Ann: Annual Report, page-2

Results from the First Line Clinical Trial in Canines with Naturally Occurring Cancer

The first line therapy clinical trial in canines with B-cell lymphoma was successfully completed during the 2017-2018 calendar year.

This trial was undertaken using gelatin encapsulated MPL liquid.

The use of MPL liquid meant that only sub-optimal doses could betested.

However, the trial confirmed MPL’s presumed anticancer activity and has provided PharmAust with full confidence toexplore this potential in more formal clinical studies.

The trial showed that:

• for the first time, inhibition of the mTOR signaling pathway is associated with anticancer efficacy in dogs with naturallyoccurring cancers,• six out of seven dogs administered gelatin encapsulated MPL liquid achieved stable disease,

• six out of seven dogs administered gelatin encapsulated MPL liquid achieved reductions in tumour size,

• stable disease and reductions in tumour size were accompanied by a high MPL safety profile,

• administration of MPL was associated with reductions in PharmAust’s identified tumour marker,

• due to poor palatability and a relatively low permissible dose, it was confirmed that MPL liquid is not an ideal formula foreffectively administering MPL to canines with cancer,• reformulation is required to realise MPL’s full anticancer potential, and

• progression to formal Phase I and Phase II clinical trials using reformulated MPL is warranted.

Successful Tablet ReformulationIn May 2018

PharmAust announced that it had successfully reformulated monepantel into a tablet. This tablet will replace MPLliquid for use in the upcoming formal Phase I and Phase II clinical trials.

In collaboration with BRI Pharmaceutical Research andAVISTA Pharma Solutions, PharmAust showed that a micronised tablet-based formulation was superior to MPL liquid in delivering 2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTSPharmAust Limited and its Controlled Entities- 5 -

monepantel at high doses suitable for taking into dose escalation clinical studies in canines. Since this time, and in furthercollaboration with BRI Pharmaceutical Research and Catalent Inc.,

PharmAust has optimised the presentation of the tablet so thatit is now suitable for taking into Phase II clinical trials and coating with taste enhancers.

Finalisation of the Formal Canine Clinical Phase I and II ProtocolsPharmAust has completed development of its Phase I and Phase II clinical trial study protocol for the use of MPL as an anticanceragent in canines with naturally occurring cancers.

PharmAust has included the use of the new tablet in the study designs as wellas identified cancer targets of interest, received ethics approvals from relevant authorities and recruited veterinarians willing toparticipate in these trials.Research and Development Targets 2018-2019During the next 12 months, the Company’s focus will be aimed at:• further examining the mechanism of action of MPL upon cancer cells with the newly commenced collaboration with DrDoug Fairlie at the Olivier Newton John Cancer Centre,

• validating preliminary studies demonstrating activity of MPL upon neurodegenerative diseases such as Parkinson’sDisease,• conducting scale up manufacture of the tablets formulated for use in canines with cancer to cGMP quality• performing optimization studies specifically for palatability and dosing for humans with cancer,

• determining the pharmacokinetic parameters, dietary enhancements and safety of the newly formulated tablet in bothcanines and humans in Phase I trials,

• undertaking Phase II trials for efficacy in canines with the new tablet and in accordance with the newly signed optionagreement with Elanco, and

• identifying Clinical Centers prepared to evaluate the new MPL tablet in humans in Phase I and II trials, as a follow on fromthe Phase I clinical trial undertaken at the Royal Adelaide Hospital in 2015.

Preparations for the trials in canines with cancer are now underway with tablet prototype finalisation, preliminary pharmacokineticstesting in canines, scale-up tablet manufacture and Phase I trial initiation sequentially commencing in Q3/Q4, 2018.

Factors Supporting PharmAust’s Focus on MPL as an Anti-Cancer Drug:

1. Demonstration of activity against naturally occurring B-cell lymphoma in dogs,

2. Demonstration of a very good safety profile in animals tested to date, as well as the human participants in the clinicaltrial conducted at the Royal Adelaide Hospital,

3. Demonstration of activity against a key cancer marker in humans and canines,

4. Extensive preclinical R&D package evaluating MPL in many cancers,

5. Independent validation of monepantel’s specificity towards malignant cell lines and relatively benign effects uponnon malignant cell lines by the newly commenced collaboration with Dr Doug Fairlie at the Olivia Newton JohnCancer Centre,

6. Publications in peer-review journals describing anti-cancer activity of MPL in preclinical models,

7. The fact that MPL is already approved for the treatment of parasitic infections in farm animals, which implies that thedrug has received extensive regulatory consideration as it is used in food-chain animals,

8. The successful reformulation of MPL by BRI/Avista into a prototype tablet formulation,

9. New Option to Licence Agreement entered into with Elanco Inc, a global provider of veterinary products,

10. The provision by Elanco of 5kg of GMP-quality MPL.Intellectual propertyAs there is growing evidence that neuro-degenerative diseases can be slowed down by blocking the mTOR pathway, PharmAusthas registered intellectual property on the effects of monepantel on neurodegenerative diseases such as Alzheimer’s andParkinson’s diseases.

Tick Tock, Tick Tock... would be great to see some wider market interest ,, just look at today for an example ,,Great News delivered by PAA,,The company continue to deliver results but the SP does not reflect advancements,or alleviated risk ,, as the year has progressed and PAA have overcome hurdles to be on the cusp of Groundbreaking Trials the SP has been in constant declined since January. ??