Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following management’s discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and the notes thereto included in this Annual Report. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs and involve numerous risks and uncertainties, including but not limited to those described in the “Risk Factors” section of this Annual Report. Our actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Special Note Regarding Forward-Looking Statements” and “Risk Factors.”

The following generally discusses 2021 and 2020 items and year-to-year comparisons between 2021 and 2020. Discussion of historical items and year-to-year comparisons between 2020 and 2019 that are not included in this discussion can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-

K for the fiscal year ended December 31, 2020, filed with the SEC on February 24, 2021 and such comparisons are incorporated herein by reference.

Overview

Aurinia is a commercial-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. In 2021, we commercially launched LUPKYNIS in the United States for the treatment of adult patients with active LN. We continue to conduct pre-clinical, clinical, and regulatory activities to support the voclosporin development program as well as our other assets.

On January 22, 2021, the FDA approved LUPKYNIS in combination with a background immunosuppressive therapy regimen to treat adult patients with active LN.

On August 17, 2021, we announced the acquisition of two novel assets, AUR200 and AUR300. AUR200 is currently undergoing pre-clinical development with projected submission of an Investigational New Drug Application (IND) to the FDA in 2023. It is anticipated that an IND for AUR300 will be submitted during the first half of 2023.

On December 9, 2021, we announced positive topline results from the AURORA 2 continuation study evaluating the long-term safety and tolerability of LUPKYNIS.

Our net product revenue in 2021 increased to $45.5 million due to FDA approval of LUPKYNIS on January 22, 2021. We did not have any products approved for sale before 2021. We expect our net product revenue to continue to increase as we continue to execute on our post approval commercialization strategy for LUPKYNIS.

Our total expenses increased in 2021 to $226.3 million, primarily as a result of additional efforts related to the commercialization of LUPKYNIS, along with an increase in and cost of sales recognized for product sales. We anticipate continuing to spend more in R&D to support our continued development programs for LUPKYNIS and in respect of our two additional assets, AUR200 and AUR300 and our post approval commitments to the FDA.

We ended 2021 with $466.1 million in cash, cash equivalents and short-term investments, which we believe to be sufficient to fund our current business plans.

LUPKYNIS is an orally administered CNI, immunosuppressant, that has the potential to improve near and long-term outcomes in LN when used in combination with MMF (although MMF is not currently approved as such) and steroids. By inhibiting calcineurin, LUPKYNIS reduces cytokine activation and blocks interleukin IL-2 expression and T-cell mediated immune responses. LUPKYNIS also potentially stabilizes podocytes, which can protect against proteinuria. Voclosporin, the active ingredient in LUPKYNIS, is made by a modification of a single amino acid of the cyclosporine molecule. The mechanism of action of LUPKYNIS has been validated with certain earlier generation CNIs for the prevention of rejection in patients undergoing solid organ transplants and in several autoimmune indications, including uveitis, keratoconjunctivitis sicca, psoriasis, rheumatoid arthritis, and for LN in Japan. We believe that LUPKYNIS possesses pharmacologic properties with the potential to demonstrate best-in-class differentiation.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the dates of the balance sheets and the reported amounts of revenue and expenses during the reporting periods. In accordance with U.S. GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances at the time such estimates are made. Actual results may differ materially from our estimates and judgments under different assumptions or conditions. We periodically review our estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates, if any, are reflected in our financial statements prospectively from the date of the change in estimate.

We define our critical accounting policies as those accounting principles generally accepted in the United States that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles. While our

significant accounting policies are more fully described in Note 2 to our financial statements appearing elsewhere in this Annual Report, we believe the following are the critical accounting policies used in the preparation of our financial statements that require significant estimates and judgments.

Product Revenues

In the United States (and territories), we sell LUPKYNIS primarily to specialty pharmacies and specialty distributors. These customers subsequently resell our products to health care providers and patients. Revenues from product sales are recognized when the customer obtains control of our product, which occurs at a point in time, typically upon delivery to the customer.

Our estimates established for variable consideration are calculated based upon utilizing the expected value method. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances, may be subject to constraint and is included in the net sales price only to the extent that it is probable that a significant reversal of the amount of the cumulative revenues recognized will not occur in a future period. Amounts related to such items are estimated at contract inception and updated at the end of each reporting period as additional information becomes available. Actual amounts may ultimately differ from our estimates. If actual results vary, we adjust these estimates, which could have an effect on earnings in the period of adjustment. We use a data aggregator and historical claims to estimate variable consideration for inventory sold to its customers that has not yet been dispensed. As of December 31, 2021, we did not have any material adjustments to estimates based on actual results.

License, Collaboration and Other Revenues

We enter into out-licensing agreements that are within the scope of ASC 606, under which we license certain rights to our product candidates to third parties. The terms of these arrangements typically include payment to us of one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments, payments for manufacturing supply services we provide through our contract manufacturers, and royalties on net sales of licensed products. Each of these payments results in license, collaboration and other revenues, except for revenues from royalties on net sales of licensed products, which are classified as royalty revenues. We recorded $50.0 million for upfront, non-refundable license revenue in 2020 related to the Otsuka agreement. The upfront fee of $50.0 million was fixed consideration for the transfer of the license and was recognized upon transfer of the license in December 2020 and we have not recorded any material amounts of revenue related to its license agreements in 2021.

Research and Development (R&D)Costs: R&D costs are accounted for in accordance with ASC Topic 730, Research and Development, (ASC 730) and are expensed as incurred. R&D costs consist primarily of the cost of salaries, share-based compensation expenses, payroll taxes and other employee benefits, subcontractors and materials used for R&D activities, including nonclinical studies, clinical trials, manufacturing costs and professional services and in process R&D costs associated with acquired or licensed assets that do not have alternative uses and therefore no separate economic value. The costs of services performed by others in connection with the R&D activities, including R&D conducted by others on behalf of us, shall be included in R&D costs and expensed as the contracted work is performed.

We accrue the costs incurred under our agreements with these third parties based on actual work completed in accordance with agreements established with these third parties. We determine the accruals for R&D costs through monitoring invoices received and discussions with internal personnel and external service providers as to the progress or stage of completion of the clinical studies and the agreed-upon fee to be paid for such services. Where contingent milestone payments are due to third parties under R&D arrangements or license agreements, the milestone payment obligations are expensed when the milestone results are probable to be achieved.

Deferred Compensation Arrangements: We have recorded deferred compensation arrangements in liabilities for estimated future employee benefits relating to applicable historical employment arrangements. The deferred compensation arrangements were approved by a resolution of the Board of Directors of the Company on March 8, 2012. Pursuant to ASC Topic 710, we recognize future benefits provided by employee retention arrangements, as deferred compensation, which is recognized when we determine that it is probable to make future payments. The deferred compensation is based on an income approach for the estimated future net revenues of voclosporin using an internal risk-adjusted net present value of the future payments to be made to the individuals.

Initially, these obligations are measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting periods. Subsequent re-measurements as a result of performance obligations we meet or changes in assumptions are recognized in the consolidated statement of operations. There have been no material historical adjustments to amounts recorded in the consolidated statement of operations in prior periods.

Impact of Recently Issued Accounting Pronouncements

For information of recent accounting pronouncements and their impact on our consolidated financial statements or disclosures, see Note 2 "Summary of Significant Accounting Policies" to our consolidated financial statements included in "Financial Statements and Supplementary Data" in this Annual Report.

Results of Operations

Comparison of the Years Ended December 31, 2021 and 2020

The following table sets forth our results of operations for the years ended December 31, 2021 and 2020:

Years Ended December 31,

Revenue:

Operating expenses:

Income tax expense (benefit) 760 (94) 854

Revenues

Total revenues were $45.6 million and $50.1 million for the years ended December 31, 2021 and 2020, respectively. Our total revenues during 2021 primarily consisted of product revenues, net of adjustments, for LUPKYNIS following FDA approval in January 2021. Total revenues during 2020 were primarily due to the upfront payment from Otsuka of $50.0 million recorded as licensing revenue. In 2020, we did not have any drugs approved for commercial sale.

Cost of Sales

Cost of sales were $1.1 million and nil for the years ended December 31, 2021 and 2020, respectively. The increase was primarily the result of commercial sales of LUPKYNIS. In 2020, we did not have any drugs approved for commercial sale and the upfront payment from Otsuka did not have cost of sales. Gross margin for the year ended December 31, 2021 was approximately 98%.

Selling, General and Administrative Expenses

SG&A expenses increased to $171.4 million for the year ended December 31, 2021 compared to $96.0 million for the year ended December 31, 2020. SG&A expenses consisted of the following:

Years Ended December 31, Change

We expense all SG&A costs in the periods in which they are incurred. We expect our SG&A expenses to continue to grow as we continue to build out the commercial and administrative functions to further support the commercialization of LUPKYNIS.

The primary drivers for the increase of $75.5 million in SG&A were due to an increase of $38.9 million in salaries and incentive pay including sales commissions and performance bonuses and employee benefits, and a $12.8 million increase in share-based compensation expense related to the expansion of the commercial and administrative functions to support the launch and commercialization of LUPKYNIS. Also contributing was an increase of $15.0 million in professional fees and services for activities such as patient assistance programs, consulting, recruiting, legal, market research and marketing. Following FDA approval, approximately $7.5 million of salaries and expenses that were previously allocated to R&D have been allocated to SG&A expense related to post approval support of LUPKYNIS. We anticipate continuing to incur significant expenses in SG&A to support the commercialization of LUPKYNIS.

Research and Development Expenses

R&D expenses increased slightly to $51.1 million for the year ended December 31, 2021 compared to $50.3 million for the year ended December 31, 2020. R&D expenses consisted of the following:

Years Ended December 31, Change

Salaries, incentive pay and employee benefits 11,008 11,094 (86)

Travel, insurance, legal fees and other 411 4,016 (3,605)

The primary drivers for the slight increase of $0.8 million in R&D were due to the upfront license and accrued milestone expense totaling $10.0 million related to our recently acquired developmental programs, AUR200 and AUR300 included in the CRO and developmental expenses line item and higher clinical research organization expenses related to our new clinical programs offset by a $3.8 million decrease in clinical supply and distribution costs following the approval of LUPKYNIS, including a reduction in new drug application preparation costs and termination of the dry eye trial during the fourth quarter of 2020. Following FDA approval, approximately $7.5 million of salaries and expenses that were previously allocated to R&D have been allocated to SG&A expense related to post approval support of LUPKYNIS.

We expect our R&D expenses will increase as we continue to develop our pipeline assets. We expect our R&D expenses will increase in future periods as we continue to meet our post approval obligations related to LUPKYNIS with the FDA, to invest in R&D activities related to developing voclosporin and product candidates, and as programs advance into later stages of development and we begin to conduct larger clinical trials. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and R&D is highly uncertain. As a result, we are unable to determine the

duration and completion costs of our R&D projects or when and to what extent we will generate revenue from the commercialization and sale of any of our product candidates.

