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Health Care | United States 14 March 2014

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Immune Pharmaceuticals
Multiple Clinical and Business Milestones in 2014
Risk and Return Potential
Return Potential Risk Current Price High/Low (12M) Number of Shares (m) Market Capitalisation (SEKm) Net Debt (SEKm) Enterprise Value (SEKm) Reuters/Bloomberg Listing High High Risk 28.00 35.90/10.55 13.3 353 29 382 IMNP.ST/IMNP SS First North Premier

Initiation of coverage Target Price Change Report Estimate Change Important Event

An emerging leader in personalized antibody therapeutics

Immune Pharmaceuticals is a US based biotech company, with R&D in Israel, specialising in the development and commercialisation of targeted drugs, including monoclonal antibodies (mAbs), nanomedicines, drugs for the treatment of inflammatory diseases and cancer. Immune Pharmaceuticals has an attractive pipeline, and its most interesting drug candidates are Bertilimumab (b-mAb) for the treatment of inflammatory bowel diseases, (Crohns Disease and Ulcerative Colitis), Severe Asthma and other indications, which is undergoing phase II studies, and NanomAbs (second generation Antibody Drug Conjugates) with greater payload capacity and better pharmacokinetic properties). Although NanomAbs is in the pre-clinical stage, the field of cancer treatment using antibody drug conjugates (ADCs) is interesting. According to Datamonitor, worldwide Antibody Therapeutic sales exceed USD 50 billion and continue to grow double digit. Leading Antibodies include Humira and Remicade used for Rheumatoid Arthritis and Inflammatory Bowel Diseases (IBD). Epicept Acquisition Immune acquired Epicept (EPCT) in August 2013 in order to become a public company. Immune is preparing the phase III clinical trials for Amiket, which received Fast Track designation from the FDA for Chemotherapy Induced Neuropathic Pain, and seeking a development and commercialization partner. Given Immunes management track record in drug development and corporate partnering we expect initiation of phase III and a revenue generating transaction for Amiket during 2014.

Estimates and Valuation (SEK)

FY (Dec) Sales EBITDA EBIT Pre-tax Result EPS Adjusted BVPS Dividend EPS Growth EBIT Margin ROE ROCE Net Debt/Equity EV/Sales EV/EBITDA EV/EBIT P/E Adjusted P/BV 2012 4 -17 -17 -17 -1.37 -7.44 0.00 36.8 77.4 -0.52 NM NM NM NM 2013E 0 -17 -18 -22 -1.74 -8.48 0.00 NM 21.6 30.8 -0.34 NM NM NM NM 2014E 65 -19 -20 -23 -1.54 0.87 0.00 NM -30.0 47.2 44.3 -2.01 6.96 NM NM NM 32.16 2015E 65 -34 -35 -38 -2.11 3.95 0.00 NM -53.5 -85.6 -193.2 -0.34 8.26 NM NM NM 7.09 0.0

-441.0 -9,034.0

60.47 1,909.00

Dividend Yield 0.0 0.0 0.0 Source: Company Reports, Erik Penser Bankaktiebolag

Will need money from the market

According to our estimates, the b-mAb for treatment of ulcerative colitis (UC) can reach, at the earliest, the market in 2017, meaning that the company will have to find funds of SEKm 70 to 100 annually to fund the project portfolio. Valuation Potential Given the current rise of the share on the stock exchange, we believe more investors have begun to see the potential of the company's attractive product pipeline with short term clinical and business milestones as well as expected institutional financing and up listing to NASDAQ in the US, we see significant share-price appreciation potential through 2014. Our sum of the part valuation indicates a net present value of SEKm 1235 for Immune Pharmaceuticals.

Price trend, 12 months

40 35 30 25 20 15 10 M A M J J A S O N D J F M

Immune Pharma

OMXS

Source: FactSet
Date 31/03/2014
See last page for the disclaimer.

Event Q4 report

Place

Immune Pharma Full-year EBIT Performance

0
06 07 08 09 10 11 12 13E 14E 15E -1,000

Immune Pharma Quarterly EBIT Performance

0 0
10 10 10 10 11 11 11 11 12 12 12 12 13 13

0 -1,000
-2,000 -3,000 -4,000 -5,000 -6,000 -7,000
EBIT EBIT Margin

-5
-10

-2
-2,000

EBIT Margin, Percentages

-3,000

-4

EBIT, SEKm

-4,000 -5,000

EBIT, SEKm

-15 -20 -25 -30

-6 -8 -10 -12

-6,000
-7,000 -8,000

-35 -40
EBIT EBIT Margin

-9,000 -10,000 -14

Source: Company Reports, Erik Penser Bankaktiebolag

Source: Company Reports, Erik Penser Bankaktiebolag

Immune Pharma Financial Position

60
50 40 30 -50

Immune Pharma Share Structure, Management

0

Market Cap (SEKm) No of Outstanding Shares (m) Avg No of Daily Traded Shares (000s) Free Float (Shares)
Net Debt/Equity

353 13.3 13 74.9% Votes 25.0% 4.9% 9.2% 3.8% 57.2% Shares 25.0% 4.9% 9.2% 3.8% 57.2% Daniel Teper Daniel Teper Robert W. Cook Anna Baran - / www.immunepharmaceuticals.com 31 March 2014

Net Debt, SEKm

20 10

-100

Main Shareholders Daniel Teper Business Asset Melini Capital Jean Kadouche vriga Chairman CEO CFO IR Phone Number / Internet

0
06 -10 -20 -30 -40
Net Debt Net Debt / Equity

-150
07 08 09 10 11 12 13E 14E 15E

-200

-250

Note: Negative numbers indicate a net cash position Source: Company Reports, Erik Penser Bankaktiebolag

Next Report Source: Company Reports, Erik Penser Bankaktiebolag

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Erik Penser Bankaktiebolag

EBIT Margin, Percentages

Investment case
We are initiating coverage of Immune Pharmaceuticals. We estimate that the company's main candidate, Bertilimumab, has the potential to become an alternative in the market for inflammatory bowel diseases (IBD). Bertilimumabs mechanism of action is unique and differs from its competitors as it is aimed directly at the onset of the disease. Attractive potential for Bertilimumab Bertilimumab (b-mab) is a first-class therapeutic monoclonal antibody (mAb) with high specificity for eotaxin-1, a well-studied inflammatory disease (ID) biomarker. With a differentiated mechanism of action, we believe that b-mab has the potential to match the market leader, Remicade (global sales USDbn 8 in 2012), and we see a potential trigger in the stock price if b-mab manages to obtain Orphan Drug status (OD) from the FDA for the treatment of bullous pemphigoid (BP), a chronic inflammatory skin disease that affects an estimated 30,000 patients worldwide and that currently has no permanent treatment. We also need to see positive results from the phase II clinical study for the treatment of BP, which is expected to be completed in 1H14. Big upside for those who can wait In our forecasts, we expect that the company will manage itself to launch b-mab for the treatment of BP, provided that OD status is achieved and that the revenue amounts to SEKm 532 in 2023. We expect that the company will licence-out bmab for the treatment of IBD. We estimate the global market for IBD to approximately USD 15bn in 2019, when b-mab could be launched on the market for IBD. Furthermore, we estimate that b-mab could achieve sales of SEKbn 2,9 in 2025, with an estimated market penetration of 28%, and a pricing of USDk 25 per year (compared with Remicades USDk 24 per year). If Phase II studies on bmab are positive, the project will be attractive to a potential partner with expertise in the IBD market. Hence, it is likely that Immune Pharmaceuticals will sign a partnership agreement in early 2015. We model an advance payment of SEKm 65 in 2015, plus another SEKm 300 in milestone payments from 2023, SEKm 365 in total plus royalties of 15% - 20%.

