Dispelling Certain Aurinia ($AUPH) Rumors

by DrKSSMDPhD | December 21, 2017 8:40 pm


[Ed. Note: Dr. KSS is our biotech and medical maven, who writes for the Irregulars. He has agreed to our trading restrictions, chooses is own topics, and his words and opinions are his own. You can find all of his previous articles and most recent comments on his Stock Gumshoe page[1].]

Although the drive to short shares of $AUPH appears to be slackening during these Christmas weeks, many readers are vexed by how $AUPH is trading at considerably less than they’d expected with a SPA-premised phase 3 voclosporin trial underway internationally for lupus nephritis.

A reader noted today in the threads that the following has appeared at the behest of investor group Seaport Global.

“Summary: On December 18, we accompanied AUPH management during nondeal roadshow (NDR) meetings with investors where the company highlighted the advantages of its lead asset, voclosporin (VCS), which is in Phase III study in lupus nephritis (LN). Specifically, whereas other investigational treatments previously studied in LN have side effects that can limit their long-term use, VCS strikes a unique balance between high potency and safety. In addition, with its novel ability to stabilize the conformation of kidney podocytes, which help form the filtration barrier in the kidney but are leaky in LN, VCS has potential disease-modifying activity. We think AUPH stock has suffered from negative perceptions about AUPH’s cash reserves and misconceptions about the AURORA Phase III trial with VCS, which is on track to complete enrollment of 265 LN patients in 2H:18. We believe AUPH’s $182MM in cash as of September 30, is sufficient to fund its clinical programs through 2020. Therefore, we look at AUPH stock as an attractive buying opportunity and reiterate our Buy rating and $10 price target.

VCS is a very differentiated CNI. We remind investors that VCS is a calcineurin inhibitor (CNI), which is a class of drugs that includes cyclosporine A (CsA) and tacrolimus. Although these CNIs showed efficacy in LN, with its better lipid profile, benign drug interactions with MMF (current LN standard of care), better glucose profile, favorable toxicity profile, as well as better potency, VCS is set apart from other CNIs.

VCS has potential to directly modify LN progression. Podocytes are normally flat cells in the Bowman’s capsule, a structure in the nephron wrapped around the capillaries of the glomerulus that filters blood. In LN, podocytes are rounded, creating spaces that allow blood proteins to leak into urine (proteinuria). By stabilizing the podocyte, VCS prevents leakage of proteins and protects against proteinuria. As severity of proteinuria is the best predictor of long-term outcomes in LN, VCS’ ability to decrease proteinuria over 48 weeks of dosing, which was demonstrated in the successful AURA-LV Phase IIb study, suggests potential for clinically meaningful long-term benefit.

AURORA is powered to meet the challenges observed in AURA-LV. We learned of concern about AURORA’s design, which varies slightly from AURA-LV. In particular, whereas AURA-LV patient entry criteria required LN proven by kidney biopsy within six months, patients enrolled in AURORA are allowed to show biopsy-proven LN within 24 months. However, we note that this is not an FDA requirement. Furthermore, although biopsy provides useful data, the tissue sampled is small and can be inaccurate. Lastly, as an end-of-study biopsy is required, a patient’s refusal would count as treatment failure. However, AUPH designed AURORA to be powered to meet its goals with 150 patients. Thus, with 265 patients expected to be enrolled, AURORA is strongly powered.”

This has alarmed readers because of its assertion that the trial requires of patients a second kidney biopsy at the end of the trial. It alleges, falsely, that patients who refuse such a biopsy (completely within their right) would confound the data and be counted as treatment failures in an intention-to-treat analysis. Despite these surprising claims, I recall nothing ever having been mentioned about an end-of-treatment biopsy for phase 3, and personally reviewed the published trial protocol this am, where no mention of it occurs. Medically and scientifically I can see no reason such a data point would be needed for an NDA, though having such data would be a luxury in, for example, a post-marketing phase 4 study.

I contacted COO Michael Martin, CMO Neil Solomons, MB, BCh, and VP Robert Huizinga, RN, M.Sc, at Aurinia this morning. According to them there is ABSOLUTELY NO PLAN, and never has been, for an end-of-treatment biopsy in phase 3 and the FDA has NOT requested such information.

Aurinia is tentatively planning a two-year continuation study (essentially a phase 4) following the completion of phase 3 and the NDA in order to maximize the data garnered from this scientific excursion. For patients who actually end up in the continuation or rollover study (which is never 100 percent of the phase 3 patients), patients will have the option of volunteering to undergo renal biopsy to inform the study. Failure to volunteer will in no way adversely affect the data, and no new or additional biopsy data is needed for the NDA. For phase 3, the company is relying on prior biopsy data to fulfill enrollment criteria. The correlation between histology and clinical renal behavior associated with voclosporin therapy is a tight one, and it would add nothing to the data dossier to obtain new on-treatment or end-of-treatment histology. This would simply drive up costs of the trial as well as risks. Aurinia anticipates releasing data from the rollover or continuation study (the protocol for which has not been submitted to the FDA or filed at clinicaltrials.gov yet) in 2023.

