Update (June 14, 2017) Equity Healthcare / Biotechnology Propanc Biopharma Inc. (OTCBB: PPCH, Target Price: $5.10) Propanc is an Australian-based biotechnology company seeking to develop anti-cancer compounds that target cancer patients suffering from solid tumors such as pancreatic, ovarian and colorectal cancers. Propanc s formulation of anti-cancer compounds utilizes pro-enzyme therapy. Its lead drug candidate, PRP, is a patented formulation consisting of two proenzymes, trypsinogen (T) & chymotrypsinogen (C) from bovine pancreas. PRP targets malignant cancer cells through multiple pathways, which the company believes may create a lasting clinical benefit for the patient. Propanc recently completed pre-clinical work on PRP and is planning a Phase II clinical trial in late 2017 / early 2018. The company has also stated that it is pursuing strategic partners in the industry, likely by way of a strategic or licensing partner. Investment Highlights Propanc encouraging clinical update, completes toxicity study On April 27, 2017, Propanc CEO James Nathanielsz announced that the company had completed a significant milestone, with the successful completion of a GLP-compliant, 28-day repeat dose toxicity study for its lead product, PRP. The study was conducted by its contract research partner in Melbourne, Australia, vivopharm Pty Ltd, and showed no major toxicological findings after the once daily administration of PRP by intravenous injection. PRP is a solution for once daily IV administration of pancreatic proenzymes trypsinogen and chymotrypsinogen. It is designed to target cancer stem cells, while leaving healthy cells alone, and will initially be investigated for pancreatic and ovarian cancers, followed by colorectal and other solid cancers. Propanc planning Phase 2a trials by end of 2017 / early 2018 In our view the completion of the toxicity study represents a major accomplishment by management. Propanc believes it can now advance towards its first in-human trials, which would transition the company from pre-clinical to clinical stage. Management has stated that it is working with manufacturing partner Q Biologicals to complete GMP compliant product manufacture of PRP. Nathanielszis targeting late 2017 / early 2018 for the commencement of its first in-human studies, a Phase IIa trial expected to take place in the UK for advanced solid tumor cancer patients. Propanc announces name change; completed reverse split Propanc has also made progress on the corporate development front. On April 20, 2017, Propanc announced that it had changed its name to Propanc Biopharma, Inc., which management stated was intended to better reflect its stage of growth. Additionally, on April 20, 2017, Propanc completed a 1:250 reverse split. Following the share consolidation, the company had 3.8mn shares outstanding as of the filing of its FY3Q17 10-Q with the SEC on May 8, 2017. In our view the reverse split was necessary as Propanc had too many shares outstanding as a public company of its size. We continue to expect the company to seek to raise external capital or find an industry partner in order to support operations and to fund its upcoming Phase 2a clinical study. Updating price target to $5.10 We are updating our price target to $5.10 for PPCH following the completion of several corporate events, including a reverse share split, recent results, and the company s move towards its first in-human clinical trial. If achieved the target represents a market capitalization of $19.1mn, which, although a premium to recent prices, seems appropriate given the many years and more than $36mn invested by the company in operating losses developing PRP to the point that it is ready for its first in-human trials, and the large market opportunity for treating solid cancerous tumors. Stock Details (5/26/17) OTCBB: Sector / Industry PPCH Price target $5.10 Recent share price $1.20 Shares o/s (mn) 3.8 Market cap (in $mn) 4.5 52-week high/low $6.25 / 0.95 Source: OTC Markets, SeeThruEquity Research Key Financial ($mn, unless specified) Healthcare / Biotechnology FY15A FY16A FY17E Revenues 0.0 0.0 0.0 EBITDA (1.3) (3.4) (6.0) EBIT (1.7) (6.9) (6.0) Net Income (3.4) (9.4) (6.0) EPS ($) (4.91) (4.87) (1.56) Source: SeeThruEquity Research Key Ratios FY15A FY16A FY17E Gross margin (%) NM NM NM Operating Margin (%) NM NM NM EBITDA margin (%) NM NM NM P/Revenue (x) NM NM NM EV/Revenue (x) NM NM NM Source: SeeThruEquity Research 12.00 10.00 8.00 6.00 4.00 2.00 0.00 May-16 Jul-16 Oct-16 Jan-17 Apr-17 Source: Thomson Reuters 2011-2017 SeeThruEquity, LLC. Important disclosures appear at the back of this report. 1 P age
