NVLN Novelion Therapeutics Inc

PROPOSAL NO. 1: APPROVAL OF LIQUIDATION RESOLUTION

AND

PROPOSAL NO. 2: APPROVAL OF LIQUIDATOR RESOLUTION

General

        We are seeking shareholder approval of the Liquidation Resolution and the Liquidator Resolution at the Annual Meeting. The Liquidation Plan was unanimously approved by the Board on September 18, 2019, subject to shareholder approval. The Board recommends that you vote "FOR" the approval of the Liquidation Resolution and "FOR" the approval of the Liquidator Resolution.

        On May 20, 2019, the Company, Aegerion, Amryt and certain other parties entered into a restructuring support agreement, and Aegerion and Amryt entered into a plan funding agreement, which, among other things, set forth the terms and conditions of the Aegerion Recapitalization. To facilitate the Aegerion Recapitalization, Aegerion and its U.S. subsidiary Aegerion Pharmaceuticals Holdings, Inc. filed voluntary petitions under Chapter 11 of Title 11 of the United States Code (the "Chapter 11 Proceedings") in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"). Under the chapter 11 plan, which was confirmed by the Bankruptcy Court on September 10, 2019, the Company's existing approximately $36 million intercompany secured loan to Aegerion will be allowed in full as a claim in the Chapter 11 Proceedings. In satisfaction of this claim, the Company will receive a distribution of Amryt equity under the Aegerion Recapitalization, which is projected to represent approximately 8.1% equity ownership of Amryt on a pro forma basis, prior to dilution from other equity interests to be issued following the Aegerion Recapitalization (the "Amryt Equity"). The Aegerion Recapitalization is expected to close on [    ·    ], 2019.

        It is anticipated that, following the conclusion of the Aegerion Recapitalization, the Company will retain its existing cash balances and net operating loss ("NOL") carryforwards (subject to applicable tax laws). The value, if any, of such NOL carryforwards is expected to be minimal. Any remaining cash balances of the Company are also expected to be minimal, and will continue to decrease throughout the course of the liquidation and dissolution of the Company as administrative expenses will continue to be incurred and as currently existing obligations and liabilities are satisfied, including the payment of employee severance obligations. Accordingly, the Company will need to monetize at least a portion of the Amryt Equity in order to help fund this process. Therefore, the unsold Amryt Equity will be the only remaining material asset of Novelion and any distributions made to shareholders in connection with the Liquidation will consist almost entirely of the Amryt Equity, any remaining proceeds from the sale of a portion of the Amryt Equity by the Company in order to fund the Company's expenses, including the expenses of the Liquidation, or a combination thereof, net of the Company's liabilities.

Background of the Transactions and Discussions Preceding the Proposed Liquidation

        Prior to the Aegerion Recapitalization, Novelion, through Aegerion, had operated a biopharmaceutical business dedicated to developing and commercializing new treatments for individuals living with rare diseases, including the two commercialized drugs in Aegerion's portfolio: (a) lomitapide (marketed in Canada, the United States and other markets as JUXTAPID® and as LOJUXTA® in the EU); and (b) metreleptin (marketed in the United States as MYALEPT® and in the EU as MYALEPTA®).

        As a result of a merger transaction involving, inter alia, Novelion's predecessor, QLT Inc. and Aegerion, Aegerion became a wholly-owned subsidiary of Novelion on November 29, 2016 (the "2016 Merger"). Aegerion had a portfolio of therapies at the time of the 2016 Merger, but also had over $300 million in outstanding debt in the form of convertible notes. To address Aegerion's immediate financial needs, Novelion agreed to advance Aegerion a secured loan of up to $15 million (the "Intercompany Loan") at the time the merger agreement was signed in June 2016, in order to fund Aegerion through to the November 2016 closing of the 2016 Merger. The 2016 Merger was subject to shareholder approval by Novelion's shareholders under the Toronto Stock Exchange and Nasdaq listing requirements because of the significant share issuance that took place in conjunction with the transaction. Approximately 98% of Novelion's shareholders voted in favor of the 2016 Merger.

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        In October 2017 and again in February 2018, Novelion extended additional funds under the Intercompany Loan to address Aegerion's ongoing operating needs. However, these advances were insufficient to address Aegerion's continuing financial challenges and, therefore, Aegerion needed additional cash injections, which it sought from other lenders.

        In response to Aegerion's continued financial difficulties, in late 2017 Novelion and Aegerion began to explore options to restructure Aegerion's debt (which, to be feasible, would require negotiating with and seeking support from a majority of the holders of the outstanding convertible notes) and in August 2018, Novelion and Aegerion jointly retained Moelis & Company LLC ("Moelis"), a global investment banking advisory firm who had industry knowledge and knowledge of the companies, to explore strategic options and financing alternatives for the companies.

        In March 2018, Aegerion entered into a $20 million loan and security agreement with Broadfin Capital, LLC ("Broadfin") and Sarissa Capital Management LP ("Sarissa") (the "2018 Term Loan"), which was subordinated in security and priority to the Intercompany Loan. Broadfin and Sarissa were both shareholders of Novelion and whose affiliates were members of the Board at the time.

        Concurrent with the 2018 Term Loan, the agreement governing the Intercompany Loan was amended and restated. At the time of the restatement, the outstanding balance on the Intercompany Loan had grown to approximately $38 million.

        Under the terms of the 2018 Term Loan and the amended and restated Intercompany Loan, Aegerion could not issue any additional senior debt with priority to those loans without the consent of Broadfin, Sarissa and Novelion.

        In August 2018, Aegerion initiated a cost reduction plan that included, among other things, reductions to its U.S. commercial operations, the suspension of key clinical development activities and the elimination of 36% of its workforce.

        Later that month, Aegerion retained AlixPartners, a management consulting firm that specializes in complex financial restructurings, and expanded Moelis' mandate to include the restructuring of Aegerion's debt as well as the provision of investment banking services for Aegerion.

        Moelis thereafter commenced actively identifying potential merger partners, strategic buyers and private equity firms that may have an interest in the business of Novelion and Aegerion. This process included a broad marketing effort through which Moelis reached out to more than 50 potential merger partners, strategic buyers and private equity firms, including Amryt.

        Around the same time, Aegerion also expanded the size of its board of directors (the "Aegerion Board") and brought on two new independent directors. The Aegerion Board had no overlapping directors with our Board. The post-expansion Aegerion Board was comprised of Michael Price, Barbara Chan, Mathew Cantor and Colin Adams.

        The Aegerion Board or its two independent directors, Messrs. Cantor and Adams, who served on a special transaction committee (the "Aegerion Special Transaction Committee"), met and deliberated separately from our Board throughout the fall of 2018 and continuing through 2019. Much of the Aegerion Board's deliberations (including the deliberation of any issues related to Novelion) were conducted by the Aegerion Special Transaction Committee. Novelion did not maintain or exercise any control over the Aegerion Board or the Aegerion Special Transaction Committee.

        At a meeting on September 4, 2018, our Board, after discussion and in light of Novelion's liquidity profile, determined to form its own special committee of independent directors (the "Novelion Special Committee") to explore, negotiate and recommend to our Board (if advisable and applicable) financing alternatives and transactions. Our Board appointed Dr. Bruhn, Dr. Sabba and Mr. Thomas to the Novelion Special Committee.

        Due to the inherent conflict between Aegerion and Novelion's interests as a result of Aegerion's substantial indebtedness to Novelion, at a meeting on September 24, 2018, our Board, based on the recommendation of the Novelion Special Committee, determined it would be prudent to engage an independent financial advisor to protect Novelion's interests and explore alternatives for Novelion as Aegerion explored its own strategic

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alternatives. On September 25, 2018, after interviewing several qualified parties for this role, Novelion, at the recommendation of the Novelion Special Committee and the direction of our Board engaged Evercore Inc. ("Evercore"), a global independent investment banking and financial advisory firm, in light of Evercore's expertise in the industry in which Novelion was operating and with companies facing similar financial and operational crises.

        From September 2018 through December 2018, our Board and the Novelion Special Committee met in person or by telephone regularly to discuss Novelion's and Aegerion's financial circumstances and Novelion's strategic options. Our Board and the Novelion Special Committee reviewed presentations and materials provided by Novelion's management and Evercore regarding, among other things, market conditions, financial and cash projections, potential strategic alternatives and risks and opportunities associated therewith, and the long-term sustainability of Novelion, particularly given Aegerion's financial condition and the cost and regulatory burden associated with Novelion being a public company, noting that, other than the Intercompany Loan, substantially all of Novelion's assets and liabilities were residing at the Aegerion level. Our Board was also regularly advised on its fiduciary duties by Canadian and U.S. counsel. At the direction of our Board and the Novelion Special Committee, Novelion's management and Evercore continued to explore various strategic alternatives, including financing alternatives, although at such time it was still uncertain which strategic alternatives, if any, Novelion could ultimately pursue, especially given that such a transaction would likely need to include a restructuring of Aegerion's convertible notes, which would require, to be feasible, negotiating with and seeking support from a majority of the holders of the outstanding convertible notes.

