AVECHO BIOTECHNOLOGY LIMITED — Capital/Financing Update 2017

Jun 4, 2017

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX’s property and may be made public.

Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12, 04/03/13

Name of entity

PHOSPHAGENICS LIMITED

ABN

32 056 482 403

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

1 +Class of+securities issued or to be issued 2 Number of+securities issued or to be issued (if known) or maximum number which may be issued 3 Principal terms of the+securities (e.g. if options, exercise price and expiry date; if partly paid +securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)	2016 Options and 2017 Options
	15,000,000 - 2016 Options to be issued under the Company’s Employee Equity Incentive Plan 5,250,000 – 2017 Options to be issued under the Company’s Employee Equity Incentive Plan
	2016 Options and 2017 Options granted to eligible employees under the terms of the Company’s Employee Equity Incentive Plan approved by the shareholders at the Annual General meeting on 31 May 2017. Each 2016 Option and 2017 Option entitles the holder to receive one fully paid ordinary share (or, at the discretion of the Board, a cash payment in lieu of a share) on the exercise of the option.

• See chapter 19 for defined terms.

Appendix 3B Page 1

04/03/2013

2016 Options Vesting Conditions Subject to the terms of the Employee Equity Incentive Plan, 2016 Options which have not lapsed will vest and become exercisable in tranches as follows:-

• one-third of the Options will vest on 11 September 2017 (Tranche 1 Vesting Date), subject to the volume weighted average of the prices of Shares traded on ASX in any 5 consecutive trading days (5 Day VWAP) during the period commencing 3-months immediately prior to and extending to 3- months post the Tranche 1 Vesting Date being greater than 50% above the Invitation VWAP ($0.021), calculated to be $0.032;

• one-third of the Options will vest on 10 September 2018 (Tranche 2 Vesting Date), subject to any 5 Day VWAP during the period commencing 3-months immediately prior to and extending to 3-months post the Tranche 2 Vesting Date being greater than 100% above the Invitation VWAP ($0.021), calculated to be $0.042;

• one-third of the Options will vest on 9 September 2019 (Tranche 3 Vesting Date), subject to any 5 Day VWAP during the period commencing 3-months immediately prior to and extending to 3-months post the Tranche 3 Vesting Date being greater than 150% above the Invitation VWAP ($0.021), calculated to be $0.053.

For these purposes, the Invitation VWAP means the volume weighted average of the prices of Shares traded on ASX in the 5 trading days up to Invitation Date (calculated to be $0.021).

• 2017 Option Vesting Conditions Subject to the terms of the Employee Equity Incentive Plan, 2017 Options which have not lapsed will vest and become exercisable in tranches as follows: one-third of the Options will vest on 11 September 2017 (Tranche 1 Vesting Date);

• one-third of the Options will vest on 10 September 2018 (Tranche 2 Vesting Date);

• one-third of the Options will vest on 9 September 2019 (Tranche 3 Vesting Date).

Vesting conditions may be waived at the discretion of the Board. 2016 Options and 2017 Options will lapse unless the applicable vesting conditions are satisfied or waived.

2016 and 2017 Vested options are exercisable at the exercise price at $0.023 (10% above Invitation VWAP). 2016 and 2017 Options expire on 10 September 2021, or any later date determined by the Board from time to time.

4 Do the[+] securities rank equally No – In accordance with the Employee Equity in all respects from the[+] issue Incentive Plan rules, 2016 Options and 2017 date with an existing[+] class of Options do not carry voting rights or quoted[+] securities? entitlement to dividends. If the additional[+] securities do not rank equally, please state:  the date from which they do  the extent to which they participate for the next However, on the exercise of a 2016 Option or dividend, (in the case of a 2017 Option the holder will receive one fully trust, distribution) or paid ordinary share which will rank equally in interest payment all respects with existing ordinary shares of the  the extent to which they do Company from the date of issue. not rank equally, other than in relation to the next dividend, distribution or interest payment 5 Issue price or consideration 2016 Options – Nil 2017 Options – Nil 6 Purpose of the issue Grant under the Company’s Employee Equity (If issued as consideration for Incentive Plan. the acquisition of assets, clearly identify those assets)

• See chapter 19 for defined terms.

Appendix 3B Page 3

04/03/2013

6a Is the entity an+eligible entity that has obtained security holder approval under rule 7.1A? If Yes, complete sections 6b – 6h in relation to the+securities the subject of this Appendix 3B, and comply with section 6i 6b The date the security holder resolution under rule 7.1A was passed 6c Number of+securities issued without security holder approval under rule 7.1 6d Number of+securities issued with security holder approval under rule 7.1A 6e Number of+securities issued with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting) 6f Number of+securities issued under an exception in rule 7.2 6g If+securities issued under rule 7.1A, was issue price at least 75% of 15 day VWAP as calculated under rule 7.1A.3? Include the +issue date and both values. Include the source of the VWAP calculation. 6h If+securities were issued under rule 7.1A for non-cash consideration, state date on which valuation of consideration was released to ASX Market Announcements 6i Calculate the entity’s remaining issue capacity under rule 7.1 and rule 7.1A – complete Annexure 1 and release to ASX Market Announcements	N/A
	N/A
	N/A
	N/A
	N/A
	2016 Options - 15,000,000 2017 Options - 5,250,000
	N/A
	N/A
	N/A

7 +Issue dates 2016 Options issued on 31 May 2017 Note: The issue date may be prescribed by 2017 Options issued on 31 May 2017 ASX (refer to the definition of issue date in rule 19.12). For example, the issue date for a pro rata entitlement issue must comply with the applicable timetable in Appendix 7A. Cross reference: item 33 of Appendix 3B.

