Expert Financial Analysis and Reporting

Introduction

This note is based on comments made by management during the ImmunoCellular Therapeutics (IMUC) conference call of May 9, 2013.

Data from the Phase II Trial of ICT-107

ImmunoCellular continues to guide that the Data Monitoring Committee for the ICT-107 trial in glioblastoma multiforme will conduct an interim safety and futility analysis during the second quarter. The Company believes that the most positive outcome would be a recommendation to continue the trial. IMUC continues to expect that it will have top line results at the end of 2013.

The phase II trial is based on 124 patients with an endpoint of median overall survival. It is randomized roughly 2:1 so that about 83 patients will receive ICT-107 plus standard of care and 41 will receive standard of care. The powering assumes an improvement for the ICT-107 regimen of 8.0 months over 18.8 months median overall survival assumed for standard of care.

What Comes After Phase II

There is hope on the part of some investors that the phase II data will be so positive that IMUC will file for approval in the US and will not need to conduct a phase III trial. The current CEO has not taken this position as he consistently has stated that this is a phase II trial, but his predecessor did not discourage this thinking.

I think that there is virtually no chance that the Company can file for approval in the event of a successful phase II trial. IMUC conducted its phase II
trial using product supplied from two different GMP production facilities, first at the University of Pennsylvania and later at a NeoStem (NBS) facility. The FDA has a stringent requirement that the manufacturing processes and quality control assays used in clinical trials be nearly identical to those which will be used when the product is commercialized. This should be especially true for living cell therapy products in which the manufacturing process is essentially the product. ICT-107 production is based on the maturation of monocytes obtained from a patient through a blood draw that are then matured into dendritic cells, loaded with tumor antigen and re-injected in the body.

My excitement with ICT-107 and that of many other investors comes from the very long survival tails that were seen in the 16 patient phase I trial in which median overall survival was 38.4 months and in which 55% of patients survived for more than three years. The phase II trial that was started in 2011 and will report topline data in late 2013 cannot provide the same insight into long term survival. However, if the trial hits its end point of an 8.0 month improvement in overall survival, it would be a pretty spectacular achievement as oncologists generally consider a 4.0 to 5.0 month increase in median overall survival in a rapidly growing cancer like glioblastoma multiforme as a major advance.

Everyone, including the FDA, would be impressed by ICT-107 hitting the primary endpoint in this trial-but, I can't see the FDA as approving it on this basis. Overlooking the manufacturing inconsistency caused by using two suppliers in phase II is not a precedent that the agency would want to set. Also, results based on only 124 patients is a small number for a drug that if, approved, would be widely and very quickly used in a patient population of perhaps 4,000 to 5,000 glioblastoma patients with the right immunotyping. I believe that the FDA will require two additional phase III trials or ask for one additional phase III trial using the phase II for supporting data. This assumes that the phase II is successful.

Two New Dendritic Cells Vaccine Products are Entering Clinical Trials

The Company plans to initiate a phase IIa trial of a second product, ICT-140, in patients with ovarian cancer in 2H, 2013. An investigator sponsored trial at Cedars-Sinai with ICT-121 in patients with recurrent glioblastoma will begin before the end of the second quarter.

Financials

The company has done an excellent job in building a strong balance sheet. The cash balance at the end of 2Q, 2013 was $24 million. This is reasonably comfortable when viewed against the historical and probable future burn rate of $3 million per quarter. The cash on the balance sheet can fund the company for two years or well into 2015.

Just after the close on April 9, the Company announced an at the market or credit facility that can potentially bring in $17 million over the next few years. The ATM, in my opinion, is an extremely effective mechanism for raising cash for a small biotechnology company. It causes minimal disruption in the market and the cost of raising capital is very attractive with discounts of perhaps 2% to 3%. I think this was a very smart move on the part of management.

Management

I believe that the new CEO Andrew Gengos, who joined the Company in December 2012, has brought and will continue to bring a professional management approach to IMUC. His goal is to build an organization that can market ICT-107 in the US, but will use partners abroad. He will be bringing in more experienced management. While Mr. Gengos has not been in the CEO position for a long enough time to establish a track record, my initial impression of him as a CEO is quite positive.

Investment Thesis

The only important catalyst for ImmunoCellular this year will be the reporting of topline data on the phase II trial of ICT-107 in glioblastoma multiforme. As I explained in this note, if the trial is successful, ICT-107 will likely be advanced into a phase III trials and have the potential for approval sometime in the 2016 to 2017 timeframe.

I think that if ICT-107 hitting the primary endpoint of an increase of 8.0 months increase in median overall survival would be a spectacular success that could lead to a doubling or more in the stock price. I think that even in the event that it does not hit on this primary endpoint, but shows a strong trend toward an increase in overall survival that it could still be quite positive for the stock if it can allow the Company to design a phase III trial.

What are the chances of success? I don't know how to answer this question with confidence. As critics consistently and correctly point out, extrapolating the results from the 16 patient phase I trial may be misleading. Still, those results were so spectacular that they can't be dismissed. I think that this is a reasonable asymmetric investment opportunity as I have previously discussed at length.