Claritas Pharmaceuticals, Inc.

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NOTICE OF MEETING

AND

MANAGEMENT INFORMATION CIRCULAR

IN RESPECT OF THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 17, 2021

FOR FISCAL YEARS 2019 AND 2020

DATED MAY 7, 2021

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Claritas Pharmaceuticals, Inc.

NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that the annual and special meeting (the “ Meeting ”) of the holders (the “ Shareholders ”) of common shares of Claritas Pharmaceuticals, Inc. (formerly, Kalytera Therapeutics, Inc.) (the “ Company ”) will be held on June 17, 2021, at 2:30 p.m. EDT using TSX Trust’s Virtual platform which can be accessed using the following link: https://virtual-meetings.tsxtrust.com/1148 Password: claritas2021. Meeting materials are available online at www.sedar.com and also on https://docs.tsxtrust.com/2232.The Meeting will address for the following matters:

to receive the financial statements of the Company, together with the report of the auditors thereon for the years ended December 31, 2019 and December 31, 2020
to elect the directors of the Company to hold office until the next annual meeting of the Company or until their respective successors are duly elected or appointed;
to appoint auditors of the Company for the fiscal year 2021;
to consider and, if thought appropriate, approve an ordinary resolution, substantially in the form set out in Schedule “A” of the accompanying information circular (the “ Information Circular ”), approving the stock option plan of the Company (the “ Option Plan ”) as required under the policies of the TSX Venture Exchange (“ TSXV ”);
to consider and, if thought appropriate, approve a special resolution, substantially in the form set out in Schedule “B” of this Information Circular, authorizing the board of directors of the Company (the “ Board ”) to effect a consolidation of all the issued and outstanding Common Shares on the basis of one post consolidation Common Share to for up to 20 pre-consolidation Common Shares, or such lesser number of pre-Consolidation Common Shares as may be accepted by the TSXV and approved by the Board, in its sole discretion, should the board of directors of the Company determine such consolidation to be in the best interests of the Company;
to consider and, if thought appropriate, approve a special resolution, substantially in the form set out in Schedule “C” of this Information Circular, authorizing the Company to transfer and sell to the former shareholders of Talent Biotechs Ltd. (the “Former Shareholders ”) all assets of the Company’s program developing cannabidiol for the prevention and treatment of graft versus host disease (the “ GVHD Program ”) in consideration for the release and discharge by the Former Shareholders of all obligations the Company and its subsidiaries may have to such Former Shareholders; and
to transact such other business as may be properly brought before the Meeting or any adjournment or postponement thereof.

Shareholders should refer to the Information Circular for more information with respect to the matters to be considered at the Meeting.

Only Shareholders at the close of business on April 28, 2021 (the “ Record Date ”) are entitled to notice of and to vote at the Meeting or any adjournments or postponements thereof.

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Shareholders may vote in person through the mentioned virtual platform at the Meeting or any adjournments or postponements thereof, or they may appoint another person (who needs not be a Shareholder) as their proxy to attend and vote in their place.

Shareholders unable to attend the Meeting in person are requested to date and sign the enclosed form of proxy and forward it to TSX Trust Company, 301 - 100 Adelaide Street West, Toronto, Ontario, M5H 4H1 no later than 10:00 a.m. (Toronto time) on May 26, 2021, or if the Meeting is adjourned or postponed, by 10:00 a.m. (Toronto time) on the second business day prior to the date on which the Meeting is reconvened.

BY ORDER OF THE BOARD OF DIRECTORS

(signed) “Robert Farrell ” Name: Robert Farrell Title: Chief Executive Officer, President, and Director May 7, 2021

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Claritas Pharmaceuticals, Inc.

MANAGEMENT INFORMATION CIRCULAR

FOR THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON June 17, 2021

FOR FISCAL YEARS 2019 AND 2020

PURPOSE OF SOLICITATION

This management information circular (the “ Information Circular ”) is furnished in connection with the solicitation of proxies by the management of Claritas Pharmaceuticals, Inc. (“ Claritas ” or the “ Company ”) for use at the annual and special meeting (the “ Meeting ”) of the holders (the “ Shareholders ”) of common shares (the “ Common Shares ”) of Claritas.

The Meeting will be held at June 17, 2021, at 2:30 p.m. EDT using TSX Trusts’ Virtual platform which can be accessed using the following link: https://virtual-meetings.tsxtrust.com/1148 Password: claritas2021 , and any adjournments or postponements thereof for the purposes set forth in the accompanying notice of meeting of Shareholders (the “ Notice of Meeting ”). Information contained herein is given as of May 6, 2021, unless otherwise specifically stated.

Solicitation of proxies will be primarily by mail but may also be by telephone, facsimile or in person by directors, officers and employees of Claritas who will not be additionally compensated, therefore. Brokers, nominees or other persons holding Common Shares in their names for others shall be reimbursed for their reasonable charges and expenses in forwarding proxies and proxy material to the beneficial owners of such Common Shares. The costs of soliciting proxies will be borne by Claritas.

As a result of Covid-19 and its effect on the Company’s resources resulting in delays in preparing its financial statements, the Company was unable to hold the annual general meeting of its shareholders in 2020 to present shareholders with its audited financials for the year ended December 31, 2019 and to conduct business for the 2020 fiscal year end being the appointment of its auditors for the ensuing year (2020), the election of its directors (for 2020), and the approval of its stock option plan (for 2020). Shareholders were previously informed of the Company’s inability to hold such meeting. As a result, the Company’s incumbent board of directors and auditors since the Company’s last annual general meeting of shareholders continued to act for the Company and had their vacancies filled from time to time in accordance with applicable laws, with the foregoing all being allowed under applicable laws until the Company could hold its next annual general meeting of shareholders; consequently, no ratification of the composition of the Company’s board of directors and its auditors are required or being asked of Shareholders with respect of the fiscal year ending December 31, 2020. Furthermore, no stock option was granted in the 2020 fiscal year to any party and as a result Shareholders are not being asked to ratify any stock option plan or any options granted in such fiscal year.

Consequently, the Meeting is (a) to rectify the Company’s missed annual general meeting for 2020 and is being held in lieu of that missed meeting in order to present Shareholders with information relating to the Company for the fiscal year ending December 31, 2019 including audited financial statement and management discussion & analysis for that year (which normally would have been presented at a meeting of shareholders in 2020) , and (b) is also the Company’s annual general meeting that is due in 2021 dealing with matters itemized in NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS, included above in this Circular.

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FORWARD-LOOKING STATEMENTS

This Information Circular contains certain “forward-looking statements” and certain “forward-looking information” as defined under applicable Canadian securities laws that may not be based on historical fact, including, without limitation, statements containing the words “believe”, “may”, “plan”, “will”, “estimate”, “continue”, “anticipate”, “intend”, “expect” and similar expressions. Forward-looking statements are necessarily based on estimates and assumptions made by us in light of Claritas’ experience and perception of historical trends, current conditions and expected future developments, as well as the factors Claritas believes are appropriate. Such statements reflect Claritas’ current views with respect to future events and are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Claritas, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Claritas’ actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements. In making the forward looking statements included in this Information Circular, the Company has made various material assumptions and in evaluating forwardlooking statements, current and prospective Shareholders should specifically consider various factors, including the risks outlined under the heading “Risk Factors”. Should one or more of these risks or uncertainties, or a risk that is not currently known to us materializes, or should assumptions underlying those forward-looking statements prove incorrect, actual results may vary materially from those described herein. These forward-looking statements are made as of the date of this Information Circular, and Claritas does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by applicable securities laws. Investors are cautioned that forwardlooking statements are not guarantees of future performance and are inherently uncertain. Accordingly, investors are cautioned not to put undue reliance on forward-looking statements.

NOTICE TO SHAREHOLDERS NOT RESIDENT IN CANADA

The Company is a corporation organized under the laws of the Province of British Columbia. The solicitation of proxies involves securities of a Canadian issuer and is being affected in accordance with applicable corporate and securities laws in Canada. Shareholders should be aware that the requirements applicable to the Company under Canadian laws may differ from requirements under corporate and securities laws relating to corporations in other jurisdictions. The enforcement of civil liabilities under the securities laws of other jurisdictions outside Canada may be affected adversely by the fact that the Company is organized under the laws of the Province of British Columbia and a large portion of its assets are located outside of the United States. A Shareholder may not be able to sue the Company or its directors or officers in a Canadian court for violation of foreign securities laws. It may be difficult to compel the Company to subject itself to a judgment of a court outside Canada. This solicitation of proxies is not subject to the requirements of Section 14(a) of the U.S. Securities Exchange Act of 1934. Accordingly, this Information Circular has been prepared in accordance with disclosure requirements in effect in Canada, which differ from disclosure requirements in the United States.

EXCHANGE RATE INFORMATION

In this Information Circular, all references to “$” refer to United States dollars except where otherwise indicated.

The following table sets forth, for the periods indicated, certain information concerning the exchange rate for translating one United States dollar into Canadian dollars based on rates quoted by the Bank of Canada website. No representation is made that United States dollars could be converted to Canadian dollars at that rate or any other rate.

Year ended December 31

	2020	2019
	($)	($)
Highest rate during the period	1.4501	1.3743
Lowest rate during the period	1.2702	1.2128
Average rate for the period	1.3401	1.2986

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APPOINTMENT AND REVOCATION OF PROXIES

All registered Shareholders will receive a form of proxy for use at the Meeting with this Circular. The persons named in the form of proxy are directors and/or officers of Claritas (non-registered Shareholders should refer to the section “Advice to Beneficial Shareholders” below). A Shareholder submitting a proxy has the right to appoint a nominee (who need not be a Shareholder) to represent him or her at the Meeting other than the persons designated in the enclosed proxy form by inserting the name of his or her chosen nominee in the space provided for that purpose on the form.

A form of proxy will not be valid for the Meeting or any adjournment or postponement thereof unless it is signed by the Shareholder or by the Shareholder’s attorney authorized in writing or, if the Shareholder is a corporation, it must be executed by a duly authorized officer or attorney thereof. The proxy, to be acted upon, must be deposited with the registrar and transfer agent of Claritas, TSX Trust Company (“ TSX Trust ”), 301 - 100 Adelaide Street West, Toronto, Ontario, M5H 4H1 by 10:00 a.m. (Toronto time) on May 26, 2021 or if the Meeting is adjourned or postponed, by 10:00 a.m. (Toronto time) on the second business day prior to the date on which the Meeting is reconvened.

A Shareholder who has given a proxy may revoke it prior to its use, in any manner permitted by law, including by instrument in writing executed by the Shareholder or by his or her attorney authorized in writing or, if the Shareholder is a corporation, executed by a duly authorized officer or attorney thereof and deposited with TSX Trust at any time up to and including the last business day preceding the day of the Meeting, or any adjournment or postponement thereof, at which the proxy is to be used, or with the chairman of the Meeting on the day of the Meeting or any adjournment or postponement thereof.

ADVICE TO BENEFICIAL SHAREHOLDERS

The information set forth in this section is of significant importance to many Shareholders, as a substantial number of Shareholders do not hold Common Shares in their own name. Shareholders who do not hold their Common Shares in their own name (“ Beneficial Shareholders ”) should note that only proxies deposited by Shareholders whose names appear on the records of Claritas as registered Shareholders can be recognized and acted upon at the Meeting. If Common Shares are listed in an account statement provided to a Shareholder by a broker, then in almost all cases those Common Shares will not be registered in the Shareholder’s name on the records of Claritas. Such Common Shares will more likely be registered under the names of the Shareholder’s broker or an agent of that broker. In Canada, the vast majority of such shares are registered under the name of CDS & Co. (“ CDS ”) (the registration name for The Canadian Depositary for Securities Limited, which acts as its nominee for many Canadian brokerage firms). Common Shares held by brokers or their agents or nominees can only be voted (for or against resolutions) upon the instructions of the Beneficial Shareholder. Without specific instructions, brokers and their agents and nominees are prohibited from voting shares for their clients. Therefore, Beneficial Shareholders should ensure that instructions respecting the voting of their Common Shares are communicated to the appropriate person.

Applicable regulatory policy requires intermediaries/brokers to seek voting instructions from their clients in advance of shareholders’ meetings. Every intermediary/broker has its own mailing procedures and provides its own return instructions which should be carefully followed by Beneficial Shareholders in order to ensure that their Common Shares are voted at the Meeting. Often, the form of proxy supplied to a Beneficial Shareholder by its broker is identical to the form of proxy provided to registered Shareholders; however, its purpose is limited to instructing the registered Shareholder how to vote on behalf of the Beneficial Shareholder. The majority of brokers now delegate responsibility for obtaining instructions from clients to Broadridge Financial Solutions, Inc. (“ Broadridge ”). Broadridge typically mails a scannable voting instruction form in lieu of the form of proxy. The Beneficial Shareholder is requested to complete and return the voting instruction form to Broadridge by mail or facsimile. Alternatively, the Beneficial Shareholder can call a toll free telephone number or visit www.proxyvote.com to vote the Common Shares held by the Beneficial Shareholder. Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of Common Shares to be represented at the Meeting. A Beneficial Shareholder receiving a voting instruction form cannot use that voting instruction form to vote Common Shares directly at the Meeting as the voting instruction form must be returned as directed by Broadridge well in advance of the Meeting in order to have the Common Shares voted.

[Although a Beneficial Shareholder may not be recognized directly at the Meeting for the purposes of voting Common Shares registered in the name of his or her broker (or agent of the broker), a Beneficial Shareholder may attend at the Meeting as proxyholder for a registered Shareholder and vote the Common Shares in that capacity. Beneficial Shareholders

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who wish to attend at the Meeting and indirectly vote their Common Shares as proxyholder for a registered Shareholder should enter their own names in the blank space on the instrument of proxy provided to them and return the same to their broker (or the broker’s agent) in accordance with the instructions provided by such broker (or agent) well in advance of the Meeting.

VOTING OF PROXIES

All Common Shares represented at the Meeting by properly executed proxies will be voted on any ballot that may be called for and, where a choice with respect to any matter to be acted upon has been specified in the accompanying form of proxy, the Common Shares represented by the proxy will be voted in accordance with such instructions. In the absence of any such instruction, the persons whose names appear on the printed form of proxy will vote “FOR” of all the matters set out thereon. The enclosed form of proxy confers discretionary authority upon the persons named therein. If any other business or amendments or variations to matters identified in the Notice of Meeting properly comes before the Meeting then discretionary authority is conferred upon the person appointed in the proxy to vote in the manner they see fit, in accordance with their best judgment.

At the time of the printing of this Information Circular, the management of Claritas knew of no such amendment, variation or other matter to come before the Meeting other than the matters referred to in the Notice of Meeting.

VOTING SHARES AND PRINCIPAL HOLDERS THEREOF

The board of directors of Claritas (the “ Board ”) has fixed April 28, 2021 as the record date (the “ Record Date ”). Any registered Shareholder at the close of business on the Record Date is entitled to receive notice of the Meeting and to vote thereat or at any adjournments or postponements thereof on the basis of one vote for each Common Share held.

As of the date hereof, there are 581,027,592 Common Shares issued and outstanding.

To the knowledge of the directors and executive officers of the Company and based on publicly available information, as at the Record Date, there is one company who beneficially owns or controls or directly Common Shares carrying 10% or more of the voting rights attached to all of the Common Shares.

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

Except for the interests of the directors and executive officer in connection with the approval of the Company’s Option Plan and the election of directors, no director or executive officer of the Company, or the associates or affiliates of such persons, has any material interest, direct or indirect, in any matter to be acted upon at the Meeting.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

No informed person or proposed director of the Company or any associate or affiliate of the foregoing has or has had any material interest in any transaction since the commencement of the Company’s last completed fiscal year or in any proposed transaction which has materially affected or will materially affect the Company.

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

No executive officer, director, employee of the Company or any of its subsidiaries or former executive officer, director or employee of the Company or any of its subsidiaries is indebted to the Company or any of its subsidiaries nor is the Company or any of its subsidiaries providing, or has provided, to any such persons, a guarantee, support agreement, letter of credit or other similar arrangement or understanding respecting any indebtedness of such persons, including indebtedness incurred for the purchase of securities of the Company.

MANAGEMENT CONTRACTS

No management function of the Company or any of its subsidiaries are performed other than by the directors or executive officers of the Company or its subsidiaries.

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RESTRICTED SECURITIES

No transaction contemplated in this Circular will result in existing non-restricted securities of the Company becoming restricted securities, or create new restricted securities.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table sets forth the number of Common Shares to be issued upon exercise of outstanding Options, the weighted average exercise price of such outstanding Options and the number of Common Shares remaining available for future issuance under the Option Plan as at December 31, 2020 and December 31, 2019.

