BEACON EQUITY RESEARCH

Analyst: Victor Sula, PhD

Initial Report
May 26th, 2008

TPIM daily 05/23 /08

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TapImmune Inc.
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700 NW Gilman Blvd, Suite 486 0.00
Issaquah, WA 98027
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Tel: 1 866 689 8274 200

Corporate Inquiries

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E-mail: info@tapImmune.com 50
Website: www.tapImmune.com
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Market Data

Symbol / Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . OTC: TPIM

Coverage Initiated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May 23rd, 2008
Current Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.20
Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Speculative Buy
Price Target . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.85
Outstanding Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.50M
Market Cap. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4.70M
52-Week Range. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.08 - $1.00
Average 3M Volume. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11,893.8

Company Overview
TapImmune Inc. (OTC BB: TPIM) develops innovative therapeutics and vaccines in the
areas of oncology and infectious diseases. The Company’s lead product, TAP (Trans-
porters Associated with Antigen Processing) vaccine, performs a key step in moving
characteristic cancer markers, known as antigens, to the surface of cells. Without TAP,
there are no cancer markers and the body’s immune system fails to detect and eradicate
cancerous cells. The Company’s TAP vaccine restores TAP proteins and the immune
system’s ability to recognize and destroy cancer cells as it normally should. The TAP
molecule also works to enhance the potency of vaccines against infectious diseases. For
example, studies have shown that including TAP with a well-known smallpox vaccine
increased the vaccine’s potency as much as 1,000-fold.

TPIM initiated preclinical testing of its TAP cancer vaccine in 2007 and is moving for-
ward with the production of clinical grade vaccines for toxicology testing and Phase I
clinical trials. TapImmune is expecting to file an investigational new drug (IND) appli-
 Analyst: Victor Sula, PhD
Initial Report
May 26th, 2008

cation with the FDA in the second half of 2009. Clinical studies have already identified many cancers deficient in TAP, includ-
ing, but not limited to, melanoma, colon, cervical, lung, prostate, breast and ovarian cancers. The TAP vaccine is designed to
treat a wide variety of carcinomas. The TAP gene and protein are common in all humans; this results in the ability to create
an almost universal vaccine against the major groups of cancer. This differentiates TPIM from many other companies that are
developing therapies directed to very specific tumor antigens. TAP therapy shows promise for improving the efficacy and re-
ducing the side effects of conventional cancer treatments, and boosting the body’s defenses against certain infectious diseases.
The revenue opportunity associated with TAP therapy is significant. The global vaccine market is estimated at $13 billion and
cancer vaccines are forecast to be a $6 billion market by 2010.

Investment Highlights

Business model capitalizing on innovative oncology therapeutics and vaccines

TPIM is developing therapeutics and vaccines in the areas of oncology and infectious disease, based on technologies that in-
troduce a protein “pump” known as TAP (Transporters Associated with Antigen Processing). TAP proteins help move tumor-
associated antigens (markers) and viral antigens to the surface of cells where the immune system can spot and destroy these
invader cells. Without sufficient TAP, cancer cells remain hidden from the immune system and grow into tumors that may
eventually kill the host. Research studies have shown that a wide variety of human cancers are associated with low expression
of TAP proteins.

TAP helps the immune system recognize cancer cells

TPIM’s cancer vaccine restores TAP levels and allows markers to be presented that help the immune system
recognize and subsequently destroy cancer cells. Some of the cancers associated with TAP deficiencies include
melanoma, breast, prostate, lung, liver, kidney, head and neck, colorectal and cervical cancers.

Pre-clinical results validate TAP technology

Preliminary results of TAP cancer vaccine studies involving animals were very encouraging. Mice with small cell
lung carcinomas treated with the TAP vaccine had high survival rates: 70 percent of the mice treated with the
TAP vaccine remained tumor-free, whereas 100 percent of the untreated mice died within 45 days. In melanoma
trials, tumor growth was retarded 10-fold in mice treated with the TAP vaccine. Some 50 percent of the vaccine-
treated mice remained tumor-free in the third week, whereas 100 percent of the untreated mice were dead by
the third week.