        After discussions and negotiations among Novelion, Aegerion and certain of Aegerion's lenders over the course of several weeks, on November 8, 2018, Aegerion and an ad hoc group of holders of over 67% of Aegerion's outstanding convertible notes (the "Bridge Loan Lenders" or the "ad hoc group") entered into a bridge credit agreement (the "Bridge Loan Agreement"), whereby Aegerion borrowed: (a) $50 million (the "New Money Loans"), which was to be used to (i) provide Aegerion with bridge funding to allow it to continue to operate, (ii) repay the 2018 Term Loan in an aggregate principal of approximately $21.2 million and (iii) repay a portion of the principal of the Intercompany Loan in an amount of $3.5 million; and (b) $22.5 million to repurchase and retire an equal amount of the convertible notes held at par by certain funds managed by the Bridge Loan Lenders (the "Roll Up Loans", and, together with the New Money Loans, the "Bridge Loan").

        The Bridge Loan contemplated that the New Money Loans would have priority over the Intercompany Loan, while the Roll Up Loans would be secured but subordinated to the Intercompany Loan.

        The Bridge Loan was intended to provide Aegerion with financing to support its operations while Aegerion continued to explore strategic alternatives. The Bridge Loan was not intended to be a stand-alone solution to Aegerion's financial challenges.

        With the benefit of advice from its financial and legal advisors, our Board, upon the recommendation of the Novelion Special Committee, determined that the New Money Loans being offered under the Bridge Loan offered the best path to preserve the value of the Intercompany Loan by providing Aegerion with funding to pursue strategic alternatives.

        The Novelion Special Committee and our Board believed that if the Bridge Loan could not be secured, it was likely that Aegerion would have to file for what is known as a "free fall bankruptcy" in which it would have to seek bankruptcy protection without any plan to emerge from that process. If that were to occur, the Novelion Special Committee and our Board believed there would almost certainly be significant value erosion with the risk that creditors of Aegerion, including Novelion, would receive little or no recovery.

        Accordingly, Novelion provided consent to the Bridge Loan and agreed to subordinate the Intercompany Loan to the New Money Loans pursuant to a subordination agreement entered into on November 8, 2018 (the "Subordination Agreement").

        On the same day that Novelion entered into the Subordination Agreement, Novelion issued a press release that Aegerion had entered into the Bridge Loan Agreement and that Novelion and Aegerion were working through strategic alternatives. In particular, Novelion disclosed that Aegerion had engaged Moelis and AlixPartners, both of whom advised on the Bridge Loan, to continue the comprehensive review of Aegerion's capital structure, and that Novelion and Aegerion had also engaged Evercore and Moelis, respectively, to

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explore and advise the companies on all available financial and strategic options, such as a restructuring of Aegerion's outstanding convertible notes (including a restructuring that would likely involve a debt for equity swap), a possible sale or merger of Novelion or Aegerion, or the sale or other disposition of certain businesses or assets, including territorial licensing deals.

        At this time, Aegerion was facing imminent debt maturities. Aegerion's upcoming obligations totaled approximately $412.6 million:

        (a)   the Bridge Loan, in the total amount of approximately $73.5 million, was at that time due on February 15, 2019. In early February 2019, this date was extended to June 30, 2019;

        (b)   the Intercompany Loan, in the total amount of approximately $36.6 million, was due July 1, 2019; and

        (c)   the convertible notes issued by Aegerion on August 15, 2014 prior to the 2016 Merger, in the amount of approximately $302.5 million, were due August 15, 2019.

        Aegerion did not have the ability to repay these obligations, nor did it have the ability to fund its ongoing operations. Consequently, Aegerion and Novelion continued to work with Moelis to pursue strategic alternatives and actively marketed the business for investment or sale as a means of addressing its financial concerns.

        On November 20, 2018, Novelion, at the direction of our Board, issued a press release announcing that a strategic transaction may require Novelion and/or Aegerion to seek protection under U.S. or Canadian bankruptcy laws, in particular reiterating that Aegerion had engaged Moelis and AlixPartners, both of whom advised on the recently announced Bridge Loan, to continue the comprehensive review of Aegerion's capital structure, and that Novelion and Aegerion had also engaged Evercore and Moelis, respectively, to explore and advise the companies on all available financial and strategic options, such as a restructuring of Aegerion's outstanding convertible notes (including a restructuring that would likely involve a debt for equity swap), a possible sale or merger of Novelion or Aegerion, or the sale or other disposition of certain businesses or assets, including territorial licensing deals. Such disclosure cautioned investors that "effecting such a refinancing, restructuring, or other wholesale recapitalization or other strategic alternative (and some of these alternatives could potentially lead Novelion and/or Aegerion to seek certain protections afforded under law, including the bankruptcy laws of the United States and Canada) will be critical for us to continue to execute on our commercial strategy and pursue our goals and objectives, and we may not be successful in doing so."

        At a meeting held on December 17, 2018, our Board discussed, with its financial and legal advisors, that of the more than 50 parties contacted in connection with Novelion's and Aegerion's review of strategic alternatives, only Amryt and one other strategic party ("Party A") had emerged as a potential viable acquiror or merger partner, though Party A had only recently expressed an interest and had not yet submitted a proposal. Our Board also discussed Aegerion's potential restructuring alternatives and the potential impact to Novelion, including a sale of Novelion and/or Aegerion, pursuit of a standalone plan, and a free-fall bankruptcy event, and the status of ongoing discussions with the ad hoc group. Our Board authorized management and its advisors to continue to engage in discussions with Amryt and Party A regarding a business combination.

        Over the next several weeks, Novelion, Aegerion, Amryt, Party A and the ad hoc group continued discussions and negotiations and our Board continued to hold meetings to discuss Novelion's and Aegerion's review of strategic alternatives and the liquidity needs of Novelion and Aegerion, including Aegerion's upcoming debt maturities, as well as certain cost-sharing provisions between Novelion and Aegerion to memorialize the allocation of certain operational services and the costs associated therewith as between the two companies. Although during this time Party A submitted a proposal for a merger transaction, such proposal considerably undervalued the Company and, after further negotiations and due diligence, Party A was unable to make a proposal that was amenable to Novelion, Aegerion or the ad hoc group and discussions with Party A ceased.

        On February 17, 2019, the ad hoc group informed Novelion that it was supportive of pursuing a business combination with Amryt in lieu of an alternative involving the standalone plan and submitted two proposals in connection with a business combination involving Amryt, which were reviewed by our Board at a meeting held on February 21, 2019, one for a business combination between Amryt and Aegerion, and the other focused on the treatment of Novelion's claims and pro forma arrangement between the ad hoc group and Novelion. At this

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meeting, our Board noted that the proposals ascribed no value to Novelion's Nasdaq listing, which was inconsistent with prior discussions among the ad hoc group, Aegerion, Novelion and Amryt. Our Board discussed the importance of securing favorable treatment for the Intercompany Loan and instructed its advisors and management to (x) negotiate with the ad hoc group on the proposal for the treatment of the Intercompany Loan and the proposed equity split of the company that would be surviving the business combination and (y) continue discussions and negotiations with the ad hoc group, Aegerion and Amryt regarding a business combination with Amryt, and on a fair cost-sharing arrangement between Novelion and Aegerion.

        The parties continued discussions and negotiations and in early March 2019, Aegerion, Amryt and the ad hoc group held an in-person meeting and thereafter informed Novelion that the ad hoc group, Aegerion and Amryt were going to pursue a business combination that did not involve Novelion, whereby a transaction would be effected through a chapter 11 plan of reorganization by Aegerion, which transaction would include the business combination of Amryt and Aegerion without the need for a Novelion shareholder vote. At a meeting held on March 8, 2019, our Board discussed this new proposal and the importance of negotiating the best terms available for the treatment of the Intercompany Loan and finalizing negotiations of cost-sharing arrangements between Novelion and Aegerion.

        From March 2019 through May 2019, the ad hoc group, Aegerion and Amryt negotiated the business combination and Novelion negotiated with the ad hoc group, Aegerion and Amryt as to the treatment of the Intercompany Loan and the equity split of the post-transaction Amryt, and to reach the final structure of the proposed restructuring plan that would be implemented through a chapter 11 bankruptcy process, referred to herein as the Aegerion Recapitalization.

        Our Board remained actively engaged throughout this period. Between January and May 2019, our Board and its legal and financial advisors met 14 times, in person or by telephone, to review and critically examine Aegerion's financial circumstances and the options available to Novelion, including the Aegerion Recapitalization and Novelion's advisors negotiated the most favorable terms available for the Intercompany Loan, including the post-closing Amryt equity split, and for the cost-sharing arrangement between Novelion and Aegerion.

