RBC starts Aurinia Pharma at OP; PT $9

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RBC Capital Markets initiated coverage of Aurinia Pharmaceuticals (NASDAQ:AUPH) with an "outperform, speculative risk" and price target of $9. The stock closed at $5.23 on Feb. 7.

The company's drug candidate, voclosporin, is currently in Phase 3 testing for the treatment of lupus nephritis (LN) and has the potential to become the first FDA-approved treatment for the disease. "We believe Aurinia is an attractive opportunity with upside vs. today's valuation over the next 12 months," writes analyst Doug Miehm.

LN is an autoimmune disorder that impedes blood filtration in the kidneys. Current treatment involves the use of off-label medication, "with drastic improvements in patient outcomes yet to be seen," he added. 

"We believe Aurinia's lead candidate, voclosporin, can become a staple of a new multi-targeted treatment approach that has significant benefits versus current methods," Mr. Miehm said. 

This approach would be based on the combined effects from two immune suppressants - usually CellCept, the current standard of care for LN, and drugs like voclosporin.

Mr. Miehm said the Phase 3 clinical risk should be largely mitigated because Aurinia successfully completed a Phase 2 trial of voclosporin plus CellCept, in which complete remission was observed in about 50% of patients, compared with 24% in the control group, at 48 weeks.

In addition, the Phase 2 criteria and endpoints are being repeated in the Phase 3 trial with more patients. "If successful, this trial should support approval for voclosporin in the U.S., EU and Japan," Mr. Miehm added.