Bod Australia Limited announced that it has entered into an exclusive Licence and Supply Agreement ("LSA") with Australia's largest generic pharmaceutical and private label over the counter (OTC) medicines company Arrotex Pharmaceuticals ("Arrotex") to licence and supply a unique CBD medicine designed for Australia's Schedule 3 (pharmacist only) market. The LSA includes a five-year supply agreement term, which will underpin Bod's growing revenue profile. Under the agreement, Bod will develop a unique Schedule 3 (Pharmacist Only) CBD medicine for Arrotex which will be exclusively licensed to Arrotex for an upfront fee of $500,000, and Arrotex has committed to a five-year supply agreement with Bod for the finished product.

The final product will be supplied to Arrotex following satisfactory completion of Bod's phase IIb clinical trial and its subsequent receipt of regulatory approval and an ARTG registration. Bod grants Arrotex exclusivity for one of the unique product formulations and delivery methods of its Schedule 3 (pharmacist only) CBD product. Bod will receive an upfront fee of $500,000 for exclusivity on the product formulation and delivery method, which is payable by Arrotex within 30 days from signing of the agreement.

The fee is refundable if clinical trials are not satisfactorily completed by 30 June 2023 or a grant of regulatory approval for the medicine is not obtained by the end of August 2024 ("Conditions Subsequent"). The agreement contains a minimum five-year binding supply agreement under which Bod will receive revenue for supplying the product formulation and delivery method ("Supply Agreement"). The Supply Agreement is subject to satisfaction of the Conditions Subsequent and may be terminated by Arrotex for, among other customary circumstances, Bod's material breach of the agreement that is unable to be remedied.

The five-year supply term demonstrates the Company's ability to commercialise its drug development pipeline and product innovation initiatives. It also provides Bod with another consistent revenue stream over the coming years and highlights the Company's ability to deliver high quality, scientifically proven solutions to another large corporate partner.