Mr. Richard Glickman reports

AURINIA REPORTS FIRST QUARTER 2017 FINANCIAL RESULTS, ANNOUNCES INITIATION OF PHASE III AURORA CLINICAL TRIAL, AND PROVIDES OPERATIONAL HIGHLIGHTS

Aurinia Pharmaceuticals Inc. has released its financial results for the first quarter ended March 31, 2017. Amounts, unless specified otherwise, are expressed in U.S. dollars.

"I am proud of the important clinical, regulatory and financial milestones our team has successfully achieved in our first quarter this year. We released positive 48-week results from our phase IIb Aura-LV trial of voclosporin, which demonstrated significantly improved complete remission rates in patients suffering from lupus nephritis," said Richard Glickman, Aurinia's chief executive officer and chairman of the board. "We also believe we have a clear path forward with regulators to develop voclosporin in major markets and have successfully funded the company's initiated phase III lupus nephritis clinical trial (Aurora) and operations through 2020. Furthermore, based on the results of our Aura trial and regulatory feedback, we have moved diligently into our Aurora trial with several sites initiated and currently screening patients. Our clinical team is focused on continuing to initiate sites with an aggressive patient recruitment program. The Aurora trial design is consistent with that of the recently completed Aura clinical trial. We believe that the totality of data from both the Aurora and Aura trials will ultimately serve as the basis for a new drug application (NDA) submission as well as regulatory submissions in other major global markets."

Recent operational highlights

48-week Aura-LV data presented in late breaker presentation at National Kidney Foundation 2017 scientific clinical meeting

On April 20, 2017, the company announced additional 48-week results from the global Aura study in lupus nephritis (LN) during the National Kidney Foundation 2017 spring clinical meetings in Orlando, Fla. In addition to the trial meeting its complete and partial remission (CR/PR) end points at 48 weeks, all prespecified secondary end points that have been analyzed to date were also met at 48 weeks. These prespecified end points include: time to CR and PR (speed of remission); reduction in systemic lupus erythematosus disease activity index or SLEDAI score; and reduction in urine protein creatinine ratio (UPCR) over the 48-week treatment period. Notably, of the patients that achieved CR at 24 weeks, in the low-dose voclosporin group, 100 per cent remained in CR at 48 weeks, which demonstrates durability of clinical response. Proteinuria levels and reduction in SLEDAI scores, which include non-renal measures of lupus activity, also continued to significantly separate over time versus the control group. Additional analyses are continuing and will be presented at future medical and scientific meetings.

No unexpected safety signals were observed and voclosporin was generally well tolerated, with the nature of adverse events consistent with what is expected of patients suffering from highly active LN while undergoing immunomodulation therapy. In the voclosporin arms, the renal function as measured by eGFR was stable and not significantly different from the control arm during the 48-week treatment period. Mean blood pressure was also similar between all treatment groups.

The 24- and 48-week efficacy results are summarized in the table.

    
End point                                  Treatment      24 weeks    P-value*     48 weeks     P-value*

Complete remission (CR)              23.7 mg VCS BID            33%    p=.045            49%     p<.001
                                     39.5 mg VCS BID            27%    p=.204            40%     p=.026
                                         Control arm            19%        NA            24%         NA
Partial remission (PR)               23.7 mg VCS BID            70%    p=.007            68%     p=.007
                                     39.5 mg VCS BID            66%    p=.024            72%     p=.002
                                         Control arm            49%        NA            48%         NA
Time to CR (TTCR) [median]           23.7 mg VCS BID     19.7 weeks    p<.001     19.7 weeks     p<.001
                                     39.5 mg VCS BID     23.4 weeks    p=.001     23.4 weeks     p<.001
                                         Control arm             NA        NA             NA         NA
Time to PR (TTPR) [median]           23.7 mg VCS BID      4.1 weeks    p=.002      4.3 weeks     p=.005
                                     39.5 mg VCS BID      4.4 weeks    P=.003      4.4 weeks     p=.002
                                         Control arm      6.6 weeks        NA      6.6 weeks         NA
SLEDAI Reduction (non-renal lupus)   23.7 mg VCS BID           -6.3    p=.003           -7.9     p<.001
                                     39.5 mg VCS BID           -7.1    p=.003           -8.3     p<.001
                                         Control arm           -4.5        NA           -5.3         NA
Reduction in UPCR                    23.7 mg VCS BID   -3.769 mg/mg    p<.001   -3.998 mg/mg     p<.001
                                     39.5 mg VCS BID   -2.792 mg/mg    p=.006   -2.993 mg/mg     p=.008
                                         Control arm   -2.216 mg/mg        NA   -2.384 mg/mg         NA

