Aurinia Pharmaceuticals Inc

NASDAQ:AUPH

Earnings Call Analysis

Aurinia's Strong Q2 2024 Financial and Operational Performance

Aurinia Pharmaceuticals reported a solid Q2 2024, with net revenue increasing 38% to $57.2 million compared to the same period last year. Year-to-date revenue reached $107.5 million, a 42% rise from 2023. The company achieved $15.8 million in free cash flow and improved its financial position with $330.7 million in cash and investments. Patient start forms (PSFs) grew to 555, stimulating 22% growth in total patients on LUPKYNIS therapy. Aurinia narrows its full-year revenue guidance to $210-220 million. The company also advances AUR200 into clinical development, anticipating data by mid-2025.

A Strong Second Quarter Performance

Aurinia Pharmaceuticals demonstrated notable growth in its second quarter of 2024, achieving total net revenue of $57.2 million, up approximately 38% from $41.5 million in the same period last year. This impressive performance pushed year-to-date revenue to $107.5 million, reflecting a robust year-over-year growth of around 42%. The company’s net product revenue, primarily from LUPKYNIS, was $55 million for the quarter, signifying a 34% increase compared to last year's $41.1 million. This growth is largely attributed to enhanced sales to key specialty pharmacies and a deeper penetration into the lupus nephritis market, which highlights the product's expanding acceptance among healthcare professionals.

Improved Financial Health

Aurinia's financial position is looking increasingly favorable, underscored by a positive free cash flow of approximately $15.8 million in Q2, ahead of expectations. The company holds cash, cash equivalents, and restricted cash of $330.7 million as of June 30, 2024, which provides it with solid footing to fuel its business operations and strategic initiatives. Notably, the total cost of sales and operating expenses saw a modest increase, amounting to $58.7 million for the quarter and impacting the gross margin, which stood at around 84%. This margin is lower than last year's corresponding figure of 96%, reflecting shifts in product mix and amortization costs associated with new product investments.

Growing Patient Base and Market Initiatives

In the second quarter, Aurinia added approximately 555 patient start forms compared to 451 in Q2 2023, illustrating a significant uptick in patient engagement with the LUPKYNIS therapy. The total number of patients receiving LUPKYNIS reached approximately 2,336, marking a 22% growth year-over-year. These figures signify strong conversion and patient persistence rates, with about 85% of patient start forms converting to therapy. The company is working on innovative marketing strategies aimed at encouraging earlier prescribing of LUPKYNIS and ensuring continuity of therapy, which are essential for optimizing treatment outcomes in patients with lupus nephritis.

Strategic Guidance Adjustments

Following the successful performance, Aurinia is narrowing its full-year net product revenue guidance to between $210 million and $220 million, down slightly from the earlier range of $200 million to $220 million. This adjustment reflects the company’s confidence in maintaining a steady growth trajectory despite potential seasonal fluctuations affecting patient activity. The guidance revision underscores management's proactive approach to business forecasting and operational strategy, indicating they are well-positioned to capitalize on opportunities in the market.

Innovative Product Development: AUR200

Looking ahead, Aurinia is excited about the development of AUR200, a new potential therapy targeting autoimmune diseases. The first patients are expected to enter clinical trials in Q3 of 2024, with safety and efficacy data anticipated by mid-2025. The company plans to fund this development through its robust cash flow, maintaining its operating expenses post-restructuring. The progress of AUR200 could establish Aurinia as a key player in a new therapeutic segment, enhancing its pipeline diversification.

Challenges and Competitive Landscape

While Aurinia is optimistic about its growth, it acknowledges competitive pressures in the lupus nephritis space from other players, particularly as Roche's GAZYVA advances toward market entry. However, the company continues to emphasize LUPKYNIS’s rapid action profile and its strategic initiatives to solidify its market share. Ensuring patient awareness and consistent prescribing practices remains a focal point for Aurinia, as they strive to maximize LUPKYNIS’s reach among potential patients and physicians.

Earnings Call Transcript 2024-Q2

[Operator]

Good day, ladies and gentlemen. Welcome to Aurinia Pharmaceuticals' Second Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would like to turn the conference over to your host, Andrea Christopher, Head of Corporate Communications and Investor Relations for Aurinia Pharmaceuticals. Thank you. You may begin.

[Andrea Christopher, executive]

Thank you, operator, and thank you to everyone for joining today's call and webcast. Joining me on the call this morning are Peter Greenleaf, Aurinia's Chief Executive Officer; Joe Miller, our Chief Financial Officer; and Dr. Greg Keenan, our Chief Medical Officer. Today, we will review and discuss Aurinia's 2024 second quarter financial and operational results as communicated in the company's press release issued this morning.

