KRC Insights

ICO THERAPEUTICS INC. 7 OCTOBER 2019 ICO-V: $0.12; ICOTF-OTC: US$0.085 Bruce Krugel 416-509-5593

Price $0.12 Market Cap $19.2 HIGHLIGHTS

Target Price $0.60 Debt $0.0 ▪ iCo Therapeutics Inc. (ICO) is a Canada-based biotechnology company principally focused on the Projected Return 400% Cash $2.7 identification, development and commercialization of 52 Week Range 0.145 / 0.045 EV ($m's) $16.5 drug candidates to treat infectious and ocular diseases. Basic Shares (000's) 153,748 It is focused on two main drug candidates.

FD Shares (000's) 220,728 Insiders 4.0% ▪ The first, is dermatologically focused ICO-008 (Bertilimumab, “Bert”) which has a significant short-

Y/E December 2018A 2019E 2020E 2021E term catalyst: potential transfer of the sub-license to Alexion (ALXN-Q) from sub-licensee Immune given Revenues ($000's) - 5,320 8,369 Immune’s Chapter 11 filing. The auction is scheduled on EBITDA ($000's) (2,208) (2,300) 1,020 3,597 October 15, 2019 with the results to be announced a few

EPS -0.02 -0.02 0.00 0.02 days later.

▪ ICO will not receive the proceeds from the sale/transfer of the sub-license to Alexion. However, ICO will benefit from the substantial improvement in its prospects of receiving its development milestone payments (US$32.0m), and then consequently royalty revenues (8.5%), if/when the product is commercialized. ▪ To ensure 100% control over the intellectual property rights associated with Bert, we believe that Alexion may also acquire the ocular rights retained by ICO. Proceeds from such a sale would accrue to ICO. ▪ Its second candidate, ICO-019 (Amphotericin B, “Oral Amp B”) targets infectious diseases and has completed its Phase 1 studies and is progressing towards initiation of Phase 2. Given its low adverse impact, we believe that it is competitively positioned in the US$570m antifungal market. ▪ Receipt of progress payments from the development of

Bert should provide adequate funding for Oral Amp B development.

Profile ▪ ICO presents investors the opportunity to participate in iCo Therapeutics Inc. (ICO) is a Canada-based biotechnology company a significant short term catalyst, which, if completed as principally focused on the identification, development and expected, will increase not only the prospects of commercialization of drug candidates to treat infectious and ocular diseases. ICO principally focuses on in-licensing drug candidates with a commercialization of Bert but also ensure sufficient clinical history, and re-dose, reformulate and develop drug candidates. funding to commercialization of its second candidate ICO’s primary product candidates include ICo-008 and an Oral Amp B oral Amp B, the largest component of our target price. Delivery System. ICO-008 is a human monoclonal that is offered to treat sight-threatening forms of allergic conjunctivitis and retinal ▪ We derive a $0.60 target price using a probability diseases by neutralizing eotaxin-1, a ligand to the receptor weighted sum of the parts DCF. CCR3. Oral Amp B Delivery System is a non-toxic option for the treatment of serious systemic fungal infections. ICO has completed pre-clinical Disclosures studies for ICO's Oral Amp B Delivery System. Please refer important disclosures on p29.

Contents ICO Therapeutics Inc...... 1 Executive Summary ...... 3 Brief History ...... 4 Markets ...... 4 ICO-008 (Bertilimumab, “Bert”) ...... 5 Systemic application of Bert ...... 6 Stalking Horse Agreement ...... 7 Ownership of the Bert license...... 7 Why is the license considered valuable? ...... 10 Risks/Protections ...... 12 Upcoming milestones ...... 13 Major competitors/markets ...... 13 ICO-019 (Amphotericin, “Oral Amp B”) ...... 13 Risks/Protections ...... 15 Upcoming milestones ...... 15 Major competitors/markets ...... 16 Forecasts ...... 18 Prospective Valuation ...... 19 Financial Statements ($000’s) ...... 21 Appendix I: Description of Bertilimumab...... 22 Appendix II: General FDA roadmap for drug approval ...... 24 Appendix III: FDA clinical trial phases ...... 25 Appendix IV: Alexion Pharmaceuticals Inc. (ALXN-Q) ...... 26 Appendix V: Senior Management/Directors of ICO ...... 27 Disclosure ...... 29

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Executive Summary iCo Therapeutics Inc. (ICO) is a Canada-based biotechnology company principally focused on the identification, development and commercialization of drug candidates to treat infectious and ocular diseases.

It’s two main drug candidates, both of which are in-licensed, address the following therapeutic areas: • ICO-008 –Immune Disorders. ICO has retained worldwide exclusivity to ocular applications. • ICO-019 – Infectious Diseases. Formulation of an oral delivery system for Amphotericin B delivery. While targeting fungal infections generally, ICO is targeting candidiasis and secondarily aspergillosis, and Visceral Leishmaniasis (VL).

While retaining ownership of Bert’s ocular rights, ICO has sub-licensed all non-ocular rights to Immune Pharmaceuticals Inc. (IMNP-OTC). However, Immune filed for Chapter 11 bankruptcy on February 17, 2019. With regards to the liquidation of Immune’s assets, the sub-license is currently the subject of a Stalking Horse Agreement (covered in detail below). The qualified bidder starting the bidding process is Alexion Pharmaceuticals Inc. (ALXN-Q) a ~US$21.9bn market cap biotech company with a focus on orphan drugs. Bert is a European and FDA approved orphan drug for bullous pemphigoid (BP).

If Alexion were to win the bid process on October 15, 2019, it would represent a significantly positive outcome for ICO. While no proceeds from the bidding will accrue to ICO, the potential new sub-licensee has substantially greater financial backing and infrastructure (vs Immune) to commercialise Bert. This greatly improves the prospects of ICO receiving its US$32.0m in milestone payments due on the path to commercialisation and ultimately the 8.5% revenue royalty in terms of the existing sub-license agreement.

We note that ICO retains the rights to ocular uses and applications of Bert. We believe that if Alexion is the successful bidder, given that it will only control part of the intellectual property (IP) rights to Bert, it would look to ensure 100% ownership of the IP to control product commercialisation risk. Consequently, there is potentially a second shoe to drop, that of additional upfront payments, milestone payments and royalty streams to ICO if Alexion seeks to acquire the ocular IP to Bert it does not own.

While this event unfolds, ICO remains on its on path to commercialise oral Amp B, which it licensed in from the University of British Columbia. Its focus is on development of an oral delivery system for Amphotericin B which could resolve the safety and delivery issues associated with its parenteral application reducing mortality rates and enabling much broader patient access. Oral Amp B comprises the largest component of our valuation of ICO (Figure 9).

ICO will continue to use its Australian subsidiary to conduct tests. ICO has received several clinical indications of interest for next studies, including women’s health (recurrent candidiasis). Primary endpoints in future studies expected to include safety and efficacy with enrolment to commence in Q4/19.

We derive a target price of 0.60 using a probability weighted sum of the parts DCF (Figure 9).

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Brief History iCo Therapeutics Inc. (ICO) is a Canadian biotechnology company that originated as the qualifying transaction of a capital pool company as outlined I the history below.

Salient dates: • April 20, 2006 Beanstalk Capital Corp. formed. Its name changed to Beanstalk Capital Ltd upon its IPO as a Capital Pool Corporation and commenced trading under the symbol BCL.P January 7, 2007. • December 31, 2007 the qualifying transaction completed: o iCo Therapeutics Inc. amalgamated with 4448073 Canada Inc. (100% owned by Beanstalk Capital Ltd) to form iCology Corp. o Name changed from Beanstalk Capital Ltd to iCo Therapeutics Inc. • January 8, 2008 shares commenced trading on TSX Venture Exchange under the symbol “ICO”. • January 1, 2009 iCology Corp. and iCology Therapeutics Inc. amalgamated.

