Financial Data and Key Metrics Changes - As of March 31, 2021, Aurinia had cash, cash equivalents, and investments of $361 million, down from $423 million at December 31, 2020, primarily due to commercial infrastructure spending for LUPKYNIS launch [31] - The net loss for the quarter was $50.4 million, or $0.40 per share, compared to a net loss of $25.9 million, or $0.23 per share, for the same quarter in 2020 [33] - Revenues for the quarter were $1 million, up from $30,000 in the same quarter of 2020, attributed to the commercial sales of LUPKYNIS [33] Business Line Data and Key Metrics Changes - The launch of LUPKYNIS began after FDA approval in January 2021, with 257 patient start forms submitted in the first quarter, and a conversion rate of 40% by the end of March [10][18] - The gross margin for the quarter was approximately 95%, with cost of sales recorded at $48,000 [33] Market Data and Key Metrics Changes - Over 2,000 healthcare providers (HCPs) attended education programs about LUPKYNIS, and over 6,000 HCPs were engaged, representing 50% of the target universe [18] - Coverage for LUPKYNIS has been confirmed for more than 120 million lives, with 40% of these lives having no step-through requirements for coverage [20][74] Company Strategy and Development Direction - The company aims to establish LUPKYNIS as the standard of care for lupus nephritis (LN) and is focused on increasing awareness and education among healthcare providers [21] - Aurinia plans to file the Marketing Authorization Application (MAA) for Voclosporin in Europe by the end of the current quarter and is preparing to approach the PMDA in Japan [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the early trends of LUPKYNIS launch despite challenges posed by the COVID-19 pandemic, anticipating a return to pre-COVID levels of patient care as vaccination rates increase [11] - The company expects to see increased prescribing momentum as more healthcare providers become aware of LUPKYNIS and as access improves [23] Other Important Information - The AURORA Phase 3 clinical study manuscript is expected to be published soon, and data will be presented at major medical events throughout 2021 [12] - The company has a strong balance sheet with over $360 million in cash to support ongoing activities into at least 2023 [14] Q&A Session Summary Question: Can you provide insights on titration and Medicaid formularies? - Management indicated that titration is on track and confirmed that 90% of Medicaid lives now have coverage as of April 1 [38][40] Question: Is the pace of enrollment forms and conversions accelerating? - Management noted that both patient start forms and the time from start forms to actual treatment have steadily increased, with no significant bolus of patients from previous trials [46] Question: What are the common adoption patterns observed? - Prescribers are split evenly between rheumatologists and nephrologists, with most prescribing occurring in community settings [53] Question: What percentage of lives do the 11 payers represent? - Management estimated that the 11 payers cover approximately 20% of the total lives [77] Question: Are patients starting LUPKYNIS while on MMF and steroids? - Management indicated that while some newly diagnosed patients are starting on LUPKYNIS, most patients have previously been treated without achieving their proteinuria goals [80]

Revenue and Sales - Total revenue for the three months ended March 31, 2021, was $914 thousand, a significant increase from $30 thousand for the same period in 2020, representing an increase of 2,946%[130] - Product revenue, net for the three months ended March 31, 2021, was $884 thousand, primarily due to the commercial sales of LUPKYNIS following FDA approval[131] Expenses - Selling, general and administrative expenses increased to $39.3 million for the three months ended March 31, 2021, compared to $11.1 million for the same period in 2020, reflecting an increase of 254%[135] - Research and development expenses decreased to $9.8 million for the three months ended March 31, 2021, down from $13.8 million in the same period in 2020, a reduction of 29%[136] Profitability and Loss - Gross margin for the three months ended March 31, 2021, was