Plan Category	Number of Common Shares to be issued upon exercise of outstanding Options	Weighted-average exercise price of outstanding Options	Number of Common Shares remaining available for future issuance under equity compensation plans (excluding Common Shares reflected in the first column)
Equity compensation plans approved by Shareholders	34,654,811 (December 31, 2020) 34,654,811 (December 31, 2019)	CDN $0.14 (December 31, 2020) CDN $0.14 (December 31, 2019)	0 (both December 31, 2020 December 31, 2019)
Equity compensation plans not approved by Shareholders	-	-	-
Total	34,654,811 (December 31, 2020) 34,654,811 (December 31, 2019)	CDN $0.14 (December 31, 2020) CDN $0.14 (December 31, 2019)	0 (both December 31, 2020 December 31, 2019)

The Option Plan allows the Company to grant options for up to 10% of the issued and outstanding Common Shares, from time to time.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Introduction

On December 30, 2016, the Company completed a change of business and reverse takeover (the “ Merger ”) of Santa Maria Petroleum Inc. (“ Santa Maria ”). Pursuant to the Merger, Santa Maria changed its name from Santa Maria Petroleum Inc. to Kalytera Therapeutics, Inc. (“ Kalytera ”) at the completion of the transaction (subsequently, Kalytera Therapeutics, Inc. changed its name to Claritas Pharmaceuticals, Inc. on April 9, 2021.) At the time of the Merger, Claritas consolidated its share capital on the basis of approximately 2.3 (old) common shares for one (new) common share, and continued under the laws of British Columbia as the Company and as a publicly listed company on the TSX Venture Exchange (“ TSXV ”).

The purpose of this Compensation Discussion and Analysis is to provide information about the Company’s philosophy, objectives and processes regarding compensation paid to those who acted as the Chief Executive Officer (“ CEO ”) and the

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Chief Financial Officer (“ CFO ”) (or in similar capacities) of Claritas’ business (the “ Claritas Business ”), during the most recently completed financial year (each a “ Named Executive Officer ” and collectively, the “ Named Executive Officers ”).

For the years ended December 31, 2019 and December 31, 2020, the Company had the following Named Executive Officers:

Robert Farrell (CFO of the Clarita Business from July 2016 to June 2018 and CEO of the Claritas Business since June 2017, and Director of the Claritas Business since July 2016); and
Victoria Rudman (CFO of the Claritas Business from June 2018 and Treasurer and Secretary of the Claritas Business since March 2015).

The Company’s executive compensation program is administered by the Board’s Compensation Committee. The Compensation Committee’s mandate with respect to compensation includes evaluating senior management and making recommendations to the Board concerning the development of appropriate compensation policies and the remuneration for the Named Executive Officers.

Compensation Philosophy and Objectives of the Compensation Program

The Board seeks to encourage the review, acquisition and development of business opportunities in order to enhance shareholder value. The Company also seeks to encourage targeted cost controls over capital spending and general and administrative expenses. To achieve these objectives, the Company believes it is critical to create and maintain compensation programs that attract and retain committed, highly qualified personnel by providing appropriate rewards and incentives and that align the interest of the Named Executive Officers with those of the Shareholders to provide incentive to the Named Executive Officers to enhance shareholder value.

What the Compensation Program is Designed to Reward

The Company’s compensation program is structured to be competitive with companies of comparable size and complexity and to recognize individual and overall corporate performance. The compensation program is designed to reward the performance that contributes to the achievement of the Company’s business strategy on both a short-term and long-term basis.

In addition, the Company strives to reward qualities that it believes help achieve its strategy such as teamwork, individual performance in light of general economic and industry specific conditions, performance that supports the Company’s core values, integrity and resourcefulness, the ability to identify and pursue new business opportunities, responsibility and accountability and tenure with the Company.

Each Element of Compensation and Why the Company Chooses to Pay Each Element

The Company has compensated the Named Executive Officers through base salaries, cash bonuses and Options, at levels which the Board believes are reasonable in light of the performance of the Company under the leadership of the Named Executive Officers. The following table provides a broad overview of the elements of the Company’s executive compensation program.

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Element	Award Type	Objective	Key Features
Base Salaries	Salary	To recognize each Named Executive Officer’s unique value and contribution to the success of the Company in light of salary norms in the industry and the general marketplace.	Non-discretionary fixed regular cash payments based upon the performance of day-to-day executive level responsibilities.
Cash Bonuses	Non-equity incentive plan	To recognize each Named Executive Officer’s superior performance or accomplishment.	Discretionary cash payment approved by the Board.
Options	Option-based award	To reward long-term performance by allowing Named Executive Officers to participate in the long-term market appreciation of the Common Shares.	Annual and special awards granted at market price, vesting ratably over several years and having a maximum term of ten years.

Additionally, the Named Executive Officers are eligible to participate in the same benefits as offered to all full-time employees. The Company does not view these benefits as a significant element of its compensation structure but does believe that they can be used in conjunction with base salary to attract, motivate and retain individuals in a competitive environment.

How the Company Determines the Amount for Each Element

Compensation of the Named Executive Officers has been generally compared against compensation paid to companies of comparable size, complexity and stage of business development. In reviewing comparative data, the Compensation Committee does not engage in benchmarking for the purposes of establishing compensation levels relative to any predetermined point. In the Compensation Committee’s view, external data provides an insight into external competitiveness, but is not an appropriate single basis for establishing compensation levels. The Compensation Committee can and does exercise both positive and negative discretion in relation to the compensation awards and its allocation between cash and non-cash awards.

The Board recognizes that the Company’s executive compensation program must be sufficiently flexible to adapt to unexpected developments in the economy and the impact of internal and market-related occurrences from time to time.

The Compensation Committee did not engage a compensation consultant or advisor in 2019 or 2020.

Base Salaries

The Board believes that base salaries should be competitive with those for similar positions within comparable industries and, as such, should provide the Named Executive Officers with an appropriate compensation that reflects their level of responsibility, industry experience, individual performance, tenure, and contribution to the growth of the Company.

The 2019 and 2020 base salaries for the Named Executive Officers provided in the “Summary Compensation Table” were established primarily on this basis.

Cash Bonuses

The Board believes that superior performance or attainment of significant objectives as described under “Compensation Philosophy and Objectives of the Compensation Program” above should be rewarded with discretionary cash payments.

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The Board does not assign any specific weight to any particular performance goal nor is any specific weight assigned to the performance goals in the aggregate. The Board considers not only the Company’s performance during the year with respect to the qualitative goals, but also with respect to market and economic trends and forces, extraordinary internal and market-driven events, unanticipated developments and other extenuating circumstances. In sum, the Board analyzes the total mix of available information on a qualitative, rather than quantitative basis, in making bonus determinations.

Options

Options to purchase Common Shares pursuant to the Option Plan (“ Options ”) are granted to Named Executive Officers at the Board’s discretion. The purpose of Option grants is to develop the interest of directors, employees, and consultants of the Company in the growth and development of the Company by providing them with the opportunity through such Options to acquire an increased proprietary interest in the Company. Option grants will be made periodically to ensure that the number of Options granted to any particular individual is commensurate with the individual’s level of ongoing responsibility within the Company.

In considering additional Option grants, the Board will evaluate the number of Options an individual has been granted, the exercise price and value of the Options and the term remaining on those Options. See “Option Plan” in this Information Circular.

Termination and Change of Control Benefits

Mr. Farrell’s employment is at-will. Pursuant Mr. Farrell’s employment agreement dated October 1, 2017, the Company may terminate Mr. Farrell’s employment at any time with or without cause and Mr. Farrell may resign, by providing the other party with 30 days’ written notice.

If Mr. Farrell is terminated for cause, the Company shall pay or reimburse to him any accrued amounts owing to him under the agreement and under applicable law and any reimbursable business expenses incurred prior to the effective date of termination.

If Mr. Farrell’s employment is terminated by the Company without cause, or if Mr. Farrell resigns for good reason (including any uncured material reduction in base salary, a material diminution of duties or responsibilities, or change in location of more than 50 miles) (“ Good Reason ”), then the Company shall pay or reimburse to him (a) any accrued amounts owing to him under the agreement and under applicable law, (b) his accrued but unpaid Performance Bonus (if earned, and to be pro-rated for a partial calendar year), (c) reimbursable expenses incurred prior to the effective date of termination, (d) the cost of group health insurance payments provided under the Consolidated Omnibus Budget Reconciliation Act (“ COBRA ”) for a period of twelve months, and (e) a severance payment equal to twelve (12) months base salary which shall be paid over a twelve (12) month period.

If Mr. Farrell’s employment is terminated as a result of death or disability, then the Company shall pay or reimburse to him (a) any accrued amounts owing to him under the agreement and under applicable law, (b) his accrued but unpaid Performance Bonus , (c) reimbursable expenses incurred prior to the effective date of termination, and (d) the cost of group health insurance payments provided under COBRA for a period of twelve months.

If the Company terminates Mr. Farrell’s employment upon a change of control of the Company, then the Company shall pay or reimburse to him (a) any accrued amounts owing to him under the agreement and under applicable law, (b) his accrued but unpaid Performance Bonus (if earned, and to be pro-rated for a partial calendar year), (c) reimbursable expenses incurred prior to the effective date of termination, and (d) the cost of group health insurance payments provided under COBRA for a period of twelve months. In addition, if Mr. Farrell is terminated by the Company without cause or if he resigns for Good Reason upon or within one (1) year after a change of control of the Company, he shall also receive a severance payment equal to 150% of twelve (12) months base salary which shall be paid over a twelve (12) month period.

Mr. Farrell has also entered into a proprietary information and inventions agreement that contains customary confidentiality covenants and he is subject to certain restrictive covenants that apply during Mr. Farrell’s employment, including a non-competition covenant.

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Other than as described herein, there are currently no termination and/or change of control entitlements for any of the executive officers or directors of the Company.

Summary Compensation Table

The following table provides information concerning compensation of the Named Executive Officers of Claritas for the years ended December 31, 2020, 2019 and 2018 on an annual basis (other than compensation securities disclosed under the heading “Compensation Securities” below).

Name and Principal Position Robert Farrell(1) CEO, President, and Director of the Claritas Business Victoria Rudman(2) Interim CFO, Treasurer and Secretary of the Claritas Business	Year 2020 2019 2018 2020 2019 2018	Salary, Consulting Fee, Retainer or Commission Bonus $300,000 - $300,000 - $300,000 - $75,000 - $75,000 - ¶ $53,000 -	Committee or meeting fees - - - - - -	Value of Perquisites - - - - -	Value of All Other Compensation Total Compensa tion - $300,000 - $300,000 $300,000 - $75,000 - $75,000 $53,000

Notes:

(1) Mr. Farrell’s employment with Claritas began in June 2016, and his employment agreement provides for an annual base salary of $300,000, with a potential performance bonus of up to 50% of his base salary (the “ Performance Bonus ”).

(2) Ms. Rudman was named as CFO on June 26, 2018. Ms. Rudman’s employment agreement provides for an annual base salary of $75,000, and provided for a lump sum hiring bonus of $5,000 in connection with her appointment as CFO.

Compensation Securities

The following table sets forth information with respect to compensation securities granted or issued to Named Executive Officers during the years ending December 31, 2016, 2017, 2018, 2019, and 2020, and also sets forth all compensation securities held by Named Executive Officers as at December 31, 2020.

Name and Principal Position Robert Farrell CEO, President, and Director	Type of Security Options Options	Number of Securities and Percentage(1) of Outstanding Common Shares (#) and(%) 988,311(3) 0.18% 5,473,442(4) 1.00%	Date of Issue or Grant December 30, 2016 October 8, 2017	Issue, Conversion or Exercise Price $0.49 (C$0.67) $0.10 (C$0.12)	Closing Price of Common Shares on Date of Grant $0.39(2) (C$0.52) $0.10 (C$0.12)	Closing Price of Common Shares at Year End $0.02 (C$0.03) $0.02 (C$0.03)	Option Expiration Date
							June 13, 2026 October 8, 2027

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Name and Principal Position Victoria Rudman Interim CFO, Treasurer and Secretary	Type of Security Options Options Options Options Options Options Options Options	Number of Securities and Percentage(1) of Outstanding Common Shares (#) and(%) 1,045,210(5) 0.19% 5,117,794(6) 0.93% 1,246,092(9) 0.23% 11,095,907(10) 2.03% 115,787(7) 0.02% 231,573(8) 0.04% 250,000(6) 0.04% 300,000 0.05%	Date of Issue or Grant January 30, 2018 September 24, 2018 January 25, 2019 June 19, 2019 December 30, 2016 December 30, 2016 September 24, 2018 January 25, 2019	Issue, Conversion or Exercise Price $0.28 (C$0.38) $0.10 (C$0.135) $0.06 (C$0.085) $0.06 (C$0.085) $0.49 (C$0.67) $0.34 (C$0.45) $0.10 (C$0.135) $0.06 (C$0.085)	Closing Price of Common Shares on Date of Grant $0.28 ($0.345) $0.13 (C$0.17) $0.06 (C$0.08) $0.04 (C$0.005) $0.39(2) (C$0.52) $0.39(2) (C$0.52) $0.13 (C$0.17) $0.06 (C$0.08)	Closing Price of Common Shares at Year End $0.02 (C$0.03) $0.02 (C$0.03) $0.02 (C$0.03) $0.02 (C$0.03) $0.02 (C$0.03) $0.02 (C$0.03) $0.02 (C$0.03) $0.02 (C$0.03)	Option Expiration Date
							January 30, 2028 September 24, 2028 January 25, 2029 June 19, 2020 September 21, 2026 December 3, 2025 September 24, 2028 January 25, 2029

Notes:

(1) Based on the 546,075,967 Common Shares issued and outstanding as of December 31, 2020.
(2) Based on the closing price of Santa Maria’s common shares on the TSXV on October 6, 2016, the last day of trading of such common shares prior to the announcement of the Merger, following which trading was halted until January 11, 2017 following completion of the Merger and TSXV approval thereof (taking into account the pre-Merger share consolidation).
(3) One-third of the Options vested on June 13, 2017 and the remaining Options vest equally on a monthly basis over the following 24 months. As part of the Merger transaction, these Options were granted in exchange for options previously granted to Mr. Farrell on June 13, 2016 on substantially similar terms and conditions to purchase common stock of the privately held Delaware corporation that carried on the current business of the Company prior to the Merger.

(4) One-third of the Options vested on October 8, 2018 and the remaining Options vest equally on a monthly basis over the following 24 months. (5) One-third of the Options vested on January 30, 2019 and the remaining options vest equally on a monthly basis over the following 24 months.

(6) One-third of the Options will vest on September 24, 2019 and the remaining options vest equally on a monthly basis over the following 24 months.
(7) Options are fully vested. As part of the Merger transaction, these Options were granted in exchange for options previously granted to Ms. Rudman on September 21, 2016 on substantially similar terms and conditions to purchase common stock of the privately held Delaware corporation that carried on the current business of the Company prior to the Merger.
(8) One-third of the Options will vest on January 25, 2020 and the remaining options vest equally on a monthly basis over the following 24 months.
(9) One-third of the Options will vest on June 19, 2020 and the remaining options vest equally on a monthly basis over the following 24 months.
(10) Options are fully vested. As part of the Merger transaction, these Options were granted in exchange for options previously granted to Ms. Rudman on December 3, 2015 on substantially similar terms and conditions to purchase common stock of the privately held Delaware corporation that carried on the current business of the Company prior to the Merger.

Exercise of Options During the Year

No Options were exercised pursuant to the Option Plan by the Named Executive Officers of Claritas during the years ending December 31, 2019 and 2020.

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Pension Plan Benefits

The Company does not currently have any retirement plans in place for the Named Executive Officers or any other employees.

DIRECTORS’ COMPENSATION

Overview

The compensation of directors is determined by the Compensation Committee. The rationale for the level of director compensation is generally the same as the rationale for the compensation policies of the Named Executive Officers. The compensation policies are in place to assist the Company in attracting and retaining a team of experienced directors with the aim of enhancing shareholder value. The compensation of directors has typically consisted of both a quarterly cash retainer as well as annual stock option grants. The cash retainer involves regular cash payments based upon the performance of board member responsibilities, and is intended to recognize each board member’s unique value and contribution to the success of the Company. The stock option grants are awarded annually at market price, vesting ratably over several years and having a maximum term of ten years, and are intended to reward long-term performance by allowing board members to participate in the long-term market appreciation of the Common Shares.

On the recommendation of the Compensation Committee, the Board has approved a policy which is intended to govern the awarding of compensation for directors who are not officers or employees (the “ Independent Director Compensation Policy ”).

The Independent Director Compensation Policy provides for cash compensation in the form of a quarterly retainer as well as additional amounts for the Chair, committee chairs and committee members. Each applicable director is expected to be paid a quarterly cash retainer of $2,500, and will receive an additional quarterly $1,500 for Chairmanship of a committee, and an additional quarterly $1,000 for each non-chair committee membership.

The Independent Director Compensation Policy also provides that applicable new directors are expected to receive a grant of Options in an amount equal to approximately 0.5% of the Company’s Common Shares outstanding at the time of such grant (with additional annual grants, if necessary to bring the director’s total number of Options up to 0.5% of Common shares outstanding).

Summary Compensation Table

The following table provides information concerning compensation of the directors of the Company (who were not also Named Executive Officers) during the years ending December 31, 2019 and 2020, on an annual basis. The compensation for the services of Mr. Farrell as Named Executive Officer is reflected in the “Executive Compensation – Summary Compensation Table” above and he did not receive any additional compensation for his services as a director.

