Richard Glickman was the CEO of Aspreva Pharmaceuticals, which put out CellCept, a drug that treats patient with lupus who develop kidney disease. Glickman has moved on to Aurinia Pharmaceuticals (NASDAQ:AUPH), and now is working on another drug, Voclosporin, for the same indication.

In this Industry Focus: Healthcare clip, Motley Fool analyst Kristine Harjes and contributor Todd Campbell explain what both drugs do, how far along in the FDA gauntlet Voclosporin is today, and why investors should be so excited to see whether or not it gets approved.

A full transcript follows the video.

This video was recorded on July 19, 2017.

Kristine Harjes: First up, after much anticipation, is a company called Aurinia Pharmaceuticals, the ticker is AUPH.

Todd Campbell: This one is not named after a big cat, so it wasn't founded by Auerbach.

Harjes: Unfortunately it was not.

Campbell: It was actually founded by a guy named Richard Glickman, who was formerly the CEO and founder of Aspreva Pharmaceuticals, a small-cap company that worked on a drug called CellCept, which has gone on to become very commonly used in treating patients with lupus who developed kidney disease.

Harjes: Yeah, this is an interesting drug, because it's actually meant to be an organ anti-rejection drug. It's approved for kidney, heart and liver transplants. But it's used off-label today in these LN -- lupus nephritis -- patients, as you mentioned. And it's come to become the standard of care for these patients. But there's actually not a drug out there yet that is specifically indicated for that indication.

Campbell: Right, and that's where Glickman and his team are at it again -- to come up with the first FDA-approved treatment for LN. Back in 2009, they sold Aspreva for $915 million, so shareholders got a nice reward out of betting on him the first time around. Who knows if things will play out similarly this time around with Aurinia. But, he's got a lot of the former slate of people working with him that helped develop CellCept for use in LN. And the drug they're developing now, Voclosporin, so far, when used with CellCept in mid-stage trials has proven to be very effective. We'll have to see how phase 3 trials pan out, but in phase 2, very effective, Kristine.

Harjes: Yeah, absolutely. And phase 3 should wrap up in 2020. As you mentioned, it's pretty promising so far. When you look at this market, about less than 10% of LN patients usually go into complete remission following the treatment. But using this drug that they're developing alongside CellCept has achieved a 49% complete remission rate, and that's compared to 25% complete remission rate in the CellCept-only control arm of the trial.

Campbell: That's really important, too, Kristine. If it's uncontrolled, if you don't go into remission, it's significantly increases the likelihood of advancing eventually to end-stage renal disease, where you require dialysis.

Harjes: Right -- 30% of patients with severe LN end up in end-stage renal failure within 15 years of diagnosis.

Campbell: Right, and that's not something, obviously, that anybody wants. The payers don't want that, the patient certainly doesn't want that. So, if you can come up with a better mousetrap than CellCept, and they very well may have done that by combining these two drugs together to improve complete remission rates. The other thing that was interesting, too, Kristine, was that they achieved those complete remission rates more quickly, which is also important because you want to reduce the amount of time that damage is being done to the kidneys, because that will help keep them healthier, as well. If this drug puts up similar kind of data in phase 3, it could be definitely a nine-figure run, and potentially higher than that.

Harjes: Right. They're looking at pricing anywhere between $50,000 to $100,000 per year from what we've heard about it so far. To give you a little bit more of an idea of the scale of this market, there are 500,000 lupus patients in the United States, and 60% of those will develop LN, and for 40% of those LN patients, the disease is considered poorly controlled. So, this was actually a fairly large market, and it's going to be an expensive drug should it be approved. So, pretty big opportunity here. We could even potentially see peak sales of $1 billion just within the U.S.

Campbell: Right. If you dig into their SEC filings, they give you all this information, they tell you about the market size, the competition that's out there, how they think they can disrupt it, and what the market opportunity could be. Like you said, this is not going to be a cheap drug. Not going to be dollars per pill, if you will. This is going to be a relatively costly drug because, in the end, it could save payers a lot of money by helping patients avoid having to go onto dialysis. They think that if they can get that pricing in the U.S., the U.S. market could be worth $1 billion, the E.U. market could be worth $300 million, Japan could be worth another $80 million. So, you have a drug that conceivably -- conceivably, if approved -- could be worth $1.4 billion someday. You never know.

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