Figure 1: iCo Therapeutics corporate structure

Source: Company reports; KRC Insights

Markets ICO is focused on the identification, development and commercialisation of drug candidates to treat infectious and ocular diseases.

The company is currently focused on two in-licensed products: • ICO-008 (Bertilimumab, “Bert”) for systemic and ophthalmic indications; and • ICO-019 (Amphotericin B, “(oral Amp B”) an oral reformulation of an intravenous drug used to combat systemic fungal infections.

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A summary of the licensors and progress to date is shown in Figure 2.

Figure 2: ICO – summary of license agreements and progress to date Bert Oral Amp B Licensor Medimmune Ltd (part of AstraZeneca) University of British Columbia Sub-Licensee Immune Pharmaceuticals Inc.* None Phase I Clinical trials testing safety, tolerability Positive primary and secondary and pharmacokinetics endpoints Phase II • Bullous Pemphigoid – positive data, current primary focus • Ulcerative Colitis – recruitment complete, data upcoming (Israel) • Allergic rhinitis (now not a focus) • Allergic conjunctivitis (now not a focus) Source: Company reports, KRC Insights; *=Immune is in Chapter 11, its license is effectively terminated but nevertheless subject to a Stalking Horse Agreement covered in more detail below.

ICO-008 (Bertilimumab, “Bert”) • Drug: Bertilimumab. • Origin: Licensed from Medimmune Ltd. Originally, the license came from Cambridge Antibody Technology (CAT) who had completed Phase 1 clinical trials for safety/tolerability/ pharmacokinetics; and Phase 2 clinical trials for allergic rhinitis/allergic conjunctivitis. AstraZeneca (AZN-L, not rated) acquired CAT in 2006 and Medimmune in 2007, subsequently merging the two in 2008 with Medimmune being the surviving entity. • Year licensed in: December 2006 from CAT. • Year licenses out: June 24, 20011 to Immune Pharmaceuticals Corp., all uses except ocular. • Patented: Yes (2021/2022) with potential extension due to data exclusivity for biologics. • Class: Antibody. • Indications: initially allergic rhinitis and allergic conjunctivitis. The current focus includes Bullous Pemphigoid (BP) and Ulcerative Colitis (UC). • Competition: Remicade, Humira, Nucala (), Dupixent (), Cinqaero® () and generically steroid and other immunosuppressive agents. • Market Size (KRC estimate): BP – 120,000 patients in the USA and Europe.

ICO provides the following description for Bert:

ICO-008 is a human that neutralizes eotaxin-1, a ligand to the C-C type three (“CCR3”). It is our view that ICO-008 neutralizes eotaxin-1 by binding to it and, as a consequence, preventing it from binding to CCR3. We believe that ICO-008 has the potential to inhibit intracellular signaling associated with mast cell degranulation and the recruitment of to the site of allergic reactions and, as a result, potentially inhibit both early stage and late stage development of severe eotaxin-1 mediated indications. We believe that ICO-008 shows promise in the treatment of the

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dermatological condition bullous pemphigoid (“BP”) and may have utility in atopic dermatitis, gastrointestinal conditions including inflammatory bowel disease/ulcerative colitis, vernal keratoconjunctivitis, asthma and age-related macular degeneration (“AMD”).1

ICO had a 2-prong strategy with regards to commercialization of Bert: 1. Exclusive Sub-license to Immune Pharmaceuticals Inc. for systemic uses of Bert; while 2. ICO retained worldwide exclusive rights to all uses and applications in the ocular field. ICO estimates the market for ocular applications, including age-related macular degeneration and sight-threatening ocular allergies exceeds $2 billion.

Systemic application of Bert Immune Pharmaceuticals Inc. (Immune) was granted an exclusive sub-license of for the development and commercialisation rights for the systemic uses of Bert. However, Immune filed for Chapter 11 on February 17, 2019.

The timeline of the Bert sub-license is it pertains to the Immune bankruptcy is as follows: • June 24, 20112 Immune exercised its option to obtain exclusive non-ocular license rights for Bert. The sub-license was granted for an upfront consideration of roughly US$1.7m comprising US$500k cash, 600k Immune shares (worth roughly US$1.0m at time of grant) and 200k Immune warrants. In addition, ICO has the right to receive up to US$32m in milestone payments and also 8.5% royalties on net sales of the licensed products. • August 26, 2013 Immune completed a merger with Epicept Corp. (formerly EPCT-Q), the merged company commenced trading on NASDAQ under the name Immune Pharmaceuticals Inc. with the symbol “IMNP”. For the purposes of the merger, Immune was valued at US$61m (Figure 8). The original Immune shares were converted into IMNP shares then sold by ICO for proceeds of ~US$1.0m. • June 4, 2018, Immune received notice from NASDAQ of its intention to delist Immune shares due to non-compliance with $1 minimum bid price. • July 26, 2018, Immune shares began trading on the OTCQB under the symbol “IMNP”. • February 8, 2019, Immune received a “Notice of Default and Notice of Sale of Collateral” from its primary financier Discover Growth Fund LLC. Discover claimed it was owed US$12.1m. • February 15, 20193, ICO delivered a notice of immediate termination of its sub-license with Immune. ICO states that the notice was delivered correctly and that it is the current owner of the Bert in its entirety. • February 17, 2019, Immune declared bankruptcy filing for Chapter 114. Immune press released its bankruptcy filing on Feb 19, 2019.

1 2018 Annual Information Form, p4 2 Immune Pharmaceuticals, Chapter 11, Case No 19-13273 (VFP), Order filed on July 16, 2019, Schedule 5.4: “The “Product Sublicense Agreement” between Immune Pharmaceuticals Ltd and iCo Therapeutics Incorporated dated December 7, 2010, as amended on March 31, 2011, 3 ICO Pharmaceuticals Inc. 2018 Annual Information Form (AIF) p12 4 Immune Pharmaceuticals Inc. 8K filing dd March 8, 2019

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• July 16, 2019 the New Jersey bankruptcy court approved and authorized the sale of ICO’s sub- license via a Stalking Horse Agreement.

Stalking Horse Agreement With regards to Immune’s Chapter 11 filing, on July 16, 2019 the New Jersey bankruptcy court approved and authorized the sale of ICO’s sub license via a Stalking Horse Agreement. Salient terms included: • Sale of the Immune’s anti-eotaxin assets (Bert license) free and clear of liens/claims, • The Stalking Horse Agreement authorizes, amongst others: o bid procedures and bid protections o scheduling of sale hearing o sale to purchaser submitting highest/best offer o procedures for transfer of ownership o that the agreement is also enforced in the bankruptcy courts of Israel as Immune had offices there.

Alexion Pharmaceuticals Inc. (ALXN-Q, not rated), or its designees, is a qualified bidder and is the initial bidder. Its bid comprises an offer of US$6.0m for the Bert sub-license. According to court filings Immune and Alexion were in discussions prior to Immune filing for Chapter 11.

Ownership of the Bert license As mentioned above, ICO delivered its notice of termination of its sub-license to Immune prior to Immune filing for Chapter 11 bankruptcy and consequently ICO states that it is the current owner of Bert in its entirety.

However, the Bert sub-license is being sold as part of the Immune asset sale. This means that the potential US$6.0m proceeds from the sale of the Bert sub-license will go to satisfying Immune’s creditors-ICO will not receive any cash from the disposition.

