Mr. Don Cilla reports

APPILI THERAPEUTICS REPORTS FINANCIAL AND OPERATIONAL RESULTS FOR FIRST QUARTER OF FISCAL YEAR 2024

Appili Therapeutics Inc. has released its financial and operational results for the first quarter of its fiscal year 2024, which ended on June 30, 2023. All figures are stated in Canadian dollars unless otherwise stated.

"During this quarter, we executed an agreement with United States Air Force Academy (USAFA) for an initial amount of $7.3-million (U.S.) in funding from the Defense Threat Reduction Agency and USAFA for our ATI-1701 vaccine, a crucial defence against tularemia, which is a top-priority biothreat. Our partnership with USAFA and the recent agreement execution will enable us to advance this program towards an Investigational New Drug ("IND")," said Don Cilla, PharmD, MBA, president and chief executive officer of Appili Therapeutics. "Additionally, securing U.S. patent coverage through at least 2039 for ATI-1501, our metronidazole formulation, is a significant milestone leading up to the anticipated FDA prescription drug user fee (PDUFA) date on Sept. 23, 2023. We look forward to receiving milestone payments and royalties from our partner, Saptalis Pharmaceuticals LLC, in the coming quarters based on their submission and commercialization plans. These achievements are expected to position us with the required resources to continue to make progress in advancing our infectious disease assets."

Operational highlights

On May 5, 2023, Appili executed an initial co-operative agreement with USAFA for the previously announced funding of the ATI-1701 program. This agreement provides the first stage of funding from the previously announced $14-million (U.S.) award from the U.S. Department of Defense (DOD). This initial funding, in the amount of $7.3-million (U.S.), will be used to kick off ATI-1701 early-stage development and regulatory activities. As the initial activities progress, Appili will submit proposals to USAFA for additional tranches of funding to continue development through IND submission. Under the terms of its agreement with USAFA, Appili will be reimbursed for direct costs and labour associated with budgeted program activities, plus will recover a portion of its overhead costs.

On May 24, 2023, the United States Patent and Trademark Office published patent claims for ATI-1501, Appili's liquid oral reformulation of the antibiotic metronidazole, under the U.S. application No. 18/072,154, covering the composition and preparation methods. The patent extends protection for this formulation through 2039.

Appili completed the technology transfer of ATI-1801, a treatment for cutaneous leishmaniasis, to the company's contract manufacturing organization. Appili plans to request a meeting with the U.S. Food and Drug Administration (FDA) later this year to discuss the previously generated phase 3 data and agree on the necessary registration package to support a new drug application (NDA) submission, which the company expects will include available non-clinical, manufacturing and clinical data generated to date. To complete the remaining development work, Appili expects to pursue non-dilutive financing and partnership opportunities with NGOs and government agencies which share the company's focus on tropical diseases.

Appili is actively evaluating the eligibility of ATI-1801 for a priority review voucher (PRV) which, if confirmed, would make ATI-1801 the second program at Appili that is potentially PRV eligible, joining ATI-1701.

Coming milestones:

• The FDA established a PDUFA action date for ATI-1501 of Sept. 23, 2023.
• Appili expects to receive milestone payments for ATI-1501 in calendar Q3 2023 and Q4 2023 based on Saptalis's NDA submission and commercialization plans.
• Appili expects to receive first payments from USAFA for ATI-1701 in the coming weeks.

Annual financial results

The company prepares its financial statements in accordance with international financial reporting standards as issued by the International Accounting Standard Board and part 1 of Chartered Professional Accountants of Canada Handbook-Accounting. All figures are stated in Canadian dollars unless otherwise stated.

The net loss and comprehensive loss of $1.5-million or one-cent loss per share for the three months ended June 30, 2023, was $800,000 lower than the net loss and comprehensive loss of $2.3-million or three-cent loss per share during the three months ended June 30, 2022. This relates mainly to an increase in government assistance of $800,000, an increase of $300,000 in foreign exchange gains, and a decrease in general and administrative expenses by $200,000. These decreases were offset by an increase in research and development expenses of $200,000, an increase in financing costs of $200,000, and an increase in business development of $100,000.

As of June 30, 2023, the company had cash of $500,000, compared with $2.5-million on March 31, 2023. In addition, the company is dependent in large part on receiving the $14-million (U.S.) DOD funding for the development of ATI-1701 in a timely manner. Due to delays in reimbursement for previously submitted invoices in the near term, Appili entered into a definitive agreement with respect to an unsecured $300,000 bridge loan from Bloom Burton & Co. Inc. For further details, please refer to the company's management's discussion and analysis (MD&A) for the first quarter of the 2024 fiscal year.

As of Aug. 11, 2023, the company had 121,266,120 issued and outstanding common shares, 7,842,000 stock options, and 58,247,879 warrants outstanding.

This press release should be read in conjunction with the company's unaudited interim condensed financial statements for the first quarter of the 2024 fiscal year and the related MD&A, copies of which are available under the company's profile on SEDAR+.

About Appili Therapeutics Inc.

Appili Therapeutics is a biopharmaceutical company that is purposefully built, portfolio-driven and people-focused to fulfill its mission of solving life-threatening infectious diseases. By systematically identifying urgent infections with unmet needs, Appili's goal is to strategically develop a pipeline of novel therapies to prevent deaths and improve lives. The company is currently advancing a diverse range of anti-infectives, including a vaccine candidate to eliminate a serious biological weapon threat, a topical antiparasitic for the treatment of a disfiguring disease and a novel easy-to-use, liquid oral formulation targeting parasitic and anaerobic infections. Led by a proven management team, Appili is at the epicentre of the global fight against infection.

We seek Safe Harbor.