Amortization of Acquired Intellectual Property and Other Intangible Assets

Amortization of acquired intellectual property and other intangible assets increased to $2.1 million for the year ended December 31, 2021 compared to $1.3 million for the year ended December 31, 2020 mainly due to implementations of internal-use software in 2020 and 2021.

Other Expenses (Income), Net

Other expenses were $0.6 million for the year ended December 31, 2021 compared to $6.8 million for the year ended December 31, 2020. The primary driver for the decrease of $6.2 million in other expenses during 2021 was the revaluation of deferred compensation in 2020 based on changes in estimates.

Interest Income

Interest income was $0.5 million for the year ended December 31, 2021 compared to $1.5 million for the year ended December 31, 2020. The decrease was mainly due to a lower return, as a result of lower interest rates on our 2021 investments, in comparison to 2020.

Liquidity and Capital Resources

As of December 31, 2021, we had cash and cash equivalents of $231.9 million and short-term investments of $234.2 million compared to cash and cash equivalents of $272.4 million and short-term investments of $126.0 million at December 31, 2020. Cash and cash equivalents and our investments are primarily held in U.S. dollars. As of December 31, 2021 and 2020, we had working capital of $472.7 million and $387.4 million, respectively.

We are devoting the majority of our operational efforts and financial resources towards the commercialization and post approval commitments of our approved drug, LUPKYNIS. We are also expending efforts towards our newly acquired assets AUR200 and AUR300. Taking into consideration the cash and cash equivalents and investments as of December 31, 2021, we believe that our cash position is sufficient to fund our current plans which include funding commercial activities, including our FDA related post approval commitments, manufacturing commercial drug supply, funding our supporting commercial infrastructure, conducting our planned R&D programs, investing in our pipeline and funding our supporting corporate and working capital for at least the next few years.

The following table summarizes our cash flows forDecember 31, 2021, 2020 and 2019:

Net cash (used in) provided by:

Cash Flows from Operating Activities

Cash used in operating activities in December 31, 2021 was $157.7 million, compared to $69.9 million, for the year ended December 31, 2020. The increase is primarily due to the commercial infrastructure spend to support the launch and commercialization of LUPKYNIS, payments for inventory, payments to help advance our clinical programs and one-time payments to a related party upon achievement of specific milestones partially offset by an increase in cash receipts. In the prior year, the Company was still in the development phase of LUPKYNIS.

Cash used in operating activities in December 31, 2020 was $69.9 million, compared to cash used in operating activities of $63.6 million for the year ended December 31, 2019. While we had a net loss of $102.7 million in 2020, non-cash components mainly included $17.5 million of share-based compensation. Operating cash flows included a net increase in working capital of

$4.5 million. Net change in working capital during 2020 was largely impacted by changes in inventory, prepaid expenses and deposits, accounts payable and accrued liabilities and changes in our non-current assets and liabilities.

Cash Flows from Investing Activities

Cash used in investing activities for the year ended December 31, 2021 was $103.9 million compared to cash used in investing activities of $158.2 million for the year ended December 31, 2020. Investing activities during 2021 consisted primarily of $439.0 million for purchases of investments of commercial paper and corporate bonds as discussed in Note 4 of the audited consolidated financial statements for the year ended December 31, 2021.

Cash used in investing activities for the year ended December 31, 2020 was $158.2 million compared to cash provided by investing activities of $7.8 million for the year ended December 31, 2019. Investing activities in 2020 consisted primarily of $203.0 million for purchases of investments of commercial paper and corporate bonds as discussed in Note 4 of the audited consolidated financial statements for the year ended December 31, 2020.

Cash Flows from Financing Activities

Cash provided by financing activities for the year ended December 31, 2021 was $221.1 million compared to cash provided by financing activities of $194.4 million for the year ended December 31, 2020. Cash provided by financing activities for the year ended December 31, 2021 increased primarily due to the net proceeds of $196.7 million from our November 2021 ATM facility and $24.0 million of proceeds from the exercise of stock options.

Cash provided by financing activities for the year ended December 31, 2020 of $194.4 million compared to cash provided by financing activities of $243.9 million for the year ended December 31, 2019 decreased mainly due to the net proceeds of $187.7 million from our public offering of common shares compared to 2019, which included $223.1 million net proceeds from public offerings of common shares in 2019.

November 2021 ATM facility

In November 2021, we entered into an Open Market Sale Agreement, or the Sale Agreement, under which we issued 10.2 million common shares, resulting in net proceeds of $196.7 million through December 31, 2021. There have been no sales subsequent to December 31, 2021.

We intend to use the net proceeds to fund our operations, which includes, but is not limited to, clinical development and commercial production of voclosporin (whether for LN or other indications), advance our pipeline, regulatory, additional clinical trials, business development opportunities, capital expenditures and working capital.

In February 2022 we terminated the Sale Agreement and no further sales will occur under the Sale Agreement.

Material cash requirements

As of December 31, 2021, our material short-term cash requirements are approximately $117.3 million. We anticipate our long-term cash requirements to be approximately $163.3 million, which does not include per annum requirements related to human capital, insurance and government payor rebates, each of which we anticipate to fluctuate based on future requirements (those per annum amounts, calculated on a short-term cash requirement basis, amount to approximately $92.9 million). These short and long-term cash requirement estimates are all based on our current operating plans and strategies, and could fluctuate if our plans were to change.

Our material cash requirements include the following:

•Short-term per annum expenses for human capital (which includes estimates for personnel headcount, performance bonuses, salaries, benefits and commissions);

•Government payor rebates and co-payment programs;

•Corporate insurance premiums;

•Cash requirements related to R&D projects, clinical trials, milestone expenses and post-approval related studies and support;

•Short-term and long-term lease liabilities included on our consolidated balance sheet or Note 16, Leases for further details;

•Deferred compensation arrangements included on our consolidated balance sheet or Note 15, Deferred Compensation and Other Non-Current Liabilities for further details; and

•Purchases for inventory and production costs to support our commercial and clinical product supply requirements, as well as capital expenditures. For further details see Note 14, Commitments and Contingencies.

There are several factors that we believe could impact our future cash requirements, including:

•the amount of revenue received from commercial sales of LUPKYNIS and potential future drug candidates;

•the scope, rate of progress, results and costs of our clinical trials, preclinical studies and other related regulatory requirements and activities;

•our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such agreements;

•the number and characteristics of the R&D assets we seek to develop or commercialize;

•the expenses needed to attract and retain skilled personnel as well as any other personnel changes that we may implement; and

•the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing possible patent claims, including litigation costs and the outcome of any such litigation.

Item 7A. Quantitative and Qualitative Disclosures about Market Risks

Our activities can expose us to market risks which include interest rate risk, foreign currency risk, inflation risk and credit risk. Risk management is carried out by management under policies approved by our Board of Directors. Our overall risk management program seeks to minimize adverse effects on our financial performance.

Interest Rate Risk

Financial assets and financial liabilities with variable interest rates expose us to cash flow interest rate risk. We manage our interest rate risk by maximizing the interest income earned on excess funds while maintaining the liquidity necessary to conduct operations on a day-to-day basis. As of December 31, 2021 our investment portfolio includes cash and cash equivalents and investments of $466.1 million that earn interest at market rates. Our investment portfolio is maintained in accordance with its investment policy, which defines allowable investments, specifies credit quality standards and limits the credit exposure of any single issuer. Our investments held during the year were comprised of instruments such as certificates of deposits, money market instruments, obligations issued by the U.S. government and U.S government agencies as well as corporate debt securities. As of December 31, 2021, these instruments have a maturity of one year or less.

As of December 31, 2021 a decrease of 100 basis points on our interest rates of our investments would result in a $0.4 million loss on the fair market value of our portfolio and would be realized at the maturity of our investments.

Accounts receivable, accounts payable and accrued liabilities bear no interest. We do not believe that the results of operations or cash flows would be affected to any significant degree by a sudden change in market interest rates relative to our investment portfolio.

Foreign Currency Risk

We are exposed to financial risk related to the fluctuation of foreign currency exchange rates. Foreign currency risk for the Company is the risk variations in exchange rates between the U.S. dollar and foreign currencies, primarily with the Canadian dollar, Swiss Franc, Great British Pound and Japanese Yen, which could affect our operating and financial results.

As of December 31, 2021, a 10% increase of the Canadian dollar would have increased the net loss by $0.9 million assuming all other variables remained constant. An assumed 10% weakening of the Canadian dollar would have had an equal but opposite effect to the amounts shown above, on the basis all other variables remain constant.

Inflation Risk

Inflation may generally affect us by increasing our cost of labor, commercial support and clinical trial expenditures. Inflation has not had a material effect on our business, financial condition or results of operations during the years ended December 31, 2021 and 2020.

Credit Risk

Our exposure to credit risk generally consists of cash and cash equivalents, investments and accounts receivable. We place our cash and cash equivalents with what we believe to be highly rated financial institutions and invest the excess cash in highly rated investments. Our investment policy limits investments to certain types of debt and money market instruments issued by

institutions primarily with investment grade credit ratings and places restriction on maturities and concentrations by asset class and issuer.

We are subject to credit risk in connection with our accounts receivable due from our two customers which accounted for 99% of our net trade accounts receivable balances as of December 31, 2021. We monitor economic conditions, the creditworthiness of our customers and government regulations and funding, both domestically and abroad. We regularly communicate with our customers regarding the status of receivable balances, including their payment plans and obtain positive confirmation of the validity of the receivables. In 2021, we did not recognize any allowance for doubtful accounts receivable related to credit risk for our customers.

ITEM 8. Financial Statements and Supplementary Data

The information required by this Item 8 is contained on pages F-1 through F-34 of this report and is incorporated herein

by reference.

Page

Report of Independent Registered Public Accounting Firm (PCAOB ID 271) F-1

Consolidated Balance Sheets F-4

Consolidated Statements of Shareholders' Equity F-6

Consolidated Statements of Cash Flows F-7

Notes to Financial Statements F-8

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive and financial officers (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Annual Report on Form 10-K. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2021, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance level.

Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles.

Management has assessed the effectiveness of our internal control over financial reporting based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 framework). Based on our evaluation, management has concluded that our internal control over financial reporting was effective as of December 31, 2021.

The effectiveness of our internal control over financial reporting has been audited by PricewaterhouseCoopers LLP (PwC) an independent registered public accounting firm, as stated in their attestation report herein, which appears in the "Index to Consolidated Financial Statements" in Part IV.

Inherent Limitations of Internal Controls

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control over Financial Reporting

We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.

During the quarter ended December 31, 2021, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

None.

