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Aurinia Reports First Quarter 2017 Financial Results, Announces Initiation of Phase III Aurora Clinical Trial, and Provides Operational Highlights

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Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH) (TSX:AUP) ("Aurinia" or the
"Company") 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
("AURA") trial of voclosporin, which demonstrated significantly improved
complete remission rates in patients suffering from lupus nephritis,"
said Richard Glickman, Aurinia's CEO 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 we 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, FL. In addition to
the trial meeting its complete and partial remission ("CR"/"PR")
endpoints at 48 weeks, all pre-specified secondary endpoints that have
been analyzed to date were also met at 48 weeks. These pre-specified
endpoints 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% 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 ongoing 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 below:

                                         
Endpoint       Treatment       24 weeks       P-value*       48 weeks       P-value*
Complete Remission (CR)       23.7mg VCS BID       33%       p=.045       49%       p<.001
39.5mg VCS BID       27%       p=.204       40%       p=.026
      Control Arm       19%       NA       24%       NA
Partial Remission (PR) 23.7mg VCS BID       70%       p=.007       68%       p=.007
39.5mg VCS BID       66%       p=.024       72%       p=.002
      Control Arm       49%       NA       48%       NA
Time to CR (TTCR) [median] 23.7mg VCS BID       19.7 weeks       p<.001       19.7 weeks       p<.001
39.5mg VCS BID       23.4 weeks       p=.001       23.4 weeks       p<.001
      Control Arm       NA       NA       NA       NA
Time to PR (TTPR) [median] 23.7mg VCS BID       4.1 weeks       p=.002       4.3 weeks       p=.005
39.5mg 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) 23.7mg VCS BID       -6.3       p=.003       -7.9       p<.001
39.5mg VCS BID       -7.1       p=.003       -8.3       p<.001
      Control Arm       -4.5       NA       -5.3       NA
Reduction in UPCR 23.7mg VCS BID       -3.769 mg/mg       p<.001       -3.998 mg/mg       p<.001
39.5mg 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 vs control

 

Regulatory pathway forward

On April 7, 2017 we 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, we
believe that the confirmatory data that can be generated from the AURORA
trial and the recently completed AURA trial should support regulatory
submissions in the US, 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 23.7mg 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 be
comprised of patients with biopsy-proven active LN who will be evaluated
on the primary efficacy endpoint of complete remission, or renal
response, at 52 weeks, a composite which includes:

  • UPCR of ≤0.5mg/mg
  • Normal, stable renal function (≥60 mL/min/1.73m2 or no
    confirmed decrease from baseline in eGFR of >20%)
  • Presence of sustained, low dose steroids (≤10mg 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 we 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 US$173.1 million. Expenses of the
offering including underwriting commissions and other offering expenses
were $10.8 million.

AURA 48-Week Results

On March 1, 2017, we announced top-line results from the AURA trial. At
48 weeks, the trial met the CR/PR endpoints, demonstrating statistically
significant greater CR and PR in patients in both low dose (23.7mg of
voclosporin twice daily (p<.001)) and high dose (39.5mg twice daily
(p=.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 February 14, 2017, we 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 vs. 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 to $39.6 million as at December 31, 2016.
We believe, based on our current plans, that we have the financial
resources to complete the AURORA trial and fund 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 comprised of 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, we reported a consolidated
net loss of $51.9 million or $0.92 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 $0.20 per common share.

This compared to a consolidated net loss of $4.3 million or $0.13 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
$0.15 per common share.

The change in the revaluation of the derivative warrant liabilities is
primarily driven by the change in our share price. Our share price was
significantly higher at March 31, 2017 compared to December 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.

We incurred net research and development expenditures of $7.3 million
for the first quarter ended March 31, 2017, as compared to $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 and regulatory submissions and drug
manufacturing costs related to the AURORA trial and completion costs
associated with the AURA trial.

We 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 to
$261,000 in 2016 primarily due to an increase in the number of options
granted in 2017 compared to the same period in 2016.

This press release should be read in conjunction with the our unaudited
interim condensed consolidated financial statements and the MD&A for the
first quarter ended March 31, 2017 which are accessible on Aurinia's
website at www.auriniapharma.com,
on SEDAR at www.sedar.com
or on EDGAR at www.sec.gov/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 (23.7mg BID) or placebo added to 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. 265 patients were enrolled at centers 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 endpoints
were released in Q3 2016 with top-line 48-week results announced in Q1
2017. The 48-week data was presented at a late-breaking presentation at
National Kidney Foundation (NKF) Spring Clinical Meeting which took
place April 18-22 in Orlando, FL.

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 & tissue systems.
It is estimated that as many as 60% 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

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, BC and focuses its development efforts
globally.

Forward-Looking Statements

This press release contains forward-looking statements, including
statements around our analysis, assessment and conclusions around the
future development and commercial potential of voclosporin; our belief
that we have a clear path forward with regulators to develop voclosporin
in major markets; our belief that we have fully funded our AURORA Phase
III clinical trial and operations through 2020; our belief that our
prior clinical trial results will serve as the basis for a NDA
submission and regulatory submissions in major global markets; and our
expectation that 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; and the timing of future clinical
trials; summary statements relating to results of the past voclosporin
trials; the timing of commencement and completion of clinical trials;
and plans and objectives of management.

It is possible that such results or conclusions may change based on
further analyses of these data. Words such as "plans," "intends," "may,"
"will," "believe," and similar expressions are intended to identify
forward-looking statements. These forward-looking statements are based
upon Aurinia's current expectations. Forward-looking statements involve
risks and uncertainties. Aurinia's actual results and the timing of
events could differ materially from those anticipated in such
forward-looking statements as a result of these risks and uncertainties,
which include, without limitation, the risk that Aurinia's analyses,
assessment and conclusions of the results of the future development and
commercial potential of voclosporin set forth in this release may change
based on further analyses of such data, and the risk that Aurinia's
clinical studies for voclosporin may not lead to regulatory approval.
These and other risk factors are discussed under "Risk Factors" and
elsewhere in Aurinia's Annual Information Form for the year ended
December 31, 2016 filed with Canadian securities authorities and
available at www.sedar.com
and on Form 40-F with the U.S. Securities Exchange Commission and
available at www.sec.gov,
each as updated by subsequent filings, including filings on Form 6-K.
Aurinia expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in Aurinia's expectations with
regard thereto or any change in events, conditions or circumstances on
which any such statements are based.

Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors that may cause our actual results,
performance, or achievements to differ materially from any further
results, performance or achievements expressed or implied by such
forward-looking statements. Important factors that could cause such
differences include, among other things, the following:

  • difficulties, delays, or failures we may experience in the conduct of
    its planned AURORA clinical trial;
  • difficulties we may experience in completing the development and
    commercialization of voclosporin;

Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future
results, levels of activity, performance or achievements. These
forward-looking statements are made as of the date hereof and will only
be updated in accordance with applicable law.

We seek Safe Harbor.

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