Arbitration Panel Finds that Syneos Health (NASDAQ

SYNH) Failed to Use Commercially Reasonable Efforts in Conducting its Trial for FSD 201

FSD Pharma Inc. (NASDAQ: HUGE) (CSE: HUGE) (FRA: 0K9A) (“FSD Pharma” or the “Company”), a biopharmaceutical company dedicated to building a portfolio of innovative assets and biotech solutions for the treatment of challenging neurodegenerative and metabolic disorders, today announces that the Arbitration Panel Finds that Syneos Health (NASDAQ: SYNH) Failed to Use Commercially Reasonable Efforts in Conducting its Trial for FSD 201.

In January 2022, Syneos Health (NASDAQ: SYNH) filed an arbitration proceeding against FSD Pharma claiming that the Company owed Syneos Health (NASDAQ: SYNH) USD$3,915,388.69 in damages and interest on that amount for a failed Phase II FDA trial for FSD 201. Syneos Health (NASDAQ: SYNH) also sought an order requiring FSD to pay its legal expenses.

The trial originally required the enrollment of 350 patients in North America; the geographic scope was later expanded to include several South American countries and 35 sites in total (25 in N. America and 10 in S. America).

Syneos Health’s (NASDAQ: SYNH) track record of enrollment during the trial was abysmal:

• Seven months into the trial, Syneos Health had not enrolled a single patient.

• By mid May 2021, over nine months into the trial, Syneos Health had enrolled fewer than 50 patients. The enrollment deadline, which had already been extended once, was 6/15/21. FSD terminated the trial in August 2021.

FSD disputed that it owed anything to Syneos Health, much less nearly USD$4 million, and countersued Syneos Health for breach of contract. In fighting back, FSD made clear that it was not going to be bullied by a large CRO.

On May 19, 2023, a three-arbitrator panel issued an award finding, among other things, that Syneos Health breached its contractual obligations because “given Syneos Health’s poor success at patient enrollment despite its self-described ‘extraordinary’ efforts, it was not commercially reasonable for it to continue to throw good money after bad in circumstances where the money in question was FSD’s.” The Panel awarded Syneos Health US$1,707,830.52 in damages plus interest for certain unpaid invoices essentially because FSD’s former management did not timely object and dispute those invoices in strict adherence with the boilerplate dispute resolution provisions in Syneos Health’s form agreement. The damage award is nevertheless less than 50% of what Syneos Health had demanded, as well as substantially less than what Syneos Health had offered to accept in settlement. The Panel also denied Syneos Health’s request for the payment of attorneys’ fees and litigation expenses.