Ann: Shareholder Update , page-24

SoT,

I would have to say YES. I am sure that why Janssen is doing the POC with PYC.

We already know antibodies can do this (called ADCs) and are better for delivering small toxic molecules, but numerous companies looking at different "payloads". The same concept is being investigated by a number of companies using different "vehicles" (instead of antibodies, using peptides, vesicles/micelles, small polypeptides, various polymers, etc. to act as the proverbial vehicle. The payloads also vary, with initial payloads looking at toxic small molecules, as I suggested, TDM1 is the first approved in this area (HER2 antibody "Herceptin" conjugated to a toxic molecule). So Pharma is certainly showing interest in vehicle-payload methods. The concept is compelling I think.

Most cell types express at least 1 or more receptors that are specific to that cell type. Gene expression analysis over the years has provided a wealth of information that has aided in identifying what those receptors or markers are. Hence now people are attempting to target them. Seems easy right, not quite. The challenge actually is that you don't want the cargo to fall off the vehicle until it is inside the cell you are targeting, so you want it to be stable in blood, but once it has entered the cells, you want the cargo to release, because many of these cargos do not function well when still attached to the vehicle. Alot of progress has been made with antibodies to figure this out. More work needs to be done with other competing vehicle technologies. Something can work fantastic in or on cells, but once you put it into the body it can be another completely different story, since the vehicle still needs to find its way to the cell type you are targeting.

Janssen was a 18 month contract as they originally announced it. The first year was to link the cargo to the library (vehicle), and that appears successful. SO that is a good start. The next is to screen the library to find peptides that will 1) specifically target the desired cell type, and 2) release the cargo inside the cell so it is functional. Clearly these are the more challenging aspects of the study. But say they can do it and it works on cells selectively. By their own timeframe that looks to be screening by end of June-July? Then have to chemically make the peptides with the cargo attached for additional studies - 2-3 months there. Janssen gets them and tests them to confirm in cells, and then would initiate characterization studies, what does the peptide bind to, where, release efficiency, etc. If PYC is super lucky they would take a lead peptide and maybe do some PK work in mice and start to investigate delivery methods...but they likely will also initiate optimization studies to see if they can't make the lead peptide better (always done)...honestly this is 6 months minimum but more likely to be a year plus. If it looks good in mice, then they would likely license. Good or bad, this is how it works. So a Janssen license will not happen in 2013, it just doesn't work that way.

THIS is why I keep posting about conserving cash so they can be around for a few more years, get the technology improvements in place, and hopefully advance/validate something with Janssen.

Also, if a BigPharma contract states that the license option period is until Feb 2013, and they don't license, then it is over. BigPharma follow their contracts, since the lawyers are anal. Why doesn't someone ask PYC Mgmt about the license period for the Roche collaboration?? They said before that it ended in Feb 2013 to decide. If the license option has expired, that is something they should at least disclose to shareholders??