Aurinia Pharmaceuticals (AUPH -2.87%), a late-stage developmental biotech, saw its shares rocket higher in after-hours trading Wednesday by a whopping 125%. The biotech's shares took flight in response to positive late-stage trial results for the experimental lupus nephritis drug candidate voclosporin. Lupus nephritis, in layman's terms, is a swelling of the kidneys caused by systemic lupus erythematosus.
The big-ticket item is that voclosporin reportedly produced significantly higher kidney response rates than placebo when used in combination with mycophenolate and low-dose corticosteroids in this pivotal trial. The company thus plans on submitting a New Drug Application to the Food and Drug Administration in the first half of next year. Aurinia said it would provide further details on the study during an 8:30 a.m. EST conference call Thursday morning.
Voclosporin could turn out to be the next standard of care for lupus nephritis. That's a big deal from a commercial standpoint because this market is expected to grow by leaps and bounds over the next few years. Moreover, several big pharmas and blue chip biotechs have a keen interest in lupus medications in general. So there's a good chance that Aurinia may fetch a worthwhile buyout offer in the not-so-distant future.
Should investors who missed the boat chase this red-hot stock during Thursday's session? The blunt answer is no. Like almost all pre-revenue biotechs that post encouraging late-stage trial results, Aurinia will almost certainly take this opportunity to raise funds via a secondary offering. That's standard operating procedure in the world of clinical-stage biotechs, after all. As such, there should be a more compelling entry point for long-term investors to get in on the action soon enough.