We believe that ICO management has chosen the strategy of leaving license as part of the Immune assets for several reasons: • Strong sub-licensee. Alexion is a significant sub-licensee with a strong balance sheet (Appendix IV) thereby significantly improving the prospects for Bert’s commercialization. Consequently, ICO has a significantly improved prospect of receiving the proceeds due to it that are embodied in the original sub-license agreement to Immune: o $32m in milestone payments. Milestones include: ▪ the first dosing in a phase 3 clinical trial or pivotal clinical trial

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▪ filing a Biologics License Application5/Marketing Authorization Application6 (“BLA/MAA”) and approval of a BLA/MAA in any indication, and ▪ the achievement of $100 million in aggregate sales of licensed products for use in irritable bowel disease (IBD). o Subsequent 8.5% royalties on net sales. • Cost and time delay. We believe that there would be significant cost and time delay associated with ICO extracting its license from the Immune assets in order to sell it/re-assign the license independently. • Certainty. Alexion would acquire the sub-license free of additional litigation and concomitant time delay if the ownership were to be disputed. • Influence. ICO has influence over the final outcome of the bidding process thereby ensuring that the original (payment) terms of the license are honoured. Key to this position is that the bankruptcy court acknowledged receipt of the ICO termination notice7 implying ICO has the right to cancel the license if it so chooses. Our view is based on certain of terms contained in the Stalking Horse Agreement, including: • A breakup fee (US$140k) and expenses (up to US$80k) are payable to Alexion if, amongst others8: o the sub-license is terminated…; or o the Bankruptcy Court… grants ICO relief from the automatic stay to terminate the License. • Qualified Bidder shall provide a brief description of a plan for developing and commercializing the Anti-Eotaxin Assets, which plan shall be shared with ICO within 1 business day of receipt.9 • The Debtors may… determine, in their business judgment, after consultation with the committee, and in consultation with ICO with regards to Qualified Bids involving the Anti-Eotaxin Assets, which Qualified Bid, if any, is the highest or otherwise best offer;10

We assume, given ICO’s strategic position embodied in the terms of the Stalking Horse Agreement, that the highest bidder may not necessarily be the winner of the Auction, if the process proceeds to the Auction stage. It is in ICO’s interest to award the sub-license to the bidder that has the most significant potential to commercialise Bert for systemic and possible ophthalmic applications and honour the

5 A biologics license application (BLA) is defined by the U.S. FDA as follows: The biologics license application is a request for permission to introduce, or deliver for introduction, a biologic product into interstate commerce (21 CFR 601.2). The BLA is regulated under 21 CFR 600 – 680. A BLA is submitted by any legal person or entity who is engaged in manufacture or an applicant for a license who takes responsibility for compliance with product and establishment standards 6 Marketing Authorisation Application (MAA) is an application submitted by a drug manufacturer seeking permission to bring a medicinal product (for example, a new medicine or generic medicine) to the European market. Its US equivalent is New Drug Application (NDA). 7 Immune Pharmaceuticals, Chapter 11, Case No 19-13273 (VFP), Order filed on July 16, 2019; Schedule 5.3: Status of the Assets and Leases of the Sellers 8 Ibid, p5 9 Ibid, p9 10 Ibid, p11

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original terms of the license. On the other hand, the creditors, claiming US$12.1m, would accept a non- maximum financial bid if the alternative is to receive zero proceeds from the sale (if ICO were to exercise its right to cancel the sub-license).

Salient dates for the bidding process: • Qualified Bids must be submitted by 5.00pm September 12, 2019 (now October 11, 2019) • If more than one Qualified Bid is received, the bids will be auctioned on September 16, 2019 (now October 15, 2019) • Any objection to the sale must be filed by on/before September 19, 2019. • A hearing to confirm the results of the Auction and to approve the sale will be held on September 24, 2019. (now October 17, 2019) • Qualified Bidder (must) consummate the transaction 14 days following entry of the order approving the sale to the Successful Bidder • The Qualified Bidder’s offer is irrevocable until the earlier of a) 2 business days after closing or, b) 30 days after the Sale Order is entered by the court. • The closing of the sale of the Acquired Assets shall take place on the first business day following satisfaction of all closing conditions set forth in the Stalking Horse Agreement. • The contract states that the Buyer may cancel the contract if the Closing has not occurred on or before October 1, 201911.

We understand from ICO management that these dates have been delayed (to the dates highlighted in bold above) with consent from all participants.

Because Immune had offices in Israel, bankruptcy was also filed in Israel. It was required that the US Stalking Horse Agreement would pertain to the Israeli proceedings as well and as such requires the Israeli Bankruptcy Court approve the transaction.

Our primary conclusions regarding the Stalking Horse Agreement include: • A significant player in the orphan drug space (Alexion) is the primary bidder. • Competing bids would result in an auction which may result in not necessarily the highest bidder being awarded the sub-license. • Alexion remains a competitive bidder if the process proceeds to auction stage. • Multiple bidders would underscore the commercialization potential of Bert and hence increases the prospects of ICO receiving its milestone payments and sales royalties. • The successful bidder will now deal with ICO directly thereby obviating the middleman (Immune).

11 Ibid, Exhibit A, p18

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Why is the license considered valuable? The progress Immune has made to date on the development of Bert and specifically focus on the BP market has made it attractive to Alexion and potentially other bidders.

Immune believed that if successfully developed and approved by the FDA, Bert could address large underserved markets with limited treatment alternatives, such as BP, an orphan indication, UC, severe AD and NASH. Based on research from GlobalData Plc (“GlobalData”) and on multiple analysts’ reports it identified its addressable markets as follows: • the $14.0 billion crohn’s & colitis market • the $7.3 billion atopic dermatitis market • the $1.6 billion bullous pemphigoid market

Its strategy was to enter into a strategic partnership with a large pharmaceutical or biotechnology company to support and accelerate the development of Bert and maximize its commercial potential. Its lead product candidate, Bert, was described as a first-in-class, human, anti-eotaxin-1 antibody that targets eotaxin-1, a key regulator of inflammation. Phase 2 trials of Bert in bullous pemphigoid (“BP”), its lead indication, as well as in allergic rhinitis and allergic conjunctivitis (by CAT), were completed, and a phase 2 clinical trial in ulcerative colitis (“UC”) has completed recruiting subjects, although this trial remains blinded.

A timeline of Immune progress with regards to Bert:

• June 24, 2011, Immune exercised its option and paid ICO ~US$1.7m for the sub-license for the world-wide rights to Bert except ocular Bert (+ US$32.0m in milestone payments + 8.5% sales royalties). • May 2, 2012 Lonza Sales AG granted Immune a non-exclusive, worldwide sub-license to manufacture/sell Bert using Lonza’s manufacturing technology. • October 14, 2012 Immune submitted a pre-IND application for Bert with the gastro-intestinal section of the FDA. • November 2012, EpiCept entered into a definitive merger agreement with Immune. The transaction closed August 25, 2013. • 2013: Immune initiated a placebo-controlled, double-blind Phase II clinical trial in Israel with Bert for the treatment of ulcerative colitis (UC). Enrolment was to require 42 patients in up to 10 hospitals in Israel with clinical results due in the first half of 2015. • Immune submitted an orphan drug application for BP to the FDA in October 2014. • Q3/14, Immune commenced manufacture a new good manufacturing practice (GMP) batch of Bert for the planned clinical trials. • February 2015, Immune published new data on the role of eotaxin-1 in UC and Crohn's disease (“CD”). • Early 2015 Immune developed an enhanced Good Manufacturing Practice (GMP)12 for Bert driving higher performance and improved productivity.

