Ann: Appendix 4D and Half-year Financial Report, page-2

Avecho Biotechnology Limited
Directors' report
30 June 2021

3
The directors present their report, together with the financial statements, on the Consolidated Entity consisting of Avecho
Biotechnology Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of,
or during, the period ended 30 June 2021.

Directors
The following persons were directors of Avecho Biotechnology Limited during the whole of the financial period and up to
the date of this report, unless otherwise stated:

Dr Greg Collier (Non-Executive Chairman)
Dr Ross Murdoch (Non-Executive Director)
Mr Matthew McNamara (Non-Executive Director)
Mr David Segal (Non-Executive Director, resigned on 31 May 2021)

Principal activities
Avecho Biotechnology Limited develops and commercialises innovative Human and Animal Health products using its
proprietary drug delivery system called TPM® (Tocopherol Phosphate Mixture). TPM® is derived from Vitamin E using
unique, proprietary and patented processes and is proven to enhance the solubility and oral, dermal and transdermal
absorption of drugs and nutrients.

The Consolidated Entity’s major projects include delivering TPM® enhanced injectable, oral and topical products for the
human health market, including the recently announced application of TPM® to cannabinoids. The Company is also
developing TPM® to enhance feed efficiency and health of livestock.

Review of operations
Avecho’s core business strategy is to develop and commercialise its TPM® technology. Each of the business divisions, Human Health, Animal Health and Nutrition, and Production, have progressed with the common goal of advancing commercialisation of the Company’s TPM® technology.

The continued development of Avecho’s pharmaceutical CBD soft-gel product was the main focus during the current period, the program priority was the finalisation of the CBD soft-gel product, and the supporting chemistry, manufacturing and control (CMC) work. CMC is an integral component of a product application to the Therapeutic Goods Administration (TGA) or FDA for a pharmaceutical product and describes the work required to prove that it can be reproducibly manufactured to pharmaceutical standards with acceptable stability.

Avecho’s leading prototype CBD oil formulation was adapted and refined to a soft-gel capsule by Catalent, a leading global provider of advanced drug delivery technologies, development, and manufacturing solutions. The refinements were designed to ensure the formulations are appropriate for inclusion in commercial capsule manufacturing lines, are compatible with candidate gelatin capsules, and most importantly, have appropriate physical and chemical stability.
Commercially appropriate stability is critical given the Company’s intention to register the finished product with the TGA.
The formulation development work was completed in May, at a dose of 75 mg of CBD per soft-gel capsule.

Having finalized the product composition, the manufacturing campaign to produce GMP product for use in the Company’s current clinical trial program began. An initial pilot batch of CBD soft-gels was successfully manufactured in May 2021.
This batch was used to validate the manufacturing process and analytical methods, as well as to inform the finished product specifications. Successful characterization of the prototype batch will allow formal GMP manufacture of the CBD soft-gel which will be used for formal stability and the planned human clinical trial campaign.
This formal GMP manufacturing campaign will begin in July / August 2021 to produce material for use in the Company’s upcoming Phase I clinical trial.

Independent of Avecho’s cannabinoid program, external licensing discussions for the non-cannabinoid programs continued though out the period. In May 2021, Avecho announced that one of its potential partners in the animal health space, AB Vista, were expanding their assessment of the utility of TPM® in livestock feeds beyond its original program analysing feed efficiency and weight gain. AB Vista are now planning to examine the application of TPM® in feed products being developed to control post-weaning diarrhoea in pigs, and pending a positive outcome of the planned programme they are undertaking, will look to partner with Avecho to bring TPM® to the animal feed market. Licensing opportunies for a number of Avecho’s human health products are still under review by third parties in the pharmaceutical space, and involve a range of territories