Another rumor circulating against Aurinia is that the company faces competition from an agent called anifrolumab from AstraZeneca ($AZN). The company is enrolling patients for a two-dose phase 2 trial[2].

Anifrolumab is a monoclonal antibody that blocks the interferon-alpha receptor[3]. This agent was originally invented by MedImmune and has exhibited some success in phase 2 systemic lupus erythematosus trials for $AZN. A subset of lupus patients have lupus nephritis, but the driving pathophysiologies are rather different, and agents that work well for one seldom suffice for the other.

The mechanisms of disease in lupus nephritis are such that interferon-receptor blockade is categorically unlikely to make much difference in disease progression; indeed, little evidence supports the idea that endogenous interferon drives LN.

As I view things, AstraZeneca is merely conducting a two-dose excursionary study in LN. It would be tough to call this a pilot study as the company seeks 150 patients. But labeling this as genuine competition for Aurinia and voclosporin is a quite a stretch pathophysiologically, and Astra’s trial is highly likely to fail. The trial officially won’t complete before July 2020, by which time Aurinia will have submitted an NDA. The convenience of twice daily voclosporin oral dosing makes the competitive landscape such that anifrolumab has little practical advantage, as it will likely require iv infusion or ENHANZE ($HALO)-potentiated SQ administration. Given a choice, patients always prefer pills over shots. We think there’s a high likelihood an interim analysis will show no efficacy and that the trial will be called off.

Word has emerged that the final patient in a SPA-premised phase 3 trial of a peptide called Lupuzor, developed by privately-held French firm ImmuPharma, has been dosed. LUPUZOR IS BEING TRIALLED FOR LUPUS, NOT LUPUS NEPHRITIS. This has confused certain readers. Here is the trial record[4].

Lupuzor is a short-peptide requiring parenteral administration whose mechanism of action is unknown but that would appear to be a decoy peptide similar in activity to certain recent agents for multiple sclerosis.

Trial outcomes from a phase 2b study are described in this clipping[5]. We encourage you to read the entire first page for a classic description of small effect size. Again, this study is in lupus not lupus nephritis. There is no reason conceptually that Lupuzor, which requires monthly subcutaneous administration, should be of benefit in lupus nephritis. I tend to predict it will fail in lupus insofar as effect size invariably falls as one moves from phase 2 to phase 3 studies.

An important orientation reminder to all readers: Aurinia’s goal in advancing voclosporin to market for lupus nephritis is not merely to provide a treatment that has activity against the disease. It is to provide a treatment THAT INDUCES REMISSION. No other competitor in the space of which I am aware (and they are few and grower fewer) can make this claim. Voclosporin hampers and shuts down the disease process so that patients need not continue taking it, and does so in at least half of recipients. In the field of lupus nephritis this is unprecedented. To be sure, many if not most will relapse within 5 years and require another induction of remission, but this is not to say that remission is not genuinely achieved. Our cardinal contention regarding this investment is that the shorts, and they are many and virulent, are elementally revealing their ignorance about voclosporin….and it is indeed a quirky, unusual drug. All the calcineurin inhibitors are, and no one would accuse any member of this class of agent of playing by pharmacology’s usual rules. We intend to take on the short case and the mysterious doubts that linger over Aurinia in a column coming soon. We continue to regard it as among the most simultaneously derisked and potentially high-yield investments that biotechnology investing has ever seen.

Disclosures: I have a long position in $AUPH. I will not trade in any equity named in this article for 7 days, reckoned in business days, after this article appears. Nothing contained here constitutes a recommendation or solicitation for you to alter your investing portfolio in any way. Diligence is due before you make such decisions. Other than in Aurinia shares, I have a long position in $HALO shares but no other positions long or short in any named equity.

Endnotes:
  1. Stock Gumshoe page: https://www.stockgumshoe.com/author/dr-kss-md-phd/
  2. two-dose phase 2 trial: https://clinicaltrials.gov/ct2/show/NCT02547922?cond=Lupus+Nephritis&draw=4&rank=24
  3. interferon-alpha receptor: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5299497/
  4. trial record: https://clinicaltrials.gov/ct2/show/NCT02504645?term=lupuzor&rank=1
  5. this clipping: http://www.immupharma.co.uk/wp-content/uploads/2015/03/BMJ-Article-Oct-2013.pdf

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