The Company’s technology is further validated by peer-reviewed studies published in leading scientific journals
such as the Journal of Immunology, Nature (Biotechnology), International Journal of Cancer, Cancer Research and PLoS
Pathogens. TAP technology has also been featured on ABC News BusinessNow and B-TV and discussed in Busi-
ness Week, Popular Mechanics and local newspapers.

TAP prophylactic vaccine opportunity

TPIM is also working on a TAP prophylactic vaccine adjuvant for protection against smallpox and other infectious diseases
such as influenza and tuberculosis. Studies have shown the prophylactic vaccine is effective in augmenting TAP and en-

TapImmune Inc. (TPIM) 2

 Analyst: Victor Sula, PhD
Initial Report
May 26th, 2008

hancing the effect of the infectious disease vaccine. For example, the potency of a much-studied smallpox vaccine increased
1,000-fold when TAP was added.

At present, there exists only one FDA-approved adjuvant available for use in humans. Greater efficiency is demanded of infec-
tious disease vaccines as entire populations must be immunized against a growing list of infectious diseases and the threat of
pandemic outbreaks.

Phase I trials planned in the second half of 2009

During 2008 the Company will contract with a GMP-approved manufacturer to produce a commercial-grade vaccine for
toxicology testing and Phase I clinical trials. The Company plans to initiate Phase I studies of its TAP cancer vaccine before
year-end 2009 and to complete toxicity testing for its prophylactic vaccine.

In April 2008, TPIM announced it had completed initial testing on a bench-made vaccine at AppTech. This allowed the Com-
pany to obtain the necessary data for proceeding with clinical grade vaccine stock production. TPIM has contracted with
SAFC Pharma, a Contract Research Organization, for the production of clinical grade vaccine for clinical studies.

Strategic R&D partnerships

The Company partnered with researchers at the University of British Columbia (UBC) to provide the preclinical research on
the biological function of TAP and perform preclinical animal studies in cancer and infectious diseases. TPIM benefited from
the scientific expertise of Wilfred A. Jefferies, Ph.D., professor and founder of TPIM, along with his team; and Terry Pearson,
Ph.D., a consultant and professor of biochemistry and microbiology at the University of Victoria.

Huge cancer vaccine market

Globally, 10 million new cases of cancer are diagnosed each year. Continuous research and advances in molecular biology,
immunology and cancer genetics, coupled with the influx of genomics, proteomics and micro arrays, have led to the iden-
tification of novel molecular targets for cancer therapy and prevention. These discoveries have opened up new frontiers in
molecular medicine, leading to new innovations such as cancer vaccines.

Kalorama Information predicts the cancer vaccine market will grow from $481 million in 2006 to more than $8 billion by 2012.
Frost & Sullivan estimated revenues from cancer vaccine at $260.4 million in 2005 and predicts a $6 billion market by 2010.

The launch of Sanofi Pasteur MSD’s Gardasil and GlaxoSmithKline’s Cervarix has propelled cancer vaccines into the clinical
research spotlight. Espicom Business Intelligence forecasts combined sales of Gardasil and Cervarix could exceed $4 billion
by 2011.

Cancer vaccine drug candidates are being developed for nearly 30 indications. Many are in late-stage development. Promis-
ing candidates include Intracel’s OncoVAX for colon cancer; Genitope’s MyVax for lymphoma; Biomire/Merck’s Stimuvax,
Biovest’s BiovaxID and Favrille’s FavId for lung cancer; Antigenics’ Oncophage, Medarex’s MDX-010 and Avax’s M-Vax for
melanoma; and Dendreon’s Provenge, Cell Genesys’ Gvax and Northest Biotherapeutics’ DCVax for prostate cancer.

