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written by reader Discussion Page for Aurinia Pharmaceuticals ($AUPH)

By LongOnLife, February 9, 2018

This company was initially brought to my attention by Dr. KSS and Glenn Newby sometime back in 2015, as best as I can recall. It has been one of Dr. KSS’s most highly recommended stocks, though he always urged that you do your own DD. I have owned the stock since fairly early in the game and have bought more as it grew in price. As a result, I have lost on some on the more recent purchases but am still nicely in the black on this one. (showing green in my graphics is nice). I have spent considerable time doing research into this company and have seen nothing of substance to make me believe that Doc and Glenn missed something. If the clinical trial is successful, which appears likely, Voclosporin, Aurinia’s lead drug candidate, will be a blockbuster for treating Lupus Nephritis and it will have no real competition for treating this disease, and so should pretty much own the market. There are other indications that are being trialed including Focal Segmental Glomerulonephritis & Minimal Change Disease as well as Dry Eye Syndrome. If these trials are successful, the prospects are even brighter for Aurinia. Estimates I have seen put the annual market for LN alone in the 1.5B range and utilizing a multiplier of 2.5 – 5, a typical market cap would range from 3.75B to 7B. With the current market cap at around 411M, a 10 bagger is not out of the question and that guesstimate is possibly on the low side, considering the other indications have shown promising results. The problem with this stock as an investment is that Aurinia is still enrolling for Phase 3 in the LN trial. I have seen it suggested they could begin a rolling NDA in late 2018, however that seems optimistic to this investor. I think money placed here will not see big gains until at least 2019 and perhaps later, unless the company is bought out. That said, there is little to not like here and it is currently my second largest biotech investment behind Espiron Therapeutics. Any and all thoughts on Aurinia are welcome here, provided they are made in good faith and show respect for other posters.

This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.

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richardo8586
richardo8586
February 9, 2018 12:30 pm

LongonLife, thank you so much for starting this blog. I am ow $AUPH. Very nice to see someone stepping up to the plate. For me there has been a lot of “Clubhouse” dialogue back and forth. Not that I don’t enjoy what people are saying, but I would much rather focus on our bio positions and leave the other comments on a separate blog.

Richard

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lchase
Irregular
lchase
February 9, 2018 1:15 pm

LongOnLife, I join with Richardo8586 in applauding your initiative in setting up the AUPH discussion site. From your writing it is obvious that you are a thoughtful fellow, and as such I know you want to do right by Dr. KSS. It is only with that helpful notion that I mention that you might reconsider a single word in your second introductory sentence. As an old lawyer (read: one inclined to quibble), my suggestion is that consistent with Dr. KSS’s own message, we should avoid the word “recommended”. In your context, the words “highly thought of” might do he job? Your Gummie comrades are all grateful for your service to the Gummune.

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OSUfball
Irregular
February 9, 2018 1:31 pm

I am long AUPH. Very rarely can a stock in biotech be considered a “sure thing”, but AUPH seems to be it. The stock seems to be languishing because there are just no news events and there will not be any until Phase 3 results come out. Can anyone make a bear case for AUPH? It’s always good to think about what could go wrong. I am tempted to add more shares at these low levels but I am already ow so want to be cautious.

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JohnM
February 9, 2018 2:35 pm
Reply to  OSUfball

$AUPH np, for me, the long wait with no news is the only problem. But I still may start a position if this market decline knocks AUPH down much more.

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shredlee
shredlee
February 9, 2018 3:18 pm
Reply to  OSUfball

$AUPH long. I like the odds of trial success but don’t consider it a sure thing since trials are notoriously difficult to reproduce. I think KSS went into great detail explaining why he thought the last p2 trial would lead to p3 success. Like OFSU said, the other issue is the time factor, for instance what will 2019-20 look like in terms of regulatory environment/govt funding, stock market conditions, FDA, new therapies entering development etc.

This stock price is way too low in my opinion even considering the risks, but I bought too much already and won’t add. Since the outcome is fairly binary (stock will be a lot lower on failure and a lot higher on success), I don’t think the price movement means much. I would lighten my own position if it were to shoot above the secondary before the trial ends.

