BOTANIX PHARMACEUTICALS LTD — Annual Report 2018

Aug 30, 2018

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ASX/Media Release

31 August 2018

Botanix Pharmaceuticals Preliminary Final Report

Highlights for the year ending 30 June 2018:

• Successfully completed the BTX 1503 Phase 1b acne patient study and advanced into Phase 2 clinical development in June 2018

• Successfully completed the BTX 1204 Phase 1b atopic dermatitis patient study, with preparations well advanced to move into Phase 2 clinical development in the near term

• Completed pre-clinical work and testing for BTX 1308 (Psoriasis) and announced development of new product BTX 1801 (Antimicrobial), with both products rapidly advancing into the next stage of clinical development

• Fully funded to complete Phase 2 clinical trials for BTX 1503 and BTX 1204 as well as to progress pipeline products

• Subsequently to year end, Botanix was awarded the Innovation Connections Grant and appointed Dr. Stephane Levy as Chief Medical Officer and Ms. Jillian Chapas-Reed as Senior Director of Clinical Operations

Philadelphia PA and Sydney Australia, 31 August 2018: Medical dermatology company Botanix Pharmaceuticals Limited (ASX:BOT, “Botanix” or the “Company”) is pleased to release its preliminary final report for the year ending 30 June 2018.

Clinical development

Lead product: BTX 1503 (Moderate to Severe Acne)

In July 2017, Botanix announced the successful completion of its Phase 1 study designed to evaluate the safety, tolerability, and pharmacokinetics for the BTX 1503 acne program. Top line data demonstrated that BTX 1503 has an excellent safety profile, with little to no skin irritation and no severe adverse events were recorded.

Following this, Botanix initiated its first patient study and achieved early completion of enrolment in December 2017. The Phase 1b acne study was conducted at four of the leading acne investigative sites in Australia and subjects were treated for 28 days and then assessed for safety, tolerability, and efficacy at Day 28 and at a follow-up visit on Day 35.

In January 2018, Botanix announced the successful completion of that Phase 1b acne patient study. The study achieved all designated endpoints, with top line data indicating that BTX 1503 has an excellent safety profile, is very effective at reducing the number of inflammatory and non-inflammatory acne lesions and provided an excellent average improvement in patient satisfaction. On average, inflammatory lesions decreased by ~47% by Day 28 of the study. This significant reduction is greater

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than any other FDA approved topical acne product, for which data is available after 4 weeks of treatment.

In May 2018, Botanix presented a poster at the International Investigational Dermatology Meeting in Orlando, Florida, detailing the positive results from the BTX 1503 Phase 1b acne study. The poster highlighted the safety and large reduction in acne lesions seen after only 4 weeks of treatment.

In the June 2018 quarter, Botanix successfully advanced BTX 1503 into Phase 2 clinical development. The Company announced in June 2018 that the first patients were recruited following acceptance of the Investigational New Drug (IND) application for BTX 1503 by the US Food and Drug Administration (FDA) and receipt of the Human Research Ethics Committee (HREC) approval in Australia. The rapid progression of BTX 1503 as a new drug from early formulation development to Phase 2 studies within 24 months, is without precedent.

The BTX 1503 Phase 2 clinical trial is now underway and is being conducted in the US and Australia, with over 30 leading dermatology sites and clinics participating in the trial. The targeted enrolment for the trial is 360 patients with moderate to severe acne. The BTX 1503 Phase 2 clinical trial has been designed to deliver data that allows Botanix to explore potential licensing and other corporate opportunities upon successful completion of the study around mid-2019.

BTX 1204 (Atopic Dermatitis or serious eczema)

In November 2017, Botanix began enrolment for its first patient study for BTX 1204 for the treatment of atopic dermatitis, after receiving HREC approval in October 2017. The Phase 1b patient study was a randomised, double blind, vehicle (placebo) controlled study, which was designed to evaluate the safety and tolerability of BTX 1204 in patients with mild to moderate atopic dermatitis. The 4-week treatment period study was conducted with 4 leading Australian dermatology clinics, involving some of Australia’s leading dermatology key opinion leaders. The study was designed to assess improvement of atopic dermatitis lesions and symptoms of atopic dermatitis including itch, burning and stinging compared with the vehicle, which contains no drug active. Enrolment for the Phase 1b study was successfully completed in early April 2018, in advance of Botanix management’s initial target, reflecting significant patient interest to participate in the study.

