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Analyst Neil Maruoka Bullish on Aurinia Pharmaceuticals Inc (AUPH) on Back of Attractive Worldwide Partnering Potential in Competitive LN Landscape


Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) served its third quarter earnings on Tuesday, but to Canaccord analyst Neil Maruoka, what matters most is the update the drug maker offered on its AURORA Phase III clinical trial in lupus nephritis (LN). This is a trial that for Maruoka flashes “a good chance of success,” where he ascribes 65% likelihood for success, notably “higher than historically seen in other Phase III trials for autoimmune diseases.”

In a quarter that saw Aurinia spend 27% higher than the analyst’s expectations with $10.8 million in R&D expenses, Marouka notes that these “elevated expenditures” largely went for the ongoing AURORA trial for funding. Additionally, the company’s operational cash burn reached $12.6 million, leading to an EBITDA loss of ($12.3 million), a sharper loss than Maruoka had been anticipating of ($11.2 million).

“Management maintained that AURORA is on track to complete enrollment in the second half of 2018, with data expected by the end of 2019. […] Based on a reported $182.4 million of cash at the end of Q3, we estimate Aurinia has a cash runway into 2020 at current burn,” adds the analyst.

Maruoka concludes on a positive note: “Following the quarter, we have marginally increased our forecast R&D spending for Aurinia over the next two years. However, despite several clinical programs moving forward in parallel, we continue to believe Aurinia remains fully funded to complete clinical development in these indications. We would remain buyers of Aurinia ahead of potential global partnerships for voclosporin in LN and, possibly, for additional indications (including ophthalmology).”

Therefore, on the heels of the print, the analyst maintains a Speculative Buy rating on AUPH stock with a $10.50 price target, which represents a 102% increase from where the stock is currently trading. (To watch Maruoka’s track record, click here)

This biotech player has magnetized early bullish word on the Street for its prospects, with TipRanks analytics demonstrating AUPH as a Strong Buy. Out of 4 analysts polled by TipRanks in the last 3 months, all 4 are bullish on Aurinia stock. With a return potential of 124%, the stock’s consensus target price stands at $11.63.