Early Warning News Release

TORONTO, July 5, 2016 /CNW/ - On July 5, 2016, 1207407 Ontario Limited ("1207407"), an entity wholly-owned by Dr. John D. Mull, filed an early warning report with respect to Cipher Pharmaceuticals Inc. ("Cipher"). 

As of the date hereof, 1207407 owns 9,386,150 common shares of Cipher ("Common Shares") representing approximately 36% of the issued and outstanding Common Shares.  Dr. John D. Mull, a director of Cipher and the founder of CML Healthcare Inc., personally owns 294,649 Common Shares.  In addition, Craig Mull (Dr. Mull's son) and Dr. Mull's wife own 434,324 Common Shares and 17,700 Common Shares, respectively.  As a result, 1207407 and entities or persons with which it may be considered to be a joint actor own and control 10,132,823 Common Shares representing approximately 38.72% of the issued and outstanding Common Shares.

Dr. John D. Mull and Craig Mull have and intend to engage with the board of directors of Cipher regarding Cipher, its business and prospects and potential means for enhancing shareholder value including, without limitation, with respect to changes in the composition of the board of directors of Cipher (which may include seeking to add nominees or removing individual directors) and potential changes in management of Cipher.  In connection with the foregoing and if necessary, 1207407 and entities or persons with which it may be considered to be a joint actor may requisition a meeting of shareholders of Cipher, solicit proxies in connection therewith and enter into discussions with other shareholders of Cipher regarding Cipher and its business.

In particular, Dr. John D. Mull and Craig Mull have expressed concerns regarding Cipher and its business to the board of directors of Cipher and have requested, among other things, that (i) the size of the board of directors be decreased immediately to a more efficient size which board of directors would be comprised of, among others, Dr. John D. Mull and Craig Mull; (ii) the re-constituted board of directors of Cipher conduct a review of Cipher's senior management team; and (iii) the re-constituted board of directors of Cipher consider other cost saving initiatives and a review Cipher's business plan generally. 

Dr. John D. Mull and Craig Mull have had discussions with Montrusco Bolton Investments Inc. ("Montrusco") with respect to the foregoing matters.  1207407 believes that Montrusco is Cipher's second largest shareholder holding approximately 2,272,032 Common Shares or approximately 8.68% of the issued and outstanding Common Shares.  Montrusco has expressed its support for the foregoing initiatives of 1207407.  At this time, 1207407 does not believe that Montrusco and 1207407 are "joint actors" within the meaning of applicable securities laws.  Montrusco has expressed its desire to 1207407 to have a nominee of its selection appointed to the board of directors of Cipher.  1207407 and the entities or persons with which it may be considered to be a joint actor are supportive of this request.

1207407 and entities or persons with which it may be considered to be a joint actor hold their respective shares for investment purposes and may, depending on market and other conditions, increase or decrease their respective beneficial ownership and control or direction over Common Shares through market transactions, private agreement purchases, treasury issuances, convertible securities or otherwise.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release constitute forward-looking statements, such as statements relating to the ability of 1207407 to effect change to the board of directors of Cipher. Such statements reflect 1207407's current intention and current information based on the number of issued and outstanding shares of Cipher as reported by Cipher. Forward looking statements contained in this press release are subject to certain risks and uncertainties. Actual results may differ from those in the forward looking statements should one or more of these risks or uncertainties materialize. Such risks include, but are not limited to, lack of cooperation from the current board and management of Cipher regarding the initiatives being put forward by 1207407, the conduct or timing of any shareholders meeting requisitioned by 1207407 and any potential actions that may be taken by the current board and management of Cipher in an attempt to thwart any efforts to bring change to the board. All such factors should be considered carefully when making decisions with respect to Cipher, and undue reliance should not be placed on 1207407's forward looking statements. 1207407 does not undertake to update any forward looking statements, whether written or oral, that may be made from time to time by or on its behalf, except as required under applicable law.

SOURCE 1207407 Ontario Limited

For further information: including to obtain a copy of the early warning report to which this press release relates, a copy of which has also been filed on www.sedar.com, please contact: Dr. John D. Mull, 8400 Jane Street, Suite 200A, Concord, Ontario, L4K 4L8, (416) 775-5382

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1207407 Ontario Limited

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