re: AUPH - Aurinia Pharmaceuticals

Why I’m bullish on AUPH
I. Nothing about the drug (Voclosporin) or its efficacy has changed

• Phase II results (48 wk. data) from March were the best results that have ever been recorded for Lupus Nephritis. Did I say ever? This is not my opinion or even from Aurinia’s team.

• Here’s a quote from the Department of Medicine at Ohio State University:
o “The AURA trial’s long-term results convincingly demonstrate that the addition of voclosporin to standard of care treatment is superior to standard of care alone. These data are not only statistically significant, but clinically important. Twice as many patients given 23.7mg voclosporin twice daily achieved a complete renal response compared to those treated with placebo. This is an impressive renal response rate and these results may shift the treatment paradigm of LN. Based on these encouraging data, I am looking forward to the Phase III trial of voclosporin in LN.” - Brad Rovin, MD, FASN, Director of Nephrology and Vice Chairman of Research for the Department of Internal Medicine at the Ohio State University Wexner Medical Center

• Stock movement at 24 and 48 weeks:

o during October of 2016 share price moved from low $2s to $4.70 on 24 week data release. For fear that Aurinia was running out of cash for the future development of Voclosporin, and some uncertainty concerning management, AUPH fell to $2 again in December of 2016.

o Share price then climbed to the mid $3s with the announcement of Richard Glickman as CEO in February of 2017, and with anticipation of the completion (48 week data) of Phase II trials. This is the data that is highlighted above.

o Complete remission was achieved in 49% of patients at 48 weeks, and partial remission achieved in 68% of patients. Most significant is the P value of less than .001 simply meaning that the odds of Voclosporin’s success are far far greater than they need to be for fda approval (p<.05)

• Stock movement after 48 wk data:

o Shares of Aurinia soared from $3.71 on March 1 to $10.54 by March 13…yeah you could argue that it was overbought, but what drove the stock down to $7 where it stayed for two months was the public offering.

o Aurinia needed cash (this was no secret), so instead of partnering with a larger pharmaceutical Glickman offered around 20 million shares of stock at $6.75 to raise 170 million dollars for the funding of Phase III.

o Why $6.75? well considering the stock was at $3.50 three weeks prior it probably didn’t seem like a bad idea. Who knew AUPH would peak above $10? But the rest is history.
o Now, why did price drop below $7 and even $6 since then? This is a long play that requires patience, and not many people are willing to wait for 3 years until Voc is able to create revenue.

• None of this really matters. Long retail investors along with many over 70 institutions are in AUPH for what we think can potentially be a $30/share company in two years.

About Aurinia
Aurinia is a clinical stage biopharmaceutical company focused on developing and commercializing therapies to treat targeted patient populations that are suffering from serious diseases with a high unmet medical need. The company is currently developing voclosporin, an investigational drug, for the treatment of LN, FSGS, MCD and DES. The company is headquartered in Victoria, BC and focuses its development efforts globally.
About LN
LN in an inflammation of the kidney caused by Systemic Lupus Erythematosus (SLE) and represents a serious progression of SLE. SLE is a chronic, complex and often disabling disorder and affects more than 500,000 people in the United States (mostly women). The disease is highly heterogeneous, affecting a wide range of organs & tissue systems. It is estimated that as many as 60 percent of all SLE patients will develop clinical LN requiring treatment. Unlike SLE, LN has straightforward disease outcomes (measuring proteinuria) where an early response correlates with long-term outcomes. In patients with LN, renal damage results in proteinuria and/or hematuria and a decrease in renal function as evidenced by reduced estimated glomerular filtration rate (eGFR), and increased serum creatinine levels. LN is debilitating and costly and if poorly controlled, LN can lead to permanent and irreversible tissue damage within the kidney, resulting in end-stage renal disease (ESRD), thus making LN a serious and potentially life-threatening condition.

About Voclosporin
Voclosporin, an investigational drug, is a novel and potentially best-in-class CNI with clinical data in over 2,400 patients across indications. Voclosporin is an immunosuppressant, with a synergistic and dual mechanism of action. By inhibiting calcineurin, voclosporin blocks IL-2 expression and T-cell mediated immune responses, and stabilizes the podocyte in the kidney. It has been shown to have a more predictable pharmacokinetic and pharmacodynamic relationship, an increase in potency, an altered metabolic profile and potential for flat dosing compared to legacy CNIs. Aurinia anticipates that upon regulatory approval, patent protection for voclosporin will be extended in the United States and certain other major markets, including Europe and Japan, until at least October 2027 under the Hatch-Waxman Act and comparable laws in other countries and until April 2028 with anticipated pediatric extension.

About DES
DES, or keratoconjunctivitis sicca, is a chronic disease in which a lack of moisture and lubrication on the eye’s surface results in irritation and inflammation of the eye. DES is a multifactorial, heterogeneous disease estimated to affect greater than 20 million people in the United States.

About VOS
VOS is an aqueous, preservative free nanomicellar solution containing 0.2% voclosporin intended for use in the treatment of DES. Studies have been completed in rabbit and dog models, and a single Phase I has also been completed in healthy volunteers and patients with DES. VOS has IP protection until 2031. In April 2017, Aurinia announced an agreement granting Merck Animal Health (MAH) worldwide rights to develop and commercialize (VOS) for the treatment of DES in dogs. MAH previously conducted proof of concept research in dogs suffering from DES, which affects one out of every 22 dogs.