TapImmune Inc. (TPIM) 3

 Analyst: Victor Sula, PhD
Initial Report
May 26th, 2008

Business Model
TPIM is developing innovative therapeutics and vaccines in the areas of oncology and infectious disease. The Company’s
technologies are based on an understanding of the function of a protein “pump” known as TAP (Transporters Associated with
Antigen Processing). TAP proteins move tumor-associated antigens (markers) and viral antigens to the surface of infected
cells. These markers allow the immune system to detect and attack cancer cells. Scientists theorize many types of metastatic
cancers go undetected by the immune system because of insufficient TAP. Without TAP proteins, cancer markers do not exist,
and the immune system fails to target rogue cells and cancers grow undetected.

Current cancer treatments include surgery, radiation therapy and chemotherapy. A drawback to these therapies is that the
targeting of cancer can be imprecise. These methods often fail to remove or destroy all of the cancer and the remaining cancer
cells form new tumors. A critical need exists for more effective cancer therapies. Cancer vaccines, such as the TAP vaccine be-
ing developed by TPIM, hold the potential for higher efficacy and lower side effects in cancer treatment.

Patented technology platform

The Company is developing immunotherapeutic and prophylactic

vaccine products for the treatment of cancer, and protection against
infectious disease based on its proprietary TAP technology. TPIM is
initially focusing on advancing its cancer vaccine while simultaneously
moving forward with the development of a prophylactic vaccine adju-
vant for protection against smallpox and other infectious diseases. The
TAP cancer vaccine is a stand-alone product that also complements,
and is synergistic with, traditional cancer therapies such as radiation
and other cancer vaccine candidates.

Researchers at The University of British Columbia (UBC) have provid-

ed the basic preclinical research on the biological function of TAP and
related technology, and have also performed preclinical animal stud-
ies in cancer and infectious diseases. The Company has also received
technical support from its licensing partner, Crucell Holland B.V. (Cru-
cell), in the development of a TAP adeno virus-based vaccine product.
TPIM has contracted with SAFC Pharma to produce commercial grade
vaccines in quantity for preclinical and clinical studies. SAFC Pharma’s
production facilities are Good Manufacturing Practices (GMP) and
Good Laboratory Practices (GLP) certified.

The Company plans to internally finance and manage the develop-

ment of the therapeutic vaccines through Phase II human clinical tri-
als. An alliance with a pharmaceutical development and marketing
organization will be sought to assist in the financing of Phase III trials,
FDA approval and vaccine marketing. TPIM may also consider earlier
strategic collaborations with attractive partners interested in its tech-
nology.

TapImmune Inc. (TPIM) 4

 Analyst: Victor Sula, PhD
Initial Report
May 26th, 2008

Product Development

TAP cancer vaccine

TPIM’s TAP cancer vaccine was developed at the UBC Biomedical Research Center, and is being tested in preclinical studies.
The Company has patented the TAP-1 gene for restoring TAP protein levels and enhancing the immune system’s recognition
and response to cancer cells. The TAP cancer vaccine will address cancers associated with TAP deficiency, which include, but
are not limited to, breast, prostate, lung, liver, melanoma, renal and colorectal cancers. The vaccine technology was acquired
from UBC in 2007 and is wholly owned by TPIM.

Most cancer vaccines and vaccine candidates contain cancer-specific proteins that directly activate the immune system or ge-
netic information that encodes cancer-specific proteins. To be effective, the cancer antigen peptides delivered by the vaccine
must be recognized as “abnormal” or “foreign” by the immune system and trigger a strong, specific T-cell response. However,
identifying suitable cancer-specific proteins has proven extremely complex. In addition, MHC Class I proteins are highly vari-
able, with more than 100 different types identified in humans. As a result, any one cancer antigen peptide may not produce
the desired immune system response in all individuals. An additional problem is that cancers are genetically unstable and
their proteins are highly variable; the selected cancer antigen may trigger the immune system to attack only a small subset of
cancerous cells.

