Announcement PDF ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023 ADALTA LTD ABN 92 120 332 925 CONTENTS CORPORATE DIRECTORY 3 CHAIR’S LETTER 5 CEO AND MANAGING DIRECTOR’S LETTER 6 DIRECTORS’ REPORT 7 AUDITOR’S INDEPENDENCE DECLARATION 28 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 29 STATEMENT OF FINANCIAL POSITION 30 STATEMENT OF CHANGES IN EQUITY 31 STATEMENT OF CASH FLOWS 32 NOTES TO THE FINANCIAL STATEMENTS 33 DIRECTORS’ DECLARATION 52 2 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ADALTA LIMITED 53 SHAREHOLDER INFORMATION 57 AdAlta Limited Annual Report 2023 ABN 92 120 332 925 CORPORATE DIRECTORY DIRECTORS SHARE REGISTRY Dr Paul MacLeman Automic Registry Services Level 5 126 Phillip Street Sydney, NSW 2000 Tel: 1300 288 664 Dr Timothy Oldham Dr Robert Peach Dr David Fuller Ms Elizabeth McCall (Resigned on 24 March 2023) Dr James Williams (Alternate to Elizabeth McCall) (Resigned on 24 March 2023) STOCK EXCHANGE LISTING AdAlta Limited shares are listed on the Australian Securities Exchange. COMPANY SECRETARY Mr Cameron Jones ASX CODE 1AD REGISTERED OFFICE Unit 15 / 2 Park Drive Bundoora Vic 3083 WEBSITE www.adalta.com.au AUDITOR Dry Kirkness (Audit) Pty Ltd Ground Floor, 50 Colin Street West Perth, Western Australia 6005 AdAlta Limited Annual Report 2023 ABN 92 120 332 925 3 4 AdAlta Limited Annual Report 2023 ABN 92 120 332 925 CHAIR’S LETTER Dear fellow shareholder, During FY23, we were pleased to maintain momentum, while further extending both the value and scope of AdAlta’s portfolio of i-body enabled assets. Our lead product, AD-214, is a first in class, next generation antibody therapeutic for the treatment of fibrotic diseases including lung fibrosis (specifically Idiopathic Pulmonary Fibrosis (IPF) and Interstitial Lung Disease (ILD)), kidney fibrosis, eye fibrosis and some cancers. This study creates value for partners and enhances licensing transaction potential by extending the safety profile of multiple doses of AD-214 to doses that will likely be tested in Phase II and providing additional data to support the dosing regimen in Phase II studies. This reduces the time required for dose escalation at the beginning of Phase II studies. A summary of our programs outside of AD-214 can be found available in both Dr Tim Oldham’s CEO report, and the operational review. Our priority for AD-214 is to attract partnerships or other sources of non-dilutive capital to secure the funds necessary to progress Phase II clinical studies in IPF or kidney fibrosis. To enable this, AdAlta is making highly targeted, limited investments in studies that generate meaningful new data to further derisk future clinical development and to address key questions that partners are asking or will likely ask. Through the period we announced that Yuuwa Capital, who had been a longstanding major shareholder, successfully concluded the anticipated closure of its fund. The enduring support we received from Yuuwa throughout many years has been immensely valuable for our company, and we express our sincere gratitude. We extend a warm welcome to the principal stakeholders of Yuuwa, who subsequently became significant shareholders of AdAlta. Consistent with this strategy, we shared important new data correlating AD-214 Phase I pharmacokinetic and receptor occupancy outcomes with potential efficacy and commenced a Phase I extension clinical study to extend the safety profile of AD-214 and refine Phase II dose selection. FY23 again presented a challenging capital markets landscape for the biotechnology sector, where a significant number of global biotech enterprises continue to find themselves trading at, or even below, valuations aligned with their available cash reserves. Using an ex vivo model of a key fibrotic process, AdAlta was able to reproduce the receptor occupancy profile seen in our earlier Phase I trial and simultaneously show that 57-85% receptor occupancy was sufficient for maximal inhibition of the model fibrotic process, cell migration, and that material inhibition could be achieved at receptor occupancy as low as 11-47%. We extend our sincere gratitude to both longstanding shareholders and those who have recently joined our us, for their active participation in our Rights Offer through the period and oversubscribed Shortfall placed post period end. Your support propels us closer to achieving important therapeutic advancements for fibrosis and cancer patients and realizing returns on the investments made in our programs to date. This data provides increased confidence that clinically viable intravenous dosing with a single IV infusion at no more than two weekly intervals could be efficacious. It also provides the tools to select doses and dose regimens for Phase II clinical studies with greater confidence in their likely therapeutic