Note: "VCS" means voclosporin.
* All p-values are versus control.
                                                                                                       

Regulatory pathway forward

On April 7, 2017, the company announced the outcome of discussions with both the European Medicines Agency (EMA) and the Pharmaceutical and Medical Devices Agency (PMDA) in Japan regarding the development of voclosporin for the treatment of active LN. Pursuant to these discussions, the company believes that the confirmatory data that can be generated from the Aurora trial and the recently completed Aura trial should support regulatory submissions in the United States, Europe and Japan.

The Aurora trial will be a global 52-week double-blind, placebo-controlled study of approximately 320 patients. Patients will be randomized 1:1: to either of 23.7-milligram voclosporin BID and mycophenolate mofetil (MMF) or MMF and placebo, with both arms receiving a stringent oral corticosteroid taper. As in Aura, the study population will comprise patients with biopsy-proven active LN who will be evaluated on the primary efficacy end point of complete remission, or renal response, at 52 weeks, a composite which includes:

• UPCR of equal to 0.5 milligram per milligram;
• Normal, stable renal function (equal to 60 milligrams per min per 1.73 square metre or no confirmed decrease from baseline in eGFR of greater than 20 per cent);
• Presence of sustained, low dose steroids (equal to 10 mg prednisone from week 16-24);
• No administration of rescue medications throughout the treatment period.

Key developments in first quarter 2017

Completion of public offering

On March 20, 2017, the company announced the closing of an underwritten public offering of 25.64 million common shares. The shares were sold at a public offering price of $6.75 per share. The gross offering proceeds to the company from this offering were $173.1-million (U.S.). Expenses of the offering including underwriting commissions and other offering expenses were $10.8-million.

Aura 48-week results

On March 1, 2017, the company announced top-line results from the Aura trial. At 48 weeks, the trial met the CR/PR end points, demonstrating statistically significant greater CR and PR in patients in both low-dose (23.7 mg of voclosporin twice daily (p is less than .001)) and high-dose (39.5 mg twice daily (p is equal to .026)) cohorts versus the control group. No unexpected safety signals were observed and there were no additional deaths in the voclosporin treated patients; however, there were three deaths and one malignancy reported in the control arm after completion of the study treatment period.

Japanese phase i ethnic bridging study for voclosporin

On Feb. 14, 2017, the company announced results of a supportive phase I safety, pharmacokinetic (PK) and pharmacodynamics (PD) study in healthy Japanese patients, which supports further development of voclosporin in this patient population. Based on evaluations comparing the Japanese ethno-bridging data versus previous PK and PD studies in non-Japanese patients, voclosporin demonstrated no statistically significant differences in exposure with respect to area under the curve measurements. Furthermore, the PK parameters in Japanese patients were generally consistent with previously evaluated PK parameters in non-Japanese volunteers. There were no unusual or unexpected safety signals in the study.

Financial results for the first quarter ended March 31, 2017

As a result of completing the public offering on March 20, 2017, Aurinia had cash, cash equivalents and short-term investments of $202.1-million as at March 31, 2017, compared with $39.6-million as at Dec. 31, 2016. The company believes, based on its current plans, that it has the financial resources to complete the Aurora trial and finance operations through 2020.

Cash used in operating activities for the three months ended March 31, 2017, was $9.7-million. Cash provided by financing activities was $172.2-million comprising net proceeds of $162.3-million from the public offering and $9.9-million from the exercise of warrants and stock options during the three-month period ended March 31, 2017.

For the first quarter ended March 31, 2017, the company reported a consolidated net loss of $51.9-million or 92 cents per common share. This loss included a non-cash increase of $40.8-million related to the estimated fair value quarterly adjustment of derivative warrant liabilities at March 31, 2017. After adjusting for this non-cash impact, the net loss from operations was $11.2-million or 20 cents per common share.

This compared with a consolidated net loss of $4.3-million or 13 cents per common share, which included a non-cash decrease on revaluation of derivative warrant liability of $664,000 at March 31, 2016. After adjustment for the non-cash impact of the revaluation, the net loss from operations for the three months ended March 31, 2016, was $4.9-million or 15 cents per common share.

