tapimmune inc. executive informational overview …

†BOLD WORDS ARE REFERENCED IN THE GLOSSARY ON PAGES 46-48.

Developing Novel Vaccines to Treat Cancer and Infectious Disease

Snapshot June 21, 2010

TapImmune Inc. (“TapImmune” or “the Company”) develops innovative immunotherapeutics† to treat cancer and prevent infectious disease. Its product candidates are based on a core technology platform of transporters associated with antigen processing (TAP)—proteins that have a crucial role in the presentation of cancer markers on the surface of tumor cells. When TAP proteins are poorly expressed, tumors may go undetected by the immune system, progressing and possibly metastasizing (spreading) to other areas of the body. One of the Company’s lead initiatives—a therapeutic cancer vaccine called AdhTAP1—aims to increase TAP expression in tumor cells in order to restore the immune system’s ability to recognize and attack cancerous cells. Proof of principle for AdhTAP1 has been established through over 10 years of research at the University of British Columbia. TapImmune is preparing to initiate clinical manufacturing and toxicology studies for AdhTAP1 and submit an Investigational New Drug (IND) application in the U.S. and abroad in late 2011. As well, the Company is commencing the clinical development of a vaccine technology for breast cancer patients who express the HER-2/neu receptor, an indication of a more aggressive form of cancer. Phase I trials are expected in early 2011. TapImmune also aims to develop safe and effective preventive vaccines for infectious diseases (e.g., smallpox, influenza, and tuberculosis) based on findings that increasing TAP expression may augment the immune system’s response to an infection. TapImmune plans to manage the development of its vaccine candidates through the Phase I/II proof-of-concept stage. In addition to its use as a stand-alone vaccine, TapImmune may be able to position the TAP technology as a “vaccine component” that improves the efficacy and potency of other vaccines.

Recent Financial Data

Key Points

Unlike many cancer vaccines in development, which target specific tumors, AdhTAP1 may address all TAP-deficient cancers (e.g., colon, cervical, lung, prostate, breast, and ovarian cancers and melanoma). As well, the Company believes that its vaccine may provide a safer and more effective alternative to traditional therapies by harnessing the highly specific defense mechanisms of the immune system.

As part of a program to identify complementary technologies, TapImmune executed an exclusive option to license a clinical-stage breast cancer vaccine technology from the Mayo Clinic in June 2010.

In preclinical testing, the Company’s prophylactic vaccine for infectious disease was shown to increase the efficacy of third-party vaccines by 100 to 1,000 times. In early 2010, TapImmune signed a Letter of Intent with Aeras Global TB Vaccine Foundation to evaluate the efficacy of TAP used with tuberculosis vaccines under development at Aeras. Aeras Global TB Vaccine Foundation is a nonprofit product development partnership dedicated to advancing affordable, preventive tuberculosis vaccines.

TapImmune’s management team has expertise with drug delivery technologies, large- and small-cap pharmaceutical companies, corporate finance, and strategic business planning. Worldwide, TapImmune holds three issued patents and five pending patent applications.

In the past year, TapImmune raised over $2.5 million, including $1.53 million in May 2010 from the sale of Senior Secured Convertible Notes. At March 31, 2010, TapImmune’s cash position was $21,367.

Ticker (Exchange) TPIV (OTC.BB)

Recent Price (06/21/2010) $0.15

52-week Range $0.14 - $2.60

Shares Outstanding ~40 million

Market Capitalization $6 million

Average 3-month Volume 91,629

Insider Owners +5% 41.9%

Institutional Owners* 11%

EPS (Qtr. ended 03/31/2010) ($0.04)

Employees** 4

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TapImmune Inc.

800 Bellevue Way NE, Suite 400 Bellevue, Washington 98004

Phone: (866) 359-7541 Fax: (425) 462-5638

www.tapimmune.com

* Warrants exercisable within 60 days ** Two full-time and two part-time individuals

CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW® PAGE 2

Table of Contents

Snapshot ....................................................................................................................................................... 1

Recent Financial Data ................................................................................................................................... 1

Key Points ..................................................................................................................................................... 1

Executive Overview ....................................................................................................................................... 3

Growth Strategy ............................................................................................................................................ 8

Intellectual Property ...................................................................................................................................... 9

Company Leadership .................................................................................................................................. 11

Core Story ................................................................................................................................................... 13

Cancer Overview .................................................................................................................................. 13

TapImmune’s Technology Platform ...................................................................................................... 16

Market Opportunities ............................................................................................................................ 25

Competition ................................................................................................................................................. 29

Milestones ................................................................................................................................................... 33

Key Points to Consider ................................................................................................................................ 34

Historical Financial Results ......................................................................................................................... 36

Risks ............................................................................................................................................................ 39

Recent Events ............................................................................................................................................. 44

Glossary ...................................................................................................................................................... 46


Executive Overview TapImmune Inc. (“TapImmune” or “the Company”) is a development-stage biotechnology company creating novel therapeutic and prophylactic vaccines to treat cancer and infectious diseases. TapImmune’s vaccine platform is based on restoring the function of a type of protein called transporters associated with antigen processing (TAP) in cancerous and infected cells. In cancer, TAP has a key role in making the tumor cells express cancer markers (tumor antigens) on their cell surface. When cells are deficient in TAP and tumor antigens are not expressed, cancer may continue to develop and spread throughout the body, undetected by the immune system. To address this issue, TapImmune is developing a therapeutic cancer vaccine that may have application in many cancers that are characterized by a deficiency of TAP protein, including colon, cervical, lung, prostate, breast, and ovarian cancers and melanoma. TapImmune is also developing its TAP technology as a prophylactic vaccine for infectious diseases. In addition to functioning as a stand-alone agent, the TAP vaccine may have use in combination with existing and experimental vaccines to improve efficacy and potency. Cancer Overview Cancer is a general term representing a group of more than 100 diseases that entail the uncontrolled division and growth of abnormal cells in the body. Cancer spreads, or metastasizes, when cancer cells break away from the primary tumor site and move to other regions of the body. Cancer therapy is a rapidly expanding segment of the pharmaceutical industry, potentially exceeding $78 billion in 2010 (Source: RNCOS, a market research and information analysis company, 2009). Today, standard cancer treatments include surgery, chemotherapy, and radiation therapy (as overviewed on page 13). However, these treatments lack precision in targeting cancer cells and often fail to remove all of the cancer, particularly once the cancer has spread. Remaining cancer cells may then grow into new tumors, which can be resistant to further chemotherapy or radiation, leaving fewer treatment options for the patient and potentially becoming fatal. Additionally, chemotherapy and radiation therapy may cause significant toxicity to healthy cells in the body. Based on the Company’s research into the human genome and immune system, TapImmune believes that its therapeutic cancer vaccine—which seeks to improve the immune system’s recognition of harmful antigens—may provide a safer and more effective alternative to traditional therapies in TAP-deficient cancers. Table 1 lists several TAP-deficient cancers where the Company’s technology may be applicable.

A number of cancers evade destruction due to absent or insufficient amounts of TAP, making the tumors unrecognizable to the immune system. The absence of TAP consequently limits the expression of major histocompatibility complex (MHC) class I molecules on the surface of cancer cells. In healthy cells, MHC class I proteins provide information to the immune system that defines whether the cell is healthy or—in the case of cancer or viral infection—abnormal. If the MHC class I proteins signal that the cells are abnormal, then the immune system’s cytotoxic (or “killer”) T-cells are activated to attack and kill the infected or malignant cell. However, in some cancers, there are very low levels of TAP expression, if any, which prevents the presentation of tumor markers by MHC class I molecules.

▪ Melanoma ▪ Renal Cell Carcinoma ▪ Head and Neck Squamous Cell Carcinoma

▪ Ovarian Carcinoma ▪ Small Cell Lung Cancer ▪ Hepatocellular Carcinoma

▪ Breast Cancer ▪ Cervical Cancer ▪ Laryngeal Papillomatosis

▪ Colorectal Cancer ▪ Prostate Cancer

Table 1

POTENTIAL APPLICATIONS OF THE TAP TECHNOLOGY IN ONCOLOGY

Source: TapImmune Inc.


Based on its research, TapImmune reports that the immune system often does not recognize cancer as harmful because the tumor cells of TAP-deficient cancers are not expressing sufficient levels of key MHC class I proteins on their cell surface. Although a number of cancer therapies have been developed to date that stimulate the immune system, TapImmune theorizes that these approaches have often proven ineffective because, unless TAP expression is restored, the cancer cells remain invisible to the immune system. Snapshot of the Cancer Vaccine Market In general, cancer vaccines are designed to stimulate a patient’s immune system to attack tumors. These therapies can be designed to prevent the development of cancer (prophylactic vaccines) or to treat existing cancers (therapeutic vaccines). To date, the majority of cancer vaccines approved in the U.S. are prophylactic. Unlike traditional prophylactic vaccines given to immunize against a certain disease, TapImmune’s therapeutic cancer vaccine initiatives are administered after a patient has been diagnosed with cancer. Presently, there are two predominant types of cancer vaccines in development: (1) cell-based vaccines, which are derived from the patient’s own cells; and (2) vector-based vaccines, which use a virus or other agent to deliver DNA to a cell without removing any cellular material from the patient. Significant progress is being made in the cancer vaccine arena as cell-based cancer vaccines progress through late-stage clinical trials and into the regulatory approval process. These advancements have increased interest for other immunotherapy approaches in the oncology sector as well. While many approaches to developing a cancer vaccine have been unsuccessful, several novel techniques using cell-based therapies have shown potential in Phase III clinical studies, including Dendreon Corporation’s (DNDN-NASDAQ) prostate cancer vaccine, Provenge®, which became the first autologous (patient-specific) cellular immunotherapy to be approved by the U.S. Food and Drug Administration (FDA) in April 2010. However, because of the specificity of cell-based vaccines, these therapies may be costly and are not easily mass produced. In contrast, TapImmune’s vaccines and other vector-based therapies are not patient specific. As such, these vaccines may be easier and less costly to manufacture, and could be ready for use “off-the-shelf.” TapImmune’s Vaccine Platform Using its patented TAP technology, TapImmune aims to develop a therapeutic cancer vaccine designed to restore the TAP function within tumor cells, thereby making them more visible to cancer-fighting immune cells. TapImmune believes that once the presentation of tumor antigens on the cell’s surface is restored, the immune system can identify the cancer cells as foreign and initiate an immune response, whereby killer T-cells begin to multiply and subsequently destroy cancer cells. TapImmune also plans to use its TAP technology to develop prophylactic vaccines for infectious diseases, as increasing TAP expression may also improve the immune system’s response to an infection. In addition to its use as a vaccine, the Company may be able to position the TAP technology as a “vaccine component” that improves the efficacy and potency of other vaccines. A Therapeutic Cancer Vaccine (AdhTAP1) TapImmune is developing a therapeutic cancer vaccine (AdhTAP1) designed to treat patients who have been diagnosed with a form of cancer that is TAP-deficient. Using its patented TAP technology, TapImmune aims to restore TAP function within tumor cells, making these cells immunogenic (more visible) to the cancer-fighting cells of the immune system. The Company’s vaccine technology transports a TAP gene to cancer cells via an adenovirus vector. Using this technique, TapImmune anticipates that its therapeutic cancer vaccine can deliver the genetic information (e.g., the TAP gene) required to produce the TAP protein in the target cancer cell. Production of TAP protein restores the antigen processing pathway, allowing cancer cells to be recognized by the body’s immune system. Vectors reintroducing TAP into deficient tumors have been shown to boost immunity and reduce tumor burden. In preclinical studies, the Company’s vaccine increased the expression of MHC class I restricted tumor antigens on the surface of cancer cells, improving the immune system’s sensitivity and enabling it to recognize and destroy cancer cells.


The Company believes that its vaccine has several advantages over existing cancer vaccine therapies: (1) it may generate an immune response to any TAP-deficient cancer, regardless of the patient’s

individual genetic variability in MHC class I proteins or in cancer-specific proteins and resultant peptides;

(2) the immune response triggered by AdhTAP1 may target all cancer antigen peptides produced by the

tumor cell versus many current cancer vaccines, which only target a single cancer antigen; (3) TapImmune’s vaccine platform may stimulate the immune system to attack the entire tumor, even if

the TAP protein and genetic information only reach a small portion of tumor cells; and (4) TapImmune’s technology has the potential to improve the efficacy of other vaccine technologies when

used as a combination therapy. Preclinical Evaluation of the TAP Cancer Vaccine Proof of principle for the TAP technology as a cancer vaccine has been established in over 10 years of research conducted at the University of British Columbia. To date, TapImmune has performed preclinical testing of its TAP cancer vaccine and is preparing to conduct further toxicology analysis. Studies using in vivo mouse models of small cell lung cancer (SCLC), a TAP-deficient cancer, evaluated TAP’s role in restoring antigen presentation and immune recognition as well as its effect on malignancy. In one study, mice receiving TapImmune’s TAP vaccine demonstrated improved immunogenicity and increased survival rates. Up to 60% of mice receiving cancer cells and subsequently protected with the TAP vaccine were still alive after 100 days. In comparison, 50% of untreated mice died of multiple tumors after 40 to 42 days (Source: Nature Biotechnology, 18:515-520, 2000). Scientists have also studied the TAP technology in animal models of human lung cancer and melanoma. In a study evaluating human SCLC and non-small cell lung cancer (NSCLC), roughly 57.9% of tested tumor lesions were negative for TAP1 expression. TAP1 is a specific TAP gene that TapImmune is using in its AdhTAP1 cancer vaccine. Treatment with a non-replicating adenovirus encoding the human TAP1 gene (AdhTAP1) both ex vivo and in vivo significantly slowed tumor growth and increased survival of mice that had tumors from the mouse lung carcinoma cell line (Source: Cancer Research, 65[17]:7926-7933, 2005). Additionally, in melanoma models, mice treated with AdhTAP1 were less likely to develop tumors and demonstrated 10-fold slower tumor growth (Source: Vaccine, 25:2331-2339, 2007). TapImmune’s Development Plans for AdhTAP1 TapImmune aims to complete preclinical studies and file an Investigational New Drug (IND) application for a cancer vaccine to the FDA, Health Canada (the federal health department in Canada), and other national regulatory agencies in late 2011. Dependent upon the completion of preclinical evaluation and upon financing, TapImmune intends to initiate Phase I clinical trials to evaluate the safety of its therapeutic TAP cancer vaccine in humans in late 2011. Breast Cancer Vaccine Technology TapImmune has executed an exclusive License Option agreement with the Mayo Clinic in Rochester, Minnesota, for a HER-2/neu breast cancer vaccine technology. HER-2/neu is a protein involved in normal cell growth that is overexpressed in some types of breast and ovarian cancer, allowing the cancer cells to grow more quickly and leading to a worse prognosis. The breast cancer vaccine technology targets a novel set of antigens on the HER-2/neu receptor that were identified in breast cancer patients with pre-existent immunity. It has a number of potential advantages for the development of a breast cancer vaccine that may address a broad patient population (Source: Clinical Cancer Research, 16[3]:825-34, 2010).