The TAP cancer vaccine works by delivering genetic information needed to restore TAP protein in the target cancer cell. In
effect, the cancer cell identifies itself to the body’s immune system and transports cancer antigen peptides to the cell surface.
The advantage of TAP therapy is that the immune response can be targeted to the entire range of cancer antigen peptides pro-
duced by cancer cells rather than a single antigen. In addition, the TAP cancer vaccine triggers an immune system response
even if the TAP protein and genetic information is delivered to only a few cancer cells. The TAP cancer vaccine also generates
an immune system response to any cancer associated with TAP deficiency, regardless of the patient’s individual genetic vari-
ability.
Exhibit 1: Restoration of TAP Expression Restored Immune Recognition

ER
ER

Transporter

Foreign Proteins:
P tumour specific or viral
protein

New Gene (Protein) is

introduced by Vector

Source: Company’s presentations

TapImmune Inc. (TPIM) 5

 Analyst: Victor Sula, PhD
Initial Report
May 26th, 2008

TAP technology has been validated in research studies at UBC and in peer-
reviewed scientific journals. The Company has conducted preclinical animal
testing of its TAP cancer vaccine, a necessary prerequisite to further preclinical
toxicology analysis and an Investigational New Drug (IND) application. In pre-
clinical trials for melanoma and lung carcinoma, animal survival rates of 70 per-
cent were achieved using TAP vaccine therapy, and 100 percent survival was
achieved when the TAP vaccine was administered ex-vivo. The Company is
ready to enter the regulatory phase of preclinical trials for lung cancer and mela-
noma and is currently moving through the proof of concept phase for prostate,
mesothelioma and breast cancer.

Once the formal preclinical testing is completed, TPIM will submit an IND ap-
plication. Phase I human clinical trials of the TAP cancer vaccine could begin
in late 2009 and will likely take place at the British Columbia Cancer Agency in
Vancouver, British Columbia and involve up to 30 cancer patients. The Com-
pany estimates between six to 12 months for Phase I trials and costs of between
$3 million and $5 million.

TAP Prophylactic Vaccines

The Company is leveraging its patented technology through the development of a TAP prophylactic vaccine for protection
against various infectious diseases such as smallpox, influenza and tuberculosis. The TAP molecule has shown promise as an
adjuvant for enhancing the effectiveness of targeted vaccines against infectious diseases. For example, adding TAP to a much-
studied smallpox vaccine increased the vaccine’s potency by 100 to 1000 times.

Currently, there is only one FDA-approved adjuvant available for use in humans. The need to immunize entire populations
against a growing number of infectious diseases and the threat of pandemic outbreaks will require greater efficiency of the
primary vaccine. As a significant percentage of the general population cannot tolerate the normal dose of smallpox vaccine,
a lower dose augmented by TAP would provide equivalent protection. In addition, administering lower doses enhanced by
TAP would reduce costs and increase the speed at which the total population could be protected.

Other Products and Technology

Peptide Transfer Assay

The Company is also investigating products that may stimulate or interrupt the chain of events involved in immune system-
related diseases. One such product, Peptide Transfer Assay, may be used to identify compounds effective in the treatment of
cancer, infectious diseases, autoimmune diseases, and transplant rejection. Peptide Transfer Assay is being readied for high-
throughput screening. TPIM has acquired the technology and will pursue a collaborative partnership for its development.

Screen for Regulators of Antigenicity

The Company has also acquired a drug discovery technology, Screen for Regulators of Antigenicity Technology, which may
be used to identify small molecule regulators of the immune response. TPIM believes that the Screen for Regulators of Anti-
genicity Technology can be used to screen for new drugs that regulate immune responses, and that it has relevance for cancer,
viral diseases, modulating transplant rejection and autoimmune diseases.

TapImmune Inc. (TPIM) 6

 Analyst: Victor Sula, PhD
Initial Report
May 26th, 2008

Strategic Relationships

UBC collaborative research agreement

In 2000, TPIM entered into a Collaborative Research Agreement with the University of British Columbia (UBC) for develop-
ment work on its TAP technologies.

