Exhibit 99.1

Aurinia Pharmaceuticals Inc.

Interim Condensed Consolidated Financial Statements

(Unaudited)

(Expressed in thousands of United States (U.S.) dollars)

Third Quarter ended September 30, 2017

Aurinia Pharmaceuticals Inc.

Interim Condensed Consolidated Statements of Financial Position

(Unaudited)

(Expressed in thousands of U.S. dollars)

	September 30, 2017 $			December 31, 2016 $
Assets
Current assets
Cash and cash equivalents		87,546			39,649
Short term investments (note 3)		94,860			—
Accrued interest and other receivables		415			86
Prepaid expenses, deposits and other		2,064			1,683
		184,885			41,418
Clinical trial contract deposits		448			—
Property and equipment		27			29
Acquired intellectual property and other intangible assets		14,472			15,550
		199,832			56,997
Liabilities
Current liabilities
Accounts payable and accrued liabilities		6,665			5,791
Current portion of deferred revenue		118			118
Contingent consideration (note 4)		72			2,021
		6,855			7,930
Deferred revenue		472			560
Contingent consideration (note 4)		3,654			3,419
Derivative warrant liabilities (note 5)		21,207			9,138
		32,188			21,047
Shareholders’ equity
Share capital
Common shares (note 6)		498,698			299,815
Warrants (note 6)		906			971
Contributed surplus		17,442			17,017
Accumulated other comprehensive loss		(894	)		(805	)
Deficit		(348,508	)		(281,048	)
		167,644			35,950
		199,832			56,997
Subsequent events (note 11)

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

Aurinia Pharmaceuticals Inc.

Interim Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

For the three and nine month periods ended September 30, 2017 and 2016

(Expressed in thousands of U.S. dollars, except per share data)

	Three months ended						Nine months ended
	September 30, 2017 $			September 30, 2016 $			September 30, 2017 $			September 30, 2016 $
Revenue
Licensing revenue		29			29			388			88
Research and development revenue		—			—			—			50
Contract services		—			2			1			5
		29			31			389			143
Expenses
Research and development		10,807			3,342			25,239			9,072
Corporate, administration and business development		2,650			1,716			8,978			4,743
Amortization of acquired intellectual property and other intangible assets		357			357			1,078			1,099
Amortization of property and equipment		5			5			17			15
Contract services		—			1			1			3
Other expense (income) (note 7)		(315	)		1,078			(392	)		1,247
		13,504			6,499			34,921			16,179
Net loss before change in estimated fair value of derivative warrant liabilities		(13,475	)		(6,468	)		(34,532	)		(16,036	)
Change in estimated fair value of derivative warrant liabilities (note 5)		355			(951	)		(32,928	)		1,074
Net loss for the period		(13,120	)		(7,419	)		(67,460	)		(14,962	)
Other comprehensive income (loss)
Item that may be reclassified subsequently to income (loss)
Net change in fair value of short-term investments		(89	)		—			(89	)		—
Net comprehensive loss for the period		(13,209	)		(7,419	)		(67,549	)		(14,962	)
Net loss per common share (note 8) (expressed in $ per share)
Basic and diluted loss per common share		(0.16	)		(0.21	)		(0.91	)		(0.44	)

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

2

Aurinia Pharmaceuticals Inc.

Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)

For the nine month periods ended September 30, 2017 and 2016

(Expressed in thousands of U.S. dollars)

	Common shares $			Warrants $			Contributed surplus $			Deficit $			Accumulated other comprehensive loss $			Shareholders’ equity $
Balance – January 1, 2017		299,815			971			17,017			(281,048	)		(805	)		35,950
Issue of common shares (note 6)		173,104			—			—			—			—			173,104
Share issue costs		(10,780	)		—			—			—			—			(10,780	)
Exercise of warrants		296			(65	)		—			—			—			231
Exercise of derivative warrants		29,543			—			—			—			—			29,543
Exercise of stock options		6,720			—			(2,862	)		—			—			3,858
Stock-based compensation		—			—			3,287			—			—			3,287
Net loss and comprehensive loss for the period		—			—			—			(67,460	)		(89	)		(67,549	)
Balance – September 30, 2017		498,698			906			17,442			(348,508	)		(894	)		167,644
Balance – January 1, 2016		261,645			1,297			15,579			(257,753	)		(805	)		19,963
Issue of common shares		6,142			—			—			—			—			6,142
Share issue costs		(407	)		—			—			—			—			(407	)
Issue of units		6,260			820			—			—			—			7,080
Share issue costs		(389	)		(51	)		—			—			—			(440	)
Exercise of warrants		2,498			(825	)		—			—			—			1,673
Expiry of warrants		—			(155	)		155			—			—			—
Exercise of stock options		56			—			(29	)		—			—			27
Stock-based compensation		—			—			1,027			—			—			1,027
Net loss and comprehensive loss for the period		—			—			—			(14,962	)		—			(14,962	)
Balance –September 30, 2016		275,805			1,086			16,732			(272,715	)		(805	)		20,103

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

3

Aurinia Pharmaceuticals Inc.

