UNITED STATESSECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549










FORM 20-F










| ̈ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------------------



OR



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------



For the fiscal year ended September
30, 2017



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from 
to



OR



| ̈ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------------



Date of event requiring this shell company
report



Commission file number:










ESSA Pharma
Inc.

(Exact name of Registrant as specified
in its charter)










Not Applicable

(Translation of Registrant’s name
into English)



British Columbia, Canada

(Jurisdiction of incorporation or organization)



Suite 720, 999 West Broadway, Vancouver,
British Columbia, Canada, V5Z 1K5

(Address of principal executive offices)










David Wood, Chief Financial Officer;
Tel (778) 331-0962; Fax (604) 738-4080
Suite 720, 999 West Broadway, Vancouver, British Columbia, Canada, V5Z 1K5

(Name, Telephone, E-mail, and/or Facsimile
number and Address of Company Contact Person)



Securities registered or to be registered
pursuant to Section 12(b) of the Act:



|Title of Each Class |  | Name of each exchange on which registered
|------------------- |  | -----------------------------------------
|Common Shares       |  | NASDAQ Capital Market                    



Securities registered or to be registered
pursuant to Section 12(g) of the Act: None



Securities for which there is a reporting
obligation pursuant to Section 15(d) of the Act: None










Indicate the number of outstanding shares of each of the issuer’s
classes of capital or common stock as of the close of the period covered by the annual report: Not applicable



Indicate by check mark whether Registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act     Yes     ̈    No  x



If this report is an annual or transition report, indicate by
check mark if Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.     Yes     ̈    No  x



Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes   x   No     ̈



Indicate by check mark whether the Registrant (1) has submitted
electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such period that the registrant
was required to submit and post such files).     Yes    ̈    No    ̈



Indicate by check mark whether Registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “accelerated filer”,
“large accelerated filer”, and “emerging growth company” in Rule 12b-2 of the Exchange Act



|Large accelerated Filer  ̈ | Accelerated Filer  ̈ | Non-accelerated Filer  ̈ | Emerging growth company x
|------------------------- | ------------------- | ----------------------- | -------------------------



Indicate by check mark which basis of accounting the Registrant
has used to prepare the financial statements included in this filing:



|U.S. GAAP  ̈ | International Financial Reporting Standards as issued by
                           the International Accounting Standards Board x | Other  ̈
|----------- | ---------------------------------------------------------------------------------------------------------------------------------- | -------



If “Other” has been check in response to the previous
question, by check mark which financial statement item Registrant has elected to follow:    Item 17  ̈    Item 18  ̈



If this is an annual report, indicate by check mark whether
Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes    ̈   No   x


















TABLE OF CONTENTS



|GENERAL MATTERS                                      | 1                                                                           
|---------------------------------------------------- | ----------------------------------------------------------------------------
|                                                     |                                                                             
|CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | 1                                                                           
|                                                     |                                                                             
|GLOSSARY OF TERMS                                    | 6                                                                           
|                                                     |                                                                             
|PART I                                               | 9                                                                           
|                                                     |                                                                             
|ITEM 1.                                              | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                       
|ITEM 2.                                              | OFFER STATISTICS AND EXPECTED TIMETABLE                                     
|ITEM 3.                                              | KEY INFORMATION                                                             
|ITEM 4.                                              | INFORMATION ON THE COMPANY                                                  
|ITEM 4A                                              | UNRESOLVED STAFF COMMENTS                                                   
|ITEM 5.                                              | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                
|ITEM 6.                                              | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                  
|ITEM 7.                                              | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                           
|ITEM 8.                                              | FINANCIAL INFORMATION                                                       
|ITEM 9.                                              | THE OFFER AND LISTING                                                       
|ITEM 10.                                             | ADDITIONAL INFORMATION                                                      
|ITEM 11.                                             | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                  
|ITEM 12.                                             | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                      
|                                                     |                                                                             
|PART II                                              |                                                                             
|                                                     |                                                                             
|ITEM 13.                                             | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                             
|ITEM 14.                                             | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|ITEM 15.                                             | CONTROLS AND PROCEDURES                                                     
|ITEM 16A                                             | AUDIT COMMITTEE FINANCIAL EXPERT                                            
|ITEM 16B                                             | CODE OF ETHICS                                                              
|ITEM 16C                                             | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                      
|ITEM 16D                                             | EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES                      
|ITEM 16E                                             | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS      
|ITEM 16F                                             | CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT                                
|ITEM 16G                                             | CORPORATE GOVERNANCE                                                        
|ITEM 16H                                             | MINE SAFETY DISCLOSURE                                                      
|                                                     |                                                                             
|PART III                                             |                                                                             
|                                                     |                                                                             
|ITEM 17.                                             | FINANCIAL STATEMENTS                                                        
|ITEM 18.                                             | FINANCIAL STATEMENTS                                                        
|ITEM 19.                                             | EXHIBITS                                                                    



i







GENERAL
MATTERS



In this Annual Report on Form 20-F (“Annual Report”),
all references to the “Company”, “ESSA”, “our”, “us”
or “we” refer to ESSA Pharma Inc. and its subsidiary, unless the context clearly requires otherwise. Certain
terms used herein are defined in the text and others are included in the glossary of terms. See “Glossary of Terms”.



ESSA uses the United States dollar
as its reporting currency. All references to “$” or “US$” are to United States dollars and
references to “C$” are to Canadian dollars. On December 11, 2017 the noon exchange rate for the conversion
of Canadian dollars into U.S. dollars as reported by the Bank of Canada was C$1.00 = US$0.7780. See also Item 3 - “Key
Information” for more detailed currency and conversion information.



CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS



This Annual Report includes certain
statements that are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation
Reform Act and applicable Canadian securities laws. All statements in this Annual Report, other than statements of historical
facts, are forward-looking statements. These statements appear in a number of different places in this Annual Report and can be
identified by words such as “anticipates”, “estimates”, “projects”, “expects”,
“intends”, “believes”, “plans”, “will”, “could”, “may”,
“projects”, or their negatives or other comparable words. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially
different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements.
Examples of such forward-looking statements include, but are not limited to:



| | · | the Company’s ability to obtain funding for operations, including research funding;
| | - | -----------------------------------------------------------------------------------



| | · | the initiation, timing, cost, progress and success of ESSA’s research and development programs, preclinical studies and clinical trials;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------



| | · | the therapeutic benefits, properties, effectiveness and safety of the Company’s potential future product candidates, including the expected benefits, properties, effectiveness and safety of the Company’s next-generation Aniten compounds;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the Company’s ability to advance its potential future product candidates into, and successfully complete, clinical trials;
| | - | --------------------------------------------------------------------------------------------------------------------------



| | · | the Company’s ability to achieve profitability;
| | - | -----------------------------------------------



| | · | the Company’s ability to recruit sufficient numbers of patients for future clinical trials, and the benefits expected therefrom;
| | - | --------------------------------------------------------------------------------------------------------------------------------



| | · | the Company’s ability to establish and maintain relationships with collaborators with acceptable development, regulatory and commercialization expertise and the benefits to be derived from such collaborative efforts;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the implementation of the Company’s business model and strategic plans;
| | - | -----------------------------------------------------------------------



| | · | the Company’s ability to identify, develop and commercialize product candidates;
| | - | --------------------------------------------------------------------------------



| | · | the Company’s commercialization, marketing and manufacturing capabilities and strategy;
| | - | ---------------------------------------------------------------------------------------



| | · | the Company’s ability to protect its intellectual property and operate its business without infringing upon the intellectual property rights of others;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the Company’s expectations regarding federal, state, provincial and foreign regulatory requirements, including the Company’s plans with respect to anticipated regulatory filings;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



1







| | · | whether the Company will receive, and the timing and costs of obtaining, regulatory approvals in the United States, Canada, the European Union and other jurisdictions;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the accuracy of the Company’s estimates of the size and characteristics of the markets that may be addressed by the Company’s potential future product candidates;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the rate and degree of market acceptance and clinical utility of the Company’s potential future product candidates, if any;
| | - | ---------------------------------------------------------------------------------------------------------------------------



| | · | the timing of, and the Company’s ability and the Company’s collaborators’ ability, if any, to obtain and maintain regulatory approvals for the Company’s potential future product candidates;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the Company’s expectations regarding market risk, including interest rate changes and foreign currency fluctuations;
| | - | --------------------------------------------------------------------------------------------------------------------



| | · | the Company’s ability to engage and retain the employees required to grow its business;
| | - | ---------------------------------------------------------------------------------------



| | · | the compensation that is expected to be paid to the Company’s employees;
| | - | ------------------------------------------------------------------------



| | · | the Company’s future financial performance and projected expenditures;
| | - | ----------------------------------------------------------------------



| | · | developments relating to the Company’s competitors and its industry, including the success of competing therapies that are or may become available; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | estimates of the Company’s expenses, future revenue, capital requirements and its needs for additional financing.
| | - | -----------------------------------------------------------------------------------------------------------------



Such statements reflect ESSA’s current views with respect
to future events, are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that
are inherently subject to significant medical, scientific, business, economic, competitive, political and social uncertainties
and contingencies. Many factors could cause ESSA’s actual results, performance or achievements to be materially different
from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements. In making
the forward looking statements included in this Annual Report, the Company has made various material assumptions, including but
not limited to:



| | · | the Company’s ability to identify a product candidate;
| | - | ------------------------------------------------------



| | · | the Company’s ability to obtain approval to commence a clinical trial;
| | - | ----------------------------------------------------------------------



| | · | the Company’s ability to obtain positive results of its research and development activities, including clinical trials;
| | - | -----------------------------------------------------------------------------------------------------------------------



| | · | the Company’s ability to obtain required regulatory approvals;
| | - | --------------------------------------------------------------



| | · | the Company’s ability to successfully out-license or sell its future products, if any, and in-license and develop new products;
| | - | -------------------------------------------------------------------------------------------------------------------------------



| | · | favorable general business and economic conditions;
| | - | ---------------------------------------------------



| | · | the availability of financing on reasonable terms;
| | - | --------------------------------------------------



| | · | the Company’s ability to attract and retain skilled staff;
| | - | ----------------------------------------------------------



2







| | · | market competition;
| | - | -------------------



| | · | the products and technology offered by the Company’s competitors; and
| | - | ---------------------------------------------------------------------



| | · | the Company’s ability to protect patents and proprietary rights.
| | - | ----------------------------------------------------------------



In evaluating forward-looking statements, current and prospective
shareholders should specifically consider various factors, including the risks outlined herein under the heading “Risk
Factors” in Item 3 of this Annual Report. Some of these risks and assumptions include, among others:



| | · | uncertainty as to the Company’s ability to raise additional funding;
| | - | --------------------------------------------------------------------



| | · | the Company’s ability to continue as a going concern;
| | - | -----------------------------------------------------



| | · | the Company’s incurrence of significant losses in every quarter since its inception and anticipation that it will continue
to incur significant losses in the future;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | risks related to raising additional capital, which may include dilution to the Company’s existing shareholders, restrictions
on the Company’s operations or requirements to relinquish rights to ESSA’s technologies or any future product candidates;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the Company’s limited operating history;
| | - | ----------------------------------------



| | · | risks related to the Company's ability to comply with the CPRIT Agreement;
| | - | --------------------------------------------------------------------------



| | · | uncertainty as to the Company’ ability to generate sufficient cash to service its indebtedness, which currently consists
of its capital term loan facility with Silicon Valley Bank;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the Company’s ability to identify a product candidate through preclinical studies;
| | - | ----------------------------------------------------------------------------------



| | · | the Company’s future success is dependent primarily on identification through preclinical studies, the regulatory approval,
and commercialization of a single product candidate;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | risks related to the Company’s ability to continue to license its product candidates or technology from third parties;
| | - | ----------------------------------------------------------------------------------------------------------------------



| | · | uncertainty related to the Company’s ability to obtain required regulatory approvals for ESSA’s proposed products;
| | - | ------------------------------------------------------------------------------------------------------------------



| | · | the Company’s ability to successfully develop potential future product candidates in a timely manner;
| | - | -----------------------------------------------------------------------------------------------------



| | · | the Company's ability to successfully commercialize future product candidates;
| | - | ------------------------------------------------------------------------------



| | · | the possibility that the Company’s potential future product candidates may have undesirable side effects:
| | - | ---------------------------------------------------------------------------------------------------------



| | · | risks related to clinical drug development;
| | - | -------------------------------------------



| | · | risks related to the Company’s ability to conduct a clinical trial or submit a future NDA/NDS or IND/CTA (each, as defined
herein);
| | - | -----------------------------------------------------------------------------------------------------------------------------------



| | · | risks related to the Company’s ability to enroll subjects in clinical trials;
| | - | -----------------------------------------------------------------------------



3







| | · | risks that the FDA (as defined herein) may not accept data from trials conducted in such locations outside the United States;
| | - | -----------------------------------------------------------------------------------------------------------------------------



| | · | risks related to the Company’s ongoing obligations and continued regulatory review;
| | - | -----------------------------------------------------------------------------------



| | · | risks related to potential administrative or judicial sanctions;
| | - | ----------------------------------------------------------------



| | · | the risk of increased costs associated with prolonged, delayed or terminated clinical trials;
| | - | ---------------------------------------------------------------------------------------------



| | · | risks related to the Company’s failure to obtain regulatory approval in international jurisdictions;
| | - | ----------------------------------------------------------------------------------------------------



| | · | risks related to recently enacted and future legislation in the United States that may increase the difficulty and cost for
the Company to obtain marketing approval of, and commercialize, its potential future products and affect the prices the Company
may obtain;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | risks related to new legislation, new regulatory requirements, and the continuing efforts of governmental and third party payors
to contain or reduce the costs of healthcare;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the risk that third parties may not carry out their contractual duties;
| | - | -----------------------------------------------------------------------



| | · | the possibility that the Company’s relationships with CROs (as defined herein) may terminate;
| | - | ---------------------------------------------------------------------------------------------



| | · | risks related to the Company’s lack of experience manufacturing product candidates on a large clinical or commercial
scale and its lack of manufacturing facility;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the Company’s reliance on proprietary technology;
| | - | -------------------------------------------------



| | · | the Company may not be able to protect its intellectual property rights throughout the world;
| | - | ---------------------------------------------------------------------------------------------



| | · | claims by third parties asserting that the Company, or its employees have misappropriated their intellectual property, or claiming
ownership of what the Company regards as its intellectual property;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | risks related to the Company's ability to manage growth;
| | - | --------------------------------------------------------



| | · | risks related to the Company’s ability to attract and maintain highly-qualified personnel;
| | - | ------------------------------------------------------------------------------------------



| | · | risks related to potential conflicts of interest between the Company and its directors and officers;
| | - | ----------------------------------------------------------------------------------------------------



| | · | competition from other biotechnology and pharmaceutical companies;
| | - | ------------------------------------------------------------------



| | · | risks related to movements in foreign currency exchange rates;
| | - | --------------------------------------------------------------



| | · | third-party coverage and reimbursement and health care cost containment initiatives and treatment guidelines may constrain
the Company’s future revenues;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | risks related to the Company’s ability to convince public payors and hospitals to include ESSA’s potential future
products on their approved formulary lists;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | risks related to the Company’s ability to establish an effective sales force and marketing infrastructure, or enter into
acceptable third-party sales and marketing or licensing arrangements;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | risks related to the Company’s ability to achieve or maintain expected levels of market acceptance for its products;
| | - | --------------------------------------------------------------------------------------------------------------------



4







| | · | risks related to the Company’s ability to realize benefits from acquired businesses or products or form strategic alliances
in the future;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------



| | · | risks related to collaborations with third parties;
| | - | ---------------------------------------------------



| | · | risks that employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards
and requirements, which could cause significant liability for ESSA and harm its reputation;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | risks related to product liability lawsuits;
| | - | --------------------------------------------



| | · | risks related to computer system failures;
| | - | ------------------------------------------



| | · | business disruptions that could seriously harm the Company’s future revenues and financial condition and increase ESSA’s
costs and expenses;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------



| | · | compulsory licensing and/or generic competition;
| | - | ------------------------------------------------



| | · | risks related to the Company’s dependence on the use of information technologies;
| | - | ---------------------------------------------------------------------------------



| | · | risks related to the increased costs and effort as a result of ESSA becoming a public company;
| | - | ----------------------------------------------------------------------------------------------



| | · | risks inherent in foreign operations;
| | - | -------------------------------------



| | · | laws and regulations governing international operations may preclude the Company from developing, manufacturing and selling
certain product candidates outside of the United States and Canada and require ESSA to develop and implement costly compliance
programs;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | risks related to laws that govern fraud and abuse and patients' rights;
| | - | -----------------------------------------------------------------------



| | · | risks related to the Company’s ability to comply with environmental, health and safety laws and regulations;
| | - | ------------------------------------------------------------------------------------------------------------



| | · | risks related to the different disclosure obligations for a U.S. domestic reporting company and a foreign private issuer such
as ESSA;
| | - | --------------------------------------------------------------------------------------------------------------------------------------



| | · | risks relating to the Company’s ability to maintain its status as a foreign private issuer in the future;
| | - | ---------------------------------------------------------------------------------------------------------



| | · | the risk that the Company could become a “passive foreign investment company;”
| | - | ------------------------------------------------------------------------------



| | · | risks related to the Company’s status as an emerging growth company;
| | - | --------------------------------------------------------------------



| | · | risks related to United States investors' ability to effect service of process or enforcement of actions against the Company;
| | - | -----------------------------------------------------------------------------------------------------------------------------



| | · | risks related to the Company's dividend policy;
| | - | -----------------------------------------------



| | · | risks associated with future sales of the Company’s securities;
| | - | ---------------------------------------------------------------



| | · | risks related to the Company’s ability to implement and maintain effective internal controls;
| | - | ---------------------------------------------------------------------------------------------



| | · | risks related to the Company's ability to maintain an active trading market for its Common Shares;
| | - | --------------------------------------------------------------------------------------------------



| | · | share price volatility associated with the Company’s thinly traded common shares;
| | - | ---------------------------------------------------------------------------------



5







| | · | risks related to market price and trading volume volatility; and
| | - | ----------------------------------------------------------------



| | · | risks related to analyst coverage.
| | - | ----------------------------------



Should one or more of these risks or uncertainties, or a risk
that is not currently known to ESSA, materialize, or should assumptions underlying those forward-looking statements prove incorrect,
actual results may vary materially from those described herein. These forward-looking statements are made as of the date of this
Annual Report and the Company does not intend, and do not assume any obligation, to update these forward-looking statements, except
as required by applicable securities laws. Investors are cautioned that forward-looking statements are not guarantees of future
performance and are inherently uncertain. Accordingly, investors are cautioned not to put undue reliance on forward-looking statements.



The Company advises you that these cautionary remarks expressly
qualify in their entirety all forward-looking statements attributable to the Company or persons acting on its behalf.



GLOSSARY
OF TERMS



As used in this Annual Report, the following terms have the
respective meaning as specified below:



“2015 Special Warrants Financing” means the
4,363,634 special warrants of the Company issued on January 16, 2015 at a price of US$2.75 per 2015 Special Warrant for gross
proceeds of approximately US$12,000,000;



“ADME” means absorption, distribution, metabolism,
and excretion;



“Aniten” refers to the Company’s proprietary
series of compounds, a unique name granted to the Company by the United States Adopted Names Council ("USAN");



“AR” means androgen receptor;



“Articles” means the Articles of the Company;



“Astellas” means Astellas Pharma Inc.;



“Audit Committee” means the Company’s
audit committee;



“Auditor” means Davidson & Company
LLP;



“BC Cancer Agency” means the British Columbia
Cancer Agency;



“Bloom Burton” means Bloom Burton &
Co. Limited;



“Bloom Burton Warrants” means the 25,000
warrants issued to Bloom Burton Healthcare Structured Lending Fund to purchase 25,000 Common Shares at an exercise price of $2.00
per Common Share and expiring on April 15, 2019;



“Board” means the board of directors of ESSA;



“CBP” means CREB-binding protein;



“CEO” means Chief Executive Officer;



“CFO” means Chief Financial Officer;



“CFPOA” means the Canadian Corruption of
Foreign Public Officials Act;



6







“cGMP” means current Good Manufacturing Practice;



“CMO” means Chief Medical Officer;



“CMS” means Centers for Medicare &
Medicaid Services;



“Common Shares” means the common shares in
the capital of the Company;



“Convertible Debenture” has the meaning given
to it under the heading “History and development of the Company” in Item 4 of this Annual Report;



“COO” means Chief Operating Officer;



“CPRIT” means the Cancer Prevention and Research
Institute of Texas;



“CPRIT Agreement” refers to the CPRIT Grant
Agreement executed by the Chief Executive Officer of CPRIT on July 9, 2014;



“CPRIT Grant” has the meaning given to it
under the heading “History and development of the Company” in Item 4 of this Annual Report;



“CRO” means Contract Research Organizations;



“CRPC” means castration-resistant prostate
cancer;



“CTA” means Clinical Trial Application, the
approval of which is the key step in obtaining Canadian regulatory approval to commence clinical trials in Canada. It is similar
to the IND application submitted to the FDA in the United States;



“EMA” means European Medicine Agency;



“ESSA Texas” means ESSA Pharmaceuticals Corp.,
a corporation existing under the laws of the State of Texas;



“FCPA” means the U.S. Foreign Corrupt Practices
Act;



“FDA” means the U.S. Food and Drug Administration;



“GCP” means Good Clinical Practices;



“GLP” means Good Laboratory Practices;



“GMP” means Good Manufacturing Practices;



“Guidelines” means National Policy 58-201
– Corporate Governance Guidelines;



“HIPAA” means the U.S. Health Insurance Portability
and Accountability Act of 1996;



“IFRS” means International Financial Reporting
Standards, as issued by the International Accounting Standards Board;



“in vitro” means experimentation in a test
tube, or, generally, in a controlled environment outside a living organism;



“in vivo” means experimentation done in or
on the living tissue of a whole, living organism as opposed to a partial or dead one;



“IND” means Investigational New Drug;



7







“IRB” means Institutional Review Boards;



“LBD” means the ligand-binding domain of
the androgen receptor;



“LHRH” means Luteinizing hormone releasing
hormone;



“License Agreement” means the licensing agreement
between the Company and the Licensors dated December 22, 2010, and amended on February 10, 2011 and May 27, 2014,
for certain patent rights and technology related to the Licensed IP, as further described under the heading “Patents and
Proprietary Rights” in Item 4 of this Annual Report;



“Licensed IP” has the meaning given to it
under the heading “History and development of the Company- Patents and Proprietary Rights” in Item 4
of this Annual Report;



“Licensors” means UBC and the BC Cancer Agency;



“Liquidity Event” has the meaning given to
it in the Articles;



“MMA” means the U.S. Medicare Modernization
Act;



“NASDAQ” means one of the NASDAQ Global Select
Market, the NASDAQ Global Market or the NASDAQ Capital Market market tiers of the NASDAQ Stock Market LLC (a U.S. national securities
exchange);



“NDA” means New Drug Application;



“NDS” means New Drug Submission;



“NEO” means Named Executive Officer;



“NI 52-109” means National Instrument 52-109
– Certification of Disclosure in Issuers’ Annual and Interim Filings of the Canadian Securities Administrators;



“NI 52-110” means National Instrument 52-110
– Audit Committees;



“NI 58-101” means National Instrument 58-101
– Disclosure of Corporate Governance Practices;



“NTD” means amino-terminal domain;



“Options” means options to acquire Common
Shares;



“PARP” means poly ADP ribose polymerase;



“Penalty Conversion Ratio” has the meaning
given to it under the heading “Outstanding Security Data”;



“PFIC” means a passive foreign investment
company;



“Preferred Shares” means the Class A
preferred shares in the capital of the Company;



“Project” means ESSA’s development
of EPI-506 towards completion of Phase I/II clinical proof-of-concept;



“PSA” means prostate-specific antigen;



“QEF” means qualified electing fund;



“R&D” means research and development;



8







“Recognized Exchange” means, collectively,
the Toronto Stock Exchange, the TSX-V, the NASDAQ Stock Market, the New York Stock Exchange, any other equity market based in North
America having listing standards similar to those of the TSX-V as determined by the Board in its sole discretion, acting reasonably
or any other equity market as may be approved by holders representing at least 66 and 2/3 % of the issued and outstanding
Preferred Shares;



“SAR” means structure-activity relationship;



“Sarbanes-Oxley” means the Sarbanes-Oxley
Act of 2002;



“SCID” means Severe Combined Immunodeficiency;



“SEDAR” means the System for Electronic Document
Analysis and Retrieval;



“SEC” means the U.S. Securities and Exchange
Commission;



“Special Warrant Agent” means Computershare
Trust Company of Canada;



“Stock Option Plan” means the stock option
plan of the Company dated May 21, 2015;



“TPD” means the Therapeutic Products Division
of Health Canada;



“TSX” means the Toronto Stock Exchange;



“TSX-V” means the TSX Venture Exchange;



“UBC” means the University of British Columbia;



“USAN” means the United States Adopted Names
Council;



“U.S.” means the United States of America;
and



“U.S. Anti-Kickback Statute” refers to the
federal Anti-Kickback Statute, which is a criminal statute that prohibits the exchange of anything of value in an effort to induce
or reward the referral of federal health care program business.



PART
I



| | ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
| | ------- | -----------------------------------------------------



| | A. | Directors and Senior Management
| | -- | -------------------------------



Not applicable.



| | B. | Advisors
| | -- | --------



Not applicable.



| | C. | Auditors
| | -- | --------



Not applicable.



| | ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE
| | ------- | ---------------------------------------



Not applicable.



9







| | ITEM 3. | KEY INFORMATION
| | ------- | ---------------



| | A. | Selected Financial Data
| | -- | -----------------------



The following table sets forth selected consolidated financial
information for the periods indicated, prepared in accordance with IFRS. In 2013, the Company changed its fiscal year end from
December 31 to September 30, commencing with the 2013 fiscal year and to continue each year going forward. The selected
consolidated financial information as at and for the nine months ended September 30, 2013 and as at and for the years ended
September 30, 2017, September 30, 2016, September 30, 2015, and September 30, 2014 has been derived from ESSA’s
audited financial statements and accompanying notes.



The selected consolidated financial information should be read
in conjunction with “Management’s Discussion and Analysis” and the audited financial statements and accompanying
notes contained elsewhere in this Annual Report. The selected consolidated financial information set out below may not be indicative
of ESSA’s future performance.





|Figures in US$ unless stated otherwise                  |  | Year Ended September 30, 2017 |             |   | Year Ended September 30, 2016 |  |             | Year Ended September 30, 2015 |  |  | Year Ended September 30, 2014 |   |  | Period from January 1, 2013 to September 30, 2013 |           
|------------------------------------------------------- |  | ----------------------------- | ----------- | - | ----------------------------- |  | ----------- | ----------------------------- |  |  | ----------------------------- | - |  | ------------------------------------------------- | ----------
|Operating Revenues                                      |  |                               | —           |   |                               |  | —           |                               |  |  | —                             |   |  |                                                   | —         
|Total Operating Expenses                                |  |                               | (11,651,870 | ) |                               |  | (19,642,164 | )                             |  |  | (10,328,202                   | ) |  |                                                   | (1,824,537
|Net Loss for the Period                                 |  |                               | (4,499,012  | ) |                               |  | (13,139,788 | )                             |  |  | (9,676,587                    | ) |  |                                                   | (1,823,929
|Comprehensive Loss for the Period                       |  |                               | (4,499,012  | ) |                               |  | (13,477,551 | )                             |  |  | (11,341,799                   | ) |  |                                                   | (1,895,667
|Basic and diluted loss per Common Share                 |  |                               | (0.15       | ) |                               |  | (0.49       | )                             |  |  | (0.53                         | ) |  |                                                   | (0.12     
|Total Assets                                            |  |                               | 5,607,044   |   |                               |  | 10,402,562  |                               |  |  | 7,539,773                     |   |  |                                                   | 4,201,833 
|Net Assets                                              |  |                               | (4,274,003  | ) |                               |  | (536,857    | )                             |  |  | 4,455,512                     |   |  |                                                   | 1,974,128 
|Capital Stock (1)                                       |  |                               | 25,980,117  |   |                               |  | 25,974,742  |                               |  |  | 19,419,004                    |   |  |                                                   | 4,193,735 
|Number of Shares Adjusted to Reflect Changes in Capital |  |                               | 29,101,889  |   |                               |  | 29,096,889  |                               |  |  | 22,629,271                    |   |  |                                                   | 15,687,534
|Dividends Declared per Share                            |  |                               | —           |   |                               |  | —           |                               |  |  | —                             |   |  |                                                   | —         












| | (1) | Excluding long-term debt and redeemable preferred stock.
| | --- | --------------------------------------------------------



| | B. | Capitalization and Indebtedness
| | -- | -------------------------------



Not applicable.



| | C. | Reasons for the Offer and Use of Proceeds
| | -- | -----------------------------------------



Not applicable.



10







| | D. | Risk Factors
| | -- | ------------



An investment in ESSA involves a high degree of risk and
should be considered highly speculative due to the nature and present early stage of the Company’s business. The following
risks are the material risks that the Company faces; however, the risks below are not the only ones ESSA faces. Additional risks
and uncertainties not presently known to us or that we believe to be immaterial may also adversely affect our business. If any
of the following risks occur, the Company’s business, financial condition and results of operations could be seriously harmed
and you could lose all or part of your investment. Before deciding to invest in any Common Shares, investors should carefully consider
the risk factors described below.



Risks Related to ESSA’s Financial Position and Need
for Additional Capital



ESSA will have significant additional future capital needs
and there are uncertainties as to the Company’s ability to raise additional funding.



Management has forecasted that ESSA’s working capital
will not be sufficient to execute its planned expenditures for the coming year. ESSA will require significant additional capital
resources to continue and expand its business, including the development of its preclinical Aniten series of compounds. Advancing
ESSA’s novel and proprietary therapies or acquisition and development of any new products or product candidates will require
considerable resources and additional access to capital. In addition, ESSA’s future cash requirements may vary materially
from those now expected. For example, ESSA’s future capital requirements may increase if:



| | · | the Company experiences setbacks in its progress with non-clinical studies or if future clinical trials are delayed;
| | - | --------------------------------------------------------------------------------------------------------------------



| | · | the Company is required to perform additional non-clinical studies and clinical trials;
| | - | ---------------------------------------------------------------------------------------



| | · | the Company elects to develop, acquire or license new technologies, products or businesses;
| | - | -------------------------------------------------------------------------------------------



| | · | the Company experiences generic competition from other life sciences companies or in more markets than anticipated;
| | - | -------------------------------------------------------------------------------------------------------------------



| | · | the Company experiences delays or unexpected increases in connection with obtaining regulatory approvals in the various markets where ESSA hopes to sell its products;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the Company experiences unexpected or increased costs relating to preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, or other lawsuits, brought by either ESSA or ESSA’s competition; or
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the Company experiences scientific progress sooner than expected in its discovery and R&D projects, if ESSA expands the magnitude and scope of these activities, or if ESSA changes its focus as a result of ESSA’s discoveries.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



ESSA could potentially seek additional funding through strategic
collaborations, alliances and licensing arrangements, through public or private equity or debt financing, or through other transactions.
However, if sales are slow to increase or if capital market conditions in general, or with respect to life sciences companies such
as ESSA’s, are unfavourable, ESSA’s ability to obtain significant additional funding on acceptable terms, if at all,
will be negatively affected. There is no certainty that any such financing will be provided or provided on favourable terms.



If sufficient capital is not available, ESSA may be required
to delay or abandon its business expansion or R&D projects, either of which could have a material adverse effect on ESSA’s
business, financial condition, prospects or results of operations.



11







ESSA’s 2017 year-end financial
statements state that its recurring losses and limited cash resources raise substantial doubt as to its ability to continue as
a going concern.





ESSA’s financial statements for the year ended September
30, 2017 were prepared on a “going concern basis” and the audit report contains a “going concern qualification”
(see the Audit Report on the Financial Statements for the year ended September 30, 2017 and Note 1 to those Financial Statements).
ESSA’s financial statements assume it will continue as a going concern, but to be able to do so it will need to raise additional
capital to fund its operations until positive operating cash flow is achieved, if ever. As at September 30, 2017, ESSA had a working
capital of $1,281,551, which the Company anticipates will fund operations through January 2018. There can be no assurance that
ESSA will be able to raise sufficient additional capital at terms commercially acceptable, if at all, to continue its operations.



The Company has incurred significant losses in every quarter
since its inception and anticipates that it will continue to incur significant losses in the future and may never generate profits
from operations or maintain profitability.





ESSA is a preclinical stage pharmaceutical company with a limited
operating history. Investment in pharmaceutical product development is highly speculative because it entails substantial upfront
capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate effect or an
acceptable safety profile, gain regulatory approval or become commercially viable. ESSA does not have any products approved by
regulatory authorities for marketing or commercial sale and have not generated any revenue from product sales, or otherwise, to
date. Furthermore, ESSA continues to incur significant research, development and other expenses related to its ongoing operations.
As a result, ESSA is not profitable and has incurred losses in every reporting period since inception in 2009. For the years ended
September 30, 2017, September 30, 2016 and September 30, 2015, ESSA reported a net loss of $4,499,012, $13,139,788, and $9,676,587,
respectively. As of September 30, 2017, ESSA had an accumulated deficit since inception of $32,964,012.



The Company expects to continue to incur significant expenses
and operating losses for the foreseeable future. ESSA anticipates these losses to increase as it continues the R&D of, and
seek regulatory approvals for, any of its future product candidates and potentially begin to commercialize any products that may
achieve regulatory approval. ESSA may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors
that may adversely affect its financial condition. The size of ESSA’s future net losses will depend, in part, on the rate
of future growth of ESSA’s expenses and ability to generate revenues. The Company’s prior losses and expected future
losses have had and will continue to have an adverse effect on the Company’s financial condition.



Even if the Company is able to commercialize any product candidate,
there can be no assurance that the Company will generate significant revenues or ever achieve profitability.



The Company expects to continue to incur substantial losses
for the foreseeable future, and these losses may be increasing. The Company is uncertain about when or if it will be able to achieve
or sustain profitability. If the Company achieves profitability in the future, it may not be able to sustain profitability in subsequent
periods. Failure to become and remain profitable would impair the Company’s ability to sustain operations and adversely affect
the price of the Common Shares and its ability to raise capital.



Raising additional capital may cause dilution to ESSA’s
existing shareholders, restrict ESSA’s operations or require ESSA to relinquish rights to technologies or any future product
candidates.



Until the Company can generate substantial revenue from product
sales, if ever, the Company expects to finance future cash needs through a combination of private and public equity offerings,
debt financings, strategic collaborations and alliances and licensing arrangements. Additional financing that the Company may pursue
may involve the sale of its Common Shares or financial instruments that are exchangeable for, or convertible into, its Common Shares,
which could result in significant dilution to ESSA’s shareholders and the terms may include liquidation or other preferences
that adversely affect the rights of existing shareholders. Additional capital may not be available on reasonable terms, if at all.
Furthermore, these securities may have rights senior to those of ESSA’s Common Shares and could contain covenants that include
restrictive covenants limiting ESSA’s ability to take important actions and potentially impair ESSA’s competitiveness,
such as limitations on ESSA’s ability to incur additional debt, make capital expenditures, acquire, sell or license intellectual
property rights or declare dividends. If ESSA raises additional funds through strategic collaborations and alliances or licensing
arrangements with third parties, ESSA may have to relinquish valuable rights to technologies or future product candidates, or grant
licenses on terms that are not favorable to ESSA. If the Company is unable to raise additional funds when needed, the Company may
be required to delay, limit, reduce or terminate its product development or commercialization efforts or grant rights to develop
and market product candidates that ESSA would otherwise prefer to develop and market ourselves.



12







ESSA has a limited operating history, which may make it
difficult for you to evaluate the success of ESSA’s business to date and to assess ESSA’s future viability.



The Company’s operations to date have been primarily limited
to organizing and staffing ESSA, acquiring the in-licensing of intellectual property, discovering and developing novel small molecule
product candidates, conducting preliminary preclinical research, and execution of a Phase I clinical study of a first generation
agent. ESSA is a development stage company with limited operating history and no revenue. ESSA has not identified a product candidate
to advance through clinical development and does not have any products ready for commercialization. Consequently, evaluating ESSA’s
performance, viability or future success will be more difficult than if ESSA had a longer operating history or approved products
on the market.



The Company remains subject to the restrictions and conditions
of the CPRIT Agreement. Failure to comply with the CPRIT Agreement may adversely affect ESSA’s financial condition and
results of operations.



ESSA has relied on the CPRIT Grant to fund a portion of its
preclinical and clinical development costs of clinical candidate EPI-506. The total of the CPRIT Grant was US$12 million, of which
ESSA has received a total of US$11.7 million to date, as follows: US$2.8 million (on grant execution), US$3.7 million (upon the
clearance of the IND of EPI-506, ESSA’s first generation agent, by the FDA) and US$5.2 million (upon commencement of the
Phase I clinical trial of EPI-506). The CPRIT Grant is subject to ESSA’s compliance with the scope of work outlined in the
CPRIT Agreement and demonstration of its progress towards achievement of the milestones set forth in the CPRIT Agreement. If
ESSA fails to comply with the terms of the CPRIT Agreement, it may not receive the remaining funds of the CPRIT Grant or it
may be required to reimburse some or the entire CPRIT Grant. Further, the CPRIT Grant may only be applied to a limited number of
allowable expenses. Being required to reimburse all or a portion of the CPRIT Grant would impact ESSA’s ongoing operations,
which may adversely affect its financial condition and results of operations.



If the Company fails to comply with the terms of the CPRIT Agreement,
CPRIT will have the option to pursue the transfer and assignment of the Company’s rights, title and interest in the intellectual
property rights and technologies developed as a result of the CPRIT Grant. Failure to maintain ownership over the Company’s
intellectual property and technologies would adversely affect the Company’s financial condition and results of operations.



ESSA may not be able to generate
sufficient cash to service its indebtedness, which currently consists of its capital term loan facility with Silicon Valley Bank.



On November 18, 2016, the Company entered
into a loan and security agreement with Silicon Valley Bank (the “2016 Loan and Security Agreement”), providing
for a capital term loan facility in the total amount of $10,000,000. The Company has initially drawn down $8,000,000 of the 2016
Loan and Security Agreement, and had conditional option to draw down an additional $2,000,000 by July 31, 2017 upon (i) positive
data for its ongoing Phase I clinical trial of EPI-506 and (ii) receipt of the third and final tranche of the CPRIT Grant of $5,422,000.
As the Company is not proceeding with the development of EPI-506, the conditional option for the additional $2,000,000 has expired.
The 2016 Loan and Security Agreement bears an interest rate of WSJ Prime Rate plus 3% per annum and will mature on September 1,
2020. The 2016 Loan and Security Agreement requires a final payment of 8.6% of the amount advanced, due upon the earlier of the
maturity or termination of the 2016 Loan and Security Agreement. The Company is required to make interest only payments until December
31, 2017. The interest only payment period would have been extended by six months if the second tranche of $2,000,000 was drawn.
The 2016 Loan and Security Agreement is secured by perfected first priority lien on all of the Company’s assets, with a negative
pledge on intellectual property. The 2016 Loan and Security Agreement does not contain any financial covenants.



13







ESSA’s ability to make scheduled
payments or to refinance its debt obligations depends on numerous factors including, but not limited to, the amount of its cash
reserves, capital requirements and its ability to raise additional capital. ESSA may be unable to maintain a level of cash reserves
or cash flows sufficient to permit it to pay the principal, premium, if any, and interest on its existing or future indebtedness.
If the Company’s cash flows and capital resources are insufficient to fund its debt obligations, the Company may be required
to seek additional capital, restructure or refinance its indebtedness, or delay or abandon its business expansion, R&D projects
or other capital expenditures, which could have a material adverse effect on ESSA’s business, financial condition, prospects
or results of operations. There is no assurance that ESSA would be able to take any of such actions, or that such actions would
permit the Company to meet its scheduled debt service obligations. In addition, since the Company is in the clinical development
stage, and does not currently generate revenue, it expects to finance future cash needs through a combination of private and public
equity offerings, debt financings, strategic collaborations and alliances and licensing arrangement. However, additional capital
may not be available on reasonable terms, if at all. Even if the Company is able to commercialize a product candidate, there can
be no assurance that the Company will generate sufficient revenues or cash flow to service its debt obligations.



Further, in the event of the Company’s
breach of the agreement with SVB providing for the SVB Term Loan, the Company may not be allowed to draw additional amounts under
the agreement, may be required to repay any outstanding amounts earlier than anticipated and the lenders may foreclose on their
security interest in the Company’s assets.



SVB may also declare the Company to be
in breach of the SVB Term Loan agreement in the event of a “Material Adverse Change”, which has been defined to include
a material impairment in the Company’s assets acting as collateral under the SVB Term Loan, a material adverse change in
the business, operations, or condition (financial or otherwise) of the Company, or a material impairment of the prospect of repayment
of any portion of its debt obligations. There can be no guarantee that the Company will not experience a “Material Adverse
Change”.



Risks Relating to ESSA’s Common Shares



ESSA’s Common Shares could
be delisted from the NASDAQ, which could affect ESSA’s Common Shares' market price and liquidity.



The Company’s listing on the NASDAQ
is contingent upon meeting all the continued listing requirements of the NASDAQ, which include maintaining a minimum bid price
of not less than US$1.00 per share and a minimum market value of US$35 million. NASDAQ listing rules provide that a failure to
meet the minimum bid price requirement or the minimum market value requirement exists if the deficiency continues for a period
of 30 consecutive business days.



On June 7, 2017, the closing bid price
of the Company’s common shares on the NASDAQ fell below US$1.00 and has not again reached the US$1.00 threshold since. On
July 20, 2017, the Company announced that it had received written notice from the NASDAQ that for 30 consecutive business days
(June 7, 2017 through July 19, 2017), its Common Shares did not maintain a minimum closing bid price of $1.00 per share as required
by NASDAQ listing rule 5550(a)(2).



In accordance with NASDAQ listing rule
5810(c)(3)(A) and upon receipt of the NASDAQ notification, the Company has a compliance period of 180 calendar days, or until January
15, 2018, to regain compliance with NASDAQ listing rule 5550(a)(2). Compliance could be achieved automatically and without further
action if the closing bid price of the Company’s Common Shares was at or above US$1.00 for a minimum of 10 consecutive business
days at any time during the 180-day compliance period, in which case the NASDAQ would notify the Company of its compliance and
the matter will be closed.



On July 21, 2017, the Company announced
that it had received written notice from the NASDAQ that it was not in compliance with the minimum market value of listed securities
requirement of US$35 million as required by NASDAQ listing rule 5550(b)(2).  In accordance with NASDAQ listing rule 5810(c)(3)(C)
and upon receipt of the NASDAQ notification, the Company has a compliance period of 180 calendar days, or until January 16, 2018,
to regain compliance with NASDAQ listing rule 5550(b)(2).  Compliance could be achieved automatically and without further
action if the market value of the Company’s Common Shares is at least US$35 million for a minimum of 10 consecutive business
days at any time during the 180-day compliance period, in which case the NASDAQ would notify the Company of its compliance and
the matter will be closed.



14







If the Company’s common shares are
delisted from the NASDAQ, its ability to raise capital in the future may be limited. Delisting could also result in less liquidity
for the Company’s shareholders and a lower share price. Such a delisting would likely have a negative effect on the price
of the Company’s Common Shares and could impair the Company shareholders’ ability to sell or purchase the Company’s
Common Shares. For example, the Company’s shareholders in the United States may be required to resell their shares on the
TSX-V if a liquid over-the-counter trading market did not develop in the United States following a delisting. In the event of a
delisting, the Company expects to take actions to restore its compliance with the NASDAQ’s listing requirements, but it can
provide no assurance that any action taken by the Company would result in its Common Shares becoming listed again, or that any
such action would stabilize the market price or improve the liquidity of its Common Shares.



The market price and trading volume of ESSA's Common Shares
may be volatile, which could result in rapid and substantial losses for its shareholders or securities litigation.



The market price of ESSA's Common Shares may be highly volatile
and could be subject to wide fluctuations. In addition, the trading volume in the Common Shares may fluctuate and cause significant
price variations to occur as demonstrated by ESSA’s share price’s low on the TSX (C$0.32) and corresponding high (C$4.45)
for the year ended September 30, 2017. For the year ended September 30, 2017, ESSA’s share price’s low on the NASDAQ
was $0.25 and corresponding high was $3.31. The market price of the Common Shares may fluctuate or decline significantly in the
future. Some of the factors that could negatively affect ESSA's share price or result in fluctuations in the price or trading volume
of the Common Shares include:



| | · | quarterly variations in operating results;
| | - | ------------------------------------------



| | · | operating results that vary from the expectations of securities analysts and investors;
| | - | ---------------------------------------------------------------------------------------



| | · | change in valuations;
| | - | ---------------------



| | · | changes in ESSA's operations;
| | - | -----------------------------



| | · | expenses ESSA incurs related to future research;
| | - | ------------------------------------------------



| | · | regulatory approvals;
| | - | ---------------------



| | · | fluctuations in the demand for ESSA's product candidates;
| | - | ---------------------------------------------------------



| | · | changes in the industry in which ESSA operates;
| | - | -----------------------------------------------



| | · | announcements by ESSA or other companies of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures, capital commitments, plans, prospects, service offerings or operating results;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | additions or departures of key personnel;
| | - | -----------------------------------------



| | · | future sales of ESSA’s securities;                  
| | - | ----------------------------------------------------
| |   |                                                     
| | · | trading of ESSA’s securities by a large shareholder;



| | · | other risk factors discussed herein; and
| | - | ----------------------------------------



| | · | other unforeseen events.
| | - | ------------------------



Stock markets in the United States and Canada have experienced
extreme price and volume fluctuations. Market fluctuations, as well as general political and economic conditions such as acts of
terrorism, prolonged economic uncertainty, a recession or interest rate or currency rate fluctuations, could adversely affect the
market price of ESSA's Common Shares resulting in substantial losses for shareholders. Also, in the past, companies that have experienced
volatility in the market price of their common shares have been subject to securities litigation. ESSA may be the target of this
type of litigation in the future. Securities litigation against ESSA could result in substantial costs and divert management’s
attention from other business concerns, which could materially harm ESSA’s business.



15







The Company has never declared dividends and may not do
so in the future.



ESSA has not declared or paid any cash dividends on Common Shares
to date. The payment of dividends in the future will be dependent on ESSA’s earnings and financial condition and on such
other factors as ESSA’s Board considers appropriate. Unless and until ESSA pays dividends, shareholders may not receive a
return on their shares. There is no present intention by the Board to pay dividends on the Common Shares.



The Company may experience future sales or issue additional
securities.



The market price of the Company’s equity securities could
decline as a result of issuances of securities by the Company or sales by the Company’s existing shareholders of Common Shares
in the market, or the perception that such sales could occur. Sales of Common Shares by shareholders might also make it more difficulty
for the Company to sell equity securities at a time and price that the Company deems appropriate. Sales or issuances of substantial
numbers of Common Shares, or the perception that such sales could occur, may adversely affect the prevailing market prices of the
Common Shares. With any additional sale or issuance of Common Shares, investors will suffer dilution to their voting power and
the Company may experience dilution in its earnings per share.



If ESSA is unable to implement and maintain effective
internal controls over financial reporting in the future, ESSA may not be able to report financial results accurately or prevent
fraud. In that case, investors may lose confidence in the accuracy and completeness of ESSA’s financial reports and the market
price of ESSA’s common shares may be negatively affected.



Maintaining effective internal control over financial reporting
is necessary for ESSA to produce reliable financial reports and is important in helping to prevent financial fraud. If ESSA is
unable to maintain adequate internal controls, ESSA’s business and operating results could be harmed. As a non-accelerated
public company, ESSA is not currently required to comply with Section 404(b) of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”).
ESSA is no longer considered a “venture issuer” by virtue of having its securities listed on the TSX in July 2015.
Non-venture issuers must establish and maintain disclosure controls and procedures and internal control over financial reporting.
ESSA will be required to certify that it has established disclosure controls and procedures and internal controls over financial
reporting for the period ended September 30, 2017. Pursuant to National Instrument 52-109—Certification of Disclosure in
Issuers’ Annual and Interim Filings of the Canadian Securities Administrators (“NI 52-109”), ESSA evaluates
how to document and test internal control procedures to satisfy the requirements of Section 404(a) of Sarbanes-Oxley and the
related rules of the SEC and NI 52-109, which require, among other things, ESSA’s management to assess annually the effectiveness
of ESSA’s internal control over financial reporting. During the course of this documentation and testing, ESSA may identify
weaknesses or deficiencies that ESSA may be unable to remedy.



Preparing ESSA’s consolidated financial statements involves
a number of complex manual and automated processes which are dependent on individual data input or review and require significant
management judgment. One or more of these elements may result in errors that may not be detected and could result in a material
misstatement of ESSA’s consolidated financial statements. Management’s significant estimates and judgements with respect
to financial reporting are discussed and disclosed in the consolidated financial statements.



The process of designing and implementing effective internal
controls and procedures, and expanding ESSA’s internal accounting capabilities, is a continuous effort that requires ESSA
to anticipate and react to changes in ESSA’s business and the economic and regulatory environments and expend significant
resources to establish and maintain a system of internal controls that is adequate to satisfy ESSA’s reporting obligations
as a public company. The standards that must be met for management to assess the internal control over financial reporting as effective
are complex, and require significant documentation, testing and possible remediation to meet the detailed standards. ESSA cannot
be certain at this time whether the Company will be able to successfully complete the continuing implementation of controls and
procedures or the certification and attestation requirements of Section 404 and NI 52-109 on a continuous basis.



If a material misstatement occurs in the future, ESSA may fail
to meet its future reporting obligations, it may need to restate its financial results and the price of its Common Shares may decline.
Any failure of ESSA’s internal controls could also adversely affect the results of the periodic management evaluations and
any future annual independent registered public accounting firm attestation reports regarding the effectiveness of ESSA’s
internal control over financial reporting that may be required when Section 404 of Sarbanes-Oxley becomes fully applicable
to ESSA. Effective internal controls are necessary for ESSA to produce reliable financial reports and are important to helping
prevent financial fraud. If ESSA cannot provide reliable financial reports or prevent fraud, ESSA’s business and results
of operations could be harmed, investors could lose confidence in ESSA’s reported financial information, and the trading
price of ESSA’s Common Shares could drop significantly.



16







An active trading market for the Common Shares may not
be sustained.



Although ESSA has listed the Common Shares on the NASDAQ and
the TSX, an active trading market for the Common Shares may not be sustained. For example, certain trading days in the year ended
September 30, 2017 resulted in no volume of trading of ESSA’s common shares on either of the NASDAQ or the TSX. If an active
trading market for the Common Shares is not maintained, the liquidity of the Common Shares and the prices that may be obtained
for the Common Shares will be adversely affected.



ESSA's Common Shares may be thinly traded, the prices
at which Common Shares trade are volatile and the buying or selling actions of a few shareholders may adversely affect ESSA's share
price.



As of September 30, 2017, ESSA's public
float, which is defined as Common Shares outstanding minus Common Shares held by officers, directors, or beneficial holders of
greater than 10% of ESSA's outstanding Common Shares, represented approximately 70% of ESSA's outstanding Common Shares. In
addition, the Company is aware of a number of significant shareholders, defined as a holding greater than 5%, who have participated
in recent financings. The average number of shares traded in any given day over the past year has been relatively small compared
to the public float. Thus, the actions of a few shareholders either buying or selling ESSA's Common Shares may adversely affect
the price of the Common Shares. Historically, securities similar to ESSA's Common Shares have experienced extreme price and volume
fluctuations that do not necessarily relate to operating performance and could result in rapid and substantial losses for shareholders.



If securities or industry analysts do not publish research
or publish inaccurate or unfavorable research about ESSA’s business, its stock price and trading volume could decline.



The trading market for ESSA’s Common Shares depends in
part on the research and reports that securities or industry analysts publish about it, or its business. If one or more of the
securities or industry analysts who cover ESSA downgrade its Common Shares or publish inaccurate or unfavorable research about
its business, its stock price would likely decline. If one or more of these analysts cease coverage of ESSA or fail to publish
reports on it regularly, demand for ESSA’s stock could decrease, which might cause its stock price and trading volume to
decline.



ESSA’s Product Candidate and Regulatory Matters



ESSA does not currently have a lead product candidate.
If ESSA is unable to identify a product candidate to advance through research and development efforts, its business would be materially
harmed.



Due to a strategic shift in the Company’s business focus,
ESSA currently has not yet identified a lead product candidate suitable for advancing into clinical trials. Accordingly,
ESSA continues to evaluate its next generation Aniten compounds to determine which, if any, are ready to move further into preclinical
and clinical development. If ESSA determines that its next generation Aniten compounds do not contain any product candidates worthy
of development, its business would be materially harmed.



ESSA’s future success is dependent primarily on
the regulatory approval and commercialization of a single product candidate, which is still in the preclinical stage.



The Company does not have any products that have obtained regulatory
approval. Currently, ESSA’s is engaged in the preclinical stage of determining a product candidate to take forward from its
Aniten series of compounds through regulatory approval for a Phase I/II clinical study to determine the safety, tolerability, maximum
tolerated dose, pharmacokinetics and potential therapeutic benefits of such a candidate in patients with metastatic castration-resistant
prostate cancer (“CRPC”). As a result, the Company’s near-term prospects, including its ability to finance its
operations and generate revenue, are substantially dependent on its ability to obtain regulatory approval for, and, if approved,
to successfully commercialize a product candidate in a timely manner. ESSA cannot commercialize future product candidates in the
United States without first obtaining regulatory approval for the product from the FDA; similarly, ESSA cannot commercialize future
product candidates outside of the United States without obtaining regulatory approval from comparable foreign regulatory authorities.
The FDA review process typically varies in time and may take years to complete and approval is not guaranteed. Obtaining regulatory
approval of ESSA’s product candidates will depend on many factors, including, but not limited to, the following:



17







| | · | successfully completing formulation and process development activities;
| | - | -----------------------------------------------------------------------
| |   |                                                                        



| | · | completing clinical trials that demonstrate the efficacy and safety of ESSA’s product candidates;
| | - | -------------------------------------------------------------------------------------------------
| |   |                                                                                                  

| | · | receiving marketing approval from applicable regulatory authorities;
| | - | --------------------------------------------------------------------
| |   |                                                                     

| | · | establishing commercial manufacturing capabilities;
| | - | ---------------------------------------------------
| |   |                                                    

| | · | launching commercial sales, marketing and distribution operations;
| | - | ------------------------------------------------------------------
| |   |                                                                   

| | · | acceptance of ESSA’s product candidates by patients, the medical community and third-party payors;
| | - | --------------------------------------------------------------------------------------------------
| |   |                                                                                                   



| | · | a continued acceptable safety profile following approval; and
| | - | -------------------------------------------------------------
| |   |                                                              



| | · | competing effectively with other therapies, including with
respect to the sales and marketing of ESSA’s product candidates, if approved.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------



Many of these factors are wholly or partially beyond ESSA’s
control, including clinical development, the regulatory submission process and changes in the competitive landscape. If ESSA does
not achieve one or more of these factors in a timely manner, it could experience significant delays or an inability to develop
ESSA’s product candidates at all.



If the Company breaches any of the agreements under which
the Company licenses rights to its technology from third-parties, the Company could lose license rights that are important to ESSA’s
business. ESSA’s current license agreement may not provide an adequate remedy for its breach by the licensor.



ESSA is developing its Aniten series product candidates pursuant
to a License Agreement with UBC and the BC Cancer Agency. The Company is subject to a number of risks associated with the Company’s
collaboration with UBC and the BC Cancer Agency, including the risk that UBC or the BC Cancer Agency may terminate the license
agreement upon the occurrence of certain specified events. ESSA’s license agreement requires, among other things, that the
Company make certain payments and use reasonable commercial efforts to meet certain clinical and regulatory milestones. See “Patents
and Proprietary Rights” in Item 4 of this Annual Report. If ESSA fails to comply with any of these obligations or
otherwise breaches this or similar agreements, UBC, the BC Cancer Agency or any future licensors may have the right to terminate
the license. ESSA could also suffer the consequences of non-compliance or breaches by licensors in connection with ESSA’s
license agreements. Such non-compliance or breaches by such third parties could in turn result in ESSA’s breaches or defaults
under the Company’s agreements with the Company’s other collaboration partners, and the Company could be found liable
for damages or lose certain rights, including rights to develop and/or commercialize a product or product candidate. Loss of ESSA’s
rights to the Licensed IP or any similar license granted to ESSA in the future, or the exclusivity rights provided therein, could
harm ESSA’s financial condition and operating results.



