SEC Form 10-Q filed by Aurinia Pharmaceuticals Inc
$AUPH
Biotechnology: Pharmaceutical Preparations
Health Care
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_____________________________________________
FORM 10-Q
_____________________________________________
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 31, 2025
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from_____________ to ________________
Commission file number: 001-36421
__________________________________________
(Exact Name of Registrant as Specified in its Charter)
__________________________________________
Alberta, | |||||
| (State or other jurisdiction of incorporation or organization) | |||||
| (Address of principal executive offices) | (I.R.S. Employer Identification Number) | ||||
Registrant’s telephone number, including area code
_____________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| x | Accelerated filer | ☐ | ||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Indicate the number of shares outstanding of each of the registrant's classes of common shares, as of the latest predictable date. As of May 8, 2025, the registrant had 135,104,302 of common shares outstanding.
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of exchange on which registered | ||||||
Table of Contents
| Page | ||||||||||||||
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AURINIA PHARMACEUTICALS INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| March 31, 2025 | December 31, 2024 | |||||||||||||
(Unaudited) | ||||||||||||||
| ASSETS | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash, cash equivalents and restricted cash | $ | $ | ||||||||||||
| Short-term investments | ||||||||||||||
| Accounts receivable, net | ||||||||||||||
| Inventory, net | ||||||||||||||
| Prepaid expenses and deposits | ||||||||||||||
| Other current assets | ||||||||||||||
| Total current assets | ||||||||||||||
| Finance right-of-use lease assets | ||||||||||||||
| Intangible assets, net | ||||||||||||||
| Operating right-of-use lease assets | ||||||||||||||
| Property and equipment, net | ||||||||||||||
| Other noncurrent assets | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | $ | $ | ||||||||||||
| Accrued expenses | ||||||||||||||
| Finance lease liabilities, current portion | ||||||||||||||
| Deferred revenue | ||||||||||||||
| Operating lease liabilities, current portion | ||||||||||||||
| Other current liabilities | ||||||||||||||
| Total current liabilities | ||||||||||||||
| Finance lease liabilities, less current portion | ||||||||||||||
| Deferred revenue, less current portion | ||||||||||||||
| Deferred compensation and other noncurrent liabilities | ||||||||||||||
| Operating lease liabilities, less current portion | ||||||||||||||
| Total liabilities | ||||||||||||||
Commitments and contingencies (Note 5) | ||||||||||||||
| Shareholders' equity | ||||||||||||||
Common shares - | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
| Accumulated other comprehensive loss | ( | ( | ||||||||||||
| Accumulated deficit | ( | ( | ||||||||||||
| Total shareholders' equity | ||||||||||||||
| Total liabilities and shareholders' equity | $ | $ | ||||||||||||
See accompanying notes.
1
AURINIA PHARMACEUTICALS INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(in thousands, except per share data)
| Three months ended | ||||||||||||||
| March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Revenue | ||||||||||||||
Net product sales | $ | $ | ||||||||||||
License, collaboration and royalty revenue | ||||||||||||||
Total revenue | ||||||||||||||
| Operating expenses | ||||||||||||||
| Cost of revenue | ||||||||||||||
| Selling, general and administrative | ||||||||||||||
| Research and development | ||||||||||||||
| Restructuring | ||||||||||||||
| Other expense (income), net | ( | |||||||||||||
| Total operating expenses | ||||||||||||||
| Income (loss) from operations | ( | |||||||||||||
| Interest income | ||||||||||||||
| Interest expense | ( | ( | ||||||||||||
| Net income (loss) before income taxes | ( | |||||||||||||
| Income tax expense | ||||||||||||||
| Net income (loss) | ( | |||||||||||||
| Other comprehensive income (loss): | ||||||||||||||
Unrealized loss on available-for-sale securities | ( | ( | ||||||||||||
| Comprehensive income (loss) | $ | $ | ( | |||||||||||
| Earnings (loss) per share | ||||||||||||||
| Basic | $ | $ | ( | |||||||||||
| Diluted | $ | $ | ( | |||||||||||
| Shares used in computing earnings (loss) per share | ||||||||||||||
| Basic | ||||||||||||||
| Diluted | ||||||||||||||
See accompanying notes.
2
AURINIA PHARMACEUTICALS INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(in thousands)
| Common Shares | ||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Additional paid-in capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Shareholders' Equity | |||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||
| Purchases of common shares under Share Repurchase Plan | ( | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||
| Issuance of common shares from exercise of stock options and vesting of restricted stock units and performance awards | ( | — | — | |||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||
| Unrealized loss on available-for-sale securities | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||
| Common Shares | ||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Additional paid-in capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Shareholders' Equity | |||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||
| Purchases of common shares under Share Repurchase Plan | ( | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||
| Issuance of common shares from exercise of stock options and vesting of restricted stock units | ( | — | — | |||||||||||||||||||||||||||||||||||
| Shared-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Unrealized loss on available-for-sale securities | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||
See accompanying notes.
