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11 DRAFT Immune System Therapeutics Limited (Administrators Appointed)( ISTL ) First meeting of creditors 16 October 2014

12 Agenda Formalities Purpose of meeting Purpose of administration Background Financial position and performance Sale strategy Resolutions Questions 2

13 Formalities Open meeting Administrator Chairperson: Corporations Regulation (1) Introductions Barry Kogan (Administrator) Mitchell Mansfield (Senior Manager) Cliff Holloway (CEO ISTL) Quorum: Corporations Regulation (2) Attendance register Voting Time and place convenient: Corporations Regulation Proofs of debt and proxies 3

14 Purpose of Meeting Convened under Section 436E of the Corporations Act to: determine whether to appoint a Committee of Creditors, and if so, who are to be the Committee s members; and consider the removal of the Administrators and appoint an alternative Administrator who has consented to act. This meeting has no authority to consider any other business. At the second statutory meeting, a decision is made regarding the company s future. 4

15 Declaration of Independence, Relevant Relationships and Indemnities ( DIRRI ) and Remuneration DIRRI DIRRI dated 9 October distributed with notice of meeting We remain of the view that we are free of any potential conflict of interest Remuneration Schedule of rates provided with meeting information Comprehensive remuneration report will be provided prior to the second meeting of creditors 5

16 Purpose of administration Administrators appointed on 3 October 2014 Directors powers are suspended and Administrators are in control Voluntary Administration provides moratorium period for investigation / determination of company s future: Return company to Directors; Deed of Company Arrangement; and Liquidation. Objective is to maximise the chance of the business or its assets to continue in order to provide a better outcome for creditors than an immediate winding up We are currently offering ISTL s assets for sale and considering any recapitalisation proposals Majority of employees made redundant on 7 October

17 Voluntary Administration - Timeline VA appointed 3 October 2014 Within 8 business days 16 October 2014 Within 20 business days 3 November 2014 Indicative sale offers due 7 November 2014 Within 25 business days 10 November 2014 Administrators take control of company and its assets Written notice of first meeting mailed to creditors and employees on 9 October st meeting of creditors held Purpose: (i) (ii) Replace VA Consider the appointment of a Committee of Creditors Complete preliminary investigation Receive any DOCA proposals Issue s439a Report and form opinion Extend convening period Indicative sale offers due. Small number of bidders to progress to confirmatory due diligence and final offers 2 nd meeting of creditors held Options: (i) (ii) DOCA Liquidation (iii) Return to directors 7

18 Background ISTL was co-founded by UTS scientists in June 2001 Technology based on over 10 years research The Company s focus has been on the development and commercialisation of a drug for the treatment of blood cancers and disorders and more specifically multiple myeloma ISTL s lead therapy, IST-1097, has been granted FDA and EMA orphan drug designation for multiple myeloma Completed Phase I and II(a) studies indicate IST-1097 is well tolerated and effective Significant amount of R&D has been conducted via partnerships/3 rd parties overseas Circa $35m has been spent on R&D to date The company requires circa $40m to complete Phase II(b) studies and reach a liquidity event Attempts to raise capital during 2014 to advance research were unsuccessful ultimately leading to our appointment 8

19 Financial Position at Appointment Statement of Financial Position as at 30 September 2014 Statement of Financial Position as at 30 September 2014 Assets $m's Cash at bank 1.34 Bank guarantee 0.01 Fixed assets 0.22 IP / Research / IST-1097 Unknown Other assets 0.19 Total assets 1.76 Liabilities Employees (0.40) Unsecured creditors (5.01) Convertible Noteholders (2.06) Total liabilities (7.47) Amount available for Shareholders (5.71) Note: Total equity invested to date is c. $16m 9

20 Financial performance Statement of Financial Performance for FY 2014 Statement of Financial Performance for FY 2014 Revenue $m s Research and development grants/credits 3.59 Other income 0.01 Total revenue 3.60 Expenses Operational expenses (1.71) Research and development related expenses (7.28) Other expenses (0.24) Total expenses (9.23) Net profit after tax (5.64) Source: XERO accounting information 10

21 Sale strategy Background During 2014, ISTL sought to raise capital for Phase II(b) clinical trials via: Existing or new shareholders; Partnership arrangements; or Backdoor listing/other means. A detailed data room with key scientific data was established for the process ISTL were unsuccessful due to relatively small data set, legacy creditors (c.$5m) and existing capital structure Administrators process Provides flexibility to buyers to either: Invest via the existing structure (via a DOCA); or Acquire the assets (free of legacy creditors) in a fresh vehicle Given pre-administration efforts, infrastructure around the sale is in place Administrators strategy: Re-engagement with previously interested parties; Engagement with overseas brokers; and Advertising campaign Given pre-administration efforts, infrastructure around the sale is in place 11

22 Sale strategy (cont d) Timetable Milestone Period Expression of interest period October 2014 Stage 1 due diligence period 15 October November 2014 Non-binding Indicative Offers due 7 November 2014 Stage 2 due diligence participants notified Week commencing 10 November 2014 Comments: The process has been accelerated as a result of: The well advanced pre-administration process (including data room) The need to strike a balance between: > allowing parties to undertake their diligence; and > preserving the value in the Company s assets. 12

23 Resolutions Removal and Replacement of Administrators Section 436E(4) of the Corporations Act 2001 We have not been made aware of any alternative Administrator having been nominated or consenting to act 13

24 Resolutions Committee of Creditors Role: consult with the Administrators about matters relating to the administration; and receive and consider reports by the Administrators. Committee of Creditors cannot instruct the Administrators We do not recommend forming a Committee of Creditors at this stage 14

25 Resolutions Committee of Creditors (continued) Resolution committee of creditors (if required) That: representing representing representing representing representing be appointed to the Committee of Creditors of Immune System Therapeutics Limited 15

26 Q & A

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