Sometimes the markets offer up a gift.We are always on the lookout for these rare moments and we think we’ve just spotted one.Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) was trading at a little over $7.09 at the start of this month. Fast forward a few weeks and the company goes for $5.82.This is a stock that has been one of the most highly watched over the last twelve months, for reasons we'll get into in a moment, and a dip of close to 20% on nothing but weak sentiment is, we think, a great opportunity to pick up some cheap shares ahead of a potentially very large revaluation. AUPH Daily ChartRegular readers will know that this is a company we've highlighted in the past as being one to keep an eye on.We thought it was cheap back at the start of June, when Aurinia shares went for around $6.10 a piece. At $5.82, this could be one of the most undervalued stocks at this end of the biotechnology space right now.What is going on that can support this statement?This is a company with one development asset in its pipeline – a drug called Voclosporin. It's currently under investigation in a target indication of what’s called Lupus Nephritis (LN), an inflammation of the kidney caused by Systemic Lupus Erythematosus (SLE). Up to 70% of SLE patients get LN and it can be incredibly serious – fatal in many cases – and, right now, there's no cure. There are therapies to help deal with it – some patients undergo dialysis and this helps to manage the symptoms and limit severity – but none are cures and this has not gone unnoticed by big pharma. Bristol-Myers Squibb Co (NYSE:BMY) and Roche Holding Ltd. (ADR) (OTCMKTS:RHHBY) have both had a go at bringing a drug to market in this space and both have failed – with Roche doing so twice with two different assets.Aurinia, on the other hand, with Voclosporin, is closer than anyone has got and the company has a wealth of strong, early to mid-stage data under its belt as things stand. And it's in a phase III right now that – assuming things go to plan – will serve to underpin a rolling NDA submission for the drug in the LN indication before it even completes.Enrollment is set to complete at some point between the second and third quarter of next year. The rolling NDA submission will start being fed to the FDA at some point during the middle of the year. That's a pretty near-term catalyst and one that, if it comes in as expected, could send this company far higher than it's trading right now and far higher even than the above discussed 20% premium reached at the start of this month.So why is this company trading down right now?As mentioned above, there doesn’t really seem to be any reason for the recent decline. There's a chance that the company might be going to raise some cash near term and, if it does, it's likely going to serve up a bit of dilution to current shareholders. Nobody likes dilution and so there may be a bit of risk off sentiment surrounding the stock on the back of these expectations.Even if we do see a raise, however, it's not going to be extortionately large as Aurinia isn’t really going to have to market this drug in order to make sales – it's going to have the entire LN market sewn up.Bottom line: this company was undervalued at a 20% premium to current prices and, right now, the discount is deeper meaning an exposure to the upside is cheaper.Check out our previous coverage of this one here.We will be updating our subscribers as soon as we know more. For the latest updates on AUPH, sign up below!Image courtesy of Dan via FlickrDisclosure: We have no position in AUPH and have not been compensated for this article.
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