The Company may not be able to obtain required regulatory
approvals for the Company’s proposed products.



The research, testing, manufacturing, labeling, packaging, storage,
approval, sale, marketing, advertising and promotion, pricing, export, import and distribution of drug products developed by ESSA
or ESSA’s future collaborative partners, if any, is subject to extensive regulation by federal, provincial, state and local
governmental authorities and those regulations differ from country to country. ESSA’s potential future product candidates
will be principally regulated in the United States by the FDA, in Canada by the TPD, in the European Union by the EMA and the regulators
in the individual European Union member countries and by other similar regulatory authorities in Japan and other jurisdictions.
Government regulation substantially increases the cost and risk of researching, developing, manufacturing and selling products.
Following several widely publicized issues in recent years, the FDA and similar regulatory authorities in other jurisdictions have
become increasingly focused on product safety. This development has led to requests for more clinical trial data, for the inclusion
of a significantly higher number of patients in clinical trials and for more detailed analysis of trial results. Consequently,
the process of obtaining regulatory approvals, particularly from the FDA, has become more costly, time consuming and challenging
than in the past. Any product developed by ESSA or ESSA’s future collaborative partners, if any, must receive all relevant
regulatory approvals or clearances from the applicable regulatory authorities before it may be marketed and sold in a particular
country.



18







ESSA will not be permitted to market any potential products
in the United States, Canada or in other countries where ESSA intends to market its potential future product candidates until such
product candidate receives approval of a NDA from the FDA or similar approval in other countries as restrictions apply. In the
United States, the FDA generally requires the completion of preclinical testing and clinical trials of each drug to establish its
safety and efficacy and extensive pharmaceutical development to ensure its quality before an NDA is approved. This process can
take many years and require the expenditure of substantial resources and may include post-marketing studies and surveillance. Regulatory
authorities in other jurisdictions impose similar requirements. Of the large number of drugs in development, only a small percentage
result in the submission of an NDA to the FDA and even fewer are approved for commercialization. To date, the Company has not submitted
an NDA for any of the Company’s potential products to the FDA or comparable applications to other regulatory authorities.
If the Company’s development efforts for potential products are not successful for the treatment of CRPC and regulatory approval
is not obtained in a timely fashion or at all, the Company’s business will be adversely affected.



The receipt of required regulatory approvals for the Company’s
potential future products is uncertain and subject to a number of risks, including the following:



| | · | the FDA, IRBs or comparable foreign regulatory authorities may disagree with the design or implementation of the Company’s clinical trials;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------



| | · | the Company may not be able to provide acceptable evidence of the safety, efficacy or quality of its potential products;
| | - | ------------------------------------------------------------------------------------------------------------------------



| | · | the results of the Company’s clinical trials may not meet the level of statistical or clinical significance required by the FDA or other regulatory agencies for marketing approval;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the dosing of the Company’s potential products in a particular clinical trial may not be at an optimal level;
| | - | -------------------------------------------------------------------------------------------------------------



| | · | patients in the Company’s clinical trials may suffer adverse effects for reasons that may or may not be related to the Company’s potential products;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the data collected from the Company’s clinical trials may not be sufficient to support the submission of an NDA for the Company’s potential products or to obtain regulatory approval in the United States, Canada, or elsewhere;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the FDA or comparable foreign regulatory authorities may find deficiencies in the manufacturing processes or facilities of third-party manufacturers with which the Company contracts for clinical and commercial supplies; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering the Company’s clinical data insufficient for approval.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The FDA and other regulators have substantial discretion in
the approval process and may refuse to accept any application or may decide that the Company’s data is insufficient for approval
and require additional clinical trials, or other studies. In addition, varying interpretations of the data obtained from preclinical
studies and clinical trials could delay, limit or prevent regulatory approval of the Company’s potential products. ESSA,
or ESSA’s future collaborative partner, if any, must obtain and maintain regulatory authorization to conduct clinical trials.
ESSA’s preclinical research is subject to GLP and other requirements and ESSA’s clinical research is subject to good
clinical practice and other requirements. Failure to adhere to these requirements could invalidate ESSA’s data. In addition,
the relevant regulatory authority or independent review board may modify, suspend or terminate a clinical trial at any time for
various reasons, including a belief that the risks to study subjects outweigh the benefits. Further, the process of obtaining regulatory
approvals is expensive, often takes many years, if approval is obtained at all, and can vary substantially based upon, among other
things, the type, complexity and novelty of the prescription product candidates involved, the jurisdiction in which regulatory
approval is sought and the substantial discretion of the regulatory authorities. If regulatory approval is obtained in one jurisdiction,
it does not necessarily mean that ESSA’s potential products will receive regulatory approval in all jurisdictions in which
the Company may seek approval, or any regulatory approval obtained may not be as broad as what was obtained in other jurisdictions.
However, the failure to obtain approval for ESSA’s potential products in one or more jurisdictions may negatively impact
the Company’s ability to obtain approval in a different jurisdiction. Accordingly, despite ESSA’s expenditures and
investment of time and effort, it may be unable to receive required regulatory approvals for product candidates developed by it.
If a significant portion of these development efforts are not successfully completed, required regulatory approvals are not obtained,
or any approved products are not commercially successful, ESSA’s business, financial condition and results of operations
may be materially harmed.



19







Until September 2017, ESSA was largely dependent on the
success of EPI-506, the development of which it has now suspended. All of the Company’s other potential future product candidates
are still in preclinical development, and accordingly ESSA’s business is now dependent on its ability to successfully develop
much earlier stage product candidates. If ESSA is unable to develop these potential future product candidates in a timely manner,
its business will be materially harmed.



Until September 2017, ESSA’s business prospects and potential
product revenues were largely dependent upon its ability to obtain regulatory approval of, and successfully commercialize, EPI-506.
Due to a strategic shift in the Company’s business focus, it is now dependent on the successful development of preclinical
stage Aniten compounds.



Before ESSA can commercialize these Aniten compounds it will
need to:



| | · | conduct substantial research and development;
| | - | ---------------------------------------------



| | · | undertake nonclinical and clinical testing and engage in sampling activity and other costly and time consuming measures;
| | - | ------------------------------------------------------------------------------------------------------------------------



| | · | scale-up manufacturing processes; and
| | - | -------------------------------------



| | · | pursue and obtain marketing and manufacturing approvals and, in some jurisdictions, pricing and reimbursement approvals.
| | - | ------------------------------------------------------------------------------------------------------------------------



This process involves a high degree of risk and takes many years,
and success is never guaranteed. ESSA’s Aniten compound development efforts may fail for many reasons, including:



| | · | ESSA’s inability to secure the funds to continue the operation of its business;
| | - | -------------------------------------------------------------------------------



| | · | failure of potential future product candidates in nonclinical studies;
| | - | ----------------------------------------------------------------------



| | · | ESSA’s inability to obtain on a timely basis supplies of the applicable reference products to which its potential future
product candidates must be compared;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | delays or difficulty enrolling patients in clinical trials, particularly for disease indications with small patient populations;
| | - | --------------------------------------------------------------------------------------------------------------------------------



| | · | patients exhibiting adverse reactions to potential future product candidates or indications of other safety concerns;
| | - | ---------------------------------------------------------------------------------------------------------------------



| | · | insufficient clinical trial data to support the bioequivalence of one or more of ESSA’s potential future product candidates
with the applicable reference product;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



20







| | · | inability to manufacture sufficient quantities of potential future product candidates for development or commercialization
activities in a timely and cost-efficient manner, if at all;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | potential patent litigation with innovator companies or others who may hold patents;
| | - | ------------------------------------------------------------------------------------



| | · | failure to obtain, or delays in obtaining, the required regulatory approvals for potential future product candidates, the facilities
or the processes used to manufacture such product candidates; or
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | changes in the regulatory environment, including pricing and reimbursement that make development of ESSA’s potential
future product candidates no longer desirable.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



If ESSA’s product development efforts fail for any of
these or other reasons, or it decides to abandon development of a potential future product candidate at any time, it would never
realize revenue from those programs and its business could be materially harmed



ESSA may not be able to successfully commercialize its
Aniten series of compounds.



Even if a candidate from ESSA’s Aniten series were to
successfully obtain approval from the FDA and comparable foreign regulatory authorities, any approval might contain significant
limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, may be subject to
burdensome post-approval study or risk management requirements, or may be limited to a subset of CRPC patients with limited commercial
value. If ESSA is unable to obtain regulatory approval in one or more jurisdictions, or any approval contains significant limitations,
ESSA may not be able to obtain sufficient funding or generate sufficient revenue to continue the development of any other future
product candidates that ESSA may discover, in-license, develop or acquire in the future. Also, any regulatory approval of any future
product candidates, once obtained, may be withdrawn. Furthermore, even if ESSA obtains regulatory approval for a product candidate,
the commercial success of such product candidate will depend on a number of factors, including the following:



| | · | development of a commercial organization or establishment of a commercial collaboration with a commercial infrastructure;
| | - | -------------------------------------------------------------------------------------------------------------------------



| | · | establishment of commercially viable pricing and approval for adequate reimbursement from third-party and government payors;
| | - | ----------------------------------------------------------------------------------------------------------------------------



| | · | the ability of ESSA’s third-party manufacturers to manufacture quantities of the compound using commercially efficient processes and at a scale sufficient to meet anticipated demand and enable ESSA to reduce its cost of manufacturing;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | ESSA’s success in educating physicians and patients about the benefits, administration and use of the compound;
| | - | ---------------------------------------------------------------------------------------------------------------



| | · | the availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing treatments;
| | - | -------------------------------------------------------------------------------------------------------------------------------------



| | · | the effectiveness of ESSA’s own or its potential strategic collaborators’ marketing, sales and distribution strategy and operations;
| | - | ------------------------------------------------------------------------------------------------------------------------------------



| | · | acceptance of the product candidate as safe and effective by patients and the medical community; and
| | - | ----------------------------------------------------------------------------------------------------
| |   |                                                                                                     
| | · | a continued acceptable safety profile of a product candidate following approval.                    



Many of these factors are beyond ESSA’s control. If ESSA,
or its potential commercialization collaborators, are unable to successfully commercialize a product candidate, ESSA may not be
able to earn sufficient revenues to continue the Company’s business.



21







The Company’s potential future product candidates
may have undesirable side effects that may delay or prevent marketing approval or, if approval is received, require them to be
taken off the market, require them to include safety warnings or otherwise limit their sales.



Although any future product candidates will undergo safety testing,
not all adverse effects of drugs can be predicted or anticipated. Unforeseen side effects from any of ESSA’s potential future
product candidates could arise either during clinical development or, if approved by regulatory authorities, after the approved
product has been marketed. The results of any future clinical
trials may show that the product candidate(s) cause undesirable or unacceptable side effects, which could interrupt, delay or halt
clinical trials, and result in delay of, or failure to obtain, marketing approval from the FDA and other regulatory authorities,
or result in marketing approval from the FDA and other regulatory authorities with restrictive label warnings, limited patient
populations or potential product liability claims.



If any of ESSA’s potential future product candidates receive
marketing approval and it or others later identify undesirable or unacceptable side effects caused by such products:



| | · | regulatory authorities may require us to take ESSA’s approved product off the market;
| | - | -------------------------------------------------------------------------------------



| | · | regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts
to physicians and pharmacies;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | it may be required to change the way the product is administered, conduct additional clinical trials or change the labeling
of the product;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------



| | · | it may be subject to limitations on how it may promote the product;
| | - | -------------------------------------------------------------------



| | · | sales of the product may decrease significantly;
| | - | ------------------------------------------------



| | · | it may be subject to litigation or product liability claims; and
| | - | ----------------------------------------------------------------



| | · | ESSA’s reputation may suffer.
| | - | -----------------------------



Any of these events could prevent ESSA or its future collaborative
partners from achieving or maintaining market acceptance of the affected product or could substantially increase commercialization
costs and expenses, which in turn could delay or prevent ESSA from generating significant revenue from the sale of ESSA’s
products.



Clinical drug development involves a lengthy and expensive
process with an uncertain outcome, results of earlier studies and trials may not be predictive of future trial results and ESSA’s
potential future product candidates may not have favourable results in later trials or in the commercial setting.



Clinical testing is expensive and can take many years to complete,
and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. ESSA’s planned
clinical trials may produce negative or inconclusive results, and ESSA or any of its current and future collaborators may decide,
or regulators may require ESSA, to conduct additional clinical or preclinical testing. The results of preclinical studies and early
clinical trials may not be predictive of the results of later-stage clinical trials. Preclinical tests and Phase I and Phase II
clinical trials are primarily designed to test safety, to study pharmacokinetics and pharmacodynamics and to understand the side
effects of product candidates at various doses and schedules. Success in preclinical or animal studies and early clinical trials
does not ensure that later large scale efficacy trials will be successful nor does it predict final results. Favourable results
in early trials may not be repeated in later trials. The Company cannot assure you that the FDA/TPD or other similar government
bodies will view the results as the Company does, or that any future trials of ESSA’s proposed products for other indications
will achieve positive results. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy
traits despite having progressed through preclinical studies and initial clinical trials.



A number of companies in the pharmaceutical industry have suffered
significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising
results in earlier trials. Any future clinical trial results for ESSA’s proposed products may not be successful. Similarly,
preclinical interim results of a clinical trial do not necessarily predict final results. A number of factors could contribute
to a lack of favorable safety and efficacy results for ESSA’s proposed products for other indications. For example, such
trials could result in increased variability due to varying site characteristics, such as local standards of care, differences
in evaluation period and due to varying patient characteristics including demographic factors and health status. There can be no
assurance that the Company’s clinical trials will demonstrate sufficient safety and efficacy for the FDA or TPD to approve
ESSA’s potential products for the treatment of CRPC, or any other indication that the Company may consider in any additional
NDA or NDS submissions for ESSA’s potential products.



22







The Company will be required to demonstrate through larger-scale
clinical trials that any potential future product is safe and effective for use in a diverse population before ESSA can seek regulatory
approvals for its commercial sale. There is typically an extremely high rate of attrition from the failure of product candidates
proceeding through clinical and post-approval trials. If ESSA’s potential products fail to demonstrate sufficient safety
and efficacy in ongoing or future clinical trials, the Company could experience potentially significant delays in, or be required
to abandon development of a product candidate.



In addition, clinical trials and nonclinical studies performed
by research organizations and other independent third parties may yield negative results regarding the effect of ESSA’s potential
products on CRPC, either in absolute terms or relative to other products.



As an organization, ESSA has never submitted an NDA/NDS
and may be unable to do so for any future products ESSA develops.



ESSA completed a Phase I clinical trial for EPI-506 which will
not be taken forward into Phase II. ESSA will have to complete a Phase I clinical trial for any future product candidates. Additionally,
ESSA will need to conduct Phase II and Phase III of clinical trials, which it has not previously undertaken. The conduct of Phase
III clinical trials and the submission of a successful IND or CTA and NDA or NDS is a complicated process. As an organization,
ESSA has limited experience in preparing, submitting and prosecuting regulatory filings and has not submitted an NDA/NDS. ESSA’s
interactions with the FDA to date have been limited to the completed EPI-506 clinical trial. Consequently, even if ESSA’s
initial clinical trials are successful, the Company may be unable to successfully and efficiently execute and complete necessary
clinical trials in a way that leads to NDA or NDS submission and approval of ESSA’s proposed products or any other future
product candidate ESSA may develop. The Company may require more time and incur greater costs than competitors and may not succeed
in obtaining regulatory approvals of products that the Company develops. Failure to commence or complete, or delays in, ESSA’s
planned clinical trials, would prevent ESSA from or delay ESSA in commercializing proposed products or any other future product
candidate ESSA develops.



If ESSA is unable to enroll subjects in clinical trials,
ESSA will be unable to complete these trials on a timely basis.



Patient enrollment, a significant factor in the timing of clinical
trials, is affected by many factors including the size and nature of the patient population, the proximity of subjects to clinical
sites, the eligibility criteria for the trial, the design of the clinical trial, ability to obtain and maintain patient consents,
risk that enrolled subjects will drop out before completion, competing clinical trials and clinicians’ and patients’
perceptions as to the potential advantages of the drug being studied in relation to other available therapies, including any new
drugs that may be approved for the indications ESSA is investigating. Furthermore, ESSA relies on CROs and clinical trial
sites to ensure the proper and timely conduct of the Company’s clinical trials, and while the Company has agreements governing
their committed activities, the Company has limited influence over their actual performance.



If ESSA experiences delays in the completion or termination
of any clinical trial of any future product candidates, the commercial prospects of product candidates will be harmed, and ESSA’s
ability to generate product revenues from any of these product candidates will be delayed. In addition, any delays in completing
ESSA’s clinical trials will increase costs, slow down product candidate development and approval process and could shorten
any periods during which ESSA may have the exclusive right to commercialize product candidates or allow competitors to bring products
to market before ESSA does, and jeopardize ESSA’s ability to commence product sales, which would impair ESSA’s ability
to generate revenues and may harm ESSA’s business, results of operations, financial condition and cash flows and future prospects.
In addition, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory
approval of ESSA’s proposed products or future product candidates.



23







ESSA may conduct trials for future product candidates
at sites outside the United States and the FDA may not accept data from trials conducted in such locations.



ESSA may in the future choose to conduct more clinical trials
outside the United States. Although the FDA may accept data from clinical trials conducted outside the United States, acceptance
of this data is subject to certain conditions imposed by the FDA. For example, the clinical trial must be well designed and conducted
and performed by qualified investigators in accordance with ethical principles. The trial population must also adequately represent
the U.S. population, and the data must be applicable to the U.S. population and U.S. medical practice in ways that the FDA deems
clinically meaningful. In addition, while these clinical trials are subject to the applicable local laws, FDA acceptance of the
data will be dependent upon its determination that the studies also complied with all applicable U.S. laws and regulations. There
can be no assurance the FDA will accept data from trials conducted outside of the United States. If the FDA chooses to not accept
data collected outside the United States, it would likely result in the need for additional trials, which would be costly and time-consuming
and delay or permanently halt the development of the Company’s proposed products or any future product candidates.



Even if the Company obtains marketing approval for any
potential future products, the Company will be subject to ongoing obligations and continued regulatory review, which may result
in significant additional expense.



Even if the Company obtains U.S. or Canadian regulatory approval
for a future product candidate, which would not occur until the Company successfully completes multiple clinical trials, including
Phase III clinical trials, the FDA or TPD may still impose significant restrictions on its indicated uses or marketing or the conditions
of approval, or impose ongoing requirements for potentially costly and time-consuming post-approval studies, including Phase 4
clinical trials or clinical outcome studies and post-market surveillance to monitor the safety and efficacy of ESSA’s potential
products. Even if the Company secures U.S. or Canadian regulatory approval, the Company would continue to be subject to ongoing
regulatory requirements governing manufacturing, labeling, packaging, storage, distribution, safety surveillance, advertising,
promotion, recordkeeping and reporting of adverse events and other post-market information. These requirements include registration
with the FDA, as well as continued compliance with GCP obligations, for any clinical trials that the Company conducts post approval.
In addition, manufacturers of drug products and their facilities are subject to continual review and periodic inspections by the
FDA and other regulatory authorities for compliance with current cGMP requirements relating to quality control, quality assurance
and corresponding maintenance of records and documents.



With respect to any product candidates for which ESSA obtains
regulatory approval, ESSA will be subject to post-marketing regulatory obligations, including the requirements by the FDA, EMA
and similar agencies in other jurisdictions to maintain records regarding product safety and to report to regulatory authorities
serious or unexpected adverse events. Compliance with extensive post-marketing record keeping and reporting requirements requires
a significant commitment of time and funds, which may limit ESSA’s ability to successfully commercialize approved products.



In addition, manufacturing of approved drug products must comply
with extensive regulations governing cGMP. Manufacturers and their facilities are subject to continual review and periodic inspections.
As ESSA will be dependent on third parties for manufacturing, ESSA will have limited ability to ensure that any entity manufacturing
products on its behalf is doing so in compliance with applicable cGMP requirements. Failure or delay by any manufacturer of ESSA’s
products to comply with cGMP regulations or to satisfy regulatory inspections could have a material adverse effect on ESSA, including
potentially preventing ESSA from being able to supply products for clinical trials or commercial sales. In addition, manufacturers
may need to obtain approval from regulatory authorities for product, manufacturing, or labeling changes, which requires time and
money to obtain and can cause delays in product availability. ESSA is also required to comply with good distribution practices
such as maintenance of storage and shipping conditions, as well as security of products, in order to ensure product quality determined
by cGMP is maintained throughout the distribution network. In addition, ESSA is subject to regulations governing the import and
export of its products.



Sales and marketing of pharmaceutical products are subject to
extensive federal and state or provincial laws governing on-label and off-label advertising, scientific/educational grants, gifts,
consulting and pricing and are also subject to consumer protection and unfair competition laws. Compliance with extensive regulatory
requirements requires training and monitoring of the sales force, which imposes a substantial cost on ESSA and ESSA’s collaborators.
To the extent any future ESSA products are marketed by collaborators, ESSA’s ability to ensure their compliance with applicable
regulations will be limited. In addition, ESSA is subject to regulations governing the design, testing, control, manufacturing,
distribution, labeling, quality assurance, packaging, storage, shipping, import and export of ESSA’s products and product
candidates.



24







Failure to comply with applicable legal and regulatory
requirements may result in administrative or judicial sanctions.



If the Company or a regulatory agency discovers previously unknown
problems with a product, such as adverse events of unanticipated severity or frequency, lack of efficacy, problems with the facility
where the product is manufactured, or the Company or its manufacturers fail to comply with applicable regulatory requirements,
the Company may be subject to the following administrative or judicial sanctions:



| | · | restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or voluntary or mandatory product recalls;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issuance of warning letters or untitled letters;
| | - | ------------------------------------------------



| | · | clinical holds;
| | - | ---------------



| | · | injunctions or the imposition of civil or criminal penalties or monetary fines;
| | - | -------------------------------------------------------------------------------



| | · | suspension or withdrawal of regulatory approval;
| | - | ------------------------------------------------



| | · | suspension of any ongoing clinical trials;
| | - | ------------------------------------------



| | · | refusal to approve pending applications or supplements to approved applications filed by the Company, or suspension or revocation of product license approvals;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | suspension or imposition of restrictions on operations, including costly new manufacturing requirements;
| | - | --------------------------------------------------------------------------------------------------------



| | · | withdrawal of the product from the market and product recalls; or
| | - | -----------------------------------------------------------------



| | · | product seizure or detention or refusal to permit the import or export of product.
| | - | ----------------------------------------------------------------------------------



The occurrence of any event or penalty described above may inhibit
the Company’s ability to commercialize potential products and generate revenue. Adverse regulatory action, whether pre- or
post-approval, can also potentially lead to product liability claims and increase the Company’s product liability exposure.



In the future, the regulatory climate might change due to changes
in the FDA and other regulatory authorities’ staffing, policies or regulations and such changes could impose additional post-marketing
obligations or restrictions and related costs. While it is impossible to predict future legislative or administrative action, if
the Company is not able to maintain regulatory compliance, the Company will not be able to market its drugs and its business could
suffer.



If clinical trials for ESSA’s potential future product
candidates are prolonged, delayed or stopped, ESSA may be unable to obtain regulatory approval and commercialize such product candidates
on a timely basis, or at all, which would require ESSA to incur additional costs and delay receipt of any product revenue.



ESSA may experience delays in any future preclinical studies
or clinical trials, and ESSA does not know whether future preclinical studies or clinical trials will begin on time, need to be
redesigned, enroll an adequate number of patients on time or be completed on schedule, if at all. The commencement of these planned
clinical trials could be substantially delayed or prevented by several factors, including:



| | · | discussions with the FDA or other regulatory agencies regarding the scope or design of ESSA’s clinical trials;
| | - | --------------------------------------------------------------------------------------------------------------



| | · | the limited number of, and competition for, suitable sites to conduct ESSA’s clinical trials, many of which may already
be engaged in other clinical trial programs, including some that may be for the same indication as ESSA’s product candidates;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



25







| | · | any delay or failure to obtain regulatory approval or agreement to commence a clinical trial in any of the countries where
enrollment is planned;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------



| | · | inability to obtain sufficient funds required for a clinical trial;
| | - | -------------------------------------------------------------------



| | · | clinical holds on, or other regulatory objections to, a new or ongoing clinical trial;
| | - | --------------------------------------------------------------------------------------



| | · | delay or failure to manufacture sufficient supplies of the product candidate for ESSA’s clinical trials;
| | - | --------------------------------------------------------------------------------------------------------



| | · | delay or failure to reach agreement on acceptable clinical trial agreement terms or clinical trial protocols with prospective
sites or clinical research organizations (“CROs”), the terms of which can be subject to extensive negotiation and may
vary significantly among different sites or CROs; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | delay or failure to obtain institutional review board, or IRB, approval to conduct a clinical trial at a prospective site.
| | - | --------------------------------------------------------------------------------------------------------------------------



The completion of ESSA’s clinical trials, once started,
could also be substantially delayed or prevented by several factors, including:



| | · | slower than expected rates of patient recruitment and enrollment;
| | - | -----------------------------------------------------------------



| | · | failure of patients to complete the clinical trial;
| | - | ---------------------------------------------------



| | · | the inability to enroll a sufficient number of patients in studies to ensure adequate statistical power to detect statistically
significant treatment effects;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | unforeseen safety issues, including severe or unexpected drug-related adverse effects experienced by patients, including possible
deaths;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------



| | · | lack of efficacy during clinical trials;
| | - | ----------------------------------------



| | · | termination of ESSA’s clinical trials by one or more clinical trial sites;
| | - | --------------------------------------------------------------------------



| | · | inability or unwillingness of patients or clinical investigators to follow ESSA’s clinical trial protocols;
| | - | -----------------------------------------------------------------------------------------------------------



| | · | inability to monitor patients adequately during or after treatment by ESSA and/or ESSA’s CROs;
| | - | ----------------------------------------------------------------------------------------------



| | · | ESSA’s CROs or clinical study sites failing to comply with regulatory requirements or meet their contractual obligations
to ESSA in a timely manner, or at all, deviating from the protocol or dropping out of a study;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the inability to produce or obtain sufficient quantities of the product candidate to complete clinical studies;
| | - | ---------------------------------------------------------------------------------------------------------------



| | · | the inability to scale up manufacture of the product candidate into a commercially acceptable formulation at reasonable cost;
| | - | -----------------------------------------------------------------------------------------------------------------------------



| | · | the inability to address any noncompliance with regulatory requirements or safety concerns that arise during the course of
a clinical trial; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the need to repeat or terminate clinical trials as a result of inconclusive or negative results or unforeseen complications
in testing.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------



Changes in regulatory requirements, policies and guidelines
may also occur and ESSA may need to significantly amend clinical trial protocols to reflect these changes with appropriate regulatory
authorities. Such changes may require ESSA to renegotiate terms with CROs or resubmit clinical trial protocols to IRBs for re-examination,
which may impact the costs, timing or successful completion of a clinical trial. ESSA’s clinical trials may be suspended
or terminated at any time by the FDA, other regulatory authorities, the IRB overseeing the clinical trial at issue, any of ESSA’s
clinical trial sites with respect to that site, or ESSA, due to a number of factors, including:



| | · | failure to conduct the clinical trial in accordance with regulatory requirements or ESSA’s clinical protocols;
| | - | --------------------------------------------------------------------------------------------------------------



| | · | unforeseen safety issues or any determination that a clinical trial presents unacceptable health risks;
| | - | -------------------------------------------------------------------------------------------------------



| | · | lack of adequate funding to continue the clinical trial due to unforeseen costs or other business decisions; and
| | - | ----------------------------------------------------------------------------------------------------------------



| | · | upon a breach or pursuant to the terms of any agreement with, or for any other reason by, current or future collaborators that
have responsibility for the clinical development of any of ESSA’s product candidates.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Product development costs for any of ESSA’s potential
products will increase if it has delays in testing or approval or if the Company needs to perform more or larger clinical studies
than planned. Additionally, changes in regulatory requirements and policies may occur and the Company may need to amend clinical
study protocols to reflect these changes. Amendments may require the Company to resubmit its clinical study protocols to the FDA,
TPD or similar regulatory authorities or IRBs for re-examination, which may impact the costs, timing or successful completion of
that study. Any delays in completing the Company’s future clinical trials will increase its costs, slow down its development
and approval process and jeopardize its ability to generate revenues. Any of these occurrences may have a material adverse effect
on the Company’s business, financial condition and prospects.



26







Failure to obtain regulatory approval in international
jurisdictions would prevent any potential future product candidates from being marketed outside the United States or Canada.



In order to market and sell ESSA’s potential future products
in the European Union and many other jurisdictions, it must obtain separate marketing approvals and comply with numerous and varying
regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to
obtain approval may differ substantially from that required to obtain FDA or TPD approval. The regulatory approval process outside
of the United States or Canada generally includes all of the risks associated with obtaining FDA or TPD approval. In addition,
in many countries outside the United States or Canada, it is required that the product be approved for reimbursement before the
product can be approved for sale in that country. Obtaining foreign regulatory approvals and compliance with foreign regulatory
requirements could result in significant delays, difficulties and costs for ESSA and could delay or prevent the introduction of
its potential products in certain countries. ESSA may not obtain approvals from regulatory authorities outside the United States
or Canada on a timely basis, if at all. A failure or delay in obtaining regulatory approval in one country may have a negative
effect on the regulatory approval process in others. ESSA may not be able to file for marketing approvals and may not receive necessary
approvals to commercialize its potential products in any market. If ESSA is unable to obtain approval of any of its future product
candidates by regulatory authorities in the European Union or another jurisdiction, the commercial prospects of that product candidate
may be significantly diminished and its business prospects could decline.



Recently enacted and future legislation in the United
States may increase the difficulty and cost for the Company to obtain marketing approval of, and commercialize, its potential future
products and affect the prices the Company may obtain.



In the United States, there have been a number of legislative
and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval for
ESSA’s potential future products, restrict or regulate post-approval activities and affect the Company’s ability to
profitably sell potential future products. Legislative and regulatory proposals have been made to expand post-approval requirements
and restrict sales and promotional activities for pharmaceutical products. The Company does not know whether additional legislative
changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such
changes on the marketing approvals of ESSA’s potential future products, if any, may be. In addition, increased scrutiny by
the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject
the Company to more stringent product labeling and post-marketing testing and other requirements.



In the United States, in recent years, Congress has considered
reductions in Medicare reimbursement levels for drugs administered by physicians. CMS also has authority to revise reimbursement
rates and to implement coverage restrictions for some drugs. Cost reduction initiatives and changes in coverage implemented through
legislation or regulation could decrease utilization of and reimbursement for any approved products, which in turn would affect
the price ESSA can receive for those products. While Medicare regulations apply only to drug benefits for Medicare

beneficiaries, private payors often follow Medicare coverage
policy and payment limitations in setting their own reimbursement rates. Therefore, any reduction in reimbursement that results
from federal legislation or regulation may result in a similar reduction in payments from private payors.



In March 2010, the Patient Protection
and Affordable Care Act (or, the ACA) was signed into law. This law substantially changes the way healthcare is financed
by both governmental and private insurers in the United States, and significantly impacts the pharmaceutical industry. The ACA
is intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against
fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new taxes and fees on
pharmaceutical and medical device manufacturers, and impose additional health policy reforms. Among other things, the ACA imposed
an annual fee on manufacturers of branded prescription drugs, increased the statutory minimum rebates a manufacturer must pay under
the Medicaid Drug Rebate Program; expanded the healthcare fraud and abuse laws, implemented a Medicare Part D coverage gap discount
program, in which manufacturers must agree to offer discounts off negotiated prices; expanded the eligibility criteria for Medicaid
programs; expanded the entities eligible for discounts under the Public Health Service Act pharmaceutical pricing program; and
imposed a number of ssubstantial new compliance provisions related to pharmaceutical companies' interactions with healthcare practitioners.
If not repealed or amended, it is likely that the Affordable Care Act will continue the pressure on pharmaceutical pricing, especially
under the Medicare and Medicaid programs, and may also increase our regulatory burdens and operating costs



27







Since its enactment, there have been judicial and
Congressional challenges to certain aspects of the ACA, including a January 2017 Executive Order issued by President Trump
that directed federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or
delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals,
healthcare providers , health insurers or manufacturers of pharmaceutical or medical devices. President Trump and the United
States Congress have also proposed repealing and replacing the ACA, including the insurance mandate. It remains to be seen,
however, precisely what the new legislation would provide, when it will be enacted and what impact it will have on the
availability of healthcare and containing of lowering the cost of healthcare. Such reforms, however, could have an adverse
effect on anticipated revenue from product candidates that ESSA may successfully develop and for which ESSA may obtain
marketing approval and may affect ESSA’s overall financial condition and ability to develop or commercialize product
candidates. For example, it is possible that these repeal and replacement initiatives, if enacted into law, could ultimately
result in fewer individuals having health insurance coverage or in individuals having insurance coverage with less generous
benefits. The scope of potential future legislation to repeal and replace the ACA provisions is highly uncertain in many
respects, as is the effect of such future legislation on ESSA’s business and prospects.



In addition, other legislative changes have been proposed and
adopted since the ACA was enacted. Beginning April 1, 2013, Medicare payments for all items and services, including drugs and biologics,
were reduced by 2% under the sequestration (i.e., automatic spending reductions) required by the Budget Control Act of 2011, as
amended by the American Taxpayer Relief Act of 2012. The Bipartisan Budget Act of 2013 extended the 2% reduction to 2023, and the
Protecting Access to Medicare Act of 2014 extended the 2% reduction, on average, to 2025. If Congress does not take action in the
future to modify these sequestrations, Medicare Part D plans could seek to reduce their negotiated prices for drugs. ESSA cannot
be sure whether additional legislative changes will be enacted, or whether FDA regulations, guidance or interpretations will be
changed, or what the impact of such changes on its product candidates, if any, may be.



Further, the FDA's policies may change and additional government
regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. For example, in December
2016, the 21st Century Cures Act, or Cures Act, was signed into law. The Cures Act, among other things, is intended to modernize
the regulation of drugs and biologics and spur innovation, but its ultimate implementation is unclear. If we are slow or unable
to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain
regulatory compliance, we may lose any marketing approval that we may have obtained, which would adversely affect our business,
prospects and ability to achieve or sustain profitability.



ESSA’s business may be materially adversely affected
by new legislation, new regulatory requirements and the continuing efforts of governmental and third-party payors to contain or
reduce the costs of healthcare through various means.



Governments and regulatory authorities in Europe and other markets
in which ESSA intends to sell its products may propose and adopt new legislation and regulatory requirements relating to pharmaceutical
approval criteria and manufacturing requirements. Such legislation or regulatory requirements, or the failure to comply with such,
could adversely impact ESSA’s operations and could have a material adverse effect on ESSA’s business, financial condition
and results of operations.



28







In recent years, national, federal, provincial, state, and local
officials and legislators have proposed, or are reportedly considering proposing, a variety of price based reforms to the healthcare
systems in the European Union, the United States and other countries. Some proposals include measures that would limit or eliminate
payments for certain medical procedures and treatments or subject the pricing of pharmaceuticals to government control. Furthermore,
in certain foreign markets, the pricing or profitability of healthcare products is subject to government controls and other measures
that have been prepared by legislators and government officials. While ESSA cannot predict whether any such legislative or regulatory
proposals or reforms will be adopted, the adoption of any such proposals or reforms could adversely affect the commercial viability
of the Company’s existing and potential products. Significant changes in the healthcare system in the European Union and
other countries may have a substantial impact on the manner in which ESSA conducts its business. Such changes could also have a
material adverse effect on ESSA’s business, financial condition and results of operations.



ESSA relies on third parties to conduct its preclinical
studies and clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines,
this could substantially harm ESSA’s business because it may not be able to obtain regulatory approval for or commercialize
potential future product candidates in a timely manner or at all.



ESSA has extensively relied upon and plans to continue to extensively
rely upon third-party CROs to monitor and manage data for its ongoing preclinical and clinical programs. ESSA relies on these parties
for execution of its preclinical studies and clinical trials, and it controls only some aspects of their activities. Nevertheless,
ESSA is responsible for ensuring that each of its studies and clinical trials is conducted in accordance with the applicable protocol
and legal, regulatory and scientific standards, and ESSA’s reliance on the CROs does not relieve it of these responsibilities.
ESSA also relies on third parties to assist in conducting its preclinical studies in accordance with GLP and the Animal Welfare
Act requirements. ESSA and its CROs are required to comply with federal regulations and current GCP, which are international standards
meant to protect the rights and health of patients that are enforced by the FDA and comparable foreign regulatory authorities for
all of ESSA’s products in clinical development. Regulatory authorities enforce GCP through periodic inspections of trial
sponsors, principal investigators and trial sites. If ESSA or any of its CROs fail to comply with applicable GCP, the clinical
data generated in ESSA’s clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities
may require it to perform additional clinical trials before approving ESSA’s marketing applications. ESSA cannot assure you
that upon inspection by a given regulatory authority, such regulatory authority will determine that any of its clinical trials
comply with GCP requirements. In addition, ESSA’s clinical trials must be conducted with product produced under cGMP requirements.
Failure to comply with these regulations may require ESSA to repeat preclinical studies and clinical trials, which would delay
the regulatory approval process.



ESSA’s CROs are not its employees, and except for remedies
available to it under ESSA’s agreements with such CROs, it cannot control whether or not they devote sufficient time and
resources to our ongoing clinical, nonclinical and preclinical programs. If CROs do not successfully carry out their contractual
duties or obligations or meet expected deadlines or if the quality or accuracy of the clinical data they obtain is compromised
due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, ESSA’s clinical trials
may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize future
product candidates. As a result, ESSA’s results of operations and the commercial prospects for its future product candidates
would be harmed, its costs could increase and its ability to generate revenues could be delayed.



Because ESSA has relied on third parties, its internal capacity
to perform these functions is limited. Outsourcing these functions involves risk that third parties may not perform to ESSA’s
standards, may not produce results in a timely manner or may fail to perform at all. In addition, the use of third-party service
providers requires ESSA to disclose our proprietary information to these parties, which could increase the risk that this information
will be misappropriated. ESSA currently has a small number of employees, which limits the internal resources we have available
to identify and monitor third-party providers. To the extent ESSA is unable to identify and successfully manage the performance
of third-party service providers in the future, its business may be adversely affected. Though ESSA carefully manages its relationships
with its CROs, there can be no assurance that it will not encounter challenges or delays in the future or that these delays or
challenges will not have a material adverse impact on ESSA’s business, results of operations, financial condition and cash
flows and future prospects.



29







If ESSA’s relationships with CROs terminate, its
drug development efforts could be delayed.



ESSA relies on third-party vendors and CROs for preclinical
studies and clinical trials related to its drug development efforts. Switching or adding additional CROs would involve additional
cost and requires management time and focus. ESSA’s CROs have the right to terminate their agreements with it in the event
of an uncured material breach. If any of ESSA’s relationships with its third-party CROs terminate, it could experience a
significant delay in identifying, qualifying and managing performance of a comparable third-party service provider, which could
adversely affect its development programs. In addition, there is a natural transition period when a new CRO commences work and
the new CRO may not provide the same type or level of services as the original provider. ESSA may not be able to enter into arrangements
with alternative CROs or to do so on commercially reasonable terms.



ESSA has no experience manufacturing product candidates
on a large clinical or commercial scale and has no manufacturing facility. As a result, ESSA may in the future be dependent on
third party manufacturers for the manufacture of potential future product candidates as well as on third parties for ESSA’s
supply chain, and if ESSA experiences problems with any future third parties, the manufacturing of ESSA’s potential future
product candidates or products could be delayed.



ESSA does not own or operate facilities for the manufacture
of future potential product candidates. ESSA currently has no plans to build internal clinical or commercial scale manufacturing
capabilities. As a result, ESSA potentially may rely on third-party contract manufacturing organizations, in the future, for the
chemical manufacture of active pharmaceutical ingredients for ESSA’s potential products. Also, ESSA may potentially rely
on another contract manufacturing organization for the production of the final product formulation. To meet ESSA’s projected
potential needs for clinical supplies to support its activities through regulatory approval and commercial manufacturing, the contract
manufacturing organizations with whom ESSA may potentially work will need to increase the scale of production. ESSA may need to
identify additional contract manufacturing organizations for continued production of supply for product candidates in the event
the current potential contract manufacturing organizations ESSA chooses to utilize are unable to scale production, or if ESSA otherwise
experiences any problems with them. Although alternative third-party suppliers with the necessary manufacturing and regulatory
expertise and facilities exist, it could be expensive and take a significant amount of time to arrange for alternative suppliers.
ESSA may encounter technical difficulties or delays in the transfer of any future potential product manufacturing on a commercial
scale to additional third-party manufacturers. ESSA may be unable to enter into agreements for commercial supply with third-party
manufacturers, or may be unable to do so on acceptable terms. If ESSA is unable to arrange for alternative third-party manufacturing
sources or to do so on commercially reasonable terms or in a timely manner, ESSA may not be able to complete development of its
potential product candidates, market or distribute them.



Reliance on third-party manufacturers entails risks to which
ESSA would not be subject if ESSA manufactured product candidates or products ourselves, including reliance on the third party
for regulatory compliance and quality assurance, the possibility of breach of the manufacturing agreement by the third party because
of factors beyond ESSA’s control, including a failure to synthesize and manufacture product candidates or any products ESSA
may eventually commercialize in accordance with ESSA’s specifications and the possibility of termination or nonrenewal of
the agreement by the third party, based on its own business priorities, at a time that is costly or damaging to ESSA. In addition,
the FDA and other regulatory authorities require that ESSA’s product candidates and any products that ESSA may eventually
commercialize be manufactured according to GMP and similar foreign standards. Any failure by ESSA’s third-party manufacturers
to comply with GMP or failure to scale up manufacturing processes, including any failure to deliver sufficient quantities of product
candidates in a timely manner, could lead to a delay in, or failure to obtain, regulatory approval of any of ESSA’s potential
product candidates and could cause ESSA to incur higher costs and prevent ESSA from commercializing product candidates successfully.
In addition, such failure could be the basis for the FDA to issue a warning letter, withdraw approvals for product candidates previously
granted to ESSA, or take other regulatory or legal action, including recall or seizure of outside supplies of the product candidate,
total or partial suspension of production, suspension of ongoing clinical trials, refusal to approve pending applications or supplemental
applications, detention or product, refusal to permit the import or export of products, injunction, or imposing civil and criminal
penalties.



Any significant disruption in ESSA’s supplier relationships
could harm the Company’s business. Any significant delay in the supply of a product candidate or its key materials for a
potential ongoing clinical study could considerably delay completion of ESSA’s potential clinical trials, product testing
and regulatory approval of ESSA’s potential product candidates. If ESSA’s manufacturers or ESSA is unable to purchase
these key materials after regulatory approval has been obtained for ESSA’s product candidates, the commercial launch of ESSA’s
product candidates would be delayed or there would be a shortage in supply, which would impair ESSA’s ability to generate
revenues from the sale of its product candidates. It may take several years to establish an alternative source of supply for ESSA’s
product candidates and to have any such new source approved by the FDA.



30







Risks Related to ESSA’s Intellectual Property



ESSA relies on proprietary technology, the protection
of which can be unpredictable and costly.



The Company’s activities depend, in part, on its ability
to (i) obtain and maintain patents, trade secret protection and operate without infringing the intellectual proprietary rights
of third parties, (ii) successfully defend these patents (including patents owned by or licensed to the Company) against third-party
challenges and (iii) successfully enforce these patents against third-party competitors. There is no assurance that the Company
will be granted such patents or proprietary technology or that such granted patents or proprietary technology will not be circumvented
through the adoption of a competitive, though non-infringing, process or product. The patent positions of pharmaceutical companies
can be highly uncertain and involve complex legal, scientific and factual questions for which important legal principles remain
unresolved. Changes in either the patent laws or in interpretations of patent laws may diminish the value of the Company’s
intellectual property. Accordingly, the Company cannot predict the breadth of claims that may be allowable or enforceable in its
patents (including patents owned by or licensed to the Company). Failure to protect the Company’s existing and future intellectual
property rights could seriously harm its business and prospects and may result in the loss of its ability to exclude others from
using the Company’s technology or its own right to use the technologies. If the Company does not adequately ensure the right
to use certain technologies, it may have to pay others for the right to use their intellectual property, pay damages for infringement
or misappropriation or be enjoined from using such intellectual property. The Company’s patents do not guarantee the right
to use the technologies if other parties own intellectual property rights that are necessary in order to use such technologies.
The Company’s patent position is subject to complex factual and legal issues that may give rise to uncertainty as to the
validity, scope and enforceability of a particular patent.



In addition, there is a risk that improved versions of ESSA’s
own product developed by third parties will be granted patent protection and compete with ESSA’s products. For example, any
patents ESSA obtains may not be sufficiently broad to prevent others from utilizing its technologies or from developing competing
products and technologies. Third parties may attempt to circumvent ESSA’s patents by means of alternative designs and processes
or may independently develop similar products, duplicate any of ESSA’s products not under patent protection, or design around
the inventions ESSA claims in any of its existing patents, existing patent applications or future patents or patent applications.
The actual protection afforded by a patent varies on a product-by-product basis, from country to country and depends upon many
factors, including the type of patent, the scope of ESSA’s coverage, the availability of regulatory related extensions, the
availability of legal remedies in a particular country and the validity and enforceability of the patents. It is impossible to
anticipate the breadth or degree of protection that patents will afford products developed by ESSA or their underlying technology.



In any case, there can be no assurance that:



| | · | any rights under Canadian, U.S. or foreign patents owned by the Company or other patents that third parties license to the Company will not be curtailed;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the Company was the first inventor of inventions covered by its issued patents or pending applications or that the Company was the first to file patent applications for such inventions;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the Company’s pending or future patent applications will be issued with the breadth of claim coverage sought by the Company, or be issued at all;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the Company’s competitors will not independently develop or patent technologies that are substantially equivalent or superior to the Company’s technologies;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | third parties will not attempt to circumvent ESSA’s patents by means of alternative designs and processes or that third parties will not also independently develop similar products, duplicate any of ESSA’s products not under patent protection, or design around the inventions ESSA claims in any of the Company’s existing patents, existing patent applications or future patents or patent applications;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



31









| | · | any of the Company’s trade secrets will not be learned independently by its competitors; or
| | - | -------------------------------------------------------------------------------------------



| | · | the steps the Company takes to protect its intellectual property will be adequate.
| | - | ----------------------------------------------------------------------------------



In addition, effective patent, trademark, copyright and trade
secret protection may be unavailable, limited or not sought in certain foreign countries. Further, countries ESSA may sell to may
not protect its intellectual property to the same extent as the laws of the United States, Canada or Europe, and may lack rules
and procedures required for defending ESSA’s patents.



There is a risk that any patents issued relating to ESSA’s
products or any patents licensed to ESSA may be successfully challenged or that the practice of its products might infringe the
patents of third parties. If the practice of ESSA’s products infringes the patents of third parties, the Company may be required
to design around such patents, potentially causing increased costs and delays in product development and introduction or precluding
ESSA from developing, manufacturing or selling its planned products. In addition, disputes may arise as to the rights to know-how
and inventions among ESSA’s employees and consultants who use intellectual property owned by others for the work performed
for the Company. The scope and validity of patents which may be obtained by third parties, the extent to which ESSA may wish or
need to obtain patent licenses and the cost and availability of such licenses are currently unknown. If such licenses are obtained,
it is likely they would be royalty bearing, which could reduce ESSA’s income. If licenses cannot be obtained on an economical
basis, delays in market introduction of its planned products could occur or introduction could be prevented, in some cases causing
the expenditure of substantial funds.



In certain instances, ESSA may elect not to seek patent protection
but instead rely on the protection of the Company’s technology through confidentiality agreements or trade secrets. There
can be no assurance that these agreements will not be breached, that the Company will have adequate remedies for any breach or
that such persons or institutions will not assert rights to intellectual property arising out of these relationships. The value
of ESSA’s assets could also be reduced to the extent that third parties are able to obtain patent protection with respect
to aspects of ESSA’s technology or products or that confidential measures ESSA has in place to protect the Company’s
proprietary technology are breached or become unenforceable. However, third parties may independently develop or obtain similar
technology and such third parties may be able to market competing products and obtain regulatory approval through a showing of
equivalency to one of ESSA’s products which has obtained regulatory approval, without being required to undertake the same
lengthy and expensive clinical studies that ESSA would have already completed. The cost of enforcing the Company’s patent
rights or defending rights against infringement charges by other patent holders may be significant and could limit operations.



Litigation may also be necessary to enforce patents issued or
licensed to ESSA or to determine the scope and validity of a third party’s proprietary rights. ESSA could incur substantial
costs if the Company is required to defend itself in patent suits brought by third parties, if ESSA participates in patent suits
brought against or initiated by ESSA’s corporate collaborators or if ESSA initiates such suits. The Company may not have
the necessary resources to participate in or defend any such activities or litigation. Even if ESSA did have the resources to vigorously
pursue its interests in litigation, because of the complexity of the subject matter, it is impossible to predict whether ESSA would
prevail in any such action. Any claims of patent infringement asserted by third parties may:



| | · | divert the time and attention of the Company’s technical personnel and management;
| | - | ----------------------------------------------------------------------------------



| | · | cause product development or commercialization delays;
| | - | ------------------------------------------------------



| | · | require the Company to cease or modify its use of the technology and/or develop non-infringing technology; or
| | - | -------------------------------------------------------------------------------------------------------------



| | · | require the Company to enter into royalty or licensing agreements.
| | - | ------------------------------------------------------------------



32







An adverse outcome in litigation or an interference to determine
priority or other proceeding in a court or patent or selling office could subject ESSA to significant liabilities, require disputed
rights to be licensed from third parties or require ESSA to cease using certain technology or products, any of which may have a
material adverse effect on the Company’s business, financial condition and results of operations.



ESSA may not be able to protect its intellectual property
rights throughout the world.



Filing, prosecuting and defending patents on ESSA’s potential
future product candidates throughout the world would be prohibitively expensive. In addition, the laws of some foreign countries
do not protect intellectual property rights to the same extent as federal and state laws in the United States or federal and provincial
laws in Canada. Consequently, ESSA may not be able to prevent third-parties from practicing its inventions in all countries outside
the United States or Canada, or from selling or importing products made using its inventions in and into the United States, Canada
or other jurisdictions. Competitors may use ESSA’s technologies in jurisdictions where it has not obtained patent protection
to develop their own products, and may export otherwise infringing products to territories where ESSA has patent protection, but
where enforcement is not as strong as that in the United States or Canada. These products may compete with ESSA’s products
in jurisdictions where it does not have any issued patents and its patent claims or other intellectual property rights may not
be effective or sufficient to prevent them from so competing.



Many companies have encountered significant problems in protecting
and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain
developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating
to biopharmaceuticals, which could make it difficult for ESSA to stop the infringement of its patents or marketing of competing
products in violation of its proprietary rights generally. Proceedings to enforce ESSA’s patent rights in foreign jurisdictions
could result in substantial cost and divert its efforts and attention from other aspects of its business. ESSA may not prevail
in any lawsuits that it initiates and the damages or other remedies awarded, if any, may not be commercially meaningful.



The requirements for patentability may differ in certain countries,
particularly developing countries. For example, unlike other countries, China has a heightened requirement for patentability, and
specifically requires a detailed description of medical uses of a claimed drug. In India, unlike the United States, there is no
link between regulatory approval of a drug and its patent status. Furthermore, generic or biosimilar drug manufacturers or other
competitors may challenge the scope, validity or enforceability of ESSA’s patents, requiring it to engage in complex, lengthy
and costly litigation or other proceedings. Generic or biosimilar drug manufacturers may develop, seek approval for, and launch
biosimilar versions of ESSA’s products. In addition to India, certain countries in Europe and developing countries, including
China, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In those
countries, ESSA may have limited remedies if patents are infringed or if it is compelled to grant a license to a third-party, which
could materially diminish the value of those patents. This could limit ESSA’s potential revenue opportunities. Accordingly,
ESSA’s efforts to enforce intellectual property rights around the world may be inadequate to obtain a significant commercial
advantage from the intellectual property that it owns or licenses.



ESSA may be subject to claims by third-parties asserting
that ESSA, or ESSA’s employees have misappropriated their intellectual property, or claiming ownership of what ESSA regards
as its own intellectual property.



Certain of ESSA’s employees, including senior management,
were previously employed, or continue to be employed, at universities or other public institutions, or at other biotechnology or
pharmaceutical companies, including ESSA’s competitors or potential competitors. Some of these employees, executed proprietary
rights, nondisclosure and noncompetition agreements, in connection with such previous employment. ESSA may be subject to claims
that ESSA, or these employees, have used or disclosed confidential information or intellectual property, including trade secrets
or other proprietary information, of any such employee’s former employer. If ESSA fails in prosecuting or defending any such
claims, in addition to paying monetary damages, ESSA may lose valuable intellectual property rights or personnel or sustain damages.
Such intellectual property rights could be awarded to a third-party, and ESSA could be required to obtain a license from such third-party
to commercialize ESSA’s technology or products. Such a license may not be available on commercially reasonable terms or at
all. Even if ESSA is successful in defending against such claims, litigation could result in substantial costs and be a distraction
to management.



33







Obtaining and maintaining ESSA’s patent protection
depends on compliance with various procedural, document submissions, fee payment and other requirements imposed by governmental
patent agencies, and its patent protection could be reduced or eliminated for non-compliance with these requirements.



Periodic maintenance and annuity fees on any issued patent are
due to be paid to the United States Patent and Trademark Office (“USPTO”), the Canadian Intellectual Property
Office (“CIPO”) and other foreign patent agencies in several stages over the lifetime of the patent. The USPTO,
CIPO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment
and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment
of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result
in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant
jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include, but are
not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly
legalize and submit formal documents. If ESSA or its future potential licensors fail to maintain the patents and patent applications
covering product candidates, ESSA’s competitive position would be adversely affected.



Other Risks Related to ESSA’s Business



Third-party coverage and reimbursement and health care
cost containment initiatives and treatment guidelines may constrain the Company’s future revenues.



In many of the markets ESSA hopes to sell future products in,
successful commercialization of any potential future product candidate will depend, in part, on the extent to which coverage and
reimbursement for such product candidates and related treatments will be available from government healthcare programs, private
health insurers, managed care plans and other organizations. Government authorities and third-party payors, such as private health
insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels. Third-party
payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. However, no
uniform policy for coverage and reimbursement for products exists among third-party payors in the United States. Therefore, coverage
and reimbursement for products can differ significantly from payor to payor. As a result, the coverage determination process is
often a time-consuming and costly process that will require ESSA to provide scientific and clinical support for the use of ESSA’s
products to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained
in the first instance.



A primary trend in the U.S. healthcare industry is cost containment.
Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement
for particular medications. Increasingly, third-party payors are requiring that drug companies provide them with predetermined
discounts from list prices and are challenging the prices charged for medical products. ESSA cannot be sure that coverage and reimbursement
will be available for any product candidates that it or any future collaborator commercialize and, if reimbursement is available,
the level of reimbursement. In addition, coverage and reimbursement may impact the demand for, or the price of, any product candidate
for which ESSA or a collaborator obtains marketing approval. If coverage and reimbursement are not available or reimbursement is
available only to limited levels, ESSA or its collaborators may not be able to successfully commercialize any product candidate
for which marketing approval is obtained.