TapImmune’s Development Plans for the HER-2/neu Breast Cancer Vaccine Technology TapImmune aims to file an IND application for the breast cancer vaccine technology and commence a Phase I clinical trial in early 2011 at the Mayo Clinic. Keith Knutson, M.D., is expected to serve as the principal investigator. In concert with initial clinical trials, preclinical studies may be used to investigate the potential of TAP to improve the immune recognition of select class I antigens. Infectious Diseases Overview Infectious diseases continue to be a leading healthcare issue worldwide, causing the deaths of over 9.5 million individuals each year (Source: the World Health Organization’s The global burden of disease: 2004 update [2008]). Globally, health authorities and other organizations have emphasized the need for safe vaccines to combat potentially deadly infectious diseases. In recent years, the threat of bioterrorism and the outbreak of pandemic diseases (e.g., the 2009 H1N1 influenza [swine flu]) have further increased the need for novel, effective vaccines that can be produced quickly in quantities sufficient to treat large populations. Prophylactic TAP Vaccine for Infectious Diseases Using its TAP technology, TapImmune aims to develop safe and effective prophylactic vaccines to treat infectious diseases such as HIV/AIDS, severe acute respiratory syndrome (SARS), hepatitis B/C, West Nile virus, avian influenza, influenza A (seasonal flu), Mycobacterium tuberculosis, Salmonella, Escherichia coli, and methicillin-resistant Staphylococcus aureus (MRSA). Data has shown that increasing TAP expression in select antigen-presenting cells or in virus-infected cells increases the cell surface presentation of antigenic peptides associated with MHC class I expression, leading to increased, specific T-cell-mediated immune responses. TapImmune’s TAP technology uses components of the MHC class I antigen processing pathway to increase immune priming and protect against foreign pathogens—a technique that hastens the production and use of vaccines in times of critical need. This approach may have particular relevance to the development of improved vaccines against bioterrorism threats. Preclinical Data Evaluating TAP Against Infectious Diseases Preclinical testing has shown that immunizing mice with recombinant vaccinia virus carrying human TAP1 and TAP2 can lead to a significant increase in cell-mediated immune responses, suggesting that the TAP technology could serve as a tool to improve vaccine efficacy and potency. Additionally, mice co-infected with vesicular stomatitis virus (VSV) and the TAP vaccine, or Sendai virus and the TAP vaccine, increased killer T-cell activity by at least four-fold versus co-infection with a control vector. Ultimately, vaccination with the lowest dose of the TAP vaccine provided as much protection as the highest dose of the control vector (Source: PLoS Pathogens, 1[4]:289-298, 2005). Further findings from preclinical evaluations of TAP show that immunization with a vector carrying the human TAP gene drives TAP expression in B-cells, macrophages, and dendritic cells—each of which is a key component of the immune response. Recent Initiatives for the Prophylactic TAP Vaccine The Company is evaluating smallpox and influenza A as potential first indications for a prophylactic TAP vaccine. In November 2009, TapImmune and Crucell N.V. (CRXL-NASDAQ) signed a license agreement allowing the Company to use Crucell’s proprietary PER.C6® cells in its development programs. The PER.C6® cell line has an extensive Biologics Master File with the FDA, which licensees can use to simplify the IND application and approval process.


Using TAP to Improve Third-Party Vaccines TapImmune is also developing its TAP technology for use in combination with existing immunizations. Presently, some vaccine manufacturers add an adjuvant to their formulation to enhance or modify the body’s immune response to the vaccine. Adjuvants may also reduce the amount of antigen required to produce a vaccine, potentially extending the vaccine’s supply and enabling more individuals to be vaccinated using fewer doses. Despite these advantages, there are also several disadvantages to using these vaccine supplements that have limited the number of adjuvants approved for use in the U.S., including adverse reactions. To the Company’s knowledge, there is only one FDA-approved adjuvant—an aluminum mixture known as aluminum sulfate (alum)—that is available for use in humans. TapImmune plans to develop or establish licensing agreements for its TAP technology for creating enhanced viral vaccines based on the Company’s findings that TAP can augment immune responses. TapImmune does not view the TAP technology as a conventional adjuvant; rather, the Company plans to position its potential vaccine-enhancing product candidates as “vaccine components.” When used in combination with another vaccine, TapImmune’s TAP molecule may improve the therapy’s efficacy and potency, possibly reducing vaccine production costs by allowing companies to use less vaccine per dose. As such, the Company believes that its technology could become a new paradigm in treating infectious diseases, potentially advancing the development of new vaccines and improving those already in existence. Partnership with Aeras Global TB Vaccine Foundation The Company is pursuing partnerships and joint research and development (R&D) ventures with vaccine manufacturers and pharmaceutical companies to facilitate the introduction of new and improved vaccines to the market. In February 2010, TapImmune signed a Letter of Intent to begin collaborative R&D efforts with Aeras Global TB Vaccine Foundation (www.aeras.org)—a nonprofit product development partnership dedicated to developing affordable, preventive tuberculosis vaccine regimens. Aeras has received over $280 million in government and private funding to develop improved vaccines against tuberculosis, which causes the deaths of nearly 1.8 million individuals worldwide each year (Source: Aeras). Under the collaboration, the companies plan to evaluate the efficacy of TAP in concert with novel vaccine vectors encoding tuberculosis immunogens that are currently under development at Aeras. Corporate History, Headquarters, and Employees TapImmune was incorporated in Nevada as Ward’s Futura Automotive Ltd in 1991. The Company’s corporate name has changed a number of times since 1991, including on June 28, 2007, when it became TapImmune Inc. In July 2009, TapImmune restructured the majority of its debt into equity with the goal of improving its balance sheet to attract potential funders and partners. From mid-2009 to mid-2010, TapImmune raised over $2.5 million in funding, which the Company has used toward clinical development programs, acquiring additional technologies, expanding its global patent portfolio, and executing corporate partnerships. As of June 2010, TapImmune employed two full-time and two part-time individuals. All development work is outsourced to specialist development and manufacturing organizations. The Company currently trades on the Over-the-Counter Bulletin Board (OTC.BB) under the ticker symbol “TPIV.”


Growth Strategy TapImmune is focused on developing its TAP vaccine technology and expanding its product platform through in-licenses, acquisitions, and partnerships. While the Company’s initial focus has been to develop its TAP vaccine to treat various forms of cancer (as listed in Table 1 [page 3]), the recent execution of an exclusive Option to License a breast cancer vaccine technology from the Mayo Clinic has the potential to enhance the Company’s cancer vaccine portfolio and clinical programs. TapImmune seeks to advance its cancer vaccine technologies from the preclinical stage to Phase I/II trials, including follow-on Phase I/II trials using TAP in combination with an adjunct therapy. The Company plans to create several product candidates for cancer using its TAP and other immunotherapy platforms. TapImmune is also developing TAP as preventive vaccine against infectious diseases. Beyond its use as a stand-alone vaccine, TapImmune also intends to develop the TAP technology for use in combination with existing vaccines to enhance their efficacy, including prophylactic inoculations against infectious diseases. The Company may seek partnership agreements or licenses for the evaluation and development of its technology by third parties (e.g., pharmaceutical companies and vaccine manufacturers) that seek to use the TAP vaccine in combination with their own product. The Company’s anticipated development schedule for both its therapeutic cancer vaccine and prophylactic infectious disease vaccine is illustrated in Figure 1. TapImmune intends to manage the preclinical and clinical development of its immunotherapeutic and prophylactic vaccine candidates through the Phase I/II proof-of-concept stage. The Company also plans to actively seek partnerships for licensing and co-development to develop the TAP technology in specific indications.

Month 1 Month 2-4 Month 4-6 Month 6-8 Month 8-10 Month 10-12 Month 13-15

Month 1 Month 2-4 Month 4-6 Month 6-8 Month 8-10 Month 10-12 Month 13-15


PRODUCT DEVELOPMENT TIMELINES

TapImmune Inc.

Figure 1

Oncology: Therapeutic Vaccine

Infectious Disease: Prophylactic Vaccine

AdhTAP1 Vaccine

HER-2/neu Breast Cancer Vaccine

Phase I Clinical Trials

VectorConstruction

Compile Preclinical Data

Investigate Out-licensing Opportunities

IND Application

GMP ProductionGLP Toxicology Testing

GLP Toxicology TestingGMP Production

Optimization and Vector Construction

IND Submission

Formulation Development and GMP Production of Antigen


Intellectual Property TapImmune’s intellectual property portfolio contains three issued patents and five pending patent applications in the U.S. and worldwide. The Company also protects its technology through trade secrets. In May 2007, TapImmune acquired the rights to the original TAP technology from the University of British Columbia and, in August 2009, the Company acquired three follow-on inventions and intellectual property relating to the TAP technology from the university. The three patent applications encompass methods for enhancing antigen presentation in both cancer and infectious disease models and may broaden the scope of products that TapImmune intends to develop around its core TAP vaccines. Table 2 provides an overview of the intellectual property acquired from the University of British Columbia. TapImmune has filed and plans to continue to file additional patent applications relating to its technology.

Additionally, Table 3 (page 10) overviews TapImmune’s pending patent applications, several of which are filed under the Patent Cooperation Treaty (PCT), enabling the Company to simultaneously seek patent protection in over 140 countries worldwide. The PCT does not grant an “international patent,” which does not exist; rather, it is a unified procedure that facilitates the process of obtaining a patent in each member country.

Patent No.

6,361,770

7,378,087

INTELLECTUAL PROPERTY ACQUIRED FROM THE UNIVERSITY OF BRITISH COLUMBIA

TapImmune Inc.

Table 2

Method of enhancing expression of MHC class I molecules bearing endogenous peptides

A patent for the use of bioengineered cell lines to measure the output of the MHC class I restricted antigen presentation pathway as a way to screen for immunomodulating drugs. This patent covers the assay that can identify compounds capable of modulating the immune system. The patent expires on March 12, 2016. Patent protection for this patent is also held in Canada, Japan, and Europe.

Title

Sources: TapImmune Inc. and the U.S. Patent and Trademark Office (www.uspto.gov).

Method of identifying MHC class I restricted antigens endogenously processed by cellular secretory pathway

5,792,604

This patent provides comprehensive protection and coverage for both in vivo and ex vivo applications of TAP1 as a therapeutic against all cancers, with a variety of delivery mechanisms. The patent expires March 23, 2014. Corresponding patents have been granted in France, Germany, the UK, and Switzerland. There is a corresponding application pending in Japan.

Method of enhancing an immune response

The patent claims relate to methods for enhancing the immune response to tumor cells by introducing the TAP molecule into infected cells. The patent expires in 2022.


Hat acetylation promoters U.S. 12/504,775 07/17/2009 — —

EPO 2114442 11/11/2009 — —

PCT PCT/CA08/000084 01/18/2008 WO08/086610 07/24/2008

PCT PCT/CA08/000088 01/21/2008 WO08/086612 07/24/2008

Pox viradae treatment U.S. 12/474,331 05/29/2009 — —

EPO 2094301 09/02/2009 — —

PCT PCT/CA06/001945 11/30/2006 WO08/064451 06/05/2008

Title Publication Date

Publication Number

Application Date

Application Number

Country

PCT

06/18/2009 —12/487,019 —U.S.

TAPIMMUNE'S PENDING PATENT APPLICATIONS

TapImmune Inc.

Table 3


Low dose innoculation with Tap-I for antitumor immunity

Tapasin augmentation for enhanced immune response 01/27/2009PCT/IB09/005030 08/06/2009WO09/095796

Combination of antigen processing components elicits enhanced survival in tumor-bearing animals

01/27/2009PCT/IB09/005030 08/06/2009WO09/095796PCT


Company Leadership Management In June 2009, Dr. Glynn Wilson was appointed as the Company’s executive chairman as part of an overall corporate restructuring plan to facilitate the advancement of TapImmune’s patented technologies. Dr. Wilson has expertise in pharmaceutical product development and drug delivery technologies, having served as the worldwide head of drug delivery at SmithKline Beecham plc (now GlaxoSmithKline plc [GSK-NYSE]) as well as in several additional executive positions with various pharmaceutical and biotechnology companies. He also has broad experience with technology licensing and external development contracts. Dr. Wilson is supported by Mr. Denis D. Corin, TapImmune’s president and a director of the Company, who has experience in both large- and small-cap pharmaceutical companies, as well as Mr. Tracy A. Moore, TapImmune’s chief financial officer and a director, who specializes in corporate finance, strategic planning, and business planning. Table 4 summarizes TapImmune’s key management, followed by detailed biographies.

Glynn Wilson, Ph.D., Chairman and Principal Executive Officer Dr. Wilson has served as a director of the Company since February 2005. He has expertise in pharmaceutical product development and drug delivery technologies. Dr. Wilson was the worldwide head of drug delivery at SmithKline Beecham from 1989 to 1994, and the chief scientific officer at Tacora Corp. from 1994 to 1997. Dr. Wilson was the vice president, research and development at Access Pharmaceuticals Inc. (ACCP-OTC.BB) from 1997 to 1998 and president and chief executive officer of PharmaSpec Corporation from 1999 to 2000. Recently, Dr. Wilson became president and chief scientific officer of Auriga Pharmaceuticals Inc., a specialty pharmaceutical company. He is president of the GW Group and co-founder of Deodora Pharma, a specialty pharmaceutical company. Dr. Wilson obtained a Ph.D. in biochemistry at Heriot-Watt University Edinburgh in 1972. He has been an adjunct professor in pharmaceutics and pharmaceutical chemistry at the University of Utah since 1994, and was a faculty member at Rockefeller University, New York, in the laboratory of Nobel laureates Dr. Stanford Moore and Dr. William Stein from 1974 to 1979. Denis D. Corin, President and Director Mr. Corin has served as TapImmune’s president since November 2006. He is a management consultant with experience in large pharmaceutical (Novartis AG [NVS-NYSE]) and diagnostic instrumentation companies (Beckman Coulter Inc. [BEC-NYSE]), as well as in the small-cap biotechnology arena (MIV Therapeutics, Inc. [MIVI-OTC.PK]). He holds a Bachelor’s degree in both economics and marketing from the University of Natal (South Africa).

Glynn Wilson, Ph.D. Chairman and Principal Executive Officer

Denis D. Corin President and Director

Tracy A. Moore Chief Financial Officer and Director

MANAGEMENT

TapImmune Inc.

Table 4



Tracy A. Moore, Chief Financial Officer and Director Mr. Moore specializes in corporate finance, strategic planning, and business planning. In addition to his consulting practice, he has owned and operated various businesses. He serves on and advises boards on financing, business planning issues, mergers, acquisitions, divestitures, joint ventures, and fundraising. Mr. Moore has provided corporate finance services to closely held, going public, and publicly traded companies in 15 countries since 1990. Between 1976 and 1990, Mr. Moore worked for three international accounting firms in restructuring, consulting, and audit positions. He received a Bachelor of Commerce in accounting and management information systems from the University of British Columbia in 1976 and was admitted as a member of the Institute of Chartered Accountants in British Columbia in 1979 (and resigned in 2008). Research and Development (R&D) Resources Preclinical efficacy studies of TAP were conducted at the University of British Columbia in the laboratory of Professor Wilfred A. Jeffries, Ph.D., founder of TapImmune. For toxicology and Good Manufacturing Practice (GMP) manufacturing, TapImmune relies on a number of external contract partners under the direction of Dr. Wilson. To evaluate new technologies and clinical programs, the Company uses a series of ad hoc advisors with relevant specialties, including cancer biology, immunology, and clinical trials. Further, significant resources are available to TapImmune for its R&D programs through the Company’s collaborations with the Aeras Global TB Vaccine Foundation and the Mayo Clinic. Table 5 provides an overview of the resources that assist TapImmune as it continues to develop its TAP technology and expand its pipeline.

Glynn Wilson, Ph.D. Chairman and Principal Executive Officer, Acting Chief Scientific Officer

Keith L. Knutson, M.D.

Aeras Global TB Vaccine Foundation

(Rockville, Maryland)

Mayo Clinic (Rochester, Minnesota)

Crucell N.V. (Netherlands)

SAFC Pharma (Carlsbad, California)

A SNAPSHOT OF TAPIMMUNE'S RESEARCH AND DEVELOPMENT (R&D) RESOURCES

TapImmune Inc.

Table 5


Associate Professor of Immunology, Mayo Clinic, and Principal Investigator for the Breast Cancer Vaccine Phase I Trials

Key Leadership

Collaborations and Partnerships

PER.C6® cell line expertise for AdhTAP manufacturing

AdhTAP manufacturing

Collaboration for the clinical development of a breast cancer vaccine technology

Partnership to evaluate the efficacy of TAP in combination with select tuberculosis vaccines


Core Story TapImmune Inc. (“TapImmune” or “the Company”) is focused on developing innovative therapeutics to treat cancer and prevent infectious disease. The Company has conducted a number of preclinical studies with its vaccine platform, which delivers the transporters associated with antigen processing (TAP) gene via an adenovirus vector to restore the immune system’s ability to identify and initiate a response against “foreign” cells (e.g., cancer, bacterial, or viral cells). Using this technology, the Company is developing a therapeutic cancer vaccine (AdhTAP1) to treat select metastatic cancers. TapImmune aims to file an Investigational New Drug (IND) application for a breast cancer vaccine technology and commence Phase I clinical trials in early 2011. The Company plans to complete preclinical trials and file an IND application for its AdhTAP1 technology in late 2011. TapImmune is also developing prophylactic infectious disease vaccines using its TAP technology. CANCER OVERVIEW The human body is composed of trillions of cells that constantly grow, divide, and die. For the most part, the cells in the body are healthy and perform their vital functions. Typically, cells that do not function properly self-destruct and are replaced. However, cancer cells differ in this respect since they reproduce regardless of their abnormalities. While the exact mechanism of transformation that causes normal cells to become cancerous is unknown, cancer cells are believed to originally develop as a result of mutations due to changed or damaged DNA. The abnormal cells continuously grow and divide, producing new cells that are not needed by the body. Once cancer cells develop, they are able to rapidly invade surrounding tissues to the extent that normal processes in the surrounding tissue and organs may be inhibited or completely stopped. Cancer spreads, or metastasizes, when cancer cells break away from the primary tumor site and move to other regions of the body via the blood or the lymphatic system. When the cells reach a new destination, they may once again begin to divide and invade the surrounding area. Ultimately, these cells form a new tumor, called a metastatic tumor, in a different part of the body. Current Therapies Cancer may be treated with a single therapy or a combination of therapies. The type of treatment generally depends on the type of primary cancer, the patient’s age and health, the size and location of any metastasis, and any treatments the patient has received in the past. The following therapies are employed to control or stop the growth of cancer or to relieve the symptoms or side effects caused by other treatments. Surgery. The Mayo Foundation for Medical Education and Research considers surgery to be the

foundation of cancer treatment. An operation to repair or remove part of the body is used for a variety of purposes, including for cancer prevention, diagnosis, determining the cancer’s progression (stage), to enhance the efficacy of an alternate therapy, or to relieve symptoms or side effects.