3
AURINIA PHARMACEUTICALS INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net income (loss) | $ | $ | ( | |||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||
| Share-based compensation | ( | |||||||||||||
| Amortization and depreciation | ||||||||||||||
| Foreign exchange loss (gain) on revaluation of finance lease liability (Monoplant) | ( | |||||||||||||
| Net amortization of premiums and discounts on investments | ( | ( | ||||||||||||
| Other, net | ||||||||||||||
| Net changes in operating assets and liabilities: | ||||||||||||||
| Accounts receivable, net | ( | ( | ||||||||||||
| Inventory, net | ( | ( | ||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||
| Other noncurrent operating assets | ||||||||||||||
| Accounts payable | ( | |||||||||||||
| Accrued expenses and other liabilities | ( | ( | ||||||||||||
| Deferred revenue | ( | |||||||||||||
| Operating lease liabilities | ( | ( | ||||||||||||
| Net cash provided by (used in) operating activities | ( | |||||||||||||
| Cash flows from investing activities: | ||||||||||||||
| Proceeds from the sale and maturities of investments | ||||||||||||||
| Purchases of investments | ( | ( | ||||||||||||
| Purchase of property, equipment and intangible assets | ( | ( | ||||||||||||
| Net cash provided by investing activities | ||||||||||||||
| Cash flows from financing activities: | ||||||||||||||
| Repurchase of common shares | ( | ( | ||||||||||||
| Principal portion of finance lease payments | ( | ( | ||||||||||||
| Proceeds from issuance of common shares from exercise of stock options and vesting of RSUs and performance awards | ||||||||||||||
| Taxes paid related to net settlement of exercises of stock options and vesting of RSUs and performance awards | ( | ( | ||||||||||||
| Net cash used in financing activities | ( | ( | ||||||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | ( | |||||||||||||
| Cash, cash equivalents and restricted cash, beginning of the period | ||||||||||||||
| Cash, cash equivalents and restricted cash, end of the period | $ | $ | ||||||||||||
| Supplemental cash flow information: | ||||||||||||||
| Cash paid for excise tax | $ | ( | $ | |||||||||||
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
| Restricted cash | ||||||||||||||
Total cash, cash equivalents and restricted cash | $ | $ | ||||||||||||
See accompanying notes.
4
AURINIA PHARMACEUTICALS INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.Organization and Description of Business
Aurinia Pharmaceuticals Inc. (“Aurinia” or the “Company”) is a biopharmaceutical company focused on delivering therapies to people living with autoimmune diseases with high unmet medical needs. In January 2021, the Company introduced LUPKYNIS® (voclosporin), the first FDA-approved oral therapy for the treatment of adult patients with active lupus nephritis (“LN”). Aurinia is also developing AUR200, a dual inhibitor of B cell activating factor (BAFF) and a proliferation inducing ligand (APRIL) for the potential treatment of autoimmune diseases.
2.Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation, Principles of Consolidation and use of Estimates
The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and disclosures required by U.S. GAAP for annual financial statements have been omitted. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.
The accompanying condensed consolidated financial statements include the accounts of Aurinia Pharmaceuticals Inc. and its wholly owned subsidiary, Aurinia Pharma U.S., Inc., a Delaware corporation. All intercompany balances and transactions have been eliminated in consolidation. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the full year or any other future periods.
Summary of Significant Accounting Policies and Recent Accounting Pronouncements
The Company's significant accounting policies and recent accounting pronouncements have not changed from those previously described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.
Recent Accounting Pronouncements
In December 2023, the FASB issued final guidance in ASU No. 2023-09, Income Taxes (ASC 740): Improvements to Income Tax Disclosures requiring entities to provide additional information in the rate reconciliation and disclosures about income taxes paid. For public business entities, the new disclosure requirements are effective for annual periods beginning after December 15, 2024, which will be reflected in our consolidated financial statements for the year ended December 31, 2025.
3.Earnings (Loss) Per Share
Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding without consideration of potential common shares. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding plus potential common shares. Stock options, performance awards, restricted stock units (“RSUs”) and shares issuable under the Company's Employee Stock Purchase Plan (“ESPP”) are considered potential common shares and are included in the calculation of diluted earnings (loss) per share using the treasury stock method when their effect is dilutive. Potential common shares are excluded from the calculation of diluted earnings (loss) per share when their effect is anti-dilutive.
For the three months ended March 31, 2025, there were 4.3 million potential dilutive common shares that were included in the calculation of diluted earnings per share, which consists of: (i) 3.0 million RSUs; (ii) 0.7 million performance awards; and (iii) 0.6 million stock options. The Company was in a loss position for the three months ended March 31, 2024 and therefore diluted loss per share is the same as basic loss per share.
For the three months ended March 31, 2025 and 2024, there were 8.8 million and 19.9 million of potential common shares, respectively, that were excluded from the calculation of diluted earnings (loss) per share because their effect was anti-dilutive.
5
4. Balance Sheet Details
Fair Value Measurement
The following table summarizes the financial assets measured at fair value on a recurring basis (in thousands):
| March 31, 2025 | ||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
Cash, cash equivalents and restricted cash | $ | $ | $ | $ | ||||||||||||||||||||||
| U.S. treasury bills | ||||||||||||||||||||||||||
| U.S. treasury bonds | ||||||||||||||||||||||||||
| Commercial paper | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
Cash, cash equivalents and restricted cash | $ | $ | $ | $ | ||||||||||||||||||||||
U.S. treasury bills | ||||||||||||||||||||||||||
| U.S. treasury bonds | ||||||||||||||||||||||||||
| Commercial paper | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||||||||||||
The fair value of the Company's investments classified within Level 2 is based upon observable inputs that may include benchmark yield curves, reported trades, issuer spreads, benchmark securities and reference data including market research publications.
The carrying amount and related unrealized gains (losses) by type of investment consisted of the following (in thousands):
| March 31, 2025 | ||||||||||||||||||||||||||
| Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | |||||||||||||||||||||||
Cash, cash equivalents and restricted cash | $ | $ | $ | $ | ||||||||||||||||||||||
U.S. treasury bills | ( | |||||||||||||||||||||||||
U.S. treasury bonds | ||||||||||||||||||||||||||
| Commercial paper | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Total cash, cash equivalents, restricted cash and short-term investments | $ | $ | $ | ( | $ | |||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | |||||||||||||||||||||||
Cash, cash equivalents and restricted cash | $ | $ | $ | $ | ||||||||||||||||||||||
U.S. treasury bills | ||||||||||||||||||||||||||
U.S. treasury bonds | ||||||||||||||||||||||||||
| Commercial paper | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
| Total cash, cash equivalents, restricted cash and short-term investments | $ | $ | $ | $ | ||||||||||||||||||||||
6
As of March 31, 2025 and December 31, 2024, accrued interest receivable from investments was $0.2 million and $0.6 million, respectively, which was included in other current assets on the condensed consolidated balance sheets. As of March 31, 2025, short-term investments mature at various dates through November 2025. As of March 31, 2025 and December 31, 2024, no allowance for credit losses was recorded.
