Ann: ADR: Adherium Directors' Statement re Takeover, page-2

KEY REASONS FOR BOARD'S RECOMMENDATION TO REJECT RESPIRI'S OFFER

1. Weak Strategic Alignment
While the Bidder's Statement suggests the Respiri offer "de-risks" an investment in Adherium, the
Adherium Board believes the Respiri offer, if accepted, would increase risk to Adherium Shareholders rather than de-risk their investment - as those Shareholders who accept the Respiri offer will be subject to the risk profile of both companies.
This is compounded by the weak strategic alignment between the two companies because:
• Respiri’s commercial strategy through pharmacies and Direct-to-Consumer is one which was tried and was unsuccessful for Adherium previously. Adherium believes that Respiri’s Direct-to-Consumer and pharmacy strategy is yet to be proven, including in its home market of Australia
• Respiri has only one sensor, for which currently to Adherium's knowledge there are no publicly available independent clinical trial results, and nor is it supported by any independently conducted clinical trial publications in peer reviewed journals. Respiri have not announced any other devices in development; and
•
KEY REASONS FOR BOARD'S RECOMMENDATION TO REJECT RESPIRI'S OFFER
1. Weak Strategic Alignment
While the Bidder's Statement suggests the Respiri offer "de-risks" an investment in Adherium, the
Adherium Board believes the Respiri offer, if accepted, would increase risk to Adherium Shareholders rather than de-risk their investment - as those Shareholders who accept the Respiri offer will be subject to the risk profile of both companies.
This is compounded by the weak strategic alignment between the two companies because:
• Respiri’s commercial strategy through pharmacies and Direct-to-Consumer is one which was tried and was unsuccessful for Adherium previously. Adherium believes that Respiri’s Direct-to Consumer and pharmacy strategy is yet to be proven, including in its home market of Australia
• Respiri has only one sensor, for which currently to Adherium's knowledge there are no publicly available independent clinical trial results, and nor is it supported by any
independently conducted clinical trial publications in peer reviewed journals.
Respiri have not announced any other devices in development; and
• The clinical significance of measuring wheeze in the treatment of Asthma and COPD and
whether this would qualify for reimbursement, in particular in the US, has currently to Adherium’s knowledge not been independently demonstrated or verified.
By contrast, Adherium’s key value proposition is clear and lies in the management of the difficult to treat patients incurring the highest cost for healthcare systems, including severe and uncontrolled Asthma and COPD patients with a focussed commercial plan in speciality clinics and disease management groups, including providers and payers.
Adherium’s Hailie® solution is a platform technology comprising an established suite of cloud and mobile app software, and six regulatory cleared sensors with 8 US FDA 510(k) clearances for
inhaled medication covering more than 56% of the market by unit sales volume in the US. Adherium also holds clearances for Canada, China and Europe, and Adherium’s technology has also been
used or evaluated in more than 100 independent studies resulting in peer reviewed journal articles.
Adherium has a clear plan for the use of the capital recently provided by its Shareholders in the
Adherium development plan; and importantly the commercialisation of Adherium's Hailie® platform.
Adherium believes the scope of its development plan and its commercialisation for the Hailie®
platform is substantially greater than that of Respiri's Wheezo product, and consequently the Adherium cash burn is higher.
In progressing its broad development portfolio, Adherium is also improving the efficiency of its Research and Development program, as noted in the fundraising process, by reducing its dependency on third party suppliers with the appointment of a small, dedicated software and
hardware development team in Australia. Whilst there could be some savings in bringing the two
By contrast, Adherium’s key value proposition is clear and lies in the management of the difficult to
treat patients incurring the highest cost for healthcare systems, including severe and uncontrolled Asthma and COPD patients with a focussed commercial plan in speciality clinics and disease management groups, including providers and payers.
Adherium’s Hailie® solution is a platform technology comprising an established suite of cloud and
mobile app software, and six regulatory cleared sensors with 8 US FDA 510(k) clearances for
inhaled medication covering more than 56% of the market by unit sales volume in the US. Adherium
also holds clearances for Canada, China and Europe, and Adherium’s technology has also been used or evaluated in more than 100 independent studies resulting in peer reviewed journal articles.
Adherium has a clear plan for the use of the capital recently provided by its Shareholders in the Adherium development plan; and importantly the commercialisation of Adherium's Hailie® platform.
Adherium believes the scope of its development plan and its commercialisation for the Hailie®
platform is substantially greater than that of Respiri's Wheezo product, and consequently the Adherium cash burn is higher.
In progressing its broad development portfolio, Adherium is also improving the efficiency of its Research and Development program, as noted in the fundraising process, by reducing its dependency on third party suppliers with the appointment of a small, dedicated software and
hardware development team in Australia. Whilst there could be some savings in bringing the two
companies together, the Adherium Board does not believe these savings compensate for the strategy execution and dilution risk associated with a potential combination.



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