Company to Continue Operating Business and Serving Customers As Usual

Aralez Pharmaceuticals Inc. announced today that it intends to enter into purchase agreements with two separate stalking-horse purchasers to sell its main operating businesses:  an agreement to sell its VIMOVO® royalties and Canadian operations to Nuvo Pharmaceuticals Inc. (“Nuvo“) in a transaction valued at U.S.$110 million and an agreement to sell its TOPROL-XL® Franchise to its secured lender, certain funds managed by Deerfield Management Company, L.P., in a transaction valued at U.S.$140 million. The Company is also engaged in ongoing efforts to sell the assets not being sold in either of the proposed transactions and intends to wind down its operations following the consummation of the sales.

The letters of intent signed with each of Nuvo and the Company’s secured lender included the material terms of each of the proposed transactions. Each proposed transaction is subject to entry into mutually agreeable definitive agreements, and in the case of Nuvo, obtaining committed financing, which is expected to be provided by the Company’s secured lender. Aralez has agreed to negotiate exclusively with Nuvo (with respect to the assets subject to the proposed transaction with Nuvo) until August 19, 2018. Closing of each proposed transaction is subject to the receipt of applicable regulatory approvals and the satisfaction or waiver of other customary closing conditions. The proposed transactions are not conditioned on one another and will be subject to approval by the applicable courts supervising the Restructuring Proceedings described below.

To facilitate the transactions, Aralez, along with its Canadian subsidiary, Aralez Pharmaceuticals Canada Inc., has elected to commence voluntary proceedings under Canada’s Companies’ Creditor Arrangement Act (the “CCAA“) in the Ontario Superior Court of Justice.  In connection with these proceedings, Aralez’s subsidiaries incorporated in the United Statesand Ireland have elected to file voluntary petitions under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York (together with the CCAA proceedings, the “Restructuring Proceedings“).

“Following a thorough financial and strategic review, we believe that these sales, together with an auction process under court supervision are in the best interests of the Company and its stakeholders,” said Adrian Adams, Chief Executive Officer of Aralez.

Aralez, together with its subsidiaries, intends to seek and obtain customary relief from the courts to permit it to continue to operate its business in the ordinary course without interruption during the sale process. In addition, Aralez has obtained commitments for debtor-in-possession (“DIP“) financing of approximately U.S.$15 million, from its secured lender, which is subject to approval of the courts. The Company intends to use the proceeds from the DIP financing, in addition to cash flow from operations, to pay for all goods and services from vendors provided after the CCAA and Chapter 11 filing date in accordance with their current terms. In addition, the Company and its subsidiaries have filed a number of customary pleadings seeking authorization from the courts to pay certain pre-petition obligations, support their business operations and transition them through the Restructuring Proceedings and the sale process. These include the payment of employee wages, salaries and benefits, and certain obligations to vendors.

The sales and Restructuring Proceedings are the culmination of a previously announced financial and strategic review undertaken by the board of directors of the Company. While the Company continued to address and improve its financial profile through several cost savings initiatives, corporate restructurings (including of the discontinuation of its U.S. commercial operations) and the Payment In Kind deferral of its July 1, 2018 interest payment until August 15, 2018, it became increasingly apparent during the course of the board’s financial and strategic review, that absent the legal protection afforded through the Restructuring Proceedings, the Company’s cash position would continue to deteriorate.

Following completion of the board’s strategic review, after careful consideration of all available alternatives and having given due consideration to the interests of all stakeholders, the boards of directors of the Company and each of its North American and Irish subsidiaries, with the assistance, input and advice from legal and financial advisors, have unanimously determined that a sale process under court supervision is in the best interests of the companies. Rob Harris, a director of the Company, abstained from voting on these matters due to a potential conflict of interest relating to the ongoing sale process. In connection with the filing and to facilitate the administration of the Restructuring Proceedings more efficiently, the size of the Board of Directors of the Company has been reduced to four members, consisting of: Arthur Kirsch (Chair), Kenneth Lee, Martin Thrasher, and Adrian Adams, with the following directors resigning: Seth Rudnick, Neal Fowler and Rob Harris.

Aralez is being advised by Moelis & Company LLC and Alvarez & Marsal as its financial advisors and Willkie Farr & Gallagher LLP and Stikeman Elliott LLP as U.S. and Canadian legal counsel, respectively.