Full Press Release Details
Reports First Quarter 2015 Financial Results and Restatement of 2014
Financial Statements
VICTORIA, British Columbia--(BUSINESS WIRE)--May 15, 2015--Aurinia
Pharmaceuticals Inc. (NASDAQ:AUPH)(TSX:AUP) ("Aurinia" or the "Company")
has released its financial results for the first quarter ended March 31,
2015. Amounts, unless specified otherwise, are expressed in U.S. dollars.
Financial Results for first quarter ended March 31, 2015
The Company's activities in the first quarter of 2015 continued to be
focused on patient recruitment, enrollment and treatment activities for
its on-going randomized 258 patient Phase 2b lupus nephritis clinical
trial ("AURA-LV") and initiation of an open label, exploratory study
called AURION to assess short term predictors of response using
voclosporin in combination with mycophenolate mofetil (MMF) in patients
with active lupus nephritis (LN). AURION will examine biomarkers of
disease activity at 8 weeks and their ability to predict response at 24
The Company had cash, cash equivalents and short term investments of
$29.0 million at March 31, 2015 compared to $32.7 million at December
31, 2014. Net cash used in operating activities was $4.0 million for the
first quarter ended March 31, 2015. The Company generated $369,000 from
financing activities during the quarter as a result of the exercise of
warrants and stock options.
Aurinia believes its cash position will be sufficient to finance its
operational needs until at least December 31, 2016. However, future cash
requirements could vary materially from current estimates due to a
number of factors including the costs associated with its clinical trial
and potential strategic opportunities.
For the first quarter ended March 31, 2015, the Company reported a
consolidated net loss of $8.6 million or $0.27 per common share, as
compared to a restated consolidated net loss of $4.8 million or $0.22
per common share for the same period in 2014.
Research and development expenses increased to $3.3 million for the
three months ended March 31, 2015, compared to $1.0 million for the
three months ended March 31, 2014. Research and development expenditures
in the first quarter of 2015 reflected Phase 2b LN clinical trial costs
including patient recruitment, enrollment and treatment activity
expenditures whereas costs in the comparable period in 2014 related to
pre-enrollment activities.
Corporate, administration and business development costs decreased to
$1.9 million for the three months ended March 31, 2015, compared to $2.4
million for the same period in 2014. These costs included a non-cash
stock compensation expense of $897,000 in 2015 compared to $1.05 million
Other expense reflected a net expense of $3.0 million for the first
quarter ended March 31, 2015 compared to $483,000 for the same period in
2014. The increase in other expense was primarily attributable to
recording a non-cash loss on revaluation of derivative warrant liability
of $2.9 million in 2015 compared to a non-cash gain on revaluation of
derivative warrant liability of $1.1 million for the comparable period
in 2014. Other expense also reflected a lower revaluation adjustment on
the long term contingent consideration to ILJIN Life Science Co., Ltd.
of $184,000 in 2015 compared to $533,000 in 2014 and a recorded foreign
exchange gain of $70,000 in 2015 compared to a loss of $144,000 in the
previous year. The 2014 comparative period also reflected one time share
issue costs allocated to warrant liability of $203,000 and to derivative
warrant liability of $646,000.
Restatement of 2014 audited consolidated financial statements
The financial statements and related management discussion and analysis
("MD&A") for the year ended December 31, 2014 have been amended and are
being re-filed with securities regulatory authorities in Canada and with
the Securities and Exchange Commission in the United States.
The purpose of this amended filing is to correct an error in the
application of International Financial Reporting Standards ("IFRS")
related to the Company's accounting for certain of its previously issued
The $52.0 million private placement financing completed by the Company
on February 14, 2014, included the issuance of common share purchase
warrants exercisable for a period of five years from the date of
issuance at an exercise price of $3.22 per warrant. The holders of the
warrants may elect, in lieu of exercising the warrants for cash, a
cashless exercise option to receive common shares equal to the fair
value of the warrants based on the number of warrants to be exercised
multiplied by a five day weighted average market price less the exercise
price, with the difference divided by the weighted average market price.
If a warrant holder exercises this option, there will be variability in
the number of shares issued per warrant.
In accordance with IFRS, a contract to issue a variable number of shares
fails to meet the definition of equity and must instead be classified as
a derivative liability and measured at fair value with changes in fair
value recognized in the statement of operations and comprehensive loss
at each period end. The derivative liability will ultimately be
converted to the Company's equity (common shares) when the warrants are
exercised, or will be extinguished upon the expiry of the outstanding
warrants, and will not result in the outlay of any cash by the Company.
In the original accounting determination, the estimated fair value of
the warrants was recorded in equity at $10.4 million, offset by an
allocation of issuance costs of $739,000. These balances have been
amended as to record the derivative warrant liability at $9.1 million,
with allocated issuance costs of $646,000 recognized as other expense.
At December 31, 2014 the derivative warrant liability has been adjusted
to $11.2 million, which results in a loss on revaluation of derivative
warrant liability in "Other expense" for the year-ended December 31,
2014 of $2.1 million. There is no impact on cash from operating,
financing or investing activities. The Company's comparative balance for
the three month period ended March 31, 2014 has been revised to reflect
a decrease of $416,000 in other expense and net loss.
See note 27 to our restated audited consolidated statements for the year
ended December 31, 2014 and page 1 of the restated MD&A for the year
ended December 31, 2014 for further details. Further detail regarding
comparative quarterly balance revisions are included in the Company's
MD&A for the three months ended March 31, 2015 on page 1 and note 2 of
the unaudited condensed interim consolidated financial statements for
the three months ended March 31, 2015. The unaudited interim condensed