There may be significant delays in obtaining coverage and reimbursement
for newly approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the TPD, FDA or
other regulatory authorities. Moreover, eligibility for coverage and reimbursement does not imply that a drug will be paid for
in all cases or at a rate that covers ESSA’s costs, including research, development, manufacture, sale and distribution expenses.
Interim reimbursement levels for new drugs, if applicable, may also be insufficient to cover ESSA’s and any collaborator’s
costs and may not be made permanent. Reimbursement rates may vary according to the use of the drug and the clinical setting in
which it is used, may be based on reimbursement levels already set for lower cost drugs and may be incorporated into existing payments
for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs
or private payers and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be
sold at lower prices than in the United States. ESSA’s or any collaborator’s inability to promptly obtain coverage
and profitable payment rates from both government-funded and private payers for any approved products that ESSA or its collaborators
develop could have a material adverse effect on ESSA’s operating results, ability to raise capital needed to commercialize
product candidates and overall financial condition.



34







If the Company is not successful in attracting and retaining
highly qualified personnel, the Company may not be able to successfully implement its business strategy.



The Company’s ability to compete in the highly competitive
pharmaceuticals industry depends in large part upon its ability to attract and retain highly qualified managerial, scientific and
medical personnel. Competition affects the Company’s ability to hire and retain highly qualified personnel on acceptable
terms. The Company is highly dependent on its management, scientific and medical personnel. The Company’s management team
has substantial knowledge in many different aspects of drug development and commercialization. Despite the Company’s efforts
to retain valuable employees, members of its management, scientific and medical teams may terminate their employment with the Company
on short notice or, potentially, without any notice at all. The loss of the services of any of the Company’s executive officers
or other key employees could potentially harm its business, operating results or financial condition. The Company’s success
may also depend on its ability to attract, retain and motivate highly skilled junior, mid-level, and senior managers and scientific
personnel. Other pharmaceutical companies with which the Company competes for qualified personnel have greater financial and other
resources, different risk profiles, and a longer history in the industry than the Company does. They also may provide more diverse
opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high-quality candidates
than what the Company has to offer. If the Company is unable to continue to attract and retain high-quality personnel, the rate
and success at which the Company can develop and commercialize product candidates would be limited.



The directors and officers of ESSA may be subject to conflicts
of interest.



Some of the directors and officers are engaged and will continue
to be engaged in the search for additional business opportunities on behalf of other corporations and situations may arise where
these directors and officers will be in direct competition with the Company. Not all of the Company’s directors or officers
are subject to non-competition agreements. Some of the directors and officers of the Company are or may become directors or officers
of the other companies engaged in other business ventures whose operations may, from time to time, be in direct competition with
ESSA’s operations. Conflicts, if any, will be dealt with in accordance with the relevant provisions of the Business Corporations
Act (British Columbia) and under the Company’s articles of incorporation.



The Company faces intense competition from other biotechnology
and pharmaceutical companies and its operating results will suffer if the Company fails to compete effectively.



The biotechnology and pharmaceutical industries are intensely
competitive and subject to rapid and significant technological change. The Company’s potential competitors in the United
States, Canada, and globally include large, well-established pharmaceutical companies, specialty pharmaceutical sales and marketing
companies and specialized cancer treatment companies. Many companies, as well as research organizations, currently engage in, or
have in the past engaged in, efforts related to the development of products in the same therapeutic areas as ESSA does. Due to
the size of the prostate cancer treatment market and the large unmet medical need for products that treat CRPC, a number of the
world’s largest pharmaceutical companies are developing, or could potentially develop, products that could compete with the
Company’s future product candidates.



Many of the companies developing competing technologies and
products in ESSA’s field have significantly greater financial resources and expertise in discovery, R&D, manufacturing,
preclinical studies and clinical testing, obtaining regulatory approvals and marketing than ESSA does. Other smaller companies
may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
Academic institutions, government agencies and other public and private research organizations may also conduct research, seek
patent protection and establish collaborative arrangements for discovery, research, clinical development and marketing of products
similar to ESSA’s. There is a risk that one or more of ESSA’s competitors may develop more effective or more affordable
products and that such competitors will commercialize products that will render its product candidates obsolete. ESSA faces competition
with respect to product efficacy and safety, ease of use and adaptability to various modes of administration, acceptance by physicians,
the timing and scope of regulatory approvals, availability of resources, reimbursement coverage, price and patent positions of
others. In addition, these companies and institutions also compete with ESSA in recruiting and retaining qualified personnel. If
the Company is not able to compete effectively against its current and future competitors, its business will not grow and its financial
condition and operations will suffer materially adverse effects.



35







The Company may face exposure to adverse movements in
foreign currency exchange rates.



ESSA’s business may expand internationally and as a result,
a significant portion of its revenues, expenses, current assets and current liabilities may be preliminary denominated in foreign
currencies, while its financial statements are expressed in U.S. dollars. A decrease in the value of such foreign currencies relative
to the U.S. dollar could result in losses in revenues from currency exchange rate fluctuations. To date, ESSA has not hedged against
risks associated with foreign exchange rate exposure. ESSA cannot be sure that any hedging techniques it may implement in the future
will be successful or that its business, financial condition, and results of operations will not be materially adversely affected
by exchange rate fluctuations.



If ESSA is not able to convince public payors and hospitals
to include ESSA’s potential future products on their approved formulary lists, revenues may not meet expectations and ESSA’s
business, results of operations and financial condition may be adversely affected.



Hospitals establish formularies, which are lists of drugs approved
for use in the hospital. If a drug is not included on the hospital’s formulary, the ability to promote and sell ESSA’s
potential future products may be limited or denied. If ESSA fails to secure and maintain formulary inclusion for potential future
products on favorable terms or are significantly delayed in doing so, ESSA may have difficulty achieving market acceptance of potential
future products and ESSA’s business, results of operations and financial condition could be materially adversely affected.



The Company has never marketed a drug before, and if the
Company is unable to establish an effective sales force and marketing infrastructure, or enter into acceptable third-party sales
and marketing or licensing arrangements, the Company may be unable to generate any revenue.



ESSA does not currently have an infrastructure for the sales,
marketing and distribution of pharmaceutical drug products and the cost of establishing and maintaining such an infrastructure
may exceed the cost-effectiveness of doing so. In order to market any products that may be approved by the FDA and comparable foreign
regulatory authorities, ESSA must build its sales, marketing, managerial and other nontechnical capabilities or make arrangements
with third parties to perform these services. If ESSA is unable to establish adequate sales, marketing and distribution capabilities,
whether independently or with third parties, ESSA may not be able to generate product revenue and may not become profitable. ESSA
will be competing with many companies that currently have extensive and well-funded sales and marketing operations. Without an
internal commercial organization or the support of a third party to perform sales and marketing functions, ESSA may be unable to
compete successfully against these more established companies.



In order to establish the Company’s sales and marketing
infrastructure, the Company will need to expand the size of its organization and the Company may experience difficulties in managing
this growth.



As the Company’s development and commercialization plans
and strategies develop, the Company expects that it will need to expand the size of its employee base for managerial, operational,
sales, marketing, financial and other resources. Future growth would impose significant added responsibilities on members of management,
including the need to identify, recruit, maintain, motivate and integrate additional employees. In addition, the Company’s
management may have to divert a disproportionate amount of its attention away from the Company’s day-to-day activities and
devote a substantial amount of time to managing these growth activities. The Company’s future financial performance and its
ability to commercialize its potential products and any other future product candidates and its ability to compete effectively
will depend, in part, on the Company’s ability to effectively manage any future growth.



36







ESSA’s potential future products may, if approved
for sale, not achieve or maintain expected levels of market acceptance, which could have a material adverse effect on its business,
financial condition and results of operations and could cause the market value of its securities to decline.



Even if ESSA is able to obtain regulatory approvals for its
product candidates, the success of those products is dependent upon achieving and maintaining market acceptance. New product candidates
that appear promising in development may fail to reach the market or may have only limited or no commercial success. Levels of
market acceptance for ESSA’s products could be impacted by several factors, many of which are not within ESSA’s control,
including but not limited to:



| | · | demonstration of clinical safety and efficacy of ESSA’s potential products and other possible AR NTD inhibitors generally;
| | - | --------------------------------------------------------------------------------------------------------------------------



| | · | safety, efficacy, convenience and cost-effectiveness of ESSA’s products compared to products of its competitors;
| | - | ----------------------------------------------------------------------------------------------------------------



| | · | the prevalence and severity of any adverse side effects;
| | - | --------------------------------------------------------



| | · | scope of approved uses and marketing approval;
| | - | ----------------------------------------------



| | · | limitations or warnings contained in FDA-approved labeling;
| | - | -----------------------------------------------------------



| | · | timing of market approvals and market entry;
| | - | --------------------------------------------



| | · | the willingness of physicians to prescribe ESSA’s potential products and of the target patient population to try new therapies;
| | - | -------------------------------------------------------------------------------------------------------------------------------



| | · | the inclusion of AR NTD inhibitor products in applicable treatment guidelines;
| | - | ------------------------------------------------------------------------------



| | · | new procedures or methods of treatment that may reduce the incidences of any of the indications for which ESSA’s potential products shows utility;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------



| | · | difficulty in, or excessive costs to, manufacture;
| | - | --------------------------------------------------



| | · | infringement or alleged infringement of the patents or intellectual property rights of others;
| | - | ----------------------------------------------------------------------------------------------



| | · | the introduction of any new products, including generic AR NTD inhibitor products, that may in the future become available to treat indications for which ESSA’s potential product may be approved;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | availability of alternative products from ESSA’s competitors;
| | - | -------------------------------------------------------------



| | · | acceptance of the price of ESSA’s products; and
| | - | -----------------------------------------------



| | · | ability to market ESSA’s products effectively at the retail level.
| | - | ------------------------------------------------------------------



In addition, the success of any new product will depend on ESSA’s
ability to either successfully build its in-house sales capabilities or to secure new, or to realize the benefits of existing arrangements
with third-party marketing or distribution partners. Seeking out, evaluating and negotiating marketing or distribution agreements
may involve the commitment of substantial time and effort and may not ultimately result in an agreement. In addition, the third-party
marketing or distribution partners may not be as successful in promoting ESSA’s products as it had anticipated. If ESSA is
unable to commercialize new products successfully, whether through a failure to achieve market acceptance, a failure to build its
own in-house sales capabilities, a failure to secure new marketing partners or to realize the benefits of ESSA’s arrangements
with existing marketing partners, there may be a material adverse effect on ESSA’s business, financial condition and results
of operations and it could cause the market value of ESSA’s securities to decline.



37







In addition, by the time any products are ready to be commercialized,
what ESSA believes to be the market for these products may have changed. The Company’s estimates of the number of patients
who have received or might have been candidates to use a specific product may not accurately reflect the true market or market
prices for such products or the extent to which such products, if successfully developed, will actually be used by patients. ESSA’s
failure to successfully introduce and market its products that are under development would have a material adverse effect on its
business, financial condition and results of operations.



The Company may acquire businesses or products or form
strategic alliances in the future and the Company may not realize the benefits of such acquisitions.



The Company may acquire additional businesses or products, form
strategic alliances or create joint ventures with third parties that the Company believes will complement or augment its existing
business.



If the Company acquires businesses in the future, it may not
be able to realize the benefit of acquiring such businesses if the Company is unable to successfully integrate them with its existing
operations and company culture. The Company may encounter numerous difficulties in developing, manufacturing and marketing any
new products resulting from a strategic alliance or acquisition that delay or prevent the Company from realizing their expected
benefits. The potential failure of the due diligence processes to identify significant problems, liabilities or other shortcomings
or challenges with respect to intellectual property, product quality, revenue recognition or other accounting practices, taxes,
corporate governance and internal controls, regulatory compliance, employee, customer or partner disputes or issues and other legal
and financial contingencies could decrease or eliminate the anticipated benefits and synergies of any acquisition and could negatively
affect ESSA’s future business and financial results.



As part of ESSA’s business strategy, it may also continue
to acquire additional companies, products or technologies principally related to, or complementary to, ESSA’s current operations.
Any such acquisitions will be accompanied by certain risks including but not limited to:



| | · | exposure to unknown liabilities of acquired companies and the unknown issues with any associated technologies or research;
| | - | --------------------------------------------------------------------------------------------------------------------------



| | · | higher than anticipated acquisition costs and expenses;
| | - | -------------------------------------------------------



| | · | the difficulty and expense of integrating operations, systems and personnel of acquired companies;
| | - | --------------------------------------------------------------------------------------------------



| | · | disruption of ESSA’s ongoing business;
| | - | --------------------------------------



| | · | inability to retain key customers, distributors, vendors and other business partners of the acquired company;
| | - | -------------------------------------------------------------------------------------------------------------



| | · | diversion of management’s time and attention; and
| | - | -------------------------------------------------



| | · | possible dilution to shareholders.
| | - | ----------------------------------



Also, the anticipated benefit of any joint venture or acquisition
may not materialize or such strategic alliance, joint venture or acquisition may be prohibited. In November 2016, ESSA entered
into the 2016 Loan and Security Agreement, which restricts ESSA’s ability to pursue certain mergers, acquisitions, amalgamations
or consolidations that it may believe to be in its best interest. Additionally, future acquisitions or dispositions could result
in potentially dilutive issuances of ESSA’s equity securities, the incurrence of debt, contingent liabilities or amortization
expenses or write-offs of goodwill, any of which could harm ESSA’s financial condition. ESSA cannot predict the number, timing
or size of future joint ventures or acquisitions, or the effect that any such transactions might have on its operating results.



38







ESSA may not be able to successfully overcome these risks and
other problems associated with acquisitions and this may adversely affect ESSA’s business, financial condition or results
of operations.



ESSA may seek to enter into collaborations with third
parties for the development and commercialization of its potential future product candidates. If ESSA fails to enter into such
collaborations, or such collaborations are not successful, it may not be able to capitalize on the market potential of its potential
future product candidates.



The Company may seek third-party collaborators for development
and commercialization of its potential future product candidates. ESSA is not currently party to any such arrangement. However,
if ESSA does enter into any such arrangements with any third parties in the future, it will likely have limited control over the
amount and timing of resources that its collaborators dedicate to the development or commercialization of ESSA’s product
candidates. The Company’s ability to generate revenues from these arrangements will depend on its collaborators’ abilities
to successfully perform the functions assigned to them in these arrangements.



Collaborations involving ESSA’s product candidates would
pose the following risks:



| | · | collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations;
| | - | --------------------------------------------------------------------------------------------------------------------------------



| | · | collaborators may not pursue development and commercialization of ESSA’s product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus or available funding, or external factors such as an acquisition that diverts resources or creates competing priorities;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with ESSA’s products or product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ESSA’s;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | collaborators with marketing and distribution rights to one or more of ESSA’s products may not commit sufficient resources to the marketing and distribution of such product or products;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | collaborators may not properly maintain or defend ESSA’s intellectual property rights or may use ESSA’s proprietary information in such a way as to invite litigation that could jeopardize or invalidate ESSA’s intellectual property or proprietary information or expose ESSA to potential litigation;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | collaborators may infringe the intellectual property rights of third parties, which may expose ESSA to litigation and potential liability;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------



| | · | disputes may arise between the collaborators and ESSA that result in the delay or termination of the research, development or commercialization of ESSA’s products or product candidates or that result in costly litigation or arbitration that diverts management attention and resources; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Collaboration agreements may not lead to development or commercialization
of product candidates in the most efficient manner or at all. If a collaborator of ESSA’s were to be involved in a business
combination, the continued pursuit and emphasis on ESSA’s product development or commercialization program could be delayed,
diminished or terminated.



39







ESSA’s employees may engage in misconduct or other
improper activities, including noncompliance with regulatory standards and requirements, which could cause significant liability
for ESSA and harm ESSA’s reputation.



ESSA is exposed to the risk of employee fraud or other misconduct,
including intentional failures to comply with FDA regulations or similar regulations of comparable foreign regulatory authorities,
provide accurate information to the FDA or comparable foreign regulatory authorities, comply with manufacturing standards ESSA
has established, comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations
established and enforced by comparable foreign regulatory authorities, report financial information or data accurately or disclose
unauthorized activities to ESSA. Employee misconduct could also involve the improper use of information obtained in the course
of clinical trials, which could result in regulatory sanctions and serious harm to ESSA’s reputation. If any such actions
are instituted against ESSA and ESSA is not successful in defending itself or asserting ESSA’s rights, those actions could
have a significant impact on ESSA’s business, results of operations, financial condition and cash flows from future prospects,
including the imposition of significant fines or other sanctions.



If product liability lawsuits are brought against the
Company, it may incur substantial liabilities and may be required to cease the sale, marketing and distribution of its potential
future products.



The Company could face a potential risk of product liability
as a result of its potential sales, marketing and distribution activities relating to any future commercialization of any future
product. For example, the Company may be sued if any product it develops allegedly causes injury or is found to be otherwise unsuitable
during product testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects
in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability and a breach
of warranties. Claims could also be asserted under U.S. state or Canadian provincial or other foreign consumer protection legislation.
If the Company cannot successfully defend itself against product liability claims, it may incur substantial liabilities or be required
to cease the sale, marketing and distribution of its products. Even successful defense against product liability claims would require
significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:



| | · | decreased demand for any future products that the Company may develop;
| | - | ----------------------------------------------------------------------



| | · | injury to the Company’s reputation;
| | - | -----------------------------------



| | · | withdrawal of clinical trial participants;
| | - | ------------------------------------------



| | · | costs to defend the related litigation;
| | - | ---------------------------------------



| | · | a diversion of management’s time and the Company’s resources;
| | - | -------------------------------------------------------------



| | · | substantial monetary awards to consumers, trial participants or patients;
| | - | -------------------------------------------------------------------------



| | · | product recalls, withdrawals or labeling, marketing or promotional restrictions;
| | - | --------------------------------------------------------------------------------



| | · | loss of revenue;
| | - | ----------------



| | · | the inability to commercialize;
| | - | -------------------------------



| | · | the inability to continue the sale, marketing and distribution of ESSA’s potential future products; and
| | - | -------------------------------------------------------------------------------------------------------



| | · | a decline in the price of the Preferred Shares or Common Shares.
| | - | ----------------------------------------------------------------



The Company currently maintains insurance that it believes has
sufficient coverage to protect against the liability risks discussed above and the Company believes this coverage is consistent
with industry norms for companies at a similar stage of development. However, if the Company is unable to obtain and retain sufficient
product liability insurance in the future at an acceptable cost to protect against potential product liability claims, the commercialization
of products it develops could be hindered or prevented.



40







The Company’s business and operations would suffer
in the event of computer system failures.



Despite the implementation of security measures, ESSA’s
internal computer systems and those of other third parties on which it relies are vulnerable to damage from computer viruses, unauthorized
access, natural disasters, fire, terrorism, war and telecommunication and electrical failures. If such an event were to occur and
cause interruptions in ESSA’s operations, it could result in a material disruption of ESSA’s drug development programs.
To the extent that any disruption or security breach results in a loss of or damage to ESSA’s data or applications, or inappropriate
disclosure of confidential or proprietary information, ESSA could incur liability and the further development of ESSA’s future
product candidates could be delayed.



Business disruptions could seriously harm ESSA’s
future revenues and financial condition and increase costs and expenses.



ESSA’s operations could be subject to earthquakes, power
shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical
epidemics and other natural or manmade disasters or business interruptions, for which ESSA is predominantly self-insured. ESSA
does not carry insurance for all categories of risk that ESSA’s business may encounter. The occurrence of any of these business
disruptions could seriously harm ESSA’s operations and financial condition and increase costs and expenses. Further, any
significant uninsured liability may require ESSA to pay substantial amounts, which would adversely affect ESSA’s business,
results of operations, financial condition and cash flows from future prospects.



Compulsory licensing or generic competition may affect
the Company’s business in certain countries.



In a number of countries, governmental authorities and other
groups have suggested that companies which manufacture medical products (e.g., pharmaceuticals) should make products available
at a low cost. In some cases, governmental authorities have held that where a pharmaceutical company does not do so, its patents
might not be enforceable to prevent generic competition. Alternatively, some governmental authorities could require that ESSA grant
compulsory licenses to allow competitors to manufacture and sell their own versions of ESSA’s products, thereby reducing
ESSA’s sales or the sales of ESSA’s licensee(s). In all of these situations, the results of future operations in these
countries if any, could be adversely affected.



ESSA’s business depends heavily on the use of information
technologies.



Several key areas of ESSA’s business depend on the use
of information technologies. Despite ESSA’s best efforts to prevent such behavior, third-parties may nonetheless attempt
to hack into ESSA’s systems and obtain data relating to ESSA’s preclinical studies or proprietary information on potential
products. If ESSA fails to maintain or protect ESSA’s information systems and data integrity effectively, ESSA could lose,
have difficulty attracting customers, have difficulty preventing, detecting, and controlling fraud, have regulatory sanctions or
penalties imposed, have increases in operating expenses, incur expenses or lose revenues as a result of a data privacy breach,
or suffer other adverse consequences. While ESSA has invested in the protection of data and information technology, there can be
no assurance that ESSA’s efforts, or those of ESSA’s third-party collaborators, if any, to implement adequate security
and quality measures for data processing would be sufficient to protect against data deterioration or loss in the event of a system
malfunction, or to prevent data from being stolen or corrupted in the event of a security breach. Any such loss or breach could
have a material adverse effect on ESSA’s business, operating results and financial condition.



41







ESSA incurs significantly increased costs and devotes
substantial management time as a result of operating as a public company.



As a public company, ESSA incurs significant legal, accounting
and other expenses that it did not incur as a private company or as a Canadian public company. For example, ESSA is subject to
the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is required
to comply with the applicable requirements of Sarbanes-Oxley and the Dodd-Frank Wall Street Reform and Consumer Protection Act,
as well as rules and regulations subsequently implemented by the SEC and including the establishment and maintenance of effective
disclosure and financial controls and changes in corporate governance practices. ESSA’s continued compliance with these requirements
increase its legal and financial compliance costs and make some activities more time consuming and costly. In addition, ESSA’s
management and other personnel need to divert attention from operational and other business matters to devote substantial time
to these public company requirements. In particular, ESSA may or in the future incur significant expenses and devote substantial
management effort toward ensuring compliance with the requirements of Section 404 of Sarbanes-Oxley, which involves annual
assessments of a company’s internal controls over financial reporting. ESSA may in the future need to hire additional accounting
and financial staff with appropriate public company experience and technical accounting knowledge and may need to establish an
internal audit function. ESSA cannot always predict or estimate the amount of additional costs incurred as a result of becoming
a public company or the timing of such costs.



Risks Related to Additional Legal Compliance and Regulatory
Matters



ESSA is subject to risks inherent in foreign operations.



ESSA intends to pursue international market growth opportunities,
such that international sales may account for a significant portion of its revenue. ESSA is subject to a number of risks associated
with its potential international business operations, sales and marketing activities that may increase liability, costs, lengthen
sales cycles and require significant management attention. These risks include:



| | · | compliance with the laws of the United States, Canada, the European Union and other jurisdictions where ESSA may conduct business, including import and export legislation;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | increased reliance on third parties to establish and maintain foreign operations;
| | - | ---------------------------------------------------------------------------------



| | · | the complexities and expenses of administering a business abroad;
| | - | -----------------------------------------------------------------



| | · | complications in compliance with, and unexpected changes in, foreign regulatory requirements;
| | - | ---------------------------------------------------------------------------------------------



| | · | instability in economic or political conditions, including inflation, recession and actual or anticipated military conflicts, social upheaval or political uncertainty;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | foreign currency fluctuations;
| | - | ------------------------------



| | · | foreign exchange controls and cash repatriation restrictions;
| | - | -------------------------------------------------------------



| | · | tariffs and other trade barriers;
| | - | ---------------------------------



| | · | difficulties in collecting accounts receivable;
| | - | -----------------------------------------------



| | · | differing tax structures and related potential adverse tax consequences;
| | - | ------------------------------------------------------------------------



| | · | uncertainties of laws and enforcement relating to the protection of intellectual property or secured technology;
| | - | ----------------------------------------------------------------------------------------------------------------



| | · | litigation in foreign court systems;
| | - | ------------------------------------



| | · | unauthorized copying or use of ESSA’s intellectual property;
| | - | ------------------------------------------------------------



| | · | cultural and language differences;
| | - | ----------------------------------



42







| | · | difficulty in managing a geographically dispersed workforce in compliance with local laws and customs that vary from country to country; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------



| | · | other factors, depending upon the country involved.
| | - | ---------------------------------------------------



There can be no assurance that the policies and procedures ESSA
implements to address or mitigate these risks will be successful, that ESSA’s personnel will comply with them or that ESSA
will not experience these factors in the future or that they will not have a material adverse effect on ESSA’s business,
results of operations and financial condition.



Laws and regulations governing international operations
may preclude ESSA from developing, manufacturing and selling certain product candidates outside of the United States and Canada
and require ESSA to develop and implement costly compliance programs.



ESSA must comply with numerous laws and regulations in each
jurisdiction in which ESSA plans to operate. ESSA must also comply with U.S. laws applicable to the foreign operations of U.S.
individuals, such as the FCPA, and Canadian laws applicable to the foreign operations of Canadian businesses and individuals, such
as the CFPOA. The creation and implementation of international business practices compliance programs is costly and such programs
are difficult to enforce, particularly where reliance on third parties is required.



The CFPOA prohibits Canadian businesses and individuals from
giving or offering to give a benefit of any kind to a foreign public official, or any other person for the benefit of the foreign
public official, where the ultimate purpose is to obtain or retain a business advantage. Furthermore, a company may be found liable
for violations by not only its employees, but also by its third-party agents. Any failure to comply with the CFPOA, as well as
applicable laws and regulations in foreign jurisdictions, could result in substantial penalties or restrictions on ESSA’s
ability to conduct business in certain foreign jurisdictions, which may have a material adverse impact on ESSA and its share price.



The FCPA prohibits any U.S. individual or business from paying,
offering, authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party
or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business
in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply
with certain accounting provisions requiring ESSA to maintain books and records that accurately and fairly reflect all transactions
of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting
controls for international operations. The anti-bribery provisions of the FCPA are enforced primarily by the Department of Justice.
The SEC is involved with enforcement of the books and records provisions of the FCPA.



Compliance with the FCPA is expensive and difficult, particularly
in countries in which corruption is a recognized problem. In addition, the FCPA presents particular challenges in the pharmaceutical
industry, because, in many countries, hospitals are operated by the government, and doctors and other hospital employees are considered
foreign officials. Certain payments to hospitals in connection with clinical studies and other work have been deemed to be improper
payments to government officials and have led to FCPA enforcement actions.



Violation of the FCPA can result in significant civil and criminal
penalties. Indictment alone under the FCPA can lead to suspension of the right to do business with the U.S. government until the
pending claims are resolved. Conviction of a violation of the FCPA can result in long-term disqualification as a government contractor.
The termination of a government contract or relationship as a result of ESSA’s failure to satisfy any of its obligations
under laws governing international business practices would have a negative impact on its operations and harm its reputation and
ability to procure government contracts. The SEC also may suspend or bar issuers from trading securities on U.S. exchanges for
violations of the FCPA’s accounting provisions.



ESSA’s employees or other agents may, without the Company’s
knowledge and despite the Company’s efforts, engage in prohibited conduct under its policies and procedures and the CFPOA,
FCPA or other anti-bribery laws that ESSA may be subject to for which it may be held responsible. If ESSA’s employees or
other agents are found to have engaged in such practices, it could suffer severe penalties and other consequences that may have
a material adverse effect on its business, financial condition and results of operations.



43







Various laws, regulations and executive orders also restrict
the use and dissemination outside of the United States, or the sharing with certain non-U.S. nationals, of information classified
for national security purposes, as well as certain products and technical data relating to those products. If ESSA expands its
presence outside of the United States in the future, it will be required to dedicate additional resources to comply with these
laws, and these laws may preclude ESSA from developing, manufacturing, or selling certain products and product candidates outside
of the United States, which could limit ESSA’s growth potential and increase development costs.



ESSA is subject to U.S. laws relating to fraud and abuse
and patients’ rights.



As a pharmaceutical company, even though ESSA does not and will
not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, federal and state
healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to ESSA’s
future arrangements with third-party payors and customers who are in a position to purchase, recommend and/or prescribe ESSA’s
product candidates for which the Company obtains marketing approval. These broadly applicable fraud and abuse and other healthcare
laws and regulations may constrain ESSA’s future business or financial arrangements and relationships with healthcare professionals,
principal investigators, consultants, customers, and third-party payors and other entities, including ESSA’s marketing practices,
educational programs and pricing policies. Restrictions under applicable federal and state healthcare laws and regulations that
may affect ESSA’s ability to operate include, but are not limited to, the following:



| | · | the U.S. Anti-Kickback Statute, among other things, prohibits persons from knowingly and willfully soliciting, offering, receiving or providing paying any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | civil and criminal false claims laws and civil monetary penalty laws impose criminal and civil penalties, including through civil whistleblower or qui tam actions, among other things, prohibits individuals or entities from knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment or approval that are false or fraudulent or from knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the federal government;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Efforts to ensure that ESSA’s business arrangements with
third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental
authorities will conclude that ESSA’s business practices may not comply with current or future statutes, regulations, agency
guidance, or case law involving applicable fraud and abuse or other healthcare laws and regulations. If ESSA’s operations
are found to be in violation of any of these laws or any other governmental regulations that may apply to ESSA, the Company may
be subject to penalties, including without limitation, significant civil, criminal and administrative penalties, damages, fines,
disgorgement, exclusion from government funded healthcare programs, such as Medicare and Medicaid, contractual damages, reputational
harm, administrative burdens and diminished profits and future earnings, and the curtailment or restructuring of ESSA’s operations.
If any physicians or other healthcare providers or entities with whom ESSA expects to do business are found to not be in compliance
with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government
funded healthcare programs. Moreover, ESSA expects there will continue to be federal and state laws and regulations, proposed and
implemented, that could impact ESSA’s operations and business. The extent to which future legislation or regulations, if
any, relating to healthcare fraud abuse laws or enforcement, may be enacted or what effect such legislation or regulation would
have on ESSA’s business remains uncertain.



44







If ESSA fails to comply with environmental, health and
safety laws and regulations, ESSA could become subject to fines or penalties or incur costs that could have a material adverse
effect on the success of ESSA’s business.



ESSA is subject to numerous environmental, health and safety
laws and regulations in the United States and in Canada, including those governing laboratory procedures and the handling, use,
storage, treatment and disposal of hazardous materials and wastes. ESSA’s operations involve the use of hazardous and flammable
materials, including chemicals and biological materials. ESSA’s operations also produce hazardous waste products. The Company
generally contracts with third parties for the disposal of these materials and wastes. ESSA cannot eliminate the risk of contamination
or injury from these materials. In the event of contamination or injury resulting from ESSA’s use of hazardous materials,
it could be held liable for any resulting damages, and any liability could exceed its resources. ESSA also could incur significant
costs associated with civil or criminal fines and penalties.



Although ESSA maintains workers’ compensation insurance
to cover for costs and expenses ESSA may incur due to injuries to employees resulting from the use of hazardous materials, this
insurance may not provide adequate coverage against potential liabilities. ESSA does not maintain insurance for environmental liability
or toxic tort claims that may be asserted against it in connection with its storage or disposal of biological or hazardous materials.



In addition, ESSA may incur substantial costs in order to comply
with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may
impair ESSA’s research, development or production efforts. Failure to comply with these laws and regulations also may result
in substantial fines, penalties or other sanctions.



ESSA is a “foreign private issuer” and has
disclosure obligations that are different from those of U.S. domestic reporting companies. As a foreign private issuer, ESSA is
subject to different U.S. securities laws and rules than a domestic U.S. issuer, which may limit the information publicly available
to its shareholders.



ESSA is a “foreign private issuer,” as such term
is defined in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”), and is not subject
to the same requirements that are imposed upon U.S. domestic issuers by the SEC. Under the Exchange Act, ESSA will be subject to
reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies.
ESSA will be required to file or furnish to the SEC the continuous disclosure documents that ESSA is required to file in Canada
under Canadian securities laws. For example, ESSA will not be required to issue quarterly reports, proxy statements that comply
with the requirements applicable to U.S. domestic reporting companies, or individual executive compensation information that is
as detailed as that required of U.S. domestic reporting companies. ESSA will also have four months after the end of each fiscal
year to file ESSA’s annual reports with the SEC and will not be required to file current reports as frequently or promptly
as U.S. domestic reporting companies. Furthermore, ESSA’s officers, directors and principal shareholders are exempt from
the insider reporting and short-swing profit recovery requirements in Section 16 of the Exchange Act. Accordingly, ESSA’s
shareholders may not know on as timely a basis when ESSA’s officers, directors and principal shareholders purchase or sell
their common shares, as the reporting deadlines under the corresponding Canadian insider reporting requirements are longer. As
a foreign private issuer, ESSA is also exempt from the requirements of Regulation FD (Fair Disclosure) which, generally, are meant
to ensure that select groups of investors are not privy to specific information about an issuer before other investors. As a result
of such varied reporting obligations, shareholders should not expect to receive the same information at the same time as information
provided by U.S. domestic companies.



In addition, as a foreign private issuer, ESSA has the option
to follow certain Canadian corporate governance practices rather than those of, except to the extent that such laws would be contrary
to U.S. securities laws, and provided that ESSA disclose the requirements ESSA is not following and describe the Canadian practices
ESSA follows instead. As a result, ESSA’s shareholders may not have the same protections afforded to shareholders of companies
that are subject to all domestic U.S. corporate governance requirements.



ESSA may lose foreign private issuer status in the future,
which could result in significant additional costs and expenses to the Company.



ESSA may in the future lose foreign private issuer status if
a majority of ESSA’s Common Shares are held in the United States and ESSA fails to meet the additional requirements necessary
to avoid loss of foreign private issuer status, such as if: (i) a majority of ESSA’s directors or executive officers
are U.S. citizens or residents; (ii) a majority of ESSA’s assets are located in the United States; or (iii) ESSA’s
business is administered principally in the United States. The regulatory and compliance costs to ESSA under U.S. securities laws
as a U.S. domestic issuer will be significantly more than the costs incurred as a Canadian foreign private issuer. If ESSA is not
a foreign private issuer, ESSA would be required to file periodic and current reports and Annual Reports on U.S. domestic issuer
forms with the SEC, which are generally more detailed and extensive than the forms available to a foreign private issuer.



45







In addition, ESSA may lose the ability to rely upon exemptions
from corporate governance requirements that are available to foreign private issuers. Further, if ESSA engages in capital raising
activities after losing foreign private issuer status, there is a higher likelihood that investors may require ESSA to file resale
Annual Reports with the SEC as a condition to any such financing.



There is a risk that ESSA is or could become a “passive
foreign investment company” which would likely result in materially adverse U.S. federal income tax consequences for U.S.
investors.



ESSA believes it was not classified as a PFIC for the taxable
year ending September 30, 2017 and believes it will not be classified as a PFIC for the current taxable year and in future taxable
years. However, the determination as to whether ESSA is a PFIC for any taxable year is based on the application of complex U.S.
federal income tax rules that are subject to differing interpretations. If ESSA is a PFIC for any taxable year during which a U.S.
Holder (as defined under “Certain United States Federal Income Tax Considerations”) holds the Common Shares, it would
likely result in adverse U.S. federal income tax consequences for such U.S. Holder. U.S. Holders should carefully read “Certain
United States Federal Income Tax Considerations—Passive Foreign Investment Company Rules” for more information and
consult their own tax advisors regarding the likelihood and consequences of ESSA being treated as a PFIC for U.S. federal income
tax purposes, including the advisability of making a qualified electing fund (“QEF”) election (including a protective
election), which may mitigate certain possible adverse U.S. federal income tax consequences but may result in an inclusion in gross
income without receipt of such income.



The Company’s status as an Emerging Growth Company
and the reduced disclosure requirements applicable to Emerging Growth Companies, may make the Common Shares less attractive to
investors.



ESSA is an “emerging growth company,” as defined
in Section 2(a)(19) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS
Act”). As such, the Company is eligible to take advantage of certain exemptions from various reporting requirements that
are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not
being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act.



In addition, Section 107 of the JOBS Act also provides
that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B)
of the Securities Act for complying with new or revised accounting standards, and delay compliance with new or revised accounting
standards until those standards are applicable to private companies. ESSA will not take advantage of the extended transition period
for complying with new or revised accounting standards. This election is irrevocable.



ESSA may take advantage of some or all of the reduced regulatory
and reporting requirements that will be available to it so long as it qualifies as an “emerging growth company” and
thus the level of information provided may be different than that of other U.S. public companies. If ESSA does take advantage of
any of these exemptions, some investors may find its securities less attractive, which could result in a less active trading market
for ESSA’s Common Shares, and its share price may be more volatile as a result.



ESSA could be an emerging growth company until the last day
of the first fiscal year following the fifth anniversary of its first common equity offering, although circumstances could cause
ESSA to lose that status earlier if annual revenues exceed US$1.0 billion, if ESSA issues more than US$1.0 billion in
non-convertible debt in any three-year period or if ESSA becomes a “large accelerated filer” as defined in Rule 12b-2
under the Exchange Act.



It may be difficult for United States investors to effect
services of process or enforcement of actions against the Company or certain of its directors and officers under U.S. federal securities
laws.



The Company is incorporated under the laws of the Province of
British Columbia, Canada. Its directors and officers reside in Canada or the United States. Because a number of these persons and
a substantial portion of the assets of the Company are located outside the United States, it will be difficult for United States
investors to effect service of process in the United States upon the Company or the directors or officers of the Company, or to
realize in the United States upon judgments of United States courts predicated upon civil liabilities under the U.S. Exchange Act
or other United States laws. There is substantial doubt as to whether an original action could be brought successfully in Canada
against any of such persons or the Company predicated solely upon such civil liabilities and whether a judgment of a United States
court predicated solely upon such civil liabilities would be enforceable in Canada by a Canadian court.



46







| | ITEM 4. | INFORMATION ON THE COMPANY
| | ------- | --------------------------



| | A. | History and development of the Company
| | -- | --------------------------------------



| | 1. | Name, Address and Incorporation; Trading Market
| | -- | -----------------------------------------------



The Company was incorporated under the name “ESSA Pharma
Inc.” pursuant to the Business Corporations Act(British Columbia) on January 6, 2009. The Company’s articles
(the “Articles”) were amended on December 16, 2010 to attach certain special rights and restrictions to
the Common Shares, on April 22, 2014 to authorize the creation of a new class of preferred shares in the capital of the Company,
issuable in one or more series, and again on July 28, 2014 to create the class A preferred shares in the capital of the Company
(the “Preferred Shares”) and to attach certain special rights and restrictions to the Preferred Shares.



The Company’s registered and records office is located
at Suite 2600, 595 Burrard Street, Vancouver, British Columbia, Canada V7X 1L3. The head office is located at Suite 720, 999 West
Broadway, Vancouver, British Columbia, Canada V5Z 1K5.



Since July 9, 2015, the Company has been trading its Common
Shares on the NASDAQ under the symbol “EPIX”. Since July 28, 2015, the Company has been trading its Common Shares under
the symbol “EPI” on the TSX after graduating from the TSX-V. On November 27, 2017, the Company delisted its common
shares from the TSX and began trading on the TSX-V under the same symbol, “EPI”.



| | 2. | Summary Corporate History and Intercorporate Relationships
| | -- | ----------------------------------------------------------



Intercorporate Relationships



The Company has one wholly-owned subsidiary, ESSA Pharmaceuticals
Corp. (“ESSA Texas”), existing under the laws of the State of Texas.



Overview



ESSA is a pharmaceutical company, currently in the preclinical
stage, focused on the development of small molecule drugs for the treatment of castration-resistant prostate cancer (“CRPC”).
The Company is developing drugs which selectively block the amino-terminal domain (“NTD”) of the androgen receptor
(“AR”), potentially overcoming the known AR-dependent resistance mechanisms of CRPC and providing CRPC patients
with the potential for increased progression-free and overall survival.



In 1999, Dr. Marianne Sadar, a Distinguished Scientist
at the British Columbia Cancer Agency (the “BC Cancer Agency”), elucidated a unique drug target on the AR: the
NTD. In 2003, Dr. Sadar and Dr. Raymond Andersen, a Professor at the University of British Columbia (“UBC”)
known for his natural product libraries and medicinal chemistry experience and expertise, began a collaboration focused on discovery
of small-molecule inhibitors of the AR NTD. By mid-2008, they together discovered a family of compounds that selectively inhibit
the NTD target on the AR and demonstrated the efficacy of those molecules in recognized laboratory models of prostate cancer. These
compounds are potential drugs for treatment of CRPC.



Drs. Sadar and Andersen incorporated ESSA in January 2009. In
2010, Robert Rieder and Richard Glickman, both former CEOs of NASDAQ-traded biopharmaceutical companies, completed the founding
team at ESSA. Mr. Rieder was appointed CEO of the Company and Dr. Glickman was appointed Chairman of the board of directors
of the Company (the “Board”).



47







ESSA began substantive operations in 2010 with the licensing
of intellectual property related to the research of Drs. Sadar and Andersen from the BC Cancer Agency and UBC (see “Patents
and Proprietary Rights” in Item 4 of this Annual Report), and completion of a seed round financing. The 2010 seed
financing raised a total of C$1,350,000 at a price of C$0.50 per Common Share from qualified investors on a private placement basis.



On January 7, 2016, Dr. David R. Parkinson
was appointed as the Company’s President and Chief Executive Officer. Dr. Parkinson replaced Mr. Robert Rieder who announced
his departure from the Company and resignation from the board of directors of the Company.



In January 2016, the Company completed a private placement of
4,545,452 units of the Company at $3.30 per unit for gross proceeds of approximately $15,000,000 (the “January 2016
Financing”). Each unit consists of one Common Share, one seven-year cash and cashless exercise warrant and one-half of
one two-year cash exercise warrant (collectively, the “2016 Warrants”). Each of the 2016 Warrants has an exercise
price of $3.30.



On January 14, 2016, effective on the closing of the January
2016 Financing, Scott Requadt, Managing Director of Clarus Ventures, LLC, was appointed to the Board of the Company. Pursuant to
the terms of a subscription agreement between the Company and Clarus Lifesciences III, L.P. (“Clarus”) in connection
with the January 2016 Financing, Clarus is entitled to nominate two directors to the Board of the Company, one of which must be
an independent director and pre-approved by the Company. The nomination rights will continue for so long as Clarus holds greater
than or equal to 1,060,606 common shares, subject to adjustment in certain circumstances.



On March 21, 2016, the Company completed a private placement
of 1,666,666 common shares of the Company at $3.00 per share for aggregate gross proceeds of approximately $5,000,000 (the “March
2016 Financing”).



On August 1, 2016, the Company appointed Peter Virsik as Executive
Vice-President and Chief Operating Officer.



On November 18, 2016, the Company entered into a $10,000,000
capital term loan facility agreement with Silicon Valley Bank (“SVB”), pursuant to which the Company has initially
drawn down $8,000,000, with a now-expired conditional option to receive an additional $2,000,000 by April 28, 2017, subsequently
amended to July 31, 2017, upon positive data for its ongoing Phase I clinical trial of EPI-506 and receipt of the third and final
tranche of the CPRIT grant of $5,422,000. The term loans bear an interest rate of Wall Street Journal Prime Rate plus 3% per annum
and will mature on September 1, 2020. The loan agreement requires a final payment of 8.6% of the amount advanced under the term
loans, due upon the earlier of the maturity or termination of the term loan facility. The term loans are secured by perfected first
priority lien on all the company’s assets, with a negative pledge on intellectual property. The term loans are subject to
standard events of default, including default in the event of a material adverse change. There are no financial covenants. Upon
funding of the respective tranches, the Company granted to SVB warrants to purchase shares of the Company’s common stock
equal to 4% of the amount advanced, divided by the exercise price of the warrants, based on the five-day volume-weighted average
trading price of the Company’s common shares on the TSX, to be determined at the time of the issuance of the warrants. In
connection with the initial $8,000,000 advance, the Company granted SVB and Life Sciences Loans II LLC an aggregate of 149,532
warrants, exercisable at a price of $2.14 per share for a period of seven years.



In January and March 2017, the Company received a total of $5,192,799
in advances from the CPRIT grant.



On July 12, 2017, the Company announced a proposed overnight
marketed public offering in Canada and a concurrent private placement in the United States. The Company received sufficient investor
interest to advance the proposed transaction but did not obtain conditional approval by financial regulators due to levels of insider
and institutional participation. While alternative transaction structures were identified that may have been pursued, additional
data was being received from the higher-dose cohorts in the Phase I clinical trial of EPI-506. As a result, the Company announced
its plan to delay an offering until after such data was announced.



On July 20 and July 21, 2017,
the Company received notifications from the NASDAQ indicating that it was not in compliance with two requirements for
continued listing, being the maintenance of a minimum bid price of US$1 and a minimum market value of US$35,000,000,
noncompliance constituting continued deficiency for a period of 30 consecutive business days. The NASDAQ has granted grace
periods for 180 calendar days, to January 15 and January 16, 2018, respectively to regain compliance with these requirements.
During this time, the Company’s common shares will continue to be listed and trade on the NASDAQ.



48







In July 2017, the Company’s Executive Vice President of
Research and Development, Paul Cossum, passed away.



On September 11, 2017, the Company announced the results from
the Phase I portion of its clinical study of EPI-506 and its strategic decision to discontinue further clinical development of
EPI-506. Instead, the Company implemented a corporate restructuring plan to focus its resources on its next-generation Anitens
targeting the AR-NTD. ESSA’s next-generation Aniten compounds represent a new class of drugs that are NTD inhibitors of the
AR and are designed to improve upon a number of attributes of first-generation Aniten compound, EPI-506. The next-generation Anitens
are considerably more potent than EPI-506 or its active metabolite, EPI-002, in an in vitro assay measuring inhibition of AR transcriptional
activity. In addition, the compounds are designed to improve upon the pharmaceutical properties of EPI-506 to enable a more efficient
and cost-effective formulation approach. The Aniten program is currently at the IND lead-selection stage with an IND filing expected
to occur in early 2019.



| | B. | Business Overview
| | -- | -----------------



Introduction



ESSA is a preclinical stage pharmaceutical
company focused on developing novel and proprietary therapies for the treatment of prostate cancer in patients whose disease is
progressing despite treatment with current therapies, including abiraterone and enzalutamide. The Company believes its preclinical
“Aniten” series of compounds can significantly expand the interval of time in which patients suffering from CRPC can
benefit from hormone-based therapies. Specifically, the compounds act by disrupting the AR signaling pathway, the primary pathway
that drives prostate cancer growth, by preventing AR activation through selective binding to the Tau-5 region of the NTD of the
AR. In this respect the ESSA compounds differ greatly from classical anti-androgens, since they interfere either with androgen
synthesis, or with the binding of androgens to the ligand binding domain (“LBD”), which is located at the opposite
end of the receptor. A functional NTD is essential for activation of the AR; blocking the NTD inhibits AR-driven transcription.
We believe such transcription inhibition mechanism of the “Aniten” class of agents is unique, and has the advantage
of bypassing identified mechanisms of resistance to the anti-androgens currently used in the treatment of CRPC. The Company has
been granted by the United States Adopted Names ("USAN") Council a unique USAN stem "-aniten" to recognize
this new mechanistic class. The Company refers to this series of proprietary compounds, currently in development, as the “Aniten”
series. In preclinical studies, blocking the NTD has demonstrated the capability to prevent AR-driven gene expression. In addition,
in a recently completed Phase I clinical trial of ESSA’s first generation agent EPI-506, prostate-specific antigens (“PSA”)
declines, a sign of inhibition of AR-driven biology, were observed at the higher dose levels.



According to the American Cancer Society,
in the United States, prostate cancer is the second most frequently diagnosed cancer among men, behind skin cancer. Approximately
one-third of all prostate cancer patients who have been treated for local disease will subsequently have rising serum levels of
PSA, which is an indication of recurrent or advanced disease. Patients with advanced disease often undergo androgen ablation therapy
using analogues of luteinizing hormone releasing hormone (“LHRH”) or surgical castration; this approach is termed
“androgen deprivation therapy”, or “ADT”. Most advanced prostate cancer patients initially respond to androgen
ablation therapy; however, many experience a recurrence in tumor growth despite the reduction of testosterone to castrate levels,
and at that point are considered to have CRPC. Following diagnosis of CRPC, patients have been generally treated with anti-androgens,
which block the binding of androgens to the AR. More recently, greater benefit has been achieved by utilizing latest generation
anti-androgens, such as abiraterone into combination in newly diagnosed metastatic prostate cancer.



It has been known for more than six
decades that the growth of prostate tumors is mediated by an activated AR. Generally, there are three means of activating the
AR. First, androgens such as dihydrotestosterone can activate AR by binding to its LBD. Second, CRPC can be driven by
constitutively-active variants of AR (“vAR”) that lack a LBD and do not require androgen for activation.
The third mechanism involves certain signaling pathways that activate AR independent of androgen activity. Current drugs for
the treatment of prostate cancer work by focusing on the first mechanism in combination with either (i) interfering with the
production of androgen, or (ii) preventing androgen from binding to the LBD. However, these approaches eventually fail due to
mechanisms of resistance which all involve the LBD, whether at the DNA (AR amplification or LBD mutations) or RNA level
(emergence of AR splice variants).



49







By directly and selectively blocking all known
means of activating the AR, the Company believes the Aniten series of compounds hold the potential to be effective in cases where
current therapies have failed. Both preclinical and clinical studies support this belief. In preclinical studies, the Aniten series
of compounds has been shown to shrink benign prostate tissue in mice as well as prostate cancer xenografts, including both tumors
sensitive and resistant to the current generation anti-androgens such as enzalutamide. Recent studies have also suggested the potential
for combinations of ESSA’s Aniten compounds with anti-androgens. These two classes of drugs have the potential to inhibit
AR-driven biology in unique and complementary mechanisms by affecting opposite ends of the AR receptor.



The Phase I clinical trial of the first
generation Aniten, EPI-506, has confirmed the safety, tolerability, and provided proof of concept for this unique mechanism
of transcription inhibition of AR-driven biology. Patients tolerated doses of the drug, which achieved exposures consistent
with those associated with efficacy in animal models. PSA declines of up to 30% were observed in some patients. However, this
first generation drug required high doses to achieve the desired exposures, and the relatively short half-life limited the
24-hour exposure of the drug. Due to such drawbacks, along with challenges in the manufacturability, stability, and
formulation of the drug, the Company decided to accelerate development of the next generation of Anitens rather than to take
EPI-506 into a Phase II clinical trial. This next generation of agents includes drugs that preclinical studies have shown to
be more potent, with superior pharmaceutical properties, including improved manufacturability, improvements in formulation,
and increased resistance to metabolism.



The NTD of AR is flexible with a high degree
of intrinsic disorder making it difficult to be used for crystal structure-based drug design. The Company is not currently aware
of any success by other drug development companies in finding drugs that bind to this drug target. The nature of the highly specific
binding of the EPI compounds to the NTD, and the biological consequences of that binding, have been defined in recent scientific
studies. The selectivity of the binding, based on in vivo imaging as well as in vitro studies, is consistent with the clean toxicological
profile of EPI-506 and its generally favorable safety and tolerability in its Phase I clinical trial, despite administration of
high doses, including of up to 3600 mg daily.



According to the Decision Resources Group,
in 2014, there were approximately 213,000 prevalent cases of CRPC, and such prevalence is expected to increase to approximately
235,000 in 2023. The Company expects that the Aniten series of compounds could be effective for many of those patients. In its
early clinical development, the Company intends to initially focus on patients who have failed abiraterone or enzalutamide therapies
for the following reasons:



| | · | CRPC treatment remains the prostate cancer market segment with the greatest unmet need and is therefore a potentially large market;
| | - | -----------------------------------------------------------------------------------------------------------------------------------



| | · | ESSA believes that the unique mechanism of action of its Aniten compounds is well suited to treat those patients who have failed AR LBD focused therapies, and whose biological characterization reveals that their tumors are still largely driven by AR biology;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | ESSA expects the large number of patients with unmet therapeutic need in this area will facilitate timely enrollment in its clinical trials; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------



| | · | ESSA believes that the initial Phase I clinical trial will facilitate early study of the combination of the ESSA Aniten compound with anti-androgens such as enzalutamide.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The British Columbia Cancer Agency (“BCCA”)
and the University of British Columbia (“UBC”) are joint owners of the intellectual property that constitutes the Company’s
primary asset(s). The Company licensed the EPI-family of drugs from UBC and the BCCA whose initial lead compound was EPI-001. It
is a mixture of four stereoisomers, each of which has the same chemical constitution but different spatial orientation of its constituent
atoms and are active against the AR NTD. The Company is party to a license agreement with the BCCA and UBC dated December 22, 2010,
as amended (“the License Agreement”), which provides the Company with exclusive access to the issued patents
and the patent applications to EPI-series compounds, including next generation Aniten compounds.



50







A strong, defensive intellectual property position has been
established by the Company for multiple EPI structural classes, with 17 patent families filed covering different EPI structural
motifs/analogues. Patents have been granted in 27 countries and are pending in 10 jurisdictions for the first generation NTD inhibitor
EPI-002, with expiry in 2029.



Patent applications are pending in the United States and Patent
Cooperation Treaty (“PCT”) for the Aniten next-generation NTD inhibitors with expiry in 2037.



One of ESSA's key resources is the experience embodied in its
management team and scientific founders:



Management Team



Dr. David R. Parkinson, President and Chief Executive Officer



| | · | served as Vice President, Global Clinical Oncology for Novartis International AG, and Vice President, Oncology Development at Amgen, Inc.;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------



| | · | at both Novartis and Amgen, he was responsible for clinical development activities leading to a series of successful global drug registrations for important cancer therapeutics, including Gleevec, Femara, Zometa, Kepivance, and Vectibix.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Dr. Frank Perabo, Executive Vice-President of Clinical Development
and Chief Medical Officer



| | · | at Astellas Pharma Global Development, Inc. led worldwide clinical development of enzalutamide;
| | - | -----------------------------------------------------------------------------------------------



| | · | also led two other successful urology development programs.
| | - | -----------------------------------------------------------



David Wood, Chief Financial Officer



| | · | 10 years as Head of Finance and Corporate Development at Celator Pharmaceuticals Inc., where he helped take the company public;
| | - | -------------------------------------------------------------------------------------------------------------------------------



| | · | 20 years of experience in increasingly senior finance roles at various biotech companies.
| | - | -----------------------------------------------------------------------------------------



Peter Virsik, Executive Vice-President and Chief Operating Officer



| | · | 20 years of experience in corporate development, new product planning, licensing and alliance management with global pharmaceutical organizations;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------



| | · | at XenoPort, Inc., played a role in the licensing and commercialization of Horizant (gabapentin enacarbil).
| | - | -----------------------------------------------------------------------------------------------------------



Scientific Founders



Dr. Marianne Sadar, Chief Scientific Officer



| | · | internationally known for her research on identifying human mechanisms of activating the AR and developing therapeutics for advanced prostate cancer;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------



| | · | served on approximately 50 scientific panels and as President of the Society of Basic Urological Research.
| | - | ----------------------------------------------------------------------------------------------------------



Dr. Raymond Andersen, Chief Technical Officer



| | · | internationally known for his research on marine natural products and their potential as drug leads;
| | - | ----------------------------------------------------------------------------------------------------



| | · | discoveries have represented core technologies of several pharmaceutical companies and progressed to the clinical trial stage.
| | - | ------------------------------------------------------------------------------------------------------------------------------



51







ESSA's Strategy



The Company’s initial therapeutic goal
is to provide a safe and effective therapy for prostate cancer patients who have failed current therapies, and ultimately to treat
all AR-dependent forms of prostate cancer, either as a single agent or in combination with other agents. The Company intends to
accomplish those objectives while maximizing shareholder value. Specific components of the Company’s strategy include:



Identifying an Aniten compound to take
into clinical trials



The purpose of the next-generation
program is to identify drug candidates with improved potency and pharmacological properties compared to ESSA’s
first-generation compounds. In internal preclinical studies, several candidate molecules have been screened which display
5-10 times higher potency than EPI-002 as measured in preclinical models of androgen receptor inhibition. ESSA intends to
conduct additional preclinical studies to identify a possible lead candidate for further IND-enabling studies. If preclinical
studies proceed as planned, the Company anticipates the nomination of a next-generation drug candidate could occur in
calendar 2018 with filing of an IND by calendar Q1-2019.