The company also filed its quarterly financial statements on Form 10-Q this morning. For more information, please refer to Aurinia's filings with the U.S. Securities and Exchange Commission and Canadian Securities authorities, which are also available on Aurinia's website at auriniapharma.com. During today's call, Aurinia may make forward-looking statements based on current expectations. These forward-looking statements are subject to a number of significant risks and uncertainties, and actual results may differ materially.

For a discussion of factors that could affect Aurinia's future financial results and business, please refer to the disclosures in Aurinia's press release, its quarterly report on Form 10-Q and its Annual Report on Form 10-K and all of its recent filings with the U.S. Securities and Exchange Commission and Canadian Securities authorities. Please note that all statements made during today's call are current as of today, Thursday, August 1, 2024, unless otherwise noted and are based upon information currently available to us. Except as required by law Aurinia assumes no obligation to update any such statements.

Now let me turn the call over to Aurinia's President and CEO, Peter Greenleaf. Peter?

[Peter Greenleaf, executive]

Thanks, Andrea, and good morning, everyone. I want to thank everybody for joining us on today's call. On this morning's call, we will focus on the company's second quarter performance. I'll then turn the call over to Dr. Greg Keenan, our Chief Medical Officer, to give an update on our medical work across the business, including the development of our pipeline asset, AUR200. Greg will be followed by Joe Miller, our CFO, to provide additional details on our financial results and highlights. Now let me provide some details on our second quarter business metrics and how we're preparing for the rest of the year.

With the continued focus on commercial execution and accelerating the company's operations towards cash flow positivity, we achieved a strong second quarter performance. For the second quarter of 2024, Aurinia achieved $57.2 million in total net revenue. This is versus $41.5 million in revenue for the same period in 2023, representing growth of approximately 38%. Year-to-date total net revenue was $107.5 million for the 6 months ended June 30, 2024, as compared to $75.9 million for the same period in 2023, representing growth of approximately 42%.

Net product revenue consisting of LUPKYNIS and voclosporin product sales was $55 million for the three months ended June 30, 2024, and $41.1 million for the same period in 2023. This represents growth of approximately 34%. Net product revenue was $103.1 million for the 6 months ended June 30, 2024, and $75.4 million for the same period in 2023, representing growth of approximately 37%. We also achieved approximately $15.8 million in positive free cash flow in the second quarter ahead of our initial projections, which further strengthens our financial position and provides more flexibility to engage in business building activities for the future.

The company had cash, cash equivalents and restricted cash and investments of $330.7 million as of June 30, 2024. In terms of commercial performance metrics, we added 428 patient start forms and approximately 127 new patients who are either restarting LUPKYNIS or receiving it through a hospital pharmacy. Together, these total approximately 555 PSFs in combination with restarts in hospital fills as compared to 451 PSFs in the prior year second quarter, representing substantial year-over-year growth. We also achieved 22% growth in total patients on LUPKYNIS therapy with approximately 2,336 patients on therapy as of June 30, 2024, as compared to 1,911 patients as of June 30, 2023.

This significant year-over-year growth was driven by increased new starts, patients restarting LUPKYNIS after being off therapy for an extended period of time, our hospital fills and improving persistency rates year-over-year. From April 1, 2024, through July 31, 2024, we added approximately 538 PSFs and approximately 155 new patients from restarts in the hospital channel. We continue to sustain a high conversion rate in the quarter with approximately 85% of PSFs converting to patients on therapy. We also sustained a rapid conversion time with approximately 60% of patients starting therapy within 20 days.

Our overall adherence rate remained high at 88% through the second quarter, and we continue to achieve strong persistency with approximately 56% of patients remaining on therapy at 12 months. Additionally, in the second quarter, 51% and 46% of patients remained on therapy at 15 and 18 months, respectively. So in summary, we believe our second quarter accomplishments reflect solid execution against our previously announced business priorities. Based on this, we're narrowing our full year net product revenue guidance range to a range of $210 million to $220 million from the previously established guidance range of $200 million to $220 million.

Looking forward to the second half of the year, we have several innovative commercial initiatives planned as well as some upcoming key milestones. Importantly, as one example of these initiatives, Aurinia is launching a new marketing campaign that reinforces the company's commercial strategy to accelerate market growth by encouraging rheumatologists to prescribe LUPKYNIS and do it earlier in the lupus nephritis treatment paradigm and to maintain that therapy for at least three years in accordance with current treatment guidelines.

