PYC THERAPEUTICS LIMITED — Capital/Financing Update 2020

Mar 31, 2020

ASX ANNOUNCEMENT

1 April 2020

Successful efficacy results on path to 'First In Human' studies

Highlights

• PYC's lead drug has effectively treated our target indication in disease models derived from patients with retinitis pigmentosa (3D 'retina in a dish' and 'phagocytosis' models)
• First In Human testing of the drug is scheduled to begin next year1
• Precision medicines in First In Human trials have >50% probability of successfully reaching market2
• The target market size in PYC's lead indication is estimated to be >USD1bn per annum3
• PYC has the funds required to progress this lead program through to market4
• PYC's core drug delivery technology successfully delivered this drug and is applicable to many other disease processes

Overview of PYC Therapeutics

1 Subject to a detailed review of the impact of COVID-19 on IND-enabling timelines that is yet to be completed

2 Hay et al, 'Clinical development success rates for investigational drugs.' Nat Biotechnol 32, 40–51 (2014); Wong et al. 'Estimation of clinical trial success rates and related parameters', Biostatistics, 20 (2), 273-286 (2019)

3 4,000-8,000 patients (based on prevalence) at median orphan drug pricing of USD150,000 p.a.; for prevalence see Daiger et al. 'Genes and Mutations Causing Autosomal Dominant Retinitis Pigmentosa' Cold Spring Harb. Perspect. Med. 5 (2014); Ellingford et al. 'Molecular findings from 537 individuals with inherited retinal disease' J Med Genet 53, 761-776 (2016); amongst other. Drug pricing in line with average orphan drug pricing and Luxturna pricing of USD425,000 per eye: see 'Orphan Drug Report 2019' Evalute Pharma

4 Assumes retention of the Australian R&D rebate in its current form and no material adverse impact from COVID-19

Announcement

Summary

• PYC Therapeutics ('PYC' or 'the Company') is pleased to announce a series of successful read-outs for our lead drug development program in models of retinitis pigmentosa (the leading cause of childhood blindness) derived from patients with the disease (see 'Detailed results' below).
• The Company will begin preparations for First In Human studies of this drug (anticipated to begin in 2021)5 in 2Q 2020 (see 'Next steps' below).
• There are currently no approved drug products for PYC's target indication nor any drugs in clinical development to address this severe unmet patient need – this affords the drug a rapid clinical development path through to market (see ASX announcement of 21 November 2019).
• In addition to validating PYC's lead program, the results also validate PYC's CPP-ASO technology and its application across the entire pipeline of retinal disease therapies PYC and the Lions Eye Institute have in development through the jointly owned subsidiary Vision Pharma Pty Ltd (PYC 90%).
• PYC's proprietary Cell Penetrating Peptide (CPP) technology is an integral element of the success of this lead drug program and the technology has broad applicability across many other disease processes.

Comments on the results

Sue Fletcher, PYC Chief R&D Officer: Phagocytosis is critical in maintaining a healthy retina and loss of this function is a hallmark of retinitis pigmentosa. The phagocytosis assay results provide compelling evidence that our CPP-ASO approach can treat inherited retinal diseases.

Doug Huey, PYC CEO: This data brings a great deal of promise for thousands of patients with RP11. We are grateful to those who gave their tissue to allow us to show what our drug can do in a model of their eyes, and we are excited at the prospect of providing them with access to this drug in the near future.

Next steps

With the critical efficacy read-outs delivered, the scheduled path for the lead program is to enter formal Investigational New Drug (IND)-enabling studies in 2Q 2020 and First In

5 Subject to a detailed review of the impact of COVID-19 on IND-enabling timelines that is yet to be completed

Human studies in 20216 as previously advised (see ASX announcement of 31 October 2019).

Path to market

RNA therapeutics for eye diseases, including PYC's lead drug molecule, have a greater than 50% prospect of successfully reaching market from First In Human studies7. PYC's target market includes ~4,000-8,000 reimbursable patients8, and average orphan drug pricing is ~USD150,000 per annum9 in the US. PYC therefore has the scope to make a meaningful impact on the lives of thousands of patients and capture a target market of more than USD1 billion per annum. PYC is in a strong financial position, with the ability to fund the clinical development of its lead program through to market10.

