Exhibit
4.23





 


Proposal
for XORTX Therapeutics Inc.


 


Development
of Prototype Capsule and Tablet Formulations for Potential Phase III Clinical Studies


 


Document:
QUO.XOR.002


 


Covar Pharmaceuticals
Inc. 


2/21/2022


 




     


     


    






Document: QUO.XOR.002


 


Table of Contents


 


Table of Contents 


 


	1.        Introduction	3
	2.        Environmental,
    Health and Safety	3
	3.        Analytical
    Method Transfer and Development	4
	       3.1       Cleaning
    Assay by HPLC Transfer	4
	       3.2       Analytical
    Method Development	4
	4.        API
    Characterisation	4
	5.        Granulate
    Size Reduction	4
	6.        Excipient
    Compatibility (optional)	6
	7.        Development
    of Capsule Formulation	7
	8.        Development
    of Tablet Formulation	7
	9.        Tablet
    Film Coating (Optional)	8
	10.      Cleaning
    Qualification	8
	11.      Stability
    Assessment of Formulations	8
	12.      Report	9
	13.      API
    Requirement	9
	14.      Project
    Management	9
	15.      Timeline	9
	16.      Budget
    Summary	10
	17.      Terms
    and Conditions	14




    Page | 2
Confidential


    Document: QUO.XOR.002


    







1.         Introduction


 


XORTX Therapeutics Inc. (XORTX)
is a biotechnology company with three drug development programs, two of which are clinically advanced products under development
— XRx-008 for Autosomal Dominant Polycystic Kidney Disease (ADPKD), XRx-101 for Coronavirus / COVID-19 infection and XRx-225
for Type 2 Diabetic Nephropathy (T2DN). XORTX is working to advance its clinical development stage products — XRx-008 and
XRx-101 - that target xanthine oxidase to inhibit production of uric acid.


 


The drug substance of interest
in this proposal is Oxypurinol for the treatment of ADPKD and COVID-19. The molecule was previously formulated as a capsule and
conditionally approved by the FDA. The innovator company never sought full approval. XORTX gained the rights to the drug and intends
to file an NDA via the 505(b)(2) pathway for treatment of ADPKD in mid-2025.


 


The current drug formulations
are based on powder filled capsules including an organic base (L-arginine) to increase the drug substance bioavailability which
was a factor in the earlier application.


 


L-arginine is hygroscopic and
exposure to moisture may adversely affect the manufacturability, stability and performance of the product. Therefore, exposure
to excessive moisture and humidity will be avoided during development, manufacturing and storage of the product.


 


The intent of this proposal is
to develop prototype, immediate release, capsule and tablet formulations with the following characteristics:


 


		●	Each
                                         formulation will contain Oxypurinol (200 mg), L-arginine (600 mg), and other appropriate
                                         excipients






		●	Use
                                         of appropriate excipients to facilitate product performance and manufacturability






		●	Comparative
                                         dissolution profiles for existing formulation and the formulations being developed will
                                         be evaluated, apply f2 comparison if acceptable






		●	Scalable
                                         to large-scale manufacturing.



 


The development work in this
proposal will be conducted under non-GMP condition.


 


2.         Environmental, Health and Safety


 


The Environmental, Health and
Safety (EH&S) requirements for handling the active pharmaceutical ingredient (API) was provided by client.


 






    Page | 3
Confidential


    Document: QUO.XOR.002


    

 


		3.	Analytical Method Transfer
and Development



 


		3.1	Cleaning Assay by HPLC
Transfer



 


A validated HPLC method for the
API cleaning assay will be transferred to Covar to support cleaning qualification of equipment for the manufacture of oxypurinol
products.


 


		3.2	Analytical Method Development



 


The following test methods will
be developed for the present study


 


		●	Content
                                         and related impurities assay for tablets and capsules by HPLC



 


It is assumed that the same dissolution
method by HPLC for existing capsules will be suitable for use in the present study.


 


Phase appropriate method validation
may be conduct upon request at additional cost.