This innovative and eye-catching campaign highlights the importance of prescribing LUPKYNIS as part of the Foundation therapy to treat lupus nephritis from the start to reduce the risk of irreversible kidney damage caused by proteinuria. Our commercial activities outside the U.S. continue to grow. Otsuka's launch efforts in Europe are generating meaningful collaboration revenues, and we are also working diligently with Otsuka to seek approval for LUPKYNIS in Japan. Recall that Otsuka filed a JNDA with the Japanese regulatory authorities in November of 2023 for the hopeful approval of LUPKYNIS to treat adults with lupus nephritis.

And we anticipate a response in the second half of this year on that filing. Upon approval, we expect to receive a milestone payment from Otsuka for $10 million as well as low double-digit royalties on net sales once LUPKYNIS is launched in Japan. In terms of our pipeline, we're excited to let you know that we continue to progress AUR200 into the clinic. Importantly, we anticipate funding the development of AUR200 with available cash flow that will not impact previously announced post-restructuring operating expense targets. And as a reminder, we expect to recognize $50 million to $55 million in annual cost savings following the restructuring with approximately 75% of that that will be recognized in 2024.

So with that, I'd now like to turn the call over to Dr. Greg Keenan, our Chief Medical Officer, for a more in-depth discussion on our Medical Affairs strategy and greater detail on our near-term AUR200 development strategy. Greg will be followed by Joe Miller, our CFO, for a more detailed review of our financial results. Of course, I'll then return you to the end of the call for a quick recap and then to open up the mic in order to have you ask your questions.

So with that, let me turn it over to Dr. Keenan. Greg?

[Greg Keenan, executive]

Thanks, Peter, and good morning, everyone. I'd like to take a few minutes to provide you with an overview of our medical and scientific efforts as it pertains to LUPKYNIS and our AUR200 development plans. Our Medical Affairs strategy is focused on important scientific engagement with the lupus nephritis treating community. In the second quarter, our Medical Affairs team had approximately 180 interactions with the top 30 experts in lupus nephritis. In the first half of the year, we had over 1,200 engagements with both rheumatologists and nephrologists.

Collectively, these discussions are focused on strategies to identify appropriate LN patients for whom LUPKYNIS should be considered and understanding the clinical attributes of LUPKYNIS that make it an optimal therapy in the management of LN. Additionally, across more than 70 sites participating in the ENLIGHT registry, we've enrolled 32 patients this quarter and are ahead of our goal to fully enroll the registry by the end of next year. This is a registry that monitors important outcome measures and safety events amongst LN patients taking LUPKYNIS and receiving care in U.S. community and academic practices.

We've submitted an abstract to a major academic society for their fall meeting, which will provide the first few of the diverse demographics of LUPKYNIS patients. Our medical team attended key meetings in the U.S., including CCR East and NKF as well as 38 additional regional and international symposia and medical society meetings in the quarter. Notably, at both ERA and EULAR, an analysis of the clinical value of LUPKYNIS in combination with MMF and low-dose steroids versus MMF and steroids alone were delivered in oral sessions.

Four manuscripts were published this quarter as well including a LUPKYNIS cost-effectiveness model as well as preclinical work, demonstrating differences in lipid metabolism and electrolyte metabolism relative to first-generation CNI. As Peter has mentioned, we are also moving forward with AUR200, our potential next-generation therapy for autoimmune disease. It's a highly potent and specific immune modulator targeting BAFF and APRIL. AUR200 is an IgG4 Fc-fusion protein containing a structurally engineered B-cell maturation antigen BCMA domain.

There's no appreciable effector function on this molecule. AUR200 binds and neutralizes BAFF and APRIL, thus affecting B-cell survival and maturation, resulting in a decrease in B-cell populations and immunoglobulins. We believe AUR200 has the potential to serve as a best-in-class treatment in diseases with high unmet need. We intend to develop it in disease areas where there are few current market entrants. Our overall development strategy for AUR200 includes exploring one larger indication and one fast-to-market smaller indication that meets the FDA criteria for orphan and rare diseases.

We expect to have first patients entering our Phase I single ascending dose study of AUR200 in the third quarter of this year. We anticipate having data available from the SAD study in the first half of 2025, which will inform our subsequent development program. Deliverables from our SAD program will include data on safety, tolerability, pharmacokinetics and biomarkers. We're excited to move forward with this high potential differentiated molecule that could make a significant impact earlier in the treatment algorithm in numerous autoimmune diseases with high unmet need.

I'll now turn the call over to Joe Miller. Joe?