        On May 20, 2019, our Board held a meeting to consider the terms of the Aegerion Recapitalization and determined to support the Aegerion Recapitalization and enter into the restructuring support agreement in connection therewith. Our Board determined to support the Aegerion Recapitalization because it would address Novelion's financial interests in the following ways:

        (a)   Novelion's shareholding interest in Aegerion would be terminated and Novelion would no longer have any claims in respect of that interest. The fact that Novelion's equity would receive no value for its shares in Aegerion is consistent with the fact that Aegerion was insolvent;

        (b)   the Intercompany Loan would be recognized in full as secured debt owed by Aegerion and would be converted into equity with Novelion receiving approximately 8.1% equity ownership of Amryt after giving effect to the dilutive impact of the new $60 million equity raise anticipated in connection with the Aegerion Recapitalization, i.e. Novelion would receive shares in Amryt worth approximately $30.2 million, representing a recovery of approximately 84% of the $36.1 million outstanding under the Intercompany Loan; and

        (c)   Novelion would receive a total of approximately $5 million for unsecured claims resulting from the Shared Services Agreements for past and future services provided by Novelion to Aegerion, with $3 million paid in May 2019 and approximately $2 million to be paid during the course of the Chapter 11 Proceedings.

        In determining to support the Aegerion Recapitalization and enter into the corresponding restructuring support agreement, our Board also noted that the Aegerion Recapitalization would provide four key benefits to Novelion:

        (a)   it would provide for an 84% recovery on the Intercompany Loan and remove the risk that the Bankruptcy Court would "recharacterize" the Intercompany Loan as equity over the objection of Novelion;

        (b)   it would remove the risk that the Bankruptcy Court would subordinate the Intercompany Loan on equitable grounds;

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        (c)   it would remove the risk that the Bankruptcy Court would approve an alternative restructuring plan with less favorable treatment to Novelion over Novelion's objections; and

        (d)   it would provide for a substantial and immediate cash recovery for certain unsecured claims.

        Our Board also noted that Aegerion's agreement with Amryt included a "go shop" provision that allowed Aegerion, with the assistance of its financial advisor Moelis, to shop for a more favorable deal prior to the closing of the Aegerion Recapitalization, which could benefit Novelion if another viable suitor were to emerge who was interested in a business combination involving Novelion or otherwise assigned value to Novelion beyond the Intercompany Loan, noting, though, that it appeared unlikely that any prospective buyer of Novelion would be identified given the broad and public process Novelion had undertaken without identifying any interested buyer or merger partner for Novelion previously. At this meeting, our Board also discussed that following the closing of the Aegerion Recapitalization, at which point Novelion would be an Amryt shareholder, the combined Aegerion/Amryt businesses will have a larger suite of drug products, a substantially reduced debt load, fresh liquidity to operate and no imminent debt repayments.

        On May 20, 2019, the parties entered into the Aegerion Recapitalization. In its press release on May 21, 2019 announcing the Aegerion Recapitalization, Novelion stated that in furtherance of its duty to maximize value for its shareholders, our Board, together with its management team and legal and financial advisors, would be evaluating post-closing plans with respect to Novelion, including a potential wind-up of Novelion and a distribution of assets to shareholders.

        Between May 2019 and September 2019, our Board met several times, including with its legal and financial advisors, to discuss the potential strategic alternatives available to Novelion after the consummation of the Aegerion Recapitalization and of the costs and benefits of continuing its operations, including the substantial accounting, legal and other expenses associated with being a small publicly-traded company with limited assets and no source of revenue, and of additional factors more fully described in "— Reasons for the Proposed Dissolution and Liquidation." During this period, Evercore, at the direction of our Board explored the possibility of a reverse merger or similar transaction involving Novelion or its assets; however, no merger partner or other buyers were identified. At a meeting held on September 18, 2019, our Board determined that the Liquidation is advisable and in the best interests of Novelion and its shareholders. In furtherance of these efforts, our Board is presenting the Liquidation Plan for approval by Novelion's shareholders.

Reasons for the Proposed Dissolution and Liquidation

        As part of Novelion's review of strategic alternatives and evaluation process, and in connection with and leading up to the Aegerion Recapitalization, our Board considered the risks and viability of each alternative potentially available to Novelion, as well as management's financial and cash projections, and consulted with management and Novelion's legal and financial advisors. In arriving at its determination that the Liquidation Plan is advisable and in Novelion's best interests and the best interests of Novelion's shareholders, and is the preferred and only viable strategic option for Novelion after the consummation of the Aegerion Recapitalization, our Board considered the foregoing, as well as the following factors:

•

the fact that, in connection with and leading up to the Aegerion Recapitalization, Novelion conducted a broad and public review of strategic alternatives involving Novelion as a whole, including a merger, asset sale, comprehensive restructuring or other business combination transaction, and despite outreach by Novelion's financial advisors to more than 50 parties, no viable potential buyer or partner emerged or was identified that was interested in such a transaction involving Novelion as a whole;



•

the fact that the go-shop provided for as part of the Aegerion Recapitalization did not yield any alternative proposals;



•

the unlikelihood that shareholders would have realized more value per share upon a sale or other transaction involving Novelion than they will receive in connection with the Liquidation Plan;



•

the fact that, after the consummation of the Aegerion Recapitalization, Novelion remains a public company, complete with the substantial accounting, legal and other expenses typical for a public company but with limited assets and resources, and no remaining source of revenue;

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•

the unlikelihood that the price of Novelion's common stock would increase in the future to a price greater than the current price or the value of the assets distributed in liquidation, given Novelion's limited assets and resources and that it has no source of revenue;



•

the terms and conditions of the Liquidation Plan; and



•

the fact that the BCBCA requires that the liquidation of a corporation under section 319 of the BCBCA be approved by the affirmative vote of holders of two-thirds of Novelion common shares, represented in person or by proxy at the Annual Meeting, which ensures that, if the Board decides to proceed with the Liquidation, the Board will be taking actions of which a significant majority of Novelion's voting shareholders approve.

        Our Board also considered the following risks in arriving at its conclusion that liquidating, winding up and dissolving Novelion is in Novelion's best interests and the best interests of Novelion's shareholders:

•

the uncertainty of the timing, nature and amount of any liquidation distributions to shareholders;



•

the risk that Novelion's shareholders may be required to return to creditors, including employees of the Company, some or all of the liquidation distributions; and



•

the fact that, if the Liquidation Plan is approved by Novelion's shareholders, Novelion anticipates that shareholders would generally not be permitted to transfer shares of Novelion's common stock after the Effective Date.

        Our Board also considered the other factors described in the section entitled "Risk Factors" in this Proxy Statement and in those risk factors identified in Novelion's filings with the SEC.

        In view of the variety of factors considered in connection with its evaluation of the Liquidation Plan, our Board did not find it practical, and did not quantify or otherwise attempt, to assign relative weight to the specific factors considered in reaching its conclusions. In addition, our Board did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination, but rather conducted an overall analysis of the factors described above. In considering the factors described above, individual members of our Board may have given different weight to different factors.

        Novelion cannot offer any assurance that the value of any liquidation distributions will equal or exceed the price or prices at which shares of the Company's common stock have recently traded at or could trade at in the future. However, our Board believes that it is in Novelion's best interests and the best interests of Novelion's shareholders to distribute to the shareholders of Novelion net assets pursuant to the Liquidation Plan. If Novelion's shareholders do not approve the Liquidation Plan, our Board will explore what, if any, alternatives are available in light of Novelion's limited business activities, limited resources and operations, limited assets and that Novelion has no source of revenue.

        Possible remaining strategic alternatives would include seeking voluntary dissolution with the BC Supreme Court approval at a later time and with diminished assets. At this time, our Board has considered all strategic options and has determined that it is in Novelion's best interests and in the best interests of Novelion's shareholders to dissolve Novelion and distribute any remaining assets or cash to Novelion's shareholders. Our Board, however, retains the right to consider other alternatives and abandon the Liquidation Plan prior to the Effective Date should a more beneficial alternative arise before the Effective Date.

Overview of Liquidation

        The Board proposes the voluntary liquidation, winding up and dissolution of the Company (the "Liquidation") pursuant to section 319(1) of the BCBCA, which Liquidation will become effective and commence at a time to be determined by the Board (the "Effective Date"), in accordance with the Liquidation Plan. The Board intends to set the Effective Date in the statement of intent to liquidate to be filed by the Company under the BCBCA. For a brief summary of the steps required to complete the Liquidation and the anticipated timing of each step, see "— Overview of Steps to Complete the Liquidation and Dissolution" beginning on page 40 of this Proxy Statement.

