Mr. Richard Glickman reports

AURINIA REPORTS FOURTH QUARTER AND FULL YEAR 2017 FINANCIAL RESULTS AND OPERATIONAL HIGHLIGHTS

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

"Aurinia gained remarkable momentum in 2017, as demonstrated by the achievement of all of our important milestones -- strong phase II results for voclosporin in LN (lupus nephritis), initiation of our phase III Aurora trial for LN, and the announcement of two exciting new clinical programs," said Richard Glickman, Aurinia's chief executive officer and chairman of the board. "We are well capitalized into 2020 and positioned for a prolific 2018 as the team continues to execute on the plans we have outlined for 2018. We intend to submit the first module of a rolling NDA (new drug application) later this year for our lead LN program and complete enrolment of our phase III Aurora trial. In addition, our team is working diligently to initiate phase II trials for FSGS (focal segmental glomerulosclerosis) and dry eye syndrome in Q2."

2017 and other recent highlights:

• Aurinia strengthened the breadth and scope of its board of directors with the recent additions of Michael Hayden and Joseph Hagan in February, 2018, and George Milne in May, 2017.
• On Oct. 20, 2017, Aurinia announced plans to pursue additional indications for voclosporin, representing an expansion of the company's strategy, pipeline and commercial opportunities.
• A phase II proof-of-concept trial in focal segmental glomerulosclerosis (FSGS) will begin in Q2 2018. A pre-IND meeting was completed in February, 2018.
• A phase IIa tolerability study of voclosporin ophthalmic solution versus the standard of care for the treatment of dry eye syndrome will begin in Q2 2018. Calcineurin inhibitors are a mainstay in the treatment for DES, and the goal of this program is to develop a best-in-class treatment option.
• In May, 2017, Aurinia initiated its phase III clinical trial (Aurora) to evaluate voclosporin for the treatment of lupus nephritis. The Aurora trial is on track to complete enrolment in Q4 2018. Aurinia currently has 201 clinical trial sites activated and is able to enroll patients around the globe. Additionally, under voclosporin's fast-track designation, Aurinia intends to utilize a rolling new drug application process, with the first module being submitted in the second half of 2018.
• On March 20, 2017, Aurinia completed a public offering for net proceeds of $162.3-million, strengthening the company's balance sheet and extending its cash runway into 2020.
• On March 1, 2017, Aurinia released positive 48-week results from its phase II Aura clinical trial for the treatment of LN. Additional data were released on April 20, 2017.

Financial liquidity at Dec. 31, 2017

In 2017, Aurinia raised net proceeds of $162.3-million from the March 20, 2017, public offering and received $12.8-million from the exercise of warrants and options. As a result, at Dec. 31, 2017, Aurinia had cash, cash equivalents and short-term investments of $173.5-million and working capital of $167.1-million, compared with $39.6-million of cash and $33.5-million of working capital at Dec. 31, 2016. Net cash used in operating activities was $41.2-million for the year ended Dec. 31, 2017, compared with $18.7-million for 2016.

Aurinia believes, based on its current plans, that it has sufficient financial resources to finance its existing LN program, including the Aurora trial and the NDA submission to the United States Food and Drug Administration, conduct the planned phase II trials for FSGS and DES, and finance operations into 2020.

Financial results for the fourth quarter ended Dec. 31, 2017

Aurinia reported a consolidated net loss of $3.3-million, or four cents per common share, for the fourth quarter ended Dec. 31, 2017, as compared with a consolidated net loss of $8.3-million, or 21 cents per common share, for the fourth quarter ended Dec. 31, 2016.

The loss for the fourth quarter ended Dec. 31, 2017, reflected a $9.0-million reduction in the estimated fair value of derivative warrant liabilities compared with a reduction of $658,000 in the estimated fair value of derivative warrant liabilities for the fourth quarter ended Dec. 31, 2016.

The net loss before this non-cash change in estimated fair value of derivative warrant liabilities was $12.4-million for the fourth quarter ended Dec. 31, 2017, compared with $9.0-million for the same period in 2016.

Research and development expenses increased to $8.7-million in the fourth quarter of 2017, compared with $5.5-million in the fourth quarter of 2016, primarily due to increased Aurora trial costs related to patient enrolment and treatment costs.

