• Additional US$6.6 million funding commitment for ATI-1701 brings the total program funding awarded to approximately US$14 million
• These funds along with other potential funding sources, are anticipated to continue to advance the ATI-1701 program toward an IND submission to the FDA in 2024
• The company also announces a change to it’s Board of Directors

HALIFAX, Nova Scotia / Oct 25, 2023 / Business Wire / Appili Therapeutics Inc. (TSX: APLI; OTCQB: APLIF) (the “Company” or “Appili”), a biopharmaceutical company focused on drug development for infectious diseases and biodefense, today announced that the company secured a commitment for the second stage of funding for ATI-1701 from the U.S. Air Force Academy (“USAFA”), who is working in partnership with the Defense Threat Reduction Agency (“DTRA”), the funding agency. ATI-1701 is the Company’s potential first-in-class vaccine candidate for the prevention of infection with Francisella tularensis, the causative agent of tularemia and a top-priority biothreat.

With this additional 6.6 million award, Appili’s ATI-1701 program has been awarded the total US$14 million in USAFA funding commitments announced on May 8, 2023.

“Being awarded this additional funding commitment from USAFA, in partnership with DTRA further strengthens Appili’s foundation in biodefense and enables us to scale-up our efforts to develop an urgently needed vaccine for this serious bioterrorism threat,” said Don Cilla, Pharm.D., M.B.A., President and Chief Executive Officer of Appili. “This level of funding commitment should further support nonclinical, manufacturing, and regulatory activities for ATI-1701, and should enable us to continue to advance this program towards an Investigational New Drug (“IND”).”

Appili will continue to oversee a comprehensive development program for ATI-1701, which includes nonclinical studies, manufacturing, and regulatory activities to support an IND submission. In May 2023, Appili was awarded the first stage of funding commitment from USAFA of US$7.3 million. The initial commitment was used to kick-off ATI-1701 early-stage development and regulatory activities, which are currently ongoing. Under the terms of the agreement with USAFA, Appili will be reimbursed for the subcontractor and vendor costs necessary to carry out the technical tasks. Additionally, Appili will be reimbursed for direct labour costs associated with budgeted program activities, including a portion of its overhead costs. Appili has also entered into an agreement with its lender whereby if needed, Appili has obtained temporary waivers of a minimum cash balance requirement. Further waivers may be necessary from time to time depending on the timing of reimbursements for expenses submitted to USAFA.

Corporate Update

It is with great sadness that the Company must announce that one of its Directors, Rochelle Stenzler, has passed away. The Company plans on seeking a new independent Director to join its Board in the coming months.

About ATI-1701

Appili is developing ATI-1701 as a vaccine to combat Francisella tularensis, which is classified by the U.S. National Institutes of Health (NIH) as a Category A pathogen, an organism that poses the highest risk to national security and public health. Estimated to be 1,000-fold more infectious than anthrax, experts consider the aerosolized form to have a high potential for use in a bioterrorism attack.

About Appili Therapeutics

Appili Therapeutics is an infectious disease biopharmaceutical company that is purposefully built, portfolio-driven, and people-focused to fulfill its mission of solving life-threatening infections. 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 epicenter of the global fight against infection. For more information, visit www.AppiliTherapeutics.com.

Forward-Looking Statements

This news release contains “forward-looking statements,” including with respect to the funding commitment from USAFA, anticipated funding amount, the anticipated timing of such funding, the Company’s ongoing development plans and timeline with respect to ATI-1701. Wherever possible, words such as “may,” “would,” “could,” “should,” “will,” “anticipate,” “believe,” “plan,” “expect,” “intend,” “estimate,” “potential for,” and similar expressions have been used to identify these forward-looking statements. Forward looking statements contained in this press release are provided in reliance on certain assumptions, including with respect to the satisfaction of all conditions precedent to the advancement of the funding commitment from USAFA (including receipt by USAFA of any requisite U.S. federal budget approvals, general development plans with respect to ATI-1701, general access to data required to support regulatory submissions, the nature and scope of the services to be provided by Appili to USAFA with respect to advancing the ATI-1701 program and the timing, scope and budget of additional contracts with USAFA and the ability of the Company to receive timely expense reimbursements from USAFA (including expense reimbursement for costs incurred prior to USAFA’s initial commitment of funds). Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, the Company cannot give assurance that these expectations will prove to have been correct. Forward looking statements involve significant known and unknown risks, uncertainties and assumptions, including, without limitation, the risk that the final conditions governing the funding and the relationship between Appili and USAFA may not be satisfactory to the Company, the final funding amount may be different than that communicated herein (including as a result of the failure to secure the requisite U.S. government budget approvals, the inability of the Company to access committed funding under the terms and conditions of the existing contractual arrangements with USAFA in a timely manner or at all or any changes in funding arrangements between USAFA and DTRA, as the ultimate funding agency), receipt of funding may be delayed as a result of any U.S. government shutdown or if any remaining conditions are not satisfied in a timely manner, other standard risks associated with government grants and contracting of this nature and the other risk factors listed in the annual information form of the Company dated June 22, 2023 and the other filings made by the Company with the Canadian securities regulatory authorities (which may be viewed at www.sedarplus.com). In particular, any delays in the reimbursement by USAFA of previously submitted expenses in the near term may, in the absence of the Company securing satisfactory alternative funding arrangements or a waiver, result in the Company not being able to satisfy its covenants to maintain a minimum cash balance pursuant to the loan agreement with Long Zone Holdings Inc. (“LZH”). Absent a waiver, such default may result in the acceleration of all obligations owing to LZH under such agreement. Delays in future expense reimbursements by USAFA in the near term may also materially and adversely impact the Company’s working capital requirements in the absence of securing satisfactory alternative funding arrangements. For further details, please refer to the Company’s going concern note in the Company’s management’s discussion and analysis for the fiscal year ended March 31, 2023. Should one or more of these risks or uncertainties materialize or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements may vary materially from those expressed or implied by the forward-looking statements contained in this news release. These factors should be considered carefully, and prospective investors should not place undue reliance on the forward-looking statements. The Company disclaims any intention or obligation to revise forward-looking statements whether as a result of new information, future developments or otherwise, except as required by law.