Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) Is A Discount Entry At Current Price

Last time we covered Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) we highlighted a couple of short attack type pieces and put forward an argument as to how and why they held little water. The situation was that the company was about to kick off a phase III trial – a trial that could end up being a real game changer not just for Aurinia and its shareholders but also for the target patient population – and some analysts decided to raise some last-minute uncertainty about the primary endpoint of the study. More specifically, they made the suggestion that the FDA would require a protocol change as far as measuring the impact of the drug (and in turn, determining efficacy against the primary endpoint) and that this protocol change could be far more difficult to achieve than the previous trial setup. In the interest of balance, if there was a change implemented to the effect that said analysts were suggesting, it would be far more difficult to meet the endpoint.We argued that no such change necessary, however, and that the sell-off that came about as a result of the false insinuation was an opportunity to pick up an exposure to the company (and the upcoming trial) at a discount.As it turns out, we were right.The company ran up subsequent to our coverage and the trial has since initiated under the predefined (and pre-established) protocol, exactly as we suggested it would.Over the past couple of weeks, however, Aurinia has taken a bit of a hit. Again, we're going to put forward the argument that this is an opportunity for our readers to add to the already discounted positions they established on the back of our previous coverage. Or, for those not yet into this one, a chance to pick up an exposure.The trial that's now ongoing is a phase III investigating the company's lead development asset, a drug called Voclosporin, in a target indication of what's called LN, an inflammation of the kidney caused by Systemic Lupus Erythematosus (SLE). A large portion (we're talking 60-70%) of SLE patients will progress to LN and – right now – there aren’t that many effective treatment options on the market. There's a standard of care called CellCept and this is generally used in combination with steroids, but it's not overly effective on its own (CellCept) and the steroid combo comes with some pretty nasty side effects.Voclosporin is an attempt to remove the necessity for steroids. It's under investigation as a potential adjuvant to CellCept and – if the phase III can prove it works as pitched – it could become a first line (combination first line, that is) in this circa $4 billion market.The trial is underway, as mentioned, and we should see data at some point mid next year. There's room for an interim release later this year (in particular a safety release based on independent monitoring) and this serves to bridge the catalyst gap to topline.We'll say it one more time for clarity: the primary endpoint is a composite of certain renal function surrogates and DOES NOT necessitate a biopsy. That's really important to the company's chances of success in this study.So why is the company down at the moment?Well, mid-May, Aurinia put out its first quarter financials. Net loss came in at $51 million, and adjusted for fair value quarterly adjustment of derivative warrant liabilities (so, noncash) came in at $11.2 million. As a headline, that's not great. At this end of the market, however, and for a company with a late-stage asset targeting a market this size, it's really not an issue.Sure, cash burn is key here, and these numbers aren’t small, but there's cash on hand of $202 million at March 31, which should see the company through to at least mid next year (so, beyond trial data). This means any raise we see is likely going to come subsequent to (or perhaps just ahead of) a major catalyst and, in turn, that it should be quickly negated by the release of top line from the study.That is, of course, the primary risk – that top line will come out as indicative of inefficacy or showing a poor safety profile. That said, data to date has proved otherwise on both counts, and we maintain that this one's well worth a look ahead of the end of the Voclosporin pathway. At times like this, where price dips, this statement rings even truer.We will be updating our subscribers as soon as we know more. For the latest updates on AUPH, sign up below!Disclosure: We have no position in AUPH and have not been compensated for this article.