Corporate, administration and business-development expenses also increased to $3.1-million for the fourth quarter of 2017, compared with $2.2-million for the fourth quarter of 2016, reflecting increased personnel and level of activities. In addition, these expenses reflected an increase in non-cash stock compensation expenses to $653,000 for the fourth quarter ended Dec. 31, 2017, compared with $314,000 for the same period in 2016.

Financial results for the year ended Dec. 31, 2017

For the year ended Dec. 31, 2017, the company recorded a consolidated net loss of $70.9-million, or 92 cents per common share, which included a non-cash increase of $23.9-million related to the estimated fair value annual adjustment of derivative warrant liabilities at Dec. 31, 2017. After adjusting for this non-cash impact, the net loss before this change in estimated fair value of derivative warrant liabilities was $47.0-million.

This compared with a consolidated net loss of $23.3-million, or 66 cents per common share, in 2016 which included a non-cash reduction of $1.7-million in the estimated fair value of derivative warrant liabilities for the year ended Dec. 31, 2016. After adjusting for the non-cash impact for 2016, the net loss before this change in estimated fair value of derivative warrant liabilities was $25.0-million.

The change in the revaluation of the derivative warrant liabilities is primarily driven by the change in Aurinia's share price. Aurinia's share price of $4.53 was significantly higher at Dec. 31, 2017, compared with Aurinia's share price of $2.10 at Dec. 31, 2016. This increase in price resulted in large increases in the estimated fair value of derivative warrant liabilities. The derivative warrant liabilities will ultimately be eliminated on the exercise or forfeiture of the warrants and will not result in any cash outlay by the company.

Aurinia incurred net research and development expenses of $33.9-million for the year ended Dec. 31, 2017, as compared with $14.5-million for the year ended Dec. 31, 2016. The increase in these expenses resulted primarily from the clinical and drug supply expenses associated with the Aurora trial, which commenced active patient enrollment and treatment in May, 2017. Research and development expenses for 2016 included costs related to the Aurora planning phase and completion costs for the phase II Aura trial.

Aurinia incurred corporate, administration and business development expenses of $12.1-million for the year ended Dec. 31, 2017, as compared with $7.0-million for the same period in fiscal 2016. The increase in these expenses reflected overall higher activity levels, higher consulting fees, sponsorships and tradeshows expenses related to greater investor and public affairs activities and higher personnel compensation costs, which included non-cash stock compensation expenses of $3.2-million for the year ended Dec. 31, 2017, compared with $1.0-million for the year ended Dec. 31, 2016.

The audited financial statements and the management's discussion and analysis for the year ended Dec. 31, 2017, are accessible on Aurinia's website, on SEDAR and on EDGAR.

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 (LN), focal segmental glomerulosclerosis (FSGS) and dry eye syndrome (DES). The company is headquartered in Victoria, B.C., and focuses its development efforts globally.

We seek Safe Harbor.

                     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
        (unaudited -- amounts in thousands of U.S. dollars, except per share data)
 
                                     Three months ended Dec. 31,    Year ended Dec. 31,
                                          2017            2016         2017       2016
                   
Licensing revenue                          $30             $30         $418       $118
Research and development revenue             -               -            -         50
Contract services                            1               -            2          5
Total                                       31              30          420        173
Expenses
Research and development                 8,691           5,462       33,930     14,534
Corporate, administration and 
business development                     3,118           2,227       12,096      6,970
Amortization of acquired intellectual 
property and other intangible assets       361             365        1,434      1,457
Amortization of property and 
equipment                                    -               -           22         22
Contract services                            -               1            1          4
Other expense (income)                     197             966         (195)     2,213
Total                                   12,367           9,021       47,288     25,200
Net (loss) before change in estimated 
fair value of derivative warrant 
liabilities                            (12,336)         (8,991)     (46,868)   (25,027)
Change in estimated fair value of 
derivative warrant liabilities           9,004             658      (23,924)     1,732
Net (loss) for the period               (3,332)         (8,333)     (70,792)   (23,295)
Other comprehensive income/(loss)
Item that may be reclassified 
subsequently to income/(loss)    
Net change in fair value of 
short-term investments                      11               -         (78)          -
Net comprehensive (loss) for the 
period                                  (3,321)         (8,333)     (70,870)   (23,295)

We seek Safe Harbor.