Interim Condensed Consolidated Statements of Cash Flow

(Unaudited)

For the three and nine month periods ended September 30, 2017 and 2016

(Expressed in thousands of U.S. dollars)

	Three months ended						Nine months ended
	September 30, 2017 $			September 30, 2016 $			September 30, 2017 $			September 30, 2016 $
Cash flow provided by (used in)
Operating activities
Net loss for the period		(13,120	)		(7,419	)		(67,460	)		(14,962	)
Adjustments for:
Amortization of deferred revenue		(29	)		(29	)		(88	)		(138	)
Amortization of property and equipment		5			5			17			15
Amortization of acquired intellectual property and other intangible assets		357			357			1,078			1,099
Stock-based compensation		1,068			548			3,287			1,027
Change in value of short term investments		11			—			(3	)		—
Revaluation of contingent consideration		88			1,146			436			1,272
Change in provision for restructuring costs		—			(38	)		—			(116	)
Loss (gain) on disposal of equipment		—			(13	)		1			(13	)
Change in estimated fair value of derivative warrant liabilities		(355	)		951			32,928			(1,074	)
		(11,975	)		(4,492	)		(29,804	)		(12,890	)
Net change in other operating assets and liabilities (note 10)		3,450			304			(284	)		(1,563	)
Net cash generated from (used in) operating activities		(8,525	)		(4,188	)		(30,088	)		(14,453	)
Investing activities
Purchase of short term investments		(84,889	)		(6,046	)		(97,996	)		(18,091	)
Proceeds on maturity of short term investments		—			5,998			3,050			25,041
Proceeds on disposal of equipment		—			13			—			13
Purchase of equipment		—			(4	)		(16	)		(5	)
Capitalized patent costs		—			—			—			(3	)
Net cash generated from (used in) investing activities		(84,889	)		(39	)		(94,962	)		6,955
Financing activities
Contingent consideration milestone payments		—			—			(2,150	)		—
Net proceeds from issuance of common shares		—			5,735			162,324			5,735
Net proceeds from issuance of units		—			—			—			6,640
Proceeds from exercise of derivative warrants		—			—			8,684			—
Proceeds from exercise of warrants		21			1,673			232			1,673
Proceeds from exercise of stock options		1,222			27			3,857			27
Net cash generated from (used in) financing activities		1,243			7,435			172,947			14,075
Increase (decrease) in cash and cash equivalents during the period		(92,171	)		3,208			47,897			6,577
Cash and cash equivalents – Beginning of period		179,717			9,125			39,649			5,756
Cash and cash equivalents – End of period		87,546			12,333			87,546			12,333

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

4

Aurinia Pharmaceuticals Inc.

Notes to Interim Condensed Consolidated Statements

(Unaudited)

For the three and nine month periods ended September 30, 2017 and 2016

(amounts in tabular columns expressed in thousands of U.S. dollars)

1. Corporate information

Aurinia Pharmaceuticals Inc. or the “Company” is a clinical stage pharmaceutical company with its head office located at #1203-4464 Markham Street, Victoria, British Columbia, V8Z 7X8. The Company has its registered office located at #201, 17904-105 Avenue, Edmonton, Alberta, T5S 2H5 where the finance function is performed.

Aurinia Pharmaceuticals Inc. is incorporated pursuant to the Business Corporations Act (Alberta). The Company’s common shares are currently listed and traded on the NASDAQ Global Market (NASDAQ) under the symbol AUPH and on the Toronto Stock Exchange (TSX) under the symbol AUP. The Company’s primary business is the development of a therapeutic drug to treat autoimmune diseases, in particular lupus nephritis (LN).

These interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Aurinia Pharma Corp., Aurinia Pharma U.S., Inc. (Delaware incorporated) and Aurinia Pharma Limited (UK incorporated).

2. Corporate information

Statement of compliance

These interim condensed consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as applicable to interim financial reports including IAS 34, Interim Financial Reporting, and should be read in conjunction with the annual financial statements of the Company for the year ended December 31, 2016 which have been prepared in accordance with IFRS, as issued by the International Accounting Standards Board (“IASB”).

