• All development and commercialization rights of ELND005 drug candidate
  have been transferred to an Irish-domiciled company (“Irish
  Subsidiary”)

• Transition has acquired 100% of the common shares of Irish Subsidiary

• Irish Subsidiary will be responsible for the future development and
  commercialization of ELND005 for all disease indications

• Affiliates of Perrigo Company plc (“Perrigo”) will invest US$15 million
  and receive newly issued Transition common shares representing a 7%
  ownership stake in Transition

• Perrigo will be eligible to receive milestone payments and royalties
  from the approval and sale of ELND005 products

TORONTO, Feb. 28, 2014 /PRNewswire/ – Transition Therapeutics Inc.
(“Transition” or the “Company”) (NASDAQ: TTHI, TSX: TTH) announced the
acquisition of an Irish domiciled company (“Irish Subsidiary”), the
holder of all the development and commercialization rights of
neuropsychiatric drug candidate, ELND005. The Company also announced
a US$15 million investment by Perrigo to acquire approximately 7% of
Transition’s common shares. ELND005 is an oral drug candidate that is
being evaluated in three studies: a Phase 2 study for Agitation and
Aggression in Alzheimer’s Disease, a Phase 2 study for Bipolar Disorder
and a Phase 2A study in Down Syndrome.

After a series of transactions, Perrigo has transferred all of its
ELND005 rights and assets to Irish Subsidiary. Transition has acquired
Irish Subsidiary, which is now a 100% wholly-owned, subsidiary of
Transition. In parallel with this acquisition, Perrigo has invested
US$15 million and will receive 2,255,640 Transition common shares
representing approximately a 7% ownership stake in Transition.
Perrigo will also be eligible to receive up to US$40 million in
approval and commercial milestone payments and a 6.5% royalty on net
sales of ELND005 products and sublicense fees received. Going
forward, Irish Subsidiary will be responsible for all future
development and commercialization activities of the ELND005 drug
candidate.

“ELND005 is a unique drug candidate that has been shown to have an
acceptable safety profile in six clinical studies and reduced the
emergence of multiple neuropsychiatric effects including agitation,
aggression, depression and anxiety in a Phase 2 clinical study. By
acquiring the ELND005 rights, Transition has the opportunity to
complete the two current large Phase 2 studies underway in Agitation
and Aggression in Alzheimer’s Disease, and mood changes in Bipolar
Disorder. This drug candidate acts through a distinct mechanism of
action by reducing brain myo-inositol levels associated with
mood/behavioral changes. We believe this approach provides a unique
opportunity to achieve therapeutic benefit for patients with
neuropsychiatric symptoms. We are very pleased to work with Perrigo
and look forward to completing the current late-stage trials of
ELND005”, said Dr. Tony Cruz, Chairman and Chief Executive Officer of
Transition.

About ELND005

ELND005 is an orally bioavailable small molecule that is being
investigated for multiple neuropsychiatric indications on the basis of
its proposed dual mechanism of action, which includes β-amyloid
anti-aggregation and regulation of brain myo-inositol levels. An
extensive clinical program of Phase 1 and Phase 2 studies has been
completed with ELND005 to support clinical development, including the
published Phase 2 study ELND005-AD201 in AD. ELND005 is also being
studied as a potential treatment of agitation and aggression in
Alzheimer’s disease (Study ELND005-AG201), as a maintenance therapy of
Bipolar Disorder Type I (Study ELND005-BPD201) and as a therapy for
those with Down syndrome (Study ELND005-DS-201).

About Transition

Transition is a biopharmaceutical company, developing novel therapeutics
for disease indications with large markets. Transition’s lead CNS drug
candidate is ELND005 for the treatment of Alzheimer’s disease and
bipolar disorder. Transition’s lead metabolic drug candidate is TT-401
for the treatment of type 2 diabetes and accompanying obesity.
Transition’s shares are listed on the NASDAQ under the symbol “TTHI”
and the Toronto Stock Exchange under the symbol “TTH”. For additional
information about Transition, please visit www.transitiontherapeutics.com.

Notice to Readers: Information contained in our press releases should be
considered accurate only as of the date of the release and may be
superseded by more recent information we have disclosed in later press
releases, filings with the OSC, SEC or otherwise. Except for historical
information, this press release may contain forward-looking statements,
relating to expectations, plans or prospects for Transition, including
conducting clinical trials and potential efficacy of its products.
These statements are based upon the current expectations and beliefs of
Transition’s management and are subject to certain risks and
uncertainties that could cause actual results to differ materially from
those described in the forward-looking statements. These risks and
uncertainties include factors beyond Transition’s control and the risk
factors and other cautionary statements discussed in Transition’s
quarterly and annual filings with the Canadian commissions.

SOURCE Transition Therapeutics Inc.