What changed in this filing

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Item 1A. Risk Factors

2021-06-22 compared with 2020-06-29 · 541 added, 1351 removed, 42 unchanged (98% of the section changed)

in our securities involves a high degree of risk due to, among other things, the nature of our business and the present stage

of our development.

Prospective and current investors should carefully consider the following risks and uncertainties, together

with all other information in this annual report, as well as our financial statements included in this annual report and “Item

Management’s Discussion and Analysis of Financial Condition and Results of Operation.” If any of these risks actually

occur, our business, financial condition, prospects, results of operations or cash flow could be materially and adversely affected

and you could lose all or a part of the value of your investment.

Additional risks or uncertainties not currently known to us,

or that we deem immaterial, may also negatively affect our business operations.

General Risks Related to the Company

Our business and operations may be materially and adversely affected

by the recent COVID-19 pandemic.

The COVID-19 pandemic is severely adversely affecting the U.S., Canadian and many other global

If the outbreak continues to spread, it may affect our operations and those of third parties upon which we rely, including:

· causing disruptions in the supply chain for our CaPre drug product candidate

delaying the scale-up of our manufacturing of CaPre in anticipation of a commercial launch;

· delaying the conclusion of our TRILOGY Phase 3 program due to limited access to expert consultants;

· delaying necessary interactions with regulators (including the FDA) due to limitations in employee

resources or furlough of government or contractor personnel;

· limiting our ability to secure funding for continued development and commercial preparations for

· delaying the development and commercial launch of CaPre;

· disrupting the commercialization of CaPre, if and once launched;

· limiting our outreach to physicians so they can be more likely to prescribe CaPre;

· limiting our ability to recruit professional staff to support the development, launch and commercialization

The extent to which the COVID-19 pandemic impacts our business

and prospects will depend on future developments, which are highly uncertain and cannot be predicted, including new information

which may emerge concerning the severity of the COVID-19 pandemic and the actions to contain the COVID-19 pandemic or

treat its impact, among others.

Additionally, while the potential economic impact brought by, and the duration

of, the COVID-19 pandemic is difficult to assess or predict, the impact of the COVID-19 pandemic on the global financial

markets may reduce our ability to access capital, which could negatively impact our short-term and long-term liquidity and adversely

affect our business and overall financial condition.

There is substantial doubt about

our ability to continue as a going concern.

We have incurred operating losses and negative

cash flows from operations since our inception.

To date, we have financed our operations through public offerings and private placements

of securities, proceeds from exercises of warrants, rights and options, and receipt of research tax credits and research grant

Our current assets of $16.1 million as

at March 31, 2020 include cash and cash equivalents totaling $14.2 million.

Assuming positive results from TRILOGY Phase 3 program,

we expect that additional time and capital will be required by us to file an NDA to obtain FDA approval for CaPre in the United

States, to further scale-up our manufacturing capabilities, and to complete marketing and other pre-commercialization activities.

Consequently, we expect to require additional capital to fund our daily operating needs beyond January 2021.

Based on a conservative

estimate, we believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure

requirements into the first calendar quarter of 2021.

To fully execute our business plan, we plan to raise the necessary capital

primarily through additional securities offerings as well as non-dilutive sources of capital such as grants or loans and strategic

If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly

delay the commercial launch of CaPre, if it receives regulatory approval.

Unexpected negative results in our TRILOGY Phase 3 program

for CaPre may affect our ability to raise additional capital and/or complete strategic development and/or distribution partnerships

to support the commercial launch of CaPre.

Additional funding from third parties may not be available on acceptable terms or at

all to enable us to continue with the commercialization of CaPre.

If we do not raise additional funds or

find one or more strategic partners, we may not be able to realize our assets and discharge our liabilities in the normal course

As a result, there is a substantial doubt about our ability to continue as a going concern.

Our financial statements

have been prepared on a going-concern basis, which assumes we will continue our operations in the foreseeable future, and will

be able to realize our assets and discharge our liabilities and commitments in the ordinary course of business.

If we are unable

to continue as a going concern, material impairments of the carrying value of our assets, including intangible assets, could be

If we fail to obtain additional financing, we may not be able to continue as a going concern.

We may never become profitable or

be able to sustain profitability.

We are a clinical-stage biopharmaceutical company with a limited

operating history.

The likelihood of the success of our business plan must be considered in light of the problems, expenses, difficulties,

complications and delays frequently encountered when developing and expanding early-stage businesses and the regulatory and competitive

environment in which we operate.

Biopharmaceutical product development is a highly speculative undertaking, involves a substantial

degree of risk, and is a capital- intensive business.

We expect to incur expenses without any meaningful corresponding revenues

unless and until we are able to obtain regulatory approval for and can begin selling CaPre in significant quantities.

our IND for CaPre in late 2013, which allowed us to initiate clinical development in the United States towards FDA approval for

To date, we have not generated any revenue from CaPre, and we may never be able to obtain regulatory approval for marketing

CaPre in any indication.

Even if we are able to commercialize CaPre, we may still not generate significant revenues or achieve

profitability.

Additionally, we may not be able to attain our targeted cost of goods sold, and levels of insurance reimbursement

for CaPre may not be commercially viable in all global markets.

We incurred net losses for the fiscal year ended March 31, 2020

of $26.3 million and $39.3 million for the fiscal year ended March 31, 2019.

As of March 31, 2020, we had an accumulated deficit

of $129.4 million.

We expect that our expenses will

increase in the future as we prepare to seek FDA approval for the commercial launch of CaPre.

Our research and development expenses could

increase in the future if we decide to develop CaPre for other indications.

As a result, we expect to continue to incur substantial

losses for the foreseeable future, and those losses may be increasing.

We are uncertain about when or if we will be able to achieve

or sustain profitability.

If we fail to become and remain profitable, our ability to sustain our operations and to raise capital

could be impaired and the price of our common shares could decline.

Given the unusually large placebo effect observed in the TG topline

results of our TRILOGY 1 Phase 3 clinical trial and that the data for TRILOGY 2 is still blinded, the outcome of our TRILOGY Phase

3 program and our ability to file an NDA in early 2021 remains uncertain.

On January 13, 2020, we released topline

results for our TRILOGY 1 trial, which did not reach statistical significance due to an unusually large placebo effect described

in more detail in “Item 1.

Business —

TRILOGY 1 Topline Results”.

Our investigation of the underlying data identified

some unexpected and inconsistent findings that we believe, based on our audits and subsequent post-hoc data analyses, may have

negatively contributed to the unusually large placebo effect.

We summarized and provided this information in the form of a briefing

package to the FDA, to gain alignment with the FDA on the interpretation of the TRILOGY 1 results and implications for our TRILOGY

2 trial as well as receive the FDA’s inputs on our proposed revisions to the pre-specified TRILOGY 2 SAP.

As we disclosed on June 19, 2020, the FDA

provided us with a written response to our Type C Meeting request and briefing package.

The FDA confirmed that it will require

pivotal efficacy analyses for TRILOGY 2 to be performed on the full ITT population as contemplated in the original SAP and it supported

the conduct of post-hoc analyses in TRILOGY 1 for exploratory purposes.

Consistent with our prior disclosures and depending on

the outcome of TRILOGY 2, an additional clinical study may still be needed prior to NDA submission.

Based on the written feedback

received from the FDA, we will now finalize the SAP for TRILOGY 2, which we plan to submit to the FDA by the end of July 2020.

See “Item 1.

Business —

Recent Developments”.

There can be no assurance that (i) the

FDA will agree with our observations on the TRILOGY 1 data, (ii) we will achieve our primary endpoint or any of our secondary and

exploratory endpoints for TRILOGY 2, or (iii) we will be able to report these topline results on a timely basis.

The FDA may also

not allow us to pool data from TRILOGY 1 and TRILOGY 2 even if we achieve the primary endpoint for TRILOGY 2.

The results of pooling

the TRILOGY 1 and TRILOGY 2 data and results may not achieve statistical significance or allow for a filing of an NDA.

to achieve the primary endpoint for TRILOGY 2 or achieve statistical significance based on the pooling the TRILOGY 1 and TRILOGY

2 data and results could result in the need to repeat one or both TRILOGY trials, which could prevent or delay our NDA submission

relating to, or the development and commercialization of, CaPre and have a material adverse effect on our business and financial

If outcome studies being conducted

by our competitors testing the impact of OM3 on treating patients with high TGs are negative, there could also be an adverse impact

Top-line results from the cardiovascular outcomes trial, or CVOT, sponsored

by Amarin (the REDUCE-IT trial) were released in September 2018.

This study was successful, and showed that long-term use of an

OM3 therapeutic (VASCEPA) in patients with elevated TGs (>150 mg/dL), resulted in a significant reduction in cardiovascular

A second CVOT sponsored by AstraZeneca (the STRENGTH trial) was discontinued on January 13, 2020 due to its low likelihood

of demonstrating a benefit to patients with elevated TGs.

The potential impacts of the discontinuance of the STRENGTH trial on

our business and the OM3 drug market in general are not yet known.

Given that the REDUCE-IT trial showed that an OM3 therapeutic

drug can effectively treat patients with high TGs and improve cardiovascular, morbidity and mortality outcomes, we believe that

the potential exists to expand CaPre’s indication in the future to include the treatment of high TGs (150 –

however, this expansion would require at least one additional clinical study, likely a CVOT trial.

As a result of the discontinuance

of AstraZeneca’s STRENGTH trial, our potential target market for CaPre may be limited to patients with sHTG (for which the

market was estimated, based on audited prescription data by Symphony Health Analytics, to be approximately $1.65 billion

in 2019), and our ability to realize greater market potential for CaPre may be harmed.

We rely on third parties to conduct

our TRILOGY Phase 3 program for CaPre.

We rely on CROs to monitor and manage data

for our TRILOGY Phase 3 program for CaPre.

While we will only control certain aspects of the CRO’s activities, we nevertheless

are responsible for ensuring that our clinical trials are conducted in accordance with applicable protocols, and legal, regulatory

and scientific standards, and our reliance on the CRO does not relieve us from those responsibilities.

We and the CRO are required

to comply with current good clinical practices, or cGCPs, which are regulations and guidelines enforced by the FDA, Health Canada

and comparable foreign regulatory authorities for any products in clinical development.

The FDA enforces these cGCP regulations

through periodic inspections of trial sponsors, principal investigators and trial sites.

If we or the CRO fail to comply with applicable

cGCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA, Health Canada or comparable foreign

regulatory authorities may require us to perform additional clinical trials before approving our marketing applications for CaPre.

Upon inspection, the FDA could determine that our clinical trials do not comply with cGCPs.

In addition, our clinical trials must

be conducted with products produced under cGMP regulations and require a large number of test subjects.

If we or the CRO fail to

comply with these regulations, we may have to repeat preclinical studies or clinical trials for CaPre, which would delay the regulatory

approval process and could also subject us to enforcement action up to and including civil and criminal penalties.

If our relationship with a CRO terminates,

we may not be able to enter into arrangements with alternative CROs.

If the CRO does not successfully carry out its duties or obligations

or meet expected deadlines, if it needs to be replaced or if the quality or accuracy of the clinical data it obtains is compromised

due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, we may have to extend, delay

or terminate our preclinical or clinical trials, and we may not be able to obtain regulatory approval for or successfully commercialize

The third parties that are conducting our

TRILOGY Phase 3 program for CaPre are not our employees and, except for remedies available to us under our agreements with the

CROs, we cannot control whether or not they devote sufficient time and resources to our preclinical, clinical and nonclinical programs.

These third parties may also have relationships with other commercial entities, including our competitors, for whom they may also

be conducting clinical studies or other drug development activities, which could affect their performance on our behalf.

We rely on third parties to manufacture,

produce and supply CaPre and we may be adversely affected if those third parties are unable or unwilling to fulfill their obligations,

including complying with FDA requirements.

Producing pharmaceutical products requires

significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls.

Currently, while we do own our manufacturing and encapsulation equipment, we outsource the production of CaPre, and do not own

or operate the manufacturing facilities.

Accordingly, we need to rely on one or more third party contract manufacturers to produce

and supply our required drug product for our nonclinical research and clinical trials, and to build commercial inventory for CaPre.

Scale up of our commercial manufacturing processes for CaPre is a

difficult and uncertain task, and there are risks associated with scaling to the level required for full commercialization, including,

among others, pricing, cost overruns, potential problems with process scale-up, process reproducibility, stability issues, lot

consistency and timely availability and consistent pricing of reagents or raw materials.

Consequently, we may not be able to attain

our targeted cost of goods sold for CaPre.

Any of these challenges could delay a commercial launch of CaPre, require bridging studies

or the repetition of studies or trials, increase development costs, delay approval of CaPre, impair our commercialization efforts,

and increase our cost of goods.

We may have to delay or suspend the production of CaPre if a third-party manufacturer:

becomes unavailable for any reason, including as a result of the failure to comply with cGMP regulations;

experiences manufacturing problems or other operational failures, such as equipment failures or unplanned facility shutdowns required to comply with cGMP or damage from any event, including fire, flood, earthquake, pandemics such as an extension of the current COVID-19 pandemic, business restructuring or insolvency;

fails or refuses to perform its contractual obligations under its agreement with us, such as failing or refusing to deliver the quantities of CaPre requested by us on a timely basis.

If our third-party contract manufacturers

fail to achieve and maintain high manufacturing standards in compliance with cGMP regulations, we may be subject to sanctions,

including fines, product recalls or seizures, injunctions, delays or suspensions of our clinical trials for CaPre, total or partial

suspension of production of CaPre, civil penalties, withdrawals of previously granted regulatory approvals, and criminal prosecution.

While we contemplate procuring it in the future, we do not currently have arrangements in place for redundant supply.

of our current contract manufacturers cannot perform as agreed, we may be required to replace that manufacturer.

Although we believe

that there are several potential alternative contract manufacturers who could manufacture CaPre, we may incur added costs and delays

in identifying and qualifying any such replacement.

