FulHold 2019-03-Investor-Update

Fulhold Pharma Ltd ‐ Investor Update March 2019

1. Belvedere Managed Funds in Administration:
This process has not yet been concluded but we have complied with everything we have been
asked to do, have not heard from any of the administrators or liquidators for nearly a year and
so as far as we are concerned there is nothing further about which to be concerned. About 20%
of the shares have already been distributed to the individual shareholders and we understand
that instructions should shortly be received to transfer the balance of the shares.

2. Regulatory Update:
a) MHRA (The UK Medicines and Healthcare products Regulatory Agency):
As the FDA made similar points to those of the MHRA and our initial Regulatory requirements
will be for a wound gel with significant U.S.‐based research and potential customer interest, we
decided to focus our efforts on the FDA submissions and use these later for MHRA / EMA
purposes.
b) FDA (The U.S. Food and Drugs Administration):
The FDA response to our submission was positive and their questions, in the main, are such that
we are confident in completing most of the work to their satisfaction. However, both the FDA
and the MHRA understood that CHD‐FA is a complex structure with many components and with,
notably, 23 ‘peaks’. In essence they are asking whether each component contributes to the
therapeutic response, and, if so, how and to what extent. This is an extremely difficult task and,
were we to embark on it, this might lead to a point where we were told to remove any
components or peaks which do NOT contribute efficacy – a situation we clearly must avoid.
Fortunately, Imelda Jordaan, our pharmacist, has recently completed research that has led us to
seek advice from the FDA in reclassifying CHD‐FA as a ‘Supramolecule’ This, in effect, would
dictate that CHD‐FA must be treated as an entity in itself and not a mixture, thus removing the
need for separate characterisations of each of the many compounds within it as would be the
case were CHD‐FA to continue to be viewed as a mixture. Imelda has just been awarded a PhD
for this work, which is both a fantastic achievement for her and a timely breakthrough for us!
Our request has been submitted to the FDA and we await further guidance from them, hopefully
before the end of March.

c) Recent Accreditations: During the last year the following Licences / registrations have
been renewed:
i. As a fully certified GMP facility for the manufacturing, formulation and packaging of
an Active Pharmaceutical Ingredient (API)
ii. Pharmacy Premises Licence
iii. Licence to Manufacture and Export Medicines
iv. Certification as a Disinfectant for the Food Industry (for our product, Fulvisan D for
which we have recently received test results showing it to be highly effective against
Listeria)
v. Halaal Certification ‐ renewal
vi. Food Safety Systems Certification (FSSC) – renewal
vii. Certification as 100% Organic ‐ renewal
Author: David Squire, March 2019

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viii. Registration as a Small/Medium Sized Enterprise (SME) with the European
Medicines Agency (EMA) – renewal
ix. SABS Renewal of SANS 1828 (1838 applied for) – Cleaning Chemicals for the Food
Industry.
x. We have had an application in with JECFA* for the last 2 years to have CHD‐FA
recognised as a Food Additive at a specific dosage. This is an intensive project with
regular interactions between the SA Department of Health and Fulvimed as only
governments can present to JECFA. Failures by and limitations of the SA government
have caused repeated delays but we persevere.
* JECFA is an international scientific expert committee administered jointly by the
Food and Agriculture Organization of the United Nations (FAO) and WHO.
xi. The application to have CHD‐FA included within the British Pharmacopeia as a new
drug has been completed and submitted. Uncertainty due to Brexit and the future
governance of the British / EU Pharmacopeia have cause delays in this process but
we are confident of a successful application in the medium term nonetheless.
d) Administration: South African Business Performance:
As you will all be aware from previous feedback, we went through an extremely difficult
period over the last 5 years; in fact, ever since the debacle with the listing and fund‐raising
failure. Coupled with this and ever since the sale of the Biobalance business to Ascendis we
have seen a steady decline in the sales by Ascendis. Unfortunately, we were contractually
bound and could do nothing for the first 3 years because of the exclusivity rights which
Ascendis held. After having the exclusivity revoked, we then entered the market and tried
via Dischem and although Dischem has been taking stock, since their first year there has
been no growth at all. Over the last 2 years we have been exploring various avenues and
opportunities to get back the share of market lost by Ascendis. Of the R15 million annual
sales lost we have recouped around R6 mill and hope that we can shortly get back to where
we were. Although the entry in to the Veterinary and especially the Agricultural markets are
at higher volumes of CHDFA the margins are lower.
The local cash flow position is extremely tight. We have lost the R6 mill that we had in
reserve and are managing at the moment on a month to month basis. On several months we
have had to call on shareholders to loan funds to keep the business going.
Currently with all our registrations we have an organisation structure to run a business that
can generate a turnover of R50 mill plus per annum with minor adjustment to the labour
force. If we reduce headcount then we will lose some of our registrations and so it is
critically imperative to improve our turnover and that is our priority.