approximately 95%[132] - The net loss for the three months ended March 31, 2021, was $50.4 million, compared to a net loss of $25.9 million for the same period in 2020, an increase of 95%[130] Regulatory and Development Milestones - The FDA approved LUPKYNIS on January 22, 2021, for the treatment of adult patients with active LN, marking a significant milestone for the company[125] - The company plans to file a marketing authorization application (MAA) with the European Medicines Agency (EMA) for LUPKYNIS in the first half of 2021[121] - The company is required to conduct two pediatric studies and other studies as a condition of FDA approval, with reports due between 2023 and 2031[120] Financial Position - The company believes it has sufficient financial resources to fund its current plans for at least the next 12 months[119] - As of March 31, 2021, the company had cash and cash equivalents of $156.6 million and short-term investments of $191.7 million, a decrease from $272.4 million and $126.0 million respectively at December 31, 2020[139] - Working capital as of March 31, 2021 was $351.1 million, down from $387.4 million at December 31, 2020[139] Cash Flow - Cash used in operating activities for the three months ended March 31, 2021 was $53.5 million, an increase of $30.9 million from $22.6 million for the same period in 2020[142] - Cash used in investing activities for the three months ended March 31, 2021 was $67.2 million, compared to $12.1 million for the same period in 2020[143] - Cash provided by financing activities for the three months ended March 31, 2021 was $5.0 million, an increase from $2.9 million in the same period in 2020[143] - The company believes its cash position is sufficient to fund current plans for at least the next 12 months, including commercialization of LUPKYNIS and R&D programs[140] Risk Factors - A 10% increase in the U.S. dollar would have increased the net loss by $0.3 million, assuming all other variables remained constant[149] - The company has no off-balance sheet arrangements as defined under Regulation S-K[144] - The investment portfolio includes cash and cash equivalents and investments that earn interest at market rates, primarily consisting of bonds and commercial paper with a maturity of less than two years[148] - The company has internal policies to monitor customer credit limits to mitigate credit risk[150]

LUPKYNIS Overview - LUPKYNIS is the first oral therapy approved for active lupus nephritis (LN) in adult patients[6] - LUPKYNIS, combined with standard of care (SoC), showed superior renal response rates compared to SoC alone in clinical trials[16] - Patients treated with LUPKYNIS + SoC were nearly 3 times more likely to have a renal response vs typical SoC alone (OR=2.65)[22] - 75% of patients were on a low steroid dose (< 2.5 mg/day) at 1 year[29] - The expected average annualized net revenue per patient is approximately $65,000[30] Lupus Nephritis (LN) Market - Systemic lupus erythematosus (SLE) affects 200,000 - 300,000 patients in the US[12] - Approximately 1 out of 3 patients with SLE develop LN at the time of SLE diagnosis[12] - Patients with LN face an approximately 45x higher risk of kidney failure compared to non-renal SLE patients[14] Financial Position and Partnerships - The company had $423 million in cash and cash equivalents as of December 31, 2020, to fund operations through 2023[38] - Aurinia has a collaboration and licensing agreement with Otsuka for LUPKYNIS in the EU and Japan, receiving a $50 million upfront payment and potential for up to $50 million in milestone payments, plus tiered royalties ranging from 10% to 20% on net sales[31] - The approved label provides patent protection to December 2037[2]

Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH) Q4 2020 Earnings Conference Call February 24, 2021 4:30 PM ET Company Participants Glenn Schulman - Senior Vice President, Investor Relations Peter Greenleaf - President and Chief Executive Officer Neil Solomons - Chief Medical Officer Max Colao - Chief Commercial Officer Joe Miller - Chief Financial Officer Conference Call Participants Ken Cacciatore - Cowen & Company Maury Raycroft - Jefferies Justin Kim - Oppenheimer David Martin - Bloom Burton Ed Arce - H.C. Wa ...