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        A portion of the distributions to be made to registered shareholders of the Company may be by way of a reduction of capital, to the extent the solvency requirements of the BCBCA and the Bankruptcy and Insolvency Act (Canada) are satisfied at the time of distribution. See "Liquidation Distribution(s)" beginning on page 38 of this Proxy Statement. The Liquidation and the Liquidation Plan require shareholder approval by a special resolution of the Company's shareholders. In addition, the Company will need to obtain shareholder approval by an ordinary resolution in order to appoint the Liquidator and authorize the Board to set such Liquidator's remuneration. The Board has determined that the liquidation and dissolution pursuant to the Liquidation Plan, described in this Proxy Statement, is advisable and in the best interests of the Company, its shareholders and its stakeholders, and have approved the Liquidation and the Liquidation Plan, which is to become effective and commence at a time to be determined by the Board, subject to shareholder approval. The Board recommends that shareholders of the Company vote in favor of (i) the Liquidation Resolution, the full text of which is set forth on page 48 of this Proxy Statement and (ii) the Liquidator Resolution, the full text of which is set forth on page 49 of this Proxy Statement. Capitalized terms used below and not otherwise defined have the meaning given to them in the Liquidation Plan.

Liquidation and Dissolution Procedure

        If the Liquidation and the Liquidation Plan are approved at the Annual Meeting, the Company will, as soon as practicable, sign the Liquidation Plan and will file a statement of intent to liquidate with the British Columbia Registrar of Companies. The Liquidation Plan provides that it will become effective as of the Effective Date (which is a date to be determined by a resolution of the Board, in its discretion, which date shall be the date established as the date for commencement of the liquidation and winding up in the statement of intent to liquidate that is filed by the Company pursuant to and in accordance with the BCBCA.

        The full text of the Liquidation Plan is attached hereto as "Schedule A — Plan of Liquidation and Distribution" and shareholders are urged to read the Liquidation Plan in its entirety. The description of the Liquidation Plan below is a summary and is qualified in its entirety by the more detailed information contained in Schedule A. The entering into of the Liquidation Plan will have a number of consequences effective as of the Effective Date, including but not limited to the following:

i.

Alvarez & Marsal Canada Inc. (the "Liquidator") will be appointed the liquidator of the estate and effects of the Company for the purpose of the Liquidation of the Company's business and affairs and distributing its Assets, after satisfying all Proven Claims, all in accordance with the Liquidation Plan and any order of the BC Supreme Court. Alvarez & Marsal Canada Inc. is a person qualified to act as a receiver and a receiver manager under Section 64 of the Personal Property Security Act (British Columbia);



ii.

all of the powers of the Board will cease and the Board will be deemed to have resigned; and



iii.

the Company will cease to carry on its undertaking, except insofar as contemplated under the Liquidation Plan and as may be required or beneficial for the Liquidation in the discretion of the Liquidator.

        The Liquidation Plan may be amended in accordance with its terms, which provide:

i.

The Liquidator may amend, modify and/or supplement the Liquidation Plan without the approval of the shareholders, (i) in order to correct any clerical or typographical error, (ii) as required to maintain the validity or effectiveness of the Liquidation Plan as a result of any change in any legal requirement, or (iii) in order to make any change that in the opinion of the Liquidator is administrative in nature and does not materially change the terms of the Liquidation Plan.



ii.

The Liquidator also reserves the right to amend, modify and/or supplement the Liquidation Plan, provided that any such amendment, modification or supplement shall not be effective until approved by either: (i) a special resolution of the shareholders at a meeting of shareholders called for the purposes of approving such amendment, modification or supplement; or (ii) order of the BC Supreme Court.

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        Following the Effective Date, the Liquidator will oversee the Liquidation. The Liquidator's powers and authorities are derived from the BCBCA, the Liquidation Plan and the terms of any BC Supreme Court orders pertaining to the Liquidation. See "Schedule A — Plan of Liquidation and Distribution".

        If the Liquidation Plan and the appointment of the Liquidator are approved at the Annual Meeting, the steps set forth below will be completed following the Effective Date at such times as the Liquidator or the BC Supreme Court, as applicable, deems necessary, appropriate or advisable, all in accordance with the Liquidation Plan and the BCBCA:

•

the filing of any statement of intent to liquidate and the publishing of a notice to creditors as required under Sections 321 and 331 of the BCBCA, respectively;



•

the application to the BC Supreme Court under section 325(1) of the BCBCA for such other directions and orders as may be deemed necessary in connection with the liquidation of the Company, including without limitation an order establishing the Claims Process described herein;



•

the sale of any of the Company's non-cash property and assets, (See "— Distribution of Assets — Liquidation Distribution(s)");



•

the establishment of the Claims Process to be approved by the BC Supreme Court for the identification, resolution and barring of claims by creditors, including employees of the Company, against the Company ("Liquidation Claims"), including the provision of written notice of the commencement of the Liquidation to all known creditors and claimants of the Company;



•

the delisting of the common shares of the Company from Nasdaq, as described under the heading "Trading of Common Shares", unless sooner delisted in connection with the hearing scheduled with the Nasdaq Hearing Panel on October 3, 2019;



•

the application to cease being a reporting issuer in Canada, as described under the heading "— Status as a Reporting Issuer";



•

request relief from the SEC or otherwise initiate steps to exit from the reporting requirements under the Exchange Act;



•

the payment of or the making of reasonable provision for the payment of all Proven Claims and obligations known to the Company, and the making of reserves as will be reasonably sufficient to provide compensation for any contingent Liquidation Claim, including, without limitation, the establishment and setting aside of a reasonable amount of cash and/or property to satisfy such contingent Liquidation Claims against, and obligations of, the Company;



•

the application to CRA and other applicable governmental authorities for tax and other clearance certificates;



•

in accordance with the BCBCA and any order of the BC Supreme Court, the pro rata distribution to registered shareholders of the remaining assets of the Company after taking into account the payment or provision for payment of Proven Claims and contingent Liquidation Claims against and obligations of the Company; and



•

the winding up and dissolution of the Company.

See "— Overview of Steps to Complete the Liquidation and Dissolution" for a brief summary of the steps required to complete the Liquidation and the anticipated timing of each step.

Trading of Common Shares

        On August 21, 2019, the Company received a letter (the "Nasdaq Letter") from the Listing Qualifications Staff ("Staff") of The Nasdaq Stock Market LLC ("Nasdaq"), notifying the Company that Nasdaq has determined to delist the Company's common stock from Nasdaq pursuant to the Staff's discretionary authority under Listing Rule 5101. The Nasdaq Letter stated that the Staff's determination was based on its belief that the Company has no current operating business and has not publicly disclosed its future business operations following the completion of the Aegerion Recapitalization.

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        The Nasdaq Letter also stated that the Company's delay in filing its Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 serves as an additional basis for delisting the Company's securities from Nasdaq. Nasdaq Listing Rule 5250(c)(1) requires companies to timely file all required periodic financial reports with the SEC. Previously, and as required, on August 12, 2019, the Company filed a Form 12b-25 with the SEC which reported that it would not be in a position to timely file the Form 10-Q because of the significant work required to effect the deconsolidation and the other demands associated with the Chapter 11 Proceedings.

        The Nasdaq Letter further stated that the Company may appeal the Staff's determination to a Hearings Panel (the "Panel"), pursuant to the procedures set forth in the Nasdaq Listing Rules and that if the Company requested a hearing, it may also request an extended stay of the suspension of the trading of the Company's common stock, pending the hearing.

        The Company submitted an appeal of the Staff's decision prior to the deadline to appeal on August 28, 2019 pursuant to the procedures set forth in the Nasdaq Listing Rules, and to request an extended stay of the suspension of the trading of the Company's common stock in connection therewith. The Panel granted a stay of the delisting of the Company's common stock from The Nasdaq Stock Market in response to the Company's request for a hearing and scheduled a hearing for October 3, 2019. Further, on September 9, 2019, the Panel granted the Company's request to extend the 15-calendar day stay of the suspension from Nasdaq, pending the hearing scheduled for October 3, 2019 and a final determination regarding the Company's listing status.

        Although Novelion is appealing to the Panel to permit the shares of Novelion to continue to trade on Nasdaq at least through the date of the Annual Meeting, or through a subsequent date following the Annual Meeting, Novelion can make no assurance as to when the Novelion shares will be delisted from Nasdaq (or what trading halts may be imposed). Following any such delisting, the common shares of Novelion will no longer be listed for trading on Nasdaq or on any stock exchange and may only trade in the U.S. on the over-the-counter market, which is a less liquid market, if at all.

        Regardless of the foregoing, we anticipate that any and all trading of our common shares on Nasdaq or the over-the-counter market, as the case may be, will be suspended as of the Effective Date or as soon thereafter as is reasonably practicable, and that we will close our stock transfer books and discontinue recording transfers at that time. Accordingly, it is expected that trading in our shares of common stock will cease after the Effective Date. The Liquidation Plan provides that any liquidation distributions made to shareholders of Novelion will be made only to those shareholders who are registered shareholders as of the Effective Date, though liquidation distributions may take place long after the Effective Date has passed.

