Khiron Life Sciences : MD&A Q3 2022

KHIRON LIFE SCIENCES CORP.

MANAGEMENT DISCUSSION & ANALYSIS

FOR THE THREE AND NINE MONTHS ENDED September 30, 2022, and 2021

November 30, 2022

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Introduction

The following interim management's discussion and analysis (Interim MD&A) of Khiron Life Sciences Corp. (the "Corporation" or "Khiron") for the three and nine months ended September 30, 2022, has been prepared to provide material updates to the business operations, liquidity and capital resources of the Corporation since its last management's discussion and analysis, being the management's discussion and analysis for the three months ended June 30, 2022. This Interim MD&A does not reflect any non-material events since the date of the Annual MD&A.

For the purposes of preparing this Interim MD&A, management, in conjunction with the board of directors of the Corporation (the Board), considers the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of the Corporation's common shares; (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) it would significantly alter the total mix of information available to investors. Management, in conjunction with the Board, evaluates materiality with reference to all relevant circumstances, including potential market sensitivity.

This discussion should be read in conjunction with the Corporation's Annual MD&A, audited annual consolidated financial statements for the years ended December 31, 2021, and 2020, together with the notes thereto, and unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2022 and 2021, together with the notes thereto.

The Corporation's unaudited condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and interpretations of the IFRS Interpretations Committee (IFRIC). The unaudited condensed interim consolidated financial statements have been prepared in accordance with International Standard 34, Interim Financial Reporting. Accordingly, information contained herein is presented as of November 30, 2022, unless otherwise indicated.

Unless otherwise identified, the MD&A is presented in Canadian dollars, which is the Corporation's functional currency. All financial information presented in dollars has been rounded to the nearest thousand where appropriate, except for share and per share amounts.

This interim MD&A has been prepared by reference to the MD&A disclosure requirements established under National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) of the Canadian Securities Administrators. Additional information regarding Khiron is available on its website at (khiron.ca) and all previous public filings, are available through SEDAR (www.sedar.com).

Caution Regarding Forward-Looking Statements

This MD&A contains or incorporates certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as "forward-looking statements"). These statements relate to future events or the Corporation's future performance, objectives, goals, strategies, beliefs, intentions, plans, estimates, projections, and outlook, or estimates or predictions of actions of customers, suppliers, partners, distributors, competitors or regulatory authorities. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates" or "believes", or variations of, or the negatives of, such words and phrases, or state that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors

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that may cause actual results to differ materially from those anticipated in such forward-looking statements. The forward-looking statements in this MD&A speak only as of the date of this MD&A or as of the date specified in such statement.

Inherent in forward-looking statements are risks, uncertainties, and other factors beyond the Corporation's ability to predict or control. Please also refer to those risk factors set out in Risk Factors. Readers are cautioned that the list of risk factors that may affect the forward-looking statements is not exhaustive, and that the assumptions underlying such statements may prove to be incorrect. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this MD&A.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Corporation's actual results, performance, or achievements to be materially different from any of its future results, performance or achievements expressed or implied by forward-looking statements. All forward-looking statements herein are qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward- looking statements. The Corporation undertakes no obligation to update publicly or otherwise revise any forward- looking statements whether as a result of new information or future events or otherwise, except as may be required by law. If the Corporation does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements, unless required by law.

Description of The Business

Khiron was incorporated under the Business Corporations Act (British Columbia) on May 16, 2012. The Corporation's shares are listed on the TSX Venture Exchange (TSXV) under the symbol "KHRN", the OTCQX Best Market under the symbol "KHRNF" and on the Frankfurt Stock Exchange under the symbol "A2JMXC".

Khiron aims to innovate the category of medical cannabis through improving the state of healthcare worldwide. Khiron is a leading medical cannabis company with core operations in Latin America and Europe. Leveraging medical health clinics and proprietary telemedicine platforms. Khiron combines a patient-oriented approach, physician education program, scientific expertise, real-world evidence, product innovation, and cannabis operations expertise to drive prescriptions and brand loyalty with patients worldwide.

The Corporation has a sales presence in Colombia, Germany, the UK, Peru, and Brazil. The Corporation's wholly owned subsidiary, Khiron Colombia S.A.S., is licensed in Colombia for the cultivation, production, domestic distribution, and international export of both tetrahydrocannabinol (THC) and cannabidiol (CBD) medical cannabis. The Corporation is authorized to manufacture and fill prescriptions for high-THC and low-THC medical cannabis in Colombia, Peru, Brazil and dried flower products in Germany and the UK.

The Corporation has three product lines:

1. Medical Cannabis Products- in which the Corporation sells branded medical cannabis products to patients with medical conditions where cannabis can be an acceptable and proven option.
2. Health Services- where the Corporation operates its own network of medium complexity health centres (operating under the ILANS and ZereniaTM brands) and Zerenia satellite clinics offering a suite of health, medical and surgical services in alignment with both insurance company partners and private practice.
3. Wellbeing Products- focused on delivering the benefits of CBD across an array of various branded consumer packaged goods, such as its KuidaTM cosmetics line. As of December 2021, the Corporation is no longer actively pursuing sales and marketing opportunities for wellbeing products.