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dunnydame
dunnydame
February 9, 2018 1:59 pm

$AUPH full position
Thanks LOL for starting this separate discussion page.
A question for all: Are SA articles still to be regarded as toxic/inept/misleading/dumb/criminal/radioactive/misinformed? Or are there correspondents out there in S Alphaland who could be read with more that a heaping wheelbarrow of salt?
Inquiring minds want to know.
Penny

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JohnM
February 9, 2018 2:41 pm
Reply to  dunnydame

DR KSS follows Jérôme Verony (seekingalpha.com/article/4140000-cytomx-augmenting-antibodies-across-indications). Bret Jensen is honest and prolific (seekingalpha.com/article/4144799-2-small-biotechs-buy-dip). With so many CFAs writing on SeekingAlpha, it’s silly to say it’s a cesspool. But LongOnLife is right – always consider the source. There are a lot of anonymous shorts and pump ‘n dumpers.

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shredlee
shredlee
February 9, 2018 2:54 pm
Reply to  dunnydame

SA is a platform not a viewpoint so I never understood the resistance to it. I also like how you can get stock, quote, news and scuttlebut in one place. The irony is KSS could have easily used it to start his own paid service within SA turnkey ready to go. It does seem like certain articles were intentionally misleading in an attempt to manipulate a stock, so not much editorial oversite. Kind of reminds me a little of some of the controversies with FB and twitter. I don’t mind contrary information to help me clarify my own thinking.

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tyler123dogfiddle
Member
tyler123dogfiddle
February 11, 2018 1:54 pm
Reply to  dunnydame

$AUPH medium position and adding as and when. For what its worth Dunnydame, I think the stuff Stephen H Goldman writes on SA is worth reading. Although he hasn’t commented on $Auph for a while, when he does it seems to be well researched and while he has always been very bullish about it I don’t get any sense of pump and dump when he writes. His Stocktwits name is Steven5120, not sure about Twitter.

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petervr
petervr
February 11, 2018 2:24 pm

tyler123dogfiddle – thank you for your views on Stephen Goldman. I believe the future of the Gummune will be dependent on the quality of guidance we receive. It is absolutely necessary to separate the Wheat from the Chaff.
PetervR

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savethemanatee
savethemanatee
February 14, 2018 10:07 am
Reply to  dunnydame

Thanks for starting this thread, LOL. I am very overweight $AUPH. As the price languished I kept buying, I exercised options, and somehow it ended up my largest position among ALL my holdings in individual stocks (not just biotech). It is so big that I’ve been contemplating culling it. All indications are that this is going to be a success, which makes the price action so strange and causes some doubt. I certainly credit KSS with all his research and discussion on this one.

Anyway, with regard to seeking alpha, there are a number of highly qualified, honest writers, especially outside the biotech and other small cap space. For instance there is a group of writers that focus on dividend growth investing who are absolutely sterling.

For me the key to separating the wheat from the chaff is to focus on the comments: Does the author interact with commenters? Is he courteous? How does he respond to different opinions? I find that the folks who don’t respond at all or fly off the handle and insult their readers are the ones not to be trusted. Jerome Verony and Steve Goldman were both mentioned here and they are both true professionals. Jonathan Faison follows some of the same stocks we do and is worth reading as well, IMO.

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mary
mary
February 15, 2018 7:54 am
Reply to  savethemanatee

#Savethemanatee…I have way too much biotech and need to find something a little less risky. Would you mind telling me some of the names of those who focus on dividend growth investing that you mentioned?
(for the longest time I thought you were STEVE the manatee….always imagined you wearing a flowered shirt, khaki shorts, and flip flops!…don’t let that comment scare you….I am a grandmother not some weird stalker lady!)

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SoGiAm
February 15, 2018 8:28 am
Reply to  mary

#Dividends – Mary, you may be interested in the following thread: https://www.stockgumshoe.com/2016/04/microblog-72-the-rule-of-72/ #Best2You!

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savethemanatee
savethemanatee
February 15, 2018 9:28 am
Reply to  mary

Hi Mary–sure, happy to help in some small way. Apologies in advance for what may be a long post.

First: That’s funny about Steve the Manatee. “Save the Manatee” is one of the premium license plate options here in Florida–not sure offhand where the money goes. They’re amazing animals. I live right on the edge of Tampa Bay and for about eight months of the year you can often find groups of between three and eight manatees hanging out off my town pier (in the winter they head for warmer water at a nearby power plant). They could easily become extinct within the next thirty or fifty years, which would be a terrible shame.