Part I [Business](index=7&type=section&id=Item%201.%20Business) Aurinia is a commercial-stage biopharmaceutical company with FDA-approved LUPKYNIS for lupus nephritis, focusing on U.S. launch and global expansion - **On January 22, 2021, the FDA approved LUPKYNIS** in combination with background immunosuppressive therapy for adult patients with active lupus nephritis (LN)[26](index=26&type=chunk) - The estimated U.S. market for LN is **80,000 to 120,000 patients**[31](index=31&type=chunk) - Expected average annualized net revenue per patient for LUPKYNIS is approximately **$65,000**, with a WAC of **$3,950 per 'wallet'** (60 capsules)[34](index=34&type=chunk) - A collaboration and licensing agreement with Otsuka Pharmaceutical Co., Ltd. for LUPKYNIS in EU/Japan included a **$50 million upfront payment**[46](index=46&type=chunk) - A collaborative agreement with Lonza Ltd. was established to build a dedicated manufacturing facility in Switzerland for voclosporin supply[47](index=47&type=chunk) [Strategy and Market Potential](index=7&type=section&id=Item%201.%20Business-Strategy) The company's strategy focuses on optimizing LUPKYNIS value, expanding its label, and adding new pipeline assets through U.S. commercialization and global partnerships - Corporate strategy focuses on optimizing LUPKYNIS's value, expanding its label for other kidney indications, and adding new pipeline assets[29](index=29&type=chunk) - Key tactics include U.S. commercial launch, collaboration with Otsuka for EU/Japan, securing supply with Lonza, and evaluating external assets[30](index=30&type=chunk) - The estimated U.S. market for LN is **80,000 to 120,000 patients**[31](index=31&type=chunk) - The wholesale acquisition cost (WAC) for a LUPKYNIS 'wallet' (60 capsules) is **$3,950**, with an expected average annualized net revenue per patient of approximately **$65,000**[34](index=34&type=chunk) [Voclosporin Development History and Other Programs](index=9&type=section&id=Item%201.%20Business-Development%20History) Voclosporin's development history includes discontinued programs for psoriasis, kidney transplantation, and dry eye syndrome, with an ongoing exploratory study for COVID-19 - Development of voclosporin for psoriasis and kidney transplantation was discontinued due to market dynamics and costs, despite some positive clinical data[40](index=40&type=chunk)[41](index=41&type=chunk) - The development program for voclosporin ophthalmic solution (VOS) for Dry Eye Syndrome was suspended after the Phase 2/3 AUDREY trial did not meet its primary endpoint in November 2020[49](index=49&type=chunk) - An exploratory study for Focal Segmentation Glomerulosclerosis (FSGS) was suspended due to difficulty in enrolling patients[52](index=52&type=chunk) - An investigator-initiated trial (VOCOVID) was initiated to evaluate the antiviral effects of voclosporin in kidney transplant recipients with COVID-19, based on in-vitro data showing it inhibited viral replication at lower concentrations than tacrolimus[53](index=53&type=chunk)[54](index=54&type=chunk) [Intellectual Property](index=13&type=section&id=Item%201.%20Business-Intellectual%20Property) Aurinia holds an extensive patent portfolio for voclosporin, with protection expected until at least October 2027 in key markets, including a U.S. patent for the LUPKYNIS dosing protocol extending to 2037 - The company expects patent protection for voclosporin to be extended until at least **October 2027** in the U.S., Europe, and Japan[62](index=62&type=chunk) - U.S. Patent No. 10,286,036, with a term extending to **December 2037**, was granted for the LUPKYNIS dosing protocol for LN, which is part of the FDA-approved prescribing information[63](index=63&type=chunk) - The company expects to receive **five years** of 'new chemical entity' exclusivity in the U.S. and up to **ten years** in Europe[62](index=62&type=chunk) [Regulatory Environment](index=13&type=section&id=Item%201.%20Business-Regulatory) The company operates in a highly regulated environment, having secured FDA approval for LUPKYNIS and planning an EMA filing, with sales highly dependent on third-party payor coverage and reimbursement - LUPKYNIS was granted Priority Review and Fast Track designation by the FDA, leading to an expedited six-month review and approval on **January 22, 2021**[56](index=56&type=chunk) - The company, with its partner Otsuka, plans to file a Marketing Authorization Application (MAA) with the European Medicines Agency (EMA) in the **first half of 2021**[66](index=66&type=chunk) - Sales of LUPKYNIS are highly dependent on adequate coverage and reimbursement from third-party payors, including government programs and private insurers, who are implementing increasing cost-containment measures[106](index=106&type=chunk) - Healthcare reforms, such as the ACA, and other legislative proposals could significantly affect reimbursement rates and the company's ability to generate revenue[108](index=108&type=chunk)[109](index=109&type=chunk) [Manufacturing, Sales, and Human Capital](index=22&type=section&id=Item%201.