CHAIRMAN'S STATEMENT

INTERIM HIGHLIGHTS

The first half of 2018 saw the completion of our pivotal Phase III trial for Lupuzor^TM, our candidate for the treatment of lupus.  Top-line results were announced on 17 April 2018 with further analysis provided on 29 May 2018.  Following these results, ImmuPharma has recently signed an agreement with a specialist provider to distribute Lupuzor^TM via a Managed Access Programme.  This will allow lupus patients early access to Lupuzor^TM prior to any regulatory filing. 

ImmuPharma has, on 6 September 2018, signed a Heads of Terms on a clinical development collaboration for the Nucant cancer programme with Incanthera Limited, a specialist oncology development company.  Further, following an extensive review, it has been decided that the Company's Ureka subsidiary which focuses on peptide treatments for metabolic disorders is not part of the ongoing strategy of ImmuPharma which is now fully focused on utilising its resources to develop late stage assets.  Consequently, we are beginning the process of divesting Ureka.

In other developments, we were pleased to have completed a successful fund raising of £10 million (before expenses) in January 2018.  The fund raising was supported by long term shareholders and the addition of new institutional and private investors.

Lupuzor^TM Phase III results and next steps

The Phase III trial was a double-blind, randomised, placebo-controlled trial. The study involved patients being dosed for one year, receiving 0.2mg once per month subcutaneously. 293 patients were screened illustrating the demand from physicians for a new, safe and effective treatment for lupus.  Of these, the required 202 patients were successfully recruited and randomised (dosed).  Patients participated in the trial in 7 countries across 28 sites. 

The clinical trial was undertaken primarily by Simbec-Orion, an international clinical research organisation, who specialises in rare and orphan conditions and has previous direct experience in lupus trials. This was a pivotal study designed to demonstrate the safety and efficacy of Lupuzor^™.

Lupuzor™ demonstrated a superior response rate over placebo (52.5% vs 44.6% "responders") in the primary analysis on the Full Analysis Set of all 202 patients. However, due to the high response rate in the placebo group, this superior response did not allow statistical significance to be reached (p = 0.2631) and the trial's primary end point was not met.

Across the whole study population, in those patients who had anti-dsDNA autoantibodies, Lupuzor^TM demonstrated a superior response rate over placebo (61.5% vs 47.3%, p = 0.0967).  Although these results were not statistically significant, further data analysis demonstrated that in the Europe cohort (130 patients) Lupuzor^TM plus standard of care showed statistically significant reductions  in disease activity compared to placebo plus standard of care in 79 patients who were anti-dsDNA autoantibody positive (71.1% vs 48.8%, p = 0.0218). 

The study confirmed the outstanding safety profile of Lupuzor^TM, with no serious adverse events reported. 

Scientific literature indicates that approximately 60% - 70% of patients diagnosed for lupus are anti-dsDNA autoantibody positive.  These proportions were seen in the Europe cohort (60.8% of patients) and could therefore be considered as representative of the overall lupus population.

In those patients who were anti-dsDNA autoantibody negative, there was almost no difference in disease activity reduction between the active group and the comparator group.  Anti-dsDNA autoantibodies are a recognised biomarker for Systemic Lupus Erythematosus. 

This finding indicates that the activity of Lupuzor^TM could be correlated with the presence of anti-dsDNA autoantibodies in lupus patients.  ImmuPharma believes that predictive biomarkers, such as anti-dsDNA autoantibodies, could allow identification of patients that are more likely to respond positively to treatment with Lupuzor^TM. 

Lupuzor^TM next steps - Managed Access Program

ImmuPharma is planning to move forward with a Managed Access Program for Lupuzor^TM.  Recognising that lupus is a disease with significant unmet medical need and given the advanced level of clinical trial investigation completed, ImmuPharma would like to meet demand for access to Lupuzor^TM by lupus patients who, together with their physicians, request it. 

Extension study

The Lupuzor^TM extension study, which was announced on 18 January 2018, is continuing and recruitment is now complete with a total of 62 patients eligible from the original Phase III trial.  We believe that this will provide more valuable information on the potential efficacy and safety of Lupuzor^TM.  The study is anticipated to report results in Q2 2019.

Nucant Platform

A number of options have been under review to develop the Company's Nucant cancer programme, which has demonstrated promising results in two Phase I trials (safety and dose-finding studies).

In order to progress the programme, on 6 September 2018 ImmuPharma signed Heads of Terms on a clinical development collaboration for the Nucant cancer programme, with Incanthera Limited ("Incanthera"), a specialist oncology development company.

Key highlights of the Heads of Terms are summarised below:

·     Incanthera, based on its positive due-diligence on the Company's Nucant technology, will license in and take up the continued clinical development of the Nucant cancer programme as an integral part of its own cancer development portfolio.

·     As an integral part of the collaboration, upon signing the Heads of Terms, ImmuPharma has invested £2m into Incanthera by subscribing for 363,637 new ordinary Incanthera shares at a price of £5.50 per share.  This investment values Incanthera at a pre-money valuation of approximately £10m and is consistent with the most recent funding round that Incanthera completed in March 2018.  Following this investment, ImmuPharma will have a circa 16% shareholding in Incanthera.

·     ImmuPharma has granted Incanthera a period of exclusivity until 31 December 2018, during which the Company and Incanthera will finalise the terms of a Definitive Licence Agreement for the Nucant technology.  These terms are expected to include, but will not be limited to the following:          

o  Incanthera will pay a licence payment to ImmuPharma of £1 million, with this payment to be made via the issuance of new ordinary shares in Incanthera.  This payment in shares is separate and will be in addition to the shareholding which Immupharma currently holds as described above;

o  Incanthera will be responsible for all of the development costs for the Nucant programme; and,

o  All future commercialisation revenues will be shared equally between the two companies.