Chemotherapy. This technique uses a drug or a combination of drugs to slow or reverse the spread of

cancer. Chemotherapeutics work by targeting rapidly dividing cells, such as cancer cells. However, fast-growing healthy cells—including blood cells forming in the bone marrow as well as cells in the digestive tract, reproductive system (sexual organs), and hair follicles—may also be affected, causing toxic side effects.

Radiation Therapy. This treatment uses high-energy radiation to kill cancer cells and reduce the size

of tumors. Like surgery, radiation therapy is a localized treatment that only affects cancer cells in the treated area. The National Cancer Institute estimates that 50% of cancer patients are treated with radiation therapy, either alone or in combination with other cancer treatments. Side effects include skin changes, fatigue, diarrhea, hair loss, nausea, vomiting, and swelling, among others.


Biological Therapy. This type of treatment works with a patient’s immune system to help fight cancer or control side effects caused by other cancer therapies. While the exact mechanism that causes biological therapy to be effective is unknown, researchers speculate that the technique may prevent cancer from spreading, stop or slow the growth of cancer cells, or enhance the immune system’s ability to destroy cancer cells. Side effects include fatigue, fever, chills, gastrointestinal upset, and body aches, among others. While this type of therapy can come in the form of pills or at-home injections, some biological treatments must be given intravenously at the hospital or a clinic.

Hormone Therapy. Depending on the type of cancer, hormones can either help cancer cells to grow

(e.g., prostate cancer and breast cancer) or can stop or slow the growth of cancer cells. As such, hormone therapy may entail taking medications to interfere with natural hormone activity or to stop the production of hormones. Side effects include hot flashes, impotence, nausea, vomiting, fatigue, loss of appetite or weight gain, and headaches, among others.

Cryosurgery. This is a non-surgical technique that entails freezing and killing abnormal cells on the

skin or inside the body to treat several conditions, including non-metastatic liver cancer, cancer that has spread to the liver from another site, non-metastatic prostate cancer, cancerous and non-cancerous bone tumors, early-stage skin cancers, and some precancerous conditions. While still under study to determine its long-term efficacy, cryosurgery is believed to be less costly than other treatments with fewer side effects.

Because of the difficulty in removing or destroying all cancer cells, conventional treatment approaches (e.g., chemotherapy, surgery, and radiation therapy) can cause side effects and do not significantly reduce the high mortality rates associated with many types of cancer. In addition, while chemotherapy is widely used for metastatic disease, this type of therapy has significant disadvantages, including toxic effects on normal tissues, minimal effect on slow-growing cancer cells, and the possibility of the cancer developing a drug resistance. As such, a variety of approaches have attempted to resolve these drawbacks by creating methods for the targeted delivery of cancer therapeutics. Based on its knowledge of the human genome and immune system, TapImmune believes that its therapeutic cancer vaccine—which seeks to improve the immune system’s recognition of harmful antigens—may provide a safer and more effective alternative to traditional therapies in TAP-deficient cancers, such as melanoma and colon, cervical, lung, prostate, breast, and ovarian cancers. Cancer Vaccines Cancer vaccines are designed to stimulate or restore the immune system and its ability to identify and combat tumor cells. These therapies can be designed to prevent the development of cancer (prophylactic vaccines) or to treat existing cancers (therapeutic vaccines). To date, two forms of prophylactic cancer vaccines have been approved for use in the U.S.: preventive vaccines against human papillomavirus (HPV) and a preventive vaccine against hepatitis B virus. As well, in April 2010, the U.S. Food and Drug Administration (FDA) approved a therapeutic vaccine for men with advanced prostate cancer. The developing cancer vaccine market includes tumor cell, antigen, dendritic cell, DNA, and vector-based technologies, among others. Two of the predominant methods to create a cancer vaccine use either a cell culture or a vector. Cell-based vaccines are created in a culture containing the patient’s own cancer and immune cells where the immune cells are activated before being injected back into the body. However, these autologous vaccines (cell-based vaccines that are derived from the patient’s own cells) may be costly and difficult to mass produce because they are patient specific. Alternatively, cancer vaccines can also be created using a vector—a virus or other agent that is used to deliver DNA to a cell—without removing any cellular material from the patient. Because vector-based vaccines are not patient specific, they are thought to be more easily mass produced and ready for use “off-the-shelf,” potentially making them a less costly option that is easier to manufacture. TapImmune’s TAP technology is an example of a vector-based vaccine as it delivers non-patient-specific genetic material to tumor cells using an adenovirus.


Many cancer vaccines are designed to act only against a specific tumor antigen. Accordingly, they are subject to certain limitations, including the possible variation of tumor-specific antigens among individuals and changing compositions of tumor cells as a result of chemotherapy and radiation treatments. To improve efficacy, some cancer vaccines may be combined with other substances called adjuvants that also improve the immune response (immunogenicity); however, many currently available adjuvants may also increase toxicity. Current Developments in the Cancer Vaccine Market Despite the broad potential of the global cancer vaccine market, which is expected to reach $8 billion by 2012, only a handful of vaccines have been approved by the FDA, the majority of which are designed to prevent (not treat) cancer. After receiving FDA approval in 1981, a vaccine protecting against hepatitis B—a virus that can lead to liver cancer—was the first cancer vaccine to be successfully developed and marketed in the U.S. (Source: the National Cancer Institute, 2009). In 1990, this plasma-derived vaccine (i.e., made from blood products) was discontinued and replaced with synthetic hepatitis B vaccines, which do not contain blood products (Source: the Hepatitis B Foundation, October 2009). A second prophylactic vaccine, Gardasil®, was approved by the FDA in 2006 to prevent cervical cancer. Manufactured by Merck & Co., Inc. (MRK-NYSE), Gardasil® protects against two types of HPV that cause 70% of cervical cancers globally as well as two other strains of HPV that lead to genital warts. Gardasil® is also approved in Europe. A second HPV vaccine, GlaxoSmithKline plc’s Cervarix®, received FDA approval in late 2009 and has already been approved in 100 other countries worldwide. Although many recent competitive approaches to developing a therapeutic cancer vaccine have been unsuccessful, several novel approaches using cell-based therapies (e.g., dendritic cell therapies or tumor cell-based immunotherapies) are showing significant progress, including Dendreon’s Provenge®, which was approved in April 2010. Several of these therapies are presented in Table 6, with greater details provided in the Competition Section on pages 29-32. These advancements have drawn interest to other immunotherapy approaches in the oncology sector. As well, a review of such product candidates by the FDA provides TapImmune with case histories that may guide the Company as it continues to develop its technologies.

In April 2010, the FDA approved Provenge® (sipuleucel-T), making it the first autologous cellular immunotherapy to receive approval in the U.S. In contrast to preventive cancer vaccines, therapeutic vaccines, such as Provenge®, combat cancer after it has developed in the body. Provenge® is a cell-based vaccine therapy for prostate cancer that requires culturing a patient’s own dendritic cells and exposing these cells to an antigen called PAP, which is found in prostate cancer tissue. Once the cells take up the antigen, they are reintroduced to the patient’s bloodstream via three injections. This specialized process is designed to train cytotoxic (or “killer”) T-cells in the immune system to recognize PAP as foreign and thus initiate an attack against cells containing this antigen, including prostate cancer tissues.

Vaccinogen, Inc. OncoVAX® Patient's own tumor cells Phase IIIb*

Dendreon Corporation Provenge® (sipuleucel-T) Activated dendritic cells Approved in April 2010

Oncothyreon Inc. Stimuvax® MUC1 liposomes Phase III

* Fast Track regulatory status for Stage II colon cancer granted by the FDA

Prostate Cancer

Colon Cancer


A SELECTION OF CANCER VACCINES APPROVED OR IN LATE-STAGE CLINICAL TRIALS

Table 6

StatusMechanismBrand NameCompany


The approval of Provenge® is considered to be similar to the approval of Rituxan® (Rituximab)—the first FDA-approved monoclonal antibody. Following the approval of Rituxan® in 1997, five monoclonal antibodies were approved in the U.S. within the next five years (Source: The Wall Street Journal [www.wsj.com], April 30, 2010). Similarly, the Provenge® achievement facilitates the approval of other cancer immunotherapies that use the patient’s own immune system and may stimulate new interest from pharmaceutical companies and venture capitalists in the cancer immunotherapy field. At present, Provenge® and other active cellular therapies in late-stage development can be categorized according to three main functions: (1) isolating and reintroducing the patient’s own tumor cells; (2) introducing modified tumor cells; or (3) isolating and reintroducing activated antigen-presenting (dendritic) cells. TapImmune’s TAP vaccine technology does not fall into one of these three categories. A TAP vaccine may have an advantage over tumor-specific vaccines as it is not restricted to any specific tumor or pathogen. As well, it is not restricted by individual genetics (indicating that it is not patient specific) unlike other immunotherapy approaches. Because the TAP protein is common in all humans, the Company believes that it may be able to create a nearly universal vaccine against a wide range of carcinomas. TAPIMMUNE’S TECHNOLOGY PLATFORM TapImmune is developing therapeutic and prophylactic vaccines incorporating the transporters associated with antigen processing (TAP) gene. TAP is important in the processing and presentation of major histocompatibility complex (MHC) class I restricted antigens, which help the immune system discern whether cells in the body are healthy or abnormal. Many cancers exhibit reduced TAP expression, which has been shown to have a negative impact on both disease progression and survival. Using its patented TAP technology, TapImmune aims to develop a therapeutic cancer vaccine designed to restore the TAP function within tumor cells, thereby making them more visible to cancer-fighting immune cells. TapImmune also plans to use its TAP technology to develop prophylactic vaccines for infectious diseases, as increasing TAP expression may improve the immune system’s response to an infection. Based on its research, TapImmune believes that the immune system does not recognize cancer as harmful because the cancer cells are not expressing sufficient levels of key MHC class I proteins on their cell surface. Healthy cells displayed by MHC class I molecules are ignored by T-cells, whereas the display of cells containing foreign proteins, such as tumors, causes T-cells to wage an immune attack. The ability of the body’s killer T-cells—and the immune system in general—to recognize and destroy tumors is contingent upon the expression of adequate numbers of MHC class I molecules on the tumor’s surface. MHC class I molecules are responsible for displaying fragments of proteins from within a cell to the T-cells, which have an important role in controlling the immune response. In many cancers, a shortage of TAP disrupts the assembly of functional MHC class I complexes such that the tumor-associated antigen needed for presentation is missing. As a result, the MHC molecule on the cell surface is not equipped with the tumor antigen peptides needed for the immune system to identify the cell as cancerous. Without functional MHC on the surface of the tumor, these cancer cells remain undetected by the cellular arm of the immune system and are able to grow into larger tumors that can eventually be fatal. The negative impact of reduced TAP expression on both disease progression and survival has been documented through preclinical studies. In particular, studies on resected tumors have found a correlation between metastasis of the carcinomas listed in Table 7 (page 17) and low or absent TAP expression. In these cancer types, TAP deficiency tends to increase as the disease progresses and metastasizes.


In a study published in the American Journal of Pathology, researchers performed immunoperoxidase staining in 10 moles (nevi) and 98 melanoma lesions (60 primary and 38 metastatic) to evaluate the expression of various molecules associated with antigen presentation (e.g., TAP1, TAP2, low molecular weight protein [LMP]-2, LMP-7, and MHC class I antigens). The down-regulation of TAP and MHC class I antigens in primary lesions was correlated to lesion thickness, disease stage, faster disease progression, and lower survival rates. As such, the data from this study suggests that TAP deficiency has a role in the clinical course of malignant melanoma likely due to the melanoma cells’ ability to evade recognition by killer T-cells during disease progression (Source: American Journal of Pathology, 154:745-754). By restoring TAP expression to TAP-deficient cells, the MHC class I protein peptide complexes could signal the immune system to attack cancerous cells. Using its patented TAP technology, TapImmune aims to restore the TAP function within cancer cells, making them immunogenic (more visible) to cancer-fighting immune cells. The Company’s TAP vaccine uses the TAP1 gene to restore the expression of TAP proteins in select cancer types, increasing the transport of tumor antigens to the endoplasmic reticulum, an area of the cell where tumor antigen peptides form functional MHC class I molecules. The MHC class I molecules are then transported to the cancer cell’s surface and presented to the immune system. TapImmune believes that once the presentation of tumor antigens on the cell’s surface is restored, the immune system can identify the cancer cells as foreign and initiate an immune response whereby killer T-cells begin to multiply and subsequently destroy cancer cells. The Company’s Therapeutic TAP Cancer Vaccine (AdhTAP1) TapImmune’s AdhTAP1 cancer vaccine delivers a human TAP gene (hTAP1) to selected tumor cells via genetically engineered, non-replicating adenoviruses. In nature, viruses latch onto other cells and inject their genetic material in order to reproduce. Capitalizing on this process, recombinant vector vaccines (such as the TAP vaccine) insert genetic material into harmless or attenuated (weakened) carrier viruses, which then deliver the microbial DNA to cells to stimulate the immune system. By using an adenovirus to deliver the TAP gene directly to TAP-deficient tumor cells, TapImmune believes that its vaccine may revive the body’s immunosurveillance mechanisms against cancer. Vectors reintroducing TAP into deficient tumors have been shown to boost immunity and reduce tumor burden. In preclinical studies, the Company’s vaccine resurrected the expression of MHC class I restricted tumor antigens on the surface of cancer cells, increasing the immune system’s sensitivity and enabling it to recognize and destroy cancer cells.

Melanoma A serious, life-threatening form of skin cancer

Ovarian Carcinoma Cancer of the ovary; occurs most often in women ages 40 to 60 years

Breast Cancer Cancer of the breast; a leading cause of cancer-related death in women

Colorectal Cancer Cancer in the lining of the large bowel, colon, and rectum; a leading cause of cancer-

related death in both men and women

Renal Cell Carcinoma A common type of kidney cancer

Small Cell Lung Cancer A fast-growing form of lung cancer classified by its small, round cells

Cervical Cancer Cancer of the cervix (the neck-like opening to the uterus)

Prostate Cancer A slowly spreading cancer of the prostate gland; occurs most often in men over age 50

Head and Neck Squamous Cell Carcinoma

Hepatocellular Carcinoma A common form of liver cancer

Laryngeal Papillomatosis A rare disease in which tumors grow inside the larynx, vocal cords, and trachea

TAP-DEFICIENT CANCERS

Table 7


OverviewCancer Type

A common type of head and neck cancer


Preclinical Evaluation of the TAP Cancer Vaccine The Company initially developed its therapeutic TAP vaccine candidate at the University of British Columbia’s Biomedical Research Centre. TapImmune has performed the preclinical testing of its TAP cancer vaccine that is needed in order to conduct further preclinical toxicology analysis and submit an IND application to the FDA. To date, the Company has focused on the following preclinical initiatives: (1) assessing the ability of several strains of adenovirus and vaccinia virus vectors to deliver the correct

genetic information to enable expression of the TAP protein in tumors; (2) the selection and licensing of a vector; and

(3) entering into an agreement with SAFC Pharma (part of the Sigma-Aldrich Corporation [SIAL -

NASDAQ]) , a Good Manufacturing Practice (GMP) manufacturer, for subsequent production of the TAP cancer vaccine.