We have historically had no marketing,

market access, and sales organization, and as a company, have not previously marketed any new drug products.

If we are unable to

properly establish marketing, market access, and sales capabilities or enter into agreements with a strategic partner to market

and sell CaPre in any key market, we may not be able to generate revenue.

We have historically had no sales, marketing,

market access, or distribution capabilities, and as a company, we have also historically not launched any new drug products.

CaPre or another of our future product candidates is approved for commercialization, we plan to develop in-house sales, marketing,

market access and sales force capability, which would require significant capital expenditures, management resources and time,

unless we can find a strategic partner to assist us with sales, marketing, market access, and distribution.

Also, we would have

to compete with other biotechnology and pharmaceutical companies to recruit, hire, train and retain marketing and sales personnel.

We face competition in our search for strategic partners to assist us with sales, marketing, market access and distribution, and

we may not be able to establish or maintain any such arrangements in any key market on terms acceptable to us or at all.

do find a strategic partner, any revenue we receive from CaPre would partly depend upon the efforts of that strategic partner,

which may not be successful.

We may have little or no control over the marketing, market access and sales efforts by any strategic

partner we find for CaPre and our revenue may be lower than if we had commercialized CaPre independently.

If we are not successful in attracting

and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.

Our ability to compete in the highly competitive

pharmaceuticals industry largely depends upon our ability to attract and retain highly qualified managerial, scientific, medical,

and commercial personnel.

Competition for skilled personnel in our market is intense and competition may limit our ability to hire

and retain highly qualified personnel on acceptable terms.

We are highly dependent on our management, financial, commercial, and

scientific personnel.

Despite our efforts to retain valuable employees, members of our management, financial, commercial, scientific

and medical teams may terminate their employment with us on short notice or, potentially, without any notice at all.

the services of any of our executive officers or other key employees could potentially harm our business, operating results or

financial condition.

Our success may also depend on our ability to attract, retain and motivate highly skilled junior, mid-level,

and senior managers and scientific personnel.

In addition, we do not maintain “key person” insurance policies on the

lives of our executives or those of any of our other employees.

Other pharmaceutical companies with which we compete for qualified

personnel have greater financial and other resources, different risk profiles, and a longer history in the industry than we do.

They also may provide more diverse opportunities, more lucrative compensation packages, and better chances for career advancement.

Some of these characteristics may be more appealing to high-quality candidates than what we can offer.

If we are unable to continue

to attract and retain high-quality personnel, the rate and success at which we can develop and commercialize CaPre and any other

future product candidates would be limited.

Business disruptions could seriously

harm our future revenue and financial condition and increase our costs and expenses.

Our operations, and those of our suppliers,

third party manufacturers and other contractors and consultants could be subject to earthquakes, power shortages, telecommunications

failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical pandemics and other natural

or man-made disasters or business interruptions, for which we are predominantly self-insured.

The occurrence of any of these business

disruptions could seriously harm our operations and financial condition and increase our costs and expenses.

We rely on third-party

manufacturers to manufacture CaPre.

Our ability to obtain supplies of CaPre could be disrupted if the operations of our manufacturers

and suppliers are affected by a man-made or natural disaster or other business interruption.

Our prospects currently depend entirely

on the success of CaPre, which is still in late stage clinical development, and we may not be able to generate revenues from CaPre.

We have no prescription drug products that

have been approved by the FDA, Health Canada or any similar regulatory authority.

Currently, our only prescription drug candidate

is CaPre, for which we have not yet filed an NDA, and for which we must complete our TRILOGY Phase 3 program and seek and receive

regulatory approval prior to commercial launch.

We do not anticipate filing our NDA until 2021 at the earliest.

The results of

our TRILOGY 1 trial did not meet its primary endpoint, and our ability to commercialize CaPre is now highly dependent on a positive,

statistically significant outcome for our TRILOGY 2 trial, and a supportive position from the FDA to allow us to file an NDA by

pooling data from both TRILOGY Phase 3 trials.

We have invested significant effort and financial resources in researching and developing

Commercialization of CaPre will require substantial additional investment, access to sufficient commercial manufacturing

capacity and significant marketing efforts before we can generate any revenue from sales of CaPre, if it is ever approved by the

FDA for commercialization.

We currently do not have any other prescription

drug candidates in development, and so our business prospects depend entirely on the successful development, regulatory approval

and commercialization of CaPre, which may never occur.

Most prescription drug candidates never reach the clinical development stage

and even those that do reach clinical development have only a small chance of successfully completing clinical development and

gaining regulatory approval.

If we are unable to successfully commercialize CaPre, we may never generate meaningful revenues.

addition, if CaPre reaches commercialization and there is low market demand for CaPre or the market for CaPre develops less rapidly

than we anticipate, we may not have the ability to shift our resources to the development of alternative products.

We may not be able to obtain required

regulatory approvals for CaPre.

We have limited experience in obtaining

regulatory approvals, including approvals by the FDA and, as a company, we have no experience in obtaining regulatory approval

of any product candidates.

The research, testing, manufacturing, labeling, packaging, storage, sale, marketing, pricing, export,

import and distribution of prescription drug products are subject to extensive regulation by the FDA in the United States and other

regulatory authorities in other countries around the world, and regulations differ from country to country.

We are not permitted

to market CaPre in the United States until we receive approval of an NDA from the FDA, and similar restrictions apply in other

In the United States, the FDA generally requires the completion of preclinical testing and clinical trials for each

drug to establish its safety and efficacy and extensive pharmaceutical development to ensure its quality and consistent manufacturing

capabilities before an NDA is approved.

Regulatory authorities in other jurisdictions impose similar requirements.

number of drugs in development, only a small percentage result in the submission of an NDA to the FDA, and even fewer are approved

for commercialization.

To date, we have not submitted an NDA for CaPre to the FDA or comparable applications to other regulatory

Our receipt of required regulatory approvals

for CaPre is uncertain and subject to a number of risks, including:

the FDA or comparable foreign regulatory authorities or independent

institutional review boards may disagree with the design or implementation of our clinical trials;

we may not be able to provide acceptable evidence of the safety and efficacy of CaPre;

the results of our clinical trials may not meet the level of statistical or clinical significance required by the FDA or other regulatory agencies for marketing approval;

the dosing of CaPre in a particular clinical trial may not be at an optimal level;

patients in our clinical trials may suffer adverse effects for reasons that may or may not be related to CaPre;

we may be unable to demonstrate that CaPre’s clinical and other benefits outweigh its safety risks;

the data collected from our clinical trials may not be sufficient to support the submission of an NDA for CaPre or to obtain regulatory approval for CaPre in the United States or elsewhere;

the FDA or comparable foreign regulatory authorities may not approve the manufacturing processes or facilities of third party manufacturers with which we contract for clinical and commercial supplies of CaPre;

the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.

Furthermore, the preliminary topline data released in January 2020 relating

to our TRILOGY 1 Phase 3 clinical trial was significantly impacted by an unusually large placebo effect.

Our ongoing investigations

into this unusually large placebo effect have not produced any definitive explanations, and there is no assurance that pooling

of the data from our TRILOGY 1 and 2 trials will achieve statistical significance, or an outcome that is supported by the FDA.

Furthermore, there is no assurance that any adjusted approach to analyzing data from our TRILOGY 1 and 2 trials would achieve statistical

significance or allow for a filing of an NDA.

For a further discussion of our TRILOGY 1 and 2 trials, see “Item 1.

Recent Developments.”

The FDA and other similar regulators have

substantial discretion in the approval process and may refuse to accept our application or may decide that our data is insufficient

for approval and require additional clinical trials, or preclinical or other studies for CaPre.

If regulatory approval for CaPre

is obtained in one jurisdiction that does not necessarily mean that CaPre will receive regulatory approval in all jurisdictions

in which we seek approval.

If we fail to obtain approval for CaPre in one or more jurisdictions, our ability to obtain approval

in a different jurisdiction may be negatively affected.

Even if we receive regulatory approval

for CaPre, it may just be for a limited indication.

If we obtain regulatory approval for CaPre,

we will only be permitted to market it for the indication(s) approved by the FDA, and any such approval may put limits on the indicated

uses or promotional claims we may make for it, or otherwise not permit labeling that sufficiently differentiates CaPre from competitive

products with comparable therapeutic profiles.

For example, while our initial objective is to seek regulatory approval for the

treatment of sHTG, afterwards obtaining approval for CaPre to address mild to moderate HTG could greatly expand our potential market

However, even if CaPre is approved for sHTG, it may never be approved for the treatment of mild to moderate HTG.

addition, any approval we receive for CaPre could contain significant use restrictions for specified age groups, warnings, precautions

or contraindications, or may be subject to burdensome post-approval study or risk management requirements.

If any regulatory approval

for CaPre contains significant limits, we may not be able to obtain sufficient funding or generate meaningful revenue from CaPre

or be able to continue developing, marketing or commercializing CaPre.

We may be unable to find successful

strategic partnerships to develop and commercialize CaPre.

We intend to utilize an in-house team to market CaPre in the United

We intend to seek co-development, licensing and/or marketing partnership opportunities with third parties for access to

key markets around the world that we believe will complement or enhance our direct development and commercialization efforts for

CaPre in the United States.

Entering into potential partnerships may require us to incur non-recurring and other charges, increase

our near and long-term expenditures, issue securities that dilute our existing shareholders or disrupt our management and business.

Entering into partnerships could also delay the commercialization of CaPre, and our other future product candidates in those markets

if we become dependent upon a strategic partner and that strategic partner does not prioritize the development of CaPre (or our

future product candidates) relative to its other development activities.

In addition, we face significant competition in seeking

strategic partners, and the negotiation process is time-consuming and complex.

We may not be successful in our efforts to establish

a strategic partnership or other alternative commercial arrangements for CaPre on our anticipated timeline, or at all, because

CaPre may be deemed to be at too early of a stage for collaborative effort, and/or third parties may not view CaPre as having the

requisite potential to demonstrate safety, efficacy or product differentiation that will make it competitive.

Even if we do enter

into strategic partnerships, those partnerships may not achieve our objectives.

We may be unable to in-license and/or

develop alternative product candidates.

To date, we have not commercialized any

prescription drug candidates and, other than CaPre, we do not currently have any compounds in clinical trials, nonclinical testing,

lead optimization or lead identification stages.

If we fail to obtain regulatory approval for and successfully commercialize CaPre

as a treatment for sHTG or any other indication, whether as a stand-alone therapy or in combination with other treatments, we would

have to develop, acquire or license alternative product candidates or drug compounds to expand our product candidate pipeline beyond

In such a scenario, we may not be able to identify and develop or acquire product candidates that prove to be commercially

successful, or to develop or acquire them on terms that are acceptable to us.

We may not be able to compete effectively

against our competitors’ pharmaceutical products.

The biotechnology and pharmaceutical industries are highly competitive.

There are many pharmaceutical companies, biotechnology companies, public and private universities and research organizations actively

engaged in the research and development of products that may be similar to CaPre.

It is probable that the number of companies seeking

to develop products and therapies similar to CaPre will increase, particularly based on positive REDUCE-IT CVOT results by Amarin.

In addition, on March 30, 2020, a federal district court ruled in favor of generic drug companies in patent litigation against

two filers of abbreviated new drug applications for Amarin’s VASCEPA franchise in the United States.

Amarin is now appealing

that decision.

A generic version of VASCEPA has now been approved by the FDA, but the timing of launch will be dependent on the

outcome of Amarin’s appeal.

More companies could be seeking to develop and produce products and therapies similar to CaPre.

Many of our existing and potential competitors have substantially greater financial, technical and human resources than we do and

may be better equipped to develop, manufacture and market products.

These companies may develop and introduce products and processes

competitive with or superior to CaPre.

In addition, other technologies or products may be developed that have an entirely different

approach or means of accomplishing the intended purposes of CaPre, which might render our technology and CaPre non-competitive

Our competitors in the United States and

globally include large, well-established pharmaceutical companies, specialty pharmaceutical sales and marketing companies, and

specialized cardiovascular treatment companies.

GlaxoSmithKline plc, which sells LOVAZA, a prescription-only OM3 fatty acid indicated

for patients with sHTG, was approved by the FDA in 2004 and has been available in the United States since 2005.

Multiple generic

versions of LOVAZA are now available in the United States.

Amarin launched its prescription-only OM3 drug VASCEPA in 2013, and

reached about a market share of approximately 20% by the end of 2015.

market share in 2019 was estimated to have grown

to more than 50%.

In addition, EPANOVA (OM3-carboxylic acids), a free fatty acid form of OM3 (comprised of 55% EPA and 20% DHA),

is FDA-approved for patients with sHTG.

OMTRYG , another OM3 fatty acid composition

developed by Trygg Pharma AS, received FDA approval for sHTG.

Neither EPANOVA nor OMTRYG have

yet been commercially launched.

Matinas Biopharma recently started their development program for MAT9001, an OM-3 free fatty acid

that consists primarily of EPA and docosapentaenoic acid.

Other large companies with products that would compete indirectly with

CaPre include AbbVie, Inc., which currently sells TRICOR and TRILIPIX for the treatment of sHTG, and NIASPAN, which is primarily

used to raise HDL-C but is also used to lower TGs.

Generic versions of TRICOR, TRILIPIX, and NIASPAN are also now available in

the United States.

In addition, we are aware of a number of other pharmaceutical companies that are developing non-OM3 products

that, if approved and marketed, could compete with CaPre.

Even if it receives regulatory approval,

CaPre will need to demonstrate compelling comparative advantages in efficacy, convenience, tolerability and safety to be commercially

Other competitive factors, including additional generic drug competition, could force us to lower prices or could result

in reduced sales of CaPre.

In addition, new products developed by others could emerge as competitors to CaPre.

If we are not able

to compete effectively against our current and future competitors, our business will not grow and our financial condition and operations

On March 30, 2020, the U.S.

