Aurinia Pharmaceuticals Inc

Greetings, and welcome to the Orinia Pharmaceuticals Inc. Q1 2025 earnings call. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation, and you may press star one at any time to be placed into question Q. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Andrea Christopher, Corporate Communications and Investor Relations. Please go ahead, Andrea.

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, Orinia's President and Chief Executive Officer, Joe Miller, Orinia's Chief Financial Officer, and Dr. Greg Keenan, Orinia's Chief Medical Officer. Today, we will review and discuss Orinia's first quarter 2025 financial results and provide an update on recent corporate progress as communicated in the company's press release and quarterly report on Form 10Q issued this morning. For more information, please refer to Orinia's filings with the U.S. Securities and Exchange Commission and Canadian Securities Authorities, which are also available on Orinia's website at OriniaPharma.com. During today's call, Orinia may make forward-looking statements based on current expectations. These forward-looking statements are subject to a number of significant risks and uncertainties, and actual results may differ materially. For discussion of factors that could affect Orinia's future financial results in business, please refer to disclosures in Orinia's press release, quarterly report on Form 10Q, and all other filings with the U.S. Securities and Exchange Commission and Canadian Securities Authorities. Please note that all statements made during today's call are current as of today, May 12, 2025, unless otherwise noted, and are based upon information currently available to us. Except as required by law, Orinia assumes no obligation to update any such statement. Now, let me turn the call over to Orinia's President and CEO, Peter Greenlee. Peter?

Thanks, Andrea, and good morning, everyone. I want to thank everybody for joining us today. On this morning's call, I'll provide an update on our 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. 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. For the first quarter of 2025, total revenue was $62.5 million, up 24% from $50.3 million in the same period of 2024. For the first quarter of 2025, net product sales of lupkinis, the first FDA-approved oral therapy for the treatment of adult patients with active lupus nephritis, or LN, were $60 million, up 25% from $48.1 million in the same period of 2024. This is primarily due to an increase in the number of lupkinis cartons sold to specialty pharmacies and driven by further lupus nephritis penetration. 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. In addition to the November 2024 restructuring, cash flow generated from operations was $12.4 million for the three months ended March 31, 2025. Exiting the quarter, we have cash, cash equivalents, restricted cash, and investments of $312.9 million, as compared to $358.5 million in 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. With our solid 25% increase in sales growth for lupkinis 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 lupkinis into first-line therapy, our commercial organization is focused on educating rheumatologists about the benefits of initiating lupkinis earlier in the treatment paradigm. We have started the year in a solid position with a highly efficient organization focused on lupkinis growth and are therefore reiterating our total revenue guidance in the range of $250 million to $260 million, 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 I study of our pipeline product, AUR200, a -baph-april inhibitor for the potential treatment of a range of autoimmune diseases later this quarter. 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. I'll 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?

Thank you, Peter, and good morning, everyone. Let's take a few minutes to discuss the first quarter. The first quarter months ended March 31, 2025. Total revenue was $62.5 million compared to $50.3 million in the same period of 2024. 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. 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. We are continuing to be opportunistic with our share repurchase program and expect to fund any future discretionary share repurchases with cash flows from operations and cash currently on hand. The company repurchased $14.5 million of its common shares for $108.5 million since the launch of the program in the first quarter of 2024 through May 8, 2025. 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 Arrhenius Net Sales of Loop Kindness. For the three months ended March 31, 2025, gross margin was 86% compared to 85% in the same period of 2024. 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 2024. 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, coupled with a reduction in non-personnel R&D expenses as a result of ceasing development of the company's AUR 300 development program and restructuring related one-time charges in the first quarter of 2024 that did not recur in 2025. This was partially offset by an increase in R&D related expenses as we continue to advance our AUR 200 program and other non-cash expense related to the remeasurement of our Swiss franc denominated monoplan finance lease liability and changes in our fair value assumptions related to our deferred compensation liability. For the three months ended March 31, 2025, net income was $23.3 million or $0.17 of earnings per share compared to a net loss of $10.7 million or $0.07 of net loss per share in the same period of 2024. With that, I'd like to hand the call back over to Peter for some closer remarks. Peter.

