PYC THERAPEUTICS LIMITED — AGM Information 2011

Nov 23, 2011

Phylogica

Harnessing Biodiversity for Peptide Therapies

Annual General Meeting

24 November 2011

Contents

Introduction

Biotech company offering leading peptide drug discovery services

Based in Perth, Western Australia, and Oxford, UK

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Headcount of approx. 25 employees

Thursday, 24 November 2011

Investment Highlights

• Strategy for rapid revenue growth from fee-for-service alliances
• Since 2009, signed partnerships with Roche, AstraZeneca & Pfizer
  • Positioned for cash flow sustainability in 2012/2013

• 10 billion peptides in our proprietary libraries
• 3 partnerships with major Pharma companies
• 100 % estimated revenue growth in FY2012

Experienced Management Team

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Dr Douglas Wilson - Executive Chairman

• Former Senior Vice-President, Medicine for Boehringer Ingelheim
• Overseen multiple drugs at all phases of development
• Overseen many drugs successfully to the market in the USA

Dr Paul Watt – CEO

• Commonwealth overseas scholarship recipient; Doctorate at the University of Oxford,
• 45 publications, including several high-impact papers, inventor on 19 patent families
• Post Doctoral appointments at Oxford and Harvard Universities
• Over 10 years commercial biotech experience

Mr Nick Woolf – CFO & VP Corporate Development

• 18 years experience in biotech industry, equity research & investment banking
• Previously Chief Business Officer of Oxford BioMedica plc in the UK
• Former Head of European Biotech Equity Research at ABN Amro
• Qualified accountant and MA in Chemistry from the University of Oxford

Dr Richard Hopkins – COO & VP Research & Development

• Doctorate from Murdoch University, Western Australia
• Over 10 years commercial biotech experience
• Overseen development of the Phylomer platform
• More than 20 publications and inventor on 11 patent families

Thursday, 24 November 2011

Operational Review

Building a Sustainable Discovery Alliance Business

Focus on Drug Discovery Reduces Risk

Upfront fees and research funding provide immediate revenue stream

• Build long-term value through milestones and royalties
  • Secure increasing share of down-stream value

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Fund co-development and in-house programmes from surplus cash flow

Partnerships with Three Top-10 Pharma

Roche

• Collaboration to discover cell-penetrating peptides in December 2009
• Successful completion of initial research objectives in February 2011
• Expanded to discover peptides that cross blood-brain barrier in May 2011

• Collaboration to discover novel antibiotic peptides in August 2010
• Total deal value of up to US$100M & royalties on worldwide sales

• Collaboration to discover novel peptide vaccines in December 2010
• Total deal value of up to US$135M & royalties on worldwide sales

'Target Discovery' Collaboration with Cambridge

Successful collaboration with Cambridge University to develop new application of Phylomers as probes to identify disease-associated drug targets

Support from Cambridge Enterprise to spin-out new company 'Phenomica' to commercialise joint IP

Interest from Pharma Corporate Funds and leading European biotech VCs in funding Phenomica

Phylogica and Cambridge exploring options for setting up new UK-based operations

Technology Review

Phylomers: Unique Source of Bioactive "Peptides"

Advantages of Peptides vs. Other Biologic Classes

Peptides (protein fragments) have advantages over larger biologics

• can be delivered by more patient friendly routes eg: intranasal
• can be made synthetically at low cost
• can penetrate cells and access intracellular targets due to smaller size

Intracellular interactions control critical pathways in most diseases but have generally proved intractable with larger biologics

Protein Phylomer

Rapid Growth in Peptide Drug Market

• Peptides are one of the fastest growing drug classes
• 60 marketed peptides represent $13 billion market
• Peptide market growing twice as fast as small molecules
• New technologies have addressed traditional challenges for peptide development (eg: short half-life)
• Increasing Pharma interest, approx 140 peptides in clinical development

Chemical & Engineering News May 30, 2011

Improving Peptides: Small firms develop better peptide drug candidates to expand this pharmaceutical class and attract big pharma partners (picture of Phylomer)

Demand for Novel Approaches to Peptide Drug Discovery

Design peptide inhibitors that mimic known natural interfaces (eg. Kai, Aileron, Trimeris)

Find new structures within proteins which have already been selected by evolution for stability and biological compatibility (Phylogica)

Phylomers Derive from Parts of Biodiverse Proteins

• Encoded from >35 biodiverse bacterial genomes, environments like volcanic streams, geysers and deep sea vents
  • Phylomer libraries contain several billion distinct peptides
  • Pre-selected by evolution to allow survival, such as thermal stability
  • Dominant intellectual property over entire drug class

Watt PM (2006) Nature Biotechnology 24 (2):177-83

Bacteria Provide Richest Source of Diversity

World's richest source of structurally diverse natural peptides

Thursday, 24 November 2011

Diversity: Phylomers Derive from Multiple Structural Families

Fully-Integrated Drug Discovery Platform

Assembled a world-class 'one-stop-shop' integrated drug discovery platform

• Proprietary technologies for rapid screening of libraries against drug targets
• Network of academic and biotech collaborators with synergistic technology
• State-of-the-art infrastructure and laboratory automation technology

Harvesting Structural Diversity for Drug Discovery

Phylomers: A Powerful Toolbox for Drug Discovery

Phylomer Libraries: a rich source of novel cell penetrating peptides

Thursday, 24 November 2011

Roche project: crossing the blood brain barrier

Cell penetrating Phylomers - expanding the druggable landscape

Druggable landscape consists of;