Erik Penser Bankaktiebolag

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Immune Pharmaceuticals Sum of The Parts

Source: Erik Penser Bankaktiebolag,

Other projects NanomAbs has the potential to attract investors Monoclonal antibodies (mAb) are used in biochemical and medical research as reagents for proteins. Since they only bind to one type of protein, they are more specific than polyclonal antibodies, which can bind to many different types of protein. Monoclonal antibodies are often used to detect cancer, but many are not strong enough to kill tumours on their own. For this reason, conjugated mAbs have been developed. In simple terms, a conjugated mAb is a mAb that carries a cytotoxic load (i.e. toxins or radionuclides), also known as antibody-drug conjugates (ADC). According to Roots Analys, market research indicates that the ADC market is expected to grow to USDbn 9 in 2023. Immune Pharmaceuticals NanomAbs platform is an ADC technology discovered by Professor Shimon Benita at the Hebrew University of Jerusalem (HUoJ) in collaboration with one of the company's founder, Jean Kadouche, PhD. NanomAbs has unique characteristics, such as controlled drug release, not found in other ADCs. The company's objective with NanomAbs is to create various attractive drug candidates, one of which is AMB8LK (potential to detect/kill cancer cells in the pancreas and lungs). Since the candidates are still at the preclinical stage, we estimate that a NanomAbs partnership could yield about SEKm 250 in advance payments and that the entire project could be worth up to SEKm 300900 in total. AmiKet is a joker The acquisition of EpiCept in 2013 means that Immune Pharmaceuticals has control of AmiKet, which is in phase III studies for chemotherapy-induced peripheral neuropathy (CIPN), a condition experienced by 30-40% of cancer patients receiving chemotherapy. However, the study has been paused to await a partnership, which we expect will happen in H2 2014. We believe that AmiKet has the potential to reach the market with the help of a partner, and we estimate the market to about USDbn 2.7. However, we believe licensing out of AmiKet could take place as early as in 2014 and could raise about SEKm 50 to 250 in total milestone payments to the company.

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Erik Penser Bankaktiebolag

Crolibulin and Azixa Immune Pharmaceuticals also gained two other projects from the acquisition of EpiCept, Crolibulin and Azixa, each of which have completed phase II studies. Both products are small molecules that use vascular disturbances to stimulate signals of cell death (apoptosis). However, the company indicates that it will not drive these projects forward without a partner, so in this analysis we choose to primarily focus on the other projects.
Immune Pharmaceuticals Product Portfolio

Source: Erik Penser Bankaktiebolag,

Immune Pharmaceuticals Our estimated calendar

Anticipates Milestones Potential uplisting from the OTC BB to the NASDAQ Bertilimumab in Bullous Pemphigoid Initiation of Phase II study with bertilimumab in bullous pemphigoid Orphan Disease designation by FDA for bertilimumab in bullous pemphigoid Potential announcement of topline Phase I I results with bertilimumab in bullous pemphigoid Conduct end-of-Phase II meeting with FDA for bertilimumab in bullous pemphigoid Initiation of Phase III study with bertilimumab in bullous pemphigoid Projected FDA approval of bertilimumab in bullous pemphigoid Bertilimumab in Inflammatory Bowel Diseases and Asthma Expansion of ongoing Phase I I study with bertilimumab in ulcerative colitis into EU and US Potential announcement of topline Phase I I results with bertilimumab in ulcerative colitis Potential announcement of bertilimumab development partnership agreement in IBD Potential advancement of bertilimumab into Phase II study in Crohn's disease Potential advancement of bertilimumab into Phase II study in severe asthma Initiation of Phase I I I study with bertilimumab in moderate to severe ulcerative colitis Projected FDA approval of bertilimumab in ulcerative colitis AmiKet Potential announcement of AmiKet out-licensing agreement Initiation of Phase III study with AmiKet in chemotherapy-induced peripheral neuropathy (CIPN) Projected FDA approval of AmiKet for CIPN NanomAbs File IND application for Phase I clinical evaluation of NanomAbs candidate Potential announcement of NanomAbs out-licensing agreement Q1 2014 H1 2014 H2 2014 H2 2014 H2 2014 2015 2017 H2 2014 2015 2015 2015 2015 2016 2019 H2 2014 H2 2014 2016 H1 2015 2015

Source: Erik Penser Bankaktiebolag.

Erik Penser Bankaktiebolag

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History of Immune Pharmaceuticals Immune Pharmaceuticals is a biotechnology company, headquartered in New York and with research/development facilities in Herzliya Pituach and Rehovot, Israel. The present form of the company focuses on developing nanotherapeutic drug candidates (mAb and ADC) for inflammatory diseases and cancer. History Prior to the merger, Immune Pharmaceuticals was a privately held biotechnology company specialising in the development of nanotherapeutic drugs (mAbs and ADC) for inflammatory diseases and cancer. Its focus was mainly on the development of one leading drug candidate, Bertilimumab. This is a mAb purchased from ICO Therapeutics in June 2011 for USDk 500 cash up-front, USDm 32 in potential milestone payments and royalties, 600k in Immune Pharmaceuticals stock at a closing price of USD 2 per share, 200k Immune Pharmaceuticals warrants and 6.14% ownership (fully diluted). ICO retains certain rights to Bertilimumab but focuses on developing Bertilimumab for ophthalmic indications. EpiCept before the merger Parts of the Immune Pharmaceuticals product portfolio came with the acquisition of EpiCept. EpiCept was a specialty-pharma, a pharmaceutical company working on the development of drugs for the treatment of cancer and pain, with a focus on the latter. The company's lead drug candidate, AmiKet, is a patented prescription cream formulation containing amitriptyline 4% and ketamine 2%. Other new drug candidates Azixa and Crolibulin were acquired by EpiCept in a previous merger with Maxim Pharmaceuticals (January 2006). In January 2012, Suntrust Robinson Humphrey evaluated strategic alternatives to maximise the commercial opportunity of AmiKet, which they estimate to about USDm 175 250 in upfront payments and milestone payments from partners. Acquisition of EpiCept In November 2012, EpiCept and Immune Pharmaceuticals signed an agreement to merge. Technically, Immune Pharmaceuticals acquired EpiCept, and as a result the new company is called Immune Pharmaceuticals. In connection with the merger, which was completed in August 2013, EpiCept issued ordinary shares to Immune Pharmaceuticals shareholders. EpiCepts shareholders retained approximately 19% ownership and Immunes shareholders received approximately 81%, on a fully diluted basis. EpiCept previously traded on Nasdaq OMX Stockholm, but the new company moved after the merger to First North Premier. The new group has a broad portfolio of product candidates. Immune Pharmaceuticals has expertise in therapeutic mAbs, which remains an area of great interest for product development and market potential, and holds ADC technology, which is a hot research field in the industry. One result of the merger is that more resources are allocated to EpiCepts drug candidate AmiKet. The company is currently working to find a project partner that can fund the last part of the Phase III studies.