Name and Principal Position Ronald Erickson(1) Director Robin Hutchison(1) Director	Year 2020 2019 2020 2019	Salary, Consulting Fee, Retainer or Commission($) Bonus $ - $ - $ - $ -	Committee or Meeting Fees $96,000 $96,000 38,000 19,000	Value of Perquisites - - - -	Value of All Other Compensation Total Compensation - $96,000 - $96,000 - $38,000 - $19,000

(1) Ronald Erickson and Robin Hutchison resigned as the Company’s directors on March 18, 2021.

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Compensation Securities

The following table sets forth information with respect to compensation securities granted or issued to directors of the Company during the years ending December 31, 2016, 2017, 2018, 2019, and 2020, and also sets forth all compensation securities held by directors as at December 31, 2020.

Name and Principal Position Ronald Erickson(8) Director Robin Hutchison Director	Type of Security Options Options Options Options Options Options Options	Number of Compensation Securities and Percentage(1) of Outstanding Common Shares (#) and(%) 193,808(3) 0.03% 206,872(4) 0.04% 1,022,610(5) 0.18% 326,000(6) 0.06% 1,262,475(7) 0.23% 1,129,318(8) 0.20% 68,698(9) 0.01% 1,000,000(9) 0.18%	Date of Issue or Grant December 30, 2016 December 30, 2016 October 8, 2017 January 30, 2018 September 24, 2018 January 25, 2019 June 19, 2019 June 19, 2019	Issue, Conversion or Exercise Price $0.34 (C$0.45) $0.49 (C$0.67) $0.10 (C$0.12) $0.28 (C$0.38) $0.10 (C$0.135) $0.06 (C$0.085) $0.06 (C$0.085) $0.06 (C$0.085)	Closing Price of Common Shares on Date of Grant $0.39(2) (C$0.52) $0.39(2) (C$0.52) $0.10 (C$0.12) $0.28 (C$0.345) $0.13 (C$0.17) $0.06 (C$0.08) $0.04 (C$0.005) $0.04 (C$0.005)	Closing Price of Common Shares at Year End
						$0.02 (C$0.03) $0.02 (C$0.03) $0.02 (C$0.03) $0.02 (C$0.03) $0.02 (C$0.03) $0.02 (C$0.03) $0.02 (C$0.03) $0.02 (C$0.03)

Notes:

(1) Based on the 546,075,967 Common Shares issued and outstanding as of December 31, 2020.
(2) Based on the closing price of Santa Maria’s common shares on the TSXV on October 6, 2016, the last day of trading of such common shares prior to the announcement of the Merger, following which trading was halted until January 11, 2017 following completion of the Merger and TSXV approval thereof (taking into account the pre-Merger share consolidation).
(3) Options are fully vested. As part of the Merger transaction, these Options were granted in exchange for options previously granted to Mr. Erickson on December 3, 2015 on substantially similar terms and conditions to purchase common stock of the privately held Delaware corporation that carried on the current business of the Company prior to the Merger.
(4) One-third of the Options vested on September 21, 2017 and the remaining Options vest equally on a monthly basis over the following 24 months beginning on October 31, 2017. As part of the Merger transaction, these Options were granted in exchange for options previously granted to Mr. Erickson on September 21, 2016 on substantially similar terms and conditions to purchase common stock of the privately held Delaware corporation that carried on the current business of the Company prior to the Merger.
(5) Options are fully vested. As part of the Merger transaction, these Options were granted in exchange for options previously granted to Dr. Paley on December 3, 2015 on substantially similar terms and conditions to purchase common stock of the privately held Delaware corporation that carried on the current business of the Company prior to the Merger.
(6) One-third of the Options vested on September 21, 2017 and the remaining Options vest equally on a monthly basis over the following 24 months beginning on October 31, 2017. As part of the Merger transaction, these Options were granted in exchange for options previously granted to Dr. Paley on September 21, 2016 on substantially similar terms and conditions to purchase common stock of the privately held Delaware corporation that carried on the current business of the Company prior to the Merger.
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(7) One-third of the Options will vest on September 24, 2019 and the remaining options vest equally on a monthly basis over the following 24 months.
(8) One-third of the Options will vest on January 25, 2020 and the remaining options vest equally on a monthly basis over the following 24 months.
(9) One-third of the Options will vest on June 19, 2020 and the remaining options vest equally on a monthly basis over the following 24 months.

Exercise of Options

No Options were exercised pursuant to the Option Plan to the directors of the Company (who were not also Named Executive Officers) during the years ending December 31, 2019 and 2020.

CORPORATE GOVERNANCE

In establishing its corporate governance practices, the Board has been guided by National Instrument 58-201 - Corporate Governance Guidelines and other regulatory requirements such as National Instrument 52-110 - Audit Committees (“ NI 52-110 ”).

Board of Directors

The Board is currently comprised of three directors as at the date of this Information Circular, being Robert Farrell, Prof. Salvatore Cuzzocrea and Dr. Perenlei Enkhbaatar. Prof. Cuzzocrea and Dr. Enkhbaatar are independent directors as such term is defined by NI 52-110. Robert Farrell, Chairman of the Board, as an executive officer of the Company, is not considered by the Board to be independent directors within the meaning of NI 52-110.

Orientation and Continuing Education

At present, the Board does not provide an official orientation or training program to its new directors. Members of the Board have had extensive business experience or experience in acting as a director of public or private companies, or both. The Company’s legal counsel is made available to the directors to assist them in better understanding their legal responsibilities.

Nomination of Directors

The Nominating and Corporate Governance Committee as a whole is responsible for identifying and evaluating qualified candidates for nomination to the Board. In identifying candidates, the Nominating and Corporate Governance Committee considers the competencies and skills that the Nominating and Corporate Governance Committee considers to be necessary for the Board, as a whole, to possess, the competencies and skills that the Nominating and Corporate Governance Committee considers each existing director to possess, the competencies and skills each new nominee will bring to the Board and the ability of each new nominee to devote sufficient time and resources to his or her duties as a director.

Ethical Business Conduct

The Company requires the highest standards of professional and ethical conduct from its directors, officers and employees and believes that its reputation for honesty and integrity among its stakeholders is key to the success of its business. Claritas has developed a code of conduct and ethics (the “ Code of Ethics ”). The Code of Ethics serves to emphasize the Company’s commitment to ethics and compliance with the law as well as set forth basic standards of ethical and legal behavior. All individuals representing the Company are expected to abide by all applicable provisions of the Code of Ethics and adhere to its principals and values when representing the Company to the public or performing services for, or on behalf of, Claritas. The Board will review the effectiveness of the Code of Ethics on an ongoing basis to ensure that the Company’s business activities are conducted in accordance with the principals and rules set out therein. A copy of the Code of Ethics is filed on SEDAR at www.sedar.com.

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Board Committees

The Board has three standing committees, being the Audit Committee, the Nominating and Corporate Governance Committee and the Compensation Committee. All of the committees have been constituted with at least a majority of independent directors and are further described below.

Audit Committee

Composition

The Audit Committee is comprised of Prof. Salvatore Cuzzocrea (Chair), Dr. Perenlei Enkhbaatarl, and Mr. Robert Farrell. All members of the Audit Committee are financially literate as required by NI 52-110 and all members of the Audit Committee, except for Mr. Farrell, are independent directors as such term is defined by NI 52-110. As a company listed on the TSXV, Claritas is exempt from the requirements of Parts 3 (Composition of the Audit Committee) and 5 (Reporting Obligations) of NI 52-110.

Relevant Education and Experience

The following sets out the education and experience of each director relevant to the performance of his duties as a member of the Audit Committee.

Dr. Cuzzocrea, the former President of the European Shock Society, currently serves in numerous leadership roles at the University of Messina in Sicily, including Director of Scientific Research, Director of the Department of Chemical, Biological, Pharmaceutical and Environmental Sciences, Director of the Oncology Unit at the University Hospital of Messina, and Full Professor of Pharmacology at the University’s School of Medicine. Dr. Cuzzocrea has been awarded honorary Professorships in Pharmacology at the University of Manchester and Saint Louis University, was elected a Fellow of the British Pharmacological Society, and has been appointed as an Honorary Lecturer in Pharmacology at the Department of Experimental Medicine and Nephrology at The William Harvey Institute at St. Bartholomew’s and Royal London School of Medicine and Dentistry. In 2020, Professor Cuzzocrea was elected Vice-President of the Board of the Conference of Rectors of all Italian universities.

Dr. Enkhbaatar currently serves as the Charles Robert Allen Professor and the Director of the Translational Intensive Care Unit in the Department of Anesthesiology at the University of Texas Galveston Medical Branch. Following his medical training at the University of Saint Petersburg in Russia, Dr. Enkhbaatar went on to receive his Ph.D. at Kumamoto University Graduate School of Medical Sciences in Japan. He then undertook his post-doctoral training in the Department of Anesthesiology, University of Texas Medical Branch in Galveston, Texas, under the mentorship of the late Professor Daniel Traber, the foremost authority over the last fifty years on the pathophysiology of acute lung injury. Upon Dr. Traber’s death, Dr. Enkhbaatar assumed the leadership of the research unit in Galveston and has further expanded its research prominence in the development of effective therapeutic approaches with special emphasis on tissue regeneration and stem cell biology.

Robert Farrell is currently the Company’s CEO, President and Director. Mr. Farrell has over 28 years of experience as President and CEO, and as CFO with both public and private companies in the pharmaceutical, biotechnology and medical device industries, including extensive M&A experience, and experience in corporate finance and corporate partnering activities. Previously, he served as Chief Financial Officer of Titan Pharmaceuticals from 1996 to 2008 and as President and Chief Executive Officer of Titan Pharmaceuticals from 2008 to 2009. From 1991 - 1996, he served as CFO, Corporate Group Vice President and General Counsel at Fresenius USA and Fresenius Medical Care where he completed 6 corporate partnership and M&A transactions totaling over $4 billion. Mr. Farrell holds a B.A. degree from the University of Notre Dame, and a J.D. degree from the University of California.

Audit Committee Charter

Please refer to Schedule “D” to this Information Circular for the complete text of the Company’s Audit Committee Charter.

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Auditor’s Fees

For the year ended December 31, 2019 the auditors of the Company were Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global (“ Kost Forer ”). Kost Forer had served as the Company’s auditor since April 23, 2017. The fees paid by the Company to its external auditors, Kost Forer, for the year ended December 31, 2019 are detailed below. At the request of the Company, Kost Forer Gabbay & Kasierer/Ernst & Young Global resigned as the auditor of the Company on August 20, 2020.

The current auditors of the Company are BDO. BDO has served as the Company’s auditor since August 20, 2020. The fees paid by the Company to its external auditors for the years ending December 31, 2019 and 2020, are detailed below.

Fee Audit Fees(1) Audit-Related(2) Tax Fees(3) All Other Fees(4)	Audit Fees Paid to BDO Year Ended December 31, 2020 $98,000 - -	Audit Fees Paid to Kost Forer Gabbay & Kasirer/Ernst & Young Year End December 31, 2019 $208,000 - -
Total	$98,000	$208,000

Notes:

(1) “Audit Fees” are the aggregate fees billed by the external auditor and include: fees necessary to perform the annual audit and quarterly reviews of the Company’s financial statements and of its subsidiaries; fees charged for review of tax provisions and for accounting consultations on matters reflected in the financial statements; and audit or other attest services required by legislation or regulation, such as comfort letters, consents, reviews of securities filings and statutory audits.
(2) “Audit-Related Fees” include services that are traditionally performed by the auditor. These audit-related services include employee benefit audits, due diligence assistance, accounting consultations on proposed transactions, internal control reviews and audit or attest services not required by legislation or regulation.
(3) “Tax Fees” include fees for all tax services other than those included in “Audit Fees” and “Audit-Related Fees”. This category includes fees for tax compliance, tax planning and tax advice. Tax planning and tax advice includes assistance with tax audits and appeals, tax advice related to mergers and acquisitions, and requests for rulings or technical advice from tax authorities.
(4) “All Other Fees” include all other non-audit services.

All permissible categories of non-audit services require pre-approval by the Audit Committee, subject to certain statutory exemptions.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee is currently comprised of Dr. Enkhbaatar (Chair), Prof Cuzzocrea and Mr. Farrell.

The Nominating and Corporate Governance Committee annually assesses the effectiveness of the Board as a whole, the various other committees as well as individual directors, with particular focus on the Chairman and the chairs of the various committees of the Board, all in accordance with the standards established by the Board. In addition, as described above under “Nomination of Directors”, the Nominating and Corporate Governance Committee has responsibility for assessing and making recommendations to the Board as to the size and composition of the Board. The Nominating and Corporate Governance Committee also assesses the Company’s approach to corporate governance and monitors the relationship between management and the Board, as well as undertaking those initiatives as are necessary to maintain a high standard of corporate governance practices and ensure ongoing compliance with the rules and policies of applicable regulatory authorities with respect to corporate governance. Further, the Nominating and Corporate Governance Committee also

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reviews and addresses certain conflict of interest issues that may arise and reports to the Board on the results of such activities and provides recommendations to the Board in respect thereof on a regular basis.

Compensation Committee

The Compensation Committee is comprised of Dr. Enkhbaatar (Chair), Prof. Cuzzocrea and Mr. Farrell.

The Compensation Committee is responsible for reviewing and making recommendations to the Board with respect to the salary and other remuneration to be awarded to senior officers, including the CEO, and the directors of Claritas. For further discussion of the Compensation Committee, its mandate and the process for determining compensation, see “Executive Compensation and Directors’ Compensation” in this Information Circular.

Assessments

The practices of the Board respecting the above corporate governance matters are subject to modifications during the evolution of the Company. Consequently, the Board keeps in mind the questions surrounding corporate governance and assesses and, if necessary, creates measures, control mechanisms and the necessary structures to ensure the efficient execution of its responsibilities, without creating additional general fees and without reducing the performance of the Company.

MEETING MATTERS

1. Financial Statements

The audited financial statements of the Company for the years ended December 31, 2019 & December 31, 2020 and the auditor’s report thereon will be received at the Meeting. The audited financial statements of the Company and the auditor’s report were delivered to each Shareholder which has formally requested a copy thereof as required pursuant to applicable laws and are available on SEDAR at www.sedar.com.

2. Election of Directors

At the Meeting, Shareholders will vote on the election of directors to hold office for the ensuing year and until the next annual general meeting of shareholders of the Company. It is the intention of the persons named in the enclosed form of proxy, if not expressly directed to the contrary in such form of proxy, to vote “FOR” the election of each of the nominees specified below as directors of Claritas. If, prior to the Meeting, any vacancies occur in the list of proposed nominees herein submitted, the persons named in the enclosed form of proxy intend to vote “FOR” the election of any substitute nominee or nominees recommended by management of Claritas and “FOR” the remaining proposed nominees. Management of Claritas has been informed that each of the proposed nominees listed below is willing to serve as a director if elected. Each director, if elected, will hold office until the next annual meeting of Shareholders, or until his successor is duly elected or appointed, unless his office is vacated prior to such time, in accordance with the articles of the Company.

Name and Residence Robert Farrell Novato, California USA Prof. Salvatore Cuzzocrea Messina, Italy	Office(s) held with Claritas Chairman, President and CEO Director	Principal Occupations for Past Five Years President and CEO of Claritas . Director of Claritas since March 2021.Director of Scientific Research, Director of Claritas since March 2020. the Department of	Common Shares Beneficially Owned Directly or Indirectly 1,972,950 Nil	Director Since
				December 30, 2016(1) March 5, 2021

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Name and Residence Dr. Perenlei Enkhbaatar Galveston, TX USA	Office(s) held with Claritas Director	Principal Occupations for Past Five Years Chemical, Biological, Pharmaceutical and Environmental Sciences, Director of the Oncology Unit at the University Hospital of Messina, and Full Professor of Pharmacology at the University’s School of Medicine. In 2020, Professor Cuzzocrea was elected Vice-President of the Board of the Conference of Rectors of all Italian universities. Director of Claritas since April 2021. The Charles Robert Allen Professor and the Director of the Translational Intensive Care Unit in the Department of Anesthesiology at the University of Texas Galveston Medical Branch..	Common Shares Beneficially Owned Directly or Indirectly Nil	Director Since
				April 9, 2021

Notes:

(1) Mr. Farrell was appointed as a director of the privately held Delaware corporation that carried on the current business of the Company prior to the Merger on June 20, 2016.

Biographies of Directors

The following are biographies of each of the proposed directors for the Company:

Robert Farrell –Chairman, CEO, President

Mr. Farrell has over 28 years of experience as President and CEO, and as CFO with both public and private companies in the pharmaceutical, biotechnology and medical device industries, including extensive M&A experience, and experience in corporate finance and corporate partnering activities. Previously, he served as Chief Financial Officer of Titan Pharmaceuticals from 1996 to 2008 and as President and Chief Executive Officer of Titan Pharmaceuticals from 2008 to 2009. From 1991 - 1996, he served as CFO, Corporate Group Vice President and General Counsel at Fresenius USA and Fresenius Medical Care where he completed 6 corporate partnership and M&A transactions totaling over $4 billion. Mr. Farrell holds a B.A. degree from the University of Notre Dame, and a J.D. degree from the University of California.