District Court

for the District of Nevada ruled in favor of two generic companies (Hikma Pharmaceuticals plc and Dr.

Reddy’s Laboratories

Ltd) by deciding that Amarin’s patent claims for VASCEPA were invalid for being obvious in view of prior art.

has filed an appeal, and both parties have requested the U.S.

Court of Appeals for the Federal Circuit to review Amarin's appeal

on an expedited schedule, with a decision expected later this year.

Should Amarin lose this appeal, we would expect generic

versions of VASCEPA to enter the market within the next year.

This could have a negative impact on pricing much sooner than previously

expected and could result in downward pressure on pricing for CaPre in order to get payer coverage.

CaPre could face competition from

products for which no prescription is required.

If it receives regulatory approval, CaPre will be a prescription-only

Mixtures of OM3 fatty acids are naturally occurring substances in various foods, including fatty fish.

Lower potency and lower

purity forms of OM3 fatty acids are also marketed by other non-pharmaceutical companies as dietary supplements or natural health

Dietary supplements may generally be marketed without a lengthy FDA premarket review and approval process, and do not

require a prescription.

However, unlike drug products, manufacturers of dietary supplements are not permitted to make therapeutic

claims for their products;

dietary supplements may be marketed with claims describing how the product affects the structure or

function of the body without premarket approval, but cannot expressly or implicitly represent that the dietary supplement will

diagnose, cure, mitigate, treat, or prevent disease.

We cannot be certain that physicians or consumers will view CaPre as superior

to these alternatives or that physicians will be more likely to prescribe CaPre.

If CaPre is not broadly covered by insurance,

or the patient co-pay is significantly higher than the prices of commercially available OM3 fatty acids marketed by other companies

as dietary supplements or natural health products, physicians may recommend these commercial alternatives instead of CaPre, or

patients may elect on their own to take commercially available non-prescription OM3 fatty acids.

Either of these outcomes could

limit how we price CaPre and market adoption, and therefore negatively affect potential revenues.

Recent and future legal developments

could make it more difficult and costly for us to obtain regulatory approvals for CaPre and negatively affect the prices we may

In the United States and elsewhere, recent and proposed legal and

regulatory changes to healthcare systems could prevent or delay our receipt of regulatory approval for CaPre, restrict or regulate

our post-approval marketing activities, and adversely affect our ability to profitably sell CaPre.

Proposals have also been made

to expand post-approval requirements and to restrict sales and promotional activities for pharmaceutical products.

We do not know

whether additional legislative changes will be enacted, or whether the FDA’s regulations, guidance or interpretations will

be changed, or what impact any such changes will have, if any, on our ability to obtain regulatory approvals for CaPre.

the Centers for Medicare and Medicaid Services, or CMS, frequently changes product descriptors, coverage policies, product and

service codes, payment methodologies and reimbursement values.

Also, increased scrutiny by the U.S.

Congress of the FDA’s

approval process could significantly delay or prevent our receipt of regulatory approval for CaPre and subject us to more stringent

product labeling and post-marketing testing and other requirements.

Furthermore, for market approval in EU countries, a CVOT is

currently required.

These types of trials are large, costly, and follow patients for at least 5 years.

There can be no guarantee

that we will ever conduct an outcome trial to meet these requirements to market in the European Union.

In the United States, the Medicare Modernization

Act, or the MMA, changed the way Medicare covers and pays for pharmaceutical products.

The MMA expanded Medicare coverage for drug

purchases by the elderly and introduced a new reimbursement methodology based on average sales prices for drugs.

In addition, the

MMA authorized Medicare Part D prescription drug plans to use formularies where they can limit the number of drugs that will be

covered in any therapeutic class.

As a result of the MMA and the expansion of federal coverage of drug products, we expect there

will be additional pressure to contain and reduce healthcare costs.

These healthcare cost reduction initiatives and other provisions

of the MMA could decrease the coverage and price that we would receive for CaPre.

While the MMA applies only to drug benefits for

Medicare beneficiaries, private health insurance companies often follow Medicare coverage policy and payment limitations in setting

their own reimbursement rates, and any reduction in reimbursement that results from the MMA may result in a similar reduction in

payments from private health insurance companies.

The Patient Protection and Affordable Care

Act, as amended by the Health Care and Education Affordability Reconciliation Act (the Health Care Reform Law), has broadened access

to health insurance, reduced or constrained the growth of healthcare spending, enhanced remedies against fraud and abuse, added

new transparency requirements for the healthcare and health insurance industries, imposed new taxes and fees on the health industry

and imposed additional health policy reforms.

Provisions of the Health Care Reform Law affecting pharmaceutical companies include

requirements to offer discounts on brand-name drugs to patients who fall within the Medicare Part D coverage gap, commonly referred

to as the “donut hole”, and to pay an annual non-tax deductible fee to the federal government based on each company’s

market share of prior year total sales of branded products to certain federal healthcare programs, such as Medicare, Medicaid,

Department of Veterans Affairs and Department of Defense.

The Healthcare Reform Law also includes significant provisions that encourage

state and federal law enforcement agencies to increase activities related to preventing, detecting and prosecuting those who commit

fraud, waste and abuse in federal healthcare programs, including Medicare, Medicaid and Tricare.

Despite initiatives to invalidate the Health

Care Reform Law, the U.S.

Supreme Court has upheld key aspects of it.

There is still uncertainty with respect to the impact the

presidential administration and the U.S.

Congress may have, if any, and the effects of any changes will likely take

time to unfold.

As judicial challenges and legislative initiatives to modify, limit, or repeal the Healthcare Reform Law continue

to evolve, the Health Care Reform Law may be significantly changed and we do not know whether any such changes could have significant

negative financial impact on the development or potential profitability of CaPre.

At this time, it remains unclear whether there

will be any changes made to the Health Care Reform Law, whether to certain provisions or its entirety.

The Health Care Reform Law

or any replacement of it could continue to apply downward pressure on pharmaceutical pricing, especially under the Medicare program,

and may also increase our regulatory burdens and operating costs.

Additional federal healthcare reform measures could be adopted

in the future limiting the amounts that federal and state governments will pay for healthcare products and services, which could

negatively affect the value of CaPre and our ability to achieve profitability.

In Canada, most new patented drug prices

are limited so that the cost of therapy is in the range of the cost of therapy for existing drugs sold in Canada used to treat

the same disease.

prices of drugs that show a moderate to substantial improvement, including breakthrough drugs are also restricted by a variety of tests;

existing patented drug prices cannot increase by more than the Canadian Consumer Price Index;

the Canadian prices of patented medicines can never be the highest in the world.

If CaPre receives regulatory approval in

Canada, restrictions on the price we can charge there for CaPre could reduce the value of CaPre and our ability to generate revenue

and achieve profitability.

In many jurisdictions outside the United

States, a product candidate must be approved for health care reimbursement before it can be approved for sale.

In some cases, the

price that we intend to charge for CaPre will also be subject to approval.

If we fail to comply with the regulatory requirements

in our target international markets or to receive required marketing approvals, our potential market for CaPre will be reduced

and our ability to realize the full market potential for CaPre will be harmed.

Reimbursement decisions by third-party

payors may have an adverse effect on pricing and market acceptance.

If there is not sufficient reimbursement for CaPre, it is less

likely that it will be widely used.

Even if CaPre is approved for sale by the

appropriate regulatory authorities, market acceptance and sales of CaPre will depend on reimbursement policies and may be affected

by future healthcare reform measures.

Government authorities and third-party payors, such as private health insurers and health

maintenance organizations, decide which drugs they will reimburse and establish payment levels.

We cannot be certain that reimbursement

will be available for CaPre.

If reimbursement is not available or is available on a limited basis, we may not be able to successfully

commercialize CaPre.

There may be significant delays in obtaining coverage and reimbursement

for newly-approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the FDA or other

regulatory authorities.

Moreover, eligibility for coverage and reimbursement does not imply that a drug will be paid for in all

cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution expenses.

reimbursement levels for new drugs, if applicable, may also be insufficient to cover our costs and may not be made permanent.

Reimbursement

rates may vary according to the use of a drug and the clinical setting in which it is used, may be based on reimbursement levels

already set for lower-cost drugs and may be incorporated into existing payments for other services.

Net prices for drugs may be

reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation

of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States.

Our inability to promptly obtain coverage and profitable payment rates from both government-funded and private payors for CaPre

could have a material adverse effect on our operating results and our overall financial condition.

Even if we obtain FDA approval of

CaPre, we may never obtain approval or commercialize it outside of the United States, which would limit our ability to realize

CaPre’s full market potential.

In order to market CaPre outside of the

United States, we must establish and comply with numerous and varying regulatory requirements of other countries regarding safety

and efficacy.

Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory

approval in one country does not mean that regulatory approval will be obtained in any other country.

Approval procedures vary

among countries and can involve additional product testing and validation and additional administrative review periods.

foreign regulatory approvals could result in significant delays, difficulties and costs for us and may require additional preclinical

studies or clinical trials, which would be costly and time consuming.

Regulatory requirements can vary widely from country to country

and could delay or prevent the introduction of CaPre in those countries.

In addition, our failure to obtain regulatory approval

in any country may delay or have negative effects on the process for regulatory approval in other countries.

If we fail to comply

with regulatory requirements in international markets or to obtain and maintain required approvals, our target market will be reduced

and our ability to realize the full market potential of CaPre will be harmed.

If we or our third-party service

providers fail to comply with healthcare laws and regulations or government price reporting laws, we could be subject to civil

or criminal fines or penalties.

In addition to the FDA’s restrictions

on marketing pharmaceutical products, several other types of federal and state healthcare fraud and abuse laws restrict marketing

practices in the pharmaceutical industry.

These laws include the U.S.

Anti-Kickback Statute, U.S.

False Claims Act and similar

Anti-Kickback Statute prohibits, among other things, offering, paying, soliciting or receiving remuneration

to induce, or in return for, purchasing, leasing, or ordering any healthcare item or service reimbursable under Medicare, Medicaid

or other federally financed healthcare programs.

A person or entity does not need to have actual knowledge of the U.S.

Anti-Kickback

Statute or special intent to violate the law in order to have committed a violation.

This statute has been interpreted broadly

to apply to arrangements between pharmaceutical manufacturers and prescribers, dispensers, purchasers and formulary managers.

exemptions and safe harbors from prosecution are drawn narrowly and we may fail to meet all of the criteria for safe harbor protection

from anti-kickback liability.

In addition, the Health Care Reform Law

provides that the government may assert that a claim including items or services resulting from a violation of the U.S.

Anti-Kickback

Statute constitutes a false or fraudulent claim for purposes of the U.S.

False Claims Act.

Federal false claims laws prohibit any

person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government or knowingly

making, or causing to be made, a false statement to get a false claim paid.

The “qui tam” provisions of the False Claims

Act allow a private individual to bring civil actions on behalf of the federal government alleging that the defendant has submitted

a false claim to the federal government.

These individuals, sometimes known as “relators” or, more commonly, as “whistleblowers”,

may share in any amounts paid by the entity to the government in fines or settlement.

The number of filings of qui tam actions

has increased significantly in recent years, causing more healthcare companies to have to defend a case brought under the federal

False Claim Act.

If an entity is determined to have violated the federal False Claims Act, it may be required to pay up to three

times the actual damages sustained by the government, plus attorneys’ fees and costs, and civil penalties of up to $21,563

for each separate false claim.

Certain administrative sanctions, up to and including exclusion of an entity from participation

in the federal healthcare programs, may also ensue.

Additional laws and regulations include:

the federal Anti-Inducement Law (also known as the Civil Monetary Penalties Law), which prohibits a person from offering or transferring remuneration to a Medicare or State healthcare program beneficiary that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of any item or service for which payment may be made, in whole or in part, by Medicare or a State healthcare program;

the Ethics in Patient Referrals Act of 1989, commonly referred to as the Stark Law, which prohibits physicians from referring Medicare or Medicaid patients for certain designated health services where that physician or family member has a financial relationship with the entity providing the designated health service, unless an exception applies;

federal Health Insurance Portability and Accountability Act (HIPAA), as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH), which created additional federal criminal statutes that prohibit, among other things, schemes to defraud healthcare programs and imposes requirements on certain types of people and entities relating to the privacy, security, and transmission of individually identifiable health information, and requires notification to affected individuals and regulatory authorities of breaches of security of individually identifiable health information;

the federal Physician Payment Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, to report annually to the CMS information related to payments and other transfers of value to physicians, other healthcare providers and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members, which is published in a searchable form on an annual basis;

federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

analogous state laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and some state laws require pharmaceutical companies report or disclose pricing or other financial information and to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government;

Foreign Corrupt Practices Act and similar worldwide anti-bribery laws, which generally prohibit companies and their intermediaries from making improper payments to government officials for the purpose of obtaining or retaining business.

Violations of these laws, or allegations of such violations, could result in fines, penalties or prosecution and have a negative impact on our business, results of operations and reputation.

Over the past few years, a number of pharmaceutical

and other healthcare companies have been prosecuted under these laws for a variety of alleged prohibited promotional and marketing

activities, such as providing free trips, free goods, sham consulting fees and grants and other monetary benefits to prescribers;

reporting to pricing services inflated average wholesale prices that were then used by federal programs to set reimbursement rates;

engaging in off-label promotion that caused claims to be submitted to Medicaid for non-covered, off-label uses;

and submitting

inflated best price information to the Medicaid Rebate Program to reduce liability for Medicaid rebates.

Most states also have

statutes or regulations similar to the U.S.

Anti-Kickback Statute and the U.S.

False Claims Act, which apply to items and services

reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor.

Sanctions under these

federal and state laws may include civil monetary penalties, exclusion of a manufacturer’s products from reimbursement under

government programs, criminal fines and imprisonment.

Settlements of U.S.

government litigation may include Corporate Integrity

Agreements with commitments for monitoring, training, and reporting designed to prevent future violations.