In early June 2018, Botanix announced the successful completion of the Phase 1b atopic dermatitis patient study. The study showed that BTX 1204 was twice as effective as the vehicle in improving the key signs of atopic dermatitis. Results suggested a longer treatment period would enable BTX 1204 to potentially exceed industry performance, as efficacy was still increasing at the 4-week timepoint. The data indicated clear separation from the vehicle, with BTX 1204 showing superiority over vehicle at an early stage of the treatment period. BTX 1204 also demonstrated an excellent safety profile allowing for extended dosing, which remains a major challenge for other available therapies.

Botanix is currently focused on progressing BTX 1204 into Phase 2 clinical development and is well advanced in preparing the US FDA regulatory package to support the planned Phase 2 clinical trial. The study will involve both US and Australian clinical sites and because of the efficiencies that Botanix can

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drive from running two Phase 2 studies in parallel, is expected to complete enrolment shortly after completion of the BTX 1503 acne Phase 2 trial.

Development pipeline: BTX 1308 (Psoriasis) and new product BTX 1801 (Antimicrobial)

In the June 2018 quarter, Botanix successfully completed the required pre-clinical work to support initiation of clinical development for BTX 1308, a novel treatment for psoriasis. The BTX 1308 formulation was successfully optimised and pre-clinical testing conducted further elucidated the mechanisms of action of BTX 1308. Botanix is now preparing for a Phase 1b proof of concept study in psoriasis patients. The study will involve a collaboration with BioSkin, a German based research organisation internationally recognised for their experience with the psoriasis plaque test. The study is planned to commence in late 3Q CY2018 and is expected to take approximately 3-4 months to complete.

Botanix also announced the successful completion of pre-clinical testing of a new product denoted BTX 1801, a novel antimicrobial with the potential to address the significant global public health issue of antimicrobial resistance, in the June 2018 quarter. The pre-clinical testing showed that the Permetrex™ formulation of BTX 1801 was very effective at killing methicillin-resistant staphylococcus aureus strains of bacteria when compared to Permetrex™ or cannabidiol alone. Botanix is now focused on completing a market review and commercial assessment, in conjunction with key opinion leaders, to identify the preferred type of skin infection to target initially, before embarking on initial clinical development targeted for late 4Q CY2018.

Business development and strategic partnerships (Permetrex[TM] )

During the year, Botanix continued to work collaboratively with multiple partners to utilise the Permetrex[TM] delivery technology to formulate new drugs in development. These collaborations involve undertaking early stage paid formulation work for select collaborators, which will be followed by human skin testing and product characterisation work. This work helps to offset the Company’s operational costs and may also translate into future licensing opportunities for the Permetrex[TM] platform, which may provide immediate revenue and the potential for substantial revenues from milestone payments and royalties, at no additional cost to Botanix.

Corporate

Botanix raised approximately A$23m through two oversubscribed equity placements from institutional and sophisticated investors in February 2018 and June 2018. Additionally, the Company received an R&D tax incentive of A$1.6m in January 2018. Botanix invested more than A$10m in R&D activities, primarily associated with BTX 1503 and BTX 1204 clinical programs and development pipeline products. Botanix remains focused on investing in the development of key clinical programs, rather than administrative overheads, highlighting the clear priority on prudent cash management. At 30 June 2018, Botanix held A$17.2m in cash.

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About Botanix Pharmaceuticals

Botanix Pharmaceuticals Limited (ASX:BOT) is a clinical stage medical dermatology company based in Perth, Australia and Philadelphia, PA. The Company’s focus is the development of safe and effective topical treatments for acne, psoriasis, atopic dermatitis and other skin conditions. The active ingredient contained in Botanix products is a synthetic form of a widely studied natural compound. Treatment targets include inflammation, deterioration of the of the skin barrier, skin cell proliferation, pruritus (itch), excess sebum production and bacterial infection.

Botanix has an exclusive license to use a proprietary drug delivery system (Permetrex[TM] ) for direct skin delivery of active pharmaceuticals in all skin diseases. Botanix is working with multiple parties to test the application of Permetrex[TM] on both a fee-for-service and traditional license basis.

Botanix pursues a rapid clinical development strategy aimed at accelerating product commercialisation. The patient treatment duration of clinical studies is generally completed within a 4 to 12 week timeframe.