Based on preclinical data collected to date, treatment with AdhTAP1 results in several critical effects: (1) it restores the MHC class I antigen-presenting pathway; (2) it increases numbers of tumor-infiltrating lymphocytes and dendritic cells; (3) it enhances memory T-cell subpopulations; and (4) it improves animal survival. TAP can also increase the ability of weak antigens to activate the immune system for an improved immune response, and may enhance the immune response in immunocompromised individuals. Nevertheless, the molecular mechanisms behind the vaccine’s anti-tumor effects remain under investigation. Proof of principle for the TAP technology in oncology has been established in over 10 years of research conducted at the University of British Columbia. Initial studies published in May 2000 in Nature Biotechnology evaluated TAP’s role in restoring antigen presentation and immune recognition as well as its effect on malignancy using in vivo mouse models using the CMT.64 cell line of small cell lung cancer (SCLC), a TAP-deficient cancer. The TAP vaccine was used against a SCLC cell line derived from an aggressive, metastatic cancer. These cells have multiple defects in the antigen presentation pathway that prevent detection by the immune system. Introduction of the TAP protein to these cells restored antigen presentation. In one study, mice receiving TapImmune’s TAP vaccine—the TAP1 gene via a vaccinia virus vector—demonstrated improved immunogenicity and increased survival rates such that up to 60% of mice receiving cancer cells and subsequently protected with the TAP vaccine were still alive after 100 days. In comparison, 50% of untreated mice died of multiple tumors after 40 to 42 days. For mice with any tumor remaining after treatment with the TAP vaccine, metastasis was reduced. The study’s authors recommended the consideration of TAP in cancer therapies as it may increase immune responses against tumors regardless of the host’s genetic variability in MHC class I proteins or in cancer-specific proteins and resultant peptides (Source: Nature Biotechnology, 18:515-520, 2000). The ability of TAP to restore an immune response has also been demonstrated in a series of animal studies. For example, the vaccine produced an effective immune response in animal models of melanoma, as published in 2004 in the Journal of Immunology (172[9]:5200-5205), further validating the technology. A study evaluating the expression of human leukocyte antigen (HLA), TAP1, β2 microglobulin, and tapasin in nine cases of human SCLC and 10 cases of non-small cell lung cancer (NSCLC) showed severe impairment of the antigen presentation pathway in immunohistochemical staining. In particular, some cases of primary lung cancer demonstrated a loss of TAP1 expression, as illustrated in Figure 2 (page 19). In the study, roughly 57.9% of tested tumor lesions were negative for TAP1 expression, with only 1 of 19 tumors displaying strong positive expression of TAP1. Researchers used a non-replicating adenovirus expressing human TAP1 (AdhTAP1) to restore TAP1 expression and recover tumor immunogenicity in the mouse lung carcinoma cell line CMT.64. Restoring the TAP expression in lung carcinoma (CMT.64) increased tumor-specific immune responses and survival.


In particular, AdhTAP1 treatment increased MHC class I surface expression, restored antigenicity (ability to present antigens), improved dendritic cell cross-presentation, increased susceptibility to antigen-specific killer T-cells, and appeared to induce a Th1-type tumor-specific immune response in CMT.64 cells. As well, treatment with AdhTAP1 both ex vivo and in vivo significantly slowed tumor growth and increased survival of mice bearing CMT.64 tumors. Roughly 35% of mice treated with AdhTAP1 survived over 100 days without visible tumors versus mice treated with phosphate-buffered saline or an adenovirus vector control, of which 100% died within 43 and 48 days, respectively (Source: Cancer Research, 65[17]:7926-7933, 2005). Researchers have also evaluated AdhTAP1 in murine melanoma models using the B16F10 cell line. B16F10 is often used to evaluate T-cell-based immunization and vaccination strategies, as it is a highly metastatic, poorly immunogenic cancer cell line. B16F10 is defective in many antigen-processing components, including TAP1, TAP2, tapasin, LMP-2, LMP-7, LMP-10, and PA28α/β (Source: Vaccine, 25:2331-2339, 2007). In a study published in Vaccine, researchers were able to induce effective anti-tumor responses by immunizing melanoma-bearing animals with AdhTAP1. The study determined that the AdhTAP1 injection—which uses a limited input inoculum relative to the tumor cell mass—delivers the following effects: (1) increases TAP1 expression, MHC class I antigen expression, and immunogenicity in murine B16F10 melanoma cells; (2) restores antigen presentation in human melanoma cells; and (3) inhibits tumor growth in B16F10 tumor-bearing mice and increases tumor-infiltrating lymphocytes and memory cells. Overall, melanoma-bearing mice treated with the TAP1 vaccine were less likely to develop tumors (shown on the left side of Figure 3 [page 20]) and demonstrated 10-fold slower tumor growth (depicted on the right side of Figure 3). AdhTAP1 also improved animal survival as 50% of the TAP-protected animals were tumor-free three weeks following tumor introduction, whereas 100% of the animals not protected by TAP died by week three (Source: Vaccine, 25:2331-2339, 2007).

A STUDY OF TAP DEFICIENCY IN HUMAN LUNG CANCER USING IMMUNOHISTOCHEMICAL STAINING

TapImmune Inc.

Figure 2

Sources: TapImmune Inc. and Cancer Research 65(17):7926-7933, 2005.

Negative staining for TAP1 in 11 of 19 (57.9%) tumor lesions tested

(a) Only 1 of 19 tumors (5.2%) displayed strong positive staining for TAP1

(b) Normal respiratory epithelium of the bronchus showed strong positive staining for TAP1

(c)


Potential Competitive Advantages of Using TAP Technology in a Cancer Vaccine The Company believes that its strategy may be the only therapeutic approach addressing the “non-immunogenicity” characteristic of cancer cells. Because restoring the TAP protein may enable the immune system to specifically target cancer cells without harming healthy tissues, TapImmune anticipates that its therapy may have a competitive advantage over other cancer therapies. In general, cancer vaccines are designed to stimulate a patient’s immune system to attack tumors. The majority of cancer vaccines currently in development contain either cancer-specific proteins that directly activate the immune system or genetic information (e.g., DNA) that encodes these cancer-specific proteins. TapImmune has identified several key conditions that it believes must be addressed in order for a cancer vaccine to generate an effective therapeutic immune response. (1) The immune system must recognize the cancer antigen peptide delivered by the vaccine as abnormal

or foreign. (2) That same cancer antigen peptide must be displayed on the surface of cancer cells with MHC class I

proteins. (3) The cancer antigen peptides must be sufficiently different from normal proteins in the body. The Company expects that a cancer vaccine meeting all three conditions could generate a robust immune response against cancer cells. However, the process of identifying suitable cancer-specific antigen proteins to use in therapeutic vaccines is highly complex. As well, with over 100 different types of MHC class I proteins in humans, a single tumor antigen peptide cannot produce an immune response for all individuals. Cancers are genetically unstable and contain highly variable proteins. As such, the use of a single cancer antigen protein may result in the immune system only attacking a small subset of cancer cells. In contrast, the Company anticipates that the immune response triggered by its TAP cancer vaccine could target all cancer antigen peptides produced by the cancer cell versus many other cancer vaccines in development, which only target a single cancer antigen. With this ability, the Company believes that its TAP vaccine represents a novel breakthrough in the design of therapeutic cancer vaccines and may be applicable to a broad range of cancer types.

* Ψ5 = vector negative control ** PBS = phosphate-buffered saline

ADHTAP1 TREATMENT LEADS TO FEWER AND SMALLER TUMORS IN MICE BEARING B16F10 TUMORS

Figure 3

Mice Treated with AdhTAP1 had Significantly Smaller Tumors than Mice Treated with Ψ5* or PBS**

Mice Treated with AdhTAP1 had Significantly Fewer Tumors than Mice Treated with Ψ5* or PBS**

Source: Vaccine 25:2331-2339, 2007.

AdhTAP1 Ψ5 PBS AdhTAP1 Ψ5 PBSTreatment(A)

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As well, TapImmune anticipates that its cancer vaccine may be able to deliver the genetic information required to produce TAP protein in the target cancer cell. Production of TAP protein allows the cancer cell to be recognized by the immune system. A TAP cancer vaccine may allow the immune system to attack tumors even if the TAP protein and genetic information only reach a small portion of the cancer cells. In addition, TapImmune expects that its vaccine can generate an immune response to any TAP-deficient cancer—including the malignancies identified in Table 7 (page 17)—regardless of the patient’s genetic variability in MHC class I proteins or in cancer-specific proteins and resultant peptides. On a commercial level, a potential advantage of the TAP technology is that the candidates produced using this platform are lyophilized (freeze-dried). Lyophilization is a process used to prepare stable pharmaceutical and biopharmaceutical products. In addition to being stable, lyophilized products also exhibit a broader temperature tolerance and a longer shelf-life than their liquid counterparts. As lyophilized vaccines, any candidates developed from the TAP platform will likely be convenient to transport, thus facilitating global delivery. Based on the preclinical findings detailed on the previous pages, Table 8 provides a summary of the possible competitive advantages of AdhTAP1. The Company believes that its vaccine may be effective against the majority of solid tumors, with particular therapeutic benefit in TAP-deficient metastatic cancers.

Continued Development of the TAP Cancer Vaccine TapImmune believes that it has met the key milestone of efficacy in animal models of cancer. Experimental data from these animal studies has been validated by other scientific research teams. TapImmune now plans to complete toxicology studies using the TAP cancer vaccine on at least two animal species, with manufacturing expected to commence in the second quarter 2010. Following the completion of formal preclinical testing, the Company intends to submit an IND application to the FDA, Health Canada (the federal health department in Canada), and other national regulatory agencies in late 2011. The IND submission will likely include data on vaccine production, animal studies, and toxicology studies, as well as proposed protocols for Phase I clinical trials. To prepare for clinical trials, the Company expects to initiate vaccine production and obtain the necessary personnel and infrastructure to support a clinical program. As TapImmune transitions from the research stage to the development stage of its TAP technology, the Company plans to execute its contract with SAFC Pharma (part of the Sigma-Aldrich Corporation) for the production of clinical-grade vaccine product. TapImmune expects to use the product in preclinical toxicology studies and subsequent human clinical trials that require production facilities with GMP and Good Laboratory Practices (GLP) certification.

▪ Normally expressed in all cells

▪ Applicable to many types of cancers and microbial pathogens

▪ Not restricted to any specific tumor- or pathogen-associated antigen

▪ Not restricted by an individual’s genetics

▪ Complementary and synergistic with other immunotherapeutics and microbial vaccines

▪ May increase vaccine potency with a small amount of antigen

▪ May increase the ability of weak antigens to activate the immune system for an enhanced immune response

▪ May improve the immune response of immunocompromised individuals

▪ May lower antigen requirements thereby lowering vaccine production costs

▪ Facilitates global delivery via lyophilized (freeze-dried) vaccine

POTENTIAL COMPETITIVE ADVANTAGES OF TAP TECHNOLOGY

TapImmune Inc.

Table 8



Fundraising is ongoing, which is required for TapImmune to initiate its preclinical manufacturing contracts. The Company’s short-term requirement is roughly $2 million to $2.5 million, which TapImmune estimates is sufficient to initiate a Phase I study. To this extent, in May 2010, the Company raised $1.53 million from the sale of Senior Secured Convertible Notes, which it plans to use to establish partnerships for the clinical development of its proprietary vaccine technologies as well as for general working capital. Phase I Clinical Trials Dependent upon the completion of preclinical evaluation and financing, TapImmune believes that Phase I human clinical trials to evaluate the safety of its therapeutic TAP cancer vaccine could commence in late 2011. TapImmune may receive assistance in the design and execution of the clinical study from the Department of Advanced Therapeutics of the BC Cancer Agency, which provides a population-based cancer control program for the residents of British Columbia and the Yukon Territory. Prophylactic Vaccine to Prevent Select Infectious Diseases The Company also aims to develop safe and effective vaccines to prevent infectious diseases—including smallpox, influenza, and tuberculosis, among others—based on findings that increasing TAP expression may augment the immune system’s response to an infection. In addition to TAP technology’s use as a stand-alone vaccine (as described on pages 23-24), TapImmune may be able to position the TAP technology as a “vaccine component” that improves the efficacy and potency of other vaccines, as overviewed on page 24. Snapshot of the Infectious Disease Market An infectious disease is an illness caused by bacteria, fungi, protozoa, prions, or parasites that can be transmitted from one organism to another. The global infectious disease market is expected to reach $103 billion by 2015, driven largely by novel therapies for drug-resistant bacteria, an increasing prevalence of severe fungal infections, as well as the potential launch of novel antiviral agents and new drugs for HIV (Source: Global Industry Analysts, Inc., a market research provider, February 2010). Available treatments for infectious diseases include antibacterial, antiviral, and anti-fungal therapies as well as vaccines. Global threats—such as bioterrorism and outbreaks of severe acute respiratory syndrome (SARS) or the flu—have exemplified the need for vaccines that protect against various infectious diseases. This need has been emphasized by governments, health authorities, and other organizations worldwide. In recent years, the threats of bioterrorism and pandemic diseases have created an urgent need for new, effective vaccines. For example, in 2009, H1N1 influenza (swine flu) emerged as a global pandemic threat, stimulating significant interest in the infectious disease market and increasing demand for safe and efficacious vaccines to treat pandemic viruses that can be produced quickly and in large quantities. Nevertheless, safe and efficacious vaccines against some severe diseases (e.g., AIDS) remain a scientific challenge to develop. Bioterrorism is the release of viruses, bacteria, or other germs (agents) to cause illness or death in humans, animals, or plants. Following the outbreak of anthrax in 2001—when terrorists sent letters containing anthrax spores through the U.S. postal system—the federal government has spent nearly $50 billion on programs from 2001 through mid-2008 to combat bioterrorism (Source: The Wall Street Journal, August 4, 2008). There are a host of challenges associated with developing new vaccines to combat bioterrorism, including toxic side effects as a result of vaccination. In addition, the ability to quickly produce and supply sufficient doses of a vaccine for a large population in the event of an emergency remains challenging based on available technologies, thus the supply of vaccines for emerging threats and pandemics may be limited. For example, at the onset of the 2009 H1N1 pandemic, the U.S. government was unable to rapidly produce needed vaccinations and treatments, despite having months of warning leading up to the outbreak (Source: CNN.com, January 26, 2010).


Preclinical Data Evaluating TAP Against Infectious Diseases To test the hypothesis that over-expression of TAP enhances antigen-specific cytotoxic activity in response to viral infection, researchers have employed an expression system with recombinant vaccinia virus to over-express human TAP1 and TAP2 (VV-hTAP1,2). Immunizing healthy mice with this combination resulted in a significant increase in cell-mediated immune responses, suggesting that the inoculation could serve as a tool to increase vaccine efficacy and potency. According to its authors, this study was the first to demonstrate that over-expressing an antigen-processing component can increase endogenous antigen presentation and dendritic cell cross-presentation of exogenous antigens, potentially providing a novel approach to increase immune responses against pathogens using low doses of vaccine inocula (Source: PLoS Pathogens, 1[4]:289-298, 2005). Mice co-infected with either vesicular stomatitis virus (VSV) and VV-hTAP1,2, or Sendai virus and VV-hTAP1,2, demonstrated increased killer T-cell activity by at least four-fold versus co-infection with a control vector (VV encoding the plasmid PJS-5). Figure 4 illustrates a comparison of weight change between three vaccine doses of (A) VVhTAP1,2 and (B) VV-PJS-5 (vaccinia virus encoding the plasmid PJS-5) vaccinated mice after intranasal challenge with vaccinia virus Western Reserve strain (VV-WR). Researchers measured percentage weight change as an indication of death and morbidity. As shown on the left side of Figure 4, three groups of mice were challenged with a lethal dose of VV-WR (1e5 PFU) after being vaccinated with increasing doses of VV-hTAP1,2 (3e3 PFU, 3e4 PFU, and 3e5 PFU). On the right side of Figure 4, three groups of mice were vaccinated with escalating doses of VV-PJS-5 (3e3 PFU, 3e4 PFU, and 3e5 PFU) after being challenged with a lethal dose of VV-WR. These groups served as negative controls for the effect of VV-hTAP1,2 on protection from lethal viral challenge. Ultimately, vaccination with the lowest dose of VV-hTAP1,2 provided as much protection as the highest dose of VV-PJS-5 (Source: PLoS Pathogens, 1[4]:289-298, 2005).