 


The following compendial tests
may be evaluated before testing


 


		●	Appearance






		●	ID
                                         by FTIR (ATR)






		●	Disintegration






		●	Loss
                                         on drying



 


		4.	API Characterisation



 


The following physical properties
of oxypurinol drug substance will be studied:


 


		●	Appearance






		●	Flow
                                         properties by Flodex






		●	Optical
                                         microscopy






		●	Bulk
                                         and tap density (compressibility)






		●	Particle
                                         size distribution by sieve analysis






		●	Particle
                                         size distribution by laser diffraction if aggregates can be dispersed in water






		●	Powder
                                         x-ray diffraction






		●	Differential
                                         scanning calorimetry



 


		5.	Granulate Size Reduction



 


The API is expected to be supplied
as an agglomerated material. Different granule size reduction approaches will be evaluated in the following order:


 


1. Granule size reduction
by high shear mixing


 






    Page | 4
Confidential


    Document: QUO.XOR.002


    

 


Oxypurinol and L-arginine
(mass ratio to be defined) will be mixed under different conditions in a conventional high shear granulator at different chopper
speeds and time. The powder blend will be examined under an optical microscope after high shear mixing. Based on the results,
a powder blend (after high shear mixing) will be dispersed in water to dissolve the L-arginine and the particle size distribution
of the sheared drug substance will be determined by laser diffraction. The powder blend will also be filled into gelatin capsules
and tested for dissolution (3 vessels)


 


2. Granule size reduction
by sieving


 


Oxypurinol and L-arginine (mass
ratio to be defined) will be blended (e.g. using a V-blender) and sieved (screen size to be defined). The sieved blend will be
examined under the optical microscope and the particle size distribution of the API will be determined by laser diffraction. The
dissolution profile of the powder blend after sieving will also be determined.


 


3. Milling in the presence
of L-arginine or a suitable excipient


 


Milling trials will be conducted
using a Quadro Comil U5, which is a milling equipment known to be scalable by design. The following strategies will be considered:


 


		●	Milling
                                         of a mixture of API and excipient such as L-arginine or microcrystalline cellulose (e.g.
                                         Avicel PH102).






		●	Milling
                                         of API and excipient such as L-arginine or microcrystalline cellulose using a screen
                                         with larger openings than that being used (screen with a openings of 150 micron). A multiple
                                         pass process may be considered and evaluated.






		●	Milling
                                         of API alone at sub-ambient temperature may be considered. A low milling temperature
                                         may be maintained by addition of dry ice to the input milling material.






		●	Milling
                                         of a mixture of API and excipient such as L-arginine or microcrystalline cellulose at
                                         sub-ambient temperature may be considered. A low mill temperature may be maintained by
                                         addition of dry ice to the input milling material.



 


In each milling trial, sufficient
quantity of oxypurinol with or without L-arginine/excipient (mass ratio to be defined) will be blended (e.g. using a v-blender)
and milled using the Quadro Comil (screen size 150 micron, except for multiple pass trials) for up to one hour. The temperature
of the impeller will be monitored using an infrared thermometer during the milling process and the milling rate will be monitored
online using a suitable balance.


 


A de-agglomeration method will
be selected, and the de-agglomerated material will be examined by:


 


		●	Appearance






		●	Particle
                                         size distribution by laser diffraction



 






    Page | 5
Confidential


    Document: QUO.XOR.002


    

 


		●	Optical
                                         microscopy






		●	Powder
                                         X-ray diffraction (optional, non-GMP in-house or by third party)






		●	Differential
                                         scanning calorimetry (DSC)






		●	Assay
                                         and related impurities by HPLC



 


		6.	Excipient Compatibility
(optional)



 


Preformulation data such as those
collected from existing formulations and API characterisation will be studied. Excipient candidates will be proposed to client
for the excipient compatibility study.


