Mr. Richard Glickman reports

AURINIA COMPLETES LICENSING DEAL WITH MERCK ANIMAL HEALTH FOR ITS NANOMICELLAR FORMULATION OF VOCLOSPORIN FOR THE TREATMENT OF CANINE DRY EYE SYNDROME

Aurinia Pharmaceuticals Inc. has signed a definitive agreement granting Merck Animal Health, known as MSD Animal Health outside of the United States and Canada, worldwide rights to develop and commercialize Aurinia's patented nanomicellar voclosporin ophthalmic solution (VOS) for the treatment of dry eye syndrome in dogs.

Under the terms of this agreement, Aurinia will receive an upfront payment and is eligible to receive further payments based on certain development and sales milestones. Furthermore, Aurinia will receive royalties based on global product sales. Merck Animal Health will be responsible for the remaining clinical development and commercialization of VOS for use in the animal health field, while Aurinia retains all human health rights. The companies will share in the final work product and any technical knowledge that may be generated during the collaboration.

"This partnership with Merck Animal Health underscores our long-standing belief that voclosporin has the potential to be effectively used across a range of therapeutic areas, in addition to its primary potential indication for the treatment of lupus nephritis," said Richard Glickman, Aurinia's chief executive officer and chairman of the board. "In addition to enhancing dry eye treatment options in the animal health field, VOS has a differentiated product profile with long patent life that has the potential to compete in the multibillion-dollar human prescription dry eye market. While this ophthalmology project will continue to be advanced by Merck Animal Health, the Aurinia clinical team will remain focused on our lupus nephritis program, which is on track to begin enrolment for the Aurora phase III trial this quarter."

Throughout the past year, Merck Animal Health has conducted proof-of-concept research in dogs suffering from dry eye syndrome, which affects one out of every 22 dogs. The early symptoms can be easily missed by pet owners, leading to irreversible damage to a dog's vision and eventually resulting in blindness.

"VOS has the potential to address significant unmet medical needs in ophthalmology, and the preliminary results of our canine dry eye trial are very promising," said Holger Lehmann, DVM, PhD, associate vice-president, drug discovery, Merck Animal Health. "We look forward to continuing our collaboration with Aurinia and believe this partnership is a prime example of the synergies that exist between human and animal health drug development for the benefit of all of our patients."

"Completed preclinical and human phase Ib studies using Aurinia's nanomicellar VOS formulation have shown encouraging results in terms of delivery of active drug to the target tissues of the eye," said Neil Solomons, MD, chief medical officer of Aurinia. "The nanomicellar formulation enables high concentrations of voclosporin to be incorporated into a preservative-free solution for local delivery to the ocular surface. This has been shown to potentially improve efficacy, dosing frequency and tolerability versus the current treatments for dry eye syndrome. We are excited about the potential for topical ocular administration of voclosporin utilizing this unique and proprietary nanomicellar drug delivery technology."

Aurinia is exploring all options to create value with its proprietary nanomicellar ocular formulation of voclosporin in the human health field, including, but not limited to, further development, outlicensing or divestiture while remaining focused on the phase III lupus nephritis program.

About Aurinia Pharmaceuticals Inc.

Aurinia is a clinical-stage biopharmaceutical company focused on developing and commercializing therapies to treat targeted patient populations that are suffering from serious diseases with a high unmet medical need. The company is currently developing voclosporin, an investigational drug, for the treatment of lupus nephritis. The company is headquartered in Victoria, B.C., and focuses its development efforts globally.

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