12 Good Manufacturing Practice Regulations promulgated by the US Food and Drug Administration under the authority of the Federal Food, Drug, and Cosmetic Act. These regulations, which have the force of law, require that

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• Early 2015, Immune initiated a Phase II program for Bert to treat Bullous Pemphigoid (BP)13 • June 2015, Immune initiated a Phase II study, IMNP UC-01, Evaluation of Safety, Efficacy, Pharmacokinetic and Pharmacodynamic of Bert in Patients with Active Moderate to Severe Ulcerative Colitis (UC), at clinical sites in Israel. In 2016, Immune expanded the study to clinical sites in Russia. • October 7, 2015, Immune submitted an Investigational New Drug Application (IND) 14 in the US to expand recruitment for Bert for the treatment of BP. • November 9, 2015, US Food and Drug Administration (FDA) accepted the IND application. • November 17, 2015, Immune announced that the first of 33 patients was enrolled in a Phase II clinical trial evaluating the safety and efficacy of Bert in UC. • November 2015, the first patient was dosed in the Phase II clinical trials with Bert in UC. • Effective Q1/2016, Immune signed a new agreement to transfer the manufacturing of Bert to MassBiologics from Lonza Sales AG. • February 2016, Immune launched a phase 2a clinical trial, IMNP BP-01, “Evaluation of Safety, Efficacy and Pharmacodynamic Effect of Bertilimumab in Patients with Bullous Pemphigoid” (ClinicalTrials.gov Identifier: NCT02226146). • March 2017, Immune presented preliminary data with Bert from the IMNP BP-01 study at the American Academy of Dermatology 2017 Annual Meeting in Orlando, Florida. The Bullous Pemphigoid Disease Activity Index ("BPDAI") measured in the patients who completed the study was reduced by an average of 84%. Oral prednisone was tapered down to 10mg or less. No significant adverse events were reported. • April 2017, Immune announced a restructuring and a focus on inflammatory disease and dermatology. • September 2017, Immune announced additional results from the first six subjects enrolled. The interim analysis showed that the six subjects in the study experienced a decline in the Bullous Pemphigoid Disease Area Index (BPDAI) Total Activity Score of 85% (p=0.0096). All six patients>50% reduction with four>90% and no serious adverse events were reported. • May 15, 2018 Immune announced positive results from the completed Phase II bullous pemphigoid (BP) trial. Results pertained to 6 patients vs a target enrolment of 10-15 patients at 6 sites in the US and 2 sites in Israel.

manufacturers, processors, and packagers of drugs, medical devices, some food, and blood take proactive steps to ensure that their products are safe, pure, and effective. GMP regulations require a quality approach to manufacturing, enabling companies to minimize or eliminate instances of contamination, mixups, and errors. This protects the consumer from purchasing a product which is not effective or even dangerous. Failure of firms to comply with GMP regulations can result in very serious consequences including recall, seizure, fines, and jail time. https://ispe.org/initiatives/regulatory-resources/gmp/what-is-gmp 13 Bullous pemphigoid is a rare skin condition that causes large, fluid-filled blisters. They develop on areas of skin that often flex — such as the lower abdomen, upper thighs or armpits. Bullous pemphigoid is most common in older adults. https://www.mayoclinic.org/diseases-conditions/bullous-pemphigoid/symptoms-causes/syc- 20350414 14 An Investigational New Drug Application (IND) is a request for Food and Drug Administration (FDA) authorization to administer an investigational drug to humans. Such authorization must be secured prior to interstate shipment and administration of any new drug that is not the subject of an approved new drug application. https://www.fda.gov/drugs/investigational-new-drug-ind-application/information-sponsor-investigators- submitting-investigational-new-drug-applications-inds

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• July 9, 2018 WuXi Biologics and Immune announced a development and manufacturing agreement for the production of Bert. • In July 2018, the Committee for Orphan Medicinal Products (COMP) of the EMA issued a positive opinion on Immune’s application for Orphan Drug Designation for Bert for the treatment of BP. • August 20, 2018, the FDA granted an orphan drug designation to Bert for the treatment of BP. • September 2018, Bert received Fast Track Designation from the FDA for the treatment of BP. • December 2018, Immune announced a collaboration with WuXi Biologics Ltd to produce the drug for clinical studies, up to 2,000 litres. • 2019, Immune planned to initiate a pivotal multinational phase 2/3 trial of Bert in BP upon the availability of new clinical supplies of Bert from WuXi Biologics, anticipated no earlier than late 2019. • 2019, With regards to the IMNP UC-01 trial, this study had finished enrollment (33 patients enrolled) and Immune expected to receive top-line results in the first half of 2019.

Immune’s R&D expenditures are highlighted in Figure 3. The majority of the money spent was on Bert.

Figure 3: Immune Operating Expenses (US$m’s) 2013 2014 2015 2016 2017 2018* R&D 3.6 5.6 (1) 5.9(2) 8.3(3) 5.5 (4) 3.6 (5) G&A 5.4 10.7 9.8 6.4 6.6 4.7 In process R&D impairment 12.5 (6) Total 9.0 16.3 15.7 27.2 12.1 8.3 Source: Respective 10K filings; *=per 10-Q for 9 months ending 30/9/18, the financial filing prior to bankruptcy (1)= The increase was mainly due to an increase in outsourced manufacturing and consulting costs of US$1.2m, related to the commencement of Phase II clinical trials. (2)=The increase was mainly due to an increase in outsourced consulting services related to the Phase II clinical trials of Bert. (3)=increase in pre-clinical and clinical trials costs related to Bert of approximately US$1.2m. (4)=decrease of US$2.8m in clinical trial expenses. (5)= The YTD increase of US$2.5m was primarily driven by YoY increase in clinical trial expenses of US$1.7m. (6)=write down of in-process R&D unrelated to Bert.

Summary of accomplishments

• Bullous Pemhigoid (BP) – Phase 2 study completed • Ulcerative Colitis (UC) – Phase 2 recruitment complete, top line results expected • BP received Orphan Drug designation both in the US and Europe • BP received Fast Track Designation from the FDA • Manufacturing of Bert improved – higher volumes, improved efficacy

Risks/Protections • Ensure Bert maintains its Fast Track designation for BP. • A license to a patent family that covers a composition of matter of Bert and a method of using Bert to screen for an antibody or antibody fragment that binds eotaxin-1, including: four registered patents in the United States and registered patents in Europe (Switzerland, Germany, France, United Kingdom (UK), and Ireland), Brazil, Canada, Israel, Australia, Japan, New Zealand and

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Singapore, and one pending patent application in the United States. The U.S. patents will expire, without extension between March 2021 and August 2022. • The foreign patents and patents granted with respect to pending patent applications in this family will expire, without extension, in March 2021. • All rights, title and interest in and to a patent application family that covers a method for treating an inflammatory bowel disease with an anti-human eotaxin antibody, including Bert in the United States, Europe, Australia, Canada, China, Israel, and New Zealand. Any patents granted with respect to the pending patent application will expire, without extension, in March 2034. • If Bert or any other product candidates were to be approved as biological products under a BLA, such approved products should qualify for the 12-year period of exclusivity

Upcoming milestones • Phase 2 UC study preliminary recruitment (completed, awaiting data) • Pivotal BP study (possibly 2020), this would trigger a milestone payment.

Major competitors/markets Major competing products to Bert in the BP market include Remicade and Humira which are expected to become available on a generic basis over the coming years. Other competitors include: Nucala (mepolizumab) for asthma, Dupixent (dupilumab) for asthma and atopic dermatitis, Cinqaero® (reslizumab) for eosinophilic asthma and generically steroid and other immunosuppressive agents

The BP population can be described as: • Approximately 2,100 new cases in the US p.a.15 • Bullous Pemphigoid (BP) is a severe orphan autoimmune inflammatory skin disease with an estimated prevalence of 18 per 100,000 in the U.S. and Europe.16 • Prevalence of circa 120K patients in US and EU17

ICO’s second drug candidate is oral Amp B.

ICO-019 (Amphotericin, “Oral Amp B”) • Drug: Oral amphotericin B (intravenous Amp B is the gold standard) • Origin: University of British Columbia • Year licensed: optioned July 2007, licensed May 6, 2008 exclusive world-wide license to ICO-019 • Patented: Yes, over 10 patents until mid 2030’s

15 https://my.clevelandclinic.org/ccf/media/files/newsletters/SkinSmart_Sp06.pdf 16 https://markets.businessinsider.com/news/stocks/akari-therapeutics-announces-new-data-demonstrating- synergistic-benefits-of-nomacopan-s-bifunctional-c5-and-ltb4-inhibitory-activity-in-pemphigoid-disease- 1028434320 17 http://investor.akaritx.com/static-files/bb340965-d1f5-4420-a4e5-65261142e974

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• Class: Biologic • Indications: serious life and sight threatening fungal infections in immune-compromised patients (e.g. in HIV/AIDS, cancer, transplant recipients, diabetics, etc) and secondarily, Visceral Leishmaniasis (VL) a parasitic infection with high mortality rates • Competition: Miltefosine (Leishmaniasis), Ambisome (fungal infections and Leishmaniasis) and Diflucan (fluconazole) • Market Size (KRC estimate): US$570m

While Amp B has been used to treat systemic fungal infections intravenously for over 50 years, an oral formulation has yet to be developed. Systemic fungal infections are infections that affect the entire body and are prevalent among people whose immune systems have been weakened – it is the leading cause of death among organ transplant recipients.