 


The following will be considered
for potential excipients:


 


		●	Degradation
                                         pathway and potential degradation pathway of the API






		●	Moisture
                                         content and hygroscopicity






		●	Compression
                                         behavior






		●	Particle
                                         size distribution






		●	Regulatory
                                         acceptance






		●	Bioavailability
                                         impact






		●	Supplier
                                         sourcing



 


Effort will be made to avoid
excessive use of excipients to preserve the impact of L-arginine on the bioavailability of the drug substance.


 


Up to 10 powder blends of formulations
will be prepared and compressed into round biconvex tablets (compression weight around 1000 mg) using a tabletop single-station
(manual) compression machine. The samples will be packaged in 40mL HDPE bottle and induction sealed with and without desiccant.
The packaged tablets will be stored at 25, 40 and 50°C. The 50°C samples will be evaluated using the following tests:


 


		●	Appearance






		●	Assay
                                         and impurities






		●	Disintegration



 


Samples stored under other conditions
will be tested if needed with additional cost.


 


Based on the excipient compatibility
study results, a lead formulation and a backup formulation will be identified and tested for dissolution for further formulation
development.


 






    Page | 6
Confidential


    Document: QUO.XOR.002


    

 


		7.	Development of Capsule
Formulation



 


Based on the composition of the
lead formulation from excipient compatibility study and/or existing formulation development data, up to five prototype capsules
blends will be prepared and evaluated for the following properties:


 


		●	Appearance
                                         before and after storage with and without desiccant






		●	Flow
                                         properties by Flodex






		●	Tap
                                         and bulk density



 


Based on the blend testing results,
a lead blend and a backup capsule blend will identified for processability and physical stability, The lead formulation will be
filled into white opaque size 00 elongated or 000 hard gelatin capsules using a manual encapsulation machine and tested for:


 


		●	Appearance






		●	Fill
                                         weight






		●	Disintegration






		●	Dissolution



 


		8.	Development of Tablet Formulation



 


Based on the composition of the
lead capsule blend and background stability information from oxypurinol formulations, up to 6 prototype blends (about 500 g each)
will be prepared. The composition of the prototype blends may be taken directly from those of the capsule blends. The prototype
blends may also be prepared to evaluate to the effect of lubricant, disintegrant, and binder levels on their flow and compression
properties.


 


The compression blends will be
evaluated before compression for:


 


		●	Appearance






		●	Flow
                                         properties by Flodex






		●	Bulk
                                         and tap densities



 


The compression blends will be
compressed into tablets (of different tablet hardness) of plain biconvex capsule shaped tablets of 1 g or less. Plain, biconcave,
capsule shape tooling will be used for tablet compression. It is assumed that the formulation blends will be directly compressible.
Otherwise, a dry granulation method will be employed by slugging or by roller compaction using a tabletop roller compactor to
be acquired by Covar a its own cost. At present, several used tabletop roller compactors is available for purchase in North America
and for immediate delivery.


 


The formulations will be prepared
using the following equipment


 






    Page | 7
Confidential


    Document: QUO.XOR.002


    

 


		●	PK
                                         V-blender






		●	Instrumented
                                         Piccola bilayer tablet press (partially tooled, B tooling)



 


The compressed tablets will be
evaluated for:


 


		●	Appearance






		●	Crushing
                                         strength






		●	Friability






		●	Thickness



 


Based on the results, a suitable
batch of tablets will be prepared at 1 kg scale. 500 g of the compressed tablets will be packaged in induction sealed (HDPE, 40
mL) bottles with and without desiccant and stored at 25°C ± 2°C / 60% ± 5% RH and 40°C ± 2°C
/ 75% ± 5% RH.


 


		9.	Tablet Film Coating (Optional)



 


About 250 g of the compressed
tablets will be aqueous film coated using a moisture barrier coating composition, Opadry® amb II. An enhanced O’Hara pan coater
(Labcoat M10, 8 inch perforated coating pan) will be used for the coating operation. The coated tablets will be evaluated for
dissolution and packaged in induction sealed (HDPE, 40 mL) bottles with and without desiccant and stored at 25°C ±
2°C / 60% ± 5% RH and 40°C ± 2°C / 75% ± 5% RH, for further stability testing if required with
additional cost.


