PharmAla Biotech Holdings Inc. announced the establishment of a 50:50 joint venture, "Cortexa", with Australian-based Vitura Health Limited ("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 Pharm Ala 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 Prescribers1 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 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.