Mr. Sylvain Chretien reports

HEALTH CANADA UPHOLDS NOTICE OF DEFICIENCY-WITHDRAWAL LETTER REGARDING EASYHALER BUDESONIDE

Health Canada has upheld the May, 2015, notice of deficiency-withdrawal letter regarding Pediapharm Inc.'s Easyhaler Budesonide, without prejudice to refiling.

Health Canada's decision, communicated through a letter received by Pediapharm in the afternoon of Dec. 24, 2015, is based on recommendations contained in a report issued by a reconsideration panel and Health Canada's Office of Science. The reconsideration panel was responsible to hear arguments from Pediapharm and Health Canada's allergy and respiratory drugs division on Nov. 20, 2015, and to submit recommendations to the Director General, who accepted them in a letter sent to company.

"We are very disappointed with Health Canada's decision and we will take the appropriate time to analyze the available documents and notes with our team of consultants and partner that have accompanied us during this process. We will assess our alternatives and intend on communicating our plan of action by the end of March, 2016. As previously stated, budesonide is a clinically proven and safe active ingredient approved and commonly used by adults and children in Canada. Furthermore, Easyhaler Budesonide is currently being used by millions of patients suffering from asthma in over 25 countries around the world, such as Germany, Finland and the United Kingdom. We feel this decision by no means undermines the efficacy and safety of Easyhaler Budesonide, and are convinced of the benefits the product could bring to numerous patients should they have access to it," stated Sylvain Chretien, president and chief executive officer of Pediapharm.

We seek Safe Harbor.