Propanc provides update after successfully completing 28-day repeat dose toxicity study for PRP On April 27, 2017, Propanc CEO James Nathanielsz announced that the company had completed a GLP-compliant, 28-day repeat dose toxicity study for its lead product. PRP. No major toxicological findings in study: As part of the announcement, Propanc noted that there were no major toxicological findings after the once daily administration of PRP by intravenous injection. PRP is a solution for once daily IV administration of pancreatic proenzymes trypsinogen and chymotrypsinogen. It is designed to target cancer stem cells, while leaving healthy cells alone, and will initially be investigated for pancreatic and ovarian cancers, followed by colorectal and other solid cancers. Propanc s 28-day repeat dose toxicology study was conducted by its contract research partner in Melbourne, Australia, vivopharm Pty Ltd. Moving to clinical stage: In the company s release, highlighting the findings of the study, Nathanielsz noted that Propanc was now moving towards becoming a clinical stage company, as it has achieved sufficient data to support a safe starting dose for First-in-Human studies. The company stated that it will initially target patients suffering from solid tumors, and that it expects to file an application for its first human clinical trial in the UK during 2017. Large opportunity for Propanc s PRP Propanc s lead product candidate is PRP. Propanc is seeking to use proenzymes to develop anti-cancer compounds designed to limit or prevent tumor recurrence and metastasis from solid tumors. Initially the company is targeting patients suffering from pancreatic, ovarian, and colorectal cancers. Large market opportunity: Propanc is seeking to develop a differentiated approach that could address a large market opportunity cancer is a leading cause of death and disability worldwide, impacting more than 14mn people each year, according to 2015 data from the World Health Organization. According to GBI Research, the combined world market for pancreatic, ovarian and colorectal cancers is expected to be more than $14 billion, as illustrated in the enclosed graphic. Propanc s PRP is a patented formulation consisting of two proenzymes, trypsinogen (T) & chymotrypsinogen (C) from bovine pancreas, mixed in a synergetic ratio that targets solid tumors. 80% of all cancers are solid tumors and the company notes that metastasis is the main cause of patient death from cancer. Propanc has developed PRP with the goal of it being complementary with existing cancer therapies, and PRP has been shown in vitro to suppress cancer stem cells by reducing cancer cell growth via cell differentiation, and enhancing cell adhesion, according to the company. Specifically, PRP targets Epithelial-Mesenchymal Transition (EMT), which causes epithelial cancer cells to become invasive and stem cell-like. PRP seeks to reverse the conversion from an epithelial to a mesenchymal phenotype, reducing the metastatic potential of the tumor. With its pipeline of proenzyme related oncology candidates, Propanc first plans to develop clinical trials targeting pancreatic cancer and ovarian cancer, followed by colorectal cancer. Initially, Propanc will target patients with limited therapeutic options for solid tumors, and in the future intends to develop products to treat early stage cancer, precancerous diseases and potentially as preventative treatment for patients at high risk of developing cancer based on genetic screening. 2011-2017 SeeThruEquity, LLC. Important disclosures appear at the back of this report. 2 P age
Targeting Phase IIa trial in late 2017 / early 2018: With the completion of its 28-day repeat dose toxicity study the company plans to emerge from pre-clinical to clinical stage by the end of 2017/ early 2018, with the initiation of a Phase IIa study in the UK for advanced solid tumor cancer patients, as illustrated in the pipeline below, provided by management in an investor presentation in May 2017. Source: Company We are updating our price target to $5.10 for Propanc We are updating our model and price target for Propanc following the completion of several corporate events, including a reverse share split, recent results, and the company s move towards its first in-human clinical trial. The new target is $5.10 per share, which reflects results through FY3Q17, our expectation, an updated share count of 3.8mn as of May 8, 2017. We have also pushed out initial revenue projections until 2023E, with a probability factor of 0.25x, and weighted cost of capital of 20.1%. If achieved the target represents a market capitalization of $19.1mn, which, although a premium to recent prices, seems appropriate given the many years and more than $36mn invested by the company in operating losses developing PRP to the point that it is ready for its first in-human trials, and the large market opportunity for treating solid cancerous tumors. In our view the company will likely need to raise additional capital to support its development plans in 2017 and beyond. While the degree of dilution experienced by the company over the last two years has been greater than we initially contemplated, this is a risk common to the microcap biotech space, and new equity funding is required to advance the development of Propanc s therapeutic portfolio. We continue to see Propanc as developing an intriguing method to combat malignant cancer with its pro-enzyme therapy and lead candidate PRP. In our view, key events ahead include future financing plans and managements goal goal of beginning studies of PRP in humans by the end of 2017, which would be a significant accomplishment. 2011-2017 SeeThruEquity, LLC. Important disclosures appear at the back of this report. 3 P age