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Although the news from the SA market is not great, we can confirm that we have been able
to keep our GMP status during this tough period. This is costly but we believe it is in our
long‐term interest. We urgently need the approvals from the FDA, as discussed in other
parts of this document, to come through; so that we can safely pursue the international
market.

e) Tax / year‐end accounting:
This is in the process of preparation / filing etc.

f) Location(s):
At this stage there is no change to our belief that the next plant we have to put up will be based
in the USA. We will make further plans after we understand the outcomes of our FDA meetings.

3. Research & Development / Opportunity Pipeline:

a) Veterinary:
Given the strong demand for products in both human and animal markets, Fulhold Pharma’s
strategy separates the animal and human health markets and has assigned a global license for
the use of CHDFA in the Animal Health sector to Fulvivet. Fulhold part‐owns the SA rights but
fully owns future international rights and registrations.
Current product lines developed and registered by Fulvivet include:
 A variety of feed additives containing CHDFA in combination with electrolytes, trace
elements, amino acids etc.;
 Topical antimicrobial wound treatment gels and sprays
 Topical anti‐inflammatory gels;
 Antibacterial and antifungal sanitizers, safe if ingested by animals, effective in farm
environments, production, packaging, packaging and logistics, etc.;
 Teat dip for teat infections; and
 Antibacterial Foot dip.
Fulvivet requires funding of $15 million to achieve the following objectives in the short to
medium term (1 to 3 years):
 Complete and formally appoint the management team (most management and technical
experts required have already been identified and confirmed involvement)
 Relocate business premises (away from current Fulhold Pharma premises)
 Proceed with global registration of current (+/‐ 12) products. This process can take between
3‐6 months per country / region (this process is already underway for some key products
discussed in this document)
 Establish global client partnerships (this process is already taking place)

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 Continue with current product development process
 Ensure company profitability
 Fulhold Pharma is in favour of pursuing a listing for the company in the short to medium
term (1 to 3 years) as a mechanism to allow maximum value creation and flexibility for
investors.
We are currently is discussions to raise the $15m from a group of U.S. investors in order to
pursue the approach described above.

b) Anti‐Inflammatory:
After a series of discussions, a team from Procter & Gamble’s OTC Anti‐Inflammatory division
began working on a set of research assays in October 2018 in order to assess CHD‐FA’s potential
as the active ingredient in one or more anti‐inflammatory products. We are expecting the results
of these tests in the next month.
c) Opportunity in India
A substantial Indian Pharmaceutical company offering products in the areas of cosmetic and
clinical dermatology contacted us about the potential use of CHD‐FA in a range of formulations.
They have already explored the benefits of fulvic acid but, fortunately for Fulhold, the Indian
Regulatory authorities rejected their application to use an ‘extracted’ fulvic acid supplied by a
company in New Zealand, citing the level of contaminants and impurities in their FA. This is
commercially very encouraging as well as reassuring that international Regulatory Authorities
are seen to be rejecting environmental fulvic acids and that CHD‐FA was chosen as potentially
the only pure form available.
We have had very positive and constructive discussions and are currently finalising a submission
to the Indian Regulators in collaboration with this group as well as arranging respective meetings
in Mumbai and Cape Town to discuss detailed terms and potential product ranges for sale in
India, Dubai, Sri Lanka, Bangladesh and Nepal. These would include dermatological formulations
as well as jointly approaching Indian ‘generic’ Pharma companies potentially to develop new
antibiotics.

d) Household Disinfectant Range:
Procter & Gamble conducted a series of studies on our household range but, for now, tell us that
they will stay with their current formulations.
In South Africa we launched the Happy Loo flush alternative and were let down very badly by
Two Oceans marketing. We have since taken on the marketing ourselves and hope this will now
move a bit more volume. We are tied into the drought‐stricken areas for this product but are
also branching out to commercial and industrial toilets.

e) Sports / Nutrition:
There have been / are several interested parties but we will not use valuable resource on pursuit
of this until we see a compelling opportunity and partner(s) worth pursuing.


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f) Food Industry:
Fulvisan D has turned out to be a great product but suffers the same delays as all other products
i.e.: Registration. We are currently in the process of SANS 1838 accreditation which should
improve this situation.

g) Novel Food / Food Additive / Ingredient:
This is all part of the FDA registration and discussions.

h) Alzheimer’s Disease
The ongoing work with CHD‐FA by Dr Frank Muller in George with CHD‐FA and Alzheimer’s
continues successfully albeit at the ‘anecdotal’ stage.

4. Infringement of Fulhold Patents:
As you will be aware we have for the last 2 years been trying to address patent infringements
against Fulvic Force who are selling their product “Fulvic Force” in the SA market. The product is
made from coal and is full of contaminants. Our current problem is that to be able to take on Fulvic
Force in the courts we have to make adjustments to our patents for which we currently do not
have the necessary funding. Instead, our approach is to take them on in the market. Our new
website, to which all our customers will be linked, is designed to help us succeed in this endeavour
and you will be alerted to its launch in the coming weeks.

Regards,
David, Hans & Stephen


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