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PO Box 8207, Subiaco East, Western Australia 6008 Suite 3, 257 York Street, Subiaco, Western Australia 6008

Tel: +61 8 9382 8888 Fax: +61 8 9382 www.phylogica.com ABN 48 098 391 961

The Company Announcements Platform ASX Ltd Sydney NSW 2000

PHYLOGICA REPORTS PROMISING DATA ON CELL-PENETRATING

PHYLOMER® PEPTIDES PERTH, AUSTRALIA: May 25, 2011 – Phylogica Ltd (ASX: PYC, XETRA: PH7), a leading Australian peptide drug discovery company, announced today promising validation of its novel cell-penetrating Phylomer peptides. The findings were presented for the first time by Phylogica’s CEO, Dr. Paul Watt, at the TIDES Conference on Peptide Discovery and Development, being held in Boston, MA, on 22-25 May 2011. The theme of this event was ‘Peptides Coming of Age as Intracellular Drugs, Delivery Agents and Modulators of Previously Undruggable Targets and Disease Mechanisms’. “We have identified several distinct structural families of cell-penetrating Phylomers that have shown encouraging activity, A number of these peptides come from completely new structural families, bearing no resemblance to previously identified cell-penetrating peptides”, commented Dr. Watt. “These important data underscore the opportunity for Phylomers to target disease mechanisms that have traditionally not been accessible for drug discovery and they also reaffirm our technology as a rich source from which to discover new peptide classes.”

-ends- For further information, please contact: Nick Woolf CFO & VP, Corporate Development Tel: +61 417 986 005 nwoolf@phylogica.com Rudi Michelson Monsoon Communications Tel + 61 3 9620 3333 About Phylogica Phylogica Limited (ASX: PYC) is a biotechnology company based in Perth, Australia, and Oxford, UK, with a world-class drug discovery platform harnessing the rich biodiversity of nature to discover novel peptide therapeutics. The Company was incorporated in 2001 as a spin out from the Telethon Institute for Child Health Research (Perth, Australia) and the Fox Chase Cancer Centre (Philadelphia, USA). The Company’s drug discovery platform is based on its proprietary Phylomer® libraries of natural peptides, which have been optimised by evolutionary selection to have stable drug-like structures. Phylogica

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offers fully integrated drug discovery services to the pharmaceutical industry utilising its Phylomer® libraries and proprietary screening technologies. Its current partners include Roche, MedImmune (the worldwide biologics unit of AstraZeneca) and Pfizer. About Phylomer® Peptides Phylomer peptides are derived from biodiverse natural sequences, which have been selected by evolution to form stable structures, which can bind tightly, and specifically to disease associated target proteins, both inside and outside cells. Suitable targets for blockade by Phylomers include protein interactions that promote multiple diseases, such as infectious diseases, cancer, autoimmunity and heart disease. Phylomer peptides can have drug-like properties, including specificity, potency and thermal stability, and are capable of being produced by synthetic or recombinant manufacturing processes. Phylomer peptides are also readily formulated for administration by a number of means, including parenteral or intranasal delivery approaches.

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PhylogicaHarnessing biodiversity for biologics discovery

Beyond TAT:

Exploring Natural Protein-Derived Phylomer Peptides for Cell Penetration

Paul WattTuesday, 24 May 2011

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Background to Phylogica

Spin-out from collaboration between Telethon Institute for Child Health

Research in Western Australia and Fox Chase Cancer Centre in Philadelphia

Based in Perth, Western Australia, and Oxford, UK; ~20 employees

Listed on Australian Stock Exchange (ASX)

Control access to the most structurally diverse peptide libraries available

Business model of contract discovery for big pharma in exchange for

technology access fees, milestones and royalties

Have done 3 deals in the last year with Roche, Medimmune and Pfizer

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Phylomer libraries: more structures to increase quality and quantity of hits

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Encoded from biodiverse bacterial genomes, many of which live in extreme environments like volcanic streams, geysers and deep sea volcanic vents

Phylomer libraries contain several billion distinct peptides

Phylomer structures are pre-selected by evolution to allow survival, such as high thermal stability

Average Phylomer about 30 amino acids long

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

Phylomers® come from parts of biodiverse proteins

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Diverse peptides derived from natural proteins

World’s richest source of diverse natural secondary and tertiary structures

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

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Harvesting structural diversity for drug discovery

Phylomer libraries offer the most structurally diverse set of peptides available

Contain multiple classes of subdomain/supersecondary structures from diverse evolutionary protein lineages

Watt 2009 Future Medicinal Chemistry. 1 (2) 257-265.

