Yesterday, drug maker Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) announced the beginning of Phase 3 trial AURORA of voclosporin, a medicine intended to treat lupus nephritis (LN).

In reaction, H.C. Wainwright top analyst Ed Arce reiterates a Buy rating but lowers his price target to $10 (from $12), considering a share dilution occurred on March 20th, and as a significant risk of incurring an additional one remains.

“Based on the results of AURA, we are highly confident in a positive readout for AURORA, especially given that the treatment affect of voclosporin appears to be cumulative, with clinical outcomes improving over time […] In addition, we believe an important lesson learned from AURA was site selection: as we understand it, management will avoid establishing clinical sites where access to standard of care (SOC) therapies is limited,” opines the analyst.

Looking ahead, Arce “project[s] top-line AURORA results at the end of 2019 or early 2020, followed by NDA submittal likely by June 2020. Given voclosporin’s Fast Track designation, we expect the drug to be granted Priority Review (8 months from submittal), leading to a potential commercial launch in 1Q 2021, in-line with our current model assumptions. We continue to believe that, once launched, voclosporin will quickly be established as the new, vastly improved SOC, and first indicated treatment, for LN.”

Two months ago, the drug maker realized a follow-on offering of 25.64M shares priced at $6.75 each, and received net proceeds of $162.3M. Aurinia’s management expects to have enough cash until 2020, which will be enough to cover expenses during Phase 3 trial and probably until the FDA approval for voclosporin. However, the analyst projects another round of funding for Aurinia for U.S. commercial launch of the drug. Arce surmises likewise pointing out the biotech company did not settle with any collaborator for Europe and Japan “which may carry substantial upfront payments.”

According to TipRanks, a financial engine that measures and ranks analysts’ and bloggers’ performance, top analyst Ed Arce is ranked #118 out of #4561 analysts. Arce has a 51% success rate and generates an annual yield of 27.4%. When recommending AUPH, the analyst earns a 121.4% average profit on the stock.

TipRanks analytics show AUPH as a Strong Buy. Based on 4 analysts offering recommendations for this share, all 4 issue a Buy rating. The 12-month average price target stands at $11.25, making a nearly 56% upside from where the stock is currently trading.

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