Prof. Salvatore Cuzzocrea – Director

Prof. Cuzzocrea, is the former President of the European Shock Society, and is an internationally renowned authority and leader on the biology and pathophysiology of nitric oxide. He currently serves in numerous leadership roles at the University of Messina in Sicily, including Director of Scientific Research, Director of the Department of Chemical, Biological, Pharmaceutical and Environmental Sciences, Director of the Oncology Unit at the University Hospital of Messina, and Full Professor of Pharmacology at the University’s School of Medicine. Dr. Cuzzocrea has been awarded honorary Professorships in Pharmacology at the University of Manchester and Saint Louis University, was elected a Fellow of the British Pharmacological Society, and has been appointed as an Honorary Lecturer in Pharmacology at the Department of Experimental Medicine and Nephrology at The William Harvey Institute at St. Bartholomew’s and Royal London School of Medicine and Dentistry. In 2020, Professor Cuzzocrea was elected Vice-President of the Board of the Conference of Rectors of all Italian universities. Prof. Cuzzocrea received his undergraduate and graduate medical education at the University of

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Messina, followed by doctoral studies at Cincinnati Children’s Hospital Medical Center and the William Harvey Institute in London. He is the author of more than 759 peer-reviewed publications and books, and is an international leader in the fields of autoimmunity, inflammation, toxic inhalational lung injury, and neurodegenerative disorders. Prof. Cuzzocrea’s research interests include the role of nitric oxide in the pathophysiology and treatment of pulmonary inflammation and cytokine storm associated acute lung injury, and the identification of new potential pharmacological targets for nitric oxide in autoimmune and inflammatory diseases.

Prof. Cuzzocrea brings expert knowledge to Claritas of nitric oxide pharmacology, and R-107, Claritas’ proprietary nitric oxide-releasing compound, having carried out more than 40 studies of this molecule in the treatment of experimental models of acute lung injury, pulmonary arterial hypertension, wound healing, ischemia-reperfusion injury, and multiple organ failure in sepsis and endotoxic shock. Prof. Cuzzocrea is an authority also on the biological mechanisms of cytokinestorm induced acute lung injury, and thus is ideally positioned to understand the pathophysiology of COVID-19 disease and its amelioration by supplemental provision of nitric oxide by administration of R-107.

Dr. Perenlei Enkhbaatar – Director

Dr. Enkhbaatar currently serves as the Charles Robert Allen Professor and the Director of the Translational Intensive Care Unit in the Department of Anesthesiology at the University of Texas Galveston Medical Branch. Following his medical training at the University of Saint Petersburg in Russia, Dr. Enkhbaatar served as a Senior Lieutenant physician in the Mongolian Army. He went on to receive his Ph.D. at Kumamoto University Graduate School of Medical Sciences in Japan. He then undertook his post-doctoral training in the Department of Anesthesiology, University of Texas Medical Branch in Galveston, Texas, under the mentorship of the late Professor Daniel Traber, the foremost authority over the last fifty years on the pathophysiology of acute lung injury. Upon Dr. Traber’s death, Dr. Enkhbaatar assumed the leadership of the research unit in Galveston and has further expanded its research prominence in the development of effective therapeutic approaches with special emphasis on tissue regeneration and stem cell biology.

For the past 25 years, Dr. Enkhbaatar has played a leading role in the elucidation of basic mechanisms of disease in acute lung injury and acute respiratory distress syndrome secondary to pneumonia, sepsis, toxic gas inhalation, and thermal injury associated with smoke inhalation. He has been at the forefront of pioneering therapeutic approaches to counter reactive oxidative and nitrosative stress. In recognition of these advances in the medical science of acute lung injury, Dr. Enkhbaatar has been awarded numerous federal grants, including funding from the National Institutes of Health, the American Heart Association, the Department of Defense, Shriners of North America, and the Office of Naval Research. His research advances have been presented at international conferences and in the publication of more than three hundred abstracts, one hundred and fifty-four original manuscripts in leading peer-reviewed journals, and twelve book chapters.

In recognition of his contributions to the field of cytokine storm induced acute lung injury, Dr. Enkhbaatar has been selected to serve on the Editorial Boards of leading journals in the fields of trauma and acute lung injury, including Critical Care Medicine , Shock , and Burn & Trauma , and has been invited to join numerous professional societies, including the Society of Critical Care Medicine, the American Burn Association, the Shock Society, the American Thoracic Society, the American Physiological Society, the American Heart Association, the Surgical Infection Society, and the Royal Society of Medicine. He also serves the U.S. military in support of its mission to protect soldiers from acute lung injury and septic shock via his membership on the Steering Committee of the Multi-Organ Support Technology (MOST) Task Area, Combat Casualty Care Research Program, US Army Institute of Surgical Research.

Dr. Enkhbaatar brings to Claritas expert knowledge of nitric oxide pharmacology, and R-107, Claritas’ proprietary nitric oxide-releasing compound, having carried out clinically-relevant large animal studies showing its treatment benefit in experimental models of bacterial pneumonia, smoke inhalation and burn injury, and chlorine inhalational lung injury. As a world authority on the biological mechanisms of pulmonary damage in cytokine-storm induced acute lung injury, Dr. Enkhbaatar is ideally positioned to appreciate the underlying pathophysiology of COVID-19 disease and to guide potential therapeutic approaches based on the provision of nitric oxide via the clinical administration of R-107.

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Corporate Cease Trade Orders or Bankruptcies

Mr. Farrell served as President, CEO and director on June 22, 2020, when the British Columbia Securities Commission (the “BCSC”) and the Ontario Securities Commission (the “OSC”) issued a Failure-to-File Cease Trade Order(“FFCTO”) against the Company. The FFCTO was due to the Company's failure to file by the prescribed filing deadlines its annual financial statements for the year ending December 31, 2019, and the accompanying management’s discussion and analysis and certifications. As a result, the TSXV also suspended trading of the Company’s common shares. The Company’s auditor, BDO, completed the audit of the Company’s financial statements for the year ended December 31, 2019, and the Company filed the audited financial statements for 2019, the quarterly financial statements for Q1 2020 (for period ending in March 31, 2020) and Q2 2020 (for period ending in June 30, 2020), and the accompanying Management’s Discussion and Analysis and certifications for all three periods, all of which are available on the Company’s profile on SEDAR (accessible at www.sedar.com) ( the “Filings” ). The Company applied to the BCSC and the OSC on November 4, 2020 to have the FFCTO fully revoked, and applied to the TSXV to have the Company’s shares resume trading after the FFCTO has been fully revoked. The BCSC and the OSC granted the full revocation with respect of the FFCTO on January 22, 2021, and the TSXV reinstated the Company’s securities for trading on the TSXV on February 26, 2020. Mr. Farrell has neither been a director or executive officer of any other company that, while he was acting in that capacity: (a) was subject to a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation for a period of more than 30 consecutive days; (b) was subject to a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation for a period of more than 30 consecutive days that was issued, after he ceased to be a director or executive officer of such company, and which resulted from an event that occurred while he was acting in the capacity as director or executive officer; or (c) is, or has been within the past 10 years a director of executive officer of any company that, while he was acting in that capacity, or within a year of ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.

Other than for Mr. Farrell as disclosed above, no current or proposed director is, or has been within the past 10 years, a director or executive officer of any other company that, while such person was acting in that capacity: (a) was subject to a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation for a period of more than 30 consecutive days; (b) was subject to a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation for a period of more than 30 consecutive days that was issued, after the current or proposed director ceased to be a director or executive officer of such company, and which resulted from an event that occurred while that person was acting in the capacity as director or executive officer; or (c) is, or has been within the past 10 years a director of executive officer of any company that, while the current or proposed director was acting in that capacity, or within a year of the current or proposed director ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; other than set forth below.

Personal Bankruptcies

No current or proposed director has, within the past 10 years, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold his assets.

Penalties or Sanctions

No current or proposed director has been subject to: (a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable Shareholder in deciding whether to vote for a proposed director.

The persons designated as proxyholders in the accompanying form of proxy (absent contrary directions) intend to vote FOR the election of the directors as set forth above.

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3. Appointment of Auditors

At the Meeting, Shareholders will be asked to pass an ordinary resolution appointing BDO as auditors of the Company, to hold office until the close of the next annual meeting of Shareholders, at such remuneration as may be fixed by the Board in accordance with the recommendation of the Audit Committee. BDO was first appointed as the auditors of the Company on August 20, 2020.

The persons designated as proxyholders in the accompanying form of proxy (absent contrary directions) intend to vote FOR the appointment of the auditors as set forth above.

4. Renewal of Option Plan

The Option Plan is a “rolling” option plan whereby the maximum number of Common Shares that may be reserved for issuance upon the exercise of stock options granted under the Option Plan and under any other Share Compensation Arrangement (as defined in the Option Plan) is 10% of the total Common Shares issued and outstanding in the capital of the Company, from time to time. Pursuant to the policies of the TSXV, the Shareholders are required to approve the Option Plan at Claritas’ annual shareholder meeting on a yearly basis. Accordingly, at the Meeting, Shareholders will be asked to pass an ordinary resolution approving the Option Plan for the year 2021 allowing the Company to grant options in its discretion under the Option Plan.

The purpose of the Option Plan is to develop the interest of directors, employees and consultants of the Company in the growth and development of the Company by providing them with the opportunity through such Options to acquire an increase proprietary interest in the Company. As of the date hereof, there is an aggregate of 31,273,897 Options outstanding under the Option Plan, which is equal to approximately 5.4% of the total Common Shares issued and outstanding in the capital of the Company.

The following is a summary of certain provisions of the Option Plan and is subject to, and qualified in its entirety by, the full text of the Option Plan:

subject to the terms of the Option Plan, Options may be granted to eligible employees, directors or consultants in such numbers and with such vesting provisions as the Board may determine;
the Board shall, at the time an Option is granted under the Option Plan, fix the exercise price at which Common Shares may be acquired upon the exercise of such Options provided that such exercise price shall not be less than the Discounted Market Price (as is defined in Policy 1.1 – Interpretation of the TSXV Corporate Finance Manual);
Options may only be transferred or assigned subject to the terms of the Option Plan;
the Option Plan is a “rolling” option plan pursuant to which the maximum number of Common Shares that may be reserved for issuance upon the exercise of stock options granted under the Option Plan is 10% of the total Common Shares issued and outstanding in the capital of the Company, from time to time;
the number of Common Shares issuable to insiders at any time under all share compensation arrangements shall not exceed 10% of the issued and outstanding Common Shares and the number of Common Shares issuable to insiders, within any 12-month period under all share compensation arrangements shall not exceed 10% of the issued and outstanding Common Shares;
the maximum number of Common Shares that may be issued to any one person under the Option Plan together with any Common Shares reserved for issuance under options granted within any 12-month period shall not exceed 5% of the outstanding Common Shares as at the date of the grant unless disinterested shareholder approval is obtained;
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the maximum number of Common Shares reserved for issuance to a Consultant (as defined in Policy 4.4 – Incentive Stock Options (“ Policy 4.4 ”) of the TSXV Corporate Finance Manual) or a person engaged in Investor Relations Activities (as defined in Policy 1.1 – Interpretation of the TSXV Corporate Finance Manual) in any 12 month period shall not exceed 2% of the outstanding Common Shares as at the date of the grant;
Options may be granted for a maximum term of ten years, subject to any extension in the event of a blackout period;
Options expire within 90 days (or 30 days with respect to a person engaged in Investor Relations Activities) of termination of employment or holding office as a director, officer, employee or consultant of the Company for any reason other than death or permanent disability (or for a “reasonable period” after such events at the discretion of the Board);
in case of death, Options expire on the earlier of one year thereafter or the end of the period during which the Option may be exercised, and may be exercised by legal representatives or designated beneficiaries of the holder of such Options;
the Company is permitted to make the required source withholdings and remittances in respect of employee stock option benefits as required under the Income Tax Act (Canada);
the Board may suspend or terminate the Option Plan at any time;
the Board may, at any time, amend or revise the terms of the Option Plan, subject to the receipt of all necessary regulatory approvals, provided that no such amendment or revision shall alter the terms of any Options granted under the Option Plan; and
in the event of a change of control transaction, the Board has the right to deal with any Options in a manner it deems equitable and appropriate in the circumstances, including determining that the Options will remain in full force or effect, causing Options to be exchanged or converted for options to acquire shares of another entity involved in the change of control, accelerating the vesting and expiration date of Options, and providing participants the right to surrender the Options for a cash payment equal to the in the money amount.

The persons designated as proxyholders in the accompanying form of proxy (absent contrary directions) intend to vote FOR the approval of the Option Plan as described above and as set forth in Schedule “A”. Management recommends that Shareholders or their proxyholders vote in favor of the resolutions in Schedule “A”.

5. Approval of Consolidation

General

At the Meeting, shareholders will be asked to pass a special resolution, with or without amendment, to affect a consolidation (the “ Consolidation ”) of the issued and outstanding Common Shares on a basis of up to 20 pre-Consolidation Common Shares being consolidated into one post-Consolidation Common Share, or such lesser number of preConsolidation Common Shares as may be accepted by the TSXV and approved by the Board, in its sole discretion. Approval of the resolution does not necessarily mean the Board will implement the Consolidation. Even if the resolution is approved by Shareholders at the Meeting, and accepted by the TSXV, the Board will have the discretion not to proceed with the Consolidation.

In connection with the Consolidation, each Option, Common Share purchase warrant, convertible debenture or other security of the Company convertible or exercisable into pre-Consolidation Common Shares that has not been exercised or cancelled prior to the effect date of the implementation of the Consolidation will be adjusted pursuant to the terms thereof, including adjustments to the exercise prices and the number of Common Shares issuable thereunder, in order to preserve the proportional rights and obligations of the securityholders.

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As of the date hereof, there are 581,027,592 Common Shares issued and outstanding. If the Consolidation is put into effect on the basis of the maximum authorized ratio of 20 pre-Consolidation Common Shares for everyone postConsolidation Common Share, a total of approximately 29,051,380 Common Shares in the capital of the Company would be issued and outstanding following the Consolidation, assuming no other changes to the issued capital. As the Company currently has an unlimited number of Common Shares authorized for issuance, the Consolidation will not have any effect on the number of Common Shares of the Company available for issuance.

Purpose of the Consolidation

The Board believes it is in the best interests of the Company to reduce the number of issued and outstanding Common Shares by way of the Consolidation. The potential benefits of the Consolidation include:

Greater investor interest – a higher post-Consolidation Common Share price could help generate interest in the Company among certain investors. In particular, a higher anticipated Common Share price may meet investing criteria for certain institutional investors and investment funds that may be prevented under their investing guidelines from otherwise investing in the Common Shares at current price levels;
Compliance with exchange pricing policies – the policies of the TSXV generally require special approval for issuances of Common Shares at a price less than C$0.05 per share, and a share consolidation may allow the Company to complete financings (or to issue Common Shares in consideration for services or grant Options) in the future without requiring exemptive relief from the TSXV in respect of the pricing of Common Shares or Options in any such transactions;
Improved trading liquidity – an increased interest from investors may ultimately improve the trading liquidity of the Common Shares; and
Reduced price volatility – an anticipated higher post-Consolidation Common Share price could result in less volatility in the price of the Common Shares.

Risks Associated with the Consolidation

There can be no assurance that the market price of the post-Consolidation Common Shares will increase as a result of the Consolidation. The Company’s total market capitalization immediately after the proposed Consolidation may be lower than immediately before the proposed Consolidation. A decline in the market price of the Common Shares after the Consolidation may result in a greater percentage decline than would occur in the absence of the Consolidation, and the liquidity of the Commons Shares could be adversely affected following the Consolidation. The marketability and trading liquidity of the post-Consolidation Common Shares may not improve. The Consolidation may result in some Shareholders owning “odd lots” of less than 100 Common Shares which may be more difficult for such Shareholders to sell or which may require greater transaction costs per Common Share to sell. These are only some of the risks associated with the Consolidation.

Effect on Fractional Shares

No fractional Common Shares will be issued in connection with the Consolidation and, in the event that a Shareholder would otherwise be entitled to receive a fractional Common Share upon the Consolidation, the number of Common Shares to be received by such Shareholder will be rounded to the nearest whole number of Common Shares such that fractions equal to or greater than 0.5 will be rounded up, and if the fractional entitlement is less than 0.5, will be rounded down, provided that each Shareholder shall receive at least one (1) Common Share post-Consolidation.

Effect on Share Certificates

If the Consolidation is implemented by the Board, following the announcement by the Company of the effective date of the Consolidation, registered Shareholders will be sent a letter of transmittal by the Transfer Agent containing instructions on how to exchange their share certificates representing pre-Consolidation Common Shares for new share certificates representing post-Consolidation Common Shares. Beneficial Shareholders holding Common Shares through a bank, broker or other nominee should note that such banks, brokers or other nominees may have different procedures for processing

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the Consolidation than those that will be put in place by the Company for the registered Shareholders. Such non-registered Shareholders are encouraged to contact their intermediary or broker if they have questions in this regard.

Approval

The full text of the resolution confirming the Consolidation is attached to this Information Circular as Schedule “B”. In order to be passed, the resolution confirming the Consolidation requires the approval of not less than two-thirds (2/3) of the votes cast thereon by Shareholders present in person or represented by proxy at the Meeting. Under the BCBCA, Shareholders will not have dissent or appraisal rights with respect to the proposed Consolidation. In addition to the approval of the Shareholders, the Consolidation requires regulatory approvals, including the approval of the TSXV.

