Mr. Roger DuMoulin-White reports

THERALASE(R) RELEASES 1Q2023 INTERIM FINANCIAL STATEMENTS

Theralase Technologies Inc. has released its Q1 2023 unaudited condensed interim consolidated financial statements.

1 Other represents foreign exchange, interest accretion on lease liabilities and/or interest income.

Financial highlights

Total revenue decreased 2 per cent, year over year.

Cost of sales for the three-month period ended March 31, 2023, was $114,638 (55 per cent of revenue) resulting in a gross margin of $92,523 (45 per cent of revenue). In comparison, the cost of sales for the same period in 2022 was $120,430 (57 per cent of revenue) resulting in a gross margin of $91,232 (43 per cent of revenue). Cost of sales is represented by the following costs: raw materials, subcontracting, direct and indirect labour, and the applicable share of manufacturing overhead. The gross margin increase, as a percentage of sales, year over year, is primarily attributed to a decrease in labour and material costs.

Selling expenses for the three-month period ended March 31, 2023, decreased to $74,671, from $87,640 for the same period in 2022 (15-per-cent decrease). The decrease in selling expenses is a result of reduced advertising (47 per cent) and salaries (17 per cent).

Administrative expenses for the three-month period ended March 31, 2023, increased to $522,695 from $418,087 for the same period in 2022 (25-per-cent increase). The increase in administrative expenses is primarily attributed to increased spending on general and administrative expenses (85 per cent) and advisory fees (36 per cent). Stock-based compensation expense was higher in 2022 due to an increase in stock options granted.

Net research and development expenses for the three-month period ended March 31, 2023, decreased to $910,280 from $1,298,035 for the same period in 2022 (30-per-cent decrease). The decrease in research and development expenses for the three-month period is primarily attributed to the costs related to the manufacture of the Study II drug. Research and development expenses represented 77 per cent of the company's operating expenses and represent investment into the research and development of the company's anti-cancer therapy (ACT) technology.

The net loss for the three-month period ended March 31, 2023, was $1,480,953, which included $244,787 of net non-cash expenses (in example: amortization, stock-based compensation expense and foreign exchange gain/loss). This compared with a net loss for the same period in 2022 of $1,701,489, which included $99,600 of net non-cash expenses. The ACT division represented $4,708,874 of this loss (82 per cent) for the three-month period ended March 31, 2023. The decrease in net loss is primarily attributed to decreased spending on research and development expenses in Study II.

Operational highlights

1. Leadership change

On May 24, 2023, Roger DuMoulin-White, BSc, PEng, ProDir, was appointed president and chief executive officer (CEO) of the company. Dr. Arkady Mandel, MD, PhD, DSc, tendered his resignation as interim CEO and continues to serve as chief scientific officer (CSO) and as a member of Theralase's board.

Mr. DuMoulin-White is the founder of Theralase and its former president and CEO. He stepped down as president and CEO in 2018 and has since served in a non-executive business development role.

Mr. DuMoulin-White was the subject of a voluntary settlement agreement with the Ontario Securities Commission (OSC) dated Feb. 16, 2018, and an OSC order dated Feb. 26, 2018, which required, among other things, that he resign as a director and officer of Theralase and refrain from holding those positions for a period of five years. That period has expired and Theralase has obtained the approval of the TSX Venture Exchange (TSX-V) to appoint Mr. DuMoulin-White as president and CEO of the company and to nominate him for election to the company's board of directors at the company's annual meeting on June 29, 2023.

2. TSX Venture 50

Theralase was named to the TSX-V 2023 Venture 50. The Venture 50 is an annual ranking of the top-performing companies from five industry sectors; specifically: clean technology and life sciences, diversified industries, energy, mining, and technology. Theralase was recognized in the clean technology and life sciences category. Theralase was previously named a 2015, 2019 and 2020 Venture 50 company making this the fourth year Theralase has been recognized as a top performer in the clean technology and life sciences sector in the last eight years.

3. Warrant extension

On Jan. 5, 2023, the company extended the expiry date of 4,095,157 share purchase warrants, all of which are exercisable at 50 cents per share. The share purchase warrants were issued on Jan. 9, 2019, pursuant to a private placement involving the issuance of 4,095,157 units of the company. The new expiry date of the warrants is Jan. 9, 2024.

4. Study II update

To date, Study II has provided the primary study treatment for 59 patients.

In recent discussions with the Medical and Scientific Advisory Board (MSAB) for Study II, the MSAB advised the company to review the FDA Guidance to Industry on how to best classify indeterminate response (IR) patients (patients assessed with negative cystoscopy and positive urine cytology), where the source of the positive urine cytology has not been determined.

The FDA Guidance to Industry states as follows:

"For single-arm trials of patients with BCG-unresponsive disease, the FDA defines a complete response as at least one of the following:

• "Negative cystoscopy and negative (including atypical) urine cytology;
• "Positive cystoscopy with biopsy-proven benign or low-grade NMIBC and negative cytology.

"For intravesical therapies without systemic toxicity, the FDA includes, in the definition of a complete response, negative cystoscopy with malignant urine cytology if cancer is found in the upper tract or prostatic urethra and random bladder biopsies are negative."

Theralase's Study II treats patients with an intravesical study drug activated by an intravesical study device. In accordance with the FDA Guidance to Industry, patients enrolled and provided the primary study treatment, where the source of the positive urine cytology has not been identified (in example: upper tract or prostatic urethra urothelial cell carcinoma (UCC)) and confirmatory bladder biopsies were negative, Theralase has reclassified these patients from indeterminate response (IR) to complete response (CR).

For patients, who have been enrolled and provided the primary study treatment in Study II, that have been diagnosed as IR and do not have confirmatory negative bladder biopsies (confirming that the source of the UCC is not from the bladder wall), these patients have remained classified as IR, until additional clinical assessments can be completed by the PIs to prove or disprove a diagnosis of CR.

