Mr. Sylvain Chretien reports

PEDIAPHARM SELLS ITS US RIGHTS TO NAPROXEN SUSPENSION IN A TRANSACTION VALUED AT UP TO APPROXIMATELY US$4.25 MILLION

Pediapharm Inc. has entered into a letter of intent with a third party for the sale of its U.S. rights to Naproxen Suspension in a transaction valued at approximately $4.25-million (U.S.). Financial terms of the proposed transaction include: payment of $2.25-million (U.S.) in cash on closing and payment of $2-million (U.S.) conditional on Pediapharm being granted approval from the Food and Drug Administration of the manufacturing site transfer on or before Sept. 30, 2016. The prescription drug user fee assessment date is expected to be held in February, 2016. The proposed transaction is subject to a number of terms and conditions, including completion of due diligence and the entering into of a formal asset purchase agreement, as well as receipt of all necessary regulatory approvals, including the approval of the TSX Venture Exchange.

Pediapharm will retain the rights to Naproxen suspension in Canada and will continue to commercialize using its own infrastructure.

"This is a very exciting transaction for Pediapharm, especially coming from the sale of an asset that had yet to generate revenue for us," stated Sylvain Chretien, president and chief executive officer of Pediapharm. He added: "As part of our process to identify potential commercial partners in the United States, we also received offers for the purchase of the rights of Naproxen Suspension. During our evaluation process and for strategic reasons, we felt it was in the best interest of all stakeholders to proceed with the sale of the rights. This solidifies our balance sheet, enables us to fuel the growth of our existing products and puts us in a solid position for the upcoming potential launches of Rupafin and Otixal in 2016."

We seek Safe Harbor.