Here's Why Aurinia Pharmaceuticals Inc. Is Surging Today

What happened

Shares of Aurinia Pharmaceuticals Inc. (NASDAQ: AUPH), a clinical-stage biotech, are on the rise following the company's first-quarter earnings report. Plans to expand voclosporin, the company's lupus candidate, to a much larger indication inspired investors to push the shares 10.2% higher as of 1:03 p.m. Monday.

So what

A pivotal trial for the treatment of lupus nephritis started a year ago, and the company's on track to send its first application to the FDA in the first half of 2020. Investors perked up today because it looks like they could have a couple of new catalysts to look forward to in the meantime.

During its first-quarter report, Aurinia announced plans to begin a study for an extremely rare kidney disorder, plus plans to develop voclosporin drops to treat dry eye syndrome. It seems odd that a drug that appears to limit kidney damage also has a shot as a treatment for an eye condition that affects more than 20 million Americans, but we could find out soon. Merck & Co.'s Animal Health unit licensed rights to develop voclosporin for dogs with dry eye, and Aurinia slated a head-to-head human study against Allergan's (NYSE: AGN) Restasis for this June.

Now what

Aurinia finished March with a healthy $159.1 million cash balance, which management thinks will see it through the planned filing of voclosporin's lupus application in early 2020 despite the increased clinical trial activity. Success against Restasis could send the stock soaring before phase 3 lupus results are even ready.

Before you get too fired up about a possible expansion to the enormous dry eye indication, it's important to remember that voclosporin solution for dry eye has been on the back burner a long time. Lux Biosciences reported positive results from a phase 1 trial with healthy volunteers and five dry-eye patients all the way back in 2009.

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Cory Renauer 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.