Any action against us for an alleged or

suspected violation of these laws could cause us to incur significant legal expenses and could divert our management’s attention

from the operation of our business, even if our defense is successful.

In addition, achieving and sustaining compliance with these

laws and regulations may be costly to us in terms of money, time and resources.

If we or any strategic partners, manufacturers

or service providers fail to comply with these laws, we could be subject to enforcement actions, including:

adverse regulatory inspection findings;

warning letters;

voluntary or mandatory product recalls or public notification or medical product safety alerts to healthcare professionals;

restrictions on, or prohibitions against, marketing our products;

restrictions on, or prohibitions against, importation or exportation of our products;

suspension of review or refusal to approve pending applications or supplements to approved applications;

exclusion from participation in government-funded healthcare programs;

exclusion from eligibility for the award of government contracts for our products;

suspension or withdrawal of product approvals;

product seizures;

civil and criminal penalties and fines.

The research, development and manufacture

of CaPre involves using potentially hazardous materials.

Our research and development activities

relating to CaPre involve the controlled use of potentially hazardous substances, including chemical materials such as acetone.

Our manufacturers for CaPre will be subject to federal, provincial, state and local laws and regulations in Canada, the United

States and in other jurisdictions governing laboratory procedures and the use, manufacture, storage, handling and disposal of medical

and hazardous materials.

Although we believe that our procedures used by our contract manufacturing organizations for handling,

storing and disposing of these materials comply with legally prescribed standards, we cannot completely eliminate the risk of contamination

or injury resulting from medical or hazardous materials.

If any such contamination or injury were to occur, we may incur liability

or local, city, provincial, state or federal authorities may curtail the use of these materials and interrupt our business operations

and the production of CaPre.

In the event of an accident, we could be held liable for damages or penalized with fines, and the

liability could exceed our resources.

We do not have any insurance for liabilities arising from medical or hazardous materials.

Complying with environmental, health and safety laws and regulations is expensive, and current or future environmental regulations

may impair our research, development and production efforts relating to CaPre, which could harm our business, prospects, financial

condition or results of operations.

Although we maintain workers’ compensation insurance to cover us for costs and expenses

we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate

coverage against potential liabilities.

We do not maintain insurance for environmental liability or toxic tort claims that may

be asserted against us in connection with our storage or disposal of potentially hazardous materials.

In addition, we may incur

substantial costs in order to comply with current or future environmental, health and safety laws and regulations.

These laws and

regulations may make it more difficult for us to conduct our research, development or production activities relating to CaPre and

if we fail to comply with them, we could have substantial fines, penalties or other sanctions imposed against us.

If product liability lawsuits are brought against us, we may incur

substantial liabilities and may be required to cease the sale, marketing and distribution of CaPre.

We face a potential risk of product liability

associated with any future commercialization of CaPre or any other future product candidate we develop.

For example, we may be

sued if CaPre allegedly causes injury.

Any such product liability claims may include allegations of defects in manufacturing, defects

in design, a failure to warn of dangers inherent in the product, negligence, strict liability and a breach of warranties.

could also be asserted under U.S.

state or Canadian provincial or other foreign consumer protection legislation.

If we cannot successfully

defend against product liability claims, we may incur substantial liabilities or may be required to cease the sale, marketing and

distribution of CaPre.

Even successful defense against product liability claims would require significant financial and management

Regardless of the merits or eventual outcome, liability claims may result in:

decreased demand for CaPre or any future products that we may develop;

injury to our reputation;

costs to defend the related litigation;

a diversion of management’s time and our resources;

substantial monetary awards to consumers, trial participants or patients;

product recalls, withdrawals or labeling, marketing or promotional restrictions;

loss of revenue;

an inability to commercialize CaPre;

a decline in the price of our common shares.

If we are unable to obtain and retain sufficient

product liability insurance at an acceptable cost to protect against potential product liability claims, the commercialization

of CaPre or any other product candidates we develop could be hindered or prevented.

We currently carry product liability insurance

in the amount of $10.0 million in the aggregate.

Any claim that may be brought against us could result in a court judgment or settlement

in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage.

Our insurance policies also have various exclusions, and we may be subject to a product liability claim for which we have no coverage.

In the event of a successful product liability claim against us, we may have to pay from our own resources any amounts awarded

by a court or negotiated in a settlement that exceed coverage limitations or that is not covered by our insurance, and we may not

have, or be able to obtain, sufficient funds to pay such amounts.

We may not achieve our publicly announced

milestones on time, or at all.

From time to time, we may publicly announce the timing of certain

events that we expect to occur, such as the anticipated timing of results from our clinical trials and the timing of an upcoming

These statements are forward-looking and are based on the best estimate of management at the time relating to the occurrence

of the events.

However, the actual timing of these events may differ from what has been publicly disclosed.

The timing of events

such as completion of a clinical trial, discovery of a new product candidate, filing of an application to obtain regulatory approval,

beginning of commercialization of products, completion of a strategic partnership, or announcement of additional clinical trials

for a product candidate may ultimately vary from what is publicly disclosed.

For example, we cannot provide assurances that our

current estimate of the completion date for our TRILOGY Phase 3 program will be accurate, that we will not require additional studies

to submit an NDA, that we will make regulatory submissions or receive regulatory approvals as planned, that we will be able to

adhere to plans for the scale-up of manufacturing and launch of CaPre, or that our TRILOGY Phase 3 clinical trials for CaPre will

achieve all or any of their primary and secondary endpoints.

These variations in timing may occur as a result of different events,

including the nature of the results obtained during a clinical trial or during a research phase, problems with a supplier or a

distribution partner or any other event having the effect of delaying the publicly announced timeline.

We undertake no obligation

to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except

as otherwise required by law.

Any variation in the timing of previously-announced milestones could have a material adverse effect

on our business, financial condition or operating results and the trading price of our common shares.

We may be subject to foreign exchange

rate fluctuations.

Any investment in our common Shares involves a high degree of risk.

The following risk factors and other information included in this Quarterly Report on Form 10-Q should be carefully considered.

of these risks actually occur, our business, financial condition, prospects, results of operations or cash flow could be materially and

adversely affected, and you could lose all or a part of the value of your investment.

Additional risks or uncertainties not currently

known to us, or that we deem immaterial, may also negatively affect our business operations.

In addition, on May 7, 2021, Acasti entered into a merger agreement

with Grace, pursuant to which, subject to the approval of Acasti shareholders and the satisfaction or waiver of the conditions set forth

in the merger agreement, Grace would become a wholly-owned subsidiary of Acasti, referred to herein as the merger.

Risks Related to the Merger

The equity exchange ratio will not be adjusted in the event of any

change in Acasti's share price.

If the merger is completed, at the effective time of the merger, each issued

and outstanding share of Grace common stock will automatically be converted into the right to receive a number of Acasti common shares

per share of Grace common stock equal to the equity exchange ratio set forth in the merger agreement such that, immediately following

the consummation of the merger, existing Acasti shareholders are expected to own at least 55% and existing Grace stockholders are expected

to own at most 45% of the outstanding capital stock of the combined company on a fully-diluted basis.

The equity exchange ratio is subject

to upward adjustment in favor of Acasti shareholders based on each company’s capitalization and net cash balance at the effective

time of the merger, as specified in the merger agreement.

For more information on the equity exchange ratio, see the merger agreement

filed as exhibit 2.1 to this annual.

The equity exchange ratio will not be adjusted for changes in the market price of Acasti common shares.

As a result, changes in the price of Acasti common shares prior to completion of the merger will affect the market value of the share

considerations that Grace stockholders will receive in the merger.

Changes in the Acasti common share price may result from a variety

of factors (many of which are beyond Acasti’s control), including the following:

changes in Acasti’s and Grace’s respective businesses, operations and prospects, or the market assessments thereof;

market assessments of the likelihood that the merger will be completed;

general market and economic conditions and other factors generally affecting the price of Acasti common shares.

The price of Acasti common shares at the closing of the merger may vary

from the price on the date the merger agreement was executed, the date of this annual report and the date of the annual and special meeting

of Acasti shareholders.

As a result, the market value of the merged entity will also vary.

For example, based on the range of closing

prices of Acasti common shares during the period from May 6, 2021, which was the last trading day before the public announcement of the

execution of the merger agreement, through June 18, 2021, the estimated equity exchange ratio represented a market value ranging from

a low of approximately $2.47 to a high of approximately $3.07 for each share of Grace common stock.

Because the merger will be completed after the date of the Acasti

annual and special shareholders meeting and the Grace stockholder approval, you will not know, at the time of the Acasti annual and special

shareholder meeting or the Grace stockholder approval, the market value of the Acasti common shares that Grace stockholders will receive

upon completion of the merger.

If the price of Acasti common shares increases between the time of the

Acasti annual and special meeting or the Grace stockholder approval and the time at which Acasti common shares are distributed to Grace

stockholders following completion of the merger, Grace stockholders will receive Acasti common shares that have a market value that is

greater than the market value of such shares at the time of the Acasti annual and special meeting or the Grace stockholder approval.

if the price of Acasti common shares decreases between the time of the Acasti annual and special meeting or Grace stockholder approval

and the time at which Acasti common shares are distributed to Grace stockholders following completion of the merger, Grace stockholders

will receive Acasti common shares that have a market value that is less than the market value of such shares at the time of the Acasti

annual and special meeting or the Grace stockholder approval.

Therefore, Grace stockholders and Acasti shareholders will not have certainty

at the time of the Acasti annual and special meeting or the Grace stockholder approval of the market value of the consideration that will

be paid to Grace stockholders upon completion of the merger.

Failure to complete the merger could negatively impact the share

prices and the future business and financial results of Acasti.

If the merger is not completed, the ongoing businesses of Acasti may be

adversely affected.

Additionally, if the merger is not completed and the merger agreement is terminated, in certain circumstances, either

Acasti or Grace may be required to pay to the other a termination fee of $1,000,000 including any reimbursement the other party’s

expenses up to a maximum of $500,000.

Even if a termination fee or expenses of the other party are not payable in connection with a termination

of the merger agreement, Acasti has incurred significant transaction expenses in connection with the merger regardless of whether the

merger is completed.

The foregoing risks, or other risks arising in connection with the failure of the merger, including the diversion

of management attention from conducting the business of Acasti and pursuing other opportunities during the pendency of the merger, may

have an adverse effect on the business, operations, and financial results of Acasti as well the price of Acasti common shares.

Acasti could be subject to litigation related to any failure to consummate the merger transaction or any related action that could be

brought to enforce a party’s obligations under the merger agreement.

The merger agreement contains provisions that could discourage a

potential competing acquirer of either Acasti or Grace.

The merger agreement contains “no shop” provisions that, subject

to limited exceptions, restrict Acasti’s and Grace’s ability to solicit, encourage, facilitate, or discuss competing third

party proposals to acquire shares or assets of Acasti or Grace.

In specified circumstances, upon termination of the merger agreement,

Acasti or Grace will be required to pay the termination fee to the other party.

In the event that either Acasti or Grace receives an alternative

acquisition proposal, the other party has the right to propose changes to the terms of the merger agreement before the Acasti or Grace

board of directors may withdraw or qualify its recommendation with respect to the merger and related transactions.

These provisions could discourage a potential competing acquirer that might

have an interest in acquiring all or a significant part of Acasti from considering or proposing that acquisition, even if it were prepared

to pay consideration with a higher per share cash or market value than the market value proposed to be received or realized in the merger,

or might result in a potential competing acquirer proposing to pay a lower price than it might otherwise have proposed to pay because

of the added expense of the termination fee that may become payable in specified circumstances.

Acasti’s and Grace’s right

to match specified alternative acquisition proposals with respect to the other party could also discourage potential competing acquirers

from considering or proposing that acquisition.

If the merger agreement is terminated and Acasti determines to seek another

transaction, it may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the merger.

The merger may be completed even though certain events occur prior

to the closing that materially and adversely affect Acasti or Grace.

The merger agreement provides that either Acasti or Grace can refuse to

complete the merger if there is a material adverse change affecting the other party prior to the closing.

However, certain types of changes

do not permit either party to refuse to complete the merger, even if such change could be said to have a material adverse effect on Acasti

or Grace, including, among others:

changes, developments or conditions in or relating to general international, political, economic or financial

or capital market conditions, or political, economic or financial or capital market conditions in any jurisdiction in which Acasti and

Grace operate or carry on business;

changes, developments or conditions resulting from any act of sabotage or terrorism or any outbreak of hostilities

or declared or undeclared war, or any escalation or worsening of such acts of sabotage, terrorism, hostilities or war;

any natural disaster;

changes or developments in or relating to currency exchange or interest rates;

changes or developments affecting the pharmaceutical industry in general;

any change in applicable laws (other than orders against a party or a subsidiary thereof) or U.S.

except for purposes of representations regarding required approvals in connection with the merger and the

absence of violations of law, the parties' respective constating documents or material contracts of the parties or changes in permits

held by the parties as a result of the consummation of the transactions contemplated by the merger agreement, the announcement of the

execution of the merger agreement or the transactions contemplated thereby;

any actions taken (or omitted to be taken) by Acasti or Grace upon the express written request of the other;

any changes in the share price or trading volume of Acasti common shares or any failure of Grace to meet projections,

guidance, milestones, forecasts or published financial or operating predictions or measures (it being agreed that the facts and circumstances

giving rise to any of the foregoing events or failures, unless expressly excluded, may be taken into account in determining whether a

material adverse effect has occurred);

the COVID-19 pandemic or other epidemic or pandemic outbreaks including any continuation or worsening thereof;

a share consolidation of Acasti.

If an adverse change occurs and Acasti and Grace still complete the merger,

the business, operations or prospects of the combined company, or the market price of its common shares, may suffer.

This in turn may

reduce the value received by the shareholders of Acasti in connection with the merger.

If the conditions to the merger are not satisfied or waived, the

merger may not occur.

