On March 14, Aurinia Pharmaceuticals—a small-cap, Canadian-based biotech company—raised over $140M net proceeds in a second public offering of its shares to secure pivotal funds for the upcoming Phase III clinical trial of its late-stage clinical candidate voclosporin, a revamped version of the calcineurin inhibitor cyclosporine for the lupus nephritis (LN) indication. Late-stage clinical development represents a considerable hurdle to market entry for small companies. Therefore, GlobalData believes that this additional source of income is pivotal in the future development and commercialization of voclosporin.

Investors were initially disappointed when seeing the share price drop by almost 30% after soaring to all-time highs of $10.54 per share within days, which was largely driven by the release of positive clinical data from their Phase IIb and Japanese Phase I ethno-bridging study. However, GlobalData notes that the second public offering of over 22 million common shares at $6.75 per share is crucial for Aurinia to pursue independent commercialization plans for voclosporin in the US market, with further $21M net proceeds expected through additional public offerings of 3.3 million common shares at $6.75 in the next 30 days, raising the total secured funds to over $160M.

In the past, small-cap drug developers in a rare auto-immune disease such as systemic lupus erythematosus (SLE) and LN—a more severe form of SLE involving the kidney—have been the target of acquisitions by large Pharma; Benlysta (belimumab), the first approved therapeutic intervention in lupus to reach the market in over 60 years, was first developed by Human Genome Sciences Inc. before being licensed and subsequently acquired by GlaxoSmithKline Plc in 2012.

GlobalData anticipated a similar fate for Aurinia, but the company has demonstrated that small-cap biotech firms, at least in the US market, are able to successfully secure funding to enter the playing field. As for the European and Japan markets, Aurinia is actively seeking for licensing agreements for future commercialization. 

GlobalData notes that although this strategy initially makes sense from a potential sales perspective, experts have indicated that calcineurin inhibitors are currently the first-line treatment option for LN in Japan. As such, Aurinia is potentially losing out on major commercial opportunities by out-licensing voclosporin, a potentially very popular treatment option in Japan. 

While securing funding for bringing voclosporin to market is an essential step for future commercialization, GlobalData anticipates that after its successful approval, Aurinia’s voclosporin will be competing with other big players in the field for patient share—specifically AstraZeneca’s anifrolumab, Bristol-Myers Squibb’s Orencia, and GlaxoSmithKline’s Benlysta, all of which are bringing very compelling treatment options for LN patients. Based on Aurinia’s past resilience in bringing voclosporin to the market, GlobalData believes that Aurinia has demonstrated great potential to become the first small player to succeed in bringing much needed new therapeutic treatment options for LN to the market.

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