Aurinia Pharmaceuticals searched long and hard for a potential buyer, but, faced with a lack of serious offers, the biotech has resorted to trimming its workforce by a quarter and cleaning out its R&D pipeline.
The company initiated a “robust strategic review” last summer under the oversight of J.P. Morgan, which involved reaching out to “more than 60 parties,” Aurinia explained in its full-year earnings report this morning. Despite this wide-ranging effort, the Canadian biotech only received one nonbinding expression of interest, which didn't result in a formal offer to buy the company.
The review also involved exploring the possibility of buying another biotech or licensing assets from elsewhere. But the board ultimately concluded that none of the available options were in its best near-term interests.
With those avenues exhausted, Aurinia has fallen back on a path commonly trodden by biotechs at the moment: to “streamline its operations … and focus on the company’s commercial execution.”
In practice, this means halting work on AUR200, which the biotech had been sizing up as a potential next-generation therapy for B-cell mediated autoimmune diseases. As recently as late December, Aurinia submitted the med—an Fc-fusion protein containing a modified B cell maturation antigen—to the FDA for permission to run a phase 1 trial in healthy volunteers.
The company is also discontinuing AUR300, a peptide therapeutic that modulates M2 macrophages. The biotech had previously been planning to submit an investigational new drug application for the drug at some point this year.
With the R&D pipeline thrown out, 25% of the company’s staff will also be shown the exits by the end of March, although the company stressed that this will not affect commercial or commercial-supporting roles.
Aurinia’s stripped-back operation will now be focused solely on its approved lupus nephritis med Lupkynis. Around 2,066 patients were receiving the therapy as of the end of 2023, compared to 1,525 a year earlier, the company reported.
“Our strong performance and growth for Lupkynis throughout 2023 demonstrates the ongoing success of our commercial strategy,” CEO Peter Greenleaf said in the release. “We will continue to focus on driving the upward trajectory of Lupkynis, while significantly reducing expenses and providing increased cash flow for 2024 and beyond.”
The company ended 2023 with $350.7 million in cash and equivalents, which is estimated to fund the commercial and R&D activities related to Lupkynis for “at least the next few years.” The board also signed off on a share repurchase program of up to $150 million common shares.
The pipeline and head count changes are expected to claw back between $50 million and $55 million annually.
Investors didn't appear convinced by Aurinia's decision, sending the biotech's stock down 20% in premarket trading to $6.34 from a Wednesday closing price of $7.97.