These interim condensed consolidated financial statements were authorized for issue by the audit committee of the Board of Directors on November 9, 2017.

Basis of measurement

These interim condensed consolidated financial statements have been prepared on a going concern and historical cost basis, other than certain financial instruments which are recognized at fair value.

Functional and presentation currency

These interim condensed consolidated financial statements are presented in United States (US) dollars, which is the Company’s functional currency.

3. Short term investments

During the nine months ended September 30, 2017, the Company purchased short term investments and has classified them as either held-to-maturity or as available for sale.

Held-to-maturity investments which are recorded initially at fair value and subsequently at amortized cost using the effective interest method less any provisions for impairment. Available for sale investments are recorded initially at fair value including direct and incremental transaction costs. They are subsequently recorded at fair value. Gains or losses arising from changes in fair value are included as a separate component of equity until sale, when the cumulative gain or loss is transferred to the consolidated statements of operations and comprehensive loss. Interest is determined using the effective interest method and impairment losses, if any, on monetary items are recorded in the statement of operations and comprehensive loss.

5

Aurinia Pharmaceuticals Inc.

Notes to Interim Condensed Consolidated Statements

(Unaudited)

For the three and nine month periods ended September 30, 2017 and 2016

(amounts in tabular columns expressed in thousands of U.S. dollars)

	September 30, 2017 $
Interest bearing securities (amortized cost)
Held to maturity
Bank discount note		7,006
Canadian Government bond		3,072
		10,078
Available for sale (fair value)
United States treasury notes		40,491
Canadian government notes		24,888
Bank corporate bonds		16,951
Bankers acceptances		2,452
		84,782
		94,860

The average duration of the interest-bearing securities is 1.2 years and the average yield to maturity is 1.26%. Short term investments held at fair value are classified as Level 2 fair values in the fair value hierarchy.

4. Contingent consideration

The outstanding fair value of contingent consideration payable to ILJIN SNT Co., Ltd. (ILJIN), an affiliated shareholder and related party, is the result of an Arrangement Agreement (the Agreement) completed on September 20, 2013 between the Company, Aurinia Pharma Corp. and ILJIN. Pursuant to the Agreement, payments of up to $10,000,000 may be paid dependent on the achievement of pre-defined clinical and marketing milestones.

In the second quarter ended June 30, 2017 the Company paid ILJIN $2,150,000 upon the achievement of two specific milestones.

At September 30, 2017, if all of the remaining milestones are met, the timing of these payments is estimated to occur as follows:

	$
2018		100
2020		2,625
2021		5,125
		7,850

The fair value estimates at September 30, 2017 were based on a discount rate of 10% and an assumed probability adjusted payment range between 50% and 95%. There were no changes in these assumptions since December 31, 2016. The fair value of this contingent consideration as at September 30, 2017 was estimated to be $3,726,000 compared to $5,440,000 at December 31, 2016. The change in the fair value was primarily due the payment of the $2,150,000 in the second quarter of 2017.

The Company recorded in a revaluation of contingent consideration expense of $88,000 and $436,000 respectively for the three and nine month periods ended September 30, 2017 compared to $1,146,000 and $1,272,000 respectively for the same periods in 2016. The change in the revaluation amounts in 2017 result primarily from the change in the passage of time and the achievement of two milestones in the second quarter ended June 30, 2017 whereas the comparative figures from 2016 reflect probability adjustments made in the third quarter ended September 30, 2016. These adjustments were determined by estimating the probability and timing of achieving the milestones and applying the income approach.

This is a Level 3 recurring fair value measurement. If the probability for success were to increase by a factor of 10% for each milestone, this would increase the net present value (NPV) of the obligation by approximately $569,000 as at September 30, 2017. If the probability for success were to decrease by a factor of 10% for each milestone, this would decrease the NPV of the obligation by approximately $569,000 as at September 30, 2017. If the discount rate were to increase to 12%, this would decrease the NPV of the obligation by approximately $217,000. If the discount rate were to decrease to 8%, this would increase the NPV of the obligation by approximately $235,000.

6

Aurinia Pharmaceuticals Inc.

Notes to Interim Condensed Consolidated Statements

(Unaudited)

For the three and nine month periods ended September 30, 2017 and 2016

(amounts in tabular columns expressed in thousands of U.S. dollars)

5. Derivative warrant liabilities

In accordance with IFRS, a contract to issue a variable number of shares fails to meet the definition of equity and must instead be classified as a derivative liability and measured at estimated fair value with changes in estimated fair value recognized in the consolidated statements of operations and comprehensive loss at each period-end. The derivative liabilities will ultimately be converted into the Company’s equity (common shares) when the warrants are exercised, or will be extinguished on the expiry of the outstanding warrants, and will not result in the outlay of any cash by the Company. Immediately prior to exercise, the warrants are remeasured at their estimated fair value. Upon exercise, the intrinsic value is transferred to share capital (the intrinsic value is the share price at the date the warrant is exercised less the exercise price of the warrant). Any remaining fair value is recorded through the statement of operations and comprehensive loss as part of the change in estimated fair value of derivative warrant liabilities.