Inventory, net
Inventory, net consisted of the following (in thousands):
| March 31, 2025 | December 31, 2024 | |||||||||||||
| Raw materials | $ | $ | ||||||||||||
| Work in process | ||||||||||||||
Finished goods | ||||||||||||||
Total inventory, net | $ | $ | ||||||||||||
As of March 31, 2025 and December 31, 2024, inventory reserves was nil
Prepaid Expenses and Deposits
Prepaid expenses and deposits consisted of the following (in thousands):
| March 31, 2025 | December 31, 2024 | |||||||||||||
Prepaid manufacturing and other deposits | $ | $ | ||||||||||||
Prepaid insurance | ||||||||||||||
Other prepaid expenses | ||||||||||||||
Total prepaid expenses and deposits | $ | $ | ||||||||||||
Intangible Assets, Net
Intangible assets, net consisted of the following (in thousands):
| March 31, 2025 | ||||||||||||||||||||
| Gross Carrying Value | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
| Acquired intellectual property and reacquired right | $ | $ | ( | $ | ||||||||||||||||
| Patents | ( | |||||||||||||||||||
| Internal-use software implementation costs | ( | |||||||||||||||||||
Total intangible assets, net | $ | $ | ( | $ | ||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
| Gross Carrying Value | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
| Acquired intellectual property and reacquired right | $ | $ | ( | $ | ||||||||||||||||
| Patents | ( | |||||||||||||||||||
| Internal-use software implementation costs | ( | |||||||||||||||||||
Total intangible assets, net | $ | $ | ( | $ | ||||||||||||||||
For each of the three months ended March 31, 2025 and 2024, the Company recorded amortization expense of $0.2
7
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
| March 31, 2025 | December 31, 2024 | |||||||||||||
| Leasehold improvements | $ | $ | ||||||||||||
Furniture | ||||||||||||||
Office equipment | ||||||||||||||
Computer equipment | ||||||||||||||
Total gross property and equipment | ||||||||||||||
| Less accumulated depreciation | ( | ( | ||||||||||||
| Property and equipment, net | $ | $ | ||||||||||||
Accrued Expenses
Accrued expenses consisted of the following (in thousands):
| March 31, 2025 | December 31, 2024 | |||||||||||||
Accrued sales rebates and fees | $ | $ | ||||||||||||
Accrued payroll and related expenses | ||||||||||||||
Accrued research and development expenses | ||||||||||||||
Accrued sales and marketing expenses | ||||||||||||||
Accrued restructuring expenses | ||||||||||||||
Accrued other expenses | ||||||||||||||
Total accrued expenses | $ | $ | ||||||||||||
5.Commitments and Contingencies
Lease Commitments
Finance Leases
Monoplant
In December 2020, the Company entered into a manufacturing services agreement with Lonza for the construction of a dedicated manufacturing facility for voclosporin (the “Monoplant”). The construction of the Monoplant began in January 2021 and manufacturing of voclosporin began in late June 2023. The Monoplant is equipped with state-of-the-art manufacturing equipment to provide cost and production efficiency for the manufacturing of voclosporin, while expanding existing capacity and providing supply security to meet future commercial demand. The Company completed a capital expenditure payment program for the Monoplant totaling $23.7 million, which included: (i) a $11.8 million payment in February 2021, which was treated as an upfront lease payment and recorded under other noncurrent assets on the consolidated balance sheets; and (ii) a $11.9 million payment when the facility fulfilled the required operational qualifications, which occurred in late June 2023. The Company has the exclusive right to use the Monoplant through March 31, 2030 by paying a quarterly fixed facility fee of 3.6 million Swiss Francs (approximately $4.0 million).
The Monoplant arrangement was determined to be an embedded lease and is accounted for as a finance lease under ASC 842. The lease term is based on the non-cancellable period for which a lessee has the right to use an underlying asset (the “Monoplant Lease”). The Company determined that the Monoplant Lease commencement occurred at the point when the FDA manufacturing validation process began, which occurred on June 26, 2023. At lease inception, the Company recorded a finance right-of-use (“ROU”) lease asset and a corresponding lease liability. As of March 31, 2025, the Monoplant Lease finance ROU lease asset and corresponding lease liability balance were $86.9 million and $71.3 million, respectively.
8
Operating Lease
Rockville, Maryland
In March 2020, the Company entered into a lease agreement for 30,531 square feet of office space in Rockville, Maryland (the “Rockville Lease”). The Rockville Lease commenced on March 12, 2020 and expires on August 31, 2031. The Company has the option to extend the Rockville Lease for two 5-year periods at the end of the initial 11-year term and has the option to terminate after 7 years; however, such options were not recognized as part of the Company's lease liabilities and corresponding ROU lease assets. The Rockville Lease requires the Company to pay certain taxes, insurance and operating costs relating to the leased premises (“Lease Operating Costs”); however, such costs are not material to the Company’s financial position.
