Mr. Jody Aufrichtig reports

PSYENCE GROUP PROVIDES CORPORATE UPDATE FOLLOWING SUCCESSFUL SPAC SPIN OUT OF THERAPEUTIC DIVISION

Further to the announcement by Psyence Group Inc. of the closing of the business combination of its subsidiary, Psyence Biomedical Ltd. (PBM) with Newcourt Acquisition Corp., a special-purpose acquisition company, and the subsequent listing of PBM on the Nasdaq stock exchange with the trading symbol PBM, Psyence Group has provided a corporate update.

The spinout

Psyence Biomed II Corp., the therapeutics division of Psyence Group and target business of the business combination, is now a wholly owned subsidiary of Nasdaq-traded PBM. Psyence Biomed consists of the clinical trial business and the development of natural psilocybin products in the context of palliative care. It has partnered with iNGENu Pty. Ltd. to conduct Psyence Biomed's clinical trial in palliative care. iNGENu is an Australian-based, globally focused contract research organization (CRO) with extensive experience working in the psychedelic pharmaceutical drug development and clinical research industry.

"Despite a year of constrained small-cap markets, particularly in the biotech sector, combined with the numerous start-up, early-stage psychedelic companies competing for a limited pool of capital, we are proud that we were able to close a financing and complete the business combination, allowing us to list our clinical trial and product development business on a U.S. national exchange," said Jody Aufrichtig, executive chairman of Psyence Group.

Upon the close of the business combination effective Jan. 25, 2024, Psyence Group was issued five million common shares in PBM, equal to approximately a 37-per-cent interest in PBM. The common shares of PBM held by Psyence Group are subject to a trading lock-up period ending on the earliest of: (a) 180 days after the closing (subject to a further extension under certain conditions); and (b) a change of control event. The company is taking tax and corporate securities advice on the possibility of distributing the PBM shares to Psyence Group shareholders.

As a result of the spinout, Psyence Group has significantly reduced its operating costs by no longer having to finance the clinical trial being carried out by iNGENu and by substantially reducing its general and administrative costs as well as removing the compensation of a number of senior executives and consultants who will now be employed by PBM.

Changes in board and management

Dr. Neil Maresky has assumed the role of chief executive officer of PBM to oversee the Psyence Biomed business and has resigned as chief executive officer of Psyence Group. Dr. Clive Ward-Able has been appointed as medical director for PBM to support the chief executive officer in the execution of the Psyence Biomed clinical trial and has resigned as medical director of Psyence Group. Warwick-Corden Lloyd will step down as the chief financial officer of Psyence Group to assume the position of chief financial officer of PBM. Adri Botha, Psyence Group's group financial manager, will act as interim chief financial officer of Psyence Group while the search for a new chief financial officer and chief executive officer continues. Since these executives are moving over to PBM, no termination payments are being paid by the company, and unvested equity incentives and compensation securities will be cancelled. In addition hereto, a senior consultant's contract has also been terminated as the services related largely to the Psyence Biomed business. As a sign of confidence in the business, such senior consultant has agreed to settle a portion of his outstanding consulting fees totalling $60,550 in common shares in the company and will receive 1,668,044 common shares at a price of 3.63 cents per share (based on a 30-day VWAP (volume-weighted average price) calculation as at Feb. 29, 2024), subject to approval from the Canadian Securities Exchange.

Christopher Bull and Dr. Maresky have resigned as members of the Psyence Group board to join the board of PBM. Mr. Aufrichtig and Alan Friedman will retain their respective board positions with Psyence Group with Mr. Aufrichtig as continuing executive chairman of the board.

Strategic restructuring of business units

The company is also pleased to announce the strategic restructuring of its non-clinical business through a conditional M&A (merger and acquisition) transaction. The conditional transaction involves the transfer of the company's non-clinical subsidiaries Mind Health Pty. Ltd. (Lesotho), the vehicle housing the psilocybin cultivation, extraction and production operations in southern Africa, and Psyence U.K. Group Ltd. (United Kingdom), the entity engaged in API (active pharmaceutical ingredient) and IP (intellectual property) development, and the functional mushroom brand Goodmind to a third party private company (PriveCo), which will be responsible for raising the private investment required and continuing finance to continue the operations of the non-clinical assets. PriveCo will concentrate on growing, production and extraction operations, and creating an API for commercialization in the legal research and development and medical markets globally.

Psyence Group will retain sales and distribution rights for all products and services developed and offered by PriveCo with the intention of creating a marketplace therefor in the psychedelics industry. As consideration for the conditional transaction, the company will receive $1-million in shares of PriveCo priced at PriveCo's most recent financing at the time of close. The company will also be entitled to a 3.5-per-cent royalty on net sales generated through the non-clinical assets with respect to the intellectual property transferred as part of the conditional transaction for a period of 7.5 years.

The motivation of management and the board to pursue the conditional transaction is to ensure the continued operation of the underlying non-clinical business while substantially reducing the company's overhead. As a result of the conditional transaction and should all conditions to closing be met, all major company overhead expenditure related to the company's Psyence Production and Psyence Function divisions will be transferred to PriveCo whilst being exposed to upside through owning shares in PriveCo as well as entitlements to future royalties flowing from revenue generated in the various businesses of PriveCo. The continuing operational costs and future spend will become the responsibility of PriveCo. The company's management team intends to expand its asset-light business model in addition to the marketing and distribution of PriveCo's products and services by minimizing asset maintenance costs through the conditional transaction and identifying additional less capital-intensive opportunities in the psychedelics space.

Required steps

To give effect to the conditional transaction, the company and PriveCo have entered into an agreement whereby PriveCo shall be entitled to acquire the non-clinical assets in exchange for the share consideration valued at $1-million as described herein, provided that certain closing conditions are met, which closing conditions include the raising of a minimum of $250,000 in cash. PriveCo has launched fundraising initiatives and intends to raise up to $2-million for continuing operational costs. Upon the closing of the conditional transaction, the non-clinical assets shall become subsidiaries of PriveCo.

Proposal approval

The board of the company has approved the required steps set out herein, paving the way for the conditional transaction.

About Psyence Group Inc.

Psyence Group is a life science biotechnology company listed on the CSE with a focus on natural psychedelics. Psyence Biomed (now trading on Nasdaq under the ticker symbol PBM) works with natural psilocybin products for the healing of psychological trauma and its mental health consequences in the context of palliative care. The company's name -- Psyence -- combines the words psychedelic and science to affirm the company's commitment to producing psychedelic medicines developed through evidence-based research.

Informed by nature and guided by science, the company built and operates one of the world's first federally licensed commercial psilocybin mushroom cultivation and production facilities in southern Africa. The company's team brings international experience in both business and science and includes experts in mycology, neurology, palliative care and drug development. The company works to develop advanced natural psilocybin products for clinical research and development. The company's divisions, Psyence Production and Psyence Function, and minority stake in Psyence Biomed (the former therapeutics division), anchor an international collaboration, with operations in Canada, the United Kingdom, southern Africa and Australia and a presence in the United States.

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