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Aurinia has strong trial results and M&A kicker: FBR

March 13, 2017

Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) shares are surging 18% today following fourth-quarter and full year 2016 financial results released Thursday evening that have since left investors keyed up for the clinical roadmap ahead. Particularly, the progress update shows a glimmering future ahead for lupus nephritis (LN) drug voclosporin, whose 48-weeks results marked a compelling rise in complete and partial remission rates.

For FBR analyst Vernon Bernardino, “what makes the 48-week AURA data really good” is the added enticement for the biotech firm as a merger and acquisition (M&A) target. In reaction, the analyst reiterates an Outperform rating on shares of AUPH with a $9 price target.

While the analyst additionally praises AUPH’s financial print for 2016, underscoring $41 million in equity financings that bolstered the firm’s standing balance, he believes the real key asset lies in voclosporin.

“Although AUPH shares are up 139% in March alone (up 305% YTD, versus the NASDAQ Biotech Index up 12%), we continue to think AUPH remains attractive: We believe the strength of the 48-week results from the AURA-LV Phase IIb study with voclosporin (VCS) in patients with lupus nephritis (LN), which were reported on March 1, remains underappreciated. In particular, the results showed 48 weeks of VCS treatment improved, versus 24 weeks of treatment (numerically and statistically better complete and partial remission rates), achieved with steroid sparing, pointing to more durable and safer results when compared to standard of care (SOC). We think the robust results position AUPH to consider inking a lucrative, non-dilutive agreement for VCS’s continued development, and to be an attractive acquisition target in 2017,” Bernardino concludes.

For the fourth quarter, AUPH posted a net loss of $8.3 million, or ($0.21) per share, compared to the analyst’s projection of $4.7 million. The biotech firm closed the quarter with $39.6 million in cash and equivalents, which the analyst predicts “should be operationally sufficient into mid 2018.”

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