If the merger is consummated, it will result in substantial dilution to Acasti shareholders and may not deliver

the anticipated benefits Acasti expects.

Even if the merger is approved by the shareholders of Acasti and the stockholders

of Grace, specified other conditions must be satisfied or waived to complete the merger.

These conditions are set forth in the merger

agreement filed as exhibit 2.1 to this annual report.

Acasti cannot assure you that all of the conditions will be satisfied or waived.

Certain of the closing conditions are legally incapable of being waived.

If the conditions are not satisfied or waived, the merger may

not occur or will be delayed, and Acasti may lose some or all of the intended benefits of the merger.

If consummated, the merger will

result in dilution to Acasti’s shareholders and could result in other restrictions that may affect its business.

Further, if completed,

the merger ultimately may not deliver the anticipated benefits or enhance shareholder value.

The combined company may become involved in securities class action

litigation that could divert management’s attention and harm the combined company’s business and insurance coverage may not

be sufficient to cover all costs and damages.

In the past, securities class action or shareholder derivative litigation

often follows certain significant business transactions, such as the sale of a business division or announcement of a merger.

company may become involved in this type of litigation in the future.

Litigation is often expensive and diverts management’s attention

and resources, which could adversely affect the combined company’s business.

Acasti has received notice from Nasdaq of non-compliance with the

Nasdaq Listing Rules.

On May 11, 2021, Acasti received written notice from the Nasdaq Listing

Qualifications Department notifying Acasti that based upon Acasti’s non-compliance with the $1.00 bid price requirement set forth

in Nasdaq Listing Rule 5550(a) as of May 10, 2021, Acasti securities were subject to delisting unless the Company timely requested a hearing

before the Nasdaq Hearings Panel.

Acasti requested a hearing, which stayed any further action by Nasdaq pending

the conclusion of the hearing process.

At the hearing, on June 17, 2021, Acasti presented a detailed plan of compliance

for the Nasdaq Listing Panel’s consideration, which included Acasti’s commitment to implement a share consolidation if needed

to evidence compliance with Nasdaq listing rules.

Acasti expects to receive the Nasdaq Listing Panel’s decision 30 days after the

hearing date.

There can be no assurance that Nasdaq will accept Acasti’s plan or that Acasti will be able to regain compliance with

Nasdaq’s listing rules or maintain compliance with any other Nasdaq requirement in the future.

The approval by Nasdaq of (i) the

continued listing of Acasti’s common shares on Nasdaq following the effective time and (ii) the listing of the Acasti common shares

being issued in connection with the merger on Nasdaq at or prior to the effective time are conditions to the closing of the merger.

We may be subject to foreign exchange rate fluctuations.

Our reporting currency is the U.S.

However, many of our

expenses, such as CaPre’s chief manufacturing organization’s production activities and certain CRO arrangements for

our TRILOGY Phase 3 program, currently are and/or are expected to be, denominated in foreign currencies, including Canadian dollars

and European euros.

However, many of our expenses

are denominated in foreign currencies, including Canadian dollars.

As we previously completed financings in both Canadian and U.S.

dollars, both currencies are maintained and

used to make required payments in the applicable currency.

Though we plan to implement measures designed to reduce our foreign

exchange rate exposure, the U.S.

both currencies are maintained and used to make required payments in the applicable currency.

Though we plan to implement measures designed

to reduce our foreign exchange rate exposure, the U.S.

dollar/Canadian dollar and U.S.

dollar /European euro exchange rates have fluctuated significantly

in the recent past and may continue to do so, which could have a material adverse effect on our business, financial position and

results of operations.

In the past, Neptune supplied us with the RKO needed to produce

CaPre for all of our clinical and non-clinical trials, including the RKO that was needed to supply our TRILOGY Phase 3 program.

In 2019 we validated a new RKO supplier and we are now evaluating additional suppliers for on going commercial supply.

RKO is the starting material used by Acasti

to make CaPre, which is then further processed via a series of complex and proprietary extraction and purification manufacturing

steps to produce the active pharmaceutical ingredient, or API, for CaPre.

We sourced all of our RKO from Neptune in the past to

produce CaPre for our clinical programs.

However, in light of Neptune’s sale of its krill oil business and inventory to Aker

in August 2017, we immediately began validating several alternative suppliers of RKO.

In November 2019, we announced that we had

signed a two-year, fixed price supply agreement with Aker to provide RKO for the purpose of building commercial lots of CaPre.

This agreement is intended to ensure an adequate RKO supply to meet our anticipated raw material needs through at least mid-2021,

including for the scale-up of production of API to build CaPre inventory for a potential commercial launch.

While we believe that there are alternative

suppliers of RKO that could be readily available and meet our specifications, we do not have enough experience with any one of

them to guarantee that these alternative suppliers will be of comparable quality to the RKO previously provided by Neptune and

now, Aker, which could negatively affect the cost of CaPre.

Our reliance on third-party suppliers for RKO exposes us to risks

such as potential fluctuations in supply and reduced control over our production costs and delivery schedules for CaPre.

CaPre may cause or be perceived to

cause undesirable side effects or have other properties that could delay or prevent its regulatory approval, limit the commercial

profile of an approved label, or result in significant negative consequences following marketing approval, if any.

Many of the patients that we enrolled in

our TRILOGY Phase 3 clinical trials may have pre-existing disorders.

While such disorders may lead to serious adverse events during

the clinical trial that may be found to be unrelated to CaPre, such events may create a negative safety perception and adversely

impact market acceptance of CaPre following any approval.

The safety profile of CaPre in our TRILOGY 1 trial was similar to placebo,

as there was no significant difference in treatment-related serious adverse events in the trial.

Safety results for our TRILOGY

2 trial remain blinded.

While patient participation in our TRILOGY

Phase 3 program has been completed, it is still possible that a future study conducted by a collaborator or third party researcher

may identify undesirable side effects.

If, following any approval of CaPre or another product candidate, we, or others, discover

that the product is less effective than previously believed or causes undesirable side effects that were not previously identified

during the clinical trial phase, any of the following adverse events could occur:

regulatory authorities may withdraw their approval of the product or seize the product;

we, or any future collaborators or third party researcher, may need to recall the product, or be required to change the way the product is administered or conduct additional clinical trials;

restrictions may be imposed on the marketing of, or the manufacturing processes

for the product;

we may be subject to fines, injunctions or the imposition of civil or criminal penalties;

regulatory authorities may require the addition of labeling statements;

we, or any future collaborators, may be required to issue a communication outlining the risks of the previously unidentified side effects for distribution to patients;

we, or any future collaborators, could be sued and held liable for harm caused to patients;

the product may become less competitive;

our reputation may suffer.

Any of these events could harm our business

and operations and could negatively impact our share price.

dollar /European euro exchange rates have fluctuated

significantly in the recent past and may continue to do so, which could have a material adverse effect on our business, financial position

and results of operations.

Risks Related to Intellectual Property

In addition to our own patents, CaPre

is covered by patents that are sublicensed to us by Neptune and Aker.

In addition to our proprietary issued patents

and pending patent applications, pursuant to a license agreement we entered into with Neptune in August 2008, which was later amended

on February 9, 2009 and March 7, 2013 (the “License Agreement”), we have an exclusive license to use certain intellectual

property developed by Neptune and now owned by Aker, to develop, manufacture and commercialize CaPre, and our novel and APIs for

use in pharmaceutical and medical food applications in the cardiovascular field.

Aker has granted to Neptune the right to sublicense

to us certain intellectual property as necessary to allow us to maintain its license grant under the License Agreement.

the exclusive license granted to us under the License Agreement remains in full force.

Disputes may arise between us and Aker

regarding the intellectual property that is subject to the License Agreement, including with respect to the scope of rights granted

under the License Agreement and other interpretation-related issues and our right to sublicense patent and other rights to third

parties under collaborative development relationships.

It is difficult and costly to protect

our intellectual property rights.

The success of our business will largely

depend on our ability to:

obtain and maintain our patents and trade secret protections and operate

without infringing the intellectual proprietary rights of third parties;

successfully defend our patents, including enforcing our licensed patents against third-party challenges;

successfully enforce our patents against third party competitors.

It is possible that our patents and/or

proprietary technologies in the future could be circumvented through the adoption of competitive, though non-infringing, processes

The patent positions of pharmaceutical companies can be highly uncertain and involve complex legal, scientific and

factual questions for which important legal principles remain unresolved.

Changes in either the patent laws or in interpretations

of patent laws may diminish the value of our intellectual property.

We cannot predict the breadth of claims that may be allowable

or enforceable in our patents, or of patents licensed to us.

We may not realize any additional value

in a strategic transaction for our intellectual property.

The market capitalization of our corporation is

or may be below the value of our cash, cash equivalents and marketable securities at the time of consummation of any strategic transaction.

Although the CaPre clinical trial failed to meet its primary endpoints, we believe that data from preclinical and other clinical studies

of CaPre may support potential further investigation and development activities.

However, potential counterparties in a strategic transaction

involving our corporation may place minimal or no value on our assets, given the limited data regarding their potential application.

the development and any potential commercialization of investigational CaPre will require substantial additional funding associated with

conducting the necessary clinical testing and obtaining regulatory approval.

Consequently, any potential counterparty in a strategic transaction

involving our corporation may choose not to spend additional resources and continue development of CaPre and may attribute little or no

value, in such a transaction, to CaPre or our other intellectual property.

It is difficult and costly to protect our intellectual property rights.

It is possible that our patents and/or proprietary technologies in the

future could be circumvented through the adoption of competitive, though non-infringing, processes or products.

The patent positions of

pharmaceutical companies can be highly uncertain and involve complex legal, scientific and factual questions for which important legal

principles remain unresolved.

Changes in either the patent laws or in interpretations of patent laws may diminish the value of our intellectual

We cannot predict the breadth of claims that may be allowable or enforceable in our patents, or of patents licensed to us.

We face risks that:

our rights under our U.S., Canadian or foreign patents or other

licensed patents that other third parties license to us could be curtailed;

we may not be the first inventor of inventions covered by our issued patents or pending applications or be the first to file patent applications for those inventions;

our pending or future patent applications may not be issued with the breadth of claim coverage sought by us, or be issued at all;

our competitors could independently develop or patent technologies that are substantially equivalent or superior to our technologies;

our rights under our U.S., Canadian or foreign patents or other licensed patents

that other third parties license to us could be curtailed;

we may not be the first inventor of inventions covered by our issued patents

or pending applications or be the first to file patent applications for those inventions;

our pending or future patent applications may not be issued with the breadth

of claim coverage sought by us, or be issued at all;

our competitors could independently develop or patent technologies that are

substantially equivalent or superior to our technologies;

our trade secrets could be learned independently by our competitors;

the steps we take to protect our intellectual property may not be adequate;

effective patent, trademark, copyright and trade secret protection may be unavailable, limited or not sought by us in some foreign countries.

effective patent, trademark, copyright and trade secret protection may be unavailable,

limited or not sought by us in some foreign countries.

Further, patents have a limited lifespan.

In the United States, a patent generally expires 20 years after it is filed (or 20 years after the filing date of the first non-provisional

patent application to which it claims priority).

While extensions may be available, the life of a patent, and the protection

it affords, is limited.

Without patent protection for CaPre or any other of our future product candidates, we may be open to competition

from generic versions of CaPre or our other future product candidates.

Further, the extensive period of time between patent filing

and regulatory approval for a product candidate limits the time during which we can market that product candidate under patent

Patents owned by third parties could have priority over patent applications filed or in-licensed by us, or we or our

licensors could become involved in interference, opposition or invalidity proceedings before U.S., Canadian or foreign patent offices.

The cost of defending and enforcing our patent rights against infringement charges by other patent holders may be significant and

could limit our operations.

CaPre may infringe the intellectual

property rights of others, which could increase our costs and delay or prevent our development and commercialization efforts.

Our success depends in part on avoiding

infringement of the proprietary technologies of others.

The pharmaceutical industry has been characterized by frequent litigation

regarding patent and other intellectual property rights.

Identification of third party patent rights that may be relevant to our

proprietary or licensed technology is difficult because patent searching is imperfect due to differences in terminology among patents,

incomplete databases and the difficulty in assessing the meaning of patent claims.

Additionally, because patent applications are

maintained in secrecy until the application is published, we may be unaware of third-party patents that may be infringed by our

development and commercialization of CaPre or any other future product candidate.

There may be certain issued patents and patent

applications claiming subject matter that we may be required to license in order to research, develop or commercialize CaPre, and

any such patents and patent applications may not be available to license on commercially reasonable terms, or at all.

of patent infringement are asserted by third parties against us, they could be time-consuming and may:

result in costly litigation;

divert the time and attention of our technical personnel and management;

delay future clinical trials for CaPre;

prevent us from commercializing CaPre until the asserted patent expires or is held finally invalid or not infringed in court;

require us to cease or to modify our use of the technology and/or develop non-infringing technology;

require us to enter into royalty or licensing agreements.

Others may hold proprietary rights that

could prevent CaPre from being marketed.

Any patent-related legal action against us claiming damages and seeking to enjoin commercial

activities relating to CaPre or our processes could subject us to potential liability for damages and require us to obtain a license

to continue to manufacture or market CaPre or any other future prescription drug candidates.

We might not prevail in any such actions

or if any license is required under any of these patents it may not be available on commercially acceptable terms, if at all.

Even if a license can be obtained on acceptable

terms, the rights may be non-exclusive, which could give our competitors access to the same technology or intellectual property

rights licensed to us.

We could be forced to redesign CaPre or any other future product candidates or processes to avoid infringement.

In addition, we may find it necessary to

pursue claims or initiate lawsuits to protect or enforce our patent or other intellectual property rights.

The cost to us in defending

or initiating any litigation or other proceeding relating to patent or other proprietary rights, even if resolved in our favor,

could be substantial, and litigation would divert our management’s attention.

