Immune Pharmaceuticals Reports Third Quarter 2013 Financial Results

     Immune Pharmaceuticals Reports Third Quarter 2013 Financial Results

GAIN ON MERGER TRANSACTION DRIVES INCREASE IN STOCKHOLDERS' EQUITY TO $7.8
MILLION

PR Newswire

TARRYTOWN, N.Y. and HERZLIYA-PITUACH, Israel, Nov. 20, 2013

TARRYTOWN, N.Y. and HERZLIYA-PITUACH, Israel, Nov. 20, 2013 /PRNewswire/
--Immune Pharmaceuticals Inc. (OTCQX and NASDAQ OMX Stockholm Exchange: IMNP)
("Immune" or the "Company") announced today its financial results for the
three and nine month periods ended September 30, 2013. During the third
quarter of 2013, Immune recorded net income attributable to common
stockholders of $1.2 million, or $0.11 per diluted share compared with a net
loss attributable to common stockholders of $3.1 million, or $1.11 per share,
during the third quarter of 2012. The Company recorded net income during the
2013 period as a result of the recent merger between Immune Pharmaceuticals
Ltd. ("Immune Ltd.") and the Company from which the Company recorded other
income of $6.4 million representing the excess of fair value of the assets
acquired over the purchase price. Total stockholders' equity increased from
$14,000 at December 31, 2012 to $7.8 million at September 30, 2013 primarily
as a result of this gain.

For the nine months ended September 30, 2013, the Company recorded a net loss
attributable to common stockholders of $3.2 million, or $0.65 per share,
compared with a loss $9.9 million, or $1.81 a share, for the nine month period
ended September 30, 2012.

Dr. Daniel G. Teper, Chairman and CEO of Immune, commented, "Immune
Pharmaceuticals' improved balance sheet as a result of the merger supports our
plans to raise sufficient capital to realize the value of our innovative drug
portfolio including the funding in 2014 of two Phase II clinical trials in
ulcerative colitis and bullous pemphigoid – a dermatological orphan
auto-immune indication- with our lead monoclonal antibody bertilimumab."

Details of Merger Transaction

On August 25, 2013, the planned merger between the Company and Immune Ltd.
closed. After giving effect to the acquisition and the issuance of the
Company's common stock to the former shareholders of Immune Ltd., the Company
had approximately 13.3 million shares of its common stock issued and
outstanding, of which approximately 81% was held by the former shareholders of
Immune Ltd. and 19% retained by the Company's pre-merger stockholders. The
Company's assets and liabilities were recorded as of the acquisition date at
their estimated fair values. As the merger is treated as a reverse merger with
Immune Ltd. being the acquiring company, the Company's reported consolidated
financial condition and results of operations after completion of the merger
will reflect these values. The transaction is expected to qualify as a
reorganization within the meaning of Section368(a) of the Internal Revenue
Code.

In addition to the share exchange, all of the outstanding Immune Ltd. options
and warrants were exchanged for warrants and options to purchase the Company's
common stock. The exchange ratio, and consequently, the proportionate
ownership of the Company, was subject to adjustment and did not include (i)
the exercise or conversion of certain of our out-of-the-money options and
warrants, (ii) ordinary shares and common stock (including common stock issued
upon the conversion of certain securities) issued in connection with a
proposed private placement of securities conducted by either Immune Ltd, us or
both, (iii) loans made between the parties or (iv) the purchase of our common
stock by Immune Ltd. prior to the closing of the Merger with the use of a
portion of the proceeds from such private placement of securities and in lieu
of a certain loan to the Company, each as contemplated and more fully
described in the Merger Agreement.

The estimated acquisition consideration and the preliminary allocation of the
estimated acquisition consideration are in part based upon a preliminary
management valuation, as more fully described in the Company's Report on Form
10-Q for the Period Ended September 30, 2013. The Company's estimates and
assumptions are subject to change.