In March 2000, TPIM entered into a license agreement with UBC and Wilfred A. Jefferies, Ph.D., the Company’s founder and
former chief scientific officer. The license gave TPIM exclusive worldwide rights to use the technology associated with two
patents: “Method for Enhancing Expression of MHC-Class 1 Molecules Bearing Endogenous Peptides” and “Method of Iden-
tifying MHC-Class 1 restricted Antigens Endogenously Processed by a Cellular Secretory Pathway.” In August 2007, TPIM
completed an outright acquisition of the technologies from UBC and will no longer be required to pay royalty or license fees.
In addition, the Company has continued to build its IP portfolio to include additional follow-on technologies associated with
the first TAP patents.

Industry Outlook
U.S. health expenditures (including investments) exceeded $2.2 trillion in 2007 and are projected to reach $4.3 trillion in 2017.
Expenditures are forecast to grow 6.7 percent annually and outpace GDP growth. As a percentage of GDP, health care spend-
ing is projected to rise from 16 percent in 2006 to 20 percent in 2017.
Exhibit 2: National health expenditures, $billions

4,500 4,277
4,008
4,000 3,757
3,524
3,500 3,305
3,098
2,905
3,000 2,726
2,555
2,394
2,500 2,246
1,852 1,973 2,106
2,000 1,603 1,732
1,500
1,000
500
-
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: Centers for Medicare and Medicaid Services: National Health Care Expenditures Projections: 2007-2017

Growth in healthcare expenditures reflects:

(1) Increased awareness of health issues. Expenditures for medical care are approaching 16 percent of all personal con-
sumption expenditures or approximately $7,500 per person per year, up from $5,500 per year just a few years ago.
(2) An aging population. The number of Americans aged 65 and older is forecast to double to more than 70 million se-
niors over the next 25 years. The numbers of Americans aged 85 and above will grow four-fold.
(3) As a result of population aging, disease incidence is rising. Medical care expenditures are forecast to increase dramati-
cally as Baby Boomers file for Medicare over the next few years.

TapImmune Inc. (TPIM) 7

 Analyst: Victor Sula, PhD
Initial Report
May 26th, 2008

Cancer vaccine market

Cancer encompasses a large number of diseases that affect many different parts of the human body. The diversity of cancer
types and their prevalence creates the need for new, improved treatments. Globally, 10 million new cases of cancer are diag-
nosed each year and the National Cancer Institute forecasts that cancer will be America’s number one killer in as little as five
years.

Innovations in cancer treatment methodologies include highly specific defense mechanisms for jump-starting the immune
system’s response. Continuous research and advances in molecular biology, immunology cancer genetics, coupled with the
influx of genomics, proteomics and micro arrays, have led to the identification of novel molecular targets for cancer therapy
and prevention. These discoveries have opened up new frontiers in molecular medicine and spurred the development of
cancer vaccines.

Cancer vaccines can be either therapeutic (to treat existing cancers in patients) or prophylactic (administered to healthy in-
dividuals to prevent cancer occurrence). These vaccines typically contain cancer-specific antigens that stimulate an immune
system response by specifically targeting cancer cells; normal cells are not affected. Another advantage of cancer vaccines is
that the unpleasant side effects of chemotherapeutic agents are avoided.

The launch of Sanofi Pasteur MSD’s Gardasil and GlaxoSmithKline’s Cervarix has propelled cancer vaccines from research
obscurity to an area of considerable clinical interest. In addition to offering a novel treatment option, these cancer vaccines have
enormous market potential. The U.S. market for Gardasil is estimated between $1.4 billion and $1.8 billion annually. Espicom
Business Intelligence forecasts sales of Gardasil and Cervarix together could exceed $4 billion by 2011.

