Stonepine Capital Management LLC

Item 5.        Fees and Compensation

Stonepine’s compensation is negotiable and varies, but typically it charges a 2% annual
management fee with respect to each investor in Stonepine Capital, payable in quarterly
installments at the beginning of each calendar quarter based on the net market value of each
investor’s capital account on that date. Stonepine also typically receives a performance-based
allocation with respect to each investor in Stonepine Capital equal to 20% of net profits (including
both realized and unrealized gains and losses) otherwise allocable to such investor. Performance
allocations are made with respect to each investor at the end of each calendar year (and on
withdrawals or redemptions with respect to the amount withdrawn or redeemed), and are typically
only applied to the portion of profits that exceed the cumulative losses previously allocated to that
investor in that year or in any subsequent year.

Stonepine may waive or reduce all or part of the management or performance-based allocations
with respect to any investor or Fund. For example, Stonepine has waived or reduced the

management fee and performance-based allocations for certain strategic investors in Stonepine
Capital and for certain employees and family members. In addition, an SPV may be subject to
lower management fees and performance-based allocations than Stonepine Capital. Please see
Item 6 below for additional information regarding Stonepine’s receipt of performance-based
allocations.

Stonepine typically deducts management fees and performance allocations directly from the
Funds.

Stonepine believes that its fees are competitive with fees charged by other investment advisers for
comparable services. Comparable services may be available, however, from other sources for
lower fees.

The disclosure in this Item 5, together with the disclosure in Item 12, allow a plan that is subject
to the Employee Retirement Income Security Act of 1974 and that invests in an investment limited
partnership of which Stonepine is general partner, to use the “alternative reporting option” to report
Stonepine’s compensation as “eligible indirect compensation” on the Schedule C of the plan’s
Form 5500 Annual Return/Report of Employee Benefit Plan.

Relationships with each Fund are terminable on expiration of the Fund’s term, its dissolution or
the termination of Stonepine as the investment adviser to the Fund. Generally, each investor may
withdraw from Stonepine Capital on specified prior written notice, on the last day of any calendar
quarter. If an investor in Stonepine Capital makes a withdrawal before the day preceding the first
anniversary of the capital contribution to which the withdrawn amount relates, that investor must
pay Stonepine Capital a withdrawal fee of 5% of the amount withdrawn (as detailed in Stonepine
Capital’s governing documents). An investor who withdraws from a Fund on a date other than the
last day of a quarter does not receive a refund of the management fee previously paid. Investors
in an SPV may be subject to more favorable liquidity provisions than Stonepine Capital.

Each Fund is responsible for its own costs and expenses, including trading costs and expenses
(such as brokerage commissions, expenses related to short sales, and clearing and settlement
charges), research expenses, ongoing legal, audit, bookkeeping fees and expenses, and the fees
and expenses charged by the Fund’s administrator and sub-administrator for their accounting,
bookkeeping and other services.

Stonepine allocates any expenses that relate to multiple Funds among all of those Funds as it deems
appropriate in its reasonable discretion.

Stonepine bears its own operating, general, administrative and overhead costs and expenses, other
than the expenses described in the preceding two paragraphs. All or part of these costs and
expenses may be paid, however, by securities brokerage firms that execute the Funds’ securities
trades, as discussed in Item 12 below.

Item 7.        Types of Clients

Stonepine provides investment advice solely to investment funds. Investors in the Funds generally
are required to invest a minimum of $500,000, but Stonepine may waive, and has waived, this
minimum. Investors must be (i) “accredited investors” for purposes of Regulation D under the
Securities Act, and (ii) “qualified purchasers” as defined in Section 2(a)(51) of the Investment
Company Act.