The persons designated as proxyholders in the accompanying form of proxy (absent contrary directions) intend to vote FOR the resolutions confirming and approving the Consolidation as described above and as set forth in Schedule “B”. Management recommends that Shareholders or their proxyholders vote in favor of the resolutions in Schedule “B”.

6. Approval of disposition of the Company’s GVHD Program

At the Meeting, shareholders will be asked to pass a special resolution substantially in the form set out in Schedule “C” of this Information Circular, authorizing the Company to transfer and sell to the former shareholders of Talent Biotechs Ltd. (the “Former Shareholders”) all assets of the Company’s program developing cannabidiol for the prevention and treatment of graft versus host disease (the “GVHD Program”) in consideration for the release and discharge by the Former Shareholders of all obligations the Company and its subsidiaries may have to such Former Shareholders.

During the first quarter of 2019, the Company determined that it did not have sufficient resources to continue research and development activities in the GVHD Program. In May 2019, the Company engaged Echelon Wealth Partners (“Echelon”) to assist with the review of potential out-licensing and divestment opportunities for the commercial rights to the GVHD Program. In conjunction with Echelon, the Company engaged in an extensive effort to out-license or sell the GVHD program. The Company reached out to several dozen companies in the pharmaceutical and cannabis industries, and engaged in negotiations with several potential corporate partners, but did not receive an acceptable offer for either a license or sale of the GVHD Program.

The Company’s wholly owned subsidiary, Kalytera Therapeutics Israel, Ltd. (“Kalytera Israel”) acquired Talent Biotechs Ltd. (“Talent”) in 2017 from the former shareholders of Talent (the “Former Shareholders”), under the terms of a share purchase agreement (the “SPA”) between Kalytera, Kalytera Israel, Talent and the Former Shareholders. Under the terms of the SPA, Kalytera Israel is obligated to make certain milestone payments (the “Milestone Payments”) to the Former Shareholders. Kalytera Israel failed to pay certain Milestone Payments when they became due under the SPA, and issued a promissory note (the “ Note ”) in favor of the Former Shareholders evidencing such debt. Kalytera Israel is obligated to pay approximately $4 million to the Former Shareholders under the terms of the Note, including accrued interest.

Kalytera Israel is in default under the terms of the SPA and the Note, and has received a formal notice of default from the representative of the Former Shareholders. The obligations of Kalytera Israel under the Note are guaranteed by Talent, and both Kalytera Israel and Talent are parties to a Security Agreement, under which they have secured their obligations under the Note by pledging certain assets to the Former Shareholders as security for the Note (the “Pledged Assets’). The Pledged Assets are the assets of the Company’s GVHD Program. The Pledged Assets are both tangible and intangible assets, consisting primarily of tangible assets, such as patient blood samples, and intangible assets, such as contract rights, clinical and preclinical data, know how, and intellectual property rights that are held under a license agreement between MOR Research Applications, Ltd. and Talent. The Pledged Assets also include all shares of the Company’s two subsidiaries, Kalytera Israel and Talent.

The Company and the representative of the Former Shareholders have negotiated an Agreement under which the Company will transfer ownership of all Pledged Assets, other than the shares of Kalytera Israel, to the Former Shareholders in consideration for the release and discharge by the Former Shareholders of all obligations the Company and its subsidiaries may have to such Former Shareholders, including all obligations under the Note, which are approximately $4 million, inclusive of accrued interest, and all contingent liabilities under the SPA, which are approximately $22 million.

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Upon approval of the agreement that has been negotiated by the Company and the representative of the Former Shareholders, the Company will return the GVHD Program to the Former Shareholders, and the Company will owe no further amounts to the Former Shareholders.

The persons designated as proxyholders in the accompanying form of proxy (absent contrary directions) intend to vote FOR the resolution confirming and approving disposition of the Company’s GVHD Program as set forth in Schedule “C”. Management recommends that Shareholders or their proxyholders vote in favor of the resolutions in Schedule “C”.

7. Other Matters

The Company knows of no other matters to be submitted to the Shareholders at the Meeting. If any other matters properly come before the Meeting, it is the intention of the persons named in the enclosed form of proxy to vote the Common Shares they represent in accordance with their judgment on such matters.

RISK FACTORS

An investment in the Common Shares involves a high degree of risk. Claritas operates in a dynamic and rapidly changing industry that involves numerous risks and uncertainties. The risks described below are not the only risks facing the Company. Additional risks and uncertainties not currently known or that are currently deemed to be immaterial may also materially and adversely affect Claritas’ business operations. If any of these risks actually occur, Claritas’ business, financial condition, operating results or cash flows could be materially adversely affected. This could cause the trading price of the Common Shares to decline.

Risks Related to Claritas’ Financial Condition and Capital Requirements

Claritas is an early clinical stage pharmaceutical company

Claritas is an early clinical stage pharmaceutical company and has a limited operating history on which to assess the prospects for its business, has incurred significant losses since the date of its inception, and anticipates that it will continue to incur significant losses until it is able to successfully out-license, sell or commercialize its product candidates.

Claritas is subject to all of the business risks and uncertainties associated with any early-stage enterprise, including undercapitalization, cash shortages, limitations with respect to personnel, financial and other resources, and lack of revenues.

Claritas has incurred significant operating losses since inception and substantially all losses have resulted from expenses incurred in connection with research and development and general and administrative costs associated with operations. Claritas may not be able to achieve or maintain profitability and may continue to incur significant losses in the future. In addition, Claritas expects to continue to increase operating expenses as Claritas implements initiatives to continue to grow its business. If Claritas cannot produce revenue to offset these expected increases in costs and operating expenses, Claritas will not be profitable. There is no assurance that Claritas will generate revenue and be successful in achieving a return on shareholders’ investments and the likelihood of success must be considered in light of the early stage of operations.

Claritas expects that it will need to raise substantial additional funding before it becomes profitable. This additional financing may not be available on acceptable terms, or at all. Failure to raise such capital could result in the delay or indefinite postponement of current business objectives or Claritas going out of business.

Claritas’ ability to secure any required financing to sustain its operations will depend in part upon prevailing capital market conditions, as well as its business success. There can be no assurance that Claritas will be successful in its efforts to secure any additional financing or additional financing on terms satisfactory to the management. If additional funds are raised through issuances of equity or convertible debt securities, existing shareholders could suffer significant dilution, and any new equity securities issued could have rights, preferences and privileges superior to those of holders of common shares. In addition, from time to time, Claritas may enter into transactions to acquire assets or the shares of other corporations. These transactions may be financed wholly or partially with debt, which may temporarily increase Claritas’ debt levels

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above industry standards. Claritas’ articles do not limit the amount of indebtedness that Claritas may incur. The level of Claritas’ indebtedness from time to time could impair its ability to obtain additional financing in the future on a timely basis to take advantage of business opportunities that may arise.

Claritas has not generated any revenue to date and may never be profitable.

Claritas has not generated any revenue to date and may never be profitable. The ability to generate revenue depends upon the Company’s ability to out-license or sell its product candidates, or, alternatively, upon the Company’s ability to obtain and maintain regulatory approval for, and successfully commercialize, existing product candidates or product candidates that Claritas develops or acquires in the future. As of the date of this Proxy Circular, there is no expectation to generate revenue in the foreseeable future.

There is no assurance that Claritas can generate revenues. The ability to generate revenue depends on a number of factors, including:

successful completion of development activities, including the additional preclinical studies and planned clinical trials for the product candidates;
completion and submission of applications for regulatory approval in select jurisdictions, including New Drug Applications to the FDA in the United States, Marketing Authorization Applications to the EMA in Europe, and New Drug Submissions to Health Canada;
obtaining regulatory approval from the FDA, EMA, and Health Canada for indications for which there is a commercial market;
completion and submission of applications to, and obtaining regulatory approval from, other foreign regulatory authorities;
completion of agreements to out-license or sell its product development programs;
raising substantial additional capital to fund operations;
developing a commercial organization, or finding suitable partners, to market, sell and distribute approved products in the markets in which Claritas have obtained commercialization rights;
achieving acceptance among patients, clinicians and advocacy groups for any developed products;
obtaining coverage and adequate reimbursement from third parties, including government payors; and
selling approved products at a commercially viable price in countries subject to price controls.

Claritas’ product candidates, if approved, may be unable to achieve the expected market acceptance and, consequently, Claritas’ ability to generate revenue from new products may be limited.

Claritas’ product candidates, if approved, may be unable to achieve the expected market acceptance and, consequently, Claritas’ ability to generate revenue from new products may be limited. Even if product development is successful and regulatory approval is obtained, Claritas’ ability to generate sufficient revenue depends on the acceptance of its products by physicians and patients. Claritas cannot assure that its product candidates will achieve the expected level of market acceptance and revenue if it obtains the requisite regulatory approvals. The market acceptance of any product depends on a number of factors, including the indication statement and warnings required by regulatory authorities in the product label, continued demonstration of efficacy and safety in commercial use, physicians’ willingness to prescribe the product, reimbursement from third-party payers such as government health care systems and non-governmental third-party payers, the price of the product, the nature of any post-approval risk management activities mandated by regulatory authorities, competition, and marketing and distribution support. Further, the success and acceptance of a product in one

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country may be negatively affected by its activities in another. By way of example, its approval and pricing strategy in Europe could create post-approval commitments to EMA and other European regulators that damages its market or price in the U.S. Likewise, if Claritas fails to adapt its approach to clinical trials in the U.S. market to meet the needs of EMA or other European regulatory authorities, or to generate the health economics and outcomes research data needed to support pricing and reimbursement negotiations in Europe, it may have difficulties obtaining marketing authorization for its products from EMA and may have difficulties obtaining pricing and reimbursement approval for its products at a national level. Any factors preventing or limiting the market acceptance of its products could have a material adverse effect on its business, results of operations and financial condition.

Claritas may not receive the government grants Claritas applies for, and, even if it does, its government grants could subject the Company to audits and could require the Company to repay substantial amounts of funds awarded.

As of the date hereof, Claritas has not received any research grants and there can be no assurance that Claritas will receive any grant funds. If grant funds are received, Claritas may be subject to routine audits by government agencies. As part of an audit, these agencies may review Claritas’ performance, cost structures and compliance with applicable laws, regulations, policies and standards and the terms and conditions of the grant. If any of Claritas’ expenditures are found to be unallowable or allocated improperly or if Claritas has otherwise violated terms of the grant, the expenditures may not be reimbursed and/or Claritas may be required to repay funds already disbursed. Accordingly, if grants funds are received and there is an audit, such an audit could result in a material adjustment to Claritas’ results of operations and financial condition.

Claritas may be exposed to the financial risk related to the fluctuation of foreign exchange rates.

Claritas may maintain cash and other financial instruments, or may incur expenditures in currencies other than the Canadian dollar. Significant changes in the currency exchange rates between the Canadian dollar relative to these foreign currencies, which may include but are not limited to U.S. dollars, Israeli new shekel (NIS), Australian dollars, Euros, and British pounds, could have an effect on Claritas’ results of operations, financial position or cash flows. Claritas has not hedged its exposure to currency fluctuations.

Risks Related to Claritas’ Regulatory Requirements

Claritas’ activities are subject to regulation by governmental authorities, particularly in the United States, Israel and other jurisdictions where Claritas intends to test and, if approved, market its product candidates.

Achievement of Claritas’ business objectives is contingent, in part, upon compliance with regulatory requirements enacted by governmental authorities and obtaining all regulatory approvals, where necessary, for the testing, manufacture, packaging/labelling, advertising, transportation, storage, possession, disposal, production, distribution, sale, import and export of its products. Claritas cannot predict the outcome of the FDA, EMA or Health Canada’s regulatory approval process. Even if Claritas succeeds in getting regulatory approval in the United States, this does not necessarily mean that it will get approval in other countries. Claritas cannot predict the time required to secure all appropriate regulatory approvals for its products, or the extent of testing and documentation that may be required by governmental authorities. Any delays in obtaining, or failure to obtain regulatory approvals, or revocation or suspension of approvals, may significantly delay or prevent the development of markets, products and sales initiatives and could have a material adverse effect on Claritas’ business, results of operations and financial condition.

Claritas will incur ongoing costs and obligations related to regulatory compliance. Failure to comply with regulations may result in additional costs for corrective measures, penalties or restrictions of its operations. Canadian legislation imposes criminal penalties for non-compliance with drug regulatory requirements. In addition, changes in regulations, more vigorous enforcement thereof or other unanticipated events could require extensive changes to the Company’s operations, increased compliance costs or give rise to material liabilities, which could have a material adverse effect on its business, results of operations and financial condition.

Claritas’ ability to successfully produce the product candidates is dependent on extensive ongoing regulatory compliance and reporting requirements by the Drug Enforcement Agency, FDA, EMA, Health Canada, other foreign regulatory authorities and provincial, state and local regulatory authorities (“Reporting Requirements”).

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Failure to comply with the requirements and terms of the Reporting Requirements could have a material adverse impact on Claritas’ business, financial condition and operating results. There is no assurance that continuous regulatory approval will be given for the testing, manufacture, management, packaging/labelling, advertising, transportation, storage, possession, disposal, production, distribution, sale, import and export of the product candidates. Should regulatory approval not be continued, Claritas’ business, financial condition and operating results would be materially adversely affected.

Any failure by Claritas to comply with existing regulations could harm its reputation and operating results.

Claritas must adhere to all regulatory requirements including FDA’s Good Laboratory Practice, cGMP, and GCP requirements and their equivalents in Canada, Europe and other jurisdictions, if applicable. If Claritas or its suppliers fail to comply with applicable regulations, including pre-or post-approval GMP requirements, then the applicable regulatory authorities could sanction Claritas. Even if a drug receives regulatory approval, the regulatory authority may impose significant restrictions on a product’s indicated uses or marketing or impose ongoing requirements for potentially costly post-marketing trials.

If any of its product candidates is approved in the United States, Claritas will be subject to ongoing regulatory requirements for labeling, packaging, storage, distribution, import, export, advertising, promotion, sampling, recordkeeping and submission of safety and other post-market information, including both federal and state requirements in the U.S. In addition, manufacturers and manufacturers’ facilities are required to comply with extensive FDA requirements, including ensuring that quality control and manufacturing procedures conform to GMP. As such, Claritas and its contract manufacturers (in the event contract manufacturers are appointed in the future) are subject to continual review and periodic inspections to assess compliance with GMP. Accordingly, Claritas and others with whom Claritas work must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production, quality control and quality assurance. Claritas will also be required to report certain adverse reactions and production problems, if any, to the FDA, and to comply with requirements concerning advertising and promotion for our products. Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s approved label. Claritas would also be subject to ongoing regulatory requirements in Canada and other jurisdictions.

If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, or disagrees with the promotion, marketing or labeling of the product, it may impose restrictions on that product or use, including requiring withdrawal of the product from the market. If Claritas fails to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may:

issue warning letters;
impose civil or criminal penalties;
suspend regulatory approval;
suspend any of Claritas’ ongoing clinical trials;
refuse to approve pending applications or supplements to approved applications submitted by Claritas;
impose restrictions on Claritas’ operations, including by requiring Claritas to enter into a Corporate Integrity Agreement or closing Claritas. contract manufacturers’ facilities, if any; or
seize or detain products or require a product recall.

Any government investigation of alleged violations of law could require Claritas to expend significant time and resources in response, and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect its ability to commercialize and generate revenue for its product candidates. If regulatory

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sanctions are applied or if regulatory approval is withdrawn, the value of its business and its operating results will be adversely affected.

Any action against Claritas for violation of these laws, even if Claritas successfully defends against it, could cause it to incur significant legal expenses, divert its management’s attention from the operation of its business and damage its reputation. Claritas expends significant resources on compliance efforts and such expenses are unpredictable and might adversely affect its results. Changing laws, regulations and standards might also create uncertainty, higher expenses and increase insurance costs. As a result, Claritas intends to invest all reasonably necessary resources to comply with evolving standards, and this investment might result in increased management and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

Risks Related to the Development of Claritas’ Product Candidates

The results of the preclinical testing and clinical trials are uncertain and a product candidate can fail at any stage of clinical development.

Prior to obtaining regulatory approval for sale of the product candidates, Claritas must conduct preclinical testing and clinical trials. The historic failure rate for product candidates is high due to scientific feasibility, safety, efficacy, changing standards of medical care and other variables.

The testing process can take many years and may include post-marketing studies and surveillance, which would require the expenditure of substantial resources. As a result, Claritas cannot assure that clinical trials will begin or be completed on schedule, as the commencement and completion of clinical trials can be delayed for various reasons. A clinical trial conducted in the United States may be suspended or terminated by Claritas, the FDA, IRB, ethics committees, data safety monitoring boards or other foreign or U.S. regulatory authorities overseeing the clinical trial at issue due to a number of factors, including, among others: failure to conduct the clinical trial in accordance with regulatory requirements; inspection of clinical trial sites by regulatory authorities which requires corrective action by Claritas, including the imposition of a clinical hold; unforeseen safety issues; adverse side effects or lack of effectiveness of the product candidates; and changes in government regulations or administrative actions.