 


		10.	Cleaning Qualification



 


Cleaning qualification campaign
will be performed for the process training. The cleaning process is considered validated if three satisfactory cleaning verification
is achieved using the same equipment.


 


		11.	Stability Assessment of
Formulations



 


The package capsules and uncoated
tablets packaged without desiccant will be tested in accordance with the following schedule:


 


		●	Initial






		●	2
                                         wk, 1 and 3 months at 40°C ± 2°C / 75% ± 5% RH (accelerated condition)






		●	2
                                         wk, 1 and 3 months at 25°C ± 2°C / 60% ± 5% RH (long term condition;
                                         optional testing)



 


The packaged capsules and uncoated
tablets with desiccant will also be tested after storage at 40°C ± 2°C / 75% ± 5% RH (accelerated condition)
for 2 wk, 1 and 3 months.


 






    Page | 8
Confidential


    Document: QUO.XOR.002


    

 


The following tests will be conducted:


 


		●	Appearance






		●	Content
                                         uniformity by HPLC (initial only)






		●	Assay
                                         and related impurities by HPLC






		●	Water
                                         content by LOD






		●	Disintegration






		●	Dissolution
                                         by HPLC






		●	Crushing
                                         strength (tablets only)






		●	Friability
                                         (tablets only)






		●	Weight
                                         (bottle and tablets) loss on storage



 


The coated tablets (if prepared)
and the rest of the formulations packaged with or without desiccant will be tested upon requested with additional cost.


 


Because of the known satisfactory
chemical stability of the drug substance, it may be possible to define the composition and the packaging components for the potential
Phase III clinical formulation using the 2 week (accelerated and long term) stability data.


 


		12.	Report



 


A development report will be
prepared by Covar.


 


		13.	API Requirement



 


API (GMP API and/or non-GMP)
and reference standards for analytical testing will be supplied by the client. Contract service for reference standard preparation
and qualification by a third party is available upon request.


 


	Preformulation, API milling trial and excipient compatibility	= 1 kg
	Capsule development	= 0.5 kg
	Tablet development including film coating	= 1.5 kg
	Contingency	= 1 kg
	Total     	= 4 kg


 


		14.	Project Management



 


A project manager will be assigned
to coordinate project activities with project team members. A kickoff meeting will be held after execution of agreement and deposit
is received. A dedicated project team from Covar will teleconference with the Client on regular basis.


 


		15.	Timeline



 


See MS Project file.


 






    Page | 9
Confidential


    Document: QUO.XOR.002


    

 


		16.	Budget Summary



 


	Activity	Estimated
    

    Cost (CAD)
	Material
    Management	1,796.88
	Material
    purchase and management	 
	Method
    Transfer and Development	11,767.38
	Cleaning
    Assay by HPLC method transfer	 
	Method
    Development for content and related impurities assay for tablets and capsules by HPLC	 
	API
    Characterisation	3,346.50
	Appearance	 
	Flow
    properties by Flodex	 
	Optical
    microscopy	 
	Bulk
    and tap density (compressibility)	 
	Particle
    size distribution by sieve analysis	 
	Particle
    size distribution by laser diffraction if aggregation can be dispersed in sample preparation	 
	Powder
    x-ray diffraction	 
	Differential
    scanning calorimetry	 
	Data
    analysis and reporting	 
	Granule
    Size Reduction of API	14,961.50
	Granule
    size reduction by high shear mixing trials	 
	Granule
    size reduction by sieving	 
	Milling
    in the presence of L-arginine or a suitable excipient	 
	Setup
    and cleanup	 
	Appearance	 
	Particle
    size distribution by laser diffraction	 
	Optical
    microscopy	 
	Powder
    X-ray diffraction (optional, non-GMP by third party)	 
	Differential
    scanning calorimetry (DSC)	 
	Assay
    and related impurities by HPLC	 
	Data
    analysis and reporting	 
	Excipient
    Compatibility (optional)	13,943.75
	Sample
    preparation	 
	Appearance	 
	Assay
    and impurities	 
	Disintegration	 
	Report
    results	 
	Development
    of Capsule Formulation	8,420.88
	Sample
    preparation	 
	Appearance
    before and after storage with and without desiccant	 
	Setup
    and cleanup	 
	Flow
    properties by Flodex	 
	Tap
    and bulk density	 
	Encapsulation	 