The final determination of the acquisition consideration allocation will be
based on the fair values of the assets acquired and liabilities assumed as of
the date the merger was consummated. The Company expects that the allocation
will be finalized within twelve months after the merger. Based on the purchase
price allocation, the following table summarizes the estimated provisional
fair value amounts of the assets acquired and liabilities assumed at the date
of acquisition: (in thousands):

                                                             Amount
Preliminary pro forma acquisition consideration allocation:
Cash and cash equivalents                                    $ 292
Restricted cash                                                252
Other current assets                                           96
Property and equipment                                         29
In-process research and development                            27,500
Accounts payable                                               (3,078)
Accrued liabilities                                            (1,737)
Loan payable                                                   (4,442)
Deferred tax liability                                         (10,870)
Gain on bargain purchase                                       (6,444)
Total acquisition consideration                              $ 1,598

The total acquisition consideration consisted of Immune Ltd.'s equity
investment in pre-merger Immune Inc. and loans between the parties that were
forgiven in the merger.

The Company estimates that approximately $27.5 million of the acquisition
consideration represents the fair value of purchased in-process research and
development related to projects associated with the AmiKet license agreement.
In accordance with U.S. generally accepted account principles, any excess of
fair value of acquired net assets over the acquisition consideration results
in a gain on bargain purchase, which was recognized in the quarter ended
September 30, 2013.

Product Pipeline

Following the completion of the merger, Immune's product portfolio includes
the following major products:

  oBertilimumab - a first in class monoclonal antibody (mAb) that targets
    eotaxin-1, a small protein that attracts and activates several sub-classes
    of immune cells, which are white blood cells that play a role in the
    development of several inflammatory diseases, including ulcerative
    colitis, Crohn's Disease, severe asthma and bullous pemphigoid, a
    dermatological auto-immune orphan condition with high unmet medical need.
    Eotaxin-1 has been shown to correlate with the severity of those diseases,
    which allows for selection of patients based on eotaxin-1 levels, a major
    step toward treatment personalization. Immune is currently initiating a
    multi-national Phase II trial of bertilimumab for the treatment of
    ulcerative colitis, and plans to initiate a Phase II trial for the
    treatment of bullous pemphigoid in 2014. Data from the bullous pemphigoid
    trial is expected to report in 2014.
  oNanomAbs - an antibody drug conjugate (ADC) platform designed to deliver
    cancer drugs specifically to tumor cells thereby improving efficacy and
    reducing off-target undesirable effects. Immune intends to continue
    development of its own candidates as well as to enter into partnerships
    where it will incorporate the partner's chemotherapeutic drug into the
    NanomAbs and/or power the partner's antibody with a drug-loaded
    nano-particle.
  oAmiKet™ - a prescription topical analgesic cream containing the active
    ingredients amitriptyline and ketamine designed to provide long-term
    relief from the pain of peripheral neuropathies, which affects more than
    15 million people in the U.S. The Company is preparing for Phase III
    development and has re-energized its efforts to out-license the product
    candidate prior to the start of a Phase III trial for the treatment of
    chemotherapy-induced peripheral neuropathic pain (CIPN) and possibly other
    peripheral neuropathies. AmiKet has obtained Fast Track status for the
    treatment of CIPN and is eligible for an FDA Special Protocol Assessment.
    AmiKet has also been granted orphan drug status for the treatment of
    post-herpetic neuralgia.
  oCrolibulin - a vascular disruption agent that has demonstrated potent
    anti-tumor activity in both preclinical and early clinical studies. In
    December 2010 the National Cancer Institute initiated a Phase Ib/II trial
    for crolibulin to assess safety and efficacy in combination with cisplatin
    in patients with anaplastic thyroid cancer. The Phase I safety portion of
    the trial completed in early 2013, and the results were presented at the
    May 2013 ASCO meeting in Chicago. Immune believes that crolibulin may be
    a candidate for use with its NanomAb technology.

Financial and Operating Highlights

Third Quarter and Nine Months 2013 vs. Third Quarter and Nine Months 2012

Revenue

During the three and nine month period ended September 30, 2013, the Company
recognized revenue of $19,000 from royalties received with respect to
technology acquired in the merger. We recorded no revenue during the three
and nine month periods ended September 30, 2012.

General and Administrative (G&A) Expense

General and administrative expense decreased by approximately $0.7 million to
$1.0 million for the three month period ended September 30, 2013 from $1.7
million for the three month period ended September 30, 2012. The decrease was
primarily attributable to lower stock-based compensation expense recorded in
the three month period ended September 30, 2013 compared with the third
quarter of 2012. For the nine month period ended September 30, 2013, General
and administrative expense was $3.2 million compared with $3.3 million for the
comparable period ended September 30, 2012. Stock-based compensation expense
was $2.1 million and $2.6 million in the nine month periods ended September
30, 2013 and September 30, 2012, respectively.