Conducting clinical trials outside the United States could negatively impact Claritas. Risks inherent in conducting international clinical trials include: foreign regulatory requirements that could burden or limit the ability to conduct clinical trials; administrative burdens of conducting clinical trials under multiple foreign regulatory schema; foreign currency fluctuations which could negatively impact Claritas’ financial condition; manufacturing, customs, shipment and storage requirements; cultural differences in medical practice and clinical research; and diminished protection of intellectual property. There is no assurance that the FDA will accept data from clinical trials conducted in other jurisdictions. If the FDA does not accept the data, the result would be an increase in clinical trials that would be costly, time-consuming and delay Claritas’ development plan.

Claritas relies on contract research organizations, clinical data management organizations and consultants to design, conduct, supervise and monitor preclinical studies due to a lack of internal resources to perform these functions.

Outsourcing these functions involves risk that third party providers may not perform to the Company’s standards, may not produce results in a timely manner or may fail to perform at all. If any contract research organization fails to comply with applicable regulatory requirements, the clinical data generated in the clinical trial may be deemed unreliable to regulatory authorities. Additional clinical trials may be required before approval of marketing applications will be given. Claritas cannot provide assurance that all third-party providers will meet the regulatory requirements for clinical trials. Failure of third-party providers to meet regulatory requirements could result in repeat preclinical and clinical trials, which would delay the regulatory approval process or result in termination of preclinical and clinical trials. Reliance on third party providers could result in a material adverse effect on Claritas’ costs and results of operations.

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Claritas may encounter significant setbacks in clinical trials after achieving positive results in preclinical and early clinical development.

The results of Claritas’ preclinical testing may not necessarily be predictive of the results from the planned additional clinical trials in humans. Significant setbacks can be caused by, among other things, preclinical findings made while clinical trials were underway or safety or efficacy observations made in clinical trials, including adverse events. Preclinical and clinical data is susceptible to varying interpretations and analyses, and there is the potential that product candidates that performed satisfactorily in preclinical studies and clinical trials fail to obtain FDA, Health Canada or EMA approval. Failure to produce positive results in clinical trials of the product candidates could result in a material adverse effect to Claritas’ development timeline, regulatory approval, commercialization prospects and business and financial prospects.

There is a risk of product failure if Claritas’ product candidates prove to be unsafe, ineffective or inadequate for clinical development or commercialization.

Claritas will focus its financial and managerial resources on research programs relating to its product candidates. Claritas may forego or delay pursuit of opportunities with other product candidates that could potentially prove to have commercial potential. Claritas’ resource allocation decisions could result in failure to capitalize on viable commercial products or profitable market opportunities.

If product development is successful and regulatory approval is obtained, Claritas’ ability to generate revenue depends on the acceptance of the product candidates by physicians and patients. Factors which affect market acceptance include the indication statement and warnings approved by regulatory authorities on the product label, continued demonstration of efficacy and safety in commercial use, physicians’ willingness to prescribe the product candidates, reimbursement from third-party payors such as government healthcare systems and insurance companies, the price of the product, the nature of any post-approval risk management plans mandated by regulatory authorities, competition, and marketing and distribution support. Factors preventing market acceptance of the product candidates could have a material adverse effect on Claritas’ business, results of operations and financial condition.

Claritas’ ability to generate revenue is based on its ability to market the product candidates in multiple jurisdictions where Claritas has limited experience. This risk could have a material adverse effect on Claritas’ business, results of operations and financial condition.

Claritas may not be successful in its efforts to identify, license or discover additional product candidates.

Although a substantial amount of Claritas’ effort will focus on the continued clinical testing, potential approval and commercialization of its existing product candidates, the success of its business also depends in part upon its ability to identify, license or discover additional product candidates. Claritas’ research programs or licensing efforts may fail to yield additional product candidates for clinical development for a number of reasons, including but not limited to the following:

Claritas’ research or business development methodology or search criteria and process may be unsuccessful in identifying potential product candidates;
Claritas may not be able or willing to assemble sufficient resources to acquire or discover additional product candidates;
Claritas’ product candidates may not succeed in preclinical or clinical testing;
Claritas’ product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval;
competitors may develop alternatives that render Claritas’ product candidates obsolete or less attractive;
product candidates Claritas develops may be covered by third parties’ patents or other exclusive rights;
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the market for a product candidate may change during Claritas’ program so that such a product may become unreasonable to continue to develop;
a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and
a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors.

If any of these events occurs, Claritas may be forced to abandon its development efforts for a program or programs, or Claritas may not be able to identify, license or discover additional product candidates, which would have a material adverse effect on its business and could potentially cause Claritas to cease operations. Research programs to identify new product candidates require substantial technical, financial and human resources. Claritas may focus its efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful.

Even if Claritas is able to commercialize its product candidates, the products may not receive coverage and adequate reimbursement from third-party payors, which could harm its business.

The availability of reimbursement by governmental and private payors is essential for most patients to be able to afford expensive treatments. Sales of Claritas’ product candidates, if approved, will depend substantially on the extent to which the costs of these product candidates will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payors. If reimbursement is not available, or is available only to limited levels, Claritas may not be able to successfully commercialize its product candidates it develops. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow Claritas to establish or maintain pricing sufficient to realize a sufficient return on its investment.

In the United States, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or Medicare Modernization Act, established the Medicare Part D program and provided authority for limiting the number of drugs that will be covered in any therapeutic class thereunder. The Medicare Modernization Act, including its cost reduction initiatives, could decrease the coverage and reimbursement rate that Claritas receives for any of its approved products. Furthermore, private payors often follow Medicare coverage policies and payment limitations in setting their own reimbursement rates. Therefore, any reduction in reimbursement that results from the Medicare Modernization Act may result in a similar reduction in payments from private payors.

There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products. In the United States, the principal decisions about reimbursement for new medicines are typically made by the Centers for Medicare & Medicaid Services, or CMS, an agency within the U.S. Department of Health and Human Services, or HHS, as CMS decides whether and to what extent a new medicine will be covered and reimbursed under Medicare. Private payors tend to follow CMS to a substantial degree.

The intended use of a drug product by a physician can also affect pricing. For example, CMS could initiate a National Coverage Determination administrative procedure, by which the agency determines which uses of a therapeutic product would and would not be reimbursable under Medicare. This determination process can be lengthy, thereby creating a long period during which the future reimbursement for a particular product may be uncertain.

Outside the United States, particularly in member states of the EU, the pricing of prescription drugs is subject to governmental control. In these countries, pricing negotiations or the successful completion of health technology assessment procedures with governmental authorities can take considerable time after receipt of marketing approval for a product. In addition, there can be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as part of cost containment measures. Certain countries allow companies to fix their own prices for medicines, but monitor and control company profits. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various EU member states and parallel distribution, or arbitrage between low-priced and highpriced member states, can further reduce prices. In some countries, Claritas or its collaborators may be required to conduct

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a clinical trial or other studies that compare the cost-effectiveness of its product candidates to other available therapies in order to obtain or maintain reimbursement or pricing approval. Publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries. If reimbursement of any product candidate approved for marketing is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, Claritas’ business, financial condition, results of operations or prospects could be adversely affected.

Claritas faces an inherent risk of exposure to product liability claims, regulatory action and litigation if its products are alleged to have caused significant loss or injury.

If Claritas obtains regulatory approval for its product candidates, as a manufacturer and distributor of products designed to be ingested by humans, Claritas faces an inherent risk of exposure to product liability claims, regulatory action and litigation if its products are alleged to have caused significant loss or injury. Claritas may be subject to various product liability claims, including, among others, that its products caused injury or illness, include inadequate instructions for use or include inadequate warnings concerning possible side effects or interactions with other substances. A product liability claim or regulatory action against Claritas could result in increased costs, could adversely affect its reputation with its clients and consumers generally, and could have a material adverse effect on its results of operations and financial condition. There can be no assurances that Claritas will be able to obtain or maintain product liability insurance on acceptable terms or with adequate coverage against potential liabilities. Such insurance is expensive and may not be available in the future on acceptable terms, or at all. The inability to obtain sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of products.

Risks Related to Claritas’ Business Operations

Claritas may not be able to maintain its required supply of skilled labor, equipment, parts and components.

Claritas’ ability to compete and grow will be dependent on it having access, at a reasonable cost and in a timely manner, to skilled labor, equipment, parts and components. No assurances can be given that Claritas will be successful in maintaining its required supply of skilled labor, equipment, parts and components.

Claritas relies on third parties to supply and manufacture the materials for the research and development of the product candidates. Claritas cannot provide assurance that the supply of research and development, preclinical and clinical development drugs and other materials will not be limited, interrupted, restricted in certain geographic regions, be of satisfactory quality or be delivered in a timely manner.

Manufacturers of therapeutic products and their facilities are subject to review and periodic inspections by the FDA, the EMA and other comparable regulatory authorities for compliance with regulations. If there are issues with the facility where the product is manufactured, a regulatory agency may impose restrictions on that product, the manufacturing facility or Claritas, including requiring a recall or withdrawal of the product from the market or suspension of manufacturing. The occurrence of problems with a facility may inhibit Claritas’ ability to commercialize the product candidates and may otherwise have a material adverse effect on its business, financial condition and results of operations.

The proposed business is dependent on a number of key inputs and their related costs, including raw materials.

The proposed business is dependent on a number of key inputs and their related costs including raw materials and supplies. Any significant interruption or negative change in the availability or economics of the supply chain for key inputs could materially impact the business, financial condition and operating results of Claritas. Any inability to secure required supplies and services or to do so on appropriate terms could have a materially adverse impact on the proposed business, financial condition and operating results of Claritas.

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Failure to obtain import and export licenses or delays or disruption to transportation systems could cause partial or total loss of revenue.

Claritas’ shipment, import and export of its product candidates and the active pharmaceutical ingredients used to manufacture its product candidates requires import and export licenses. The granting and maintenance of these licenses is uncertain. Any failure to obtain or maintain an import or export license would have a material adverse effect on its business, results of operations or financial condition.

In the event licenses are granted, Claritas will depend on fast and efficient courier services to distribute its product. Any prolonged disruption of this courier service may result in the product batches being stored outside required temperature ranges. Inappropriate storage may damage the product shipment resulting in delays in clinical trials or, upon commercialization, a partial or total loss of revenue from one or more shipments of active pharmaceutical ingredients or the product candidates. A delay in a clinical trial or, upon commercialization, a partial or total loss of revenue from delays in shipment could have a material adverse effect on its business, results of operations or financial condition. Rising costs associated with the courier services used by Claritas to ship its products may also adversely impact its business and its ability to operate profitably.

Claritas currently has no sales, marketing and distribution capabilities to commercialize the product candidates.

If Claritas’ product candidates are approved by regulatory bodies, Claritas may need to acquire sales, marketing and distribution capabilities to commercialize its product candidates. This process is expensive and time-consuming. If Claritas is not successful in commercializing any product candidate approved, either through internal processes or through third parties, its business, financial condition and results of operations could be materially adversely affected.

Increased competition by larger and better financed competitors could materially and adversely affect Claritas’ business, financial condition and results of operations.

The pharmaceutical industry is highly competitive and subject to rapid change. The industry continues to expand and evolve as an increasing number of competitors and potential competitors enter the market. Many of these competitors and potential competitors have substantially greater financial, technological, managerial and research and development resources and experience than Claritas has. Some of these competitors and potential competitors have more experience than Claritas has in the development of pharmaceutical products, including validation procedures and regulatory matters.

Claritas competes with, and its product candidates, if successfully developed, will compete with, product offerings from large and well-established companies that have greater marketing and sales experience and capabilities than Claritas has or its collaboration partners have. Other companies with greater resources than Claritas may announce similar plans in the future. If Claritas is unable to compete successfully, our commercial opportunities will be reduced and our business, results of operations and financial conditions may be materially harmed. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in more concentrated resources among a smaller number of competitors. To remain competitive, Claritas will require a continued level of investment in research and development, marketing, sales and client support. Claritas may not have sufficient resources to maintain research and development, marketing, sales and client support efforts on a competitive basis, and that could materially and adversely affect its business, financial condition and results of operations.

Counterfeit versions of Claritas’ products could harm its business.

Counterfeiting activities and the presence of counterfeit products in a number of markets and over the Internet continue to be a challenge for maintaining a safe drug supply for the pharmaceutical industry. Counterfeit products are frequently unsafe or ineffective, and can be life-threatening. To distributors and users, counterfeit products may be visually indistinguishable from the authentic version. Reports of adverse reactions to counterfeit drugs along with increased levels of counterfeiting could be mistakenly attributed to the authentic product, affect patient confidence in the authentic product and harm the business of companies such as Claritas’. If Claritas’ products were to be the subject of counterfeits, it could incur substantial reputational and financial harm.

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Claritas may become party to litigation from time to time in the ordinary course of business that could adversely affect its business.

Should any litigation in which Claritas becomes involved be determined against it, such a decision could adversely affect its ability to continue operating and the market price for the common shares and could use significant resources. Even if Claritas is involved in litigation and wins, litigation could redirect a significant portion of Claritas’ resources. Litigation may also create a negative perception of Claritas’ brand.

Claritas may identify a material weakness in its internal control over financial reporting for future fiscal years. If Claritas does not remediate material weaknesses or is unable to implement and maintain effective internal control over financial reporting in the future, the accuracy and timeliness of our financial reporting may be adversely affected.

Claritas may discover future deficiencies in its internal controls over financial reporting, including those identified through testing conducted by itself or subsequent testing by its independent registered public accounting firm. If it is unable to achieve effective internal control over financial reporting, or if its independent registered public accounting firm determines it continues to have a material weakness in its internal control over financial reporting, it could lose investor confidence in the accuracy and completeness of its financial reports, the market price of its Common Shares could decline, and its reputation may be damaged.

If any of Claritas’ products are recalled due to an alleged product defect or for any other reason, Claritas could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall.

Products are sometimes subject to the recall or return for a variety of reasons, including product defects, such as contamination, unintended harmful side effects or interactions with other substances, packaging safety and inadequate or inaccurate labeling disclosure. If any of Claritas products are recalled due to an alleged product defect or for any other reason, Claritas could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall. Claritas may lose a significant amount of sales and may not be able to replace those sales at an acceptable margin or at all. In addition, a product recall may require significant management attention. Although Claritas intends to implement detailed procedures for testing finished products, there can be no assurance that any quality, potency or contamination problems will be detected in time to avoid unforeseen product recalls, regulatory action or lawsuits. Additionally, if one of Claritas’ significant brands were subject to recall, the image of that brand and Claritas could be harmed. A recall for any of the foregoing reasons could lead to decreased demand for Claritas’ products and could have a material adverse effect on the results of operations and financial condition of Claritas. Additionally, product recalls may lead to increased scrutiny of Claritas’ operations by regulatory agencies, requiring further management attention and potential legal fees and other expenses.

Claritas is exposed to the risk of employee fraud and other misconduct.

Employee fraud includes intentional failure to comply with regulations, intentional failure to provide accurate information to regulatory authorities and intentional failure to comply with manufacturing standards. Other misconduct includes failure to report financial information accurately, failure to disclosure unauthorized activities to us, and the improper use of information obtained in the course of clinical trials. Employee misconduct resulting in legal action, significant fines or other sanctions could result in a material adverse effect to Claritas business, results of operations or financial condition.

Claritas relies on the Salzman Group and a very small number of employees and key consultants.

Claritas relies heavily on its relationship with the Salzman Group for its research and development services. If the Salzman Group were to terminate providing its research and development services related to the Company’s business and/or products and/or related technology, there is no assurance that the Company would be able to complete these tasks itself or through an alternate third-party research and development provider. The Company manages its business through a very small number of employees and key consultants. The Company depends on them even more than similarly situated companies. The Company’s success is dependent upon the ability, expertise, judgment, discretion and good faith of its senior management. While employment agreements are customarily used as a primary method of retaining the services of key employees, these agreements cannot assure the continued services of such employees. Any loss of the services of

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such individuals, or an inability to attract, retain and motivate sufficient numbers of qualified senior management could have a material adverse effect on the Company’s business, operating results or financial condition. The Company does not currently carry “key person” insurance on the lives of members of management.

Claritas will need to expand its organization and Claritas may experience difficulties in recruiting needed additional employees and consultants, which could disrupt its operations.

As Claritas’ development and commercialization plans and strategies develop and because Claritas is so leanly staffed, it will need additional managerial, operational, sales, marketing, financial, legal and other resources. The competition for qualified personnel in the pharmaceutical field is intense. Due to this intense competition, Claritas may be unable to attract and retain qualified personnel necessary for the development of its business or to recruit suitable replacement personnel.

Claritas’ management may need to divert a disproportionate amount of its attention away from its day-to-day activities and devote a substantial amount of time to managing these growth activities. Claritas may not be able to effectively manage the expansion of its operations, which may result in weaknesses in its infrastructure, operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. Claritas’ expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of additional product candidates. If Claritas’ management is unable to effectively manage its growth, its expenses may increase more than expected, its ability to generate and/or grow revenue could be reduced and Claritas may not be able to implement its business strategy. Claritas’ future financial performance and its ability to commercialize product candidates and compete effectively will depend, in part, on its ability to effectively manage any future growth.

Claritas may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws and health information privacy and security laws. If Claritas is unable to comply, or have not fully complied, with such laws, Claritas could face substantial penalties.