[Joseph Miller, executive]

Thank you, Greg, and good morning, everyone. Let's take a few minutes and go into detail regarding our financial results for the second quarter and 6 months ended June 30, 2024. As of June 30, 2024, we had cash, cash equivalents, restricted cash and investments of $330.7 million compared to $350.7 million at December 31, 2023, and $320.1 million at the end of Q1 2024.

The decrease from year-end cash, cash equivalents, restricted cash and investments is primarily related to the continued investment in commercialization activities and post-approval commitments of LUPKYNIS, Monoplant payments, share repurchases and restructuring-related payments, partially offset by an increase in cash received from sales of LUPKYNIS and cash payments from Otsuka. Through July 31, Aurinia had repurchased 3.4 million shares for approximately $18.6 million at an average cost of $5.36.

As Peter mentioned, our free cash flow in the second quarter of 2024 was approximately $15.8 million, ahead of initial projections and demonstrating the positive impact of the restructuring efforts the company undertook in the first quarter of 2024. Total net revenue was $57.2 million for the quarter ended June 30, 2024, and $41.5 million for the same period in 2023, representing growth of approximately 38%. Year-to-date net revenue was $107.5 million for the 6 months ended June 30, 2024, compared to $75.9 million for the same period in 2023, representing growth of approximately 42%.

Net product revenue consisting of LUPKYNIS, voclosporin product sales was $55 million for the quarter ended June 30, 2024, and $41.1 million for the same period in 2023, representing growth of approximately 34%. Net product revenue was $103.1 million for the 6 months ended June 30, 2024, and $75.4 million for the same period in 2023, representing growth of approximately 37%. The increase is primarily due to an increase in sales of LUPKYNIS to our two main specialty pharmacies, driven predominantly by further penetration into the LN market.

Additionally, we had sales of semi-finished product to Otsuka as they continue to commercialize in the Otsuka territories and prepare for approval launch in Japan. License, collaboration and royalty revenue was $2.2 million and $394,000 for the quarters ended June 30, 2024, and June 30, 2023. License, collaboration and royalty revenue was $4.4 million and $466,000 for the 6 months ended June 30, 2024, and June 30, 2023. The increase is primarily due to manufacturing service revenue from Otsuka related to the shared capacity services that commenced in late June of 2023.

Total cost of sales and operating expenses, inclusive of restructuring costs in the second quarter of 2024, were $58.7 million and $57.7 million for the quarters ended June 30, 2024, and June 30, 2023. Total cost of sales and operating expenses, inclusive of restructuring costs in the first half of 2024 were $122.3 million and $121.7 million for the 6 months ended June 30, 2024, and June 30, 2023. Let me now give you a further breakdown of operating expenses, drivers and fluctuations. Cost of sales were $8.9 million and $1.6 million for the quarters ended June 30, 2024, and June 30, 2023.

Cost of sales were $16.7 million and $2 million for the 6 months ended June 30, 2024, and June 30, 2023. The increase is primarily due to the amortization of the Monoplant finance right-of-use asset, which was placed into service in late June of 2023, semi-finished product sales to Otsuka and increased sales of LUPKYNIS. Gross margin was approximately 84% and 96% for the quarters ended June 30, 2024, and June 30, 2023. Gross margin was approximately 85% and 97% for the 6 months ended June 30, 2024, and June 30, 2023.

Gross margin for the quarter and full year of 2024 were negatively impacted by the amortization of the Monoplant and lower margin sales of semi-finished product to Otsuka for distribution in Europe in anticipation of product approval in Japan. SG&A expenses, inclusive of share-based compensation were $44.9 million and $47.1 million for the quarters ended June 30, 2024, and June 30, 2023. SG&A expenses, inclusive of share-based compensation, were $92.6 million and $97.2 million for the 6 months ended June 30, 2024, and June 30, 2023.

The primary driver for the decrease were lower employee and overhead costs due to a reduction in general and administrative headcount, which occurred late in the first quarter of 2024 partially offset by an increase in legal fees. Noncash SG&A share-based compensation expense included with SG&A expenses was $8.1 million and $9.8 million for the quarters ended June 30, 2024, and June 30, 2023. Noncash SG&A share-based compensation expense included within SG&A expenses, was $15.6 million and $17.4 million for the 6 months ended June 30, 2024, and June 30, 2023.

R&D expenses, inclusive of share-based compensation expense were $4.1 million and $12.7 million for the quarter ended June 30, 2024, and June 30, 2023. R&D expenses inclusive of share-based compensation expense were $9.6 million and $25.8 million for the 6 months ended June 30, 2024, and June 30, 2023. The primary drivers for the decrease were lower employee costs due to a reduction in headcount, which occurred late in the first quarter of 2024, a decrease of CRO and development expenses related to ceasing development of our AUR300 program and timing of expenses related to AUR200.

