Ann: Appendix 4C - Quarterly, page-7

wasa

After selling down RGS in early 2014, three and a half years later I'm beginning to feel a bit of nascent excitement again about this company's prospects.

The commercial partnering and manufacturing deal with AGC provides a potentially solid base for Progenza to develop in Japan. The company claims that it has an 18 month positive cash runway due to the deal and to several other project grant and tax incentive arrangements, and since this calculation claims not to include incremental cash receipts from a) AGC milestone payments; and, b) any license fees that may accrue in the period from the issuing of clinical development or marketing rights of Progenza for OA or other indications in Japan, - I am inclined to accept the projections as prudent and conservative.

An indication of how things may unfold in Japan could come with the imminent report on the Progenza osteoarthritis STEP trial which is due before the end of next month,and the success of which is a necessary precursor for proceeding to phase 2 trials at the end of next month. Given that the company claims to be in advanced clinical partnering discussions for Progenza for OA and other indications in Japan, the conclusion of the STEP trial could be a possible trigger for RGS and AGC getting some early clinical development licensing underway.

While the action in Japan has been the focus of all the recent excitement for RGS, it is evident that the company is determined not to be a one trick pony. Trials and potential commercial developments with Cryoshot canine provide a focus for the second half of FY 18 and Kvax trials provide a "holy grail" focus into the long term. However, what has really caught my interest is the increased attention the company is starting to put on its topical stem cell secretions gel for treatment of a range of inflammatory skin conditions and wound treatment scenarios, and I must say that I am quite eagerly anticipating the results of the preclinical trials in the US which are also scheduled for completion before the end of this FY. A successful preclinical trial could well be the catalyst for early commercial partnering arrangements.

I've been disappointed before by RGS , but I'm getting the feeling that they have now learned from their early mistakes and are well placed to get some runs on the board for shareholders.

From a TA perspective it seems perverse that the market had valued RGS at 50to 60 cents per share in early 2014, but now, after a further 3 years of steadily establishing the business, the market can only value the company at 14 odd cents per share. I'm also presuming from a TA perspective that the 10 to 20 cents per share trend channel that the company has been more or less stuck in since November 2014 must be creating some pressure for a pretty decisive break when the break does occur. Of course, the $64 question will be: a break up, or a break down? I'm finally back in the camp which is expecting a trend channel break to the upside.

zeno9