Claims Process

        A BC Supreme Court approved Claims Process will be established following the successful application to the BC Supreme Court under section 325(1) of the BCBCA for the identification, resolution and barring of Liquidation Claims (the "Claims Process"). The Company anticipates seeking BC Supreme Court approval of a Claims Process as soon as reasonably practicable after the Effective Date. The Claims Process will include the provision of written notice of the commencement of the Liquidation to all known creditors of the Company, including its employees, and its present or former officers and directors. Such notice will be published in major newspapers in Canada and the U.S. and will be sent by the Liquidator to known and potential creditors based on the Company's books and records, informing them of the Liquidation and stating that any Liquidation Claims must be filed with the Liquidator so that they are received by the deadline stated within the letter, which the Company anticipates will be 120 days after the initial BC Supreme Court approval of the Claims Process is obtained, which is consistent with the time periods required pursuant to section 331 of the BCBCA. Shareholders of the Company are hereby notified of the Claims Process and should review the Company's future press releases (filed on www.sedar.com and on www.sec.gov/edgar/) and/or the Liquidator's website for further details at: www.alvarezandmarsal.com/novelion.

        The Claims Process will request expedited hearings of any disputed Liquidation Claims by the BC Supreme Court, but there are no assurances as to the number of Liquidation Claims that may be filed, the monetary amount of such Liquidation Claims and the amount of time such Liquidation Claims will require for resolution.

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        The Claims Process described above is intended to fully and finally determine all claims against the Company. A court order will be sought that any claims not submitted pursuant to the Claims Process will be fully and finally barred (the "Claims Bar Order") with the intention that no claims should be pursued following the Liquidation of the Company. However, there is no absolute certainty that the risk of claims arising after the Liquidation of the Company will be eliminated completely. See "— Distribution of Assets — Potential Liability of Shareholders" below.

Distribution of Assets

Liquidation Distribution(s)

        The following discussion assumes that the Liquidation Plan will be approved by the shareholders of the Company. If the Liquidation Plan is not approved by the shareholders of the Company or otherwise approved by the BC Supreme Court, no Liquidation distributions will be made pursuant to the Liquidation Plan.

        Pursuant to the Liquidation Plan, the Liquidator is authorized and empowered, but not obligated, to cause the Company to sell any of its assets, including the Amryt Equity and, after paying or making reasonable provision for the payment of Liquidation Claims against and obligations of the Company as required by law and once it has obtained all required tax clearance certificates, distribute any remaining assets or cash to Shareholders as a reduction of capital and/or as a dividend. Amounts distributed by way of a reduction of capital may, in certain circumstances, be received tax free by the shareholders of the Company. See "— Certain Material Canadian Federal Income Tax Considerations".

        The Company will continue to defend any proceedings commenced against it, and incur claims, liabilities and expenses (such as salaries and benefits, directors' and officers' insurance, payroll and taxes, legal, accounting and consulting fees and miscellaneous office expenses) following approval of the Liquidation Plan and during the period following the Effective Date until the Liquidation of the Company is complete. Satisfaction of these claims, liabilities and expenses will reduce the amount of assets available for ultimate distribution to the registered shareholders of the Company.

        In order to reduce its expenses, and in connection with the Aegerion Recapitalization, the Company will decrease the number of full-time employees to three and its administrative (i.e., IT support, office space, expense reporting, payroll) expenses will decrease substantially. In addition, Amryt has agreed to reimburse us for certain compensation and benefits that we will be paying to two of the three remaining employees starting at the closing of the Aegerion Recapitalization until the earlier of each employee's last date of employment with the Company and December 31, 2019, in exchange for such employee's providing executive and transitional services to Amryt during such period. Under this agreement, Amryt will also provide us with accounting and SEC reporting support, if requested, for an agreed monthly fee, and administrative support at no cost. We further expect that as of the Effective Date or soon thereafter, the Company will not have any full-time employees. Additionally, as set forth under "Proposal No. 3: Election of Directors", in connection with the Annual Meeting, the Board will be streamlined to consist of three directors, two of whom will be independent, reducing the amount of director compensation the Company will be responsible for. Upon the Effective Date, the Board will be deemed to have resigned and all powers of the Board will cease. Lastly, following the completion of the Aegerion Recapitalization, the Company will terminate all contracts and relationships with vendors that are not related to the Liquidation and/or continued compliance with applicable law throughout the implementation of the Liquidation. Thus, other than executive and employee salaries and severance, and related costs, the Company expects that, after the Aegerion Recapitalization, its primary ongoing expenses will consist of legal expenses, auditor expenses and other administrative costs.

        Given that the Company currently expects that the liquidation distributions will consist almost entirely of the Amryt Equity (which is publicly traded), any remaining proceeds from the sale of a portion of the Amryt Equity by the Company in order to fund the Company's expenses, including the expenses of the Liquidation, or a combination thereof, net of the Company's liabilities, the Company cannot predict with certainty the value of any liquidation distributions to its shareholders. Accordingly, you will not know the amount of any liquidation distributions you may receive as a result of the Liquidation Plan when you vote on the Liquidation Resolution. Many of the factors influencing the value of the liquidation distributions cannot currently be quantified with certainty and are subject to change, including the amount of cash the Company will need to fund the liquidation,

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the amount of Amryt Equity that will need to be sold by the Company in connection with such funding and the proceeds received therefrom, and the value of the Amryt Equity, which is dependent upon the business operations and financial success of Amryt and is subject to market fluctuations and volatility among other risks over which we have no control, the Company's inability to predict the amount of its remaining liabilities or the amount that the Company will incur during the course of the Liquidation, the net value, if any, of its remaining non-cash assets and the fact that, if the Liquidation and Liquidation Plan are approved, the Liquidator will have the power and authority to approve the number, amount and timing of distributions, which will consist almost entirely of Amryt Equity, any remaining proceeds from the sale of a portion of the Amryt Equity by the Company in order to fund the Company's expenses, including the expenses of the Liquidation, or a combination thereof, net of the Company's liabilities. In addition, the timing and amount of any distributions may be impacted by (i) the Company's and/or the Liquidator's discussions with the CRA (as defined herein) and other applicable taxation authorities in finalizing the Company's and its subsidiaries final tax returns and the amounts of their corresponding tax liabilities and (ii) the number and complexity of claims resulting from the Claims Process and whether any disputed claims can be reserved for or processed in an expedited manner. There is no guarantee of the value of any distribution.

        Based upon the foregoing, Liquidation distribution(s), if made, may be comprised of cash or may be distributions of assets, such as the Amryt Equity, in kind, payable as a return of capital. Following the completion of the Claims Process, the Company expects to issue a press release as to the estimated amount, character and timing of any Liquidation distributions. The Liquidator's website (www.alvarezandmarsal.com/novelion) will also include periodic updates in respect of estimated amount, character and timing of any Liquidation distributions

Uncertainty of Liquidation Distribution Amounts

        The Company may be subject to contingent claims including lawsuits. If such contingent claims are determined to be valid, the Company could be required to pay significant amounts to these contingent claimants and, even if it is successful in defending such claims, the Company could incur significant legal costs to do so, either of which could result in a significant reduction in the amount available to be distributed to its shareholders and/or a significant delay in the timing of any such distribution.

        As a result, the amount of cash and/or assets to be distributed to shareholders as Liquidation distributions cannot currently be quantified with certainty and is subject to change. Accordingly, you will not know the amount of any Liquidation distributions you may receive as a result of the Liquidation Plan when you vote on the proposal to approve the Liquidation Plan. You may receive substantially less than your pro rata share of the net assets of the Company, as set out on its most recent balance sheet. In addition, as disclosed in the Company's press release of August 12, 2019, due to the need to deconsolidate the Company's financial statements from those of Aegerion, the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 may not be completed and published prior to the date of the Annual Meeting. The Company currently believes that the Liquidator will complete distributions by the fourth quarter of 2020, subject to the resolution of claims. The amount and timing of any distribution has not been determined.

Potential Liability of Shareholders

        Under the BCBCA, despite the Liquidation, each shareholder of the Company to whom any of its property has been distributed is potentially liable, for a period of two years, to any person claiming under section 346 of the BCBCA to the extent of the amount received by that shareholder upon the distribution, and an action to enforce such liability may be brought.

        Section 346 of the BCBCA provides that, despite the dissolution of a company under the BCBCA:

•

a civil, criminal, quasi-criminal, administrative or regulatory action or proceeding (each, a "legal proceeding") that was commenced by or against a company before its dissolution may be continued as if the company had not been dissolved; and



•

a legal proceeding may be brought against a company within two years after its dissolution, as if the company had not been dissolved.