Additional findings from preclinical evaluation of TAP show that VV-hTAP1,2 drives TAP expression in B-cells, macrophages, and dendritic cells. Researchers analyzed splenocytes from mice infected with VV-hTAP1,2 or the negative control, VV-PJS-5, for the presences of hTAP1. Fluorescence confocal microscopy identified hTAP1 expression in B-cells, macrophages, and dendritic cells of mice infected with VV-hTAP1,2. Development Initiatives for Infectious Diseases Future targets for TAP could include HIV/AIDS, SARS, hepatitis B/C, and the West Nile virus. In November 2009, TapImmune and Dutch-based Crucell N.V. signed a license agreement allowing the Company to use Crucell’s proprietary PER.C6® cells in its development programs. The PER.C6®

RESULTS FROM A VIRAL CHALLENGE EXPERIMENT TO MEASURE PROTECTION PROVIDED BY LOW-DOSE VACCINATION WITH VV-hTAP1,2

Figure 4

Source: PLoS Pathogens 1(4):289-298, 2005.

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technology is important for the production of TapImmune’s vaccine products. In general, adenovirus is a widely used vector in gene therapy; however, clinical use of this vector has been limited as unwanted replication competent adenoviruses (RCA) are often produced during manufacture (Source: Crucell). PER.C6® cells do not generate RCA, thus enabling large-scale production of adenoviral vectors for clinical applications. The PER.C6® cell line has an extensive Biologics Master File with the FDA, which can be cross-referenced by licensees to simplify the IND application and approval process. As part of the agreement, Crucell was granted the right to negotiate a license for TapImmune’s TAP technologies for infectious disease indications. TAP as a Vaccine Component to Improve Existing Therapies Presently, some vaccine manufacturers add an adjuvant to their formulation to enhance or modify the body’s immune response to the vaccine. In addition to increasing a vaccine’s efficacy or potency, adjuvants may reduce the amount of antigen required to produce a vaccine, potentially extending the vaccine’s supply and allowing a greater number of people to be vaccinated using fewer doses. Typically, adjuvants are mixed with antigens prior to vaccine administration. However, they can also be delivered independently, either before or after the antigen is administered to the patient. Despite these advantages, there are several disadvantages to using these vaccine supplements that have limited the number of adjuvants approved for use in the U.S. For instance, some adjuvants elicit reactogenicity (the capacity to produce adverse reactions), while others increase the risk of Guillain-Barré syndrome. To the Company’s knowledge, there is only one FDA-approved adjuvant—an aluminum mixture known as aluminum sulfate (alum)—that is available for use in the U.S. While TapImmune’s initial focus is to create a therapeutic cancer vaccine, the Company also aims to simultaneously demonstrate the breadth of the TAP technology, including its ability to complement currently approved and emerging products. This approach enables TapImmune to pursue its own internal product development while positioning the Company to enter into multiple partnerships and licensing agreements. TapImmune does not view the TAP technology as a conventional adjuvant; rather, the Company plans to position its potential vaccine-enhancing product candidates as “vaccine components.” When used in combination with another vaccine, TapImmune’s TAP molecule may augment immune responses and improve the therapy’s efficacy. Data has shown that increasing TAP expression in TAP-competent antigen-presenting cells or in virus-infected cells increases the cell surface presentation of antigenic peptides associated with MHC class I expression, leading to increased, specific T-cell-mediated immune responses. Because of TAP’s ability to increase vaccine potency using a small amount of antigen, the Company believes that it may lead to the creation of improved, more effective vaccines. When combined with other vaccines in animal studies, TapImmune’s TAP technology has shown 100 to 1,000 times greater potency than vaccines without an adjuvant. Additionally, by lowering antigen requirements, TAP can potentially reduce vaccine production costs. As such, the Company believes that its technology could become a new paradigm in treating infectious diseases, potentially advancing the development of new vaccines and improving those already in existence. The Company intends to pursue partnerships and joint research and development (R&D) ventures with vaccine manufacturers and pharmaceutical companies to facilitate bringing new and improved vaccines to market. R&D Collaboration with Aeras Global TB Vaccine Foundation In February 2010, TapImmune signed a Letter of Intent to enter into an R&D partnership with Aeras Global TB Vaccine Foundation (www.aeras.org). Aeras is a nonprofit product development partnership dedicated to advancing preventive tuberculosis vaccine regimens that are affordable for all age groups and available worldwide. Aeras is based in Rockville, Maryland, where it operates a state-of-the-art manufacturing and laboratory facility. The purpose of the collaboration between Aeras and TapImmune is to evaluate the efficacy of TAP in concert with vaccine vectors encoding tuberculosis immunogens under development at Aeras. Aeras will likely be responsible for conducting all preclinical development studies. Affecting roughly two billion people worldwide, tuberculosis causes the deaths of nearly 1.8 million people annually (Source: Aeras). It is also a leading cause of death among HIV-infected individuals.


Aeras is largely funded through government aid programs and private foundations, including the Bill & Melinda Gates Foundation, having received over $280 million to develop improved vaccines against tuberculosis. In January 2010, the Gates Foundation announced its plan to invest $10 billion on a 10-year program to develop vaccines for AIDS, tuberculosis, rotavirus, and pneumonia, among other initiatives. HER-2/neu Breast Cancer Vaccine Technology In June 2010, TapImmune signed an exclusive Licensing Option agreement with the Mayo Clinic in Rochester, Minnesota, for the clinical development of a vaccine technology to treat breast cancer. The technology targets a novel set of antigens on the human epidermal growth factor receptor 2 (HER-2/neu) receptor that were identified in breast cancer patients with pre-existent immunity. It has a number of potential advantages for the development of a breast cancer vaccine that may use both MHC class I and class II pathways to address a broad patient population (Source: Clinical Cancer Research, 16[3]:825-34, 2010). The technology may also elicit a longer immune response versus traditional immunotherapies. The option to license this technology can be exercised after Phase I clinical trials under terms agreed to between Mayo Clinic and TapImmune. Upon obtaining IND approval, TapImmune and the Mayo Clinic will likely execute a Sponsored Research Agreement. Breast cancer is a common form of cancer in women, affecting roughly 13% of females in the U.S. (Source: Breastcancer.org, January 2010). The American Cancer Society expects roughly 209,060 new cases of breast cancer to be diagnosed in 2010. TapImmune estimates that 30% of breast cancer patients express HER-2/neu. In 2009, Roche AG’s Pharmaceutical Division reported 2009 sales of 5.3 billion Swiss francs (~US$5 billion) for Herceptin® (trastuzumab), an intravenously delivered monoclonal antibody for HER-2/neu breast cancer (Source: Roche’s 2009 Annual Report). Presently, Herceptin® is primarily used in patients who express high levels of the antigen, which the Company believes is less than 50% of the HER-2/neu-positive population. As such, TapImmune believes that the market potential for HER-2/neu vaccines that address a broader portion of the breast cancer population is significant. TapImmune’s Development Plans for HER-2/neu Breast Cancer Vaccine Technology A Phase I clinical trial in breast cancer patients who have a form of breast cancer that expresses HER-2/neu receptors (also called HER-2/neu breast cancer) is planned at the Mayo Clinic, with Keith Knutson, M.D., serving as principal investigator. TapImmune plans to file an IND and commence Phase I trials in early 2011. In concert with the initial clinical trials, preclinical studies may be conducted to investigate TAP’s potential to improve the immune recognition of select class I antigens. MARKET OPPORTUNITIES TapImmune is initially addressing the cancer therapy market, which is detailed below and on page 26. Based on the Company’s ability to obtain additional funding and collaborations, TapImmune also plans to pursue product development for its TAP molecule as a prophylactic vaccine to treat various infectious diseases. An overview of the infectious disease market is provided on pages 27-28. TapImmune believes that recent developments in the biotechnology industry have reenergized interest in the therapeutic vaccine market by both the investment community and potential strategic partners. After reaching pandemic status in June 2009, the global H1N1 influenza (swine flu) threat brought significant attention to both the vaccine and immunotherapy industries. As of March 2010, the H1N1 pandemic was responsible for nearly 17,500 laboratory-confirmed deaths worldwide. Espicom Business Intelligence, a pharmaceutical research provider, anticipates the influenza pandemic may have a long-term impact on the vaccine market for infectious diseases, including increased funding for new vaccines and improved manufacturing methods (Source: Espicom Business Intelligence’s Advances in Vaccine Technology and Delivery, January 2010). Additionally, the approval of Dendreon’s Provenge® by the FDA in April 2010 has further ignited interest in the therapeutic cancer vaccine market, as greater detailed on pages 15-16 and page 30.


Oncology In the U.S., the lifetime risk of developing cancer is slightly less than one in two for men and just over one in three for women (Source: the American Cancer Society, 2009). Despite current treatments, an unmet need persists for therapies that offer improved safety and efficacy. In particular, TapImmune believes that there is a significant market opportunity for a treatment that harnesses the highly specific defense mechanisms of the immune system to attack cancer. With nearly 560,000 deaths per year, cancer is the second leading cause of death in the U.S., following cardiovascular disease, which causes roughly 630,000 deaths annually (Source: the U.S. Centers for Disease Control [CDC]). The National Institutes of Health (NIH) estimated the total cost of cancer in 2008 to be $228.1 billion, encompassing $93.2 billion in direct medical costs and $134.9 billion for lost productivity due to illness or premature death. Cancer therapy is the fastest growing segment in the pharmaceutical industry, expected to surpass $78 billion by 2010 (Source: RNCOS, an industry research firm, 2009). Cancer vaccines are forecast to become more prominent in the global vaccine market, potentially increasing from $135 million in 2007 to over $8 billion by 2012 (Source: Kalorama Information 2007). In particular, the market for therapeutic cancer vaccines, which may include TapImmune’s TAP vaccine, could reach $3.7 billion by 2015, largely fueled by the recent approval of Provenge® (Source: Advances in Vaccine Technology and Delivery, January 2010). There is a critical need in the oncology market for more effective therapies, particularly for metastatic cancers. Because of the difficulty in removing or destroying all cancer cells, many conventional cancer approaches (e.g., surgery, radiation therapy, and chemotherapy) cause numerous side effects and do not significantly reduce the high mortality rates associated with many types of cancer. Capitalizing on increased knowledge of the human genome and immune system, TapImmune believes that its therapeutic vaccine could provide a safer and more effective alternative to traditional therapies in TAP-deficient cancers, such as melanoma and colon, cervical, lung, prostate, breast, and ovarian cancer, among others. A snapshot of the TAP-deficient market is provided in Table 9, which lists several TAP-deficient cancers and the number of new cancer cases expected each year in the U.S.

In addition, TapImmune estimates that roughly 435,000 new cases of TAP-deficient cancers present annually in Western Europe and the UK. The Company also reports roughly 114,000 new cases per annum in Japan.

Melanoma 68,720 Breast Cancer 194,280

Head and Neck Squamous Cell Carcinoma 650,000 Renal Cell Carcinoma** 57,760

Hepatocellular Carcinoma (Liver Cancer)* 22,620 Small Cell Lung Cancer 27,430

Colorectal Cancer 146,970 Cervical Cancer 11,270

Ovarian Carcinoma 21,550 Prostate Cancer 192,280

* Includes intraheptic b ile duct cancer ** Includes renal pelvis cancer

A SNAPSHOT OF THE TAP-DEFICIENT CANCER MARKET IN THE U.S. (2009)

Table 9

Sources: Wood Mackenzie (a research and consulting firm for various industries), American Cancer Society, Inc., and the National Cancer Institute.

Estimated Total New Cases of TAP-deficient Cancers Each Year: ~1.4 million

New Cases Per Year

New Cases Per Year

Cancer Type Cancer Type


Infectious Diseases Infectious diseases are caused by pathogenic microorganisms such as bacteria, viruses, parasites, or fungi. These diseases are transmissible from one person to another (directly or indirectly). Infectious diseases continue to be a major healthcare issue worldwide, causing the deaths of over 9.5 million individuals each year (Source: the World Health Organization’s The global burden of disease: 2004 update [2008]). Worldwide, governments, health authorities, and other organizations have emphasized the need for vaccines that protect against various infectious diseases. However, safe and efficacious vaccines remain a scientific challenge to develop. For example, since scientists first identified HIV as the cause of AIDS in 1981, over 25 million people have died from HIV-related causes (Source: the International AIDS Vaccine Initiative). In 2008, approximately two million individuals died as a result of AIDS (Source: UNAIDS, the joint UN program on HIV/AIDS, November 2009). Figure 5 illustrates the trend of an increasing global AIDS population from 1990 through 2008. AIDS is a potential future target for TapImmune’s TAP technology.

As well, in recent years, the threat of bioterrorism has created an urgent need for new, effective vaccines. The CDC has identified several high-priority agents (listed in Table 10) that pose a significant risk to national security because they are easily transmitted and have high mortality rates.

The global market for vaccines is dominated by five companies—Merck & Co., GlaxoSmithKline, Sanofi Pasteur (the vaccines division of sanofi-aventis SA [SNY-NYSE]), Pfizer Inc. (PFE-NYSE), and Novartis AG—with four of the largest firms accounting for approximately 91.5% of the market (Source: Genetic Engineering & Biotechnology News, Vol. 28, No. 11, June 2008). In 2009, the world vaccine market reported revenues of $27 billion (Source: RNCOS 2010). Total revenues for the global vaccine market have been forecast to exceed $34 billion by 2012 (Source: RNCOS 2009).

GLOBAL AIDS POPULATION TREND FROM 1990 TO 2008

Figure 5

Source: UNAIDS, November 2009.

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

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▪ Bacillus anthracis (anthrax) ▪ Filoviruses

▪ Clostridium botulinum toxin (botulism) ◦ Ebola virus (Ebola hemorrhagic fever)

▪ Francisella tularensis (tularemia) ◦ Marburg virus (Marburg hemorrhagic fever)

▪ Variola major (smallpox) ▪ Arenaviruses

▪ Yersinia pestis (septicemic, pneumonic, and ◦ Junin virus (Argentinian hemorrhagic fever) and related viruses

bubonic plagues) ◦ Lassa virus (Lassa fever)

TOP PRIORITY BIOTERRORISM THREAT AGENTS

Table 10

Source: the U.S. Centers for Disease Control and Prevention (CDC), adapted from the California Department of Health Services' Bioterrorism Surveillance and Epidemiologic Response Plan.


Using its TAP technology, TapImmune aims to develop safe and effective prophylactic vaccines to treat infectious diseases such as HIV/AIDS, West Nile virus, avian influenza, influenza A, Mycobacterium tuberculosis, Salmonella, Escherichia coli (hemorrhagic colitis and necrotizing fasciitis), and methicillin-resistant Staphylococcus aureus (MRSA). Espicom Business Intelligence estimated the market for prophylactic vaccines against infectious diseases (excluding pandemic H1N1) to be $21.4 billion in 2009 and forecasts a compound annual growth rate (CAGR) of 8% through 2015, when the market could reach $36.4 billion. Nearly half of the product candidates for this segment are in early development stages (preclinical or Phase I), and these vaccine initiatives are receiving significant research attention (Source: Espicom Business Intelligence’s Advances in Vaccine Technology and Delivery, January 2010).


Competition The oncology market is characterized by rapid growth and significant competition. It is considered to be the fastest growing segment in the pharmaceutical industry (Source: RNCOS 2009). Numerous entities—including large pharmaceutical and smaller specialized biotechnology companies as well as colleges, universities, government agencies, and other public and private research institutions—are developing immunotherapies to treat cancer. Many companies are also pursuing the creation of new vaccines as well as adjuvants to improve the efficacy of available vaccines. To date, the only FDA-approved adjuvant is aluminum salts. TapImmune does not consider TAP to be a conventional adjuvant; rather, the Company considers TAP to have potential as either a vaccine or as a vaccine component. The following pages are not intended to represent an exhaustive summation of TapImmune’s competitors, but rather are an indication of the type of competition that the Company may face as it seeks to develop and commercialize its TAP technology to treat cancer. Table 11 presents some of the Company’s key competitors, which are overviewed thereafter.