Some of our competitors may be able to sustain

the costs of complex patent litigation more effectively than we can because they have substantially greater resources.

Uncertainties

resulting from the initiation and continuation of patent litigation or other proceedings could delay our research and development

efforts and limit our ability to continue our operations.

A number of companies, including several major pharmaceutical

companies, have conducted research on pharmaceutical uses of OM3 fatty acids, which has resulted in the filing of many patent applications

related to this research.

We are aware of third-party U.S., Canadian and other foreign patents that contain broad claims related

to methods of using these general types of compounds, which may be construed to include potential uses of CaPre.

If we were to

challenge the validity of these or any other issued U.S., Canadian or other foreign patents in court, we would need to overcome

a statutory presumption of validity that attaches to every U.S.

and Canadian or other foreign patent.

This means that, in order

to prevail, we would have to present clear and convincing evidence as to the invalidity of the other party’s patent’s

If we were to challenge the validity of any issued U.S.

patent, for example, in an administrative trial before the Patent

Trial and Appeal Board in the United States Patent and Trademark Office, or USPTO, we would have to prove that the claims are unpatentable

by a preponderance of the evidence.

If there are disputes over our intellectual property rights, a jury and/or court may not find

in our favor on questions of infringement, validity or enforceability.

If we do not protect our trademark

for CaPre or any new trademark that is developed for CaPre, we may not be able to build name recognition in our markets of interest.

We have registered CaPre as a trademark

in several jurisdictions.

Our trademark, or any new mark that is developed for CaPre may be challenged, infringed, circumvented

or declared generic or determined to be infringing on other marks.

We may not be able to protect our rights to this trademark or

may be forced to stop using this name, which we need for name recognition by potential strategic partners and customers.

are unable to establish name recognition based on our trademark, we may not be able to compete effectively, and our business may

be adversely affected.

We may be involved in lawsuits to

protect or enforce our patents or the patents of our licensors, which could be expensive, time-consuming and unsuccessful.

Competitors may infringe our patents or

the patents of our licensors.

To counter infringement or unauthorized use, we may be required to file infringement claims, which

can be expensive and time-consuming.

If we or our licensors were to initiate legal proceedings against a third party to enforce

a patent covering CaPre or our technology, the defendant could counterclaim that our or our licensor’s patent is invalid

or unenforceable.

In patent litigation, defendant counterclaims alleging invalidity or unenforceability are commonplace.

for a validity challenge could be an alleged failure to meet any of several statutory requirements;

for example, lack of novelty,

obviousness or non-enablement.

Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution

of the patent withheld relevant information from the patent office, such as the USPTO, or made a misleading statement, during prosecution.

In the United States, a patent

generally expires 20 years after it is filed (or 20 years after the filing date of the first non-provisional U.S.

patent application to

which it claims priority).

While extensions may be available, the life of a patent, and the protection it affords, is limited.

the extensive period of time between patent filing and regulatory approval for a product candidate limits the time during which we can

market that product candidate under patent protection.

Patents owned by third parties could have priority over patent applications filed

or in-licensed by us, or we or our licensors could become involved in interference, opposition or invalidity proceedings before U.S.,

Canadian or foreign patent offices.

The cost of defending and enforcing our patent rights against infringement charges by other patent

holders may be significant and could limit our operations.

We may be involved in lawsuits to protect or enforce our patents

or the patents of our licensors, which could be expensive, time-consuming and unsuccessful.

Competitors may infringe our patents or the patents of our licensors.

counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming.

we or our licensors were to initiate legal proceedings against a third party to enforce a patent our technology, the defendant could counterclaim

that our or our licensor’s patent is invalid or unenforceable.

In patent litigation, defendant counterclaims alleging invalidity

or unenforceability are commonplace.

Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements;

for example, lack of novelty, obviousness or non-enablement.

Grounds for an unenforceability assertion could be an allegation that someone

connected with prosecution of the patent withheld relevant information from the patent office, such as the USPTO, or made a misleading

statement, during prosecution.

The outcome following legal assertions of invalidity and unenforceability during patent litigation is unpredictable.

to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we or our licensors

With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we or our licensors

and the patent examiner were unaware during prosecution.

If a defendant were to prevail on a legal assertion of invalidity or unenforceability,

we would lose at least part, and perhaps all, of the patent protection on CaPre or certain aspects of our platform technology.

Such a loss of patent protection could have a material adverse impact on our business.

Patents and other intellectual property

rights also will not protect our technology if competitors design around our protected technology without legally infringing our

patents or other intellectual property rights.

In addition, in an infringement proceeding,

a court may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the

technology in question.

An adverse result in any litigation or defense proceedings could put one or more of our patents at risk

of being invalidated, held unenforceable, or interpreted narrowly and could put our patent applications at risk of not issuing.

Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion

of employee resources from our business.

Interference proceedings provoked by third

parties or brought by the USPTO may be necessary to determine the priority of inventions with respect to our patents or patent

applications or those of our licensors.

An unfavorable outcome could result in a loss of our current patent rights and could require

us to cease using the related technology or to attempt to license rights to it from the prevailing party.

Our business could be

harmed if the prevailing party does not offer us a license on commercially reasonable terms, or at all.

Litigation or interference

proceedings may result in a decision adverse to our interests and, even if we are successful, may result in substantial costs

and distract our management and other employees.

We may not be able to prevent, alone or with our licensors, misappropriation

of our trade secrets or confidential information, particularly in countries where the laws may not protect those rights as fully

as in the United States and Canada.

Furthermore, because of the substantial amount of discovery required in connection with intellectual

property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this

type of litigation.

In addition, there could be public announcements of the results of hearings, motions or other interim proceedings

or developments.

If securities analysts or investors perceive these results to be negative, it could have a substantial adverse

effect on the price of our common shares.

Obtaining and maintaining our patent protection

depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental

patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Changes in patent law could diminish

the value of patents in general, thereby impairing our ability to protect CaPre and any of our other future product candidates.

Numerous recent changes to the patent laws

and proposed changes to the rules of the various patent offices around the world may have a significant impact on our ability to

protect our technology and enforce our intellectual property rights.

These changes may lead to increasing uncertainty with regard

to the scope and value of our issued patents and to our ability to obtain patents in the future.

Once granted, patents may remain open to

opposition, re-examination, post-grant review, inter partes review, nullification derivation and opposition proceedings

in court or before patent offices or similar proceedings for a given period after allowance or grant, during which time third parties

can raise objections against the initial grant.

In the course of any such proceedings, which may continue for a protracted period

of time, the patent owner may be compelled to limit the scope of the allowed or granted claims attacked, or may lose the allowed

or granted claims altogether.

Depending on decisions by authorities in various jurisdictions, the laws and regulations governing

patents could change in unpredictable ways that may weaken our and our licensors’ ability to obtain new patents or to enforce

existing patents we and our licensors or partners may obtain in the future.

We may not be able to protect our

intellectual property rights throughout the world.

Many companies have encountered significant

problems in protecting and defending intellectual property rights in foreign jurisdictions.

The legal systems of some countries,

particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property

protection, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in

violation of our proprietary rights generally.

Proceedings to enforce our patent rights in foreign jurisdictions could result in

substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being

invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert

claims against us.

We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not

be commercially meaningful.

Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate

to obtain a significant commercial advantage from the intellectual property that we develop or license.

we would lose at least part, and perhaps all, of the patent protection or certain aspects of our platform technology.

Such a loss of patent

protection could have a material adverse impact on our business.

Patents and other intellectual property rights also will not protect

our technology if competitors design around our protected technology without legally infringing our patents or other intellectual property

In addition, in an infringement proceeding, a court may refuse to stop

the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.

result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated, held unenforceable,

or interpreted narrowly and could put our patent applications at risk of not issuing.

Defense of these claims, regardless of their merit,

would involve substantial litigation expense and would be a substantial diversion of employee resources from our business.

Interference proceedings provoked by third parties or brought by the USPTO

may be necessary to determine the priority of inventions with respect to our patents or patent applications or those of our licensors.

An unfavorable outcome could result in a loss of our current patent rights and could require us to cease using the related technology

or to attempt to license rights to it from the prevailing party.

Our business could be harmed if the prevailing party does not offer us

a license on commercially reasonable terms, or at all.

Litigation or interference proceedings may result in a decision adverse to our

interests and, even if we are successful, may result in substantial costs and distract our management and other employees.

be able to prevent, alone or with our licensors, misappropriation of our trade secrets or confidential information, particularly in countries

where the laws may not protect those rights as fully as in the United States and Canada.

Furthermore, because of the substantial amount

of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could

be compromised by disclosure during this type of litigation.

In addition, there could be public announcements of the results of hearings,

motions or other interim proceedings or developments.

If securities analysts or investors perceive these results to be negative, it could

have a substantial adverse effect on the price of our common shares.

Obtaining and maintaining our patent protection depends on compliance with

various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection

could be reduced or eliminated for non-compliance with these requirements.

Changes in patent law could diminish the value of patents in general,

thereby impairing our ability to protect product candidates.

Numerous recent changes to the patent laws and proposed changes to the

rules of the various patent offices around the world may have a significant impact on our ability to protect our technology and enforce

our intellectual property rights.

These changes may lead to increasing uncertainty with regard to the scope and value of our issued patents

and to our ability to obtain patents in the future.

Once granted, patents may remain open to opposition, re-examination, post-grant

review, inter partes review, nullification derivation and opposition proceedings in court or before patent offices or

similar proceedings for a given period after allowance or grant, during which time third parties can raise objections against the initial

In the course of any such proceedings, which may continue for a protracted period of time, the patent owner may be compelled to

limit the scope of the allowed or granted claims attacked or may lose the allowed or granted claims altogether.

Depending on decisions

by authorities in various jurisdictions, the laws and regulations governing patents could change in unpredictable ways that may weaken

our and our licensors’ ability to obtain new patents or to enforce existing patents we and our licensors or partners may obtain

in the future.

We may not be able to protect our intellectual property rights throughout

Many companies have encountered significant problems in protecting and

defending intellectual property rights in foreign jurisdictions.

The legal systems of some countries, particularly certain developing

countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, which could make it difficult

for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally.

to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other

aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk

of not issuing and could provoke third parties to assert claims against us.

We may not prevail in any lawsuits that we initiate, and the

damages or other remedies awarded, if any, may not be commercially meaningful.

Accordingly, our efforts to enforce our intellectual property

rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop

Risks Relating to Our Common Shares

The price of our common shares may

The price of our common shares may be volatile.

Market prices for pharmaceutical companies can fluctuate significantly.

2 unchanged sentences

patents or exclusive rights obtained by us or others;

disputes or other developments relating to proprietary rights,

including patents, litigation matters and our ability to obtain patent protection for our technologies;

the commencement, enrollment

or announcement of results of clinical trials we conduct, or changes in the development status of our product candidates;

or delays of pre-clinical and clinical studies by us or others;

any delay in our regulatory filings for our product candidates

and any adverse development or perceived adverse development with respect to the applicable regulatory authority’s review

of such filings;

disputes or other developments relating to proprietary rights, including

patents, litigation matters and our ability to obtain patent protection for our technologies;

the commencement, enrollment or announcement

of results of clinical trials we conduct, or changes in the development status of our product candidates;

results or delays of pre-clinical

and clinical studies by us or others;

any delay in our regulatory filings for our product candidates and any adverse development or perceived

adverse development with respect to the applicable regulatory authority’s review of such filings;

a change of regulations;

additions or departures of key scientific or management personnel;

overall performance

of the equity markets;

or departures of key scientific or management personnel;

overall performance of the equity markets;

general political and economic conditions;

publications;

failure to meet the estimates and projections of

the investment community or that we may otherwise provide to the public;

research reports or positive or negative recommendations

or withdrawal of research coverage by securities analysts;

actual or anticipated variations in quarterly operating results;

announcements

of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors;

public concerns

over the risks of pharmaceutical products and dietary supplements;

unanticipated serious safety concerns related to the use of

the ability to finance, future sales of securities by us or our shareholders;

and many other factors, many of which are

beyond our control, could have considerable effects on the price of our common shares.

The price of our common shares has fluctuated

significantly in the past and there can be no assurance that the market price of our common shares will not experience significant

fluctuations in the future.

In addition, pharmaceutical companies often experience extreme

price and volume fluctuations that are unrelated or disproportionate to the operating performance of those companies.

and industry factors may negatively affect the market price of our common shares, regardless of our actual operating performance.

In the past, securities class action litigation has often been instituted against pharmaceutical companies following periods of

volatility in the market price of their securities.

This type of litigation, if instituted against us, could result in substantial

costs and a diversion of management’s attention and resources, which would harm our business, operating results or financial

Raising additional capital may cause

dilution to our existing shareholders, restrict our operations or require us to relinquish rights to our technologies or product

We will need to raise additional capital

in order to execute on our business plan.

We may seek additional capital through a combination of public and private equity offerings,

debt financings, strategic partnerships and alliances and licensing arrangements.

To the extent that we raise additional capital

through the sale of equity or convertible debt securities, the ownership interests of our shareholders will be diluted, and the

terms may include liquidation or other preferences that adversely affect the rights of our shareholders.

The incurrence of indebtedness

by us would result in increased fixed payment obligations and could involve certain restrictive covenants, such as limitations

on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other

operating restrictions that could adversely impact our ability to conduct our business.

If we raise additional funds through strategic

partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies

or product candidates, or grant licenses on terms unfavorable to us.

The market price of our common shares

could decline as a result of operating results falling below the expectations of investors or fluctuations in operating results

each quarter.

Our net losses and expenses may

fluctuate significantly and any failure to meet financial or clinical expectations may disappoint securities analysts or

investors and result in a decline in the price of our common shares.

Our net losses and expenses have fluctuated in the past

and are likely to do so in the future.

The market price of our common shares has fluctuated significantly in the past and may

continue to do so.

