PharmAla Biotech Holdings Inc. (“PharmAla”)(CSE: MDMA) is pleased to announce the establishment of a 50:50 joint venture, "Cortexa", with Australian-based Vitura Health Limited (ASX: VIT) (“Vitura”). Following the execution of a letter of intent between Vitura and PharmAla in late February, the parties have executed definitive agreements (the "Agreements"), including for the establishment of an incorporated joint venture vehicle, Cortexa Pty Ltd ("Cortexa"), which is owned equally by Vitura and PharmAla, pursuant to the terms of a joint venture agreement (the "JV Agreement") entered into among Cortexa, Vitura and PharmAla.

Cortexa is an Australian company, jointly owned by Vitura and PharmAla and with equal board representation. Supported by exceptional domestic distribution provided by the Vitura group, Cortexa will be able to provide MDMA and Psilocybin products (the "Products") for clinical use to be prescribed by Authorised Prescribers ¹ and for use in clinical trials undertaken by academic and commercial researchers.

PharmAla's MDMA and Psilocybin Products are already being supplied to numerous Australian clinical trials. Under the terms of the Agreements, the benefit of any sale orders for the Products received by PharmAla from the date of signing the letter of intent in February have been transferred to Cortexa, ensuring that the joint venture will generate revenues from the outset.

As PharmAla has already completed manufacturing a batch of the Products, Products are now available to Cortexa for import into Australia for supply to medical practitioners under the TGA’s Authorised Prescriber ² scheme once the changes come into effect on 1 July 2023. Furthermore, it is anticipated that Cortexa will receive a licence to PharmAla’s manufacturing technology and intellectual property, allowing for the efficient manufacturing of MDMA and Psilocybin in Australia under GMP conditions.

Initially, all Products will be imported from Canada, however, the anticipated licence to PharmAla's manufacturing technology and certain pharmaceutical intellectual property assets provides Cortexa with valuable optionality to partner with a local contract manufacturer to produce GMP MDMA and Psilocybin in Australia. Pursuant to the terms of the licence to PharmAla’s manufacturing technology and IP, Cortexa will pay PharmAla a licence fee of $250,000 per annum for three years on and from the date the joint venture is unconditional. Cortexa will also pay PharmAla a royalty equal to 5% of the net profit generated by Cortexa.

The joint venture is conditional on (among other things):

• Vitura being satisfied that PharmAla has, either directly or under license, all necessary intellectual property (IP) to allow Cortexa to utilise, sub-licence and commercialise such IP for the manufacture, marketing, sale and distribution of GMP MDMA and Psilocybin products in Australia; and
  
  
• The parties receiving any requisite regulatory approvals and permits from the relevant governmental agencies and third parties.

A break fee of $500,000 will be payable by PharmAla or Vitura, whichever is the breaching party, in the event of certain incurable breaches of the Agreements that result in the termination of the JV Agreement.

In order to provide Cortexa with sufficient working capital in its initial stage of development, Vitura has agreed to advance loan funds to Cortexa of up to $2,200,000 at an interest rate equal to the official cash rate +5% per annum, should they be required. Vitura will advance any such loan funds to Cortexa from its cash reserves.

In announcing the Joint Venture, Nick Kadysh, CEO of PharmAla Biotech, said:

“In seeking a partner to be the market leading supplier of GMP manufactured MDMA and Psilocybin in Australia, we looked far and wide. We spoke to half a dozen entities in Australia, seeking not only an organization with excellent relationships with regulators and good capitalization, but a real reputation for operational excellence. On every metric, Rodney Cocks, Guy Headley and Vitura have exceeded our expectations. We consider ourselves very lucky to have them as a partner and look forward to great success in the Australian market over the coming years – both for Cortexa, and more importantly, for patients accessing Psychedelics in Australia.”

Vitura CEO, Rodney Cocks, said:

“We are very pleased to be forming this JV with Nick Kadysh and his highly experienced PharmAla team. Vitura is proud that one of the world’s leading players in the Psychedelic space has joined forces with us to establish Cortexa as the leading MDMA and Psilocybin supplier in the Australian market. We are looking forward to working with the PharmAla team to bring a number of new, GMP manufactured treatment options to market at a time when major changes have been made to patient access to Psychedelics in Australia.”