Pharmaxis : Response to ASX Aware Query

For personal use only

10 January 2022

Listing Compliance

Australian Securities Exchange

Exchange Centre

Level 3

20 Bridge Street

Sydney NSW 2000

By email.

Dear Sir/Madam,

Aware Query dated 6 January 2022

In response to your letter dated 6 January 2022 in relation to Pharmaxis announcement of the same date (Announcement) we advise as follows:

Question 1:Does PXS consider the Information to be information that a reasonable person would expect to have a material effect on the price or value of its securities?

The Information relates to additional early stage research for certain of Pharmaxis' drugs and therefore potentially of long term strategic importance to Pharmaxis. Although the Information is of sufficient importance for all shareholders to be advised by way of the ASX announcement platform, Pharmaxis ought not to have marked the announcement as price sensitive when it submitted it to ASX, and did so in error. The determination of whether listed companies should select "price sensitive" when submitting their announcements to ASX involves an element of judgement and is done in the knowledge that ASX makes the final determination as to whether an annoucement is marked price sensitive when released to the market. In this case, Pharmaxis marked the announcement based on an incorrect understanding of recent ASX guidance (in particular the update to Guidance Note 8 issued in June 2021).

Notwithstanding the error and having regard to section 7.10 of ASX Guidance Note 8, Pharmaxis considers that the Announcement relates to matters of substance, is clear, has a measured tone and accurately describes the level of importance of that Information to Pharmaxis.

Question 2:If the answer to question 1 is "no", please advise the basis for that view, commenting specifically on why PXS marked the announcement as 'price‐sensitive'.

Refer to the response on question 1 with respect why Pharmaxis marked the announcement as price sensitive.

For personal use only

The Announcement is not considered to be price sensitive because:

1. although of strategic importance and a demonstration of progress, the work to be undertaken under both grants is preclinical research. One grant relates to a possible additional indication for Pharmaxis' drug PXS‐5505 that has already been noted in Pharmaxis public statements for some time. The other relates to an early Pharmaxis research program.
2. the grants are paid to the relevant third party research collaborators and no funding is received directly by Pharmaxis.
3. although Pharmaxis is appreciative of support from the Government and its third party research collaborators, the dollar value of the two grants are not considered material either individually or in total.

Consistent with Pharmaxis' view that the Announcement is not price sensitive, there was no material effect on the price or trading of Pharmaxis' securities in the trading days immediately following the Announcement.

Question 3:If the answer to question 1 is "yes":

3.1 Please explain the basis for that view.

Not applicable

3.2 When did PXS become aware of the Information?

While this question is not applicable, as the original release was marked by Pharmaxis as price sensistive, for the sake of completeness Pharmaxis notes:

1. Pharmaxis became aware of the information on 4 January 2022 when one of the relevant third party research collaborators notified Pharmaxis that it had received notification of the grant. Pharmaxis could not reasonably have become aware of the Information prior to this date.
2. The grants are applied for and awarded to the relevant third party research collaborators, and as such Pharmaxis does not receive any direct communication from the Government.
3. Although you have identified a website on which information concerning the grants was released on 27 December 2021 (the NHMRC release), that NHMRC release does not mention Pharmaxis and accordingly was not picked up by any automated search alerts.
4. The more prominent formal announcement of the grants by the Government was itself not published until 4 January 2022 (refer tohttps://www.health.gov.au/ministers/the‐ hon‐greg‐hunt‐mp/media/15‐million‐to‐drive‐medical‐research‐to‐the‐next‐level)
5. Moreover, the NHMRC release occurred over the holiday period on a date when the relevant research collaborators were on leave. It was only on 4 January 2022 that one of the research collaborators forwarded the notification of the grant to Pharmaxis. That research organisation only published its own annoucement concerning the receipt of the grant on 4 January 2022.

For personal use only

3.3 Why did PXS wait until 6 January 2021 to release the Announcement, when the Information appears to have been available from 27 December 2021?

Having been made aware of the Information on 4 January 2022, and considering the information to be important but not price sensitive, Pharmaxis completed the drafting and internal review of the announcement and released it before opening of the market on 6 January 2022.

Question 4:Please explain why PXS asserted in the Announcement that it is a recipient of the $590,264 grant, when it does not appear to be listed as a recipient as per paragraph C.

The Announcement makes it clear that all the grant funds are physically received by the relevant research collaborators, including prominently in the heading and in the executive summary.

The applications for the grants are made by individuals on behalf of their relevant organisations. The NHMRC release names only one of the applicants for each grant. In the case of the grant ASX is referring to, there are five investigators that made the application which include two employees of Pharmaxis and accordingly although Pharmaxis will not directly receive funds, it is a recipient of the grant and will be a direct party to the grant agreement.

Question 5:Please confirm that PXS is complying with the Listing Rules and, in particular, Listing Rule 3.1.

Pharmaxis continues to be in compliance with the Listing Rules and in particular Listing Rule 3.1.

Question 6:Please confirm that PXS's responses to the questions above have been authorised and approved in accordance with its published continuous disclosure policy or otherwise by its board or an officer of PXS with delegated authority from the board to respond to ASX on disclosure matters.

This reponse has been reviewed and approved by the Pharmaxis Disclosure Committee as required by the Pharmaxis Continuous Disclosure and Shareholder Communication Policy.

Sincerely,

David McGarvey

Company Secretary

For personal use only

1. The detailed list of grants, to which PXS provided a link in the Announcement1, which disclosed that the recipients of the $590,264 grant were: Assoc Prof Mark Fear; Prof Fiona Wood; Dr Wolfgang Jarolimek; Dr Dieter Hamprecht; and Dr Mehra Haghi.
2. Listing Rule 3.1, which requires a listed entity to immediately give ASX any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity's securities.
3. The definition of "aware" in Chapter 19 of the Listing Rules, which states that:
   "an entity becomes aware of information if, and as soon as, an officer of the entity (or, in the case of a trust, an officer of the responsible entity) has, or ought reasonably to have, come into possession of the information in the course of the performance of their duties as an officer of that entity" and section 4.4 in Guidance Note 8 Continuous Disclosure: Listing Rules 3.1 - 3.1B "When does an entity become aware of information."
4. Listing Rule 3.1A, which sets out exceptions from the requirement to make immediate disclosure, provided that each of the following are satisfied.

"3.1A Listing rule 3.1 does not apply to particular information while each of the following is satisfied in relation to the information:

3.1A.1 One or more of the following applies:

• It would be a breach of a law to disclose the information;
• The information concerns an incomplete proposal or negotiation;
• The information comprises matters of supposition or is insufficiently definite to warrant disclosure;
• The information is generated for the internal management purposes of the entity; or
• The information is a trade secret; and

3.1A.2 The information is confidential and ASX has not formed the view that the information has ceased to be confidential; and

3.1A.3 A reasonable person would not expect the information to be disclosed."

Request for information

Having regard to the above, ASX asks PXS to respond separately to each of the following questions and requests for information:

1. Does PXS consider the Information to be information that a reasonable person would expect to have a material effect on the price or value of its securities?

2. If the answer to question 1 is "no", please advise the basis for that view, commenting specifically on why PXS marked the announcement as 'price-sensitive'.

3. If the answer to question 1 is "yes":

3.1 Please explain the basis for that view.

3.2 When did PXS become aware of the Information?

1https://www.nhmrc.gov.au/sites/default/files/documents/attachments/grant%20documents/development-grants-commencing-in-2022.pdf

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