Initial goals of the next-generation program
are to increase potency, improve absorption, distribution, metabolism, and excretion (“ADME”) profile, and improve
pharmaceutical properties of product candidate compounds. Significant structure-activity relationship (“SAR”)
studies conducted on the chemical scaffold have elicited a new series of high-potency compounds. Additional changes in the chemical
scaffold have also been incorporated to improve ADME and pharmaceutical properties of the chemical class.



Advancing a potential future product candidate through
clinical development and regulatory approval in CRPC patients



If a product candidate is successfully identified, and following
approval of an IND, the Company will conduct a Phase I/II clinical trial to determine the safety, tolerability, maximum tolerated
dose, pharmacokinetics and potential therapeutic benefits of the drug in CRPC patients. It is currently estimated that the Phase
I clinical trial will proceed to completion in the second half of calendar 2019. Once the Phase I clinical trial is complete, the
Company plans to review the data, including the safety, tolerability, evidence of efficacy and pharmacological and biomarker data.
This information will inform the final size, design and timing of a Phase II clinical trial.



Developing a potential future product candidate as an
essential component of a new standard of care for the treatment of pre-CRPC and expanding usage earlier in the disease stage



An activated AR is required for the growth
and survival of most prostate cancer; therefore, the Company believes the AR NTD is an ideal target for next-generation hormone
therapy. If ESSA’s potential future product candidate is successful in treating CRPC patients, it is reasonable to expect
that such clinical candidate may be effective in treating earlier stage patients. Therefore, the Company may conduct additional
clinical studies potentially leading to approval of the clinical candidate for use in prostate cancer patients at an earlier disease
stage. Such studies would likely include the clinical candidate in combination with anti-androgens; the Company is currently generating
in vitroand in vivo data in collaboration with academic investigators in this regard. Other emerging potential clinical
applications for NTD inhibitors are in salvage of anti-androgen refractory mCRPC patients, in combination with second generation
anti-androgens in earlier mCRPC patient, and with other agents, such as poly ADP ribose polymerase (“PARP”)
inhibitors, and in the subset of metastatic breast cancer patients whose tumors have been demonstrated to have activation of the
AR pathway.



Evaluating strategic collaborations
to maximize value



The Company currently retains all commercial rights for its
EPI and Aniten series drug portfolio. The Company intends to evaluate potential collaborations that could enhance the value of
its prostate cancer program and allow it to leverage the expertise of strategic collaborators.



52







Overview of Castration-Resistant Prostate Cancer



According to the American Cancer Society, in the United States,
prostate cancer is the second most frequently diagnosed cancer among men, behind skin cancer. The American Cancer Society estimates
that, in the United States during 2017, approximately 161,360 new cases of prostate cancer will be diagnosed, and approximately
26,730 men will die from the disease. Overall, in the United States, about one in seven men will be diagnosed with prostate cancer
during his lifetime, and about one in 39 men will die from the disease.



Prostate cancer is most frequently diagnosed at an early stage,
when it is confined to the prostate gland and its immediate surroundings. Advances in screening and diagnosis, including the widespread
use of PSA screening, have allowed detection of the disease in its early stages. Patients with early-stage disease are typically
treated with surgery or radiation therapy, or in certain circumstances, with both. For the majority of men, these procedures are
successful in curing the disease. However, for others, these procedures are not curative and their prostate cancer ultimately recurs.
Men with recurrent or metastatic prostate cancer are considered to have advanced prostate cancer. The Decision Resources Group
estimates that approximately 151,000 men in the United States currently have advanced prostate cancer and are eligible for treatment
with drug therapy.



Hormonal therapy of prostate cancer which is effective in inhibiting
tumor growth typically use drugs conferring pharmacological castration (i.e. LHRH (Leuprolide), or abiraterone). Other drugs competitively
bind in the ligand-binding pocket of the LBD of the AR prevent both the binding of androgen and interaction of the AR with co-regulatory
proteins, and therefore also prevent AR transcriptional activity. Commonly, these drugs are called “antiandrogens”.
Current antiandrogens used for prostate cancer include bicalutamide, cyproterone acetate, flutamide, nilutamide, and enzalutamide.



When the disease becomes resistant to initial androgen ablation
therapy, second line hormonal treatments can be used depending on several factors that include the biology of the tumor, evidence
of metastases, whether or not the patient is experiencing symptoms and if the disease comprises neurocrine or small cell carcinoma.
However, castrate levels of androgen are typically maintained (i.e. patient remains on LHRH analogues) while other therapies are
added to the patient’s regime. Asymptomatic patients with rising PSA and evidence of metastasis will typically go on to receive
second-line hormonal therapies that include abiraterone acetate, corticosteroids or enzalutamide. For symptomatic CRPC patients,
docetaxel or radium-233 for bone metastases are generally the treatments of choice. Prostate small cell carcinoma can be treated
with chemotherapies such as docetaxel as those carcinomas usually do not respond to AR targeted therapies.



Abiraterone acetate plus prednisone was approved by the FDA
and in many countries globally for patients with post-docetaxel metastatic CRPC in 2011. In the key clinical trials supporting
initial approval for post-chemotherapy CRPC, abiraterone acetate plus prednisone demonstrated a statistically significant improvement
in overall survival of 4.6 months in patients with metastatic CRPC who have failed one prior chemotherapy regimen. Abiraterone
acetate plus prednisone has also been approved in the pre-chemotherapy setting. In the key supporting clinical trial, the co-primary
endpoint showed a statistically significant increase in median radiographic progression-free survival with abiraterone plus prednisone
versus prednisone alone of 16.5 months versus 8.3 months, whereas improvement in median overall survival only showed a trend
towards statistical significance. Treatment with abiraterone requires the concomitant usage of prednisone to ameliorate symptoms
of mineralocorticoid excess, including fluid overload, hypertension and hypokalemia; abiraterone plus prednisone must be used with
caution in those with a significant cardiovascular history, including congestive heart failure. These effects, as well as treatment-associated
elevations in liver enzymes, necessitate monitoring for blood pressure, serum potassium, fluid retention, aspartate aminotransferase
(“AST”), alanine transaminase (“ALT”) and bilirubin levels. Furthermore, the pharmacokinetics
of abiraterone acetate demonstrate a large food effect, with exposure increasing up to ten-fold in the presence of food. For safe
administration, food must not be eaten two hours before the drug is taken and for one hour afterwards.



Enzalutamide was approved by the FDA as a treatment for patients
with post-docetaxel metastatic CRPC in 2012. In the initial pivotal clinical trial supporting FDA approval in the post-chemotherapy
CRPC population, the median overall survival was 18.4 months in the enzalutamide group versus 13.6 months in the placebo group.
The label extension to metastatic CRPC is subsequently supported by data from a pivotal Phase III trial in chemo-naive CRPC, which
demonstrated a statistically significant 29% reduction in the risk of death over placebo, despite enrolling patients with visceral
disease, a population with a poorer prognosis that has historically been excluded from this trial setting. This survival benefit
was achieved without the requirement for concomitant prednisone. The safety profile of enzalutamide is considered favorable despite
a higher incidence of hypertension and a risk for seizure.



53







The immunotherapy sipuleucel-T has been shown to increase the
median survival time of CRPC patients by four months. Sipuleucel-T is generally considered a treatment option in advanced patients
who are either asymptomatic or minimally symptomatic and with a good performance status (“ECOG 0-1”). Sipuleucel-T
is not indicated for patients with hepatic metastases or less than six month life expectancy. In clinical trials, sipuleucel-T
has shown no effect on serum PSA and does not affect the time to disease progression.



Radium-223 has been shown to extend survival in CRPC patients
with symptomatic bone metastases and no known visceral metastatic disease. Limitations include the incidence of bone marrow suppression,
primarily thrombocytopenia, and the need for this injectable radiopharmaceutical to be administered by trained personnel at select
centers able to handle this product. In addition, the administration of radium-233 is associated with potential risks for other
persons (e.g. medical staff, care givers and members of the patient’s family) from radiation or contamination from body fluids
such as spills of urine, feces, and vomit. Therefore, radiation protection precautions must be taken in accordance with national
and local regulations.



Androgen and the Androgen Receptor



Androgens such as testosterone and dihydrotestosterone mediate
their biological effects through the AR. In adult males, the testes produce the majority of androgen with some contribution from
the adrenal glands and other tissues. Androgens play a role in a wide range of developmental and physiological responses and are
involved in male sexual differentiation, maintenance of spermatogenesis, and male gonadotropin regulation. The growth and survival
of the prostate is dependent on androgen. When androgens increase in males during puberty there is an increase in growth of the
prostate gland, and in adult males when androgens are reduced by castration there is involution of the prostate and apoptosis,
or cell death, of prostate epithelial cells. This dependency of the prostate epithelium on androgens provides the underlying rationale
for treating advanced prostate cancer with androgen ablation.



The AR is a ligand-activated transcription factor that mediates
the biological effects of androgen. Without a functional full-length AR, the addition of androgen has no biological effects. The
AR has distinct functional domains that include a C-terminal LBD, DNA-binding domain, the N-terminal domain and a hinge region.
All current FDA-approved therapies that target the AR are directly or indirectly focused on its C-terminal LBD. Androgens such
as testosterone and dihydrotestosterone bind to the LBD of the AR which result in changes in conformation and post-translational
modifications, nuclear translocation and ultimately binding to the regulatory regions of DNA of target genes called androgen response
elements. Thus, AR regulates the transcription of genes involved in prostate tissue growth and survival.



AR is unique from other steroid hormone receptors in that the
AF-1 region in the NTD contributes to transcriptional activity, with little to no activity contributed from AF-2 in the LBD. AR
LBD functions independent of the NTD and can still bind ligand even if the AF-1 region is deleted or mutated; however, no transcriptional
activity can be achieved without the AF-1 region in the NTD. Previous research used deletion mutants of the AR to explore which
regions of the AR were critical to its activity, with the following key findings:



| | · | truncated AR (AR1-653) that lacked the LBD was found to be constitutively active, and mimicked the AR splice variants that were reported more than one decade later in 2008;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | deletion of AF-1 (residues 245-527) in the AR NTD yielded a receptor that could still bind androgen but was transcriptionally dead; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------



| | · | deletion of AF1 also blocked all transcriptional activity of the truncated variant AR.
| | - | --------------------------------------------------------------------------------------



It is generally believed that,
in the majority of patients, CRPC continues to be driven by a transcriptionally-active AR in spite of maintaining castrate levels
of androgen. Evidence to support the concept that CRPC remains dependent upon AR signaling includes:



| | 1) | many of the same genes that are increased by androgens become elevated in CRPC, such as PSA;
| | -- | --------------------------------------------------------------------------------------------



54







| | 2) | detection of nuclear localization of the AR in CRPC tissues supports that the AR may continue to be transcriptionally active
in the absence of testicular androgens;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3) | increased expression of the AR (full-length and AR splice variant) in tissues from CRPC;
| | -- | ----------------------------------------------------------------------------------------

| | 4) | survival advantages with enzalutamide and abiraterone (block synthesis of androgens) in CRPC patients; and
| | -- | ----------------------------------------------------------------------------------------------------------

| | 5) | correlation of levels of expression of AR splice variant with poor outcome and resistance to abiraterone and enzalutamide.
| | -- | --------------------------------------------------------------------------------------------------------------------------



AR-related mechanisms of CRPC



The mechanisms for the development of CRPC have been intensely
studied, in part because the emergence of CRPC is almost universal in recurrent prostate cancer treatment. The mechanisms described
below represent the current state of knowledge in this regard.



Mutations Causing AR Activation by Antiandrogens



Some patients receiving antiandrogens will develop antiandrogen
withdrawal syndrome. This syndrome is characterized by a rising PSA and worsening symptoms while the patient is taking antiandrogens,
followed by a decline in PSA or improvement when the patient is taken off antiandrogens. Prostate cancer cells obtained from patients
with antiandrogen withdrawal syndrome may have gain-of-function mutations in the LBD of the AR. Thus, current antiandrogens used
to block the LBD of the AR may become activators of the mutated AR and as a result, have the opposite effect from what they were
intended to do.



Amplification or Over-Expression of AR



Several studies have shown that androgen deprivation results
in over-expression of the AR, thus giving any residual androgen more opportunities to bind and thereby activate the full-length
AR.



Residual Androgens Activate AR



While in mature men, the majority of androgen is produced by
the testes, androgen is produced by a number of other tissues including the adrenal glands and in some prostate cancer tumors.
A variety of different pathways can produce androgen, as well. As blood levels of androgen are reduced through use of current androgen-suppressing
drugs or surgical castration, androgen production by alternate pathways may become an important way in which ARs become activated.
Recently, it has been shown that prostate cancer tumor tissue can synthesize androgen, leading potentially to concentrations of
intra-tumoral androgen that are sufficient to activate the full-length AR.



Over-expression of AR Coactivators



The AR requires interaction with an abundance of other proteins
such as bridging factors and coactivators. An example of a bridging factor that is associated with CRPC is CREB-binding protein
(“CBP”). CBP is a bridging factor that interacts with the NTD of the AR and is thought to be essential for AR
transcriptional activity. CBP levels are increased in CRPC, which may lead to cancer growth driven by AR activity. Coactivators
of AR have also been reported to be increased in CRPC which may subsequently result in aberrant transactivation of AR.



Ligand-independent Activation by Cytokines or Kinases



There is evidence that cytokines and kinases can activate the
NTD of the AR. It is possible that under castrate levels of androgen, cross-talk between the AR and signal transduction pathways
circumvent the need for androgen for the activation of the AR for the growth and survival of CRPC.



Constitutively Active AR Splice Variants that Lack the Ligand-Binding
Domain



CRPC may involve the expression of constitutively active splice-variants
of the AR that lack the full ligand-binding domain. These AR splice variants are always activated and have a truncated LBD, thus
do not require androgen to be transcriptionally active. Antiandrogens such as enzalutamide would have no effect on these AR splice
variants because antiandrogens bind to the LBD which is not present in these variants.



55







ESSA’s drug candidates have been shown to be active on
all of the above pathways. Specifically:



| | · | EPI-002 does not cause activation of mutated ARs that are activated by antiandrogens;
| | - | -------------------------------------------------------------------------------------



| | · | EPI-002 is active in vivo against VCaP xenografts that overexpress AR;
| | - | ----------------------------------------------------------------------



| | · | EPI-002 is not competitive with androgen for the LBD, hence its inhibitory effect cannot be competed away by high localized concentrations of androgen;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | EPI-001 blocks the interaction of CBP and RAP74 which are required for transcriptional activity and may contribute to tumor growth;
| | - | -----------------------------------------------------------------------------------------------------------------------------------



| | · | EPI-001 blocks AR activation by IL-6, bone-derived factors and stimulation of the PKA pathway;
| | - | ----------------------------------------------------------------------------------------------



| | · | In vitro and in vivo, EPI-002 significantly inhibits LNCaP95 human prostate cancer cells that harbour constitutively-active AR splice variant V7 and are resistant to enzalutamide; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | EPI-002 blocks gene expression regulated by full-length AR and V7.
| | - | ------------------------------------------------------------------



Programs and Potential Products



The Company’s EPI-Series Drugs



The Company’s compounds, based on
EPI-001, are selective, oral, small molecules that block the NTD of the AR. The AR is required for the growth and survival of most
prostate cancer; therefore, the NTD of the AR is an ideal target for next-generation hormone therapy. Consistent with the inhibition
of AR activity by other EPI compounds, experimentation conducted in a test-tube or in a controlled environment outside a living
organism (known as “in vitro” studies) and experimentation done in or on the living tissue of a whole, living
organism (known as “in vivo” studies) show that stereoisomers of EPI-001 selectively block AR-dependent proliferation
of human prostate cancer cells that express AR and do not inhibit the proliferation of cells that do not express functional AR
or do not rely on the AR for growth and survival. By directly inhibiting the NTD of the AR, the Company believes EPI series molecules
may be able to overcome resistance mechanisms in CRPC.



Preclinical Studies



The Company is focused on the advancement
of next-generation NTD inhibitors designed to improve upon the properties of the first-generation compound, EPI-506, a prodrug
of EPI-002. A series of oral small molecule compounds have been identified which, while retaining the common mechanism of action
to interfere with AR-mediated signaling, include improved pharmaceutical properties such as enhanced potency, reduced susceptibility
to metabolism and improved drug-like properties. Several of these compounds are currently being characterized in more detail with
a goal of selecting a next-generation development compound based on certain established criteria. The Company also continues to
conduct preclinical combination studies.



These next-generation compounds were discovered
through chemical modification of the EPI-002 chemical scaffold. Specific chemical changes to the structure of EPI-002 resulted
in increased potency in an in vitro AR-based gene transcription assay, exhibiting 5-10 times higher potency than EPI-002.
The efficacy of the first in the series of these next-generation high-potency molecules was confirmed in a human prostate cancer
xenograft model. In this preclinical study, the next-generation high-potency compound reduced tumor growth compared to the control
using low daily doses of the drug.



56







In addition to higher potency, the next-generation
compounds are designed to reduce the metabolism of these agents following oral dosing compared to EPI-002. Excessive metabolism
of a drug candidate may reduce the effective exposure levels of a drug and necessitate frequent and excessive dosing requirements.
Specific modifications in the chemical structure of these high-potency molecules were made in an attempt to block known sites of
metabolism of EPI-002. A series of in vitro studies examining drug metabolism were conducted with the next-generation compounds.
Results indicated that several of these high-potency compounds, with the additional chemical modifications, may be metabolized
more slowly than EPI-002 in humans. If this in vitro data is replicated in animals and in patients, the reduced metabolism
of the next-generation compounds may be expected to improve the pharmacokinetic profile and daily dose requirements following oral
dosing compared to EPI-002.



Importantly, the next-generation high-potency compounds exhibiting
less in vitro metabolism were tested against off-target screening. Significant off-target binding of drug candidates may lead to
unanticipated toxicity. Several of these compounds show minimal non-specific binding properties, indicating a favorable profile
for further development. The most promising of these high-potency low-metabolism next-generation compounds were selected for further
preclinical characterization with the goal of selecting an IND candidate molecule from among these compounds.



Future Clinical Development Program



Phase I/II Clinical Trial Design for treating CRPC patients



If the Company successfully identifies
a clinical candidate following preclinical studies of Aniten compounds, and approval of the IND and CTA are obtained, the Company
will conduct a Phase I/II clinical trial to determine the safety, tolerability, maximum tolerated dose, pharmacokinetics, and efficacy
of the compound in CRPC patients. In a Phase I study, it is expected the clinical trial will evaluate the safety, tolerability,
pharmacokinetics, and maximum-tolerated dose of the compound, in multiple-dose escalations. Learnings from the Phase I clinical
trial of EPI- anti-androgens 506 will be incorporated into the design and conduct of potential future trials. Included, for example,
will be extensive biological characterization of the patients entered into the clinical trial. Circulating tumor and, if available,
contemporary tissue tumor DNA will be examined for relevant genomic change. Similarly RNA studies in circulating tumor cells will
be used to confirm that the AR pathway is active in patients entered into the clinical trial. Similar gene expression-based assays
will confirm the biological activity of the drug, and relate this to dose responsiveness and if relevant, drug dosing schedule.
If the Phase I portion is successful, the Phase II portion (dose expansion) of the clinical trial will evaluate activity in a target
group of biologically-characterized mCRPC patients.



Early Conduct of a Combination Phase
I/II Clinical Trial



Given the evolution of prostate cancer
therapeutics towards combination therapy strategies, the biological rationale for combining NTD and LBD inhibitors, and compelling
early preclinical animal model results, the Company expects the early performance of combination studies of the next generation
Aniten compound with current generation anti-androgens.



Phase III Clinical Trial



In order to obtain full regulatory approval,
the Company expects that it will be required to carry out at least one Phase III clinical trial, most likely in patients similar
to the population of CRPC patients that enrolled in the planned Phase I/II clinical trial. However, the results of the Phase I/II
clinical trial may suggest modification of the initial patient population based on response and biomarker assessment. In a Phase
III clinical trial, the key end-point is expected to be overall survival relative to patients receiving the standard-of-care. It
is expected that such a Phase III clinical trial would be conducted at numerous sites around the world.



Competition



The competition in the prostate cancer market is very high,
with several pharmaceutical therapies already approved and many new molecules being tested for their effect in this patient population.



57









Currently approved or developmental therapies include:



|GENERIC/PROGRAM
        NAME |  | BRAND
        NAME |  | COMPANY
        NAME(S) |  | STAGE    
|---------------------------- |  | ------------------ |  | ----------------------- |  | ---------
|Enzalutamide                 |  | Xtandi             |  | Astellas and Pfizer     |  | Marketed 
|Abiraterone acetate          |  | Zytiga             |  | Johnson & Johnson       |  | Marketed 
|Sipuleucel-T                 |  | Provenge           |  | Valeant                 |  | Marketed 
|Docetaxel                    |  | n/a                |  | Sanofi and various      |  | Marketed 
|Cabazitaxel                  |  | Jevtana            |  | Sanofi                  |  | Marketed 
|Radium-233                   |  | Xofigo             |  | Bayer                   |  | Marketed 
|Apalutamide (ARN-509)        |  | n/a                |  | Johnson & Johnson       |  | Phase III
|ODM-201                      |  | n/a                |  | Orion Corp. and Bayer   |  | Phase III



In this market, ESSA believes that its competitive position
is strong because its product candidate, if successful, will focus mechanistically on the approach to prostate cancer that has
been shown to make the biggest difference to the survival of recurrent prostate cancer patients: blocking AR activation. Since
EPI compounds have been shown to directly block the AR NTD, they have the potential to overcome the AR-dependent resistance pathways
(discussed above) that may develop as a result of treatment with current hormone-related therapies that target the AR LBD. If successful,
ESSA believes this could represent a significant step forward in the treatment of prostate cancer. To ESSA’s knowledge, no
other antagonist to the AR NTD is currently undergoing clinical trials for prostate cancer or any other indication.



Patents and Proprietary Rights



License Agreement with UBC and the BCCA



ESSA has in-licensed intellectual property embodied in issued
patents, pending patents applications and know-how relating to compounds that modulate AR activity created through research work
done at the BCCA and UBC (the “Licensors”) under the direction of Drs. Marianne Sadar and Raymond Andersen,
respectively. ESSA refers to these intellectual property rights as the “Licensed IP.” ESSA’s Aniten series drugs
are covered in the Licensed IP.



Pursuant to an agreement among ESSA and the Licensors dated
as of December 22, 2010, and amended on February 10, 2011 and on May 27, 2014 (the “License Agreement”),
ESSA has been granted a worldwide, exclusive license to develop and commercialize products based on the Licensed IP. ESSA must
pay a minimum annual royalty of C$40,000 in the 2014 calendar year, increasing to C$65,000 in each of 2015 and 2016 and C$85,000
in 2017 and for each year thereafter. An additional C$50,000 and C$900,000 must be paid upon enrollment of a patient in a Phase
II and Phase III clinical trial, respectively.



The Licensors may terminate upon ESSA’s insolvency, or
the License Agreement may be terminated by either party for certain material breaches by the other party, including the failure
of ESSA and ESSA’s sublicensees to spend a total of at least C$5,000,000, in cash or in kind, in connection with the commercialization
of products relating directly to the Licensed IP by December 22, 2015. ESSA has already spent more than C$5,000,000 in connection
with the commercialization of products relating directly to the Licensed IP. ESSA is required to allocate reasonable time to the
development and commercialization of the Licensed IP and to use reasonable efforts to promote, market and sell products covered
by the Licensed IP. The terms of the License Agreement required ESSA to issue to the Licensors, in lieu of payment of an initial
license fee, 1,000,034 Common Shares. If ESSA develops products covered by the Licensed IP in the future, it will be required to
pay certain development and regulatory milestone payments up to an aggregate of C$2.4 million for the first drug product developed
under the license and up to an aggregate of C$510,000 for each subsequent product. ESSA must also pay the Licensors low single-digit
royalties based on aggregate worldwide net sales of products covered by the Licensed IP and a percentage of sublicensing revenue
in the low teens. ESSA is also required to reimburse costs incurred by the Licensors related to the prosecution and maintenance
of patents embodying the Licensed IP. The License Agreement will expire on the later of 20 years after the date of the License
Agreement or the expiry of the last issued patent included in the Licensed IP.



ESSA’s Intellectual Property Strategy



Both ESSA and the broader pharmaceutical industry attach significant
importance to patents for the protection of new technologies, products and processes. Accordingly, ESSA’s success depends,
in part, on its ability to obtain patents or rights thereto, to protect commercial secrets and carry on activities without infringing
the rights of third parties. See “Risk Factors” in Item 3.D elsewhere in this Annual Report. Where appropriate,
and consistent with management’s objectives, patents are pursued once concepts have been validated through appropriate laboratory
work. To that end, ESSA will continue to seek patents in relation to those components or concepts that it perceives to be important.



58







Patent Applications



ESSA has licensed patents and patent applications with respect
to its technology from the Licensors, jointly. ESSA has the right to acquire ownership of these patents and patent applications
upon specified payment to the Licensors, and providing that payments required under the License Agreement continue to be made.
The specific active patent applications to which ESSA has licensed rights are listed below, along with notes relating to the countries
in which the patent applications have been filed and the expected expiration dates of such patent applications.



Pending Licensed Applications





|TITLE                                                                                                                               |  | COUNTRY                                                                                          |  | STANDARD
        EXPIRATION
        DATES
|----------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------ |  | -----------------------------------------
|DIGLYCIDIC ETHER DERIVATIVE THERAPEUTICS AND METHODS FOR THEIR USE                                                                  |  | Brazil, Chile, China, Europe, Hong Kong, Indonesia, India, the Russian Federation, United States |  | July 2, 2029                             
|                                                                                                                                    |  |                                                                                                  |  |                                          
|BISPHENOL COMPOUNDS AND METHODS FOR THEIR USE                                                                                       |  | United States and Europe                                                                         |  | April 6, 2032                            
|                                                                                                                                    |  |                                                                                                  |  |                                          
|BISPHENOL DERIVATIVES AND THEIR USE AS ANDROGEN RECEPTOR ACTIVITY MODULATORS                                                        |  | Canada                                                                                           |  | January 6, 2031                          
|                                                                                                                                    |  |                                                                                                  |  |                                          
|BISPHENOL DERIVATIVE THERAPEUTICS AND METHODS FOR THEIR USE                                                                         |  | United States                                                                                    |  | January 6, 2031                          
|                                                                                                                                    |  |                                                                                                  |  |                                          
|FLUORINATED BISPHENOL ETHER COMPOUNDS AND METHODS FOR THEIR USE                                                                     |  | United States                                                                                    |  | August 17, 2032                          
|                                                                                                                                    |  |                                                                                                  |  |                                          
|HALOGENATED COMPOUNDS FOR CANCER IMAGING AND TREATMENT AND METHODS FOR THEIR USE                                                    |  | Australia, Canada, Europe, Japan, the Republic of Korea, New Zealand, Singapore, United States   |  | September 9, 2034                        
|                                                                                                                                    |  |                                                                                                  |  |                                          
|BISPHENOL ETHER DERIVATIVES AND METHODS FOR USING THE SAME                                                                          |  | United States                                                                                    |  | March 12, 2036                           
|                                                                                                                                    |  |                                                                                                  |  |                                          
|HETEROCYCLIC COMPOUNDS FOR CANCER IMAGING AND TREATMENT AND METHODS FOR THEIR USE                                                   |  | United States, Australia, Canada, Europe, Israel, Japan, New Zealand                             |  | January 13, 2036                         
|                                                                                                                                    |  |                                                                                                  |  |                                          
|CO-TARGETING ANDROGEN RECEPTOR SPLICE VARIANTS AND MTOR SIGNALING PATHWAY FOR THE TREATMENT OF CASTRATION-RESISTANT PROSTATE CANCER |  | Canada and United States                                                                         |  | September 2, 2036                        
|                                                                                                                                    |  |                                                                                                  |  |                                          
|BISPHENOL DERIVATIVES AND THEIR USE AS ANDROGEN RECEPTOR ACTIVITY MODULATORS                                                        |  | United States and as a Patent Convention Treaty application                                      |  | April 17, 2037                           







59









|TITLE                                                                                |  | COUNTRY                                                              |  | STANDARD
        EXPIRATION
        DATES
|------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------- |  | -----------------------------------------
|SMALL MOLECULE INHIBITORS OF N-TERMINUS ACTIVATION OF THE AR                         |  | United States, Chile, Hong Kong and India                            |  | August 24, 2029                          
|                                                                                     |  |                                                                      |  |                                          
|ANDROGEN RECEPTOR MODULATORS AND METHODS FOR THEIR USE                               |  | United States, Australia, Canada, Europe, Israel, Japan, New Zealand |  | May 29, 2035                             
|                                                                                     |  |                                                                      |  |                                          
|COMPOUNDS AND METHODS FOR TREATING DRUG-RESISTANT ANDROGEN RECEPTOR MEDIATED CANCERS |  | Patent Convention Treaty Application                                 |  | September 8, 2037                        
|                                                                                     |  |                                                                      |  |                                          
|COMPOUNDS AND COMPOSITIONS FOR RADIOIMMUNOTHERAPY AND METHODS OF USING THE SAME      |  | Patent Convention Treaty Application                                 |  | June 6, 2037                             







Granted Licensed Patents







|TITLE                                                                            |  | COUNTRY                                                                                                                                                                                                                                                                                              |  | STANDARDEXPIRATIONDATES
|-------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------
|DIGLYCIDIC ETHER DERIVATIVE THERAPEUTICS AND METHODS FOR THEIR USE               |  | United States, Australia, Canada, China, Colombia, Israel, Japan, the Republic of Korea, the Russian Federation, Mexico, New Zealand, South Africa, Belgium, Denmark, France, Germany, Great Britain, Finland, Hungary, Iceland, Ireland, Italy , Netherlands, Norway, Spain, Sweden and Switzerland |  | July 2, 2029           
|                                                                                 |  |                                                                                                                                                                                                                                                                                                      |  |                        
|BISPHENOL DERIVATIVES AND THEIR USE AS ANDROGEN RECEPTOR ACTIVITY MODULATORS     |  | United States, Japan, Germany, France, Great Britain                                                                                                                                                                                                                                                 |  | January 6, 2031        
|                                                                                 |  |                                                                                                                                                                                                                                                                                                      |  |                        
|FLUORINATED BISPHENOL ETHER COMPOUNDS AND METHODS FOR THEIR USE                  |  | Germany, Spain, Great Britain, France, Italy                                                                                                                                                                                                                                                         |  | August 17, 2032        
|                                                                                 |  |                                                                                                                                                                                                                                                                                                      |  |                        
|AZIRIDINE BISPHENOL ETHERS AND RELATED COMPOUNDS AND METHODS FOR THEIR USE       |  | United States                                                                                                                                                                                                                                                                                        |  | April 16, 2033         
|                                                                                 |  |                                                                                                                                                                                                                                                                                                      |  |                        
|HALOGENATED COMPOUNDS FOR CANCER IMAGING AND TREATMENT AND METHODS FOR THEIR USE |  | United States                                                                                                                                                                                                                                                                                        |  | September 9, 2034      
|                                                                                 |  |                                                                                                                                                                                                                                                                                                      |  |                        
|SMALL MOLECULE INHIBITORS OF N-TERMINUS ACTIVATION OF THE AR                     |  | United States, Australia, Canada, China, France, Germany, Italy, Spain, United Kingdom, Mexico, New Zealand and the Russian Federation                                                                                                                                                               |  | August 24, 2029        
|                                                                                 |  |                                                                                                                                                                                                                                                                                                      |  |                        
|ANDROGEN RECEPTOR MODULATORS AND METHODS FOR THEIR USE                           |  | United States                                                                                                                                                                                                                                                                                        |  | May 29, 2035           







60







Regulatory Environment



The production and manufacture of ESSA’s product candidate
and its R&D activities are subject to regulation for safety, efficacy, quality and ethics by various governmental authorities
around the world. In Canada, these activities are regulated by the Food and Drugs Act and the rules and regulations thereunder,
which are enforced by the TPD. In the United States, drugs and biological products are subject to regulation by the FDA. Drug approval
laws require registration of manufacturing facilities, carefully controlled research and testing of product candidates, government
review and approval of experimental results prior to giving approval to sell drug products. Regulators also require that rigorous
and specific standards such as cGMP, GLP and GCP are followed in the manufacture, testing and clinical development respectively
of any drug product. See “Risk Factors” in Item 3.D elsewhere in this Annual Report.



The process of obtaining regulatory approvals and the corresponding
compliance with appropriate federal, state, local and foreign statutes and regulations requires the expenditure of substantial
time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development
process, approval process or after approval may subject an applicant or sponsor to a variety of administrative or judicial sanctions,
including refusal by the FDA to approve pending applications, withdrawal of an approval, imposition of a clinical hold, issuance
of warning letters and other types of enforcement letters, product recalls, product seizures, total or partial suspension of production
or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits, or civil or criminal
investigations and penalties brought by the FDA and the Department of Justice (“DOJ”) or other governmental
entities.



An applicant seeking approval to market and distribute a new
drug product in the United States must typically undertake the following:



| | · | completion of extensive nonclinical, sometimes referred to as preclinical laboratory tests, and preclinical animal trials and applicable requirements for the humane use of laboratory animals and formulation studies in compliance with applicable regulations, including GLPs;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | submission to the FDA of an IND, which must take effect before human clinical trials may begin;
| | - | -----------------------------------------------------------------------------------------------



| | · | approval by an IRB, representing each clinical site before each clinical trial may be initiated;
| | - | ------------------------------------------------------------------------------------------------



| | · | performance of adequate and well-controlled human clinical trials according to the FDA’s regulations commonly referred to as GCP regulations and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed biological product for its intended use;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | preparation and submission to the FDA of a NDA;
| | - | -----------------------------------------------



| | · | review of the product by an FDA advisory committee, where appropriate or if applicable;
| | - | ---------------------------------------------------------------------------------------



| | · | satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with current Good Manufacturing Practices, or cGMP, requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | payment of user fees and securing FDA approval of the NDA; and
| | - | --------------------------------------------------------------



61









| | · | compliance with any post-approval requirements, including Risk Evaluation and Mitigation Strategies (“REMS”) and post-approval studies required by the FDA.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------



Preclinical Studies



Preclinical studies are conducted in vitro and in animals to
evaluate pharmacokinetics, metabolism and possible toxic effects to provide evidence of the safety of the product candidate prior
to its administration to humans in clinical studies and throughout development. The conduct of preclinical studies is subject to
federal regulations and requirements, including GLP regulations. The results of the preclinical tests, together with manufacturing
information, analytical data, any available clinical data or literature and plans for clinical studies, among other things, are
submitted to the FDA as part of an IND. Some long-term preclinical testing, such as animal tests of reproductive adverse events
and carcinogenicity, may continue after the IND is submitted. ESSA has completed GLP preclinical toxicology studies as required
for the IND.



Initiation of Human Testing



Clinical trials involve the administration of the investigational
product to human subjects under the supervision of qualified investigators in accordance with GCP requirements, which include,
among other things, the requirement that all research subjects provide their informed consent in writing before their participation
in any clinical trial. Clinical trials are conducted under written trial protocols detailing, among other things, the objectives
of the trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. A protocol for each
clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. An IND automatically becomes
effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to a proposed
clinical trial and places the trial on clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding
concerns before the clinical trial can begin. In Canada, this application is called a CTA. An IND/CTA application must be filed
and accepted by the FDA or TPD, as applicable, before human clinical trials may begin. In addition, an IRB representing each institution
participating in the clinical trial must review and approve the plan for any clinical trial before it commences at that institution,
and the IRB must conduct continuing review and reapprove the trial at least annually. The IRB must review and approve, among other
things, the trial protocol and informed consent information to be provided to trial subjects. An IRB must operate in compliance
with FDA regulations.



Two key factors influencing the rate of progression of clinical
trials are the rate at which patients can be enrolled to participate in the research program and whether effective treatments are
currently available for the disease that the drug is intended to treat. Patient enrollment is largely dependent upon the incidence
and severity of the disease, the treatments available and the potential side effects of the drug to be tested and any restrictions
for enrollment that may be imposed by regulatory agencies.



Phase I Clinical Trials



Phase I clinical trials for cancer therapeutics are typically
conducted on a small number of patients to evaluate safety, dose limiting toxicities, tolerability, pharmacokinetics and to determine
the dose for Phase II clinical trials in humans.



Phase II Clinical Trials



Phase II clinical trials typically involve a larger patient
population than Phase I clinical trials and are conducted to identify possible adverse effects and safety risks, to preliminarily
evaluate the efficacy of a product candidate for specific targeted diseases and to determine dosage tolerance, optimal dosage and
dosing schedule.



Phase III Clinical Trials



Phase III clinical trials typically involve testing an experimental
drug on a much larger population of patients suffering from the targeted condition or disease – in ESSA’s case, CRPC.
These studies involve testing the experimental drug in an expanded patient population at geographically dispersed test sites (multi-center
trials) to establish clinical safety and effectiveness. These trials also generate information from which the overall risk-benefit
relationship relating to the drug can be determined.



62







In most cases FDA requires two adequate and well controlled
Phase III clinical trials to demonstrate the efficacy of the drug. A single Phase III trial with other confirmatory evidence may
be sufficient in rare instances where the trial is a large multicenter trial demonstrating internal consistency and a statistically
very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity or prevention of a disease with
a potentially serious outcome and confirmation of the result in a second trial would be practically or ethically impossible.



New Drug Application



Assuming successful completion of required clinical testing
and other requirements, the results of the preclinical and clinical studies, together with detailed information relating to the
product’s chemistry, manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of
an NDA, or the TPD as part of an NDS, requesting approval to market the drug product for one or more indications. The NDS or NDA
is then reviewed by the applicable regulatory body for approval to market the drug.



The FDA conducts a preliminary review of an NDA within 60 days
of its receipt and informs the sponsor by the 74th day after the FDA’s receipt of the submission to determine
whether the application is sufficiently complete to permit substantive review. The FDA may request additional information rather
than accept an NDA for filing. In this event, the application must be resubmitted with the additional information. The resubmitted
application is also subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA
begins an in-depth substantive review. The FDA has agreed to specified performance goals in the review process of NDAs. Most such
applications are meant to be reviewed within ten months from the date of filing, and most applications for “priority review”
products are meant to be reviewed within six months of filing. The review process may be extended by the FDA for three additional
months to consider new information or clarification provided by the applicant to address an outstanding deficiency identified by
the FDA following the original submission.



Before approving an NDA, the FDA typically will inspect the
facility or facilities where the product is or will be manufactured. These pre-approval inspections cover all facilities associated
with an NDA submission, including drug component manufacturing (such as Active Pharmaceutical Ingredients), finished drug product
manufacturing, and control testing laboratories. The FDA will not approve an application unless it determines that the manufacturing
processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within
required specifications. Additionally, before approving an NDA, the FDA will typically inspect one or more clinical sites to assure
compliance with GCP.



The cost of preparing and submitting an NDA is substantial.
The submission of most NDAs is additionally subject to a substantial application user fee, currently exceeding $2,421,000 and the
manufacturer or sponsor under an approved new drug application are also subject to annual product and establishment user fees,
currently exceeding $97,000 per product and $512,000 per establishment. These fees are typically increased annually.



An NDS costs roughly $322,056 per submission and will also be
subject to Drug Establishment Licensing fees, which currently exceed $16,000 per established facility.



On the basis of the FDA’s evaluation of the NDA and accompanying
information, including the results of the inspection of the manufacturing facilities, the FDA may issue an approval letter or a
complete response letter. An approval letter authorizes commercial marketing of the product with specific prescribing information
for specific indications. A complete response letter generally outlines the deficiencies in the submission and may require substantial
additional testing or information in order for the FDA to reconsider the application. If and when those deficiencies have been
addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed
to reviewing such resubmissions in two or six months depending on the type of information included. Even with submission of this
additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.



63







If the FDA approves a product, it may limit the approved indications
for use for the product, require that contraindications, warnings or precautions be included in the product labeling, require that
post-approval studies, including Phase 4 clinical trials, be conducted to further assess the drug’s safety after approval,
require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including
distribution restrictions or other risk management mechanisms which can materially affect the potential market and profitability
of the product. The FDA may prevent or limit further marketing of a product based on the results of post-market studies or surveillance
programs. After approval, many types of changes to the approved product, such as adding new indications, manufacturing changes
and additional labeling claims, are subject to further testing requirements and FDA review and approval.



Post-Approval Requirements



Drugs manufactured or distributed pursuant to FDA approvals
are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping,
periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the
product. After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject
to prior FDA review and approval. There also are continuing, annual user fee requirements for any marketed products and the establishments
at which such products are manufactured, as well as new application fees for supplemental applications with clinical data.



In addition, drug manufacturers and other entities involved
in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and state agencies,
and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements.
Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA
regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements
upon the sponsor and any third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue
to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance.



Once an approval is granted, the FDA may withdraw the approval
if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.
Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency,
or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling
to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of
distribution or other restrictions under a REMS program. Other potential consequences include, among other things:



| | · | restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;
| | - | -------------------------------------------------------------------------------------------------------------------------------------



| | · | fines, warning letters or holds on post-approval clinical trials;
| | - | -----------------------------------------------------------------



| | · | refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product license approvals;
| | - | -------------------------------------------------------------------------------------------------------------------------------------



| | · | product seizure or detention, or refusal to permit the import or export of products; or
| | - | ---------------------------------------------------------------------------------------



| | · | injunctions or the imposition of civil or criminal penalties.
| | - | -------------------------------------------------------------



The FDA strictly regulates marketing, labeling, advertising
and promotion of products that are placed on the market. Drugs may be promoted only for the approved indications and in accordance
with the provisions of the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the
promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant
liability.



In addition, the distribution of prescription pharmaceutical
products is subject to the Prescription Drug Marketing Act, or PDMA, which regulates the distribution of drugs and drug samples
at the federal level, and sets minimum standards for the registration and regulation of drug distributors by the states. Both the
PDMA and state laws limit the distribution of prescription pharmaceutical product samples and impose requirements to ensure accountability
in distribution.



64







Orphan Designation and Exclusivity



ESSA may, in the future, seek orphan drug designation for its
product candidates. Under the Orphan Drug Act, the FDA may designate a drug product as an “orphan drug” if it is intended
to treat a rare disease or condition (generally meaning that it affects fewer than 200,000 individuals in the United States, or
more in cases in which there is no reasonable expectation that the cost of developing and making a drug product available in the
United States for treatment of the disease or condition will be recovered from sales of the product). A company must request orphan
product designation before submitting an NDA. If the request is granted, the FDA will disclose the identity of the therapeutic
agent and its potential use. Orphan product designation does not convey any advantage in or shorten the duration of the regulatory
review and approval process.



If a product with orphan status receives the first FDA approval
for the disease or condition for which it has such designation, the product generally will be receive orphan product exclusivity.
Orphan product exclusivity means that the FDA may not approve any other applications for the same product for the same indication
for seven years, except in certain limited circumstances. Competitors may receive approval of different products for the indication
for which the orphan product has exclusivity and may obtain approval for the same product but for a different indication. If a
drug or drug product designated as an orphan product ultimately receives marketing approval for an indication broader than what
was designated in its orphan product application, it may not be entitled to exclusivity.



| | C. | Organizational Structure
| | -- | ------------------------



The Company has one wholly-owned subsidiary, ESSA Pharmaceuticals
Corp., existing under the laws of the State of Texas.



| | D. | Property, Plants and Equipment
| | -- | ------------------------------



ESSA’s operating plan does not include building infrastructure
in the form of an in-house laboratory, capital equipment, headcount, or administrative burden.



ESSA operates from its head office located in Vancouver, Canada.
Operations related to the EPI-506 development program are based in Houston, Texas. ESSA does not own any real property. The following
table outlines significant properties that ESSA currently leases:



|LOCATION               |  | AREA(IN SQUARE FEET) |  | LEASE EXPIRATION DATE |  | USE         
|---------------------- |  | -------------------- |  | --------------------- |  | ------------
|Vancouver, Canada      |  | 200                  |  | Monthly               |  | Office Space
|Houston, United States |  | 9,363                |  | Dec. 31, 2019         |  | Office Space



The Canadian office space costs C$3,850 per month and is rented
on a month to month basis. The United States office space costs $14,045 per month. ESSA believes that its current facilities are
adequate to meet its ongoing needs and that, if ESSA requires additional space, it will be able to obtain additional facilities
on commercially reasonable terms.



| | ITEM 4A | UNRESOLVED STAFF COMMENTS
| | ------- | -------------------------



Not applicable.



65









| | ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS
| | ------- | --------------------------------------------



| | A. | Operating Results
| | -- | -----------------



The following discussion and analysis of the financial condition
and results of operations of ESSA should be read in conjunction with the audited financial statements as at and for the fiscal
years ended September 30, 2017, 2016, and 2015, together with the notes thereto. The financial information contained in this Annual
Report is derived from the financial statements, which were prepared in accordance with IFRS.



Overview



ESSA is a preclinical stage
pharmaceutical company focused on developing novel and proprietary therapies for the treatment of prostate cancer in patients
whose disease is progressing despite treatment with current therapies, including abiraterone and enzalutamide. The Company
believes its preclinical Aniten series of compounds can significantly expand the interval of time in which patients suffering
from CRPC can benefit from hormone-based therapies. Specifically, the Aniten compounds act by disrupting the AR signaling
pathway, the primary pathway that drives prostate cancer growth, by preventing AR activation through selective binding to the
Tau-5 region of the NTD of the AR. In this respect, ESSA’s Aniten compounds differ greatly from classical
anti-androgens, since they interfere either with androgen synthesis, or with the binding of androgens to the LBD, which is
located at the opposite end of the receptor. A functional NTD is essential for activation of the AR; blocking the NTD
inhibits AR-driven transcription. We believe such transcription inhibition mechanism of the Aniten class of agents is unique,
and has the advantage of bypassing identified mechanisms of resistance to the anti-androgens currently used in the treatment
of CRPC. In preclinical studies, blocking the NTD has demonstrated the capability to prevent AR-driven gene expression. In
addition, in a recently completed Phase I clinical trial of ESSA’s first generation agent EPI-506, PSA declines, a sign
of inhibition of AR-driven biology, were observed at the higher dose levels.



According to the American Cancer Society, in the United States,
prostate cancer is the second most frequently diagnosed cancer among men, behind skin cancer. Approximately one-third of all prostate
cancer patients who have been treated for local disease will subsequently have rising serum levels of PSA, which is an indication
of recurrent or advanced disease. Patients with advanced disease often undergo androgen ablation therapy using analogues of LHRH
or surgical castration. Most advanced prostate cancer patients initially respond to androgen ablation therapy, however many experience
a recurrence in tumor growth despite the reduction of testosterone to castrate levels, and at that point are considered to be suffering
from CRPC. Following diagnosis of CRPC, patients are often treated with anti-androgens, which block the binding of androgens to
the AR.





ESSA has never been profitable and has incurred net losses
since inception. ESSA's net losses were $4,499,012, $13,139,788, and $9,676,587 for the years ended September 30, 2017, 2016,
and 2015, respectively. ESSA expects to incur losses for the foreseeable future, and it expects these losses to increase as it
continues the development of, and seek regulatory approvals for, its product candidate. Because of the numerous risks and uncertainties
associated with product development, ESSA is unable to predict the timing or amount of increased expenses or when, or if, it will
be able to achieve or maintain profitability.



Results of Operations



The
following table sets forth ESSA's consolidated statements of financial position and consolidated statements of loss and comprehensive
loss as at and for the fiscal years ended September 30, 2017, 2016, and 2015:



|(US$) Income
                                         Statement Data |  | Year
    Ended September 30, 2017 |             |   | Year
    Ended September 30, 2016 |  |             | Year
    Ended September 30, 2015 | 
|-------------------------------------------------------------------- |  | --------------------------------- | ----------- | - | --------------------------------- |  | ----------- | --------------------------------- | 
|Revenue                                                              |  |                                   | —           |   |                                   |  | —           |                                   | 
|Other
    Income                                                     |  |                                   | —           |   |                                   |  | —           |                                   | 
|Total operating expenses                                             |  |                                   | (11,651,870 | ) |                                   |  | (19,642,164 | )                                 | 
|Research and development,
    net of recoveries                      |  |                                   | 5,726,366   |   |                                   |  | 13,060,201  |                                   | 
|Financing costs                                                      |  |                                   | 784,583     |   |                                   |  | 937,845     |                                   | 
|General
    and administration, net of recoveries                    |  |                                   | 5,140,921   |   |                                   |  | 5,644,118   |                                   | 
|Loss
    before income taxes                                         |  |                                   | (4,382,621  | ) |                                   |  | (12,988,516 | )                                 | 
|Net
    loss, net of income tax                                      |  |                                   | (4,499,012  | ) |                                   |  | (13,139,788 | )                                 | 



66









|(US$) Income
                                         Statement Data |  | Year
    Ended September 30, 2017 |            |   | Year
    Ended September 30, 2016 |  |            | Year
    Ended September 30, 2015 | 
|-------------------------------------------------------------------- |  | --------------------------------- | ---------- | - | --------------------------------- |  | ---------- | --------------------------------- | 
|Balance
    Sheet Data                                               |  |                                   |            |   |                                   |  |            |                                   | 
|Cash                                                                 |  |                                   | 3,957,185  |   |                                   |  | 8,985,095  |                                   | 
|Other current assets                                                 |  |                                   | 1,101,578  |   |                                   |  | 1,034,114  |                                   | 
|Deferred financing
    costs                                         |  |                                   | 211,073    |   |                                   |  | —          |                                   | 
|Equipment                                                            |  |                                   | 99,882     |   |                                   |  | 127,730    |                                   | 
|Intangible
    assets                                                |  |                                   | 237,326    |   |                                   |  | 255,623    |                                   | 
|Total
    assets                                                     |  |                                   | 5,607,044  |   |                                   |  | 10,402,562 |                                   | 
|Accounts payable
    and accrued liabilities                         |  |                                   | 1,641,103  |   |                                   |  | 3,538,761  |                                   | 
|Income tax payable                                                   |  |                                   | 109,521    |   |                                   |  | 91,191     |                                   | 
|Long-term debt                                                       |  |                                   | 7,959,680  |   |                                   |  | —          |                                   | 
|Derivative liability                                                 |  |                                   | 170,743    |   |                                   |  | 7,309,467  |                                   | 
|Shareholders’
    equity (deficiency)                                |  |                                   | (4,274,003 | ) |                                   |  | (536,857   | )                                 | 
|Total
    liabilities and shareholders’ equity (deficiency)          |  |                                   | 5,607,044  |   |                                   |  | 10,402,562 |                                   | 



Results
of Operations for the Fiscal Years Ended September 30, 2017 and 2016





There was no revenue in any of the fiscal years as reported.
The Company incurred a comprehensive loss of $4,499,012 for the year ended September 30, 2017 compared to a comprehensive loss
of $13,477,551 for the year ended September 30, 2016. Variations in ESSA’s expenses and net loss for the periods resulted
primarily from the following factors:



Research and Development Expenditures



Expenses increased in all categories of R&D. R&D expense
included the following major expenses by nature:



|                                         |  | Year ended September 30, 2017 |            |   | Year ended September 30, 2016 |  
|---------------------------------------- |  | ----------------------------- | ---------- | - | ----------------------------- | -
|Clinical                                 |  | $                             | 2,623,636  |   |                               | $
|Consulting                               |  |                               | 935,151    |   |                               |  
|Legal patents and license fees           |  |                               | 834,295    |   |                               |  
|Manufacturing                            |  |                               | 3,571,106  |   |                               |  
|Other                                    |  |                               | 187,228    |   |                               |  
|Pharmacology                             |  |                               | 407,373    |   |                               |  
|Program administration                   |  |                               | (38,534    | ) |                               |  
|Royalties                                |  |                               | 48,863     |   |                               |  
|Salaries and benefits                    |  |                               | 2,213,655  |   |                               |  
|Share-based payments                     |  |                               | (3,870     | ) |                               |  
|Travel                                   |  |                               | 140,262    |   |                               |  
|CPRIT Grant claimed on eligible expenses |  |                               | (5,192,799 | ) |                               |  
|Total                                    |  | $                             | 5,726,366  |   |                               | $



The overall R&D expense for the year ended September 30,
2017 was $5,726,366 compared to $13,060,201 for the year ended September 30, 2016, net of R&D recoveries of $5,192,799 for
the year ended September 30, 2017 and $nil for the year ended September 30, 2016. The gross expense for 2017 of $10,919,165 was
lower as compared to $13,060,201 in 2016 due to reduced overall activity as the Company concluded Phase I of its clinical trial
in September 2017. Pharmacology costs of $407,373 (2016 - $866,527) have decreased compared to the comparative period in 2016 due
to the completion of testing and experimentation on the Company’s EPI-series drugs. Manufacturing costs of $3,571,106 (2016
- $3,601,407) and clinical costs of $2,623,636 (2016 - $2,920,104) related to the ongoing Phase I/II clinical trial which commenced
in November 2015, including manufacture of batches of EPI-506 for use in the clinical trial, and work performed by the clinical
research organization in conducting of the clinical trial. Legal patent and license fees decreased to $834,295 for the year ended
September 30, 2017 (2016 - $905,392) as the Company has submitted a number of patent applications for which the Company owns the
rights. Consulting costs decreased to $935,151 for the year ended September 30, 2017 (2016 - $1,333,323) relating to professionals
engaged in Texas to conduct specific R&D services for the Company in addition to regular payments made to the Company’s
Chief Scientific Officer and Chief Technical Officer. Salaries and benefits of $2,213,655 for the year ended September 30, 2017
(2016 - $2,194,047) related to research support staff on payroll during the period.



67







Share-based payments expense recovery of $3,870 (2016 - $322,160
expense) relates to the value assigned to stock options granted to key management and consultants of the Company. The expense is
recognized in relation to the grant and vest of these equity instruments as measured by the Black-Scholes pricing model.



General and Administration Expenditures



General and administrative expenses include the following major
expenses by nature:



|                                         |  | Year ended September 30, 2017 |           |  | Year ended September 30, 2016 |  
|---------------------------------------- |  | ----------------------------- | --------- |  | ----------------------------- | -
|Amortization                             |  | $                             | 46,145    |  |                               | $
|Consulting and subcontractor fees        |  |                               | 86,931    |  |                               |  
|Director fees                            |  |                               | 191,500   |  |                               |  
|Insurance                                |  |                               | 395,690   |  |                               |  
|Investor relations                       |  |                               | 230,579   |  |                               |  
|Office, insurance, IT and communications |  |                               | 187,364   |  |                               |  
|Professional fees                        |  |                               | 612,865   |  |                               |  
|Regulatory fees and transfer agent       |  |                               | 74,600    |  |                               |  
|Rent                                     |  |                               | 470,716   |  |                               |  
|Salaries and benefits                    |  |                               | 1,863,634 |  |                               |  
|Share-based payments                     |  |                               | 762,797   |  |                               |  
|Travel and entertainment                 |  |                               | 218,100   |  |                               |  
|Total                                    |  | $                             | 5,140,921 |  |                               | $



General and administration expenses decreased to $5,140,921
from $5,644,118 in the year ended September 30, 2016. Significant components of the expense in 2017 included $612,865 (2016 - $776,339)
in professional fees for legal and accounting services in conjunction with corporate activities including the Company’s regulatory
and tax filings as compared to financing activities in the comparative period; salaries and benefits expense of $1,863,634 (2016
- $1,634,380) related to administrative staff and senior management costs.



Share-Based Payments



Share-based payments expense of $762,797 (2016 - $897,043) relates
to the value assigned to stock options granted to key management and consultants of the Company. The expense is recognized in relation
to the grant and vest of these equity instruments and allocated to research and development, general and administration and financing
expenditures relative to the activity of the underlying optionee.



