Devonian Health : MD&A for the period ended April 30, 2022

Q3-2022

MANAGEMENT REPORT

FOR THE THREE-MONTH PERIOD ENDED APRIL 30, 2022

1. INTRODUCTION
   This management report provides the reader with an overview of the activities and financial position of Groupe Devonian Inc. ("The Company") as of April 30,2022. It also provides an overview of the Company's performance by comparing its operating results on a consolidated basis for the three-month and nine-month periods ending April 30, 2022, with those of the three-month and nine-month periods ending April 30, 2021. It should be read in conjunction with the Company's consolidated and audited financial statements for the years ended July 31, 2021, and July 31, 2020. The financial data contained in this Management 's Discussion & Analysis report have been prepared by the Management, in accordance with the International Financial Reporting Standards (IFRS), based on the information available as of June 21, 2022. All amounts presented in this document are expressed in Canadian dollars.
2. FORWARD-LOOKINGSTATEMENTS
   The information contained in this Management's Discussion & Analysis, as well as the analysis of the results of operations and the financial position may contain statements relating to future results of operations. Certain forward- looking statements made by Management, relative to the results of the research studies as well as the objectives and the expectations of the Company, can be influenced by various risks and uncertainties and therefore generate real results different from those anticipated. The assumptions that support forward-looking statements made by Management are made from data presently available.
3. COMPANY PROFILE
   Devonian Health Group is a pharmaceutical company specializing in the development of botanical drugs. Incorporated on March 27, 2015, under the Québec Business Corporations Act. On May 12, 2017, the Company was continued under the Canada Business Corporations Act. Acquired on February 1, 2018, Altius Healthcare Inc., a corporation governed by the Business Corporations Act (Ontario), is a wholly owned subsidiary of Devonian Health Group Inc.
   The first family of active ingredients available to the Company is currently extracted from organic baby spinach. The flagship product of the Company, PUR0110, shows immunomodulatory, antioxidant and anti-inflammatory properties. It is the first product of a family of active ingredients, extracted using the Supra Molecular Complex Extraction and Stabilization Technology (SUPREX™). It is customary that when a drug is at an advanced stage of development, the code name be changed to a generic name associated with the chemical structure of the product.
   The PUR0110 will now bear the name of "Thykamine™".
   In addition to benefiting from a pharmaceutical complex extraction facility in Montmagny, Devonian also has skin care products developed with the same approach as its pharmaceutical products. The first cosmeceutical product developed by Devonian, is an anti-aging treatment for women, consisting of day creams, night cream and eye contour. R-Spinasome®, Devonian's proprietary natural active ingredient, is an integral part of this product, ready for marketing under the brand name Purgenesis ™. Purgenesis™ have earned the designation of being the first product distributed by dermatologists to be recognized by the Skin Health Program™ of the Canadian Dermatology Association. Backed by objective medical specialists and led by an Expert Advisory Board, the CDA Program provides advice for the maintenance of healthy skin, hair, and nails.

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This product is patented in Canada, Europe, Japan, and United States.

About Altius Healthcare

Based in Concord, Ontario, Altius Healthcare is a specialty pharmaceutical company focused on the acquisition and licensing of safe and innovative medicines and health products designed to help people of all age to lead a healthier life. Altius then leverages its expertise in the commercialization activities required to successfully launch and distribute these drugs in Canada.

Altius' current portfolio includes two pharmaceutical drugs: Pantoprazole magnesium and Cleo-35.

Pantoprazole Magnesium belongs to the family of medications called proton pump inhibitors (PPIs). Proton pump inhibitors are used to relieve symptoms of acid reflux or gastroesophageal reflux disease (GERD) also known as heartburn or acid regurgitation. They are also used to treat conditions requiring reduction of stomach acid, such as gastric (stomach) or duodenal (intestinal) ulcers, in combination with antibiotics in many instances.

Cleo-35® is a drug that contains a combination of two ingredients: cyproterone and ethinyl estradiol. Cyproterone belongs to a group of medicines called antiandrogens. Ethinyl estradiol belongs to a group of medicines called estrogens. Together, they are used to treat hormonal acne in women. This medicine works by regulating the hormones affecting the skin.

Devonian Health Group's business strategy is also to build a portfolio of complementary products that are compatible with its expertise and technology, which will help it achieve revenue and cash flow to enable it to realize its research projects and create value for its shareholders.

4. SUMMARY FOR THE QUARTER ENDING APRIL 30, 2022

1. FINANCING

During its third quarter of fiscal 2022, 1,311,553 subordinate voting shares were issued at a price of $0.352, for total consideration of $461,667. These shares were issued in settlement of the total amount of $461,667 due to a consultant of the Company's wholly owned subsidiary, Altius Healthcare Inc., which was assumed by the Company.