	December 28, 2016 Warrants						February 14, 2014 Warrants						Total
	# of warrants						# of warrants						# of warrants
	(in thousands)			$			(in thousands)			$			(in thousands)			$
Balance at January 1, 2017		6,388			7,405			3,748			1,733			10,136			9,138
Conversion to equity (common shares) upon exercise of warrants		(2,859	)		(12,399	)		(516	)		(2,834	)		(3,375	)		(15,233	)
Income statement adjustment on exercise of warrants		—			(3,836	)		—			(195	)		—			(4,031	)
Revaluation of derivative warrant liabilities		—			28,784			—			16,028			—			44,812
Balance at March 31, 2017		3,529			19,954			3,232			14,732			6,761			34,686
Conversion to equity (common shares) upon exercise of warrants		(6	)		(23	)		(1,364	)		(5,526	)		(1,370	)		(5,549	)
Income statement adjustment on exercise of warrants		—			(8	)		—			(773	)		—			(781	)
Revaluation of derivative warrant liabilities		—			(4,734	)		—			(1,983	)		—			(6,717	)
Balance at June 30, 2017		3,523			15,189			1,868			6,450			5,391			21,639
Conversion to equity (common shares) upon exercise of warrants		—			—			(20	)		(77	)		(20	)		(77	)
Income statement adjustment on exercise of warrants		—			—			—			(8	)		—			(8	)
Revaluation of derivative warrant liabilities		—			(382	)		—			35			—			(347	)
Balance at September 30, 2017		3,523			14,807			1,848			6,400			5,371			21,207
Balance at January 1, 2016		—			—			4,548			5,499			4,548			5,499
Revaluation of derivative warrant liability		—			—			—			(664	)		—			(664	)
Balance at March 31, 2016		—			—			4,548			4,835			4,548			4,835
Revaluation of derivative warrant liability		—			—			—			(1,361	)		—			(1,361	)
Balance at June 30, 2016		—			—			4,548			3,474			4,548			3,474
Revaluation of derivative warrant liability		—			—			—			951			—			951
Balance at September 30, 2016		—			—			4,548			4,425			4,548			4,425

7

Aurinia Pharmaceuticals Inc.

Notes to Interim Condensed Consolidated Statements

(Unaudited)

For the three and nine month periods ended September 30, 2017 and 2016

(amounts in tabular columns expressed in thousands of U.S. dollars)

Derivative warrant liability related to December 28, 2016 Bought Deal public offering

On December 28, 2016, the Company completed a $28,750,000 Offering. Under the terms of the Offering, the Company issued 12,778,000 units at a subscription price per Unit of $2.25, each Unit consisting of one common share and one-half (0.50) of a common share purchase warrant (a Warrant), exercisable for a period of five years from the date of issuance at an exercise price of $3.00. The holders of the Warrants issued pursuant to this offering may elect, if the Company does not have an effective registration statement registering, or the prospectus contained therein is not available for the issuance of the Warrant Shares to the holder, in lieu of exercising the Warrants for cash, a cashless exercise option to receive common shares equal to the fair value of the Warrants based on the number of Warrants to be exercised multiplied by the weighted average market price less the exercise price with the difference divided by the weighted average market price. If a Warrant holder exercises this option, there will be variability in the number of shares issued per Warrant.

No Warrants were exercised in the three months ended September 30, 2017. Previously, 6,000 of these Warrants were exercised for cash and we issued 6,000 common shares and received cash proceeds of $19,000 during the three-month period ended June 30, 2017, while 2.86 million of these Warrants were exercised for cash and we issued 2.86 million common shares and received cash proceeds of $8.58 million for the three-month period ended March 31, 2017.

At initial recognition on December 28, 2016, the Company recorded a derivative warrant liability of $7,223,000 based on the estimated fair value of the Warrants with allocated share issuance costs of $655,000 recognized as other expense. As at December 31, 2016, the Company revalued the derivative warrant liability to $7,405,000.

As at September 30, 2017, the Company revalued the remaining derivative warrants at an estimated fair value of $14,807,000 (December 31, 2016 – $7,405,000).

