Aurinia Pharmaceuticals Inc. (NASDAQ: NASDAQ:AUPH), a biopharmaceutical company, is under pressure from shareholder Lucien Selce, who holds approximately 2.2% of the company's shares, to overhaul its boardroom.
Selce's call for change follows the recent Annual General Meeting (AGM) where four of the nine directors, including CEO Peter Greenleaf, did not receive a majority of shareholder votes.
Selce criticizes the company's financial management, citing a $100 million expenditure with minimal investment in Research and Development (R&D), a fundamental aspect of Aurinia's growth. He argues that the company's budget should be $70 million, not the current $150 million, labeling the financial strategy as unsustainable and harmful to shareholder value.
The shareholder also points to the company's inconsistent strategy regarding the development of AUR200, which was discontinued in February 2024 and then unexpectedly resumed. This flip-flop has raised concerns about the company's transparency.
Additionally, Aurinia's struggle to achieve expected sales for its drug LUPKYNIS and the emergence of a competitive product from ADALVO, a generic drug manufacturer, have not been adequately addressed by management, according to Selce.
Selce also highlights the company's poor judgment in not fully utilizing a $150 million share repurchase program, spending only $18 million over six months, despite the company's low share price.
In response to these issues, Selce demands the immediate resignation of Dr. Brinda Balakrishnan, Dr. Robert T. Foster, and CEO Peter Greenleaf, who received limited shareholder support at the AGM. He also urges the appointment of two shareholder representatives to the board and a reduction in board size to streamline decision-making.
Finally, Selce is calling for an Extraordinary General Meeting to address these issues, realign the company's strategy with shareholder interests, and prevent any acquisitions that could threaten the company's financial stability.
Aurinia reported improved outcomes in lupus nephritis therapy during the European Alliance of Associations for Rheumatology (EULAR) 2024. The company's study showed that a treatment regimen including LUPKYNIS, in combination with lower-dose mycophenolate mofetil (MMF) and low-dose steroids, was more effective in reducing proteinuria and steroid exposure than traditional high-dose glucocorticoid therapies.
Patients on this regimen experienced over 50% reduction in steroid use at six months and reached a urine protein creatinine ratio (UPCR) of less than 0.5 mg/mg quicker than those on the high-dose two-drug regimen.
Moreover, these patients achieved a significant reduction in UPCR at any study point earlier than their counterparts in the Aspreva Lupus Management Study (ALMS). LUPKYNIS is the first oral medicine approved by the U.S. Food and Drug Administration (FDA) and the European Commission for adult patients with active lupus nephritis.
It works as an immunosuppressant and promotes stability in the kidneys, aiming to preserve kidney health without the need for chronic high-dose glucocorticoids.
InvestingPro Insights
In the midst of shareholder unrest, Aurinia Pharmaceuticals Inc. (NASDAQ: AUPH) has been navigating through a challenging period. InvestingPro provides a more detailed look into the company's financial health and strategic positioning, offering insights that could be pertinent to shareholders like Lucien Selce and potential investors.
An InvestingPro Tip highlights that management has been actively buying back shares, which resonates with Selce's criticism of the company's underutilization of its share repurchase program. While only $18 million of the allocated $150 million was spent over six months, this move indicates a confidence from management in the intrinsic value of the company.
Another positive aspect is the company's financial structure. According to an InvestingPro Tip, Aurinia holds more cash than debt on its balance sheet, which is a sign of financial resilience. This could be a crucial factor in weathering the competition from generic drug manufacturers and investing in R&D, which Selce has pinpointed as a key area of concern.
On the data front, Aurinia's Market Cap stands at $780.73 million, and despite not being profitable over the last twelve months, analysts predict the company will turn a profit this year. The Revenue Growth over the last twelve months as of Q2 2024 is reported at 29.35%, showcasing a strong upward trend. However, the Price to Earnings (P/E) Ratio is currently negative at -15.53, reflecting the market's anticipation of future earnings growth rather than current profitability.
For those interested in a deeper analysis, InvestingPro offers additional tips on Aurinia Pharmaceuticals Inc., providing a comprehensive view of the company's performance and potential. Visit InvestingPro for more tips on Aurinia and other companies at https://www.investing.com/pro/AUPH.
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