Thanks, Joe. In summary, we're continuing to lean into our highest growth drivers for commercial lupkinus business, continuing clinical development of AUR 200, and maintaining excellent operational efficiency throughout the organization. I want to thank you all for your time today. We'll now open the lines for any questions you might have. Operator.

Operator Thank you. We'll now be conducting a question and answer session. If 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. One moment, please, while we pause for questions. Our first question is coming from Stacy Kuh from TD Cowan. Your line is now live.

Stacy Kuh Hey, good morning. Congrats on the solid quarter and thanks for taking your questions. First is on lupkinus. Can you maybe just talk about the quarterly cadence as we think about Q1 sales and your guidance for the year? Understand you're 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 it largely new patient ads or is it more of the additional restarts and hospital ads? That's the first question. And then the second question is on AUR 200. Just as we near the phase one single ascending dose update, maybe talk about some base case scenarios on how you give an update on next steps. Just maybe, Kheris, you could speak to some strategies to get the market faster. What type of regulatory pathway you think is feasible as we think about other anti-aprilbash agents? Thanks so much.

Kheris Thanks, Stacy. Let me start with the first one. On lupkinus, obviously we're guiding to a range of 240 to 250. I think the best way to think about the quarterly gate is to go back and look at historicals. I think that will help in terms of how this business has performed consistently quarter on quarter. Obviously, somewhere in the 2Q, 3Q range, we've historically seen some effect in the summer and then we've historically seen a lift and rise into the back half of the year. That's been pretty predictive for the last several years. In terms of mix and drivers, what I can tell you is the full complement is still driving the business. Everything from new patient ads to persistency, time to getting patients on drugs, all of those continue to show improvement for us, but that improvement I would look at holistically. It's not any one 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 we're overly trying to favor one versus the other, but we think it's indicative of early diagnosis and early treatment when rheumatologists are taking the lead in treating these patients. A good quarter, I think our guidance range staying consistent gives you where we think we're going to fall out. I think that's about it. On the AUR 200, not to give you nothing here, but between now and the end of June, we intend to report out the data and I would just ask you to wait until then and that will be our single ascending dose data and we'll give more steer on the program once we get there.

Thank you.

Thanks, Stacey.

The next question is coming from Morrie Raycroft from Jefferies. Your line is now live.

Hi, good morning. Congrats on the quarter and thanks for taking my questions. I'll ask one just on guidance to you. Historically, first quarter tends to be the lowest quarter, just wondering if you're expecting second quarter to be in line or lower and what are you seeing in the initial six weeks and second quarter that informs your outlook for the rest of the year?

Yeah, 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 Q, three Q spread because it incorporates the summer usually using history has been the lower and then usually historically we've come back to a rise in four Q. In terms of our guidance range, I think we are using history probably more than anything to project where we're going for the year and that would include what we've seen historically as a soft summer. We're only one Q through this into two Q, so we've got some time ahead of us and look forward to reporting two Q when we do that. In terms of drivers, I kind of already talked to that, Morty, but I think if you look at last year and the year before, probably that's the best way to think about quartering the remainder of the year.

Got it. I just wanted to ask on the andafilers too. It seems like there's a good number of those challenging the validity of the 2037 dosing protocol patent. I wonder if you could just talk more about that and what the strategy and risks are there.

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 initially come in with with ANDAs. We've obviously filed patent infringement lawsuits against all of them, intend to vigorously defend patents that we have and will keep you updated along the way. But obviously, you know that through that, it automatically puts these filers under a 30-month stay of execution. We'll have to just see that process through and we have continued work that we're doing in the organization to, I guess I would just leave it with the longevity of Leukinus is an a priority for the organization. So it's all hands on deck at not just defending our patents, but making sure that we're working hard towards keeping that revenue stream coming in and the drug being an important drug for us well into the future.