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Diseases Inflammatory bowel diseases (IBD) The term inflammatory bowel disease (IBD) is normally used as a generic term for Crohn's disease (CD) and ulcerative colitis (UC), which are inflammatory diseases of the intestine. IBD is characterised by chronic inflammation of the intestinal lining (mucosa). The cause of the disease is unknown, but both genetics and the environment play a role. The disease is chronic, often starts at 15-40 years of age and usually goes in spells with long periods of low or no disease activity. Population-based studies show that approximately 20% of patients with CD develop chronic continuous disease activity. For UC the figure is much lower. The prevalence of IBD is estimated to be >200 cases per 100,000, or about 1.01.5 million people in the United States, approximately 200,000 people in Canada, and 2.02.2 million people in Europe. CD can affect any part of the gastrointestinal tract (GI), from the mouth to the anus, but most commonly it affects the lower part of the small intestine, while UC is limited to the colon and rectum. The symptoms of both CD and UC include diarrhoea, abdominal pain, fever and weight loss. People suffering from IBD are severely debilitated and the disease has a significant impact on an individual's daily wellbeing and function. These effects impact more negatively on the individual's quality of life than, say, chronic back pain, rheumatic heart disease and intellectual disability. Treatment and management People are most commonly affected by IBD between the ages of 16 and 30, and if the disease becomes chronic intestinal inflammation (colitis) it can last for 8-10 years. In conjunction with this, there is also an increased risk of colorectal cancer (CRC), which is difficult to detect. Due to the high risk of cancer developing, the practice of doctors (gastroenterologists) is to conduct regular endoscopic screening of patients. However, there is no evidence to suggest that screening patients with UC improves survival. Today's treatment initially consists of corticosteroids and anti-inflammatory agents. In moderate to severe cases of IBD, when medical treatment in some cases does not work, surgery to remove part, or all, of the colon (colectomy) may help. This is considered in 25-40% of patients afflicted with IBD. Recent evidence supports the correlation of eotaxin-1 with disease severity Eotaxin-1 is a potential biomarker and therapeutic target for UC and CD. Eotaxin-1, also known as CC-motif chemokine 11 (CCL11) or eosinophil chemotactic protein, is a chemokine, which is one of the key regulators of a number of pathological reactions such as inflammation, angiogenesis, and certain infections. Since eosinophils are an important part of innate immunity, the accumulation of eosinophils in tissues can be harmful as they are known to release cytokines to enhance inflammatory signalling. This inflammation may be pathological in CD and UC. Therefore, drug-absorbing eosinophil accumulation may have a role in the treatment of these indications. Clinical data supports the suggestion that eotaxin-1 is a biomarker for UC and CD. This biomarker has been identified not only as a potential indicator of the disease but also as a target for therapeutic intervention. An antibody such as Bertilimumab, which binds to eotaxin-1, therefore has a solid scientific basis to be able to treat UC and CD. A clinical study has screened a large number of cytokines and chemokines to search for correlations between various diseases.

Erik Penser Bankaktiebolag

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The study examined 40 healthy controls against 137 UC patients. The chart below shows tissue taxin-1 levels for several groups of patients in the study. The first column contains healthy subjects (Ctrl). Qui refers to patients who are categorised as quiescent, meaning that their disease is not active. The remaining categories represent patients with mild (Mild), moderate (Mod) and severe (Sev) UC. Eotaxin-1 levels in the tissue exhibit a clear increasing trend in patients with increased severity of the disease. The difference between groups was statistically significant. The researchers reported similar differences in tissue eotaxin-1 gene expression.

Immune Pharmaceuticals Eeotaxin-1 levels in different states of UC

Source: Erik Penser Bankaktiebolag, Coburn et al. (2013, PLoS One, 8 (12): e82300)

The researchers in this study concluded that eotaxin-1 is a strong potential candidate for a biomarker in UC patients. An antibody targeting eotaxin-1 may be a good therapeutic candidate for the treatment of UC. Immune Pharmaceuticals is acting on this proposal by requiring that patients enrolled in the ongoing phase II study have a minimum of 100 pg/mg eotaxin-1 in a biopsied tissue sample. Since Bertilimumab specifically targets eotaxin-1, these patients may also be the most likely to respond to this treatment. Bullous pemphigoid Bullous pemphigoid (BP) is a chronic autoimmune skin disease that primarily affects skin cells, especially in the areas around the lower abdomen, groin, and extremities. The disease tends to persist for months or years, with periods of deterioration. The range of how the disease is expressed is extremely wide, but usually there is an itchy rash with widespread blistering (bullae). Blisters may vary in size from a few millimetres to several centimetres. BP may be difficult to diagnose before blistering starts since the symptoms are usually only itchy red patches. BP is characterised by spontaneous outbreaks. Even without treatment, BP symptoms are often self-limiting and the symptoms may disappear after a period of several months to years, but can become very extensive during the outbreak. The disease is rare, affecting approximately 14 in one million worldwide, but the risk increases with age. In total there are an estimated 30,000 cases worldwide. Treatment and management

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The goals for treatment of BP are currently focused on symptom relief and prevention of infections, primarily to help the skin to heal as quickly as possible. Antibiotics (tetracycline and minocycline) have been used primarily for mild to moderate symptoms of the disease and are used in combination with various skin creams containing steroids for more effective treatment. Once blisters have stopped forming, the number decreases over a long period (months or years). Because steroids have some unwanted side effects, dermatologists try to reduce the dose as quickly as possible. If this happens too quickly, outbreaks of blisters occur again. Knowledge of the disease is still very limited. High mortality is observed in BP patients previously suffering from severe heart disease (25-40%). The highest mortality rate of BP is observed in patients undergoing a different treatment. For example, patients at risk of BP also have heightened risk of, for example, hypertension, diabetes and heart disease. Treatments for these disorders may exacerbate the progression of BP. Role of eotaxin-1 in bullous pemphigoid Onset of BP is partly driven by eosinophils, which secrete pro-inflammatory cytokines and proteases. Eotaxin-1 (CCL11) and related eotaxin CCL24 are also involved in the onset of BP. The chart below illustrates the levels of eotaxin-1 in the serum of BP patients compared with healthy donors (HD) and patients with pemphigus vulgaris (PV), a related condition. Patients with BP had a statistically significant difference in concentration of eotaxin-1 as compared to both healthy donors and PV patients. The chart to the right shows the same data for individual patients, according to severity of the patients' condition (mild, moderate and severe).
Immune Pharmaceuticals Eotaxin-1 levels in BP Immune Pharmaceuticals Eotaxin-1 in BP

Source: Company reports, Erik Penser Bankaktiebolag, nther, C. et al., 2011.

Source: Company reports, Erik Penser Bankaktiebolag, nther, C. et al., 2011.

Severe asthma Asthma is a common chronic disease associated with episodic inflammation of the airways. According to the Global Initiative for Asthma (GINA), more than 300 million people worldwide now have asthma, a number that is expected to rise to 400 million by 2025. It is the most common chronic disease among children and is a global concern; over 80% of deaths due to asthma occur in low and lower middle income individuals. The disease is under-diagnosed and under-treated, and creates a substantial burden on individuals and families and can limit

Erik Penser Bankaktiebolag

Immune Pharma 14 March 2014 9

individuals' activities for a lifetime. Severe asthma affects up to 15% of patients diagnosed with asthma and who respond poorly to current treatments. The Immune Pharmaceuticals Bertilimumab project Bertilimumab (formerly CAT-213) Immune Pharmaceuticals leading drug candidate is Bertilimumab (b-mab), a human monoclonal antibody (mAb) designed to neutralise chemokine (a signalling protein), eotaxin-1 (also known as CC-motif chemokine 11 or CCL11) originally developed as CAT-213 by Cambridge Antibody Technology (CAT), a company acquired by AstraZeneca in 2006. In 2007, CAT-213 was licensed to ICO Therapeutics (a Canadian biotech company that also develops b-mab under the name iCo-008 for ophthalmic indications). In June 2011, ICO granted Immune Pharmaceuticals an exclusive license to develop and commercialise b-mab for systemic applications, which were initially moderate to severe ulcerative colitis (UC) and inflammatory bowel disease (IBD), as well as for asthma and Crohn's disease (CD) as the next targets. Immune Pharmaceuticals intends to develop b-mab for the treatment of UC and CD, severe asthma and bullous pemphigoid (BP). Recently, the company received permission from the Israeli health authorities to initiate a phase II randomised, double blind, placebo-controlled, parallel group study on b-mab in patients with moderate to severe UC. The study, which began in Q3 2013 and will be expanded in 2014, is being conducted in parallel in both the EU and US. The company anticipates that patient enrolment will be completed in 2014 and that the first results will be published in 2015. Pending a favourable outcome, the company plans to submit an application for Orphan Drug status for b-mab for the treatment of BP to both the FDA and the European Medicines Agency (EMA). If approval is granted, the company would have market exclusivity as well as financial incentives for b-mab. The company intends to initiate a pilot study of b-mab in patients with BP in mid-2014. Finally, Immune Pharmaceuticals also plans to conduct a pilot phase II study on b-mab for the treatment of severe asthma in patients with high concentrations of eosinophil and eotaxin-1 in their sputum. The study is scheduled for 2015, followed by an exploratory phase II study on CD, also in 2015. Current treatments of IBD Tumoricidal drugs (TNF inhibitors) such as Johnson & Johnsons Remicade (infliximab) are the primary drugs used for the treatment of CD and UC today. However, there is minimal product differentiation among these TNF inhibitors. Around 30% of patients for each disease (CD and UC) suffer from moderate to severe disease states, and one third of these patients (who suffer from moderate to severe conditions) are deemed as suitable candidates for advanced therapies. Approximately 25-40% of anti-TNF treatments fail. We believe that b-mab could be positioned as a first-line treatment in IBD, especially considering that b-mabs mechanism impacts higher up in the signal path compared to anti-TNFs, where the potential for premium pricing can occur. Potential for Bertilimumab In the US, the market for inflammatory bowel disease is over 1.4 million patients. The US IBD market was worth USDbn 4.3 in 2011 and is expected to reach USDbn 7.7 in 2017. The global IBD market could reach almost USDbn 10 in 2017. B-mab has the potential to take a significant part of the IBD market if it is eventually approved for the treatment of both CD and UC. The ability to use b-