An oral formulation would resolve safety issues associated with its current topical application and also enable much broader patient access, especially in less developed countries.

With regards to new antibacterial and antifungal drugs, the FDA has various expedited development programs, including break-through therapy, fast track designation and priority review, that are intended to expedite or simplify the process for the development and FDA review of drugs that meet certain qualifications. The purpose of these programs is to provide important new drugs to patients earlier than under standard FDA review procedures.

In this regard, the GAIN Act is intended to encourage development of new antibacterial and antifungal drugs for the treatment of serious or life-threatening infections by providing certain benefits to sponsors, including extended exclusivity periods, fast track and priority review. To be eligible for these benefits a product in development must seek and be awarded designation as a Qualifying Infectious Disease Product, or QIDP.

The antifungal market may be described as: • not crowded (less than 10 products), • new treatments are required given the high mortality rate (40%-50% depending on infection), • long treatment durations (6-12 weeks). • Evolving with the two main players being: o incumbent Ambisome™ with worldwide sales US$420m in 201818, up 15% from 2017, is now being o caught up by the new, Cresemba, which launched in 2015 and generated US$150m in worldwide sales 201819 in more than 20 countries.

Specifically, oral Amp B has demonstrated promising results in pre-clinical trials for Visceral Leishmaniasis (VL), a parasitic infection prevalent in developing nations known for its high mortality rates. ICO has received Orphan Drug Status from the FDA for the treatment of VL.

18 Gilead 2018 10K 19 Basilea Pharmaceutica Ltd Annual Report p9

KRC Insights, Bruce Krugel 14

Timeline: • September 2010, Oral Amp B Delivery System received Orphan Drug Status from the FDA for the treatment of VL20 • December 12, 2013, Oral Amp B delivery system was moved into in-vitro testing with partner ImmuneCarta • August 19, 2014, results of the study were released showing a reactivation response in six out of 7 in vitro cultures. • October 25, 2015, ICO engaged contract manufacturer Corealis Pharma Inc. to develop a new capsule formulation to deliver oral Amp B. • During 2016, ICO demonstrated in pre-clinical studies that: o The optimized formulations exhibited pharmacokinetic and tissue accumulation data with clinical and commercial relevance; and o A once daily regime might be possible in certain indications. • January 23, 2017, ICO announced that it had commenced three pre-clinical studies. All studies were completed in Q1/17 showing: o A 7-day dose of up to 1000mg/day revealed no toxicities o Bridging study testing various formulations demonstrated oral bioavailability and no significant differences between formulation groups o The 14-day Good Laboratory Practice (GLP) toxicology study revealed dose levels up to 600mg/d once daily was well tolerated. • April 17, 2018, a Phase 1 single ascending dose clinical trial commenced in Australia. The trial comprised 4 cohorts of 8 patients each. • June 27, 2018 ICO, announced that the study met its primary endpoint of safety and tolerability. All drug doses were tolerated (including up to 800mg/d) with no indication of kidney toxicity. • July 16, 2018 ICO, announced the advancement into later stage clinical trials. • September 6, 2018, ICO announced additional pharmacokinetic data from the study that showed superiority (approx 2x AUC0-inf) vs formulation data by the closest competitor. . ICO is now preparing for a second clinical study having completed a March 2019 financing.

Risks/Protections • Time to market: Matinas Biopharma Inc.’s oral Amp B formulation is in Phase 2 clinical trials (see below). • Tissue penetration

Upcoming milestones • Completion of next study enrolment (expected Q1/20).

20 https://www.accessdata.fda.gov/scripts/opdlisting/oopd/detailedIndex.cfm?cfgridkey=315310

KRC Insights, Bruce Krugel 15

Major competitors/markets The leading drugs by antifungal classes are as follows: • Azoles. Noxafil® (posaconazole) marketed by Merck and Cresemba® (isavuconazole), marketed by Astellas in the U.S.; • Echinocandins. Merck markets Cancidas® (caspofungin), genericized in March 2017. Pfizer markets Eraxis® (anidulafungin) and Astellas markets Mycamine® (micafungin); and • Polyenes. AmBisome® (liposomal amphotericin B), a product sold by Gilead in Europe, by Astellas in the U.S. and by Dainippon-Sumitomo in Japan.

However, there is the issue of the development of resistance to many drugs which Amp B obviates.

The market leader in the Amp B IV market is Gilead’s Ambisome™ with worldwide sales US$420m in 2018.

Antifungals in clinical development include: • VT-1161 (triazole) being developed by Mycovia Pharmaceuticals, Inc., formerly Viamet Pharmaceuticals, Inc., • Rezafungin21 (formerly CD101) being developed by Cidara Therapeutics, Inc., a long-acting IV echinocandin, • APX001 developed by Amplyx Pharmaceuticals Inc., • MAT2203, a polyene amphotericin B oral formulation being developed by Matinas BioPharma Holdings Inc (see Figure 4), • Olorofim (formerly F901318) developed by F2G Limited, and • Ibrexafungerp (formerly SCY-078) being developed by Scynexis (Figure 4).

Of the three companies that we view as competitors, Matinas is the most direct comparable, refer to Figure 4.

21 Cidara estimates the annual worldwide sales of prescription systemic antifungals are ~US $4 billion

KRC Insights, Bruce Krugel 16

Figure 4: ICO competitors (all figures US$) Matinas (1) Scynexis (2) Basilea (3) Symbol MTNB-N SCYX-Q BSLN-Swiss Market cap US$102.4m US$59.3m CHF519.6m Competing product MAT2203 Ibrexafungerp Cresemba (formerly SCY-078) Delivery Oral Oral and IV Oral and IV Stage Multiple Phase 2 Multiple Phase 3 Commercially available studies Target markets/ Aspergillus, Invasive Vulvovaginal Aspergillosis and focus candidiasis and IFIFs Candidiasis (VVC), mucormycosis. including Cryptococcal Invasive Aspergillosis, Meningitis Refractory Invasive Fungal Infections Progress QIDP with Fast Track QIDP/Orphan Commercially available, Drug/Fast Track QIDP, Orphan Drug designation in US and EU. Expect exclusivity to 2027 in both geog. Update Met FDA in June 2019 NDA expected for aVVC Approved to discuss a late 2020 development pathway for Cryptococcal Meningitis Source: KRC Insights; (1) Corporate Presentation April 2019, 2018 10K; (2) Corporate Presentation Aug 2019; (3) Investor Presentation September 2019; *=assuming 15%-30% penetration rates

The size of the market opportunity is presented in Figure 5:

Figure 5: Antifungal market opportunities/growth (US$) Matinas (1) Scynexis (2) Basilea (3) Estimates of $10.7bn – global antifungal $70m-100m* – aVVC Launched 2015, $150m US market size market (2015) $350m-470m* – rVVC sales in F2018. Regulatory $4.0bn – world wide antifungal $250m-400m – Invasive and sales milestones from prescription drugs Aspergillosis all license agreements 1.5m cases of invasive fungal for Cresemba could infections p.a. amount to ~ US patient markets: $1.0bn over the lifetimes of 46,000 – invasive candidiasis its partnerships 6,000 - invasive aspergillosis 3,000 – cryptococcal meningitis Source: Respective company presentations/filings, KRC Insights, *=Scynexis revenue estimate to Scynexis based its determination of its penetration rates.