Results of Operations for the Fiscal Year Ended September
30, 2016 and the Fiscal Year ended September 30, 2015



There was no revenue in any of the fiscal years as reported.
The Company incurred a comprehensive loss of $13,477,551 for the year ended September 30, 2016 compared to a comprehensive loss
of $11,341,799 for the year ended September 30, 2015. Variations in ESSA’s expenses and net loss for the periods resulted
primarily from the following factors:



68







Research and Development Expenditures



Expenses increased in all categories of R&D. R&D expense
included the following major expenses by nature:



|                                         |  | Year ended September 30, 2016 |            |  | Year ended September 30, 2015 |  
|---------------------------------------- |  | ----------------------------- | ---------- |  | ----------------------------- | -
|Clinical                                 |  | $                             | 2,920,104  |  |                               | $
|Consulting                               |  |                               | 1,333,323  |  |                               |  
|Legal patents and license fees           |  |                               | 905,392    |  |                               |  
|Manufacturing                            |  |                               | 3,601,407  |  |                               |  
|Other                                    |  |                               | 306,657    |  |                               |  
|Pharmacology                             |  |                               | 866,527    |  |                               |  
|Program administration                   |  |                               | 381,429    |  |                               |  
|Royalties                                |  |                               | 46,228     |  |                               |  
|Salaries and benefits                    |  |                               | 2,194,047  |  |                               |  
|Share-based payments                     |  |                               | 322,160    |  |                               |  
|Travel                                   |  |                               | 182,927    |  |                               |  
|SRED tax credits                         |  |                               | —          |  |                               |  
|CPRIT Grant claimed on eligible expenses |  |                               | —          |  |                               |  
|Total                                    |  | $                             | 13,060,201 |  |                               | $



The overall R&D expense for the year ended September 30,
2016 was $13,060,201 compared to $4,975,928 for the year ended September 30, 2015, net of R&D recoveries of $nil for the year
ended September 30, 2016 and $5,438,964 for the year ended September 30, 2015. The gross expense for 2016 of $13,060,201 was higher
as compared to $10,414,892 in 2015 due to increased overall activity following several significant financings in early 2016 that
corresponded with the Company commencing Phase I of its clinical trial. Pharmacology costs of $866,527 (2015 - $1,420,276) have
decreased compared to the comparative period in 2015 due to the completion of testing and experimentation on the Company’s
EPI-series drugs. The investment for the comparative period was significant as the Company worked with its research facility partners
to complete the documentation and information to supplement its IND application as filed at the end of March 2015. Manufacturing
costs of $3,601,407 (2015 - $3,417,551) and clinical costs of $2,920,104 (2015 - $304,142) related to the commencement of the Phase
I/II clinical trial in November 2015, including manufacture of batches of EPI-506 for use in the clinical trial, and work performed
by the clinical research organization in preparation for and conducting of the clinical trial. Legal patent and license fees increased
to $905,392 for the year ended September 30, 2016 (2015 - $554,712) as the Company has submitted a number of patent applications
for which the Company owns the rights. Consulting costs increased to $1,333,323 for the year ended September 30, 2016 (2015 - $1,072,039)
as the Company has engaged professionals in Texas to conduct specific R&D services for the Company in addition to regular payments
made to the Company’s Chief Scientific Officer and Chief Technical Officer. Salaries and benefits of $2,194,047 for the year
ended September 30, 2016 (2015 - $1,671,567) related to additional research support staff added to formal payroll during the period.



Share-based payments expense of $322,160 (2015 - $779,263) relates
to the value assigned to stock options granted to key management and consultants of the Company. The expense is recognized in relation
to the grant and vest of these equity instruments as measured by the Black-Scholes pricing model.



General and Administration Expenditures



General and administrative expenses include the following major
expenses by nature:



|                                         |  | Year ended September 30, 2016 |           |  | Year ended September 30, 2015 |  
|---------------------------------------- |  | ----------------------------- | --------- |  | ----------------------------- | -
|Amortization                             |  | $                             | 66,181    |  |                               | $
|Consulting and subcontractor fees        |  |                               | 87,014    |  |                               |  
|Director fees                            |  |                               | 204,049   |  |                               |  
|Insurance                                |  |                               | 422,066   |  |                               |  
|Investor relations                       |  |                               | 317,822   |  |                               |  
|Office, insurance, IT and communications |  |                               | 288,968   |  |                               |  
|Professional fees                        |  |                               | 776,339   |  |                               |  
|Regulatory fees and transfer agent       |  |                               | 131,302   |  |                               |  
|Rent                                     |  |                               | 620,023   |  |                               |  
|Salaries and benefits                    |  |                               | 1,634,380 |  |                               |  
|Share-based payments                     |  |                               | 897,043   |  |                               |  
|Travel and entertainment                 |  |                               | 198,931   |  |                               |  
|CPRIT Grant claimed on eligible expenses |  |                               | —         |  |                               |  
|Total                                    |  | $                             | 5,644,118 |  |                               | $



69







General and administration expenses increased to $5,644,118
from $5,258,519 in the year ended September 30, 2015. Significant components of the expense in 2016 included $776,339 (2015 - $1,807,112)
in professional fees for legal and accounting services in conjunction with corporate activities including the Company’s financing
activities, initial listings on the TSX-V and the NASDAQ in fiscal 2015, and salaries and benefits expense of $1,634,380 (2015
- $815,544) related to the addition of administrative staff as well as the resignation of the former CEO and appointment of a new
CEO and COO.



Share-Based Payments



Share-based payments expense of $897,043 (2015 - $637,524) relates
to the value assigned to stock options granted to key management and consultants of the Company. The expense is recognized in relation
to the grant and vest of these equity instruments and allocated to research and development, general and administration and financing
expenditures relative to the activity of the underlying optionee.



Quarterly Results of Operations



The following table summarizes selected unaudited consolidated
financial data for each of the last eight quarters, prepared in accordance with IFRS. This data should be read in conjunction with
the Company’s audited financial statements and related notes included elsewhere in this Annual Report. These quarterly operating
results are not necessarily indicative of ESSA’s operating results for a full year or any future period.



For the Quarters Ended



|                                            |  | September 30, 2017 |            |   | June 30, 2017 |   |           | March 31, 2017 |  |   | December 31, 2016 |  
|------------------------------------------- |  | ------------------ | ---------- | - | ------------- | - | --------- | -------------- |  | - | ----------------- | -
|                                            |  |                    |            |   |               |   |           |                |  |   |                   |  
|Research and development expense            |  | $                  | 1,165,917  |   |               | $ | 2,920,181 |                |  | $ | 2,548,761         |  
|General and administration                  |  |                    | 1,105,295  |   |               |   | 1,302,314 |                |  |   | 1,363,493         |  
|Comprehensive income (loss)                 |  |                    | (1,945,299 | ) |               |   | 3,592,404 |                |  |   | (7,610,579        | )
|Basic and diluted earnings (loss) per share |  |                    | (0.07      | ) |               |   | 0.12      |                |  |   | (0.26             | )
|Total assets                                |  |                    | 5,607,044  |   |               |   | 8,405,965 |                |  |   | 13,738,990        |  
|Long-term liabilities                       |  |                    | 6,103,835  |   |               |   | 7,105,830 |                |  |   | 15,931,442        |  



|                                            |  | September 30, 2016 |            |   | June 30, 2016 |   |            | March 31, 2016 |  |   | December 31, 2015 |  
|------------------------------------------- |  | ------------------ | ---------- | - | ------------- | - | ---------- | -------------- |  | - | ----------------- | -
|                                            |  |                    |            |   |               |   |            |                |  |   |                   |  
|Research and development expense            |  | $                  | 3,951,799  |   |               | $ | 3,362,948  |                |  | $ | 2,544,517         |  
|General and administration                  |  |                    | 1,236,873  |   |               |   | 1,305,780  |                |  |   | 1,874,597         |  
|Comprehensive loss                          |  |                    | (4,236,768 | ) |               |   | (3,865,757 | )              |  |   | (1,335,215        | )
|Basic and diluted earnings (loss) per share |  |                    | (0.15      | ) |               |   | (0.13      | )              |  |   | (0.04             | )
|Total assets                                |  |                    | 10,402,562 |   |               |   | 13,666,625 |                |  |   | 17,470,959        |  
|Long-term liabilities                       |  |                    | 7,309,467  |   |               |   | 8,350,043  |                |  |   | 9,217,777         |  



Research and Development Expenditures



In the quarter ended December 31, 2015,
the Company commenced the Phase I portion of its clinical trial.



70







In the quarter ended December 31, 2016, the Company recorded
a receivable of $5,122,000 for a portion of its third tranche of the CPRIT Grant, which was recognized as recoveries of R&D
expenditures, resulting in a net recovery of $908,493 for the period.



General and Administration Expenditures



General and administrative expenses for the three months ended
March 31, 2016 have increased over the prior period in relation to the January 2016 Financing and March 2016 Financing, pursuant
to which the Company raised gross proceeds of $20,000,000.



Critical Accounting Policies and Estimates



The Company makes estimates and assumptions about the future
that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated based on historical
experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
In the future, actual experience may differ from these estimates and assumptions.



The effect of a change in an accounting estimate is recognized
prospectively by including it in comprehensive income in the period of the change, if the change affects that period only, or in
the period of the change and future periods, if the change affects both. Significant assumptions about the future and other sources
of estimation uncertainty that management has made at the statement of financial position date, that could result in a material
adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions that have
been made that relate to the following key estimates:



Intangible Assets – impairment



The application of the Company’s accounting policy for
intangible assets expenditures requires judgment in determining whether it is likely that future economic benefits will flow to
the Company, which may be based on assumptions about future events or circumstances. Estimates and assumptions may change if new
information becomes available. If, after expenditures are capitalized, information becomes available suggesting that the recovery
of expenditures is unlikely, the amount capitalized is written off in profit or loss in the period the new information becomes
available.



Intangible Assets – useful lives



Following initial recognition, the Company carries the value
of intangible assets at cost less accumulated amortization and any accumulated impairment losses. Amortization is recorded on a
straight-line basis based upon management’s estimate of the useful life and residual value. The estimates are reviewed at
least annually and are updated if expectations change as a result of technical obsolescence or legal and other limits to use. A
change in the useful life or residual value will impact the reported carrying value of the intangible assets resulting in a change
in related amortization expense.



Product development and relocation grant



Pursuant to the terms of the Company’s CPRIT Grant, the
Company must meet certain terms and conditions to qualify for the grant funding. The Company has assessed its performance relative
to these terms as detail in “Summary Corporate History and Intercorporate Relationships” in Item 4 of this
Annual Report and has judged that there is reasonable assurance the Company will meet the terms of the grant and qualify for the
funding. The Company has therefore taken into income a portion of the grant that represents expenses the Company has incurred to
date under the grant parameters. The expenses are subject to assessment by CPRIT for compliance with the grant regulations which
may result in certain expenses being denied and incurred in a future period.



71







Long-term debt



The Company has made certain estimates
regarding the expected timing of and value of cash flows with respect to long-term debt. The estimates will fluctuate in accordance
with changes in interest rates and any prepayments made, should the Company elect to do so.



Derivative financial instruments



Certain warrants are treated as derivative
financial liabilities. The estimated fair value, based on the Black-Scholes model, is adjusted on a quarterly basis with gains
or losses recognized in the statement of loss and comprehensive loss. The Black-Scholes model is based on significant assumptions
such as volatility, dividend yield, expected term and liquidity discounts.



Share-based payments and compensation



The Company has applied estimates with respect to the valuation
of shares issued for non-cash consideration. Shares are valued at the fair value of the equity instruments granted at the date
the Company receives the goods or services.



The Company measures the cost of equity-settled transactions
with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair
value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the
terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including
the fair value of the underlying common shares, the expected life of the share option, volatility and dividend yield and making
assumptions about them. The fair value of the underlying common shares is assessed as the most recent issuance price per common
share for cash proceeds.



JOBS Act



As a company with less than US$1.07 billion in revenue during
the last fiscal year, ESSA qualifies as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company
may take advantage of specified exemptions from various requirements that are otherwise applicable generally to public companies
in the United States.



The JOBS Act also permits an emerging growth company such as
ESSA to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public
companies. ESSA will not take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act
for complying with new or revised accounting standards. This election is irrevocable. ESSA will remain an emerging growth company
until the earliest of:



| | · | the last day of the Company’s fiscal year during which it has total annual gross revenues of at least US$1.07 billion;
| | - | ----------------------------------------------------------------------------------------------------------------------



| | · | the last day of the Company’s fiscal year following the fifth anniversary of the completion of an initial public offering;
| | - | --------------------------------------------------------------------------------------------------------------------------



| | · | the date on which Company has, during the previous three-year period, issued more than US$1.07 billion in non-convertible debt securities; or
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------



| | · | the date on which the Company is deemed to be a “large accelerated filer” under the Exchange Act, which would occur if the market value of ESSA’s Common Shares that are held by non-affiliates exceeds US$700 million as of the last business day of its most recently completed second fiscal quarter.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As a result of ESSA’s status as an emerging growth company,
the information that the Company provides shareholders may be less comprehensive than what you might receive from other public
companies that are not emerging growth companies. When ESSA is no longer deemed to be an emerging growth company, ESSA will not
be entitled to the exemptions provided in the JOBS Act.



72







| | B. | Liquidity and Capital Resources
| | -- | -------------------------------



ESSA is a preclinical stage company and does not currently generate
revenue. In January 2016, the Company completed a private placement (the “January 2016 Financing”) of 4,545,452
Units of the Company at a price of $3.30 per Unit for gross proceeds of approximately $15,000,000. Each Unit consisted of one Common
Share, one Seven-Year Warrant, and one-half of one Two-Year Warrant. In March 2016, the Company completed a private placement (the
“March 2016 Financing”) of 1,666,666 common shares at a price of $3.00 per share for gross proceeds of approximately
$5,000,000. On November 18, 2016, the Company completed a debt financing of up to $10,000,000, of which $8,000,000 has been advanced
(discussed under “Item 4.A.2. Summary Corporate History”).





Operational activities during the year ended September 30,
2017, were financed mainly by proceeds from the equity financings completed in January 2015, January 2016, March 2016 and the
CPRIT Grant. At September 30, 2017, ESSA had available cash reserves of $3,957,185 and $29,475 in accounts receivable related
to refundable GST input tax credits, to settle current liabilities of $3,777,212. This compares to cash of $8,985,095 and $15,882
in accounts receivable related to refundable GST input tax credits at September 30, 2016 to settle current liabilities of
$3,629,952.



The 2015 Special Warrant Financing was completed in January
2015 for gross proceeds of approximately $12,000,000, the January 2016 Financing was completed for gross proceeds of $15,000,000
and the March 2016 Financing was completed for gross proceeds of $5,000,000, each as previously described above.



As of September 30, 2017, ESSA had cash on hand of $3,957,185,
down from $8,985,095 at September 30, 2016. The decrease of $5,027,910 was due primarily to financing cash flows of $12,326,784
including the partial third CPRIT tranche of $5,192,799 and the SVB Term Loan advance of $8,000,000, offset by operating cash flows
of $17,354,811. During the year ended September 30, 2016, the Company also purchased furniture and equipment of $9,983 and received
$37,659 in proceeds on exercise of stock options and warrants. Management continues to seek sources of additional financing which
would assure continuation of the Company’s operations and research programs. However, there is no certainty that such financing
will be provided or provided on favourable terms. The Company believes that it will complete one or more of these arrangements
in sufficient time to continue to execute its planned expenditures without interruption.



Cash Flows from Operating Activities





For the year ended September 30, 2017, cash used in operating
activities of $17,354,811 was attributable to a net loss of $4,499,012, net non-cash credits of $10,937,756, and net change of
$1,918,043 in ESSA's net operating assets and liabilities. The non-cash credits consisted primarily of a $758,927 charge in share-based
payments and finance expense of $784,583 attributable to the accretion of the SVB Term Loan obtained in November 2016, offset
by a $7,305,746 gain for the fair value of the derivative liability arising on Seven-Year Warrants, Two-Year Warrants, and broker
warrants denominated in Canadian dollars. The change in operating assets and liabilities was primarily attributable to a $1,867,853
net decrease in accounts payable and accrued liabilities due to a decrease in overall activity, including research and development
costs associated with ESSA's EPI-506 clinical trial, which concluded in September 2017.



For the year ended September 30, 2016, cash used in operating
activities of $15,300,969 was attributable to a net loss of $13,139,788, net non-cash credits of $4,491,016, and net change of
$2,329,835 in ESSA's net operating assets and liabilities. The non-cash credits consisted primarily of a $1,246,946 charge in share-based
payments, finance expense of $910,101 attributable to the warrant portion of the Units issued in the January 2016 Financing, offset
by a $6,574,105 gain for the fair value of the derivative liability arising on Seven-Year Warrants, Two-Year Warrants, and broker
warrants denominated in Canadian dollars. The change in operating assets and liabilities was primarily attributable to a $644,089
net decrease in prepaid expenses due to recognition of deposits paid in prior periods to contract service organizations in relation
to the ongoing Phase I/II trial, a $91,191 net increase in income tax payable, and a $1,545,577 net increase in accounts payable
and accrued liabilities due to an increase in overall activity, including research and development costs associated with ESSA's
clinical trial which commenced in November 2015.



73







Cash Flows from Investing Activities



There were no cash flows from investing activities for the year
ended September 30, 2017.



For the year ended September 30, 2016, cash used in investing
activities was $9,983 due to acquisition of equipment and furniture associated with the office space in Houston, Texas.



Cash Flows from Financing Activities



For the year ended September 30, 2017, cash provided by financing
activities was $12,326,784, consisting primarily of $5,192,799 in proceeds received from the partial third tranche of the CPRIT
Grant, $8,000,000 in proceeds received from the SVB Term Loan obtained in November 2016, $2,939 in proceeds received from the exercise
of stock options, offset by $211,073 and $436,944 in transaction costs and interest paid, respectively, on the SVB Term Loan.



For the year ended September 30, 2016, cash provided by financing
activities was $22,744,129, consisting primarily of $3,786,667 in proceeds received from the second tranche of the CPRIT Grant,
$19,999,992 in proceeds received from the January 2016 Financing and March 2016 Financing, $37,659 in proceeds received from the
exercise of stock options and warrants, offset by $1,080,189 in share issuance costs.



ESSA's future cash requirements may vary materially from those
now expected due to a number of factors, including the costs associated with future preclinical work and to take advantage of strategic
opportunities, such as partnering collaborations or mergers and acquisitions activities. In the future, it may be necessary to
raise additional funds. These funds may come from sources such as entering into strategic collaboration arrangements, the issuance
of shares from treasury, or alternative sources of financing. However, there can be no assurance that ESSA will successfully raise
funds to continue its operational activities. See “Risk Factors” in Item 3.D elsewhere in this Annual Report.



| | C. | Research and Development, Patents and Licenses, etc.
| | -- | ----------------------------------------------------



Research and Development



It is currently expected that ESSA will continue its preclinical
studies, anticipating the nomination of a next-generation drug candidate in calendar 2018 with filing of an IND by calendar Q1-2019.
See “Programs and Potential Products” in Item 4 of this Annual Report for further details of each stage
of development.



Key Patent Applications



See "Patents and Proprietary Rights" elsewhere
in Item 4 of this Annual Report for details regarding ESSA's key patent applications.



Licensed Pending Applications



See "Pending Licensed Applications" elsewhere
in Item 4 of this Annual Report for details regarding ESSA's licensed intellectual property pending applications.



Research and Development Policies



Expenditures during the research phase of a project are recognized
as expenses when incurred. Development costs are capitalized only when technical feasibility studies identify that the project
will deliver future economic benefits and these benefits can be measured reliably.



The Company spent $5,726,366, $13,060,201, and $4,975,928, on
R&D, net of recoveries, during the fiscal years ended September 30, 2017, 2016, and 2015, respectively. All of these costs
have been recognized as an expense in the Company’s statement of profit and loss in the respective periods.



74







It is not possible to always estimate the timing of project
completion due to the uncertainty of preclinical research and development projects and the results of associated scientific experiments.
Analysis of costs between projects are influenced by the length and nature of the study and costs of material used.



In 2015, a total of $13,208,938 was raised through private placements
and preclinical work continued.  The IND application was prepared and submitted to the FDA in order to receive approval to
commence the Phase I/II clinical study of EPI-506. Clinical sites were identified and agreements were negotiated with sites
in order that the trial could commence once FDA approval of the IND was received.  Upon approval of the IND, the Company received
the second tranche of funds from CPRIT in the amount of $3,786,667.  Manufacturing of clinical supplies for early clinical
trials was performed by Southwest Research Institute in San Antonio, Texas. Current formulation and cGMP production of the final
product candidate for clinical trials is being performed by Catalent Pharma Solutions, St. Petersburg, Florida and SAFC, Inc. in
Madison, Wisconsin.



In 2016, the Company raised, through private placements, an
additional $20,000,000, which supported continuing manufacturing and formulation work as well as the ongoing Phase I clinical trial
underway at five sites.   The Company has also commenced preparation for the Phase II clinical study with regard to site
identification and manufacture of clinical supplies of drug product.



In 2017, the Company announced its decision to discontinue further
clinical development of EPI-506 and to implement a corporate restructuring plan to focus R&D resources on its next-generation
Anitens targeting the AR-NTD.



| | D. | Trend Information
| | -- | -----------------



ESSA is a preclinical development stage company and does not
currently generate revenue. The Company is focused on the development of small molecule drugs for the treatment of prostate
cancer. The Company has acquired a license to certain Licensed IP. As at the date of this Annual Report, no products are in
commercial production or use. The Company’s financial success will be dependent upon its ability to continue development
of its compounds through preclinical and clinical stages to commercialization.



| | E. | Off-Balance Sheet Arrangements
| | -- | ------------------------------



ESSA has no material undisclosed off-balance sheet arrangements
that have, or are reasonably likely to have, a current or future effect on its results of operations, financial condition, revenues
or expenses, liquidity, capital expenditures or capital resources that is material to investors.



| | F. | Tabular Disclosure of Contractual Obligations
| | -- | ---------------------------------------------



As of September 30, 2017, and in the normal course of business,
ESSA has the following obligations to make future payments, representing contracts and other commitments that are known and committed.



|                                                                                        |  | Payments Due by Period |           
|--------------------------------------------------------------------------------------- |  | ---------------------- | ----------
|Contractual Obligations                                                                 |  | Total                  |           
|Minimum Annual Royalty per License Agreement with UBC/BC Cancer Agency (in C$)(1)(2)(3) |  | $                      | 1,190,000 
|Collaborative research agreement with BC Cancer Agency (in C$) (3)                      |  |                        | 77,938    
|SVB Term Loan                                                                           |  |                        | 9,681,046 
|Lease on U.S. office space                                                              |  |                        | 390,125   
|Total (in US$)                                                                          |  | $                      | 11,057,626



| | (1) | ESSA has the worldwide, exclusive right to develop products based on the Licensed IP pursuant to the License Agreement.
| | --- | -----------------------------------------------------------------------------------------------------------------------



75







| | (2) | As consideration for the License Agreement with UBC and the BC Cancer Agency, there are certain cumulative milestone payments totaling C$2,400,000 for the first compound, to be paid in stages at the start of Phase II and Phase III clinical trials, at application for marketing approval, and with further milestone payments on the second and additional compounds. These milestone payments are not represented in the tabular disclosure above due to the uncertain timing of the triggering events and associated payments.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | ESSA's agreements pertaining to the License Agreement with UBC and the BC Cancer Agency,
and the lease on Canadian office space are valued in Canadian dollars. For the purposes of the calculations above, ESSA has converted
the values to Canadian dollars based on the closing exchange rate on December 11, 2017, as reported by the Bank of Canada, being
C$1.00=US$0.7780.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | G. | Safe Harbor
| | -- | -----------



See “Cautionary Note Regarding Forward-Looking Statements”
in the introduction to this Annual Report.



| | ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
| | ------- | ------------------------------------------



| | A. | Directors and Senior Management
| | -- | -------------------------------



The following table sets forth the names and municipalities
of residence of the Company’s directors and executive officers as well as their positions with the Company and principal
occupations for the previous five years. All directors, officers and employees are required to sign standard confidentiality and
non-disclosure agreements with the Company. Each director’s terms of office expires at the next annual general meeting of
the shareholders of the Company.



|Name and Place of Residence                      |  | Age |  | Principal Occupations                                                                                                                                                                                                                                                                                                           
|------------------------------------------------ |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                 |  |     |  |                                                                                                                                                                                                                                                                                                                                 
|Dr. Raymond AndersenBritish Columbia,Canada      |  | 70  |  | Chief Technical Officer and Director (October 11, 2010 –
        Present), Secretary (January 6, 2009 – Present), ESSA Pharma Inc.;
        Professor of Chemistry and Earth, Ocean & Atmospheric Sciences,
        University of British Columbia (1977 – Present)                                                             
|                                                 |  |     |  |                                                                                                                                                                                                                                                                                                                                 
|Franklin Berger(1)(3)New York, USA               |  | 68  |  | Director, ESSA Pharma Inc. (March 2015 – Present);
        Director, Five Prime Therapeutics, Inc. (October 2010 – Present);
        Director, Immune Design Corp. (March 2014 – Present);
        Director, Bellus Health, Inc. (May 2010 – Present);
        Director, Seattle Genetics, Inc. (2003 – May 2014)               
|                                                 |  |     |  |                                                                                                                                                                                                                                                                                                                                 
|Richard M. Glickman(1)(2)British Columbia,Canada |  | 59  |  | Chairman of the Board, ESSA Pharma Inc. (October 2010 – Present);Co-Founder and Executive Chairman (September 2013 – February 2014), Chief Executive Officer and Chairman of the Board (February 2014 – Present), Aurinia Pharmaceuticals Inc.                                                                                  
|                                                 |  |     |  |                                                                                                                                                                                                                                                                                                                                 
|David ParkinsonCalifornia, USA                   |  | 67  |  | President and Chief Executive Officer (January 2016 – Present), Director (June 2015 – January 2016), ESSA Pharma Inc.;Venture Advisor, New Enterprise Associates (2012 – Present);Acting CEO, Zyngenia Inc. (2013 – 2014);President and CEO, Nodality (2007 – 2012)                                                             
|                                                 |  |     |  |                                                                                                                                                                                                                                                                                                                                 
|Dr. Frank PeraboTexas, USA                       |  | 53  |  | Executive Vice-President of Clinical Development and Chief Medical Officer, ESSA Pharma Inc. (September 2014 – Present);Executive Director of Medical Science Oncology (July 2011 – September 2014), Senior Director (August 2010 – June 2011) and Director (January 2008 – June 2011), Astellas Pharma Global Development, Inc.



76







|Scott Requadt(2)(3)Massachusetts, USA     |  | 49 |  | Director, ESSA Pharma Inc. (January 14, 2016 – Present);
        Director, VBI Vaccines (formerly SciVac Therapeutics) (May 2016
        – Present);
        Managing Director, Clarus Ventures, LLC (2005 – Present)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|----------------------------------------- |  | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Dr. Marianne SadarBritish Columbia,Canada |  | 56 |  | Director (January 6, 2009 – Present), Chief Scientific
        Officer (October 11, 2010 – Present) and President (January 6, 2009 – October 11, 2010),
        ESSA Pharma Inc.;
        Director, Canada Science and Technology Museum (Nov 1, 2017
        – Present);
        Distinguished Scientist (2012 – Present), Senior Scientist
        (1998 – 2012), British Columbia Cancer Agency Professor (2012 – Present), Honorary Associate Professor (2009 –
        2012), Pathology and Laboratory Medicine, University of British Columbia;
        Provincial Program Leader for Prostate Cancer Research (2000
        – 2012),
        British Columbia Cancer Agency;
        Officer (2007 – 2015), Past President (2014 – 2015),
        President (2013 – 2014), Vice President (2012 – 2013), Treasurer (2007 – 2011), Society of Basic Urologic Research



|Gary Sollis(1)(2)(3)British Columbia,Canada |  | 64 |  | Director, ESSA Pharma Inc. (April 26, 2012 – Present);Partner, Dentons Canada LLP (May 1, 1995 – Present)                                                                                                                                                                                                                                                                                                                                                                                                           
|------------------------------------------- |  | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                            |  |    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Peter VirsikCalifornia, USA                 |  | 46 |  | Executive Vice-President and Chief Operating Officer, ESSA Pharma
        Inc. (August 2016 – Present);
        Senior Vice President (2013 – 2015) and Vice President
        (2011 – 2013), Corporate Development, XenoPort, Inc.
        Vice President (2009 – 2011), Executive Director (2007
        – 2009) and Senior Director (2005 – 2007), Business Development, XenoPort, Inc.;
        Associate Director (2004 – 2005) and Manager (2000 –
        2004), Corporate Development, Gilead Sciences, Inc.
|David WoodBritish Columbia,Canada           |  | 60 |  | Chief Financial Officer, ESSA Pharma Inc., (July 2013-Present);
        Head of Finance, Secretary & Treasurer, Celator Pharmaceuticals Inc. (April 2003-April 2013);
        Cubist Pharmaceuticals Inc. (2000-2003)
        Terragen Discovery Inc. (1996-2000)                                                                                                                                                                                                                                                   










| | (1) | Member of the Audit Committee (as defined herein).
| | --- | --------------------------------------------------



| | (2) | Member of the Compensation Committee.
| | --- | -------------------------------------



| | (3) | Member of the Corporate Governance Committee.
| | --- | ---------------------------------------------



77







Biographies



Dr. Raymond Andersen, Chief Technical Officer, Secretary
and Director



Dr. Raymond Andersen is one of ESSA's co-founders. He has
served as the Secretary of the Company since January 2009, and as a director and Chief Technical Officer of the Company since October
2010. He is responsible for participating in the research and development of ESSA’s drug candidates, and with the assessment
and review of business and scientific matters. As an independent consultant, he devotes approximately 20% of his time to the affairs
of the Company. He is also a Professor at UBC in the departments of Chemistry and Earth & Ocean Sciences. He is internationally
known for his research into the identity and structure of novel chemical compounds derived from marine organisms, the molecular
routes to their biosynthesis, their role in ocean ecology, and their potential as new drugs. Among them are compounds that have
anti-inflammatory and anti-cancer properties and these compounds are being developed as anti-asthma, and anti-tumour drugs. His
discoveries represented core technologies of the UBC spinoff companies Aquinox Pharmaceuticals Inc. and Inflazyme Pharmaceuticals.
His industrial programs have led to deals with Aventis and Wyeth and the venture capital arms of Johnson & Johnson and Pfizer.
Dr. Andersen received his B.Sc. degree from the University of Alberta, a M.Sc. from the University of California, Berkeley, and
Ph.D. from the University of California, San Diego. He carried out postdoctoral research at the Massachusetts Institute of Technology.
In recognition of his pioneering achievements, Dr. Andersen was inducted into the Royal Society of Canada and recently received
the R. U. Lemieux Award from the Canadian Society for Chemistry and the Jacob Biely Research Prize from UBC. Dr. Andersen’s
consulting agreement contains non-competition and confidentiality clauses.



Franklin Berger, Director



Franklin Berger spent 12 years in sell-side equity research,
most recently as Managing Director, U.S. Equity Research at J.P. Morgan Securities, Inc. (“JPM”) from May 1998
to March 2003. During his five years at as a Managing Director at JPM, he was involved with the issuance of over $12 billion in
biotechnology company equity or equity-linked securities. The majority of these transactions were book-run and lead-managed by
the JPM biotech team. He was associated with several notable financings in the biotechnology sector including the Genentech Inc.
initial public offering, the first large Celgene Corporation financings as well as financings of several large-cap biotechnology
companies in their rapid growth phase. His team covered 26 publicly-traded biotechnology companies. Mr. Berger began his career
as a sell-side analyst at Josephthal & Co. in 1991, subsequently moving to Salomon Smith Barney in 1997 serving as Director,
Equity Research and Senior Biotechnology Analyst. Mr. Berger currently serves on the board of directors of three public biotechnology
companies: Five Prime Therapeutics, Inc., Immune Design Corp. and Bellus Health, Inc. Mr. Berger received an AB in International
Relations from Johns Hopkins University, a MA in International Economics from Johns Hopkins University for Advanced International
Studies and a MBA from Harvard University.



Richard M. Glickman, Chairman of the Board



Richard M. Glickman has served as ESSA's Chairman of the Board
since October 2010. As the Chairman of the Board, Mr. Glickman is responsible for the management of the Board to ensure ESSA
has appropriate objectives and an effective strategy, and that ESSA is operating in accordance with a high standard of corporate
governance. Mr. Glickman was a co-founder, Chairman and Chief Executive Officer of Aspreva Pharmaceuticals Inc. (“Aspreva”)
which was acquired by the Galenica group for $915 million. Prior to establishing Aspreva, Mr. Glickman was the co-founder
and Chief Executive Officer of StressGen Biotechnologies Corporation. Mr. Glickman currently serves on Cardiome Pharma Corp.’s
board of directors as a member of the Compensation and Audit Committees and as its lead independent director. In addition, Mr. Glickman
serves as Chairman of the Board of Aurinia Pharmaceuticals Inc., as Chairman of the Board of Engene Corporation and as a Director
of Vida Pharmaceuticals. In addition, he has served on numerous biotechnology boards including roles as Chairman of Life Sciences
B.C. (formerly the British Columbia Biotechnology Alliance), as a Director of the Canadian Genetic Diseases Network (a Canadian
Centre of Excellence), a member of the federal government’s National Biotechnology Advisory Committee, a member of the British
Columbia Innovation Council and a director for the Vancouver Aquarium and Chair of its Research Committee. Mr. Glickman received
the Ernst & Young Entrepreneur of the Year 2004 Award for the Pacific Region Life Sciences Group, both Canada’s
and British Columbia’s Top 40 under 40 Award for Entrepreneurs, the 2006 BC Biotech Leadership Award and the Lupus Foundation
of America Leadership Award.



Dr. David Parkinson, President, Chief Executive Officer and
Director



Dr. David Parkinson has served as a director of the Company
since June 2015 and has been serving full-time as the Company’s President and Chief Executive Officer since January 2016.
Since his appointment in January 2016, he has become a venture advisor at New Enterprise Associates, Inc., where previously he
was a venture partner. From 2007 until 2012, Dr. Parkinson served as President and CEO of Nodality, a South San Francisco-based
biotechnology company. Until 2007 Dr. Parkinson was Senior Vice President, Oncology Research and Development, at Biogen Idec.
Prior to joining industry, Dr. Parkinson worked at the National Cancer Institute from 1990 to 1997, serving as Chief of the
Investigational Drug Branch, then as Acting Associate Director of the Cancer Therapy Evaluation Program. Dr. Parkinson is
a past Chairman of the FDA’s Biologics Advisory Committee. He currently serves as director on the boards of Threshold Pharmaceuticals
and Cerulean Pharma Inc., public biopharma companies focused on the discovery and development of anti-cancer drugs. Dr. Parkinson
received his medical degree from the University of Toronto. He has held academic positions both at Tufts and at the University
of Texas MD Anderson Cancer Center, and has authored over 100 peer-reviewed publications.



78







Dr. Frank Perabo, Executive Vice-President of Clinical Development
and Chief Medical Officer



Dr. Frank Perabo has been employed full time as ESSA's
Chief Medical Officer since September 2014. He is responsible for developing a clinical advisory board and assisting with the preclinical
development of ESSA's product candidate. Dr. Perabo has more than 18 years of experience in preclinical and clinical drug
development in Urologic Oncology. Before joining the Company, he served as Executive Director of Medical Science Oncology for 5
years at Astellas Pharma Global Development, Inc. In this position he was instrumental in the development and global approvals
of XTANDI (Enzalutamide). From January 2008 to June 2011, he served as a Director and then Senior Director at Astellas Europe,
as Global Medical Lead in Urology, Gynecology and Pain working on preclinical to Phase III development, successfully directing
Phase-3 programs for OAB and BPH, as well as various other preclinical and clinical compounds in development. From 2001 to 2006,
Dr. Perabo worked as independent consultant in business development, and preclinical and clinical research and development.
From 2000 to 2001, Dr. Perabo served as Scientific Director at Oncology World, Munich (a specialized CRO in Oncology) establishing
clinical development and business strategies. He obtained his training in surgery and urology at the Universities of Munich, Freiburg
and Bonn from 1993 to 1999 after graduating from the Medical School at the University of Munich with magna cum laude. He is a board
certified urologist, and Associate Professor of Urology at Bonn University (Germany), and a Fellow of the European Board of Urology,
next to being a member of several Urologic and Oncologic associations. In his career, he has received many awards and grants including
an European Commission FP7 (Marie Curie Fellowship) grant, a grant from the Center for Translational Molecular Medicine, numerous
awards for best scientific presentations, and the prestigious Maximilian-Nitze-Award of the German Urological Society for his work
on tumor immune escape.



Scott Requadt, Director



Scott Requadt, JD, MBA, is currently a Managing Director at
Clarus Ventures, a life sciences venture capital fund. Scott has over 15 years of operating and investment experience in the pharmaceutical
industry. Prior to joining Clarus in 2005, Mr. Requadt was Director, Business Development of TransForm Pharmaceuticals, and previously
practiced for several years as an M&A attorney at the NYC-based law firm of Davis Polk & Wardwell. Before that, Mr. Requadt
was a law clerk for a senior judge at the Supreme Court of Canada. Mr. Requadt holds a B.Com (Economics & Finance) from McGill
University, an LL.B from University of Toronto and an MBA from Harvard Business School (Baker Scholar). Mr. Requadt has been involved
in multiple investments spanning both therapeutics and medtech, including Intercept Pharmaceuticals and several R&D risk-sharing
collaborations with large pharma partners. He has previously been active on the Boards of TyRx, Catabasis, Oxford Immunotec, VBI
Vaccines, Link Medicine and Biolex Therapeutics.



Dr. Marianne Sadar, Chief Scientific Officer and Director



Dr. Marianne Sadar is one of ESSA's co-founders. Dr. Sadar
has been a director since January 2009, and has acted as ESSA's Chief Scientific Officer since October 2010. She is responsible
for participating in the research and development of ESSA's product candidates, and with the assessment and review of business
and scientific matters. As an independent consultant, she devotes approximately 20% of her time to ESSA's affairs. She is a Distinguished
Scientist at the BCCA and a Professor of Pathology and Laboratory Medicine at UBC. Dr. Sadar is internationally known for
her research on identifying mechanisms of activating the AR and developing therapeutics for advanced prostate cancer that target
the N-terminal domain of the AR. Her research was the first to show that the N-terminal domain of the AR could be activated by
alternative pathways and she proposed this domain as a therapeutic target in 1999. Later, Dr. Sadar provided the first proof-of-concept
that targeting the N-terminus of the AR results in a therapeutic response in an in vivo model of CRPC. Dr. Sadar received
her B.Sc. from Simon Fraser University, and Ph.D. from the University of Bradford, U.K. She carried out post-doctoral training
at AstraZeneca (Astra Hässle), Department of Drug Metabolism and Pharmacokinetics in Mölndal, Sweden and at the BCCA.
She has served on approximately 50 scientific panels, and has been a recipient of awards including the Terry Fox Young Investigator
Award, Simon Fraser University Alumni Award for Academic Excellence, and the first non- American to receive the Society of Women
in Urology/Society of Basic Urologic Research “Award for Excellence in Urologic Research”. She has served as President
of the Society of Basic Urologic Research (USA), member of the Scientific Advisor Boards for the Prostate Cancer Foundation (USA)
and Coalition to Cure Prostate Cancer (Canada). Dr. Sadar is FY2017 Chair of the Programmatic/Integration Panel of the U.S. Army’s
Department of Defence Congressionally Directed Medical Research Programs Prostate Cancer Research Program (“PCRP”).



79







Gary Sollis, Director



Mr. Gary Sollis has served as a director since April 2012.
Mr. Sollis is a partner at the law firm of Dentons Canada LLP. He represents clients in the areas of corporate and securities
law, with a focus on acquisitions, financings and reorganizations. He has acted for a variety of public and private companies in
financing transactions, including public offerings, private placements of debt and equity, special warrant financings and public
and private limited partnership offerings. Mr. Sollis has also assisted clients in connection with takeover bids, mergers,
proxy contests, spin-offs, joint ventures and acquisitions of private businesses. He received a Bachelor of Laws degree from Dalhousie
University.



Peter Virsik, Executive Vice President and Chief Operating
Officer



Peter Virsik joined the Company in August 2016 as Executive
Vice President and Chief Operating Officer, bringing over 20 years of experience in corporate development, strategy, new product
planning, alliance management, and finance. During his career, Mr. Virsik has completed over 30 licensing, M&A and financial
transactions, totaling over $3 billion in value. Most recently, he served as Senior Vice President, Corporate Development for XenoPort
(acquired by Arbor Pharmaceuticals), leading licensing, strategy, new product planning and alliance management for the company.
During his tenure at XenoPort, Mr. Virsik played an integral role in the licensing and commercialization of Horizant® (gabapentin
enacarbil). Prior to XenoPort, Mr. Virsik worked for Gilead Sciences from 2000 through 2005 in Corporate Development, where he
was involved in building Gilead’s HIV franchise through the acquisition of Triangle Pharmaceuticals and the licensing of
Vitekta® (elvitegravir). Before joining Gilead, Mr. Virsik spent time at J.P. Morgan in the biotechnology equity research group
and as a consultant for Ernst and Young. Mr. Virsik began his career in R&D at Genentech. Mr. Virsik received an MBA from the
Kellogg Graduate School of Management at Northwestern University, an MS in Microbiology from the University of Michigan, Ann Arbor,
and a BA in Molecular and Cellular Biology from the University of California, Berkeley.



David Wood, Chief Financial Officer



David Wood has been employed full time as ESSA's Chief Financial
Officer since July 2013. He is responsible for managing all of ESSA's financial aspects, including financial reporting, treasury,
and matters related to compliance and corporate governance, insurance, human resources, and facilities. Mr. Wood has over
30 years of experience in management positions in both large corporations and early stage companies in North America and the U.K.
Prior to joining us in 2013, he was Head of Finance and Corporate Development, Secretary and Treasurer at Celator Pharmaceuticals
Inc. from 2003 to 2013. Prior to 2003, he was Managing Director of Cubist Pharmaceuticals (UK) Ltd., Senior Director, International
Operations of Cubist Pharmaceuticals Inc. and Finance Director at TerraGen Discovery, Inc., Vancouver, B.C. During over 18 years
working in the biopharmaceutical industry, he has overseen several merger and acquisition transactions and numerous financings
which raised over $150 million. Mr. Wood began his career in the finance and exploration departments at Chevron Corp. He received
an M.B.A. from the University of Western Ontario, a B.Sc. Honors in Biology, Queen’s University, and a CPA, CMA accounting
designation. Mr. Wood served on the governing body of the National Research Council of Canada from 2008 to 2014.



80







| | B. | Compensation
| | -- | ------------



Executive Compensation



Compensation Discussion and Analysis



For the purposes of this Annual Report, a named executive officer
(“NEO”) of the Company, using the definition contained in applicable Canadian securities laws, means each of
the following individuals:



| | (a) | the Chief Executive Officer (“CEO”) of the Company;
| | --- | ---------------------------------------------------



| | (b) | the Chief Financial Officer (“CFO”) of the Company;
| | --- | ---------------------------------------------------



| | (c) | each of the three most highly compensated Executive Officers, or the three most highly compensated individuals acting in a similar capacity, other than the CEO and CFO, at the end of the most recently completed financial year whose total compensation was, individually, more than $150,000. “Executive Officer” means the chairman, and any vice-chairman, president, secretary or any vice-president and any officer of the Company or a subsidiary who performs a policymaking function in respect of the Company; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | each individual who would be an NEO under paragraph (c) but for the fact that the individual was neither an executive officer of the Company, nor acting in a similar capacity, at the end of that financial year.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Each of Dr. David Parkinson, President and CEO, David Wood,
CFO, Peter Virsik, Executive VP and Chief Operating Officer (“COO”), Dr. Frank Perabo, Chief Medical Officer
(“EVP & CMO”), Dr. Paul Cossum, Former Executive Vice President of Research and Development (“Executive
VP of R&D”), and Dr. Marianne Sadar, Chief Scientific Officer (“CSO”), is an NEO of the Company
for purposes of this disclosure.



Compensation Philosophy and Objectives



ESSA’s compensation philosophy for NEOs will be focused
on its belief that capable and qualified employees are critical to the Company’s success. Therefore, its compensation plan
is designed to attract the very best individuals in each expertise arena and to use salaries and long term incentive compensation
in the form of stock options or other suitable long-term incentives to attract and retain such employees. In making its determinations
regarding the various elements of executive stock option grants, ESSA will seek to meet the following objectives:



| | (a) | to attract, retain and motivate talented executives who create and sustain ESSA’s continued success within the context of compensation paid by other companies of comparable size engaged in similar business in appropriate regions;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | to align the interests of the ESSA’s NEO’s with the interests of shareholders of ESSA; and
| | --- | ------------------------------------------------------------------------------------------



| | (c) | to incent extraordinary performance from the Company’s key employees.
| | --- | ---------------------------------------------------------------------



Elements of Compensation



Base Salary – The base salary review of any NEO
will take into consideration the current competitive market conditions, experience, proven or expected performance, and the particular
skills of the NEO. Base salary is not expected to be evaluated against a formal “peer group”. The base salaries for
NEOs of ESSA as of the date of this Annual Report are:



|NEO                          |  | BASE SALARY    
|---------------------------- |  | ---------------
|Dr. David Parkinson (CEO)    |  | US$438,600/year
|David Wood (CFO)             |  | US$230,000/year
|Peter Virsik (EVP & COO)     |  | US$365,000/year
|Dr. Frank Perabo (EVP & CMO) |  | US$447,372/year
|Dr. Marianne Sadar (CSO)     |  | C$180,000/year 



81







Performance-Based Cash Bonuses – Cash bonuses are
not a normal part of ESSA’s executive compensation. However, the Company may elect to utilize such incentives where the role-related
context and competitive environment suggest that such a compensation modality is appropriate. When and if utilized, the amount
of cash bonus compensation will normally be paid on the basis of timely achievement of specific pre-agreed milestones. Each milestone
will be selected based upon consideration of its impact on shareholder value creation and the ability of the Company to achieve
the milestone during a specific interval. The amount of bonus compensation will be determined based upon achievement of the milestone,
its importance to the Company’s near and long term goals at the time such bonus is being considered, the bonus compensation
awarded to similarly situated executives in similarly situated development-stage life-sciences companies or any other factors the
Company may consider appropriate at the time such performance-based bonuses are decided upon. The quantity of bonus will normally
be a percentage of base salary not to exceed 100%. However, in exceptional circumstances, the quantity of bonus paid may be connected
to the shareholder value creation embodied in the pre-agreed milestones.



The bonuses available to the NEOs as of the date of this Annual
Report are:



|NEO                       |  | BONUS PAYABLE                                                                                        
|------------------------- |  | -----------------------------------------------------------------------------------------------------
|Dr. David Parkinson (CEO) |  | Up to 50% of Base Salary                                                                             
|David Wood (CFO)          |  | Up to 30% of Base Salary                                                                             
|Peter Virsik (EVP & COO)  |  | Up to 40% of Base Salary                                                                             
|Dr. Marianne Sadar (CSO)  |  | C$10,000 per provisional patent application
        filed,
        C$10,000 per publication completed



Up to the date of this Annual Report, the Company has generally
relied on a flexible and informal approach to executive compensation for certain NEOs. Accordingly, the bonuses noted above of
up to a certain percentage of base salary available to Mr. Wood, Mr. Virsik, and Dr. Perabo were selected based on the Board’s
collective agreement regarding an appropriate bonus range and on discussions with Mr. Wood and Dr. Perabo about their expectations
as CFO and EVP & CMO of the Company, respectively.



Stock Options – Stock options are a key compensation
element for companies such as ESSA. Because many of the most capable employees in ESSA’s industry work for pharmaceutical
companies who can offer attractive cash and bonus compensation and a high level of employment security, stock options represent
a compensation element that balances the loss of employment security that such employees must accept when moving to a small development-stage
company like ESSA. Stock options are also an important component of aligning the objectives of ESSA employees with those of shareholders.
ESSA has issued significant stock options positions to senior employees and lesser amounts to lower-level employees. The precise
amount of stock options to be offered was governed by the importance of the role within ESSA, by the competitive environment within
which ESSA operates, and by the regulatory limits on stock option grants that cover organizations such as ESSA. This reflects ESSA’s
commitment to attracting and retaining world-level expertise to the Company. The stock options granted to the Company’s NEOs
as of the date of this Annual Report are:



|NEO                                           |  | OPTIONS                                                                                                                                                               
|--------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Dr. David Parkinson (CEO)                     |  | 50,000 Options (C$14.90 exercise price per Common Share, expiring June 23, 2025, 600,000 Options (C$6.25 exercise price per Common Share, expiring January 12, 2021)  
|David Wood (CFO)                              |  | 75,000 Options (C$0.80 exercise price per Common Share, expiring October 1, 2018) and 200,000 Options (C$2.00 exercise price per Common Share, expiring July 30, 2019)
|Peter Virsik (EVP & COO)                      |  | 290,000 Options (C$3.49 exercise price per Common Share, expiring August 9, 2021)                                                                                     
|Dr. Frank Perabo (EVP & CMO)                  |  | 450,000 Options (C$2.00 exercise price per Common Share, expiring September 8, 2019)                                                                                  
|Estate of Dr. Paul Cossum (Former EVP of R&D) |  | 340,000 Options (C$2.00 exercise price per Common Share, expiring April 14, 2019)                                                                                     
|Dr. Marianne Sadar (CSO)                      |  | 300,000 Options (C$0.80 exercise price per Common Share, expiring January 31, 2018)                                                                                   



82







Compensation Risks



In making its compensation-related decisions, the Board carefully
considers the risks implicitly or explicitly connected to such decisions. These risks include the risks associated with employing
executives who are not world-class in their capabilities and experience, the risk of losing capable but under-compensated executives,
and the financial risks connected to the Company’s operations, of which executive compensation is an important part.



In adopting the compensation philosophy described above, the
principal risks identified by ESSA are:



| | · | that the Company will be forced to raise additional funding (causing dilution to shareholders) in order to attract and retain the calibre of executive employees that it seeks; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | that the Company will have insufficient funding to achieve its objectives.
| | - | --------------------------------------------------------------------------



After careful consideration of these risks, the Board has adopted
the compensation policy described above.



General Equity-Compensation Arrangements



On September 4, 2014, ESSA adopted a stock option plan,
which was later amended and restated on May 21, 2015, March 10, 2016, March 8, 2017 and on November 27, 2017 (the “Plan”),
in connection with ESSA’s listing on the TSX-V. The stock option plan is administered by the Chief Financial Officer of ESSA
on the instructions of the Board or such director or other senior officer or employee of ESSA as may be designated by the Board
from time to time.



The Plan was adopted as the successor to ESSA’s previously
amended and restated stock option plan as of March 8, 2017 (the “Prior Plan”). Pursuant to the plan, all outstanding
option awards granted prior to February 28, 2017 will be governed by the terms and conditions of the Prior Plan. With any award
granted on or after February 28, 2017 being governed by the terms and conditions of the Plan.



The Board may grant Options to any director, officer, employee,
consultants or affiliates. Option grants are contingent upon the determination by the Board that such grants and the exercise of
such Options will not violate the securities laws of the jurisdiction in which the Optionee resides. Grants of Options to “Insiders”
(as defined in the policy manual of the TSX-V) are subject to the policies of the TSX-V so long as the Common Shares are listed
on the TSX-V.



A person can receive grants of no more than 5% of ESSA’s
issued and outstanding share capital in any 12 month period, with the exception of a consultant who may not receive grants
of more than 2% of ESSA’s issued and outstanding share capital in any 12 month period; and, no more than an aggregate of
2% of ESSA’s issued and outstanding Common Shares may be reserved for issue to persons engaged in investor relations activities
at any one time.



The Options granted under the Plan must not have an exercise
price that is less than the “Market Price” meaning an amount which is not less than the closing market price for the
ESSA’s Common Shares on the trading day prior to the date of the grant. Further, an Option shall not establish a minimum
exercise price until it has been awarded to a particular person. Any reduction in the exercise price of Options granted to Insiders,
provided that the Optionee is an Insider at the time of the proposed reduction, requires Disinterested Shareholder Approval (as
defined in the policy manual of the TSX-V).



The Options granted under the Plan are prohibited from having
an exercise period in excess of ten years following their award date. No Option may be granted under the Plan following August
28, 2027 unless ESSA’s shareholders have approved an extension of the Plan. No Options granted on or after February 28, 2017
shall be exercisable until prior approval of the Plan has been obtained and disinterested shareholder approval has been obtained
for the grants of such Options. The maximum number of Common Shares that will be available to Directors, Officers, Employees, Consultants
and Affiliates may be reserve red and made available for issuance, under the Plan, is 5,000,000 Common Shares of which no more
than 4,500,000 will be available for employees to acquire pursuant to an incentive stock option plan (within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended, of the United States. The Common Shares may be subject to a four month resale
restriction imposed by the TSX-V on certain shares.



83







Options will be granted by the Board and the Board may determine
and impose terms upon which the Option shall vest provided that if the Common Shared are listed on the TSX-V, Options granted to
persons employed to conduct investor relations activities must vest in stages over 12 months with no more than 25% of the Options
vesting in any three month period.



The Options are non-assignable and non-transferable except in
limited circumstances, including but not limited to the case of death or disability of an Optionee. If an Option expires, cancels
or otherwise terminates without having been exercised in full, the number of Common Shares in respect of which the Option was not
exercised will again be available for the purposes of the Plan.



The Plan provides for adjustments to the Options in various
circumstances, including adjustments to the number of Common Shares available under the Plan, the number of Common Shares subject
to any Option and the exercise price therefore in the event of a declaration of a stock dividend, or a consolidation, subdivision
or reclassification of the Common Shares, and adjustments in the Common Shares receivable on the exercise of an Option in the event
of an amalgamation, merger or entry into a plan of arrangement by ESSA. Further, upon a “Change of Control” (as defined
in the Plan), all Options become immediately exercisable, notwithstanding any contingent vesting provisions to which such Options
may have otherwise been subject.



ESSA’s administration of the Plan is consistent with the
policies and rules of the TSX-V and the NASDAQ and will comply with such other stock exchanges on which the Common Shares may be
listed in the future. Subject to the acceptance of the TSX-V and any other applicable regulatory authorities, the Board can terminate,
suspend or amend the terms of the Plan, however, the Board may not do so without first obtaining, within 12 months either before
or after the Boards adoption of a resolution authorizing such action, approval by the affirmative votes of the holders of a majority
of the voting securities of ESSA. Further, certain amendments to the Options require Disinterested Shareholder Approval, including,
but are not limited to: the maximum number of Common Shares that may be reserved under the Plan; a grant to Insiders (within a
12 month period) of Options exceeding 10% of the issued and outstanding Common Shares; an issue to any Optionee (within a 12 month
period) of Common Shares exceeding 5% of ESSA’s Common Shares; and an extension of the duration of the Plan.



Certain other amendments including
amendments that are administrative in nature, any amendment necessary to comply with applicable law or any amendment required to
clarify an existing provision of the Plan (provided that such changes do not affect the scope, nature, or intent of the Plan) may
be made by the Board without consent or approval from any participant or shareholder of ESSA.



NEO Compensation



As of September 30, 2017, ESSA had five NEOs: Dr. David Parkinson,
President and CEO, David Wood, CFO, Peter Virsik, EVP & COO, Dr. Frank Perabo, EVP & CMO, and Dr. Marianne Sadar, CSO.



Defined Benefits Plans



ESSA currently does not intend to have a defined benefits pension
plan.



Defined Contribution Plans



ESSA currently does not intend to have a defined contribution
plan.



Deferred Compensation Plans



ESSA currently does not intend to have a deferred compensation
plan.



Termination and Change of Control Benefits



84







Except as described below, there are no contracts, agreements,
plans or arrangements that provide for payments to a NEO at, following, or in connection with any termination (whether voluntary,
involuntary or constructive), resignation, retirement, a change in control of the Company or its subsidiary or a change in a NEO’s
responsibilities (excluding perquisites and other personal benefits if the aggregate of this compensation is less than $50,000).



