Phylogica LtdASX: PYC

Doug Wilson

www.phylogica.com

Introduction

Specialist drug discovery company with unique capabilities to identify novel drug candidates (prototype drugs)

Proprietary technology based on world’s largest and most structurally diverse peptide library of drug-like compounds

Low–risk strategy to drive revenue growth and accelerate profitability through technology licensing and fee-for-service drug discovery

Initiated commercialisation phase – progressing multiple deal opportunities with major pharmaceutical companies

Secured key agreement with Roche, Europe’s largest pharma company, with potential to generate substantial income

Experienced management team with required skills to execute deals and commitment to maximise shareholder value

Traditional drug development pipelines are drying up

Numbers of conventional ‘small molecule’ drugs coming to market are diminishing

Nature Reviews Drug Discovery, Vol 9, p92, 2010

No.

new

sm

all

mole

cule

s d

rug

s/yr

Biologics: The fastest growing class of new therapeutics

2015

50%50%

SmallMoleculesBiologics

1996

98%

2%

Biologics consist of

• antibodies

• proteins

• peptides

2008 worldwide sales = $120 Billion

Phylogica has discovered a novel source of therapeutics peptides known as “Phylomers®”

Cost of small molecule drug development are increasing exponentiallyD

rug C

ost

s (U

S$

Bill

ion

)

Targets most amenable to treatment with conventional small molecule drugs are drying up.

Cost to develop drugs against “difficult” targets increasing exponentially

Phylomers® represent a new class of peptides derived from natural protein fragments encoded by biodiverse ancient bacterial genomes

Phylomer libraries contain billions of distinct peptides from diverse branches of the evolutionary tree

The libraries are made from genomes of bacteria, many of which live in extreme environments like volcanic streams, geysers and deep sea volcanic vents

• Phylomer structures are pre-selected by evolution to allow survival• High thermal stability is a desirable characteristics of drugs

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

Phylomer® Peptides

Advantages of peptides over other biologics classes

Peptides have advantages over larger biologics (eg. MAbs)

• patient friendly delivery - several marketed intranasal spray formulations

• can be made synthetically at low cost

• avoids additional costs due to antibody-associated ‘royalty stack’

• can be delivered into cells

• can exhibit good tissue penetration due to smaller size

Antibody (~150 kilodaltons) Phylomer (~3 kilodaltons)

Peptide market growing nearly twice as fast as small molecules

• 33 marketed peptides represent $4 billion market (excluding insulin)

• 178 peptides in clinical development

• 400 peptides in advanced preclinical development (tip of the iceberg)

• virtually all peptides come from analogues of natural peptides

Phylogica has developed next generation of peptide therapeutics

• most diverse set of peptide structures available

• bigger pool of different structures to choose compounds from

• libraries yield best quality and quantity of drug prototypes available

Addressing the challenge of peptide drug discovery

Traditional path to drug development

10-15 year cycle, costly

Most Australian biotech’s can progress only 1-2 candidates

High risk: requires long-term investment and mostly fails

Traditional Biotech Model

Big Pharma

De-risking investment in drug development by focusing on drug discovery

Proprietary peptide libraries and screening systems for drug discovery

Maximizing near-term revenue growth through drug discovery alliances

Anticipate 3-4 deals required to reach cash flow sustainability

Entered first major drug discovery alliance with Roche in December 2009

Model provides access to long-term revenue streams

Building long-term value through milestones and royalties

Objective to secure an increasing share of down-stream value in progressive deals

Discovery alliances – multiple revenue sources

Discovery Pharma PartnershipsValue Per Drug Target (US$)

Upfront license fee $500K

Contract Discovery (3-4 FTE’s/yr) $750K- $1M

Milestone Payments $1M - $100M

Royalties usually single digit %

Preclinical Licenses of Internal Drug LeadsUpfront fee

Seven to eight figuresMilestone Payments

Royalties

Large Strategic Alliance Around Disease AreasAblynx/BI $1.8 Billion

Galapagos/Merck $1.0 Billion

Morphosys/Novartis >$600M

Successful companies focused on discovery-alliance model

Company Platform Market Value 2009 Revenues Listed

Morphosys Antibody Library Screening >US $500M €81M DE

Evolva Library Screening/Small Molecule >US $400M CHF $11M (2008) SIX

Evotec Genetic Library Screening/Small Molecule

>US $300M >€40M Frankfurt/Nasdaq

Galapagos Genetic Library Screening/Small Molecule

>US $380M €100M €2.4B Listed on EuroNext

Galapagos: major alliances

Phylomer hits belong to multiple structural families: diversity of shapes

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

olo

gous

Cry

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All SCOP Classes Represented

98% ID48% ID 36% ID

Phylogica owns the most comprehensive collection of peptide structures found in nature

Patents cover methods of making and screening Phylomer libraries and composition-of-matter on peptides and the libraries themselves

16 patent families, 26 granted/ allowed patents and 27 patent applications covering the markets of US, Europe, Japan and Australia

Intellectual Propertyintegrated patent portfolio

Extensive evaluation studies validate the high quality of Phylomer library hits

Multiple in vivo efficacy studies support therapeutic potential of Phylomer drug candidates

Versatility of libraries endorsed by multiple international collaborations

Deal discussions progressing with >20 prospective pharma partners

Late-stage negotiations with three major pharma companies

Developing new generation Phylomer libraries to expand discovery platform

Building screening capabilities for future strategic alliances

Well-positioned for commercial success

M&A activity in biologics discovery field

Eight acquisitions of companies with biologics discovery libraries in less than 2 years

Average valuation at acquisition of A$450M

62% of companies acquired at pre-clinical stage

Pharma values drug discovery engines with associated proprietary drug libraries

Phylomers: a versatile toolbox for drug discovery

Unique drug discovery resource for pharmaceutical industry

Technology is fully validated, scalable and optimized for commercialization

Broad patent protection for entire class of drugs

Initiated commercialization phase, three late-stage deal negotiations

Strategy for near-term profitability driven by fee-for-service business model

Objective to secure an increasing share of down-stream value in progressive deals

Potential exit opportunities via trade sale or major strategic alliance

Summary

Phylogica LtdASX: PYC

www.phylogica.com