Liminal BioSciences : Annual MD&A - English

Management's discussion and analysis

For the quarter ended June 30, 2023

This Management's Discussion and Analysis, or MD&A, is intended to help the reader to better understand Liminal BioSciences Inc.'s ("Liminal" or "the Company") operations, financial performance and results of operations, as well as the Company's present and future business environment. This MD&A has been prepared as of August 8, 2023 and should be read in conjunction with Liminal's unaudited interim condensed consolidated financial statements for the quarter ended June 30, 2023, which are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, or IFRS (which we refer to as our interim financial statements). Our financial information is presented in Canadian Dollars and all references to "$" means Canadian Dollars. Additional information related to the Company, including the Company's Annual report on Form 20-F for the year ended December 31, 2022 (the "Annual Report"), is available on SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar. Given the recent entry into a definitive arrangement agreement (the "Arrangement Agreement") between Liminal BioSciences Inc. ("the Company") and Structured Alpha LP ("SALP") for the acquisition of all of the issued and outstanding common shares of the Company that it does not already own, the business activities, financial performance, and statements provided within this MD&A are subject to change based on the successful closing of the proposed transaction.

FORWARD-LOOKING STATEMENTS

This MD&A contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are based on our management's beliefs and assumptions and on information currently available to our management. These statements are "forward-looking" because they represent our expectations, intentions, plans and beliefs about our business and the markets we operate in and on various estimates and assumptions based on information available to our management at the time these statements are made. All statements other than statements of historical facts may be forward-looking statements. Without limiting the generality of the foregoing, words such as "may", "will", "expect", "believe", "anticipate", "intend", "could", "might", "would", "should", "estimate", "continue", "plan", "pursue", "seek", "project", "predict", "potential" or "targeting" or the negative of these terms, other variations thereof, comparable terminology or similar expressions, are intended to identify forward-looking statements although not all forward-looking statements contain these terms and phrases.

Forward-looking statements are provided for the purposes of assisting you in understanding our business, operations, prospects and risks at a point in time in the context of historical and possible future developments and therefore you are cautioned that such information may not be appropriate for other purposes. Actual events or results may differ materially from those anticipated in these forward-looking statements if known or unknown risks affect our business, or if estimates or assumptions turn out to be inaccurate. In particular, forward-looking statements included in this MD&A include, without limitation, statements with respect to:

• the ability to complete and the timing of completion of the transactions contemplated by the Arrangement Agreement between Liminal BioSciences and SALP, including our and SALP's ability to satisfy the conditions to the consummation of the transaction, including the adoption of the Arrangement Agreement and transactions contemplated thereby by our shareholders, and the possibility of any termination of the Arrangement Agreement before consummation;
• our plans to develop and commercialize our product candidates;

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• our ability to develop, manufacture and successfully commercialize value-added pharmaceutical products;
• our ability to reduce our cash burn;
• uncertainties associated generally with research and development, clinical trials and related regulatory reviews and approvals;
• the availability of funds and resources to pursue research and development projects;
• the successful and timely completion of our drug discovery, preclinical studies and clinical trials;
• the properties of our drug candidates;
• the analysis of our preclinical and clinical trial data;
• our ability to take advantage of business opportunities in the pharmaceutical industry;
• potential strategic transactions that we may pursue, including potential divestments or sale of non-core assets;
• our reliance on key personnel, collaborative partners and other third parties;
• the validity and enforceability of our patents and proprietary technology;
• expectations regarding our ability to raise capital;
• the use of certain hazardous materials;
• the availability and sources of raw materials;
• our third-party manufacturing capabilities;
• currency fluctuations;
• the value of our intangible assets;
• negative operating cash flow;
• the outcome of any current or pending litigation against us;
• uncertainties related to the regulatory process and approvals;
• increasing data security costs;
• costs related to environmental safety regulations;
• competing drugs, as well as from current and future competitors;
• developing products for the indications we are targeting;
• market acceptance of our product candidates by patients and healthcare professionals;
• our ability to secure insurance coverage;
• general changes in economic or market conditions, including inflation;

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• the impact of the ongoing COVID-19 pandemic and other geopolitical tensions, such as Russia's ongoing invasion of Ukraine, on our business and its potential effect on the operations of third party service providers and collaborators with whom we conduct business, our industry and the economy;
• volatility of our share price;
• our ability to comply with Nasdaq Capital Market's continued listing requirements; and
• other risks and uncertainties, including those listed in our Annual Report F titled "Item 3.D-Risk Factors."

Other factors that may cause actual results to differ from those expressed or implied in the forward-looking statements are discussed in our filings with the Canadian Securities Administrators and the U.S. Securities and Exchange Commission, including the section titled "Risk Factors" contained therein. You should refer to such "Risk Factors" for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this MD&A will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material.

In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified period or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

You should read this MD&A and the documents that we reference in this MD&A completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all our forward-looking statements by these cautionary statements.

This MD&A may contain market data and industry forecasts that were obtained from industry publications. Such data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We have not independently verified any third-party information. While we believe the market position, market opportunity and market size information included in this MD&A is generally reliable, such information is inherently imprecise.

In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this MD&A, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.

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Business Overview

Program Overview

We are a development stage biopharmaceutical company focused on discovering and developing novel and distinctive small molecule therapeutics that modulate G protein-coupled receptors, or GPCR, pathways. We are designing proprietary novel small molecule therapeutic candidates with the intent of developing best/first in class therapeutics for the treatment of metabolic, inflammatory, and fibrotic diseases with significant unmet medical needs, using our integrated drug discovery platform, medicinal chemistry expertise and deep understanding of the GPCR biology.

Our pipeline is currently made up of three development programs. The candidate we selected for clinical development, LMNL6511, a selective antagonist for the GPR84 receptor, is expected to commence a Phase 1 clinical trial in the second half of 2023. We are also developing LMNL6326 as an antagonist for the OXER1 receptor, targeting treatment of eosinophil-driven diseases, and GPR40 agonists, both of which are at the preclinical stage. In addition to these priority development programs, we continue to explore other development opportunities to add to our pipeline.

We believe that our drug discovery platform and deep understanding of GPCRs allows us to identify small molecule candidates that can accurately target GPCRs where other drug discovery approaches have been unsuccessful. Our drug discovery platform leverages a fully integrated chemistry and biology expertise supported by our broad in vivo capabilities, which allows us to investigate our preclinical drug candidates' efficacy in a wide variety of animal models and enables us to develop small molecule therapeutic candidates for the treatment of various metabolic, inflammatory, and fibrotic diseases. We aim to develop best or first-in-class therapies targeting indications with significant unmet needs, where a novel small molecule approach may be better suited using our drug discovery platform, specialized know-how and data-driven development plans. We are led by a strong, experienced team with proven track records in the discovery, development, and approval of biopharmaceuticals. Our team's extensive experience in clinical development and regulatory success is backed by our data driven philosophy.

Recent R&D milestones

In June 2023, we provided an update on our research and development programs:

• LMNL6326 was nominated as the lead preclinical candidate for our OXER1 antagonist development program, targeting the treatment of eosinophil-driven diseases.
• Advancement of clinical trial application (CTA) enabling preclinical studies of LMNL6511 to support CTA filing for Phase 1 clinical trial in the second half of 2023.
• Insights gained from In Vivo preclinical studies of LMNL6511 to further refine potential indications' spectrum.
• GPR40 agonist development program on track and the Company aims to identify potent, low molecular weight GPR40 agonists without significant PPARy activity in 2023.

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