Cytos Biotechnology Ltd updates on a key transaction and plans going forward - successful bondholders' meeting key to avoid liquidation and ensure going concern

- Repayment of subordinated convertible bonds at maturity impossible - total loss for bondholders highly likely unless bonds are converted into equity

- Going concern of Cytos subject to successful bondholders' meeting agreeing to convert all subordinated convertible bonds into equity at market prices

- Proposed conversion of subordinated convertible bonds into equity allows the bondholders to participate in any equity upside

- Licensing transaction - subject to going concern - provides upside potential to shareholders

Schlieren (Zurich), Switzerland, January 6, 2015 - Cytos Biotechnology Ltd. (SIX:CYTN) ("Cytos" or the "Company") announced today that it proposes a mandatory conversion of the outstanding subordinated convertible bonds and convenes a bondholders' meeting on January 26, 2015 in Schlieren/Switzerland. Furthermore, Cytos announced the signing of a transaction in conjunction with its efforts to monetize on its asset base.

Key considerations of the subordinated convertible bond restructuring:

- According to the present financial forecast, holders of subordinated convertible bonds cannot expect any payment at maturity as cash in February 2015 is estimated to be max. CHF 16 million whereas the repayment obligation to loan note holders - which are senior to those of the bondholders - amounts to CHF 22.2 million. Hence, even loan note holders will not receive full repayment of their loans and therefore, holders of subordinated convertible bonds cannot expect any payment.

- Access to new financial means for a small biotech company without sustainable revenues remains very challenging in the current financial market environment.

- With the planned conversion of its subordinated convertible bonds into equity, Cytos remains a going concern and liquidation can be avoided. In addition, the licensing transaction as mentioned below will take effect.

Key elements of the proposed subordinated convertible bond restructuring:

- More than 30-fold reduction of the conversion price from CHF 7.71 to CHF 0.25 per share which is about the current market share price.

- Each outstanding subordinated convertible bond of nominal CHF 2,500 is mandatorily converted into 10'000 Cytos shares of nominal CHF 0.10.

- An incentive payment of CHF 25.00 per subordinated convertible bond is paid in case the bond restructuring becomes valid and binding. The incentive payment is subject to 35% withholding tax.

- Two thirds of all outstanding subordinated convertible bonds need to support the bond restructuring.

- Maximum 77'490'000 shares to be issued for bond conversion. Such issuance is subject to shareholder approval in an extraordinary shareholders meeting to be held.

The conversion of the CHF 19'372'500 subordinated convertible bonds maturing on February 20, 2015 into Cytos shares is essential for Cytos to remain a going concern. In order to approve the conversion, a bondholders' meeting is scheduled to take place on January 26, 2015 in Schlieren/Zurich, Switzerland.

The notice to the bondholders as well as the detailed content of the conversion of the outstanding subordinated convertible bonds can be downloaded at www.cytos.com/bondrestructuring. The invitation to the bondholders' meeting will be mailed within the next few days.

The terms for the conversion of the subordinated convertible bonds have been carefully considered and represent, in the view of the Board of Directors and the management, a fair and reasonable proposal which serves to avoid liquidation and ensure that Cytos remains a going concern.

The Board of Directors and the management unanimously support approving the conversion, which is in the best interest of bondholders, shareholders, and other stakeholders, and will do their utmost to realize a solution that enables Cytos to deliver shareholder value - for example by means of a reverse merger in which Cytos would purchase another company with intact operations and products.

In addition, Cytos announced today that it has executed an agreement granting OnCore Biopharma, Inc. ("OnCore") an exclusive license to Cytos' clinically validated virus like particle (VLP) platform to develop and commercialize products for the treatment and prevention of hepatitis B viral infections. Cytos also granted OnCore an option to extend the license to additional viral diseases other than influenza.

For the first product in each of six possible product categories in the field of hepatitis B that may be developed under the agreement, Cytos may receive up to USD 67 million in development milestones, or a maximum of USD 402 million if one product in each product category is developed. In addition, Cytos is eligible to receive commercial milestone payments of up to USD 120 million upon achievement of certain sales levels, and up to double-digit royalties on net sales from any successfully developed product.

The agreement will become effective with the achievement of certain closing conditions, including a successful conversion of the subordinated convertible bonds into equity.

For further information, please contact:

Cytos Biotechnology Ltd
Harry Welten, MBA
Chief Financial Officer
Tel: +41 44 733 46 46
harry.welten@cytos.com

About Cytos Biotechnology Ltd

Cytos is a public biopharmaceutical company located in Schlieren (Zurich), Switzerland. The Company is listed according to the Main Standard on the SIX Swiss Exchange Ltd under the symbol CYTN.

Forward Looking Statements
This media release contains certain forward-looking statements that involve risks and uncertainties that could cause actual results to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. You are urged to consider statements that include the words "will" or "expect" or the negative of those words or other similar words to be uncertain and forward-looking. Factors that may cause actual results to differ materially from any future results expressed or implied by any forward-looking statements include scientific, business, economic and financial factors, Against the background of these uncertainties, readers should not rely on forward-looking statements. The Company assumes no responsibility for updating forward-looking statements or adapting them to future events or developments.

www.cytos.com