PART III

Item 10. Directors, Executive Officers, and Corporate Governance

The information required by this Item and not set forth below will be set forth in the section headed “—Election of Directors” and “Information Regarding the Board of Directors and Corporate Governance” in our definitive Proxy Statement for our 2022 Annual Meeting of Shareholders (or amended Annual Report on Form 10-K) to be filed with the SEC by April 28, 2022 (our Proxy Statement) and is incorporated in this Annual Report by reference.

We have adopted a code of ethics for directors, officers (including our principal executive officer, principal financial officer and principal accounting officer) and employees, known as the Corporate Code of Ethics and Conduct. The Corporate Code of Ethics and Conduct is available on our website at http://www.auriniapharma.com under the Corporate Governance section of our Investors page. We will promptly disclose on our website (i) the nature of any amendment to the policy that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and (ii) the nature of any waiver, including an implicit waiver, from a provision of the policy that is granted to one of these specified individuals, the name of such person who is granted the waiver and the date of the waiver. Shareholders may request a free copy of the Corporate Code of Ethics and Conduct from c/o Aurinia Pharmaceuticals Inc., #1203-4464 Markham St., Victoria, BC, V8Z 7X8, Attn: Corporate Secretary.

Item 11. Executive Compensation

The information required by this Item will be set forth in the section headed “Executive Compensation” in our Proxy Statement and is incorporated in this Annual Report by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item will be set forth in the section headed “Security Ownership of Certain Beneficial Owners and Management” in our Proxy Statement and is incorporated in this Annual Report by reference.

Information regarding our equity compensation plans will be set forth in the section headed “Executive Compensation” in our Proxy Statement and is incorporated in this Annual Report by reference.

Item 13. Certain Relationships and Related Transactions and Director Independence

The information required by this Item will be set forth in the section headed “Transactions With Related Persons” in our Proxy Statement and is incorporated in this Annual Report by reference.

Item 14. Principal Accountant Fees and Services

The information required by this Item will be set forth in the section headed “—Ratification of Selection of Independent Registered Public Accounting Firm” in our Proxy Statement and is incorporated in this Annual Report by reference.

PART IV

Item 15. Exhibits and Financial Statement Schedules

a.We have filed the following documents as part of this Annual Report:

1.Consolidated Financial Statements.

The following financial statements are filed as part of this report:

Our consolidated financial statements are listed under Part II, Item 8. "Index to Consolidated Financial Statements" in this Annual Report.

2.Financial Statement Schedules

All financial statement schedules have been omitted because they are not applicable, not material or the required information is shown under Part II, Item 8. “Index to Consolidated Financial Statements” in this Annual Report.

3.Exhibits

The following exhibits, as required by Item 601 of Regulation S-K, which are incorporated herein by reference, are filed or furnished with this Annual Report, in each case as indicated therein.

Incorporation by Reference

ExhibitNumber Description Form SEC File No. Exhibit Filing Date

4.2 Reference is made to Exhibits 3.1 and 3.2

21.1* List of Subsidiaries of Registrant

24.1* Power of Attorney (contained in signature page of this report)

101.SCH* Inline XBRL Taxonomy Extension Schema Document

101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

+ Indicates a management contract or compensatory plan.

Item 16. Form 10-K Summary

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AURINIA PHARMACEUTICALS INC.

February 28, 2022 By: /s/ Peter Greenleaf

Peter Greenleaf

Chief Executive Officer

(Principal Executive Officer)

SIGNATURES AND POWER OF ATTORNEY

We, the undersigned directors and officers of Aurinia Pharmaceuticals Inc., hereby severally constitute and appoint Peter Greenleaf and Joseph Miller, and each of them singly, our true and lawful attorneys, with full power to them, and to each of them singly, to sign for us and in our names in the capacities indicated below, any and all amendments to this Annual Report on Form 10-K, and to file or cause to be filed the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of us might or could do in person, and hereby ratifying and confirming all that said attorneys, and each of them, or their substitute or substitutes, shall do or cause to be done by virtue of this Power of Attorney.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name Title Date

/s/ Peter Greenleaf Chief Executive Officer, Director February 28, 2022

Peter Greenleaf (Principal Executive Officer)

/s/ Joseph Miller Chief Financial Officer February 28, 2022

Joseph Miller (Principal Financial and Accounting Officer)

/s/ Brinda Balakrishnan Director February 28, 2022

Brinda Balakrishnan, M.D., Ph.D.

/s/ Daniel Billen Director February 28, 2022

Daniel Billen, Ph.D.

/s/ Joseph P. Hagan Director February 28, 2022

Joseph P. Hagan

/s/ David R.W. Jayne Director February 28, 2022

David R.W. Jayne, M.D., FRCP, FRCPE, FMedSci

/s/ Jill Leversage Director February 28, 2022

Jill Leversage

/s/ R. Hector MacKay-Dunn Director February 28, 2022

R. Hector MacKay-Dunn, J.D., Q.C.

/s/ George M. Milne, Jr. Chairman February 28, 2022

George M. Milne, Jr., Ph.D.

/s/ Timothy P. Walbert Director February 28, 2022

Timothy P. Walbert

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Aurinia Pharmaceuticals Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Aurinia Pharmaceuticals Inc. and its subsidiaries (together, the Company) as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive loss, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the consolidated financial statements). We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Measurement of deferred compensation liability

As described in Notes 2 and 15 to the consolidated financial statements, the Company recorded deferred compensation and other non-current liabilities of $16 million as of December 31, 2021 which primarily included the deferred compensation liability. The deferred compensation arrangements are the result of a resolution of the board of directors of the Company dated March 8, 2012 whereby certain executive officers at that time were provided with future potential employee benefit obligations for remaining with the Company, for a certain period of time, and these obligations were also contingent on the occurrence of uncertain future events. The Company recognizes future benefits provided by employee retention arrangements as deferred compensation liability when the Company determines that it is probable to make future payments. The deferred compensation liability, which is based on the income approach, is the present value of the future payments to be made to the individuals (the model). These future payments are based on royalty rates applied to estimated future net revenues of voclosporin (estimated future net revenues). The royalty rates applied to the estimated future net revenues are dependent on the type of net revenue earned. Significant judgments and estimates are used in determining the deferred compensation liability which include the determination of assumptions related to estimated future net revenues and the discount rate. The estimated future net revenues for the United States includes assumptions related to the number of patients being treated, dosing adjustments, duration of treatment, timing of generics and competitors entering the market, market penetration and potential future use in new indications which management developed with the assistance of an internal scientific team and third party consultants (management’s specialists).

The principal considerations for our determination that performing procedures relating to measurement of the deferred compensation liability is a critical audit matter are (i) the significant judgment by management, including the use of management’s specialists, when developing the assumptions to determine the deferred compensation liability, which in turn led to; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures related to the assumptions used by management and management’s specialists including the estimated future net revenues for the United States and the discount rate; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the measurement of the deferred compensation liability, including controls over management’s development of the number of patients being treated, dosing adjustments, duration of treatment, timing of generics and competitors entering the market, market penetration, potential future use in new indications and discount rate assumptions utilized in the measurement of the deferred compensation liability. These procedures also included, among others (i) evaluating and testing management’s process for determining the deferred compensation liability; (ii) evaluating the appropriateness of the model used; and (iii) testing the completeness and accuracy of underlying data used in the determination of the deferred compensation liability. The work of management’s specialists was used in performing the procedures to evaluate the estimated future net revenues which included evaluating the reasonableness of the assumptions relating to the number of patients being treated, dosing adjustments, duration of treatment, timing of generics and competitors entering the market, market penetration and potential future use in new indications. As a basis for using this work, the qualifications of management’s specialists were understood and the Company’s relationship with management’s specialists was assessed. The procedures performed also included evaluation of the model and assumptions used by management’s specialists, tests of the data used by management’s specialists, and an evaluation of the findings of management’s specialists. The evaluation of the

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number of patients being treated, dosing adjustments, duration of treatment, timing of generics and competitors entering the market, market penetration and potential future use in new indications included considering available

industry and third party data, including scientific and market studies, that management’s specialists used. Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discount rate assumption.

/s/ PricewaterhouseCoopers LLP

Chartered Professional Accountants

Edmonton, Canada

February 25, 2022

We have served as the Company's auditor since at least 1997. We have not been able to determine the specific year we began serving as auditor of the Company.

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AURINIA PHARMACEUTICALS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

As of December 31,

Assets

Current assets:

Cash, cash equivalents and restricted cash (2) $ 231,900 $ 272,350

Accounts receivable, net (2) 15,414 —

Prepaid expenses and other current assets (7) 12,506 7,171

Non-current assets:

Long-term investments (4) — 24,380

Acquired intellectual property and other intangible assets, net (9) 8,404 9,332

Liabilities and Shareholders' Equity

Current liabilities:

Non-current liabilities:

Deferred compensation and other non-current liabilities (15) 15,950 16,295

Commitments and Contingencies (14)

Shareholders’ Equity:

Accumulated other comprehensive loss (852) (805)

Total liabilities and shareholders' equity $ 543,367 $ 463,661

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

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Years ended December 31,

Revenue:

Product revenue, net (2) $ 45,488 $ — $ —

Operating expenses:

Cost of sales (2) 1,091 — —

Other comprehensive loss:

Basic and diluted loss per common share (19) $ (1.40) $ (0.87) $ (0.95)

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

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Shares Amount

Exercise of warrants (17) 1 2 (1) — — 1

Other comprehensive income — — — (47) — (47)

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

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Years ended December 31,

Cash flows from operating activities:

Depreciation of property and equipment (8) 663 82 33

Upfront license and milestone expense (11) 10,000 — —

Net changes in operating assets and liabilities:

Prepaid expenses and other current assets (5,335) 2,559 (1,826)

Non-current assets 247 — —

Cash flows from investing activities:

Upfront lease payment (16) (11,838) — —

Upfront license payment (11) (6,000) — —

Purchase of long-lived assets (297) (5,584) (85)

Additions to internal use-software implementation costs (1,198) (1,675) —

Capitalized patent costs (6) (84) (16)

Cash flows from financing activities:

Proceeds from exercise of warrants (17) 365 1 6,988

Supplemental cash flow information:

Cash paid for legal settlement $ — $ — $ (100)

Cash paid for taxes $ (257) $ (261) $ (59)

Restricted cash 257 — —

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

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1. Organization and Description of Business

Aurinia Pharmaceuticals Inc. (Aurinia) or the Company is a commercial-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 has commercially launched LUPKYNIS in the United States for the treatment of adult patients with active LN, and continues to conduct pre-clinical, clinical, and regulatory activities to support the voclosporin development program

On January 22, 2021, the U.S. Food and Drug Administration (FDA) approved LUPKYNIS in combination with a background

immunosuppressive therapy regimen to treat adult patients with active LN.

On August 17, 2021, the Company announced the addition of two novel assets AUR200 and AUR300. AUR200 is currently undergoing pre-clinical development with projected submission of an Investigational New Drug Application (IND) to the FDA in 2023. The Company anticipates that an IND for AUR300 will be submitted during the first half of 2023.