On February 4, 2022, the Company issued 100,822 units, at a unit price of $0.50 in exchange for the $50,411 of interest it owed as of January 19, 2022, to the holder of debentures issued in July 2018. Each unit consists of one subordinate voting share and one warrant. Each warrant entitles its holder to subscribe to one subordinate voting share of the Company at a price of $0.65 for a period of 48 months following their date of issue.

In March 2022, the Company issued 73,540 units, at a unit price of $0.47 in exchange for the $34,564 of interest it owed as of February 28, 2022, to holders of convertible debentures issued in August 2018. Each unit consists of one subordinate voting share and one warrant. Each warrant entitles its holder to subscribe to one subordinate voting share of the capital stock of the Company at a price of $0.61 for a period of 48 months following their date of issue.

The Company also issued 700,000 subordinate voting shares at a unit price of $0.25 following the exercise of 700,000 warrants, for a gross amount of $175,000.

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1. RESEARCH AND DEVELOPMENT

i) Atopic dermatitis (AD)

The positive results of this study, which several were disclosed during the previous fiscal year, allow the Company to continue, possibly with a pharmaceutical partner, in phase 3 of clinical development in adult patients.

The final manuscript on the results of the clinical study of atopic dermatitis in adults has been submitted and accepted by a peer-reviewed scientific journal, for publication in the Journal of Drugs in Dermatology, which is expected to appear in the fall 2022, in a special issue dealing with atopic dermatitis.

The phase 2 study protocol, in the pediatric population, has been written and is being reviewed by an opinion leader in pediatric dermatology. The protocol must then be submitted to an ethics committee for approval, after which it must be submitted to Health Canada for final approval.

About Atopic Dermatitis(AD)

Atopic dermatitis (AD), also known as eczema, is a type of inflammation of the skin. This results in itching, redness, swelling and cracking that can lead to secondary infection. The condition usually begins during childhood with changing severity over the years. Although the cause of AD is unknown, it is thought to involve genetics, a weakened immune system, and may be triggered by environmental factors. AD is the most common skin disease, and its prevalence continues to increase worldwide. There is currently a pressing need for new, effective, and well tolerated therapeutic options for AD.

1. Other pharmaceutical applications of ThykamineTM

Hand and Foot Syndrome (HFS) associated to chemotherapy

Hand-foot syndrome (MPS), a well-documented adverse effect of many chemotherapeutic agents whose prevalent characteristic manifestations include erythema, dysesthesia, pain, cracking, and scaling.

Discussions have been initiated with a hospital dedicated to cancer research, for the design and implementation of a clinical trial (proof of concept) in a population of cancer patients. Such a study would be initiated during the second quarter of 2023.

Radiodermatitis associated to radiotherapy

Radio dermatitis (radiation dermatitis, radiation-induced skin reactions, or radiation injury) is one of the most common side effects of ionizing radiation applied in radiotherapy of carcinoma of all locations, most commonly tumors in the breast region, head and neck, lung, and soft tissue sarcomas.

Despite its prevalence, there is no gold standard for its prevention and management. Many of the interventions currently in use are often based on anecdotal evidence, underpowered studies, or physician preferences. Additionally, trials evaluating topical agents have failed to demonstrate efficacy in the prevention and management of radiation- induced skin damage.

The anti-inflammatory, antioxidant, and immunomodulatory properties of ThykamineTM have been demonstrated by a considerable number of in vitro and in vivo studies. The Company believes that through the multi-target approach offered by ThykamineTM, it could be effective for the prevention and treatment of radio dermatitis. The Company plans to initiate a phase 2 study (proof of concept) in Q2-2023.

A first version of the research protocol has been written and will be reviewed by a radiation oncologist. The full protocol will be thoroughly reviewed and drafted considering the comments thus obtained.

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Mechanism of action of ThykamineTM

A study on the mechanism of action of ThykamineTM, initiated in a specialized laboratory during the previous fiscal year, continued during the first quarter of fiscal 2022. After obtaining positive results in June 2021, regarding the antioxidant properties of Thykamine TM, the study of the bioavailability of ThykamineTM at the cellular level and of the properties of ThykamineTM related to the health of skin cells, was initiated in September 2021. Results are expected during the next quarter and could be included in the Thykamine™ regulatory file. In addition, the Company is of the opinion that these could be the subject of a patent.

Method of analysis

The development of a new analytical method to validate the biological activity of Thykamine™ after extraction began during the third quarter. This method will allow product stability studies with overall storage conditions compliant with GMP (Good Manufacturing Practice) and ICH (International Conference on Harmonization). Such data is required by regulatory agencies when approving pharmaceutical products for marketing.

