Aurinia Pharmaceuticals has agreed to jointly file a motion with India’s Sun Pharmaceuticals (Sun Pharma) to dismiss the inter parties review of patent No. 10,286,036., the British Columbia-based company announced Tuesday.
The proposed dismissal is contingent upon approval by the U.S. Patent Trial and Appeal Board.
If approved, this motion would effectively settle a key patent dispute for Aurinia’s flagship drug Lupkynis. Lupkynis is the first orally administered lupus nephritis (LN) medication approved by the FDA.
Aurinia’s shares jumped by 36% in early morning action Tuesday in response to the news.
The key reason behind the biotech’s surging share price is that Aurinia was widely considered a potential takeover target due to Lupkynis’ unique clinical profile and sizable commercial opportunity (greater than $1 billion in annual sales at peak).
This patent dispute, however, tamped down the buyout fervor that had pushed Aurinia’s shares to a five-year high in late 2021. In fact, the biotech’s shares lost a noteworthy 51% of their value since this patent dispute news became public knowledge last summer.
Sun’s Patent Dispute Put the Brakes on Aurinia’s Buyout Thesis
On July 26, 2022, the PTAB reportedly initiated an inter parties review following a petition filed by Sun Pharma. The dispute centered around a patent claiming Lupkynis’ dosing protocol that extends the drug’s U.S. exclusivity to 2037.
This potential settlement agreement with Sun Pharma could remove a key overhang for the Canadian biotech. Moreover, it possibly re-opens the door for a lucrative tender offer down the road.
Prior to the patent dispute, Aurinia was rumored to be fetching serious interest from several industry heavyweights including Bristol Myers Squibb.
Although Bristol appears to have moved on to other business development deals since these rumors first surfaced, Aurinia may still interest a number of big pharmas on the hunt for value-creating acquisitions.
That being said, Lupkynis’ commercial trajectory hasn’t quite lived up to expectations – a fact that may lower the drugmaker’s appeal to potential buyers.
Thanks to a slowdown in LN diagnoses and patient visits due to the pandemic, Aurinia was forced to lower its 2022 annual revenue guidance to between $100 million and $105 million during its Q3 earnings call. Previously, the drugmaker was guiding for $115 million to $135 million in annual revenue for the year.
What’s more, Aurinia’s initial 2023 fiscal guidance only calls for revenue of between $120 million to $140 million.
Lupkynis, in turn, may take a lot longer than originally anticipated to hit blockbuster status, although a big pharma with a larger sales infrastructure might be able to dramatically improve its commercial performance.
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