QUARTERLY FINANCIAL SUMMARY Figure 1. Income Statement Summary Figures in $, unless specified FY3Q17 FY3Q16 9 mos FY17 9 mos FY16 Revenues 0 0 0 0 YoY growth General and Administrative 1,153,138 775,216 3,893,534 2,620,324 Occupancy Costs 7,649 5,235 22,237 15,062 Research & Development 386,490 510,310 714,889 806,578 Operating Expenses 1,547,277 1,290,761 4,630,660 3,441,964 YoY growth 19.9% 34.5% Operating Income (Loss) -1,547,277-1,290,761-4,630,660-3,441,964 Operating Margin % NM NM NM NM Interest Expense -797,713-1,104,315-2,524,714-2,676,577 Change in FV of Derivatives & Other Items 273,202 57,118 472,038-553,665 Foreign Currency 394,503 186,070 143,169 47,366 Total Other Items -130,008-861,127-1,909,507-3,182,876 PreTax Income (loss) -1,677,285-2,151,888-6,540,167-6,624,840 Income Tax Benefit (Expense) 306,159-30 306,159 71,970 Net Income (loss) -1,371,126-2,151,918-6,234,008-6,552,870 Other Comprehensive Income (Loss) -473,998-238,292-217,100-126,413 Comprehensive Income -1,845,124-2,390,210-6,451,108-6,679,283 EPS -0.38-1.05-1.86-3.9 Avg Shares outstanding in period 3,653,154 2,043,235 3,347,593 1,679,829 Source: Company Form 10Q, SeeThruEquity Research Results reflect continued investment in operations and preclinical pipeline Propanc reported an operating loss of ($1.5mn), with GAAP net income coming in at ($1.4mn), or EPS of ($0.38) for FY3Q17, ended March 31, 2017. As expected for an early stage healthcare company undertaking research and development activities, Propanc reported no revenues. Avg. Shares in the period rose to 3.65mn, versus 2.04mn in FY3Q16. We note the company completed a reverse split with a ratio of 1:250 during April 2017, and the share count above reflects this share consolidation. Operating expenses increased to $1.5mn in the quarter, from $1.3mn in the year-ago period. The company has used ($1.45mn) in cash from its operations in the first nine months of fiscal 2017, versus ($2.2mn) in the year-ago period. Key Balance Sheet Metrics: At the end of the quarter Propanc had cash on hand of $9,058 and current assets of $31,212, versus current liabilities of $4.8mn. Current liabilities include $2.7mn and $1.1mn in convertible notes and embedded conversion option liabilities, respectively. Propanc reported a stockholder s deficit of ($4.7mn), versus a deficit of ($3.8mn) in prior period and $2.6mn in the year-ago period. We see the balance sheet as a key item to watch for Propanc. Management stated in a recent investor presentation in December 2016, that it would likely need an additional $3mn to fund its operating plan through 2017, and additional capital to continue its development beyond 2017. 2011-2017 SeeThruEquity, LLC. Important disclosures appear at the back of this report. 4 P age
Management Team James Nathanielsz B.App.Sc, MEI Executive Chairman James Nathanielsz has served as a director since inception. Mr. Nathanielsz has served as a director and Chief Executive Officer of Propanc s Australian company since October 2007. From July 2006 until October 2007, Mr. Nathanielsz served as the New Products Manager of Biota Holdings Limited, an anti-infective drug development company in Australia. Mr. Nathanielsz was selected as a director because he is the Co-Founder of Propanc s Australian company and for his experience in R&D and manufacturing and distribution. Mr. Nathanielsz graduated with a Bachelor of Applied Science, majoring in Biochemistry/Applied Chemistry and subsequently with a Master of Entrepreneurship & Innovation from Swinburne University of Technology in Melbourne, Australia. Dr. Julian Kenyon MB, ChB, MD Chief Scientific Officer Dr. Julian Kenyon has served as a director since Propanc s inception. Dr. Kenyon founded Propanc s Australian company and was appointed as a director of our Australian company on February 12, 2008. Since 2000, Dr. Kenyon has served as an integrated medical physician and Medical Director of the Dove Clinic for Integrated Medicine in Winchester and London. Dr. Kenyon is the Founder-Chairman of the British Medical Acupuncture Society in 1980 and Co-Founder of the Centre for the Study of Complementary Medicine in Southampton and London. Dr. Kenyon was selected as a director because he is the Co-Founder of the Australian subsidiary and the business is based on his initial work at the Dove Clinic. Dr. Kenyon graduated from the University of Liverpool with a Bachelor of Medicine and Surgery and subsequently with a research degree, Doctor of Medicine. Since 1972, he was appointed a Primary Fellow of the Royal College of Surgeons, Edinburgh. Professor Klaus Kutz, M.D Chief Medical Officer Professor Kutz has ten years of experience as independent consultant in Clinical Pharmacology and Safety for pharmaceutical companies and clinical research organizations. His specialty over the last six years is Oncology, including preparation of multiple NDAs and INDs for small and medium sized pharmaceutical companies. He has prepared, organized and reported clinical Phase I studies in oncology and Phase II studies in different cancer indications (prostate, gastric, ovarian, small cell lung cancer) and Non-Hodgkin Lymphomas. Professor Kutz has more than 12 years experience as Head of Clinical Pharmacology with world-wide responsibilities for Phase I and Clinical Pharmacokinetics in two internationally operating pharmaceutical companies, setting up and restructuring international Clinical Pharmacology departments. His achievements include the successful world-wide registration of multiple important Sandoz compounds by preparation of multiple NDAs (New Drug Applications) and Expert reports (including Written Summary), as well as the preparation of multiple INDs (Investigational New Drug Applications) for Sandoz Pharma Ltd and Sanofi Research. A specialist for Internal Medicine, Gastroenterology, and Clinical Pharmacology, he is also Professor of Medicine at the University of Bonn, Germany. 2011-2017 SeeThruEquity, LLC. Important disclosures appear at the back of this report. 5 P age
