Aurinia Pharmaceuticals, the Canadian biotech riding high on the success of its lupus nephritis drug LUPKYNIS, just posted a stellar first quarter. Revenue soared, cash flow positivity is imminent, and a favorable FDA label update arrived earlier than expected. On the surface, it's a story of commercial triumph. But lurking beneath the celebratory headlines, a subtle trend hints at a potential vulnerability: the "Summer Slump."

Peter Greenleaf, Aurinia's CEO, alluded to this phenomenon during the earnings call, noting that for "three seasons now," LUPKYNIS sales have dipped or flattened during the summer months. This begs the question: what's driving this recurring dip?

The easy answer is seasonality. After all, summer is a time for vacations, not doctor's visits. But is this a sufficient explanation? Could there be more complex factors at play, factors that Aurinia needs to address proactively to maintain its impressive growth trajectory?

Let's delve deeper. Aurinia's commercial success hinges on several key metrics: Patient Start Forms (PSFs), restarts (patients resuming therapy), hospital fills, conversion rates (PSFs converting to actual patients), processing speeds (time to start therapy), and persistency (patients remaining on therapy).

The first quarter saw robust year-over-year growth across all these metrics, with notable strength in restarts and hospital fills. However, PSFs, the company's key indicator of new patient volume, show a less dramatic uptick. While PSFs in April 2024 were consistent with April 2023, the bulk of the April growth stemmed from restarts and hospital patients, not new prescriptions.

This raises a crucial hypothesis: **Is the summer slump primarily driven by a decline in new patient starts, masked by strong restart and hospital fill numbers?**

If true, this points to a potential vulnerability in Aurinia's long-term growth. While restarts and hospital fills are encouraging indicators of physician and patient confidence in LUPKYNIS, they're ultimately finite pools. Sustained growth relies on a steady influx of new patients.

Analysis of Aurinia's Quarterly PSF Numbers

Further analysis of Aurinia's quarterly PSF numbers reveals a possible correlation:

Excluding restarts and hospital fills from the Q1 2024 figure would paint a clearer picture of the underlying trend in new patient starts. A continuation of the 2023 pattern could mean a decline in new patient starts during Q2 2024, potentially masked by strong restarts and hospital fills.

Aurinia's "Know the Signs" campaign, aimed at increasing awareness and screening for lupus nephritis among rheumatologists, holds the key to counteracting this potential slump. Success in driving early diagnosis and aggressive treatment, particularly among rheumatologists (who historically prescribe LUPKYNIS at lower rates than nephrologists), could translate to a surge in new patient starts, breaking the summer slump cycle.

"**Quote from Peter Greenleaf, Aurinia's CEO:** "With an underdiagnosed and underserved population, we continue to believe there is still significant untapped potential in the LN market. Current screening and treatment guidelines are not actually being followed.""

Patient Start Forms and Revenue Projection

The following chart compares the quarterly PSFs (excluding restarts and hospital fills for Q1 2024) with a hypothetical revenue projection based on the company's guidance.

The financial stakes are high. Aurinia's 2024 revenue guidance range of US$200 million to US$220 million hinges on robust summer performance. A cash flow positive position, a major milestone for the company, is also within reach.

But the real story lies beyond the balance sheet. Lupus nephritis is a serious, potentially life-threatening disease, disproportionately affecting women of color. Aurinia's success in reaching more patients, earlier, with effective therapy like LUPKYNIS, isn't just about financial wins; it's about improving lives. The challenge now is to translate a strong first quarter into sustained, year-round momentum, breaking the summer slump and ensuring LUPKYNIS reaches every patient who needs it.

"**Interesting Fact:** Lupus nephritis affects approximately 20-40% of individuals with systemic lupus erythematosus (SLE), and is a leading cause of morbidity and mortality in this population."