The Company completed its first acne patient studies with BTX 1503 in January 2018 and has commenced a Phase 2 clinical trial in June 2018 with completion of the study expected in mid-2019. The Phase 1b BTX 1204 atopic dermatitis patient study concluded in June 2018 and preparation is underway for a Phase 2 clinical trial. A further Phase 1b BTX 1308 psoriasis patient study is also scheduled to commence in late 3Q CY2018.

For more information, please contact:

General enquiries

Matt Callahan Botanix Pharmaceuticals Ltd Founder and Executive Director P: +1 215 767 4184 E: mcallahan@botanixpharma.com

Investor Relations Joel Seah Vesparum Capital P: +61 3 8542 4800 E: botanixpharma@vesparum.com

Media enquiries Julia Maguire The Capital Network P: +61 419 815 386 julia@thecapitalnetwork.com.au

,.Rules 4.3A

Appendix 4E

Preliminary final report

Name of entity

Botanix Pharmaceuticals Limited

ABN or equivalent company reference 70 009 109 755	Financial year ended (‘current period’)
70 009 109 755	30 June 2018

For announcement to the market

$AUD

For announcement to the market $AUD	For announcement to the market $AUD	For announcement to the market $AUD
Other income from continuing operations Up 401.3% to 233,171 Loss from ordinary activities after tax attributable to members Up 130.7% to (11,011,813) Net loss for the period attributable to members Up 130.7% to (11,011,813)
Dividends (distributions)	Amount per security	Franked amount per security
Interim dividend	Nil	- ¢
Final dividend	Nil	- ¢
Previous corresponding period	Nil	- ¢
+Record date for determining entitlements to the dividend, (in the case of a trust, distribution)	N/A
Net Tangible Assets per share	30 June 2018	30 June 2017
Net tangible asset backing per ordinary security (cents per share)	2.2	1.0

The above results should be read in conjunction with the notes and commentary contained in this report.

Management Discussion and Analysis

Provided as a covering announcement to this preliminary final report

Consolidated Statement Profit or Loss and Other Comprehensive Income

For the year ended 30 June 2018

	Notes	for the year ended 30 June 2018 $	for the year ended 30 June 2017 $
Revenue from continuing operations	3	233,171	46,501
Other revenue		1,632,913	-
Operatingexpenses	3	(12,877,897)	(4,819,599)
Loss from continuing operations before income tax		(11,011,813)	(4,773,098)
Income tax benefit		-	-
Net loss attributable to members of Botanix Pharmaceuticals Limited		(11,011,813)	(4,773,098)

Earnings per share	for the year ended 30 June 2018 Cents	for the year ended 30 June 2017 Cents
Basic earnings/(loss) per share from continuing operations	(2.26)(1)	(1.08)(1)
Diluted earnings/(loss) per share from continuing operations	(2.26)(1)	(1.08)(1)

(1) Based on a weighted average number of shares totalling 488,096,862 (ordinary shares) as at 30 June 2018 (2017: 434,195,513 ordinary shares). The Company currently has 757,424,658 ordinary shares on issue.

Consolidated Statement of Financial Position

As at 30 June 2018

	Notes	as at 30 June 2018 $	as at 30 June 2017 $
Current assets Cash and cash equivalents Receivables Derivative asset	1	17,263,408 426,637 20,444	5,720,514 186,909 -
Total current assets		17,710,489	5,907,423
Total assets		17,710,489	5,907,423
Current liabilities Trade and otherpayables		1,425,598	470,600
Total current liabilities		1,425,598	470,600
Total liabilities		1,425,598	470,600
Net Assets		16,284,891	5,436,823
Equity Issued capital Share based payment reserve Foreign currency translation reserve Accumulated losses	5	33,299,239 453,605 25,335 (17,493,288)	11,631,844 267,387 19,067 (6,481,475)
Total equity		16,284,891	5,436,823