The adjustment resulting from the revaluation of the outstanding December 28, 2016 warrants at September 30, 2017 resulted in a decrease in the estimated fair value of the derivative warrant liability for the three months ended September 30, 2017 of $382,000.

The Company uses the Black-Scholes pricing model to estimate fair value. The Company considers expected volatility of its common shares in estimating its future stock price volatility. The risk-free interest rate for the life of the Warrants was based on the yield available on government benchmark bonds with an approximate equivalent remaining term at the time of issue. The life of warrant is based on the contractual term.

The following assumptions were used to estimate the fair value of the derivative warrant liability on September 30, 2017 and December 31, 2016.

	September 30, 2017 $			December 31, 2016 $
Annualized volatility		60	%		76	%
Risk-free interest rate		1.80	%		1.92	%
Life of warrants in years		4.24			5.00
Dividend rate		0	%		0	%
Market price		6.27			2.10
Fair value per Warrant		4.20			1.16

Derivative warrant liability related to February 14, 2014 private placement offering

On February 14, 2014, the Company completed a $52,000,000 private placement. Under the terms of the Offering, the Company issued 18,919,404 units at a subscription price per Unit of $2.7485, each Unit consisting of one common share and one-quarter (0.25) of a common share purchase warrant (a Warrant), exercisable for a period of five years from the date of issuance at an exercise price of $3.2204. The holders of the Warrants issued pursuant to the February 14, 2014 private placement may elect, in lieu of exercising the Warrants for cash, a cashless exercise option to receive common shares equal to the fair value of the Warrants based on the number of Warrants to be exercised multiplied by a five-day weighted average market price less the exercise price with the difference divided by the weighted average market price. If a Warrant holder exercises this option, there will be variability in the number of shares issued per Warrant.

8

Aurinia Pharmaceuticals Inc.

Notes to Interim Condensed Consolidated Statements

(Unaudited)

For the three and nine month periods ended September 30, 2017 and 2016

(amounts in tabular columns expressed in thousands of U.S. dollars)

In the third quarter ended September 30, 2017, a holder of 20,000 Warrants elected this option and the Company issued 11,000 common shares upon the cashless exercise of these Warrants. These Warrants had an estimated fair value of $85,000 on the date of exercise, determined using the Black-Scholes warrant pricing model.

9

Aurinia Pharmaceuticals Inc.

Notes to Interim Condensed Consolidated Statements

(Unaudited)

For the three and nine month periods ended September 30, 2017 and 2016

(amounts in tabular columns expressed in thousands of U.S. dollars)

Of this amount, $77,000 was transferred from derivative warrant liabilities to equity (common shares) and $8,000 was recorded through the statement of operations and comprehensive loss as part of the change in estimated fair value of derivative warrant liabilities. Previously, we issued 749,000 common shares upon the cashless exercise of 1,364,000 2014 Warrants during the three months ended June 30, 2017 and 308,000 common shares upon the cashless exercise of 489,000 2014 Warrants and received proceeds of $88,000 by issuing 27,000 common shares upon the cash exercise of 27,000 2014 Warrants during the three-month period ended March 31, 2017.

As at September 30, 2017, the Company revalued the remaining derivative warrants at $6,400,000 (December 31, 2016 – $1,733,000).

The net adjustment resulting from the revaluation of the outstanding February 14, 2014 warrants at September 30, 2017 and the impact of the revaluation of the exercised warrants immediately before they were exercised resulted in an increase in the estimated fair value of the derivative warrant liabilities for the three months ended September 30, 2017 of $27,000. (September 30, 2016 – increase in derivative warrant liability of $951,000).

The Company considers expected volatility of its common shares in estimating its future stock price volatility. The risk-free interest rate for the expected life of the Warrants was based on the yield available on government benchmark bonds with an approximate equivalent remaining term at the time of the grant. The expected life is based on the contractual term.

The Company uses the Black-Scholes pricing model to estimate fair value. The following assumptions were used to estimate the fair value of the derivative warrant liability on September 30, 2017 and December 31, 2016.

	September 30, 2017 $			December 31, 2016 $
Annualized volatility		67	%		61	%
Risk-free interest rate		1.37	%		1.21	%
Life of warrants in years		1.38			2.12
Dividend rate		0	%		0	%
Market price		6.27			2.10
Fair value per Warrant		3.46			0.46

The derivative warrant liabilities are Level 3 recurring fair value measurements.

The key Level 3 inputs used by management to estimate the fair value are the market price and the expected volatility. If the market price were to increase by a factor of 10%, this would increase the estimated fair value of the obligation by approximately $3,067,000 as at September 30, 2017. If the market price were to decrease by a factor of 10%, this would decrease the estimated fair value of the obligation by approximately $3,008,000. If the volatility were to increase by 10%, this would increase the estimated fair value of the obligation by approximately $650,000. If the volatility were to decrease by 10%, this would decrease estimated fair value of the obligation by approximately $638,000 as at September 30, 2017.