efficacy, substantially reducing the risk of these studies. The studies that generated the new data were technically demanding and we are very proud of the team who performed them. At the time of writing, we had just announced that the first participants had been dosed in our AD-214 Phase I extension clinical study. The study sees us return to the clinic at least 12 months earlier than would be possible for a full Phase II program. Interim results are expected in the December quarter and the final healthy volunteer dose is planned to be administered before the end of 2023, with top line results in January 2024. AdAlta Limited Annual Report 2023 ABN 92 120 332 925 Paul MacLeman Chair 5 CEO AND MANAGING DIRECTOR’S LETTER AdAlta’s core mission revolves around developing an exceptional, next-generation pipeline of protein and cell therapy products addressing diseases that are elusive for conventional antibodies. In short, we aim to go where antibodies cannot. What really drives us though, are the patients desperate for new approaches to disease because what they have is inadequate. As I write to you, Bill Van Nierop, who many of you will have met at previous AdAlta investor days, is preparing to launch his kayak for his second marathon paddle. The trip will see him paddle 1400 km of the Murrumbidgee River from Jugiong near Canberra to west of Balranald, where the Murrumbidgee meets the Murray River. Bill was diagnosed in 2015 with the progressive and incurable lung disease, Idiopathic Pulmonary Fibrosis (IPF). In 2021, he was fortunate to receive a double lung transplant, making Bill a rare survivor. He said, “I’ve been given a second chance and I’m not going to waste it.” Bill is embarking on his Long Kayak for Lungs 2 to raise awareness of lung disease and raise funds for research to improve outcomes for those impacted by this debilitating and fatal but little understood disease. We are proud to support his initiative. While our lead i-body enabled candidate, AD-214 has been shown to hold promise in many different fibrotic diseases, IPF is the very definition of unmet need. The existing marketed therapies slow but do not halt disease and come with debilitating side effects. Through our work with AD-214, we are hoping to bring forward a new therapy to help patients like Bill. GPCR Therapeutics’ evaluation of several CXCR4 i-bodies in cancer applications under the collaboration announced in October 2022. Importantly initial studies have successfully replicated AdAlta i-body results in in vitro cell based assays. Associated with this, through FY23 and beyond, we have been pleased with the progress of our business and corporate development activities, with a focus on securing a return on our investment in AD-214, expanding our “business as usual” collaboration pipeline, and evaluating complementary products and technologies. At the Bio Industry Organisation BIO2023 partnering conference, AdAlta advanced discussions with multiple potential partners for AD-214. In general, partners respond positively to AD-214’s novel model of action and potential for multiple routes of administration. Importantly, the Phase I extension study materially enhances partner interest. The new data linking our prior Phase I results and efficacy at clinically convenient dosing regimens is perceived to fill an important gap and reduce risk. These discussions increase and validate our confidence in the therapeutic potential of AD-214 and our ability to secure strategic partnerships. Our “business as usual” partnering program focusses on additional co-discovery and co-development collaborations that bring new skills and research funding. AdAlta received and is evaluating three unsolicited expressions of interest from BIO23 in one of our early discovery programs, demonstrating the continued industry awareness and appreciation of the potential of the i-body platform. It is an exciting time for AD-214, with the molecule now returned to the clinic earlier than previously forecast and important new data generated as described in the Chair’s letter. We anticipate interim results from this study in the December 2023 quarter and top line results in the first quarter of 2024. We recognize that clinical stage assets with near term milestones and commercial transactions are key to growing our company and creating value for shareholders, particularly in the current environment. We are continuously evaluating such assets and technology platforms where there are clear synergies with our i-body platform and existing skills. The Company is encouraged by the progress of several of these opportunities and investor support for them. In tandem, we have been working on securing suppliers for essential toxicology studies and manufacturing campaigns necessary to initiate Phase II studies, while deferring the