The change in the revaluation of the derivative warrant liabilities is primarily driven by the change in the company's share price. Its share price was significantly higher at March 31, 2017, compared with Dec. 31, 2016, which resulted in a large fair value adjustment. These derivative warrant liabilities will ultimately be transferred to equity upon the exercise or expiry of these warrants and therefore are non-cash adjustments.

The company incurred net research and development expenditures of $7.3-million for the first quarter ended March 31, 2017, as compared with $3.3-million for the same period in 2016. The increase in research and development expenditures in 2017 reflected initiation costs, including activities such as clinical site selections, regulatory submissions and drug manufacturing costs related to the Aurora trial, and completion costs associated with the Aura trial.

The company incurred corporate, administration and business development costs of $3.4-million for the first quarter ended March 31, 2017, as compared with $1.2-million for the same period in 2016. These costs included a non-cash stock compensation expense of $1.1-million in 2017 compared with $261,000 in 2016 primarily due to an increase in the number of options granted in 2017 compared with the same period in 2016.

This press release should be read in conjunction with the the company's unaudited interim condensed consolidated financial statements and the management's discussion and analysis for the first quarter ended March 31, 2017, which are accessible on Aurinia's website, on SEDAR or on EDGAR.

About Aurora

The Aurora trial is a 52-week global double-blind placebo controlled phase III trial that will compare the efficacy of one dose of voclosporin (23.7 mg BID) or placebo added with current standard of care of mycophenolate mofetil (MMF, also known as CellCept) in achieving renal response (formerly referred to as complete remission) in patients with active LN. Both arms will also receive corticosteroids as part of background therapy. These corticosteroids will be stringently and aggressively tapered over the course of the trial.

About Aura-LV

The Aura-LV trial (Aurinia urinary protein reduction in active lupus with voclosporin) was a 48-week trial comparing the efficacy of two doses of voclosporin added to current standard of care of MMF against standard of care with placebo in achieving CR in patients with active LN. All arms also received low doses of corticosteroids as background therapy. Two hundred sixty-five patients were enrolled at centres in 20 countries worldwide. On entry to the study, patients were required to have a diagnosis of LN according to established diagnostic criteria (American College of Rheumatology) and clinical and biopsy features indicative of highly active nephritis. The 24-week primary and secondary end points were released in Q3 2016 with top-line 48-week results announced in Q1 2017. The 48-week data were presented at a late-breaking presentation at National Kidney Foundation (NKF) spring clinical meeting which took place April 18 to 22 in Orlando, Fla.

About voclosporin

Voclosporin, an investigational drug, is a novel and potentially best-in-class calcineurin inhibitor (CNI) with clinical data in over 2,200 patients across indications. Voclosporin is an immunosuppressant, with a synergistic and dual mechanism of action that has the potential to improve near- and long-term outcomes in LN when added to standard of care (MMF). By inhibiting calcineurin, voclosporin blocks IL-2 expression and T-cell mediated immune responses. It is made by a modification of a single amino acid of the cyclosporine molecule which has shown a more predictable pharmacokinetic and pharmacodynamic relationship, an increase in potency, an altered metabolic profile, and potential for flat dosing. The company anticipates that upon regulatory approval, patent protection for voclosporin will be extended in the United States and certain other major markets, including Europe and Japan, until at least October, 2027, under the Hatch-Waxman Act and comparable laws in other countries.

About lupus nephritis (LN)

LN in an inflammation of the kidney caused by systemic lupus erythematosus (SLE) and represents a serious progression of SLE. SLE is a chronic, complex and often disabling disorder, and affects more than 500,000 people in the United States (mostly women). The disease is highly heterogeneous, affecting a wide range of organs and tissue systems. It is estimated that as many as 60 per cent of all SLE patients have clinical LN requiring treatment. Unlike SLE, LN has straightforward disease outcomes where an early response correlates with long-term outcomes, measured by proteinuria. In patients with LN, renal damage results in proteinuria and/or hematuria and a decrease in renal function as evidenced by reduced estimated glomerular filtration rate (eGFR), and increased serum creatinine levels. LN is debilitating and costly and if poorly controlled, LN can lead to permanent and irreversible tissue damage within the kidney, resulting in end-stage renal disease (ESRD), thus making LN a serious and potentially life-threatening condition.

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 LN. The company is headquartered in Victoria, B.C., and focuses its development efforts globally.

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