Advaxis, Inc. Headquartered in North Brunswick, New Jersey, Advaxis is a biotechnology company using live, genetically modified Listeria monocytogenes to create therapeutic vaccines that stimulate multiple immune responses against cancer, infectious diseases, and immune disorders. The company bioengineers Listeria bacteria using a proprietary technique to create a specific antigen that can stimulate an immune response after recognition by the recipient’s immune system. Advaxis’ lead drug candidate is ADXS11-001, which is used to treat head and neck cancer as well as HPV-derived cervical cancer. In December 2009, the company announced plans to collaborate with the Gynecologic Oncology Group, a collaborative research group of the NCI, in a multicenter, Phase II clinical trial of ADXS11-001 in advanced cervical cancer in women who have failed prior cytotoxic therapy. The company further has prostate and breast cancer vaccines in preclinical phases and is researching these vaccines’ potential in other cancers, including ovarian cancer, gliomas, lymphomas, and leukemias. Advaxis employs eight individuals.

Advaxis, Inc. ADXS (OTC.BB) $0.18 $0.02 - $0.26 930,335 $22.92M

Apthera, Inc. Closely held — — — —

BioSante Pharmaceuticals, Inc. BPAX (NASDAQ) $1.88 $1.33 - $2.70 683,909 $120.43M

CEL-SCI Corporation CVM (NYSE Amex) $0.51 $0.37 - $2.10 1,191,920 $104.99M

Dendreon Corporation DNDN (NASDAQ) $36.73 $21.25 - $57.67 6,286,010 $4.98B

Genzyme Corporation GENZ (NASDAQ) $53.24 $45.39 - $60.15 3,836,270 $14.21B

Immune Design Corp. (IDC) Closely held — — — —

Micromet, Inc. MITI (NASDAQ) $7.12 $4.11 - $8.98 474,091 $574.71M

Oncothyreon Inc. ONTY (NASDAQ) $3.48 $2.20 - $7.77 238,142 $89.62M

Transgene S.A.* TNG (NYSE Euronext Paris) €15.72 €14.76 - €23.20 63,309 €348.4M

Vaccinogen, Inc. Closely held — — — —

VaxOnco Inc. Closely held — — — —

* Amounts in euros; €1 was approximately US$1.24 at 06/21/2010.

Sources: Yahoo! Finance (www.finance.yahoo.com) and Crystal Research Associates, LLC.

Table 11

TapImmune Inc.

COMPETITION

Company Symbol (Exchange) Last Trade (06/21/2010)

52-week Range

Avg. Vol. (3 month)

Market Cap.


Apthera, Inc. Headquartered in Scottsdale, Arizona, Apthera develops and commercializes peptide-based immunotherapies to treat cancer. The company’s core technology is licensed from the University of Texas MD Anderson Cancer Center and the Henry M. Jackson Foundation for the Advancement of Military Medicine, Inc. Apthera’s lead candidate is NeuVax™, a peptide-based immunotherapy that has been shown effective at targeting a range of HER-2/neu-positive cancers. The immunotherapy uses a peptide called E75 that is derived from HER-2/neu to specifically target cancer. NeuVax™ has completed Phase I/II clinical trials in breast cancer. BioSante Pharmaceuticals, Inc. Headquartered in Lincolnshire, Illinois, BioSante is a specialty pharmaceutical company developing products for female sexual health, menopause, contraception, and male hypogonadism. In October 2009, BioSante merged with Cell Genesys, Inc., a developer of biological cancer therapies. As a result of the merger, BioSante obtained a portfolio of cancer immunotherapies (known as GVAX Immunotherapies) and other technologies. Designed to stimulate the immune system to fight cancer, GVAX cancer treatments consist of tumor cells that are genetically modified to secrete an immune-stimulating cytokine and are irradiated for safety. In March 2010, BioSante received Orphan Drug designation from the FDA for the GVAX AML Vaccine in AML patients. BioSante has further received Orphan Drug designation for its GVAX Pancreas Vaccine to treat pancreatic cancer. Currently, GVAX cancer vaccines are in late human clinical evaluation for prostate, pancreatic, leukemia, myeloma, and breast cancer and in early human clinical testing for colorectal cancer and melanoma. BioSante is evaluating future development opportunities for GVAX Immunotherapies, including a potential combination with BioVant™, BioSante’s vaccine adjuvant, as well as possible external collaborations. BioSante is as well developing its calcium phosphate technology (CaP) for aesthetic medicine, as a vaccine adjuvant, and for drug delivery. The company employs approximately 23 individuals. CEL-SCI Corporation Headquartered in Vienna, Virginia, CEL-SCI develops cancer and infectious disease products that empower immune system defenses. The company’s lead product is Multikine®, a second-generation cancer vaccine with Orphan Drug status being developed as a first-line standard-of-care cancer treatment. CEL-SCI is preparing to initiate a global, open-label Phase III clinical trial of Multikine® for advanced primary head and neck cancer during 2010. As of May 2010, the company and its development partners had selected 40 of the planned 50 global medical centers for the study. Multikine®, which activates multiple cellular components of the immune system to fight cancer, is administered to patients when the immune system is strongest—before any other treatment (e.g., surgery, chemotherapy, or radiotherapy). The company also initiated a Phase I clinical study with an investigational L.E.A.P.S.™ (Ligand Epitope Antigen Presentation System) H1N1 vaccine in November 2009. CEL-SCI’s L.E.A.P.S.™ technology allows the Company to direct an immune response against specific disease epitopes. CEL-SCI employs 42 individuals. Dendreon Corporation With headquarters in Seattle, Washington, Dendreon is a biotechnology company developing targeted cancer therapies. Dendreon’s pipeline includes active cellular immunotherapy (ACI), monoclonal antibody, and small molecule product candidates. ACI uses live human cells to re-engage a patient’s immune system in order to elicit a specific and long-lasting response against cancer. In April 2010, the FDA approved Dendreon’s Provenge® (sipuleucel-T)—an autologous (patient-specific) ACI—for the treatment of prostate cancer. Provenge® was the first autologous cellular immunotherapy to be approved by the FDA. Lapuleucel-T, which has completed two Phase I trials in patients with breast, ovarian, and colorectal tumors, was also developed from Dendreon’s ACI platform. Lapuleucel-T targets HER-2/neu-positive cancers. Dendreon employs 480 individuals.


Genzyme Corporation With corporate offices in Cambridge, Massachusetts, Genzyme is a global biotechnology company developing products and services for rare inherited disorders, kidney disease, orthopedics, cancer, transplant and immune disease, and diagnostic testing. Genzyme’s development program for cancer, Genzyme Oncology, focuses on antibody and small molecule therapies. Internally and through collaborative efforts, Genzyme Oncology is developing therapeutics that target the regulation of cellular-level processes. Presently, the company markets two leukemia products: Campath® (alemtuzumab for injection) for the treatment of B-cell chronic lymphocytic leukemia (B-CLL) and Clolar® (clofarabine for intravenous infusion) to treat patients 1 to 21 years old who have relapsed or refractory acute lymphoblastic leukemia after at least two prior regimens. Worldwide, Genzyme employs more than 12,000 individuals. Immune Design Corp. (IDC) Headquartered in Seattle, Washington, IDC aims to develop and commercialize vaccines for infectious diseases. IDC employs two platforms to target dendritic cells and deliver antigens together with select signals to stimulate the immune system: (1) toll-like receptor (TLR) agonist adjuvants; and (2) lentivirus-based vectors. TLRs have a role in the dendritic cell-mediated activation of adaptive (acquired) immunity. Using proprietary synthetic TLRs and formulations, IDC is developing vaccine adjuvants, which the company is evaluating with commercial vaccines for several indications. The company is also developing lentivirus-based vectors to combat serious human infections. Lentivirus-based vectors have been shown to specifically target dendritic cells in vivo and induce maturation. IDC is also evaluating alternative methods to target these vectors to dendritic cells. Micromet, Inc. Headquartered in Bethesda, Maryland, Micromet focuses on the development of proprietary antibodies to treat a variety of cancers, autoimmune diseases, and inflammation. The company employs two platform technologies: (1) the creation of Single-Chain Antibodies (SCAs) through the use of the antigen-binding region of a full-sized antibody, held together by a linker; and (2) BiTE® technology, which uses the body’s killer T-cells to attack tumor cells. Two SCAs create one BiTE® molecule. Employing these methods, Micromet has developed three clinical-stage compounds and five preclinical agents. The company’s most advanced candidates include the BiTE® antibody blinatumomab (MT103), which completed a Phase II clinical trial to treat patients with acute lymphoblastic leukemia and is in a Phase I clinical trial for patients with non-Hodgkin’s lymphoma (NHL), as well as the human monoclonal antibody adecatumumab (MT201), which is in a Phase II trial in colorectal carcinoma and a Phase Ib trial in combination with docetaxel for metastatic breast cancer. As well, the company is evaluating MT110, a BiTE® antibody to treat patients with advanced solid tumors, in a Phase I clinical trial. Micromet employs 118 individuals. Oncothyreon Inc. With headquarters in Seattle, Washington, Oncothyreon is a biotechnology company developing multiple therapeutic candidates to target cancer. The company’s pipeline includes Stimuvax®, a therapeutic cancer vaccine being developed by Merck Serono, a division of Merck KGaA, in Europe and its U.S. affiliate EMD Serono Inc. in the U.S. under an exclusive worldwide license. Stimuvax® is designed to stimulate an individual’s immune system to recognize cancer cells and limit the growth and spread of cancer. Stimuvax® incorporates a 25-amino acid sequence of MUC-1 (a cancer-associated marker) in a liposomal formulation. The vaccine is believed to work by stimulating a T-cell-mediated immune response to cancer cells expressing the target MUC-1. After temporarily suspending the clinical development of Stimuvax® in March 2010 due to an unexpected serious adverse reaction in an exploratory clinical trial, Merck Serono and EMD Serono resumed the clinical program in June 2010 in non-small cell lung cancer (NSCLC) patients. Additionally, the company is developing ONT-10, a preclinical therapeutic vaccine candidate designed to stimulate an individual’s immune system to identify and attack cancer cells. ONT-10 is a liposomal vaccine composed of a 40-amino acid glycoprotein sequence of MUC-1. Oncothyreon employs 18 individuals.


Transgene S.A. Headquartered in Illkirch-Graffenstaden, France, Transgene is a biopharmaceutical company developing therapeutic vaccines and immunotherapeutic products for cancer and chronic infectious diseases. The company’s product line includes technologies using viral vectors. Transgene has biomanufacturing capacity in place for its viral-based products. Currently, the company has four compounds in clinical development: (1) TG4010, a targeted active immunotherapy to treat metastatic NSCLC in combination with first-line chemotherapy, which has completed Phase II trials; (2) TG4001/RG3484, a targeted immunotherapy to treat HPV-induced cervical diseases, which is in a Phase IIb trial; (3) TG4040, an active immunotherapy for chronic hepatitis C, which has completed Phase I studies; and (4) TG4023, an immunotherapy and targeted chemotherapy to treat primary tumors of the liver and metastatic colorectal cancer, which is in Phase I. Transgene has established a strategic agreement with Roche Holding AG (ROG-SIX) to develop TG4001/RG3484 and with Novartis AG to develop TG4010. Transgene employs approximately 225 individuals at its headquarters and an additional 15 people at its research laboratory in Lyon, France. Vaccinogen, Inc. Headquartered in Frederick, Maryland, Vaccinogen is a biopharmaceutical company developing product candidates to treat cancer as well as infectious, autoimmune, and anti-inflammatory diseases. Vaccinogen’s OncoVAX® vaccine is an immunotherapy designed to prevent cancer recurrence years after surgery. The company prepares each vaccine using a patient’s own cancer cells. Results from Vaccinogen’s Phase IIIa trial with OncoVAX® in Stage II colon cancer demonstrated a 64% decrease in the number of patients whose disease progressed 18 months following treatment, and a 25% improvement in five-year median overall survival. In May 2010, Vaccinogen selected Clinipace Worldwide to manage a pivotal Phase III trial for OncoVAX® in patients with Stage II colon cancer. To date, OncoVAX® has received marketing authorization from Swissmedic (Switzerland’s medical authority), permitting foreign and domestic Swiss patients to purchase OncoVAX® on a self-pay basis. The company has submitted final documentation to Swissmedic for pivotal review. A final positive decision could enable Vaccinogen to apply for insurance reimbursement within Switzerland. Vaccinogen is also developing the OncoVAX® vaccine as a therapy for renal carcinoma (a type of kidney cancer) and melanoma. VaxOnco Inc. With headquarters in Seoul, South Korea, VaxOnco specializes in developing new cancer therapies and vaccines that use the selective power of the immune system to seek out and destroy tumor cells. In April 2009, VaxOnco acquired Pharmexa-Epimmune Inc. from Pharmexa A/S (PHARMX-CPH) for €440,000. Pharmexa-Epimmune’s portfolio included T-cell epitope-based vaccines using microstructures in bacteria that stimulate an immune reaction, including GV1001, a peptide vaccine in both Phase III testing for pancreatic cancer and Phase II testing for liver and NSCLC. Pharmexa-Epimmune also had two vaccines against HER-2-positive breast cancer in Phase I and Phase II clinical trials.


Milestones Recent Milestones TapImmune has achieved a number of key milestones within the past 12 months, including the following: Signed a license agreement with Crucell N.V., giving the Company access to the PER.C6® cell line

and the necessary components to pursue its desired outcomes in the vaccine manufacturing process; Signed a Letter of Intent with Aeras Global TB Vaccine Foundation to enter into a collaborative R&D

partnership; Secured over $2.5 million in funding during the past 12 months; Acquired three follow-on inventions and intellectual property relating to its key TAP technology from

the University of British Columbia; Announced a corporate restructuring plan, which included the appointment of Dr. Glynn Wilson as

TapImmune’s executive chairman; and Announced the execution of an exclusive License Option agreement with the Mayo Clinic for a breast

cancer vaccine technology. Potential Milestones The following initiatives outline the key elements of the Company’s near-term development strategy during the upcoming 12 to 18 months: Commence production of clinical-grade breast cancer vaccine; Conduct a pre-IND meeting, file an IND, and initiate Phase I clinical studies for the breast cancer

vaccine; Complete preclinical and manufacturing studies for the AdhTAP1 vaccine; Conduct a pre-IND meeting, file an IND, and initiate Phase I clinical studies for the AdhTAP1 vaccine; Commence studies at Aeras to evaluate the efficacy of TAP when combined with tuberculosis

vaccine antigens; and Complete efficacy studies for the TAP vaccine with a novel smallpox vaccine. As well, the Company is identifying and pursuing additional partnership opportunities for its technology.


Key Points to Consider TapImmune is a development-stage biotechnology company creating novel therapeutic and

prophylactic (preventive) vaccines to treat cancer and infectious diseases. The Company’s vaccine platform is based on restoring the function of a protein called transporters associated with antigen processing (TAP) in cancer and virus-infected cells, which increases the immune system’s ability to recognize and respond to cancerous and pathogenic cells in the body.

Many cancers have reduced or no expression of TAP, which has a crucial role in the presentation of

cancer markers (antigens) on the surface of tumor cells. Without expressing TAP proteins, tumors may go undetected by the immune system, progressing and possibly metastasizing (spreading) to other areas of the body. TapImmune’s vaccine technology restores TAP presentation by delivering a TAP gene via a vector to cancer or infected cells.

The Company is developing a therapeutic cancer vaccine called AdhTAP1 to increase TAP

expression in tumor cells in order to improve the immune system’s ability to identify and attack cancerous cells. Proof of principle for TapImmune’s cancer vaccine has been established through over 10 years of research at the University of British Columbia.

o In preclinical studies, the Company’s vaccine increased the expression of major histocompatibility

complex (MHC) class I restricted tumor antigens on the surface of cancer cells, increasing the immune system’s sensitivity and enabling it to recognize and destroy cancer cells.

TapImmune is preparing to initiate clinical manufacturing and toxicology studies for AdhTAP1 and to

submit an Investigational New Drug (IND) application to the U.S. Food and Drug Administration (FDA) and other regulatory health authorities worldwide in late 2011.

o The Company believes that its vaccine may provide a safer and more effective alternative to

traditional therapies by harnessing the highly specific defense mechanisms of the immune system. Unlike many vaccines in development, which target specific cancers, TapImmune’s AdhTAP1 therapeutic vaccine may have application to all TAP-deficient cancers (e.g., colon, cervical, lung, prostate, breast, and ovarian cancers and melanoma).

