Island Pharmaceuticals : Quarterly Activity Report & Appendix 4C

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27 January 2022

ASX Announcement

December 2021 Quarterly Activity Report

and Appendix 4C

• Teresa Byrne appointed Vice President Clinical Product Development
• Key agreements signed for Island's ISLA-101 Phase 2a dengue fever clinical trial - with The Research Foundation for The State University of New York (SUNY) as trial site and with ICON for Clinical Trials Support Services
• Dr. Kristopher Paolino, MD appointed to lead study at SUNY as Principal Investigator
• ISLA-101Drug Substance manufactured
• Island closed the quarter with a strong cash position of A$5.83m.

MELBOURNE Australia, 27 January 2022: Australian mid-clinical stage antiviral drug

development company, Island Pharmaceuticals Ltd (ASX: ILA; "Island"; "the Company") is pleased to release its Appendix 4C and quarterly business activities review for the three- month period ended 31 December 2021 (Q2 FY22).

CEO of Island Pharmaceuticals, Dr David Foster said, "Several key agreements were executed through the quarter, necessary for progressing our PEACH1 Phase 2a trial, where we are assessing ISLA-101in dengue fever. We were delighted to announce Dr Kristopher Paolino as Principal Investigator on the study and also to appoint Teresa Byrne to the Island team as VP Clinical Product Development - Teresa will oversee the clinical development of ISLA-101and our other pipeline programs.

We are also pleased to announce that manufacturing of our drug substance has reached a critical milestone. We remain on track to begin dosing patients early this calendar year."

Corporate Summary

Island Pharmaceuticals listed on the ASX following an oversubscribed A$7.5m Initial Public Offer (IPO) on 13 April 2021. Funds raised under the IPO enable Island to conduct a Phase 2 study of its lead drug candidate ISLA-101 and provide working capital for research and development. ISLA-101 is a drug with a very well-known safety profile, being repurposed as a potential preventative for dengue fever. The funds raised enable Island's drug repurposing strategy to develop at speed.

Island is well positioned to execute a rapid path to the clinic for ISLA-101. Since listing, the Company has been focused on executing on the structured delivery of its ISLA-101 clinical trial.

1 A Phase 2, Randomized, Double blind, Placebo-controlled Study for the Prophylactic Examination of an Antiviral in a Dengue Challenge Model

Island Pharmaceuticals Limited ACN 641 183 842 | Registered office: Suite 201, 697 Burke Rd, Camberwell VIC 3124, Australia Page 1 of 4

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Through the quarter, Island held its inaugural Annual General Meeting, with all resolutions passed with votes in favour in excess of 95.8%. Island thanks those shareholders who attended and all those who voted.

Post-quarter, Ms. Teresa Byrne was appointed as Vice President Clinical Product Development. Teresa has been engaged to oversee clinical development of Isla-101 in the upcoming PEACH trial and other pipeline development programs. Teresa is an experienced Clinical Research Executive, with more than 20 years of pharmaceutical industry experience from the research bench to the clinic, and has experience in both large company settings such as big pharmaceutical companies as well as in smaller biotech companies and CRO organizations.

Teresa is a key addition to the team as Island builds out the support required to further develop ISLA-101 and pipeline development programs. In addition to overseeing the PEACH study, Teresa will support all of our programs in a variety of ways including establishment of quality and/or clinical operations structure and systems, general clinical and quality oversight, vendor management, qualification and oversight.

Also in January, Island participated in the Biotech Showcase as part of JP Morgan Healthcare week. Through this event, Island's CEO, Dr David Foster held a series of meetings with potential pharmaceutical partners and investors.

ISLA-101 trial preparation

Island is able to leverage the significant pre-existing body of clinical data for ISLA-101 as well as data from previously filed INDs in the US to expedite its path into the clinic.

The PEACH trial is a Phase 2a, randomized, double blind, placebo-controlled study for the Prophylactic Examination of an Antiviral in a Dengue Challenge Model.

To support the PEACH trial, through the quarter, Island signed a Clinical Trial Agreement with The Research Foundation for The State University of New York (SUNY) on behalf of Upstate Medical University, Syracuse NY, where the trial will be conducted, and where PEACH's control (untreated) arm viral challenge studies have already been completed.

It is anticipated that the Phase 2a clinical trial will begin dosing subjects in early 2022 and will take 8-12 months to complete. The trial may enrol up to 16 individuals.

Dr. Kristopher Paolino, MD has been appointed Principal Investigator on the trial.

Post the quarter, Island announced it had signed a key agreement with Clinical Research Organisation, ICON Government and Public Health Solutions, Inc. f/k/a Clinical Research Management, Inc. ("ICON GPHS"). ICON GPHS is a CRO with significant expertise in clinical trials, including the dengue human infection model (DHIM) that Island will be using in the PEACH study.

ICON has a solid professional history as a quality CRO and has worked in the field of dengue fever research in the past. This Agreement allows Island to continue moving forward with its Phase 2a trial preparations at a rapid pace.