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A shareholder will not be liable under Section 346 of the BCBCA unless (a) in the case of a legal proceeding that is ongoing, such shareholder is added as a party to the legal proceeding within two years after the date on which the Company is dissolved, or (b) if a judgement is obtained in a legal proceeding described above, the judgment creditor brings a legal proceeding against such shareholder within two years after the date on which the Company is dissolved.

        Under Section 101 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended, if a distribution is made to shareholders of the Company (i) at a time when the Company is insolvent; or (ii) that renders the Company insolvent, a court may, in certain circumstances, give judgment against a shareholder who received such distribution in the amount of the distribution received and interest thereon.

        The Claims Process described under the heading "— Claims Process", including the Claims Bar Order, is intended to mitigate the risk that any claims may arise following the Liquidation of the Company, but there is no absolute certainty that this risk will be eliminated completely.

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Interests of the Company's Directors and Executive Officers in the Liquidation

        Some of our directors and executive officers may have interests in the Liquidation that are different from, or in addition to, the interests of our shareholders generally, namely, the Company's continuing indemnification obligations to its directors and officers. The Board was aware of these interests and considered them, among other matters, in approving the Liquidation pursuant to the Liquidation Plan and the transactions contemplated thereby. While our executive officers may be entitled to certain single and double trigger change in control payments or benefits in connection with the Aegerion Recapitalization, the Liquidation will not give rise to any incremental compensation, severance or change in control benefits for our directors or officers.

Stock Ownership

        Certain members of the Board and our executive officers own, as of September 13, 2019, an aggregate of 27,419 common shares of the Company. In connection with any liquidation distributions, certain of our directors and our executive officers will be entitled to the same pro rata cash distributions as our shareholders based on their ownership of common shares of the Company. See "Security Ownership of Certain Beneficial Owners and Management" beginning on page 66 of this Proxy Statement for a table setting forth the number of common shares of the Company beneficially owned by each of our directors and executive officers as of September 13, 2019.

Indemnification of Directors and Officers

        The Company will continue, until the completion of the Liquidation, to indemnify and provide for advancement of expenses to its officers, directors, employees, agents and representatives in accordance with the Company's organizational documents, any contractual arrangements and applicable law, for acts or omissions of such persons in connection with the implementation of the Liquidation Plan and the winding up of the affairs of the Company. The Company's obligation to indemnify (or advance expenses to) such persons may also be satisfied out of insurance proceeds.

        The Board or any trustee(s) or agent(s) as may be appointed by the Board under the Liquidation Plan, as applicable, is authorized to obtain and maintain insurance as may be necessary, appropriate or desirable to cover

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the Company's obligations under the Liquidation Plan, including its existing directors' and officers' liability insurance policy or any replacement policy.

Certain Material Canadian Federal Income Tax Considerations

        The following is a summary of the principal Canadian federal income tax considerations generally applicable under the Tax Act to shareholders of the Liquidation, winding up and dissolution of the Company (the "Dissolution") and the distribution of any amounts in the course of the winding up in accordance with the Liquidation Plan.

        This summary is based on the current provisions of the Tax Act and the regulations thereunder, and an understanding of the current administrative practices of the CRA published in writing and all specific proposals to amend the Tax Act publicly announced on behalf of the Minister of Finance (Canada) prior to the date hereof ("Tax Proposals"). There can be no assurance that the Tax Proposals will be implemented in their current form or at all. This summary does not otherwise take into account or anticipate any changes in income tax law or administrative practice, whether by judicial, governmental or legislative decision or action, nor does it take into account provincial, territorial or foreign tax considerations, which may differ significantly from those discussed herein. This summary is not exhaustive of all Canadian federal income tax considerations.

        This summary is not applicable to a person (i) that is a "financial institution" for purposes of the mark-to-market rules in the Tax Act, (ii) an interest in which is a "tax shelter investment", (iii) that reports its "Canadian tax results" in a currency other than Canadian currency, or (iv) that has entered into or will enter into a "derivative forward agreement" in respect of the common shares of the Company, each as defined in the Tax Act. Such persons should consult their own tax advisors having regard to their particular circumstances. In addition, this summary assumes that any distributions made pursuant to the Liquidation Plan are considered to occur on the Liquidation or discontinuance of the Company's business for the purposes of the Tax Act. This summary does not address the Canadian federal income tax considerations applicable to the holdings by a shareholder of the Amryt Equity, which may be distributed in kind. Shareholders should consult their own tax advisors in this regard.

        This summary is of a general nature only and is not intended to be, nor should it be considered to be, legal or tax advice to any particular shareholder and no representation is made with respect to the income tax consequences to any particular shareholder. Accordingly, shareholders should consult their own tax advisors concerning the application and effect of the income and other taxes of Canada and of any other relevant country, province, territory, state or local tax authority, having regard to their particular circumstances.

Residents of Canada

        The following portion of the summary is applicable to shareholders who, at all relevant times and for the purposes of the Tax Act, are resident or deemed to be resident in Canada, hold their common shares as "capital property" and deal at arm's length with and are not "affiliated" with the Company ("Resident Shareholders").

        Generally, common shares of the Company will be considered to be capital property to a Resident Shareholder provided that the Resident Shareholder does not hold the common shares in the course of carrying on a business or has not acquired them in one or more transactions considered to be an adventure or concern in the nature of trade. Certain Resident Shareholders whose common shares might not otherwise qualify as capital property may, in certain circumstances, make an irrevocable election in accordance with subsection 39(4) of the Tax Act to have the common shares, and every "Canadian security" as defined in the Tax Act owned by such Resident Shareholder in the taxation year of the election and in all subsequent taxation years, deemed to be capital property.

Distributions to Resident Shareholders

        Where a distribution under the Liquidation Plan and in the course of the Dissolution is effected through a reduction of the capital in respect of the common shares of the Company, a Resident Shareholder will be considered to have received a dividend only to the extent (if any) that the aggregate of any amounts received on such distribution exceeds the "paid-up capital" (as defined in the Tax Act) at that time of the Resident

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Shareholder's common shares. The Company reasonably expects that its paid-up capital will be greater than the anticipated aggregate amount of the distributions, with the result that no portion of the distributions expected to be paid to the Resident Shareholders on the reduction of capital and in the course of the liquidation, winding up and dissolution of the Company should be classified as a taxable dividend. Provided that this expectation is correct, no deemed taxable dividend should arise as a consequence of any distribution. However, the CRA could take a different view as to the calculation of the paid-up capital of the common shares, which could result in materially different tax consequences to the Resident Shareholders. Any portion of a distribution that is paid by the Company as a dividend would be taxable to a Resident Shareholder, as generally described below under the heading "— Taxation of Dividends".

        Any portion of a distribution received on a reduction of the paid-up capital in respect of the Resident Shareholder's common shares will be deducted from the Resident Shareholder's adjusted cost base of its common shares. To the extent that the amount received on such reduction of paid-up capital exceeds the adjusted cost base to the Resident Shareholder of the common shares, the adjusted cost base of the common shares to the Resident Shareholder will be reduced to nil and the excess of such paid-up capital reduction over the resulting reduction in adjusted cost base will be deemed to be a capital gain of the Resident Shareholder for the year from the disposition of the common shares. The tax consequences to a Resident Shareholder of any such capital gain are generally as described below under the heading "— Taxation of Capital Gains and Losses" beginning on page 44 of this Proxy Statement.

Cancellation of the Common Shares

        For purposes of the Tax Act a Resident Shareholder will generally be considered to have disposed of the common shares when all of the legal requirements for dissolution have been satisfied and the final distribution of the Company's assets has been made.

        A Resident Shareholder may realize a capital loss on cancellation of the Resident Shareholder's common shares on the final dissolution of the Company equal to the positive amount, if any, of the adjusted cost base of the Resident Shareholder's common shares determined immediately before that time. The tax consequences to a Resident Shareholder of such capital losses are generally as described below under the heading "— Taxation of Capital Gains and Losses" beginning on page 44 of this Proxy Statement.

Taxation of Dividends

        A Resident Shareholder will be required to include in computing income for a taxation year any dividends received or deemed to be received on the common shares.

        Any dividend that is, or is deemed to be, received by a Resident Shareholder who is an individual will be subject to the gross up and dividend tax credit rules normally applicable to taxable dividends received by Canadian resident individuals from a taxable Canadian corporation, including the enhanced gross up and dividend tax credit if the dividend recipient receives notice from the Company designating the dividend as an "eligible dividend".

        Any dividend that is, or is deemed to be, received by a Resident Shareholder that is a corporation will be included in computing the Resident Shareholder's income as a dividend, and will ordinarily be deductible in computing its taxable income. In certain circumstances, subsection 55(2) of the Tax Act will treat a taxable dividend received by a Resident Shareholder that is a corporation to be proceeds of disposition or a capital gain. Shareholders that are corporations should consult their own tax advisors having regard to their own circumstances.

