Phylogica Ltd. Forms Target Discovery Spin-Off, Phenomica, With Cambridge University

PERTH, AUSTRALIA AND CAMBRIDGE UK 9 March 2011 – Leading Australian drug discovery company Phylogica Ltd (ASX: PYC, XETRA: PH7) will partner with researchers from the University of Cambridge in a spin-off company to pursue a novel application of its Phylomer® peptides for discovery of disease-associated targets. The spin-off complements Phylogica’s existing business model by opening up a new market opportunity for the Company. It offers the potential to secure new revenue streams that would otherwise not be accessible to Phylogica without substantial investment in both capital and also in technical expertise. Phylogica has already initiated discussions with prospective partners who are interested in the capabilities of the new Phylogica-Cambridge University venture.

The spin-off company, named Phenomica, will combine Phylogica’s Phylomer® libraries, which comprise billions of naturally derived peptides, with technology from Cambridge to identify vulnerable points in a disease that can be the focus for new drug development. Phylogica has signed a Memorandum of Understanding with Cambridge Enterprise, the University’s commercialisation group, outlining plans to form Phenomica. The spin-off will be based in Cambridge, UK, maximising access to state-of-the-art research facilities. Its mission will be to discover and validate new disease-associated targets and to identify new avenues for therapeutic intervention.

Phylogica CEO Dr Paul Watt said: “The formation of Phenomica follows our extensive collaboration in the area of target discovery and validation with the molecular therapeutics programme directed by Professor Ashok Venkitaraman at the world-renowned Hutchison/Medical Research Council (MRC) Research Centre.”

“The researchers at Cambridge, in collaboration with Phylogica, reported that phenotypic screening of Phylomer libraries against biological pathways associated with the development of cancer, resulted in exceptional hit rates for modulating these pathways and hence a better understanding of the disease process and how to block it. Since then, intense work on the technology by the Cambridge-based team has established that this novel application of our libraries can be used more broadly as a tool to identify and validate disease-relevant biological targets for drug discovery,” Dr Watt continued. Finding new ways to identify targets is becoming increasingly important as the ‘low-hanging fruit’ of traditional target classes such as kinases is diminishing, making it more difficult to develop new drugs without considerable competition and the need to navigate an increasingly complex patent landscape.

Phylogica is receiving growing interest from prospective pharmaceutical partners in the use of Phylomer libraries for target discovery. Through the creation of Phenomica, the Company is capitalising on the opportunity to generate new revenue streams from phenotypicallydriven screening approaches - a major area of interest for large pharmaceutical companies.

Dr Watt said: “Phenomica will provide access to the expanding field of phenotypic screening for target discovery without competing with or distracting Phylogica from its core focus on drug discovery alliances.”

Ashok Venkitaraman, Ursula Zoellner Professor of Cancer Research at the University of Cambridge, who directs the molecular therapeutics programme and the MRC Cancer Cell Unit in the Hutchison/MRC Research Centre, said: “I am excited to be transitioning our collaboration with Phylogica into a commercial operation. We have shown that the enormous structural diversity of Phylomer libraries can be harnessed in phenotypic screens that can identify and validate new targets for drug discovery with high efficiency.”

Professor Venkitaraman continued: “Now that we’ve proven the concept, leading UK technology investors are showing interest in our work with Phylogica, which has prompted us to create Phenomica to accelerate our pursuit of the opportunity.”