What happened
Aurinia Pharmaceuticals (AUPH -3.18%), a small-cap commercial-stage drugmaker, is having another strong session today. Specifically, the biotech's stock was up by 11.9% on moderate volumes as of 1:51 p.m. ET Tuesday afternoon.
Following this latest double-digit gain, Aurinia's shares have risen by a staggering 155% so far this year. Today's uptick coincides with the issuance of a new and refined method-of-use patent for the company's lupus nephritis medication, Lupkynis, from the United States Patent and Trademark Office. Aurinia noted in its press release that this patent provides another layer of protection against generic competition, as it extends the drug's period of exclusivity to 2037.
So what
What's all the fuss about? Aurinia's stock has been in rebound mode ever since management announced that the patent dispute with the Indian multinational pharmaceutical company Sun Pharma over Lupkynis was favorably resolved back in January. This patent challenge weighed heavily on the biotech's stock price last year, and it may have even halted a buyout offer from a major pharmaceutical company.
With this patent challenge out of the way, Aurinia's stock could be deeply undervalued. After all, Lupkynis has the potential to generate over $1 billion in annual sales, which is a sizable amount for a company with a $1.56 billion market cap at the time of this writing.
Now what
Is Aurinia's stock a strong speculative buy? Biotechs with one commercial-stage drug are fraught with risk. Emerging competitive threats, unexpected regulatory hiccups, and poor execution on the part of management can all derail a drug's commercial trajectory.
That being said, Aurinia has passed one of its biggest tests to date with this successful patent defense. The biotech, in turn, could attract a suitor soon. Nonetheless, investors may want to keep any position on the small side due to the company's heavy dependence on a single product for growth.