Kalorama Information predicts the cancer vaccine market will grow from $481 million in 2006 to more than $8 billion by 2012,
based on several new drugs to be launched in 2008. Frost & Sullivan estimated revenues for cancer vaccines at $260.4 million
in 2005 and forecasts a $6 billion market by 2010.
Exhibit 3: National health expenditures, $billions

9,000 8,00 7,000

6,00
8,000 6,000
7,000
6,000 5,000
5,000 4,000
4,000 3,000
3,000
2,000
2,000
1,000 48 1,000 26
- -
2006 2012 200 201

Source: Kalorama Information Source: Frost & Sullivan

http://www.spacedaily.com/reports/Cancer_Vaccines_To_Top_8B_999.html
http://pharmalicensing.com/public/articles/view/1156416910_44ed858edd9b5

Many new vaccines are in late-stage development. Promising new vaccines include Intracel’s OncoVAX for colon cancer and
Genitope’s MyVax for lymphoma. Several companies have vaccines in development for lung cancer, including Biomire/Mer-
ck’s Stimuvax, Biovest’s BiovaxID and Favrille’s FavId. Antigenics’ Oncophage, Medarex’s MDX-010 in combination with
MDX-1379 and Avax’s M-Vax are targeting melanoma. Other vaccines that are likely to win approval include Antigenics’ On-
cophage for kidney cancer, Aphton’s Insegia for pancreatic cancer, Dendreon’s Provenge, Cell Genesys’ Gvax and Northwest
Biotherapeutics’ DCVax for prostate cancer.

TapImmune Inc. (TPIM) 8

 Analyst: Victor Sula, PhD
Initial Report
May 26th, 2008

Exhibit 4: Cancer vaccines by cancer type, developer and brand name

Expected Turnovem
Company Brand Name
$ billion by 2012
Cervical Cancer
Merck Gardasil
GlaxoSmithKline’s Cervarix
Colon Cancer 1.2
Intracel OncoVAX
Prostate Cancer 3.2
Cell Genesys’ Gvax
Dendreon Provenge
Lung Cancer
Merck KGaA Stimuvax 0.7
Source: http://www.researchwikis.com/Vaccines_Market_Research

Current drug candidates target nearly 30 types of cancer, including colon, breast, melanoma and prostrate cancers. More than
170 companies worldwide are developing cancer drugs.

Prophylactic vaccine market

The world vaccine market, once characterized by slow growth, has experienced increased sales in recent years as a result of
new pediatric vaccines and demand for more effective influenza vaccines in the United States and Europe. Governments are
issuing long-term purchasing contracts for vaccines and public health groups and nonprofits are helping to fund the distribu-
tion of vaccines in developing countries.

World vaccine sales were estimated at $10 billion in 2007 and are forecast to grow to $23.8 billion by 2012. Growth will be at-
tributable mainly to new products. Pediatric vaccines currently dominate but adult vaccines will experience higher demand
due to increased uptake of influenza and hepatitis. Spending on adult vaccines is expected to rise from $3.7 billion in 2005
to $7.5 billion in 2012. The combined global adult and pediatric vaccine markets are forecast to total $15 billion by 2012. The
fastest-growing segment in adult vaccines is influenza vaccines, followed by hepatitis vaccines, with a projected growth rate of
8-9 percent. Sales of flu vaccines are forecast to grow 13.2 percent and exceed $4 billion by 2012. The leading flu vaccine manu-
facturers include Sanofi and Novartis. Spending on hepatitis vaccines is projected to reach $1.5 billion by 2012. The top-selling
Hepatitis B vaccine is GSK’s Engerix-B.

The prophylactic vaccine market is currently valued at $7 billion and forecast to grow 9 percent to 11 percent annually1. Frost
& Sullivan estimates the current prophylactic vaccine market at around $6 billion and expects it to reach $11 billion in 2010.

Competition within the vaccine sector is minimal. However, with many new products in development, competition is likely
to increase and the vaccine market will grow to resemble other pharmaceutical markets, characterized by fast turnaround and
the need to ramp up quickly to meet demand.