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Erik Penser Bankaktiebolag

mab in patients who have high levels of eotaxin-1 may provide an advantage for b-mab over TNF inhibitor drugs, on the grounds that b-mab may inhibit inflammation by binding of eotaxin-1. Bertilimumab undergoing more clinical phase II studies Three clinical studies of b-mab have been conducted in Europe: CAT-213-0101, CAT-213-0103 and CAT-213 to 0203. These studies investigated the pharmacodynamic properties of b-mab to provide evidence of the tolerability of b-mab in intravenous administration, both intranasally as intraocularly. These trials included initial studies of the drug's efficacy in the treatment of allergic rhinitis and allergen-induced conjunctivitis. B-mab was shown to be effective in these indications. The problem in these trials was that the wrong patient groups were selected, and the patients were chosen without regard to eotaxin-1 status. The strategy of Immune Pharmaceuticals, to target indications such as IBD where eotaxin-1 is a biomarker for the disease, has much more potential to be effective. The Immune Pharmaceuticals AmiKet project AmiKet: analgesic cream for pain relief AmiKet is a topical analgesic consisting of amitriptyline 4% and ketamine 2%. This patented combination has received FDA Fast Track as a treatment for chemotherapy-induced peripheral neuropathy (CIPN) in cancer patients previously treated with chemotherapy. AmiKet has been tested extensively in phase II studies. In these studies, AmiKet demonstrated analgesic efficacy, good tolerance and an attractive side-effect profile compared with oral therapies. AmiKet can be placed as a primary therapy and used in combination with other analgesics, which enhances the value of the product. AmiKet has received Fast Track status from the FDA for a phase III study in chemotherapy-induced peripheral neuropathy, a condition for which no treatments are approved. This represents a significant market opportunity for a highly prevalent medical need. The company expects to license AmiKet in 2H 2014 to another unknown partner. CIPN creates a significant market opportunity Neuropathy is caused by nerve damage to the peripheral or central nervous system, which may result from traumatic injuries, infections, metabolic problems, or exposure to toxins. Many chemotherapeutic agents have severe neurotoxic effects, and are directly linked to the development of CIPN in patients receiving systemic treatment for their cancer, particularly treatment with platinum compounds (taxanes). Taxanes are approved and recommended for the treatment of the most common cancers, including breast, prostate, lung and ovarian cancers. Patients treated with taxane-class chemotherapy have a 50-70% risk of developing CIPN. For some people, transient pain can be relieved by lowering the dose of chemotherapy or temporarily halting it, which reduces the pain within a few weeks. However, for other patients, symptoms can become persistent. Using survey data from the National Cancer Institute 2011 on physician-stated cytostatic treatment rates for cancer, we estimate that approximately 90% of cancer patients are treated with chemotherapy, and around 60% are treated with a taxane-based regimen. With an estimated 577,190 people in the US living with advanced cancer, around 55-67% of patients are treated for neuropathic pain. We believe that AmiKet is a potential candidate for these patients and we estimate a potential value for the project of SEKm 130. Competition is open in CIPN According to Datamonitor, the overall market for neuropathic pain in the US is expected to grow by 2.7% per year from 2010 until 2019, peaking in 2018. The

Erik Penser Bankaktiebolag

Immune Pharma 14 March 2014 11

total projected market is forecasted to be USDbn 2.7. Antidepressants and local anaesthetic drugs represent the largest market share for the treatment of neuropathic pain. However, there are products currently in clinical development that are expected to gain significant market share if they reach the market. Existing patents for approved products will also expire, with the exception of Lyrica (pregabalin), the leading drug marketed by Pfizer. Most drugs currently used for the treatment of peripheral neuropathic pain will go off-patent over the next five years. Over the past 12 years, seven drugs have been approved for the treatment of neuropathic pain. However, there are no drugs approved for the treatment of CIPN, and only five compounds are being developed specifically for CIPN, leaving the field open for AmiKet. AmiKet opportunities We believe that AmiKet has the potential to become a substitute for, or complement to, oral therapies for pain. We believe that AmiKets advantages and disadvantages, above all its safety and efficacy, will play a crucial role in the market share it can take. However, these parameters are still uncertain but we expect that the completion of the phase III study will shed light on how attractive AmiKet is. We do not wish to make detailed forecasts of AmiKets market opportunities. Our forecast is that a partnership agreement may be finalised in mid-2014. Furthermore, we estimate with a probability of 35% that AmiKet will receive FDA approval in 2016 and that pricing will be comparable with Lyrica (USD 150 for a 30-day treatment). Our sum-of-the-parts indicate a present value of SEKm 130. The Immune Pharmaceuticals NanomAbs project NanomAbs Monoclonal antibodies (mAb) are used in biochemical and medical research as reagents for proteins. Since they only bind to one type of protein they are more specific than polyclonal antibodies, which can bind many different types of protein. Many monoclonal antibodies have started to be used clinically in recent years, in patients with rheumatoid arthritis and cancer. But many are not strong enough to eliminate tumours on their own, and are used more for detection of, for example, cancer. For this reason, conjugated mAbs have been developed. In simple terms, a conjugated mAb is a mAb that carries a cytotoxic load (i.e. toxins or radionuclides), also known as antibody-drug conjugates (ADC). NanomAbs basically consists of PEGylated polymeric nanoparticles (PPNs), proprietary linker molecules embedded within the PPN, an anti-cancer drug incorporated within the PPN and a therapeutic monoclonal antibody (mAb) that binds to a specific tumour antigen. The goal of Immune Pharmaceuticals with NanomAbs is to create various attractive drug candidates. AMB8LK is Immune Pharmaceuticals initial drug candidate, developed using NanomAbs. AMB8LK is an anti-H ferritin formed with NanomAbs to deliver paclitaxel and gemcitabine in the same nanoparticle. The idea behind the selection of H ferritin is based on its overexpression on the surface of tumour cells in certain cancers, such as pancreatic and lung cancers. Only two ADCs, Adcetris (brentuximab vedotin, developed by Seattle Genetics) and Kadcyla (ado-trastuzumab emtansine, developed by Roche and Immuno Gen), have been launched on the market, in 2011 and 2012, respectively.