10

Aurinia Pharmaceuticals Inc.

Notes to Interim Condensed Consolidated Statements

(Unaudited)

For the three and nine month periods ended September 30, 2017 and 2016

(amounts in tabular columns expressed in thousands of U.S. dollars)

6. Share Capital

a) Common shares

Authorized

Unlimited common shares without par value

Issued	Common shares
	Number		$
	(in thousands)
Balance as at January 1, 2017		52,808		299,815
Issued pursuant to public offering		25,645		162,324
Issued pursuant to exercise of warrants		85		296
Issued pursuant to exercise of derivative liability warrants (note 5)		3,960		29,543
Issued pursuant to exercise of stock options		1,475		6,720
Balance as at September 30, 2017		83,973		498,698
Balance as at January 1, 2016		32,287		261,645
Issued pursuant to ATM facility		2,618		5,735
Issued pursuant to June 22, 2016 private placement		3,000		5,871
Issued pursuant to the exercise of warrants		879		2,498
Issued pursuant to the exercise of stock options		10		56
Balance as at September 30, 2016		38,794		275,805

On March 20, 2017, the Company completed a public offering of 25,645,000 common shares which included 3,345,000 common shares from the overallotment exercised by the underwriter. The shares were issued at a price of $6.75 per share. Gross proceeds from this Offering were $173,104,000 before deducting the 6% underwriting commission and other offering expenses which totaled $10,780,000.

b) Warrants

Issued	Warrants
	Number (in thousands)			$
Balance as at January 1, 2017		1,257			971
Warrants exercised		(85	)		(65	)
Balance as September 30, 2017		1,172			906
Balance at January 1, 2016		1,368			1,297
Issued pursuant to June 22, 2016 private placement		1,050			769
Warrants exercised		(879	)		(825	)
Warrants expired		(160	)		(155	)
Balance as at September 30, 2016		1,379			1,086

11

Aurinia Pharmaceuticals Inc.

Notes to Interim Condensed Consolidated Statements

(Unaudited)

For the three and nine month periods ended September 30, 2017 and 2016

(amounts in tabular columns expressed in thousands of U.S. dollars)

A summary of the outstanding warrants, including derivative warrants, as at September 30, 2017 is presented below:

Expiry date	Number		Weighted average exercise price $
	(in thousands)
Exercisable in CA$
June 26, 2018 (CA$2.50)		190		2.00
December 31, 2018 (CA$2.00)		14		1.60
		204		1.98
Exercisable in US$
June 22, 2018		968		2.77
February 14, 2019 (note 5)		1,848		3.22
December 28, 2021 (note 5)		3,523		3.00
		6,543		3.00

c) Stock options and compensation expense

A summary of the stock options outstanding as of September 30, 2017 and September 30, 2016 and changes during the nine months periods ended on those dates is presented below:

	September 30, 2017					September 30, 2016
	Number			Weighted average exercise price in CDN$		Number			Weighted average exercise price in CDN$
Outstanding – Beginning of period		4,052			3.74		2,713			4.00
Granted pursuant to Stock Option Plan		2,694			5.42		1,660			3.46
Exercised		(1,475	)		3.42		(10	)		3.50
Forfeited		(422	)		3.54		(195	)		3.94
Expired		—			—		(70	)		7.00
Outstanding – End of period		4,849			4.79		4,098			3.73
Options exercisable – End of period		2,643			4.19		2,715			3.90

On June 21, 2017, the Shareholders of the Company approved the Company’s Stock Option Plan for an additional three years.

The maximum number of Common Shares issuable under the Stock Option Plan is equal to 12.5% of the issued and outstanding Common Shares at the time the Common Shares are reserved for issuance. As at September 30, 2017 there were 83,973,000 Common Shares of the Company issued and outstanding, resulting in a maximum of 10,495,000 options available for issuance under the Stock Option Plan. An aggregate total of 4,665,000 options are presently outstanding in the Stock Option Plan, representing 5.6% of the issued and outstanding Common Shares of the Company.

The Stock Option Plan requires the exercise price of each option to be determined by the Board of Directors and not to be less than the closing market price of the Company’s stock on the day immediately prior to the date of grant. Any options which expire may be re-granted. The Board approves the vesting criteria and periods at its discretion. The options issued under the plan are accounted for as equity-settled share-based payments.

12

Aurinia Pharmaceuticals Inc.