Consolidated Statement of Cash Flows

For the year ended 30 June 2018

	Notes	for the year ended 30 June 2018 $	for the year ended 30 June 2017 $
Cash flows from operating activities Payments to suppliers & employees Research and development Finance costs R&D tax concession received Fees received Interest received		(1,430,081) (10,361,883) (2,502) 1,632,913 145,005 107,539	(1,120,827) (3,550,312) (3,225) - - 31,277
Net cash flows(used) in operating activities		(9,909,009)	(4,643,087)
Cash flows from financing activities Proceeds from issue of shares and options Share issue costs Repayment of borrowings		23,107,991 (1,656,088) -	7,453,031 (562,909) (181,667)
Net cash flows from financing activities		21,451,903	6,708,455
Net increase in cash held Cash and cash equivalents at beginningofperiod		11,542,894 5,720,514	2,068,528 3,651,986
Cash and cash equivalents at end ofperiod	1	17,263,408	5,720,514

Consolidated Statement of Changes in Equity For the year ended 30 June 2018

or the year ended 30	June 2018
	Issued Capital $	Share based payment reserve $	Translation reserve $	Accumulate d losses $	Total equity $
At 30 June 2016	4,716,525	166,410	6,356	(1,708,377)	3,180,914
Issue of shares, net of costs Share based payment reserve Foreign currency reserve Loss for year	6,915,319 - - -	- 100,977 - -	- - 12,711	- - - (4,773,098)	6,915,319 100,977 12,711 (4,773,098)
As 30 June 2017	11,631,844	267,387	19,067	(6,481,475)	5,436,823
Issue of shares, net of costs Share based payment reserve Foreign translation reserve Loss for year	21,667,395 - - -	- 186,218 - -	- - 6,268	- - - (11,011,813)	21,667,395 186,218 6,268 (11,011,813)
At 30 June 2018	33,299,239	453,605	25,335	(17,493,288)	16,284,891

Notes to and forming part of the financial statements

For the year ended 30 June 2018

1. Reconciliation of cash

. Reconciliation of cash
Reconciliation of cash at the end of the period (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows:	As at 30 June 2018 $	As at 30 June 2017 $
Cash at bank	17,263,408	5,720,514
Total cash at end ofperiod	17,263,408	5,720,514

2. Non-cash financing and investing activities

There were no non-cash financing and investing activities for the year ended 30 June 2018.

3. Revenue and expenses

. Revenue and expenses
	for the year ended 30 June 2018 $	for the year ended 30 June 2017 $
Revenue from continuing operations Finance revenue - interest received Fee income	88,166 145,005	46,501 -
Total revenue from continuing operations	233,171	46,501
Other revenue – R&D tax concessions received	1,632,913	-
Operating expenses Employee costs Administrative and corporate expenses Finance expense Fair value on foreign exchange forward contract Research and development Foreign exchange losses Share basedpayments	436,039 1,061,630 2,502 (20,444) 11,041,427 (44,966) 401,709	379,899 674,754 3,225 - 3,650,526 10,218 100,977
Total operating expenses	12,877,897	4,819,599

4. Dividends paid and proposed

No dividends have been paid or proposed during the year.

5. Issued capital

. Issued capital
	for the year ended 30 June 2018 $	for the year ended 30 June 2017 $
Ordinaryshares(net of issue costs)	33,299,239	11,631,844

	Number of shares	$
At 30 June 2017	543,111,296	11,631,844
At 30 June 2018	757,424,658	33,299,239

6. Group structure

Companies within the Botanix Pharmaceuticals Group (all wholly owned) carry out designated activities:

• Botanix Pharmaceuticals Limited

• Botanix Pharmaceuticals Inc.

• Bone Limited

7. Events after the reporting period.

No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Company, the results of those operations or the state of affairs of the Company in future financial years.

8. Annual meeting

(Preliminary final report only)

The annual meeting will be held as follows:

The annual meeting will be held as follows:
Place	TBA
Date	On or before 30 November 2018
Time	TBA
Approximate date the annual report will be available	On or before 30 October 2018

Compliance statement

• 1 This report has been prepared in accordance with AASB Standards, other AASB authoritative pronouncements and Urgent Issues Group Consensus Views or other standards acceptable to ASX.

• 2 This report, and the[+] accounts upon which the report is based (if separate), use the same accounting policies.

• 3 This report does give a true and fair view of the matters disclosed.

• 4 This report is based on[+] accounts to which one of the following applies.

(Tick one)  The +accounts have been  The +accounts have been audited. subject to review.  The[+] accounts are in the  The[+] accounts have not yet process of being audited or been audited or reviewed. subject to review.

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Sign here: Date: 31 August 2018 (Company Secretary) Print name: Simon Robertson