 






    Page | 10
Confidential


    Document: QUO.XOR.002


    

 


	Activity	Estimated
    

    Cost (CAD)



	Appearance	 
	Fill
    weight of capsules	 
	Disintegration	 
	Dissolution	 
	Development
    of Tablet Formulation	22,482.50
	Set
    up	 
	Prototype
    preparation (6 batches)	 
	●         
    Appearance	 
	●         
    Flow properties by Flodex	 
	Bulk
    and tap densities	 
	Packaging	 
	Clean
    up	 
	Data
    analysis and reporting	 
	Tablet
    Film Coating (Optional)	6,307.75
	Setup	 
	Coating	 
	Clean
    up	 
	Dissolution	 
	Packaging	 
	Dissolution	 
	Cleaning
    Qualification	10,511.00
	Protocol	 
	Sampling	 
	Testing	 
	Reporting	 
	QA
    approval	 
	Stability
    Assessment of Capsule and Tablet Formulations	 
	Protocol	8,711.25
	Set
    up	 
	Initial	10,084.06
	Appearance	 
	Content
    uniformity by HPLC (initial only)	 
	Assay
    and related impurities by HPLC	 
	Water
    content by LOD	 
	Disintegration	 
	Dissolution
    by HPLC	 
	Crushing
    strength (tablets only)	 
	Friability
    (tablets only)	 
	Weight
    (bottle and tablets) loss on storage	 
	2
    weeks	15,306.50
	Appearance	 
	Assay
    and related impurities by HPLC	 
	Water
    content by LOD	 
	Disintegration	 



 






    Page | 11
Confidential


    Document: QUO.XOR.002


    

 


 


	Activity	Estimated
    

    Cost (CAD)



	Dissolution
    by HPLC	 
	Crushing
    strength (tablets only)	 
	Friability
    (tablets only)	 
	Weight
    (bottle and capsules/tablets) loss on storage	 
	1
    month	15,306.50
	Appearance	 
	Assay
    and related impurities by HPLC	 
	Water
    content by LOD	 
	Disintegration	 
	Dissolution
    by HPLC	 
	Crushing
    strength (tablets only)	 
	Friability
    (tablets only)	 
	Weight
    (bottle and capsules/tablets) loss on storage	 
	3
    months	15,306.50
	Appearance	 
	Assay
    and related impurities by HPLC	 
	Water
    content by LOD	 
	Disintegration	 
	Dissolution
    by HPLC	 
	Crushing
    strength (tablets only)	 
	Friability
    (tablets only)	 
	Weight
    (bottle and capsules/tablets) loss on storage	 
	Development
    Report	13,800.00
	Subtotal	172,052.94
	Project
    management fee (5%)	25,807.94
	Total	197,860.88


 


Third-party contractor fees will
be cross charged plus 5% service fee. Other fees, including but not limited to input processing materials, shipping, customs duties,
and consumables such as chromatography columns and solvents will be cross charged at cost plus 10% service fee.


 




    Page | 12
Confidential


    Document: QUO.XOR.002


    

 





	Xortx
    Therapeutics Inc.	 	Covar
    Pharmaceuticals Inc.	 
	 	 	 	 	 	 	 	 	 	 