Research and Development (R&D) Expense

Research and development expense decreased by 23%, or approximately $0.3
million during the quarter ended September 2013 to approximately $1.0 million,
compared with $1.3 million during the quarter ended September 30, 2012. The
decrease in research and development expense was primarily attributable to
manufacturing expenses related to bertilimumab that were incurred in the three
month period ended September 30, 2012 and were not continued in 2013. During
the nine month period ended September 30, 2013, Research and development
expense decreased by 19%, or approximately $0.6 million to approximately $2.5
million, compared with $3.1 million during the nine month period ended
September 30, 2012. The decrease in research and development expense was
primarily attributable to manufacturing expenses related to bertilimumab
incurred during the nine month period ended September 30, 2012. Our research
and development effort has been focused on the development of bertilimumab,
anti-Ferritin mAb and NanomAbs.

Other Income (Expense)

Other income (expense), net amounted to $3.6 million income during the quarter
ended September 30, 2013 compared with a net expense of $0.1 million during
the quarter ended September 30, 2012. Other income of $6.4 million was
recognized during the quarter ended September 30, 2013 as a gain on bargain
purchase recorded as a result of the merger. The Company recorded an
additional $2.0 million liquidation preference attributable to a grant of
additional founder shares to the Company's Chief Executive Officer during the
quarter ended September 30, 2013, and a $0.7 million charge for warrant
amendment expense incurred as a result of extending the maturity of certain
Immune Ltd. warrants beyond the merger closing date, which partially offset
the gain on bargain purchase. Other components of other income (expense)
primarily relate to interest and other expense and, during the quarter ended
September 30, 2012, a charge of $26,000 for the derivative liability recorded
for the anti-dilution shares issuable to iCo upon a deemed liquidation event.

For the nine months ended September 30, 2013, other income (expense) net
amounted to $3.4 million net income compared with a net expense of $3.5
million for the nine month period ended September 30, 2013. Other income of
$6.4 million was recognized during the nine months ended September 30, 2013 as
a gain on bargain purchase recorded as a result of the merger. The Company
recorded an additional $2.0 million liquidation preference attributable to a
grant of additional founder shares to the Company's Chief Executive Officer
during the nine months ended September 30, 2013, and a $0.7 million charge for
warrant amendment expense incurred as a result of extending the maturity of
certain Immune Ltd. warrants beyond the merger closing date, partially
offsetting the gain on bargain purchase. Other components of other income
(expense) primarily relate to interest and other expense.

Deemed Dividends

Deemed dividends amounted to $0.4million for the three months ended September
30, 2013 as a result of anti-dilution provisions in the securities purchase
agreements for certain investors, which was triggered when Immune Ltd. closed
the merger with the Company at a price that was less than 80% of the price per
share of Immune Ltd.'s common stock at the time of the merger. Deemed
dividends amounted to $0.9million for the nine months ended September 30,
2013. 

Financial Condition

Immune had approximately $0.4 million in cash and cash equivalents as of
September 30, 2013, plus an additional $0.2 million in restricted cash held by
its senior secured lender. The Company raised $4.4 million since the
beginning of 2013 primarily in the form of equity issuances through Immune
Ltd. in order to fund the associated merger costs and the on-going operations
of the Company through the merger closing. The Company's current level of
liquidity is low. The Company has significantly reduced its cash burn as much
as possible but must raise additional capital, in the form of equity, debt or
non-dilutive funding in order to continue operations, pay vendors, and meet
debt service obligations. The Company is negotiating transactions with
select groups of investors that it believes will raise a sufficient amount of
capital to continue operations while the Company completes its longer term
fundraising efforts in association with its bankers and advisors.

The Company's obligations under its outstanding loan with MidCap Financial LLC
were restructured at the time of the merger closing. MidCap consented to the
merger, and entered into the Third Amendment to the Loan and Security
Agreement with the Company that fixed the principal balance of the loan at
approximately $4.4 million. Principal repayments on the loan will commence on
December 1, 2013. Principal repayments will be due in approximately equal
monthly installments commencing on the first repayment date. The scheduled
maturity date of the loan is August 1, 2016. Interest on the loan is accruing
at the rate of 11.5% per annum.