• Extracellular targets (10%)
  • targeted by antibodies, recombinant proteins, peptides (biologics)

Phylomer CPPs

Intracellular targets (90%)

• Small Molecule Drugs (10%)
• Currently inaccessible to biologics (80%)

Three cell penetrating (CPP) selections strategies

Thursday, 24 November 2011

Summary of CPP and cell binding selections

	Clone number
Unique sequences (n)	992
Peptides synthesised	153 (15%)
Recombinant peptides	13 (1%)
FACS +ve (Bend.3/CHO)	46 (30%)
Microscopy +ve (Bend.3/CHO)	17 (11%)

Bioinformatic analysis of 992 unique sequence

2-fold enrichment for classical CPP-like sequences (~14%)

• classical TAT-like amphipathic, cationic peptides positively charged
• bind to cell membranes via electrostatic interaction which facilitates cell-uptake
• binding mechanism is NOT cell selective

Bioinformatic analysis of 992 unique sequence

2-fold enrichment for classical CPP-like sequences (~14%)

• classical TAT-like amphipathic, cationic peptides
• most Phylomers could not be assigned to previous characterised CPP families
• Many Phylomers derived from membrane-associated proteins
• CHO_0007: B. pertussis, Outer membrane porin protein
• CHO_0131: D. radiodurans, Mulitdrug-efflux transporter
• CHO_0104: N. meningitidis, ABC transporter protein

Enrichment for bacterial virulence factors involved in cell invasion

• BEN_1209: S. aureus, Fibronectin binding protein
• BEN_0096: S. enterica, Invasion Protein InvE
• BEN_1520: G. sulfurreducens, Cadherin-like binding domain

Confocal microscopy confirms Phylomer CPP activity

CPP Phylomer

Thursday, 24 November 2011

Multiple classes of validated Phylomer CPPs

Phylomer	Comments	Length(aa)	Charge
BEN_1079	• Arginine rich TAT-like sequence.• RCGRASRCRVRWMRRRRI	18	+9
BEN_0805	• Similar to gp41 transmembrane protein from SIV.• Facilitates fusion between viral and endosomal membranes.• PYSRPHVQLWYPNRESCRSLIRSLGP	26	+3
BEN_5000	• Putative transposase from S. avermitilis• Negatively charged sequence suggests a different mode ofuptake compared to the cationic TAT-like peptides.• Receptor mediated uptake• Preference for brain endothelial cells	35	-3
BEN_1312	•• Fibronectin Binding protein from S. aureus• Virulence factor known to play a role in cell invasion	42	-12

Summary: cell penetrating Phylomer screen

Phylomer libraries represent a rich source of novel cell penetrating peptides.

Identified different classes of cell penetrating peptide

Nature has already solved the problem of cell entry!

Next generation Phylomer libraries will include pathogenic viruses and bacteria.

Key Advantages of Phylomers

• Highly flexible drug discovery platform
• Antimicrobial peptides (Astrazeneca/MedImmune)
• Vaccines (Pfizer)

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Provide access for biologics to intracellular targets.

• Novel source of cell penetrating peptides for delivery of therapeutic cargoes
• Proven activity against intracellular multiple intracellular targets
• Phylomers can bind protein interfaces providing access to new target classes

Thanks to the Phylogica Team

Thursday, 24 November 2011

Financial Review

Delivering on Strategy

Objective to Add Three New Partnerships in FY2012

Rank	Company	Signed	Activity	Value
1	Johnson & Johnson
2	Pfizer	2010	Therapeutic peptide vaccines	>US$134M
3	Roche	2009	Cell-penetrating & blood-brain delivery	NA
4	GlaxoSmithKline
5	Novartis
6	Sanofi-Aventis
7	AstraZeneca (MedImmune)	2010	Antibiotics for hospital-acquired infection	US$100M
8	Abbott
9	Merck & Co
10	Bayer
11	Eli Lilly

Leveraging Discovery Alliances to Build Value

Robust Finances Supported by Revenue

• FY2011 results in line with expectations
  • Revenue of A$2.5 million (+259% vs. FY2010)
  • Net loss narrowed to A$3.6 million (vs. A$4.6 million)
  • Analysts estimate +100% revenue growth in FY2012
  • Net cash of A$3.3 million at 30 September 2011
  • Positioned for cash flow sustainability in 2012/2013

Major Shareholders

NAOS Asset Management: 11%

Australian Heritage Group: 8%

Ascent BioMedical Holdings: 5%

Telethon Institute of Child Health Research: 5%

Management: 5%

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Issued capital of 405 million shares Phylogica Limited (PYC.AX)

Share price increase of 21% over 12 months

37 Insider Transactions

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Summary

Assembled world-class peptide drug discovery platform

• Successfully validated 'Alliance Model' with three pharma partners
• Strong institutional shareholder base
• Anticipate rapid revenue growth based on current and prospective deals

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Objective to close at least three new major partnerships by end of FY2012

Dr. Paul Watt Chief Executive Officer Tel: +61 8 9382 8888 Fax: +61 8 9382 1766 Mobile UK: +44 7775 682478 paulw@phylogica.com

Nick Woolf CFO, VP Corporate Development Tel: +61 8 9382 8888 Fax: +61 8 9382 1766 Mobile AUS: +61 417 986 005 nwoolf@phylogica.com

www.phylogica.com