BOTANIX PHARMACEUTICALS LTD — Interim / Quarterly Report 2017

Jul 30, 2017

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ASX/Media Release

31 July 2017

Botanix Pharmaceuticals Quarterly Activities Report and Appendix 4C

Highlights for the quarter ending 30 June 2017:

• Successful completion of the Company’s first Phase 1 clinical study for its lead acne treatment product, BTX 1503

• Successful completion of a pilot study for BTX 1701 acne facial cleanser, demonstrating positive safety outcomes and prospective activity in removing excess skin oiliness and reducing bacterial infection

• Pipeline advancement of BTX 1204, a novel treatment for atopic dermatitis

• Early stage formulation work undertaken with select potential strategic partners, utilising the Permetrex[TM] technology, which may translate into future licensing opportunities

• Successful completion of a A$7.4m capital raising via a significantly oversubscribed placement to new and existing shareholders

Philadelphia PA and Sydney Australia, 31 July 2017: Medical dermatology company Botanix Pharmaceuticals Limited (ASX:BOT, “Botanix” or “The Company”) is pleased to release its Quarterly Activities report and Appendix 4C for the period ending 30 June 2017.

Clinical development

Lead product: BTX 1503

During the quarter, Botanix successfully completed its first human clinical study for its lead acne product, BTX 1503, in Australia. The Phase 1 study was designed to evaluate the safety, tolerability, and pharmacokinetics (i.e. concentration of drug detected in blood) of BTX 1503 in human volunteers. Top line data showed BTX 1503 has an excellent safety profile, with little to no skin irritation or severe adverse events recorded.

Data from the Phase 1 study also provided evidence that the Permetrex[TM] delivery technology is efficient at delivering BTX 1503 across the outer skin layers and directly into the dermis. The dermis is the skin layer where the sebaceous gland, the target organ for BTX 1503 resides. Of further importance was the limited systemic exposure of BTX 1503 or negligible levels of the drug that were found to be delivered into the blood stream. This data will form the basis of requesting regulatory waivers from the FDA to bypass certain animal safety studies and clinical studies normally required for marketing approval.

Generation of this initial clinical data for BTX 1503 within 12 months of listing, represents a significant milestone for the Company. Achievement of this milestone has been made possible, by the highly

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experienced team that has been assembled by Botanix over the last 12 months and the short drug development timelines that are afforded to dermatology products compared to other therapeutic areas such as oncology, cardiovascular and central nervous system products.

Botanix is now preparing to initiate a pilot study for BTX 1503 in patients with moderate to severe acne. Subject to ethics approval, the Phase 1b clinical study will be conducted at several leading dermatology clinics in Australia. This will be the first study conducted to investigate the potential clinical benefit of synthetic cannabidiol in the treatment of skin disease. This study is scheduled to be completed before the end of the 2017 calendar year.

Pipeline products: BTX 1204 and BTX 1701

Botanix is also advancing two pipeline products that utilise the Company’s proprietary Permetrex[TM] delivery technology. The Company plans to advance the first of these products (BTX 1204), a novel treatment for atopic dermatitis into initial patient studies in 2H CY2017. Like BTX 1503, BTX 1204 utilises synthetic cannabidiol as the active pharmaceutical ingredient. Cannabidiol has been shown to directly inhibit keratinocyte (skin cell) proliferation and inhibit the immune response via multiple pathways that are pivotal in the pathogenesis (development) of atopic dermatitis. The extensive preclinical and human studies completed by Botanix using both Permetrex™ and synthetic cannabidiol for its lead acne product, means that the Company can progress BTX 1204 straight into a Phase 1b study in dermatitis patients in Australia, across several dermatology sites. Dermatitis is a significant prescription product market with an estimated value of products sold each year exceeding US$4bn.

The second pipeline product that the Company continued to progress during the quarter was BTX 1701, a development product for the treatment of mild acne. Botanix successfully completed a small patient study at a leading dermatology clinic in the United States. Preliminary results demonstrated positive safety outcomes and indicated that the daily application of BTX 1701 reduces oil levels on the skin and removes P. acnes, the bacteria responsible for the development of acne, from the surface of the skin more effectively than a leading facial cleanser product.

BTX 1701 does not utilise synthetic cannabidiol, but instead employs an active which has been used in numerous FDA approved dermatology products, but never for the purpose identified by Botanix. The Company is currently reviewing the commercialisation options for BTX 1701 to choose whether to develop the product through the usual FDA approval process, or as an over-the-counter (“OTC”) acne cleanser. If developed as an OTC cleanser the product would not require FDA approval for development and marketing. Botanix plans to commence a further patient study in 2H CY2017.

Business development and strategic partnerships (Permetrex[TM] )

The Permetrex[TM] delivery technology provides further business development and potential revenue generating opportunities for Botanix. The technology has the potential to improve several existing marketed skin products that suffer from poor drug delivery challenges. Further, it also allows for the

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establishment of collaborative clinical development partnerships with other dermatology companies looking to advance their own compounds using the technology.

Throughout the quarter Botanix was actively involved in pursuing several business development opportunities and in undertaking some early stage formulation work for select collaborators which may translate into future licensing opportunities for the Permetrex[TM] platform.

Corporate

During the quarter, Botanix successfully completed a A$7.4m capital raising via a significantly oversubscribed placement to new and existing shareholders. The transaction facilitated the introduction of some well-regarded institutional and family office investors to the share register, and allowed for the accelerated development of the Company’s product pipeline.