Noncash R&D share-based compensation expense included within R&D expense was $87,000 and $2.1 million for the quarters ended June 30, 2024 and June 30, 2023. Noncash R&D share-based compensation expense included within R&D expense was a $2.1 million credit and a $3.7 million expense for the 6 months ended June 30, 2024, and June 30, 2023. The noncash R&D share-based compensation credit in the 6 months ended June 30, 2024, is due to the reversals of expense for forfeitures related to a reduction in headcount, which occurred in the first quarter of 2024.

Restructuring expenses were approximately $1.1 million and zero for the quarters ended June 30, 2024, and June 30, 2023. Restructuring expense were approximately $7.8 million and zero for the 6 months ended June 30, 2024, and June 30, 2023. Restructuring expenses primarily included employee severance, onetime benefit payments and contract termination expenses. The company does not expect to incur additional material restructuring-related expenses going forward. Other income net was $290,000 and $3.6 million for the quarters ended June 30, 2024, and June 30, 2023.

Other income net was $4.4 million and $3.3 million for the 6 months ended June 30, 2024, and June 30, 2023. The change is primarily driven by changes in the fair value assumptions related to our deferred compensation liability and the foreign exchange remeasurement of the Monoplant lease liability, which commenced in June 2023 and is denominated in Swiss francs. Interest income was $4.2 million and $4.1 million for the quarters ended June 30, 2024, and June 30, 2023. Interest income was $8.7 million and $7.9 million for the 6 months ended June 30, 2024, and June 30, 2023. Interest expense was $1.2 million and $65,000 for the quarters ended June 30, 2024, and June 30, 2023.

Interest expense was $2.5 million and $65,000 for the 6 months ended June 30, 2024, and June 30, 2023. The interest expense is related to the amortization of our Monoplant financing lease. For the quarters ended June 30, 2024, Aurinia recorded net income of $722,000 or $0.01 net income per common share as compared to a net loss of $11.5 million or $0.08 net loss per common share for the quarter ended June 30, 2023. For the 6 months ended June 30, 2024, Aurinia recorded a net loss of $10 million or $0.07 net loss per common share as compared to a net loss of $37.7 million or $0.26 net loss per common share for the 6 months ended June 30, 2023.

With that, I'd like to hand the call back over to Peter for some closing remarks. Peter?

[Peter Greenleaf, executive]

Thank you, Joe. We're looking forward to a continued robust performance for the second half of 2024, including solid commercial execution, advancing AUR200 into the clinic with first patients dosed and a strong balance sheet with cash flow generation. I want to thank you all for your time today.

And we'll now open the lines for any questions you might have. Operator?

[Operator]

[Operator Instructions] Your first question comes from Maury Raycroft with Jefferies.

[Farzin Haque, analyst]

This is Farzin on for Maury. So your growth in PSFs and patient restarts in 2Q came in a bit lower than 1Q. And then this month, it is also looking slightly lean. So how should we expect about the cadence in the summer months, given the typical seasonal impacts you've seen in the past? And how does that factor into your adjusted guidance?

[Peter Greenleaf, executive]

Thank you for the question, Farzin. The simple answer is the quarterly performance from Q1 to Q2 and the trend going into because as we know, we report PSFs up until the date of the call, are consistent year-over-year, and there is growth year-over-year, albeit your observation that Q1 to Q2, our weekly run rate on new patients in combination is slightly down, but that's consistent with what we've seen over the last several years moving into the summer months.

But if you look at the trend year-over-year, we are up on both -- on all metrics, Q1, Q2 and the run rate going in on a weekly basis into Q3. Last point, there's the obvious -- we need to continue to grow new patients. There's -- we're not backing away from that. We need to continue to see PSF growth. We need to continue to see the hospital channel grow, and we need to continue to see consistent growth out of our patient restarts. But the numbers are year-over-year still growing, albeit your observation is, in fact, right.

[Farzin Haque, analyst]

All right. Makes sense. You achieved the free cash flow positivity and have a strong balance sheet. So wondering should we expect any potential in-licensing assets or other [indiscernible] options?

[Peter Greenleaf, executive]

Yeah, I think there's the obvious observation that we -- barring AUR200, which has moved into the -- is in the process of moving into the clinic that we are a single-product company. And as we've said on other calls, we think it's important strategically to continue to diversify our pipeline and of course, be open to commercial opportunities as well. But our priority has been more focused on later-stage pipeline but your observation that our balance sheet and the need for diversification is there. And as a company strategically, we continue to work on that.