Notes to Interim Condensed Consolidated Statements

(Unaudited)

For the three and nine month periods ended September 30, 2017 and 2016

(amounts in tabular columns expressed in thousands of U.S. dollars)

A summary of the stock options granted pursuant to the Stock Option Plan for the years is presented below:

Nine months ended September 30, 2017
Grant Date	Grant Price US$		Grant Price CDN$		Number
January 20, 2017-New Director (3)		2.74		3.65		10
January 27, 2017-Employee (4)		3.02		3.96		25
February 9, 2017-Chief Executive Officer (6)		3.20		4.21		1,050
February 9, 2017-Officers & Employees (4)		3.20		4.21		836
February 16, 2017-Directors (3)		3.62		4.73		50
April 26, 2017-Employees (5)		6.95		9.45		233
April 26, 2017-Directors (5)		6.95		9.45		100
June 23, 2017-New Director (3)		6.40		8.48		50
July 5, 2017-New Officer (5)		6.24		8.10		280
September 20, 2017-New employees (5)		6.19		7.59		60
						2,694
Nine months ended September 30, 2016
Grant Date	Grant Price US$		Grant Price CDN$		Number
March 23, 2016-Directors (1)		3.00		3.96		60
March 30, 2016-Officers & employees (1)		3.02		3.91		220
March 31, 2016-Officer (1)		2.90		3.76		40
June 17, 2016-Officer (2)		2.48		3.20		1,000
July 12, 2016-Employee (2)		3.05		4.00		100
July 21, 2016-Officer (2)		3.03		3.95		40
						1,460

1. These options vest in equal amounts over 12 months and are exercisable for a term of five years.

2. These options vest in equal amounts over 36 months and are exercisable for a term of five years.

3. These options vest in equal amounts over 12 months and are exercisable for a term of ten years.

4. These options vest in equal amounts over 36 months and are exercisable for a term of ten years.

5. These options vest 12/36 on the 12-month anniversary date and thereafter 1/36 per month over the next 24 months and are exercisable for a term of ten years.

6. One quarter of the options vested immediately, with the remainder of the options vesting each month in equal amounts over a period of 36 months and are exercisable for a term of ten years.

On February 9, 2017, the Company granted 1,050,000 stock options to the Chairman and Chief Executive Officer upon his appointment as Chief Executive Officer of the Company.

On May 2, 2016, the Company granted 200,000 inducement stock options to a new employee pursuant to Section 613 (g) of the TSX Company Manual at a price of $2.92 (CDN$3.66). These options vest in equal amounts over 36 months and are exercisable for a term of five years. In the second quarter ended June 30, 2017, this employee exercised 16,000 of these options to hold 184,000. These options are recorded outside of the Company’s stock option plan.

The Company recognized stock-based compensation expense of $1,068,000 and $3,287,000 for the three and nine month periods ended September 30, 2017 respectively (2016–$548,000 and $1,027,000) with corresponding credits to contributed surplus. For the three and nine months ended September 30, 2017, stock compensation expense has been allocated to research and development expense in the amount of $273,000 and $692,000 respectively (2016–$79,000 and $288,000) and corporate administration expense in the amount of $795,000 and $2,595,000 respectively (2016 – $469,000 and $739,000).

The Company used the Black-Scholes option pricing model to estimate the fair value of the options granted to employees, officers and directors.

13

Aurinia Pharmaceuticals Inc.

Notes to Interim Condensed Consolidated Statements

(Unaudited)

For the three and nine month periods ended September 30, 2017 and 2016

(amounts in tabular columns expressed in thousands of U.S. dollars)

The following weighted average assumptions were used to estimate the fair value of the options granted during the nine month periods ended September 30:

	September 30, 2017			September 30, 2016
Expected volatility		74	%		74	%
Risk-free interest rate		1.31	%		0.59	%
Expected life of options in years		6.6			4.0
Estimated forfeiture rate		24.6	%		16.9	%
Dividend rate		0.0	%		0.0	%
Exercise price	$	4.11		$	2.68
Market price on date of grant	$	4.11		$	2.68
Fair value per common share option	$	2.78		$	1.46

The Company considers historical volatility of its common shares in estimating its future stock price volatility. The risk-free interest rate for the expected life of the options was based on the yield available on government benchmark bonds with an approximate equivalent remaining term at the time of the grant. The expected life is based upon the contractual term, taking into account expected employee exercise and expected post-vesting employment termination behaviour.