About Propanc Health Group Corporation Propanc is developing new cancer treatments for patients suffering from pancreatic, ovarian and colorectal cancers. We have developed a formulation of anti-cancer compounds, which exert a number of effects designed to control or prevent tumors from recurring and spreading throughout the body. Our products involve or employ pancreatic proenzymes, which are inactive precursors of enzymes. In the near term, we intend to target patients with limited remaining therapeutic options for the treatment of solid tumors. In future, we intend to develop our lead product to treat (i) early stage cancer and (ii) pre-cancerous diseases and (iii) as a preventative measure for patients at risk of developing cancer based on genetic screening. Propanc.com. 2011-2017 SeeThruEquity, LLC. Important disclosures appear at the back of this report. 6 P age
Contact Ajay Tandon SeeThruEquity www.seethruequity.com (646) 495-0939 info@seethruequity.com Disclosure This research report has been prepared and distributed by SeeThruEquity, LLC ( SeeThruEquity ) for informational purposes only and does not constitute an offer, solicitation or recommendation to acquire or dispose of any investment or to engage in any transaction. This report is based solely on publicly-available information about the company featured in this report which SeeThruEquity considers reliable, but SeeThruEquity does not represent it is accurate or complete, and it should not be relied upon as such. All information contained in this report is subject to change without notice. This report does not constitute a personal trading recommendation or take into account the particular investment objectives, financial situation or needs of an individual reader of this report, and does not provide all of the key elements for any reader to make an investment decision. Readers should consider whether any information in this report is suitable for their particular circumstances and, if appropriate, seek professional advice, including tax advice. This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, many of which are beyond the company s control. Actual results could differ materially and adversely from those anticipated in such forward-looking statements as a result of certain industry, economic, regulatory or other factors. SeeThruEquity is not a FINRA registered broker-dealer or investment adviser and does not provide investment banking services. SeeThruEquity does not accept or receive fees or other compensation for preparing its research reports. SeeThruEquity has not been retained or hired by the company featured herein or by any other party to prepare this report. In some but not in all instances, SeeThruEquity and/or its officers, directors or affiliates may receive compensation from companies featured in its reports for non report-related services which may include charges for presenting at SeeThruEquity investor conferences, distributing press releases and performing certain other ancillary services. The company featured in this report paid SeeThruEquity its standard fee described below for distributing a press release on this report. Such compensation is received on the basis of a fixed fee and made without regard to the opinions and conclusions in its research reports. The fee to present at SeeThruEquity conferences is no more than seven thousand dollars, and the fee for distributing press releases is no more than fifteen hundred dollars. The fees for performing certain other ancillary services vary depending on the company and service provided but generally do not exceed five thousand dollars. In no event is a company on which SeeThruEquity has issued a report required to engage it with respect to these non report-related services. SeeThruEquity and/or its affiliates may have a long equity position with respect to a non-controlling interest in the publicly traded shares of companies featured in its reports, and follows customary internal trading restrictions pending the release of its reports. SeeThruEquity s professionals may provide verbal or written market commentary that reflects opinions that are contrary to the opinions expressed in this report. This report and any such commentary belong to SeeThruEquity and are not attributable to the company featured in its reports or other communications. The price and value of a company s shares referred to in this report may fluctuate. Past performance by one company is not indicative of future results by that company or of any other company covered by a report prepared by SeeThruEquity. This report is being disseminated primarily electronically and, in some cases, in printed form. An electronic report is made simultaneously available to all recipients. The information contained in this report is not incorporated into the contents of our website and should be read independently thereof. Please refer to the Disclosures section of our website for additional details. Copyright 2011-2017 SeeThruEquity, LLC. No part of this material may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of SeeThruEquity, LLC. 2011-2017 SeeThruEquity, LLC. Important disclosures appear at the back of this report. 7 P age