[Operator]

Your next question comes from Joseph Schwartz with Leerink Partners.

[Joseph Schwartz, analyst]

I was going to ask something on LUPKYNIS and then also on AUR200. So I guess as we've discussed before, there seems to be an area of significant upside if the overall LN market embraces more regular urine screening. I was wondering if you could help us understand how much success you've had influencing this behavior and how we should think about your ability to move the needle going forward? Do you have a strong understanding of which practices are not doing this? And how effective can you be targeting such sites with your MSLs to educate physicians and encourage more identification of patients that might benefit from LUPKYNIS.

[Peter Greenleaf, executive]

So three-point answer to the question, Joe. One is through our awareness studies that we do, our [ attitude ] and awareness studies that we do on a quarterly basis, it's clear that both rheumatologists, which, by the way, is the primary mover on this one because rheumatologists are going to be the one seeing an SLE patient, doing the initial diagnosis in the urine screen, awareness is up significantly since we've been talking about this. Now we juxtapose that I'm talking to it, meaning educating physicians on the guidelines, with the guidelines saying the need to do urine screens on every visit of an SLE patient.

But that awareness is up. Second, we pull data on actual urine screen analysis that's done. And we don't target it down to directly the office. We just look at an aggregate to see if urine screening is up. We have not seen massive increases. Now albeit we're in the summer, we're moving into the summer time period. So I think we need to continue to monitor this over time. But that awareness has not translated into a higher rate of diagnosing yet.

So -- but the positive momentum is awareness is higher. Your question around targeting, yeah, I think we have a very good understanding of who the high prescribers are and who the high target rheumatologists are with a high number of lupus patients. And a part of our plan is to call on both with our MSLs and with our sales representatives to call on those target accounts.

The last point I will make is obviously, I mentioned in the call that we've launched a new campaign initiative across the business, and that campaign initiative is exclusively targeted towards the point that you bring up that there's this [ d-link ] between what the aspirations and the goals of therapy are and how actual practice is happening from diagnosis through to treatment. And we think once that can catch up, there's significant growth for the market. So our new campaign is all centered around that. So positive momentum. Haven't seen it actually materialize yet, but feeling good about the message at least sticking with physicians.

[Joseph Schwartz, analyst]

That's helpful. And then can you talk about your decision to bring AUR200 forward again? Is this driven by the strategic interest in this space? Can you talk about how the preclinical data for this agent compares to the many assets in late-stage development? And what indications are you thinking about pursuing?

[Peter Greenleaf, executive]

Yes. So as we've said all along, our restructuring efforts were to first bring the company into a more optimized phase knowing that both -- we had AUR200, we also had AUR300 alongside of it. We knew that AUR300, we had to take back to reformulation. So we exited that asset. And by doing so, we had the ability to cut a significant amount of our operating expense. On AUR200, we said, well, we'll do a market check as well as keep moving the product forward or the asset forward and then determine after doing a market check whether we're to partner it or whether we should take it forward on our own.

While we had interest, it was our determination, one, based upon how those potential conversations went. And two, based on the excitement in the space, we've always been excited about the possibility of B-cell inhibition for APRIL and BAFF -- by the APRIL and BAFF pathway. And we made the decision to take it forward on our own and did it in a way where we're not changing at least our '24 operating expense guidance and what we've given in terms of estimates for operating free cash flow for the year. The last two questions were centered around any data.

I'll tee to Greg Keenan talk about that in a second. But on the indication front, I'll oversimplify to say we're going to try to, as Greg said, target an area that might be under orphan designation and alongside of that to try to target a much larger area that would not be in the IgAN space. Not that we don't think the product could work in IgAN, but obviously, IgAN has been the primary focus of other APRIL/BAFF inhibitors who are further ahead of us. On the differentiation side, let me give Greg to just talk a little bit about what we've seen to-date with the compound.

[Greg Keenan, executive]

Sure. So thanks, Peter. With some preclinical work that we've done, we've been able to make some comparisons relative to some of the earlier BAFF/APRIL inhibitors, namely telitacicept and atacicept. And we find that our KDs and IC50s are lower, meaning we have more [ pop ] compound and equivalent milligram amount of drug. And so we think that is going to be a favorable attribute for AUR200 as we advance it. We don't have those comparisons for [ ovatasocept ].