Aurinia's head office is located at #1203-4464 Markham Street, Victoria, British Columbia, Canada and its registered office is located at #201, 17873-106 A Avenue, Edmonton, Alberta. Aurinia also has a U.S. Commercial office located at 77 Upper Rock Circle, Rockville, Maryland, United States.

Aurinia 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 until July 30, 2021. As of July 30, 2021, the Company's common shares no longer trade on the TSX following the voluntary delisting by the Company and are solely traded on the Nasdaq.

2. Summary of Significant Accounting Policies

Basis of presentation: The Company follows accounting standards established by the Financial Accounting Standards Board (FASB) to ensure consistent reporting of financial condition, results of operations, and cash flows. References to generally accepted accounting principles (GAAP) or U.S. GAAP in these footnotes are to the FASB Accounting Standards Codification (ASC or the Codification). At the end of the second quarter of 2020, the Company determined that it no longer qualified as a Foreign Private Issuer under the SEC rules. As a result, beginning January 1, 2021 the Company is required to report with the SEC on domestic forms and comply with domestic company rules in the United States.

Principles of consolidation: These financial statements present the consolidated financial position of the Company and its wholly owned subsidiaries, Aurinia Pharma U.S., Inc. (Delaware incorporated) and Aurinia Pharma Limited (UK incorporated). as of December 31, 2021 and 2020, and the results of operations and cash flows for the three years ended December 31, 2021, 2020 and 2019. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of estimates: The preparation of the accompanying financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from those estimates.

Segment information: The Company operates in one operating segment engaged in the research, development and commercialization of therapeutic drugs in which revenues are derived from product, license, and contract revenues. Operating segments are defined as components of an enterprise where separate financial information is evaluated regularly by the chief operating decision maker (CODM), the chief executive officer, in deciding how to allocate resources and assessing performance. The Company's CODM allocates resources and assesses performance based upon discrete financial information at the consolidated level.

Functional currency: The functional currency for the Company and all of its foreign subsidiaries is determined to be the U.S. dollar, therefore there is no currency translation adjustment upon consolidation as the remeasurement of gains or losses are

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recorded in the consolidated statement of operations. All assets and liabilities denominated in a foreign currency are remeasured into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are remeasured at the average exchange rate during the period. Foreign exchange gains and losses arising on translation or settlement of a foreign currency denominated monetary item are included in the consolidated statements of operations.

Fair value measurements: The Company's financial instruments consist primarily of cash and cash equivalents, short-term and long-term investments, accounts receivable, accounts payable and accrued liabilities. The Company has determined the carrying values of these financial instruments approximate their fair value because of the relatively short period to maturity of the instruments.

Financial assets and liabilities are categorized based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

Concentration of credit risk: Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of cash and cash equivalents and short term investments. The Company attempts to minimize the risks related to cash and cash equivalents and investments by investing in a range of financial instruments. The Company established guidelines related to credit ratings and maturities intended to safeguard principal balances, earn a return on investments and to maintain liquidity. The Company's investment portfolio is maintained in accordance with its investment policy, which defines allowable investments, specifies credit quality standards and limits the credit exposure of any single issuer. The Company does not enter into any investment transaction for trading or speculative purposes.

The Company’s investment policy limits investments to certain types of instruments such as certificates of deposit, money market instruments, obligations issued by the U.S. government and U.S. government agencies as well as high quality corporate debt securities, and places restrictions on maturities and concentration by type and issuer. The Company maintains cash balances in excess of amounts insured by the Federal Deposit Insurance Corporation and Canada Deposit Insurance Corporation and concentrated within a limited number of financial institutions. The accounts are monitored by management to mitigate the risk.

The Company is exposed to financial risk related to the fluctuation of foreign currency exchange rates which could have a material effect on its future operating results or cash flows. Foreign currency risk is the risk that variations in exchange rates between the U.S. dollar and foreign currencies, primarily with the Canadian dollar, Swiss France, Great British Pound and Japanese Yen will affect the Company's operating and financial results. The Company holds the majority of its cash and cash equivalents in U.S. dollars and the majority of its expenses, including commercial and clinical trial costs are also denominated in U.S. dollars, which mitigates the risk of material foreign exchange fluctuations.

Major customers: The Company currently has three main customers for the U.S. commercial sales of LUPKYNIS and one customer for sales of voclosporin in the European Union, Japan, as well as United Kingdom, Russia, Switzerland, Norway, Belarus, Iceland, Liechtenstein and Ukraine. Revenues from two customers accounted for approximately 56% and 43% of the Company's total revenues for the year ending December 31, 2021. Two individual customers accounted for 99% of the Company’s net trade accounts receivable balances as of December 31, 2021.The Companymonitors economic conditions, the creditworthiness of customers and government regulations and funding, both domestically and abroad. The Company regularly communicates with its customers regarding the status of receivable balances, including their payment plans and obtains positive confirmation of the validity of the receivables.

COVID-19: U.S. GAAP requires management to make estimates and assumptions that affect amounts reported in the annual consolidated financial statements and accompanying notes. The annual consolidated financial statements reflect all adjustments of a normal, recurring nature that are, in the opinion of management, necessary for a fair presentation of results for these interim periods. The full extent to which the novel coronavirus (COVID-19) pandemic will directly or indirectly impact the Company’s financial statements related to items such as investments (Note 4), inventories (Note 6), income taxes (Note 13), leases (Note 16), share-based compensation (Note 18) or results of operations will depend on future developments that are uncertain at this time. As events continue to evolve and additional information becomes available, the Company’s estimates may change materially in future periods.

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Cash and cash equivalents: The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist primarily of operating accounts, money market funds and bank money market accounts which are recorded at fair value. Cash and cash equivalents totaled $231.9 million as of December 31, 2021. The Company has invested its cash reserves in short term U.S. dollar denominated, fixed rate, highly liquid and highly rated financial instruments such as treasury notes, banker acceptances, bank bonds, and term deposits.

Restricted cash: Restricted cash consists of the 2021 Employee Share Purchase Plan (ESPP) deposits of $0.3 million and nil as of December 31, 2021 and December 31, 2020, respectively.

Investments: The Company classifies its debt securities as either held to maturity or available-for-sale in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 320, Investments — Debt Securities. Investments classified as held to maturity are carried at amortized cost when management has the positive intent and ability to hold them to maturity. Investments classified as available-for-sale are carried at fair value with unrealized gains and losses reported in other comprehensive income/loss within shareholders’ equity. Realized gains and losses on held to maturity and available-for-sale securities are recorded in other income (expense), net. Interest income (expense) is recorded separately on the consolidated statements of operations.The cost of securities sold is based on the specific-identification method.

Accounts receivable, net: Accounts receivables are stated at their net realizable value less an allowance for doubtful accounts. As of December 31, 2021, accounts receivable, net are $15.4 million. We estimate the allowance for doubtful accounts using current expected credit loss model, or CECL model. Under the CECL model, the allowance for doubtful accounts reflects the net amount expected to be collected from the account receivables. We evaluate the collectability of these cash flows based on the asset’s amortized cost, the risk of loss even when that risk is remote, losses over an asset’s contractual life, and other relevant information available to us. Accounts receivable balances are written off against the allowance when it is probable that the receivable will not be collected. Given the nature of our accounts receivable, we determined that an allowance for doubtful accounts was nil at December 31, 2021.

Accounts receivables are recorded net of estimates of variable consideration for which reserves are established and which result from discounts that are offered within contracts between us and two specialty pharmacies and one specialty distributor in the United States. These reserves are recorded as a reduction of accounts receivable.

Intangible assets: Intangible assets are amortized over their useful lives using methods that correlate to the pattern in which the economic benefits are expected to be realized. All intangible assets are amortized on a straight-line basis. The Company evaluates the estimated remaining useful life of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. The carrying amounts of these assets are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Refer to the long-lived assets section below for impairment considerations.

Acquired intellectual property and patents

External patent costs specifically associated with preparing, filing, obtaining and protecting patents are capitalized and amortized straight-line over the shorter of the estimated useful life and the patent life, commencing in the year of the grant of the patent. Other intellectual property expenditures are recorded as R&D expenses on the consolidated statements of operations as incurred. Patents do not contain the option to extend or renew.

Separately acquired intellectual property is shown at historical cost. The initial recognition of a reacquired right is recognized as an intangible asset measured on the basis of the remaining contractual term of the related contract. If the terms of the contract giving rise to a reacquired right are favorable relative to the terms of current market transactions for the same or similar items, the difference is recognized as a gain or loss in the consolidated statements of operations and comprehensive loss. Purchased intellectual property and reacquired rights are capitalized and amortized on a straight-line basis in the consolidated statements of operations and comprehensive loss over periods ranging from 10 to 20 years.

Property, plant and equipment: Property, plant and equipment are recorded at cost and is depreciated using the straight-line method. Expenditures for additions are capitalized and leasehold improvements are amortized over the lesser of the expected lease term or the estimated useful life of the improvement. Expenditures for maintenance and repairs are charged to expense as incurred; however, maintenance and repairs that improve or extend the life of existing assets are capitalized. The carrying

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amount of assets disposed of and the related accumulated depreciation are eliminated from the accounts in the year of disposal. Gains or losses from property and equipment disposals are recognized in the year of disposal.

Recoverability and impairment of long-lived assets: ASC Topic 360 requires long-lived assets, including definite-lived intangible assets, to be evaluated for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The judgments made related to the expected useful lives of long-lived assets, definitions of lease terms and the Company’s ability to realize undiscounted cash flows in excess of the carrying amounts of these assets are affected by factors such as the ongoing maintenance and improvements of the assets, changes in economic conditions, changes in usage or operating performance and other factors. If indicators are present, assets are grouped to the lowest level for which identifiable cash flows are largely independent of other asset groups and cash flows are estimated for each asset group over the remaining estimated life of each asset group. If the undiscounted cash flows estimated to be generated by the asset group are less than the asset’s carrying amount, impairment is recognized in the amount of excess of the carrying value over the fair value. The Company recorded no asset impairment charges during the years ended December 31, 2021, 2020 and 2019.

Leases: The Company assesses all contracts at inception to determine whether a lease exists. The Company’s leases are all classified either as operating or finance leases per ASC 842. Certain leases have lease and non-lease components, which are accounted for as a single lease component.

The Company leases office space under operating leases that typically provide for the payment of minimum annual rentals and may include scheduled rent increases. The Company also entered into a manufacturing agreement that contained an embedded lease of a dedicated manufacturing facility that will be accounted for as a financing lease once lease commencement begins (see Note 16).

The Company adopted ASC Topic 842 on January 1, 2019, which requires lessees to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset (ROU asset), which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASC 842 also requires lessees to classify leases as either finance or operating leases based on whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification is used to evaluate whether the lease expense should be recognized based on an effective interest method or on a straight-line basis over the term of the lease.