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Others, such as CDX-011 from Celldex, use SGEN ADC technology, and are in late-stage clinical development. Combined sales of Adcetris and Kadcyla reached USDm 160 in H1 2013. But according to market assessment by Roots, the market is expected to grow to USDbn 9 by 2023. This is supported by increased investment in the biotechnology sector. For example, Roche expects to spend over USDm 200 to build an ADC production facility to support Kadcyla, and eight other ADCs are in development. Other companies making similar investments in the segment include MedImmune (a subsidiary of AstraZeneca), Bayer Healthcare and BristolMyers Squibb. At the beginning of the year, MedImmune paid USDm 240 to acquire privately owned Spirogen, which has new ADC technology that includes pyrrolobenzodiazepine-binding mAbs. Contract manufacturers, such as Sigma Aldrich and Lonza, have also recently expanded their commercial ADC capability. Immune Pharmaceuticals NanomAbs platform is an ADC technology discovered by Professor Shimon Benita at the Hebrew University of Jerusalem (HUoJ) in collaboration with the company's founder, Jean Kadouche, PhD. In April 2011, Immune Pharmaceuticals was granted an exclusive license for NanomAbs technology for intravenous and intramuscular targeted delivery of active agents. This gives Immune Pharmaceuticals the right to develop NanomAbs with clinical studies inhouse to develop drug candidates for cancer and other diseases. Compared with independent mAbs and ADC, the therapeutic profile of NanomAb is more effective. For example, Immune Pharmaceuticals research shows that NanomAbs binds very strongly with target tissue and has a minimal off-target effect, which could lead to fewer/less severe side effects. When NanomAbs binds to tumour tissue it enters the tumour with the help of the mAb component. Once inside the cancer cell, the nanoparticle is released in a controlled manner, stimulating the tumour to eliminate itself. This is a unique feature of NanomAbs not found in other ADCs (according to company management). We expect the company to enter the clinical phase with AMB8LK in 2019, and we value NanomAb at a total of approximately SEKm 30.
Immune Pharmaceuticals NanomAb

Source: Erik Penser Bankaktiebolag,.

Forecasts for Immune Pharmaceuticals We used a sum-of-the-parts (SOTP ) methodology to arrive at a value of SEKm 1235. We believe that SOTP is the best method to value Immune Pharmaceuticals, as the company has several proprietary assets with potential in multiple indications. We have used the following assumptions in our methodology:

Erik Penser Bankaktiebolag

Immune Pharma 14 March 2014 13

Bertilimumab is approved in 2017 for bullous pemphigoid (BP) and in 2019 for ulcerative colitis (UC) with a 35% chance. Introductory pricing for Bertilimumab of USDk 25 on an annual basis per treatment (3% annual price increase). If Bertilimumab receives OD indication for BP the price may be increased further, since Remicade costs up to USDk 24 for an annual course. Bertilimumab achieves 12% maximum penetration in severe BP in the major markets (USA/EU/CA/JP). Bertilimumab achieves 28% maximum penetration in moderate/severe UC in the world by 2027. Contribution of SEKm 130 from AmiKet (in phase III but uncertain potential).

Sales We calculate that Immune Pharmaceuticals will not be able to generate revenue from Bertilimumab until 2017. Then we believe that the drug candidate will receive approval as an Orphan Drug for BP in the USA and EU. We also expect that the company will license out the rights for Bertilimumab in the treatment of IBD during 2015-2016 up to SEKbn 1,2 plus a royalty percentage of sales of 12%. In total this corresponds to an income of approximately SEKm 611 in 2020. COGS/gross margin It is difficult to currently state the manufacturing costs for Bertilimumab. But if we compare with previous data from CAT-213 (the predecessor of Bertilimumab), we estimate that Immune Pharmaceuticals could achieve a gross margin of 55-60%, which is in line with the production of therapeutic antibodies and vaccines. Operating costs Driven by the costs associated with the development of Bertilimumab for BP and NanomAbs, we expect operating expenses totalling SEKm 769 from 2014 to 2020. We anticipate that research and development (R&D) will increase by 15% annually, from SEKm 52 in 2014 to SEKm 115 in 2019, when we expect that the first royalties on sales of Bertilimumab for UC will be realised. We also expect the company to receive funding from the Israeli government's Science and Technology Office. We believe that Immune Pharmaceuticals is powered by an efficient organisational structure, as there are fewer than 10 employees in the US, and the remainder, including research and development, are in Herzliya Pituach, Israel. Upon commercialisation and launch of Bertilimumab for BP, we expect that administration costs will grow modestly by 12% annually, from SEKm 33 in 2014 to SEKm 62 in 2019. We expect Immune Pharmaceuticals to continue its strategy of licensing out potential drugs to different partners, which means that opex as a percentage of revenues is less predictable from 2019, when we expect NanomAbs product candidates to have reached midpoint of clinical development. Profits Until significant revenues from a successful launch of Bertilimumab are realised, Immune Pharmaceuticals will not generate positive earnings and will show significant net losses. We expect that the company will generate net losses until early 2019, when hopefully Bertilimumab can be launched. Liquidity and capital requirements We expect Immune Pharmaceuticals to have a capital requirement of SEKm 70 100 annually until 2018, representing a total of about SEKm 592.

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Appendix
Immune Pharmceuticals Bertilimumab for Bullous Pemphigoid (BP) market model
USA Antal patienter med BP Andel (%) som har svr BP Antal patienter med svr BP Bertilimumab mark nadsandel Antal patienter som behandlas med Bertilimumab rlig kostnad fr behandling Prisfrndring Total frsljning av Bertilimumab SEKm (USA) 2014 30,013 50% 15,007 0% 0 25,000 $ 0% 0 2015 2016 30,016 30,019 50% 50% 15,008 15,010 0% 0% 0 0 25,000 $ 25,000 $ 0% 0% 0 0 2017 30,022 50% 15,011 0.49% 74 25,000 $ 0% 12 2018 30,025 50% 15,013 2.40% 360 25,750 $ 3% 60 2019 30,028 50% 15,014 5.08% 763 26,523 $ 3% 132 2020 30,031 50% 15,016 6.47% 971 27,318 $ 3% 172 2021 30,034 50% 15,017 8.04% 1,208 28,138 $ 3% 221 2022 30,037 50% 15,019 8.68% 1,304 28,982 $ 3% 246 2023 30,040 50% 15,020 9.21% 1,384 29,851 $ 3% 269 2024 2025 2026 2027 30,043 30,046 30,049 30,049 50% 50% 50% 50% 15,022 15,023 15,025 15,025 9.58% 10% 11% 12% 1,439 1,502 1,653 1,803 30,747 $ 31,669 $ 32,619 $ 33,598 3% 3% 3% 3% 288 309 350 394

vriga vrlden Antal patienter med BP Andel (%) som har svr BP Antal patienter med svr BP Bertilimumab mark nadsandel Antal patienter som behandlas med Bertilimumab rlig kostnad fr behandling Prisfrndring Total frsljning av Bertilimumab SEKm (vriga vrlden) Total frsljning av Bertilimumab SEKm (USA + vriga vrlden) NPV Chans fr att lyckas Sum NPV

