Dr. Steven Theriault reports

CYTOPHAGE REPORTS Q1 FINANCIALS AND PROVIDES BUSINESS UPDATE

Cytophage Technologies Ltd. has filed its financial results for the first quarter (Q1) ended March 31, 2024. The financial statements and the accompanying management discussion and analysis report are available under the company's profile at SEDAR+. This is the first reporting of financial results since the completion of the reverse takeover transaction of Cuspis Capital III Ltd. by the company in February (see press release on Feb. 2, 2024).

Q1 business highlights:

• Cytophage, the first phage company to go public in Canada, completed its reverse takeover of Cuspis and began trading on the TSX Venture Exchange as of Feb. 9, 2024.
• Cytophage provided bacteriophage for the first phage therapy in Canada for a prosthetic joint infection.
• Cytophage held meetings with several large-scale, integrated poultry producers in Asia. Preliminary evaluation work on bacteria and corresponding phages is under way as prospective terms for a commercial collaboration agreement are being explored.
• Construction continued on Cytophage's new 20,000-square-foot research and development and production facility that will include state-of-the-art labs and good manufacturing practice manufacturing. This new global headquarters for the company is set to open in Q2.
• Cytophage strengthened its board of directors through the addition of two experienced executives: Michael Cochrane, who has a strong background in capital markets, and John Snisarenko, an experienced and successful pharmaceutical/biotech commercialization executive. Cytophage has contracted former pharma executive Dr. Ashley Wozniak, founding partner of Fosera Consulting, to develop financing proposals for phage projects focused on human health and to assist in assessing product potential. Dr. Wozniak has significant experience in securing non-dilutive funding throughout her career (over $500-million), as well as in leading new product planning, late-stage product development and product launches for commercial and medical countermeasure products.

Cytophage chief executive officer Dr. Steven Theriault commented: "Q1 was a busy period for Cytophage with lots of exciting developments within the commercialization and financial portfolios. This momentum has carried into the second quarter where we continue to pursue commercial opportunities in the animal health sector, expand on our human health efforts and continue to engage with the investment community in Canada."

Animal health update

AviPhage

Cytophage's current commercialization efforts in animal health are primarily focused on Asia, a region with a high demand for antibiotic alternatives and precedents in phage regulation, adoption and awareness. Cytophage held targeted meetings in March with some of the largest poultry producers and integrators in Asia that collectively produce approximately 1.5 billion broiler chickens annually. Bacterial samples are being analyzed and assessed against the company's phages while, concurrently, prospective terms for a commercial collaboration agreement are being developed. Cytophage anticipates conducting large-scale commercial trials in this region in 2024.

In Bangladesh, Cytophage continues to collaborate with its distribution partner. Cytophage has developed an innovative new product form: a lyophilized tablet designed to replace the traditional liquid form commonly used in phage therapy. This lyophilized (freeze-dried/stabilized) product represents a significant technological breakthrough, offering increased flexibility, stability and application versatility. Cytophage anticipates leveraging this innovation globally across all existing and pending product lines. This advancement allows for the delivery and storage of bacteriophages by extending the shelf life of the product. Cytophage believes it is currently the only phage company worldwide capable of delivering a lyophilized phage product at scale, without significantly increasing costs for consumers.

OvaPhage

Cytophage has been evaluating its egg phage product, OvaPhage, for compatibility with current delivery systems within egg producing barns. OvaPhage is a non-toxic, environmentally friendly disinfectant product for egg production. Field trials are expected to be completed by the end of 2024.

Summary

It is important to note that even among the same bacterial species (such as E. coli), bacterial populations vary from region to region, which can limit the efficacy/longevity of phage products developed for/from foreign bacterial populations. Cytophage CEO Dr. Theriault commented: "In recognition of global variations in bacterial strains, Cytophage embraces the importance of regionalizing phage products to address local bacterial strains, believing that this approach will maximize product adoption, attract suitable partners and create a sustainable long-term, defensible business model. The capability to modify/regionalize phage products at scale appears to be unique to Cytophage."

Human health update

Cytophage, for the first time in Canada, was able to provide bacteriophage for treatment of a patient at The Ottawa Hospital with approval from Health Canada as a single-subject clinical trial (see press release March 1, 2024). The patient, who was suffering from a severe hardware-associated bone and joint infection, had undergone several surgeries, and numerous antibiotic therapies, none of which had successfully treated their infection. The patient saw improvement in terms of reduced pain and increased mobility related to the treated joint. This landmark treatment received considerable attention from national media, including CTV and CBC, highlighting the potential of bacteriophages as an effective alternative to antibiotics. Cytophage has identified a second patient for phage therapy. Bacteria and phage analyses are currently under way.

Q1 2024 financial highlights

The financial results of the first quarter of 2024 include the consolidation of the financial results of Cytophage Technologies from the closing date of the acquisition and the accounting impacts of the transaction, and the concurrent private placement.

• Cash and cash equivalents balance, as of March 31, 2024, was $5,567,000. The increase was primarily due to the closing of the concurrent financing and the cash and cash equivalents assumed upon the completion of the transaction. The company is focused on closely managing its expenditures and cash resources, while also pursuing additional non-dilutive financing sources.
• Operating expenses, as of the three-month ended March 31, 2024, were approximately $1,634,000 compared with $1,213,000 for the period ended March 31, 2023. During the period ending March 31, 2024, there were approximately $260,000 of one-time expenses that related to the RTO. These included one-time legal, professional and listing fees.
• Net loss was $4,283,000 for the first quarter of 2024, compared with $1,116,000 for the first quarter of 2023. The increase is primarily due to the $2,692,000 listing expense, which is a non-cash accounting expense associated with assuming the shares and dilutive securities of the former Cuspis Capital III, in addition to the aforementioned $260,000 of one-time transaction expenses, relating to legal, professional and listing fees.

About Cytophage Technologies Ltd.

Cytophage Technologies is a pioneering biotechnology company dedicated to bacteriophage research, product development and commercialization. Committed to addressing the global challenge of antibiotic resistance, Cytophage advances innovative products that harness the power of bacteriophages to combat bacterial infections affecting human health, animal health and food security.

We seek Safe Harbor.