The Company elected, for all asset classes, the practical expedient that allows lessees to treat the lease and non-lease components of leases as a single lease component. Leases with an initial term of 12 months or less are not recorded on the Company's consolidated balance sheet, and fixed costs associated with these arrangements are disclosed in Note 16 of the financial statements.

The Company has elected to recognize lease incentives, such as tenant improvement allowances, at the lease commencement date as a reduction of the ROU asset and lease liability until paid to the Company by the lessor, to the extent that the lease provides a specified fixed or maximum level of reimbursement, and the Company is reasonably certain to incur reimbursable costs at least equaling such amounts.

Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company used the incremental borrowing rate for all of its leases, as the implicit interest rate was not readily determinable. In determining the Company’s incremental borrowing rate of each lease, the Company considered recent rates on secured borrowings, observable risk-free interest rates and credit spreads correlating to the Company's creditworthiness, the impact of collateralization and the term of each of the Company's lease agreements. The lease terms range from 12 to 128 months.

The table in Note 16 provides supplemental balance sheet information related to the operating lease ROU assets and lease liabilities.

Deferred Compensation Arrangements: The Company has recorded deferred compensation arrangements in liabilities for estimated future employee benefits relating to applicable historical employment arrangements. The deferred compensation arrangements are part of the resolution of the board of directors of the company dated March 8, 2012. Pursuant to ASC Topic 710, the Company recognizes future benefits provided by employee retention arrangements, as deferred compensation, which is

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recognized when the Company determines that it is probable to make future payments. The deferred compensation is based on an income approach for the estimated future net revenues of voclosporin using an internal risk-adjusted net present value of the future payments to be made to the individuals.

The Company is required to use judgment to determine the most appropriate model to use to measure the deferred compensation liability and is required to use significant judgment and estimates in determining the inputs into the model. The royalty rates applied to the net revenue are dependent on the type of net revenue earned, which includes product sales and royalty revenue. There are multiple unobservable and inherently uncertain inputs. The determination of this deferred compensation is subject to significant judgments and estimates in determining the assumptions related to future net revenues and the determination of the discount rate for the net present value calculation. The net revenue estimate for the United States includes assumptions related to the number of patients being treated (including patients who initially start taking the product but subsequently discontinue), dosing adjustments, duration of treatment, timing of generics and competitors entering the market, market penetration and potential future use in new indications. Additional variables for ex-US geographies include timing of approval in ex-US territories, escalating royalty rates, net pricing, government payor coverage of the product, and market penetration. In determining the estimate for ex-US revenues, the Company relies heavily on forecasts provided by its collaboration partner.

Management developed the model and inputs in conjunction with their internal scientific team and utilized third party scientific studies, information provided by third party consultants engaged by the Company, information from medical and pharmacy claims databases and research papers as sources to develop their inputs; application and usage of these inputs is also informed by product sales and distribution data, ongoing market research fielded by the company and third parties, and our continually evolving understanding of the market as our US launch progresses. Management believes the liability is based on reasonable assumptions; however, these assumptions may be incomplete or inaccurate and unanticipated events and circumstances may occur. There are numerous significant inputs into the model all of which individually or in combination may result in a material change to the obligation.

Initially, these obligations are measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting periods. Subsequent re-measurements as a result of performance obligations met by the Company or changes in assumptions are recognized in the consolidated statement of operations.

Contingencies:In the normal course of business, the Company may be subject to loss contingencies, such as legal proceedings, amounts arising from contractual arrangements and claims arising out of the Company’s business that cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, product and environmental liability, and tax matters. In accordance with ASC Topic 450, Accounting for Contingencies, (ASC 450), the Company records accruals for such loss contingencies when it is probable that a liability will be incurred, and the amount of loss can be reasonably estimated. The Company, in accordance with this guidance, does not recognize gain contingencies until realized.

Common Shares: The Company’s shares have no par value and therefore, upon issuance of shares, all amounts related to the shares are credited to common shares on the balance sheet. The value of common shares includes cash amounts received for the shares and the fair value of equity awards and warrants. Amounts for common shares are offset by share issue costs associated with equity offerings.

Inventories: Inventories are valued under a standard costing methodology on a first-in, first-out basis and are stated at the lower of cost or net realizable value. The Company capitalizes inventory costs related to products to be sold in the ordinary course of business. The Company makes a determination of capitalizing inventory costs for a product based on, among other factors, status of regulatory approval, information regarding safety, efficacy and expectations relating to commercial sales and recoverability of costs. Capitalized costs of inventories mainly include third party manufacturing costs, transportation, storage, insurance, depreciation and allocated internal labor. The Company assesses recoverability of inventory each reporting period to determine any write down to net realizable value resulting from excess or obsolete inventories.

Revenue Recognition: Pursuant to Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606), the Company recognizes revenue when a customer obtains control of promised goods or services. The Company records the amount of revenue that reflects the consideration that it expects to receive in exchange for those goods or services. Revenue is recognized through a five-step process: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations

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in the contract; and (v) recognize revenue when (or as) a performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, the Company assesses the goods or services promised within each contract and determines those that are performance obligations. Revenue is recognized for the applicable performance element when each distinct performance obligation is satisfied.

Product Revenues

In the United States (and territories), the Company sells LUPKYNIS primarily to specialty pharmacies and specialty distributors. These customers subsequently resell the Company's products to health care providers and patients. Revenues from product sales are recognized when the customer obtains control of our product, which typically occurs upon delivery to the customer.

Reserves for discounts and allowances: Product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to our customer) or a liability (if the amount is payable to a party other than our customer). The Company's estimates of reserves established for variable consideration are calculated based upon utilizing the expected value method. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances, may be subject to constraint and is included in the net sales price only to the extent that it is probable that a significant reversal of the amount of the cumulative revenues recognized will not occur in a future period. Actual amounts may ultimately differ from the Company's estimates. If actual results vary, the Company adjust these estimates, which could have an effect on earnings in the period of adjustment.

More specifically, these adjustments include the following:

Prompt Pay Discounts: The Company generally provides invoice discounts on product sales to its customers for prompt payment. The Company estimates that its customers will earn these discounts and fees, and deducts the full amount of these discounts and fees from its gross product revenues and accounts receivable at the time such revenues are recognized.

Customer Fees: The Company pays certain customer fees, such as fees for certain data that customers provide to the Company. The Company records fees paid to its customers as a reduction of revenue, unless the payment is for a distinct good or service from the customer and the Company can reasonably estimate the fair value of the goods or services received. If both conditions are met, the Company records the consideration paid to the customer as SG&A expense.

Government Rebates: The Company estimates its government rebates, primarily Medicaid and Medicare rebates based upon a range of possible outcomes that are probability-weighted for the estimated payor mix. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability that is included in accrued expenses on the consolidated balance sheet.

Medicaid rebates relate to the Company's estimated obligations to states under established reimbursement arrangements. Rebate accruals are recorded in the same period that the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a liability, which is included in other current liabilities. The Company's liability for Medicaid rebates consists of estimates for claims that a state will make for the current quarter, claims for prior quarters that have been estimated for which an invoice has not been received, invoices received for claims from the prior quarters that have not been paid and an estimate of potential claims that will be made for inventory that exists in the distribution channel at period end.

For Medicare, the Company also estimates the number of patients in the prescription drug coverage gap for whom the Company will owe an additional liability under the Medicare Part D program. The Company’s liability for these rebates consists of invoices received for claims from prior quarters that have not been paid or for which an invoice has not yet been received, estimates of claims for the current quarter, and estimated future claims that will be made for product that has been recognized as revenue, but remains in the distribution channel inventories at the end of each reporting period.

Co-payment Assistance: Co-payment assistance represents financial assistance to qualified patients, assisting them with prescription drug co-payments required by insurance. The program is administered by the specialty pharmacies. The calculation

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of the accrual for co-payment assistance is based on the co-payments administered on the Company's behalf by the specialty pharmacies.

License, Collaboration and Other Revenues

The Company enters into out-licensing agreements that are within the scope of ASC 606, under which it licenses certain rights to its product candidates to third parties. The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments, payments for manufacturing supply services the Company provides through its contract manufacturers, and royalties on net sales of licensed products. Each of these payments results in license, collaboration and other revenues, except for revenues from royalties on net sales of licensed products, which are classified as royalty revenues.

In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. As part of the accounting for these arrangements, the Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. The Company uses key assumptions to determine the stand-alone selling price, which may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success.

Licenses of Intellectual Property: If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from non-refundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Manufacturing Supply Services: Arrangements that include a promise for future supply of drug substance or drug product for either clinical development or commercial supply at the licensee’s discretion are generally considered as options. The Company assesses if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations. If the Company is entitled to additional payments when the licensee exercises these options, any additional payments are recorded in license, collaboration and other revenues when the licensee obtains control of the goods, which is typically upon delivery.

Milestone Payments: At the inception of each arrangement that includes development or commercial sales milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, collaboration and other revenues and earnings in the period of adjustment. Any consideration related to sales-based royalties (and sales-based milestones) will be recognized when the related sales occur.

Research, Development and/or Manufacturing Services: The Company’s agreements may include R&D or manufacturing services to be performed by the Company on behalf of the counterparty. If these services are determined to be distinct from the other promises or performance obligations identified in the arrangement, the Company recognizes the transaction price allocated to these services as revenue over time based on an appropriate measure of progress when the performance by the Company does not create an asset with an alternative use and the Company has an enforceable right to payment for the performance completed to date. If these services are determined not to be distinct from the other promises or performance

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obligations identified in the arrangement, the Company recognizes the transaction price allocated to the combined performance obligation as the related performance obligations are satisfied.

Costs to obtain a contract: As the majority of our contracts are short-term in nature, sales commissions are generally expensed when incurred as the amortization period would have been less than one year. There costs are recorded within SG&A. For contracts that extend beyond one year, the incremental expense recognition matches the recognition of related revenue,

Cost of sales: Cost of sales consist primarily of cost of inventories for LUPKYNIS, which mainly includes third party manufacturing costs, transportation, storage, insurance and allocated internal labor and depreciation.

Research and development costs: R&D costs are accounted for in accordance with ASC Topic 730, Research and Development, (ASC 730) and are expensed as incurred. R&D costs consist primarily of the cost of salaries, share-based compensation expenses, payroll taxes and other employee benefits, subcontractors and materials used for R&D activities, including nonclinical studies, clinical trials, manufacturing costs and professional services. The costs of services performed by others in connection with the R&D activities of the Company, including R&D conducted by others on behalf of the Company, shall be included in R&D costs and expensed as the contracted work is performed.

R&D expenses for the years ended December 31, 2021, 2020 and 2019 were $51.1 million, $50.3 million and $52.9 million, respectively, and are included in total cost of sales and operating expenses on the accompanying consolidated statements of operations.