90,030 50% 45,015 0.00% 0 20 $ 0% 0 0 0 35% 662

90,038 50% 45,019 0.00% 0 15,001 $ 0% 0 0 0

90,046 50% 45,023 0.00% 0 15,002 $ 0% 0 0 0

90,054 50% 45,027 0.05% 23 15,003 $ 0% 2 14 10

90,062 50% 45,031 1.00% 450 15,004 $ 2% 44 104 68

90,070 50% 45,035 2.00% 901 15,005 $ 2% 88 219 131

90,078 50% 45,039 3.00% 1,351 15,006 $ 2% 132 304 166

90,086 50% 45,043 5.00% 2,252 15,007 $ 2% 220 441 221

90,094 50% 45,047 6.00% 2,703 15,008 $ 2% 264 509 235

90,102 50% 45,051 6.00% 2,703 15,009 $ 2% 264 532 225

90,110 50% 45,055 6.00% 2,703 15,010 $ 2% 264 551 214

90,118 50% 45,059 6.50% 2,929 15,011 $ 2% 286 595 212

90,126 50% 45,063 6.50% 2,929 15,012 $ 2% 286 636 208

90,134 50% 45,067 6.50% 2,929 15,013 2% 286 680 203

Klla: Bolagsrapporter, Erik Penser Bankaktiebolag

Immune Pharmceuticals Bertilimumab fr Ulcerative Colitis (UC) market model

USA IBD patienter Andelen patienter med Ulcers k olit (UC) Antal patienter med UC Andelen patienter med mttligt Ulcers k olit (UC) Andelen patienter med svr Ulcers k olit (UC) Antal patienter med mttlig och svr UC Andelen patienter med mttligt UC med hg andel Eotaxin-1 Andelen patienter med svr UC med hg andel Eotaxin-1 Antal patienter som kan behandlas med Bertilimumab Bertilimumab mark nadsandel Antal patienter som behandlas med Bertilimumab rlig kostnad fr behandling Prisfrndring Total frsljning av Bertilimumab SEKm (USA) vriga vrlden IBD patienter Andelen patienter med Ulcers k olit (UC) Antal patienter med UC Andelen patienter med mttligt Ulcers k olit (UC) Andelen patienter med svr Ulcers k olit (UC) Antal patienter med mttlig och svr UC Andelen patienter med mttligt UC med hg andel Eotaxin-1 Andelen patienter med svr UC med hg andel Eotaxin-1 Antal patienter som kan behandlas med Bertilimumab Bertilimumab mark nadsandel Antal patienter som behandlas med Bertilimumab rlig kostnad fr behandling Prisfrndring Total frsljning av Bertilimumab SEKm (vriga vrlden) Total frsljning av Bertilimumab SEKm (USA + vriga vrlden) Immune Pharmaceuticals royalty Intkter fr Immune Pharmaceuticals NPV Chans fr att lyckas Sum NPV 2014 1,171,902 50.5% 591,811 15% 28% 254,479 20% 20% 101,791 0.0% 0 $ 25,000 $ 0% 0 2014 3,515,200 50.5% 1,775,176 15% 28% 763,326 20% 20% 305,330 0.0% 0 $ 20,000 $ 0% 0 0 12% 0 0 35% 1,976 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 1,171,914 1,171,925 1,171,937 1,171,949 1,171,961 1,171,972 1,171,984 1,171,996 1,172,007 1,172,019 1,172,031 1,172,043 1,172,054 50.5% 50.5% 50.5% 50.5% 50.5% 50.5% 50.5% 50.5% 50.5% 50.5% 50.5% 50.5% 50.5% 591,816 591,822 591,828 591,834 591,840 591,846 591,852 591,858 591,864 591,870 591,876 591,882 591,887 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 28% 28% 28% 28% 28% 28% 28% 28% 28% 28% 28% 28% 28% 254,481 254,484 254,486 254,489 254,491 254,494 254,496 254,499 254,501 254,504 254,507 254,509 254,512 20% 20% 21% 22% 23% 24% 24% 24% 25% 26% 27% 28% 29% 20% 20% 21% 22% 23% 24% 24% 24% 25% 26% 27% 28% 29% 101,792 101,793 106,884 111,975 117,066 122,157 122,158 122,159 127,251 132,342 137,434 142,525 147,617 0.0% 0.0% 0.0% 0.0% 3.0% 10.0% 15.0% 23.0% 25.0% 28.0% 28.0% 28.0% 28.0% 0 0 0 0 3,512 12,216 18,324 28,097 31,813 37,056 38,481 39,907 41,333 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,500 $ 26,010 $ 26,530 $ 27,061 $ 27,602 $ 28,154 $ 28,717 $ 29,291 0% 0% 0% 0% 0% 2% 2% 2% 2% 2% 2% 2% 2% 0 0 0 0 571 2,025 3,098 4,845 5,596 6,648 7,042 7,449 7,870 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 3,515,201 3,515,202 3,515,203 3,515,204 3,515,205 3,515,206 3,515,207 3,515,208 3,515,209 3,515,210 3,515,211 3,515,212 3,515,213 50.5% 50.5% 50.5% 50.5% 50.5% 50.5% 50.5% 50.5% 50.5% 50.5% 50.5% 50.5% 50.5% 1,775,177 1,775,177 1,775,178 1,775,178 1,775,179 1,775,179 1,775,180 1,775,180 1,775,181 1,775,181 1,775,182 1,775,182 1,775,183 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 28% 28% 28% 28% 28% 28% 28% 28% 28% 28% 28% 28% 28% 763,326 763,326 763,326 763,327 763,327 763,327 763,327 763,327 763,328 763,328 763,328 763,328 763,329 20% 20% 21% 22% 23% 24% 24% 24% 25% 26% 27% 28% 29% 20% 20% 21% 22% 23% 24% 24% 24% 25% 26% 27% 28% 29% 305,330 305,330 320,597 335,864 351,130 366,397 366,397 366,397 381,664 396,930 412,197 427,464 442,731 0.0% 0.0% 0.0% 0.0% 0.1% 1.1% 4.0% 8.0% 15.0% 25.0% 28.0% 28.0% 28.0% 0 0 0 0 351 4,030 14,656 29,312 57,250 99,233 115,415 119,690 123,965 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,400 $ 20,808 $ 21,224 $ 21,649 $ 22,082 $ 22,523 $ 22,974 $ 23,433 0% 0% 0% 0% 0% 2% 2% 2% 2% 2% 2% 2% 2% 0 0 0 0 46 534 1,982 4,044 8,056 14,243 16,897 17,873 18,882 0 12% 0 0 0 12% 0 0 0 12% 0 0 0 12% 0 0 616 12% 74 44 2,559 12% 307 168 5,080 12% 610 306 8,889 12% 1,067 491 13,652 12% 1,638 692 20,891 12% 2,507 972 23,939 12% 2,873 1,021 25,322 12% 3,039 991 26,751 12% 3,210 961

Klla: Bolagsrapporter, Erik Penser Bankaktiebolag

Immune Pharmceuticals Cost

R&D rligkning SG&A rligkning Total kostnadsbas NVP Sum NPV 2014 -52 -33 -85 -78 -1,592 2015 -62 20% -37 15% -100 -84 2016 -74 18% -43 15% -117 -90 2017 -87 18% -49 15% -136 -97 2018 -100 15% -55 12% -155 -101 2019 -115 15% -62 12% -177 -105 2020 -132 15% -69 12% -202 -110 2021 -152 15% -78 12% -230 -115 2022 -175 15% -87 12% -262 -121 2023 -201 15% -98 12% -299 -126 2024 -231 15% -109 12% -340 -132 2025 -266 15% -122 12% -388 -138 2026 -306 15% -137 12% -443 -144 2027 -352 15% -154 12% -505 -151

Klla: Bolagsrapporter, Erik Penser Bankaktiebolag

Intellectual property AmiKet Immune Pharmaceuticals holds a US patent for a formulation containing a combination of amitriptyline and ketamine used for treatment of pain, including neuropathic pain. The patent expires in August 2021. The company also has a license for additional patents for topical use of tricyclic antidepressants (including amitriptyline) and NMDA antagonists (including ketamine). NanomAbs

Erik Penser Bankaktiebolag

Immune Pharma 14 March 2014 15

Immune Pharmaceuticals has licensed the technology for NanomAb from Yissum, Technology Transfer Company of the Hebrew University of Jerusalem. The platform, which was discovered by Dr Shimon Benita, allows binding of monoclonal antibodies to nanoparticles loaded with chemotherapeutic agents.