Future minimum lease payments, excluding Lease Operating Costs, as of March 31, 2025 consisted of the following (in thousands):
| Finance Lease Payments | Operating Lease Payments | |||||||||||||
| Remainder of 2025 | $ | $ | ||||||||||||
| 2026 | ||||||||||||||
| 2027 | ||||||||||||||
| 2028 | ||||||||||||||
| 2029 | ||||||||||||||
| Thereafter | ||||||||||||||
Total lease payments | ||||||||||||||
Less: imputed interest | ( | ( | ||||||||||||
Total | $ | $ | ||||||||||||
For each of the three months ended March 31, 2025 and 2024, finance lease expense related to the amortization of finance ROU lease assets was $4.4 million. For the three months ended March 31, 2025 and 2024, interest expense on finance lease liabilities was $1.1 million and $1.3 million, respectively. For each of the three months ended March 31, 2025 and 2024, cash paid for amounts included in the measurement of finance lease liabilities classified in financing cash flows was $2.8 1.2 million and $1.4 million, respectively.
For the three months ended March 31, 2025 and 2024, operating lease expense was not material to the Company's financial position.
Manufacturing Commitments
The Company's manufacturing commitments have not changed in any material manner from those previously described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.
Contingencies
From time to time, the Company may become subject to claims and litigation arising in the ordinary course of business. The Company is not a party to any material legal proceedings, nor is it aware of any material pending or threatened litigation other than as described in Item 1 of Part II Legal Proceedings.
6.Deferred Compensation and Other Noncurrent Liabilities
9
7.License and Collaboration Agreements
In December 2020, the Company entered into a collaboration and licensing agreement with Otsuka to develop and commercialize oral voclosporin in Japan, the E.U., the U.K., Switzerland, Russia, Norway, Belarus, Iceland, Liechtenstein and Ukraine (collectively, the “Otsuka Territories”) in exchange for: (i) a $50 million upfront cash payment; (ii) regulatory and commercial milestone payments; and (iii) royalties ranging from 10 % to 20 % on net sales in the Otsuka Territories. As of March 31, 2025 and December 31, 2024, the Company had received an aggregate of $50 million of regulatory and commercial milestone payments.
In August 2022, the Company entered into a commercial supply agreement with Otsuka to: (i) supply LUPKYNIS inventory to Otsuka at cost plus a margin; and (ii) provide manufacturing and other services, including sharing the capacity of the Monoplant. For the three months ended March 31, 2025 and 2024, the Company recognized $2.5 million and $2.2 million, respectively, of collaboration revenue from manufacturing and other services, which includes sharing capacity of the Monoplant.
8.Shareholders’ Equity
On February 15, 2024, the Company announced that the Board had approved a share repurchase program of up to $150 million of the Company's common shares (the “Share Repurchase Plan”).
The timing and amount of future repurchase transactions will be determined by management based on its evaluation of market conditions, share price, legal requirements, including applicable blackout period restrictions, and other factors. The Company has entered into a Rule 10b5-1 stock repurchase plan for the purpose of establishing a trading plan to purchase the Company’s common shares in a manner intended to satisfy the affirmative defense of Rule 10b5-1(c)(1) under the Securities Exchange Act of 1934, as amended and in accordance with applicable Canadian laws.
For the three months ended March 31, 2025 and 2024, the Company repurchased 5.8 million and 2.4 million of its common shares for $47.4 million and $13.4 million, respectively, including commissions and excise tax. The cost of repurchased shares is recorded as a reduction in common shares. Under Alberta law, the common shares were cancelled and not reissued.
9.Equity Incentive Plans
Stock Options
The activity related to stock options during the three months ended March 31, 2025 consisted of the following:
| March 31, 2025 | ||||||||||||||
| Number of shares (in thousands) | Weighted-average exercise price $ | |||||||||||||
Outstanding at December 31, 2024 | $ | |||||||||||||
| Granted | ||||||||||||||
Exercised/released | ( | |||||||||||||
Cancelled/forfeited | ( | |||||||||||||
Outstanding at March 31, 2025 | $ | |||||||||||||
10
The following weighted-average assumptions were used to estimate the fair value of the options granted during the three months ended March 31, 2025 and 2024:
Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Expected volatility | % | % | ||||||||||||
| Risk-free interest rate | % | % | ||||||||||||
| Expected term (in years) | ||||||||||||||
| Expected dividend yield | % | |||||||||||||
| Fair value per common share option | $ | $ | ||||||||||||
Performance Awards and Restricted Stock Units
The fair value of performance awards and RSUs is based on the market price of the Company's common shares on the date prior to the grant. During the three months ended March 31, 2025, the Company granted performance awards that vest in four tranches upon the Company’s common shares achieving four progressively higher target prices, and each tranche is further subject to a one year service period following tranche achievement. The Company estimated the fair value of each award with a market and service condition on the date of grant by using a Monte Carlo simulation (lattice model).
The activity related to performance awards and RSUs for the three months ended March 31, 2025 consisted of the following:
| March 31, 2025 | ||||||||||||||
| Number of shares (in thousands) | Weighted-average fair value price | |||||||||||||
Unvested balance, December 31, 2024 | $ | |||||||||||||
| Granted | $ | |||||||||||||
| Vested | ( | $ | ||||||||||||
| Forfeited | ( | $ | ||||||||||||
Unvested balance, March 31, 2025 | $ | |||||||||||||
Share-based Compensation Expense
The classification of share-based compensation expense consisted of the following (in thousands):
Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Research and development | $ | $ | ( | |||||||||||
| Selling, general and administrative | ( | |||||||||||||
Capitalized in inventory, net | ||||||||||||||
| Share-based compensation expense | $ | ( | $ | |||||||||||
As of March 31, 2025, there was $26.0 million of unrecognized share-based compensation expense related to unvested awards granted which is expected to be recognized over a weighted-average period of 1.4 years.
