Pediapharm Inc. and Laboratorios SALVAT S.A. Enter Into a License and Supply Agreement for a Novel Patented Combination Product Developed to Efficiently Treat Ear Infections

BARCELONA, SPAIN and MONTREAL, QUEBEC--(Marketwired - Oct. 8, 2014) -

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Pediapharm Inc. ("Pediapharm" or the "Company") (TSX VENTURE:PDP) and Laboratorios SALVAT S.A., Ltd. ("SALVAT") announced today they have entered into an agreement to grant Pediapharm the exclusive Canadian rights to a novel patented formulation of Ciprofloxacin 0.3% and Fluocinolone Acetonide 0.025% otic solution. Pediapharm intends to register the combination product for 2 indications in adults and children older than 6 months old: 1) acute otitis media in patients with tympanostomy tubes ("AOMT"); 2) acute otitis external (swimmer's ear).

In addition to the recent results from two phase III trials in patients suffering from AOMT, SALVAT has been commercializing with success this combination product indicated for otitis externa (swimmer's ear) since 2011 in several European countries.

"SALVAT is pleased to be expanding patient and physician access to our new otic formulation of Ciprofloxacin and Fluocinolone Acetonide through this new agreement with Pediapharm," said Alberto Bueno, Chief Executive Officer of SALVAT. "We are dedicated to improving the quality of life of patients by developing innovative products and finding partners worldwide that share our vision. We look forward to collaborating with Pediapharm in order to achieve this goal."

"Our business development pipeline is very exciting as companies are more than ever conscious of the needs of the pediatric population. Developing formulations or delivery systems that are better adapted to children is critical and should be encouraged. In particular, SALVAT's novel formulation presented in sterile unit-dose format is very convenient for adults, but even more so for parents or caregivers who need a simple and precise administration method in children", said Benoît Hébert, Pediapharm's Vice President of Business Development and Licensing. "We are quite impressed with the SALVAT team and the quality of the development program they managed."

"This transaction will eventually bring an important addition to our portfolio of innovative products. Our previous experience in the area of infectious diseases is telling us that the unique attributes of this product will translate into commercial success", said Sylvain Chrétien, President and Chief Executive Officer of Pediapharm Inc. "This transaction is our third in 2014 confirming once again our ability to further strengthen our product pipeline and we remain confident in Pediapharm's goal to add further products before the end of the fiscal year" concluded Mr. Chretien.

Pediapharm intends to register the product with Health Canada in 2015 and, if approved, expects to launch the product by the end of 2016.

About Ciprofloxacin 0.3% plus Fluocinolone Acetonide 0.025% Otic Solution

Ciprofloxacin 0.3% Otic Solution plus Fluocinolone Acetonide 0.025% Otic Solution is a new combination that can be equally used to treat external ear infections (Otitis Externa), and reach the middle ear for the treatment of Acute Otitis Media in children with tympanostomy tubes. It will be available in preservative-free, single-use containers which safeguard sterility at each dose and make it easy to ensure correct dosing and application of drops into the ear.

Acute Otitis Media with Tympanostomy Tubes (AOMT) is characterized by the presence of otorrhea, following the insertion of a tympanostomy tube into the eardrum. This insertion is a surgical procedure intended to treat the effusion that usually accompanies a middle ear inflammation, and complications appear quite commonly, being otorrhea the most frequent.

SALVAT markets different forms of its otic combination solution through its proprietary sales team in Spain and through its network of licensees and distributors in the majority of the markets outside the United States.

About Pediapharm Inc.

Pediapharm is the only Canadian specialty pharmaceutical company dedicated to serving the needs of the pediatric community. Its mission is to bring to the Canadian market the latest innovative pediatric products with the objective to improve the health and the well-being of children in Canada. Since its debut in 2008, Pediapharm has entered into numerous commercial agreements with partners from Canada and other countries around the world.

About Laboratorios SALVAT S.A.

Based in Barcelona (Spain), SALVAT is a privately owned pharmaceutical group closely identified with technological innovation and strongly committed to R&D. Founded in 1955 SALVAT has presence in over 60 countries worldwide in collaboration with well-reputed pharmaceutical partners. SALVAT is working to strengthen its international presence by licensing its own developments. SALVAT launched Cetraxal® Otic, a ciprofloxacin 0.2% otic solution in the US in 2009 and is currently working on the submission to the US FDA of an NDA for its second otic development. Further information about Laboratorios SALVAT, S.A. can be found at www.salvatbiotech.com

FORWARD LOOKING STATEMENTS FOR PEDIAPHARM

This news release contains forward-looking statements and other statements that are not historical. Such forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that could cause actual results to vary materially from target results and the results or events predicted in these forward-looking statements. As a result, investors are cautioned not to place undue reliance on these forward-looking statements.

The forward-looking statements contained in this news release are made as of the date of this release. Except as required by applicable law, the Corporation disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking information reflects the current expectations or belief of the Corporation based on information currently available and such information is subject to a number of assumptions, risks and uncertainties described in details at pp. 35 to 41 of the Management Information Circular of Chelsea Acquisition Corporation dated November 12, 2013 available on SEDAR at www.sedar.com and other risks associated with being a specialty pharmaceutical company.

For more information about Pediapharm or its products, please visit www.pedia-pharm.com.

For more information about SALVAT or the Company's products, please visit www.salvatbiotech.com.

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