Management team Dr Daniel Teper CEO and Chairman Dr Teper is the founder and CEO of Immune Pharmaceuticals. Dr Teper was formerly CEO of Bionest Partners, a global strategy consulting firm in pharmaceuticals. Dr Teper started his career at Sandoz (now Novartis), where he was responsible for sales, marketing and new product development. He held senior executive positions in Europe, first at GSK as head of commercial operations for Glaxo France and then as president and chief operating officer of Laboratoires Delagrange through the acquisition by Synthelabo (now part of Sanofi). Dr Teper holds a doctor of pharmacy degree from Paris XI University and an MBA from INSEAD. Mr Robert Cook Senior Vice President and CFO Mr Cook was appointed as the CFO in August 2013. Mr Cook previously served as the companys CEO and director since August 2012 and CFO and senior vice president since April 2004. Prior to joining Immune Pharmaceuticals, Mr Cook was vice president and CFO at Pharmos Corporation since January 1998, and became executive vice president of Pharmos in February 2001. Ms Suzy Jones Chief Business Development Officer Ms Jones is the founder and managing partner of DNA- Ink LLC, a life sciences firm in San Francisco, California. Prior to starting her own firm, Ms Jones spent 20 years at Genentech in research and product development. In 2010, Ms Jones was named by Black Health Magazine as Top 25 Most Influential African Americans in Healthcare, Medicine, Pharmaceutical and Food Industries. Alongside her work with Immune, Ms Jones is currently on the board of Patrys, an Australian biotech company, and on the advisory board of CentRx. Dr Jean Eli Kadouche Vice President, Biologics R&D Dr Kadouche is vice president, innovation & research, focusing on research. He helped develop the NanomAbs technology, and is a co-author of several papers with Professor Benita. Dr Kadouche has 25 years of experience in the development of monoclonal antibodies in both academia and in industry. Dr Kadouche has been an advisor to Sangstat, Roche and J&J. He holds a PhD in immunology from the Pasteur Institute and was an assistant professor at St Louis Hospital in Paris, France. Dr Michal Ayalon Vice President, R&D Operations Dr Ayalon is the VP new product development. Dr Ayalon previously served as senior biopharmaceutical development manager at BioLineRx. Dr Adam Foley-Comer Is the VP of Medical Affairs of IMMUNE Pharmaceuticals.

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Erik Penser Bankaktiebolag

Before joining Immune Pharmaceuticals Adam served as Medical Director at BioLineRx, providing medical expertise in the design, conduct, oversight and reporting of clinical programs in gastrointestinal, oncology, dermatology, neurology and infectious disease indications. Prior to that he served at Roche UK as Clinical Pharmacologist with global responsibility for the Avastin franchise and medical lead in their internal clinical pharmacology unit. Board of Directors Dr. Sidransky, Vice Chairman Dr. Sidransky is a renowned oncologist and research scientist named and profiled by TIME magazine in 2001 as one of the top physicians and scientists in America, recognized for his work with early detection of cancer. Since 1994, Dr. Sidransky has been the Director of the Head and Neck Cancer Research Division at Johns Hopkins University School of Medicine and Professor of Oncology, Otolaryngology, Cellular & Molecular Medicine, Urology, Genetics, and Pathology at John Hopkins University and Hospital. Dr. Isaac Korbin, R&D Dr. Isaac Korbin led worldwide clinical programs from Phase I development through to regulatory approval, marketing and launch for several major drugs. He spent 10 years at Roche Global Headquarters in Basel, Switzerland and in Nutley, New Jersey, USA. He then joined Actelion Pharmaceuticals (SIX: ATLN) in September 1999 to build and lead its clinical development department. Dr. Korbin held the position of Head of Clinical Development till 2009, when he was appointed to Chief Medical Officer and Chairman of the Strategic and Portfolio Board.

Erik Penser Bankaktiebolag

Immune Pharma 14 March 2014 17

Immune Pharma Income Statement, Cash Flow and Balance Sheet (SEKm)
Income Statement
Net Sales Other Operating Income Personnel Costs Other Operating Costs EBITDA Depreciation Amortisation of Goodwill EBIT Non-recurring Items Associated Companies Net Financial Items Pre-tax Result Tax Minority Interest Net Result 2006 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2007 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2008 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2009 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2010 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2011 0 0 0 0 0 -1 0 0 0 0 0 0 0 0 0 2012 4 47 0 -67 -17 -1 0 -17 0 0 0 -17 0 0 -17 2013E 0 0 0 -18 -17 -1 0 -18 0 0 -4 -22 0 0 -22 2014E 65 0 -51 -34 -19 -1 0 -20 0 0 -4 -23 0 0 -23 2015E 65 0 -60 -40 -34 -1 0 -35 0 0 -4 -38 0 0 -38

Cash Flow
EBITDA Change in Working Capital Other Operating Cash Items Operating Cash Flow Net Financial Costs Taxes Paid Capital Expenditure Free Cash Flow Dividends Acquisitions Disposals Equity Issue/Share Buybacks Other Adjustments Total Cash Flow Other Non-cash Adjustments Net Debt 2006 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2007 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2008 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2009 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2010 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2011 0 0 0 1 0 0 0 1 0 0 0 0 1 2 0 0 2012 -17 -15 1 -30 0 0 -5 -35 0 0 1 0 2 -32 1 48 2013E -17 36 0 19 -4 0 -6 9 0 0 0 0 0 9 0 39 2014E -19 -55 0 -73 -4 0 -7 -83 0 0 0 150 0 67 0 -28 2015E -34 -59 0 -91 -4 0 -7 -101 0 0 0 0 0 2 0 -26

Balance Sheet
2006 ASSETS Goodwill Other Intangible Assets Tangible Assets Shares in Participations Other Fixed Assets Total Fixed Assets Inventories Accounts Receivable Other Current Assets Cash and Cash Equivalents Total Current Assets TOTAL ASSETS EQUITY AND LIABILITIES Shareholder Equity Minority Interest Total Equity Long-term Financial Liabilities Pension Provisions Deferred Tax Liabilities Other Long-term Liabilities Total Long-term Liabilities Current Financial Liabilities Accounts Payable Tax Liabilities Other Current Liabilities Total Current Liabilities TOTAL EQUITY AND LIABILITIES 0 0 0 0 0 0 0 0 0 0 0 0 2007 0 0 0 0 0 0 0 0 0 0 0 0 2008 0 0 0 0 0 0 0 0 0 0 0 0 2009 0 0 0 0 0 0 0 0 0 0 0 0 2010 0 0 0 0 0 0 0 0 0 0 0 0 2011 0 0 0 0 0 0 0 0 0 0 0 0 2012 0 0 0 0 0 1 0 0 7 1 8 9 2013E 0 0 5 0 0 6 0 0 0 10 10 16 2014E 0 0 11 0 0 11 7 0 14 77 97 108 2015E 0 0 16 0 0 17 65 0 14 74 153 170

0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0

-91 0 -91 49 0 0 0 49 0 0 0 51 51 9

-113 0 -113 49 0 0 0 49 0 0 0 80 80 16

14 0 14 49 0 0 0 49 0 0 0 46 46 108

76 0 76 49 0 0 0 49 0 0 0 46 46 170

Source: Company Reports, Erik Penser Bankaktiebolag

Immune Pharma 14 March 2014 18

Erik Penser Bankaktiebolag

Immune Pharma Valuation and Key Ratios (SEK)

Per Share Data
2006 EPS Reported EPS Adjusted CEPS Free Cash Flow Dividend Book Value Tangible Book Value (Excl Goodwill) Net Asset Value Net Debt Enterprise Value Diluted No of Shares, Weighted Average (m) Diluted No of Shares, Year-end (m) 0.00 0.00 0.00 0.00 0.00 0.00 NM 0.00 0.00 2007 0.00 0.00 0.00 0.00 0.00 0.00 NM 0.00 0.00 2008 0.00 0.00 0.00 0.00 0.00 0.00 NM 0.00 0.00 NM 2009 0.00 0.00 0.00 0.00 0.00 0.00 NM 0.00 0.00 NM 2010 0.00 0.00 0.00 0.00 0.00 0.00 NM 0.00 0.00 NM 2011 0.00 0.00 0.00 0.08 0.00 0.00 0.00 0.00 0.00 88.00 12.2 12.2 2012 -1.37 -1.37 -3.13 -2.88 0.00 -7.44 -7.47 -7.47 3.90 18.78 12.2 12.2 2013E -1.74 -1.74 1.19 0.71 0.00 -8.48 -8.51 -8.51 2.91 17.07 12.6 13.3 2014E -1.54 -1.54 -5.09 -5.52 0.00 0.87 0.85 0.85 -1.75 26.16 15.1 16.0 2015E -2.11 -2.11 -5.28 -5.58 0.00 3.95 3.93 3.93 -1.34 26.64 18.1 19.2