Some of the factors that could cause the market price for our common shares to fluctuate include the

results of preclinical studies and clinical trials, or the addition or termination of preclinical studies, clinical trials or funding support;

failure to meet the estimates and projections of the investment community or that we may otherwise provide to the public;

research reports or positive or negative recommendations or withdrawal of research coverage by securities analysts;

actual or anticipated

variations in quarterly operating results;

announcements of significant acquisitions, strategic partnerships, joint ventures or capital

commitments by us or our competitors;

public concerns over the risks of pharmaceutical products and dietary supplements;

unanticipated

serious safety concerns related to the use of our product candidates;

the ability to finance, future sales of securities by us or our

shareholders;

and many other factors, many of which are beyond our control, could have considerable effects on the price of our common

The price of our common shares has fluctuated significantly in the past and there can be no assurance that the market price of

our common shares will not experience significant fluctuations in the future.

In addition, pharmaceutical companies often experience extreme price and

volume fluctuations that are unrelated or disproportionate to the operating performance of those companies.

Broad market and industry

factors may negatively affect the market price of our common shares, regardless of our actual operating performance.

In the past, securities

class action litigation has often been instituted against pharmaceutical companies following periods of volatility in the market price

of their securities.

This type of litigation, if instituted against us, could result in substantial costs and a diversion of management’s

attention and resources, which would harm our business, operating results or financial condition.

Raising additional capital may cause dilution to our existing shareholders,

restrict our operations or require us to relinquish rights to our technologies or product candidates.

We may need to raise additional capital in order to execute on our business

We may seek additional capital through a combination of public and private equity offerings, debt financings, strategic partnerships

and alliances and licensing arrangements.

To the extent that we raise additional capital through the sale of equity or convertible debt

securities, the ownership interests of our shareholders will be diluted, and the terms may include liquidation or other preferences that

adversely affect the rights of our shareholders.

The incurrence of indebtedness by us would result in increased fixed payment obligations

and could involve certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability

to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct

our business.

If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties,

we may have to relinquish valuable rights to our technologies or product candidates or grant licenses on terms unfavorable to us.

The market price of our common shares could decline as a result of

operating results falling below the expectations of investors or fluctuations in operating results each quarter.

Our net losses and expenses may fluctuate significantly and any failure

to meet financial or clinical expectations may disappoint securities analysts or investors and result in a decline in the price of our

common shares.

Our net losses and expenses have fluctuated in the past and are likely to do so in the future.

The market price of our

common shares has fluctuated significantly in the past and may continue to do so.

Some of the factors that could cause the market price

for our common shares to fluctuate include the following:

the fluctuations in valuation of our derivative warrant liabilities;

the timing of the release of results from any preclinical studies and clinical trials;

an inability to complete product development in a timely manner that results in a failure or

delay in receiving the required regulatory responses, approvals or allowances to commercialize product candidates;

the timing of regulatory responses, submissions and approvals;

the timing and willingness of any current or future collaborators to invest the resources necessary to commercialize our products;

the outcome of any litigation;

changes in foreign currency fluctuations;

the timing of achievement and the receipt of milestone payments from current or future third parties;

failure to enter into new or the expiration or termination of current agreements with third parties;

failure to introduce our products to the market in a manner that generates anticipated revenues;

execution of any new collaboration, licensing or similar arrangement, and the timing of payments we may make or receive under such existing or future arrangements or the termination or modification of any such existing or future arrangements;

any intellectual property

infringement lawsuit or opposition against us or our competition that could have a negative impact on the OM3 space,

interference or cancellation proceeding in which we may become involved;

the timing of achievement and the receipt of milestone payments from current

or future third parties;

failure to enter into new or the expiration or termination of current agreements

with third parties;

execution of any new collaboration, licensing or similar arrangement, and the

timing of payments we may make or receive under such existing or future arrangements or the termination or modification of any such existing

or future arrangements;

any intellectual property infringement lawsuit or opposition against us or our

competition that could have a negative impact on or any proceedings in which we may become involved;

additions and departures of key personnel;

strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;

if any of our product candidates receives regulatory, or fails to receive approval, market acceptance and demand for such product candidates;

regulatory developments affecting our product candidates or those of our competitors;

strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures,

strategic investments or changes in business strategy;

inability to achieve strategic outcome from review of strategic alternatives;

changes in general market and economic conditions.

If our quarterly operating results fall

below the expectations of investors or securities analysts, the market price of our common shares could decline substantially.

Furthermore, any quarterly fluctuations in our operating results may, in turn, cause the market price of our common shares to fluctuate

substantially.

We believe that quarterly comparisons of our financial results are not necessarily meaningful and should not be

relied upon as an indication of our future performance.

There can be no assurance that an

active market for our common shares will be sustained.

There can be no assurance that an active

market for our common shares will be sustained.

Holders of common shares may be unable to sell their investments on satisfactory

As a result of any risk factor discussed herein, the market price of our common shares at any given point in time may not

accurately reflect our long-term value.

Furthermore, responding to these risk factors could result in substantial costs and divert

management’s attention and resources.

Substantial and potentially permanent declines in the value of our common shares may

adversely affect the liquidity of the market for our common shares.

Other factors unrelated to our performance

that may have an effect on the price and liquidity of our common shares include:

If our quarterly operating results fall below the expectations of investors

or securities analysts, the market price of our common shares could decline substantially.

Furthermore, any quarterly fluctuations in

our operating results may, in turn, cause the market price of our common shares to fluctuate substantially.

We believe that quarterly

comparisons of our financial results are not necessarily meaningful and should not be relied upon as an indication of our future performance.

There can be no assurance that an active market for our common shares

will be sustained.

There can be no assurance that an active market for our common shares will

be sustained.

Holders of common shares may be unable to sell their investments on satisfactory terms.

As a result of any risk factor discussed

herein, the market price of our common shares at any given point in time may not accurately reflect our long-term value.

responding to these risk factors could result in substantial costs and divert management’s attention and resources.

and potentially permanent declines in the value of our common shares may adversely affect the liquidity of the market for our common shares.

Other factors unrelated to our performance that may have an effect on the

price and liquidity of our common shares include:

positive or negative industry or competitor news;

extent of analyst coverage;

lessening in trading volume and general market interest in our common shares;

the size of our public

and any event resulting in a delisting of our common shares.

A large number of common shares may

be issued and subsequently sold upon the exercise of existing warrants.

The sale or availability for sale of existing warrants

or other securities convertible into common shares may depress the price of our common shares.

As of March 31, 2020, there were 15.9 million

common shares issuable under outstanding warrants at various exercise prices.

To the extent that holders of existing warrants sell

common shares issued upon the exercise of warrants, the market price of our common shares may decrease due to the additional selling

pressure in the market.

The risk of dilution from issuances of common shares underlying existing warrants may cause shareholders

to sell their common shares, which could further contribute to any decline in our common share market price.

Any downward pressure on the price of our

common shares caused by the sale of common shares issued upon the exercise of existing warrants could encourage short sales by

third parties.

In a short sale, a prospective seller borrows common shares from a shareholder or broker and sells the borrowed

common shares.

The prospective seller anticipates that the common share price will decline, at which time the seller can purchase

common shares at a lower price for delivery back to the lender.

The seller profits when the common share price declines because

it is purchasing common shares at a price lower than the sale price of the borrowed common shares.

Such short sales of common shares

could place downward pressure on the price of our common shares by increasing the number of common shares being sold, which could

lead to a decline in the market price of our common shares.

We do not currently intend to pay

any cash dividends on our common shares in the foreseeable future.

We have never paid any cash dividends on

our common shares and we do not anticipate paying any cash dividends on our common shares in the foreseeable future because, among

other reasons, we currently intend to retain any future earnings to finance our business.

The future payment of cash dividends

will be dependent on factors such as cash on hand and achieving profitability, the financial requirements to fund growth, our general

financial condition and other factors our board of directors may consider appropriate in the circumstances.

Until we pay cash dividends,

which we may never do, our shareholders will not be able to receive a return on their common shares unless they sell them.

Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

— Dividends.”

If we fail to meet applicable listing

requirements, the NASDAQ Stock Market or the TSXV may delist our common shares from trading, in which case the liquidity and market

price of our common shares could decline.

Our common shares are currently listed

on the NASDAQ Stock Market and the TSXV, but we cannot assure you that our securities will continue to be listed on the NASDAQ

Stock Market and the TSXV in the future.

In the past, we have received notices from the NASDAQ Stock Market that we have not been

in compliance with its continued listing standards, and we have taken responsive actions and regained compliance.

On February 28, 2020, we received written

notification from the NASDAQ Listing Qualifications Department for failing to maintain a minimum bid price of $1.00 per share for

the preceding 30 consecutive business days, as required by NASDAQ Listing Rule 5550(a)(2) –

bid price (the “Minimum

Bid Price Rule”).

The NASDAQ notification has no immediate effect on the listing of our common shares.

in trading volume and general market interest in our common shares;

the size of our public float;

and any event resulting in a delisting

of our common shares.

A large number of common shares may be issued and subsequently sold

upon the exercise of existing warrants.

The sale or availability for sale of existing warrants or other securities convertible into common

shares may depress the price of our common shares.

As of March 31, 2021, there were 15.6 million common shares issuable under

outstanding warrants at various exercise prices.

To the extent that holders of existing warrants sell common shares issued upon the exercise

of warrants, the market price of our common shares may decrease due to the additional selling pressure in the market.

The risk of dilution

from issuances of common shares underlying existing warrants may cause shareholders to sell their common shares, which could further contribute

to any decline in our common share market price.

Any downward pressure on the price of our common shares caused by the sale

of common shares issued upon the exercise of existing warrants could encourage short sales by third parties.

In a short sale, a prospective

seller borrows common shares from a shareholder or broker and sells the borrowed common shares.

The prospective seller anticipates that

the common share price will decline, at which time the seller can purchase common shares at a lower price for delivery back to the lender.

The seller profits when the common share price declines because it is purchasing common shares at a price lower than the sale price of

the borrowed common shares.

Such short sales of common shares could place downward pressure on the price of our common shares by increasing

the number of common shares being sold, which could lead to a decline in the market price of our common shares.

We do not currently intend to pay any cash dividends on our common

shares in the foreseeable future.

We have never paid any cash dividends on our common shares and we do not

anticipate paying any cash dividends on our common shares in the foreseeable future because, among other reasons, we currently intend

to retain any future earnings to finance our business.

The future payment of cash dividends will be dependent on factors such as cash

on hand and achieving profitability, the financial requirements to fund growth, our general financial condition and other factors our

board of directors may consider appropriate in the circumstances.

Until we pay cash dividends, which we may never do, our shareholders

will not be able to receive a return on their common shares unless they sell them.

If we fail to meet applicable listing requirements, the NASDAQ Stock

Market or the TSXV may delist our common shares from trading, in which case the liquidity and market price of our common shares could

Our common shares are currently listed on the NASDAQ Stock Market and the

TSXV, but we cannot assure you that our securities will continue to be listed on the NASDAQ Stock Market and the TSXV in the future.

the past, we have received notices from the NASDAQ Stock Market that we have not been in compliance with its continued listing standards,

and we have taken responsive actions and regained compliance.

On February 28, 2020, we received written notification from the NASDAQ

Listing Qualifications Department for failing to maintain a minimum bid price of $1.00 per share for the preceding 30 consecutive business

days, as required by NASDAQ Listing Rule 5550(a)(2) – bid price (the “Minimum Bid Price Rule”).

Under NASDAQ Listing

Rule 5810(c)(3)(A) –

compliance period, we have 180 calendar days to regain compliance.

On April 17, 2020, we were informed that

NASDAQ had granted temporary regulatory relief related to its minimum bid price requirement due to the COVID-19 pandemic for all

NASDAQ-listed companies.

As a result of the announced regulatory relief, we now have until at least November 9, 2020 to regain

We have not regained compliance to date.

If at any time over this relief period

the bid price of our common shares closes at $1.00 per share or more for a minimum of ten (10) consecutive business days, NASDAQ

will provide written confirmation of compliance and the matter will be closed.

If we do not regain compliance within the relief

period, but otherwise meet the continued listing requirements for market value of publicly-held shares and all other initial listing

standards for the NASDAQ Listing Rule 5505 –

Capital Market criteria, except for the Minimum Bid Price Rule, we may be eligible

for an additional 180 calendar days to regain compliance.

If we are not granted additional time, then our common shares will be

subject to delisting, at which time we may appeal the delisting determination to a NASDAQ Hearings Panel.

If we fail to comply with listing standards

and the NASDAQ Stock Market or TSXV delists our common shares, we and our shareholders could face significant material adverse

consequences, including:

Rule 5810(c)(3)(A) – compliance period, we initially had 180 calendar days to regain compliance.

On April 17, 2020, we were informed that NASDAQ had granted temporary regulatory

relief related to its minimum bid price requirement due to the COVID-19 pandemic for all NASDAQ-listed companies and therefore extended

the deadline for us to regain compliance to November 9, 2020.

On November 11, 2020, we were further informed that NASDAQ had granted

an additional 180 calendar days, or until May 10, 2021, for us to regain compliance.

On May 11, 2021, we received notice from the Nasdaq Listing Qualifications

Department indicating that, based upon our non-compliance with the $1.00 bid price requirement set forth in (the Minimum Bid Price Rule)

as of May 10, 2021, our common shares were subject to delisting unless we timely requested a hearing before the Nasdaq Hearings Panel

(the “Panel”).

We requested and were granted a hearing on June 17, 2021, which will stay

any further action by Nasdaq pending the conclusion of the hearing process.

At the hearing, we presented a detailed plan of compliance for the Panel’s

consideration, which included our commitment to implement a share consolidation if needed to evidence compliance with the Minimum Bid

Should we determine that a share consolidation is necessary or otherwise advisable to regain compliance with the Minimum Bid

Price Rule, we would likely take such action concurrently with the completion of our proposed acquisition of Grace.