As a result, Theralase updated its Study II's interim clinical study data analysis, where some patients have been reclassified from IR to CR on certain assessment days.

In accordance with the FDA Guidance to Industry, Theralase will conduct sensitivity analyses, in which these IR patients are considered not to have achieved a CR, as a part of the final clinical report.

In 2016, Kamat et al. stated in the Journal of Clinical Oncology that the International Bladder Cancer Group (IBCG) recommended that: "Single-arm designs may be relevant for the BCG-unresponsive population. Here, a clinically meaningful initial complete response rate (for carcinoma in situ) or recurrence-free rate (for papillary tumours) of at least 50 per cent at six months, 30 per cent at 12 months and 25 per cent at 18 months is recommended."

The interim clinical data presented herein meets or exceeds these IBCG guidelines.

In an analysis of evaluable patients, Study II clinical data provides the interim analysis as shown in the attached table.

The interim clinical data demonstrates that 60 per cent of evaluable patients (patients evaluated by a principal investigator (PI)) achieved a CR at 90 days post primary study treatment and 33 per cent achieved a CR at 450 days.

Note:

• For patients to be included in the statistical clinical analysis, they must be enrolled in Study II, provided the primary study treatment and evaluated by a PI at the 90-day assessment visit (cystoscopy and urine cytology).
• One patient passed away prior to their 90-day assessment and is therefore not included in the statistical analysis.
• Evaluable patients are defined as patients who have been evaluated by a PI and thus excludes a patient's clinical data at specific assessment days, if that clinical data are pending.
• Five patients have been enrolled and provided the primary study treatment, but have not been evaluated at their 90-day assessment; therefore, 53 patients are considered evaluable patients at 90 days, with 39 patients considered evaluable patients at 450 days.
• The data analysis presented herein, should be read with caution, as the clinical data are interim in its presentation, as Study II is continuing and new clinical data collected may or may not continue to support the current trends, with significant data still pending.
• Total responders (CR and IR) are defined as CR plus IR.
• For patients who have been removed from the study by the PI or have elected to discontinue from the clinical study their last observation has been carried forward in this analysis.

The Swimmer's Plot illustrates:

• 13 evaluable patients that achieved CR at each assessment date and thus achieved the primary and secondary objectives of Study II for all patients assessed up to 450 days (13/39 equals 33 per cent);
• 35 evaluable patients that achieved CR on at least one assessment date and thus achieved the primary objective of Study II (35/53 equals 66 per cent)

The interim Kaplan-Meier (KM) curve represents the cumulative incidence of clinical events, including the treatment efficacy, occurring over a prespecified time in Study II. According to the KM curve, approximately 80 per cent of patients remained in Study II after 90 days, following the primary study treatment. More than 60 per cent of the treated patients have a probability to achieve the primary study objective and 34 per cent of patients have a probability to achieve a durable CR (the Study II secondary endpoint) at 450 days.

5. Study II interim data presentations

Study II (interim) clinical data was presented at the American Society of Clinical Oncology (ASCO) Genito Urinary (GU) Cancer Symposium on Feb. 17, 2023, in San Francisco, Calif., with the poster presented for general viewing and discussion within Poster Session B: Prostate Cancer and Urothelial Carcinoma. The poster presented at the ASCO GU Cancer Symposium can be found on the company's website.

Study II (interim) clinical data was presented at the 2023 American Urology Association (AUA) annual meeting on May 1, 2023, in Chicago, Ill., with the poster presented for general viewing and discussion at a moderated poster session, within the AUA annual meeting. The poster presented at the AUA annual meeting can be found on the company's website.

About Study II

Study II utilizes the therapeutic dose of TLD-1433 (0.70 milligram/square centimetre) activated by the proprietary TLC-3200 medical laser system. Study II is focused on enrolling and treating approximately 100 to 125 BCG-unresponsive non-muscle invasive bladder cancer (NMIBC) carcinoma in situ (CIS) patients in up to 15 clinical study sites (CSS) located in Canada and the United States.

Study II objectives are as follows:

Primary

Efficacy -- evaluated by CR at any point in time patients diagnosed with CIS (with or without resected papillary Ta/T1 disease)

CR is defined as at least one of the following:

• Negative cystoscopy and negative (including atypical) urine cytology;
• Positive cystoscopy with biopsy-proven benign or low-grade NMIBC and negative cytology;
• Negative cystoscopy with malignant urine cytology, if urothelial cancer is present in the upper tract or prostatic urethra and random bladder biopsies are negative.

Secondary

Duration of CR -- evaluated as sustainability of CR at 12 months post initial CR

Tertiary

Safety -- evaluated by the incidence and severity of adverse events (AEs) directly related to the study drug and/or study device, grade 4 or higher, that do not resolve within 450 days post treatment (where: grade 1 equals mild, grade 2 equals moderate, grade 3 equals severe, grade 4 equals life-threatening or disabling, grade 5 equals death).

About TLD-1433 (Ruvidar)

TLD-1433 is a patented PDC with 12 years of published peer reviewed preclinical research and is currently under investigation in Study II.

The trade name Ruvidar was selected by the company, as Ru is the element symbol for ruthenium, a rare transition metal belonging to the platinum group, which the Theralase PDC is based upon, vita is Latin for life and dar is Russian for gift; hence, roughly translated, "ruthenium, the gift of life."

About Theralase Technologies Inc.

Theralase is a clinical-stage pharmaceutical company dedicated to the research and development of light activated compounds and their associated drug formulations with a primary objective of efficacy and a secondary objective of safety in the destruction of various cancers, bacteria and viruses.

We seek Safe Harbor.