        A Resident Shareholder that is a "private corporation", as defined in the Tax Act, or any other corporation resident in Canada controlled, whether because of a beneficial interest in one or more trusts or otherwise, by or for the benefit of an individual (other than a trust) or a related group of individuals (other than trusts), will generally be liable to pay tax under Part IV of the Tax Act (which may be refundable in certain circumstances) on dividends received or deemed to be received on the Common Shares to the extent such dividends are deductible in computing the Resident Shareholder's taxable income for the taxation year.

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Taxation of Capital Gains and Losses

        Generally, on a disposition or deemed disposition of a common share, a Resident Shareholder will realize a capital gain (or capital loss) equal to the amount, if any, by which the proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base to the Resident Shareholder of the common share immediately before the disposition or deemed disposition.

        Generally, a Resident Shareholder will be required to include in computing its income for a taxation year one half of any capital gain (a "taxable capital gain") realized by it in that year. A Resident Shareholder will generally be entitled to deduct one half of the amount of any capital loss (an "allowable capital loss") realized in a taxation year from taxable capital gains realized by the Resident Shareholder in that year, and any excess may be carried back to any of the three preceding taxation years or carried forward to any subsequent taxation year and deducted against net taxable capital gains realized in such years, to the extent and under the circumstances specified in the Tax Act.

        The amount of a capital loss realized on the disposition of a common share by a Resident Shareholder that is a corporation may, to the extent and under the circumstances specified in the Tax Act, be reduced by the amount of dividends on the common shares received or deemed to be received by the Resident Shareholder, to the extent and in the circumstances set out in the Tax Act. Similar rules may apply where common shares are owned by a partnership or trust of which a corporation, trust or partnership is a member or beneficiary. Resident Shareholders to whom these rules may be relevant should consult their own tax advisors in this regard.

        A Resident Shareholder that is a "Canadian controlled private company" (as defined in the Tax Act) may be liable to pay an additional refundable tax on its "aggregate investment income" for the year, which is defined to include an amount in respect of taxable capital gains.

Alternative Minimum Tax

        A capital gain realized, or a dividend received (or deemed to be received) by a Resident Shareholder that is an individual, including a trust (other than certain specified trusts), may give rise to a liability for alternative minimum tax as calculated under the detailed rules set out in the Tax Act. Such Resident Shareholders should consult their own tax advisors with respect to the alternative minimum tax rules set out in the Tax Act.

Non-Residents of Canada

        The following portion of the summary is applicable to shareholders of the Company who, at all relevant times and for purposes of the Tax Act, are not resident or deemed to be resident in Canada and do not use or hold, and are not deemed to use or hold, their common shares in connection with carrying on a business in Canada ("Non-Resident Shareholders"). Special rules not discussed in this summary may apply to an insurer carrying on an insurance business in Canada, and any such insurers should consult their own tax advisors.

Distributions

        The consequences to Non-Resident Shareholders of any distribution under the Tax Act will be as described above under the heading "— Residents of Canada — Distributions to Resident Shareholders" beginning on page 42 of this Proxy Statement.

        A distribution under the Liquidation Plan that is effected as a return of capital on the common shares held by a Non-Resident Shareholder will not be subject to Canadian withholding tax, unless the amount received on such distributions exceeds the "paid-up capital" (as defined in the Tax Act) at that time in respect of the Non-Resident Shareholder's common shares. In such case, any such excess amount will be deemed to be a dividend and would be subject to taxation as described below under the heading "— Taxation of Dividends" beginning on page 45 of this Proxy Statement.

        The Company reasonably anticipates that its paid-up capital will be greater than the anticipated aggregate amount of the distributions with the result that no amount of the distributions to be paid to the Non-Resident Shareholders on the reduction of capital and in the course of the liquidation, winding up and dissolution of the Company should be classified as a taxable dividend. However, the CRA could take a different view as to the

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calculation of the paid-up capital of the common shares, which could result in materially different tax consequences to the Non-Resident Shareholders.

Taxation of Dividends

        Any dividend that is, or is deemed to be, paid or credited by the Company to a Non-Resident Shareholder will be subject to Canadian withholding tax at a rate of 25% or such lower rate as may be provided under the terms of an applicable Canadian income tax treaty. Under the Canada-United States Income Tax Convention the rate of withholding tax on dividends paid or credited to a Non-Resident Shareholder that is fully entitled to the benefits of such treaty is generally reduced to 15% of the gross amount of the dividends.

Taxation of Capital Gains

        A Non-Resident Shareholder will not be subject to tax under the Tax Act in respect of a capital gain realized on the disposition or deemed disposition of the common shares provided the common shares do not constitute "taxable Canadian property" for the purposes of the Tax Act. The common shares of the Company will not generally constitute taxable Canadian property to a Non-Resident Shareholder at the time of disposition or deemed disposition provided that at no time during the 60 month period prior to the disposition more than 50% of the fair market value of such common shares was derived directly or indirectly from real or immovable property situated in Canada or "Canadian resource properties", "timber resources property" (such as defined in the Tax Act), and options in respect of, or interests in or civil law rights in such properties. The Company does not believe that, at any time in the 60 month period ending on the date hereof, more than 50% of the fair market value of the common shares was derived directly or indirectly from real or immovable property situated in Canada, "Canadian resource properties", "timber resources property" and options in respect of, or interests in or civil law rights in such properties.

        The common shares of the Company may also be deemed to constitute taxable Canadian property to a particular Non-Resident Shareholder in certain circumstances under the Tax Act. In the event that the common shares of the Company constitute taxable Canadian property to a particular Non-Resident Shareholder, any resulting capital gain may be exempt from tax under the Tax Act in accordance with any applicable income tax treaty. If the capital gains (or capital losses) are derived from the disposition or deemed disposition of "taxable Canadian property" by a Non-Resident Shareholder, the Non-Resident Shareholder may in certain circumstances be required to file a Canadian tax return reporting the disposition or deemed disposition. A Non-Resident Shareholder who believes that its common shares may constitute taxable Canadian property should consult with its own tax advisor as to the particular Canadian tax implications that may be applicable.

Certain Material U.S. Federal Income Tax Considerations

        The following is a general summary of certain material U.S. federal income tax considerations applicable to the Liquidation Plan that are applicable to our shareholders that are U.S. holders (as defined below). This discussion is included for general information purposes only and does not constitute, and is not, a tax opinion or tax advice to any particular U.S. holder. This summary is based on the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the Treasury Regulations promulgated thereunder, judicial decisions, administrative rulings and other legal authorities, all as of the date hereof and all of which are subject to change, possibly with retroactive effect. No ruling from the Internal Revenue Service (the "IRS") and no opinion of counsel will be requested concerning the U.S. federal income tax consequences of the Liquidation Plan. The tax consequences set forth in the following discussion are not binding on the IRS or the courts, and no assurance can be given that contrary positions will not be successfully asserted by the IRS or adopted by a court.

        Each shareholder should consult his, her or its tax advisors to determine the U.S. federal income tax consequences to such shareholder as a result of the Liquidation Plan, and any U.S. federal non-income, state, local or non-U.S. tax consequences relevant to such shareholder as a result of the Liquidation Plan.

        The following discussion does not address all of the U.S. federal income tax consequences that may be relevant to our shareholders, including Company shareholders who, in light of their particular circumstances, may be subject to special rules, including, without limitation, shareholders that are not U.S. holders, mutual funds, retirement plans, financial institutions, tax-exempt organizations, insurance companies, regulated

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investment companies, real estate investment trusts, brokers or dealers in securities, traders who mark to market, shareholders who hold their shares as part of a straddle, hedge or conversion transaction, shareholders whose "functional currency" is not the U.S. dollar and shareholders that hold shares through a partnership or any entity treated as a partnership for U.S. federal income tax purposes. Furthermore, this discussion does not apply to shareholders of options or warrants or shareholders who acquired their shares by exercising options or warrants, nor does it apply to shareholders who received their shares in connection with the performance of services. This discussion assumes that shareholders hold their stock as capital assets within the meaning of Section 1221 of the Code. In addition, the discussion does not address the alternative minimum tax, the Medicare tax or any aspect of U.S. federal non-income, state, local or non-U.S. taxation that may be applicable to a particular shareholder.

        For purposes of this discussion, a U.S. holder is a beneficial owner of our common stock that is for U.S. federal income tax purposes:

•

an individual who is a citizen or resident of the United States;



•

a corporation (or other entity that is classified as a corporation for U.S. federal income tax purposes) that is created or organized in or under the laws of the United States, any State thereof or the District of Columbia;



•

an estate the income of which is subject to U.S. federal income tax regardless of its source; or



•

a trust (i) if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (ii) that has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person for U.S. federal income tax purposes.