10.Restructuring
On February 15, 2024, the Company announced a strategic restructuring that reduced headcount by approximately 25 % and discontinued the Company's AUR300 development program (the “February Restructuring”). On November 7, 2024, the Company announced another strategic restructuring that further reduced headcount by approximately 45 % to sharpen the Company's focus on continued LUPKYNIS growth and the development of AUR200 (the “November Restructuring”).
11
For the three months ended March 31, 2025, total expense for the November Restructuring was $1.5 million, which was comprised of: (i) $0.3 million for one-time termination benefits to affected employees, including severance and health care benefits; (ii) $0.1 million of contract termination costs; and (iii) $1.1 million of other restructuring costs. For the three months ended March 31, 2025, the Company paid $11.1 million for November Restructuring costs. As of March 31, 2025 and December 31, 2024, the Company paid $15.9 million and $4.8 million, respectively, related to the November Restructuring. The Company anticipates up to $19 million of total expense to be incurred related to the November Restructuring, and for restructuring activities to be substantially completed in the first half of 2025.
For the three months ended March 31, 2024, total expense for the February Restructuring was $6.7 million, which was comprised of: (i) $5.2 million for one-time termination benefits to affected employees, including severance and health care benefits; (ii) $0.9 million of contract termination costs; and (iii) $0.6 million of other restructuring costs. For the three months ended March 31, 2024, the Company paid $3.8 million for February Restructuring costs. As of December 31, 2024, the Company had recognized all expense and made all payments related to the February Restructuring.
11.Income Taxes
The effective tax rates for the three months ended March 31, 2025, and 2024, differed from the federal statutory rate applied to net income (loss) before income taxes primarily as a result of valuation allowances.
For the three months ended March 31, 2025 and 2024, the Company recognized an income tax expense of $1.0 million and $0.7 million, respectively. The income tax expense recognized is a result of U.S. source income. For the three months ended March 31, 2025, the Canadian parent entity also recorded net income, which is subject to income tax and is fully offset by a partial release of the valuation allowance.
12.Subsequent Events
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q (the "Quarterly Report") and our audited financial statements and the related notes and other financial information included in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the U.S. Securities and Exchange Commission on February 27, 2025 (the “Form 10-K”) and with applicable Canadian securities regulatory authorities.
This Quarterly Report contains “forward-looking statements” within the meaning of U.S. federal securities laws and "forward-looking information" within the meaning of Canadian securities laws, and such statements may involve substantial risks and uncertainties. All statements, other than statements of historical facts included in this Quarterly Report, including statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, future expenses, business trends and other information referred to under this section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking statements. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements by terms such as “may,” “might,” “will,” “objective,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “design,” “estimate,” “predict,” “potential,” “plan,” “anticipate,” “target,” “forecast” or the negative of these terms and similar expressions intended to identify forward-looking statements. Forward-looking statements are not historical facts and reflect our current views with respect to future events. Forward-looking statements are also based on assumptions and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements.
We discuss a number of risks, uncertainties and other factors in greater detail under the heading “Risk Factors” in Part I, Item 1A of the Form 10-K as well as in Part II, Item 1A of this Quarterly Report. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this filing. You should read this discussion completely and with the understanding that our actual future results may be materially different from what we expect. We hereby qualify our forward-looking statements by our cautionary statements. Except as required by law, we assume no obligation to update our forward-looking statements publicly, or to update the reasons that actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Overview
Background
Aurinia is a biopharmaceutical company focused on delivering therapies to people living with autoimmune diseases with high unmet medical needs. In January 2021, the Company introduced LUPKYNIS® (voclosporin), the first FDA-approved oral therapy for the treatment of adult patients with active lupus nephritis (“LN”). Aurinia is also developing AUR200, a dual inhibitor of B cell activating factor (BAFF) and a proliferation inducing ligand (APRIL) for the potential treatment of autoimmune diseases.
Net Product Sales
For the three months ended March 31, 2025, net product sales were $60.0 million, up 25% from $48.1 million in the same period of 2024.
Cash Flow Provided by (Used in) Operating Activities
For the three months ended March 31, 2025, cash flow provided by (used in) operating activities was $1.3 million, compared to $(18.6) million in the same period of 2024. Excluding $11.1 million of cash payments made in connection with the November 2024 restructuring, cash flow generated from operations was $12.4 million for the three months ended March 31, 2025.
Cash Position
As of March 31, 2025, Aurinia had cash, cash equivalents, restricted cash and investments of $312.9 million compared to $358.5 million at December 31, 2024. For the three months ended March 31, 2025, the Company repurchased 5.8 million of its common shares for $47.4 million.
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Results of Operations
Comparison of the Three Months ended March 31, 2025 and 2024
The following table sets forth our results of operations for the three months ended March 31, 2025 and 2024 (in thousands):
Three Months Ended March 31, | ||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||
| Revenue | ||||||||||||||||||||
Net product sales | $ | 59,971 | $ | 48,073 | $ | 11,898 | ||||||||||||||
License, collaboration and royalty revenue | 2,494 | 2,230 | 264 | |||||||||||||||||
Total revenue | 62,465 | 50,303 | 12,162 | |||||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Cost of revenue | 8,574 | 7,752 | 822 | |||||||||||||||||
| Selling, general and administrative | 20,339 | 47,695 | (27,356) | |||||||||||||||||
| Research and development | 5,743 | 5,551 | 192 | |||||||||||||||||
| Restructuring | 1,533 | 6,683 | (5,150) | |||||||||||||||||
| Other expense (income), net | 4,429 | (4,125) | 8,554 | |||||||||||||||||
| Total operating expenses | 40,618 | 63,556 | (22,938) | |||||||||||||||||
| Income (loss) from operations | 21,847 | (13,253) | 35,100 | |||||||||||||||||
| Interest income | 3,569 | 4,526 | (957) | |||||||||||||||||
| Interest expense | (1,067) | (1,283) | 216 | |||||||||||||||||
| Net income (loss) before income taxes | 24,349 | (10,010) | 34,359 | |||||||||||||||||
| Income tax expense | 1,005 | 739 | 266 | |||||||||||||||||
| Net income (loss) | $ | 23,344 | $ | (10,749) | $ | 34,093 | ||||||||||||||
Net Product Sales
Aurinia sells LUPKYNIS to two specialty pharmacies and a specialty distributor in the U.S., and Aurinia sells LUPKYNIS inventory to its collaboration partner, Otsuka Pharmaceutical Co., Ltd. (“Otsuka”), for the European and Japanese market. The two specialty pharmacies, specialty distributor and Otsuka are considered our customers for accounting purposes.
