LIFESCI ADVISORS. Immune Pharmaceuticals Shares Up-Listed to Nasdaq Capital Markets ~Phase II Trial for Bertilimumab in BP~ Company Note

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1 Immune Pharmaceuticals Shares Up-Listed to Nasdaq Capital Markets ~Phase II Trial for Bertilimumab in BP~ Company Note On August 21 st, Immune Pharmaceuticals (IMNP) will begin trading on the Nasdaq Capital Market. The up-listing should improve the liquidity and marketability of the Company s shares. Immune also recently announced the initiation of a Phase II study to evaluate the safety and tolerability of bertilimumab as a treatment for bullous pemphigoid (BP), a rare autoimmune skin disorder. The risks associated with most current therapies leave a large, unmet medical need for a safer alternative which Immune hopes to fill with bertilimumab. Jerry Isaacson, Ph.D. (646) jerry@lifesciadvisors.com David Sherman, Ph.D. david@lifesciadvisors.com Andrew I. McDonald, Ph.D. andrew@lifesciadvisors.com Immune Pharmaceuticals Completes Nasdaq Uplisting. On August 19 th, Immune Pharmaceuticals announced that on August 21 st the Companies shares will begin trading on the Nasdaq Capital Market. The up-listing should increase the marketability of Immune s common shares to investors by increasing share visibility and liquidity. According to data provided by Nasdaq, companies up-listing to the exchange in 2014 experienced a mean increase of 33% in market capitalization and 125% in trading volume. Companies up-listing in 2013 experienced an average 100% increase in market capitalization and a 552% increase in trading volume. While not predictive, uplisting to Nasdaq should positively impact the marketability of the Company s shares. The successful up-listing follows the merger with Epicept and a 1:40 reverse stock split that were completed in late Immune Pharmaceuticals Announced Initiation of a Phase II Trial of Bertilimumab in Bullous Pemphigoid. On July 30 th, Immune announced the initiation of a proof-of-concept Phase II trial to evaluate the safety and tolerability of lead candidate bertilimumab as a potential therapy for patients with bullous pemphigoid Ticker IMNP Price $3.92 Market Cap (M) $64 EV (M) $65 Shares Outstanding (M) 16.3 Avg. Daily Volume 69, week Range: $1.15-$5.65 Cash (M) $9.2 Net Cash/Share $0.20 Debt (M) $4.6 Annualized Cash Burn (M) $9.0 Years of Cash Left 1.0 Short Interest (M) N/A Short Interest (% of Float) N/A LIFESCI ADVISORS Equity Research Page 1

2 (BP). The Company has commenced patient screening and expects to dose the first patient in the near future. Bertilimumab has already been evaluated in clinical trials for patients with ulcerative colitis (UC) and has produced positive safety data in this indication. Immune Forming Collaborations with Patient Advocacy Groups to Raise Awareness. Immune Pharmaceuticals has formed a collaboration with LyfeBulb, an advocacy group for patients with chronic diseases, and the International Pemphigus Pemphigoid Foundation (IPPF), whose goal is to raise awareness of the unmet needs of BP patients. The collaborations are designed to bring increased visibility to attract future researchers, industry investment, and financial support to aid these patients. Phase II Bullous Pemphigoid Trial Design. The BP proof-of-concept study is an open-label Phase II trial evaluating the safety and efficacy of bertilimumab as a treatment for this indication. The study will enroll patients who will receive an infusion of bertilimumab at a dose of 10 mg/kg on days 0 and 14 of the 8 week study. In addition to bertilimumab, patients will begin a daily prednisone regimen that will start at 30 mg and taper based on patient response. The co-primary study endpoints are the bullous pemphigoid disease area index (BPDAI) and the level of steroid sparing, measured as the percentage of patients able to reach a prednisone dosage under 10 mg per day. Immune Addressing Unmet Medical Need in BP. BP is a rare skin condition that causes large, fluid-filled, subepidermal blisters on areas of skin that often flex, including the lower abdomen, upper thighs or armpits. There are approximately 30,000 BP patients in the US and Europe. Because the average age of onset for BP is about 65 years, patients with the disease frequently have other comorbid conditions, thus making them more vulnerable to the adverse effects of current treatments. The range of treatment categories and associated risks and downsides are described in Figure 1. The most commonly used drugs are corticosteroids, including topical corticosteroids as a first-line therapy and oral glucocorticoids when topical agents are ineffective. Of currently available treatments, topical corticosteroids carry the least degree of risk for a BP patient, with adrenal suppression as the most severe potential adverse effect. 1,2 Oral glucocorticoids carry substantially heightened risks across many organ systems and for this reason physicians often try to minimize use of this drug class through concurrent prescription of immunosuppressive or anti-inflammatory agents. 34 This reduces the necessary glucocorticoid doses and spares the patient from many systemic 1 Walsh, P, et al., Hypothalamus-pituitary-adrenal axis suppression by superpotent topical steroids. Journal of American Academy of Dermatology, 29(3), pp Roujeau, JP, et al., A comparison of oral and topical corticosteroids in patients with bullous pemphigoid. New England Journal of Medicine, 346(5), pp Frew, JW and Murrell, DF, Corticosteroid use in autoimmune blistering diseases. Immunology and allergy clinics of North America, 32(2), pp Schmidt, E, et al., Treatment of bullous pemphigoid with dapsone, methylprednisolone, and topical clobetasol propionate: a retrospective study of 62 cases. Cutis, 76(3), pp LIFESCI ADVISORS Equity Research Page 2