The Amendment also provided for additional availability of $1 million for
drawing by the Company through August 2014 upon meeting certain conditions,
most importantly the raising of net cash proceeds of at least $17.5 million
through one or more qualifying transactions, as defined in the Amendment.
Repayment of this amount, if borrowed, will be in approximately equal monthly
payments, ending on the maturity date of the loan.

About Immune Pharmaceuticals Inc.

Immune Pharmaceuticals Inc. (OTCQX and NASDAQ OMX Stockholm Exchange: IMNP)
applies a personalized approach to treatment, developing novel, highly
targeted antibody therapeutics to improve the lives of patients with
inflammatory diseases and cancer. The Company's lead product candidate,
bertilimumab, is entering Phase II clinical studies for moderate to severe
ulcerative colitis and bullous pemphigoid, with additional studies planned for
Crohn's disease and severe asthma. The Company is evaluating the use of its
NanomAb® platform, a second generation antibody drug conjugate technology,
with chemotherapeutics in order to enhance their safety and efficacy profiles
by delivering the medicines directly to cancer cells. The Company's growing
oncology pipeline also includes proprietary antibodies and, clinical-stage
small molecules that have been shown activity in a variety of solid tumors.

Immune is headquartered in Tarrytown, New York, with its primary research and
development facilities in Herzliya-Pituach, Israel.

For more information, visit Immune's website at www.immunepharmaceuticals.com,
the content of which is not a part of this press release.

Forward-Looking Statements

This news release and any oral statements made with respect to the information
contained in this news release contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. You are
urged to consider statements that include the words "may," "will," "would,"
"could," "should," "believes," "estimates," "projects," "potential,"
"expects," "plans," "anticipates," "intends," "continues," "forecast,"
"designed," "goal" or the negative of those words or other comparable words to
be uncertain and forward-looking. Such forward-looking statements include
statements that express plans, anticipation, intent, contingency, goals,
targets, future development and are otherwise not statements of historical
fact. These statements are based on our current expectations and are subject
to risks and uncertainties that could cause actual results or developments to
be materially different from historical results or from any future results
expressed or implied by such forward-looking statements. Factors that may
cause actual results or developments to differ materially include: the risks
associated with the adequacy of our existing cash resources and our ability to
continue as a going concern; the risks associated with our ability to continue
to meet our obligations under our existing debt agreements; the risk that
clinical trials for bertilimumab, crolibulin or AmiKet™ will not be
successful; the risk that bertilimumab, crolibulin, AmiKet™ or compounds
arising from our NanomAb® program will not receive regulatory approval or
achieve significant commercial success; the risk that we will not be able to
find a partner to help conduct the Phase III trials for AmiKet™ on attractive
terms, a timely basis or at all; the risk that our other product candidates
that appeared promising in early research and clinical trials do not
demonstrate safety and/or efficacy in larger-scale or later-stage clinical
trials; the risk that we will not obtain approval to market any of our product
candidates; the risks associated with dependence upon key personnel; the risks
associated with reliance on collaborative partners and others for further
clinical trials, development, manufacturing and commercialization of our
product candidates; the cost, delays and uncertainties associated with our
scientific research, product development, clinical trials and regulatory
approval process; our history of operating losses since our inception; the
highly competitive nature of our business; risks associated with litigation;
and risks associated with our ability to protect our intellectual property.
These factors and other material risks are more fully discussed in our
periodic reports, including our reports on Forms 8-K, 10-Q and 10-K and other
filings with the U.S. Securities and Exchange Commission. You are urged to
carefully review and consider the disclosures found in our filings which are
available at www.sec.gov or at www.immunepharmaceuticals.com. You are
cautioned not to place undue reliance on any forward-looking statements, any
of which could turn out to be wrong due to inaccurate assumptions, unknown
risks or uncertainties or other risk factors.

