Dear Cynata Supporter,As you may have already seen, Cynata...

Dear Cynata Supporter,

As you may have already seen, Cynata released a very positive announcement today about a new agreement with Fujifilm.

Cynata and Fujifilm have entered into aStrategic Partnership Agreement (SPA) which includes the following keyelements:

• Fujifilm to provide clinical and commercial manufacturing services for, and supply of, Cynata’s Cymerus™ therapeutic mesenchymal stem cell (MSC) products through a to-be-finalised manufacturing services agreement based on core terms agreed in the SPA
• Cynata has regained all development and commercialisation rights to CYP-001 for graft-versus-host disease (GvHD)
• US$5m fee payable by Fujifilm to Cynata
• Cynata to immediately pursue a GvHD product development strategy in the US, building on the existing US Orphan Drug Designation for CYP-001
• Fujifilm’s shareholding in Cynata to be subject to a new voluntary escrow

Fujifilm remains very supportive of Cynata, and we are excited to continue our long and fruitful relationship through this new strategic partnership. Fujifilm’s affiliate, Fujifilm Cellular Dynamics, developed the original iPSC line used in Cynata’s Cymerus™ manufacturing process and the Fujifilm group has extensive experience and credibility as a leading cell therapy manufacturer. These strengths will bring significant long-term benefits to Cynata and our shareholders as we advance the development of our unique MSC therapeutic products. Fujifilm has also confirmed its strong commitment to Cynata by agreeing to a further voluntary escrow over their shares in Cynata.

As part of the agreement, Cynata has regained rights to CYP-001 for GvHD. With this very valuable and advanced clinical asset now back under Cynata’s control we will immediately implement a US development strategy for CYP-001 to capitalise on the need for an effective and scalable MSC therapeutic product for acute GvHD. Existing treatment options for GvHD are inadequate with patients facing a poor prognosis. The global acute GvHD market continues to grow and is estimated to reach US$600m within 10years.

This represents both an exciting and compelling opportunity for the Company as we have already shown CYP-001 to have very promising efficacy in patients with acute steroid resistant GvHD. Moreover, we believe our Cymerus technology addresses many of the challenges of manufacturing MSCs of consistent quality at a commercially viable scale, which has recently been highlighted as a critical product characteristic by the USFDA.

Cynata is well positioned in the GvHD market and has already secured Orphan Drug Designation from the US FDA, which potentially provides seven years of marketing exclusivity, substantial tax credits and a waiver of FDA fees. We are now looking to engage with the FDA to conduct a Phase 2 GvHD trial in the US, leveraging the results of our ground-breaking Phase 1 trial of CYP-001 in GvHD, which met all safety and efficacy endpoints, and received significant attention including featuring on the front cover of the prestigious medical journal, Nature Medicine.

In light of the large market opportunity, and our strong competitive positioning in GvHD, we plan to divert future activities from the proposed critical limb ischemia (CLI) trial (currently on hold due to the pandemic) towards partnering opportunities for that indication. This will provide us with greater flexibility to accelerate our progress, while still growing our diverse and advanced clinical product portfolio. The MEND (respiratory distress) and SCUlpTOR (osteoarthritis)clinical trials continue on track and the planned DFU clinical trial is still expected to commence this year.

The full announcement can be viewed on the ASX site here: https://www.asx.com.au/asxpdf/20210930/pdf/4512y73m0v2lh5.pdf.

Yours sincerely

Ross Macdonald