Dividend growth investing: So for those who don’t know, DGI refers to investing in those companies that not only pay an annual dividend, but have a history of raising their dividend every single year. If you’re a long term investor, investing in the right DGI stocks will provide steady and rising income for decades. Essentially you are able to extract value from your holdings on an increasing basis without having to trade, so fluctuations in share price are pretty much irrelevant.

There are about 850 stocks (including MLPs and REITs) that have raised their dividends for at least each of the past five years. Of those, about 220 have raised their dividends each of the past 10 years or more, and about 120 are true dividend champions–raising their dividends each of the last 25 years or longer. Some of these companies have little growth left in them and are just raising their dividends just a penny or two each year to keep their streak going, so you can’t simply buy them without digging into the numbers.

The best resource is a spreadsheet kept by a man named David Fish, located at: http://www.dripinvesting.org/tools/tools.asp. The speadsheet includes some basic financial info and metrics for each of these companies, including number of years of their streaks and what industry and sector they are in (also dividend yield, dividend growth over the past three, five, and ten years, debt, insider ownership, percentage of revenue paid out in the most recent dividend payment, market cap, etc., etc., etc.). David posts regularly on SA just to announce when the new spread sheet is out and which companies have raised their dividends (and which are being kicked off the list for failure to do so).

Chuck Carnevale writes regular columns taht are absolutely outstanding, relying on a tool he developed called FAST graphs that quickly analyze whether a stock is fairly priced. It’s an amazing product.

In addition to Chuck, there are a number of writers who like to post about their own portfolios and buy and sell decisions using the DGI mindset, including reporting on how their total dividends grow from year to year. They provide great insight and can introduce you to companies that you otherwise may know nothing about. The ones I follow are RoseNose, Dividend Derek, Dividend House, Giesbers Investment Strategy, Accelerating Dividends, and FerdiS. There are others, too. What is nice is that they all feed off of each other and share ideas and thoughts, and you’ll see there is a lot of overlap in their choices.

There are also about a half-dozen funds that focus on DGI companies, and it can be instructive to look at them to see their holdings (you can view their top 25 holdings on Morningstar.com). These include the Vanguard Dividend Growth Fund Investor Shares Fund, T. Rowe Price Dividend Growth Fund, Hartford Dividend and Growth Fund (which includes some non-DGI companies like Google, I believe), the Vanguard Dividend Appreciation Index Fund, The Columbia Dividend Income Fund, and the Fidelity Dividend Growth Fund.

Favorites in these funds include Microsoft, J & J, JPMorgan, Cisco, Lockheed, Pepsi, etc., but there are many smaller companies to look at, too, that may well have more growth potential. Again, David Fish’s spread sheet is a great place to start.

Hope that helps….

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KennyG
KennyG
February 15, 2018 9:55 am
Reply to  savethemanatee

#Dividends: STM, excellent advice to Mary. Pretty thorough and complete and I’m sure that its useful to many besides Mary.

…and yet, some troll, some ungrateful individual had the audacity to give that post of yours a TD. I’m sure it’s a matter of ‘whatever STM posts I will give him a TD’. Is this what we have come to here?

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twine
twine
February 15, 2018 10:24 am
Reply to  KennyG

#Dividends; Yes STM, thank you for sharing. I would say that was an honor roll post. I never understood why some people got so upset with you when you cautioned folks about jumping into $CWBR too early – you were just offering some free advice and they took it as a challenge to them and you were labeled a troll. I always look forward to your posts.

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dunnydame
dunnydame
February 15, 2018 2:32 pm
Reply to  KennyG

#Dividends
Good to see you commenting, KennyG. Also good to see that that aberrant TD for STM has been eliminated.
Penny

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Esther
Esther
February 15, 2018 10:21 am
Reply to  savethemanatee

You can get a lot of dividend growing stocks in one well managed, low cost ETF – VIG

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sheldon
sheldon
February 15, 2018 1:57 pm
Reply to  Esther

any thoughts on VIG vsBCV(Bancroft Fund)?

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savethemanatee
savethemanatee
February 15, 2018 11:06 am
Reply to  savethemanatee

Thanks folks. To be honest, I never look at the thumbs up/down so someone could give me a thumbs down all day and I’ll never notice….lol.

I’m a big believer in the idea behind DGI investing, in part because these are true investments that give you regular, growing returns. If kids are taught early enough, as teenagers or in their twenties, they can ensure they will have a huge supplement when they are ready to retire forty years later.