In June 2010, the Company executed an exclusive option to license a clinical-stage breast cancer

vaccine technology from the Mayo Clinic to treat HER-2/neu breast cancer. TapImmune plans to file an IND and commence Phase I clinical trials in early 2011 for this technology.

o In 2009, Herceptin® (trastuzumab), an intravenously delivered monoclonal antibody for HER-

2/neu breast cancer, reported sales of 5.3 billion Swiss francs (~US$5 billion) (Source: Roche’s 2009 Annual Report). Presently, Herceptin® is primarily used in patients who express high levels of the antigen, which the Company believes represents less than 50% of the HER-2/neu-positive population.

Cancer vaccines are expected to become more prominent in the global vaccine market, potentially

increasing from $135 million in 2007 to over $8 billion in 2012. In particular, the market for therapeutic cancer vaccines—such as AdhTAP1—could reach $3.7 billion by 2015.

TapImmune also aims to develop safe and effective prophylactic vaccines to treat infectious

diseases—including smallpox, influenza, and tuberculosis, among others—based on findings that increasing TAP expression may augment the immune system’s response to an infection.

In addition to functioning as a stand-alone agent, the Company’s TAP vaccine may be used in

combination with existing and experimental vaccines to improve efficacy and potency. In preclinical testing, the TAP vaccine increased the efficacy of third-party vaccines by 100 to 1,000 times.

o TapImmune is collaborating with Aeras Global TB Vaccine Foundation—a nonprofit product

development partnership dedicated to developing tuberculosis vaccines. The partnership is designed to evaluate TAP’s efficacy when used with tuberculosis vaccines in development at Aeras. Annually, tuberculosis causes the deaths of nearly 1.8 million people worldwide.


TapImmune’s management team has expertise in drug delivery technologies, large- and small-cap pharmaceutical companies, corporate finance, and strategic business planning.

The Company holds three issued patents and five pending applications globally. From mid-2009 to mid-2010, the Company raised over $2.5 million—which was used for clinical

development programs, acquiring additional technologies, expanding the global patent portfolio, and executing corporate partnerships—including $1.53 million in May 2010 from the sale of Senior Secured Convertible Notes. As of March 31, 2010, TapImmune’s cash position was $21,367.


Historical Financial Results Tables 12, 13 (page 37), and 14 (page 38) provide a summary of TapImmune’s key historical financial statements: its consolidated Statements of Operations, Balance Sheets, and Statements of Cash Flows.

July 27, 1999(inception) to

March 31,2010 2009 2010

Expenses

Consulting fees 12,000$ 40,000$ 1,783,206$

Consulting fees – stock-based 863,698 — 4,655,515

Depreciation — 1,868 213,227

General and administrative 15,966 23,333 2,424,422

Interest and finance charges 165,596 199,916 4,076,199

Management fees 69,300 75,642 2,263,777

Management fees – stock-based 324,000 13,167 3,171,050

Professional fees 135,834 108,009 3,450,283

Research and development 43,273 24,381 5,460,665

Research and development – stock-based — — 612,000

1,629,667 486,316 28,110,344

Net Loss Before Other Items (1,629,667) (486,316) (28,110,344)

Other Items

Foreign exchange (loss) gain (4,479) 33,898 40,111

Gain on settlement of debt — — 1,134,066

Interest income — — 33,344

Loss on disposal of assets — — (5,399)

Net Loss for the Period (1,634,146) (452,418) (26,908,222)

Deficit Accumulated During the Development Stage,

beginning of period (25,274,076) (20,812,106) —

Deficit Accumulated During the Development Stage,

end of period (26,908,222)$ (21,264,524)$ (26,908,222)$

Basic and Diluted Net Loss per Share (0.04)$ (0.19)$

Weighted Average Number of Common Shares

Outstanding 38,854,230 2,414,983

Table 12

Three Months EndedMarch 31,


(UNAUDITED)

CONSOLIDATED STATEMENTS OF OPERATIONS

(A Development Stage Company)

TapImmune Inc.


March 31, December 31,

2010 2009

(Unaudited)

Current Assets

Cash 21,367$ 141,431$

Due from government agency 1,064 1,033

Prepaid expenses and deposits 127,501 214,501

149,932$ 356,965$

Current Liabilities

Accounts payable and accrued liabilities 584,767$ 586,556$

Research agreement obligations 71,601 45,676

Convertible Note payable 350,000 203,021

Notes payable and secured loan 135,000 135,000

Due to related parties 101,400 16,100

1,242,768 986,353

Commitments and Contingencies

Stockholders’ Deficit

Capital Stock

Common Stock, $0.001 par value, 150,000,000 shares authorized

39,076,674 shares issued and outstanding (2009 – 38,361,674) 39,077 38,362

Additional paid-in capital 25,783,462 24,152,319

Shares and Warrants to be issued 52,573 513,733

Deficit accumulated during the development stage (26,908,222) (25,274,076)

Accumulated other comprehensive loss (59,726) (59,726)

(1,092,836) (629,388)

149,932$ 356,965$

TapImmune Inc.

Table 13

CONSOLIDATED BALANCE SHEETS


ASSETS

LIABILITIES AND STOCKHOLDERS’ DEFICIT



Three Months Three Months July 27, 1999

Ended Ended (inception) to

March 31, March 31, March 31,

2010 2009 2010

Cash Flows from Operating Activities

Net loss (1,634,146)$ (452,418)$ (26,908,222)$

Adjustments to reconcile net loss to net

cash used in operating activities:

Depreciation — 1,868 213,228

Gain on settlement of debts — — (1,134,066)

Loss on disposal of assets — — 5,399

Non-cash interest and finance fees 146,979 153,340 3,695,068

Stock-based compensation 1,187,698 13,167 8,454,815

Changes in operating assets and liabilities:

Due from government agency (31) 493 (1,064)

Prepaid expenses and receivables (30,000) 9,520 (24,000)

Accounts payable and accrued liabilities 98,211 116,843 2,584,224

Research agreement obligations 25,925 (13,626) 289,732

Net Cash Used in Operating Activities (205,364) (170,813) (12,824,886)

Cash Flows from Investing Activities

Purchase of furniture and equipment — — (218,626)

Cash acquired on reverse acquisition — — 423,373

Net Cash Provided by Investing Activities — — 204,747

Cash Flows from Financing Activities

Issuance of Common Stock, net — — 9,622,125

Convertible Notes — — 658,450

Notes and loans payable — 120,000 919,845

Advances from related parties 85,300 54,567 1,441,086

Net Cash Provided by Financing Activities 85,300 174,567 12,641,506

Net (Decrease) Increase in Cash (120,064) 3,754 21,367

Cash, Beginning of Period 141,431 987 —

Cash, End of Period 21,367$ 4,741$ 21,367$

Table 14


(UNAUDITED)

CONSOLIDATED STATEMENTS OF CASH FLOWS


TapImmune Inc.


Risks Some of the information in this Executive Informational Overview® (EIO®) relates to future events or future business and financial performance. Such statements can only be predictions and the actual events or results may differ from those discussed due to the risks described in TapImmune’s statements on Forms 10-K, 10-Q, 8-K, and other forms filed from time to time. The content of this report with respect to TapImmune has been compiled primarily from information available to the public released by the Company through news releases, Annual Reports, and U.S. Securities and Exchange Commission (SEC) filings. TapImmune is solely responsible for the accuracy of this information. Information as to other companies has been prepared from publicly available information and has not been independently verified by TapImmune. Certain summaries of activities have been condensed to aid the reader in gaining a general understanding. For more information about TapImmune, please refer to the Company’s website at www.tapimmune.com. Investors should carefully consider the risks and information about TapImmune’s business described below. Investors should not interpret the order in which these considerations are presented as an indication of their relative importance. The risks and uncertainties described below are not the only risks that the Company faces. Additional risks and uncertainties not presently known to TapImmune or that the Company currently believes to be immaterial may also adversely affect its business. If any of the following risks and uncertainties develops into actual events, the business, financial condition, and results of operations could be materially and adversely affected, and the trading price of the Company’s shares could decline. TapImmune has a history of operating losses. The Company continues to incur losses and will require additional financing to continue its operations. TapImmune has incurred operating losses and negative cash flow from operations for most of its history. Losses incurred since the Company’s inception have aggregated to $25,274,076 at December 31, 2009. There can be no assurance that the Company will be able to generate positive cash flows to fund operations in the future or to pursue strategic objectives. TapImmune believes that it will have sufficient cash to satisfy its needs for at least the next six months. The Company will need to raise additional capital—most likely via the sale of equity securities—to fund its operations. There can be no assurance that TapImmune will be able to obtain such financing on terms satisfactory to the Company, if at all. Any additional equity financing may be dilutive to existing stockholders and debt financing, if available, may include restrictive covenants. If adequate funds are not available, TapImmune might be required to limit its R&D activities or its administrative activities, any of which could have a material adverse effect on the future of its business. Further, TapImmune does not have any products that generate revenue and expects its operating losses to increase significantly as the Company commences clinical trials. TapImmune does not expect to earn significant revenue for several years, and may never do so. Continued operating losses and the failure to satisfy financial obligations will have a material adverse effect upon the Company’s financial condition and the future of its business. The independent auditor’s report accompanying TapImmune’s December 31, 2009, consolidated financial statements contained an explanatory paragraph expressing substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements have been prepared on the basis of a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As at December 31, 2009, the Company had a working capital and capital deficiency of $629,388. TapImmune has incurred significant losses since inception. Further losses are anticipated in the development stage, raising substantial doubt as to TapImmune’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on raising additional capital to fund ongoing R&D, maintenance and protection of patents, accommodation from certain debt obligations, and ultimately on generating future profitable operations. Planned expenditures relating to future clinical trials of TapImmune’s immunotherapy vaccine will require significant additional funding. The Company is dependent on future financings to fund ongoing R&D as well as working capital requirements.


TapImmune depends upon collaborative relationships and third parties for product development and commercialization. The Company has historically entered into R&D agreements with collaborative partners. Pursuant to these agreements, TapImmune’s collaborative partners provide the Company with the intellectual property and options for the license of the intellectual property necessary to develop and commercialize its product candidates. TapImmune will continue to rely on future collaborative partners for the development of products and technologies. There can be no assurance that the Company will be able to negotiate such collaborative arrangements on acceptable terms, if at all, or that current or future collaborative arrangements will be successful. To the extent that TapImmune is not able to establish such arrangements, the Company could be forced to undertake such activities at its own expense. The amount and timing of resources that any of these partners devotes to these activities will generally be based on progress by TapImmune in its product development efforts. Some of the Company’s collaborative arrangements may be terminated by the partner upon prior notice without cause and there can be no assurance that any of these partners will perform their contractual obligations or that they will not terminate their agreements. Preclinical testing and future clinical trials may take longer than anticipated and TapImmune may be unable to complete them at all. While TapImmune believes that the Phase I human clinical trials of its TAP cancer vaccine could commence in 2011, there can be no assurances that they will occur within this timeframe, if at all. TapImmune may not initiate or complete the pivotal clinical trials of the TAP cancer vaccine or commence or complete clinical trials with any other product candidates or may not conduct them successfully. Further, TapImmune’s development costs will increase if the Company experiences any delays in the preclinical or clinical trials of the TAP cancer vaccine or other potential products or if it is required to perform additional or larger clinical trials than expected. Any substantial delay of or the failure to complete the clinical trials would have a material adverse effect upon TapImmune’s business. If testing of a particular product candidate does not yield successful results, then the Company will be unable to commercialize that product. TapImmune must demonstrate the safety and efficacy of the TAP cancer vaccine and its other potential products in humans through extensive preclinical and clinical testing. The Company may experience numerous unforeseen events during, or as a result of, the testing process that could delay or prevent commercialization of its product candidates. Further, clinical testing is very costly, takes many years, and has an uncertain outcome. Unsuccessful results from preclinical and clinical testing will have a material adverse effect on TapImmune’s business. The Company’s products and activities are subject to regulation by various governments and government agencies. The testing of TapImmune’s products is subject to regulation by numerous government authorities, principally the FDA and certain foreign regulatory agencies. Pursuant to the Federal Food, Drug, and Cosmetic Act and the regulations promulgated thereunder, the FDA regulates the preclinical and clinical testing, development, and commercialization of TapImmune’s potential products. Noncompliance with applicable requirements can result in, among other consequences, fines, injunctions, civil penalties, recall, or seizure of products, repair, replacement, or refund of the cost of products, total or partial suspension of production, failure of the government to grant premarket clearance or premarket approval for devices, withdrawal of marketing clearances or approvals, and criminal prosecution. Government regulation imposes significant costs and restrictions on the development and commercialization of TapImmune’s products and services. The Company’s success will depend on its ability to satisfy regulatory requirements. The Company may not receive required regulatory approvals on a timely basis, if at all. Government agencies heavily regulate the production and sale of healthcare products and the provision of healthcare services. In particular, the FDA and comparable agencies in foreign countries must approve human therapeutic and diagnostic products before they are marketed, as well as the facilities in which they are made. This approval process can involve lengthy and detailed laboratory and clinical testing, sampling activities, and other costly and time-consuming procedures. TapImmune’s failure to comply with applicable regulatory approval requirements may lead regulatory authorities to take action against the Company, which may delay or cease development and commercialization of its product candidates.


Therapies that have received regulatory approval for commercial sale may continue to face regulatory difficulties. The FDA and comparable foreign regulatory agencies may require post-marketing clinical trials or patient outcome studies. In addition, regulatory agencies subject a marketed therapy, its manufacturer, and the manufacturer’s facilities to continual review and periodic inspections. The discovery of previously unknown problems with a therapy, the therapy’s manufacturer, or the facility used to produce the therapy could prompt a regulatory authority to impose restrictions on the therapy, manufacturer, or facility, including withdrawal of the therapy from the market. Competition in the oncology sector is, and is expected to remain, significant, and TapImmune may never obtain market acceptance of its product candidates. Competition in the cancer therapeutics industry is intense and is accentuated by the rapid pace of technological development. TapImmune’s competitors range from development-stage entities to major domestic and international pharmaceutical companies, many of which have significantly greater financial, technical, marketing, sales, manufacturing, distribution, and other resources than TapImmune. As well, many companies have name recognition, established market positions, and long-standing relationships with customers and distributors. Moreover, the industry has experienced a period of consolidation, where many large domestic and international pharmaceutical companies have acquired mid-sized companies, further increasing the concentration of resources. TapImmune’s future success depends on its ability to effectively develop and market its product candidates against those of its competitors. If the Company’s product candidates receive marketing approval but cannot compete effectively in the marketplace, TapImmune’s business and financial position will suffer greatly. There can be no assurance that products will not be introduced that are directly competitive with or superior to the Company’s technologies. Market acceptance of the TAP cancer vaccine and TapImmune’s other product candidates is uncertain. Even if the TAP cancer vaccine and other potential products are approved and sold, physicians may not use them or may use them only in applications more restricted than the Company expects. Physicians will only prescribe a product if they determine—based on experience, clinical data, side effect profiles, and other factors—that it is beneficial and preferable to other available products and treatments. Many other factors influence the adoption of new products, including marketing and distribution restrictions, course of treatment, adverse publicity, product pricing, the views of thought leaders in the medical community, and reimbursement by third-party payers. Failure to obtain market acceptance of TapImmune’s product candidates will have a material adverse effect upon the Company’s business.

TapImmune depends on key management and advisors. Due to the specialized nature of the business, TapImmune’s success will be highly dependent upon its ability to attract and retain qualified scientific and executive personnel. The Company’s success depends to a significant extent upon its key management, including Dr. Glynn Wilson, chairman and principal executive officer; Mr. Denis D. Corin, TapImmune’s president and a director of the Company; and Mr. Tracy A. Moore, the Company’s chief financial officer and a director. There can be no assurance that the Company will be successful in attracting and retaining the personnel required to develop and market its product candidates and conduct operations successfully. Failure to retain Dr. Wilson, Mr. Corin, or Mr. Moore could have a material adverse effect upon TapImmune’s business. The Company’s success depends in part on its ability to obtain patents and license patent rights, to maintain trade secret protection, and to operate without infringing on others’ proprietary rights. TapImmune’s success depends in part on its ability to obtain and maintain patent protection for the technology underlying its product candidates both in the U.S. and in other countries. The Company cannot assure investors that any of its current or future patent applications will result in issued patents or that any patents issued to or licensed by TapImmune will not be challenged, invalidated, or held unenforceable. Further, the Company cannot guarantee that any issued patents will provide a significant competitive advantage. If TapImmune fails to successfully enforce its proprietary technology or otherwise maintain the proprietary nature of the Company’s intellectual property with respect to its current and proposed products, it would have a material adverse effect upon the business. TapImmune could incur substantial costs defending the Company or its licensees in litigation brought by others who claim that TapImmune is infringing on their intellectual property rights. The potential for reduced sales and increased legal expenses would have a negative impact on the Company’s cash flow and thus its overall business could be adversely affected.


