Aurinia Raises Guidance and Shares Are Surging— Is This Why a Major Investor Just Boosted Its Stake?

AUPH -6.29%

Key Points

• San Diego-based Tang Capital Management increased its position in AUPH by 1.3 million shares in the third quarter.

• Following the transaction, Tang reported holding more than 11.3 million AUPH shares valued at $125.2 million.

• The holding represents 4.8% of AUM, making it the fund's third-largest holding.

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San Diego-based Tang Capital Management reported that it acquired 1.3 million shares in Aurinia Pharmaceuticals (AUPH) during the third quarter, a move that helped increase its position in the stock by $40.2 million.

What Happened

According to a Securities and Exchange Commission (SEC) filing dated November 14, Tang Capital Management, a life-sciences-focused fund,  increased its stake in Aurinia Pharmaceuticals (NASDAQ:AUPH) by 1.3 million shares during the third quarter. This brought its total holding to 11.3 million shares, with a reportable market value of $125.2 million as of September 30.

What Else to Know

The buy lifted Aurinia Pharmaceuticals to 4.82% of Tang Capital Management’s reportable U.S. equity AUM

Top holdings after the filing:

• NASDAQ: TARS: $145.9 million (5.6% of AUM)

• NASDAQ: GLPG: $143.8 million (5.5% of AUM)

• NASDAQ: AUPH: $125.2 million (4.8% of AUM)

• NASDAQ: PTCT: $92.1 million (3.5% of AUM)

• NASDAQ: MIRM: $90.6 million (3.5% of AUM)

As of Tuesday, AUPH shares were priced at $15.93, up a staggering 7% over the past year and well outperforming the S&P 500, which is up 13%.

Company Overview

Metric

Value

Market capitalization

$2.1 billion

Revenue (TTM)

$265.8 million

Net income (TTM)

$77.8 million

Price (as of Tuesday)

$15.93

Company Snapshot

Aurinia Pharmaceuticals Inc. is a commercial-stage biotechnology company specializing in the development and commercialization of treatments for serious diseases, with a focus on autoimmune conditions. The company leverages its proprietary expertise to address unmet medical needs, notably through its flagship product LUPKYNIS for lupus nephritis. Strategic collaborations and a targeted approach to specialty markets underpin Aurinia's competitive position in the biopharmaceutical sector. It targets healthcare providers and patients in the United States and internationally, with strategic collaboration agreements such as with Otsuka Pharmaceutical Co.

Foolish Take

Aurinia’s steady revenue growth, rising profitability, and updated full-year guidance paint an image of a company transitioning from early commercialization to sustained cash generation—an inflection point that makes sense for a fund like Tang Capital to target.Aurinia reported $73.5 million in third-quarter revenue, up 8% year over year, thanks in very large part to a 27% jump in LUPKYNIS net product sales to $70.6 million. The company also delivered $31.6 million in quarterly net income, more than doubling the prior year’s result. Meanwhile, cash flows from operations climbed sharply to $44.5 million, underscoring improving efficiency, and to top it all off, management raised full-year revenue guidance to $275 million to $280 million, citing continued uptake following updated lupus nephritis treatment guidelines and early progress on its next autoimmune candidate, aritinercept.For Tang Capital, a specialist in life sciences, the decision to expand an already large position—especially one that's been performing so well lately—makes sense as a sign of strengthening conviction, something long-term investors may want to pay attention to.

Glossary

AUM (Assets Under Management): The total market value of investments managed by a fund or investment firm.Reportable AUM: The portion of a fund’s assets that must be disclosed in regulatory filings, often focused on specific asset classes or regions.Position: The amount of a particular security or asset held by an investor or fund.Stake: The ownership interest or percentage of a company held by an investor or fund.Commercial-stage biopharmaceutical: A biotech company that has begun selling its products, not just developing them.Unmet medical need: A condition for which current treatments are inadequate or nonexistent.Strategic collaboration agreement: A formal partnership between companies to jointly develop, market, or distribute products.Flagship product: The main or most important product offered by a company.Outperforming: Achieving better returns or results compared to a benchmark or peer group.TTM: The 12-month period ending with the most recent quarterly report.Biotechnology company: A business focused on using biological processes to develop medical or pharmaceutical products.Equity position: An ownership interest in a company represented by holding its shares.

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Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Aurinia Raises Guidance and Shares Are Surging— Is This Why a Major Investor Just Boosted Its Stake? was originally published by The Motley Fool