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Phylomers are derived from multiple structural families

Bacteroides: (40L_0859) Bordetella: (40L_0716) Haloarcula: (40L_0735)

S. enterica. (dTDP-D-glucose 4,6-dehydratase)

E. coli. (Ferric siderophore receptor)

B. stearothermophilus(Alpha-L-arabinofuranosidase)

Hom

olog

ous

Cry

stal

Str

uctu

re

All SCOP Classes Represented

98% ID48% ID 36% ID

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Modelling and CD support diversity of secondary structures

De Novo Structure Predicted by PEP-FOLD

Ac14 Ac10059 at 100ug/ml +16mM SDS

190 200 210 220 230 240 250-15000

-10000

-5000

0

5000

10000

15000Raw data

Wavelength (nm)

Homology Model (40L_1064)

Structure Predicted by MODBASE

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Flexible approach for peptide lead discovery

Phage Display

Mammalian

Pure Peptide Affinity

Phage Display

Yeast Two Hybrid

Phenotypic

High Throughput Synthesis

Pure Peptide

Recombinant

Specificity

Affinity

Functional Validation

Mutagenesis

Multimerisation

PEGylation

Long Lived Serum Proteins

Screening Synthesis Filter Maturation PK

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TNF TNF RII CD40L GMCSF

Phylomers bind multiple target classes

TargetStreptavidin

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Phylomers can exhibit high target specificity

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Phylomer affinities before maturation (CD40L Primary hits)

Peptides expressed as recombinant fusions with Maltose Binding Protein (MBP) and then affinities determined using Octet Red (ForteBio)

Affinities range from high pM (350pM) to high nM

PeptideAffinity (Octet Red)Affinity (Octet Red)Affinity (Octet Red)

Size Charge rMBP-Peptide FusionrMBP-Peptide FusionrMBP-Peptide Fusion

hCD40L (nM) TNF (nM) GMCSF (nM)

40L_000240L_000440L_000640L_42(b)40L_072140L_085940L_081840L_090140L_1049

19 -1 21 none none18 0 13 none none18 0 24 none none23 +1 3 none none28 -4 9 none none36 -7 0.35 none none32 -2 0.42 none none37 -1 0.9 none none75 -11 1 none none

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Hitting intracellular cellular targets with Phylomers®

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Intracellular target screeningDeliver Phylomers into cells using the TAT Cell Penetrating Peptide or use novel Phylomer-based cell penetrating peptides

Screened against intracellular targets using Yeast Two hybrid assays:

Example 1. AP-1 (inflammation and cancer): • No. Unique Hits = 63. • Functional Hit Rate (AP-1 Luc Assay) = 67% (42/63)• Validated in models of Stroke, TBI, Acute Burns and ARDS

Example 2. MAL (inflammation): • No. Unique Hits = 58.

• Functional Hit Rate (NFkB Luc Assay) = 89% (49/58)

Example 3. Sonic Hedgehog Pathway (inflammation) > 100 unique hits against two intracellular targetsCollaboration with Cambridge University

Peptides can show efficacy before any affinity maturationTuesday, 24 May 2011

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Phylomer delivery into cells with TAT Cell Penetrating Peptide

D-PYC38 TAT 488

D-38TAT D-38

D-PYC38 488

Fluorescence microscopy of Alexafluor488 labeled (green) peptide and DAPI labeled (blue) nuclei

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Nucleolar Localisation of Phylomer PYC38TAT-FITC

Bright field

DAPI (nuclear stain)

Rab5 AF594(early endosome)

FITC labeled peptide

Merged Image – 100x

HEK-293

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Retroinverso Phylomer® peptides have been demonstrated to be highly stable (>6 months at -20 and >2 months at room temperature in buffer)

Retroinverso Phylomers are stable and protease-resistant in human plasma- >50% of retroinverso peptides present after 12 hrs incubation in human plasma- Retroinverted Phylomers® show greatly extended in vivo half-life in rat plasma without further modification (e.g.PEGylation)

Peptide Levels Detected by LC/MS

UnPEGylated PYC35/PY36 Half life in vivo (rats) of 100 minutes(Comparable with T1/2 of many unPEGylated domain antibodies )

Enhancing Phylomer stability using retroinverso peptidiomimetics

0

12.5

25.0

37.5

50.0

0 15 30 45 60 120240480720

D-PYC35-TATD-PYC36-TAT

Time [min]

Phyl

omer

® [µ

g/m

l]

Peptide Levels Detected by LC/MS

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PYC35 PYC36

Dose-dependent neuroprotection with Phylomers

AP-1 specific peptides protecting primary rat neurons from cell death induced by glutamate

Meade et al., 2010. Journal of Neurochemistry 112: 258–270

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Brai

n Da

mag

e(In

farc

t vo

lum

e m

m3)

Saline PYC36DScrambled

Control

PYC36D 0

50

100

150

200

250

300

350

400

N = 4 N = 3

N = 4

*

Phylomer Protection from brain damage of Permanent Focal Ischaemia - PYC36-D

Intravenous administration of peptide

500 nMol/Kg Phylomer peptide administered IV 1 hour Post-ischaemia

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Phylomer reduces damage from traumatic brain injury

Extensively-characterised focal cortical model of traumatic brain injury

Phylomer D-PYCAG5-TAT decreased extent of inflammation and death

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Discovery of Phylomers® which can penetrate cells

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Workflow for Cell Penetrating Peptide Screen

