: C&I is like Bock was born as explicit not just in class three and four but also in <unk>.
Speaker Change: Five and so we think it's a good day for patients.
Speaker Change: I was just going to continue to have an important role in helping patients achieve their goals. Yeah. I think it comes to me it comes down to speed and Wow.
Speaker Change: These products are obviously getting approved if it takes two years to get the effect that we get at one year and quite frankly that we see it at three months six months. The guidelines are calling for rapid reductions in proteinuria in these b cell agents, so far have not been able to achieve the repair.
Speaker Change: <unk> of response and reduction in proteinuria that the guidelines are calling for it. So in other words, we think we have a very competitive profile.
Speaker Change: Great. Thank you so much.
David Martin: Thank you next question is coming from David Martin from Bloom Burton Your line is now live.
David Martin: Good morning, Thanks for taking my questions.
David Martin: My understanding is that loop cardenas's quite difficult to manufacture. The fact that you now have anda filers does that infer to you that they solve the puzzle and should they be able to manufacture the drug matching kind of soft commercial scale.
Speaker Change: We don't have any insight into that outside of as part of their anda package, you'll have to show that they can actually manufacture it.
Speaker Change: So we haven't changed our position on what we believe.
Speaker Change: Our process is whether they can duplicate it or find a way to do it differently is TBD.
Speaker Change: We haven't seen their actual filing package.
Speaker Change: Okay and.
Speaker Change: Next major events in the patent litigation, what what kind of timing should we expect and what events are coming up.
Speaker Change: I mean, we obviously have filed patent infringement lawsuits.
Speaker Change: I don't think we intend to disclose major milestones in the <unk>.
Speaker Change: The IP patent defense space, We'll report them when there are major things to update on but now we are in the throes of litigation and I think you can look at any analog product small molecule product that is in.
In the end a battle.
Speaker Change: And use that as a way to predict what we're going to see going forward, but we don't intend to give timelines on.
Speaker Change: On legal proceedings.
Speaker Change: Okay, and then one last question.
What endpoints do you anticipate could differentiate EUR 200 from other April and BARF inhibitors with.
With the phase one sad results.
Speaker Change: I think the phase one sad results are obviously going to give us the pharmacokinetics and pharmacodynamics of the product that's everything from the half life of the product which could be directly.
Speaker Change: Juxtaposed against what the dose of the product would be how often you have to give it we're going to get hopefully a good idea of the range of doses and then the impact on Biomarkers like <unk> and all those things will who will give us and give the market a way to assess.
Speaker Change: How the product looks versus others in the space.
Speaker Change: And.
Speaker Change: Alongside of our strategic development pathway from there.
Speaker Change: Those will all be important to look at as we rollout this single ascending dose data.
Speaker Change: Okay. Thanks, that's it for me.
Speaker Change: Thank you.
Speaker Change: Thank you we reached end of our question and answer session I'd like to turn the floor back over for any further or closing comments.
Speaker Change: So I want to thank everybody for taking the time with us today.
Speaker Change: Belated mother's day, and we look forward to updating as the quarters roll forward here. Thank you.
Speaker Change: Thank you that does conclude today's teleconference and webcast you may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.
Speaker Change: Yeah.