Botanix spent A$2.8m during the quarter on operations with A$2.5m being spent on R&D activities, primarily associated with the Phase 1 study and ongoing preparations for the Phase 1b and Phase 2 studies. Botanix’s significant investment into clinical product development rather than administrative overheads highlights a clear focus on prudent cash management. At the end of the financial year, Botanix had A$5.7m in cash and expects to receive an R&D tax concession return of more than A$1.5m in 4Q CY2017.

Forecast expenditure for the coming quarter is estimated to be A$2.2m with approximately A$2.0m planned to be spent on further clinical development associated with BTX 1503, BTX 1204 and BTX 1701. Successful completion of the BTX 1503 Phase 1b study will represent a significant milestone, acting to further de-risk the Company’s overall clinical program. Patient studies for both BTX 1204 and BTX 1701 will likewise provide important validation of the potential for these new therapies and significant value inflection points for the Company.

About Botanix Pharmaceuticals

Botanix Pharmaceuticals is a clinical stage medical dermatology company, which is dedicated to developing next generation therapeutics for the treatment of serious skin diseases. Our mission is to improve the lives of patients battling acne, psoriasis and atopic dermatitis, by providing new treatment options for conditions that currently are inadequately addressed, or are treated with therapeutics that are burdened with side effects profiles. Botanix is harnessing the untapped potential of a synthetic active pharmaceutical ingredient, known as cannabidiol, which has a wellestablished safety profile. Botanix has successfully completed its first-in-man studies with BTX 1503 and is preparing to conduct a follow-on clinical trial with acne patients in 2H 2017. The Company has an exclusive license to use a proprietary drug delivery system (Permetrex[TM] ) for direct skin delivery of active pharmaceuticals in all skin diseases and plans to progress the development of BTX 1503 for acne and its pipeline of other Permetrex[TM] enabled products alone, or in collaboration with partners.

For more information on Botanix, please visit www.botanixpharma.com or follow us on Twitter @Botanixpharma.

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For more information, please contact:

General enquiries

Matt Callahan Botanix Pharmaceuticals Ltd 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 Harrison Polites MC Partners P: +61 409 623 618 E: harrison.polites@mcpartners.com.au

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

+Rule 4.7B

Appendix 4C

Quarterly report for entities subject to Listing Rule 4.7B

Introduced 31/03/00 - Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16

Name of entity

Botanix Pharmaceuticals Limited

ABN 70 009 109 755

Quarter ended (“current quarter”)

30 June 2017

Consolidated statement of cash flows	Current quarter $A’000	Year to date (12 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) research and development (b) staff costs (c) administration and corporate costs Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives 1.8 Other (provide details if material) 1.9 Net cash from / (used in) operating activities	(2,547) (155) (150) - 9 - - - -	(3,974) (380) (519) - 27 - - - -
	(2,843)	(4,846)
2. Cash flows from investing activities 2.1 Payments to acquire: (a) property, plant and equipment (b) businesses (see item 10) (c) investments (d) intellectual property (e) other non-current assets 2.2 Proceeds from disposal of: (a) property, plant and equipment	- - - - - -	- - - - - -

• See chapter 19 for defined terms 1 September 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Current quarter $A’000	Year to date (12 months) $A’000
(b) businesses (see item 10) (c) investments (d) intellectual property (e) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities	- - - - - - -	- - - - - - -
	-	-
3. Cash flows from financing activities 3.1 Proceeds from issues of shares 3.2 Proceeds from issue of convertible notes 3.3 Proceeds from exercise of share options 3.4 Transaction costs related to issues of shares, convertible notes or options 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from / (used in) financing activities	7,387 - - - - (356) - - -	7,453 - - - - (538) - - -
	7,031	6,915
4. Net increase / (decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of quarter/year to date 4.2 Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above) 4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of quarter	1,533 (2,843) - 7,031 -	3,652 (4,846) - 6,915 -
	5,721	5,721

• See chapter 19 for defined terms 1 September 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)	447 5,274 - -	768 765 - -
	5,721	1,533
6. Payments to directors of the entity and their associates 6.1 Aggregate amount of payments to these parties included in item 1.2 6.2 Aggregate amount of cash flow from loans to these parties included in item 2.3
		Current quarter $A'000
		152
		-

• 6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2

6.1 – Directors fees

7. Payments to related entities of the entity and their associates 7.1 Aggregate amount of payments to these parties included in item 1.2 7.2 Aggregate amount of cash flow from loans to these parties included in item 2.3	Current quarter $A'000
	-

• 7.3 Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2

	8. Financing facilities available Add notes as necessary for an understanding of the position Total facility amount at quarter end $A’000 Amount drawn at quarter end $A’000 8.1 Loan facilities - - 8.2 Credit standby arrangements - - 8.3 Other (please specify) - - 8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
		-	-
		-	-
		-	-

• See chapter 19 for defined terms 1 September 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

9. Estimated cash outflows for next quarter	$A’000
9.1 Research and development 9.2 Staff costs 9.3 Administration and corporate costs 9.4 Leased assets 9.5 Other (provide details if material) 9.6 Total estimated cash outflows	1,950 100 175 - -
	2,225

10. Acquisitions and disposals of business entities (items 2.1(b) and 2.2(b) above)	Acquisitions	Disposals
10.1 Name of entity	-	-
10.2 Place of incorporation or registration	-	-
10.3 Consideration for acquisition or disposal	-	-
10.4 Total net assets	-	-
10.5 Nature of business	-	-

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Sign here: (Company secretary) Print name: Simon Robertson

Date: 31 July 2017.

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. See chapter 19 for defined terms 1 September 2016

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