To say that in contrast to the result, there wasn’t a dry eye in the house after Aurinia Pharmaceuticals (AUPH) suspended the Phase 2/3 AUDREY clinical trial for voclosporin ophthalmic solution (VOS) in dry eye syndrome (DES), might be an easy jibe, but somewhat fitting.
Results from the trial did not achieve statistical significance, and based on the full set of data, Aurinia has now discarded the ophthalmic program.
As expected, shares trended south in the following trading sessions. However, while the results are disappointing for Oppenheimer analyst Justin Kim, they are no more than a “stumble.”
“Despite an opportunity to mince these data, we agree with the decision and reaffirmed focus on core renal business (led by lupus nephritis),” the 4-star analyst said. “While dry eye held optionality for AUPH, the future of VOS was already slated for partnership, as the event of a positive result would have led most likely to a partnership, in our view. As such, we had modeled the program on a royalty basis, and ascribed a smaller proportion of our valuation for the indication.”
Focus now turns to the real value driver, according to Kim.
Voclosporin is in the home stretch for the treatment of lupus nephritis (LN). A PDUFA date is set for January 22 2021, which could result in the first FDA approved drug to treat LN. Kim remains convinced in its “potential to transform the treatment paradigm,” and sees a “compelling investment setup unfolding for AUPH.”
“Based on the clinical profile of voclosporin and following the recent ASN (American Society of Nephrology) meeting,” Kim summed up, “We see strong potential for the drug’s broad adoption across the patient population.”
Pending approval, Aurinia could commercially launch the drug early next year.
Nevertheless, the removal of dry eye syndrome from the analyst’s Aurinia model results in a slash to the price target – which drops from $22 to $20. Upside from current levels is 29%. Kim’s Outperform (i.e. Buy) rating remains intact. (To watch Kim’s track record, click here)
Aurinia also retains the Street’s full support. Based on Buys only – 4, in total – the stock has a Strong Buy consensus rating. With a $23.75 average price target, the analysts forecast 71% of upside over the next 12 months. (See AUPH 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.