Valuation
2006 P/E Reported P/E Adjusted P/CEPS P/FCFPS FCF Yield Dividend Yield Dividend Payout Ratio Adjusted P/BV P/Tangible BV P/NAV EV/Sales EV/EBITDA EV/EBIT Share Price, Year-end Share Price, High Share Price, Low Share Price, Average Market Cap, Year-end and Current (SEKm) Enterprise Value, Year-end and Current (SEKm) NM NM 2007 NM NM 2008 NM NM NM NM 0.0 0.0 NM NM NM NM NM 573.60 660.00 567.60 615.60 0 2009 NM NM NM NM 0.0 0.0 NM NM NM NM NM 522.00 906.00 517.20 638.56 0 2010 NM NM NM NM 0.0 0.0 NM NM NM NM NM 232.00 744.00 99.20 379.82 0 2011 NM NM NM 1,073.6 0.1 0.0 NM NM NM NM NM high high 88.00 236.00 75.20 138.49 1,074 1,074 2012 NM NM NM NM -19.4 0.0 NM NM NM NM 60.47 NM NM 14.80 100.00 14.80 46.10 181 229 2013E NM NM 23.6 39.5 2.5 0.0 NM NM NM NM 1,909.00 NM NM 14.00 29.20 10.55 17.29 353 382 2014E NM NM NM NM -19.7 0.0 NM 32.16 33.03 33.03 6.96 NM NM 28.00 35.90 13.50 19.96 423 452 2015E NM NM NM NM -19.9 0.0 NM 7.09 7.13 7.13 8.26 NM NM 28.00 508 537

Growth Rate and Margins

2006 Sales Growth, YoY EBIT Growth, YoY EPS Adjusted Growth, YoY EBITDA Margin EBITA Margin EBIT Margin Pre-tax Margin Adjusted Net Margin Adjusted Tax Rate NM NM NM NM NM NM 2007 NM NM NM NM NM NM NM NM NM 2008 NM NM NM NM NM NM NM NM NM 2009 NM NM NM NM NM NM NM NM NM 2010 NM NM NM NM NM NM NM NM NM 2011 NM NM NM NM NM NM NM NM NM 2012 NM -441.0 -441.0 -441.0 -441.0 -441.0 NM 2013E -94.7 NM NM -8,534.0 -9,034.0 -9,034.0 -10,980.2 -10,980.2 NM 2014E NM NM NM -28.5 -30.0 -30.0 -35.9 -35.9 NM 2015E 0.0 NM NM -52.0 -53.5 -53.5 -58.9 -58.9 NM

Profitability
2006 Return on Equity, ROE Return on Equity 5-Year Average Return on Capital Employed, ROCE Return on Capital Employed 5-Year Average 2007 NM NM 2008 NM NM 2009 NM NM 2010 NM NM 2011 NM NM NM NM 2012 36.8 NM 77.4 NM 2013E 21.6 NM 30.8 NM 2014E 47.2 NM 44.3 NM 2015E -85.6 NM -193.2 NM

Capital Expenditure and Efficiency

2006 Capital Expenditure Capex/Sales Capex/Depreciation Inventory/Sales Receivables/Sales Payables/Sales Net Working Capital/Sales Asset Turnover 0 NM NM NM NM NM NM 2007 0 NM NM NM NM NM NM NM 2008 0 NM NM NM NM NM NM NM 2009 0 NM NM NM NM NM NM NM 2010 0 NM NM NM NM NM NM NM 2011 0 NM 0.0 NM NM NM NM NM 2012 5 143.9 5.5 0.0 0.0 0.0 0.0 0.88 2013E 6 3,000.0 6.0 10.0 0.0 0.0 10.0 0.02 2014E 7 10.0 6.5 10.0 0.0 0.0 10.0 1.05 2015E 7 10.0 6.5 100.0 0.0 0.0 100.0 0.47

Financial Position
2006 Interest-bearing Net Debt (SEKm) Equity Ratio Net Debt/Equity Net Debt/Market Cap Net Debt/EBITDA 0 NM NM NM 2007 0 NM NM NM 2008 0 NM NM NM NM 2009 0 NM NM NM NM 2010 0 NM NM NM NM 2011 0 NM NM 0.00 NM 2012 48 -1,051.9 -0.52 0.26 -2.8 2013E 39 -706.3 -0.34 0.22 -2.3 2014E -28 12.9 -2.01 -0.07 1.5 2015E -26 44.5 -0.34 -0.05 0.8

Note: Key ratios based on fully diluted number of shares. Historical key ratios are calculated using the year-end share price. Source: Company Reports, Erik Penser Bankaktiebolag

Erik Penser Bankaktiebolag

Immune Pharma 14 March 2014 19

Immune Pharma Quarterly Operating Performance (SEKm)

Income Statement
Q310 Net Sales Other Operating Income Other Operating Costs EBITDA Depreciation and Amortisation EBIT Non-recurring Items Associated Companies Net Financial Items Pre-tax Result Reported Pre-tax Result Adjusted Tax Minority Interest Net Result Reported 0 0 0 0 -0 0 0 0 0 0 0 0 0 0 Q410 0 0 0 0 -1 0 0 0 0 0 0 0 0 0 Q111 0 0 0 0 -0 0 0 0 0 0 0 0 0 0 Q211 0 0 0 0 -0 0 0 0 0 0 0 0 0 0 Q311 0 0 0 0 -0 0 0 0 0 0 0 0 0 0 Q411 0 0 0 0 -0 0 0 0 0 0 0 0 0 0 Q112 0 0 0 0 -0 0 0 0 0 0 0 0 0 0 Q212 0 0 0 0 -0 0 0 0 0 0 0 0 0 0 Q312 0 0 0 0 -0 0 0 0 0 0 0 0 0 0 Q412 0 0 0 0 -0 0 0 0 0 0 0 0 0 0 Q113 0 0 -10 -10 -0 -10 0 0 0 -10 -10 0 0 -10 Q213 0 0 -12 -11 -0 -12 0 0 0 -12 -12 0 0 -12

Growth Rates and Margins

Q310 Sales Growth, YoY EBIT Growth, YoY EBITDA Margin EBIT Margin Pre-tax Margin Adjusted Tax Rate NM NM NM NM Q410 NM NM NM NM Q111 NM NM NM NM Q211 NM NM NM NM Q311 NM NM NM NM Q411 NM NM NM NM Q112 NM NM NM NM Q212 NM NM NM NM Q312 NM NM NM NM Q412 NM NM NM NM Q113 NM NM NM NM NM Q213 NM NM -5,694.8 -5,794.8 -5,794.8 NM

Source: Company Reports, Erik Penser Bankaktiebolag

Immune Pharma Sales, 12-month Moving Average

0 1

Immune Pharma EBITDA, 12-month Moving Average

0
10 1 11 11 11 11 12 12 12 12 13 13 -2,000

0 1

EBITDA, SEKm

-4,000 -10 -6,000

0
0 0

-15
-8,000 -20

-10,000

0 10 11 11 11 11 12 12 Sales, 12-month Moving Average 12 12 13 YoY Change 13

-25
EBITDA EBITDA Margin

-12,000

Source: Company Reports, Erik Penser Bankaktiebolag

Source: Company Reports, Erik Penser Bankaktiebolag

Immune Pharma EBIT, 12-month Moving Average

0
10 11 11 11 11 12 12 12 12 13 13 -2,000

Immune Pharma Pre-tax Result, 12-month Moving Average

0 0
10 11 11 11 11 12 12 12 12 13 13 -2,000

-4,000

-4,000 -10 -6,000

-10 -6,000

-15
-8,000 -20

-15
-8,000 -20

-10,000

-10,000

-25
EBIT EBIT Margin

-12,000

-25
Pre-tax Result Adjusted Pre-tax Margin Adjusted

-12,000

Source: Company Reports, Erik Penser Bankaktiebolag

Source: Company Reports, Erik Penser Bankaktiebolag

Immune Pharma 14 March 2014 20

Erik Penser Bankaktiebolag

Pre-tax Margin, Percentages

-5

-5

EBIT Margin, Percentages

Pre-tax Result, SEKm

EBIT, SEKm

EBITDA Margin, Percentages

-5

YoY Change, Percentages

Sales, SEKm

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