substantial costs of these studies until appropriate funding is secured. I extend my heartfelt gratitude to the entire AdAlta team and our Board for their contributions throughout the year. A special acknowledgment goes out to the dedicated volunteers participating in our clinical trials. Your contributions are key to advancing AD-214 for the benefit of patients in need. We have also been able to progress our other i-body programs. We are excited about the potential role for i-bodies in bringing the power of CAR-cell therapies to patients with solid tumors and have progressed our first i-CAR-T product under our collaboration with Carina Biotech into pilot in vivo efficacy studies in mice and are currently evaluating those results to define next steps. We have commenced discovery activities on two further targets as part of this collaboration. Finally, my sincere appreciation goes to our valued collaborators, patients and shareholders, whose enduring support serves as a constant source of motivation and encouragement. We continued our collaboration with GE Healthcare to develop i-body enabled granzyme B PET imaging agents for use in immuno-oncology. We are encouraged by the progress of 6 Tim Oldham CEO and Managing Director AdAlta Limited Annual Report 2023 ABN 92 120 332 925 DIRECTORS’ REPORT The Directors of AdAlta Limited (“AdAlta” or “the Company”) submit herewith the Annual Report of the Company for the financial year ended 30 June 2023. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows: Information about the Directors The names and particulars of the Directors of the Company during or since the end of the financial year are: Dr Paul MacLeman MBA, BVSc, Grad Dip Tech, Grad Cert Eng, FAICD, MATT Chairman, joined the board 16 April 2015. Paul has over 25 years’ experience across all phases of the life sciences sector. With a career-spanning veterinary practice, pharmaceutical development and manufacturing, biotechnology, diagnostics and finance, Paul has expertise in capital management, business development, technology commercialisation and sales & marketing globally. Paul has launched products using both in-house and outsourced sales staff in Australia and the US. He has founded life sciences start-ups in the biologics area and worked in investment banking focusing on the analysis and financing of technology companies. Paul has previously served as Chairman, Director or Managing Director/CEO of several VC funded, ASX, NASDAQ, CSE and TSX listed companies and has driven a number of IPOs. Paul Chaired the Industry Review Committee for the Pharmaceutical Manufacturing National Training Package for the AISC for approximately 10 years prior to the establishment of the new Jobs and Skills Councils and advises the new formed Manufacturing Industry Skills Alliance. He is also an expert advisor to PharmaVentures plc. (Oxford, UK) and serves on a number of other NFP and government advisory groups. He currently Chairs or is a Non-Executive Director of a number of public unlisted and private companies. Paul is the Executive Chairman of Island Pharmaceuticals Limited (ASX:ILA). Dr David Fuller MBBS, BPharm(Hons) Non-Executive Director, appointed 22 July 2020. David has over 30 years’ experience in pre-clinical, clinical development, medical and regulatory affairs with specialisations in early phase development and oncology. He has led five product approvals in the United States (US) and European Union (EU) for orphan and major market products, together with multiple Regulatory Agency (US/EU) interactions including Investigational New Drug (IND) applications. David has designed and executed multiple Phase I – III studies in US, EU and Asia across multiple therapeutic areas. David is currently Chief Medical Officer for Aucentra Therapeutics and is also Chair of EpiAxis Therapeutics Pty Ltd. Previously David was Chief Medical Officer at Race Oncology (ASX:RAC), Senior Vice President, Oncology, Syneos Health, a Non-Executive Director of Linear Clinical Research Ltd – a Perth based clinical trials facility – and a former Chair of Dimerix Ltd (ASX:DXB). David holds Bachelor of Medicine/Bachelor of Surgery and Bachelor of Pharmacy degrees from University of Sydney. AdAlta Limited Annual Report 2023 ABN 92 120 332 925 Dr Timothy Oldham BSc(Hons), LLB (Hons), PhD Managing Director and CEO, joined the Board on 8 October 2019. Tim has more than 20 years of life sciences business development, alliance management, portfolio and product development, and commercialisation experience in Europe, Asia and Australia, with a particular focus on biologics, cell and gene therapies and pharmaceutical products. Tim was appointed CEO and MD in October 2019. Immediately prior to this, he was Executive Leader of Tijan Ventures, an advisory business focused on growing life sciences