About ThykamineTM

Thykamine™, the first pharmaceutical product issued from the Devonian SUPREX ™ platform, is a highly innovative product to use in the prevention and treatment of health problems related to inflammation and oxidative stress, including ulcerative colitis, atopic dermatitis, psoriasis, rheumatoid arthritis, and other autoimmune diseases. The anti- inflammatory, anti-oxidative and immunomodulatory properties of Thykamine™ have been demonstrated in a considerable number of in vitro and in vivo studies as well as in a phase IIa clinical study on patients with mild to moderate distal ulcerative colitis. Thykamine ™ is currently being developed for ulcerative colitis and atopic dermatitis. Thykamine ™ and the SUPREX ™ platform are protected by several patents in North America, Europe, and Asia.

1. DERMA COSMECEUTICAL PRODUCTS

An agreement with a private Canadian company has been signed to carry out an assessment of business opportunities and a strategic study to facilitate the distribution of Purgenesis™ products in North America. This study will be carried out for the anti-aging treatment for women, consisting of day, night and eye contour creams, as well as for 2 other products, namely a serum and a regenerating balm, for which development began during of the second trimester. The report of this study was completed in May 2022.

During this third quarter, the Company made a significant supply of raw materials for future production of its Purgenesis™ brand derma cosmeceutical products. Like most players in this industry, Devonian faces slow supply chains for some of its raw materials.

About Purgenesis ™ anti-aging Treatment

R-Spinasome®, an active complex of thylakoids extracted from organic green leaves, is the basis of the first anti-aging cosmeceutical treatment marketed under the Purgenesis ™ product line. The structure of this complex is essential for its antioxidant action, which allows it to capture and dissipate the harmful energy generated by reactive oxygen derivatives (ROS), thus restoring the complex to a state ready to be subjected to new activation cycles. This regenerative capacity invests the R-Spinasome® complex with long-lasting antioxidant activity that is still unmatched. In a clinical study of 72 subjects, Purgenesis ™ anti-aging treatment has been shown to provide anti-wrinkle, firmness and hydration results far superior to leading anti-aging creams. Made of a day cream, night cream and eye cream, the anti-aging

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treatment is recognized by the Skin Health Program™ of the Canadian Dermatology Association. Purgenesis ™ anti-aging treatment is protected by patents in Japan, Canada, United States and Europe (#JP5952261; #CDN 2,699,6795; #US 13 / 261,472; #EUR 11 768 299.7).

1. DIGITIZATION AND AUTOMATION

During the quarter ended April 30, 2022, the Company began a process of digitizing the collection of data collected during its extraction activities, for each of the workstations, in order to facilitate the accessibility of the results of the analyzes and increase the efficiency of data processing. This digitization process will be tested, in parallel, during the next extraction activities, and must subsequently be subject to regulatory verifications.

5. SUMMARY OF OPERATING RESULTS FOR THE QUARTER ENDED APRIL 30, 2022

NET LOSS

For the quarter ended April 30, 2022, net loss attributable to shareholders amounted to $695,210 ($0.006 per share) compared to a net loss of $806,871 ($0.01 per share) for the same period corresponding to the previous year.

As for the nine-month period, ended April 30, 2022, the net loss totaled $2,667,125 ($0.02 per share) compared to $2,457,953 ($0.028) per share for the same period. corresponding to the previous year.

This decrease in net loss for the third quarter of 2022 compared to the same quarter of the previous year is mainly attributable to an increase in distribution revenues, partially offset by an increase in administrative and research and development expenses. For the nine-month period, ended on the same date, the increase in the net loss compared to the previous year is mainly explained by an increase in administrative expenses which was not offset by the increase in distribution revenues

REVENUES

During the three-month period, ending April 30, 2022, total revenues of $729,139 were recorded, mainly from the distribution of Cléo-35 and Pantoprazole Magnesium through its subsidiary Altius Healthcare. These revenues also come from royalties on the gross sales of products marketed by SkinScipac, according to the partnership with the American company SkinScipac Inc. (SkinScipac), announced in 2020.

For the same corresponding quarter of the previous fiscal year, revenues from Altius for the distribution of these two products amounted instead to $255,109.

For the first three quarters of fiscal 2022, revenues totaled $1,693,066 compared to $1,139,995 for the same period of the previous fiscal year.

This marked increase in revenues is mainly attributable to sales of Pantoprazole Magnesium as well as the sustained growth in sales of Cléo-35. In March 2022, Altius Healthcare was able to take advantage of a unique opportunity with a major wholesaler who had run out of stock for a competing product. An advantageous pricing policy negotiated with the Pantoprazole supplier also explains part of this increase.

Management is still in discussions with a major company, with the intention of obtaining further distribution rights.

RESEARCH AND DEVELOPMENT

During the three-month period ended April 30, 2022, research and development expenses amounted to $248,019, compared to $118,054 for the same quarter last year. This increase is mainly attributable to the multiple extraction activities carried out during this period, as well as to the preparation of the research protocol for the next clinical study on pediatric atopic dermatitis.

In addition, costs have been incurred for the development of a new analytical method to validate the biological activity of Thykamine after extraction. This method will allow product stability studies with overall storage conditions

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