Bionomics : CEO & Managering Director's Report to Shareholders

I am delighted to report that the past year has been a particularly strong one for the Company with impressive, positive BNC210 clinical trial results, continued progress in our collaboration with MSD and greater recognition of our rich development pipeline from global investors.

As part of our desire for continuous improvement Bionomics undertook a thorough review of its strategy and business operations with the result that some difficult decisions have been made to ensure that Bionomics remains an agile yet focussed organisation. In order to facilitate continued company success and extend our cash runway, Bionomics has closed its US operations. This decision has allowed us to focus on our essential operations in Australia and France, and resulted in

significant cost saving and increased efficiency for the Company, whilst ensuring that our core business remains strong.

The Company also underwent a strategic realignment to focus its capital on its ion channel assets. In focussing on our core strengths and strong competitive advantage in ion channel biology and drug discovery, we have recognised that our clinical stage oncology drugs BNC105 and BNC101 are no longer central to our strategy. Consequently, Bionomics is seeking to monetise both assets. A formal process for divestment, through partnering, licensing and other mechanisms, is underway.

While the depth and breadth of our pipeline has provided Bionomics with multiple shots on goal, as our clinical programs mature we must concentrate our resources on those therapeutic candidates addressing high unmet patient needs for safe and effective treatment, where there is limited competition and therefore high potential value, and which offer the greatest promise of generating returns for our shareholders. BNC210 - a first in class negative allosteric modulator of the α7 nicotinic acetylcholine receptor -fits all of these criteria. In the coming year we are looking forward to results from the ongoing Phase 2 trial evaluating the effectiveness of this therapeutic candidate in treating Post-Traumatic Stress Disorder or PTSD. The Phase 2 clinical trial - known as the RESTORE trial - has been expanded as foreshadowed at last year's AGM to 192 patients across four treatment arms with 20 clinical trial sites in the US actively recruiting patients in addition to five trial sites in Australia. I am delighted to report that recruitment in the trial is on track.

It is worthwhile spending a few minutes on the impressive BNC210 Phase 2 trial results in Generalised Anxiety Disorder or GAD patients. As you will no doubt recall, BNC210 not only met its two co-primary endpoints in this trial, it also outperformed the current acute standard of care

Lorazepam when compared to placebo. It reduced anxiety as measured by both imaging and behavioural read-outs.

BNC210 caused significant changes to blood flow in the brain, reduced amygdala activation in response to an anxiety provoking task - the fearful faces task - and reduced anxiety-induced behaviour in the Joy Stick Operated Runway Task or JORT.

BNC210 has now achieved positive results in multiple clinical trials aimed at demonstrating its safety and tolerability, its lack of side-effects relative to currently marketed drugs for anxiety and depression, its ability to modulate its target the α7 receptor and its ability to reduce the symptoms of panic attacks in addition to its usefulness in the treatment of GAD.

We believe that BNC210 has a number of clear competitive advantages when it comes to side- effects. It is non-sedating, doesn't impair memory and current data indicates that it is non-addictive with no withdrawal syndrome. Yet BNC210 is fast acting in its anti-anxiety effects which adds to its attractiveness.

Clinical data have therefore provided sound evidence for the anti-anxiety effects of BNC210. A next generation product like BNC210 could have broad therapeutic potential across a range of anxiety disorders including Panic Disorder and Social Anxiety Disorder in addition to GAD, depressive states where there is also anxiety such as major Depressive Disorder and Bipolar Disorder, trauma related disorders and potentially in neurodegenerative disorders for example in the treatment of agitation and anxiety in the elderly.