1 http://www.researchwikis.com/Vaccines_Market_Research

TapImmune Inc. (TPIM) 9

 Analyst: Victor Sula, PhD
Initial Report
May 26th, 2008

Financial Analysis

Revenues
TPIM is a development-stage company and has yet to generate revenues from product sales. Over the medium term, TPIM
may generate revenues from government grants, milestone payments from collaborative partners and license fees. The Com-
pany has incurred losses since its inception and expects to incur losses over the next several years.
Exhibit 5: Income statement, $
2006 2007 % chg
Revenue 0 0 n/m
Total Operating Expenses, including 857,789 2,511,336 193%
Consulting fees 155,407 481,354 210%
Management fees 182,819 941,354 415%
Professional fees 240,016 524,502 119%
Research and development expenses 270,122 425,569 58%
Other expenses 9,425 138,557 1370%
Operating income (857,789) (2,511,336) n/m
Interest and finance charges 446,598 1,380,075 209%
Net income (1,304,387) (3,891,411) n/m
Diluted EPS (0.11) (0.19) n/m
Source: SEC Filings

The Company recognized $3.9 million of expenses during 2007 and expects to spend at least $5 million over the next 12
months for clinical manufacturing and development, additional preclinical studies involving TAP technology and filing an
Investigational New Drug application.
Liquidity and capital expenses
The Company has financed its research and development activities with funds raised through equity sales. TPIM plans to
raise additional capital for its 2008 business activities through an equity offering of four to six million shares.
Exhibit 6: Income statement, $
31-Dec-06 31-Dec-07
Current Assets 154,170 262,486
Cash and equivalents 120,436 167,539
Long term assets 166 16,621
Total Assets 154,336 279,107

Current liabilities, including 3,154,416 1,953,879

Short term debt 2,113,955 650,850

Shareholders' equity, including (3,000,080) (1,674,772)

Accumulated deficit (14,761,321) (18,675,893)
Source: SEC Filings

The Company anticipates spending at least $3 million over the next 12 months in preparation for Phase I trials. Going forward,
spending on Phase I trials is estimated at between $3 million and $5 million and spending on Phase II trials is forecast at be-
tween $10 million and $15 million. Assuming these trials are successful, TPIM will seek to partner with a major pharmaceutical
company for large-scale Phase III trials which could cost as much as $200 million.

TapImmune Inc. (TPIM) 10

 Analyst: Victor Sula, PhD
Initial Report
May 26th, 2008

Valuation

Outlook

During 2008, the Company plans to initiate cGMP manufacturing of the TAP cancer vaccine with SAFCPharma and produce
enough commercial grade vaccines for toxicology testing and Phase I clinical trials of its TAP cancer vaccine by year-end 2009.
The company will continue to develop its adjuvant for prophylactic vaccines either as a stand-alone project or in partnership
with a suitable vaccine company.
Exhibit 7: Product development timeline

Source: Company’s presentations

The Company recently received positive news from the U.S. Patent office regarding key follow on patents and has also filed
additional patent applications that further strengthen and expand its IP portfolio.

TPIM also benefits from recent successes in the cancer vaccine segment. The launch of Sanofi Pasteur MSD’s Gardasil and
GlaxoSmithKline’s Cervarix has increased commercial and clinical interest in cancer vaccines and are fueling growth in what
is expected to be a $6 billion market by 2010. Many smaller biotech companies in the space have also been headlined recently
with successes in the immunological therapeutic area, adding to the interest in this segment of the market.

Valuation

We based our DCF valuation on several assumptions:

• The Company has a 20 percent probability of successfully commercializing its TAP cancer vaccine and prophylactic
vaccine;
• Its drug candidates will be out-licensed to a big pharma and TPIM will receive a long-term royalty stream of 5 percent
of annual sales;
• The Company will begin generating revenue in late 2013;
• Annual sales will approach $1 billion per product;
• The present value of capital spending required to move its drug candidates forward to Phase III trials and a collabora-

TapImmune Inc. (TPIM) 11

 Analyst: Victor Sula, PhD
Initial Report
May 26th, 2008

tive partnership is $20 million;

• 14 percent Weighted Average Cost of Capital (WACC); and
• A 100 percent increase in the number of shares outstanding to 47 million.