%20Business-Manufacturing%20and%20Human%20Capital) Aurinia relies on sole contract manufacturers Lonza and Catalent for its supply chain and has established a commercial organization to support the LUPKYNIS launch, employing 294 people as of December 31, 2020 - The company relies on Lonza as the sole source manufacturer for voclosporin API and Catalent as the sole supplier for encapsulation and packaging[114](index=114&type=chunk)[115](index=115&type=chunk) - A commercial organization with expertise in rheumatology and nephrology has been established to support the marketing, sales, and distribution of LUPKYNIS[116](index=116&type=chunk) - As of **December 31, 2020**, the company had **294 employees** across the U.S., Canada, and the U.K[117](index=117&type=chunk) [Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including COVID-19 impacts, single-product dependency, reimbursement challenges, intellectual property issues, capital needs, reliance on third-party manufacturers and partners, and complex regulatory compliance - The COVID-19 pandemic could materially affect business operations, including sales, marketing, clinical trials, and supply chain[124](index=124&type=chunk)[125](index=125&type=chunk) - As a single-product company with limited commercial experience, success is highly dependent on the successful commercialization of LUPKYNIS[129](index=129&type=chunk) - The company's ability to generate revenue is contingent on obtaining and maintaining adequate coverage and reimbursement from government and private payors, which is subject to pricing pressures and healthcare reform[137](index=137&type=chunk)[139](index=139&type=chunk) - The company relies exclusively on third parties like Lonza (API) and Catalent (encapsulation) for manufacturing, and any disruption could delay commercialization efforts[203](index=203&type=chunk)[204](index=204&type=chunk) - The company is dependent on its partner, Otsuka, for the development and commercialization of LUPKYNIS in key territories outside the U.S., and failure by the licensee to perform could adversely affect business[197](index=197&type=chunk)[198](index=198&type=chunk) [Unresolved Staff Comments](index=52&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[277](index=277&type=chunk) [Properties](index=53&type=section&id=Item%202.%20Properties) The company leases all its facilities, including headquarters in Victoria, BC, an administrative office in Edmonton, AB, and a commercial office in Rockville, MD, which are deemed adequate for current needs - The company leases its primary headquarters in Victoria, BC (**13,206 sq. ft.**), an administrative office in Edmonton, AB (**2,248 sq. ft.**), and its U.S. commercial office in Rockville, MD (**30,531 sq. ft.**)[278](index=278&type=chunk) [Legal Proceedings](index=53&type=section&id=Item%203.%20Legal%20Proceedings) The company has initiated a patent infringement lawsuit against Sun Pharmaceutical Industries regarding its CEQUA product, alleging infringement of U.S. Patent No. 10,265,375 and seeking injunctive and monetary relief - On **December 18, 2020**, Aurinia filed a patent infringement lawsuit against Sun Pharmaceutical Industries concerning Sun's CEQUA product, alleging infringement of U.S. Patent No. 10,265,375[500](index=500&type=chunk) [Mine Safety Disclosures](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's business - Not applicable[279](index=279&type=chunk) Part II [Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=54&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Aurinia's common shares trade on Nasdaq and TSX, with no anticipated cash dividends as earnings will be retained for business development and LUPKYNIS commercialization - Common shares are traded on the Nasdaq Global Market (AUPH) and the Toronto Stock Exchange (AUP)[282](index=282&type=chunk) - The company does not anticipate paying cash dividends in the foreseeable future, retaining funds for business development and commercialization[284](index=284&type=chunk) [Selected Financial Data](index=55&type=section&id=Item%206.