The Company has entered into employment agreements with certain
NEOs, which provide for certain rights upon termination of employment or a change of control of ESSA. ESSA believes that these
provisions of the NEO employment agreements are reasonable in the context of similar-sized biopharmaceutical companies. The Company
expects to offer similar provisions to executive-level employees in the future.



Specific termination and change-of-control provisions of each
NEO include:



For Dr. David Parkinson:



| | · | A payment of six months of base salary upon termination without cause and a payment of one year of base salary upon termination without cause after 12 months of employment. This amount increases to 18 months if the termination without cause occurs after a change of control event or within 60 days prior to a change of control event where such event was under consideration at the time of termination. Had Dr. Parkinson’s employment been terminated without cause on September 30, 2017, he would have received $219,300. Had Dr. Parkinson’s employment been terminated without cause after a change of control event or within 60 days prior to a change of control event where such event was under consideration at the time of termination, he would have received $657,900.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Immediate vesting of all stock options upon occurrence of a change of control event. Dr. Parkinson held 650,000 options as of the date of this Annual Report.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------



For David Wood:



| | · | A payment to the employee of up to one year of base salary for termination without cause, whether or not the termination was caused by a change of control event. Had Mr. Wood been terminated without cause on September 30, 2017, whether or not the termination was caused by a change of control event, he would have received up to $230,000.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Immediate vesting of all stock options upon occurrence of a change of control event. Mr. Wood held 275,000 options as of the date of this Annual Report.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------



For Dr. Frank Perabo:



| | · | A payment to the employee of up to one year of base salary for termination without cause, whether or not the termination was caused by a change of control event. Had Dr. Perabo been terminated without cause on September 30, 2017, he would have received $447,372. If there is a change of control, and continuing employment is not offered, Dr. Perabo will receive one year of base salary.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Immediate vesting of all stock options upon occurrence of a change of control event. Dr. Perabo held 450,000 options as of the date of this Annual Report.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------



For Mr. Peter Virsik:



| | · | A payment of six months of base salary upon termination without cause and a payment of one year of base salary upon termination without cause after 12 months of employment. This amount increases to 18 months if the termination without cause occurs within 18 months after a change of control event. Had Mr. Virsik’s employment been terminated without cause on September 30, 2017, he would have received $182,500. Had Mr. Virsik’s employment been terminated without cause within 18 months after a change of control event, he would have received $547,500.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



85







| | · | Immediate vesting of all stock options upon occurrence of a change of control event. Mr. Virsik held 290,000 options as of the date of this Annual Report.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------



For Dr. Marianne Sadar:



| | · | None
| | - | ----



Summary Compensation Table



ESSA's key management personnel include
Dr. David Parkinson, CEO, David Wood, CFO, Peter Virsik, EVP & COO, Dr. Frank Perabo, EVP & CMO, Dr. Paul Cossum,
former EVP of R&D, Dr. Marianne Sadar, CSO and Director, and Dr. Raymond Andersen, CTO and Director. Compensation
paid to key management personnel are as follows:



|                             |  | YEAR ENDED         |           |  | YEAR ENDED         |  |           | YEAR ENDED         | 
|---------------------------- |  | ------------------ | --------- |  | ------------------ |  | --------- | ------------------ | 
|($)                          |  | SEPTEMBER 30, 2017 |           |  | SEPTEMBER 30, 2016 |  |           | SEPTEMBER 30, 2015 | 
|                             |  |                    |           |  |                    |  |           |                    | 
|Salaries and consulting fees |  |                    | 1,988,326 |  |                    |  | 2,454,401 |                    | 
|                             |  |                    |           |  |                    |  |           |                    | 
|Share-based payments         |  |                    | 756,154   |  |                    |  | 975,927   |                    | 
|                             |  |                    |           |  |                    |  |           |                    | 
|Total compensation           |  |                    | 2,744,480 |  |                    |  | 3,430,328 |                    | 



Director Compensation



On January 1, 2015, ESSA adopted a compensation plan for independent
members of the Board. Pursuant to this compensation plan, both cash payments and Options will be offered to independent directors.
Each independent director will receive a retainer of $25,000 per annum. In addition, the Chair of the Board will receive a premium
of $25,000 per annum and the Chair of each sub-committee will receive a premium of $10,000 per annum. Independent directors will
also be paid a cash fee of $1,500 per in-person meeting, and $1,000 per teleconference meeting, $1,000 per sub-committee meeting,
and receive an Option grant of 50,000 Options, with 20,000 Options vesting upon appointment to the Board, 15,000 vesting on the
first anniversary of the grant and the remainder vesting on the second anniversary of the grant. Directors who are ESSA’s
officers, employees or consultants will receive no compensation under the terms of this compensation plan.



Incentive Plan Awards Outstanding



As at September 30, 2017, the end of the Company’s last
fiscal year, non-NEO directors held 545,000 Options in the Company, granted in prior years, resulting in $14,068 vested or earned
in the year ended September 30, 2017.



Options to Purchase Securities



As at the date of this Annual Report, 3,546,219 outstanding
options to acquire Common Shares (the “Options”) are held by directors, consultants, employees and executive officers
of the Company. Of these Options, 962,000 are exercisable at a price of C$0.80 per Common Share, 1,579,219 are exercisable at a
price of C$2.00 per Common Share, 290,000 are exercisable at a price of C$3.49 per Common Share, 10,000 are exercisable at a price
of C$5.15 per Common Share, 50,000 are exercisable at a price of C$5.35 per Common Share, 600,000 are exercisable at C$6.25 per
Common Share, and 55,000 are exercisable at a price of C$14.90 per Common Share. The table below summarizes the 3,546,219 Options
outstanding as at the date of this Annual Report.



86









|Class of Optionee (Number)                                      |  | Number of Common  Share Options Held |         |      | Exercise Price (C$) |                     | Expiry Date
|--------------------------------------------------------------- |  | ------------------------------------ | ------- | ---- | ------------------- | ------------------- | -----------
|Dr. Marianne Sadar                                              |  |                                      | 300,000 | (1)  |                     | $0.80/Common Share  |            
|Chief Scientific Officer                                        |  |                                      |         |      |                     |                     |            
|                                                                |  |                                      |         |      |                     |                     |            
|Dr. Raymond Andersen                                            |  |                                      | 300,000 | (1)  |                     | $0.80/Common Share  |            
|Chief Technical Officer                                         |  |                                      |         |      |                     |                     |            
|                                                                |  |                                      |         |      |                     |                     |            
|Kim Hewitt                                                      |  |                                      | 5,000   | (2)  |                     | $0.80/Common Share  |            
|Consultant                                                      |  |                                      |         |      |                     |                     |            
|                                                                |  |                                      |         |      |                     |                     |            
|Bloom Burton & Co. Inc.                                         |  |                                      | 529,219 | (4)  |                     | $2.00/Common Share  |            
|                                                                |  |                                      |         |      |                     |                     |            
|Estate of Dr. Paul Cossum  Former EVP of Research & Development |  |                                      | 340,000 | (5)  |                     | $2.00/Common Share  |            
|                                                                |  |                                      |         |      |                     |                     |            
|Dr. Stephen Plymate  Consultant                                 |  |                                      | 50,000  | (6)  |                     | $0.80/Common Share  |            
|                                                                |  |                                      |         |      |                     |                     |            
|Gary Sollis  Director                                           |  |                                      | 120,000 | (7)  |                     | $0.80/Common Share  |            
|                                                                |  |                                      |         |      |                     |                     |            
|Kally Singh  Consultant                                         |  |                                      | 25,000  | (2)  |                     | $0.80/Common Share  |            
|                                                                |  |                                      |         |      |                     |                     |            
|David Wood                                                      |  |                                      | 75,000  | (3)  |                     | $0.80/Common Share  |            
|Chief Financial Officer                                         |  |                                      | 200,000 | (8)  |                     | $2.00/Common Share  |            
|                                                                |  |                                      |         |      |                     |                     |            
|Richard Glickman  Chairman                                      |  |                                      | 75,000  | (9)  |                     | $0.80/Common Share  |            
|                                                                |  |                                      |         |      |                     |                     |            
|Daisy Wong  Consultant                                          |  |                                      | 12,000  | (2)  |                     | $0.80/Common Share  |            
|                                                                |  |                                      |         |      |                     |                     |            
|Dr. Frank Perabo  EVP & Chief Medical Officer                   |  |                                      | 450,000 | (10) |                     | $2.00/Common Share  |            
|                                                                |  |                                      |         |      |                     |                     |            
|Sequoia Partners Inc.                                           |  |                                      | 50,000  | (11) |                     | $2.00/Common Share  |            
|                                                                |  |                                      |         |      |                     |                     |            
|Leah DiMascio                                                   |  |                                      | 10,000  | (12) |                     | $2.00/Common Share  |            
|                                                                |  |                                      |         |      |                     |                     |            
|Erin Rudsinski                                                  |  |                                      | 10,000  | (13) |                     | $5.15/Common Share  |            
|                                                                |  |                                      |         |      |                     |                     |            
|Franklin Berger                                                 |  |                                      | 50,000  | (14) |                     | $5.35/Common Share  |            
|                                                                |  |                                      |         |      |                     |                     |            
|Erica Osbourne                                                  |  |                                      | 5,000   | (15) |                     | $14.90/Common Share |            
|                                                                |  |                                      |         |      |                     |                     |            
|David Parkinson                                                 |  |                                      | 50,000  | (16) |                     | $14.90/Common Share |            
|Chief Executive Officer                                         |  |                                      | 600,000 | (17) |                     | $6.25/Common Share  |            
|                                                                |  |                                      |         |      |                     |                     |            
|Peter Virsik EVP & Chief Operating Officer                      |  |                                      | 290,000 | (18) |                     | $3.49/Common Share  |            







87














| | (1) | These Options vest in equal monthly installments of 12,500 Options per month with the first installment of Options vesting on February 28, 2013.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | These Options vest according to the following schedule: 20% on May 21, 2014; 20% in four equal monthly installments on the anniversary date of the grant.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | These Options vest according to the following schedule: 20% on May 21, 2014; 20% in four equal monthly installments on the anniversary date of the grant.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | 100% of these Options vest 12 months from the date the Company becomes a reporting issuer on a recognized stock exchange.
| | --- | -------------------------------------------------------------------------------------------------------------------------



| | (5) | These Options vest according to the following schedule: 10,000 options vest each month for the first 24 months of employment starting April 15, 2014. The remaining Options vest upon the following events: (1) 100,000 Options upon filing a successful IND; and (2) all unvested Options vest upon completion of a sale of the Company. Vested Options will automatically expire one year after the optionee elects to terminate employment with the Company for any reason.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | These Options vest according to the following schedule: (1) 20% on July 1, 2013; (2) 20% in four equal monthly installments on the anniversary date of the grant.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



|(7) | These Options vested in equal quarterly installments of 10,000 Options per quarter with the first installment of Options vesting on April 1, 2013.                
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                   
|(8) | These Options vest according to the following schedule: (1) 20% on July 30, 2014; (2) 20% in four equal monthly installments on the anniversary date of the grant.



| | (9) | These Options vest according to the following schedule: (1) 25% on May 21, 2014; (2) 25% in three equal monthly installments on the anniversary date of the grant.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (10) | These Options were granted pursuant to the terms of the Stock Option Plan and vest in equal monthly installments of 10,000 Options per month for 36 months with the first installment of Options vesting on September 8, 2014. The remaining Options vested upon the following events: (1) 40,000 Options upon dosing the first patient in a Phase I/II clinical trial; (2) 50,000 Options upon completing enrollment for such study prior to September 30, 2017; and (3) all unvested Options vest upon completion of a sale of the Company. Vested Options will automatically expire one year after the optionee elects to terminate employment with the Company.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (11) | These Options vest according to the following schedule: 10,000 Options on December 19, 2014; 10,000 Options three months after December 19, 2014; and 10,000 Options every three months thereafter.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (12) | These Options vest according to the following schedule: 20% on December 19, 2014; and 20% in four equal annual installments beginning on December 3, 2015.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| | (13) | The Options vest according to the following schedule: 20% on March 2, 2015; and 20% in four equal annual installments beginning March 2, 2016.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------



| | (14) | The Options vest according to the following schedule: 20,000 on March 5, 2015; 15,000 on March 5, 2016; and 15,000 on March 5, 2017.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------



88







| | (15) | These Options vest according to the following schedule: 20% on June 23, 2015; and 20% in four equal installments beginning June 23, 2016.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------



| | (16) | The Options vest according to the following schedule: 20,000 on June 23, 2015; 15,000 on June 23, 2016; and 15,000 on June 23, 2017.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------



| | (17) | These Options vest according to the following schedule: 150,000 on January 12, 2017; and 12,500 every month thereafter.
| | ---- | -----------------------------------------------------------------------------------------------------------------------



| | (18) | These Options vest according to the following schedule: 72,500 on August 9, 2017; and 6,042 every month thereafter.
| | ---- | -------------------------------------------------------------------------------------------------------------------



| | C. | Board Practices
| | -- | ---------------



Item 6.A., “Directors, Senior Management and
Employees – Directors and Senior Management” above sets out each directors’ and officers’ date of
expiration of their current term of office, as applicable, and the period during which such person has served in that office.



For specific termination and change-of-control provisions for
the Company’s five NEO’s, Dr. David Parkinson, David Wood, Peter Virsik, Dr. Frank Perabo, and Dr. Marianne Sadar,
see Item 6.B “Compensation.”



As of the date of this Annual Report, Richard Glickman, Gary
Sollis, Dr. Marianne Sadar, Dr. Raymond Andersen, Franklin Berger, Dr. Frank Perabo and David Parkinson are not engaged in a contract
providing for benefits upon termination of employment with the Company.



Audit Committee



The audit committee of the Board (the “Audit Committee”)
is comprised of Franklin Berger (chair), Richard Glickman, and Gary Sollis, all of whom are “financially literate”
as defined in National Instrument 52-110 – Audit Committees (“NI 52-110”) and the rules of the NASDAQ.
Each member of the Audit Committee is considered independent pursuant to NI 52-110, Rule 10A-3 under the U.S. Exchange Act and
the rules of the NASDAQ. Franklin Berger served as the Audit Committee’s financial expert for the 2016 fiscal year. A description
of the education and experience of each Audit Committee member that is relevant to the performance of his responsibilities as an
Audit Committee member may be found above under the heading “Directors, Senior Management and Employees – Directors
and Senior Management”.



The Audit Committee is responsible for reviewing the Company’s
financial reporting procedures, internal controls and the performance of the financial management and the Auditor. The Audit Committee
also reviews the annual audited financial statements and makes recommendations to the board. A copy of the Audit Committee’s
charter is set out below.



Audit Committee Charter



| | I. | Purpose
| | -- | -------



The main objective of the Audit Committee is to act as a liaison
between the Board and the Company’s independent auditor and to assist the Board in fulfilling its oversight responsibilities
with respect to the financial statements and other financial information provided by the Company to its shareholders and others.



| | II. | Organization
| | --- | ------------



The Committee shall consist of three or more directors and shall
satisfy the laws governing the Company and the independence, financial literacy, expertise and experience requirements under applicable
securities law, stock exchange requests and any other regulatory requirements applicable to the Audit Committee of the Company.



89







The members of the Committee and the Chair of the Committee
shall be appointed by the Board. A majority of the members of the Committee shall constitute a quorum. A majority of the members
of the Committee shall be empowered to act on behalf of the Committee. Matters decided by the Committee shall be decided by majority
votes.



Any member of the Committee may be removed or replaced at any
time by the Board and shall cease to be a member of the Committee as soon as such member ceases to be a director.



The Committee may form and delegate authority to subcommittees
when appropriate.



| | III. | Meetings
| | ---- | --------



The Committee shall meet as frequently as circumstances require.



The Committee may invite, from time to time, such persons as
it may see fit to attend its meetings and to take part in discussion and consideration of the affairs of the Committee.



| | IV. | Responsibilities
| | --- | ----------------



| | (1) | The Committee shall recommend to the Board:
| | --- | -------------------------------------------



| | (a) | the external auditor to be nominated for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services for the Company; and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | the compensation of the external auditor.
| | --- | -----------------------------------------



| | (2) | The Committee shall be directly responsible for overseeing the work of the external auditor engaged for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services for the Company, including the resolution of disagreements between management and the external auditor regarding financial reporting.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | The Committee must pre-approve all non-audit services to be provided to the Company or its subsidiary entities by the Company’s external auditor.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | The Committee must review the Company’s financial statements, MD&A and annual and interim earnings press releases before the Company publicly discloses this information.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | The Committee must be satisfied that adequate procedures are in place for the review of the Company’s public disclosure of financial information extracted or derived from the Company’s financial statements, other than the public disclosure referred to in subsection (4), and must periodically assess the adequacy of those procedures.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | The Committee must establish procedures for:
| | --- | --------------------------------------------



| | (a) | the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------



90







| | V. | Authority
| | -- | ---------



The Committee shall have the following authority:



| | (a) | to engage independent counsel and other advisors as it determines necessary to carry out its duties,
| | --- | ----------------------------------------------------------------------------------------------------



| | (b) | to set and pay the compensation for any auditor or tax advisors employed by the Committee, and
| | --- | ----------------------------------------------------------------------------------------------



| | (c) | to communicate directly with the external auditor.
| | --- | --------------------------------------------------



Audit Committee Oversight



Since the commencement of the Company’s most recently
completed financial year, there has not been a recommendation of the Audit Committee to nominate or compensate an external auditor
which was not adopted by the Company’s Board.



Pre-Approval Policies and Procedures



The Audit Committee has the authority and responsibility for
pre-approval of all non-audit services to be provided to the Company or its subsidiary entities by the external auditor or the
external auditor of the Company’s subsidiary entities, unless such pre-approval is otherwise appropriately delegated or if
appropriate specific policies and procedures for the engagement of non-audit services have been adopted by the Audit Committee.



External Auditor Service Fees by Category



The aggregate fees billed by the Company’s external auditor
in each of the last three fiscal years for audit fees are set out in the table below. In the table, “Audit Fees”
are fees billed by the Company’s external auditor for services provided in auditing the Company’s annual financial
statements for the subject year. “Audit-Related Fees” are fees not included in audit fees that are billed by
the auditor for assurance and related services that are reasonably related to the performance of the audit review of the Company’s
financial statements. “Tax Fees” are fees billed by the auditor for professional services rendered for tax compliance,
tax advice and tax planning. “All other fees” are fees billed by the auditor for products and services not included
in the foregoing categories. All amounts in the table are expressed in Canadian dollars.







|Financial Year Ending |  | Audit Fees |        |  | Audit- Related Fees |   |     | Tax Fees |  |   | All Other Fees | 
|--------------------- |  | ---------- | ------ |  | ------------------- | - | --- | -------- |  | - | -------------- | 
|September 30, 2017    |  | C$         | 55,080 |  |                     | $ | nil |          |  | $ | nil            | 
|September 30, 2016    |  | C$         | 56,610 |  |                     | $ | nil |          |  | $ | nil            | 
|September 30, 2015    |  | C$         | 45,000 |  |                     | $ | nil |          |  | $ | nil            | 
|September 30, 2014    |  | C$         | 32,000 |  |                     | $ | nil |          |  | $ | nil            | 
|September 30, 2013    |  | C$         | 15,000 |  |                     | $ | nil |          |  | $ | nil            | 
|December 31, 2012     |  | C$         | 15,000 |  |                     | $ | nil |          |  | $ | nil            | 





Compensation Committee



Prior to December 19, 2014, compensation matters were determined
by the entire Board. At a meeting held on December 19, 2014, the Board formed a Compensation Committee. The Compensation Committee
is currently comprised of Scott Requadt (chair), Richard Glickman and Gary Sollis. Under SEC and NASDAQ rules, there are heightened
independence standards for members of the compensation committee. All of ESSA’s compensation committee members meet these
heightened standards. The Compensation Committee is responsible for reviewing the compensation plans and severance arrangements
for management, to ensure they are commensurate with comparable companies. Factors that are taken into consideration when making
compensation decisions include:



| | · | the financial resources available or expected to be available to the Company;
| | - | -----------------------------------------------------------------------------



| | · | comparative compensations levels for companies of ESSA’s size in the biopharmaceutical industry;
| | - | ------------------------------------------------------------------------------------------------



| | · | the capabilities of individual contributors to the Company’s success;
| | - | ---------------------------------------------------------------------



91







| | · | the reasonable compensation expectations of the individual contributor; and
| | - | ---------------------------------------------------------------------------



| | · | relative equity with other ESSA contributors.
| | - | ---------------------------------------------



Statement of Corporate Governance Practices



On June 30, 2005, National Instrument 58-101 – Disclosure
of Corporate Governance Practices(“NI 58-101”) and National Policy 58-201 – Corporate Governance
Guidelines(the “Guidelines”), came into force. The Guidelines address matters such as the constitution
of and the functions to be performed by the Board. NI 58-101 requires that the Company disclose its approach to corporate governance
with reference to the Guidelines. The Board is committed to ensuring that the Company has an effective corporate governance system,
which adds value and assists the Company in achieving its objectives.



The Company’s approach to corporate governance is set
forth below.



Mandate of the Board



The Board assumes responsibility for the stewardship of the
Company and the creation of shareholder value. The Board is responsible for:



| | (a) | ensuring that management develops and implements a strategic plan that takes into account market realities and regulatory compliance;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------



| | (b) | upholding a comprehensive policy for communications with shareholders and the public at large;
| | --- | ----------------------------------------------------------------------------------------------



| | (c) | developing and formalizing the responsibilities for each member of the board, including the responsibilities of the CEO vis-à-vis corporate objectives;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | ensuring that the risk management of ESSA is prudently addressed; and
| | --- | ---------------------------------------------------------------------



| | (e) | overseeing succession planning for management.
| | --- | ----------------------------------------------



The frequency of meetings of the Board and the nature of agenda
items may change from year to year depending upon the activities of ESSA. However, the Board meets at least quarterly and at each
meeting there is a review of the business of ESSA.



The Board facilitates its exercise of independent supervision
over the Company’s management through frequent meetings of the Board being held to obtain an update on significant corporate
activities and plans, both with and without members of the Company’s management being in attendance. Further, the independent
directors of the Board hold, at a minimum, two meetings annually without the presence of non-independent directors.



Composition of the Board



The Board is composed of seven directors, three of whom qualify
as independent directors. For this purpose, a director is independent if he or she has no direct or indirect “material relationship”
with ESSA. A “material relationship” is a relationship which could, in the view of the Board, be reasonably expected
to interfere with the exercise of the director’s independent judgment. An individual who has been an employee or executive
officer of the Company within the last three years is considered to have a material relationship with the Company.



Of the directors, Franklin Berger, Richard Glickman, and Gary
Sollis are considered independent under Rule 5605(a)(2) of the NASDAQ listing standards. Four directors: (i) Dr. David Parkinson,
President and Chief Executive Officer of the Company; (ii) Dr. Marianne Sadar, Chief Scientific Officer of the Company; (iii) Dr.
Raymond Andersen, Secretary and Chief Technical Officer of the Company; and (iv) Scott Requadt, Managing Director of Clarus (a
major shareholder) are considered not independent. The size of the Company is such that all the Company’s operations are
conducted by a small management team which is also represented on the Board. The Board believes that management is effectively
supervised by the three independent directors, as the independent directors are actively and regularly involved in reviewing the
operations of the Company and have regular and full access to management not represented on the Board.



92







Directorships



Currently, the following directors serve on the following boards
of directors of other public companies:



|DIRECTOR         |  | PUBLIC CORPORATION BOARD MEMBERSHIP                                    
|---------------- |  | -----------------------------------------------------------------------
|Richard Glickman |  | Cardiome Pharma Corp., Aurinia Pharmaceuticals Corp.                   
|Franklin Berger  |  | Five Prime Therapeutics, Inc., Immune Design Corp., Bellus Health, Inc.
|David Parkinson  |  | Threshold Pharmaceuticals, Inc., Cerulean Pharma Inc., 3SBio Inc.      
|Scott Requadt    |  | VBI Vaccines Inc.                                                      










Orientation and Education



ESSA will provide new directors with copies of relevant financial,
technical and other information regarding its R&D programs. Board members are also encouraged to communicate with management
and the Auditor and, to keep themselves current with industry trends and developments. Board members have full access to the Company’s
records.



Ethical Business Conduct



ESSA has adopted a Code of Business Conduct applicable to all
of its directors and employees, including its Chief Executive Officer and Chief Financial Officer, which is a “code of ethics”
as defined in Item 16B of Form 20-F promulgated by the SEC and which is a “code” under National Instrument NI 58-101. The
objective of the Code of Conduct is to (i) emphasize ESSA’s commitment to ethics and compliance with the laws, (ii) set forth
basic standards of ethical and legal behavior, (iii) provide reporting mechanisms for known or suspected ethical or legal violations
and (iv) help prevent and detect wrongdoing. The full text of the Code of Business Conduct is posted on ESSA’s website at
www.essapharma.com. Information contained on, or that can be accessed through, the Company’s website does not constitute
a part of this and is not incorporated by reference herein. If ESSA makes any amendment to the Code of Business Conduct or
grants any waivers, including any implicit waiver, from a provision of the code of conduct, ESSA will disclose the nature of such
amendment or waiver on its website to the extent required by the rules and regulations of the SEC and the Canadian Securities Administrators.
Under Item 16B of the SEC’s Form 20-F, if a waiver or amendment of the Code of Business Conduct applies to the Company’s
principal executive officer, principal financial officer, principal accounting officer or controller and relates to standards promoting
any of the values described in Item 16B(b) of such Form 20-F, ESSA will disclose such waiver or amendment on its website in accordance
with the requirements of Instruction 4 to such Item 16B.



Nomination of Directors



ESSA has adopted a director nomination policy to ensure that
it identifies nominees for the Board in compliance with applicable securities laws and regulations and exchange requirements.



Director nominees will be recommended for the Board’s
selection by a minimum of three Independent Directors constituting a majority of the Board’s independent directors in a vote
in which only independent directors participate. The term “independent director” has the meaning given to such
term in the listing standards of the NASDAQ. In making nominee recommendations, such independent directors will consider:



| | (a) | the competencies and skills considered necessary for the Board as a whole to possess;
| | --- | -------------------------------------------------------------------------------------



| | (b) | the competencies and skills that each existing director possesses;
| | --- | ------------------------------------------------------------------



93







| | (c) | the competencies and skills each new nominee will bring to the Board; and
| | --- | -------------------------------------------------------------------------



| | (d) | whether the nominee will be an independent director.
| | --- | ----------------------------------------------------



In addition, such independent directors will consider whether
each new nominee can devote sufficient time and resources to his or her duties as a member of the Board.



Assessments



The Board and each individual director will be regularly assessed
regarding his or its effectiveness and contribution. The assessment will consider and take into account:



| | · | in the case of the Board, its mandate and charter; and
| | - | ------------------------------------------------------



| | · | in the case of an individual director, the competencies and skills each individual director is expected to possess.
| | - | -------------------------------------------------------------------------------------------------------------------



D. Employees



As of the date of this Annual Report, ESSA has a total of 15
employees and consultants on a full-time or part-time basis. ESSA has in the past, and may in the future, retain additional expert
consultants on an ad-hoc basis if required in connection with the Company’s development program. None of ESSA’s employees
are represented by a union. The following table sets forth the total number of ESSA’s employees at September 30, 2017, 2016,
and 2015, respectively, and a breakdown of persons employed by category of activity and geographic location for the corresponding
periods.



|                                                   |  | September 30,  2017 |    |  | September 30,  2016 |  |    | September 30,  2015 | 
|-------------------------------------------------- |  | ------------------- | -- |  | ------------------- |  | -- | ------------------- | 
|Employees and consultants by category of activity: |  |                     |    |  |                     |  |    |                     | 
|Management                                         |  |                     | 6  |  |                     |  | 7  |                     | 
|Administration                                     |  |                     | 6  |  |                     |  | 8  |                     | 
|Research                                           |  |                     | 3  |  |                     |  | 10 |                     | 
|Total Number of Employees and Consultants          |  |                     | 15 |  |                     |  | 25 |                     | 
|Employees and consultants by geographic location:  |  |                     |    |  |                     |  |    |                     | 
|Canada                                             |  |                     | 8  |  |                     |  | 8  |                     | 
|United States                                      |  |                     | 7  |  |                     |  | 17 |                     | 
|Total Number of Employees and Consultants          |  |                     | 15 |  |                     |  | 25 |                     | 



| | E. | Share Ownership
| | -- | ---------------



As at the date of this Annual Report, as a group, the Company’s
directors and executive officers beneficially owned, directly or indirectly, or exercised control over 6,914,328 Common Shares
being 23.76% of the 29,101,889 Common Shares issued and outstanding.



The following table states the number of Common Shares beneficially
owned by each person, directly or indirectly, or over which each person exercised control or direction as at December 11, 2017.
The persons listed below are deemed to be the beneficial owners of Common Shares underlying stock options that are exercisable
within 60 days from the above date.



|Name of Beneficial Owner |  | Common Shares(1) |           |  | Percent of Common Shares(2) | 
|------------------------ |  | ---------------- | --------- |  | --------------------------- | 
|Dr. David Parkinson      |  |                  | 349,976   |  |                             | 
|Richard M. Glickman      |  |                  | 850,000   |  |                             | 
|Dr. Marianne Sadar       |  |                  | 3,189,296 |  |                             | 
|Dr. Raymond Andersen     |  |                  | 3,186,296 |  |                             | 
|Gary Sollis              |  |                  | 120,000   |  |                             | 
|David Wood               |  |                  | 275,100   |  |                             | 
|Dr. Frank Perabo         |  |                  | 450,000   |  |                             | 
|Dr. Paul Cossum          |  |                  | 340,000   |  |                             | 
|Franklin Berger          |  |                  | 413,636   |  |                             | 
|Peter Virsik             |  |                  | 108,752   |  |                             | 



94














| | (1) | These numbers include Common Shares underlying stock options that are exercisable within 60 days from December 11, 2017.
| | --- | ------------------------------------------------------------------------------------------------------------------------



| | (2) | Based on an aggregate total of 32,124,004 Common Shares, being the 29,101,889 Common Shares issued and outstanding as at December 11, 2017 plus the 3,022,115 Common Shares underlying stock options that are exercisable within 60 days from December 11, 2017.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Item 6.B., “Directors, Senior Management and Employees
– Compensation” above sets out information regarding options granted to members of the Board of Directors and describes
arrangements for involving employees in the capital of the Company.



| | ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
| | ------- | -------------------------------------------------



| | A. | Major Shareholders
| | -- | ------------------



The following table shows the name and information about ESSA’s
voting securities owned by each person or company which, as at December 11, 2017, owned of record, or which, to ESSA’s knowledge,
owned beneficially, directly or indirectly, more than 5% of any class or series of the Company’s voting securities:



|Name                           |  | Number and Type of Securities |  | Type of Ownership |  | Percentage ofClass(1) |      |   | Percentage of Classon a Diluted Basis(2) | 
|------------------------------ |  | ----------------------------- |  | ----------------- |  | --------------------- | ---- | - | ---------------------------------------- | 
|Dr. Marianne Sadar             |  | 2,889,296 Common Shares       |  | Beneficial        |  |                       | 9.93 | % |                                          | 
|Dr. Raymond Andersen           |  | 2,886,296 Common Shares       |  | Beneficial        |  |                       | 9.92 | % |                                          | 
|Eventide Asset Management, LLC |  | 2,719,410 Common Shares       |  | Beneficial        |  |                       | 9.34 | % |                                          | 
|Clarus Ventures LLC            |  | 2,121,212 Common Shares       |  | Beneficial        |  |                       | 7.29 | % |                                          | 
|Omega Fund Management LLC      |  | 1,696,969 Common Shares       |  | Beneficial        |  |                       | 5.83 | % |                                          | 










| | (1) | Based on 29,101,889 outstanding
Common Shares as of December 11, 2017.
| | --- | ----------------------------------------------------------------------



| | (2) | Based on an aggregate total
of 39,640,818 outstanding Common Shares on a fully diluted basis as of December 11, 2017, being the 29,101,889 Common Shares issued
and outstanding as at December 11, 2017, and assuming the exercise of all outstanding 3,546,219 Options, 25,000 Bloom Burton Warrants,
4,545,452 7-Year Warrants, 2,272,726 2-Year Warrants, and 149,532 SVB Warrants, each on a one to one basis.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



No major shareholders have different voting rights.



The information in the table above was supplied by Computershare
Trust Company of Canada, the Company’s registrar and transfer agent, and by the individuals themselves.



As of December 11, 2017, the number of registered shareholders
of record (and the number and percentage of shares held by such shareholders) is as follows:



|Location:     |  | Number of registered  shareholders of record |     |   | Number of Common Shares |  |            | Percentage of total Common  Shares | 
|------------- |  | -------------------------------------------- | --- | - | ----------------------- |  | ---------- | ---------------------------------- | 
|Canada        |  |                                              | 31  |   |                         |  | 17,321,952 |                                    | 
|United States |  |                                              | 5   |   |                         |  | 11,671,484 |                                    | 
|Other         |  |                                              | 2   |   |                         |  | 108,453    |                                    | 
|Total         |  |                                              | 100 | % |                         |  | 100        | %                                  | 



95







The Company is not aware that it is directly owned or controlled
by another corporation, any foreign government or any other natural or legal person(s) severally or jointly. The Company is not
aware of any arrangement, the operation of which may result in a change of control of the Company.



| | B. | Related Party Transactions
| | -- | --------------------------



In addition to the compensation arrangements discussed under
Item 6.B “Compensation,” the following is a description of the material terms of those transactions with related
parties to which ESSA is a party and which it is required to disclose pursuant to the disclosure rules of the SEC and the British
Columbia Securities Commission.



Agreements with Directors and Officers



Indemnity Agreements

ESSA has entered into indemnity agreements with its directors
and certain officers which provide, among other things, that it will indemnify him or her to the fullest extent permitted by law
from and against all liabilities, costs, charges and expenses incurred as a result of his or her actions in the exercise of his
or her duties as a director or officer.



Employment Agreements

ESSA has entered into employment agreements with Dr. David Parkinson,
President and Chief Executive Officer, David Wood, Chief Financial Officer, and Peter Virsik, Executive Vice President and Chief
Operating Officer. Terms of employment for Dr. Frank Perabo, Executive Vice President of Clinical Development and Chief Medical
Officer, and Dr. Paul Cossum, Executive Vice President of Research and Development are as stated in letter agreements. For more
information regarding certain of these agreements, see “Compensation” in Item 6.B of this Annual Report.



Consulting Agreements

ESSA has entered into consulting agreements with Dr. Marianne
Sadar, Chief Scientific Officer, and Dr. Raymond Andersen, Chief Technical Officer. The specific provisions of each consulting
agreement include:



For Dr. Marianne Sadar:



| | · | The term of this consulting agreement expires on January 31, 2018 and may be extended for additional periods of one year each by mutual written agreement between the parties.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | An annual fee to the consultant of C$180,000 per year shall be paid in equal monthly installments of C$15,000 throughout the term of the agreement.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------



| | · | In connection with consulting services performed, on February 1, 2013 Dr. Sadar received options to purchase 300,000 Common Shares at an exercise price of C$0.80 per share. Such options vest monthly in 24 equal installments of 12,500 Common Shares. Any unvested options will vest immediately upon the closing of this offering. In addition, on May 1, 2011 ESSA granted Dr. Sadar options to purchase 120,000 Common Shares at an exercise price of C$0.50 per share. Such options vest monthly in 12 equal installments of 10,000 shares and vested options shall be exercisable any time and from time to time until April 30, 2016; these options were exercised for 106,862 Common Shares on a cashless basis during the year ended September 30, 2016.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Dr. Sadar shall receive a one-time bonus within 10 days of us reaching certain significant milestones described within the consulting agreement.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------



| | · | At all times during the term of the consulting agreement, and for a period of 12 months thereafter, Dr. Sadar will be restricted from competing against us.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------



For Dr. Raymond Andersen:



| | · | The term of this consulting agreement expires on January 31, 2018 and may be extended for additional periods of one year each by mutual written agreement between the parties.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



96







| | · | An annual fee to the consultant of C$120,000 per year shall be paid in equal monthly installments of C$10,000 throughout the
term of the agreement.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------



| | · | In connection with consulting services performed, on February 1, 2013 Dr. Andersen received options to purchase 300,000
Common Shares at an exercise price of C$0.80 per share. Such options vest monthly in 24 equal installments of 12,500 Common Shares.
Any unvested options will vest immediately upon the closing of this offering. In addition, on May 1, 2011 ESSA granted Dr. Andersen
options to purchase 120,000 Common Shares at an exercise price of C$0.50 per share. Such options vest monthly in 12 equal installments
of 10,000 shares and vested options shall be exercisable any time and from time to time until April 30, 2016; these options
were exercised for 106,862 Common Shares on a cashless basis during the year ended September 30, 2016.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Dr. Andersen shall receive a one-time bonus within 10 days of us reaching certain significant milestones described within
the consulting agreement.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------



| | · | At all times during the term of the consulting agreement, and for a period of 12 months thereafter, Dr. Andersen will
be restricted from competing against ESSA.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



Equity Awards



Since ESSA's inception, it has granted equity awards to certain
of its directors and officers. ESSA describes its equity plans under “Executive Compensation” in Item 6 of this
Annual Report.



Included in accounts payable and accrued liabilities at September
30, 2017 is $219,031 (compared to $276,399 on September 30, 2016) due to related parties with respect to the transactions
described under “Executive Compensation” in Item 6 of this Annual Report and expense reimbursements. Amounts
due to related parties are non-interest bearing, with no fixed terms of repayment.



Included in accounts payable and accrued liabilities at September
30, 2016 is $276,399 (compared to $82,414 on September 30, 2015) due to related parties with respect to the transactions described
under “Executive Compensation” in Item 6 of this Annual Report and expense reimbursements. Amounts due to related
parties are non-interest bearing, with no fixed terms of repayment.



Indebtedness of Directors, Executive Officers and Employees



None of ESSA's directors, executive officers, employees, former
directors, former executive officers or former employees, and none of their associates, is indebted to ESSA or another entity whose
indebtedness is the subject of a guarantee, support agreement, letter of credit or other similar agreement or understanding provided
by ESSA, except for routine indebtedness as defined under applicable securities legislation.



Significant Influence



The Company previously completed the January 2016 Financing,
a private placement for gross proceeds of approximately $15,000,000. For greater detail see Item 4.A “History and development
of the Company – 2016.”



As a result of the January 2016 Financing, Scott Requadt, Managing
Director of Clarus Ventures, LLC, was appointed to the Board of the Company. Pursuant to the terms of a subscription agreement
between the Company and Clarus in connection with the January 2016 Financing, Clarus is entitled to nominate two directors to the
board of directors of the Company, one of which must be an independent director and pre-approved by the Company. The nomination
rights will continue for so long as Clarus holds greater than or equal to 1,060,606 common shares, subject to adjustment in certain
circumstances. As of the date of this Annual Report, Clarus has significant influence on the Company beneficially owning 2,121,212
Common Shares, representing 7.29% of the issued and outstanding Common Shares.



| | C. | Interests of Experts and Counsel
| | -- | --------------------------------



Not applicable.



97







| | ITEM 8. | FINANCIAL INFORMATION
| | ------- | ---------------------



| | A. | Consolidated Statements and Other Financial Information
| | -- | -------------------------------------------------------



The Company’s audited consolidated financial statements
as at and for the years ended September 30, 2017, 2016, and 2015, as required under this Item 8, are attached hereto and found
immediately following the text of this Annual Report. The audit report of Davidson & Company LLP is included herein immediately
preceding the consolidated financial statements and schedules.



Legal Proceedings



From time to time, ESSA may become involved in legal or regulatory
proceedings arising in the ordinary course of business. ESSA is not currently a party to any material litigation or regulatory
proceeding and it is not aware of any pending or threatened litigation or regulatory proceeding against it that could have a material
adverse effect on its business, operating results, financial condition or cash flows.



Dividend Policy



ESSA has never declared or paid any dividends on its securities.
ESSA does not have any present intention to pay cash dividends on its Common Shares and it does not anticipate paying any cash
dividends on its Common Shares in the foreseeable future. ESSA currently intends to invest its future earnings, if any, to fund
its growth. However, any future determination as to the declaration and payment of dividends will be at the discretion of ESSA's
board of directors and will depend on its financial condition, operating results, contractual restrictions, capital requirements,
business prospects and other factors its board of directors may deem relevant.



| | B. | Significant Changes
| | -- | -------------------



Other than the 2016 Loan and Security Agreement executed in
November 2016, there have been no significant changes in the Company’s financial condition since the most recent consolidated
financial statements for the fiscal year ended September 30, 2017. See “Summary Corporate History and Intercorporate Relationships”
in Item 4 of this Annual Report.



| | ITEM 9. | THE OFFER AND LISTING
| | ------- | ---------------------



| | A. | Offer and Listing Details
| | -- | -------------------------



As at the date of this Annual Report, the Company had 29,101,889
Common Shares outstanding. On January 27, 2015, the Common Shares began trading on the TSX-V under the symbol “EPI”.
On July 28, 2015, ESSA delisted from the TSX-V and began trading its Common Shares on the TSX under the same symbol, “EPI”.
On July 9, 2015, the Common Shares began trading on the NASDAQ under the symbol “EPIX”. On November 27, 2017,
ESSA delisted from the TSX and began trading its Common Shares on the TSX-V under the same symbol, “EPI”.



Using information from published sources, the following information
shows the high and low trading values of ESSA’s Common Shares for the periods indicated:



NASDAQ (“EPIX”)



|For the month ended |  | High  ($) |      |  | Low  ($) | 
|------------------- |  | --------- | ---- |  | -------- | 
|November 30, 2017   |  |           | 0.32 |  |          | 
|October 31, 2017    |  |           | 0.35 |  |          | 
|September 30, 2017  |  |           | 0.49 |  |          | 
|August 31, 2017     |  |           | 0.37 |  |          | 
|July 31, 2017       |  |           | 0.54 |  |          | 
|June 30, 2017       |  |           | 2.10 |  |          | 



98







|For the quarter ended |  | High  ($) |      |  | Low  ($) | 
|--------------------- |  | --------- | ---- |  | -------- | 
|September 30, 2017    |  |           | 0.54 |  |          | 
|June 30, 2017         |  |           | 3.00 |  |          | 
|March 31, 2017        |  |           | 3.31 |  |          | 
|December 31, 2016     |  |           | 2.75 |  |          | 
|September 30, 2016    |  |           | 2.95 |  |          | 
|June 30, 2016         |  |           | 3.39 |  |          | 
|March 31, 2016        |  |           | 4.75 |  |          | 
|December 31, 2015     |  |           | 7.00 |  |          | 



|For the year ended                               |  | High  ($) |      |  | Low  ($) | 
|------------------------------------------------ |  | --------- | ---- |  | -------- | 
|September 30, 2017                               |  |           | 3.31 |  |          | 
|September 30, 2016                               |  |           | 7.00 |  |          | 
|For the period from July 9 to September 30, 2015 |  |           | 9.45 |  |          | 



TSX (“EPI”)



|For the month ended                                 |  | High  ($) |      |  | Low  ($) | 
|--------------------------------------------------- |  | --------- | ---- |  | -------- | 
|For the period from November 1 to November 24, 2017 |  |           | 0.39 |  |          | 
|October 31, 2017                                    |  |           | 0.37 |  |          | 
|September 30, 2017                                  |  |           | 0.60 |  |          | 
|August 31, 2017                                     |  |           | 0.47 |  |          | 
|July 31, 2017                                       |  |           | 0.73 |  |          | 
|June 30, 2017                                       |  |           | 2.83 |  |          | 



|For the quarter ended |  | High  ($) |      |  | Low  ($) | 
|--------------------- |  | --------- | ---- |  | -------- | 
|September 30, 2017    |  |           | 0.73 |  |          | 
|June 30, 2017         |  |           | 4.05 |  |          | 
|March 31, 2017        |  |           | 4.45 |  |          | 
|December 31, 2016     |  |           | 3.55 |  |          | 
|September 30, 2016    |  |           | 3.80 |  |          | 
|June 30, 2016         |  |           | 4.41 |  |          | 
|March 31, 2016        |  |           | 6.90 |  |          | 
|December 31, 2015     |  |           | 9.03 |  |          | 



|For the year ended                                |  | High  ($) |      |  | Low  ($) | 
|------------------------------------------------- |  | --------- | ---- |  | -------- | 
|September 30, 2017                                |  |           | 4.45 |  |          | 
|September 30, 2016                                |  |           | 9.03 |  |          | 
|For the period from July 28 to September 30, 2015 |  |           | 9.50 |  |          | 










| | B. | Plan of Distribution
| | -- | --------------------



Not applicable.



99









| | C. | Markets
| | -- | -------



The Company’s Common Shares are listed on the NASDAQ
under the symbol “EPIX”. The Company’s Common Shares commenced trading on the TSX under the symbol “EPI”
on July 28, 2015, while the Company’s Common Shares were concurrently delisted from the TSX-V. On November 27, 2017, the
Company downlisted from the TSX and began trading its Common Shares on the TSX-V. The Company’s Common Shares trade in U.S.
dollars on the NASDAQ and in Canadian dollars on the TSX. On December 11, 2017, the closing price of the Company’s Common
Shares on the TSX-V and the NASDAQ was C$0.27 and $0.22, respectively.



| | D. | Selling Shareholders
| | -- | --------------------



Not applicable.



| | E. | Dilution
| | -- | --------



Not applicable.



| | F. | Expenses of the Issue
| | -- | ---------------------



Not applicable.



| | ITEM 10. | ADDITIONAL INFORMATION
| | -------- | ----------------------



| | A. | Share Capital
| | -- | -------------



Not applicable.



| | B. | Memorandum and Articles of Association
| | -- | --------------------------------------



The Company incorporates by reference into this Annual Report
the information contained in the Company’s registration statement on Form 20-F (File No. 377-00939) originally filed with
the SEC on February 24, 2015, as amended.



| | C. | Material Contracts
| | -- | ------------------



Except for contracts entered into in the ordinary course of
business, the only contracts entered into by ESSA within two years immediately preceding this Annual Report that are still in effect,
which may be regarded as material, are as follows:



| | 1. | Cancer Research Grant Contract between CPRIT and the Company dated July 9, 2014.
| | -- | --------------------------------------------------------------------------------



| | 2. | License Agreement between the BC Cancer Agency, UBC and the Company dated December 22, 2010, as amended on February 10,
2011 and May 27, 2014.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Sublease for 2130 West Holcombe Boulevard, Houston, Texas, United States dated April 7, 2015.
| | -- | ---------------------------------------------------------------------------------------------



| | 4. | Employment Agreement for David Wood.
| | -- | ------------------------------------



| | 5. | Employment Agreement for David Parkinson.
| | -- | -----------------------------------------



| | 6. | Employment Agreement for Peter Virsik.
| | -- | --------------------------------------



| | 7. | Loan and Security Agreement between the Company and Silicon Valley Bank dated November 18, 2016.
| | -- | ------------------------------------------------------------------------------------------------



100







| | D. | Exchange Controls
| | -- | -----------------



The Company is not aware of any Canadian federal or provincial
laws, decrees, or regulations that restrict the export or import of capital, including foreign exchange controls, or that affect
the remittance of dividends, interest or other payments to non-Canadian holders of the Common Shares. There are no limitations
under the laws of Canada or by the charter or other constituent documents of the Company, except the Investment Canada Act
which may require review and approval by the Minister of Industry (Canada) of certain acquisition of control of the Company by
non-Canadians. The threshold for acquisitions of control is generally defined as being one-third or more of ESSA’s voting
shares. If the investment is potentially injurious to national security it may be subject to review under the Investment Canada
Act notwithstanding the percentage interest acquired or amount of the investment. “Non-Canadian” generally means an
individual who is not a Canadian citizen, or a corporation, partnership, trust or joint venture that is ultimately controlled by
non-Canadians.



| | E. | Taxation
| | -- | --------



U.S. Federal Income Tax Considerations



The following is a summary of the anticipated U.S. federal income
tax consequences generally applicable to U.S. Holders (as defined below) of the ownership and disposition of Common Shares. This
summary addresses only holders who acquire and hold Common Shares as “capital assets” (generally, assets held for investment
purposes).



The following summary does not purport to address all U.S. federal
income tax consequences that may be relevant to a U.S. Holder (as defined below) as a result of the ownership and disposition of
Common Shares, nor does it take into account the specific circumstances of any particular holder, some of which may be subject
to special tax rules (including, but not limited to, brokers, dealers in securities or currencies, traders in securities that elect
to use a mark-to-market method of accounting for securities holdings, tax-exempt organizations, insurance companies, banks, thrifts
and other financial institutions, persons liable for alternative minimum tax, persons that hold an interest in an entity that holds
the Common Shares, persons that will own, or will have owned, directly, indirectly or constructively 10% or more (by vote or value)
of ESSA’s stock, persons that hold the common shares as part of a hedging, integration, conversion or constructive sale transaction
or a straddle, or persons whose functional currency is not the U.S. dollar).



This summary is based on the U.S. Internal Revenue Code of 1986,
as amended (the “Code”), U.S. Treasury regulations, administrative pronouncements and rulings of the United
States Internal Revenue Service (the “IRS”) and judicial decisions, all as in effect on the date hereof, and
all of which are subject to change (possibly with retroactive effect) and to differing interpretations. Except as specifically
set forth below, this summary does not discuss applicable income tax reporting requirements. This summary does not describe any
state, local or foreign tax law considerations, or any aspect of U.S. federal tax law other than income taxation (e.g., estate
or gift tax or the Medicare contribution tax). U.S. Holders (as defined below) should consult their own tax advisers regarding
such matters.



No legal opinion from U.S. legal counsel or ruling from the
IRS has been requested, or will be obtained, regarding the U.S. federal income tax consequences of the ownership or disposition
of Common Shares. This summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different
from, and contrary to, the positions taken in this summary. In addition, because the authorities on which this summary is based
are subject to various interpretations, the IRS and U.S. courts could disagree with one or more of the positions taken in this
summary.



As used in this summary, a “U.S. Holder”
is a beneficial owner of Common Shares who, for U.S. federal income tax purposes, is (i) a citizen or individual resident
of the United States, (ii) a corporation (or other entity that is classified as a corporation for U.S. federal income tax
purposes) that is created or organized in or under the laws of the United States, any State thereof or the District of Columbia,
(iii) an estate whose income is subject to U.S. federal income tax regardless of its source, or (iv) a trust if (A) a
U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to
control all substantial decisions of the trust, or (B) the trust has a valid election in effect to be treated as a U.S. person
for U.S. federal income tax purposes.



The tax treatment of a partner in a partnership (or other entity
or arrangement classified as a partnership for U.S. federal income tax purposes) may depend on both the partnership’s and
the partner’s status and the activities of the partnership. Partnerships (or other entities or arrangements classified as
a partnership for U.S. federal income tax purposes) that are beneficial owners of Common Shares, and their partners and other owners,
should consult their own tax advisers regarding the tax consequences of the ownership and disposition of Common Shares.



101







Taxation of Common Shares



Distributions on Common Shares



In general, subject to the passive foreign investment company
rules discussed below, the gross amount of any distribution received by a U.S. Holder with respect to the Common Shares (including
amounts withheld to pay Canadian withholding taxes) will be included in the gross income of the U.S. Holder as a dividend to the
extent attributable to the Company’s current and accumulated earnings and profits, as determined under U.S. federal income
tax principles. The Company does not intend to calculate its earnings and profits under U.S. federal income tax rules. Accordingly,
U.S. Holders should expect that a distribution generally will be treated as a dividend for U.S. federal income tax purposes. Subject
to the passive foreign investment company rules discussed below, distributions on Common Shares to certain non-corporate U.S. Holders
that are treated as dividends may be taxed at preferential rates. Such dividends will not be eligible for the “dividends
received” deduction ordinarily allowed to corporate shareholders with respect to dividends received from U.S. corporations.



The amount of any dividend paid in Canadian dollars (including
amounts withheld to pay Canadian withholding taxes) will equal the U.S. dollar value of the Canadian dollars calculated by reference
to the exchange rate in effect on the date the dividend is received by the U.S. Holder, regardless of whether the Canadian dollars
are converted into U.S. dollars. A U.S. Holder will have a tax basis in the Canadian dollars equal to their U.S. dollar value on
the date of receipt. If the Canadian dollars received are converted into U.S. dollars on the date of receipt, the U.S. Holder should
generally not be required to recognize foreign currency gain or loss in respect of the distribution. If the Canadian dollars received
are not converted into U.S. dollars on the date of receipt, a U.S. Holder may recognize foreign currency gain or loss on a subsequent
conversion or other disposition of the Canadian dollars. Such gain or loss will be treated as U.S. source ordinary income or loss.



Distributions on Common Shares that are treated as dividends
generally will constitute income from sources outside the United States and generally will be categorized for U.S. foreign tax
credit purposes as “passive category income.” A U.S. Holder may be eligible to elect to claim a U.S. foreign tax credit
against its U.S. federal income tax liability, subject to applicable limitations and holding period requirements, for Canadian
tax withheld, if any, from distributions received in respect of the Common Shares. A U.S. Holder that does not elect to claim a
U.S. foreign tax credit may instead claim a deduction for Canadian tax withheld, but only for a taxable year in which the U.S.
Holder elects to do so with respect to all foreign income taxes paid or accrued in such taxable year. The rules relating to U.S.
foreign tax credits are complex, and each U.S. Holder should consult its own tax adviser regarding the application of such rules.



Sale, Exchange or Other Taxable Disposition of Common
Shares



A U.S. Holder generally will recognize gain or loss on the sale,
exchange or other taxable disposition of Common Shares in an amount equal to the difference, if any, between the amount realized
on the sale, exchange or other taxable disposition and the U.S. Holder’s adjusted tax basis in the Common Shares exchanged
therefor. Subject to the passive foreign investment company rules discussed below, such gain or loss will be capital gain or loss
and will be long-term capital gain (currently taxable at a reduced rate for non-corporate U.S. Holders) or loss if, on the date
of the sale, exchange or other taxable disposition, the Common Shares have been held by such U.S. Holder for more than one year.
The deductibility of capital losses is subject to limitations. Such gain or loss generally will be sourced within the United States
for U.S. foreign tax credit purposes.



Passive Foreign Investment Company Rules



A foreign corporation will be considered a passive foreign investment
company (“PFIC”) for any taxable year in which (1) 75% or more of its gross income is “passive income”
under the PFIC rules or (2) 50% or more of the average quarterly value of its assets produce (or are held for the production
of) “passive income.” For this purpose, “passive income” generally includes interest, dividends, rents,
royalties, and certain gains. Interest, dividends, rents and royalties received from a related person (within the meaning of the
PFIC rules) are excluded from passive income to the extent such payments are properly allocable to the active income of such related
person. Moreover, for purposes of determining if the foreign corporation is a PFIC, if the foreign corporation owns, directly or
indirectly, at least 25%, by value, of the shares of another corporation, it will be treated as if it holds directly its proportionate
share of the assets and receives directly its proportionate share of the income of such other corporation. If a corporation is
treated as a PFIC with respect to a U.S. Holder for any taxable year, the corporation will continue to be treated as a PFIC with
respect to that U.S. Holder in all succeeding taxable years, regardless of whether the corporation continues to meet the PFIC requirements
in such years, unless certain elections are made.



102







The determination as to whether a foreign corporation is a PFIC
is based on the application of complex U.S. federal income tax rules, which are subject to differing interpretations, and the determination
will depend on the composition of the income, expenses and assets of the foreign corporation from time to time and the nature of
the activities performed by its officers and employees. The Company believes that it was not classified as a PFIC for the taxable
year ending September 30, 2017, and the Company believes it will not be classified as a PFIC for the current taxable year and in
future taxable years. However, the Company’s actual PFIC status for the current or any future taxable year is uncertain and
cannot be determined until after the end of such taxable year.