The testing, manufacturing, and marketing of therapeutic medical technology entails an inherent risk of product liability claims. To date, TapImmune has experienced no product liability claims, but any such claims arising in the future could have a material adverse effect on its business, financial condition, and results of operations. Potential product liability claims may exceed the amount of TapImmune’s insurance coverage or may be excluded from coverage under the terms of the Company’s policy or limited by other claims under its umbrella insurance policy. Additionally, there can be no assurance that TapImmune’s existing insurance can be renewed by the Company at a cost and level of coverage comparable to that presently in effect, if at all. In the event that TapImmune is held liable for a claim against which it is not insured or for damages exceeding the limits of its insurance coverage, such claim could have a material adverse effect on the Company’s cash flow and thus potentially have a materially adverse effect on its business, financial condition, and results of operations. There has, to date, been no active public market for TapImmune’s Common Stock, and there can be no assurance that an active public market will develop or be sustained. The Company’s Common Stock traded on the Over-the-Counter Bulletin Board (OTC.BB) prior to the acquisition of GeneMax Pharmaceuticals in 2002. Both before and since the acquisition, trading in the Company’s Common Stock has been sporadic with insignificant volume. Moreover, the OTC markets for securities of very small companies have historically experienced extreme price and volume fluctuations. These broad market fluctuations and other factors, such as new product developments, trends in the industry, investment markets, economic conditions generally, and quarterly variation in the Company’s results of operations, may adversely affect the market price of its Common Stock. In addition, TapImmune’s Common Stock is subject to rules adopted by the SEC regulating broker-dealer practices in connection with transactions in “penny stocks.” Such rules require the delivery prior to any penny stock transaction of a disclosure schedule explaining the penny stock market and all related risks and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors, which are generally defined as institutions or an investor with a net worth in excess of $1 million or annual income exceeding $200,000, or $300,000 together with a spouse. For these transaction types, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser’s written consent to the transaction prior to sale. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in securities subject to the penny stock rules. TapImmune does not intend to pay any cash dividends on its Common Stock in the foreseeable future. Significant fluctuations in the Company’s stock price may have a material adverse effect upon its shareholders. RISKS RELATING TO TAPIMMUNE’S SHARES The Company has not paid dividends to date and does not intend to pay any dividends in the near future. TapImmune has never paid dividends on its Common Stock and presently plans to retain any future earnings to finance the operations of its business. Investors may never receive any dividends on the Company’s shares. The exercise of Stock Options and Warrants, the conversion of Debentures, or the later sales of TapImmune’s Common Stock may further dilute the interest of TapImmune’s current or future shareholders. As of December 31, 2009, the Company had outstanding 3,618,000 Options to purchase shares of TapImmune’s Common Stock and 6,062,800 Warrants exercisable into shares of its Common Stock. The issuance of any shares of Common Stock pursuant to exercise of such Options and Warrants or the redemption of the Debentures could dilute the interest of the Company’s current or future shareholders. TapImmune’s Board of Directors is authorized to sell additional shares of Common Stock, or securities convertible into shares of Common Stock, if they determine that such action would be beneficial to the Company. Any such issuance could dilute the interest of TapImmune’s current or future shareholders.


The Company’s articles of association provide indemnification for officers, directors, and employees. TapImmune’s governing instruments provide that officers, directors, employees, and other agents and their affiliates shall only be liable to the Company for losses, judgments, liabilities, and expenses that result from the negligence, misconduct, fraud, or other breach of fiduciary obligations. Thus, certain alleged errors or omissions might not be actionable by TapImmune. The governing instruments also provide that, under the broadest circumstances allowed under law, the Company must indemnify its officers, directors, employees, and other agents and their affiliates for losses, judgments, liabilities, expenses, and amounts paid in settlement of any claims sustained by them in connection with TapImmune, including liabilities under applicable securities laws. If large amounts of TapImmune’s shares held by existing shareholders are sold in the future, the market price of the Company’s Common Stock could decline. Four shareholders beneficially own roughly 14,401,173 shares of TapImmune’s Common Stock. The market price of the Company’s shares could fall substantially if these or other shareholders sell large amounts of its Common Stock in the public market. These sales, or the possibility that these sales may occur, could also make it more difficult for TapImmune to sell equity or equity-related securities if the Company needs to do so in the future to address then-existing financing needs. U.S. federal securities laws requiring the registration or exemption from registration in connection with the sale of securities limit the number of Common Stock available for sale in the public market.


Recent Events An overview of TapImmune’s recent announcements is provided below, referring the reader to the Company’s website for complete press releases (www.tapimmune.com/news). TapImmune and its technology have also been featured in several national magazines and other media outlets, including BusinessWeek, WallSt.net, Popular Mechanics, and ABC News. Links to view each article can be found on the News section of the Company’s website under “In the Media” (www.tapimmune.com/news/media). 06/01/2010—TapImmune Inc. announced that it signed an exclusive Licensing Option agreement with the Mayo Clinic in Rochester, Minnesota, for clinical development of a breast cancer vaccine technology. The option to license this technology can be exercised after Phase I clinical trials under terms agreed between the Mayo Clinic and TapImmune. Upon Investigational New Drug (IND) approval, TapImmune and the Mayo Clinic may execute a Sponsored Research Agreement. Mayo Clinic is expected to conduct a Phase I clinical trial in breast cancer patients who have a form of breast cancer that expresses HER-2/neu receptors (also called HER-2/neu breast cancer). Keith Knutson, M.D., of the Mayo Clinic has been assigned the role of principal investigator. 05/24/2010—Announced that the Company completed the sale of Senior Secured Convertible Notes totaling $1.53 million, which will likely be used to establish partnerships for the clinical development of proprietary vaccine technologies and for general working capital. Greater details on this financing are provided on Form 8-K and related exhibits filed with the U.S. Securities and Exchange Commission (SEC) on May 18, 2010. 02/23/2010—Provided a corporate update to its shareholders and other interested parties. The update included a summary of the Company’s corporate initiatives during 2009, including entering into a definitive relationship with Crucell N.V. and a Letter of Intent with Aeras Global TB Vaccine Foundation, in addition to raising over $1 million. The update also overviewed current trends and events in the cancer and infectious disease industries, including the pandemic H1N1 outbreak and the clinical success of Dendreon Corporation’s Provenge®. 02/01/2010—Announced that it signed a Letter of Intent to enter into a research and development (R&D) collaboration with Aeras Global TB Vaccine Foundation. The entities planned to evaluate TAP’s efficacy when used with novel vaccine vectors encoding tuberculosis immunogens under development at Aeras. 01/12/2010—Announced that TapImmune retained Wolfe Axelrod Weinberger Associates LLC as its investor relations counsel. 11/25/2009—Announced that the Company secured $600,000 in equity funding within the prior 60 days, bringing the total for the second half of 2009 to over $1 million. The investors acquired $0.80 units composed of one share and one Warrant exercisable at $1.20 for five years. 11/04/2009—Signed a license agreement with Crucell allowing the Company to use PER.C6® cells in its development programs. Under the terms of this agreement, Crucell was granted the rights to negotiate a license for TapImmune’s TAP technologies for infectious disease indications. 10/01/2009—Provided a corporate update. In July 2009, TapImmune restructured the majority of its debt into equity as part of a strategy to improve its balance sheet for potential funders and partners. As well, the Company announced that it had raised roughly $450,000 in operating capital in recent months. TapImmune also appointed Mr. Tracy A. Moore as chief financial officer and as a member of the Company’s Board of Directors. Further, the Company was encouraged by the interest of the investment community and potential development partners in the cancer and infectious disease vaccine candidates in TapImmune’s portfolio. The biotechnology market had recently gained momentum in both of these therapeutic areas due to the current pandemic threat of various diseases, including H1N1 (swine flu), and the success of Dendreon’s Provenge® Phase lll clinical trial in prostate cancer.


08/05/2009—Announced the acquisition of three follow-on inventions and intellectual property relating to its key TAP technology from the University of British Columbia. The three patent applications involve the enhancement of antigen presentation in both cancer and infectious disease models. 06/29/2009—Announced the appointment of Dr. Glynn Wilson as TapImmune’s new executive chairman as part of a corporate restructuring plan. In addition, Mr. Pat McGowan resigned from his roles as chief financial officer and Board member, and Mr. Denis Corin vacated his position as chief executive officer but retained his role of president and assumed a seat on the Board. TapImmune had been working with Dusford Overseas Investments Ltd. Dusford provided the Company with working capital and funding to progress vaccine manufacturing for clinical trials and assisted TapImmune in restructuring substantially all of its debt into equity, eliminating roughly $3.2 million in liabilities (which accounted for 95% of debt).


Glossary Adenovirus—A group of DNA-containing viruses that cause respiratory disease, including one form of the common cold. Adenoviruses can also be genetically modified and used in gene therapy to treat cystic fibrosis, cancer, and potentially other diseases. Adjuvant—An additive that enhances the effectiveness of medical treatment. Aluminum Sulfate (Alum)—An inorganic compound containing aluminum that is used in various immunologic preparations to improve immunogenicity. In vaccines, this agent binds to the protein conjugate, resulting in improved antigen processing by the immune system. Antigen-presenting Cells—Cells of the immune system that present antigens on their surface to other immune cells, such as T-cells, to enable proper T-cell activation. Autologous—Taken from an individual’s own tissues, cells, or DNA. B-cells—White blood cells made in the bone marrow that produce antibodies and help fight infection. β2 Microglobulin—A protein found free-form in serum or on a cell’s surface non-covalently associated with the α-chain of the MHC class I complex. Cancer Markers—Substances produced by tumor cells or by other cells of the body in response to cancer or certain benign (non-cancerous) conditions. These substances can be found in the blood, in the urine, in the tumor tissue, or in other tissues. Different tumor markers are found in different types of cancer, and levels of the same tumor marker can be altered in more than one type of cancer. Also called “tumor markers.” Dendritic Cells—A type of white blood cell that captures antigens and processes them into peptides, which are used to chemically program T-cells to go on search-and-destroy missions. Docetaxel—A first-line therapy for metastatic and refractory breast and non-small cell lung cancers that inhibits cancer cell growth by blocking mitosis (cell division). Endoplasmic Reticulum—A system of folded membranes that loop back and forth, spreading throughout a cell’s cytoplasm and providing a large surface area for cell reactions. Epitopes—Specific antibody-generating locations on a protein that are able to stimulate an immune response. Fluorescence Confocal Microscopy—A type of confocal microscopy, an optical imaging technique that scans a fine laser beam of light over an object through an objective lens. The technique rejects light from outside the plane of focus to produce a higher resolution Guillain-Barré Syndrome—An acute disease that produces fever and nerve inflammation resulting in bilateral weakness or paralysis, most commonly in the legs and feet. HER-2/neu (Human Epidermal Growth Factor Receptor 2)—A protein involved in normal cell growth that is found in high levels and is more aggressive on cells in a variety of cancers. Human Leukocyte Antigen (HLA)—A collection of human genes that encode proteins which function in cells to transport antigens from within the cell to the cell’s surface. These proteins are sometimes referred to as the major histocompatibility complex (MHC). Hypogonadism—A condition in which there are low levels or impaired production of hormones. Immunogenic—Possessing the ability to elicit an immune response.


Immunogens—Any substance or organism that provokes an immune response (produces immunity) when introduced into the body. Immunohistochemical Staining—The use of antibody-antigen stains to create reactions to locate markers specific to certain tissues or cells. Immunoperoxidase Staining—A type of immunostaining used on tissue biopsies for more detailed histopathological study. Immunosurveillance—The continuous monitoring process of the immune system whereby abnormal cells are recognized and destroyed. Immunotherapeutics—Therapies designed to produce immunity to a disease or to enhance resistance by the immune system. Inoculations—Vaccines that are taken as a precaution against contracting a disease. Investigational New Drug (IND) Application—Refers to the U.S. Food and Drug Administration’s (FDA) program by which a pharmaceutical company obtains permission to ship an experimental drug across state lines (usually to clinical investigators) before a marketing application for the drug has been approved. The FDA reviews the IND for safety to assure that research subjects will not be subjected to unreasonable risk. The application has three main sub-sections: Animal Pharmacology and Toxicology Studies; Manufacturing Information; and Clinical Protocols and Investigator Information. Listeria Monocytogenes—The species of the genus Listeria that is pathogenic to humans. Macrophages—A type of white blood cell that assists in the body’s fight against bacteria and infection by engulfing and destroying invading organisms. Major Histocompatibility Complex (MHC) Class I—Antigen-presenting cells that primarily present peptides that have been digested from external sources. Nevi—Plural form of nevus, the medical term for a mole (a pigmented, raised spot that can be present almost anywhere on the body). PA28α/β—Two homologous subunits of PA28, which is a family of regulatory complexes that have a role in the production of antigenic peptides. PAP (Prostatic Acid Phosphatase)—An enzyme produced by the prostate. It may be found in increased amounts in men who have prostate cancer. Prions—Protein particles that lack nucleic acid (DNA or RNA) and have been implicated as the cause of various neurodegenerative diseases. Prophylactic—Preventing or contributing to the prevention of disease. Recombinant—An organism that has a genome containing integrated genetic material from a different organism. Resected—Surgically removed. Severe Acute Respiratory Syndrome (SARS)—A severe form of pneumonia caused by a virus that appeared in outbreaks in 2003. According to the World Health Organization (WHO), the 2003 outbreak entailed 8,098 probable SARS cases worldwide, resulting in over 770 deaths. Splenocytes—Macrophages of the spleen.


Tapasin—A transmembrane glycoprotein located in the endoplasmic reticulum that is important in the assembly and peptide-binding process of the MHC class I molecule. Tapasin is a subunit of the protein complex consisting of TAP, MHC class I, and the chaperone molecule calreticulin. Tapasin binds to TAP1 and to β2 microglobulin, thus acting as a bridge between the MHC I molecule and the TAP1/2 complex. Th1—A type of T-cell that helps in the activation of other cell types, including macrophages. Transporters Associated with Antigen Processing (TAP)—Proteins that are important in the delivery of peptides derived from viral proteins and cancer cells to the cell surface. TAP translocates these peptides into the endoplasmic reticulum lumen for loading onto nascent MHC class I molecules. Tumor Antigens—Substances isolated from tumor cells that cause the body to make a specific immune response. Tumor-infiltrating Lymphocytes—White blood cells that have left the bloodstream and migrated into a tumor. Vaccinia Virus—The “live virus” used in the smallpox vaccine. It is a pox-type virus related to smallpox. When given to humans as a vaccine, it helps the body to develop immunity to smallpox. Vector—A virus or other agent (e.g., an individual, animal, or microorganism) that carries and transmits a disease.


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Jeffrey J. Kraws and Karen B. Goldfarb

Phone: (609) 306-2274 Fax: (609) 395-9339

Email: [email protected] Web: www.crystalra.com

Legal Notes and Disclosures: This report has been prepared by TapImmune Inc. (“TapImmune” or “the Company”) with the assistance of Crystal Research Associates, LLC (“CRA”) based upon information provided by the Company. CRA has not independently verified such information. In addition, CRA has been compensated by the Company in cash of forty-two thousand five hundred dollars and two hundred thousand Options/Warrants to purchase TapImmune’s stock for its services in creating this report, for updates, and for printing costs. Some of the information in this report relates to future events or future business and financial performance. Such statements constitute forward-looking information within the meaning of the Private Securities Litigation Act of 1995. Such statements can be only predictions and the actual events or results may differ from those discussed due to, among other things, the risks described in TapImmune’s reports on its 10-K, 10-Q, press releases, and other forms filed from time to time. The content of this report with respect to the Company has been compiled primarily from information available to the public released by TapImmune. The Company is solely responsible for the accuracy of that information. Information as to other companies has been prepared from publicly available information and has not been independently verified by TapImmune or CRA. Certain summaries of scientific activities and outcomes have been condensed to aid the reader in gaining a general understanding. For more complete information about TapImmune, the reader is directed to the Company’s website at www.tapimmune.com. This report is published solely for information purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy any security in any state. Past performance does not guarantee future performance. Additional information about TapImmune and its public filings, as well as copies of this report, can be obtained in either a paper or electronic format by calling (866) 359-7541.

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