%20Selected%20Financial%20Data) For 2020, total revenues reached $50.1 million, primarily from a licensing agreement, resulting in a net loss of $102.7 million, while total assets grew to $463.7 million Selected Consolidated Statements of Operations Data (in thousands, except per share data) | | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total revenues** | $50,118 | $318 | $463 | $418 | $173 | | **Research and development** | $50,327 | $52,866 | $41,382 | $33,930 | $14,534 | | **General and administrative** | $95,983 | $22,338 | $13,694 | $12,118 | $6,992 | | **Loss from operations** | $(104,290) | $(90,943) | $(55,240) | $(46,817) | $(25,499) | | **Net loss** | $(102,680) | $(88,385) | $(53,079) | $(46,115) | $(25,472) | | **Basic and diluted loss per common share** | $(0.87) | $(0.95) | $(0.63) | $(0.60) | $(0.72) | Selected Balance Sheet Data (in thousands) | | As of Dec 31, 2020 | As of Dec 31, 2019 | | :--- | :--- | :--- | | **Cash, equivalents, & short-term investments** | $398,329 | $306,019 | | **Working capital** | $387,430 | $303,842 | | **Total assets** | $463,661 | $324,301 | | **Total liabilities** | $55,911 | $25,701 | | **Total shareholders' equity** | $407,750 | $298,600 | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=56&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The MD&A details the company's financial performance, highlighting a surge in 2020 revenue due to a $50 million Otsuka payment, increased G&A expenses for pre-commercialization, and a strong liquidity position from a public offering [Results of Operations](index=57&type=section&id=Item%207.%20MD%26A-Results%20of%20Operations) For 2020, revenue increased to $50.1 million due to the Otsuka licensing agreement, while R&D expenses slightly decreased, and G&A expenses significantly rose due to pre-commercial activities, leading to a net loss of $102.7 million Comparison of Operations (in thousands) | | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | Change | | :--- | :--- | :--- | :--- | | **Licensing revenue** | $50,118 | $318 | $49,800 | | **Research and development** | $50,327 | $52,866 | $(2,539) | | **General and administrative** | $95,983 | $22,338 | $73,645 | | **Net loss** | $(102,680) | $(88,385) | $(14,295) | - The **$49.8 million increase in revenue** in 2020 was primarily due to the **$50.0 million upfront payment** from the Otsuka licensing agreement[297](index=297&type=chunk) - The **$73.6 million increase in G&A expenses** in 2020 was driven by a **$32.8 million increase in salaries**, **$8.9 million in share compensation**, and **$24.1 million in professional fees** for pre-commercial activities[300](index=300&type=chunk)[301](index=301&type=chunk) [Critical Accounting Policies and Estimates](index=59&type=section&id=Item%207.%20MD%26A-Critical%20Accounting%20Policies) The company's critical accounting policies involve significant judgments for revenue recognition, R&D costs, pre-launch inventory capitalization, royalty obligations, and share-based compensation - Revenue from licensing agreements is recognized when the customer obtains control; the **$50 million upfront fee from Otsuka** was recognized upon transfer of the license in December 2020[312](index=312&type=chunk)[482](index=482&type=chunk) - A royalty obligation to former executives is recorded as a liability, measured using a risk-adjusted net present value model based on significant assumptions like future net pricing, patient numbers, and a discount rate (**10.3% at Dec 31, 2020**)[322](index=322&type=chunk)[323](index=323&type=chunk)[504](index=504&type=chunk) - Pre-launch inventory is capitalized when regulatory approval is highly probable; as of **Dec 31, 2020**, **$13.9 million** of pre-launch inventory was recognized[320](index=320&type=chunk)[453](index=453&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=Item%207.%20MD%26A-Liquidity%20and%20Capital%20Resources) As of December 31, 2020, the company maintained a strong liquidity position with $398.4 million in cash and investments, bolstered by a $187.7 million public offering, sufficient to fund operations for at least the next 12 months Cash and Liquidity (in millions) | | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | **Cash, Cash Equivalents & Short Term Investments** | $398.4 | $306.0 | | **Working Capital** | $387.4 | $303.8 | | **Accumulated Deficit** | $(575.2) | $(472.5) | Summary of Cash Flows (in millions) | | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(69.9) | $(63.6) | | **Net cash (used in) provided by investing activities** | $(158.2) | $7.8 | | **Net cash provided by financing activities** | $194.4 | $243.9 | - In **July 2020**, the company completed a public offering of common shares, raising net proceeds of **$187.7 million**[335](index=335&type=chunk) - Management believes that the cash position as of **Dec 31, 2020** is sufficient to fund current plans for at least the next **12 months**[329](index=329&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=65&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to foreign currency risk, primarily between the U.S. and Canadian dollars, and manages interest rate and credit risks through investment policies - The company is exposed to