$DFFN Final FDA Guidance for TSC Phase 3 Clinical in Glioblastoma

Expects to Begin Trial by Year-End

CHARLOTTESVILLE, Va., Oct. 17, 2017 — Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN) (“Diffusion” or “the Company”), a clinical-stage biotechnology company focused on extending the life expectancy of cancer patients, announced that it has received final protocol guidance from the U.S. Food and Drug Administration (FDA) for a Phase 3 clinical trial with the Company’s lead compound trans sodium crocetinate (TSC) in patients newly diagnosed with inoperable glioblastoma multiforme (GBM), a type of brain cancer. The Company has responded to all outstanding points raised by the FDA and plans to begin the trial under the protocol agreed to by the FDA by the end of 2017.  The trial will compare survival at two years of patients receiving TSC concurrent with chemotherapy and radiation (standard of care, or SOC), with patients receiving SOC alone.

“Following a series of interactions with the FDA, we are gratified to have an agreed-upon protocol and to be preparing to start our TSC Phase 3 trial in patients newly diagnosed with inoperable GBM,” said David Kalergis, Chief Executive Officer of Diffusion Pharmaceuticals.  “As previously announced, we have engaged the contract research organization to oversee this trial and have completed the Phase 3 TSC drug production run to FDA standards.  On our way to opening an anticipated total of 100 sites across the U.S. and Europe, we have 17 initial sites selected in the U.S., all under one Institutional Review Board, and first patients are expected to be enrolled this year.”

Mr. Kalergis continued, “This Phase 3 study will focus on treating newly diagnosed GBM patients who have been judged by their medical team to be inoperable because of the size or location of the tumor. In Diffusion’s Phase 2 proof-of-concept trial, the inoperable GBM patients who were treated with TSC plus standard of care showed a nearly four-fold increase in survival at two years compared with standard of care patients only. Due to their poor prognoses, inoperable patients are often excluded from GBM clinical trials and have usually been treated with radiation and chemotherapy only. We are excited to bring a new treatment possibility to patients with inoperable GBM, and look forward to beginning the trial.”

About the Glioblastoma Multiforme Phase 3 Trial

The Phase 3 trial is a randomized, controlled registration trial with TSC and SOC chemotherapy and radiation, compared with SOC alone in newly diagnosed inoperable GBM patients.  The primary endpoint is overall survival, either after a predetermined number of patient deaths or following successful results of an optional interim analysis. Secondary endpoints include progression-free survival (PFS) and objective response rate (ORR; tumor response) using RANO criteria, as well as patient performance scoring (Karnofsky Performance Scale; KPS), Quality of Life (EQ-5D-5L questionnaire) and corticosteroid and anticonvulsant usage.

A total of 236 patients will be randomized 1:1 at 100 clinical sites (54 U.S., 46 EU).  TSC will be dosed three times each week for six weeks concurrent with standard radiation and chemotherapy as initial treatment. This will be followed by one month of rest and then adjuvant chemotherapy consisting of six monthly cycles of TSC and temozolomide given for the first week of each cycle.  As such, 18 doses of TSC will be administered during initial treatment and another 18 doses will be administered during adjuvant treatment to those so randomized.

About Treatment-Resistant Cancers and TSC

Oxygen deprivation at the cellular level (hypoxia) is the result of rapid tumor growth, causing the tumor to outgrow its blood supply.  Cancerous tumor cells thrive with hypoxia and the resultant changes in the tumor microenvironment cause the tumor to become resistant to radiation therapy and chemotherapy. Using a novel, proprietary mechanism of action, Diffusion’s lead drug TSC counteracts tumor hypoxia – and therefore treatment-resistance – by safely re-oxygenating tumor tissue, thus enhancing tumor kill and potentially prolonging patient life expectancy. Oxygen levels of normal tissue remain unaffected upon administration of TSC, thereby avoiding the introduction of harmful side effects.

About Diffusion Pharmaceuticals Inc.

Diffusion Pharmaceuticals Inc. is a clinical-stage biotechnology company focused on extending the life expectancy of cancer patients by improving the effectiveness of current standard-of-care treatments including radiation therapy and chemotherapy. Diffusion is developing its lead product candidate, trans sodium crocetinate, for use in the many cancers where tumor hypoxia (oxygen deprivation) is known to diminish the effectiveness of SOC treatments. TSC targets the cancer’s hypoxic micro-environment, re-oxygenating treatment-resistant tissue and making the cancer cells more vulnerable to the therapeutic effects of SOC treatments without the apparent addition of any serious side effects.

A Phase 2 clinical program was completed in the second quarter of 2015 and evaluated 59 patients with newly diagnosed glioblastoma multiforme, a type of brain cancer. This open-label, historically controlled study demonstrated a favorable safety and efficacy profile for TSC combined with SOC, including a 37% improvement in overall survival compared with the control group at two years.  A particularly strong efficacy signal was seen in the subset of inoperable patients where survival of TSC-treated patients at two years was nearly four-fold higher compared with the controls. Due to its novel mechanism of action, TSC has safely re-oxygenated a range of tumor types in preclinical and clinical studies.  Diffusion believes the therapeutic potential of TSC is not limited to specific tumors, thereby making it potentially useful to improve SOC treatments of other life-threatening cancers.  Additional planned studies include Phase 2 trials in pancreatic cancer and brain metastases, with study initiation subject to receipt of additional funding or collaborative partnering. The Company also believes that TSC has potential application in other indications involving hypoxia, such as neurodegenerative diseases and emergency medicine

Forward-Looking Statements

To the extent any statements made in this news release deal with information that is not historical, these are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the company’s plans, objectives, expectations  and intentions with respect to future operations and products, the potential of the company’s technology and product candidates, the anticipated timing of future clinical trials and protocol review, and other statements that are not historical in nature, particularly those that utilize terminology such as “would,” “will,” “plans,” “possibility,” “potential,” “future,” “expects,” “anticipates,” “believes,” “intends,” “continue,” “expects,” other words of similar meaning, derivations of such words and the use of future dates. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Uncertainties and risks may cause the company’s actual results to be materially different than those expressed in or implied by such forward-looking statements. Particular uncertainties and risks include: general business and economic conditions; the company’s need for and ability to obtain additional financing; and the difficulty of developing pharmaceutical products, obtaining regulatory and other approvals and achieving market acceptance, and the various risk factors (many of which are beyond Diffusion’s control) as described under the heading “Risk Factors” in Diffusion’s filings with the United States Securities and Exchange Commission. All forward-looking statements in this news release speak only as of the date of this news release and are based on management’s current beliefs and expectations. Diffusion undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Contacts:
David Kalergis, CEO
Diffusion Pharmaceuticals Inc.
(434) 220-0718
dkalergis@diffusionpharma.com
or
LHA Investor Relations
Kim Sutton Golodetz
(212) 838-3777
kgolodetz@lhai.com