Aurinia Pharmaceuticals Inc. has released its financial results for the fourth quarter and year ended December 31, 2017.
“Aurinia gained remarkable momentum in 2017, as demonstrated by the achievement of all of our important milestones—strong Phase II results for voclosporin in LN, initiation of our Phase III AURORA trial for LN, and the announcement of two exciting new clinical programs,” said Richard Glickman, Aurinia CEO and Chairman of the Board. “We are well-capitalized into 2020 and positioned for a prolific 2018 as the team continues to execute on the plans we’ve outlined for 2018. We intend to submit the first module of a rolling NDA later this year for our lead LN program and complete enrollment of our Phase III AURORA trial. In addition, our team is working diligently to initiate Phase II trials for FSGS and dry eye syndrome in Q2.”
2017 and other recent highlights
- We strengthened the breadth and scope of our Board of Directors with the recent additions of Michael Hayden and Joseph Hagan in February of 2018 and George Milne in May of 2017.
On October 20, 2017, we announced our plans to pursue additional indications for voclosporin, representing an expansion of the Company’s strategy, pipeline and commercial opportunities.
- A Phase II proof-of-concept trial in focal segmental glomerulosclerosis (“FSGS”) will begin in Q2 2018. A pre-IND meeting was completed in February 2018.
- A Phase IIa tolerability study of voclosporin ophthalmic solution (“VOS”) versus the standard of care for the treatment of dry eye syndrome (“DES”) will begin in Q2 2018. Calcineurin inhibitors (“CNIs”) are a mainstay in the treatment for DES, and the goal of this program is to develop a best-in-class treatment option.
- In May 2017, we initiated our Phase III clinical trial (“AURORA”) to evaluate voclosporin for the treatment of lupus nephritis (“LN”). The AURORA trial is on track to complete enrollment in Q4 2018. We currently have 201 clinical trial sites activated and able to enroll patients around the globe. Additionally, under voclosporin’s fast-track designation, we intend to utilize a rolling New Drug Application (“NDA”) process, with the first module being submitted in the second half of 2018.
- On March 20, 2017, we completed a public offering for net proceeds of $162.3 million, strengthening the Company’s balance sheet and extending our cash runway into 2020.
- On March 1, 2017, we released positive 48-week results from our Phase II AURA clinical trial for the treatment of LN. Additional data were released on April 20, 2017.
Financial Liquidity at December 31, 2017
In 2017, we raised net proceeds of $162.3 million from the March 20, 2017 public offering and received $12.8 million from the exercise of warrants and options. As a result, at December 31, 2017, we had cash, cash equivalents and short term investments of $173.5 million and working capital of $167.1 million compared to $39.6 million of cash and $33.5 million of working capital at December 31, 2016. Net cash used in operating activities was $41.2 million for the year ended December 31, 2017, compared to $18.7 million for the year ended 2016.
We believe, based on our current plans that we have sufficient financial resources to fund our existing LN program, including the AURORA trial and the NDA submission to the FDA, conduct the planned Phase II trials for FSGS and DES and fund operations into 2020.
Financial results for the fourth quarter ended December 31, 2017
We reported a consolidated net loss of $3.3 million or $0.04 per common share for the fourth quarter ended December 31, 2017, as compared to a consolidated net loss of $8.3 million or $0.21 per common share for the fourth quarter ended December 31, 2016.
The loss for the fourth quarter ended December 31, 2017 reflected a $9.0 million reduction in the estimated fair value of derivative warrant liabilities compared to a reduction of $658,000 in the estimated fair value of derivative warrant liabilities for the fourth quarter ended December 31, 2016.
The net loss before this non-cash change in estimated fair value of derivative warrant liabilities was $12.4 million for the fourth quarter ended December 31, 2017 compared to $9.0 million for the same period in 2016.
Research and development (“R&D”) expenses increased to $8.7 million in the fourth quarter of 2017, compared to $5.5 million in the fourth quarter of 2016 primarily due to increased AURORA trial costs related to patient enrollment and treatment costs.
Corporate, administration and business development expense also increased to $3.1 million for the fourth quarter of 2017, compared to $2.2 million for the fourth quarter of 2016, reflecting increased personnel and level of activities. In addition, these expenses reflected an increase in non-cash stock compensation expense to $653,000 for the fourth quarter ended December 31,2017 compared to $314,000 for the same period in 2016.
Financial Results for the year ended December 31, 2017
For the year ended December 31, 2017, the Company recorded a consolidated net loss of $70.9 million or $0.92 per common share, which included a non-cash increase of $23.9 million related to the estimated fair value annual adjustment of derivative warrant liabilities at December 31, 2017. After adjusting for this non-cash impact, the net loss before this change in estimated fair value of derivative warrant liabilities was $47.0 million.
This compared to a consolidated net loss of $23.3 million or $0.66 per common share in 2016 which included a non-cash reduction of $1.7 million in the estimated fair value of derivative warrant liabilities for the year ended December 31, 2016. After adjusting for the non-cash impact for 2016, the net loss before this change in estimated fair value of derivative warrant liabilities was $25.0 million.
The change in the revaluation of the derivative warrant liabilities is primarily driven by the change in our share price. Our share price of $4.53 was significantly higher at December 31, 2017 compared to our share price of $2.10 at December 31, 2016. This increase in price resulted in large increases in the estimated fair value of derivative warrant liabilities. The derivative warrant liabilities will ultimately be eliminated on the exercise or forfeiture of the warrants and will not result in any cash outlay by the Company.
We incurred net R&D expenses of $33.9 million for the year ended December 31, 2017, as compared to $14.5 million for the year ended December 31, 2016. The increase in these expenses resulted primarily from the clinical and drug supply expenses associated with our AURORA trial which commenced active patient enrollment and treatment in May of 2017. R&D expenses for 2016 included costs related to the AURORA planning phase and completion costs for the Phase II AURA trial.
We incurred corporate, administration and business development expenses of $12.1 million for the year ended December 31, 2017, as compared with $7.0 million for the same period in fiscal 2016. The increase in these expenses reflected overall higher activity levels, higher consulting fees, sponsorships and tradeshows expenses related to greater investor and public affairs activities and higher personnel compensation costs which included non-cash stock compensation expense of $3.2 million for the year ended December 31, 2017 compared to $1.0 million for the year ended December 31 ,2016.
The audited financial statements and the Management’s Discussion and Analysis for the year ended December 31, 2017, are accessible on Aurinia’s website at www.auriniapharma.com, on SEDAR at www.sedar.com or on EDGAR at www.sec.gov/edgar.
