After an activist investor revolted against the leadership team at Aurinia Pharmaceuticals, the CEO in question is resorting to restructuring.
Aurinia on Thursday unveiled a strategic overhaul that will slash 45% of the Canadian biotech’s entire workforce.
Aurinia expects the trimming will save it more than $40 million in annual operating expenses. The move will allow the company to focus on the commercialization of its lupus nephritis drug Lupkynis and the development of AUR200, an autoimmune disease candidate that Aurinia recently salvaged from its garbage can.
The cost savings will strengthen Aurinia’s financial position and “provide more flexibility to engage in future business building activities,” CEO Peter Greenleaf said on an investor call Thursday.
This marks the second round of layoffs at Aurinia in less than a year. Back in February, following a fruitless search for a potential buyer, Aurinia decided to reduce its headcount by about 25%.
At that time, Aurinia had decided to discontinue AUR200 but later revived the APRIL/BAFF inhibitor. Now, CEO Greenleaf in a Thursday statement said the organizational overhaul will help Aurinia accelerate the development of AUR200, an “important pipeline product.”
Greenleaf’s leadership at Aurinia was put into serious question when he and three other Aurinia board directors lost majority stockholder support during the company’s annual meeting. The company’s proposed executive pay packages also failed to garner majority investor backing.
As required by Aurinia’s company policy, the four directors submitted their resignations. But the board, while accepting the resignations of the other three members, argued that “there are exceptional circumstances that warrant the rejection of Mr. Greenleaf’s conditional resignation,” it said in a September securities filing. As a result, Greenleaf stayed on.
Amid broader investor disapproval of Aurinia’s leadership team, an activist shareholder who owned 2.2% of the company’s stock in August called for board and management changes, blasting them for “unchecked spending, ineffective leadership, and a clear lack of strategic direction.”
Lupkynis is currently Aurinia’s single commercial product, with third-quarter sales of $55.5 million. The number represents 36% year-over-year growth but is flat compared with $55 million in the second quarter. The number of patients on the therapy has grown about 25% to 2,422 as of the end of September, Greenleaf told investors on a call Thursday.
“This significant year-over-year growth was driven by patients restarting Lupkynis after being off therapy for an extended period of time, as well as hospital fills and maintaining high persistency rates year over year,” he said.
With total product revenue of $158.6 million in the first nine months of this year, Aurinia has kept its full-year guidance range of $210 million to $220 million.
As to AUR200, the company in September dosed the first participant in a phase 1 single-ascending dose study, with data expected in the first half of 2025. Aurinia has not disclosed the indications that it plans to develop AUR200 in.