Processa Pharmaceuticals, Inc. (PCSA) Initiation Report

October 28, 2020 Processa Pharmaceuticals, Inc. Page 7 of 16 ALPHA SELECT LIST Institutional Research Figure 4: Side Effect Profile of Pentoxifylline Source: Wee, E., & Kelly, R., 2015. Pentoxifylline: An effective therapy for necrobiosis lipoidica. Australasian Journal of Dermatology, 58(1), 65–68. The FDA granted orphan-drug designation for PCS499 to treat NL in June 2018. The Company conducted a Phase IIa study that completed its last patient visit in February 2020, and subsequently met with the FDA in March 2020 to discuss the clinical program. The Company will begin a randomized, placebo-controlled Phase IIb study in Q1 2021 to better understand the potential response of NL patients on PCS499 versus placebo. Clinical Study Below is a summary of the design and results of PCSA’s Phase II study of PCS499 in NL. The open label study planned to include a subset of patients with the more severe form of uNL. The results for these 2 uNL patients were excellent, showing complete closure of the primary ulceration, as well as closure of secondary ulcerations that occurred due to trauma while the trial was ongoing. Based on the data, we believe the future Phase IIb study will focus on this patient population of more severe NL cases. Individualized patient baseline characteristics and results might elucidate why we didn’t see more improvement in the patients with mild-moderate NL. The prior research showing that early introduction of pentoxifylline in the NL disease course could be beneficial was in patients with 2 year and 18 month histories of NL with no evidence of active NL at 7 months and 12 months, respectively, from the start of their treatment with pentoxifylline. In addition to length of NL history, lesion size, study timeframe, and prior therapies may have been other factors impacting PCSA’s results.