companies through strategic advisory and interim CEO, executive and non-executive leadership services, with a particular focus on biologics, cell and gene therapies and immunotherapy. Previous roles include CEO and Managing Director of Cell Therapies Pty Ltd, a leading contract manufacturer and distributor cellular therapies in Asia Pacific, President of Asia Pacific for Hospira, Inc., and a variety of senior management roles with Mayne Pharma Ltd prior to its acquisition by Hospira. Prior to this, Tim was an engagement manager with McKinsey & Company. He currently serves as a Director of BioMelbourne Network Inc and as a Non-executive Director at Acrux Ltd (ASX:ACR). Dr Robert Peach BSc, MSc, PhD Non-Executive Director, appointed 14 November 2016. Robert has 30 years of drug discovery and development experience in the Pharmaceutical and Biotechnology industry. In 2009 he co-founded Receptos, becoming Chief Scientific Officer and raising US$59M in venture capital and US$800M in an IPO and three subsequent follow-on offerings. In August 2015 Receptos was acquired by Celgene for $7.8B. Robert held senior executive and scientific positions in other companies including Apoptos, Biogen Idec, IDEC and Bristol- Myers Squibb, supporting in-licensing, acquisition and venture investments. His extensive drug discovery and development experience in autoimmune and inflammatory diseases, and cancer has resulted in multiple drugs entering clinical trials and 4 registered drugs. He currently serves on the Board of Directors of Amplia Therapeutics (ASX:ATX), Rekover Therapeutics and is a Scientific Advisory Board member of Eclipse Bioinnovations. Robert is the co-author of 75 scientific publications and book chapters, and 17 patents. He was educated at the University of Canterbury and the University of Otago, New Zealand. 7 DIRECTORS’ REPORT (Continued) Ms Elizabeth (Liddy) McCall LLB., B.Juris,B.Com (Hons), GDipApFin (SIA), GAICD Liddy resigned as Non-Executive Director on 24 March 2023. Dr James Williams BSc (Hons), MBA, PhD, GAICD James resigned as Alternate Non-Executive Director on 24 March 2023. The above-named Directors held office during the whole of the financial year and since the end of the financial year, unless otherwise indicated. The Company is undertaking a search for a suitably financially qualified director to replace Ms McCall. Company Secretary The name and particulars of the Company Secretary of the Company during or since the end of the financial year are: Cameron Jones B.Bus, CA,GIA(Cert) Cameron is a finance executive and Chartered Accountant with experience as CFO and Company Secretary of ASX Listed and Venture Capital healthcare companies. Cameron has supported companies through IPOs, capital raising and M&A transactions. Cameron is the Managing Director of Bio101, a financial services firm providing accounting, tax and company secretarial services specialising in the healthcare and life science sectors. Directors’ shareholdings as at the date of this report The following table sets out each Director’s relevant interest in shares, debentures and rights or options in shares or debentures of the Company as at the date of this report: Fully paid ordinary shares Unlisted Options Listed options (ASX:1ADOA) (Number) (Number) (Number) Dr Paul MacLeman 472,970 3,055,000 - Dr Timothy Oldham 1,101,750 6,129,090 300,000 Dr Robert Peach 1,453,126 1,200,000 - Dr David Fuller 294,936 1,200,000 42,134 Directors Dividends There were no dividends paid, recommended or declared during the current or previous financial year. Shares under option as at the date of this report Number of shares under option Class of shares Exercise price of option Expiry date of options 78,075,186 Ordinary $0.03 29 May 2024 400,000 Ordinary $0.1744 15 March 2025 4,929,060 Ordinary $0.2479 26 November 2025 6,655,000 Ordinary $0.0845 29 November 2025 600,000 Ordinary $0.0757 28 February 2026 1,600,000 Ordinary $0.0397 27 February 2027 The holders of these options do not have the right to participate in any share issue of the Company without first exercising the options in accordance with the terms of any such share issue. 