LSL PHARMA GROUP EXPANDS ITS ACTIVITIES BY AQUIRING DERMOLAB PHARMA AND ANNOUNCES THE CLOSING OF A CONCURRENT DEBT FINANCING

• Acquisition is accretive, expected to boost revenues by approximately 40% and adds development and manufacturing capabilities of liquid and semi-solid products for the pharmaceutical and cosmetic markets.
• The Corporation strengthens its management team with the appointment of Guy Paul Allard as VP Legal Affairs and Corporate Secretary.

BOUCHERVILLE, QC, Dec. 18, 2024  /CNW/ - LSL PHARMA GROUP INC. (TSXV: LSL, LSL.DB) ("the Corporation" or "LSL Pharma"), a Canadian integrated pharmaceutical Corporation, is pleased to announce the acquisition of Dermolab Pharma Ltd. ("Dermolab"), a contract manufacturing company specializing in the manufacturing of liquid, and semi-solid products, based in Ste-Julie, Quebec. This acquisition increases LSL Pharma's contract development and manufacturing activities, while creating synergies with its other subsidiaries, LSL Laboratory Inc., Steri-Med Pharma Inc. and Virage Santé Inc. LSL Pharma also announced the closing of a $2 million concurrent debt financing (the "Financing"). The closing of the transaction occurred after markets had closed on December 17, 2024.

Details about the Dermolab Transaction

The total consideration for the transaction includes (i) the renewal of Dermolab's operating line of credit and term loan totaling a maximum of $3 million and (ii) a cash payment of $955,000 on closing. The cash portion of the purchase price was financed by the proceeds of the concurrent debt financing and will be subject to post-closing adjustments. For the 12-month period ended on August 31, 2024, Dermolab generated net earnings and net earnings before interest taxes and amortization (EBITDA) of nil and $0.5 million respectively, from revenues of $10.1 million. As at August 31, 2024, Dermolab had total assets of $7.9 million, and liabilities of $5.3 million including bank loans totaling $2.7 million. The acquisition is expected to boost LSL Pharma's revenues by approximately 40% for the upcoming fiscal year. The acquisition is also expected to broaden Dermolab's customer base which will benefit from the LSL Group's expanded service offering. Robert Boisvert, Dermolab's prior President has been retained for an interim period to ensure a smooth transition.  

"We are excited about the opportunity to add Dermolab to our contract manufacturing division. This acquisition fits with LSL Pharma's growth strategy of diversifying its service offering and increasing its manufacturing capabilities to better serve the pharmaceutical sector, as well as to expand our activities to the cosmetic market", said François Roberge, President and CEO.

"By leveraging the management talent and expertise of its seasoned staff, we expect Dermolab to operate as a standalone entity as part of our group. We look forward at the opportunity to continue building Dermolab into a dominant player in the development and manufacturing of high-quality creams and liquids for the Canadian, US and European pharmaceutical and cosmetic markets. Finally, we are especially thankful for the support of the departing President, Robert Boisvert, who has been at the helm of the Corporation for the last 20 years", concluded Mr. Roberge.

About the Financing

Concurrent to the Transaction, LSL Pharma successfully completed a $2 million Notes offering (the "Notes").  $1 million of such Notes, results from the amendment of an existing note entered into on November 19, 2024 with a non-related party as disclosed in the Corporation's November 25, 2024 press release. The Notes are unsecured, bear interest at a blended rate of 13% and mature on January 1, 2028. 2,000,000 warrants (the "Warrants") were issued in connection with the Notes, with each Warrant entitling the holder, subject to adjustments in certain cases, to purchase one common share of the Corporation (the "Warrant share") at a price equal to the greater of (i) $0.70 or (ii) the closing price of the LSL Pharma Shares on December 20, 2024 , for a period of 36 months following the closing of the Financing. The Notes may be redeemed by the Corporation at any time on or after January 1, 2026.The purpose of the Financing was to support growth initiatives, such as the Dermolab acquisition, by strengthening LSL Pharma's working capital.

Each Warrant and Warrant share will be subject to a four-month hold period under the applicable securities laws. The Financing is subject to the TSX Venture Exchange's approval. There were no finders involved with the Financing.

A Corporation controlled by Luc Mainville, Executive VP and Chief Financial Officer of the Corporation (the "Insider") contributed an amount of $1 million into the Financing. The participation of the Insider in the Financing and the issuance of Warrants to the Insider constitute "related party transactions" as defined under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Corporation is exempt from the need to obtain a formal valuation and minority shareholder approval, as required by MI 61-101 in respect of such insider participation the Financing, since the Notes are deemed to create a new loan, and such loan is on reasonable commercial terms that are not less advantageous to the Corporation than if the loan was obtained from a person dealing at arm's length with the Corporation. Furthermore, the loan is not convertible, directly or indirectly, into equity or voting securities of the Corporation or a subsidiary, or otherwise participating in nature, or repayable, as to principle or interest, directly or indirectly, in equity or voting securities of the Corporation or a subsidiary. The Corporation is also exempt from the need to obtain a formal valuation and minority shareholder approval for the issuance of Warrants to the Insider because the fair market value of the Warrants does not exceed 25% of the Corporation's market capitalization. A material change report in respect of these related party transactions will be filed by the Corporation.

Appointment of Guy Paul Allard

The Corporation also announced today the appointment of Guy Paul Allard as Vice President, Legal Affairs and Corporate Secretary. A seasoned lawyer specializing in corporate and securities law for over 25 years, Mr. Allard has practiced in national and global law firms and has previously held similar executive in-house positions in the pharmaceutical industry. "The Corporation's growth requires the addition of specialized legal resources internally and we are pleased to welcome Guy Paul in our management team", said Mr. Roberge.

ABOUT DERMOLAB PHARMA LTD.

Founded in 1985, Dermolab Pharma operates a 50,000 sq.ft. plant, employs 85 staff, and specializes in the development, manufacturing and packaging of liquid and semi-solid cosmetic, pharmaceutical and natural health products. The Corporation serves both the Canadian and international markets and its manufacturing operations meet the Food and Drug Administration (FDA) and Health Canada standards.

For more information on Dermolab Pharma, please visit www.dermolabpharma.com.

ABOUT LSL PHARMA GROUP INC.

LSL Pharma Group Inc. is a Canadian integrated pharmaceutical Corporation specializing in the development, manufacturing, and commercialization of high-quality sterile ophthalmic pharmaceuticals, as well as natural health products in solid and liquid dosage forms. For further information, please visit www.groupelslpharma.com.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements as defined under applicable Canadian securities legislation. Forward-looking statements can generally be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "continue" or similar expressions. Forward-looking statements are based on a number of assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the Corporation's ability to control or predict, that could cause actual results or performance to differ materially from those expressed or implied in such forward-looking statements. These risks and uncertainties include, but are not limited to, those identified in the Corporation's filings with Canadian securities regulatory authorities, such as legislative or regulatory developments, increased competition, technological change and general economic conditions. All forward-looking statements made herein should be read in conjunction with such documents.

Readers are cautioned not to place undue reliance on forward-looking statements. No assurance can be given that any of the events referred to in the forward-looking statements will transpire, and if any of them do, the actual results, performance or achievements of the Corporation may differ materially from those expressed or implied by the forward-looking statements. All forward-looking statements contained in this press release speak only as of the date of this press release. The Corporation does not undertake to update these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Groupe LSL PHARMA INC.

François Roberge, President and Chief Executive Officer, [phone], E-mail: [email protected] OR Luc Mainville, Executive VP & Chief Financial Officer, [phone] ext.: 301, E-mail : [email protected]