Determining the fair value of stock options on grant date, requires judgment related to the choice of a pricing model, the estimation of stock price volatility and the expected term of the underlying instruments. Any changes in the estimates or inputs utilized to determine fair value could result in a significant impact on the Company’s reported operating results, liabilities or other components of shareholders’ equity. The key assumption used by management is the stock price volatility. If the market price or volatility factors were to increase or decrease by a change of 10% there would be no significant impact.

7. Other expense (income)

	Three months ended						Nine months ended
	September 30, 2017 $			September 30, 2016 $			September 30, 2017 $			September 30, 2016 $
Other expense (income) net composed of:
Finance Income
Interest		(399	)		(7	)		(893	)		(20	)
Other
Revaluation adjustment on contingent consideration (note 4)		88			1,146			436			1,272
Foreign exchange loss (gain) and other		(4	)		(48	)		64			8
Loss (gain) on disposal of equipment		—			(13	)		1			(13	)
		84			1,085			501			1,267
		(315	)		1,078			(392	)		1,247

8. Net loss per common share

Basic and diluted net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. In determining diluted net loss per common share, the weighted average number of common shares outstanding is adjusted for stock options and warrants eligible for exercise where the average market price of common shares for the three and nine months ended September 30, 2017 exceeds the exercise price. Common shares that could potentially dilute basic net loss per common share in the future that could be issued from the exercise of outstanding stock options and warrants were not included in the computation of the diluted loss per common share for the three and nine months ended September 30, 2017 and September 30, 2016 because to do so would be anti-dilutive.

14

Aurinia Pharmaceuticals Inc.

Notes to Interim Condensed Consolidated Statements

(Unaudited)

For the three and nine month periods ended September 30, 2017 and 2016

(amounts in tabular columns expressed in thousands of U.S. dollars)

The numerator and denominator used in the calculation of historical basic and diluted net loss amounts per common share are as follows:

	Three months ended						Nine months ended
	September 30, 2017 $			September 30, 2016 $			September 30, 2017 $			September 30, 2016 $
Net loss for the period		(13,120	)		(7,419	)		(67,460	)		(14,962	)
	#			#			#			#
	In thousands			In thousands			In thousands			In thousands
Weighted average common shares outstanding		83,608			36,079			74,519			33,648
	$			$			$			$
Loss per common share (expressed in $ per share)		(0.16	)		(0.21	)		(0.91	)		(0.44	)

The outstanding number, calculated using the treasury stock method, and type of securities that would potentially dilute basic loss per common share in the future and which were not included in the computation of diluted loss per share, because to do so would have reduced the loss per common share (anti-dilutive) for the years presented, are as follows:

	Three months ended				Nine months ended
	September 30, 2017 #		September 30, 2016 #		September 30, 2017 #		September 30, 2016 #
Stock Options		1,253		60		1,198		717
Warrants (equity)		687		135		646		519
Warrants (derivative liability)		2,774		—		2,537		618
		4,714		195		4,381		1,854

9. Segment disclosures

The Company’s operations comprise a single reporting segment engaged in the research, development and commercialization of therapeutic drugs. As the operations comprise a single reporting segment, amounts disclosed in the consolidated financial statements represent those of the single reporting unit. In addition, all of the Company’s long-lived assets are located in Canada.

The following geographic information reflects revenue based on customer location.

	Three months ended				Nine months ended
	September 30, 2017 $		September 30, 2016 $		September 30, 2017 $		September 30, 2016 $
Revenue
United States		—		—		300		—
China		29		29		88		88
Canada		—		2		—		55
Switzerland		—		—		1		—
		29		31		389		143

15

Aurinia Pharmaceuticals Inc.

Notes to Interim Condensed Consolidated Statements

(Unaudited)

For the three and nine month periods ended September 30, 2017 and 2016

(amounts in tabular columns expressed in thousands of U.S. dollars)

10. Supplementary cash flow information

Net change in other operating assets and liabilities:

	Three months ended						Nine months ended
	September 30, 2017 $			September 30, 2016 $			September 30, 2017 $			September 30, 2016 $
Accounts receivable		(130	)		(49	)		(329	)		(51	)
Prepaid expenses and deposits		354			(117	)		(829	)		(1,111	)
Accounts payable and accrued liabilities		3,226			470			874			(401	)
		3,450			(304	)		(284	)		(1,563	)
Interest Received		279			15			661			34

11. Subsequent events

a) Exercise of warrants

Subsequent to September 30, 2017, the Company issued 59,000 common shares upon the cashless exercise of 110,000 derivative warrants.

b) Stock options

Subsequent to September 30, 2017 the Company issued 20,000 common shares upon the exercise of 20,000 stock options for proceeds of $56,000 and granted 5,000 stock options to a new employee at an exercise price of $5.76 (CDN$7.30) per share.

16