8 AdAlta Limited Annual Report 2023 ABN 92 120 332 925 DIRECTORS’ REPORT (Continued) Indemnity and insurance of officers and auditors During the financial year, the Company paid a premium in respect of a contract that insures the Directors of the Company (as named above), the company secretary and all executive officers of the Company and of any related body corporate against a liability incurred as such a Director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor. Meetings of Directors The number of meetings of the company’s Board of Directors (‘the Board’) and of each Board committee held during the year ended 30 June 2023, and the number of meetings attended by each Director were: Remuneration and Nomination Committee1 Full Board1 Audit and Risk Committee1 Attended Held Attended Held Attended Held 7 7 3 3 2 2 7 7 - - - - Ms Elizabeth McCall 4 5 2 2 1 2 Dr Robert Peach 7 7 3 3 2 2 Mr David Fuller 7 7 1 1 - - Dr James Williams3 5 7 2 2 1 2 Dr Paul MacLeman Dr Timothy Oldham 2 Held: represents the number of meetings held during the time the Director held office or was a member of the relevant committee. The June 2022 Board meeting and Remuneration and Nomination Committee meeting was rescheduled to 1 July 2022. In total 6 Board meetings were conducted in respect of the financial year 2023. All non-executive directors are invited to attend all committee meetings regardless of committee membership. Only committee members are entitled to vote on resolutions of the committees. 2 Liddy McCall resigned as non-executive director 24 March 2023. 3 James Williams resigned as alternate non-executive director on 24 March 2023. 1  AdAlta Limited Annual Report 2023 ABN 92 120 332 925 9 DIRECTORS’ REPORT (Continued) Proceedings on behalf of the Company No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. Auditor’s independence declaration A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this Directors’ report. Operating and financial review Summary of principal activities AdAlta Ltd (ASX:1AD, AdAlta or the Company) is a clinical stage drug discovery company developing next generation protein and cell-based therapeutics. The Company is using its proprietary i-body® technology platform to solve drug targeting problems that challenge traditional antibodies and in doing so generate a pipeline of protein and cell therapeutics with the potential to treat some of today’s most challenging medical conditions. i-bodies are a novel class of small, targeted proteins that mimic the properties of the unique and versatile single domain antibodies found in the shark immune system: they are the first fully human, single domain antibody-like proteins. i-bodies are a powerful drug discovery tool to engage targets that are intractable for traditional antibodies. i-bodies have been engineered so their unique properties (small size, stability and long, flexible binding domain) make them ideally suited for addressing drug targets considered challenging or ‘undruggable’ by traditional antibody therapies. They can also be coupled to diverse therapeutic or diagnostic “cargoes”, enabling these cargoes to be delivered to difficult to reach targets within the human body. Figure 1 illustrates some of the many ways that i-bodies can be used to generate novel pharmaceutical products. The primary focus of the FY2023 year was to progress the development of AdAlta’s lead i-body enabled candidate; progress partnered immuno-oncology programs via collaborations with Carina and GE Healthcare; and to expand internal programs and business development activities. Figure 1: Features and applications of i-bodies 10 AdAlta Limited Annual Report 2023 ABN 92 120 332 925 DIRECTORS’ REPORT (Continued) Company strategy AdAlta’s purpose is produce a high-value, next generation protein and cell therapy product pipeline for diseases where traditional antibodies are ineffective. The Company is focused on developing both its discovery business and its product development business, as indicated in Figure 2. AdAlta creates value by: (a) Discovering new protein and cell therapeutics exploiting the unique capabilities of its i-body® platform. The current focus is on difficult to access targets such as G-protein coupled receptors (GPCRs) that are implicated in many serious diseases and on components enabling engineering of multifunctional CAR cell therapies. (b) Progressing or developing product candidates through preclinical studies, product development and early-stage clinical trials. The current focus is in the fields of inflammation/ fibrosis and immuno-oncology. This value is converted to revenue by: (a) Partnering with biotechnology and biopharmaceutical companies to co-discover and co-develop i-body enabled products for targets identified by these partners. In return AdAlta receives research fees, development and commercialisation milestones, and royalties. (b) Out-licensing i-body products developed by AdAlta at various stages of discovery, preclinical or early clinical development to larger biopharmaceutical and biotechnology companies. In return AdAlta receives upfront payments, further development and commercialisation milestones, and royalties. Figure 2: AdAlta’s company strategy is focused on its discovery and product development businesses Strategic priorities AdAlta’s growth and continued success depends on the Company executing the three key processes: 1. Discovering an inventory of well characterised i-bodies against therapeutic targets that: a) are difficult for traditional antibodies to address; and b) are in demand by potential partners; AdAlta Limited Annual Report 2023 ABN 92 120 332 925 2. Progressing selected i-body-enabled products towards clinical trials, with a focus on opportunities that have the shortest time and lowest cost to achieve valuable inflection points such as pre-clinical or clinical evidence of efficacy; 3. Entering co-discovery, co-development and licensing collaborations with other biopharmaceutical companies to progress i-body discovery programs, product development programs and/or to access complementary technology to enable acceleration of product development opportunities. 