KRC Insights, Bruce Krugel 17

Forecasts In determining our revenue forecasts for ICO, we: • Accounted for the impact of license agreements • Assumed that Alexion would be the winner of the Stalking Horse Agreement, and • Made assumptions about US target populations, penetration rates and pricing for end markets for BP and oral Amp B.

Figure 6 shows that Bert is effectively a net license stream: ICO pays over the difference to CAT between what it receives from its sub-licensee and what it owes CAT. The longer term upside to revenues (and hence valuation) is from oral Amp B which it owns directly.

Figure 6: ICO license commitments Drug/Licensor Bert/CAT Oral Amp B ICO pays US$7.4m, of which US$0.4m Initial license fee of $20k (paid) already paid Royalty on future sales Annual fees until a New Drug Application (“NDA”) is approved by the FDA or other regulatory body Contingent payments of up to $1.9m in aggregate upon the achievement of certain development and commercialization milestones Royalties on future revenues

ICO receives US$32.0m milestone payment divided evenly between 2 indications.

Revenue royalty rate of 8.5% Source: ICO Therapeutics Inc., KRC Insights

Figure 7: ICO Calculation of addressable markets (US$) Bert Oral Amp B Bertilimumab Oral Amp B Indications BP Candidiasis Aspergillosis Target population (US) 65,700 46,000 6,000 Pricing course $50k TAM $3.285bn(1) $1.2bn(3) to $570m(4) ICO penetration rate 10% 10% 10% ICO net sales $28.0m(2) $120m-$57m Source: KRC Insights, (1)=at 50% prescription rate, (2)=royalty at 8.5%, (3)= Pfizer’s Diflucan (fluconazole) reported peak sales of $1.2bn in 2003, now available as a generic, (4)=sum of 2018 revenues for the 2 larger antifungal players mentioned in this report: Ambisome at $420m and Cresemba at $150m.

KRC Insights, Bruce Krugel 18

Prospective Valuation As a reference point for ICO’s valuation here is the history of the Bert license: • June 24, 2011 Immune exercised its option and acquired the sub-license for ~US$1.7m excluding any ophthalmic applications. • August 26, 2013 Immune merged with Epicet and Immune was valued at US$61.0m with its principal asset being the Bert sub-license (Figure 8). • July 16, 2019 the Bert sub-license was subject to the Stalking Horse Agreement with the initial bid at US$6.0m. Final auction still pending.

Figure 8 shows the Bert valuations used by Sun Trust Robinson Humphrey to support its Fairness Opinion w.r.t. the EpiCept merger with Immune. The financial data reviewed by SunTrust Robinson Humphrey was limited to upfront payments, although several of the selected transactions did include milestone and/or royalty payment data as well.

Figure 8: Summary of Selected Bert transactions w.r.t. EpiCept and Immune merger (US$m’s) Low High Systematic Bert 5 100 Ophthalmic Bert 10 50 Immune Equity Value Reference 15 150 Selected percentile range 25% 75% Adjusted Immune Equity Value Reference Range 49 116 Source: EpiCept Corp Schedule 14A, Definitive Proxy Statement to approve merger with Immune, dd 18/6/2013, p 29

We identify four revenue streams for ICO and value each separately (Figure 9): 1. Bert milestone payments. We assign a high probability (80%) to the first of these payments given Alexion is the stalking horse bidder. We assign a lower probability to the second of the milestone payments as we understand that Alexion may develop the drug for a second indication but have no insight into its direction yet. 2. Potential acquisition of Bert’s ocular rights. We believe that Alexion may have an interest in acquiring 100% of the intellectual property associated with Bert. Referring to Figure 8, we have chosen the lower end of historical Ophthalmic Bert range. 3. Bert royalty payments. We believe that 20% appropriately reflects the probability of a Phase 2 orphan drug (BP) being developed by Alexion eventually coming to market and hence ICO receiving its sales royalties. 4. Oral Amp B is a Phase 1 drug owned 100% by ICO (net of royalties). Its development would continue using funding from the proceeds from the Bert milestone payments.

ICO has non-capital losses available to reduce taxable income of future years in the amount of $32.9m.

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Figure 9: ICO Valuation – probability weighted sum-of-the parts DCF (C$/US$ 1.33)

Indication Full amount Probability ICO share Probability adj. NPV Value/share Milestone payments BP US$16.0m 80% 100% $13,309 $0.06

Other US$16.0m 50% 100% $5,046 $0.02

Alexion acquiring ocular rights US$10.0m 50% 100% $6,665 $0.03

Royalties BP 186,289 20% 100% $37,258 $0.17

Revenues Oral Amp B 682,0470 10% 100% $68,205 $0.31

Value/ FD share $0.61*

Rounded $0.60

Implied fully diluted market cap $129,685 Source: KRC Insights, *=may not sum due to rounding

We derive a $0.60 target price for ICO using a weighted average sum of the parts approach.

KRC Insights, Bruce Krugel 20

Financial Statements ($000’s)

December year-end $000's 2018 2019E 2020E 2021E 2022E 2023E

Royalties 5,320 4,655 9,975 9,310 Drug revenues (Oral Amp B) - 3,714 7,427 43,040

Revenues 5,320 8,369 17,402 52,350 Cost of revenue (371) (743) (4,304) Gross profit 5,320 7,997 16,660 48,046 R&D (1,421) (1,500) (1,500) (1,500) (1,500) (1,500) General & Administrative (781) (800) (800) (900) (1,000) (1,100) Royalty payments (2,000) (2,000) (2,000) (2,000) Foreign Exchange (6) Total costs (2,208) (2,300) (4,300) (4,400) (4,500) (4,600)

Operating income (2,208) (2,300) 1,020 3,597 12,160 43,446 Interest and other income 505 Net income before taxation (1,703) (2,300) 1,020 3,597 12,160 43,446

Taxation

Net income (1,703) (2,300) 1,020 3,597 12,160 43,446

EPS - Basic ($ 0.02) ($ 0.02) $ 0.01 $ 0.02 $ 0.08 $ 0.29 EPS - FD ($ 0.02) ($ 0.02) $ 0.00 $ 0.02 $ 0.06 $ 0.20

KRC Insights, Bruce Krugel 21

Appendix I: Description of Bertilimumab22

Bertilimumab

Our lead product candidate, bertilimumab, is a first-in-class, human monoclonal antibody that targets eotaxin-1, a chemokine that plays a role in inflammation.

Chemokines are small proteins that can act as chemical attractants of inflammatory cells to sites of inflammation and infection. We licensed all non-ocular uses of bertilimumab from ICO Therapeutics Inc. in 2011.

Eotaxin-1 is a chemoattractant for eosinophils, which are inflammatory cells important in the pathogenesis of allergic airway diseases, inflammatory bowel disease, skin conditions and other conditions. By neutralizing eotaxin-1, bertilimumab may prevent the migration and activation of eosinophils. We believe Bertilimumab has potential applications as a treatment for a variety of allergic and inflammatory diseases, including BP, inflammatory bowel disease, AD, and asthma, among others. Bertilimumab has been shown to have biological activity in a variety of preclinical studies, with high affinity and specificity for human eotaxin-1 and was safe and well-tolerated in primates. In a phase 1 clinical study consisting of a single intravenous (“IV”) administration to healthy volunteers, bertilimumab demonstrated excellent safety and tolerability (no significant adverse events and no anti-bertilimumab ) and demonstrated an elimination half-life consistent with biweekly dosing. In phase 2 studies, bertilimumab has been safely administered via intravenous, intranasal and ocular routes of administration and has shown activity in patients with allergic rhinitis. Currently, we are studying bertilimumab in two active clinical programs, BP and UC.