Alan Tribe, PYC Chairman commented on the results: We believe we have all of the elements required for success now in place: compelling scientific results, attractive markets in terms of patient impact and investor returns, and the financial strength to advance our lead program and broader pipeline. These results represent a major milestone in PYC's transformation into a drug development company.

Detailed results

Background

The read-outs were generated in models created from cells derived from individuals with Retinitis Pigmentosa type 11 (RP11), PYC's target indication. These models include the Retinal Pigment Epithelium cells or 'RPE' that are central to the progression of RP11 and the 3D 'retina in a dish/organoid' model. The assays conducted in these models (most notably the 'self-repair/phagocytosis' assessment) provide the critical insight into the likely effectiveness of the drug when it enters human testing next year (see ASX announcements of 5 December 2019 and 6 January 2020).

RPE model

When administered to diseased RPE cells, PYC's drug successfully mediated restoration of the scavenger function/self-repair process that is lost in RP11. This self-repair process is known as 'phagocytosis' and it reflects the ability of one layer of cells in the back of the eye (the RPE) to clear away debris from the cellular layer above (the photoreceptors).

6 Subject to a detailed review of the impact of COVID-19 on IND-enabling timelines that is yet to be completed

7 Hay et al, 'Clinical development success rates for investigational drugs.' Nat Biotechnol 32, 40–51 (2014); Wong et al. 'Estimation of clinical trial success rates and related parameters', Biostatistics, 20 (2), 273-286 (2019)

8 Daiger et al. 'Genes and Mutations Causing Autosomal Dominant Retinitis Pigmentosa' Cold Spring Harb. Perspect. Med. 5 (2014); Ellingford et al. 'Molecular findings from 537 individuals with inherited retinal disease' J Med Genet 53, 761-776 (2016)

9 EvaluatePharma, 'Orphan Drug Report 2019' (2019)

10 Assumes retention of the Australian R&D rebate in its current form and no material adverse impact from COVID-19

Figure 1 – anatomy of the photoreceptors and RPE in the retina11 and overview of the 'phagocytosis' self-repair pathway12

The photoreceptors are responsible for converting light hitting the back of the eye into a visual image. Photoreceptors shed their outer segments on a daily basis and replace them with new ones. It is the role of the RPE to clear away or 'phagocytose' those shed outer segments to maintain the health of the photoreceptors. If phagocytosis is compromised (as it is in this form of retinitis pigmentosa), the shed outer segments accumulate and cause the photoreceptors to die. It is the death of the photoreceptors that causes blindness in patients with this condition, hence the importance of assessing the drug's impact on the phagocytosis or 'self repair' process.

Figure 2 – Phagocytosis by RPE cells from a patient with RP11, with and without treatment with PYC's lead drug (a Cell Penetrating Peptide-Antisense Oligonucleotide conjugate or 'CPP-ASO').

11 Image courtesy of Eye Care Fundamentals

12 Image courtesy of the University of Sydney

Figure 2 illustrates the successful impact of PYC's drug on the phagocytosis process in diseased cells. In the assay, photoreceptor outer segments have been labelled with a fluorescent green 'tag' to assess the ability of the RPE (cell nuclei stained in blue) to selfrepair (more green = more self-repair). The cells treated with 5µM of PYC's drug demonstrate a substantially greater ability to phagocytose the fluorescent green photoreceptor outer segments than the untreated cells. Figure 2 shows microscopic images of treated and untreated cells at 10x magnification, taken 5 days after treatment. These images are representative of a broader set of assays conducted across cells derived from two individuals with a genetic mutation responsible for RP11 (see Figure 3 for more detailed results).

Figure 3 – Comparison of the level of phagocytosis in RPE cells (signal intensity of green flurescent 'tag' per cell actively phagocytosing) derived from a patient with RP11, with and without treatment with PYC's drug. Within 5 days, a single 5µM dose of PYC's drug (CPP-ASO, 2 samples) significantly increased the phagocytosis ability of the diseased RPE cells by more than 1.5-fold (p=0.0083, two-tailed unpaired t-test) compared to untreated cells (4 samples).

