Year End 2018 Shareholder Letter

January 2, 2019

Dear Shareholders and Stakeholders,

Now that 2018 has ended, I would like to provide an update to our external shareholders and stakeholders. First, I would like to reaffirm that the potential of the Alitair pipeline remains strong and relevant in terms of meeting unmet medical needs. Our valuation has held firm. And, helping treat respiratory disease and providing solutions for the Opioid Crisis are central to our mission.

Key Initiatives - 2018 progress

Product Development: Successfully completed pilot formulation work for two narcotic cough products (both analytical and resin binding work), manufactured ALT-09 clinical trial material for a key animal study designed to strengthen IP, identified and engaged a significant contract manufacturer for the ion-exchange resin portfolio.

Regulatory and IP: Successfully renewed orphan drug designation and IND status with FDA for ALT-09, successfully renewed orphan drug designation with FDA for ALT-07, engaged a leading IP firm to manage key patent components.

Government Agencies: Secured required quota approval from DEA for raw material purchases (codeine, hydrocodone and pseudoephedrine), completed filing and payment for Delaware franchise tax which maintains the company’s “Certificate of Good Standing”.

Business Development: Participated in 2018 JP Morgan Healthcare and BIO International conferences, initiated discussions with potential strategic partners for ODR, launched an initiative to out-license non-core assets in the OTC space.

Strategic Partners: Re-established executive-level relationships with our existing pharma development partners for ALT-07 and ALT-09, refined the existing ALT-07 contract to gain an additional indication and geographic scope.

Financial Controls/ Corporate Governance: Established Quarterly Board Meetings, strengthened internal financial controls and reporting, implemented a new cash management process with a new banking partner, rolled out a formal expense account management system and a virtual payroll system, launched a best-in-class electronic data room to add efficiency to the Due Diligence process, updated financial forecasts for core assets which have been validated by investment banking partners, developed an updated corporate valuation model.

Update on Prior Commitment to Investor Relations

In the August Investor Letter, I committed to 3 key initiatives to improve the Alitair Investor Relations communications process. As a management team, we committed to completing these items within 60 days of closing with our major funders.

I am pleased to announce that we will go live with a new Alitair website, with up-to-date content and a 'sign-up" tab for ongoing outbound communications, earlier than planned. This new site will launch by January 14th, 2019 at You may also want to follow Alitair on Facebook as we launched our social media presence mid-year.

And, we continue to hold to our prior commitments on the remaining items.

  1. Initiate a quarterly IR newsletter to shareholders

  2. Launch an electronic, web-based book entry listing of existing stock certificates using American Stock Transfer (AST) as our Transfer Agent. This will provide you with a web portal to view your Alitair holdings, provide us with updated contact information and provide you a mechanism to transfer shares to your individual brokerage account if/when Alitair shares are listed on a public exchange.

Market Environment Remains Positive for Alitair Pipeline Opportunities

The opportunity to meet unmet medical needs is a cornerstone of the Alitair business model. Our pipeline of Overdose Reduction (ODRTM) formulation technology, NonNarcotic and Narcotic prescription cough products, and Orphan Drugs for rare diseases all hold great promise and will be key value drivers to grow our enterprise valuation over time.

Capital Requirements

Our most critical issue to address is the need for capital. Alitair requires additional money to fund its 24-month Clinical Development Plan and for General Corporate Purposes. I am limited to what I can say as Alitair is working through the final stages of a closing process to raise capital with two funding sources -- one a new investment fund that targets Alternate Investment from endowment funds of major non-profit health systems, and the other a Healthcare Investment Bank.

Together, these two entities will potentially provide up to $30 million in new capital to help grow our company. The investment fund committed to a future funding of up to $10 million as well. Due to confidentiality agreements, I can't share the names of these financial partners today, however I will share more details once we finalize all closing documents, have a firm closing date, and exit our confidentiality period. It is critical that we receive this new capital and the Alitair executive team is highly focused on that task.

Management is also exploring alternative funding opportunities as a contingency and we will be active participants at the upcoming JP Morgan Healthcare Conference in January 2019.


This has been a challenging period for Alitair as our new management team came on board and worked towards raising sufficient capital to progress our robust pipeline. I believe we are nearing the end of that phase, and once the closing is complete, we can focus on execution of the clinical development plans. Please refer to the Alitair Forward-Looking Statement (below) for full disclosure.

Thank you for your past investment in Alitair and for your patience as we worked through this challenging, yet exciting, period over the past 12-18 months.

Lastly, I hope you had a safe and joyous holiday season and best wishes for the new year.

On behalf of Alitair, and the entire Management team,

James Hoyes

Chief Executive Officer

Alitair Forward-Looking Statement

The information contained in this January 2019 Investor Letter may contain information about the Company’s future plans and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical facts and may be "forward looking statements". Forward looking statements may be identified through the use of words such as “may”, "expects/excepted", "will", "anticipates", “allows”, "estimates", "believes", “provides” or by statements indicating certain actions "may", "could", "should" or "might" occur. Forward looking statements are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. The information contained in this January 2019 Investor Letter was current as of the date prepared and we specifically disclaim any obligation to update any forward-looking statements, whether as a result of new information, future developments, or otherwise.

Version: 01.02.2019

Alitair Pharmaceuticals