Bertilimumab for Bullous Pemphigoid (“BP”)

Published studies have suggested that eotaxin-1 plays a role in the pathogenesis of BP. Therefore, bertilimumab, which blocks eotaxin-1, has the potential to be an effective therapeutic agent for BP patients.

In October 2015, we submitted an Investigational New Drug Application (“IND”) to the FDA for the study of bertilimumab in patients with BP. In February 2016, we launched a phase 2a proof-of-concept clinical trial, IMNP BP-01 (ClinicalTrials.gov Identifier: NCT02226146), an open-label, single arm study in adults with moderate to extensive BP. The primary endpoint is safety and secondary endpoints include a variety of efficacy measures related to clinical signs and symptoms and tapering of systemic corticosteroids. Subjects in this study received bertilimumab IV at a dose of 10 mg/kg on days 0, 12 and 28 and were followed for a total of 84 days. In addition, they receive oral prednisone at a maximum initial dose of 30 mg/day, which was tapered rapidly according to the subject’s clinical status.

We reported interim results from the study in February 2017, and additional results in September 2017. Subjects in the study experienced a decline in the Bullous Pemphigoid Disease Area Index (BPDAI) Activity Score of 81% at day 84 from a mean baseline score of 67, with 86% of subjects showing at least a 50% improvement in the BPDAI Activity Score and 57% showing at least a 90% improvement. These

22 Immune Pharmaceuticals Inc. S-1 filing of January 17, 2019, pp 50-51

KRC Insights, Bruce Krugel 22

improvements were observed despite subjects receiving only three doses of bertilimumab (on days 0, 14 and 28) and modest doses of prednisone that were aggressively tapered, from a mean starting dose of 0.33 mg/kg to 0.15 mg/kg by day 84.

In July 2018, the Committee for Orphan Medicinal Products (COMP) of the EMA issued a positive opinion on the Company’s application for Orphan Drug Designation for bertilimumab for the treatment of BP. In August 2018, we received Orphan Drug Designation from the FDA for bertilimumab for the treatment of BP. In September 2018, bertilimumab received Fast Track Designation from the FDA for the treatment of BP.

Currently we plan to initiate a pivotal multinational phase 2/3 trial of bertilimumab in BP upon the availability of new clinical supplies of bertilimumab from WuXi Biologics, anticipated no earlier than late 2019.

Bertilimumab for Ulcerative Colitis (“UC”)

Published studies have suggested that eotaxin-1 plays a role in the pathogenesis of UC. In June 2015, we initiated a phase 2 proof-of-concept study, IMNP UC-01 (ClinicalTrials.gov Identifier: NCT01671956). IMNP UC-01 was a randomized, double blind, placebo-controlled trial in adult patients with active moderate-to-severe UC.

Subjects were randomized in a 2:1 ratio to receive bertilimumab or placebo and received bertilimumab 10 mg/kg IV or placebo on days 0 and 14 and 28, and were followed for safety and efficacy measures for 12 weeks. The primary end point is clinical response assessed by the Mayo Clinic Ulcerative Colitis Disease Index at 8 weeks. Secondary end points include assessment of mucosal injury and clinical remission. This study has finished enrollment and we expect to receive top-line results in the first half of 2019.

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Appendix II: General FDA roadmap for drug approval

The process required by the FDA before a drug may be marketed in the United States generally involves the following:

• completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice (“GLP”) regulations; • submission to the FDA of an IND which must become effective before human clinical trials may begin; • approval by an independent institutional review board (“IRB”) at each clinical site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with good clinical practice (“GCP”) requirements to establish the safety and efficacy of the proposed drug product for each indication; • submission to the FDA of an New Drug Application (NDA) or Biologics License Applications (BLA); • satisfactory completion of an FDA advisory committee review, if applicable; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current GMP requirements and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; and • FDA review and approval of the NDA or BLA.

Before approving an NDA or BLA, the FDA typically will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with Current Good Manufacturing Practice (“cGMP”) requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA or BLA, the FDA may inspect one or more clinical trial sites to assure compliance with GCP requirements.

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Appendix III: FDA clinical trial phases

Preclinical studies Preclinical studies include laboratory evaluation of product chemistry, toxicity and formulation, as well as animal studies to assess potential safety and efficacy. An IND sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data and any available clinical data or literature, among other things, to the FDA as part of an IND. Some preclinical testing may continue even after the IND is submitted. An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to one or more proposed clinical trials and places the clinical trial on a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. As a result, submission of an IND may not result in the FDA allowing clinical trials to commence.

Clinical trials Clinical trials involve the administration of the investigational new drug to human subjects under the supervision of qualified investigators in accordance with GCP requirements, which include the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial. Clinical trials are conducted under protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. In addition, an IRB at each institution participating in the clinical trial must review and approve the plan for any clinical trial before it commences at that institution. Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health, or NIH, for public dissemination on their ClinicalTrials.gov website.

Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined:

• Phase 1 clinical trial: The drug is initially introduced into healthy human volunteers or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness. • Phase 2 clinical trial: The drug is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage. • Phase 3 clinical trial: The drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product.

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Appendix IV: Alexion Pharmaceuticals Inc. (ALXN-Q)

ALXN.O Enter RIC Alexion Pharmaceuticals, Inc. is a biopharmaceutical company. The Company is focused on the development and commercialization of therapeutic products. The Company's products include Soliris (), Strensiq (asfotase alfa) and Kanuma (sebelipase alfa). The Company's clinical development programs include Soliris (eculizumab), cPMP (ALXN1101), SBC- Alexion Pharmaceuticals Inc 103, ALXN1210 (IV) and ALXN1210 (Subcutaneous). Its Soliris is the therapeutic approved for patients with either paroxysmal Country United States of America nocturnal hemoglobinuria (PNH) or hemolytic uremic syndrome (aHUS). PNH and aHUS result from chronic uncontrolled Exchange NASDAQ/NGS (GLOBAL SELECT MARKET) activation of the complement component of the . Its Strensiq is for the treatment of patients with Industry Pharmaceuticals Hypophosphatasia (HPP). Its product, Kanuma is for the treatment of patients with Lysosomal Acid Lipase Deficiency (LAL-D). It is a recombinant form of the human LAL enzyme, which is a replacement therapy that is approved for the treatment for Sector Health Care patients with LAL-D. Market Cap Currency USD General Information (Currency: USD) Consensus Recommendation Price (Previous Close): 106.32 Beta 5 Year: (NASDAQ Composite Index)1.69 BUY Price - 52 Week High: 141.86 Dividend Yield (Indicated): NULL ▼ Price - % Below High: -25.1% Shares Outstanding (MIL): 224 ██████████████████ Price - 52 Week Low: 92.56 Float Shares (MIL): 224 Sell Strong Buy Price - % Above Low: 14.9% Float % of O/S: 99.8% # of Analysts: 19 Median Price Target: 161.00 Market Capitalization (MIL): 23,840 Implied Profit: 51.4% Enterprise Value (MIL): 24,396

Review of Stock Performance Profitability FY2018 Sales By Region 0% FY0 5 Year Avg Region Sales Gross Margin 90.9% 90.4% United States 48.8% -5% R/D % Sales 17.7% 23% Europe 27.1% SGA % Sales 26.9% 30% Asia Pacific 10.0% -10% EBITDA Margin 45.6% 38.7% Rest of World 14.1% Operating Margin 6.5% 19.0% -15% Pretax Margin 5.9% 17.5% Net Margin 0.5% 11.0% -20% CF/Sales Tax Rate 91.3% 37% -25% ROA 0.2% 3.2% 1 month 3 month 6 month 12 month ROE 0.2% 5.2%

Price Chart (Currency: USD) $160 12,000

$140 10,000

$120

8,000 $100

$80 6,000

$60 4,000

$40

2,000 $20

$0 0 23/08/17 23/10/17 23/12/17 23/02/18 23/04/18 23/06/18 23/08/18 23/10/18 23/12/18 23/02/19 23/04/19 23/06/19 23/08/19 Volume ('000) Closing Price 50 Day MA 200 Day MA

Source: Thomson Reuters Eikon

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Appendix V: Senior Management/Directors of ICO

Andrew J. Rae President, CEO and Director

Mr. Rae is President and CEO of iCo Therapeutics, Inc., an ocular development company he co-founded in 2005. Andrew has spent two decades in the biotechnology industry, formerly as CFO with Ability Biomedical Corporation (Irvine CA, Vancouver BC), acquired by Medarex, Inc. in 2004. Mr. Rae has also served as Vice President, Finance & Corporate Affairs at Active Pass Pharmaceuticals (Vancouver BC). In his various roles,Mr. Rae has raised approximately $50M in venture, strategic and capital markets financings, engaged in a successful cross-border M&A transaction, and played a significant role in shaping multiple business development deals (Cambridge Antibody, Isis Pharmaceuticals, Medarex). Prior to his operational experiences, Mr.Rae served as BiotechnologyEquities Analyst, Goepel Shields & Partners (now Raymond James Canada), covering Canadian biotechnology stocks including Angiotech Pharmaceuticals, QLT Inc. and ID Biomedical.