Understood. Okay, thanks for taking my questions. I'll be back in the queue. Thanks.

Thank you. Next question is coming from Joseph Schwartz from Learing Partners. Your live is now live.

Great. Thanks very much. So I just had a couple questions on potential new federal government policies here and Arrhenius potential exposure to tariffs and NFN. So could you first of all just help us understand where the IP is domiciled for Leukinus, how you're importing any product from overseas, whether it's at COGS or transfer prices, if you've got significant drugs stockpiled in the US, and if you can grow supply within the US over time. And then how should we think about any exposure Arrhenius has to potential NFN legislation based on the amount of government reimbursement for Leukinus? Thank you.

Okay. There's a lot there, Joe. So let me just start with the tariffs side of the equation, I guess. As you know, our API is done in Switzerland. But to be clear, we have several years worth of product that sits on US soil. And I think that even if tariffs were, 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 US. So we think minimal to no impact over the next several years. And then TBD as to what those tariffs look like, and what the impact would be on our API. Of course, like most, we're working hard to ensure we have as much product in the US as possible. And as I said, we've got several years here. In terms of transfer pricing, etc. We're watching this like everybody else. Obviously, we're a Canadian company that does business in the US. So transfer pricing is part of how our economic model works. My understanding is it would take not an executive order, but an act of Congress to actually go and impact that. So our ears are open, and we're watching where the market goes on this and where the president and his administration goes as it relates to not tariffs, but the element of transfer pricing for ex-US companies operating within the US. And then lastly, the most recent executive order, your guess is as good as mine. It kind of seems like there's a directive put out there under an executive order by President Trump. And then where it eventually lands, if it lands is kind of a TBD. So we're watching that as closely as you are, because obviously the entire pharmaceutical and really healthcare industry is affected by you know, the government pricing side of the business. To recall, our business is pretty evenly split between commercial pay, public pay, or excuse me, private pay, and the government side of the business. So obviously it's something we're watching closely.

Very helpful. Thanks, Peter. Thank you, Joe.

Thank you. Next question today is coming from Olivia Breyer from Canterbury Show, July, it's not live.

Hi, good morning. Thank you for the question. So for AUR 200, is there anything you can say just around how many patients we'll see data from, or how many dose levels you've studied in that SAD trial? And maybe just overall thoughts around what kind of dosing schedule you think you'll need to be competitive and whether at home administration is important or not.

Yeah, I think those are all good questions, we look forward to. It's now almost mid-May, and as we've said between now and the end of June, we're going to report out that SAD data. So we look forward to showing you what we've got. Obviously in the areas of protein or kidney diseases and the like, there is more than one April bath ahead of us in the IGAN space, so we'll learn what we've got as it relates to others in just a short couple of weeks.

Okay, Peter, anything you can say just around data disclosure in terms of how you guys are, you know, will you host a call and kind of what level of details just in terms of next steps should we expect to see then?

Yeah, I mean, outside of the fact that we've committed to reporting out that single ascending dose data by the end of June, no, we're not given any guide as to how much data and what we'll show in addition to that. So, you know, more to come. We got to discuss it. We got to see what the data is first, because, you know, obviously this trial is ongoing, and then we have to sit with our board and talk about, you know, what we want to disclose publicly as it relates to not just the program, but where we intend to go from there. So we look forward to doing that, but it's between now and the end of June.

Okay, thanks. Looking forward to that.

Thank you.

Thank you. Next question is from Sahil Dhingra from RBC Capital Markets. The line is now live.

Hi, good morning. This is Sahil Paddami. Thank you so much for taking your questions. I have two. My first question is related to the SG&A expense. So that was around 20 million this quarter, and it was a bit below what we had modeled. So I wanted to know if there was any one-time item in it, and how should we think about the SG&A expense going forward?

All right. 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, you know, as it relates to the year.

