PYC THERAPEUTICS LIMITED — Management Reports 2016

Dec 20, 2016

Operational Update

21 December, 2016

Dear Shareholders,

In establishing Phylogica as a leading intracellular delivery company, we are pleased to report significant progress has been made over the last quarter in the areas of:

• i) intracellular delivery technology – further advances in our FPP intracellular delivery platform which we believe is best in class with demonstrable, significant endosomal escape and outperformance over other delivery technologies such as TAT.

• ii) Internal oncology program – refined our shortlist of proprietary iMYC cargoes aimed at the high‐ value intracellular cancer target Myc to 5 high quality candidates for optimisation, and completed our proof of concept toxicity experiments.

• iii) commercialisation – a number of presentations to interested pharma and biotechnology companies were made during the quarter to discuss current and future collaborations.

We have also been very pleased to recently announce that Genentech has extended its exclusivity period for the Research Collaboration and License Agreement to discover novel antibiotics utilizing Phylogica’s Phylomer® drug discovery platform, including our proprietary cell penetrating peptide discovery technology, resulting in a US$2m milestone payment.

1. Progress on FPP platform development

Our work this quarter has further supported our FPP (Functional Penetrating Phylomer) intracellular delivery platform as being superior to other delivery technologies. Key attributes of our platform include:

• Enables endosomal escape

• Endosomal escape is a critical feature required for efficient intracellular delivery, which other intracellular delivery platforms have not demonstrated to our knowledge to this extent, and helps establish our FPPs as best‐in‐class.

• Compatible with a wide range of cargoes

• Our FPPs are able to deliver cargoes from as small as oligonucleotides and siRNA to as large as enzymes – which greatly expands the range of therapies for which FPPs can be used to deliver and the diseases that can be treated.

• Outperforms other intracellular delivery technologies in delivering more efficiently to the cytoplasm

• Our delivery of cargoes to the cytoplasm outperforms the current gold standard of intracellular delivery technology known as TAT.

• Functional in multiple cell types

• FPP‐delivered cargoes can function in various cell types rather than being restricted to only cell types such as liver cells or transformed cancer cells. This provides significant scope for expanding the range of treatable targets.

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• Preliminary evidence of intravenous in vivo efficacy(with Omomyc cargo)

• Evidence of in vivo activity in two distinct animal models following intravenous administration.

• Promising initial safety signals

• Our in vitro experiments show little evidence of toxicity. This is supported by preliminary evidence from in vivo experiments, both of our own and with collaborators, with no evidence of toxicity of FPP‐ only controls.

Externally, we continue our commercialisation discussions and presentations with individual pharma companies, with several recent face‐to‐face meetings in US and Europe. The discussions are for both established opportunities under evaluation and to initiate new ones to assess the FPP delivery platform with various types of proprietary pharma cargoes in multiple disease areas.

2. Progress on the i‐MYC cancer program

Our proof of concept (POC) data pack is almost complete, with significant work undertaken in the last quarter. Formal preclinical development is still targeted to commence during the second half of 2017. Table 1 summarises the elements of the program, with relevant updates as follows:

• iMYC Phylomer cargo candidate selection

• 5 candidates with high quality features have been selected for optimisation, with early stages of the optimisation process now underway.

• Data pack and optimisation progress

• Potency:

  • Affinity maturation and other approaches have commenced as part of the early optimisation process, in order to achieve further increases in potency.

• Toxicity:

  • Additional experiments have again showed no evidence of toxicity, completing this key element of the proof‐of‐concept data pack.

• Pharmacokinetics (PK):

  • Well‐established optimization approaches are being assessed to enhance PK and we are confident that we can achieve the objectives of PK and biodistribution as we progress through the optimization process.

• Selectivity:

  • For selectivity, having established proof of concept we are now continuing to generate further supporting data using transcriptional analysis of a signature of Myc target genes.

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Table 1: POC Data Pack Milestones

1. Progress on other external collaborations and discussions

2. Genentech – Antimicrobial collaboration exclusivity extension with US$2m milestone payment

   • We have announced earlier this month the excellent news that Phylogica will received a $US2m milestone payment from Genentech to extend its exclusivity period for the Research Collaboration and License Agreement to discover novel antibiotics utilizing Phylogica’s Phylomer® drug discovery platform, including our proprietary cell penetrating peptide discovery technology.

   • This is an exciting collaboration to develop novel antibiotics to treat bacterial infections including antimicrobial‐resistant infection, an area of critical unmet need, which has received increased attention this year from the World Health Organisation and the UN.

3. Murdoch University – Oligonucleotide delivery collaboration progressing

   • We have seen further encouraging progress in our collaboration with Murdoch University on oligonucleotide delivery. A round of intravenous animal model experiments has shown preliminary signs of efficacy, and importantly, lack of toxicity, in delivery of exon‐skipping oligonucleotides in models of both Duchenne Muscular Dystrophy (DMD) and Spinal Muscular Atrophy (SMA) to muscles in a range of locations (including cardiac, diaphragm and tibia). Excitingly, we have seen

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evidence for increased levels of the dystrophin protein following treatment with FPP‐delivered exon‐skipping oligonucleotides.

• Olivia Newton John Cancer Research Institute (ONJCRI) collaboration – NHMRC grant awarded

• In November we announced the receipt of a ~$750,000 grant by our collaborator Doug Fairlie at ONJCRI to support a 4 year project entitled “Dual targeting of Myc and apoptosis pathways for improved blood cancer treatment outcomes”. A small part of these funds will help subsidise the cost of synthesis of our peptide and protein constructs, but most importantly the funding allows research to progress on further validating our FPP platform and iMYCs in the area of blood cancers such as leukaemia and lymphoma.

• University of Queensland (UQ) collaboration progressing

• In our ARC grant‐funded collaboration with the Institute for Molecular Biosciences at UQ, we have confirmed high hit rates from new synthetic phylomer libraries against several target classes. This collaboration is on track for the validating of prototype arrays of Phylomers for use in universal diagnostics.

Also our collaboration with Dana Farber has continued with work on both our STAT5 and YB1 proprietary oncology cargoes advancing; and our phenotypic screening collaboration with Phoremost continues.

In addition, since the end of September, we’ve signed a further non‐disclosure agreement with an international pharmaceutical company to discuss elements of Phylogica’s technology portfolio. This brings the total of additional NDAs signed since the end of March to 5 which, although early stage, indicate an increasing interest in Phylogica’s progress.

As we move into 2017, we are proud of the progress we have made over the last 12 months and are excited to be further advancing our intracellular delivery technology, our innovative cancer program and our discovery platform. With the work completed over the last calendar year, Phylogica is now firmly established as a leading intracellular delivery platform outperforming all other known delivery platforms. We look forward to updating you through 2017, as the iMYC cancer program approaches formal preclinical development in the second half of the year, and as we see further internal and external validation of our FPP intracellular delivery platform.

Stephanie Unwin

Chair Phylogica Limited

For further information, please contact:

Ms Stephanie Unwin Tel: +61 8 9286 1219 Email: stephanieu@phylogica.com

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 Phylogica’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 Phylogica’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. Phylogica 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 Phylogica. 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.

Phylogica Limited ACN 098 391 961