Selected financial information follows:

Immune Pharmaceuticals, Inc.
(Unaudited)
Selected Consolidated Balance Sheet Data
(in $000s)
                                                September 30,  December 31,
                                                2013           2012
Cash and cash equivalents                       $    417       $    95
Property and equipment, net                          54             35
In-process research and development                  27,500         —
Identifiable intangible assets, net                  3,680          3,896
Total assets                                    $    32,078    $    4,131
Accounts payable and other accrued liabilities  $    7,676     $    2,423
Notes and loans payable                              4,868          375
Deferred tax liability                               10,870         —
Total stockholders' equity                           7,825          14
Total liabilities and stockholders' equity      $    32,078    $    4,131



Immune Pharmaceuticals, Inc.
(Unaudited)
Selected Consolidated Statement of Operations Data
(in $000s except share and per share data)
                         Three Months Ended          Nine Months Ended
                         September 30,              September 30,
                         2013        2012            2013        2012
 Revenue:
 Licensing and other     $      $         $      $     
 revenue                 19          —               19          —
 Costs and expenses:
 General and             1,008       1,739           3,237       3,324
 administrative
 Research and            1,007       1,312           2,520       3,113
 development
  Total costs and    2,015       3,051           5,757       6,437
 expenses
  Loss from          (1,996)     (3,051)         (5,738)     (6,437)
 operations
 Other income
 (expense):
 Interest expense       (44)        (17)            (117)       (32)
 Derivative liability    —           (26)            (74)        (51)
 expense
 Warrant amendment       (734)       —               (734)       —
 expense
 Liquidation
 preference granted to   (2,037)     —               (2,037)     (2,804)
 founder
 Loss on
 extinguishment of       —           —               —           (549)
 debt
 Gain on bargain         6,444       —               6,444       —
 purchase
 Other expense           (32)        (20)            (57)        (27)
  Other income       3,597       (63)            3,425       (3,463)
 (expense), net
 Net income (loss)       1,601       (3,114)         (2,313)     (9,900)
 before income taxes
 Income tax expense      (3)         —               (3)         —
 Net income (loss)      $        $            $        $   
                         1,598      (3,114)        (2,316)    (9,900)
 Deemed dividends       (443)       —               (932)       —
 Income (loss)
 attributable to         $        $            $        $   
 common                  1,055      (3,114)        (3,248)    (9,900)

 stockholders
 Basic income (loss)     $0.14       $            $        $   
 per common share                    (1.11)         (0.65)     (1.81)
 Diluted income (loss)   $0.11       $            $        $   
 per common share                    (1.11)         (0.65)     (1.81)
 Weighted average        8,055,360   2,811,899       5,003,677   5,461,288
 common shares - Basic
 Weighted average
 common shares -         10,308,296  2,811,899       5,003,677   5,461,288
 Diluted



Immune Pharmaceuticals, Inc.
(Unaudited)
Selected Consolidated Statement of Cash Flows Data
(in $000s)
                                               Nine Months Ended September 30,
                                               2013              2012
Net cash used in operating activities          $    (2,826)      $   (2,906)
Net cash used in investing activities               (1,270)          (85)
Net cash provided by financing activities          4,418            1,317
Net increase (decrease) in cash and cash            322              (1,674)
equivalents
Cash and cash equivalents at beginning of          95               1,792
period
Cash and cash equivalents at end of period    $    417          $   118



Immune Pharmaceuticals, Inc.
(Unaudited)
Selected Consolidated Statement of Stockholders' Deficit Data
(in $000s)
                                               Nine Months Ended September 30,
                                               2013              2012
Stockholders' equity at beginning of period   $    14           $   3,196
Net loss for the period                             (2,316)          (9,900)
Stock-based compensation expense                    2,203            2,985
Share and warrant issuance                          7,190            1,411
Conversion of Ordinary shares to Founder's                           2,804
shares
Warrant amendment expense                           734              —
Stockholders' equity at end of period         $    7,825        $   496

As of November 19, 2013, Immune had 13,276,037 common shares outstanding.

Immune expects to report results for the year ending December 31, 2013 on or
about February 28, 2014.

SOURCE Immune Pharmaceuticals Inc.

Website: http://www.immunepharmaceuticals.com
Contact: Immune Pharmaceuticals Inc.: 777 Old Saw Mill River Road, Tarrytown,
NY 10591, Anna Baran, Director of Investor Relations and Corporate
Communications, Tel: (914) 606-3500 or (646) 937-1941,
anna.baran@immunepharma.com; or Immune Pharmaceuticals Ltd.: 15 Aba Even
Avenue, 2nd Floor, Herzliya-Pituach, 46733, Israel