Mr. Rae currently sits on the Dean’s External Advisory Board for the Faculty of Business Administration at Simon Fraser University. In 2009 Andrew was Pacific Finalist, Ernst & Young Entrepreneur of the Year (Canada).Mr. Rae’s degrees include a B.Sc. from the University of Western Ontario and an MBA from Simon Fraser University

William Jarosz JD Partner Cartesian Capital Group, LLC Chairman of the Board of Directors

William Jarosz is currently a Partner at Cartesian Capital Group, LLC, a global investment management firm. From 1997 until 2005, Mr. Jarosz served as Managing Director and General Counsel ofAIGCapital Partners, a subsidiary of American International Group, Inc., and as Managing Director of the AIG- Brunswick Millennium Fund. While atAIGCapital Partners, Mr. Jarosz oversaw global private equity transactions for the firm’s various private equity funds. Prior to joining AIG in 1997, Mr.Jarosz practiced law at Debevoise & Plimpton, specializing in international private equity investment and Russian corporate and securities laws. Mr. Jarosz also served as a consultant to the World Bank on the regulation of Foreign Direct Investment in emerging markets. Mr. Jarosz is a graduate of the University of Montana and received an MA in Law and Diplomacy from the Fletcher School at Tufts University and a JD from Harvard Law School

Michael Liggett, CPA, CA, Bsc. Pharm Chief Financial Officer and Director

Michael Liggett brings 30 years of experience in the health care sector. Michael was a practicing pharmacist for 7 years before obtaining his training and certification as a Chartered Accountant. After spending 7 years at Price Waterhouse Coopers (then Price Waterhouse), he joined Inflazyme Pharmaceuticals Ltd. in the capacity of Chief Financial Officer. He provided leadership through multiple

KRC Insights, Bruce Krugel 27

financings and other strategic initiatives before successfully transitioning the company to establish its footprint in the forestry sector as Eacom Timber. His background includes over 19 years as a public company CFO with strategic and operational expertise and proven success in finance, M&A, strategic partnerships, restructurings, and risk management.

Dr. Peter Hnik, MD, MHSc Chief Medical Officer

Dr. Hnik received his medical degree from the Medical Faculty of Charles University of Prague in 1981. After practicing for years at the Eye Clinic of the Charles University Hospital where he performed surgery and consultation in glaucoma and neuro-ophthalmology, Dr. Hnik later joined the Eye Clinic of the University of British Columbia as part of the glaucoma research group. He received his Master of Health Sciences degree from the University of British Columbia in 1999. Prior to joining iCo Therapeutics, Dr. Hnik served as Associate Director of Clinical Research with QLT Inc., playing a critical role in designing and directing Visudyne clinical trials in AMD and diabetic retinopathy. He was also heavily involved in the publication, in-licensing and pharmacovigilance activities for Visudyne. He has authored numerous ocular publications and presentations at international forums. Dr. Hnik is a member of the Association for Research in Vision and Ophthalmology (ARVO), the American Academy of Ophthalmology (AAO), the European Society of Retina Specialists (EURETINA), the Drug Information Association (DIA), and the New York Academy of Sciences (NYA).

Susan Koppy, BSc Director

Ms. Koppy has more than 30 years of experience in marketing and business development in the bio- pharmaceutical industry in the U.S., Europe, and Japan. She has participated in the negotiation of numerous agreements with a multi-billion dollar aggregate commercial value and is a frequent speaker on business development issues in the industry. After 15 years working through progressive positions of responsibility in life sciences, Ms. Koppy joined Novartis Pharmaceuticals AG in Basel Switzerland in 2000 where she became the first woman on the global marketing management team. Between 2005 and2008 she built and led strategy, business development and acquisition groups for Applied Biosystems, Inc., Idenix Pharmaceuticals and Transcept Pharmaceuticals where she successfully sourced and executed a major U.S. partnership with Purdue Pharmaceuticals. Ms. Koppy now consults with a variety of bio-pharmaceutical companies on business development strategy, search, and transactions in a broad variety of therapeutic areas both in-and out-licensing. She is a member of the National Association for Corporate Directors, Healthcare Businesswomen’s Association, and Licensing Executive Society.

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Disclosure

• 2622632 Ontario Inc. is doing business as KRC Insights. • KRC Insights undertakes paid research and was paid by iCo Therapeutics Inc. for this report. • 2622632 Ontario Inc. and its directors/family members have ownership positions in iCo Therapeutics Inc. (ICO-V). They may buy, sell or offer to purchase or sell such securities from time to time. • 2622632 Ontario Inc. and its directors will use all reasonable efforts to avoid engaging in activities that would lead to conflicts of interest and 2622632 Ontario Inc. will use all reasonable efforts to comply with conflicts of interest disclosures and regulations to minimize the conflict. • The opinion expressed in the report was formed at the date of the report and KRC Insights undertakes no obligation to update its view. • The opinion of KRC Insights does not and will not constitute an offer to buy or sell securities in ICO Therapeutics Inc. • KRC Insights and 2622632 Ontario Inc. are not registered with any financial or securities regulatory authority in Ontario or Canada, and do not provide nor claim to provide investment advice or recommendations. • Research reports written by KRC Insights are for informational purposes only. The opinions of KRC Insights analyst(s) is not intended to be investment, tax, banking, accounting, legal, financial or other professional or expert advice. Consequently, such information should not be relied upon for such advice. Readers of the report must seek professional advice before acting or omitting to act on any information contained in the report. • This research report was prepared without reference to any particular user’s investment risk profile, investment requirements or financial situation. Where reference is made to estimate of value or relative value of a specific company, there is no guarantee that these estimates are reliable or will materialize. Hence, readers of this report are advised to conduct their own due diligence before making any investment decisions. • This report may include forward-looking statements about objectives, strategies and expected financial results of companies featured. Such forward-looking statements are inherently subject to uncertainties beyond the control of such companies. Readers of this report are cautioned that the company’s actual performance could differ materially from such forward-looking statements. • Although the content of this report has been obtained from sources believed to be reliable, KRC Insights reports could include technical or other inaccuracies or typographical errors and it is provided to you on an “as is” basis without warranties or representations of any kind. • KRC Insights and 2622632 Ontario Inc. make no representation and disclaim all express and implied warranties and conditions of any kind, including without limitation, representations, warranties or conditions regarding accuracy, timeliness, completeness, non-infringement, satisfactory quality, merchantability, merchantable quality or fitness for any particular purpose or those arising by law, statute, usage of trade, or course of dealing. KRC Insights and 2622632 Ontario Inc. assumes no responsibility to you or any third party for the consequences of any errors or omissions. • KRC Insights assumes no liability for any inaccurate, delayed or incomplete information, nor for any actions taken in reliance thereon.

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