	By:	/s/
    Allen Davidoff	 	By:	/s/ Kwok Chow	 
	 	 	 	 	 	 	 	 	 	 
	Name:	Allen
    Davidoff	 	Name:	 	Kwok Chow, PhD	 
	 	 	 	 	 	 	 	 	 	 
	Title:	CEO	 	Title:	President	 
	 	 	 	 	 	 	 	 	 	 
	Date:	Feb
    24, 2022	 	Date:	Feb 25, 2022	 
	 	 	 	 	 	 	 	 	 	 


 







    Page | 13
Confidential


    Document: QUO.XOR.002


    

		17.	Terms and Conditions



 


Services


 


Covar Pharmaceuticals Incorporated
(Covar) agrees to perform the pharmaceutical development services described in the Project Scope (“Services”)
of this Agreement. Services will be performed in the Preferred Provider Laboratories (Provider) selected by Covar.
Unless otherwise stated the Services will be non-GMP.


 


Parties must agree on Changes
to the Services (“Changes”).


 


Minor Changes will be confirmed
by electronic mail, or other written document. Significant Changes (such as a request by the Client to change the Project
Scope) will be confirmed by a Change of Scope Agreement.


 


Payment


 


Client will pay Covar
for the Services.


 


Client will pay Covar
a refundable deposit equal to 30% of the estimated cost provided in this proposal. The deposit will be used for the final
payments of the project.


 


Services Covar may issue
an invoice upon completion of each milestone set out in the Budget Summary or revised Budget Summary in Changes.


 


Covar invoice will be
due and payable within 30 days of the date of the invoice. 


 


Interest on past due accounts
will accrue at a rate of 1.5% per month.


 


In the event that payment in
full is not received by Covar within thirty (30) days of Client’s receipt of the data and results, this Agreement
may be terminated at Covar’s sole discretion and all right and title to the data and results.


 


Ownership
of Data


 


Client will own all data
and information specifically and directly arising from the provision of the Services, and as such Covar will have no claim
on any intellectual property that may be derived from any such data and information.


 


Intellectual
Property


 


The term “Intellectual
Property” includes, without limitation, rights in patents, patent applications, formulae, trade-marks, trade-mark applications,
trade-names, trade secrets, inventions, copyright, industrial designs and know-how.


 






    Page | 14
Confidential


    Document: QUO.XOR.002


    

 


For the term of this Agreement,
Client hereby grants to Covar, a non-exclusive, paid-up, royalty-free, non-transferable license of Client’s Intellectual Property
which Covar must use in order to perform the Services.


 


All Intellectual Property generated
or derived by Covar in the course of performing the Services, to the extent it is specific to the development, manufacture, use
and sale of the Client’s Product that is the subject of the Services, will be the exclusive property of Client.


 


All Intellectual Property generated
or derived by Covar while performing the Services which is not specific to, or dependent upon, Client’s Product and which has
application to manufacturing processes or formulation development of drug products or drug delivery systems will be the exclusive
property of Covar. Covar hereby grants to Client, a non-exclusive, paid-up, royalty-free, transferable license of the Intellectual
Property which Client may use for the manufacture of Client’s Product.


 


Confidentiality


 


The confidentiality agreement
entered into between the parties will apply to all confidential information about the parties and the Services to be conducted
under this Agreement and the Confidentiality Agreement is deemed to be incorporated herein by reference. If the
Confidentiality Agreement expires or terminates prior to the expiration or termination of this Agreement, then the
terms of the Confidentiality Agreement will nonetheless continue to govern the parties’ obligations of confidentiality
for the term of this Agreement and for five years thereafter. Covar shall have the right to disclose confidential
information hereunder to its Preferred Providers solely for the purpose of performing the Services. Covar represents that
it has entered into confidentiality Agreements with each Preferred Provider consist with the terms hereof.


 


Providers shall hold in
confidence and not disclose or use for any purpose other than for the provision of the Services any “Confidential Information”
provided by Client. “Confidential Information” means any information provided by the Client to Providers
in confidence and any Client samples and/or materials associated with the Services, and shall further include any information
and all related data and information generated pursuant to the provision of the Services.