foreign currency risk, primarily between the U.S. and Canadian dollars; a **10% strengthening of the Canadian dollar** would have increased the net loss by **$0.5 million**[347](index=347&type=chunk) - Interest rate risk is considered low due to the short-term nature of the investment portfolio[346](index=346&type=chunk) - Credit risk is managed through an investment policy that diversifies holdings and limits investments to high-quality, investment-grade instruments[348](index=348&type=chunk) [Financial Statements and Supplementary Data](index=66&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This item serves as an index to the company's audited consolidated financial statements, located starting on page F-1 of the Annual Report - This item provides an index to the company's audited consolidated financial statements, which are located starting on page F-1 of the Annual Report[349](index=349&type=chunk)[350](index=350&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=67&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting principles or financial disclosure - None[352](index=352&type=chunk) [Controls and Procedures](index=67&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2020, with independent auditor attestation - Management concluded that the company's disclosure controls and procedures were effective as of **December 31, 2020**[354](index=354&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of **December 31, 2020**, and this assessment was audited by PricewaterhouseCoopers LLP[355](index=355&type=chunk)[356](index=356&type=chunk) [Other Information](index=67&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[358](index=358&type=chunk) Part III [Directors, Executive Officers, and Corporate Governance](index=68&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the company's 2021 Proxy Statement, and a Corporate Code of Ethics and Conduct is available online - Required information is incorporated by reference from the definitive Proxy Statement to be filed by **April 30, 2021**[359](index=359&type=chunk) - The company has adopted a Corporate Code of Ethics and Conduct, available on its website[360](index=360&type=chunk) [Executive Compensation](index=68&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's 2021 Proxy Statement - Required information is incorporated by reference from the company's 2021 Proxy Statement[361](index=361&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=68&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership by beneficial owners and management, along with equity compensation plans, is incorporated by reference from the company's 2021 Proxy Statement - Required information is incorporated by reference from the company's 2021 Proxy Statement[361](index=361&type=chunk) [Certain Relationships and Related Transactions and Director Independence](index=68&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the company's 2021 Proxy Statement - Required information is incorporated by reference from the company's 2021 Proxy Statement[362](index=362&type=chunk) [Principal Accountant Fees and Services](index=68&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding fees paid to the principal accountant and services rendered is incorporated by reference from the company's 2021 Proxy Statement - Required information is incorporated by reference from the company's 2021 Proxy Statement[363](index=363&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=69&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the Annual Report, including consolidated financial statements, material contracts, and SEC certifications, noting the omission of inapplicable financial statement schedules - This item lists all exhibits filed with the Form 10-K, including material contracts such as the Collaboration and Licensing Agreement with Otsuka and the Manufacturing Services Agreement with Lonza[369](index=369&type=chunk)[370](index=370&type=chunk) [Form 10-K Summary](index=72&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no summary for this item - None[373](index=373&type=chunk) Financial Statements and Notes [Report of Independent Registered Public Accounting Firm](index=75&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) PricewaterhouseCoopers LLP issued an unqualified opinion on the consolidated financial statements and internal control over financial reporting, identifying the measurement of royalty obligation as a Critical Audit Matter - The auditor, PricewaterhouseCoopers LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting[382](index=382&type=chunk) - A Critical Audit Matter was identified related to the 'Measurement of the royalty obligation' due to the significant judgment and complex assumptions required by management, particularly regarding net