For the three months ended March 31, 2025, net product sales were $60.0 million, up 25% from $48.1 million in the same period in 2024. The increase is primarily due to an increase in the number of LUPKYNIS cartons sold to specialty pharmacies, driven by further LN market penetration.
License, Collaboration and Royalty Revenue
License, collaboration and royalty revenue consists of revenue from a collaboration and licensing agreement with Otsuka to develop and commercialize oral voclosporin in Japan, the European Union (the “E.U.”), the U.K., Switzerland, Russia, Norway, Belarus, Iceland, Liechtenstein and Ukraine (collectively, the “Otsuka Territories”) in exchange for: (i) a $50 million upfront cash payment; (ii) regulatory and commercial milestone payments; and (iii) royalties ranging from 10% to 20% on net sales in the Otsuka Territories. Otsuka has obtained regulatory approval of LUPKYNIS in Japan, the E.U., the U.K. and Switzerland.
License, collaboration and royalty revenue also consists of revenue from a commercial supply agreement with Otsuka to provide manufacturing and other services, including sharing the capacity of a dedicated manufacturing facility at Lonza Ltd. (the “Monoplant”), Aurinia’s contract manufacturing partner for voclosporin.
For the three months ended March 31, 2025, license, collaboration, and royalty revenue was $2.5 million, up 14% from $2.2 million in the same period in 2024. The increase is primarily due to manufacturing services provided to Otsuka for sharing the capacity of the Monoplant.
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Cost of Revenue
Cost of revenue consists primarily of expense associated with: (i) amortization of the finance lease right-of-use asset recognized in connection with the Monoplant; (ii) manufacturing; and (iii) shipping, storage and distribution.
In December 2020, Aurinia entered into a manufacturing services agreement with Lonza Ltd. for the construction of the Monoplant. The construction of the Monoplant began in January 2021 and manufacturing of voclosporin began in late June 2023. The Monoplant is equipped with state-of-the-art manufacturing equipment to provide cost and production efficiency for the manufacturing of voclosporin, while expanding existing capacity and providing supply security to meet future commercial demand. Aurinia pays a quarterly fixed facility fee of 3.6 million Swiss Francs (approximately $4.0 million) for the exclusive right to use the Monoplant through March 31, 2030.
For the three months ended March 31, 2025, cost of revenue was $8.6 million, compared to $7.8 million in the same period in 2024. The increase is primarily due to an increase in Aurinia’s net sales of LUPKYNIS in the U.S. and net sales of LUPKYNIS inventory to Otsuka.
For the three months ended March 31, 2025, gross margin was 86%, compared to 85% in the same period in 2024.
Selling, General and Administrative Expense
Selling, general and administrative (“SG&A”) expense consists of personnel and non-personnel expenses to support growing sales of LUPKYNIS. Personnel-related expense includes salaries, incentive pay, benefits and share-based compensation for personnel engaged in sales, finance and administrative functions. Non-personnel-related expense includes: (i) selling, patient services, pharmacovigilance, marketing, advertising, travel, sponsorships and trade shows; and (ii) other general and administrative costs, including consulting, legal, patent, insurance, accounting, information technology and facilities.
The following table summarizes our SG&A expense for three months ended March 31, 2025 and 2024 (in thousands):
| Three months ended March 31, | ||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||
Personnel expense: | ||||||||||||||||||||
Salaries, incentive pay and benefits | $ | 12,140 | $ | 21,661 | $ | (9,521) | ||||||||||||||
Share-based compensation | (3,513) | 7,537 | (11,050) | |||||||||||||||||
Total personnel expense | 8,627 | 29,198 | (20,571) | |||||||||||||||||
Non-personnel expense: | ||||||||||||||||||||
Professional fees and services | 7,288 | 9,676 | (2,388) | |||||||||||||||||
Marketing and advertising | 970 | 3,278 | (2,308) | |||||||||||||||||
Travel, sponsorship and trade shows | 844 | 2,701 | (1,857) | |||||||||||||||||
Other | 2,610 | 2,842 | (232) | |||||||||||||||||
Total non-personnel expense | 11,712 | 18,497 | (6,785) | |||||||||||||||||
Total SG&A expense | $ | 20,339 | $ | 47,695 | $ | (27,356) | ||||||||||||||
The decrease in SG&A personnel expense was primarily a result of lower employee-related costs, including the reversal of non-cash, share-based compensation expense related to forfeited, unvested equity awards, resulting from our strategic restructuring efforts in 2024. The decrease in SG&A non-personnel expense was primarily a result of lower overhead, marketing, travel, sponsorship and trade show costs resulting from our strategic restructuring efforts in 2024.
We expect our SG&A expense to remain low in 2025 as compared to 2024 as we realize the full benefits of our strategic restructuring efforts.
