Dr. James Helliwell reports

EUPRAXIA PHARMACEUTICALS REPORTS FOURTH QUARTER AND 2022 FINANCIAL RESULTS

Eupraxia Pharmaceuticals Inc. has released its audited financial results (prepared in accordance with international financial reporting standards) and operational highlights for the fourth quarter and year ended Dec. 31, 2022.

"The fourth quarter of 2022 was a period of accelerated progress for Eupraxia," said Dr. James Helliwell, chief executive officer of Eupraxia. "We advanced our innovative drug delivery technology platform during the reporting period with the commencement of a phase 1b/2a trial of EP-104GI in eosinophilic esophagitis. This open-label study is on track to generate interim data readouts in the second quarter of 2023, with complete top-line data anticipated in the second half of 2023. We also continued to make strong progress with our phase 2 trial of EP-104AR in osteoarthritis, with top-line data readout expected in the second quarter of this year. In parallel with our ongoing pipeline progress, we recently announced the appointment of Paul Brennan as chief business officer as we look to fully resource and fund each of our high-potential clinical programs."

Going forward, the company intends to use EP-104IAR when referring to the product intended for intra-articular injections for indications such as osteoarthritis, EP-104GI when referring to the product intended for submucosal injections in the gastrointestinal tract for indications such as eosinophilic esophagitis, and simply EP-104 when referring to disclosure related to both EP-104IAR and EP-104GI.

Selected operational and financial highlights for the fourth quarter:

• Concluded the quarter ended Dec. 31, 2022, with cash and cash equivalents of $24.7-million; Eupraxia anticipates its current cash is sufficient to finance the company through to the fourth quarter of 2023;
• Announced the appointment of Paul Brennan, a seasoned business development executive with more than three decades in the health care space, to the role of chief business officer; Mr. Brennan is working closely with the executive management team to secure partnership opportunities to help advance the company's pipeline of drug candidates;
• Announced the completion of Data Safety Monitoring Board reviews for the phase 2 osteoarthritis (OA) trial, the inclusion of patients with diabetes into the trial and the inclusion of magnetic resonance imaging in the trial's protocol;
• Completed enrolment in the phase 2 OA trial;
• Announced the initiation of a phase 2 trial of EP-104GI in adult patients afflicted with eosinophilic esophagitis, a rare disease that restricts the ability to swallow food and greatly impacts quality of life;
• Recent developments with Silicon Valley Bank (SVB) have not impacted the company's outlook for cash runway; the company holds no amounts on deposit with SVB, and its convertible debt facility with SVB that matures in June, 2024, remains in good standing, is fully drawn and is not callable by SVB.

Fourth quarter and full-year 2022 financial review

The company continued to enroll and dose patients in its 300-patient phase 2 clinical trial of EP-104IAR for OA, completing enrolment just prior to year-end. Operating expenses for the three months ended Dec. 31, 2022, were $8.8-million, versus $3.4-million in the prior-year period. For the full-year period, operating expenses grew to $23.2-million, versus $18.7-million during the comparative period in 2021. The increase for both periods was primarily driven by increased costs associated with its phase 2 OA clinical trial.

The company incurred a net loss of $9.1-million for the three months ended Dec. 31, 2022, versus $3.8-million for the three months ended Dec. 31, 2021. For the year ended Dec. 31, 2022, the company incurred a net loss of $23.9-million compared with a net loss of $23.4-million for the year ended Dec. 31, 2021. The increase in net loss was primarily driven by increased costs associated with its phase 2 OA clinical trial.

The company had cash and cash equivalents of $24.7-million as of Dec. 31, 2022. Management believes its current cash is sufficient to finance the company through to the fourth quarter of 2023.

As of Dec. 31, 2022, the company had 21,593,145 common shares issued and outstanding.

Financial statements and management's discussion and analysis

Please see the audited consolidated financial statements and related management's discussion and analysis for more details. The audited consolidated financial statements for the year ended Dec. 31, 2022, and related MD&A have been reviewed and approved by Eupraxia's audit committee and board of directors. For a more detailed explanation and analysis, please refer to the MD&A that has been filed under the company's profile on SEDAR and is also available on the company's website.

About Eupraxia Pharmaceuticals Inc.

Eupraxia is a clinical-stage biotechnology company focused on the development of locally delivered, extended-release alternatives to currently approved drugs. Each of Eupraxia's product candidates has the potential to address therapeutic areas with high unmet medical need and strives to provide improved patient benefit by delivering targeted, long-lasting activity with fewer side effects.

Eupraxia's lead product candidate, EP-104IAR, is currently in phase 2 development for the treatment of pain due to osteoarthritis of the knee. The EP-104 platform has expanded into gastrointestinal disease with the launch of a phase 1b/2a program to treat eosinophilic esophagitis. Eupraxia is also developing a pipeline of later- and earlier-stage long-acting formulations. Potential pipeline indications include candidates for both other inflammatory joint indications and oncology, each designed to improve on the activity and tolerability of currently approved drugs.

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