Screen phage displayed libraries for internalisation

Sequence

Synthesise Recombinant

FACS screen for cell binding/internalisation

Confocal analysis for internalisation

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Isolating cell penetrating Phylomers

Phage displaying Phylomers

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Negative control peptide Positive control peptide (TAT)

Phylomer delivery peptide A Phylomer delivery peptide B

Have identified multiple cell penetrating Phylomer peptides

Delivery of Phylomer peptides into cells

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Confidential, 28/3/2011

Live confocal microscopy shows efficient Phylomer delivery

Labelled Phylomer in CHO Cells Phylomer CHO-D Optical sections (Z-plane)

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Cargo delivery with Phylomers: Cellular uptake of MBP-Phylomer fusions

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Selections to identify phylomers able to internalise into endothelial cells

PROTEASE and/orACID WASHING

HARVESTING OF CELLS

recovery of internalised phage

Phage amplificationin E.coli

T7M13

bEnd.3 cells

X Removal of “sticky”phage

1-5 rounds, +/- neg selection

HUVEC cells

SVEC4-10 cells

Negative selection

Removal of non-specificphage

Phage displaying Phylomers

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Phylomers with binding/internalisation specific to particular cells

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Assessment of CPP cytotoxicity in endothelial cells

29

• Assessment of cytotoxicity after exposure to peptide concentrations up to 50µM- Toxic Peptide Ac 35 included positive control

No significant cytotoxicity observed for any of the CPPs

Positive control

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Statistical Summary of CPP and cell binding selections

Number

Phage Screens (n) 37

Unique sequences (n) 992

Peptide synthesised 153 (15%)

Recombinant peptides 13 (1%)

FACS +ve (Bend.3/CHO) 46 (30%, n=166)

Microscopy +ve (Bend.3/CHO) 17 (11%, n=166)

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New structural classes of CPP from Phylomer libraries

Sibling clones (single screen)

Sibling clone (multiple screens)

Tat-like CPP

pVEC-,MPG-like CPP

Some phylomers isolated multiple times from independent screens, even from different display systems (T7, M13)

Distinct sequence

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New Classes of Cell Penetrating Peptide from Phylomer Library

PHYLOMER CLASS CHO bEND.3 Toxicity

CLASS PYC (1-10 µM) PYC (1-10 µM) PYC (10 µM)

TAT-like +++ ++ -

TAT-like +++ ++ -

++ (10 µM) +/- -

++ ++

TAT-like +++ + -

nORF - + -

nORF ++ (10 µM) ++ -

nORF +++ ++ -

Cell Specificity

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Multiple classes of validated Phylomer CPPs

Phylomer Comments

BEN-B

- Arginine rich TAT-like sequence.

- Using chemical constraint to stabiliseamphipathic helical structure

RcGRASRcRVRWMRRRRI

CHO-D

- Similar to gp41 transmembrane protein from SIV. - Facilitates fusion of viral and target cell membranes.

PYSRPHVQLWYPNREScRSLIRSLGP

BEN-A

- Putative transposase from Streptomyces avermitilis- Negatively charged sequence suggests a different mode of action to the cationic TAT-like peptides. - Preference for Brain endothelial cells (Receptor mediated?)

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Enrichment for membrane-associated protein fragments from CPP screen

Clone Organism Phylomer Comments

CHO-A Bordetella pertussis Outer membrane porin protein porins are responsible for the 'molecular sieve' properties of the outer membrane. Porins form large water-filled channels which allows the diffusion of hydrophilic molecules into the periplasmic space.

CHO-B Deinococcus radiodurans

Multidrug-efflux transporter The MFS transporters are single-polypeptide secondary carriers capable only of transporting small solutes in response to chemiosmotic ion gradients

CHO-C Neisseria meningitidis ABC transporter family protein ABC transporters for a large family of proteins responsible for translocation of a variety of compounds across biological membranes. ABC transporters are the largest family of proteins in many completely sequenced bacteria

BEN-A Bordetella pertussis Putative leu/ile/val-binding protein

This family includes extracellular ligand binding domains of a wide range of receptors.

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Phylomer homologous to part of an SIV protein implicated in viral fusion (1µM

) D3

Cel

ls

CHO Cells

(10 µM

) CH

O C

ells

bEND.3 cells

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Phylomers provide a useful toolbox for discovery

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Phylomer libraries offer a particularly rich source of drug like peptides

Phylomers peptides can be active on intracellular and extracellular targets

Novel Phylomer-derived cell penetrating peptides belong to multiple families

Phylomers identified with preference for particular cell types

We are open to discovery alliances through a variety of license structures

Summary

22

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Dr. Paul WattChief Executive OfficerTel: +61 8 9382 8888Fax: +61 8 9382 1766Mobile UK: +44 7775 682478paulw@phylogica.com

www.phylogica.com

Nick WoolfCFO, VP Corporate Development

Tel: +61 8 9382 8888Fax: +61 8 9382 1766

Mobile UK: +44 7766 234206 Mobile AUS: +61 417 986 005

nwoolf@phylogica.com

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