Also post the quarter, Island announced that the Drug Substance for use in formulation of the final dose form in the PEACH study had been manufactured and manufacturing of the formulated Drug Product is expected to begin shortly.

In addition, Island has continued working with regulatory consultants to finalise its Investigational New Drug (IND) application, which will be submitted to the US Food and Drug Administration following completion of clinical Drug Product manufacturing.

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Pipeline development and intellectual property

Through the quarter, a data driven analysis was completed, where Island reviewed a number of viruses with unmet needs, for which the Company may develop future products. Island and its experienced Scientific Advisory Board (SAB) will be prioritising the viruses identified in this analysis to select viruses to nominate as targets in the two previously announced research collaborations.

Financial Summary

Island's cash position was A$5.83million as at 31 December 2021. During the December 2021 quarter total cash operating outflows were approximately A$0.414million (A$0.305million in the prior quarter).

A summary of the operating cashflows for six months ending 31 December 2021 compared with the proposed use of funds in Year 1 (twelve months) of Island's Prospectus dated 26 February 2021 is outlined below:

	Y1 First 9 Months	Y1 Per Prospectus
	(A$)	(A$)
Clinical, regulatory and implementation	191,000	2,027,000
IP research and development	29,000	139,000
Formulation development	-	-
Working capital and administration	1,209,000	1,195,000
costs
Expenses of the offer costs	450,000	450,000
	1,879,000	3,811,000

During the 9-month period ended December 2021, overall spend is lower than the estimated use of funds as set out in the Prospectus largely due to the change in API supply and delayed receipt of invoices from third parties . The Company expects R&D expenditure to significantly increase in the coming quarters as the Company preparesfor the ISLA-101 Phase II clinical study.

In accordance with Listing Rule 4.7C, payments made to related parties and their associates included in items 6.1 of the Appendix 4C was A$149,000 and included Director fees, salary and superannuation for the CEO/Managing Director, Executive Chair and Non-executive directors.

Approved for release to the ASX by:

Dr Paul MacLeman

Executive Chairman

Island

Pharmaceuticals Ltd

[e-mail]

Investors and media, for further information, please contact:

Jane Lowe

IR Department Mobile: [phone]

[e-mail]

Island Pharmaceuticals Limited ACN 641 183 842 | Registered office: Suite 201, 697 Burke Rd, Camberwell VIC 3124, Australia Page 3 of 4

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About Island Pharmaceuticals

Island is a mid clinical-stage drug repurposing company, focused on the topical area of antiviraltherapeutics for infectious diseases. Our lead asset is ISLA-101, a drug with a well- established safety profile, being repurposed for the prevention and treatment of dengue2 fever and other mosquito (or vector) borne diseases. The Company is close to commencing a Phase 2a clinical trial in dengue-infected subjects.

If ISLA-101 achieves FDA approval, and certain other criteria are met, Isla may be eligible to obtain a "Priority Review Voucher" at the time of FDA approval. This means that as well as getting approval to manufacture and sell ISLA-101, the Priority Review Voucher (PRV) could permit Island to expedite the FDA approval process for a new drug or sell the PRV in a secondary market.

Island encourages all current investors to go paperless by registering their details with the Company's share registry, Automic Registry Services, whose contact info is housed on the Shareholder Services page of the Company's website.

Visitwww.islandpharmaceuticals.comfor more on Island.

Island Pharmaceuticals Limited ACN 641 183 842 | Registered office: Suite 201, 697 Burke Rd, Camberwell VIC 3124, Australia Page 4 of 4

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Rule 4.7B

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Name of entity

ISLAND PHARMACEUTICALS LIMITED
ABN	Quarter ended ("current quarter")
48 641 183 842	31 December 2021

Consolidated statement of cash flows	Current quarter	Year to date
			$A'000	(6 months)
				$A'000
1.	Cash flows from operating activities
1.1	Receipts from customers	-	-
1.2	Payments for
	(a)	research and development	(182)	(188)
	(b) product manufacturing and operating	-	-
		costs
	(c)	advertising and marketing	-	-
	(d)	leased assets	-	-
	(e)	staff costs	(64)	(127)
	(f) administration and corporate costs	(168)	(404)
1.3	Dividends received (see note 3)	-	-
1.4	Interest received	-	-
1.5	Interest and other costs of finance paid	-	-
1.6	Income taxes paid	-	-
1.7	Government grants and tax incentives	-	-
1.8	Other (provide details if material)	-	-
1.9	Net cash from / (used in) operating	(414)	(719)
	activities
2.	Cash flows from investing activities
2.1	Payments to acquire:
	(a)	entities	-	-
	(b)	businesses	-	-
	(c) property, plant and equipment	-	-
	(d)	investments	-	-
	(e)	intellectual property	-	-

ASX Listing Rules Appendix 4C (17/07/20)	Page 1
+ See chapter 19 of the ASX Listing Rules for defined terms.