DRAFT

Immune System Therapeutics Limited (Administrators Appointed)(“ISTL”) Adjourned second meeting of creditors 14 January 2015

2

Formalities

Voting

Purpose of the meeting

Circular to creditors

Vote on the Company’s future

Remuneration

Committee of Inspection

Other resolutions

Questions

Agenda

Formalities

3

Open meeting

Administrator Chairman: Corporations Regulation 5.6.17(1)

Introductions:

Barry Kogan (Administrator)

Mitchell Mansfield (Senior Manager)

Bryce Carmine (Director – ISTL)

Quorum: Corporations Regulation 5.6.16 (2)

Attendee register

Time and place convenient: Corporations Regulation 5.6.14

Proofs of debt and proxies

Formalities (cont’d)

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Voting on voices unless poll demanded: Corporations Regulation 5.6.19

Poll can be demanded by:

Chairperson; or

2 persons present and entitled to vote; or

Creditors representing at least 10% of claims.

When a poll is conducted, a resolution is passed if:

more than half the creditors (in number) vote in favour of the resolution; and

more than half the creditors (in value) vote in favor of the resolution.

If there is a deadlock, the Chairperson may use their casting vote

Purpose of meeting

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Convened under Section 439A of the Corporations Act to:

Provide a further update regarding ISTL’s business, property, affairs and financial circumstances

set out the Administrators’ opinion on the courses of action available to the Company

vote on the Company’s future:

＞ return Company to its Directors; or

＞ execute a Deed of Company Arrangement (“DOCA”); or

＞ enter into liquidation

consider and (if thought fit) approve the Administrators’ and Liquidators’ remuneration

consider the appointment of a Committee of Inspection

consider authorising the Liquidators to compromise debts of the Company

consider authorising the Liquidators to enter into agreements that may take longer than three months to complete

Background

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Incorporated on 22 June 2001

Main activity: development of a drug (IST-1097) for the treatment of blood cancers and disorders

Secured approximately $38m in external funding, applied:

- $20.6m to fund R&D activities (outsourced to third parties); and

- $15.4m to fund day to day activities (mainly in-house R&D)

Administrators were appointed on 3 October 2014

Shortly following appointment we commenced marketing the business/assets of ISTL for sale to extract value from its R&D activities

On 10 November 2014, creditors resolved to adjourn this meeting for up to 45 business days

Course of action was recommended to retain the option of a DOCA structure for buyers of ISTL’s assets

Bidders have now indicated that they wish to acquire ISTL’s assets (rather than a DOCA structure)

Activities since 10 November 2014

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Since 10 November 2014 our efforts have focused on:

- advancing the sale process;

- preserving ISTL’s assets;

- managing, renewing and registering intellectual property;

- investigating ISTL’s entitlement to a R&D tax credit;

- calculating and repaying employee entitlements; and

- attending to other statutory and operational matters.

Sale process

8

Following our appointment, we commenced marketing the business/assets of ISTL for sale to extract value from its R&D activities

To date, we have engaged with over 40 interested parties

Final bids were due by 10 December 2014

A number of parties have undertaken detailed diligence (both scientific and financial)

Several parties have submitted offers to purchase ISTL’s assets

We are currently in final stages of negotiations

During the sale process significant asset preservation costs have been incurred which has impacted the return to creditors (discussed later)

Accordingly, our overall objective is to execute a sale and purchase agreement as soon as possible (i.e. prior to 31 January 2015) and have advised bidders that it is challenging for us to meet preservation costs beyond this date

Estimated return to creditors in a liquidation

Particulars High $ Low $

Assets 1,139,819 775,784

Costs (587,128) (655,938)

Amount available for unsecured creditors 552,691 119,846

Unsecured creditor claims (including noteholder claims) 6,745,308 6,745,308

Estimated return to unsecured creditors 8.19% 1.78%

Residual funds available to shareholders Nil Nil

Anticipated return to creditors

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Range available to creditors has decreased due to the sale timetable being extended to accommodate further interested party due diligence and contract negotiations

The above analysis does not include any recoveries from ISTL’s business/assets or from voidable transactions

Under either scenario:

a significant shortfall to unsecured creditors (including noteholders) is incurred; and

there are no funds available for shareholders of ISTL.

Vote on ISTL’s future (as per the circular to creditors)

10

Administration to end

As ISTL is insolvent, control of ISTL should not be returned to the Directors

DOCA

No DOCA has been proposed, we are unable to recommend that creditors vote in favour of the Company executing a DOCA

ISTL be wound up

As there is no DOCA and ISTL is insolvent, we recommend that creditors vote in favour of ISTL being placed into liquidation

Vote on ISTL’s future – resolution

11

Liquidation

I now put the following resolution to the meeting:

“That ISTL be wound up and Barry Kogan and Tony McGrath be appointed Joint and Several Liquidators”

Resolutions – Administrators’ remuneration

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Resolution – remuneration incurred from 11 November 2014 to 26 December 2014

I now put the following resolution to the meeting:

“That the remuneration of the Administrators for the period from 11 November 2014 to 26 December 2014, calculated on hours spent at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors, in the amount of $114,570.50 (excluding GST), is hereby approved for payment.”

Resolutions – Administrators’ remuneration (cont)

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Resolution – estimated remuneration incurred from 27 December 2014 to 14 January 2015

I now put the following resolution to the meeting:

“That the Administrators’ remuneration for the period from 27 December 2014 to 14 January 2015 shall be a sum equal to the time cost spent by the Administrators, their partners and their staff, calculated at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors, in the amount of $35,789 (exclusive of GST).

Creditors acknowledge that if actual costs incurred are below the amount approved, the Administrators are only authorised to draw the amount incurred. Creditors also acknowledge that if actual costs incurred exceed the amount approved, the Administrators will seek further approval from creditors.

The Administrators are approved to draw their remuneration as and when it is incurred from funds under their control”

Resolutions – Liquidators’ remuneration

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I now put the following resolution to the meeting:

“That the remuneration of the Liquidators, for the period from 15 January 2015 onwards, shall be a sum equal to the time cost spent by the Liquidators, their partners and their staff, calculated at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors, in the amount of $138,810 (exclusive of GST).

Creditors acknowledge that if actual costs incurred are below the amount approved, the Liquidators are only authorised to draw the amount incurred. Creditors also acknowledge that if actual costs incurred exceed the amount approved, the Liquidators will seek further approval from creditors.

The Liquidators are approved to draw their remuneration as and when it is incurred from funds under their control”.

Resolutions – Committee of Inspection

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I now put the following resolution to the meeting:

“That a committee of inspection be formed, with the following to be members:

………………………… representing …………………………

………………………… representing …………………………

………………………… representing …………………………

………………………… representing …………………………

………………………… representing …………………………”

Resolutions – Compromise of debts & long term agreements

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I now put the following resolution to the meeting:

“That so far as is necessary for the beneficial winding up of ISTL the Liquidators are hereby authorised pursuant to subsections 506(1A), 477(2A) and 477(2B) of the Corporations Act 2001 to compromise any debt to ISTL greater than the prescribed amount (currently $100,000) and to enter any agreement on behalf of ISTL involving a term or obligations extending for more than three months.”

Q & A