Sharon: The ETFs can be good, but you need to make sure they pay out dividends instead of reinvesting them, or you lose the reason for entering this space. If you have enough money to invest in a large number of companies without being overwhelmed by all the transaction fees, I think it can be better to invest in individual stocks yourself if you can. There are also a number of companies that some of the funds like the one you mention that I don’t think have much growth left in them, and doing it yourself obviously allows you to pick and chose. Examples may be Coke and Walmart, for example.

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Esther
Esther
February 15, 2018 12:05 pm
Reply to  savethemanatee

Good points, as usual, Save. Thanks. I do have some of those, and hope to add to them, both in amounts and in number. Our current situation, (fiscal/economic fragility) makes me more cautious than usual. I own GE, and it was a shock to see its current upheavals. Diversity is definitely important across sectors.

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mary
mary
February 15, 2018 2:15 pm
Reply to  savethemanatee

#STM….Thank you for your generous reply….I have copied it to my documents so I will have it handy when doing research. I was so sorry to hear about your daughter’s friend. It is so hard to understand what could possibly be going on in the minds of these mass shooters.
https://www.youtube.com/watch?v=gUU7zFOuMoY

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dunnydame
dunnydame
February 15, 2018 2:29 pm
Reply to  savethemanatee

#dividends (and FP #AUPH)
Great advice STM ( and others).
These are the stocks in my portfolios that allow me to gamble with the vagaries of the biotech and metals/mining/commodities stocks without worrying overly about perennial ups and downs of the market.
I’ve done well with $NOBL (PROSHARES S&P 500 DIV ARISTOCRAT ETF) in the joint account, and with individual stocks like $ABBV, $ED, $JNJ & $MSFT in my personal IRA account. (I had $KO but sold it last year.) I do compound those dividends.
For all sorts of instructional reading and good ideas, you could try Googling: Dividend Aristocrats List, Dividend Champions List, Dividend Achievers List, Dividend Kings List, Sure Dividend Blue Chip Stocks List or High Dividend Stocks List.
For example: https://www.suredividend.com/dividend-aristocrats-list/?gclid=Cj0KCQiA_JTUBRD4ARIsAL7_VeVu0ZAULCcgYy8vkniq5OTPj8eJqwaCLLyxsI1Nqqg7Pzc8mQAtn-saAvhpEALw_wcB
Cheers, Penny

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shredlee
shredlee
February 9, 2018 2:06 pm

$AUPH long, thanks for starting the thread and good write up.

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rumrunner
Member
rumrunner
February 10, 2018 1:35 pm

$auph OW I sell the 7.5 calls laddered and sell the 5 puts laddered when it dips below 5 , the 5 puts were never excercised. The options are not liquid so orders should be limited to 15 initially, until the MM figures out what your up to then you dump a 100 options.

You need to be approved by the broker to sell naked puts.

AUPH appears stronger and stronger as time passes. Does not stay below 5 as much as it did 2 months ago.

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OSUfball
Irregular
February 18, 2018 10:12 am

I was reading some AUPH discussions on other forums and someone had mentioned that the patents are only valid until 2020. I’d never heard about this before. Are there any concerns about the patents?

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SoGiAm
February 18, 2018 12:24 pm
Reply to  OSUfball

$AUPH ow – Read on short.

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OSUfball
Irregular
February 18, 2018 1:51 pm
Reply to  SoGiAm

I am long AUPH. I just wanted to hear about this patent concern. Never heard about it before.

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SoGiAm
February 18, 2018 2:18 pm
Reply to  OSUfball

$AUPH ow – If you truly want to know the ends and outs of $AUPH, in a way that very few have the privilege of knowing, begin by reading every article and comment made by #ZKSS and Glenn, SuperSleuth, at StockGumshoe.com, on the issue.

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SoGiAm
February 22, 2018 4:16 pm

$AUPH ow – Aurinia Enhances Research, Development, and Scientific Expertise with the Appointment of Michael Hayden to its Board of Directors
https://ir.auriniapharma.com/press-releases/detail/109
Thanks LongOnLife! #Best2ALL!

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hipockets
March 7, 2018 10:21 pm

The $AUPH tab on the spreadsheet at http://tinyurl.com/KSSDAMAN has been updated with the latest comments from Dr. KSS.

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