Aurinia Pharmaceuticals (AUPH) has been in the news for a couple of reasons over the past few weeks. First there were rumors the biotech was a bolt on accusation target for Novartis, marking another instance of a pharma giant showing interest in Aurinia. Then, the company released positive topline results from the AURORA 2 continuation study. This is an investigation of the long-term safety and tolerability of Lupkynis (voclosporin), Aurinia’s treatment for adults with active lupus nephritis (LN).
However, for Oppenheimer’s Justin Kim neither of these events are directly related to why he recently upgraded Aurinia’s rating from Perform (i.e., Hold) to Outperform (i.e., Buy). The analyst also has a price target of $31 here, indicating potential upside of 54% from current levels.
So, if it’s not positive clinical trial results which merit a rejig to Kim’s model, what is the reason behind the upgrade? The analyst explained: “While coinciding with a positive update from the recently completed AURORA 2 study, we view our upgrade primarily on the basis of valuation and an unchanged view of the commercial outlook for Lupkynis (voclosporin), as current share levels do not appreciate the fundamental value of Lupkynis’ commercial potential.”
Early in the year, Lupkynis (voclosporin) was approved to treat adult patients with active LN, marking it as the first FDA-approved oral therapy for the autoimmune disease.
Covid-19 blunted the treatment’s impact upon release, and although Kim thinks the “fundamental road, reliant on execution, could take time to play out,” the analyst continues to believe in the long-term potential for Lupkynis to see “favorable adoption and utilization in the LN treatment paradigm.”
The analyst also highlights a couple of instances which could help boost sentiment. For one, despite “lingering uncertainties” from new variants such as omicron, a more bullish outlook next year could “better reflect the long-term trajectory of Lupkynis sales.”
Kim also believes a key catalyst for the treatment’s adoption could be from changes in physicians’ prescribing behaviors. “Although these changes are largely anticipated to occur organically with time,” the analyst said, “We view updates to general LN treatment guidelines with inflection-creating potential as well as a bellwether on physician perception.”
So, that’s Oppenheimer’s view, what does the rest of the Street make of Aurinia’s prospects? All are on board, as it happens. The stock has a Strong Buy consensus rating, based on a unanimous 6 Buys. Moreover, the $33.33 average target, suggests shares have room for 66% growth in the year ahead. (See Aurinia stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