 


Confidential Information shall
not include or otherwise encompass any information and materials which:


 


		●	are
                                         part of the public domain, or become part of the public domain through no fault of Providers;



 






    Page | 15
Confidential


    Document: QUO.XOR.002


    

 


		●	are
                                         obtained from a third party who is not under a duty of confidentiality respecting the
                                         Confidential Information and said third party has a legal right to disclose such information;






		●	are
                                         identified by the Client as no longer constituting Confidential Information of
                                         the Client;






		●	are
                                         already known at the time of disclosure by Client to Providers, as can
                                         be demonstrated by written or other records/information; or






		●	are
                                         developed independently by Providers without access to the Confidential Information
                                         of the Client, as can be demonstrated by written or other records/information.



 


In the event that Covar is
required to disclose Client Confidential Information by law or an order of a court, tribunal or government agency, Covar
shall promptly notify Client and give Client a reasonable opportunity to seek a confidentiality order or take
other appropriate action in respect of the proposed disclosure.


 


This obligation of confidentiality
in respect of any particular Confidential Information shall survive for a period of three (3) years from the earlier of
(i) the full and final provision of the specific Services associated with the particular Confidential Information, or (ii) the
expiration or earlier termination of this Agreement.


 


Term
and/or Termination


 


Notwithstanding, a Party may
earlier terminate this Agreement upon the provision of thirty (30) day notice to the other Party, and the Parties shall
immediately cease all unnecessary activities and shall cooperate to minimize all costs associated with this cessation/termination
of activities associated with the provision of said Services.


 


Either party may terminate this
Agreement if a party is in material breach of any part of this Agreement and that party fails to remedy the breach
within 30 days after receiving notice of the breach from the non-breaching party.


 


Client may terminate this
Agreement upon 5 days prior written notice for any business reason.


 


Covar may terminate the
Agreement if the Client requests to reschedule any part of the Services beyond 180 days.


 


Upon completion or expiry of
the Agreement or if the Client terminates the Agreement for any business reason or if Covar terminates
the Agreement because of: (i) Client’s failure to cure any default within the 30 day notice period; or (ii) Client
rescheduling any part of the Services beyond the 180 days, then Client will pay to Covar any fees and expenses
due to Covar and any additional costs incurred by Covar with the Services.


 






    Page | 16
Confidential


    Document: QUO.XOR.002


    

 


Client will arrange for
the pickup from the Covar site of all materials owned by Client within ten days after the earlier of the completion,
or termination of this Agreement.


 


Shipping
of API and Materials


 


Client will, at its expense,
supply Covar with sufficient quantities of API for Covar to perform the Services. For all shipments of API and materials
from Client to Covar, Client will pay all costs including transportation, import duties and taxes. All shipments
of API will be accompanied by appropriate Safety Data Sheet (e.g. MSDS).


 


For import of API, Client
or Client’s broker will be the “Importer of Record.” Client’s obligation will include obtaining
the proper release of API from the local customs and health authorities.


 


For shipments (if applicable)
of Client’s Product or Client’s API, the Client will pay all transportation costs and also bear the risks
for bringing the goods to their final destination.


 


Indemnity


 


Client shall indemnify
and save harmless Covar against all costs, actions, suits, claims, losses or damages and for all other matters arising
out of its (i.e Client’s) use or any other exploitation of the data, results, conclusions, and products derived therefrom,
arising out of, or resulting from, this Agreement (and any intellectual property associated therewith), except to the extent
that such were caused by Covar’s gross negligence, willful misconduct or material breach of this Agreement.


 


Covar will defend, indemnify
and hold the Client harmless against Covar of any of its obligations or warranties under this Agreement except
to the extent that these Losses are determined to have resulted from the negligence or willful misconduct of Client.


