Correspondence With Adam Feurstein Dear Shareholders

Correspondence With Adam Feurstein

Dear Shareholders –

In light of an article written today by Adam Feuerstein of The Street, we thought it best that we share with our shareholders a copy of our correspondence with Mr. Feuerstein. See below. We feel that we answered his questions forthrightly and that his piece was written based on a selective interpretation of the data.

Cellceutix believes strongly that Prurisol, the focus of Mr. Feuerstein’s article, showed a promising signal in the Phase 2 proof-of-concept trial to merit advancement to a powered Phase 2b trial. This ongoing trial is a randomized, double-blind, parallel-group, placebo-controlled study with approximately 189 patients anticipated to be enrolled and designed to show statistical significance. We anticipate reporting interim analysis in the 1st half of 2017.

A link to the Phase 2b trial assessing the efficacy and safety of Oral Prurisol in moderate-to-severe chronic plaque psoriasis can be found below:

https://clinicaltrials.gov/ct2/show/NCT02949388

We appreciate the continued support of Cellceutix shareholders and look forward to sharing more results as our first-in-class drug candidates continue to advance in later-stage clinical trials.

Sincerely,
Leo Ehrlich
Cellceutix, CEO

CORRESPONDENCE WITH ADAM FEUERSTEIN

From: Adam Feuerstein --
Leo --

Can you please clarify some of the data you've announced from the ph2 psoriasis study?

What percentage of patients in each of the 3 Prurisol dose arms achieved the ITT primary endpoint ( >=2 point improvement in IGA rating at 84 days). What was the corresponding response rate for the placebo arm?

Did any of the Prurisol doses demonstrate a statistically significant improvement over placebo on the primary endpoint, as measured by the ITT analysis?

Adam

CELLCEUTIX:

Hi Adam,

Thank you for the clinical questions that you sent to us at Cellceutix. Leo won’t be back until late this evening and asked me to reply. I’m glad to make your acquaintance. I was recruited by Cellceutix and joined in June 2016 as President and Chief Medical Officer. Previously at Novartis in Basel, Switzerland, the Cosentyx program was in my group, so I have significant experience with psoriasis clinical trials and know the challenges needed to cross the FDA finish line. With me, I brought along to Cellceutix another senior ex-Novartis team member. What compelled me to take the Cellceutix position was the very chart you sent Leo. It shows patients transitioning early on.

I believe most of your questions are answered in a slide-deck presented at a conference in September 2016 that can be accessed through our website or through the following link:

https://static1.squarespace.com/static/571535...2016-u.pdf

As far as the specific reasons for attrition, there were various reasons and we should have that information more readily available when our CSR is completed. The attrition rate at one site was significantly higher than the other sites.

Please note our ongoing Phase 2b is a powered study treating moderate-to-severe psoriasis. Total daily oral dosing is increase from Prurisol 200 mg to 300 mg per day, 400 mg per day, and placebo (3:1:3 randomization, respectively). The trial is a randomized, double-blind, parallel-group, placebo-controlled study with approximately 189 patients anticipated to be enrolled. Treatment duration is 12 weeks (84 days), with a post-treatment follow-up 4 weeks after the end of treatment.
Primary efficacy will be evaluated using PASI. Interim analysis of 6-week data with readout is anticipated in 2Q2017, with full study top-line results in 3Q2017.
We have selected a very capable CRO which I have used previously. The patient population of moderate-to-severe psoriasis is likely to have a more robust PASI 75 response than mild-to-moderate psoriasis. That is to be expected as the IGA (-2) decline was seen in greater numbers in moderate psoriasis patients than mild psoriasis patients in the Phase 2a study.

I would be happy to further address whatever I can in a tc if that would be helpful.

Kind regards,
Art

From: Adam Feuerstein
Is there a reason why Cellceutix hasn't disclosed the details of the phase 2a study more broadly than just dropping this slide deck onto the web site?
There are huge and troubling disparities between the negative data in the slide deck versus the way Leo and the company have described the Prurisol data publicly in press releases and SEC filings.
The study failed its primary endpoint.
The endpoint upon which you claim study success -- IGA response in the 200 mg dose at 84 weeks -- isn't pre-specified.
The 12.6 percentage point difference between Prurisol and placebo was not statistically significant. Four more responders numerically than placebo, with patients missing.... really?
At 12 weeks, placebo performed better than your 50 mg and 100 mg Prurisol dose arms. No dose response?
The AEs are alarming! Liver enzyme elevations all over the place. And now you're going to a higher dose?
How does these data gibe with anything Leo has said about the potential for this drug to be a competitor to Otezla?
Good luck with the next study.
Adam

CELLCEUTIX:

Hi Adam,

Thanks for looking at our data previously presented at a clinical meeting in Boston that we shared with you through our website and link. The Phase 2a study was a proof-of-concept. It was not a powered study and as such your comments regarding statistical significance don’t really apply. In such a study, the goal is to see the efficacy signal that we observed at 200mg and examine it more carefully as we are currently doing in our ongoing Phase 2b study. Our primary endpoint was specified in our criteria for evaluation in our protocol and was met in the 200mg group, suggesting that it will compare favorably against existing treatments. Please note that changes in liver function that you mentioned were also seen in the placebo group and make meaningful conclusions difficult.

I hope that you will look forward to the efficacy and safety data that we are generating in the ongoing Phase 2b study to answer the kinds of questions that you pose. Please stay tuned.

Thanks.

Kind regards,
Art

From: Adam Feuerstein

You didn't answer my questions.

Is there a reason why Cellceutix hasn't disclosed the details of the phase 2a study more broadly than just dropping this slide deck onto the web site?
How does these data gibe with anything Leo has said about the potential for this drug to be a competitor to Otezla?
Is there a reason why Cellceutix hasn't disclosed the details of the phase 2a study more broadly than just dropping this slide deck onto the web site?

CELLCEUTIX:

Please see:

Press releases:
http://www.cellceutix.com/press-release/2016/...onferences

http://www.cellceutix.com/press-release/2016/...y-endpoint

How does these data gibe with anything Leo has said about the potential for this drug to be a competitor to Otezla?

Otezla efficacy is only modest.

Kind regards,

Art