If the Company is classified as a PFIC, a U.S. Holder that does
not make any of the elections described below would be required to report any gain on the disposition of Common Shares as ordinary
income, rather than as capital gain, and to compute the tax liability on the gain and any “Excess Distribution”
(as defined below) received in respect of Common Shares as if such items had been earned rateably over each day in the U.S. Holder’s
holding period (or a portion thereof) for the Common Shares. The amounts allocated to the taxable year during which the gain is
realized or distribution is made, and to any taxable years in such U.S. Holder’s holding period that are before the first
taxable year in which the Company is treated as a PFIC with respect to the U.S. Holder, would be included in the U.S. Holder’s
gross income as ordinary income for the taxable year of the gain or distribution. The amount allocated to each other taxable year
would be taxed as ordinary income in the taxable year during which the gain is realized or distribution is made at the highest
tax rate in effect for the U.S. Holder in that other taxable year and would be subject to an interest charge as if the income tax
liabilities had been due with respect to each such prior year. For purposes of these rules, gifts, exchanges pursuant to corporate
reorganizations and use of Common Shares as security for a loan may be treated as a taxable disposition of the Common Shares. An
“Excess Distribution” is the amount by which distributions during a taxable year in respect of a Common Share exceed
125% of the average amount of distributions in respect thereof during the three preceding taxable years (or, if shorter, the U.S.
Holder’s holding period for the Common Shares).



Certain additional adverse tax rules will apply to a U.S. Holder
for any taxable year in which the Company is treated as a PFIC with respect to such U.S. Holder and any of its subsidiaries is
also treated as a PFIC (a “Subsidiary PFIC”). In such a case, the U.S. Holder will generally be deemed to own
its proportionate interest (by value) in any Subsidiary PFIC and be subject to the PFIC rules described above with respect to the
Subsidiary PFIC regardless of such U.S. Holder’s percentage ownership in the Company.



The adverse tax consequences described above may be mitigated
if a U.S. Holder makes a timely “qualified electing fund” election (a “QEF election”) with respect
to its interest in the PFIC. Consequently, if the Company is classified as a PFIC, it would likely be advantageous for a U.S. Holder
to elect to treat the Company as a “qualified electing fund” (a “QEF”) with respect to such U.S.
Holder in the first year in which it holds Common Shares. If a U.S. Holder makes a timely QEF election with respect to the Company,
the electing U.S. Holder would be required in each taxable year that the Company is considered a PFIC to include in gross income
(i) as ordinary income, the U.S. Holder’s pro rata share of the ordinary earnings of the Company and (ii) as capital
gain, the U.S. Holder’s pro rata share of the net capital gain (if any) of the Company, whether or not the ordinary earnings
or net capital gain are distributed. An electing U.S. Holder’s basis in Common Shares will be increased to reflect the amount
of any taxed but undistributed income. Distributions of income that had previously been taxed will result in a corresponding reduction
of basis in the Common Shares and will not be taxed again as distributions to the U.S. Holder.



A QEF election made with respect to the Company will not apply
to any Subsidiary PFIC; a QEF election must be made separately for each Subsidiary PFIC (in which case the treatment described
above would apply to such Subsidiary PFIC). If a U.S. Holder makes a timely QEF election with respect to a Subsidiary PFIC, it
would be required in each taxable year to include in gross income its pro rata share of the ordinary earnings and net capital gain
of such Subsidiary PFIC, but may not receive a distribution of such income. Such a U.S. Holder may, subject to certain limitations,
elect to defer payment of current U.S. federal income tax on such amounts, subject to an interest charge (which would not be deductible
for U.S. federal income tax purposes if the U.S. Holder were an individual).



103







If the Company determines that it, and any subsidiary in which
the Company owns, directly or indirectly, more than 50% of such subsidiary’s total aggregate voting power, is likely a PFIC
in any taxable year, the Company intends to make available to U.S. Holders, upon request and in accordance with applicable procedures,
a “PFIC Annual Information Statement” with respect to the Company and any such subsidiary for such taxable year. The
“PFIC Annual Information Statement” may be used by U.S. Holders for purposes of complying with the reporting requirements
applicable to a QEF election with respect to the Company and any Subsidiary PFIC.



The U.S. federal income tax on any gain from the disposition
of Common Shares or from the receipt of Excess Distributions may be greater than the tax if a timely QEF election is made. It is
recommended that, if the Company were to be classified as a PFIC, a U.S. Holder make a QEF election with respect to the Company
and any Subsidiary PFIC.



Alternatively, if the Company were to be classified as a PFIC,
a U.S. Holder could also avoid certain of the rules described above by making a mark-to-market election (instead of a QEF election),
provided the Common Shares are treated as regularly traded on a qualified exchange or other market within the meaning of the applicable
Treasury regulations. However, a U.S. Holder will not be permitted to make a mark-to-market election with respect to a Subsidiary
PFIC. U.S. Holders should consult their own tax advisers regarding the potential availability and consequences of a mark-to-market
election, as well as the advisability of making a protective QEF election in case the Company is classified as a PFIC in any taxable
year.



During any taxable year in which the Company or any Subsidiary
PFIC is treated as a PFIC with respect to a U.S. Holder, that U.S. Holder must file IRS Form 8621. U.S. Holders should consult
their own tax advisers concerning annual filing requirements.



Required Disclosure with Respect to Foreign Financial Assets



Certain U.S. Holders are required to report information relating
to an interest in Common Shares, subject to certain exceptions (including an exception for Common Shares held in accounts maintained
by certain financial institutions), by attaching a completed IRS Form 8938, Statement of Specified Foreign Financial Assets, with
their tax return for each year in which they hold an interest in Common Shares. U.S. Holders should consult their own tax advisers
regarding information reporting requirements relating to their ownership of Common Shares.



Certain Material Canadian Federal Income Tax Considerations



The following is a summary, as of today’s date, of the
principal Canadian federal income tax considerations under the Income Tax Act (Canada) (“Tax Act”) that
generally apply to an investor who acquires Common Shares, who, for the purposes of the Tax Act and at all relevant times, deals
at arm’s length, and is not affiliated with ESSA and who acquires and holds ESSA’s Common Shares, as capital property
(a “Holder”). Generally, Common Shares will be considered to be capital property to a Holder provided that the
Holder does not use Common Shares in the course of carrying on a business of trading or dealing in securities and such Holder has
not acquired them or been deemed to have acquired them in one or more transactions considered to be an adventure or concern in
the nature of trade.



This summary is based upon the current provisions of the Canada-United
States Income Tax Convention (1980) (“Treaty”), the Tax Act and its regulations and the current published
administrative policies and assessing practices of the Canada Revenue Agency (“CRA”). This summary takes into
account all specific proposals to amend the Tax Act and its regulations publicly announced by or on behalf of the Minister of Finance
(Canada) prior to the date hereof (the “Tax Proposals”) and assumes that the Tax Proposals will be enacted in
the form proposed, although no assurance can be given that the Tax Proposals will be enacted in their current form or at all. This
summary does not otherwise take into account any changes in law or in the administrative policies or assessing practices of the
CRA, whether by legislative, governmental or judicial decision or action, nor does it take into account or consider any provincial,
territorial or foreign income tax considerations, which considerations may differ significantly from the Canadian federal income
tax considerations discussed in this summary.



104







This summary only applies to Holders who (i) for the purposes
of the Tax Act, have not and will not be resident in Canada at any time, (ii) do not use or hold the common shares in carrying
on a business in Canada, and (iii) are resident in the United States for income tax purposes and entitled to benefits under
the Treaty. Special rules, which are not discussed in this summary, may apply to a United States Holder that is an insurer that
carries on business in Canada and elsewhere.



This summary is of a general nature only, is not exhaustive
of all possible Canadian federal income tax considerations and is not intended to be, nor should it be construed to be, legal or
tax advice to any particular Holder. Holders should consult their own tax advisors with respect to their particular circumstances.



Currency



For purposes of the Tax Act, all amounts relating to the acquisition,
holding or disposition of Common Shares must be expressed in Canadian dollars. Amounts denominated in any other currency must be
converted into Canadian dollars using the rate of exchange quoted by the Bank of Canada at noon on the day the amount first arose,
or such other rate of exchange as is acceptable to the CRA.



Dividends



Dividends paid or credited or deemed to be paid or credited
to a Holder by ESSA are subject to Canadian withholding tax at the rate of 25% on the gross amount of the dividend unless such
rate is reduced by the terms of the Treaty. The rate of withholding tax on dividends paid or credited to a Holder who is resident
in the U.S. for purposes of the Treaty, entitled to benefits under the Treaty, and is the beneficial owner of the dividend is generally
limited to 15% of the gross amount of the dividend (or 5% in the case of such a Holder that is a company beneficially owning at
least 10% of ESSA’s voting shares). Holders should consult their own tax advisors regarding the application of the Treaty
to dividends based on their particular circumstances.



Dispositions of Common Shares



A Holder generally will not be subject to tax under the Tax
Act in respect of a capital gain realized on the disposition or deemed disposition of Common Shares, nor will capital losses arising
therefrom be recognized under the Tax Act, unless Common Shares constitute “taxable Canadian property” to the
Holder for purposes of the Tax Act, and the gain is not exempt from tax pursuant to the terms of the Treaty.



Provided Common Shares are listed on a “designated stock
exchange”, as defined in the Tax Act (which currently includes the TSX and the NASDAQ), at the time of disposition, the Common
Shares generally will not constitute taxable Canadian property of a Holder at that time, unless at any time during the 60 month
period immediately preceding the disposition the following two conditions are met concurrently:



(i) the Holder, persons with whom the Holder did not
deal at arm’s length, and partnerships in which the Holder or such non-arm’s length person holds a membership interest
(either directly or indirectly through one or more partnerships), or the Holder together with all such persons, owned 25% or more
of the issued shares of any class or series of ESSA’s shares; and



(ii) more than 50% of the fair market value of the
Common Shares was derived directly or indirectly from one or any combination of real or immovable property situated in Canada,
“Canadian resource properties” (as defined in the Tax Act), “timber resource properties” (as defined in
the Tax Act) or an option, an interest or right in such property, whether or not such property exists.



Notwithstanding the foregoing, a Common Share may otherwise
be deemed to be taxable Canadian property to a Holder for purposes of the Tax Act in particular circumstances.



Holders whose Common Shares are taxable Canadian property should
consult their own tax advisors.



105







| | F. | Dividends and Paying Agents
| | -- | ---------------------------



Not applicable.



| | G. | Statement by Experts
| | -- | --------------------



The consolidated financial statements as of September 30, 2017,
2015 and 2014, and the related consolidated statements of loss and comprehensive loss, changes in shareholders’ equity, and
cash flows for the years ended September 30, 2017, 2015, and 2014, and a summary of significant accounting policies and other explanatory
information included in this Annual Report have been audited by Davidson & Company LLP, 1200-609 Granville Street, Vancouver,
B.C., Canada V7Y 1G6, an independent registered public accounting firm, as stated in their report appearing herein. Such financial
statements are included in reliance upon the report of such firm given upon their consent and authority as experts in accounting
and auditing.



| | H. | Documents on Display
| | -- | --------------------



This Annual Report and the related exhibits are available for
viewing at the offices of ESSA, 999 West Broadway, Suite 720, Vancouver, BC V5Z 1K5, telephone: (778) 331-0962. Copies of
ESSA’s financial statements and other continuous disclosure documents required under the Securities Act (Ontario) are available
for viewing on SEDAR at www.sedar.com. All of the documents referred to are in English.



You may also read and copy all or any portion of the Annual
Report of other information in the Company’s files in the SEC’s public reference room at 100 F. Street, NE, Room 1580,
Washington, D.C. 20549. You may request copies of these documents, upon payment of a duplicating fee, by writing to the Commission.
Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms.



| | I. | Subsidiary Information
| | -- | ----------------------



Not applicable.



| | ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
| | -------- | ----------------------------------------------------------



The Company is exposed to various market risks associated with
its underlying assets, liabilities and anticipated transactions. Refer to Item 18, ‘‘Financial Statements—Note
16 Financial Instruments and Risk’’ of the Company’s audited consolidated financial statements for the year ended
September 30, 2017, for a qualitative and quantitative discussion of the Company’s exposure to these market risks.



| | ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
| | -------- | ------------------------------------------------------



Not applicable.



PART
II



| | ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
| | -------- | -----------------------------------------------



| | A. | Indebtedness
| | -- | ------------



Not applicable.



| | B. | Dividends
| | -- | ---------



Not applicable.



106







| | ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
| | -------- | ----------------------------------------------------------------------------



| | A. | Not applicable.
| | -- | ---------------



| | B. | Not applicable.
| | -- | ---------------



| | C. | Not applicable.
| | -- | ---------------



| | D. | Not applicable.
| | -- | ---------------



| | E. | Not applicable.
| | -- | ---------------



| | ITEM 15. | CONTROLS AND PROCEDURES
| | -------- | -----------------------



| | A. | Disclosure Controls and Procedures
| | -- | ----------------------------------



The Company conducted an evaluation of the effectiveness of
the design and operation of its disclosure controls and procedures. The evaluation was conducted under the supervision and with
the participation of management, including the chief executive officer and chief financial officer, as of September 30, 2017. Based
on the evaluation, the Company’s chief executive officer and chief financial officer concluded that such disclosure controls
and procedures – as defined in Canada under National Instrument 52-109, Certification of Disclosure in Issuers’ Annual
and Interim Filings, and in Rules 13a-15(f) and 15d-15(f) promulgated under the United States Securities Exchange Act of 1934,
as amended (the U.S. Exchange Act) – are effective as at September 30, 2017.



It should be noted that while the Company’s disclosure
controls and procedures are designed to provide a reasonable level of assurance of achieving its objectives, its chief executive
officer and chief financial officer do not expect such disclosure controls and procedures or internal control over financial reporting
to prevent all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met.



| | B. | Management’s Annual Report on Internal Control
Over Financial Reporting
| | -- | -----------------------------------------------------------------------



Section 404 of the United States Sarbanes-Oxley Act, Management
Assessment of Internal Controls (“Section 404”), requires that management (a) have the responsibility for
establishing and maintaining an adequate internal control structure and procedure for financial reporting, and (b) assess and report
on the effectiveness of internal control over financial reporting annually. As of September 30, 2017, under the supervision and
with the participation of the Company's Chief Executive Officer and Chief Financial Officer, management has assessed the effectiveness
of the Company’s internal control over financial reporting based on the framework set forth in Internal Control – Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based
on this assessment, management has determined the Company’s internal control over financial reporting was effective as of
September 30, 2017. Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements
on a timely basis. Also, projections of any evaluation of internal controls over financial reporting to future periods are subject
to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies
may deteriorate.



| | C. | Report of the Independent Public Accounting Firm
| | -- | ------------------------------------------------



Not applicable. Under the JOBS Act, emerging growth companies
are exempt from Section 404(b) of Sarbanes-Oxley, which generally requires public companies to provide an independent auditor attestation
of management's assessment of the effectiveness of internal control over financial reporting. The Company qualifies as an emerging
growth company under the JOBS act.



| | D. | Changes in Internal Control over Financial Reporting
| | -- | ----------------------------------------------------



There were no significant changes to the Company’s internal
control over financial reporting in the year ended September 30, 2017.



107









| | ITEM 16A | AUDIT COMMITTEE FINANCIAL EXPERT
| | -------- | --------------------------------



The Board has determined that Franklin Berger, an individual
serving on the audit committee of the Company’s Board, is an audit committee financial expert and is independent as defined
in Item 16.A of Form 20-F under the Securities Exchange Act of 1934, as amended. See “Directors, Senior Management and
Employees – Directors and Senior Management” in Item 6.A of this Annual Report for a description of Franklin Berger’s
relevant financial experience.



| | ITEM 16B | CODE OF ETHICS
| | -------- | --------------



ESSA has adopted a Code of Business Conduct applicable to all
of its directors and employees, including its Chief Executive Officer and Chief Financial Officer, which is a “code of ethics”
as defined in Item 16B of Form 20-F promulgated by the SEC and which is a “code” under National Instrument NI 58-101. The
objective of the Code of Conduct is to (i) emphasize ESSA’s commitment to ethics and compliance with the laws, (ii) set forth
basic standards of ethical and legal behavior, (iii) provide reporting mechanisms for known or suspected ethical or legal violations
and (iv) help prevent and detect wrongdoing. The full text of the Code of Business Conduct is posted on ESSA’s website at
www.essapharma.com. Information contained on, or that can be accessed through, the Company’s website does not constitute
a part of this Annual Report and is not incorporated by reference herein. If ESSA makes any amendment to the Code of Business
Conduct or grants any waivers, including any implicit waiver, from a provision of the code of conduct, ESSA will disclose the nature
of such amendment or waiver on its website to the extent required by the rules and regulations of the SEC and the Canadian Securities
Administrators. Under Item 16B of the SEC’s Form 20-F, if a waiver or amendment of the Code of Business Conduct applies to
the Company’s principal executive officer, principal financial officer, principal accounting officer or controller and relates
to standards promoting any of the values described in Item 16B(b) of such Form 20-F, ESSA will disclose such waiver or amendment
on its website in accordance with the requirements of Instruction 4 to such Item 16B.



| | ITEM 16C | PRINCIPAL ACCOUNTANT FEES AND SERVICES
| | -------- | --------------------------------------



See Item 6.B “Board Practices” elsewhere
in this Annual Report.



| | ITEM 16D | EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES
| | -------- | ------------------------------------------------------



Not applicable.



| | ITEM 16E | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
| | -------- | ----------------------------------------------------------------------



Not applicable.



| | ITEM 16F | CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT
| | -------- | --------------------------------------------



Not applicable.



| | ITEM 16G | CORPORATE GOVERNANCE
| | -------- | --------------------



ESSA’s Common Shares are quoted for trading on the NASDAQ
under the symbol EPIX. As a Canadian corporation listed on the NASDAQ, ESSA is not required to comply with most of the NASDAQ corporate
governance standards, so long as it complies with Canadian corporate governance practices.



The following is a summary of the significant ways in which
ESSA’s corporate governance practices differ from those required to be followed by U.S. domestic issuers under the NASDAQ
corporate governance standards.



108







Quorum



ESSA has informed the NASDAQ that, as permitted by Rule 5615
of the NASDAQ Marketplace Rules, it intends to follow British Columbia practice with respect to quorum requirements in lieu of
those required by Rule 5620(c) of the NASDAQ Marketplace Rules (which provides that a quorum for a shareholder meeting of a NASDAQ-listed
company must be at least 33-1/3% of ESSA’s outstanding common shares). Under the Articles, the quorum for the transaction
of business at a meeting of shareholders is one or more persons who are, or who represent by proxy, one or more shareholders who
in the aggregate hold at least 10% of ESSA’s issued shares entitled to be voted at the meeting. If there is only one shareholder
entitled to vote at a meeting of shareholders, the quorum is that shareholder, present in person or by proxy. ESSA’s quorum
requirements are not prohibited by the requirements of the Act, applicable Canadian securities laws or the rules of the TSX, the
primary market for the Common Shares in Canada.



Director Independence



Rule 5605(b)(1) of the NASDAQ Marketplace Rules requires that
a majority of the members of the board of directors of a listed company must be “independent directors” as defined
in Rule 5605(a)(2). ESSA has informed the NASDAQ that it follows applicable Canadian laws with respect to independence requirements,
which do not require that a majority of the members of the board of directors be independent. Upon the designation of Dr. David
Parkinson as ESSA's Chief Executive Officer in January 2016, the number of independent members of the Board was reduced to a minority
(three of seven). Further, Rule 5605(d)(2) of the NASDAQ Marketplace Rules requires that the compensation committee must be comprised
of "independent directors" as defined in Rule 5605(a)(2) of the NASDAQ Marketplace Rules.   ESSA has informed
the NASDAQ that it follows applicable Canadian laws with respect to compensation committee composition, which do not mandate a
compensation committee comprised entirely of independent directors. Scott Requadt, who is not an independent director, was appointed
to ESSA's compensation committee on March 10, 2016.



| | ITEM 16H | MINE SAFETY DISCLOSURE
| | -------- | ----------------------



Not applicable.



PART
III



| | ITEM 17. | FINANCIAL STATEMENTS
| | -------- | --------------------



See Item 18 “Financial Statements” located
elsewhere in this Annual Report.



| | ITEM 18. | FINANCIAL STATEMENTS
| | -------- | --------------------



The following attached financial statements are attached hereto,
incorporated herein and found immediately following the text of this Annual Report:



| | 1. | The Company’s audited consolidated financial statements as at and for the years ended September 30, 2017, 2016, and 2015, together with the notes thereto and the auditor’s report thereon.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





109







ITEM 19.       EXHIBITS









|1.   | Articles of Incorporation*                                                                                                                                              
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                         
|4    | Material Contracts                                                                                                                                                      
|     |                                                                                                                                                                         
|     | 4.1                                                                                                                                                                     
|     |                                                                                                                                                                         
|     | 4.2                                                                                                                                                                     
|     |                                                                                                                                                                         
|     | 4.3                                                                                                                                                                     
|     |                                                                                                                                                                         
|     | 4.4                                                                                                                                                                     
|     |                                                                                                                                                                         
|     | 4.5                                                                                                                                                                     
|     |                                                                                                                                                                         
|     | 4.6                                                                                                                                                                     
|     |                                                                                                                                                                         
|     | 4.7                                                                                                                                                                     
|     |                                                                                                                                                                         
|8.1  | List of Subsidiaries*                                                                                                                                                   
|     |                                                                                                                                                                         
|12.1 | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities and Exchange Act of 1934, as amended.                                         
|     |                                                                                                                                                                         
|12.2 | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities and Exchange Act of 1934, as amended.                                         
|     |                                                                                                                                                                         
|13.1 | Certification by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as added by Section 906 of the Sarbanes – Oxley Act of 2002.









| | † | Confidential treatment has been requested for portions of this document. The omitted portions of this document have been filed with the Securities and Exchange Commission.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------







|*     | Previously filed (No. 377-00939) with the SEC on Form 20-F of the Company on February 24, 2015.
|----- | -----------------------------------------------------------------------------------------------
|**    | Previously filed (No. 001-37410) with the SEC on Form 20-F of the Company on December 11, 2015.
|***   | Previously filed (No. 377-00939) with the SEC on Form 20-F of the Company on April 7, 2015.    
|****  | Previously filed (No. 001-37410) with the SEC on Form 20-F of the Company on December 14, 2016.
|***** | Previously filed (No. 001-37410) with the SEC on Form 6-K of the Company on November 21, 2016. 





SIGNATURES



The Registrant hereby certifies that it meets all of the requirements
for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.



|                         | ESSA PHARMA INC.
|------------------------ | ----------------
|                         |                 
|DATED: December 11, 2017 |                 
|                         |                 
|                         | By:             
|                         |                 
|                         |                 



110







INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                                                                                            |  | Page
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                                                                                            |  |     
|The Company’s audited consolidated financial statements as at and for the years ended September 30, 2017, 2016, and 2015, together with the notes thereto and the auditor’s report thereon. |  | F-2 





F-1







Y:\TopVin\2017\12 Dec\08 Dec\Shift III\tv481105-Essa Pharma Inc\Draft\03-Production



CONSOLIDATED
FINANCIAL STATEMENTS

(Expressed
in United States dollars)



FOR
THE YEARS ENDED SEPTEMBER 30, 2017, 2016 AND 2015



F-2











REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM



To the Shareholders and Directors of

ESSA Pharma Inc.





We have audited the accompanying consolidated
financial statements of ESSA Pharma Inc., which comprise the consolidated statements of financial position as of September 30,
2017 and 2016, and the related consolidated statements of loss and comprehensive loss, changes in shareholders’ equity (deficiency),
and cash flows for the years ended September 30, 2017, 2016, and 2015 and a summary of significant accounting policies and other
explanatory information.



Management’s Responsibility
for the Consolidated Financial Statements



Management is responsible for the preparation
and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary
to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or
error.



Auditors’ Responsibility



Our responsibility is to express an opinion
on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted
auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement.



An audit involves performing procedures
to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend
on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the consolidated financial statements.



We believe that the audit evidence we
have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.









F-3









Opinion



In our opinion, these consolidated financial
statements present fairly, in all material respects, the financial position of ESSA Pharma Inc. as at September 30, 2017 and 2016
and its financial performance and its cash flows for the years ended September 30, 2017, 2016, and 2015 in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board.



Emphasis of Matter



Without qualifying our opinion, we draw
attention to Note 1 in the consolidated financial statements which indicate that ESSA Pharma Inc. has suffered recurring losses
from operations and has a net capital deficiency. These matters, along with the other matters set forth in Note 1, indicate the
existence of material uncertainties that raises substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.



“DAVIDSON & COMPANY LLP”





|Vancouver, Canada | Chartered Professional Accountants
|----------------- | ----------------------------------
|                  |                                   
|December 11, 2017 |                                   



F-4







|ESSA PHARMA INC.                             
|---------------------------------------------
|CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|(Expressed in United States dollars)         
|AS AT SEPTEMBER 30                           



|                                                        |  | 2017 |             |   | 2016 |  
|------------------------------------------------------- |  | ---- | ----------- | - | ---- | -
|                                                        |  |      |             |   |      |  
|ASSETS                                                  |  |      |             |   |      |  
|                                                        |  |      |             |   |      |  
|Current                                                 |  |      |             |   |      |  
|Cash                                                    |  | $    | 3,957,185   |   |      | $
|Receivables                                             |  |      | 29,475      |   |      |  
|Prepaids (Note 4)                                       |  |      | 1,072,103   |   |      |  
|                                                        |  |      |             |   |      |  
|                                                        |  |      | 5,058,763   |   |      |  
|                                                        |  |      |             |   |      |  
|Equipment
    (Note 5)                                  |  |      | 99,882      |   |      |  
|Intangible assets(Note 6)                               |  |      | 237,326     |   |      |  
|Deferred
    financing costs (Note 9)                   |  |      | 211,073     |   |      |  
|                                                        |  |      |             |   |      |  
|                                                        |  |      |             |   |      |  
|Total assets                                            |  | $    | 5,607,044   |   |      | $
|                                                        |  |      |             |   |      |  
|LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)       |  |      |             |   |      |  
|                                                        |  |      |             |   |      |  
|Current                                                 |  |      |             |   |      |  
|Accounts payable and accrued liabilities                |  | $    | 1,641,103   |   |      | $
|Current portion of long-term debt (Note 7)              |  |      | 2,026,588   |   |      |  
|Income tax payable                                      |  |      | 333,887     |   |      |  
|                                                        |  |      |             |   |      |  
|                                                        |  |      | 4,001,578   |   |      |  
|                                                        |  |      |             |   |      |  
|Long-term debt(Note 7)                                  |  |      | 5,933,092   |   |      |  
|Derivative
    liabilities (Note 8)                     |  |      | 170,743     |   |      |  
|                                                        |  |      |             |   |      |  
|Total liabilities                                       |  |      | 10,105,413  |   |      |  
|                                                        |  |      |             |   |      |  
|Shareholders' equity (deficiency)                       |  |      |             |   |      |  
|Share capital (Note 9)                                  |  |      | 25,980,117  |   |      |  
|Reserves (Note 10)                                      |  |      | 4,562,005   |   |      |  
|Accumulated other comprehensive loss                    |  |      | (2,076,479  | ) |      |  
|Deficit                                                 |  |      | (32,964,012 | ) |      |  
|                                                        |  |      |             |   |      |  
|                                                        |  |      | (4,498,369  | ) |      |  
|                                                        |  |      |             |   |      |  
|Total liabilities and shareholders’ equity (deficiency) |  | $    | 5,607,044   |   |      | $



Nature and continuance of operations (Note
1)

Commitments (Note 17)

Subsequent events (Note 19)



|On behalf of the Board on December 13, 2017 |         
|------------------------------------------- | --------
|                                            |         
|“David R. Parkinson”                        | Director
|                                            |         

The accompanying notes are an integral part
of these consolidated financial statements.



F-5







|ESSA PHARMA INC.                                      
|------------------------------------------------------
|CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
|(Expressed in United States dollars)                  
|FOR THE YEARS ENDED SEPTEMBER 30                      



|                                                         |  | 2017 |             |   | 2016 |   |             | 2015 | 
|-------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | ---- | 
|                                                         |  |      |             |   |      |   |             |      | 
|OPERATING EXPENSES                                       |  |      |             |   |      |   |             |      | 
|Research and development, net of recoveries (Note 18)    |  | $    | 5,726,366   |   |      | $ | 13,060,201  |      | 
|Financing costs                                          |  |      | 784,583     |   |      |   | 937,845     |      | 
|General and administration, net of recoveries (Note 18)  |  |      | 5,140,921   |   |      |   | 5,644,118   |      | 
|                                                         |  |      |             |   |      |   |             |      | 
|Total operating expenses                                 |  |      | (11,651,870 | ) |      |   | (19,642,164 | )    | 
|                                                         |  |      |             |   |      |   |             |      | 
|Foreign exchange                                         |  |      | (36,497     | ) |      |   | 79,543      |      | 
|Gain (loss) on derivative liability (Note 8)             |  |      | 7,305,746   |   |      |   | 6,574,105   |      | 
|                                                         |  |      |             |   |      |   |             |      | 
|Net loss for the year before taxes                       |  |      | (4,382,621  | ) |      |   | (12,988,516 | )    | 
|                                                         |  |      |             |   |      |   |             |      | 
|Income tax expense (Note 13)                             |  |      | (340,757    | ) |      |   | (151,272    | )    | 
|                                                         |  |      |             |   |      |   |             |      | 
|Net loss for the year                                    |  |      | (4,723,378  | ) |      |   | (13,139,788 | )    | 
|                                                         |  |      |             |   |      |   |             |      | 
|OTHER COMPREHENSIVE LOSS                                 |  |      |             |   |      |   |             |      | 
|Cumulative translation adjustment                        |  |      | -           |   |      |   | (337,763    | )    | 
|                                                         |  |      |             |   |      |   |             |      | 
|Comprehensive loss for the year                          |  | $    | (4,723,378  | ) |      | $ | (13,477,551 | )    | 
|                                                         |  |      |             |   |      |   |             |      | 
|Basic and diluted loss per common share                  |  | $    | (0.16       | ) |      | $ | (0.49       | )    | 
|                                                         |  |      |             |   |      |   |             |      | 
|Weighted average number of common shares
    outstanding |  |      | 29,098,725  |   |      |   | 26,903,834  |      | 



The accompanying notes are an integral part
of these consolidated financial statements.



F-6









|ESSA PHARMA INC.                     
|-------------------------------------
|CONSOLIDATED STATEMENTS OF CASH FLOWS
|(Expressed in United States dollars) 
|FOR THE YEARS ENDED SEPTEMBER 30     



|                                                    |  | 2017 |             |   | 2016 |   |             | 2015 | 
|--------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | ---- | 
|                                                    |  |      |             |   |      |   |             |      | 
|CASH FLOWS FROM OPERATING ACTIVITIES                |  |      |             |   |      |   |             |      | 
|Loss for the year                                   |  | $    | (4,723,378  | ) |      | $ | (13,139,788 | )    | 
|Items not affecting cash:                           |  |      |             |   |      |   |             |      | 
|Amortization                                        |  |      | 46,145      |   |      |   | 66,181      |      | 
|(Gain) loss on derivative liability                 |  |      | (7,305,746  | ) |      |   | (6,574,105  | )    | 
|Financing costs                                     |  |      | 784,583     |   |      |   | 910,101     |      | 
|Product development and relocation grant            |  |      | (5,192,799  | ) |      |   | -           |      | 
|Unrealized foreign exchange                         |  |      | (28,866     | ) |      |   | (140,139    | )    | 
|Share-based payments (Note 10)                      |  |      | 758,927     |   |      |   | 1,246,946   |      | 
|                                                    |  |      |             |   |      |   |             |      | 
|Changes in non-cash working capital items:          |  |      |             |   |      |   |             |      | 
|Receivables                                         |  |      | (14,649     | ) |      |   | 48,978      |      | 
|Prepaid expenses                                    |  |      | (53,871     | ) |      |   | 644,089     |      | 
|Accounts payable and accrued liabilities            |  |      | (1,867,853  | ) |      |   | 1,545,577   |      | 
|Income tax payable                                  |  |      | 242,696     |   |      |   | 91,191      |      | 
|                                                    |  |      |             |   |      |   |             |      | 
|Net cash used in operating activities               |  |      | (17,354,811 | ) |      |   | (15,300,969 | )    | 
|                                                    |  |      |             |   |      |   |             |      | 
|CASH FLOWS FROM INVESTING ACTIVITIES                |  |      |             |   |      |   |             |      | 
|Acquisition of equipment                            |  |      | -           |   |      |   | (9,983      | )    | 
|                                                    |  |      |             |   |      |   |             |      | 
|Net cash used in investing activities               |  |      | -           |   |      |   | (9,983      | )    | 
|                                                    |  |      |             |   |      |   |             |      | 
|CASH FLOWS FROM FINANCING ACTIVITIES                |  |      |             |   |      |   |             |      | 
|Advance on product development and relocation grant |  |      | 5,192,799   |   |      |   | 3,786,667   |      | 
|Proceeds on private placement                       |  |      | -           |   |      |   | 19,999,992  |      | 
|Proceeds on loan advance                            |  |      | 8,000,000   |   |      |   | -           |      | 
|Issuance costs                                      |  |      | -           |   |      |   | (1,080,189  | )    | 
|Financing costs                                     |  |      | (220,937    | ) |      |   | -           |      | 
|Interest paid                                       |  |      | (436,944    | ) |      |   | -           |      | 
|Deferred financing costs                            |  |      | (211,073    | ) |      |   | -           |      | 
|Options exercised                                   |  |      | 2,939       |   |      |   | 36,465      |      | 
|Warrants exercised                                  |  |      | -           |   |      |   | 1,194       |      | 
|                                                    |  |      |             |   |      |   |             |      | 
|Net cash provided by financing activities           |  |      | 12,326,784  |   |      |   | 22,744,129  |      | 
|                                                    |  |      |             |   |      |   |             |      | 
|Effect of foreign exchange on cash                  |  |      | 117         |   |      |   | (27,370     | )    | 
|                                                    |  |      |             |   |      |   |             |      | 
|Change in cash for the year                         |  |      | (5,027,910  | ) |      |   | 7,405,807   |      | 
|                                                    |  |      |             |   |      |   |             |      | 
|Cash, beginning of year                             |  |      | 8,985,095   |   |      |   | 1,579,288   |      | 
|                                                    |  |      |             |   |      |   |             |      | 
|Cash, end of year                                   |  | $    | 3,957,185   |   |      | $ | 8,985,095   |      | 



Supplemental Cash Flow Information (Note
11)



The accompanying notes are an integral part
of these consolidated financial statements.



F-7







|ESSA PHARMA INC.                                                      
|----------------------------------------------------------------------
|CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIENCY)
|(Expressed in United States dollars)                                  



|                                     |  |               |            |   |                      |   |            |                                                                                                  |  |   | Reserves                 |   |  |          |           |   |                                       |   |         |         | 
|------------------------------------ |  | ------------- | ---------- | - | -------------------- | - | ---------- | ------------------------------------------------------------------------------------------------ |  | - | ------------------------ | - |  | -------- | --------- | - | ------------------------------------- | - | ------- | ------- | 
|                                     |  | Share capital |            |   | Preferred
    shares |   |            | Special
                                                                                warrants |  |   | Share-based
    payments |   |  | Warrants |           |   | Cumulative
    translation adjustment |   |         | Deficit | 
|                                     |  |               |            |   |                      |   |            |                                                                                                  |  |   |                          |   |  |          |           |   |                                       |   |         |         | 
|Balance, September 30, 2014          |  | $             | 4,193,735  |   |                      | $ | 2,836,268  |                                                                                                  |  | $ | -                        |   |  | $        | 905,853   |   |                                       | $ | 60,984  |         | 
|Private placement                    |  |               | -          |   |                      |   | -          |                                                                                                  |  |   | 1,208,944                |   |  |          | -         |   |                                       |   | -       |         | 
|Issuance costs                       |  |               | -          |   |                      |   | -          |                                                                                                  |  |   | (169,800                 | ) |  |          | -         |   |                                       |   | 44,434  |         | 
|Conversion of special warrants       |  |               | -          |   |                      |   | 1,039,144  |                                                                                                  |  |   | (1,039,144               | ) |  |          | -         |   |                                       |   | -       |         | 
|Private placement – special warrants |  |               | -          |   |                      |   | -          |                                                                                                  |  |   | 11,999,994               |   |  |          | -         |   |                                       |   | -       |         | 
|Issuance costs                       |  |               | -          |   |                      |   | -          |                                                                                                  |  |   | (1,026,564               | ) |  |          | -         |   |                                       |   | -       |         | 
|Conversion of preferred shares       |  |               | 3,872,737  |   |                      |   | (3,875,412 | )                                                                                                |  |   | 2,675                    |   |  |          | -         |   |                                       |   | -       |         | 
|Conversion of special warrants       |  |               | 10,976,105 |   |                      |   | -          |                                                                                                  |  |   | (10,976,105              | ) |  |          | -         |   |                                       |   | -       |         | 
|Options exercised                    |  |               | 145,285    |   |                      |   | -          |                                                                                                  |  |   | -                        |   |  |          | (61,199   | ) |                                       |   | -       |         | 
|Warrants exercised                   |  |               | 231,142    |   |                      |   | -          |                                                                                                  |  |   | -                        |   |  |          | -         |   |                                       |   | (59,594 | )       | 
|Share-based payments                 |  |               | -          |   |                      |   | -          |                                                                                                  |  |   | -                        |   |  |          | 1,510,542 |   |                                       |   | -       |         | 
|Foreign currency adjustment          |  |               | -          |   |                      |   | -          |                                                                                                  |  |   | -                        |   |  |          | -         |   |                                       |   | -       |         | 
|Loss for the year                    |  |               | -          |   |                      |   | -          |                                                                                                  |  |   | -                        |   |  |          | -         |   |                                       |   | -       |         | 
|                                     |  |               |            |   |                      |   |            |                                                                                                  |  |   |                          |   |  |          |           |   |                                       |   |         |         | 
|Balance, September 30, 2015          |  | $             | 19,419,004 |   |                      | $ | -          |                                                                                                  |  | $ | -                        |   |  | $        | 2,355,196 |   |                                       | $ | 45,824  |         | 
|Private placement                    |  |               | 6,581,815  |   |                      |   | -          |                                                                                                  |  |   | -                        |   |  |          | -         |   |                                       |   | -       |         | 
|Issuance costs                       |  |               | (170,091   | ) |                      |   | -          |                                                                                                  |  |   | -                        |   |  |          | -         |   |                                       |   | -       |         | 
|Options exercised                    |  |               | 142,386    |   |                      |   | -          |                                                                                                  |  |   | -                        |   |  |          | (105,921  | ) |                                       |   | -       |         | 
|Warrants exercised                   |  |               | 1,628      |   |                      |   | -          |                                                                                                  |  |   | -                        |   |  |          | -         |   |                                       |   | (434    | )       | 
|Share-based payments                 |  |               | -          |   |                      |   | -          |                                                                                                  |  |   | -                        |   |  |          | 1,246,946 |   |                                       |   | -       |         | 
|Foreign currency adjustment          |  |               | -          |   |                      |   | -          |                                                                                                  |  |   | -                        |   |  |          | -         |   |                                       |   | -       |         | 
|Effect of functional currency change |  |               | -          |   |                      |   | -          |                                                                                                  |  |   | -                        |   |  |          | -         |   |                                       |   | 263,903 |         | 
|Loss for the year                    |  |               | -          |   |                      |   | -          |                                                                                                  |  |   | -                        |   |  |          | -         |   |                                       |   | -       |         | 
|                                     |  |               |            |   |                      |   |            |                                                                                                  |  |   |                          |   |  |          |           |   |                                       |   |         |         | 
|Balance, September 30, 2016          |  | $             | 25,974,742 |   |                      | $ | -          |                                                                                                  |  | $ | -                        |   |  | $        | 3,496,221 |   |                                       | $ | 309,293 |         | 
|Options exercised                    |  |               | 5,375      |   |                      |   | -          |                                                                                                  |  |   | -                        |   |  |          | (2,436    | ) |                                       |   | -       |         | 
|Share-based payments                 |  |               | -          |   |                      |   | -          |                                                                                                  |  |   | -                        |   |  |          | 758,927   |   |                                       |   | -       |         | 
|Loss for the year                    |  |               | -          |   |                      |   | -          |                                                                                                  |  |   | -                        |   |  |          | -         |   |                                       |   | -       |         | 
|                                     |  |               |            |   |                      |   |            |                                                                                                  |  |   |                          |   |  |          |           |   |                                       |   |         |         | 
|Balance, September 30, 2017          |  | $             | 25,980,117 |   |                      | $ | -          |                                                                                                  |  | $ | -                        |   |  | $        | 4,252,712 |   |                                       | $ | 309,293 |         | 



The accompanying notes are an integral part
of these consolidated financial statements.



F-8







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 1. | NATURE AND CONTINUANCE OF OPERATIONS
| | -- | ------------------------------------



Nature of Operations



ESSA Pharma Inc. (the “Company”)
was incorporated under the laws of the Province of British Columbia on January 6, 2009. The Company’s head office address
is Suite 720 – 999 West Broadway, Vancouver, BC, V5Z 1K5. The registered and records office address is the 26th
Floor at 595 Burrard Street, Three Bentall Centre, Vancouver, BC, V7X 1L3. The Company is listed on the NASDAQ Capital Market (“NASDAQ”)
under the symbol “EPIX”, and on the Toronto Venture Exchange (“TSX-V”) under the symbol “EPI”.



The Company is focused on the development
of small molecule drugs for the treatment of prostate cancer. The Company has acquired a license to certain patents (the “NTD
Technology”) which were the joint property of the British Columbia Cancer Agency and the University of British Columbia.
As at September 30, 2017, no products are in commercial production or use. From November 2015 until September 2017, the Company’s
primary activity was the Phase I clinical development of clinical candidate EPI-506. On September 11, 2017, the Company announced
its decision to discontinue further clinical development of EPI-506 and to implement a corporate restructuring plan to focus research
and development resources on its next-generation compounds. The restructuring included a decrease in headcount and reduction of
operational expenditures related to the clinical program.



Going Concern



These financial statements have been
prepared in accordance with International Financial Reporting Standards (“IFRS”) assuming the Company will continue
on a going-concern basis. The Company has incurred losses and negative operating cash flows since inception. The Company incurred
a net loss of $4,723,378 during the year ended September 30, 2017 and has an accumulated deficit of $32,964,012. The ability of
the Company to continue as a going concern in the long-term depends upon its ability to develop profitable operations and to continue
to raise adequate financing.  As at September 30, 2017, the Company has not advanced its research into a commercially viable
product. The Company’s continuation as a going concern is dependent upon the successful development of its NTD Technology
to a commercial standard. Management has forecasted that the Company’s current working capital will not be sufficient to
execute its planned expenditures for the coming year. These matters indicate the existence of material uncertainties that raises
substantial doubt about the Company’s ability to continue as a going concern.



During the year ended September 30,
2017, the Company drew down $8,000,000 on a term credit loan facility agreement. The term credit loan facility is subject to certain
covenants which, if triggered, could affect the timing of repayment (Note 7). During the year ended September 30, 2017, the Company
also received $5,192,799, a portion of the third and final tranche of Cancer Prevention Research Institute of Texas (“CPRIT”)
funding of $5,422,000 (Note 17). Management continues to seek sources of additional financing which would assure continuation of
the Company’s operations and research programs. However, there is no certainty that such financing will be provided or provided
on favorable terms. Management believes that it will complete a financing in sufficient time to continue to execute its planned
expenditures without interruption.



| | 2. | BASIS OF PRESENTATION
| | -- | ---------------------



Statement of Compliance



These consolidated financial statements,
including comparatives, have been prepared using accounting policies consistent with IFRS issued by the International Accounting
Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).



Basis of Presentation



The consolidated financial statements
have been prepared on a historical cost basis except for certain financial assets measured at fair value. In addition, these consolidated
financial statements have been prepared using the accrual basis of accounting, except for cash flow information.



F-9







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 2. | BASIS OF PRESENTATION(cont’d...)
| | -- | ------------------------------



Basis of Presentation(cont’d...)



All amounts expressed in these consolidated
financial statements and the accompanying notes are expressed in United States dollars, except per share data and where otherwise
indicated. References to “$” are to United States dollars and references to “C$” are to Canadian dollars.



Basis of Consolidation



The consolidated financial statements
comprise the accounts of ESSA Pharma Inc., the parent company, and its wholly-owned subsidiary, ESSA Pharmaceuticals Corp., after
the elimination of all material intercompany balances and transactions.



Subsidiaries



Subsidiaries are all entities over
which the Company has exposure to variable returns from its involvement and has the ability to use power over the investee to affect
its returns. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when
assessing whether the Company controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred
to the Company until the date on which control ceases.



The accounts of subsidiaries are
prepared for the same reporting period as the parent company, using consistent accounting policies. Inter-company transactions,
balances and unrealized gains or losses on transactions are eliminated upon consolidation.



Functional and Presentation Currency



The functional
currency of an entity is the currency of the primary economic environment in which the entity operates. From inception to January
1, 2016, the functional currency of the Company has been the Canadian dollar and its subsidiary’s the United States dollar.
The functional currency determinations were conducted through an analysis of the consideration factors identified in IAS 21, The
Effects of Changes in Foreign Exchange Rates. The financing completed in January 2016 and changes to the Company’s operations
have resulted in a change to the currency in which the Company’s management conducts its operating, capital and financing
decisions. Consequently, the functional currency of the Company became the US$ effective January 1, 2016.



These financial
statements are presented in United States dollars. All financial information is expressed in United States dollars unless otherwise
stated.



Estimates



The Company makes estimates and assumptions
about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated
based on historical experience and other factors, including expectations of future events that are believed to be reasonable under
the circumstances. In the future, actual results may differ from these estimates and assumptions.



The effect of a change in an accounting
estimate is recognized prospectively by including it in comprehensive income in the period of the change, if the change affects
that period only, or in the period of the change and future periods, if the change affects both. Significant assumptions about
the future and other sources of estimation uncertainty that management has made at the statement of financial position date, that
could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ
from assumptions that have been made, relate to the following key estimates:



F-10







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 2. | BASIS OF PRESENTATION(cont’d...)
| | -- | ------------------------------



Estimates(cont’d...)



Intangible Assets – impairment



The application of the Company’s
accounting policy for intangible assets expenditures requires judgment in determining whether it is likely that future economic
benefits will flow to the Company, which may be based on assumptions about future events or circumstances. Estimates and assumptions
may change if new information becomes available. If, after expenditures are capitalized, information becomes available suggesting
that the recovery of expenditures is unlikely, the amount capitalized is written off in profit or loss in the period the new information
becomes available.



Following initial recognition, the
Company carries the value of intangible assets at cost less accumulated amortization and any accumulated impairment losses. Amortization
is recorded on a straight-line basis based upon management’s estimate of the useful life and residual value. The estimates
are reviewed at least annually and are updated if expectations change as a result of technical obsolescence or legal and other
limits to use. A change in the useful life or residual value will impact the reported carrying value of the intangible assets resulting
in a change in related amortization expense.



Product development and relocation
grant



Pursuant to the terms of the Company’s
grant from the Cancer Prevention Research Institute of Texas (“CPRIT”), the Company must meet certain terms and conditions
to qualify for the grant funding. The Company has assessed its performance relative to these terms as detailed in Note 17 and has
judged that there is reasonable assurance the Company will meet the terms of the grant and qualify for the funding. The Company
has therefore recognized in profit or loss, as recoveries of research and development expenditures, a portion of the grant that
represents expenses the Company has incurred to date under the grant parameters. The expenses are subject to assessment by CPRIT
for compliance with the grant regulations which may result in certain expenses being denied and incurred in a future period.



Long-term debt



The Company has made certain estimates
regarding the expected timing of and value of cash flows with respect to long-term debt. The estimates will fluctuate in accordance
with changes in interest rates and any prepayments made, should the Company elect to do so (Note 7).



Derivative financial instruments



Certain warrants are treated as derivative
financial liabilities. The estimated fair value, based on the Black-Scholes model, is adjusted on a quarterly basis with gains
or losses recognized in the statement of loss and comprehensive loss. The Black-Scholes model is based on significant assumptions
such as volatility, dividend yield, expected term and liquidity discounts (Note 8).



Share-based payments and compensation



The Company has applied estimates
with respect to the valuation of shares issued for non-cash consideration. Shares are valued at the fair value of the equity instruments
granted at the date the Company receives the goods or services.



F-11







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 2. | BASIS OF PRESENTATION(cont’d...)
| | -- | ------------------------------



Estimates(cont’d...)



Share-based payments and compensation(cont’d...)



The Company measures the cost of
equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are
granted. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model,
which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs
to the valuation model including the fair value of the underlying common shares, the expected life of the share option, volatility
and dividend yield and making assumptions about them. The Company makes reference to prices quoted on the TSX and NASDAQ. The assumptions
and models used for estimating fair value for share-based payment transactions are discussed in Note 10.



| | 3. | SIGNIFICANT ACCOUNTING POLICIES
| | -- | -------------------------------



Foreign exchange



The functional
currency of an entity is the currency of the primary economic environment in which the entity operates. The functional currency
of the Company is the United States dollar and its subsidiary’s is the United States dollar. The functional currency determinations
were conducted through an analysis of the consideration factors identified in IAS 21, The Effects of Changes in Foreign Exchange
Rates.



Transactions in
currencies other than the United States dollar are recorded at exchange rates prevailing on the dates of the transactions. At the
end of each reporting period, monetary assets and liabilities of the Company that are denominated in foreign currencies are translated
at the period end exchange rate while non-monetary assets and liabilities are translated at historical rates. Revenues and expenses
are translated at the exchange rates approximating those in effect on the date of the transactions. Exchange gains and losses arising
on translation are included in comprehensive loss.



On translation
of the entities whose functional currency is other than the United States dollar, revenues and expenses are translated at the exchange
rates approximating those in effect on the date of the transactions. Assets and liabilities are translated at the rate of exchange
at the reporting date. Exchange gains and losses, including results of re-translation, are recorded in the foreign currency translation
reserve.



Equipment



The Company has acquired office and
computer equipment for use in its research and business activities.



Depreciation is recognized using
the straight-line method at the rate of 30% per annum for computer equipment and 20% for office equipment.



Intangible assets



The Company owns intangible assets
consisting of patent licences. Intangible assets acquired separately are measured on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses. Subsequent
expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset to which they
relate. All other expenditures are recognized in profit or loss as incurred.



The Company does not hold any intangible
assets with indefinite lives.



F-12







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 3. | SIGNIFICANT ACCOUNTING POLICIES(cont’d...)
| | -- | ----------------------------------------



Intangible assets (cont’d...)



Intangible assets with finite lives
are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset
may be impaired. The amortization method and amortization period of an intangible asset with a finite life is reviewed at least
annually. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the
asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting
estimates. The amortization expense on intangible assets with finite lives is recognized in general and administrative expenses.



Amortization is recognized in profit
or loss on a straight-line basis over the estimated useful lives of intangible assets from the date they are available for use
to September 15, 2030.



Impairment of long-lived assets



The Company’s long-lived assets
are reviewed for indications of impairment at the date of preparing each statement of financial position. If indication of impairment
exists, the asset’s recoverable amount is estimated.



An impairment loss is recognized
when the carrying value of an asset, or its cash-generating unit, exceeds its recoverable amount. A cash-generating unit is the
smallest identifiable group of assets that generates cash inflows that are largely independent of cash inflows from other assets
or group of assets. For the purpose of impairment testing, the Company determined it has one cash-generating unit.



The recoverable amount is the greater
of the asset’s fair value less cost to sell and value in use. In assessing fair value less cost to sell for the cash-generating
unit, the Company’s market capitalization is considered.



Provisions



Provisions are recorded when a present
legal, statutory or constructive obligation exists as a result of past events where it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation
can be made.



The amount recognized as a provision
is the best estimate of the consideration required to settle the present obligation at the statement of financial position date,
taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows
estimated to settle the present obligation, if the effect is material, its carrying amount is the present value of those cash flows.



Government assistance



Government grants, including grants
from similar bodies, consisting of investment tax credits are recorded as a reduction of the related expense or cost of the asset
acquired. Government grants are recognized when there is reasonable assurance that the Company has met the requirements of the
approved grant program and there is reasonable assurance that the grant will be received.



Research grants that compensate the
Company for expenses incurred are recognized in profit or loss in reduction thereof on a systematic basis in the same years in
which the expenses are recognized. Grants that compensate the Company for the cost of an asset are recognized in profit or loss
on a systematic basis over the useful life of the asset.



Research and development costs



Expenditures on research and development
activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, are recognized in
profit or loss as incurred. Investment tax credits related to current expenditures are included in the determination of net income
as the expenditures are incurred when there is reasonable assurance they will be realized.



F-13







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 3. | SIGNIFICANT ACCOUNTING POLICIES(cont’d...)
| | -- | ----------------------------------------



Research and development costs(cont’d...)



Development activities involve a
plan or design for the production of new or substantially improved products and processes. Development expenditures are capitalized
only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic
benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset.
These criteria will be deemed by the Company to have been met when revenue is received by the Company and a determination that
it has sufficient resources to market and sell its product offerings. Upon a determination that the criteria to capitalize development
expenditures have been met, the expenditures capitalized will include the cost of materials, direct labour, and overhead costs
that are directly attributable to preparing the asset for its intended use. Other development expenditures will be expensed as
incurred.



Capitalized development expenditures
will be measured at cost less accumulated amortization and accumulated impairment losses. No development costs have been capitalized
to date.



Financial instruments



Financial assets



The Company classifies its financial
assets into one of the following categories, depending on the purpose for which the asset was acquired. The Company's accounting
policy for each category is as follows:



Fair value through profit or loss
-This category comprises derivatives, or assets acquired or incurred principally for the purpose of selling or repurchasing
it in the near term. They are carried in the statement of financial position at fair value with changes in fair value recognized
through profit or loss.



Loans and receivables -These
assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are
carried at amortized cost less any provision for impairment. Individually significant receivables are considered for impairment
when they are past due or when other objective evidence is received that a specific counterparty will default.



Held-to-maturity investments-
These assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Company's management
has the positive intention and ability to hold to maturity. These assets are measured at amortized cost using the effective interest
method. If there is objective evidence that the investment is impaired, determined by reference to external credit ratings and
other relevant indicators, the financial asset is measured at the present value of estimated future cash flows. Any changes to
the carrying amount of the investment, including impairment losses, are recognized through profit or loss.



Available-for-sale- Non-derivative
financial assets not included in the above categories are classified as available-for-sale. They are carried at fair value with
changes in fair value recognized directly in equity. Where a decline in the fair value of an available-for-sale financial asset
constitutes objective evidence of impairment, the amount of the loss is removed from equity and recognized through other comprehensive
income (loss).



All financial assets except for those
at fair value through profit or loss are subject to review for impairment at least at each reporting date. Financial assets are
impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria
to determine impairment are applied for each category of financial assets, which are described above.



The Company has classified its cash
at fair value through profit or loss. The Company’s receivables are classified as loans and receivables.



F-14







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 3. | SIGNIFICANT ACCOUNTING POLICIES(cont’d...)
| | -- | ----------------------------------------



Financial instruments(cont’d...)



Financial liabilities



The Company classifies its financial
liabilities into one of two categories, depending on the purpose for which the liability was acquired. The Company's accounting
policy for each category is as follows:



Fair value through profit or loss- This category comprises derivatives, or liabilities acquired or incurred principally for the purpose of selling or repurchasing
it in the near term. They are carried in the statement of financial position at fair value with changes in fair value recognized
through profit or loss.



Other financial liabilities:This
category consists of liabilities carried at amortized cost using the effective interest method.



The Company’s accounts payable
and accrued liabilities and long-term debt are classified as other financial liabilities. The derivative liabilities are classified
as fair value through profit or loss.



Financial instrument disclosures



The Company provides disclosures
that enable users to evaluate (a) the significance of financial instruments for the entity’s financial position and performance;
and (b) the nature and extent of risks arising from financial instruments to which the entity is exposed during the period and
at the date of the statement of financial position, and how the entity manages these risks.



