Phylogica Ltd. to Take Innovative Burns Drug into Human Trials

* Pre-clinical data for Phylomer® drug candidate PYC35B demonstrates convincing in-vivo efficacy at low dose * Skin healing was accelerated and scar formation significantly reduced with low concentrations of the drug applied topically after injury in animal models * Positive effects on healing were maintained after treatment * Phylogica commits to exploit this exciting opportunity by taking lead PhylomerÒ PYC35B into the clinic in 2008

Perth, Western Australia, October 23, 2007: Australian drug discovery and development company Phylogica (ASX:PYC) has announced that its lead drug candidate for burns, PYC35B will progress to human trials in 2008.

Phylogica CEO Dr Stewart Washer said the company had received excellent results from the latest pre-clinical study conducted independently by Fiona Wood’s McComb Foundation.

“The dose response study using the PhylomerÒ peptide D-PYC35B in a mouse wound repair model found that at a low concentration (3 micromolar) there was a significant improvement in both the rate of wound healing as well as a significant reduction in the size of scar formation,” Dr Washer said.

2005 Australian of the Year Clinical Professor Fiona Wood said it was the second mouse efficacy study conducted independently by the McComb Foundation in which a significant effect has been seen for the PhylomerÒ peptide PYC35B.

“We’re delighted with the encouraging results and look forward to collaborating further with Phylogica in the clinical trial program for this promising compound.” Professor Wood said.

Dr Washer said the move into clinical trials represents a key milestone in Phylogica’s drug development program. He added that the company was now well funded for these trials and all other projects over the next year with the recent successful conversion of all options in August bringing in $5.1m.

“This step continues to validate the power of Phylogica’s unique drug discovery engine which is producing exciting Phylomer® drug leads for a range of other diseases including rheumatoid arthritis, allergy, traumatic brain injury and acute lung failure,” Dr Washer said.

For further information, please contact:

Investor communication Daniella Goldberg +612 9237 2803 dgoldberg@bcg.com.au

Phylogica Stewart Washer Chief Executive Officer + 618 9423 8800 / 0418 288 212 stewartw@phylogica.com

Paul Watt Scientific Director + 618 9423 8800 / 0417986005 paulw@phylogica.com

Phylogica Ltd (ASX: PYC) (www.phylogica.com) Phylogica is a biopharmaceutical company with an advanced technology (known as Phylomer® peptides) that is being applied to develop a new class of drugs for emergency treatment of burns, traumatic brain injury and other inflammatory diseases including rheumatoid arthritis. Phylogica was founded by the Telethon Institute for Child Health Research in Perth (www.ichr.uwa.edu.au) and the Fox Chase Cancer Center in Philadelphia, United States (www.fccc.edu).

About Phylomer® peptides

Phylomer® peptides are stable fragments of naturally-occurring proteins with the ability to bind tightly to target proteins and inactivate them as a result. Phylomer® peptides can be selected for activity against specific disease target proteins. The properties of Phylomer® peptides make them attractive as cost-effective alternatives to antibodies a proven multi-billion drug class. Phylogica's proprietary Phylomer® libraries are collections of millions of Phylomer® peptides that represent a source of drug leads which can be used for multiple diseases.

About The McComb Foundation

The McComb Foundation is committed to conducting leading edge research into autologous skin replacement technologies, procedures and tissue regeneration. The aim is to deliver the best possible technology for the best possible outcome. The current research is divided into three major areas:??Skin Repair, Reconstruction and Regeneration.?

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