Yeah, thank you for the question, Sahil. Yeah, we don't provide specific guidance on OPEX. By function, what I will say is that, you know, following our restructuring in November, we are on track to achieve our previously announced cash-based OPEX savings of approximately 40 million. So again, the cash flow is reported today as a result of our strong sales performance and 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, you know, unusual embedded within that functional line.

Okay, thanks. Then my second question is on Rosh's Gazeva that is expected where the -2.5 data is in October 2025. So how do you expect the evolution of the LN treatment market and what impact do you think will it have on the kind of adoption? Thank you.

Why don't I start and I have a rheumatologist here in a room with me, so it'd be good to get his perspective as well. That's Dr. Keenan, Chief Medical Officer. So 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 issued by the ACR and by ULAR and by Kedago 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, you know, the market will grow. And the more companies we have educating on those guidelines will help us, we believe, to expand the market. So that's number one. Number two, obviously, Gazeva has got some data and, you know, we've seen it and obviously are filed. I think we feel pretty confident that their filing will most likely be reviewed and they have a high probability of getting approval. Not that we can predict that, not that we're the owners of the asset in those conversations with the agency, but we think it's likely. It is a B-cell pathway drug. Greg, do you want to give any comment on what we see in the data as it relates to the drug and how the guidelines are?

You know, thank you, Peter. So first off, it's great news for individuals and clinicians that care for people with lupus nephritis. The data there is encouraging and certainly supplementing what Peter was saying. We believe that this B-cell agent will have an important role. The guidelines that were just issued last year find a place for Ben Liston. You can imagine the opportunity for Obinutuzumab to fit in that category too of B-cell agents. We think nonetheless that LUPKINES with its strong evidence and the timeliness of benefit achieving therapeutic goals, some within one month and six months time, that it will have a role in helping patients and doctors meet their goals quickly, which is a key part of what the ACR guidelines emphasize. I'll point out that the ACR guidelines in print have just been released this month and it's very specific and the role for CNIs like Voclus-Borne is explicit, not just in class three and four but also in five. And so we think that it's a good day for patients. LUPKINES is going to continue to have an important role in helping patients achieve their goals.

Yeah, I think it comes to me comes down to speed. And while 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 and six months, the guidelines are calling for rapid reductions of proteinuria and these B-cell agents so far have not been able to achieve the rapidity of response and reduction in proteinuria that the guidelines are calling for. So in other words, we think we have a very competitive profile.

Great, thank you so much.

Thank you. Next question is coming from David Martin from Bloom-Burton. Your line is now live.

Good morning. Thanks for taking my questions. My understanding is that LUPKINES is quite difficult to manufacture. The fact that you now have endophilers, does that infer to you that they've solved the puzzle and should they be able to manufacture the drug matching LUPKINES at commercial scale?

We don't have any insight into that outside of, you know, as part of their ANDA package, they'll have to show that they can actually manufacture it. So we haven't changed our position on what we believe our process is, whether they can duplicate it or find a way to do it differently is TBD. We haven't seen their actual file up package.

Okay, and next major events in the patent litigation, what kind of timing should we expect and what events are coming up?

I mean, we obviously had to have filed patent infringement lawsuits. I don't think we intend to disclose major milestones in 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 the ANDA battle 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 legal proceedings.

Okay, and then one last question. What end points do you anticipate could differentiate AUR200 from other APRIL and BAF inhibitors with the Phase I SAD results?

I think the Phase I SAD results are obviously going to give us the pharmacokinetics and the pharmacodynamics of the product. That's everything from the half-life of the product, which could be directly juxtaposed against what the dose of the product could 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 IgG, IgA, IgM, and all those things will give us and give the market a way to assess how the looks versus others in the space and alongside of a strategic development pathway from there, those will all be important to look at as we roll out this single ascending dose data.

Okay, thanks. That's it for me.

Thank

you.

Thank you. We reach the end of our question and answer session. I just turn the floor back over for any further closing comments.

Well, I want to thank everybody for taking the time with us today. Happy Belated Mother's Day and we look forward to updating as quarters roll forward here. Thank you.

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.