Selling, general and administrative expenses: The Company's SG&A expenses include commercial and allocated administrative personnel, corporate facility and external costs required to support the marketing and sales of LUPKYNIS. These

SG&A costs include corporate facility operating expenses and allocated depreciation; commercial, marketing, pharmacovigilance, publications, tradeshows, advisory boards, samples and operations in support of LUPKYNIS; patient assistance program costs; human resources; finance, legal, information technology and support personnel expenses; and other corporate costs such as telecommunications, insurance, audit and government affairs. We expense SG&A expenses as they are incurred.

The Company uses a third-party logistics provider to perform a full order to cash service, which includes warehousing and shipping directly to two specialty pharmacies and receiving orders from a specialty distributor for shipping to hospitals, on our behalf. As such, since these costs are not integral to bringing the inventories to a salable condition, we elected not to treat shipping and handling costs as a fulfillment activity. Shipping and handling costs related to order fulfillment are recorded in SG&A expenses.

SG&A expenses for the years ended December 31, 2021, 2020 and 2019 were $171.4 million, $96.0 million and $22.3 million, respectively, and are included in total cost of sales and operating expenses on the accompanying consolidated statements of operations.

Shared-based compensation: The Company follows ASC Topic 718, Compensation - Stock Compensation (ASC 718), which requires the measurement and recognition of compensation expense, based on estimated fair values, for all share-based awards made to employees and directors. The Company records compensation expense based on the fair value on the grant date for all share-based payments related to stock options, performance awards, restricted stock units and purchases under the Company's ESPP. The estimated fair value of service-based awards is determined using option pricing models that use unobservable inputs and is generally amortized on a straight-line basis over the requisite service period and is recognized based on the proportionate amount of the requisite service period that has been rendered during each reporting period. The estimated fair value of performance-based awards is measured on the grant date and is recognized when it is determined that it is probable that the

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performance condition will be achieved. The Company has elected a policy to estimate forfeitures based on historical forfeiture experience.

Income taxes:The Company accounts for income taxes under the asset and liability method in accordance with ASC Topic 740, Income Taxes (ASC 740). Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that such tax rate changes are enacted. The portion of any deferred tax asset for which it is more likely than not that a tax benefit will not be realized must then be offset by recording a valuation allowance. Financial statement recognition of a tax position taken or expected to be taken in a tax return is determined based on a more-likely-than-not threshold of that position being sustained. If the tax position meets this threshold, the benefit to be recognized is measured as the largest amount that is more likely than not to be realized upon ultimate settlement. The Company’s policy is to record interest and penalties on uncertain tax positions as a component of income tax expense.

3. Recent Accounting Pronouncements

Recently adopted accounting pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard requiresthat credit losses be reported using an expected losses model rather than the incurred losses model that is currently used, and establishesadditional disclosures related to credit risks. For available-for-sale debt securities with unrealized losses, these standards now require allowances tobe recorded instead of reducing the amortized cost of the investment. These standards limit the amount of credit losses to be recognized foravailable-for-sale debt securities to the amount by which carrying value exceeds fair value and requires the reversal of previously recognized creditlosses if fair value increases. The adoption of the standard as of January 1, 2020 did not have a material impact on the Company’s consolidated financialstatements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirement for Fair Value Measurement. Topic 820 requires to disclose transfers into and out of Level 3 of the fair value hierarchy and purchases and issues of Level 3 assets and liabilities. For investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when the restrictions from redemptions might lapse only if the investee has communicated the timing to the entity or announced the timing publicly. The new standard also amends that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. The new standard is effective for fiscal years beginning after December 15, 2019. The standard should be applied retrospectively to the date of initial application of ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The Company elected to adopt the amendment as of January 1, 2020, which did not have a material impact on the consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40)-Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the accounting for implementation costs incurred to develop or obtain internal-use software under ASC 350-40, in order to determine which costs to capitalize and recognize as an asset and which costs to expense. ASU 2018-15 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019, and can be applied either prospectively to implementation costs incurred after the date of adoption or retrospectively to all arrangements. The Company adopted ASU 2018-15 effective January 1, 2020 and applied the standard prospectively to implementation costs incurred in its cloud computing arrangements, resulting in capitalized costs of $1.7 million in 2020.

In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangement (Topic 808): Clarifying the Integration between Topic 808 and Topic 606. The new standard clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account. Further, the new standard adds unit-of-account guidance to Topic 808 to align with the guidance in Topic 606 when an entity is assessing whether the collaborative arrangement or part of the arrangement is within the scope of Topic 606. The new standard requires that in transactions with a collaborative arrangement participant that is not directly related to sales to third parties, presenting under Topic 606 is precluded if the collaborative arrangement participant is

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not a customer. The new standard is effective for fiscal years beginning after December 15, 2019. The standard should be applied retrospectively to the date of initial application of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The Company elected to adopt the amendment as of January 1, 2020, which did not have a material impact on the consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which clarifies and simplifies certain aspects of the accounting for income taxes. The standard is effective for years beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2020. The Company adopted the ASU effective January 1, 2021 with no material impact on the consolidated financial statements.

New Accounting Standards Not Yet Adopted

In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, which requires business entities to make annual disclosures about transactions with a government (including government assistance) by analogizing to a grant or contribution accounting model. The required disclosures include the nature of the transaction, the entity's related accounting policy, the financial statement line items affected and the amounts reflected in the current period financial statements, as well as any significant terms and conditions. The guidance is effective for financial statements issued for annual periods beginning after 15 December 2021. For the period ended December 31, 2021, the new standard would not have a material impact on our financial statements.

4. Investments

At December 31, 2021 the Company had $234.2 million and nil of short and long term investments, respectively, consisting mainly of commercial paper and corporate bonds. As of December 31, 2021, $19.2 million are held to maturity debt securities which are carried at amortized cost and are approximately equal to fair market value. As of December 31, 2021, $214.9 million are available-for-sale debt securities which are carried at fair market value and are approximately equal to amortized cost. As of December 31, 2020, $150.4 million were classified as held to maturity and nil were available-for-sale.

Cashable Guaranteed Investment Certificate $ 3,140 $ 2,000

Treasury Bond — 5,045

Corporate Bonds - total long term investments — 24,380

Currently, the Company does not intend to sell investments that are classified as held-to-maturity and has the ability and intent to hold these investments until maturity in order to collect interest payments over the life of the investments. As of December 31, 2021 and December 31, 2020, accrued interest receivable from the investments were $0.1 million and $0.5 million, respectively recorded as part of prepaid and other current assets on the consolidated balance sheets. During the year ended December 31, 2021, the Company had $47 thousand of unrealized losses on available-for-sale securities, net of tax and nil for the years ended December 31, 2020 and 2019, which are included as a component of comprehensive loss on the consolidated statements of operations. The Company's investments as of December 31, 2021 mature at various dates through November 2022.

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5. Fair Value Measurement

The Company's financial instruments consist primarily of cash and cash equivalents, investments, accounts receivable, accounts payable and accrued liabilities. The carrying value of accounts receivable, accounts payable and accrued liabilities approximate their fair values because of their short-term nature. Estimated fair values of held to maturity and available-for-sale debt securities are generally based on prices obtained from commercial pricing services.

In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from sources independent from the Company) and to minimize the use of unobservable inputs (the Company’s assumptions about how market participants would price assets and liabilities). As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

•Level 1 - Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

•Level 2 - Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

•Level 3 - Unobservable inputs that reflect the reporting entity’s own assumptions.

The Company's Level 1 instruments include deposits held with banks and short-term investments that are valued using quoted market prices. Level 2 instruments include the Company's short and long-term investments that are valued through third-party pricing services that use verifiable observable market data. The Company had no Level 3 instruments as of December 31, 2021 and December 31, 2020.

The following tables summarizes the Company's financial assets measured at fair value on a recurring basis:

(in thousands) Level 1 Level 2 Level 3 Total

Assets:

Cash and cash equivalents:

Short-term highly liquid investments 17,198 — — 17,198

(in thousands) Level 1 Level 2 Level 3 Total

Assets:

Cash and cash equivalents:

Refer to Note 4, “Investments,” for the carrying amount and related unrealized gains (losses) by type of investment.

6. Inventories

Inventories are valued under a standard costing methodology on a first-in, first-out basis and are stated at the lower of cost or net realizable value. The Company capitalizes inventory costs related to products to be sold in the ordinary course of business.

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The Company makes a determination of capitalizing inventory costs for a product based on, among other factors, status of regulatory approval, information regarding safety, efficacy and expectations relating to commercial sales and recoverability of costs. For our product LUPKYNIS, the Company commenced capitalization of inventory once FDA approval was deemed to be probable, which occurred during the third quarter of 2020. Capitalized costs of inventories for LUPKYNIS mainly include third party manufacturing costs, transportation, storage, insurance, depreciation and allocated internal labor.

The Company assesses recoverability of inventory each reporting period to determine any write down to net realizable value resulting from excess or obsolete inventories.

The components of inventory are as follows:

Raw materials $ 2,217 $ —

Finished goods 4,543 —

As of December 31, 2020, $13.9 million of pre-launch inventory recognized on the consolidated balance sheet was classified as work in process. In addition, as of December 31, 2021 we have inventory deposits of $3.9 million that are primarily related to the purchase of drug substance that are currently recorded under prepaid expenses and other current assets.

7. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets are as follows:

Total prepaid expenses and other current assets $ 12,506 $ 7,171

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8. Property, Plant and Equipment

Property, plant and equipment are as follows:

Construction in progress — $ 393 $ 4,467

Less accumulated depreciation (836) (179)

Property and equipment, net $ 4,418 $ 4,786

Construction in progress assets during 2021 relate primarily to the design of the proposed new corporate headquarters in Victoria, British Columbia. Construction in progress assets during 2020 were related to leasehold improvements and office equipment and furniture for the Company's Rockville, MD office, which were placed into service upon occupancy in January 2021. Depreciation expense for the years ended December 31, 2021, 2020 and 2019, was $663 thousand, $82 thousand and $33 thousand, respectively, which is included in SG&A expenses on the consolidated statements of operations.

9. Intangible Assets

Intangible assets are amortized over their useful lives on a straight-line basis. The Company’s intangible assets, net of accumulated amortization are as follows:

Acquired intellectual property and reacquired rights 12 15,126 (8,804) 6,322

Acquired intellectual property and reacquired rights 12 15,126 (7,770) 7,356

Internal-use software implementation costs 3 1,675 (147) 1,528

Amortization expense recognized by the Company related to intangible assets was $2.1 million, $1.3 million and $1.1 million for the years ended December 31, 2021, 2020 and 2019, respectively. Amortization expense as it relates to the amortization of acquired intellectual property and other intangible assets resides within amortization on the consolidated statements of

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operations. The estimated aggregate amortization expense for intangible assets over the next five fiscal years ending December 31, 2022 through December 31, 2026 is approximately $6.7 million.

