Vectus Biosystems : Half Yearly Report and Appendix 4D

For personal use only

25 February 2022

HALF-YEAR REPORT

Vectus Biosystems Limited (Vectus or the Company) reports its financial results for the half year ended 31 December 2021. The Company has completed the fourth of the five planned cohorts in the Single Ascending Dose (S.A.D.) segment of its first-in-human trial Phase I clinical trial of Vectus' key compound, VB0004. This work has been carried out by Nucleus Network in Melbourne and Syneos Health.

To-date, the results of the 2mg, 10mg, 30mg and 100mg doses of VB0004 have been reviewed by the Trial Safety Review Committee. Most significantly, no adverse events have been observed at any of the four doses of VB0004 studied to-date and the latest dose of 100mg has added materially to the therapeutic safety margin for VB0004. The absence of adverse events has allowed the Trial Safety Review Committee to give permission to proceed with three further studies, being:

• the last S.A.D. Cohort, which has a planned dose of 300mg of VB0004;
• the Food Effect study, in which Cohort 3 subjects will return and have pharmacokinetic (PK) measurements undertaken when VB0004 is taken following food ingestion
• the first Multiple Ascending Dose (M.A.D.) Cohort, which will receive a dose of 10mg of VB0004 per day for 14 days.

The preliminary PK data provide evidence that VB0004 will be amenable to once daily dosing, a desirable feature in medications for chronic conditions such as hypertension, heart failure, kidney failure and pulmonary fibrosis.

VB0004 represents a first-in-class drug that prevents and, unlike known competitors in this area, reverses fibrosis. Fibrosis is the process that causes organ failure in damaged or diseased hearts, lungs and kidneys.

The Company has successfully maintained its clinical and research activities despite the impact of the COVID-19 pandemic. COVID-19 closures and working constraints impacted the time frame of Vectus' progress with its Phase I trial.

The Company extended its research into the possible opportunity to target the fibrotic damage resulting, in some cases, from COVID-19. VB0004 has the potential for its orally active small molecules to play a role in this emerging unmet need.

Vectus has been in dialogue about VB0004 with some of the world's leading pharmaceutical companies and regional mid-sized firms. The Company continues to receive enquiries from industry participants who recognise the significant potential of Vectus' novel anti-fibrotic compounds. Feedback from all levels of the industry indicates the potential for significant transactions upon completion of a successful Phase I human trial for VB0004.

Following detailed investigation of the mechanisms involved in the development of hepatic fibrosis in the rat models of fibrosis employed by the Company, the data obtained demonstrated multiple and significant parallels with human disease as well as several novel mechanisms that have been elucidated. Work continues on pulmonary fibrosis and VB4-A79, the molecule that Vectus has found reverses fibrosis in the bleomycin-treated rat (the most commonly used animal model of pulmonary fibrosis).

VECTUS BIOSYSTEMS LIMITED ABN 54 117 526 137

3-11 Primrose Avenue, Rosebery, NSW 2018 Telephone: +61 2 9381 1000 Facsimile: +61 2 9662 1720

Website: www.vectusbiosystems.com.au

Vectus Half-Year Report

2

For personal use only

Vectus Half-Year Report

Finance

The funds expended during the half year were largely in connection with the Phase I clinical trials for VB0004. The Company's increased expenditure in the current half year ($2.2 million, compared with the previous corresponding period of $1.38 million) is in line with the work being carried out in the clinical trial. Expenditure for the half year includes work to advance other emerging leads in Vectus' library and new indications that may expand the franchises targeted by the Company's novel drugs.

During the half year Vectus issued 886,222 fully paid ordinary shares to convertible note holders following the conversion of 850,000 convertible notes, at a conversion price of $0.50 per note. In relation to the accumulated interest on these notes, at an interest rate of 6% per annum, the interest was paid as a total of 36,222 shares calculated as provided for in the Convertible Note Deed. On 14 February 2022 the Company issued 2,448,719 shares to two convertible note holders following the conversion of 2,300,000 convertible notes, at a conversion price of $0.50 per note and 148,719 fully paid ordinary shares for accumulated interest.

Vectus is on a trajectory to achieve ongoing success during the remainder of the SAD phase and equally is targeting a successful outcome in the near term of the MAD phase of its human clinical trial in calendar year 2022. Vectus believes that VB0004 and the additional emerging leads have the potential to address large-scale, unmet medical needs, drive improved healthcare and achieve these outcomes in the context of lower overall costs to the healthcare system, whilst driving shareholder value in parallel.

Vectus Biosystems Limited

Karen Duggan

Chief Executive Officer and Executive Director

This Report was authorised by the Board of Directors.

About Vectus Biosystems Limited

Vectus Biosystems Limited is developing a treatment for fibrosis and high blood pressure, which includes the treatment for three of the largest diseases in the fibrotic market, namely heart, kidney and liver diseases. Vectus successfully completed its Initial Public Offering (IPO) on the Australian Securities Exchange (ASX:VBS) and commenced trading on ASX on 23 February 2016, after raising A$5.1 million. Funds from the IPO were predominantly used to develop the Company's lead compound, VB0004, which aims to treat the hardening of functional tissue and high blood pressure. Vectus has conducted a range of successful pre-clinical trials, which have shown that VB0004 slows down the advances of fibrosis, potentially repairs damaged cell tissue and reduces high blood pressure. VB0004 is now progressing through several important milestones, including pharmaceutical scale-up and additional toxicity studies. Following successful results, the late 2019 convertible note fundraising, and the late 2020 share placement, the Company has funding for its Human Phase I trial. Vectus' strategy is to develop and perform early validation of its drug candidates to the point where they may become commercially attractive to potential pharmaceutical partners.

The Company has also developed technology aimed at improving the speed and accuracy of measuring the amount of DNA and RNA in samples tested in laboratories. The technology, called Accugen, is owned by Vectus' wholly owned subsidiary Accugen Pty Limited. The technology offers a time, cost and accuracy benefit compared to currently available systems. The Company's current stage of investment in Accugen is a commercialisation programme that may include direct sales, distribution partnerships and licensing opportunities.

3