What happened
Shares of the autoimmune disease specialist Aurinia Pharmaceuticals (AUPH -1.18%) are poised for a tough session today. Ahead of the opening bell, the drugmaker's share price cratered by more than 20%, on heavy volume, in premarket trading Monday morning.
Aurinia's shares plunged in early morning action today in response to the release of its 2021 fourth-quarter and full-year earnings report. Although net revenue from the company's oral lupus nephritis medication, Lupkynis, jumped by 60% during the three-month period relative the third quarter of 2021, Aurinia's 2022 annual revenue guidance of between $115 million and $135 million fell well short of expectations. Wall Street, for its part, was expecting the midway point of the company's 2022 revenue forecast to come in at around $178 million.
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So what
Another key issue weighing on the drugmaker's shares today are recent comments by President and CEO Peter Greenleaf. During a fireside chat at the SVB Leerink 2022 Global Healthcare Conference earlier this month, Greenleaf said investors can expect "aggressive numbers" when the company rolls out its 2022 annual revenue guidance at the end of the month. This initial financial forecast, however, doesn't exactly jump off the page as aggressive. Wall Street, in fact, was calling for a figure that was 24% higher than Aurinia's top-end estimate.
Now what
Is this small-cap biotech stock worth buying on this weakness? Launching a drug in the middle of a pandemic is a tall order, to be sure. And Aurinia arguably deserves a pass on some level for this very reason. That being said, there does seem to be a disconnect between Aurinia's internal forecasts and Wall Street's expectations for Lupkynis' initial commercial trajectory. So, until there is some clarity on why this apparent disconnect exists, investors might want to watch this biotech from the safety of the sidelines.