pricing, patient numbers, and the discount rate[388](index=388&type=chunk)[389](index=389&type=chunk)[391](index=391&type=chunk) [Consolidated Financial Statements](index=79&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show total assets of $463.7 million and a net loss of $102.7 million for 2020, reflecting the transition to U.S. GAAP Consolidated Balance Sheet Highlights (in thousands) | | As of Dec 31, 2020 | As of Dec 31, 2019 | | :--- | :--- | :--- | | **Total current assets** | $419,427 | $315,137 | | **Total assets** | $463,661 | $324,301 | | **Total current liabilities** | $31,997 | $11,295 | | **Total liabilities** | $55,911 | $25,701 | | **Total shareholders' equity** | $407,750 | $298,600 | Consolidated Statement of Operations Highlights (in thousands) | | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | | :--- | :--- | :--- | | **Total revenues** | $50,118 | $318 | | **Total operating expenses** | $154,408 | $91,261 | | **Loss from operations** | $(104,290) | $(90,943) | | **Net loss** | $(102,680) | $(88,385) | [Notes to Consolidated Financial Statements](index=84&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the retrospective transition to U.S. GAAP, the $50 million Otsuka licensing revenue, the $15 million royalty obligation, a new $94 million finance lease with Lonza, and the subsequent FDA approval of LUPKYNIS - The company retrospectively transitioned its financial statements from IFRS to U.S. GAAP, as it no longer qualified as a Foreign Private Issuer as of Q2 2020[410](index=410&type=chunk) - The **$50 million upfront payment** from the Otsuka agreement was recognized as licensing revenue in **December 2020**, as the functional IP was transferred at that time[481](index=481&type=chunk)[482](index=482&type=chunk) - The royalty obligation to former executives increased to **$15.0 million** at year-end 2020 from **$8.2 million** in 2019, primarily due to a lower discount rate and the passage of time[502](index=502&type=chunk)[504](index=504&type=chunk) - The company entered into an agreement with Lonza for a dedicated manufacturing facility, which is expected to be accounted for as a finance lease with minimum lease payments of approximately **$94 million** beginning in 2021[516](index=516&type=chunk)[517](index=517&type=chunk) - A key subsequent event was the FDA approval of LUPKYNIS on **January 22, 2021**[557](index=557&type=chunk)

Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH) Q2 2020 Results Earnings Conference Call August 11, 2020 4:30 PM ET Company Participants Glenn Schulman - SVP, Corporate Communications and IR Peter Greenleaf - CEO and Director Neil Solomons - Chief Medical Officer Max Colao - Chief Commercial Officer Joe Miller - Chief Financial Officer Michael Martin - Chief Operating Officer Conference Call Participants Alethia Young - Cantor Fitzgerald Ed Arce - H.C. Wainwright Joseph Schwartz - SVB Leerink Justin Kim - Oppenh ...

Financial Data and Key Metrics Changes - As of March 31, 2020, Aurinia had cash, cash equivalents, and short-term investments of $286.1 million, down from $306 million as of December 31, 2019 [27] - The company reported a consolidated net loss of $16.5 million or $0.15 per common share for Q1 2020, compared to a net loss of $12.4 million or $0.14 per common share for Q1 2019 [28] - Net cash used in operating activities was $22.7 million for Q1 2020, compared to $13.1 million for Q1 2019 [27] Business Line Data and Key Metrics Changes - R&D expenses increased to $13.8 million for Q1 2020, up from $10.6 million in Q1 2019, primarily due to NDA submission preparation and related activities [29] - Corporate, administration, and business development expenses rose to $11.1 million for Q1 2020, compared to $3.9 million for Q1 2019, reflecting the expansion of the commercial team and higher consulting fees [31] Market Data and Key Metrics Changes - The company is preparing to explore voclosporin in other proteinuric kidney diseases, including pediatric nephrotic syndrome and adult idiopathic membranous glomerular nephropathy, indicating a shift in market focus [19] - The lupus nephritis market is estimated to have around 200,000 to 250,000 patients in the U.S. [52] Company Strategy and Development Direction - Aurinia aims to submit the NDA for voclosporin by the end of Q2 2020, with a potential launch shortly after FDA approval [12] - The company is focusing on building a world-class commercial team to support the launch of voclosporin, leveraging expertise in nephrology and rheumatology [25] - The strategic shift includes moving resources from FSGS studies to larger, more commercially viable indications [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the NDA submission process, noting positive interactions with the FDA [36][37] - The company