If we fail to comply with listing standards and the NASDAQ Stock Market

or TSXV delists our common shares, we and our shareholders could face significant material adverse consequences, including:

a limited availability of market quotations for our common shares;

reduced liquidity for our common shares;

a determination that our common shares are “penny stock”, which would require brokers trading in our common shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our common shares;

a determination that our common shares are “penny stock”, which

would require brokers trading in our common shares to adhere to more stringent rules and possibly result in a reduced level of trading

activity in the secondary trading market for our common shares;

a limited amount of news about us and analyst coverage of us;

a decreased ability for us to issue additional equity securities or obtain additional equity or debt financing in the future.

We may pursue opportunities or transactions

that adversely affect our business and financial condition.

Our management, in the ordinary course of our business, regularly

explores potential strategic opportunities and transactions.

These opportunities and transactions may include strategic joint venture

relationships, significant debt or equity investments in us by third parties, the acquisition or disposition of material assets,

the licensing, acquisition or disposition of material intellectual property, the development of new drug candidates or new applications

for CaPre, significant distribution arrangements, the sale of our common shares and other similar opportunities and transactions.

The public announcement of any of these or similar strategic opportunities or transactions might have a significant effect on the

price of our common shares.

Our policy is to not publicly disclose the pursuit of a potential strategic opportunity or transaction

unless we are required to do so by applicable law, including applicable securities laws relating to periodic disclosure obligations.

There can be no assurance that investors who buy or sell common shares are doing so at a time when we are not pursuing a particular

strategic opportunity or transaction that, when announced, would have a significant effect on the price of our common shares.

In addition, any such future corporate

development may be accompanied by certain risks, including exposure to unknown liabilities of the strategic opportunities and transactions,

higher than anticipated transaction costs and expenses, the difficulty and expense of integrating operations and personnel of any

acquired companies, disruption of our ongoing business, diversion of management’s time and attention, and possible dilution

to shareholders.

We may not be able to successfully overcome these risks and other problems associated with any future acquisitions

and this may adversely affect our business and financial condition.

We are a “smaller reporting

company” under the SEC’s disclosure rules and have elected to comply with the reduced disclosure requirements applicable

to smaller reporting companies.

We are a “smaller reporting company”

under the SEC’s disclosure rules, meaning that we have either:

a decreased ability for us to issue additional equity securities or obtain additional

equity or debt financing in the future.

We may pursue opportunities or transactions that adversely affect

our business and financial condition.

Our management, in the ordinary course of our business, regularly explores

potential strategic opportunities and transactions.

These opportunities and transactions may include strategic joint venture relationships,

significant debt or equity investments in us by third parties, the acquisition or disposition of material assets, the licensing, acquisition

or disposition of material intellectual property, the development of new drug candidates, significant distribution arrangements, the sale

of our common shares and other similar opportunities and transactions.

The public announcement of any of these or similar strategic opportunities

or transactions might have a significant effect on the price of our common shares.

Our policy is to not publicly disclose the pursuit

of a potential strategic opportunity or transaction unless we are required to do so by applicable law, including applicable securities

laws relating to periodic disclosure obligations.

There can be no assurance that investors who buy or sell common shares are doing so

at a time when we are not pursuing a particular strategic opportunity or transaction that, when announced, would have a significant effect

on the price of our common shares.

In addition, any such future corporate development may be accompanied by

certain risks, including exposure to unknown liabilities relating to the strategic opportunities and transactions, higher than anticipated

transaction costs and expenses, the difficulty and expense of integrating operations and personnel of any acquired companies, disruption

of our ongoing business, diversion of management’s time and attention, and possible dilution to shareholders.

We may not be able

to successfully overcome these risks and other problems associated with any future acquisitions and this may adversely affect our business

and financial condition.

We are a “smaller reporting company” under the SEC’s

disclosure rules and have elected to comply with the reduced disclosure requirements applicable to smaller reporting companies.

We are a “smaller reporting company” under the SEC’s

disclosure rules, meaning that we have either:

a public float of less than $250 million;

· annual revenues of less than $100 million during the most recently completed fiscal year;

o no public float;

o a public float of less than $700 million.

As a smaller reporting company, we are

permitted to comply with scaled-back disclosure obligations in our SEC filings compared to other issuers, including with respect

to disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

We have elected to adopt

the accommodations available to smaller reporting companies.

Until we cease to be a smaller reporting company, the scaled-back

disclosure in our SEC filings will result in less information about our company being available than for other public companies.

If investors consider our common shares

less attractive as a result of our election to use the scaled-back disclosure permitted for smaller reporting companies, there

may be a less active trading market for our common shares and our share price may be more volatile.

As a non-accelerated filer, we are

not required to comply with the auditor attestation requirements of the Sarbanes-Oxley Act.

We are a non-accelerated filer under the

Securities Exchange Act of 1934, as amended, or the Exchange Act, and we are not required to comply with the auditor attestation

requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.

Therefore, our internal controls over financial reporting will

not receive the level of review provided by the process relating to the auditor attestation included in annual reports of issuers

that are subject to the auditor attestation requirements.

In addition, we cannot predict if investors will find our common shares

less attractive because we are not required to comply with the auditor attestation requirements.

If some investors find our common

shares less attractive as a result, there may be a less active trading market for our common shares and trading price for our common

shares may be negatively affected.

investors may be unable to enforce

certain judgments.

We are a company existing under the Business

Corporations Act (Québec).

Some of our directors and officers are residents of Canada, and substantially all of

our assets are currently located outside the United States.

As a result, it may be difficult to effect service within the United

States upon us or upon some of our directors and officers.

annual revenues of less than $100 million during the most recently completed

no public float;

a public float of less than $700 million.

As a smaller reporting company, we are permitted to comply with scaled-back

disclosure obligations in our SEC filings compared to other issuers, including with respect to disclosure obligations regarding executive

compensation in our periodic reports and proxy statements.

We have elected to adopt the accommodations available to smaller reporting

Until we cease to be a smaller reporting company, the scaled-back disclosure in our SEC filings will result in less information

about our company being available than for other public companies.

If investors consider our common shares less attractive as a result of

our election to use the scaled-back disclosure permitted for smaller reporting companies, there may be a less active trading market for

our common shares and our share price may be more volatile.

As a non-accelerated filer, we are not required to comply with the

auditor attestation requirements of the Sarbanes-Oxley Act.

We are a non-accelerated filer under the Securities Exchange Act of 1934,

as amended, or the Exchange Act, and we are not required to comply with the auditor attestation requirements of Section 404(b) of the

Sarbanes-Oxley Act of 2002.

Therefore, our internal controls over financial reporting will not receive the level of review provided by

the process relating to the auditor attestation included in annual reports of issuers that are subject to the auditor attestation requirements.

In addition, we cannot predict if investors will find our common shares less attractive because we are not required to comply with the

auditor attestation requirements.

If some investors find our common shares less attractive as a result, there may be a less active trading

market for our common shares and trading price for our common shares may be negatively affected.

investors may be unable to enforce certain judgments.

We are a company existing under the Business Corporations Act (Québec).

Some of our directors and officers are residents of Canada, and substantially all of our assets are currently located outside the United

As a result, it may be difficult to effect service within the United States upon us or upon some of our directors and officers.

Execution by U.S.

courts of any judgment obtained against us or any

of our directors or officers in U.S.

courts may be limited to assets located in the United States.

It may also be difficult for

holders of securities who reside in the United States to realize in the United States upon judgments of U.S.

courts predicated

upon civil liability of us and our directors and executive officers under the U.S.

federal securities laws.

There may be doubt

as to the enforceability in Canada against non-U.S.

entities or their controlling persons, directors and officers who are not residents

of the United States, in original actions or in actions for enforcement of judgments of U.S.

courts, of liabilities predicated

solely upon U.S.

courts of any judgment obtained against us or any of our directors or officers in U.S.

courts may be limited to assets

located in the United States.

It may also be difficult for holders of securities who reside in the United States to realize in the United

States upon judgments of U.S.

courts predicated upon civil liability of us and our directors and executive officers under the U.S.

securities laws.

There may be doubt as to the enforceability in Canada against non-U.S.

entities or their controlling persons, directors

and officers who are not residents of the United States, in original actions or in actions for enforcement of judgments of U.S.

of liabilities predicated solely upon U.S.

federal or state securities laws.

There is a significant risk that

we may be classified as a PFIC for U.S.

There is a significant risk that we may be classified as a PFIC for

federal income tax purposes.

Current or potential investors in our

common shares who are U.S.

Holders (as defined below) should be aware that, based on our most recent financial statements and

projections and given uncertainty regarding the composition of our future income and assets, there is a significant risk that

we may have been classified as a “passive foreign investment company”

Current or potential investors in our common shares who are U.S.

(as defined below) should be aware that, based on our most recent financial statements and projections and given uncertainty regarding

the composition of our future income and assets, there is a significant risk that we may have been classified as a “passive foreign

investment company”

or “PFIC”

for the 2020 taxable

year and may be classified as a PFIC for our current taxable year and possibly subsequent years.

If we are a PFIC for any

year during a U.S.

Holder’s holding period of our common shares, then such U.S.

taxpayer generally will be required to

treat any gain realized upon a disposition of such common shares or any so-called “excess distribution”

on such common shares, as ordinary income (with a portion subject to tax at the highest rate in effect), and to pay an

interest charge on a portion of such gain or excess distribution.

In certain circumstances, the sum of the tax and the

interest charge may exceed the total amount of proceeds realized on the disposition, or the amount of excess distribution

received, by the U.S.

for the taxable year that ended on March 31, 2021, and may be classified as a PFIC for

our current taxable year and possibly subsequent years.

If we are a PFIC for any year during a U.S.

Holder’s holding period of our

common shares, then such U.S.

taxpayer generally will be required to treat any gain realized upon a disposition of such common shares

or any so-called “excess distribution”

received on such common shares, as ordinary income (with a portion subject to tax at

the highest rate in effect), and to pay an interest charge on a portion of such gain or excess distribution.

In certain circumstances,

the sum of the tax and the interest charge may exceed the total amount of proceeds realized on the disposition, or the amount of excess

distribution received, by the U.S.

Subject to certain limitations, a timely and effective QEF Election (as defined below) under

Section 1295 of the U.S.

Internal Revenue Code of 1986, as amended, or the Code, or a Mark-to-Market Election (as defined

below) under Section 1296 of the Code may be made with respect to the common shares.

Holder who makes a timely and

effective QEF Election generally must report on a current basis its share of our net capital gain and ordinary earnings for

any year in which we are a PFIC, whether or not we distribute any amounts to our shareholders.

Holder who makes the

Mark-to-Market Election generally must include as ordinary income each year the excess of the fair market value of their

common shares over the holder’s basis therein.

This paragraph is qualified in its entirety by the discussion under the

heading “Item 5.

Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of

Equity Securities - U.S.

Federal Income Tax Considerations of the Acquisition, Ownership, and Disposition of Common Shares -

Passive Foreign Investment Company Rules.”

Internal Revenue Code of 1986, as amended, or the Code, or a Mark-to-Market Election (as defined below) under

Section 1296 of the Code may be made with respect to the common shares.

Holder who makes a timely and effective QEF Election generally

must report on a current basis its share of our net capital gain and ordinary earnings for any year in which we are a PFIC, whether or

not we distribute any amounts to our shareholders.

Holder who makes the Mark-to-Market Election generally must include as ordinary

income each year the excess of the fair market value of their common shares over the holder’s basis therein.

This paragraph is qualified

in its entirety by the discussion under the heading “Item 5.

Market for Registrant’s Common Equity, Related Shareholder Matters

and Issuer Purchases of Equity Securities - U.S.

Federal Income Tax Considerations of the Acquisition, Ownership, and Disposition of Common

Shares - Passive Foreign Investment Company Rules”

and does not take into account any changes to the composition of our income and

assets resulting from the merger.

Each current or potential investor who is a U.S.

Holder should consult its

own tax advisor regarding the U.S.

Holder should consult its own tax advisor regarding

federal, state and local, and non-U.S.

tax consequences of the acquisition, ownership, and

disposition of our common shares, the U.S.

federal tax consequences of the PFIC rules, and the availability of any election

that may be available to the holder to mitigate adverse U.S.

tax consequences of the acquisition, ownership, and disposition of our common shares,

federal tax consequences of the PFIC rules, and the availability of any election that may be available to the holder to mitigate

federal income tax consequences of holding shares in a PFIC.

Our change from foreign private issuer

domestic issuer status may result in additional costs to us.

September 30, 2019, we no longer qualified

as a “foreign private issuer”

as defined in Rule 405 under the U.S.

Securities Act of 1933, as amended, and Rule 3b-4

of the Exchange Act.

As a foreign private issuer, we were exempt from certain provisions under U.S.

federal securities laws applicable

public companies.

We are now considered a U.S.

domestic issuer and are subject to increased compliance obligations under

the Exchange Act.

The regulatory and compliance costs to us under U.S.

securities laws as a U.S.

domestic issuer may be significantly

more than the costs we incurred as a foreign private issuer.

domestic filer, we are no longer

exempt from the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q and current reports

on Form 8-K and filings of proxy statements with the SEC;

the sections of the Exchange Act regulating the solicitation of proxies,

consents or authorizations, in respect of shares registered under the Exchange Act;

the provisions of Regulation FD aimed at preventing

issuers from making selective disclosures of material information;

and the sections of the Exchange Act requiring insiders to file

public reports of their stock ownership and trading activities and establishing insider liability for profits realized from any

“short-swing”

trading transaction (a purchase and sale, or sale and purchase, of the issuer’s equity securities

within less than six months).

We are also no longer eligible to rely upon exemptions from certain

corporate governance requirements that are available to foreign private issuers or to benefit from other accommodations for foreign

private issuers under the rules of the SEC and NASDAQ, which may involve additional costs.

Unresolved Staff Comments

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors