Prima Biomed. IMP321 set to progress into Phase IIb study. Novartis moves IMP701 programme into the clinic

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1 Prima Biomed IMP321 set to progress into Phase IIb study Clinical update Pharma & biotech Prima Biomed is well positioned to push forward with the clinical development of its promising LAG3 programme following an A$25m fund raising and encouraging scientific advice from the EMA for its upcoming Phase IIb trial of IMP321 in metastatic breast cancer. Novartis and GSK have recently commenced clinical trials of partnered LAG3 programmes, providing additional validation for the LAG3 technology that Prima obtained with the 2014 acquisition of Immutep. We lift our valuation to A$271m (vs A$199m) with the inclusion of the Novartis LAG3 programme now that it has entered the clinic, and a melanoma indication for IMP321. Year end Revenue (A$m) PBT* (A$m) EPS* (c) DPS (c) P/E (x) Yield (%) 06/ (13.3) (1.09) 0.00 N/A N/A 06/ (12.9) (0.86) 0.00 N/A N/A 06/16e 1.1 (14.5) (0.82) 0.00 N/A N/A 06/17e 1.2 (14.4) (0.73) 0.00 N/A N/A Note: *PBT and EPS are normalised, excluding intangible amortisation, exceptional items and share-based payments. Novartis moves IMP701 programme into the clinic Novartis has initiated a Phase I trial of LAG525, its humanised version of Prima s IMP701 antagonist anti-lag-3 antibody, triggering a modest milestone payment. Novartis will trial LAG525 in cancer patients both as a single agent and in combination with its immune checkpoint inhibitor PDR001, underscoring the potential benefits that it sees from targeting LAG3. IMP321 Phase IIb trial in breast cancer to start Q415 Prima is poised to initiate a Phase IIb trial of lead product IIMP321 (a soluble LAG3 fusion protein) in combination with chemotherapy in metastatic breast cancer in Q415. The European regulator (EMA) has suggested that the trial could be sufficient to support a marketing authorisation if it achieves certain clinical endpoints. The trial is expected to take three years, so results are likely in H218. Prima also plans to launch a Phase I study of IMP321 in combination with an anti- PD1 immune checkpoint inhibitor in melanoma patients in early Ridgeback funding approved funded to late 2016 Prima has raised A$25m since May, including A$15m from Ridgeback Capital (including A$13.75m in convertible notes, approved by shareholders in July) and an A$10m SPP. Prima now has the resources to initiate the pivotal Phase IIb trial of IMP321 in metastatic breast cancer and a Phase I combination trial. The company indicated that it has sufficient cash to fund operations until late Valuation: Increased to A$271m, 13c per share We have increased our valuation to A$271m (prev A$199m), with the largest contributors to the increase being the inclusion of the Novartis LAG3 programme now that it has entered the clinic, and a melanoma indication for IMP321. Our valuation is equal to 13c per share on an undiluted basis (vs 14c), or 9c per share after accounting for dilution from options, warrants and convertible notes (vs 8c). Price Market cap 19 October 2015 A$0.06 A$117m US$0.72=A$1 Cash (A$m) at 30 September m Shares in issue m Free float 94% Code Primary exchange Secondary exchange Share price performance PRR/PBMD ASX NASDAQ % 1m 3m 12m Abs (5.0) (9.5) 0.0 Rel (local) (5.4) (6.6) (0.5) 52-week high/low A$0.16 A$0.02 Business description Prima BioMed is an ASX-listed biotechnology company focused on cancer immunotherapy. Its pipeline is based on three products using LAG-3 immune control system, IMP321 for cancer chemoimmunotherapy and partnered products IMP731 (GSK) and IMP701 (Novartis). It also has a Phase II asset, CVac, an autologous dendritic cell vaccine. Next events Start IMP-321 Phase IIb in MBC Start IMP-321 combination Phase I in melanoma Analysts Q415 Q116 Emma Ulker +44 (0) Dr Dennis Hulme +61 (0) Christian Glennie +44 (0) healthcare@edisongroup.com Edison profile page Prima Biomed is a research client of Edison Investment Research Limited

2 Update: IMP701 Phase I triggers Novartis milestone Prima announced in August that it will receive an undisclosed clinical milestone payment under its collaboration and licensing agreement with Novartis relating to its IMP701 LAG-3 (Lymphocyte Activation gene 3) antibody. Novartis recently commenced a Phase I trial with LAG525, its humanised version of Prima s IMP701 antagonistic anti-lag-3 antibody, which activates T cell proliferation and acts as an immune checkpoint blocker. Novartis Phase I trial (ClinicalTrials.gov Identifier: NCT ) will test LAG525 as a single agent as well as in combination with its indevelopment anti-pd1 immune checkpoint inhibitor PDR001, in patients with solid tumours. The fact that Novartis is trialling LAG525 in combination with PDR001 underscores the potential that it sees for synergistic combinations between drugs that target LAG3 and PD/L-1 checkpoint inhibitors. The Phase I trial is recruiting 240 patients with melanoma, lung, renal, bowel and nasopharyngeal cancers, and has an estimated completion date of November Novartis has not disclosed which cancers that it intends to target for subsequent development of LAG525; in our forecasts we assume that the initial indication will be non-small cell lung cancer (NSCLC), which has already been successfully targeted by the PD1 immune checkpoint inhibitors pembrolizumab (Keytruda, Merck) and nivolumab (Opdivo, Bristol-Myers Squibb). EMA indicates IMP321 Phase IIb could be pivotal IMP321, Prima s lead compound, is a soluble LAG-3Ig fusion protein that activates elements of the immune system, such as antigen presenting cells (APC), to target and destroy cancer cells. A previous Phase IIa study showed promising results in HER-2 negative metastatic breast cancer, with an encouraging improvement in RECIST response rates. In that trial, patients treated with IMP321 plus paclitaxel reported a 50% response rate at six months, compared the 25% expected for paclitaxel alone based on historical data. Prima plans to initiate a randomised double blind placebo-controlled Phase IIb study in combination with chemotherapy in first line metastatic breast cancer in Q415, to be called AIPAC (Active Immunotherapy PAClitaxel). The trial will compare IMP321 plus paclitaxel vs paclitaxel plus placebo in around 200 patients who are HER-2 negative and therefore are ineligible for treatment with Herceptin. The primary endpoint of the trial will be the improvement in progression free survival. The European Medicines Agency (EMA) advised Prima that it considers the trial to be well designed, and suggested that if it achieves certain (undisclosed) clinical endpoints it could potentially be sufficient to support a marketing authorisation based on this one pivotal study. The trial is expected to take three years to complete, potentially allowing Prima to file for approval in Europe in early 2019 ahead of a market launch in early Activation of antigen presenting cells could also be beneficial in a number of other cancer types, suggesting IMP321 could be used in a number of settings and in combination with a range of other treatments. Earlier preclinical studies have shown that LAG-3 based therapy can be synergistic with immune checkpoint inhibitors. In order to investigate this potential, Prima plans to start a Phase 1 trial of IMP321 in combination with an anti-pd1 checkpoint inhibitor (possibly Keytruda or Opdivo) in melanoma patients in Australia in early Prima Biomed 19 October

3 Ridgeback funding deal approved Shareholders have approved the A$15m investment from Ridgeback Capital that was announced in May, and have contributed a further A$10m through a share purchase plan. Prima has cancelled its earlier A$47m financing agreement with Bergen Asset Management. The Ridgeback deal included an A$1.25m placement at A$ per share announced in May and A$13.75m of 10-year notes convertible at A$0.02. The notes will accrue simple interest at 3% per annum payable on maturity or repayment. Interest will not be payable if the notes are converted prior to repayment or maturity in Ridgeback was also issued 380m warrants with an average exercise price of A$0.024 and durations of 5 and 10 years. The warrants can be exercised either by paying cash or by so-called cashless exercise, where a proportion of the new shares sufficient to cover the exercise cost are deemed to have been sold back to the company at the previous day s closing share price. Ridgeback currently holds 112.3m Prima shares, representing 5.7% of the shares on issue. Exhibit 1 shows that if it exercises all of its warrants with cash payments and converts all 13.75m convertible notes then its holding would increase to 1,180m Prima shares, representing 39% of issued stock if no other shares are issued, or 36% if the other 229m in-the-money options and performance rights not held by Ridgeback are also exercised. Exhibit 1: Potential further dilution and value per share Average exercise price (A$) m Total Prima shares on issue at 15 Oct ,018 Shares currently held by Ridgeback 112 Ridgeback convertible note potential shares Ridgeback warrants Potential Ridgeback holding if it exercises all warrants and convertible notes 1180 Valuation Our DCF valuation of Prima has increased to A$271m (previously A$199m see note 14 April 2015) or 13c per share (undiluted, previously 14c per share), based on a discount rate of 12.5%. On a fully diluted basis our valuation is at 9c per share, after taking into account the options, warrants and convertible notes on issue (previously 8c per share). The main contributors to the increased valuation are the capital raise and the inclusion for the first time of IMP701/LAG525 in our valuation model. Significant changes to our valuation assumptions include: the addition of the IMP701/LAG525 programme to the model, with Novartis having commenced Phase I trials in solid tumours in mid The likely target indications have not been disclosed we model NSCLC with peak global sales of US$2440m and launch in Financial terms of the 2012 partnership deal have not been disclosed we assume a 5% royalty rate and US$20m total milestones, which we believe would be in line with the modest milestone payment for starting Phase I trials. we have brought IMP321 market launch in Europe forward by one year to 2020 following EMA guidance of potential approvability on positive Phase IIb data, deferred US launch to 2023 (vs 2021) allowing time for a Phase III trial at the completion of Phase IIb. we have added the melanoma indication for IMP321 in combination with an anti PD1 immune checkpoint inhibitor (ICI) to the model, with a Phase I trial scheduled to commence in Australia in Q116. We model peak global sales of US$480m, a 17.5% royalty rate and launch in Prima Biomed 19 October

4 Delayed potential launch date for IMP731 by one year to 2022 following a review of the likely development timeline. Delayed potential launch date for CVac in ovarian cancer by two years to 2022, to allow time for a potential partner to conduct Phase IIb and Phase III trials. Removed CVac pancreatic cancer indication from our forecasts due to uncertainty created by the need to find a development partner, while retaining the more advanced ovarian cancer indication. Potential CVac milestones reduced to US$100m (vs US$150m) with the removal of this second targeted disease indication. With the US currently providing 12 years of market exclusivity for new biological products, we have extended our cash flow forecasts by 3 years, out to 2034 (vs 2031). Exhibit 2 summarises the constituent parts of our valuation. Exhibit 2: DCF valuation of Prima BioMed Value driver Launch date Likelihood of success Peak sales Royalty Value(A$) Value per share (A$) (US$m) IMP321-MBC 2020 (EU), 35% % (US) IMP321+anti-PD1 ICI-melanoma % % IMP321 milestones - assume partnered post PII in MBC US$225 estimated risk adjusted milestones from out licensing N American and European rights IMP731-autoimmune disease % % Potential IMP731 milestones from GSK US$90m of total US$100m in risk adjusted milestones from GSK IMP701-solid tumours (lung cancer) % % Potential IMP701 milestones from Novartis US$20m in risk adjusted milestones from Novartis CVac-ovarian cancer % % Potential milestones CVac US$100m estimated risk adjusted milestones from out licensing N American and European rights. Grants R&D expenses (16.1) (0.01) Admin expenses (11.0) (0.01) Capex (0.2) (0.00) Tax (86.8) (0.04) Net cash End December 2015 forecast net cash Total Exhibit 3 shows that in addition to the 1974m Prima shares currently on issue, there are a further 1375m potential shares that could be issued on the exercise of options, warrants and convertible notes, including 1297m that would be in-the-money at our 13c per share undiluted valuation. Exhibit 3 shows that after taking into account these potential shares our diluted valuation is 9c per share. Prima is likely to require additional funding to complete the IMP321 clinical trials; our diluted valuation of 9c per share does not take into account potential dilution from any future capital raising. Exhibit 3: Potential further dilution and value per share Average exercise price (A$) m Current number of shares 2,018 Ridgeback convertible note potential shares Ridgeback warrants Listed options Unlisted options Performance rights Total in-the-money potential shares 1,297 Total potential diluted number of shares 3,315 Net cash raised from options and CN exercise A$30 Valuation (above plus additional cash) A$302 Diluted value per share A$0.09 Prima Biomed 19 October

5 The breadth of the LAG3 pipeline means there could be further upside if Prima or its partners launch additional products into the clinic or broaden the indications being studied. We include risk-adjusted milestones payable by current partners GSK for IMP731 and Novartis for IMP701, plus milestones from prospective deals for IMP321 and for out-licensing CVac. Possible catalysts include launch of the Phase II trial of IMP321 in MBC and the Phase I melanoma in combination with a checkpoint inhibitor, or news on partnering, all of which could provide upside to our current valuation. Financials Prima reported a loss of A$32.2m for FY15 (ended 30 June 2015). The result included one-off finance costs of A$18.3m relating to the Bergen finance agreement. The main component was a fair value re-measurement loss when the A$2.8m convertible note was converted to 166m shares at a conversion price of A$0.019 per share vs. the market price of A$0.12 per share on the day the shares were issued. Normalised NPAT was a loss of A$12.8m, slightly less than the loss of A$13.3m in FY14. Prima acquired Immutep for A$26.3m in H115, including upfront cash consideration of A$15.8m, A$4.8m of stock and deferred consideration of A$5.7m. The FY15 cash flow statement records the receipt of an A$5.8m licence fee, presumably representing the milestone payment from GlaxoSmithKline after the commencement of clinical trials in the IMP731 programme. This licence fee was not recorded in the income statement, and appears to comprise the deferred Immutep consideration which was paid in H215. The company reported gross cash of A$24.4m at 30 September Since the end of FY Q116 (end 30 September) it has issued 1m (A$1.55m) of equity to Nyenburgh Investment Partners, taking pro forma gross cash to A$25.9m. We forecast A$10m R&D cost in FY16 and FY17. The company estimates that its operations are fully funded to late Sensitivities Prima is exposed to the same clinical, regulatory and commercialisation risks of all biotech companies. The key sensitivity is clinical progress of its pipeline of LAG-3 candidates, primarily the internally-funded IMP321. While Prima has funding in place to cover planned IMP321 Phase I/II studies, including the Phase II study in MBC, it would require a partnership or alternative forms of funding to advance IMP321 further. Existing partnerships with big pharma reduce the financial and execution risk for IMP701and IMP731; in addition, if the Phase I study of IMP701 reveals evidence of efficacy, this could lead GSK to extend the study to additional indications including RA and MS, which could increase the potential peak sales and therefore value of the product. Separately, progress with CVac depends on Prima successfully out-licensing the product. Prima Biomed 19 October

6 Exhibit 4: Financial summary A$'000s e 2017e Year end 30 June IFRS IFRS IFRS IFRS PROFIT & LOSS Revenue 2,020 1,336 1,119 1,240 Cost of Sales Gross Profit 2,020 1,336 1,119 1,240 EBITDA (14,003) (13,345) (14,611) (14,665) Operating Profit (before GW and except.) (14,395) (13,671) (14,649) (14,709) Intangible Amortisation (54) (1,015) (3,256) (2,894) Exceptionals 0 (18,338) 0 0 Operating Profit (14,450) (33,024) (17,905) (17,604) Other Net Interest Profit Before Tax (norm) (13,275) (12,940) (14,464) (14,388) Profit Before Tax (IFRS) (13,330) (32,294) (17,720) (17,282) Tax (14) Profit After Tax (norm) (13,289) (12,798) (14,464) (14,388) Profit After Tax (IFRS) (13,343) (32,152) (17,720) (17,282) Average Number of Shares Outstanding (m) 1, , , ,974.3 EPS - normalised (c) (1.1) (0.9) (0.8) (0.7) EPS - IFRS (c) (1.1) (2.2) (1.0) (0.9) Dividend per share (c) Gross Margin (%) N/A N/A N/A N/A EBITDA Margin (%) N/A N/A N/A N/A Operating Margin (before GW and except.) (%) N/A N/A N/A N/A BALANCE SHEET Fixed Assets ,960 19,668 16,846 Intangible Assets ,662 19,296 16,402 Tangible Assets Other Current Assets 24,684 8,023 17,356 2,896 Stocks Debtors Cash 23,200 6,760 16,093 1,632 Other 1, Current Liabilities (2,771) (4,380) (2,872) (2,872) Creditors (2,669) (2,791) (2,791) (2,791) Short term borrowings 0 (1,508) (0) (0) Short term leases Other (102) (80) (80) (80) Long Term Liabilities (15) (1,914) (15,665) (15,665) Long term borrowings incl. conv. note 0 0 (13,751) (13,751) Long term leases Other long term liabilities (15) (1,914) (1,914) (1,914) Net Assets 22,592 24,690 18,487 1,205 CASH FLOW Operating Cash Flow (14,908) (7,785) (14,693) (14,665) Net Interest Tax (24) (2) 0 0 Capex (104) (49) (112) (117) Acquisitions/disposals 0 (20,913) 0 0 Financing 6,845 7,745 11,710 0 Dividends Other (158) (164) 0 0 Net Cash Flow (7,643) (21,168) (2,910) (14,460) Opening net debt/(cash) (30,023) (23,200) (5,251) (2,341) HP finance leases initiated Other 820 3, Closing net debt/(cash) (23,200) (5,251) (2,341) 12,119 Prima Biomed 19 October

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Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE s express written consent. Frankfurt +49 (0) Prima Schumannstrasse Biomed 34b 19 October High Holborn 245 Park Avenue, 39th Floor Level 25, Aurora Place Level 15, 171 Featherston St Frankfurt Germany London +44 (0) London, WC1V 7EE United Kingdom New York , New York US Sydney +61 (0) Phillip St, Sydney NSW 2000, Australia Wellington +64 (0) Wellington 6011 New Zealand