The Company provides information
about its financial instruments measured at fair value at one of three levels according to the relative reliability of the inputs
used to estimate the fair value:



Level 1 – quoted prices (unadjusted)
in active markets for identical assets or liabilities;

Level 2 – inputs other than
quoted prices included in Level 1 that are observable for the asset or liability, either

directly (i.e.,
as prices) or indirectly (i.e., derived from prices); and

Level 3 – inputs for the asset
or liability that are not based on observable market data (unobservable inputs).



Embedded derivatives



Derivatives may be embedded in other
financial instruments (the “host instrument”). Embedded derivatives are treated as separate derivatives when their
economic characteristics and risks are not clearly and closely related to those of the host instrument, the terms of the embedded
derivative are the same as those of a stand-alone derivative, and the combined contract is not held for trading or designated at
fair value. These embedded derivatives are measured at fair value with subsequent changes recognized as gains or losses on derivative
instruments in the statement of loss and comprehensive loss.



Preferred shares



Preferred shares of the Company automatically
converted to an equivalent number of common shares immediately prior to the listing of the common shares on an approved exchange.
The preferred shares are a residual interest in the assets of the entity and are therefore classified within shareholders’
equity (deficiency).



Share-based payments



Share based payment arrangements
in which the Company receives goods or services as consideration for its own equity instruments granted to non-employees are accounted
for as equity settled share based payment transactions and measured at the fair value of goods and services received. If the fair
value of the goods or services received cannot be estimated reliably, the share based payment transaction is measured at the fair
value of the equity instruments granted at the date the Company receives the goods or services.



F-15







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 3. | SIGNIFICANT ACCOUNTING POLICIES(cont’d...)
| | -- | ----------------------------------------



Share-based payments
(cont’d...)



Share-based compensation



The Company grants stock options
to acquire common shares of the Company to directors, officers, employees and consultants. An individual is classified as an employee
when the individual is an employee for legal or tax purposes, or provides services similar to those performed by an employee.



The fair value of stock options is
measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period. Consideration
paid for the shares on the exercise of stock options is credited to share capital.



In situations where equity instruments
are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be specifically
identified, they are measured at the fair value of the share-based payment. Otherwise, share-based payments are measured at the
fair value of goods or services received.



Basic and diluted loss per share



Basic loss per share is computed
by dividing the loss available to common shareholders by the weighted average number of common shares outstanding during the year.
The computation of diluted earnings per share assumes the conversion, exercise or contingent issuance of securities only when such
conversion, exercise or issuance would have a dilutive effect on earnings per share. The dilutive effect of convertible securities
is reflected in diluted earnings per share by application of the “if converted” method. The dilutive effect of outstanding
options and warrants and their equivalents is reflected in diluted earnings per share by application of the weighted-average method.
Since the Company has losses, the exercise of outstanding options and warrants has not been included in this calculation as it
would be anti-dilutive.



Income taxes



Income tax is recognized
in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in
equity. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at period end, adjusted for amendments to tax payable with regards to previous years.



Deferred tax is
recognized in respect of temporary differences, between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible
for tax purposes; the initial recognition of assets or liabilities that affect neither accounting nor taxable loss; and differences
relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount
of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the financial position reporting date.



A deferred tax
asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable
that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting
date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.



Deferred tax assets
and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets
and liabilities on a net basis.



F-16







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 3. | SIGNIFICANT ACCOUNTING POLICIES(cont’d...)
| | -- | ----------------------------------------



New standards not yet adopted



IFRS 9 Financial Instruments



IFRS 9 was issued by the IASB in
October 2010. It incorporates revised requirements for the classification and measurement of financial liabilities and carrying
over the existing derecognition requirements from IAS 39 Financial Instruments: recognition and measurement. The revised financial
liability provisions maintain the existing amortized cost measurement basis for most liabilities. New requirements apply where
an entity chooses to measure a liability at fair value through profit or loss – in these cases, the portion of the change
in fair value related to changes in the entity's own credit risk is presented in other comprehensive income rather than within
profit or loss. IFRS 9 is effective for annual periods beginning on or after January 1, 2018. The impact of IFRS 9 on the Company’s
consolidated financial statements has not yet been determined.



IFRS 15 Revenue from Contracts
with Customers



IFRS 15 is a new standard to establish
principles for reporting the nature, amount, timing, and uncertainty of revenue and cash flows arising from an entity’s contracts
with customers. It provides a single model in order to depict the transfer of promised goods or services to customers. IFRS 15
supersedes IAS 11, Construction Contracts, IAS 18, Revenue, IFRIC 13, Customer Loyalty Programs, IFRIC 15, Agreements for the Construction
of Real Estate, IFRIC 18, Transfers of Assets from Customers, and SIC-31, Revenue – Barter Transactions involving Advertising
Service. IFRS 15 is effective for annual periods beginning on or after January 1, 2018. The impact of IFRS 15 on the Company’s
financial statements has not yet been determined.



IFRS 16 Leases



IFRS 16 is a new standard that sets
out the principles for recognition, measurement, presentation, and disclosure of leases including guidance for both parties to
a contract, the lessee and the lessor. The new standard eliminates the classification of leases as either operating or finance
leases as is required by IAS 17 and instead introduces a single lessee accounting model. IFRS 16 is effective for annual periods
beginning on or after January 1, 2019. The impact of IFRS 16 on the Company’s leases has not yet been determined.



| | 4. | PREPAID EXPENSES
| | -- | ----------------



|                                    |  | 2017 |           |  | 2016 |  
|----------------------------------- |  | ---- | --------- |  | ---- | -
|                                    |  |      |           |  |      |  
|Clinical program deposit            |  | $    | 659,899   |  |      | $
|Other deposits and prepaid expenses |  |      | 412,204   |  |      |  
|                                    |  |      |           |  |      |  
|Balance                             |  | $    | 1,072,103 |  |      | $



| | 5. | EQUIPMENT
| | -- | ---------



|                                                   |  | Furniture and
 fixtures |         |  | Computer
 equipment |   |        | Total | 
|-------------------------------------------------- |  | ----------------------- | ------- |  | ------------------- | - | ------ | ----- | 
|                                                   |  |                         |         |  |                     |   |        |       | 
|Cost                                               |  |                         |         |  |                     |   |        |       | 
|Balance, September 30, 2015                        |  | $                       | 148,674 |  |                     | $ | 39,020 |       | 
|Additions                                          |  |                         | 5,644   |  |                     |   | 4,339  |       | 
|                                                   |  |                         |         |  |                     |   |        |       | 
|Balance, September 30, 2016 and September 30, 2017 |  | $                       | 154,318 |  |                     | $ | 43,359 |       | 



F-17







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 5. | EQUIPMENT(cont’d...)
| | -- | ------------------



|                            |  | Furniture and
 fixtures |         |  | Computer
 equipment |   |        | Total | 
|--------------------------- |  | ----------------------- | ------- |  | ------------------- | - | ------ | ----- | 
|                            |  |                         |         |  |                     |   |        |       | 
|Accumulated Amortization    |  |                         |         |  |                     |   |        |       | 
|Balance, September 30, 2015 |  | $                       | 16,079  |  |                     | $ | 6,151  |       | 
|Amortization expense        |  |                         | 33,515  |  |                     |   | 14,202 |       | 
|                            |  |                         |         |  |                     |   |        |       | 
|Balance, September 30, 2016 |  |                         | 49,594  |  |                     |   | 20,353 |       | 
|Amortization expense        |  |                         | 20,945  |  |                     |   | 6,903  |       | 
|                            |  |                         |         |  |                     |   |        |       | 
|Balance, September 30, 2017 |  | $                       | 70,539  |  |                     | $ | 27,256 |       | 
|                            |  |                         |         |  |                     |   |        |       | 
|Net Book Value              |  |                         |         |  |                     |   |        |       | 
|Balance, September 30, 2016 |  | $                       | 104,724 |  |                     | $ | 23,006 |       | 
|Balance, September 30, 2017 |  | $                       | 83,779  |  |                     | $ | 16,103 |       | 



Amortization expense has been recorded
in “general and administrative expenses” in the statement of loss and comprehensive loss (Note 18).



| | 6. | INTANGIBLE ASSETS
| | -- | -----------------



|                                                   |  | NTD  Technology |        
|-------------------------------------------------- |  | --------------- | -------
|                                                   |  |                 |        
|Cost                                               |  |                 |        
|Balance, September 30, 2015                        |  | $               | 374,685
|Net exchange differences                           |  |                 | (13,401
|                                                   |  |                 |        
|Balance, September 30, 2016 and September 30, 2017 |  | $               | 361,284



|Accumulated Amortization    |  |   |        
|--------------------------- |  | - | -------
|Balance, September 30, 2015 |  | $ | 90,604 
|Amortization expense        |  |   | 18,464 
|Net exchange differences    |  |   | (3,407 
|                            |  |   |        
|Balance, September 30, 2016 |  |   | 105,661
|Amortization expense        |  |   | 18,297 
|                            |  |   |        
|Balance, September 30, 2017 |  | $ | 123,958
|                            |  |   |        
|Net Book Value              |  |   |        
|Balance, September 30, 2016 |  | $ | 255,623
|Balance, September 30, 2017 |  | $ | 237,326



Amortization expense has been recorded
in “general and administrative expenses” in the statement of loss and comprehensive loss (Note 18).



F-18







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 6. | INTANGIBLE ASSETS(cont’d...)
| | -- | --------------------------



The NTD Technology is held under
a License Agreement signed in fiscal 2010. As consideration for the License Agreement, the Company issued common shares of the
Company. The License Agreement contains an annual royalty as a percentage of annual net revenue and a percentage of any annual
sublicensing revenue earned with respect to the NTD Technology. The License Agreement stipulates certain minimum advance royalty
payments of C$85,000. In addition, there are certain milestone payments for the first compound, to be paid in stages as to C$50,000
at the start of a Phase II clinical trial, C$900,000 at the start of a Phase III clinical trial, C$1,450,000 at application for
marketing approval, and with further milestone payments on the second and additional compounds.



| | 7. | LONG-TERM DEBT
| | -- | --------------



On November 18, 2016, Silicon Valley
Bank (“SVB”) entered into a $10,000,000 capital term loan facility agreement (“SVB Term Loan”) with the
Company. The Company has drawn down $8,000,000 from the SVB Term Loan. There was a conditional option to receive an additional
$2,000,000 upon positive data for the Company’s Phase 1 clinical trial of EPI-506 and receipt of the third and final tranche
of the CPRIT grant.



The SVB Term Loan bears an interest
rate of the Wall Street Journal Prime Rate (“WSJ Prime Rate”) plus 3% per annum and will mature on September 1, 2020.
The SVB Term Loan requires a final payment of 8.6% of the amount advanced (“Final Payment”), due upon the earlier of
the maturity or termination of the SVB Term Loan. The Company is required to make interest only payments until December 31, 2017.
The SVB Term Loan contains a voluntary prepayment option whereby the principal amount can be prepaid in whole, or in part, for
a fixed fee if a prepayment is made on or before the second anniversary of the SVB Term Loan.



The SVB Term Loan is secured by a
perfected first priority lien on all of the Company’s assets, with a negative pledge on the Company’s intellectual
property. The SVB Term Loan is subject to standard events of default, including default in the event of a material adverse change.
SVB may declare the Company to be in breach of the agreement in the event of a material adverse change, which has been defined
to include a material impairment in the Company’s assets acting as collateral under the SVB Term Loan, a material adverse
change in the business, operations, or condition (financial or otherwise) of the Company, or a material impairment of the prospect
of repayment of any portion of its debt obligations. There are no financial covenants under the SVB Term Loan.



In connection with the $8,000,000
draw, the Company granted an aggregate of 149,532 warrants to SVB (the “SVB Warrants”), exercisable at a price of $2.14
per share for a period of seven years until November 18, 2023, with an initial fair value of $167,022, which has been recognized
as a derivative liability (Note 8). The Company incurred total additional transaction costs of $220,898 related to the SVB Term
Loan and First Amendment. The transaction costs and Final Payment are being amortized into profit and loss over the estimated term
of the facility, being the legal term, at an effective interest rate of 11.98%.



|                                      |  | Total |          
|------------------------------------- |  | ----- | ---------
|                                      |  |       |          
|Balance, September 30, 2015 and 2016  |  | $     | -        
|Loan advance                          |  |       | 8,000,000
|Transaction costs                     |  |       | (387,959 
|Interest paid                         |  |       | (436,944 
|Accretion                             |  |       | 784,583  
|                                      |  |       |          
|Balance, September 30, 2017           |  | $     | 7,959,680
|                                      |  |       |          
|Current portion, September 30, 2017   |  | $     | 2,026,588
|Long-term portion, September 30, 2017 |  | $     | 5,933,092



F-19







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 8. | DERIVATIVE LIABILITIES
| | -- | ----------------------



Broker Warrants Denominated in
Foreign Currency



In accordance with IFRS, an obligation
to issue shares for a price that is not fixed in the Company’s functional currency, and that does not qualify as a rights
offering, must be classified as a derivative liability and measured at fair value with changes recognized in the statement of loss
and comprehensive loss as they arise. The derivative liability was designated as a financial liability carried at fair value through
profit and loss.



Warrants exercisable in US dollars
prior to January 1, 2016 and warrants exercisable in Canadian dollars after January 1, 2016, the date marking the Company’s
change in functional currency, are therefore classified as derivative liabilities.



In 2015, the Company issued 257,018
broker warrants. Each broker warrant was exercisable to purchase one common share until January 16, 2017 at a price of US$2.75
per broker warrant (Note 10). On issuance of the broker warrants, the Company recorded a derivative liability of $282,287 using
the Black-Scholes model. As at December 31, 2015, the derivative liability had a fair value of $588,407, using the Black-Scholes
model with a risk-free interest rate of 0.52%, term of 1.04 years, volatility of 80.0%, and dividend rate of 0%. On January 1,
2016, the Company de-recognized the derivative liability of $588,407. On January 16, 2017, the remaining 256,363 outstanding warrants
expired unexercised.



In April 2014, in connection with
the issuance of a convertible debenture for $1,000,000, the Company issued 25,000 broker warrants valued at $14,935 (C$16,394),
each exercisable into one common share at a price of C$2.00 for a period of five years (Note 10). The warrants were valued using
the Black-Scholes model with a risk-free interest rate of 1.63%, term of 5 years, volatility of 80% and dividend rate of 0%.



On January 1, 2016, the Company recorded
a derivative liability of $82,743 using the Black-Scholes model. As at September 30, 2017, the derivative liability had a fair
value of $206 (2016 - $42,202). The Company has recorded the resulting change in fair value of $41,996 (2016 - $40,541) in the
statement of loss and comprehensive loss.



2016 Warrants



In January 2016, the Company completed
a private placement of 4,545,452 units of the Company at $3.30 per unit (“Unit”) for gross proceeds of $14,999,992.
Each Unit consisted of one common share of the Company, one 7-year cash and cashless exercise warrant (the “7-Year Warrants”),
and one half of one 2-year cash exercise warrant (the “2-Year Warrants”). The 7-Year Warrants and 2-Year Warrants have
an exercise price of $3.30 per common share (collectively, the “2016 Warrants”). The holders of the 7-Year Warrants
may elect, in lieu of exercising the 7-Year Warrants for cash, a cashless exercise option, in whole or in part, to receive common
shares equal to the fair value of the 7-Year Warrants based on the number of 7-Year Warrants to be exercised multiplied by a ten-day
weighted average market price less the exercise price with the difference divided by the weighted average market price. If a warrant
holder exercises this option, there will be variability in the number of shares issued per 7-Year Warrant.



Additionally, the 2016 Warrants contain
provisions which may require the Company to redeem the 2016 Warrants, at the option of the holder, in the event of a major transaction,
such as a change of control or sale of the Company’s assets (“Major Transaction”). The redemption value would
be subject to a Black-Scholes valuation at the time of exercise. In the event the consideration for a Major Transaction payable
to the common shareholders is in cash, in whole or in part, the redemption of the 2016 Warrants would be made in cash pro-rata
to the composition of the consideration. The potential for a cash settlement for the 2016 Warrants, in accordance with IFRS, requires
the 2016 Warrants to be treated as financial liabilities measured at fair value through profit or loss.



F-20







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 8. | DERIVATIVE LIABILITIES(cont’d...)
| | -- | -------------------------------



2016 Warrants(cont’d...)



On issuance of the 7-Year and 2-Year
Warrants in January 2016, the Company recorded derivative liabilities of $10,181,817 and $3,236,363, respectively using the Black-Scholes
model. The 2016 Warrants are not traded in an active market. A liquidity discount of 20% has been applied to the per warrant fair
value to account for the lack of marketability of the instruments. As at September 30, 2017, the 7-Year Warrants derivative liability
had a fair value of $160,262 (2016 - $6,005,794). As at September 30, 2017, the 2-Year Warrants derivative liability had a fair
value of $Nil (2016 - $1,261,471). The Company has recorded the resulting change in fair value of $1,261,471 (2016 - $1,974,892)
in the statement of loss and comprehensive loss.



SVB Warrants



In connection with the $8,000,000
draw on the SVB Term Loan (Note 7), the Company granted an aggregate of 149,532 warrants to SVB (the “SVB Warrants”),
exercisable at a price of $2.14 per share for a period of seven years until November 18, 2023. The holders of the SVB Warrants
may elect, in lieu of exercising the SVB Warrants for cash, a cashless exercise option, in whole or in part, to receive common
shares equal to the fair value of the SVB Warrants based on the number of SVB Warrants to be exercised multiplied by a five-day
weighted average market price less the exercise price with the difference divided by the weighted average market price. If a warrant
holder exercises this option, there will be variability in the number of shares issued per SVB Warrant.



Additionally, the SVB Warrants contain
provisions which require the Company to redeem the SVB Warrants, on a cashless basis, at the option of the holder, in the event
of a major transaction, such as a change of control or sale of the Company’s assets (“Acquisition”) where the
Company’s shareholders receive cash or shares or a combination thereof, and the five-day weighted average market price is
greater than the exercise price.



On issuance of the SVB Warrants,
the Company recorded a derivative liability of $167,022 using the Black-Scholes model. The SVB Warrants are not traded in an active
market. A liquidity discount of 20% has been applied to the per warrant fair value to account for the lack of marketability of
the instruments. As at September 30, 2017, the SVB Warrants derivative liability had a fair value of $10,275 (2016 - $Nil). The
Company has recorded the resulting change in fair value of $156,747 (2016 - $Nil) in the statement of loss and comprehensive loss.



Valuation



The Company uses the Black-Scholes
option pricing model to estimate value. The following weighted average assumptions were used to estimate the fair value of the
derivative warrant liabilities on initial recognition (January 1, 2016 with respect to the broker warrants, January 14, 2016 with
respect to the 2016 Warrants, November 18, 2016 with respect to the SVB Warrants), September 30, 2016, and September 30, 2017:



|                               |  | September
30,
2017 |            |   | November
18,
2016 |  |            | September 30,
 2016 |  |  | January 14, 
2016 |   |  | January 1,
 2016 |           
|------------------------------ |  | ------------------ | ---------- | - | ----------------- |  | ---------- | ------------------- |  |  | ----------------- | - |  | ---------------- | ----------
|                               |  |                    |            |   |                   |  |            |                     |  |  |                   |   |  |                  |           
|Risk-free interest rate        |  |                    | 1.78       | % |                   |  | 1.32       | %                   |  |  | 1.21              | % |  |                  | 1.55      
|Expected life                  |  |                    | 3.67 years |   |                   |  | 7.00 years |                     |  |  | 4.62 years        |   |  |                  | 5.33 years
|Expected annualized volatility |  |                    | 74.2       | % |                   |  | 75.4       | %                   |  |  | 70.0              | % |  |                  | 70.0      
|Dividend                       |  |                    | -          |   |                   |  |            |                     |  |  | -                 |   |  |                  | -         



F-21







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 8. | DERIVATIVE LIABILITIES(cont’d...)
| | -- | ---------------------------------



Sensitivity



The derivative warrants are a recurring
Level 3 fair value measurement. The key level 3 inputs used by management to determine the fair value are the market price and
expected volatility. If the market price were to increase by a factor of 10% this would increase the obligation by approximately
$35,549 as at September 30, 2017. If the market price were to decrease by a factor of 10% this would decrease the obligation by
approximately $28,295 as at September 30, 2017. If the volatility were to increase by 10%, this would increase the obligation by
approximately $68,318 as at September 30, 2017. If the volatility were to decrease by 10%, this would decrease the obligation by
approximately $55,656 as at September 30, 2017.



The following table is a continuity
schedule of changes to the Company’s derivative liabilities:



|                                                                     |  | Total |           
|-------------------------------------------------------------------- |  | ----- | ----------
|                                                                     |  |       |           
|Balance, September 30, 2015                                          |  | $     | 993,099   
|Derivative liability on change in functional currency                |  |       | 82,743    
|Derivative liability on issuance of warrants                         |  |       | 13,418,180
|Change in fair value                                                 |  |       | (6,574,105
|Net exchange differences                                             |  |       | (22,043   
|De-recognition of derivative liability on functional currency change |  |       | (588,407  
|                                                                     |  |       |           
|Balance, September 30, 2016                                          |  |       | 7,309,467 
|Derivative liability on issuance of warrants                         |  |       | 167,022   
|Change in fair value                                                 |  |       | (7,305,746
|                                                                     |  |       |           
|Balance, September 30, 2017                                          |  | $     | 170,743   
|                                                                     |  |       |           
|Derivatives with expected life of less than one year                 |  | $     | -         
|Derivatives with expected life greater than one year                 |  | $     | 170,743   



| | 9. | SHAREHOLDERS’ EQUITY (DEFICIENCY)
| | -- | ---------------------------------



Authorized:



Unlimited common shares, without
par value.



Unlimited preferred shares, without
par value.



F-22







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 9. | SHAREHOLDERS’ EQUITY (DEFICIENCY)(cont’d...)
| | -- | ------------------------------------------



|                               |  | Share capital |            |  | Preferred shares |   |            | Special warrants | 
|------------------------------ |  | ------------- | ---------- |  | ---------------- | - | ---------- | ---------------- | 
|                               |  | Number        |            |  | Amount           |   |            | Number           | 
|                               |  |               |            |  |                  |   |            |                  | 
|Balance, September 30, 2014    |  |               | 15,687,534 |  |                  | $ | 4,193,735  |                  | 
|Private placement              |  |               | -          |  |                  |   | -          |                  | 
|Financing costs                |  |               | -          |  |                  |   | -          |                  | 
|Conversion of special warrants |  |               | 4,363,634  |  |                  |   | 10,976,105 |                  | 
|Conversion of preferred Shares |  |               | 2,382,540  |  |                  |   | 3,872,737  |                  | 
|Options exercised              |  |               | 91,200     |  |                  |   | 145,285    |                  | 
|Warrants exercised             |  |               | 104,363    |  |                  |   | 231,142    |                  | 
|                               |  |               |            |  |                  |   |            |                  | 
|Balance, September 30, 2015    |  |               | 22,629,271 |  |                  | $ | 19,419,004 |                  | 
|Private placement              |  |               | 6,212,118  |  |                  |   | 6,581,815  |                  | 
|Financing costs                |  |               | -          |  |                  |   | (170,091   | )                | 
|Options exercised              |  |               | 254,724    |  |                  |   | 142,386    |                  | 
|Warrants exercised             |  |               | 776        |  |                  |   | 1,628      |                  | 
|                               |  |               |            |  |                  |   |            |                  | 
|Balance, September 30, 2016    |  |               | 29,096,889 |  |                  | $ | 25,974,742 |                  | 
|Options exercised              |  |               | 5,000      |  |                  |   | 5,375      |                  | 
|                               |  |               |            |  |                  |   |            |                  | 
|Balance, September 30, 2017    |  |               | 29,101,889 |  |                  | $ | 25,980,117 |                  | 



Listing on the TSX-V, TSX, and
NASDAQ



The Company completed its listing
on the TSX-V on January 27, 2015 (“Date of Listing”) and began trading under the symbol “EPI”. Immediately
prior to the listing, all of the Company’s 2,382,540 issued and outstanding Preferred Shares were converted into common shares.



The Company completed its listing
on the NASDAQ on July 9, 2015 and began trading under the symbol “EPIX”. As a result of the listing, each of the outstanding
special warrants issued on January 16, 2015 was deemed to be exercised into one common share for no additional consideration on
July 13, 2015.



On July 21, 2017, the Company received
notifications from the NASDAQ that it was not in compliance with two requirements for continued listing, being the maintenance
of a minimum bid price of US$1 and a minimum market value of US$35,000,000, noncompliance constituting continued deficiency for
a period of 30 consecutive business days. The Company has been provided a grace period for 180 calendar days to regain compliance
with these requirements.



The Company graduated from the TSX-V
to the TSX on July 28, 2015 under its existing symbol “EPI”.



Private placements



a) March 2016 Private
Placement



In March 2016, the Company completed
a private placement (the “March 2016 Financing”) of 1,666,666 common shares at a price of $3.00 per share for
gross proceeds of approximately $5,000,000. The Company incurred financing costs of $62,797.



F-23







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 9. | SHAREHOLDERS’ EQUITY (DEFICIENCY)(cont’d...)
| | -- | ------------------------------------------



Private placements(cont’d...)



b) January 2016 Private
Placement



In January 2016, the Company completed
a private placement (the “January 2016 Financing”) of 4,545,452 Units of the Company at a price of $3.30 per
Unit for gross proceeds of approximately $15,000,000. Each Unit consisted of one common share, one 7-Year Warrant, and one-half
of one 2-Year Warrant. The 7-Year Warrant and 2-Year were assigned fair values using the Black-Scholes model (Note 8). The residual
value was assigned to the common share in the Unit in accordance with IAS 32 Financial instruments: presentation. In connection
with the January 2016 Financing, the Company paid a cash commission to a financial advisor of approximately $463,447 and incurred
other financing costs of $553,942. The financing costs were recorded as $107,288 in equity for the issuance of the common shares
and $910,101 to finance expense in the statement of income (loss) and comprehensive income (loss) for the issuance of the 2016
Warrants.



In connection with the January 2016
Financing, Clarus Lifesciences III, L.P. (“Clarus”) acquired 2,121,212 common shares, representing approximately
9.4% of the issued and outstanding common shares as at December 29, 2015 on a non-diluted basis and excluding the warrants which
were issued to Clarus on the closing date and the common shares issuable upon exercise thereof. Pursuant to the terms of the subscription
agreement between the Company and Clarus, Clarus is entitled to nominate two directors to the board of directors of the Company,
one of which must be an independent director and preapproved by the Company. These nomination rights will continue for so long
as Clarus holds greater than or equal to 1,060,606 common shares, subject to adjustment in certain circumstances.



In addition, on the closing of the
January 2016 Financing, certain shareholders, who in the aggregate controlled approximately 9,482,800 common shares constituting
41.9% of the issued and outstanding common shares on a non-diluted basis as at December 29, 2015, entered into a voting agreement
(the “Voting Agreement”) with Clarus providing that such shareholders will vote against certain change of control
transactions, unless Clarus consents otherwise, and support Clarus’ nominees to the board of directors of the Company. The
provisions of the Voting Agreement relating to change of control transactions will expire, at the latest, upon the six-month anniversary
of the public release of the results of the completed Phase 2 portion of the Phase 1/2 clinical trial of EPI-506 by the Company
or the public release of the results of the completed Phase 2 portion of an alternative program that is approved by the board of
directors and the provisions relating to the Clarus nominees will continue for so long as Clarus is entitled to nominate directors
to the Company’s board of directors.



c) January 2015 Special
Warrant Financing



In January 2015, the Company issued
4,363,634 special warrants (the “2015 Special Warrants”) at a price of $2.75 per 2015 Special Warrant for gross
proceeds of approximately $12,000,000. During the year ended September 30, 2015, the 2015 Special Warrants were converted into
common shares of the Company at a rate of one common share per 2015 Special Warrant.



In connection with the 2015 Special
Warrant financing, Bloom Burton & Co. and Roth Capital Partners, LLC, as Agents, and selling group members, received cash commissions
equal to approximately $706,800 and 257,018 broker warrants. Each broker warrant is exercisable to purchase one common share until
January 16, 2017 at a price of $2.75 per broker warrant. The warrants were valued at $282,287 using the Black-Scholes model with
a risk-free interest rate of 0.87%, term of 2 years, volatility of 72.3%, and dividend rate of 0%, and had been recorded as a derivative
liability until January 1, 2016 (Note 8).



F-24







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 9. | SHAREHOLDERS’ EQUITY (DEFICIENCY)(cont’d...)
| | -- | ------------------------------------------



Private placements(cont’d...)



d) October 2014 Special
Warrant Financing



In October 2014, the Company issued
679,640 special warrants (the “2014 Special Warrants”) at a price of C$2.00 per 2014 Special Warrant for gross
proceeds of C$1,359,280. Each 2014 Special Warrant was deemed exercised for, without payment of any additional consideration, one
Class A Preferred share in the capital of the Company (each a “Preferred Share”) on December 15, 2014, being
the fifth business day after the date on which a receipt for the final prospectus of the Company qualifying the distribution of
the Preferred Shares issuable on exercise of the 2014 Special Warrants had been issued. During the year ended September 30, 2015,
the Preferred Shares were converted into common shares of the Company.



In connection with the 2014 Special
Warrant financing, the Company paid agent and finders’ fees at 7% of proceeds raised by those parties being $35,897, a cash
fee to the Agent of $26,682 and other expenses of $62,786. In addition, the Agent, and associated selling group, were issued 22,675
special broker warrants (the “Special Broker Warrants”), representing 7% of the number of 2014 Special Warrants
sold by the Agent, and the finders were issued 2,680 Special Broker Warrants, representing 7% of the number of 2014 Special Warrants
sold to purchasers introduced to the Company by such finders. Each Special Broker Warrant was deemed exercised for, without payment
of any additional consideration, one broker warrant (the “Broker Warrants”).  Each Broker Warrant is exercisable
to acquire one common share, subject to adjustment in certain circumstances, at a price of C$2.00 until October 22, 2015. The Special
Broker Warrants were valued at $44,434 using the Black-Scholes model with a risk-free interest rate of 1.00%, term of 1 year, volatility
of 80% and dividend rate of 0%.



| | 10. | RESERVES
| | --- | --------



Stock options



The Company has adopted a Stock Option
Plan (the “Plan”), pursuant to which up to a maximum of the greater of (i) 5,000,000 Common Shares and (ii) a rolling
number equal to 15% of the total number of issued and outstanding Common Shares (on an non-diluted basis) at the relevant time
may be reserved for issuance. The Stock Option Plan is consistent with the policies and rules of the TSX and NASDAQ. Pursuant to
the Plan, options may be granted with expiry terms of up to 10 years, and vesting criteria and periods are approved by the Board
of Directors at its discretion. The options issued under the Plan are accounted for as equity-settled share-based payments.



Stock option transactions are summarized
as follows:



|                                            |  | Numberof Options |           |   | WeightedAverageExercise Price |   
|------------------------------------------- |  | ---------------- | --------- | - | ----------------------------- | --
|                                            |  |                  |           |   |                               |   
|Balance,
    September 30, 2015             |  |                  | 3,473,519 |   |                               | C$
|Options granted                             |  |                  | 910,000   |   |                               |   
|Options exercised                           |  |                  | (281,000  | ) |                               |   
|Options
    expired/forfeited               |  |                  | (40,000   | ) |                               |   
|                                            |  |                  |           |   |                               |   
|Balance, September
    30, 2016             |  |                  | 4,062,519 |   |                               | C$
|Options exercised                           |  |                  | (5,000    | ) |                               |   
|Options
    expired/forfeited               |  |                  | (340,000  | ) |                               |   
|                                            |  |                  |           |   |                               |   
|Balance
    outstanding, September 30, 2017 |  |                  | 3,717,519 |   |                               | C$
|Balance
    exercisable, September 30, 2017 |  |                  | 3,135,795 |   |                               | C$



F-25







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 10. | RESERVES(cont’d...)
| | --- | -----------------



Stock options(cont’d...)



At September 30, 2017, options were
outstanding enabling holders to acquire common shares as follows:



|Exercise price (C$) |       |  | Number of options |  |           | Weighted average remaining contractual life (years) | 
|------------------- | ----- |  | ----------------- |  | --------- | --------------------------------------------------- | 
|                    |       |  |                   |  |           |                                                     | 
|C$                  | 0.80  |  |                   |  | 1,077,300 |                                                     | 
|                    | 2.00  |  |                   |  | 1,591,219 |                                                     | 
|                    | 3.49  |  |                   |  | 290,000   |                                                     | 
|                    | 5.15  |  |                   |  | 10,000    |                                                     | 
|                    | 5.35  |  |                   |  | 50,000    |                                                     | 
|                    | 6.25  |  |                   |  | 600,000   |                                                     | 
|                    | 7.26  |  |                   |  | 8,000     |                                                     | 
|                    | 9.10  |  |                   |  | 36,000    |                                                     | 
|                    | 14.90 |  |                   |  | 55,000    |                                                     | 
|                    |       |  |                   |  | 3,717,519 |                                                     | 



Share-based compensation



During year ended September 30, 2017,
the Company granted Nil (2016 – 910,000; 2015 – 495,000) stock options with a weighted average fair value of $Nil per
option (2016 – $1.98; 2015 - $2.56).



The Company recognized
share-based payments expense for options granted and vesting during the year with allocations to its functional expense as follows:



|                                           |  | 2017 |         |   | 2016 |   |           | 2015 | 
|------------------------------------------ |  | ---- | ------- | - | ---- | - | --------- | ---- | 
|                                           |  |      |         |   |      |   |           |      | 
|Research and development expense (Note 18) |  | $    | (3,780  | ) |      | $ | 322,160   |      | 
|Financing costs                            |  |      | -       |   |      |   | 27,743    |      | 
|General and administrative (Note 18)       |  |      | 762,797 |   |      |   | 897,043   |      | 
|                                           |  | $    | 758,927 |   |      | $ | 1,246,946 |      | 



The following weighted average assumptions
were used for the Black-Scholes option-pricing model valuation of stock options granted:



|                               |  | 2017 |   |  | 2016 |  |            | 2015 | 
|------------------------------ |  | ---- | - |  | ---- |  | ---------- | ---- | 
|                               |  |      |   |  |      |  |            |      | 
|Risk-free interest rate        |  |      | - |  |      |  | 0.63       | %    | 
|Expected life of options       |  |      | - |  |      |  | 3.58 years |      | 
|Expected annualized volatility |  |      | - |  |      |  | 73.01      | %    | 
|Dividend                       |  |      | - |  |      |  | -          |      | 



F-26







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 10. | RESERVES(cont’d...)
| | --- | -----------------



Warrants



Warrant transactions are summarized
as follows:



|                                                        |  | Number of Warrants |           |   | Weighted Average Exercise Price |  
|------------------------------------------------------- |  | ------------------ | --------- | - | ------------------------------- | -
|                                                        |  |                    |           |   |                                 |  
|Balance, September 30, 2014                             |  |                    | 104,479   |   |                                 | $
|Warrants granted                                        |  |                    | 282,373   |   |                                 |  
|Warrants exercised                                      |  |                    | (104,363  | ) |                                 |  
|                                                        |  |                    |           |   |                                 |  
|Balance, September 30, 2015                             |  |                    | 282,489   |   |                                 | $
|Warrants granted                                        |  |                    | 6,818,178 |   |                                 |  
|Warrants exercised                                      |  |                    | (776      | ) |                                 |  
|Warrants expired                                        |  |                    | (350      | ) |                                 |  
|                                                        |  |                    |           |   |                                 |  
|Balance, September 30, 2016                             |  |                    | 7,099,541 |   |                                 | $
|Warrants granted                                        |  |                    | 149,532   |   |                                 |  
|Warrants expired                                        |  |                    | (256,363  | ) |                                 |  
|                                                        |  |                    |           |   |                                 |  
|Balance outstanding and exercisable, September 30, 2017 |  |                    | 6,992,710 |   |                                 | $



Warrants exercisable in Canadian
dollars as at September 30, 2017 are translated at current rates to reflect the current weighted average exercise price in US dollars
for all outstanding warrants.



At September 30, 2017, warrants were
outstanding enabling holders to acquire common shares as follows:



|Number of Warrants |           |     | Exercise Price |  |         | Expiry Date
|------------------ | --------- | --- | -------------- |  | ------- | -----------
|                   |           |     |                |  |         |            
|                   | 25,000    |     |                |  | C$2.00  |            
|                   | 4,545,452 | (1) |                |  | US$3.30 |            
|                   | 2,272,726 | (1) |                |  | US$3.30 |            
|                   | 149,532   |     |                |  | US$2.14 |            
|                   | 6,992,710 |     |                |  |         |            



| | (1) | Detailed terms of the 2016 Warrants are included in Note 8.
| | --- | -----------------------------------------------------------



| | 11. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
| | --- | --------------------------------------------------



During the year ended September 30,
2017, the Company:



| | (a) | Issued warrants valued at $167,022 in connection with the SVB Term Loan (Note 7).
| | --- | ---------------------------------------------------------------------------------



| | (b) | On exercise of stock options, the Company transferred $2,436 from reserves to share capital.
| | --- | --------------------------------------------------------------------------------------------



During the year ended September 30,
2016, the Company:



| | (a) | Issued 213,724 common shares on the cashless exercise of 240,000 stock options.
| | --- | -------------------------------------------------------------------------------



| | (b) | On exercise of stock options and warrants, the Company transferred $105,921 and $434, respectively,
from reserves to share capital.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------



F-27







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 11. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS(cont’d...)
| | --- | -----------------------------------------------------------



| | (c) | Recognized a derivative liability of $13,418,180 on issuance of the 2-Year and 7-Year Warrants
(Note 8).
| | --- | --------------------------------------------------------------------------------------------------------



During the year ended September 30,
2015, the Company:



| | (a) | Issued agent warrants valued at $44,434 (Note 9).
| | --- | -------------------------------------------------



| | (b) | Recognized a derivative liability of $282,287 on the issuance of broker warrants denominated in
US dollars (Note 8).
| | --- | --------------------------------------------------------------------------------------------------------------------



| | 12. | RELATED PARTY TRANSACTIONS
| | --- | --------------------------



Key management personnel of the Company
include the President and Chief Executive Officer, Chief Financial Officer, Chief Technical Officer, Chief Scientific Officer,
Chief Medical Officer, Executive VP and Chief Operating Officer, former Executive VP of Research and Development, and Directors
of the Company. Compensation paid to key management personnel is as follows:



|                                             |  | 2017 |           |  | 2016 |   |           | 2015 | 
|-------------------------------------------- |  | ---- | --------- |  | ---- | - | --------- | ---- | 
|                                             |  |      |           |  |      |   |           |      | 
|Salaries, consulting fees, and director fees |  | $    | 2,179,826 |  |      | $ | 2,651,651 |      | 
|Share-based payments (a)                     |  |      | 770,222   |  |      |   | 1,029,878 |      | 
|Total compensation                           |  | $    | 2,950,048 |  |      | $ | 3,681,529 |      | 



| | (a) | Share-based payments to related parties represents the fair value of options granted and vested
in the year to key management personnel.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------



During the year ended September 30,
2017, the Company granted Nil (2016 – 890,000; 2015 – 250,000) options to key management personnel. The vesting of
these options and options granted to key management personnel in prior periods were recorded as share-based payments expense in
the statement of loss and comprehensive loss at a value of $770,222 (2016 - $1,029,878; 2015 - $1,154,548).



Included in accounts payable and
accrued liabilities at September 30, 2017 is $219,031 (2016 – $276,399; 2015 - $82,414) due to related parties with respect
to key management personnel compensation and expense reimbursements. Amounts due to related parties are non-interest bearing, with
no fixed terms of repayment.



Commitments



The CEO is entitled to a payment
of six months of base salary upon termination without cause, increasing to one year following one year of employment. Additionally,
the CEO is entitled to 18 months of salary if termination without cause occurs after a change of control event or within 60 days
prior to a change of control event where such event was under consideration at the time of termination.



The CFO is entitled to a payment
of one year of base salary upon termination without cause, whether or not the termination was caused by a change of control event.
The CMO is entitled to a payment of six months of base salary upon termination without cause, and one year of base salary if the
termination was caused by a change of control event.



The COO is entitled to a payment
of six months of base salary upon termination without cause, increasing to one year following one year of employment. Additionally,
the COO is entitled to 18 months of salary if termination without cause occurs within 18 months after a change of control event.



Stock options held by the CEO, CFO,
CMO, and COO vest immediately upon a change of control.





F-28







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 13. | INCOME TAXES
| | --- | ------------



A reconciliation
of income taxes at statutory rates is as follows:



|For the years ended September 30                           |  | 2017 |            |   | 2016 |   |             | 2015 | 
|---------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ----------- | ---- | 
|                                                           |  |      |            |   |      |   |             |      | 
|Loss for the year before income tax                        |  | $    | (4,382,621 | ) |      | $ | (12,988,516 | )    | 
|                                                           |  |      |            |   |      |   |             |      | 
|Expected income tax recovery                               |  | $    | (1,139,000 | ) |      | $ | (3,377,000  | )    | 
|Non-deductible share-based payments                        |  |      | 233,000    |   |      |   | 352,000     |      | 
|Other permanent differences including foreign exchange     |  |      | (1,899,000 | ) |      |   | (1,709,000  | )    | 
|Adjustment for deferred income                             |  |      | -          |   |      |   | -           |      | 
|Financing costs                                            |  |      | (142,000   | ) |      |   | (142,000    | )    | 
|Changes in tax rates, foreign exchange rates               |  |      | 68,000     |   |      |   | 15,000      |      | 
|Adjustment to prior year provision versus statutory return |  |      | (490,000   | ) |      |   | 1,308,000   |      | 
|Change in unrecognized deductible temporary differences    |  |      | 3,709,757  |   |      |   | 3,704,272   |      | 
|                                                           |  |      |            |   |      |   |             |      | 
|Total income tax expense                                   |  | $    | 340,757    |   |      | $ | 151,272     |      | 



The significant components of the
Company’s unrecognized temporary tax differences are as follows:



|                                 |  | 2017 |            |  | 2016 |   |            | 2015 | 
|-------------------------------- |  | ---- | ---------- |  | ---- | - | ---------- | ---- | 
|                                 |  |      |            |  |      |   |            |      | 
|Operating losses carried forward |  | $    | 43,966,000 |  |      | $ | 29,384,000 |      | 
|Investment tax credits           |  |      | 154,000    |  |      |   | 147,000    |      | 
|Equipment and intangible assets  |  |      | 71,000     |  |      |   | 13,000     |      | 
|Financing costs                  |  |      | 1,710,000  |  |      |   | 1,760,000  |      | 



Operating losses carried forward
as at September 30, 2017 expire from 2031 – 2036. Financing costs expire from 2037 to 2040. Investment tax credits expire
in 2034.



Tax attributes are subject
to review, and potential adjustment, by tax authorities.



During the year ended September 30,
2017, the Company received $nil (2016 - $nil; 2015 - $59,666) in Scientific Research and Experimental Development tax credits from
the Government of Canada which are included in research and development costs in the statement of loss and comprehensive loss.



The Company has recorded an income
tax expense of $340,757 for the year ended September 30, 2017 (2016 - $151,272; 2015 - $nil) in relation to taxable income generated
by its US subsidiary.



| | 14. | SEGMENTED INFORMATION
| | --- | ---------------------



The Company works in one industry
being the development of small molecule drugs for prostate cancer. The Company’s equipment is located in the USA.



| | 15. | CAPITAL MANAGEMENT
| | --- | ------------------



The Company considers its capital
to include working capital, long-term debt and the components of shareholders’ equity. The Company monitors its capital structure
and makes adjustments in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain
or adjust the capital structure, the Company may issue new equity if available on favourable terms.



F-29







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 15. | CAPITAL MANAGEMENT(cont’d...)
| | --- | ---------------------------



In December 2015, the Company filed
a short form base shelf prospectus in British Columbia, Alberta, and Ontario, and a corresponding shelf registration statement
with the United States Securities and Exchange Commission on Form F-10, which enables issuances from time to time in order to increase
the Company’s available capital which was used in connection with the financings completed during the year ended September
30, 2016 (Note 9). Future financings are dependent on market conditions and the ability to identify sources of investment. There
can be no assurance the Company will be able to raise funds in the future.



On November 18, 2016, the Company
entered into the SVB Term Loan (Note 7), pursuant to which the Company has drawn down $8,000,000 as at September 30, 2017.



Other than the SVB Term Loan, there
were no changes to the Company’s approach to capital management during the year ended September 30, 2017. As at September
30, 2017, the Company is not subject to externally imposed capital requirements.



| | 16. | FINANCIAL INSTRUMENTS AND RISK
| | --- | ------------------------------



The Company’s financial instruments
consist of cash, receivables, accounts payable and accrued liabilities, long-term debt and derivative liabilities. Cash is measured
based on level 1 inputs of the fair value hierarchy. The fair value of receivables and accounts payable and accrued liabilities
approximates their carrying values due to their short term to maturity. The fair value of the SVB Term Loan is approximately $8,736,000
which includes the principal and financing costs assessed on settlement as at September 30, 2017. The derivative liabilities are
measured using level 3 inputs (Note 8).



Fair value estimates of financial
instruments are made at a specific point in time, based on relevant information about financial markets and specific financial
instruments. As these estimates are subjective in nature, involving uncertainties and matters of judgement, they cannot be determined
with precision. Changes in assumptions can significantly affect estimated fair values.



Financial risk factors



The Company’s risk exposures
and the impact on the Company’s financial instruments are summarized below:



Credit risk



Financial instruments that potentially
subject the Company to a significant concentration of credit risk consist primarily of cash and receivables. The Company’s
receivables are primarily due to refundable GST and investment tax credits. The Company limits its exposure to credit loss by placing
its cash with major financial institutions. Credit risk with respect to investment tax credits and GST is minimal as the amounts
are due from government agencies.



Liquidity risk



The Company’s
approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at September
30, 2017, the Company had working capital of $1,057,185. During the year ended September 30, 2017, the Company received $5,192,799,
a portion of the third and final tranche of CPRIT funding of $5,422,000 (Note 17), which has been recorded as research and development
recoveries in profit and loss. The SVB Term Loan is repayable over 33 months following an interest-only period ending December
31, 2017. The Company does not generate revenue and will be reliant on external financing to fund operations and repay the SVB
Term Loan. Debt and equity financing is dependent on market conditions and may not be available on favorable terms. The CPRIT grant
is dependent on the Company completing all the milestones (Note 17).



F-30







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 16. | FINANCIAL INSTRUMENTS AND RISK(cont’d...)
| | --- | ---------------------------------------



Financial risk factors(cont’d...)



Market risk



Market risk is the risk of loss that may arise from changes
in market factors such as interest rates, and foreign exchange rates.



| | (a) | Interest rate risk
| | --- | ------------------



As at September 30, 2017, the Company
has cash balances which are interest bearing. Interest income is not significant to the Company’s projected operational budget
and related interest rate fluctuations are not significant to the Company’s risk assessment.



The Company’s SVB Term Loan
is interest-bearing debt at a variable rate. A 10% change in the WSJ Prime Rate would result in an increase of $38,696 or decrease
of $13,981 in the net loss realized for the period.



| | (b) | Foreign currency risk
| | --- | ---------------------



Historically, the Company has been
exposed to foreign currency risk on fluctuations related to accounts payable and accrued liabilities that are denominated in US
dollars as the Company was financed and functioning in Canadian dollars. Over time, the Company has become increasingly exposed
to the US dollar due to the financings completed in US dollars, the US dollar-denominated CPRIT Grant (Note 17) and movement of
operations to the State of Texas pursuant to the terms of the CPRIT Grant; accordingly, the Company adopted the US dollar as its
functional currency from the Canadian dollar as of January 1, 2016, so that the Company’s foreign currency risk exposure
now relates to net monetary assets denominated in Canadian dollars. A 10% change in the foreign exchange rate between the Canadian
and U.S. dollar would result in a fluctuation of $30,583 in the net loss realized for the year.



The Company does not currently engage
in hedging activities.



| | (c) | Price risk
| | --- | ----------



The Company is exposed to price
risk with respect to equity prices. The Company closely monitors individual equity movements, and the stock market to determine
the appropriate course of action to be taken by the Company.



| | 17. | COMMITMENTS
| | --- | -----------



The Company has the following obligations
over the next five years:



|Contractual obligations                                |  | 2018 |           |  | 2019 |    |           | 2020 |  |    | 2021      |  |  | 2022 |       
|------------------------------------------------------ |  | ---- | --------- |  | ---- | -- | --------- | ---- |  | -- | --------- |  |  | ---- | ------
|                                                       |  |      |           |  |      |    |           |      |  |    |           |  |  |      |       
|Minimum annual royalty per License Agreement (Note 6)  |  | C$   | 85,000    |  |      | C$ | 85,000    |      |  | C$ | 85,000    |  |  | C$   | 85,000
|Collaborative Research Agreement with BC Cancer Agency |  |      | 77,938    |  |      |    | -         |      |  |    | -         |  |  |      | -     
|                                                       |  |      |           |  |      |    |           |      |  |    |           |  |  |      |       
|Total (in C$)                                          |  | C$   | 162,938   |  |      | C$ | 85,000    |      |  | C$ | 85,000    |  |  | C$   | 85,000
|                                                       |  |      |           |  |      |    |           |      |  |    |           |  |  |      |       
|SVB loan payments (Note 7)                             |  | $    | 2,558,103 |  |      | $  | 3,217,471 |      |  | $  | 3,905,471 |  |  | $    | -     
|Lease on US office spaces                              |  | $    | 170,485   |  |      | $  | 175,166   |      |  | $  | 44,474    |  |  | $    | -     



F-31







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 17. | COMMITMENTS(cont’d...)
| | --- | --------------------



Product Development
and Relocation Grant



In February 2014 the Company received
notice that it had been awarded a product development and relocation grant by the CPRIT whereby the Company is eligible to receive
up to $12,000,000 on eligible expenditures over a three year period related to the development of the Company’s androgen
receptor n-terminus blocker program for prostate cancer. The funding under CPRIT is subject to a number of conditions including
negotiation and execution of an award contract which details the milestones that must be met to release the tranched CPRIT funding,
proof the Company has raised the 50% matching funds to release CPRIT monies, and relocation of the project to the State of Texas
such that the substantial functions of the Company related to the project grant are in Texas and the Company uses Texas-based subcontractor
and collaborators wherever possible.



As at September 30, 2016, the Company
had received the first two tranches of the CPRIT Grant, totalling $6,578,000, which have been recognized as research and development
recoveries in the statements of loss and comprehensive loss over fiscal years 2014, 2015, and 2016. During the year ended September
30, 2017, the Company received $5,192,799, representing a partial payment of the third and final tranche of the grant of $5,422,000;
the remaining balance of $229,201 is expected to be received after the completion of the grant term of December 31, 2017 and on
approval of subsequent final compliance reporting.



If the Company is found to have used
any grant proceeds for purposes other than intended, is in violation of the terms of the grant, or relocates its operations outside
of the State of Texas, then the Company is required to repay any grant proceeds received.



Under the terms of the grant, the
Company is also required to pay a royalty to CPRIT, comprised of 4% of revenues until aggregate royalty payments equal $24,000,000,
and 2% of revenues thereafter. The Company has the option to terminate the grant agreement by paying a one-time, non-refundable
buyout fee, based on certain factors including the grant proceeds, and the number of months between the termination date and the
buyout fee payment date.



Agency Engagements



In the year ended September 30, 2017,
the Company executed Engagement Letters with Bloom Burton & Co. (“Bloom Burton”) and H.C. Wainwright & Co.
(“HCW”), investment banks, to retain their services to act as its exclusive agents in Canada and the United States,
respectively, in connection with a proposed financing in July 2017. In exchange for their services, on successful completion of
the financing, Bloom Burton and HCW would receive a cash fee based on a percentage of any funds raised and warrants based on a
percentage of the aggregate number of common shares placed in the financing. The Company will pay all legal and other expenses
incurred by Bloom Burton and HCW. In addition, for a period of 12 months, HCW will have a right of participation to act as a placement
agent or underwriter on any equity financings for the Company, for which HCW shall receive a fee of no less than 25% of the fee
on such financings.



F-32







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 18. | EXPENSES BY NATURE
| | --- | ------------------



Research and development expenses
include the following major expenses by nature:



|For the year ended September 30                    |  | 2017 |            |   | 2016 |   |            | 2015 | 
|-------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- | 
|                                                   |  |      |            |   |      |   |            |      | 
|Clinical                                           |  | $    | 2,623,636  |   |      | $ | 2,920,104  |      | 
|Consulting                                         |  |      | 935,151    |   |      |   | 1,333,323  |      | 
|Legal patents and license fees                     |  |      | 834,295    |   |      |   | 905,392    |      | 
|Manufacturing                                      |  |      | 3,571,106  |   |      |   | 3,601,407  |      | 
|Other                                              |  |      | 187,228    |   |      |   | 306,657    |      | 
|Pharmacology                                       |  |      | 407,373    |   |      |   | 866,527    |      | 
|Program administration                             |  |      | (38,534    | ) |      |   | 381,429    |      | 
|Royalties                                          |  |      | 48,863     |   |      |   | 46,228     |      | 
|Salaries and benefits                              |  |      | 2,213,655  |   |      |   | 2,194,047  |      | 
|Share-based payments (Note 10)                     |  |      | (3,870     | ) |      |   | 322,160    |      | 
|Travel                                             |  |      | 140,262    |   |      |   | 182,927    |      | 
|SR&ED tax credits                                  |  |      | -          |   |      |   | -          |      | 
|CPRIT grant claimed on eligible expenses (Note 17) |  |      | (5,192,799 | ) |      |   | -          |      | 
|                                                   |  |      |            |   |      |   |            |      | 
|Total                                              |  | $    | 5,726,366  |   |      | $ | 13,060,201 |      | 



General and administrative expenses
include the following major expenses by nature:



|For the year ended September 30                    |  | 2017 |           |  | 2016 |   |           | 2015 | 
|-------------------------------------------------- |  | ---- | --------- |  | ---- | - | --------- | ---- | 
|                                                   |  |      |           |  |      |   |           |      | 
|Amortization                                       |  | $    | 46,145    |  |      | $ | 66,181    |      | 
|Consulting and subcontractor fees                  |  |      | 86,931    |  |      |   | 87,014    |      | 
|Director fees                                      |  |      | 191,500   |  |      |   | 204,049   |      | 
|Insurance                                          |  |      | 395,690   |  |      |   | 422,066   |      | 
|Investor relations                                 |  |      | 230,579   |  |      |   | 317,822   |      | 
|Office, IT and communications                      |  |      | 187,364   |  |      |   | 288,968   |      | 
|Professional fees                                  |  |      | 612,865   |  |      |   | 776,339   |      | 
|Regulatory fees and transfer agent                 |  |      | 74,600    |  |      |   | 131,302   |      | 
|Rent                                               |  |      | 470,716   |  |      |   | 620,023   |      | 
|Salaries and benefits                              |  |      | 1,863,634 |  |      |   | 1,634,380 |      | 
|Share-based payments (Note 10)                     |  |      | 762,797   |  |      |   | 897,043   |      | 
|Travel and entertainment                           |  |      | 218,100   |  |      |   | 198,931   |      | 
|CPRIT grant claimed on eligible expenses (Note 17) |  |      | -         |  |      |   | -         |      | 
|                                                   |  |      |           |  |      |   |           |      | 
|Total                                              |  | $    | 5,140,921 |  |      | $ | 5,644,118 |      | 



F-33







|ESSA PHARMA INC.                                     
|-----------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS       
|(Expressed in United States dollars)                 
|FOR THE YEARS ENDED SEPTEMBER 30, 2017, 2016 and 2015



| | 19. | SUBSEQUENT EVENTS
| | --- | -----------------



Subsequent to September 30, 2017:



| | (a) | A total of 115,300 stock options with a weighted exercise price of C$0.80 expired unexercised and
56,000 stock options with a weighted average exercise price of C$7.32 were forfeited unexercised.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | The Company voluntarily delisted from the TSX and began trading on
the TSX-V on November 27, 2017 under the symbol “EPI”.
| | --- | -------------------------------------------------------------------------------------------------------------------------





F-34