11 DIRECTORS’ REPORT (Continued) The Company’s near term strategic priorities are: A. Realising a return on investments in AD-214 by out-licensing the molecule or otherwise obtaining non-dilutive financing for Phase II clinical trials. B. Progress existing and add new i-CAR and other i‑body collaboration programs. C. Invest in the i-body® platform to maintain competitive advantage, increase inventory of characterised i‑bodies against valuable targets and access complementary assets and technology to enhance the clinical stage pipeline. Significant milestones achieved during the reporting period · Entered collaboration with GPCR Therapeutics (Korea) to evaluate CXCR4-binding i-bodies in combination with beta blockers for treatment of cancer (October 2022) · Demonstrated proof of principle that AD-214 could be delivered via inhalation for IPF, providing a life cycle extension strategy for partners (November 2022) · Second Japanese patent protecting AD-214 granted (January 2023), new patent applications filed relating to methods of treatment with AD-214 (post period end) and a new publication highlighted potential of a novel i-body in osteoporosis (January 2023) · Raised $1.28 million in Entitlement Offer (May 2023) and $1.87 million in oversubscribed Shortfall placement (post period end) for total $3.15 million · Obtained approval to commence a phase I extension study of AD-214, returning to the clinical a more than a year earlier than previously forecast (June 2023, first participant dosed post period end) · Generated new data for AD-214 linking clinically convenient dosing schedules with potential efficacy (announced post period end) · Commenced discovery on second target under Carina i-CAR-T collaboration (announced post period end) Pipeline Figure 3 summarises AdAlta’s current pipeline including five active programs plus additional partnering opportunities. Key programs are described in detail below. Figure 3: AdAlta’s asset pipeline 12 AdAlta Limited Annual Report 2023 ABN 92 120 332 925 DIRECTORS’ REPORT (Continued) 1. AD-214 – Fibrosis Recent updates AdAlta’s lead product, AD-214, is a first in class, next generation antibody therapeutic for the treatment of fibrotic diseases. Since successful completion of a Phase I clinical trial in mid-2021, development of AD-214 has progressed in four indications: lung fibrosis (specifically Idiopathic Pulmonary Fibrosis (IPF) and Interstitial Lung Disease (ILD)), kidney fibrosis, eye fibrosis and cancer. The Company’s priority for AD-214 is to attract partnerships or other sources of non-dilutive capital to secure the funds necessary to progress Phase II clinical studies in IPF or kidney fibrosis. To enable this, AdAlta is making modest, targeted investments in studies that generate new data to address key questions that partners are asking or will likely ask. In July 2022, the Company modified the scheduling of AD-214 manufacturing campaigns and toxicology studies to better align key programs with the emerging priorities of potential partners. AdAlta was able to secure a six-month deferral of pre-booked and manufacturing campaigns and toxicology studies, which also ensured that the company could delay financial commitments to these activities, preserving cash for activities that would generate new data supportive of partnering. The Company continues to work closely with third party vendors to maintain the shortest possible pathway to Phase II studies without committing capital prior to securing Phase II partners or financing. AdAlta has now returned AD-214 to the clinic under a Phase I extension study in the September quarter of 2023, more than a year earlier than previously forecasted. In tandem, the Company is securing suppliers for essential toxicology studies and manufacturing campaigns necessary to initiate Phase II studies, while deferring the substantial costs of these studies until appropriate funding is secured. Market Potential The markets for new antifibrotics are significant. Two existing therapies approved for IPF and ILDs generated sales of US$4.3 billion in 2022[1], have limited efficacy and significant side effects that limit patient complian