Press Release

CEO Letter To Shareholders

From the desk of Nick Kadysh, Founding CEO, Zoxona Biotech

I last wrote an update to shareholders in 2024, following the issuance of a Complete Response Letter (CRL) to Lykos Therapeutics in their bid to get MDMA approved as a treatment for Post Traumatic Stress Disorder. This seems like a long time ago, although in the grand scheme of things it was just over a year - but we’ve seen a lot of progress since then. The CRL has been published by FDA, and from our perspective we have seen an incredible uptick in Psychedelic research and treatment following that low point for the industry.

In this letter I will provide a comprehensive update on where PharmAla’s two business lines (generic MDMA production/sales and novel molecule research) have been for the past year, and then I will provide a roadmap on where they – and the company writ large – will be going in the next year.

1. Update on Pharmala’s MDMA Manufacturing Business

Last year, following the issuance of the CRL, I was asked what the impact would be to our business. In my letter to shareholders, I stated that there would be “none” in the short term. This turns out to have been pessimistic. The amount of interest in clinical trials for MDMA went up, not down. As publicized by Psychedelic Alpha, following the issuance of the CRL, we received several clinical trials from Lykos Therapeutics, customers whom we are working hard to serve. The additional volume of clinical trial contracts, combined with global trade tensions and tariff risk, required us to make a lot of operational changes over the past year. We onboarded a new US-based 3PL and our first European-based distributor (Duchefa). We also began manufacturing in Australia.

The increase in clinical trial use has opened new opportunities for PharmAla. We signed our first drugs-for-data deal with Merhavim in Israel this year, and completed their delivery. This is an important milestone for the company, as it allows us to generate Clinical Trial data in a very cost-effective manner. This has two incredibly valuable applications: we can use the data for regulatory/commercial purposes for the company (getting reimbursement for our therapies, getting licenses to new markets) and - perhaps even more importantly - we can use this data to drive broad-based regulatory change. We continue to negotiate with a number of customers on this basis, and hope we’ll be able to share more information on upcoming deals soon.

In addition to the increase in Clinical Trial orders, we also saw significant progress in the patient-centric provision of MDMA for commercial PTSD treatments. I believe the biggest of these was the announcement – in multiple parts – of Medibank’s coverage for treatments provided by our customer, Emyria, in Australia. To be clear, this is Emyria’s victory, not ours – but we are always happy to share in our customers’ successes, and I believe that growing reimbursement by insurance providers is the only path forward to broad-based patient adoption.

Things have been decidedly more mixed in our home market, Canada. A month ago, PsyCan released Access to Information Protocol (ATIP) data showing that Health Canada had cut the rate of approvals for MDMA via the Special Access Program in half. It is now quite literally easier for a patient to commit suicide via Medical Assistance in Dying in this country than it is for them to access Psilocybin or MDMA. While there have been green shoots over the past year – one-off approvals for reimbursement by provincial bodies or insurance companies – we have not seen the kind of breakthrough that Emyria has seen in Australia. However, this seems to be changing. Last week, I travelled to Ottawa with my PsyCan colleagues to fight for increased access for patients, as well as increased reimbursement for special groups like Veterans and RCMP officers. This week, I was in Saudi Arabia as part of the Government of Canada’s mission to the Global Health Expo. In both places, we heard how excited clinicians were to bring these treatments to market, in large part because of how cost-effective they are.

I’m pleased to share that a number of our Australian Authorized Prescriber clients have indicated to us that they have heard directly from the Australian Department of Veterans Affairs - and that DVA will be covering MDMA-AT treatments for veterans moving forward; A huge victory for patients, and one that we are eager to replicate in Canada.

As always, we believe that for the future of this industry we have to keep patients centered in our strategic goals – too many companies view clinical trials as a end in-and-of-themselves, rather than a tool to open access to patients. At PharmAla, we believe strongly that a treatment is only as good as the people it actually helps. This is part of why we have completely revamped our prescribers’ portal into NEXUS, to continue to drive adoption of MDMA-Assisted Therapy among Canada’s mental health professionals.

2. Updates on PharmAla’s Novel Molecule Program

I understand that some people believe that PharmAla’s drug development program has not progressed as fast as they would have liked. In short, drug development is a very expensive and laborious process. It also represents a significant amount of risk for a young company such as ours. In the past 3 months, we have made some key decisions – and some moves – in order to accelerate this work.

- We have created Zoxona Biotech Australia to lead off our drug development efforts
- We have issued an RFP for the manufacture of ALA-002
- We have begun financing operations to support development work on ALA-002 and other molecules

First, let me address PharmAla Australia (Pty, Ltd, etc.) The purpose of setting up Pharmala Biotech Australia is not to compete with our joint venture, Cortexa, but rather to act as a dedicated R&D entity focused on clinical drug development. Australia has a number of attractive features as a drug discovery jurisdiction: it offers regulatory certainty, as we assess the TGA’s clinical trial approval pathway to be much more efficient than those in other jurisdictions. It is also very capital efficient, as the Australian government offers a 43% maximum rebate on R&D expenditure. Australia also has an ecosystem of debt financing partners happy to lend to PharmAla, and secured solely by the Australian tax incentive scheme. Finally, Australia is a jurisdiction where we are comfortable working, and have many friends.

In the near future, look for PharmAla to begin transferring IP into our Australian entity, announcing our clinical research and manufacturing partners (and beginning manufacturing of ALA-002), and moving forward on a financing structure for this development work through PharmAla Australia.

Investors will also have seen that PharmAla submitted a Short Form Prospectus for review by the OSC, which we are hoping to make final following regulatory approval. This SFP represents our understanding that major development partners, as well as institutional investors, demand that a company have a registered prospectus prior to either partnering or investing in a company like PharmAla. While PharmAla has no plans to utilize the prospectus at this time, we will not be shy about raising the capital we need in order to advance our programs in a responsible manner.

3. Plans for 2025/26

In the coming year, PharmAla will be critically focused on advancing our development programs for ALA-002 and APA-01, as well as generating additional potential targets for development via our Phenesafe AI platform. This is for several reasons: one, in the last few months we have seen increases in valuation and significant increases in deal flow, pertaining to companies developing novel, psychedelic drugs. This includes ATAI Life Sciences, as well as the recent purchase of Gilgamesh by Abbvie. We do not believe that we will get a fair valuation for the company unless we can provide serious clinical evidence for our novel analogs. This will require investment, and while we can finance some of our operations through grants such as the Australian tax incentive listed above, rapid clinical scale-up will require us to move faster than our competitors.

As such, we are making some changes to our clinical development plans.

We will be shifting our focus from the more niche indication of Social Anxiety in Autism Spectrum Disorder patients, into the broader indication of general population Social Anxiety. While we previously believed that the benefit of an Orphan disorder designation would help us work with regulators, we have come to the conclusion that these benefits will be minor compared to the potential commercial benefits of a larger (and growing) patient cohort. This will be a group protocol, which we believe will not only make the treatment more economical but will also make it significantly more effective.

We will also be expanding our team, following the appointment of Dr. Kiyan Afzali to the board of PharmAla Australia, and the hiring of Dr. Farnoud Kazemzadeh as our new Chief Operations Officer. While we are proud of what PharmAla has accomplished with a small team, we will need to continue to grow the team significantly if we wish to execute on our strategy.

The past few months have been very exciting for the team, and we are all incredibly proud - and motivated - to lead PharmAla into a new phase for the company, and to take advantage of some of the amazing opportunities we have created over 2025.

Best regards,

Nick Kadysh
CEO

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