If Claritas obtains FDA approval for any of its product candidates and begins commercializing those products in the United States, its operations may be directly or indirectly through its customers, subject to various federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute, the federal False Claims Act and physician sunshine laws and regulations. These laws may impact, among other things, Claritas’ proposed sales, marketing and education programs. In addition, Claritas may be subject to patient privacy regulation by both the federal government and the states in which Claritas conducts its business. The laws that may affect its ability to operate include:

the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;
federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other third-party payors that are false or fraudulent;
the Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters;
HIPAA, as amended by the Health Information Technology and Clinical Health Act, and its implementing regulations, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information;
the federal physician sunshine requirements under the Affordable Care Act requires manufacturers of drugs, devices and medical supplies to report annually to the U.S. Department of Health and Human Services information related to payments and other transfers of value to physicians, other healthcare providers and teaching hospitals and ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations; and
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state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers, state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of Claritas’ business activities could be subject to challenge under one or more of such laws. In addition, recent health care reform legislation has strengthened these laws. For example, the Affordable Care Act, among other things, amends the intent requirement of the federal anti-kickback and criminal healthcare fraud statutes. A person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it. Moreover, the Affordable Care Act provides that the government may assert that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the False Claims Act.

If Claritas’ operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, it may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participation in government health care programs, such as Medicare and Medicaid, imprisonment and the curtailment or restructuring of its operations, any of which could adversely affect its ability to operate its business and its results of operations.

If Claritas fails to comply with environmental, health and safety laws and regulations, Claritas could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of its business.

Claritas’ research and development activities and its third-party manufacturers’ and suppliers’ activities involve the controlled storage, use and disposal of hazardous materials, including the components of its product candidates and other hazardous compounds. Claritas and its manufacturers and suppliers are subject to laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials. In some cases, these hazardous materials and various wastes resulting from their use are stored at Claritas’ and its manufacturers’ facilities pending their use and disposal. Claritas cannot eliminate the risk of contamination, which could cause an interruption of its commercialization efforts, research and development efforts, business operations and environmental damage resulting in costly clean-up and liabilities under applicable laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. Although Claritas believes that the safety procedures utilized by its third-party manufacturers for handling and disposing of these materials generally comply with the standards prescribed by these laws and regulations, Claritas cannot guarantee that this is the case or eliminate the risk of accidental contamination or injury from these materials. In such an event, Claritas may be held liable for any resulting damages and such liability could exceed its resources and state or federal or other applicable authorities may curtail its use of certain materials and/or interrupt its business operations. Furthermore, environmental laws and regulations are complex, change frequently and have tended to become more stringent. Claritas cannot predict the impact of such changes and cannot be certain of its future compliance. Claritas does not currently carry biological or hazardous waste insurance coverage.

Security breaches and other disruptions could compromise Claritas’ information, expose Claritas to liability and harm its reputation and business.

In the ordinary course of its business Claritas collects and stores sensitive data, including intellectual property, personal information and its proprietary business information. The secure maintenance and transmission of this information is critical to its operations and business strategy. Claritas relies on commercially available systems, software, tools and domestically available monitoring to provide security for processing, transmitting and storing this sensitive data.

Hackers may attempt to penetrate Claritas’ computer systems, and, if successful, misappropriate personal or confidential business information. In addition, an associate, contractor or other third-party with whom the Company does business with may attempt to circumvent Claritas’ security measures in order to obtain such information, and may purposefully or

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inadvertently cause a breach involving such information. While Claritas continues to implement additional protective measures to reduce the risk of and detect cyber incidents, cyber-attacks are becoming more sophisticated and frequent, and the techniques used in such attacks change rapidly.

Also, Claritas’ information technology networks and infrastructure may still be vulnerable to damage, disruptions or shutdowns due to attack by hackers or breaches, employee error or malfeasance, power outages, computer viruses, telecommunication or utility failures, systems failures, natural disasters, terrorism or other catastrophic events. Any such compromise could disrupt Claritas’ operations, damage its reputation and subject Claritas to additional costs and liabilities, any of which could adversely affect its business.

There are risks associated with having Claritas’ operations located in Israel.

Claritas has operations located in Israel. In addition, certain of Claritas’ officers are residents of Israel. Accordingly, political, economic and military conditions in Israel and the surrounding region may directly affect its business.

Risks Related to Claritas’ Intellectual Property

If Claritas or its licensors are unable to obtain and maintain effective patent rights for its product candidates, Claritas may not be able to compete effectively in its markets. If Claritas is unable to protect the confidentiality of its trade secrets or know-how, such proprietary information may be used by others to compete against Claritas.

Claritas’ success depends in large part on its and its licensors’ ability to obtain and maintain patent and other intellectual property protection in the United States, Canada and in other countries with respect to its proprietary technology and new product candidates.

Claritas has sought to protect its proprietary position by filing patent applications in the United States and in other countries or obtaining licenses, with respect to novel technologies and product candidates, which it considers important to its business. Patent prosecution is expensive and time consuming, and Claritas may not be able to file, prosecute, and maintain all necessary or desirable patent applications at a reasonable cost or in a timely manner or at all. It is also possible that Claritas will fail to identify patentable aspects of its research and development output before it is too late to obtain patent protection or inadvertently disclose the invention before it is protected.

Claritas cannot offer any assurances about which, if any, patent applications that it has filed or in-licensed will issue, the breadth of any such patent or whether any issued patents will be found invalid and unenforceable or will be found to infringe upon the patents or other proprietary rights of third parties. Any successful opposition to its patents after issuance could deprive Claritas of rights necessary for the successful commercialization of any new product candidates that it may develop. Also, there is no guarantee that the patent registration applications that were submitted by Claritas or its licensors with regard to its technologies will result in patent registration. In the event of failure to complete patent registration, Claritas’ developments will not be proprietary, which might allow other entities to manufacture its product candidates and compete with them. Further, there is no assurance that all potentially relevant prior art relating to Claritas’ or its licensors’ patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue, and even if such patents cover Claritas’ product candidates, third parties may challenge their validity, enforceability, or scope, which may result in such patents being narrowed, found unenforceable or invalidated. Furthermore, even if they are unchallenged, Claritas’ or its licensors’ patent applications and any future patents may not adequately protect its intellectual property, provide exclusivity for its new product candidates, or prevent others from designing around its claims. Any of these outcomes could impair Claritas’ ability to prevent competition from third parties, which may have an adverse impact on its business.

If Claritas cannot obtain and maintain effective patent and other intellectual property rights for its product candidates, Claritas may not be able to compete effectively, and its business and results of operations would be harmed.

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Claritas may not be able to identify infringements of its or its licensors’ patents and accordingly the enforcement of its intellectual property rights may be difficult.

The drug substance in some of Claritas’ product candidates may be repurposed, which means that it may become available in other pharmaceutical products for the purpose of treating indications that are different from the indications for its product candidates. It is possible that if Claritas receives regulatory approval to market and sell its drug candidates, some patients that receive a prescription could be sold the same drug substance but not its product candidate. It would be difficult, if not impossible, for Claritas to identify such instances that may constitute an infringement of its patents. In addition, if the drug substance of some of Claritas’ product candidates is repurposed, such substance may not be eligible for patent protection or data exclusivity or may infringe upon third party patents.

If Claritas is unable to maintain effective proprietary rights for its product candidates, Claritas may not be able to compete effectively in its markets.

In addition to the protection afforded by any patent applications currently owned or in-licensed and that may be granted, historically, Claritas has relied on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that Claritas elects not to patent, processes that are not easily known, knowable or easily ascertainable, and for which patent infringement is difficult to monitor and enforce and any other elements of its product candidate discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect. Claritas seeks to protect its proprietary technology and processes, in part, by entering into confidentiality agreements with its employees, consultants, scientific advisors, and contractors. Claritas also seeks to preserve the integrity and confidentiality of its data, trade secrets and intellectual property by maintaining physical security of its premises and physical and electronic security of its information technology systems. Agreements or security measures may be breached, and Claritas may not have adequate remedies for any breach. In addition, Claritas’ trade secrets and intellectual property may otherwise become known or be independently discovered by competitors.

Claritas cannot provide any assurances that its trade secrets and other confidential proprietary information will not be disclosed in violation of its confidentiality agreements or that competitors will not otherwise gain access to its trade secrets or independently develop substantially equivalent information and techniques. Also, misappropriation or unauthorized and unavoidable disclosure of Claritas’ trade secrets and intellectual property could impair its competitive position and may have a material adverse effect on its business. Additionally, if the steps taken to maintain Claritas’ trade secrets and intellectual property are deemed inadequate, Claritas may have insufficient recourse against third parties for misappropriating any trade secret.

Third-party claims of intellectual property infringement may prevent or delay Claritas’ development and commercialization efforts.

Claritas’ commercial success depends in part on it avoiding infringement of the patents and proprietary rights of third parties. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which Claritas is developing new product candidates. As Claritas expands and more patents are issued, the risk increases that its product candidates may be subject to claims of infringement of the patent rights of third parties.

Third parties may assert that Claritas is employing their proprietary technology without authorization. There may be thirdparty patents or patent applications with claims to materials, designs or methods of manufacture related to the use or manufacture of Claritas’ product candidates. There may be currently pending patent applications, some of which may still be confidential, that may later result in issued patents that Claritas’ product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of Claritas’ technologies infringes upon these patents.

If any third-party patents were held by a court of competent jurisdiction to cover aspects of Claritas’ formulations, processes for designs, or methods of use, the holders of any such patents may be able to block Claritas’ ability to develop and commercialize the applicable product candidate unless Claritas obtains a license or until such patent expires or is finally determined to be invalid or unenforceable. A license may not be available on commercially reasonable terms or at all.

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Parties making claims against Claritas may obtain injunctive or other equitable relief, which could effectively block Claritas’ ability to further develop and commercialize one or more of its product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from Claritas’ business. In the event of a successful claim of infringement against Claritas, it may have to pay substantial damages, which in certain jurisdictions may include treble damages and attorneys’ fees for willful infringement, or pay royalties, redesign its infringing product candidates or obtain one or more licenses from third parties, which may be impossible to obtain or require substantial time and monetary expenditure.

Claritas may be involved in lawsuits to protect or enforce its intellectual property, which could be expensive, time consuming, and unsuccessful.

Competitors may infringe Claritas’ intellectual property. If Claritas were to initiate legal proceedings against a third party to enforce a patent covering one of its product candidates, the defendant could counterclaim that the patent covering its product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. Under the Leahy-Smith Act, the validity of U.S. patents may also be challenged in post-grant proceedings before the USPTO. The outcome following legal assertions of invalidity and unenforceability is unpredictable. Legal proceedings would require significant time and resources, even if successful.

Claritas may acquire other companies that could divert its management’s attention, result in additional dilution to its shareholders and otherwise disrupt its operations and harm its operating results.

Claritas may in the future seek to acquire businesses, products or technologies that it believes could complement or expand its product offerings, enhance its technical capabilities or otherwise offer growth opportunities. The pursuit of potential acquisitions may divert the attention of management and cause Claritas to incur various expenses in identifying, investigating and pursuing suitable acquisitions, whether or not they are consummated. If it acquires additional businesses, it may not be able to integrate the acquired personnel, operations and technologies successfully, or effectively manage the combined business following the acquisition. Claritas also may not achieve the anticipated benefits from the acquired business due to a number of factors, including:

incurrence of acquisition-related costs;
diversion of management’s attention from other business concerns;
unanticipated costs or liabilities associated with the acquisition;
harm to its existing business relationships with collaboration partners as a result of the acquisition;
harm to its brand and reputation;
the potential loss of key employees;
use of resources that are needed in other parts of its business; and
use of substantial portions of its available cash to consummate the acquisition.

Risks Related to Ownership of Claritas’ Common Shares

Future sales or the issuances of Claritas’ securities may cause the market price of Claritas’ equity securities to decline.

The market price of Claritas’ equity securities could decline as a result of issuances of securities by Claritas or sales by its existing shareholders of Common Shares in the market, or the perception that these sales could occur. Sales of Common

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Shares by shareholders may make it more difficult for Claritas to sell equity securities at a time and price that Claritas deems appropriate. Sales or issuances of substantial numbers of Common Shares, or the perception that such sales could occur, may adversely affect prevailing market prices of the Common Shares. With any additional sale or issuance of Common Shares, investors will suffer dilution to their voting power and the Company may experience dilution in its earnings per share.

Claritas expects that Claritas’ share price may fluctuate significantly.

The market price of securities of many companies, particularly development stage pharmaceutical companies, experience wide fluctuations in price that are not necessarily related to the operating performance, underlying asset values or prospects of such companies.

The market price of Claritas’ Common Shares could be subject to wide fluctuations in response to many risk factors listed in this section, and others beyond Claritas’ control, including:

Adverse results or delays in Claritas’ planned clinical trials;
Claritas’ failure to commercialize its product candidates, if approved, or develop and commercialize additional product candidates;
Actual or anticipated fluctuations in Claritas’ financial condition and operating results;
Actual or anticipated changes in Claritas’ growth rate relative to Claritas’ competitors;
Competition from existing products or new products that may emerge;
Announcements by Claritas, Claritas’ collaborators or Claritas’ competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;
Failure to meet or exceed financial estimates and projections of the investment community or that Claritas provides to the public;
Issuance of new or updated research or reports by securities analysts;
Fluctuations in the valuation of companies perceived by investors to be comparable to Claritas;
Share price and volume fluctuations attributable to inconsistent trading volume levels of Claritas’ shares;
Additions or departures of key management or scientific personnel;
Disputes or other developments related to proprietary rights, including patents, litigation matters and Claritas’ ability to obtain patent protection for its products;
Announcement or expectation of additional debt or equity financing efforts;
Sales of Claritas Common Shares by Claritas, Claritas’ insiders or Claritas’ other shareholders; and
General economic and market conditions.

These and other market and industry factors may cause the market price and demand for Claritas’ Common Shares to fluctuate substantially, regardless of Claritas’ actual operating performance, which may limit or prevent investors from readily selling their Common Shares and may otherwise negatively affect the liquidity of Claritas’ Common Shares. In

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addition, the stock market in general, and the TSXV and the share prices of pharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. In the past, when the market price of shares has been volatile, holders of those shares have instituted securities class action litigation against the company that issued the shares. If any of Claritas’ shareholders brought a lawsuit against Claritas, Claritas could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of Claritas’ management.

Claritas may be subject to securities litigation, which is expensive and could divert management attention.

The market price of Claritas’ Common Shares may be volatile, and in the past companies that have experienced volatility in the market price of their shares have been subject to securities class action litigation. Claritas may be the target of this type of litigation in the future. Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which could adversely impact Claritas’ business. Any adverse determination in litigation could also subject Claritas to significant liabilities.

Future issuance of Claritas’ Common Shares could cause Claritas’ share price to decline.

Claritas may issue Common Shares in the future. No prediction can be made as to the effect, if any, such future issuances of Common Shares will have on the market price of the Common Shares prevailing from time to time. However, the future issuance of a substantial number of Common Shares by Claritas or the perception that such issuance could occur, could adversely affect prevailing market prices for the Common Shares.

As a venture issuer, Claritas is not required to make representations relating to the establishment and maintenance of disclosure controls and procedures and internal control over financial reporting.

In contrast to the certificate required for non-venture issues under NI 52-109, the certifying officers of Claritas, as a venture issuer, are not required to make representations relating to the establishment and maintenance of disclosure controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”), as defined in NI 52-109. In particular, the certifying officers of Claritas are not required to make any representations that they have:

(i) designed, or caused to be designed, DC&P to provide reasonable assurance that information required to be disclosed by Claritas in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(ii) designed, or caused to be designed, ICFR to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the Claritas’ GAAP.

Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost-effective basis DC&P and ICFR may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

Claritas has not paid dividends on Claritas’ Common Shares to date and Claritas currently intends to retain Claritas’ future earnings, if any, to fund the development and growth of Claritas’ business. As a result, capital appreciation, if any, of Claritas’ Common Shares will be your sole source of gain for the foreseeable future. Consequently, in the foreseeable future, you will likely only experience a gain from your investment in Claritas’ Common Shares if the price of Claritas’ Common Shares increases.

If equity research analysts do not publish research or reports about Claritas’ business or if they issue unfavorable commentary or downgrade Claritas’ Common Shares, the price of Claritas’ Common Shares could decline.

The trading market for Claritas’ Common Shares will rely in part on the research and reports that equity research analysts publish about Claritas and Claritas’ business. Claritas does not control these analysts. The price of Claritas’ Common Shares

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could decline if one or more equity analysts downgrade Claritas’ Common Shares or if analysts issue other unfavorable commentary or cease publishing reports about Claritas or Claritas’ business.

ADDITIONAL INFORMATION

Additional information relating to the Company is available under its profile at www.sedar.com. Financial information is contained in the Company’s financial statements and management’s discussion and analysis for the years ended December 31, 2019 and December 31, 2020. In addition, a Shareholder may obtain copies of the Company’s financial statements and related management’s discussion and analysis, by contacting the Company at Claritas Pharmaceuticals, Inc., 4040 Civic Center Drive, Suite 200, San Rafael, California, 94903, Attn: Robert Farrell.