Research and Development Expense
Research and development (“R&D”) expense consists of personnel and non-personnel expenses. Personnel-related expense includes salaries, incentive pay, benefits and share-based compensation for personnel engaged in research and development functions. Non-personnel-related expense includes subcontractors and materials used for R&D activities, including development, clinical trials, clinical supply and distribution, and other professional services.
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The following table summarizes our R&D expense for the three months ended March 31, 2025 and 2024 (in thousands):
| Three months ended March 31, | ||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||
Personnel expense: | ||||||||||||||||||||
Salaries, incentive pay and benefits | $ | 1,308 | $ | 3,492 | $ | (2,184) | ||||||||||||||
Share-based compensation | 93 | (2,166) | 2,259 | |||||||||||||||||
Total personnel expense | 1,401 | 1,326 | 75 | |||||||||||||||||
Non-personnel expense: | ||||||||||||||||||||
Contract research organizations and developmental expenses | 2,349 | 3,116 | (767) | |||||||||||||||||
Clinical supply and distribution | 1,865 | 915 | 950 | |||||||||||||||||
Other | 128 | 194 | (66) | |||||||||||||||||
Total non-personnel expense | 4,342 | 4,225 | 117 | |||||||||||||||||
Total R&D expense | $ | 5,743 | $ | 5,551 | $ | 192 | ||||||||||||||
The decrease in R&D personnel-expense was primarily a result of lower employee-related costs as a result of a reduction of headcount from our strategic restructuring efforts in 2024, offset by an increase in share-based compensation as a result of a reversal in the prior year of non-cash, share-based compensation expense related to forfeited, unvested equity awards related to the 2024 restructuring. The increase in R&D non-personnel expense was primarily a result of clinical development for our AUR200 program and post-approval obligations with the FDA related to LUPKYNIS.
We expect our R&D expenses to increase for the foreseeable future as we advance AUR200 through clinical development and continue to meet our post-approval obligations with the FDA related to LUPKYNIS.
Restructuring Expense
Restructuring expense consists primarily of one-time termination benefits to affected employees, including severance and health care benefits, contract terminations and other costs related to our strategic restructuring efforts in 2024. On February 15, 2024, we announced a strategic restructuring that reduced headcount by approximately 25% and discontinued Aurinia’s AUR300 development program. On November 7, 2024, we announced another strategic restructuring that further reduced headcount by approximately 45% to sharpen the Company's focus on continued LUPKYNIS growth and the development of AUR200.
For the three months ended March 31, 2025 and 2024, restructuring expense was $1.5 million, and $6.7 million, respectively.
Other Expense (Income), Net
For the three months ended March 31, 2025, other expense (income), net was $4.4 million, compared to $(4.1) million in the same period in 2024. The change is primarily due to: (i) changes in the foreign exchange remeasurement of the finance lease liability recognized in connection with the Monoplant, which is denominated in Swiss Francs; and (ii) changes in the fair value assumptions related to our deferred compensation liability.
Liquidity and Capital Resources
As of March 31, 2025, Aurinia had cash, cash equivalents, restricted cash and investments of $312.9 million compared to $358.5 million at December 31, 2024. For the three months ended March 31, 2025, the Company repurchased 5.8 million of its common shares for $47.4 million. For the three months ended March 31, 2025, cash flow provided by (used in) operating activities was $1.3 million, compared to $(18.6) million in the same period in 2024. Excluding $11.1 million of cash payments made in connection with the November 2024 restructuring, cash flow generated from operations was $12.4 million for the three months ended March 31, 2025.
Based on our current operating plans and projections, the Company expects to fund future operations with existing cash or cash generated from operations.
The amount and timing of additional future funding needs, if any, will depend on many factors, including the success of our commercialization efforts for LUPKYNIS and our ability to control expenses. If necessary, we intend to raise additional capital through equity or debt financings. We can provide no assurance that additional financing will be available to us on favorable terms, or at all.
16
Critical Accounting Estimates
There have been no material changes to our critical accounting policies and significant judgments and estimates as described in our Annual Report on Form 10-K for the year ended December 31, 2024.
Off‑Balance Sheet Arrangements
During the periods presented, we did not have, nor do we currently have, any off‑balance sheet arrangements as such term is defined in Item 303(a)(4)(ii) of Regulation S-K under the Securities Act.
Contractual Obligations
There have been no material changes outside the ordinary course of business to our contractual obligations and commitments as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024.
Item 3. Quantitative and Qualitative Disclosures About Market Risks
There have been no material changes to our quantitative and qualitative disclosures about market risks as described in our Annual Report on Form 10-K for the year ended December 31, 2024.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of March 31, 2025, have concluded that, based on such evaluation, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
During the quarter ended March 31, 2025, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be involved in various claims and legal proceedings relating to claims arising out of our operations. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. For further discussion, refer to Note 5, Commitments and Contingencies.
In February and March 2025, the Company received a paragraph IV notice of certification (the “Notice Letter”) from each of Hikma Pharmaceuticals USA Inc., Lotus Pharmaceutical Co. Ltd., Galenicum Health S.L.U., Zydus Pharmaceuticals (USA) Inc., Teva Pharmaceuticals, Inc., Dr. Reddy's Laboratories, Inc., DifGen Pharmaceuticals LLC and Sandoz Inc. advising that each company had submitted an Abbreviated New Drug Application (“ANDA”) to the FDA seeking authorization to manufacture, use or sell a generic version of LUPKYNIS in the U.S., prior to the expiry of U.S. Patent Nos. 10,286,036 and 11,622,991 in December 2037 (the “2037 Patents”), which are listed in the FDA's Orange Book. Each Notice Letter alleges that the 2037 Patents are invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of the generic product described in the ANDA.
