...because of upcoming $5m cap raising and uncertain future for...

...because of upcoming $5m cap raising and uncertain future for Xtoll...

Refer to P19 & 20 of the independant experts report:

A number of key issues were identified and recommendations provided. We have summarised below
a number of these recommendations in relation to the future outlook of the XToll® technology.
The review suggested that subcutaneous dosing with XToll® in clinical trials has a low probability of
meeting meaningful clinical endpoints and that further trials involving solely subcutaneous dosing
should only be considered if a more suitable reformulated and/or reformatted form of XToll® is
available. It was acknowledged that the time and money required to do this makes it more sensible
to focus development of XToll® on alternative indications where the unmet need is such that
relatively frequent dosing and/or intravenous dosing is acceptable to patients and physicians.
The technical review identified systemic lupus erythematosus (‘SLE’ or ‘lupus’), particularly
cutaneous lupus, as one such indication and proposed that CBio may consider further clinical
development of XToll® with intravenous dosing for this indication. This proposal was recommended
to be subject to staff consultation with key opinion leaders and specialists in the field of SLE,
detailed market and competitor analysis, detailed analysis of the intellectual property landscape
around SLE and CBio's proprietary position and freedom to operate, and confirmation of activity of
XToll® in model studies which focus on treatment rather than prevention.
Detailed costing of implementing the proposal has not been carried out however the technical
review provided an estimate of costs within the range of A$11 million to A$12 million over a period
of approximately two to three years. We are advised by the directors of CBio that an initial cost of
approximately A$2.5 million would have to be incurred for the required drug formulation, the
carrying out of mechanism of action (‘MOA’) studies, and to reach a key milestone point where a
decision can be made on whether or not to commit to the process of development and scale up
towards another human clinical trial. The risks of failure in developing Cpn 10 via this path have
been acknowledged and assessed and were deemed to be significant in the technical review.

We are advised that having considered all of the relevant factors and other strategic options
available to the Company, the directors of CBio have not adopted these recommendations of the
technical review as at the date of this Report. We understand that a more recent review of CBio’s
strategic options was conducted which identified a number of opportunities for the Company,
including the Proposed Transaction