Definitive Agreement Targeted for Execution by June 2026
TORONTO, ON 27 April, 2026 — PharmAla Biotech Holdings Inc. (CSE: MDMA)(OTCQB: MDXXF) (“PharmAla” or the “Company”), a biotechnology company focused on the research, development, and manufacturing of LaNeo™ MDMA and novel derivatives of MDMA (MDXX class molecules), is pleased to announce that it has executed a binding letter of intent (the “LOI”) with a strategic partner, Aluvaris Inc. (“Aluvaris”) for the formation and operation of a special purpose vehicle (the “SPV”) for the clinical and regulatory development of APA-01 (also known as PharmAla-1 or “P-1”), the Company’s patented novel MDXX molecule.
APA-01 is (R)-2-[(2H-1,3-benzodioxol-5-yl)methyl]pyrrolidine, a novel molecule protected by United States Patent No. 12,042,478, with potential therapeutic applications in the treatment of psychological trauma and neurological conditions, including Traumatic Brain Injury and Stroke. APA-01 is part of PharmAla’s broader portfolio of novel MDXX class molecules being developed alongside its lead drug candidate, ALA-002, via its Phenesafe.AI drug discovery platform.
Transaction Overview
Under the terms of the binding LOI, PharmAla and Aluvaris have agreed to form an SPV for the purpose of advancing APA-01 through clinical and regulatory development. The key terms of the arrangement are as follows:
Intellectual Property License. PharmAla will seed the SPV with a global exclusive license to its APA-01 intellectual property portfolio, including all patents, patent applications worldwide, research data, and related know-how (the “PharmAla IP License”). The license will be granted on a conditional basis and will become final and irrevocable upon the SPV’s strategic partner successfully meeting the Funding Threshold.
Capital Commitment. Aluvaris has committed to securing seed capital for the SPV (the “Funding Threshold”). The Funding Threshold is a critical condition for the finalization of the PharmAla IP License.
License Fee. Upon the SPV successfully completing a financing event that satisfies the Funding Threshold, the SPV will pay to PharmAla a one-time fee in consideration for the PharmAla IP License. The License Fee is payable within thirty (30) days of the closing of the Funding Threshold.
Royalty. In addition to the License Fee, the SPV and any future assignees of the PharmAla IP will pay to PharmAla a perpetual royalty of three percent (3%) on net sales of any product incorporating or derived from APA-01.
CRO Services. The SPV has retained an experienced Contract Research Organization, Diteba Inc. (“Diteba”) to manage the advancement of APA-01 through the clinical and regulatory stages of development. Diteba is a Canadian leader in complex analytical and bioanalytical testing, licensed by Health Canada and registered with FDA as a drug establishment and also licensed to handle controlled drugs and substances. Diteba has exceptional capabilities in GLP drug investigations and will provide analytical and scientific services to the SPV, leveraging its capabilities in complex analytical and bioanalytical testing under GLP and GMP standards.
Good Faith Negotiation and Break Fee. Both parties are bound to negotiate diligently and in good faith toward the execution of a definitive agreement. Either party that withdraws from negotiations will pay the other party a break fee.
Timeline
The parties have agreed to complete due diligence and execute a definitive agreement by June 8, 2026, subject to extension by mutual written agreement. Completion of the definitive agreement is subject to customary closing conditions, including satisfactory completion of due diligence by both parties and receipt of all requisite board, shareholder, and regulatory approvals.
Management Commentary
“This binding LOI represents a significant milestone in PharmAla’s strategy of creating value from our intellectual property portfolio beyond LaNeo™ MDMA and ALA-002,” said Nicholas Kadysh, CEO of PharmAla Biotech. “APA-01 is a molecule with compelling therapeutic potential, and significant regulatory upside noted in the Executive Order signed by President Donald Trump on April 18th. By partnering with a strategic counterparty that brings capital to the SPV, PharmaLa can advance APA-01 while allowing us to devote our resources to our core business assets. The retainer of Diteba by the SPV facilitates the clinical development of APA-01 without diverting PharmAla management and science resources from the development of the balance of its intellectual property portfolio. The terms and structure of the SPV ensure that PharmAla and its shareholders can participate meaningfully in the upside of APA-01’s development, while allowing us to maintain our focus and resources on our core LaNeo™ MDMA business and ALA-002 clinical program.”
Strategic Rationale
The SPV structure is designed to advance APA-01 through clinical and regulatory development without diluting PharmAla’s existing capital resources or diverting management attention from its core business.