The Company filed complaints for patent infringement against each of Hikma Pharmaceuticals USA Inc. (filed April 10, 2025); Lotus Pharmaceutical Co. Ltd. (filed April 11, 2025); Galenicum Health S.L.U. (filed April 17, 2025); Zydus Pharmaceuticals (USA) Inc. and Zydus Lifesciences Ltd. (filed April 21, 2025); Teva Pharmaceuticals, Inc. and Teva Pharmaceutical Industries, Ltd. (filed April 25, 2025); Dr. Reddy's Laboratories, Inc. (filed May 1, 2025); DifGen Pharmaceuticals LLC (filed April 30 and May 1, 2025); and Sandoz Inc. (filed May 8, 2025) in the United States District Court for the District of New Jersey and/or the United States District Court for the District of Delaware.
In accordance with the Hatch-Waxman Act, because LUPKYNIS is a New Chemical Entity and the Company filed a complaint for patent infringement within 45 days of the receipt of each Notice Letter, the FDA cannot approve the ANDAs for these applications any earlier than 7.5 years from the approval of the LUPKYNIS new drug application unless a District Court finds that all of the asserted claims of the patents-in-suit are invalid, unenforceable and/or not infringed.
The Company intends to vigorously enforce its intellectual property rights relating to LUPKYNIS.
Item 1A. Risk Factors.
Under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024, we identified important factors that could affect our financial performance and could cause our actual results for future periods to differ materially from our anticipated results or other expectations, including those expressed in any forward-looking statements made in this Quarterly Report. There has been no material change in our risk factors subsequent to the filing of our prior reports referenced above, other than as set out below. However, the risks described in our reports are not the only risks we face. Additional risks and uncertainties that we currently deem to be immaterial or not currently known to us, as well as other risks reported from time to time in our reports to the SEC, also could cause our actual results to differ materially from our anticipated results or other expectations.
Changes or developments in U.S. economic laws or policies, including the reaction of other countries thereto, may have a material adverse effect on our business
The U.S. federal government has announced that it has commenced a national security investigation of imports of “pharmaceuticals and pharmaceutical ingredients.” Depending on the findings of its investigation, the U.S. federal government could implement additional measures against the import of pharmaceuticals and pharmaceutical ingredients. The degree and extent of those measures or other measures the U.S. federal government could implement (such as pricing restrictions, tariffs or other trade restrictions or deterrents on foreign companies doing business outside of the U.S.) are unknown. Aurinia is an Alberta, Canada incorporated company, and we manufacture and import certain products in our supply chain into the U.S. from primarily Switzerland. If implemented, and depending on the degree and extent (including how directly they relate to our operations) of any changes or developments in U.S. economic laws or policies, additional measures against "pharmaceuticals and pharmaceutical ingredients" could have a material adverse effect on Aurinia’s business.
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In addition, we export encapsulated voclosporin from the U.S. to our collaboration partner, Otsuka. Certain international governments have responded to other recent related economic policies announced by the U.S. with retaliatory action. If a government in one of the Otsuka Territories implemented a retaliatory action, such as a tariff, on the import of pharmaceutical products from the U.S., this could have a material adverse effect on Otsuka's voclosporin business which, in turn, could have a material adverse effect on our business.
Item 2. Unregistered Purchases or Sales of Equity Securities and Use of Proceeds.
Purchases of Equity Securities by the Issuer or Affiliated Purchasers
In February 2024, the Board approved a share repurchase program of up to $150 million of shares of our common shares (“Share Repurchase Plan”). Purchases under the share repurchase program commenced on February 21, 2024. For the three months ended March 31, 2025, the Company repurchased 5.8 million of its common shares for $47.4 million, inclusive of broker commissions and excise tax. The timing and amount of future repurchase transactions will be determined by management based on its evaluation of market conditions, share price, legal requirements, including applicable blackout period restrictions, and other factors. Under Alberta law, the repurchased common shares are cancelled and not reissued.
The following table summarizes the common share activity of our repurchased shares under the Share Repurchase Plan.
Period | Total number of shares purchased | Average price paid per share in $ | Total number of shares purchased as part of publicly announced program | Approximate dollar value of shares that may yet be purchased under program (in thousands)(1) | ||||||||||||||||||||||
1/1/2025-1/31/2025 | 2,042,590 | $8.01 | 2,042,590 | $92,971 | ||||||||||||||||||||||
2/1/2025-2/28/2025 | 1,905,425 | $7.89 | 1,905,425 | $77,934 | ||||||||||||||||||||||
3/1/2025-3/31/2025 | 1,859,484 | $8.29 | 1,859,484 | $62,521 | ||||||||||||||||||||||
Total | 5,807,499 | 5,807,499 | ||||||||||||||||||||||||
(1)Does not include broker commissions.
The Company has entered into a Rule 10b5-1 stock repurchase plan for the purpose of establishing a trading plan to purchase the Company’s common shares in a manner intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and in accordance with applicable Canadian securities laws.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
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Item 6. Exhibits.
The following exhibits are filed as part of this report:
| Exhibit Number | Description | |||||||
| 3.1 | ||||||||
| 3.2 | ||||||||
| 31.1* | ||||||||
| 31.2* | ||||||||
| 32.1** | ||||||||
| 32.2** | ||||||||
| 101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
| * | Filed herewith. | |||||||
| ** | Furnished herewith. Exhibits 32.1 and 32.2 are being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that section, nor shall such exhibit be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing. | |||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AURINIA PHARMACEUTICALS INC. | ||||||||
| May 9, 2025 | By: | /s/ Peter Greenleaf | ||||||
| Peter Greenleaf | ||||||||
| Chief Executive Officer, Director (Principal Executive Officer) | ||||||||
| May 9, 2025 | By: | /s/ Joseph Miller | ||||||
| Joseph Miller | ||||||||
| Chief Financial Officer (Principal Financial and Accounting Officer) | ||||||||
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