Academic Medical Centers Will Expand Lupus Care Opportunities

Key Takeaways

• Expansion into medical centers and new treatment guidelines may drive higher prescriber engagement and revenue for LUPKYNIS.
  
• Pipeline progression and improved lupus nephritis care could boost future growth, positively impacting revenue and margins.
  
• The potential entry of generic competition for LUPKYNIS and challenges in shifting prescription dynamics may impact revenue and market share.

Catalysts

A biopharmaceutical company that engages in delivering therapies to people living with autoimmune diseases with high unmet medical needs.

• Expansion into academic medical centers and lupus centers is poised to drive increased prescriber engagement and, ultimately, boost revenue through deeper market penetration.
  
• Adoption of new ACR lupus nephritis treatment guidelines is expected to increase urgency among rheumatologists to screen and treat, potentially leading to higher revenue for LUPKYNIS.
  
• Reinforcement of three-year efficacy and safety data from the AURORA Clinical Program aims to clinically differentiate LUPKYNIS and position it earlier in the treatment paradigm, likely impacting revenue positively.
  
• Focus on improving continuity of care for lupus nephritis patients by growing the hospital business and extending therapy duration is expected to enhance revenue and possibly improve margins over time.
  
• Advancement of the pipeline product, AUR200, with the results of a Phase I study expected in Q2 2025, could catalyze future growth, impacting revenue and earnings positively if the drug successfully progresses through clinical trials.

Aurinia Pharmaceuticals Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Aurinia Pharmaceuticals's revenue will grow by 16.9% annually over the next 3 years.
• Analysts assume that profit margins will increase from 2.4% today to 39.0% in 3 years time.
• Analysts expect earnings to reach $146.4 million (and earnings per share of $1.01) by about May 2028, up from $5.8 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $225.1 million in earnings, and the most bearish expecting $99.1 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 9.8x on those 2028 earnings, down from 192.9x today. This future PE is lower than the current PE for the CA Biotechs industry at 20.4x.
• Analysts expect the number of shares outstanding to decline by 3.73% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.52%, as per the Simply Wall St company report.

Aurinia Pharmaceuticals Future Earnings Per Share Growth

Risks

• The company faces risks associated with its reliance on historical financial results for forward-looking projections, which could lead to inaccuracies and impact revenue forecasts.
  
• The potential entry of generic competition for LUPKYNIS around 2028 could significantly affect revenue and market share if Aurinia's patents are challenged or circumvented.
  
• There is uncertainty regarding the market penetration and adoption of LUPKYNIS given that the company has ceased providing specific patient-level metrics, which could make it harder to track sales growth and impact future revenue projections.
  
• The transition from nephrologists to rheumatologists for prescription writing remains challenging and may slow revenue growth if uptake within this segment does not improve.
  
• Development timelines and regulatory uncertainty around the pipeline product AUR200, including the transition from SAD to MAD studies and subsequent indication selection, pose risks to projected earnings if delayed.

Valuation

• The analysts have a consensus price target of $9.833 for Aurinia Pharmaceuticals based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $12.0, and the most bearish reporting a price target of just $8.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $375.3 million, earnings will come to $146.4 million, and it would be trading on a PE ratio of 9.8x, assuming you use a discount rate of 6.5%.
• Given the current share price of $8.12, the analyst price target of $9.83 is 17.4% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.