 


Limitation
of Liability


 


Covar (and its directors,
officers, employees, staff members, students, research trainees and agents) shall not be liable for any direct, indirect, consequential,
or other damages suffered by Client or any others resulting from the use of the data, results or conclusions, and any products
and intellectual property associated therewith, conceived, discovered, or otherwise premised on, or developed under or as a result
of, or consequential to, this Agreement. The entire risk as to any use of said data, conclusions or results (and any products
and intellectual property associated therewith), and the design, development, manufacture, offering for sale, sale, or other disposition
and/or performance of the data, results, conclusions and products arising therefrom (and any intellectual property associated
therewith) is assumed entirely by Client, without any legal or equitable recourse to Covar


 






    Page | 17
Confidential


    Document: QUO.XOR.002


    

 


If Covar fails to materially
perform any part of the Services in accordance with the terms of this Agreement, Covar may repeat that part of the
Service at Covar’s costs if Client supplies the API. Under no circumstances whatsoever will Covar reimburse
Client for the cost of the API. Under no circumstances whatsoever will either party be liable to the other in Agreement,
tort, negligence, breach of statutory duty or otherwise for (i) any (direct or indirect) loss of profits, of production, of anticipated
savings, of business or goodwill or (ii) any other liability, damage, cost or expense of any kind incurred by the other party
of an indirect or consequential nature, regardless of any notice of the possibility of the damages.


 


No
Warranty


 


Covar makes no warranty of any
kind, either expressed or implied, by fact or law, other than those expressly set forth in this Agreement. Covar makes no warranty
for any particular results from the performance of the services or with respect to any data or information generated therefrom,
or of fitness for a particular purpose or warranty of merchantability for the Client’s product.


 


Disputes


 


All negotiations under this provision
shall be considered confidential and shall be treated as compromise and settlement negotiations and deemed to be “off the
record” and without prejudice.


 


General
Provisions


 


This Agreement shall be
construed according to the laws of the Province of Ontario and the federal laws of Canada applicable therein.


 


Each provision of this Agreement
shall be deemed separate, severable and distinct. If any part of any provision of this Agreement is found by a court
to be invalid, illegal or unenforceable in any way, the finding shall not limit or affect the validity, legality or enforceability
of the remaining provisions.


 


For the purposes of this Agreement
and all services to be provided under it, each Party shall be deemed to be an independent Agreement or and not an agent
or employee of the other Party. No Party shall have the authority to make any statements, representations or commitments of any
kind, or take any action which shall be binding on the other Party, except as may be explicitly provided for herein or authorized
by the other Party in writing.


 


Except as otherwise required
by law, neither Party shall, without the consent of the other Party, (i) use the name(s), logo(s), trade-mark(s) or trade-name(s)
of the other Party in connection with any products, publicity, promotion, news release, advertising or similar public statements
in respect of the Agreement and the Services provided, and (ii) make any other public disclosure in respect of this
Agreement and its subject matter. Notwithstanding, Covar may disclose the general subject matter and monies received further
to this Agreement without any further consent of Client.


 






    Page | 18
Confidential


    Document: QUO.XOR.002


    

 


This Agreement constitutes
the entire Agreement and understanding between the Parties and supersedes any prior Agreements between or among
the Parties with respect to the Services.


 


This Agreement may be
signed in separate counterparts and delivered by mail, facsimile or electronically, and, when so signed and delivered, all the
counterparts will together constitute one and the same instrument which is deemed to be an original.


 


Neither this Agreement,
nor any of either party’s rights hereunder, may be assigned or otherwise transferred by either party without the prior written
consent of the other party, which consent will not be unreasonably withheld.


 


Except for payment obligations,
neither party will be responsible for delay or failure in performance resulting from acts beyond the reasonable control and without
the fault or negligence of the party, including, but not limited to, strikes or other labour disturbances, wars, riot, crime,
communicable disease outbreaks„ acts of terrorism, fires, floods, storms, interruption of or delay in transportation, defective
equipment, power or regulation compliance of any government or act of God.


 


Any termination or expiration
of this Agreement will not affect any outstanding obligations or payments due hereunder prior to the termination or expiration,
nor will it prejudice any other remedies that the parties may have under this Agreement.


 








    Page | 19
Confidential