is preparing for multiple launch scenarios in light of COVID-19, including normal, full lockdown, and limited access scenarios [38] Other Important Information - The company has established a U.S. commercial hub in Rockville, Maryland, to facilitate the launch of voclosporin [15] - A new Chief Financial Officer, Joe Miller, has joined the company, succeeding Dennis Bourgeault [14] Q&A Session Summary Question: Feedback from the FDA and launch strategies during COVID - Management reported positive feedback from the FDA and is preparing for various launch scenarios, including virtual engagement with physicians [36][38] Question: Intellectual property and dosing instructions - The company hopes to include specific dosing instructions in the drug label, based on successful trial protocols [42] Question: Anticipated indication structure and patient coverage - The target label is focused on treating lupus nephritis, with an estimated patient population of 200,000 to 250,000 in the U.S. [52] Question: Real-world dosing adjustments for physicians - The dosing scheme is designed to be accessible and not add complexity to current treatment practices [54][56] Question: Market research on off-label use - The company is conducting market research to understand potential off-label uses and indications for voclosporin [77]

Financial Data and Key Metrics Changes - As of December 31, 2019, Aurinia had cash and cash equivalents of $306 million, a significant increase from $125.9 million at the end of 2018, primarily due to net proceeds of $179.9 million from a public offering [19] - The consolidated net loss for the year ended December 31, 2019, was $123.8 million, or $1.33 per common share, compared to a net loss of $64.1 million, or $0.76 per common share in 2018 [20][21] - Research and development expenses increased to $52.9 million in 2019 from $41.4 million in 2018, reflecting higher costs related to various studies [23] Business Line Data and Key Metrics Changes - The company reported positive results from the AURORA Phase III trial for voclosporin, achieving a renal response rate of 40.8% compared to 22.5% for the control arm, with a p-value of less than 0.001 [11] - The AURORA study met all pre-specified hierarchical secondary endpoints, demonstrating robust efficacy across various subgroups [11] Market Data and Key Metrics Changes - The company is preparing for a rolling NDA submission to the FDA, with expectations for priority review and potential approval in early 2021 [16] - Aurinia is also evaluating voclosporin for primary FSGS and has ongoing studies for dry eye syndrome, with results expected in the second half of 2020 [17] Company Strategy and Development Direction - Aurinia's strategic focus remains on voclosporin and its clinical development programs, with plans for a commercial launch following FDA approval [26] - The company is building a world-class commercial team to support the launch and has hired experienced leaders from the industry [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the regulatory process, noting no significant roadblocks during the pre-NDA meeting with the FDA [31] - The company aims to diversify its pipeline and is actively seeking partnerships for global commercialization [46][48] Other Important Information - The company plans to present additional AURORA study results at various medical congresses throughout the year [12] - Aurinia's share price increased significantly in December 2019, impacting the estimated fair value of derivative warrant liabilities [22] Q&A Session Summary Question: Can you provide insights on the pre-NDA meeting and potential advisory committee involvement? - Management reported a positive interaction with the FDA, with no significant roadblocks identified, and anticipates an advisory committee meeting due to the new molecular entity status [31][32] Question: What strategies are in place to build brand loyalty and commercial infrastructure? - The company plans to implement a comprehensive commercial model that includes manufacturing, distribution, and customer support to enhance brand loyalty [34] Question: What are the plans for European regulatory interactions? - Aurinia intends to follow up with the EMA application process, which is approximately six months behind the U.S. regulatory timeline [39] Question: How does the company view the competitive landscape with other therapies? - Management believes voclosporin's rapid response time will provide a competitive advantage over other therapies that may take longer to show results [76] Question: What are the goals for the commercial team as it builds out? - The focus is on establishing a robust infrastructure for a successful launch, including hiring additional personnel and developing marketing strategies [53][54]