Shares of Aurinia Pharmaceuticals (NASDAQ: AUPH) were sliding 6.5% lower as of 11:36 a.m. ET on Wednesday. The stock fell as much as 12.7% earlier in the day. This decline came after Canadian investment bank Bloom Burton & Co. downgraded Aurina stock from a buy recommendation to “accumulate.”
Aurinia has had plenty of bad news lately. The biotech stock was down 61% year to date even before the Bloom Burton downgrade. On Tuesday, Aurinia announced that the U.S. Patent and Trademark Office (USPTO) Patent Trial and Appeal Board (PTAB) decided to move forward with a trial challenging its key patent for lupus nephritis drug Lupkynis.
It’s usually best to take analysts’ downgrades (and upgrades, for that matter) with a grain of salt. After all, Aurinia’s share price plunged while Bloom Burton was recommending that investors buy the stock.
Aurinia’s underlying business prospects are what really matter. It’s possible that the USPTO decision could negatively impact those prospects. However, Aurinia remains confident that it will be able to successfully defend its patent for Lupkynis.
Even if the PTAB invalidates the patent, Aurinia could still be in good shape. The company has already filed for an extension to a composition-of-matter patent that isn’t being challenged. If granted, this extension would push its patent protection out to October 2027.
In the meantime, what happens with COVID-19 could have a bigger impact on Aurinia. Sales for Lupkynis were dampened in the first quarter of 2022 because of the coronavirus omicron variant. Investors should learn more about what Aurinia expects for the second half of the year when the company gives its second-quarter update on Aug. 4.