10. Accounts payable and accrued liabilities

Accounts payable and accrued liabilities are as follows:

Total accounts payable and accrued liabilities $ 34,947 $ 24,797

11. License and Collaboration Agreements

Riptide License

As discussed in Note 1, on August 17, 2021, AUR300 (M2 macrophage modulation via CD206 binding) was secured through a global licensing and research agreement with Riptide Bioscience, Inc. (Riptide), a private company. As part of the agreement, the Company paid Riptide an upfront license fee of $6.0 million and accrued for a milestone payment deemed probable which were expensed as R&D on the consolidated statement of operations. Additional milestone payments are due upon certain development, clinical and regulatory milestones, and royalties will be payable upon commercialization which will be accrued when deemed probable. It is anticipated that clinical development for AUR300 will commence during the first half of 2023.

Thunderbolt

In 2020, Aurinia made an aggregate upfront payment of $750 thousand to the shareholders of Thunderbolt and will be responsible for future regulatory milestones upon investigational new drug (IND) acceptance by the United States’ Food and Drug Administration (FDA) or any equivalent authority. Additionally, Thunderbolt shareholders will receive low single digit royalties on any future net sales. AUR200, a recombinant Fc fusion protein designed to specifically block B-cell Activating Factor, known as BAFF, and A Proliferation-Inducing Ligand, known as APRIL, is currently undergoing pre-clinical development with projected submission of an IND to the FDA in 2023.

Otsuka Contract

On December 17, 2020, the Company entered into a collaboration and license agreement with Otsuka Pharmaceutical Co., Ltd. (Otsuka) for the development and commercialization of oral LUPKYNIS for the treatment of adult patients with active LN in the European Union (EU), Japan, as well as the United Kingdom, Russia, Switzerland, Norway, Belarus, Iceland, Liechtenstein and Ukraine.

As part of the agreement, Aurinia received in 2020 an upfront cash payment of $50.0 million for the license agreement, and has the potential to receive up to $50.0 million in additional regulatory and reimbursement milestones. Aurinia will receive tiered royalties on future sales ranging from 10 to 20 percent (dependent on achievement of sale milestones) on net sales upon commercialization, along with additional milestone payments based on the attainment of certain annual sales by Otsuka. In addition, we are currently negotiating a supply agreement.

The Company evaluated the Otsuka Agreement under ASC 606. Based on that evaluation, the license transferred was determined to be functional intellectual property (IP) that has significant standalone functionality. That is, the treatment of LN and other diseases provides significant benefit to Otsuka at the point of transfer, and it is not expected that the utility of the IP

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will substantively change as a result of any remaining clinical trials or ongoing activities of Aurinia. The Company determined the upfront fee of $50.0 million is fixed consideration for the transfer of the license and is recognized as revenue upon transfer of the license in December 2020.

The remaining forms of consideration are variable because they are dependent on achieving milestones or are based on aggregate future net sales for the regions. None of the regulatory, reimbursement, or sales-based milestones have been included in the transaction price, as all milestone amounts were fully constrained. As part of its evaluation of the constraint, the Company considers numerous factors, including the magnitude of a potential reversal of revenue, uncertainty about if or when the milestone related performance obligations might be achieved and that receipt of the milestones are outside the control of the Company since they are dependent on efforts to be undertaken by Otsuka and regulatory approval by various foreign government agencies. Any consideration related to sales-based royalties (and sales-based milestones) will be recognized as license revenue when the related sales occur.

As of December 31, 2021, there has been no additional consideration earned or received since the upfront payment of $50.0 million during the fourth quarter of 2020.

12. Segment Information and Geographic Data

As the operations comprise a single reporting segment, amounts disclosed in the consolidated financial statements represent those of the single reporting unit. Revenues and accounts receivable, net from two customers accounted for approximately 56% and 43% for the year ending December 31, 2021. There was one customer and two customers that accounted for all of the revenues during 2020 and 2019, respectively.

Revenues by Geographic Location

The following geographic information reflects revenue, net of adjustments, based on customer location:

Revenue

Long-lived Assets by Location

Long-lived assets by location consist of property plant and equipment:

Long-lived assets

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13. Income Taxes

The components of pre-tax (losses) income before income taxes for the years ended December 31, 2021, 2020 and 2019 are as follows:

Income tax expense (benefit) for the years ended December 31, 2021, 2020 and 2019 are as follows:

Current:

Canada $ — $ — $ —

Deferred:

Canada — — —

Foreign — — —

Total deferred — — —

Income tax expense (benefit) $ 760 $ (94) $ 144

The Company's parent entity is located in Canada and therefore the Canadian statutory rate is utilized. The provision for income taxes varied from the income taxes provided based on the Canadian statutory rate of 26.8%, 26.8%, and 25.4% for the years ending December 31, 2021, 2020 and 2019, respectively.

Canada statutory income tax benefit 26.8 % 26.8 % 25.4 %

Effect of tax rates on foreign jurisdictions — (2.4) —

Impact of future rates and tax rate changes (0.1) 6.1 (0.9)

Non-deductible share-based compensation (4.5) (4.5) (2.1)

Change in valuation allowance (21.8) (26.0) (22.3)

Effective tax rate (0.4) % 0.1 % (0.2) %

The tax effects of the temporary differences giving rise to the Company's net deferred tax assets as of December 31, 2021 and 2020 are summarized as follows:

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Deferred tax assets:

SRED (Scientific Research and Experimental Development) 6,059 4,808

Deferred tax liabilities:

Property and equipment and intangible assets (837) (192)

Net deferred tax assets (liabilities) $ — $ —

The Company’s valuation allowance increased by $39.6 million in 2021 as compared to 2020 as a result of the additional pre-tax book losses.

As of December 31, 2021, the Company has $429.8 million of Canada gross net operating loss (NOL) carryforwards with an expiration period of 2029 through 2040. As of December 31, 2021, the Company has approximately $4.8 million of Canada Investment Tax Credits and British Columbia Scientific Research and Experimental Development (SRED) with an expiration period of 2029-2040. As of December 31, 2021 the Company has approximately $31.4 million of U.S. federal gross NOL carryforwards that carryforward indefinitely.

Uncertain Tax Positions

The Company is under examination by the Canadian Revenue Agency for years 2017 and 2018. The Company is subject to examination in the U.S., UK, Canada and tax periods remain open in the range of 2015 through 2020.

14. Commitments and Contingencies

The Company may, from time to time, be subject to claims and legal proceedings brought against it in the normal course of business. Such matters are subject to many uncertainties. Management believes the ultimate resolution of such contingencies will not have a material adverse effect on the consolidated financial statements.

On December 18, 2020, the Company commenced an action in the United States District Court for the District of New Jersey against Sun Pharmaceutical Industries, Inc., Sun Pharmaceutical Industries, Ltd., and Sun Pharma Global FZE (collectively, "Sun"). The action is a claim for patent infringement under the patent laws of the United States arising from Sun's commercial manufacture, use, offer to sell, or sales within the United States, and/or importation into the United States of Sun's CEQUATM product, a CNI immunosuppressant ophthalmic solution, prior to the expiration of our United States Patent Nos. 10,265,375 and 10,973871. In our action, we request relief in the form of an order confirming Sun has infringed our patent, an injunction preventing Sun from manufacturing, using or selling CEQUATM, and monetary relief (including costs). Sun responded by denying infringement and/or asserting that the patents at issue are invalid. The parties have exchanged initial pleadings and patent disclosures, and are in the process of claim construction proceedings. Trial is scheduled to commence on or around March 2023.

Manufacturing Commitments

The Company has various manufacturing agreements to support our commercial and clinical product supply requirements.

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We rely on Lonza, a third party manufacturer, to produce a portion of commercial and clinical quantities of our commercial and clinical drug substance requirements. We have firm orders with Lonza for future purchases of drug substance, with remaining total non-cancellable future commitments of approximately $26.4 million through 2023 of which $3.5 million was paid during the second quarter of 2021. If we terminate certain firm orders with Lonza without cause, we will be required to pay for drug substance scheduled for manufacture under our arrangement.

15. Deferred Compensation and Other Non-current Liabilities

The Company recorded other non-current liabilities of $16.0 million and $16.3 million as of December 31, 2021 and December 31, 2020, respectively. The balance as of December 31, 2021 and December 31, 2020 primarily included deferred compensation arrangements that are the result of a resolution of the board of directors of the Company dated March 8, 2012 whereby certain executive officers at that time were provided with future potential employee benefit obligations for remaining with the Company, for a certain period of time. These obligations were also contingent on the occurrence of uncertain future events. The other non-current liabilities also include milestone payments deemed probable to be paid in the future.

16. Leases

The Company has the following lease obligations:

Victoria, British Columbia

During the fourth quarter of 2020, the Company entered into facility and furniture leases for its head office located in Victoria, British Columbia for a total of 13,206 square feet of office space. The lease terms commenced on January 1, 2021 for the facility and furniture leases. As of December 31, 2021, the Company had $0.2 million right-of-use assets (ROU assets) and $0.2 million lease liabilities related to the leases. The Company recognized operating lease costs that are included in SG&A expense in the consolidated statement of operations. The incremental borrowing rate applied to the lease liabilities on January 1, 2021 was 4.08% based on financial position of the Company, geographical region and terms of leases.

During August 2020, the Company signed a lease for commercial office space in Victoria, British Columbia. The lease term is expected to begin in 2022. The present value of the minimum lease payments for this lease are $2.3 million. As of December 31, 2021, the lease has not commenced and as a result there has been no accounting recognition associated with the lease.

Rockville, Maryland

During March 2020, the Company entered into a lease for its U.S. commercial office in Rockville, Maryland for a total of 30,531 square feet of office space. The lease has a remaining term of approximately 11 years and has an option to extend for twofive-year periods after the 11 years has elapsed and has an option to terminate after seven years. As of December 31, 2021, the Company had a right-of-use asset of $5.2 million and lease liability of $8.6 million included in the consolidated balance sheets. As of December 31, 2020, the Company had a right of use asset of $5.5 million and lease liability of $8.4 million included in the consolidated balance sheets. During 2020, the Company received reimbursements for tenant leasehold improvements by the landlord in the amount of $2.3 million for the Maryland lease. The Company recorded these leasehold improvement incentives as additions to the lease liability. The lease term commenced on March 12, 2020. When measuring the lease liability, the Company discounted lease payments using its incremental borrowing rate at March 12, 2020. The incremental borrowing rate applied to the lease liability on March 12, 2020 was 5.2% based on the financial position of the Company, geographical region and terms of lease.

