AVECHO BIOTECHNOLOGY LIMITED — Capital/Financing Update 2016

May 16, 2016

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ASX Limited Market Announcements Office

Phosphagenics Signs Japanese License Option Agreement for TPM[®] /Oxycodone Patch

17 May 2016, Melbourne: Australian biotechnology company, Phosphagenics Limited (ASX: POH; OTCQX: PPGNY), today announced that it has expanded its existing license option agreement, with one of Japan’s largest healthcare companies, to include its TPM[®] /Oxycodone patch. This agreement is an extension to the agreement announced on 29[th] April 2016 for a license option to the TPM[®] /Oxymorphone patch and an R&D alliance for three other TPM[®] based products.

The Japanese healthcare company, not to be disclosed at present, has now entered into an agreement for an exclusive 6-month option to obtain an exclusive license to Phosphagenics’ TPM[®] /Oxycodone patch in Japan.

Under the terms of the agreement extension, Phosphagenics will receive an additional upfront option payment. Phosphagenics and the Japanese company will collaborate on pre-specified activities to confirm the development path and commercial opportunity for the product in Japan. If the option is exercised and the companies enter into an exclusive license agreement, Phosphagenics expects to receive a licensing fee, payments upon the achievement of certain milestones and royalties on commercial sales of the TPM[®] /Oxycodone patch in Japan.

Phosphagenics’ CEO and Managing Director, Dr Ross Murdoch, added, “The extension to the agreement with our Japanese partner provides us with a valuable opportunity to potentially have a single Japanese healthcare company, focusing on the development - and commercialisation of both of our opioid patches as well as several other TPM[®] based products. We will be working closely with them over the following months to determine the best way for us to move forward together.”

Phosphagenics completed a Phase 2a clinical study of the TPM[®] /Oxycodone patch earlier this year and is actively assessing strategies for additional development.

Enquiries

Dr Ross Murdoch Phosphagenics Limited +61 3 9565 1119

Kyahn Williamson WE Buchan +61 3 9866 4722 / +61 40 101 8828 Email: kwilliamson@buchanwe.com.au

Phosphagenics Limited ACN 056 482 403 ABN 32 056 482 403

11 Duerdin Street, Clayton VIC 3168 PO Box 1415, Clayton South MDC VIC 3169 Australia Tel: +61 (0)3 9565 1119 Fax: +61 (0)3 9565 1151

www.phosphagenics.com Email: info@phosphagenics.com

About Phosphagenics

Phosphagenics Limited is focused on developing and commercialising innovative Human Health, Animal Health and Personal Care products using its proprietary drug delivery system called TPM[® ] (Targeted Penetration Matrix). TPM[®] is derived from Vitamin E using a unique, proprietary and patented process and has been proven to enhance the solubility and oral, dermal and transdermal absorption of drugs and nutrients. Amongst its major projects, Phosphagenics’ is developing TPM[®] enhanced oxymorphone and oxycodone patches for the treatment of pain.

Phosphagenics' shares are listed on the Australian Securities Exchange (POH) and its ADR – Level 1 program in the US is with The Bank of New York Mellon (PPGNY).

Inherent Risks of Investment in Biotechnology Companies

There are a number of inherent risks associated with the development of pharmaceutical products to a marketable stage. The lengthy clinical trial process is designed to assess the safety and efficacy of a drug prior to commercialisation and a significant proportion of drugs fail one or both of these criteria. Other risks include uncertainty of patent protection and proprietary rights, whether patent applications and issued patents will offer adequate protection to enable product development, the obtaining of necessary drug regulatory authority approvals and difficulties caused by the rapid advancements in technology.

Forward-looking Statements

Certain statements in this announcement may contain forward-looking statements regarding Company business and the therapeutic and commercial potential of its technologies and products in development. Any statement describing Company goals, expectations, intentions or beliefs is a forward-looking statement and should be considered an at-risk statement. Such statements are subject to certain risks and uncertainties, particularly those risks or uncertainties inherent in the process of developing technology and in the process of discovering, developing and commercialising drugs that can be proven to be safe and effective for use as human therapeutics, and in the endeavour of building a business around such products and services.

www.phosphagenics.com

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