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NON-GAAP MEASURES AND ADDITIONAL GAAP MEASURES

Throughout this document, reference is made to "gross profit", "working capital", and "Adjusted EBITDA", which are all non-IFRS measures. Management use these measures as they provide additional information that is relevant to the business:

• Gross profit is a useful supplemental measure of operations
• Working capital is a useful indicator of the Corporation's liquidity and its ability to meet its current obligations
• EBITDA, which is earnings before finance costs including unrealized gains and losses on financial instruments, tax, and depreciation and amortization
• Whilst EBITDA is a useful measure, management believes that Adjusted EBITDA is a more appropriate measure for comparing results from one period to another. Adjusted EBITDA normalizes earnings to exclude certain non-operating,non-cash, and extraordinary amounts.

All these terms are defined below. Readers are cautioned that these non-IFRS measures may not be comparable to similar measures used by other companies. Readers are also cautioned not to view these non-IFRS financial measures as an alternative to financial measures calculated in accordance with International Financial Reporting Standards ("IFRS").

NON-GAAP MEASURES DEFINITIONS

"Adjusted EBITDA" is a measure of the Corporation's operating profitability. Adjusted EBITDA provides an indication of the results generated by the Corporation's principal business activities, excluding the impact of how these activities and assets are financed (including mark-to-market movements of the warrant value), depreciated and amortized and how the results are taxed in various jurisdictions It also excludes various non-cash accounting charges/credits such as impairment of property, plant, and equipment, impairment of intangible assets, changes in fair value of inventory, unrealized changes in fair value of biological assets, prior to the effect of foreign exchange, and share-based payment expense. Adjusted EBITDA is not intended to represent net earnings as calculated in accordance with IFRS. A reconciliation of net loss to adjusted EBITDA is provided in page 16.

"Working capital" is used by management and the investment community to analyze the operating liquidity available to the Corporation. Working capital is calculated as current assets less current liabilities.

ADDITIONAL GAAP MEASURES DEFINITIONS

Working capital is derived from the statements of financial position and is calculated as follows:

			Increase
As at	September 30,	December 31,	(decrease)
($ Cdn thousands)	2022	2021	in working capital
Current assets
Cash and cash equivalents	1,938	8,923	(6,985)
Accounts receivable	4,538	2,880	1,658
Inventory and biological assets	9,814	9,454	360
Prepaid expenses and other current assets	2,037	2,517	(480)
Total current assets	18,327	23,774	(5,447)

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Current liabilities
Accounts payable and accrued liabilities	6,757	4,308	2,449
Current portion of deferred consideration	1,079	104	975
Current portion of long-term debt and lease liabilities	1,226	1,522	(296)
Warrant liability	549	1,783	(1,234)
Total current liabilities	9,611	7,717	1,894
Working capital	8,716	16,057	(7,343)

"Gross profit" is used by management to analyze overall and segmented operating performance. Gross profit is not intended to represent an alternative to net earnings or other measures of financial performance calculated in accordance with IFRS. Gross profit is calculated from the statements of operations and comprehensive income (loss) and from the segmented information contained in the notes to the financial statements. Gross profit is defined as revenue less cost of sales, changes in fair value of inventory sold, and unrealized gain (loss) on changes in fair value of biological assets.

OVERVIEW

Key developments during Q3 2022 and up to November 30, 2022

The Corporation announced the appointment of Helen Bellwood as Interim CFO in July 2022, following the resignation of former interim CFO, Swapan Kakumanu.

In August 2022, Khiron announced the completion of the acquisition of Pharmadrug Production Gmbh, an EU-GMP certified German pharmaceutical manufacturer and wholesaler, from its parent PharmaDrug Inc. Pharmadrug Production Gmbh is an experienced player in the European pharmaceutical market. The acquisition provides Khiron with direct access to German pharmacies, a broader product portfolio with strong market presence and increase in gross margins for the Corporation's products.

Khiron opened its first clinic in Brazil in August 2022, in the district of Ipanema in Rio de Janeiro, a city of more than 12 million people. In the initial phase of the 7,000 sq. ft. clinic, Brazil's first Zerenia™ Clinic has a total capacity of approximately 23,000 patient consultations per year. Under the leadership of Dr. Eduardo Faveret as Medical Director, the clinic will open with more than 13 doctors for both in-person and telehealth models.

In October 2022, Khiron successfully imported its first-everhigh-THC product into Brazil from Colombia, expanding its product portfolio in the country.

In November 2022, Khiron entered the Swiss medical cannabis market with the first sales of two of its new flower products, namely the KHIRON Gelato 19/1 and the first THC:CBD balanced flower product KHIRON Caramel 5/7.

For the three months ended September 30,		2022	2021
Key Operating Metrics
Medical Cannabis Products
Revenue generating countries	#	5	4
Latin America	Bottles	28,239	11,058
Europe	Grams	116,705	42,890
Health Services
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