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SCHEDULE A

ORDINARY RESOLUTION OF SHAREHOLDERS: OPTION PLAN RENEWAL

BE IT HEREBY RESOLVED AS AN ORDINARY RESOLUTION THAT:

The Option Plan as described in the Information Circular of the Company dated May 7, 2021, including the reservation for issuance under the Option Plan at any time of a maximum number of Common Shares equal to 10% of the number of issued and outstanding Common Shares of the Company from time to time, is hereby ratified, confirmed and approved for the year 2021;
The Board be authorized in its absolute discretion to administer the Option Plan (including the entry into any option agreement(s) with any person(s) being granted options under the Option Plan) and amend or modify the Option Plan in accordance with its terms and conditions and with the policies of the TSXV; and
any director or officer of the Company is hereby authorized and directed, acting for, in the name of and on behalf of the Company, to execute or cause to be executed, under the seal of the Company or otherwise and to deliver or to cause to be delivered, all such other deeds, documents, instruments and assurances and to do or cause to be done all such other acts as in the opinion of such director or officer of the Company may be necessary or desirable to carry out the terms of the foregoing resolutions. Any capitalized term not defined in these resolutions shall have the meaning ascribed to it in Claritas Pharmaceuticals, Inc.’s management information circular dated May 7, 2021.

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SCHEDULE B

SPECIAL RESOLUTION OF SHAREHOLDERS: PROPOSED CONSOLIDATION OF COMMON SHARES

BE IT HEREBY RESOLVED AS A SPECIAL RESOLUTION THAT:

The Board be and is hereby authorized, subject to approval of the applicable regulatory authorities, take such actions as are necessary to consolidate all of the issued and outstanding Common Shares of the Company on the basis of a consolidation ratio to be selected by the Board, in its sole discretion, provided that the ratio may be no larger than one post-consolidation Common Share for every 20 preconsolidation Common Shares;
In the event that the consolidation would otherwise result in the issuance of a fractional share, each fractional share that is at least 0.5 of a Common Share will be rounded up to the nearest whole Common Share and each fractional Common Share that is less than 0.5 of a Common Share will be rounded down to the nearest whole Common Share, provided that each Shareholder shall receive at least one (1) Common Share post- consolidation;
the Board be and are hereby authorized without further approval of the Shareholders to modify, vary or amend such terms and conditions in respect of the consolidation as may be required by the regulatory authorities having jurisdiction or as the board of directors may in its sole discretion deem in the best interests of the Company;
the Board is hereby authorized to revoke, without further approval of the shareholders, this special resolution at any time prior to the completion thereof, notwithstanding the approval by the shareholders of same, if determined, in the Board’s sole discretion to be in the best interest of the Company; and
any director or officer of the Company is hereby authorized to execute or cause to be executed and to deliver or cause to be delivered, all such certificates, instruments, agreements, notices and other documents and to do or cause to be done all such other acts and things as such director or officer may determine to be necessary or desirable in order to carry out the intent of this resolution, including but not limited to, the making of all necessary or desirable filings under the BCBCA, such determination to be conclusively evidenced by the execution and delivery of such documents and other instruments or the doing of any such act or thing. Any capitalized term not defined in these resolutions shall have the meaning ascribed to it in Claritas Pharmaceuticals, Inc.’s management information circular dated May 7, 2021.

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SCHEDULE C

SPECIAL RESOLUTION OF SHAREHOLDERS: PROPOSED DISPOSITION OF THE COMPANY’S GVHD PROGRAM

BE IT HEREBY RESOLVED AS A SPECIAL RESOLUTION THAT:

The Board be and is hereby authorized to transfer ownership of all assets of the GVHD program to the Former Shareholders of Talent Biotechs Ltd. in consideration for the release and discharge by the Former Shareholders of all obligations the Company and its subsidiaries may have to such Former Shareholders, including all obligations under the Note, which are approximately $4 million, inclusive of accrued interest, and all contingent liabilities under the SPA, which are approximately $22 million; and
Any director or officer of the Company is hereby authorized to execute or cause to be executed and to deliver or cause to be delivered, all such certificates, instruments, agreements, notices and other documents and to do or cause to be done all such other acts and things as such director or officer may determine to be necessary or desirable in order to carry out the intent of this resolution. Any capitalized term not defined in these resolutions shall have the meaning ascribed to it in Claritas Pharmaceuticals, Inc.’s management information circular dated May 7, 2021.

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SCHEDULE D

CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

The Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Claritas Pharmaceuticals, Inc. (the “Corporation”) shall have the oversight responsibility, authority and specific duties as described below.

COMPOSITION

The Committee shall consist of not less than three directors. No members of the Committee shall be an officer or employee of the Corporation or any of its subsidiaries or any affiliate thereof. A majority of the members must not be control persons of the Corporation or any affiliate of the Corporation. Each Committee member shall satisfy the independence, experience and financial literacy requirements of applicable securities laws, any applicable stock exchange requirements and any other applicable regulatory rules. No member of the Committee shall have participated in the preparation of the financial statements of the Corporation or any subsidiary of the Corporation at any time during the three years prior to appointment to the Committee. Determinations as to whether a particular director satisfies the requirements for membership on the Committee shall be made by the full Board and shall be reviewed at least annually.

If a member of the Committee ceases to satisfy the necessary requirements for membership for reasons outside that member’s reasonable control, the member shall immediately notify the Chairman of the Board as to this fact and shall resign his or her position as a member of the Committee on the earliest of (i) the appointment of his or her successor; (ii) the next annual meeting of shareholders of the Corporation; and (iii) such other date as the Board shall specify, which date shall not be more than six months from the occurrence of the event which caused the member to not satisfy the necessary requirements for membership.

Members of the Committee shall be appointed from time to time by the Board. Each member shall serve until his or her successor is appointed, unless he or she shall resign or be removed by the Board or he or she shall otherwise cease to be a director of the Corporation. Where a vacancy occurs at any time in the membership of the Committee, it may be filled by the Board. The Board shall fill any vacancy if the membership of the Committee is less than three members.

The Chair of the Committee may be designated by the Board or, if it does not do so, the members of the Committee may elect a Chair by vote of a majority of the full Committee membership.

OPERATION

The Committee shall have access to such officers and employees of the Corporation and to such information respecting the Corporation, as it considers to be necessary or advisable in order to perform its duties and responsibilities. The Committee has the authority to engage independent counsel and other advisors as it determines necessary to carry out its duties and to set and pay the compensation for any such counsel and advisors, such engagement to be for the Corporation’s sole account and expense.

Meetings of the Committee shall be conducted as follows:

The Committee shall meet at least four times per year at such times and at such locations as the Chair of the Committee shall determine, provided that meetings shall be scheduled so as to permit timely review of the quarterly and annual financial statements and reports. In addition, a special meeting of the Committee may be called at any time as described in paragraph 2 below.
The Committee shall meet with the external auditors on a regular basis in the absence of management and, if so requested by a member of the Committee, the external auditor shall attend every meeting of the Committee held during the term of office of the external auditor. The Chair of the Committee, the Chairman of the Board, any two members of the Committee or the external auditors may call a special meeting of the Committee. The

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external auditors shall be provided with notice of every meeting of the Committee and, at the expense of the Corporation, shall be entitled to attend and be heard thereat.

The Chair of the Committee shall hold an in camera portion, without management present, at every Committee meeting.
The quorum for meetings shall be a majority of the members of the Committee, present in person or by telephone or by other telecommunication device that permits all persons participating in the meeting to hear each other.
If the Chair of the Committee is not present at any meeting of the Committee, one of the other members of the Committee who is present at the meeting shall be chosen by the Committee to preside at the meeting.
The Chair shall, in consultation with management and any other directors that called the applicable meeting, establish the agenda for the meetings and instruct management to ensure that properly prepared agenda materials are circulated to the Committee with sufficient time for study prior to the meeting.
Every question at a Committee meeting shall be decided by a majority of the votes cast.
The Chief Executive Officer of the Corporation shall be available to advise the Committee, and may attend meetings at the invitation of the Chair of the Committee. Other management representatives and/or Board members may be invited to attend.
The Corporate Secretary shall act as secretary for the purposes of recording the minutes of each meeting. If no Corporate Secretary has been appointed or the Corporate Secretary is not present at the meeting, a Committee member, or any other person selected by the Committee, shall be appointed at each meeting to act as secretary for the purpose of recording the minutes of each meeting.
The Committee may delegate from time to time to any person or committee of persons any of the Committee’s responsibilities that may be delegated under applicable stock exchange rules and securities laws.

The Committee may contact directly any employee or consultant of the Corporation as it deems necessary and any employee may bring before the Committee any matter on a confidential basis involving matters within the purview of the Committee.

The Committee shall provide the Board with a summary of all meetings together with a copy of the minutes from such meetings. Where minutes have not yet been prepared, the Chair shall provide the Board with oral reports on the activities of the Committee. All information reviewed and discussed by the Committee at any meeting shall be retained and made available for examination by the Board upon request to the Chair.

RESPONSIBILITIES

The Committee is part of the Board. Its primary function is to assist the Board in fulfilling its oversight responsibilities in relation to the review and approval of the financial statements and financial reporting of the Corporation and the assessment of internal control and management information systems of the Corporation and to assist the Board in fulfilling its oversight responsibilities generally. The Committee shall also be directly responsible for overseeing all audit processes and the relationship of the external auditors with the Corporation and the external auditors shall report directly, and be accountable, to the Committee.

The role of the Committee is one of supervision, stewardship and oversight.

Management is responsible for preparing the financial statements and financial reporting of the Corporation and for maintaining internal control and management of information. The external auditors are responsible for the audit or review of the financial statements and other services they provide.

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The Committee shall have access to such information respecting the Corporation as it considers to be necessary or advisable in order to perform its duties and responsibilities.

Committee members will be provided training and exposure to knowledge and information required to fulfill their responsibilities, as determined by the Committee.

SPECIFIC DUTIES

1. Financial Statements and Financial Reporting

The Committee shall:

(a) review with management and the external auditors, and recommend to the Board for approval, the annual financial statements of the Corporation, the reports of the external auditors thereon and related financial reporting, including Management’s Discussion and Analysis and press releases containing financial results, prior to the public disclosure of such information;
(b) review with management and the external auditors, and approve, the interim financial statements of the Corporation and related financial reporting, including Management’s Discussion and Analysis and press releases containing financial results, prior to the public disclosure of such information;
(c) review with management and recommend to the Board for approval, any Annual Report or Annual Information Form of the Corporation;
(d) review with management and recommend to the Board for approval, any financial statements of the Corporation which have not previously been approved by the Board and which are to be included in a prospectus of the Corporation or any other document required to be filed or publicly disclosed pursuant to applicable legal and regulatory requirements;
(e) consider and be satisfied that adequate procedures are in place for the review of the Corporation’s public disclosure of financial information extracted or derived from the Corporation’s financial statements (other than disclosure referred to in clauses (a) and (b) above), and periodically assess the adequacy of such procedures;
(f) review with management, the external auditors and, if necessary, legal counsel, any litigation, claim or contingency, including tax assessments, that could have a material effect upon the financial position of the Corporation, and the manner in which these matters may be, or have been, disclosed in the financial statements;
(g) review the appropriateness of the accounting practices and policies of the Corporation and review any proposed changes thereto;
(h) review and discuss any new or pending developments in accounting and reporting standards that may affect the Corporation; and
(i) review accounting, tax and financial aspects of the operations of the Corporation as the Committee considers appropriate.

2. Relationship with External Auditors

The Committee shall:

(a) be directly responsible for the appointment or re-appointment, and retention, of the external auditors, ensuring that such auditors are participants in good standing pursuant to applicable securities laws;

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(b) review and approve the compensation of the external auditors;
(c) review and approve the annual audit plan of the external auditors (including without limitation, engagement letters, objectives and scope of the external audit, procedures for quarterly review of financial statements, materiality limits, areas of audit risk, staffing, timetables and proposed fees);
(d) oversee the work of the external auditors in performing their audit, review and/or attestation services (as applicable) and oversee the resolution of any disagreements between management and the external auditors;
(e) review and discuss with the external auditors all significant relationships that the external auditors and their affiliates have with the Corporation and its affiliates in order to determine the external auditors’ independence, including, without limitation, (i) requesting, receiving and reviewing, on a periodic basis, a formal written statement from the external auditors delineating all relationships that may reasonably be thought to bear on the independence of the external auditors with respect to the Corporation, (ii) discussing with the external auditors any disclosed relationships or services that the external auditors believe may affect the objectivity and independence of the external auditors, and (iii) recommending that the Board take appropriate action in response to the external auditors’ report to satisfy itself of the external auditors’ independence;
(f) as may be required by applicable securities laws, rules and guidelines, either:
(i) pre-approve all non-audit services to be provided by the external auditors to the Corporation (or its subsidiaries, if any), or, in the case of de minimis non-audit services, approve such nonaudit services prior to the completion of the audit; or
(ii) adopt specific policies and procedures for the engagement of the external auditors for the purpose of the provision of non-audit services;
(g) be satisfied that the fees paid by the Corporation to the external auditors for audit and non-audit services are publicly disclosed to the extent required under applicable securities laws; and
(h) review and approve the hiring policies of the Corporation regarding partners, former partners, employees and former employees of the present and former external auditors of the Corporation.

3. Internal Controls

The Committee shall:

(a) review with management and the external auditors, the adequacy and effectiveness of the internal control and management information systems and procedures of the Corporation (with particular attention given to accounting, financial statements and financial reporting matters and to being satisfied that such systems are reliable and that they operate effectively to produce accurate, appropriate and timely management and financial information) and determine whether the Corporation is in compliance with applicable legal and regulatory requirements and with the Corporation’s policies;
(b) review the external auditors’ recommendations regarding any matters, including internal control and management information systems and procedures, and management’s responses thereto;
(c) establish procedures for the receipt, retention and treatment of complaints, submissions and concerns regarding accounting, internal accounting controls or auditing matters on an anonymous and confidential basis;

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(d) review policies and practices concerning the expenses and perquisites of the Chief Executive Officer of the Corporation, including the use of the assets of the Corporation;
(e) review with external auditors any corporate transactions in which directors or officers of the Corporation have a personal interest;
(f) review material litigation and its impact on financial reporting; and
(g) review policies and procedures for the review and approval of officers’ expenses and perquisites.
At least annually, review and make recommendations to the Nominating and Corporate Governance Committee with respect to this mandate.
Perform any other activities consistent with this mandate and governing laws as the Committee or the Board deems necessary or appropriate.

FUNDING

The Corporation will provide adequate funding, as determined by the Committee, for payment of:

compensation of the external auditors;
any independent counsel or other advisors engaged pursuant to this mandate; and
ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.

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AI assistant

Claritas Pharmaceuticals, Inc. — Proxy Solicitation & Information Statement 2021

45562_rns_2021-05-14_6489af4a-c4b9-46cc-8e1e-828b386b2f5f.pdf

Claritas Pharmaceuticals, Inc.

NOTICE OF MEETING

AND

Claritas Pharmaceuticals, Inc.

NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

BY ORDER OF THE BOARD OF DIRECTORS

Claritas Pharmaceuticals, Inc.

MANAGEMENT INFORMATION CIRCULAR

FOR FISCAL YEARS 2019 AND 2020

FORWARD-LOOKING STATEMENTS

NOTICE TO SHAREHOLDERS NOT RESIDENT IN CANADA

EXCHANGE RATE INFORMATION

Year ended December 31

APPOINTMENT AND REVOCATION OF PROXIES

ADVICE TO BENEFICIAL SHAREHOLDERS

VOTING OF PROXIES

VOTING SHARES AND PRINCIPAL HOLDERS THEREOF

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

MANAGEMENT CONTRACTS

RESTRICTED SECURITIES

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Introduction

Compensation Philosophy and Objectives of the Compensation Program

What the Compensation Program is Designed to Reward

Each Element of Compensation and Why the Company Chooses to Pay Each Element

How the Company Determines the Amount for Each Element

Base Salaries

Cash Bonuses

Options

Termination and Change of Control Benefits

Summary Compensation Table

Notes:

Compensation Securities

Notes:

Exercise of Options During the Year

Pension Plan Benefits

DIRECTORS’ COMPENSATION

Overview

Summary Compensation Table

Compensation Securities

Notes:

Exercise of Options

CORPORATE GOVERNANCE

Board of Directors

Orientation and Continuing Education

Nomination of Directors

Ethical Business Conduct

Board Committees

Audit Committee

Composition

Relevant Education and Experience

Audit Committee Charter

Auditor’s Fees

Notes:

Nominating and Corporate Governance Committee

Compensation Committee

Assessments

MEETING MATTERS

1. Financial Statements

2. Election of Directors

Notes:

Biographies of Directors

Robert Farrell –Chairman, CEO, President

Prof. Salvatore Cuzzocrea – Director

Dr. Perenlei Enkhbaatar – Director

Corporate Cease Trade Orders or Bankruptcies

Personal Bankruptcies

Penalties or Sanctions

3. Appointment of Auditors

The persons designated as proxyholders in the accompanying form of proxy (absent contrary directions) intend to vote FOR the appointment of the auditors as set forth above.

4. Renewal of Option Plan

5. Approval of Consolidation

General

Claritas Pharmaceuticals, Inc. Proxy Solicitation & Information Statement 2021