Relative to how this particular strategy fits compared to other B-cell inhibitors and depleters we think that given the presumed combination of efficacious reductions in B-cells and reductions in quantitative immunoglobulins that we expect to see against the backdrop of perhaps a maintenance of the ability to have an adaptive immune response we think that the efficacy and safety profile will be one that compares favorably relative to other B-cell depleting strategies. Hence, we think it will be a very useful agent in many B-cell-driven diseases.

[Operator]

Your next question comes from Stacy Ku with TD Cowen.

[Stacy Ku, analyst]

So we had a few. Just back to the hospital channel that we asked about last time. I know it's still early days, but just help us understand where you think that's going to progress this year and the next few years? It seems like the patient restarts and hospital channel additions are going to be quite important as we think about LUPKYNIS moving forward. And then some metrics around these patient restarts.

What's the average amount of time of treatment before the restart, obviously, probably above 12 months, but just help us understand why they're coming back? Is it a relapse? How do you capture these patients and convert them into more chronic therapy? And then last question is going to be on the long-term trajectory. Just your thoughts around the competitive landscape. So we believe Roche's Obinutuzumab will have their Phase III readout this summer for lupus nephritis. So just curious your thoughts there.

[Peter Greenleaf, executive]

Making sure I have all these. Let me start first with the hospital channel. Because we haven't broken this out, let me give a little bit more direction on kind of how these have rolled through. I think right now, the smaller of the two numbers in terms of restarts in the hospital channel has clearly been the hospital channel, and we've talked about that. I would -- it's hard to say we have enough to really trend it out yet, Stacy, but we're seeing growth in the tens of patients, call it, 10 to 20 patients, 30 patients a quarter.

And my hope would be that continues, and we start to see this be a significant growth element per quarter, moving from a couple of 10 patients per Q to more than that. But we'll have to see how it trends. We're excited about it. It has moved from almost being just onesies/twosies to now being as high as 30, 40, 50 patients a quarter. And on a base of 400 to 500 to 600 patients per quarter of new patients, 10% to 20% of that base coming from the hospital channel. Our hope would be that, that's going to continue to grow. And everything points to that.

The average in terms of restarts, they have to be -- in order to be a restart in our qualification, they have to be off therapy for at least four months. I don't think I have at my hands of those restarts that we have, what their average has been. But for us, know that they fall out of our system and they become a restart when they've been off therapy for at least four months. Your last question on competition. Obviously, lots of folks targeting the LN space, and more importantly, targeting it as a precursor towards lupus, especially with the B-cell therapies.

The most recent activity updates that you're referring to are both SAPHNELO and Roche's product, GAZYVA, the two that my understanding from what they've reported, Roche hopes to have data soon, hopes to file this year, potentially be on market if data is positive by as soon as next year. And then SAPHNELO is more protracted. Let me start with SAPHNELO. Obviously, they ran a Phase II study. That study did not show a difference in terms of -- a statistically significant difference in terms of reduction in proteinuria, but they did move forward with a Phase III.

So we'll see, and that's a couple of years off. Both by different pathways, and Greg can build on this if I miss anything, are targeting B-cells. So it's our belief that much like Benlysta the data will probably work, but will probably have a more protracted impact in terms of their impact in reducing proteinuria to the levels that the guidelines are calling for. The guidelines are targeting three-month, six-month, one-year reductions in proteinuria. And so far, we've not seen B-cell inhibition be able to hit the target levels at those early stages.

Now at two years, they seem to work about as good as we do, and these have not been cross-compared, obviously. But in the study data for each individual agent appear to show that they work about as good as we do at a year at two years. These patients have a serious complication of their disease. They can't wait for two years. So we think our positioning based upon the rapidity of response and magnitude of response early puts us at a competitive advantage even though the studies haven't been cross compared. Greg, what did I miss?

[Greg Keenan, executive]

No, I think you were spot on. I think the punchline is there's definitely a role for LUPKYNIS in many of these scenarios, and it does with the evidence we've shown work very, very quickly, and these B-cell depleting agents just take that much longer, and that's something clinicians need to be mindful of.

[Peter Greenleaf, executive]

Other modalities. We haven't seen any new interest and/or information on and seem to be well off in the time period. The two big ones coming soon are the larger companies. Hopefully, one of these larger companies will also start to focus on educating docs and patients in the LN market and help us with the expansion and the market development work that we're doing. They obviously have more resource and more dollars to do that.

[Operator]

Your next question comes from Ed Arce with H.C. Wainwright.

[Antonio Arce, analyst]

Congrats on the quarter. A few questions for me. First, I just wanted to ask -- I know this has already been discussed a little bit, but I wanted to get a little bit more clarity, if I could, on the PSF and hospital restart numbers, both sequentially down. Just thinking about the regular annual seasonality, first quarter obviously has the insurance restarts is typically a little light. So I'm wondering if you can discuss the seasonality, if there is any from 1Q to 2Q and how that fits overall with you lowering the end of your guidance range for this year.