3 adverse effects. 5 Figure 1. Range of Treatments for Bullous Pemphigoid Drug Description Downside/Risks Topical Corticosteroids Oral Glucocorticoids Immunosuppressive Agents Anti-inflammatory Agents Intravenous immunoglobulin Antibodies Examples: clobetasol or prednisone; first-line therapy Example: oral prednisone or prednisolone; used when topical agents are impractical Examples: azathioprine or mycophenolate mofetil; used to reduce glucocorticoid dose Examples: dapsone or tetracycline with nicotinamide; used when immunosuppressant risks outweigh benefits Used in refractory disease Example: rituximab targeting B cells; used in refractory disease Source: LifeSci Advisors High-potency can result in cutaneous atrophy, striae, folliculitis, and adrenal suppression Hypothalamic pituitary (HPA) axis suppression; cardiovascular disease; Cushing s syndrome; hyperlipidemia; osteoporosis; immune suppression; hyperglycemia and insulin resistance; GI disorders and GERD Decreased bone marrow activity; malignancy; GI disorders; infections from immune suppression Tetracycline: photosensitivity; GI distress; Dapsone: hemolytic anemia; methemoglobinemia; agranulocytosis; motor neuropathy High cost; anaphylaxis; headache; aseptic meningitis; acute kidney injury; hemolysis; venous thrombosis; risk of heart attack or stroke Acute infusion reactions; anaphylaxis; immune deficiency; opportunistic infections; respiratory problems; heart problems In more severe, refractory disease states, patients are prescribed either intravenous immunoglobulin (IVIG) or intravenous Rituxan (rituximab). 6,7 Both of these intravenous treatments carry infusion reaction risks including anaphylaxis and risks of cardiac and respiratory problems. In addition, IVIG carries a substantially higher cost than most therapies which may deter wide adoption. Moreover, not all patients benefit and the disease often recurs. The serious complications that can arise from use of these drug classes leave open are large, unmet medical need for an effective therapy with a better safety profile for the treatment of BP. 5 Stanley, JR. et al. Bullous Pemphigoid. In: Fitzpatrick's Dermatology in General Medicine, Wolff K (Ed), McGraw-Hill, New York, Kasperkiewicz, M et al., Rituximab for treatment-refractory pemphigus and pemphigoid: a case series of 17 patients. Journal of American Academy of Dermatology, 65(3), pp Shetty, S and Ahmed, AR, Treatment of Bullous Pemphigoid With Rituximab: Critical Analysis of the Current Literature. Journal of Drugs in Dermatology, 12(6), pp LIFESCI ADVISORS Equity Research Page 3

4 Immune Reported Financial Results for the Second Quarter of Immune reported operating expenses of $3 million in the second quarter of 2014, compared with operating expenses of $1.9 million in the same period of Research and development expenses for the quarter rose to $1 million from $0.8 million in the same period of The comprehensive net income for the second quarter of 2014 was $0.3 million, or $0.03 per share, compared with a net loss of $1.9 million, or $0.65 per share, in the same period of The Company ended the quarter with $3.2 million in cash on hand. Importantly, Immune also took multiple actions in the second quarter to make the Company s shares eligible for listing on the Nasdaq exchange, including restructuring of preferred shares. Shares will begin trading on the Nasdaq Capital Market on August 21, Expected Upcoming Milestones 2014 File joint FDA and EMA application for Orphan Drug Designation for bertilimumab as a treatment for bullous pemphigoid Potential partnership or licensing activities for Amiket. H Data expected from Phase II trial of bertilimumab in bullous pemphigoid. H Expected data from the Phase II double-blind placebo-controlled trial of bertilimumab in UC Potential IND filing and commencement of a Phase I study of NanomAbs. About Immune Pharmaceuticals: More information on Immune can be found in our Initiation of Coverage Report and at LIFESCI ADVISORS Equity Research Page 4

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