Mr. Ken d'Entremont reports

MEDEXUS AND MEDAC CONCLUDE NEGOTIATIONS TO AMEND US TREOSULFAN AGREEMENT, SETTING REGULATORY MILESTONE AMOUNTS AND PAYMENT SCHEDULE

Medexus Pharmaceuticals Inc. recently entered into a fourth amendment to its February, 2021, exclusive licence agreement with Medac relating to commercialization of treosulfan in the United States.

Among other things, the fourth amendment adjusts the unpaid regulatory milestone payments under the U.S. treosulfan agreement. Upon an FDA (Food and Drug Administration) approval of treosulfan, Medexus would repay a $2.5-million (U.S.) credit received from Medac in September, 2021, and would pay a regulatory milestone amount to Medac, based on the language of the product label approved by the FDA, of either $15-million (U.S.), or $20-million (U.S.) if the product label includes non-inferiority but not clinical superiority, or $45-million (U.S.) if the product label includes clinical superiority. This regulatory milestone amount would be paid in instalments as follows:

• One-sixth of the total amount by June 30, 2025;
• One-third of the total amount by Oct. 1, 2025;
• The remaining amount (50 per cent of the total) by Jan. 1, 2026.

For the lowest regulatory milestone amount, this instalment schedule would result in payments of $2.5-million (U.S.), $5-million (U.S.) and $7.5-million (U.S.).

Medexus would be entitled to temporarily defer a portion of the first instalment (to the extent, if any, exceeding $3.25-million (U.S.)) for up to 90 days, the second instalment for up to 120 days and the third instalment for up to 30 days, with any deferred amount accruing interest at an interest rate of 9.0 per cent per annum.

"We are pleased to have achieved clarity on the remaining contractual milestones under our agreement and arrived at terms that appropriately reflect the value we see in this product," commented Ken d'Entremont, chief executive officer of Medexus. "We remain optimistic about the prospect of FDA approval no later than Jan. 30, 2025, and we view the lower milestone amounts as the more likely outcome based on the expected labelling of the product. If approved, we continue to believe annual product-level revenue in the United States has the potential to exceed $100-million (U.S.) within five years after commercial launch, providing a significant uptick to our growth profile."

"Achieving the favourable payment terms of this amendment further strengthens our financial position," added Brendon Buschman, chief financial officer of Medexus. "This structure will allow us to allocate existing capital towards the launch of treosulfan in the United States and provides us the flexibility to defer 83 per cent of the total regulatory milestone amount to the end of January, 2026. This means we can fund these amounts with cash on hand, cash generated from operations, additional debt financing or the option that best aligns with our strategic objectives at the time of payment."

The fourth amendment also extends the agreed outside date for FDA approval to reflect the current status of the FDA regulatory review process. In addition, in connection with the fourth amendment, Medexus agreed to end a concession previously granted by Medac in respect of the supply price for Rasuvo and, in the event Medexus exercises the temporary deferral right discussed above, to a further marginal increase in the per-unit supply price for that product.

Additional information about the terms of the licence agreement, including copies of the relevant documents, is included in the company's filings on SEDAR+. The summary in this news release is qualified by reference to the terms of each such document as applicable.

About Medexus Pharmaceuticals Inc.

Medexus is a leading specialty pharmaceutical company with a strong North American commercial platform, and a growing portfolio of innovative and rare disease treatment solutions. Medexus's current focus is on the therapeutic areas of oncology, hematology, rheumatology, auto-immune diseases, allergy and dermatology.

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