Pharmala Biotech : CEO Letter To Shareholders

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

Over the past 48 hours, a large number of shareholders have reached out to me for my thoughts on the recent FDA Advisory Committee Meeting convened to discuss the Lykos Therapeutics application for New Drug Approval for Midomafetamine (MDMA). As most of you know by now, the committee overwhelmingly voted that there was not enough evidence to show efficacy of MDMA-Assisted Therapy (MDMA-AT) in the treatment of PTSD, and raised some serious methodological concerns on the part of Lykos.

First, I want to address the impact on the company: in the short run, there is none. We do not expect to deviate from our strategic plan. PharmAla Biotech, is currently the only other producer of MDMA for Clinical use other than Lykos; Where Lykos operates in the United States, we operate in the rest of the world. Unlike Lykos, our MDMA is already treating patients: in Canada through the Special Access Program and in Australia through the Authorized Prescriber Scheme. Our LaNeo MDMA business will continue to operate in Australia and Canada, and we will continue to supply clinical trials globally. I anticipate the pace of these clinical trials, in the wake of the AdComm meeting, will increase. I will come back, in this letter, to what I believe will be the long-run impacts of the AdComm decision on the business.

Many people have asked what I and my team believe will happen next. It is very challenging to accurately predict the regulatory decision that FDA will make. The FDA is not bound to take the advice of AdComm, and has a range of potential decisions that it could make - including sending Lykos' application back for additional data gathering.

I do not believe that all of the concerns brought by AdComm were germane. Questions of functional unblinding have been debated in the industry for close to a decade, and while they have some merit, they do not have sufficient merit in my opinion to warrant delaying or denying an application. However, a number of concerns that were made explicit in the AdComm meeting were absolutely correct, including the troubling finding that some required lab data was missing from the application (forgotten by both Lykos and FDA).

Candidly, I believe the AdComm's comments have validated our strategy for the business and provides us confidence in the decisions we have taken at PharmAla accordingly:

• Due to functional blinding issues in trials, we are focused on gathering Real World Evidence; due to our position as a provider of MDMA for patient therapies in several markets, we are unique in our ability to do so
  
  

• ALA-002, our novel patented enantiomeric mix of MDMA, seems to provide significantly improved cardiotoxicology in animal research, a key concern cited numerous times at AdComm
  
  

• With APA-01, we intend to move to psychotherapy-free, drug-only clinical regimen **for what indication**. While we believe in the power of MDMA-Assisted Therapy to treat PTSD, it is clear that many regulators mistrust psychotherapy, and in our opinion there has not been nearly enough research done on differential therapy approaches in combination with the drug.

Lastly, I will address the long-term impacts of the AdComm decision on PharmAla's business: we believe that this decision will encourage additional researchers to begin doing clinical research on MDMA; as much of our work currently revolves around supporting clinical trials, I believe this unsearched-for impact will be positive. We do not believe the AdComm decision has significant regulatory bearing outside of the US, and while it may slow adoption of MDMA-AT in other countries, it is unlikely to change anything in those markets where we have already established a presence.

Above all, it is critical to remember that despite this setback, AdComm was broadly of the opinion that there is enough data to continue moving forward - this was in no way a blanket denial or repudiation of MDMA's potential use. It was a comment on a specific drug product application made by a specific company. We will not be releasing a specific response to AdComm, as some shareholders have requested - firstly, because we believe it is inappropriate, and secondly because the application under review was not ours. Some of the comments made are fair, and we agree with them. Others are not, and we strongly disagree - but this is the nature of the drug approval process in the US.

For those who believed that approval would be quick, or easy, or guaranteed: we do not, and have never, shared that opinion. However, we remain confident in MDMA as a potential treatment for a range of mental health disorders, as well as our novel molecule research and development. We continue to focus on the needs of our customers: clinical investigators, doctors, and above all the patients who are benefitting every single day from access to our drug products.

Best regards,

Nicholas Kadysh

About PharmAla

PharmAla Biotech Holdings Inc. (CSE: MDMA) is a biotechnology company focused on the research, development, and manufacturing of MDXX class molecules, including MDMA. PharmAla was founded with a dual focus: alleviating the global backlog of generic, clinical-grade MDMA to enable clinical trials, and to develop novel drugs in the same class. PharmAla is a "regulatory first" organization, formed under the principle that true success in the psychedelics industry will only be achieved through excellent relationships with regulators. Our team of dedicated professionals includes regulatory experts, scientists, and biomanufacturing professionals. PharmAla has built what it believes to be North America's first cGMP MDMA value chain, encompassing GMP manufacturing of Active Pharmaceutical Ingredient (API), and drug product formulation. PharmAla's research and development unit has also begun preclinical research into two patented Novel Chemical Entities (NCEs) based on MDXX class molecules, with proof-of-concept research currently ongoing at the University of Arkansas Medical School.