Another feature of retinitis pigmentosa is shortened cilia length in the RPE. Shortened cilia are indicative of poor cellular health and are likely to be related to the reduced functionality of cells in patients with this disease (e.g. reduced ability to self-repair or 'phagocytose' as described above). Figure 4 illustrates the morphology of a healthy RPE cell with a full length primary cilium compared to a diseased cell with a shortened primary cilium.

Figure 4 – Illustration of cilia length in healthy and diseased RPE cells

PYC's drug successfully increased the cilia length in diseased RPE cells to levels seen in individuals without the disease – an indication that the health of the cells after treatment is substantially improved.

Figure 5 – RPE cilia length in cells derived from an individual with a RP11 mutation, with and without PYC's drug treatment 5 days after a single 5µM drug treatment. The lower images represent a higher resolution on the sections of the upper images represented in the white boxes.

In the magnified images in Figure 5, the basal bodies of the cells (seen in red in Figure 4) have been stained in green and the cilia have been stained in red. Arrows in the treatment group illustrate the increase in the cilia length observed when compared to the untreated group.

Figure 6 - RPE cilia length in cells from an individual with a RP11 mutation, with and without PYC's drug treatment 5 days after a single 2.5µM drug treatment. Treatment with PYC's drug significantly increased cilia length, which is indicative of an improvement of functionality (p<0.0001, two-tailed unpaired t-test). The length (in micrometers) of at least 1000 cilia has been measured across five image fields per sample.

'Retina in a dish' model

PYC's drug also demonstrated positive outcomes in 3D models of patient retinas known as 'organoids' or 'retina in a dish'. The 'retina in a dish' models confirmed the ability of the drug molecule to enter the nucleus of cells and induce exon skipping of the target gene message (see Figure 7). This result explains the 'mechanism of action' of PYC's lead drug and more broadly validates the effectiveness of PYC's delivery technology and the potential of its retinal pipeline of ASO therapies.

Figure 7 – Exon skipping in patient 'retina in a dish' models (n=2 patients with RP11), with and without PYC's drug treatment. Organoids (4-6 organoids combined) were treated with 5µM of drug administered twice over a 14 day time period. Due to the successful delivery of the Antisense Oligonucleotide, up to 71% of RNA molecules have been altered (skipped) by the ASO (n=1 sample per treatment).

This ASX announcement was approved and authorised for release by the Board of PYC Therapeutics Limited

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About PYC Therapeutics

PYC Therapeutics (ASX: PYC) is a drug development company solving a major challenge in the development of a revolutionary new class of drugs – delivering large drugs into cells. Cell Penetrating Peptides (CPPs) can overcome 'the delivery challenge' and provide access for a wide range of potent and precise drug 'cargoes' to the 'undruggable genome' – the highest value drug targets that exist inside cells. PYC Therapeutics is using its CPP platform to develop a pipeline of novel therapies with an initial focus on inherited retinal diseases.

Forward looking statements

Any forward-looking statements in this ASX announcement have been prepared on the basis of a number of assumptions which may prove incorrect and the current intentions, plans, expectations and beliefs about future events are subject to risks, uncertainties and other factors, many of which are outside the Company's control. Important factors that could cause actual results to differ materially from assumptions or expectations expressed or implied in this ASX announcement include known and unknown risks. Because actual results could differ materially to assumptions made and the Company's current intentions, plans, expectations and beliefs about the future, you are urged to view all forward-looking statements contained in this ASX announcement with caution. The Company undertakes no obligation to publicly update any forward-looking statement whether as a result of new information, future events or otherwise.

This ASX announcement should not be relied on as a recommendation or forecast by the Company. Nothing in this ASX announcement should be construed as either an offer to sell or a solicitation of an offer to buy or sell shares in any jurisdiction.

Tel: +61 8 6151 0994 pyctx.com PYC Therapeutics ACN 098 391 961