Federal Income Taxation of Liquidation Distributions Received by U.S. Holders

        Subject to the discussion below under "— Passive Foreign Investment Company Considerations," amounts received by U.S. holders pursuant to a distribution in complete liquidation will be treated as full payment in exchange for their shares of common stock. As a result of our Liquidation Plan, a U.S. holder generally will recognize gain or loss equal to the difference between (i) the amount of cash and the fair market value (at the time of distribution) of any other property distributed, less any liabilities assumed by the shareholder or to which the distributed property is subject, if applicable, and (ii) such U.S. holder's tax basis in his, her or its shares of our common stock.

        Amounts received by U.S. holders pursuant to the Liquidation Plan will first be applied against and reduce a U.S. holder's tax basis in his, her or its shares of common stock. Gain will be recognized as a result of a liquidation distribution to the extent that the aggregate value of the distribution and any prior liquidation distributions received by a U.S. holder with respect to a share exceeds his, her or its tax basis for that share. If we make more than one liquidation distribution, each liquidation distribution will be allocated proportionately to each share of common stock owned by a U.S. holder. Any loss will generally be recognized only when the final distribution from us has been received and then only if the aggregate value of all liquidation distributions with respect to a share is less than the U.S. holder's tax basis for that share. Gain or loss recognized by a U.S. holder will be capital gain or loss provided the shares are held as capital assets, and will be long-term capital gain or loss if the common stock has been held for more than one year.

        In the event of a distribution of property, the U.S. holder's tax basis in such property immediately after the distribution will generally be the fair market value of such property at the time of distribution and the holding period in such property will begin on the day following such distribution.

        If a U.S. holder is required to satisfy any liability of ours not fully covered by our reserves, payments by U.S. holders in satisfaction of such liabilities would generally produce a capital loss in the year paid, which, in the hands of individual U.S. holders, could not be carried back to prior years to offset capital gains realized from liquidation distributions in those years.

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Passive Foreign Investment Company Considerations

        The treatment of a U.S. holders holding our common stock could be materially different from that described above if we are or were treated as a "passive foreign investment company" within the meaning of Section 1297 of the Code (a "PFIC") for U.S. federal income tax purposes.

        A non-U.S. corporation, such as our Company, will be a PFIC, if, in the case of any particular taxable year, either (i) 75% or more of its gross income for such year consists of certain types of "passive" income or (ii) 50% or more of the average quarterly fair market value of its assets during such year produce or are held for the production of passive income. For this purpose, cash is categorized as a passive asset and the company's unbooked intangibles associated with active business activities may generally be classified as active assets. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. We will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or indirectly, more than 25% (by value) of the stock.

        Based on the price of our common stock and composition of our assets, we believe that we were a PFIC for our taxable years ending December 31, 2008 through December 31, 2015 and that we were not a PFIC for our taxable years ending December 31, 2016 through December 31, 2018. Additionally, the determination of whether we are a PFIC is made annually and depends on the particular facts and circumstances (such as the valuation of our assets, including goodwill and other intangible assets) and also may be affected by the application of the PFIC rules, which are subject to differing interpretations. Accordingly, there can be no assurances that we will not be a PFIC for the taxable year ending with the liquidation (or if earlier, the taxable year ending December 31, 2019).

        If we have been a PFIC for any taxable year during which a U.S. holder held our common stock, unless the U.S. holder had made a timely qualified electing fund election or mark-to-market election with respect to the shares, the U.S. holder will generally be subject to special tax rules in connection with the Liquidation distribution. In general, under the PFIC rules, in connection with the Liquidation distribution:

•

any excess distribution and/or gain will be allocated ratably over the U.S. holder's holding period for the common stock;



•

the amount allocated to the current taxable year and any taxable years in the U.S. holder's holding period prior to the first taxable year in which we are a PFIC, each a pre-PFIC year, will be taxable as ordinary income;



•

the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect applicable to the U.S. holder for that year; and



•

an interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year.

We cannot provide any assurances regarding our PFIC status for the current or prior taxable years. Regardless of whether you made a qualified electing fund election or mark-to-market election with respect to the shares, we strongly urge you to consult your tax advisor regarding the impact of our PFIC status on your investment in the common stock as well as the application of the PFIC rules to your investment in the common stock.

Backup Withholding

        In order to avoid "backup withholding" of U.S. federal income tax on the Liquidation distribution, each U.S. holder, unless an exception applies, may be required to provide such U.S. holder 's correct taxpayer identification number ("TIN") on IRS Form W-9 (or, if appropriate, another withholding form) and certify under penalties of perjury that such number is correct and that such shareholder is not subject to backup withholding. If a Company shareholder fails to provide the correct TIN or certification, payments received may be subject to backup withholding at the then prevailing rate (currently at 24%). Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may generally be obtained from the IRS, provided that the required information is properly furnished in a timely manner to the IRS.

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        The tax consequences of the Liquidation Plan may vary depending upon the particular circumstances of the shareholder. We recommend that each shareholder consult his, her or its tax advisor regarding the U.S. federal income tax consequences of the Liquidation Plan as well as the state, local and foreign tax consequences.

        This Proxy Statement does not address any tax considerations other than certain Canadian federal income tax considerations and certain material U.S. federal income tax considerations. Shareholders who are resident in jurisdictions other than Canada or the U.S. should consult their own tax advisors with respect to the tax implications in such jurisdictions of the Liquidation and any distributions that may be made in connection therewith. All Shareholders should consult their own tax advisors regarding provincial, territorial or other tax considerations of the Liquidation and any distributions that may be made in connection therewith.

Consequences if the Liquidation Plan is not Approved

        NOVELION DOES NOT HAVE SUFFICIENT RESOURCES, OPERATIONS OR ASSETS TO CONTINUE AS A STAND-ALONE OPERATING COMPANY. IF THE LIQUIDATION RESOLUTION AND THE LIQUIDATOR RESOLUTION ARE NOT APPROVED, THE FUTURE OF NOVELION WILL BE UNCERTAIN, AND ANY REALIZATION OF VALUE FOR YOUR NOVELION SHARES WILL LIKELY BE SIGNIFICANTLY DELAYED OR YOU MAY NOT REALIZE ANY VALUE FOR YOUR NOVELION SHARES. IF THE LIQUIDATION RESOLUTION AND THE LIQUIDATOR RESOLUTION ARE NOT APPROVED, THE COMPANY MAY APPLY TO COURT FOR AN ORDER THAT A LIQUIDATOR BE APPOINTED AND THAT THE COMPANY BE LIQUIDATED, WOUND UP AND DISSOLVED.

Vote Required and Board of Director's Recommendation

        Approval of the Liquidation Resolution and the Liquidator Resolution would give the Board authority to complete, among other things, the Liquidation Plan as described herein.

Proposal No. 1 Approval of the Liquidation Resolution

        This proposal requires the affirmative vote of two-thirds of the votes cast by, or on behalf of, the shareholders of the Company entitled to vote present in person or by proxy voting at the Annual Meeting. Unless the shareholder directs that the shareholder's common shares are to be voted against the Liquidation Resolution, the persons named in the enclosed Form of Proxy intend to vote FOR the Liquidation Resolution.

        The following special resolution will be submitted for a shareholder vote at the Annual Meeting:

"BE IT RESOLVED AS A SPECIAL RESOLUTION OF SHAREHOLDERS THAT:

1.

The Company is hereby authorized to voluntarily liquidate, wind-up and dissolve pursuant to section 319 of the BCBCA, which Liquidation shall become effective and commence at a time to be determined by the Board of the Company in accordance with the terms of the Liquidation Plan substantially in the form attached to the Proxy Statement of the Company dated [    ·    ] as "Schedule A — Plan of Liquidation and Distribution";



2.

the Liquidation Plan is hereby approved and any officer or director of the Company is authorized to execute and deliver the Liquidation Plan;



3.

the Company is hereby authorized to make one or more distributions following the Effective Date by way of a reduction of capital, in an amount not to exceed the capital, provided that the solvency requirements of the BCBCA and section 101 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended, are satisfied at the time of the distribution;



4.

notwithstanding the provisions hereof, the Board is authorized to delay or determine not to proceed with the implementation of any of the matters contemplated by the foregoing resolutions and the Proxy Statement, without further approval of the shareholders of the Company, if in the opinion of the Board, it is necessary or desirable to do so, and may, pursuant to the provisions of the BCBCA revoke this special resolution at any time before it is acted upon without further approval of the shareholders of the Company; and

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5.

any officer or director of the Company be and is hereby authorized, on behalf of and in the name of the Company, to take all necessary steps and proceedings, and to execute and deliver and file any and all declarations, agreements, documents and other instruments and to do all such other acts and things (whether under corporate seal of the Company or otherwise) that may be necessary or desirable to give effect to the provisions of this resolution."

        The Board of Directors unanimously recommends that our shareholders vote "FOR" the Liquidation Resolution.