And then on the income statement, just looking at your restructuring I know you had guided initially to $11 million to $15 million. You really only have less than $8 million so far. Just wanted to confirm, there won't be any further charges in the third quarter. And then lastly, if you could, the number of share buybacks in the quarter, the number and the amount spent? And then I have a follow-up.

[Peter Greenleaf, executive]

Okay. Well, let me -- I'll let Joe handle both the P&L and/or income statement questions that were asked. On the PSF hospital thing and the 1Q to 2Q in relation to how we've guided for the year, as I said previously, and I want to reiterate, I think there's a level of consistency in terms of the business trends that we've seen from 1Q to 2Q and the effect of -- which we still characterize more qualitatively as patients -- just less patient activity in the offices as well as less doc activity in the offices during the summer time, which I think makes a lot of sense based upon the fact that we have a relatively young patient population has been consistent since we've launched the product.

And the trends that we've seen so far this year align with what we've seen historically and are up year-over-year, albeit there is a recognition, we'd like them to be up even more. As it relates to our guidance for the year, we've posted, I think, in total, about $107 million year-to-date. We would have to see in order to hit the low end range of our guidance of what was previously [ 200 ], we would have to see a significant decrease in the business in the back half of the year.

We don't project that, Ed. We project even if we have a down summer, consistency and if we are consistent, we will fall within that guidance range and be well in that guidance range. So we feel comfortable about it based upon that assumption. If we see a great summer performance, we should be at the higher end of that guidance range or maybe when we report 3Q, we adjust that. But we feel comfortable with the range that we've given based upon that. In terms of the charges, I think if you go back on the transcript, Joe actually addressed this but I'll have him address it again. And then buybacks, what we did in the Q was in the transcript as well, but let us reiterate it for you.

[Joseph Miller, executive]

Thanks for the question, Ed. Yeah, so on the restructuring charge for all intents and purposes, all restructuring activities were completed in the second quarter. So we do not anticipate any further material spend related to the restructuring plan that was announced early in the first quarter. So yes, you're right. We had roughly approximately $8 million of total restructuring related costs, about $1.1 million of that reflected in Q2, slightly less than our guidance range initially, but we don't expect anything further thereafter.

In regards to your second question related to the share repurchase program, I think we disclosed at March 31 that we acquired approximately 2.4 million shares. As of July 31, we have repurchased approximately 3.4 million shares. So roughly in the time between March 31 and July 31, approximately 1 million additional shares have been repurchased.

[Antonio Arce, analyst]

Great. Fantastic. Then last question, perhaps this is for Greg. Regarding AUR200, you've decided to move forward and have stated there's a SAD study data readout expected in the first half of next year with safety, tolerability and PK. I'm wondering if you could provide any detail around the biomarker data that you expect to report.

[Greg Keenan, executive]

Thanks for the question. So as you know BAFF/APRIL inhibitors, they block the maturation and proliferation of short-lived plasma cells, specifically the ones that are thought to generate the pathologic antibodies that drive disease. So from the standpoint of healthy volunteers, we can get an early impression as to whether or not we'll have an impact on those measures, namely quantitative immunoglobulins, so IgG, IgM and IgA we'll be looking to see what percentage relative to baseline those levels drop over time. Of course, it's only a single dose, and so the impact may be relatively modest, but it will give us an early impression as to whether or not we've got a molecule here that is biologically active. So that will be the key set of numbers that we'll be looking at as it relates to biologic activity.

[Peter Greenleaf, executive]

The essence of what we're trying to do here is look at those who were ahead of us too and what they've reported on and try to give as much like-to-like data. So the question that was asked previously around how do you see your molecule sort of mapping towards the others who might be ahead of you. Each one is slightly different now they're hitting these targets. So we think even that early biomarker data will have key points of differentiation in both shaping how we move into further clinical development and the indications we go after and how we should be looking at this compound relative to potential competitors in the APRIL/BAFF space.

[Operator]

At this time, there are no further questions. I'd like to turn the call back over to our speakers for any further remarks.

[Peter Greenleaf, executive]

No further remarks. I want to thank everybody for joining us on the call today. We look forward to continuing to keep you updated on our business as we move it forward. Thanks for your time, everyone.

[Operator]

Thank you, everyone, for attending the Aurinia Pharmaceuticals second quarter 2024 earnings call. Have a wonderful rest of your day.