Number +Class 8 Number and +class of all +securities quoted on ASX 1,261,965,957 ORD Shares (POH) ( including the +securities in section 2 if applicable) Number +Class 9 Number and +class of all 3,000,000 Non-Quoted Options expiring +securities not quoted on ASX 22 May 2019 (A$0.172 an ( including the +securities in option) (POHAS) section 2 if applicable) 5,250,000 2017 Options 48,948,150 2016 Options

10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)

N/A

Part 2 - Pro rata issue

11 Is security holder approval N/A required? 12 Is the issue renounceable or nonN/A renounceable? 13 Ratio in which the[+] securities N/A will be offered 14 +Class of +securities to which the N/A offer relates 15 +Record date to determine N/A entitlements 16 Will holdings on different N/A registers (or subregisters) be aggregated for calculating entitlements?

• See chapter 19 for defined terms.

Appendix 3B Page 5

04/03/2013

17 Policy for deciding entitlements in relation to fractions 18 Names of countries in which the entity has security holders who will not be sent new offer documents Note: Security holders must be told how their entitlements are to be dealt with. Cross reference: rule 7.7. 19 Closing date for receipt of acceptances or renunciations 20 Names of any underwriters 21 Amount of any underwriting fee or commission 22 Names of any brokers to the issue 23 Fee or commission payable to the broker to the issue 24 Amount of any handling fee payable to brokers who lodge acceptances or renunciations on behalf of security holders 25 If the issue is contingent on security holders’ approval, the date of the meeting 26 Date entitlement and acceptance form and offer documents will be sent to persons entitled 27 If the entity has issued options, and the terms entitle option holders to participate on exercise, the date on which notices will be sent to option holders 28 Date rights trading will begin (if applicable) 29 Date rights trading will end (if applicable)	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A

• 30 How do security holders sell N/A their entitlements in full through a broker?

• 31 How do security holders sell part N/A of their entitlements through a broker and accept for the balance?

• 32 How do security holders dispose N/A of their entitlements (except by sale through a broker)?

• 33 +Issue date N/A

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

• 34 Type of[+] securities ( tick one )

• (a) +Securities described in Part 1

• (b)[All other ][+][securities ]

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

• 35 If the[+] securities are[+] equity securities, the names of the 20 largest holders of the additional[+] securities, and the number and percentage of additional[+] securities held by those holders

• 36 If the[+] securities are[+] equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories

• 1 - 1,000

• 1,001 - 5,000

5,001 - 10,000 10,001 - 100,000 100,001 and over

• See chapter 19 for defined terms.

Appendix 3B Page 7

04/03/2013

37 A copy of any trust deed for the additional[+] securities

Entities that have ticked box 34(b)

38	Number of+securities for which
	+quotation is sought
39	+Class of+securities for which
	quotation is sought
40	Do the+securities rank equally in
	all respects from the+issue date
	with an existing+class of quoted
	+securities?
	If the additional+securities do not
	rank equally, please state:
	 the date from which they do
	 the extent to which they
	participate for the next
	dividend, (in the case of a
	trust, distribution) or interest
	payment
	 the extent to which they do
	not rank equally, other than in
	relation to the next dividend,
	distribution or interest
	payment
41	Reason for request for quotation
	now

Example: In the case of restricted securities, end of restriction period (if issued upon conversion of another[+] security, clearly identify that other[+] security)

Number

+Class

42 Number and +class of all +securities quoted on ASX ( including the[+] securities in clause 38)

Quotation agreement

• 1 +Quotation of our additional +securities is in ASX’s absolute discretion. ASX may quote the[+] securities on any conditions it decides.

• 2 We warrant the following to ASX.

• The issue of the[+] securities to be quoted complies with the law and is not for an illegal purpose.

• There is no reason why those[+] securities should not be granted +quotation.

• An offer of the[+] securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any[+] securities to be quoted and that no-one has any right to return any[+] securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the[+] securities be quoted.

• If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the[+] securities be quoted.

• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.

• 4 We give ASX the information and documents required by this form. If any information or document is not available now, we will give it to ASX before +quotation of the +securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

==> picture [69 x 44] intentionally omitted <==

Sign here: …………………........................................... Date: 5 June 2017 (Company secretary)

Print name: Anna Legg

== == == == ==

• See chapter 19 for defined terms.

Appendix 3B Page 9

04/03/2013