Edmonton, Alberta

During the fourth quarter of 2020, the Company entered into an agreement to lease office space in Edmonton, Alberta, commencing on October 1, 2020 and ending September 30, 2021. During the third quarter of 2021, the lease was extended until September 30, 2022. The Company recognizes short-term leases on a straight-line basis and did not record a related lease asset or liability for the Edmonton lease. The Company recognized short-term rent expense for this lease, which is included in SG&A expense in the consolidated statement of operations.

F-25

Supplemental balance sheet information related to the operating lease ROU asset and lease liabilities as of December 31, 2021 and December 31, 2020 are as follows:

(in thousands) Balance Sheet Classification 2021 2020

Assets

Operating lease right of-use assets Non-current assets $ 5,383 $ 5,489

Liabilities

Beginning January 1, 2021, the Company began to incur variable lease costs under the existing Victoria and Rockville leases. These costs include operation and maintenance costs and are recorded under rent expense in SG&A. A summary of the components of leasing costs and rent for the years ended December 31, 2021 and December 31, 2020 are as follows:

(in thousands) Consolidated Statement of Operations 2021 2020 2019

Operating lease costs

Operating lease costs Selling, general and administrative $ 1,045 $ 653 $ 229

Short-term lease costs

Office Building Selling, general and administrative 27 288 68

Variable lease costs

Office building Selling, general and administrative 167 3 —

The weighted-average remaining lease term and discount rate for the years ended December 31, 2021 and December 31, 2020 are as follows:

Weighted average remaining lease term (in years) 9.49 10.67

Weighted average discount rate 5.2% 5.2%

Supplemental cash flow information related to operating leases for the years ended December 31, 2021, December 31, 2020 and December 31, 2019 are as follows:

Initial recognition of operating lease right-of-use asset $ 419 $ 5,804 $ —

F-26

Future maturities of operating lease liabilities as of December 31, 2021 are as follows:

(in thousands) Operating Lease Payments

Total lease payments 11,171

Less: imputed interest (2,432)

On December 15, 2020, the Company entered into a collaborative agreement with Lonza to build a dedicated manufacturing capacity within Lonza’s existing small molecule facility in Visp, Switzerland. The dedicated facility (also referred to as "monoplant") will be equipped with state-of-the-art manufacturing equipment to provide cost and production efficiency for the manufacture of voclosporin, while expanding existing capacity and providing supply security to meet future commercial demand.

Following U.S. regulatory approval of voclosporin in January 2021, the Company has commenced a capital expenditure payment program totaling approximately CHF 21.0 million. The first capital expenditure payment of $11.8 million was made in February 2021 and was treated as an upfront lease payment and recorded under other non-current assets on the consolidated balance sheets. The second payment is not due until the facility fulfills the required operational qualifications which is estimated to be during 2023. Upon completion of the monoplant, the Company will have the right to maintain sole dedicated use of the monoplant by paying a quarterly fixed facility fee.

The Company expects to account for the arrangement as a finance lease under ASC 842. The present value of the minimum lease payments total approximately $79.0 million, beginning April 2023 and expiring in 2030, and are not included in the above table.

17. Shareholders' Equity

Common shares: The Company has authorized an unlimited number of common shares with no par value. As of December 31, 2021, 2020 and 2019, 141.6 million, 126.7 million and 111.8 million Common Shares, respectively, were issued and outstanding. Each common share entitles the holder to one vote on all matters submitted to a vote of the Company’s shareholders. Common shareholders are not entitled to receive dividends unless declared by the Company’s Board of Directors.

F-27

The common share activity for 2021, 2020 and 2019 is as follows:

Common Shares

Number of shares(in thousands) Amount(in thousands)

Issued pursuant to At-the-Market (ATM) Facilities 6,953 45,010

Share issue costs — (13,629)

Issued pursuant to exercise of warrants 2,983 12,428

Issued pursuant to exercise of stock options 3,580 22,197

Share issue costs — (12,268)

Issued pursuant to exercise of warrants 1 2

Issued pursuant to exercise of stock options 1,593 10,107

Share issue costs — (5,616)

Issued pursuant to exercise of warrants 1,434 2,102

Issued pursuant to exercise of stock options 3,238 33,073

Issued pursuant to ESPP 37 808

As discussed below from time to time, we intend to use the net proceeds from the sale of securities to fund our operations, which includes, but is not limited to, clinical development and commercial production of voclosporin (whether for LN or other indications), advancing our pipeline, regulatory, additional clinical trials, business development opportunities, capital expenditures and working capital.

November 19, 2021 ATM facility

On November 19, 2021 the Company entered into an Open Market Sale Agreement (the "Sale Agreement") with Cantor Fitzgerald & Co. pursuant to which the Company may from time to time sell, through ATM offerings, common shares that would have an aggregate offering price of up to $250.0 million. Pursuant to this agreement the Company issued 10.2 million common shares at a weighted average price of $19.90 resulting in gross proceeds of $202.4 million as of December 31, 2021. The Company incurred share issue costs of approximately $5.6 million which included up to a 3% underwriting commission of $5.3 million and professional fees of $0.3 million directly related to the ATM.

On February 25, 2022, the Company gave notice to Cantor Fitzgerald & Co. to terminate the Sale Agreement. No further sales will occur under the Sale Agreement dated November 19, 2021.

July 27, 2020 public offering

On July 27, 2020 the Company completed a public offering of 13.3 million common shares at a price of $15.00 per share. Gross proceeds from this offering were $200.0 million and the share issue costs totaled an estimated $12.3 million which included a 6% underwriting commission of $12.0 million and professional fees of $0.3 million.

F-28

December 12, 2019 public offering

On December 12, 2019 the Company completed a public offering of 12.8 million common shares at a price of $15.00 per share. Gross proceeds from this offering were $191.7 million and the share issue costs totaled $11.8 million which included a 6% underwriting commission of $11.5 million and professional fees of $0.3 million.

September 13, 2019 ATM facility

On September 13, 2019 the Company entered into an Open Market Sale Agreement (the "Sale Agreement") with Jefferies pursuant to which the Company may from time to time sell, through ATM offerings, common shares that would have an aggregate offering price of up to $40.0 million. Pursuant to this agreement the Company issued 2.3 million common shares at a weighted average price of $6.40 resulting in gross proceeds of $15.0 million. The Company incurred share issue costs of $640 thousand including a 3% commission of $450 thousand paid to the agent and professional fees of $190 thousand directly related to the ATM. On December 9, 2019, the Company terminated the September 13, 2019 Sale Agreement with Jefferies LLC related to the 2019 ATM.

Warrants:

Warrant related to February 14, 2014 private placement offering:On February 14, 2014, the Company completed a $52.0 million private placement (2014 Private Offering). Under the terms of the 2014 Private Offering, a Unit consisted of one common share and one-quarter (0.25) of a common share purchase price warrant (2014 Warrant). The Company issued 18.9 million Units at a subscription price per Unit of $2.7485, exercisable for a period of five years from the date of issuance, at an exercise price of $3.2204. These February 2014 Warrants meet the scope exceptions provided in ASC 815, Derivatives and Hedging, as they are indexed to the Company’s own shares, and therefore are accounted for under ASC 505, Equity.

In 2019, certain holders of these 2014 Warrants elected the cashless exercise option and the Company issued 0.7 million common shares in lieu of 1.3 million 2014 Warrants, which was recorded through an increase in equity (common shares) and decrease in additional paid-in capital. One holder of 464,000 2014 Warrants exercised these 2014 Warrants for cash and received 464,000 common shares. The Company received cash proceeds of $1.5 million and recorded an increase in cash and additional paid in capital. In 2018, no holders of the 2014 Warrants elected the cashless exercise option. As a result, the Warrants related to the February 14, 2014 private placement offering have been extinguished upon the exercise of the aforementioned warrants, at December 31, 2019.

Warrant related to December 28, 2016 bought deal public offering:On December 28, 2016, the Company completed a $28.8 million Bought Deal public offering (2016 Public Offering). Under the terms of 2016 Public Offering, each Unit consists of one common share and one-half (0.50) of a common share purchase warrant (December 2016 Warrant). The Company issued 12.8 million Units at a subscription price per Unit of $2.25, exercisable for a period of five years from the date of issuance at an exercise price of $3.00. These December 2016 Warrants also meet the scope exceptions provided in ASC 815, Derivatives and Hedging, as they are indexed to the Company’s own shares, and therefore are accounted for under ASC 505, Equity.

At initial recognition on December 28, 2016, the Company recorded a warrant in the amount of $7.2 million based on the estimated fair value of the December 2016 Warrants with allocated share issuance costs of $655 thousand recognized as a reduction of equity.

During 2019, certain holders of these Warrants exercised at $3.00 per share for gross proceeds of $5.5 million. During 2020, a holder exercised 500 Warrants at $3.00 per share for gross proceeds of $2 thousand. During 2021, 1.7 million warrants have been exercised at $3.00 per share for gross proceeds of $0.3 million. Of these 1.7 million warrants, the Company issued 1.3 million common shares in lieu of 1.6 million warrants. All gross proceeds were recorded as an increase in cash and equity. The remaining 6,000 warrants expired as of December 31, 2021.

F-29

The warrant activity for 2021 and 2020 is as follows:

Number of warrants(in thousands)

Warrants exercised (1)

Warrants exercised (1,684)

Warrants expired (6)

18. Shared-Based Compensation

The Company's Amended and Restated Equity Incentive Plan (the Plan), which was adopted and approved by the Company's shareholders in June 2021, allows for an issuance of up to an aggregate of 23.8 million shares (inclusive of outstanding awards). Also in June 2021, the Company's shareholders adopted and approved the Company's Employee Stock Purchase Plan (2021 ESPP), which allows for the issuance of up to 2.5 million shares of which 37 thousand were purchased during 2021. The 2021 ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code (the “Code”) but also permits the Company to include the employees, including non-United States employees, in offerings not intended to qualify under Section 423. The purpose of the 2021 ESPP is to provide eligible employees with opportunities to purchase the Company’s common shares at a discounted price.

As of December 31, 2021 and 2020, 141.6 million and 126.7 million, common shares were issued and outstanding.

Stock Options

AUPH US Equity

AUPH · 10-K · period ended 2021-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures about Market Risks

ITEM 8. Financial Statements and Supplementary Data

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Item 10. Directors, Executive Officers, and Corporate Governance

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and Related Transactions and Director Independence

Item 14. Principal Accountant Fees and Services

Item 15. Exhibits and Financial Statement Schedules

Item 16. Form 10-K Summary

AUPH US Equity☆

AUPH · 10-K · period ended 2021-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures about Market Risks

ITEM 8. Financial Statements and Supplementary Data

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Item 10. Directors, Executive Officers, and Corporate Governance

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and Related Transactions and Director Independence

Item 14. Principal Accountant Fees and Services

Item 15. Exhibits and Financial Statement Schedules

Item 16. Form 10-K Summary

AUPH US Equity