We expect the Company to begin generating a $100 million annual royalty stream in 2014. Discounted at a 14 percent WACC,
this equates to a $60 million present value. Excluding the $20 million present value of anticipated future capital spending, we
derive a $40 million market capitalization target for the Company. Dividing this amount by 47 million fully diluted shares
outstanding, we obtain a $0.85 target price. As a result, we are initiating coverage of TapImmune Inc. with a Speculative Buy
rating and a $0.85 price target. However, we strongly advise investors to consider the risk factors mentioned below since the
Company will face many financial and regulatory challenges in achieving its product commercialization goals.

Risks
History of losses

TPIM has incurred operating and net losses and negative cash flow since its inception. The Company’s cumulative losses ex-
ceed $18.6 million. TPIM is several years away from generating revenues and will continue to report losses for the foreseeable
future.
The Company may be unable to complete pre-clinical testing and clinical trials

TPIM anticipates beginning Phase I clinical trials in late 2009 but there is no guarantee that trials will commence in this time-
frame, if at all. There is also no guarantee that clinical trials will yield favorable results. Any substantial delay or the failure to
complete clinical trials would have a material adverse impact on the Company’s operations.
Highly regulated business

The Company must obtain regulatory clearance from the FDA before it can market its vaccines. Securing FDA approval is an
expensive, time-consuming process with no guarantee of success. Clinical trials can take several years to complete and cost
hundreds of million of dollars. If the Company fails to receive FDA clearance or approval from Canadian regulatory authori-
ties, its business would most likely fail.
Need for additional funding

TPIM estimates it will need $3 million to complete preclinical investigations and $3 million to $5 million for Phase I clinical tri-
als. The Company plans to raise the necessary capital through a 2008 equity sale but there is no guarantee that it can raise the
needed funds on acceptable terms.

TapImmune Inc. (TPIM) 12

 Analyst: Victor Sula, PhD
Initial Report
May 26th, 2008

Management
Denis D. Corin, Mr. Corin has served as the Company’s president and CEO since November 2006. He
President and CEO is a management consultant and has worked in various capacities with large pharma-
ceutical firms (Novartis), diagnostic instrumentation companies (Beckman Coulter)
and cutting-edge biotech businesses (MIV Therapeutics). He holds bachelor degrees
in economics and marketing from the University of Natal, South Africa.

Pat McGowan, Mr. McGowan has served as the Company’s CEO, director, secretary, treasurer and
Secretary, Treasurer principal accounting officer since December 2005. As a management consultant, he
and CFO specialized in assisting public companies with financing, regulatory filings, adminis-
tration and business plans. From November 2001 to the present, he worked with MIV
Therapeutics Inc. as its executive vice president and CFO, assuming responsibility for
negotiations with attorneys, auditors and financial institutions and managing day-
to-day business operations. Prior to that, Mr. McGowan served as CEO of publicly-
traded American Petro-Hunter Inc., an oil exploration company. His duties included
reviewing business proposals, writing business plans, approving corporate filings
and overseeing all legal matters and functional areas, including administration, ac-
counting, contract negotiations, banking, press releases and regulatory filings. Mr.
McGowan obtained a Master of Business Administration degree from the University
of Western Ontario in 1965, and his Bachelor of Science degree from the University of
Oregon in 1963.

Alan Lindsay, Mr. Lindsay has extensive experience and expertise in the mining and bio-technology
Chairman of the Board of sectors. From 2000 to the present, he has been the chairman of MIV Therapeutics Inc
Directors where he also served as president and CEO until January 2008. MIV is a publicly-
listed biomedical company recently awarded the prestigious Frost & Sullivan 2005
and 2008 Award for Technology Innovation in the Field of Medical Coatings. Mr.
Lindsay was the founder of AZCO Mining and served as chairman, president and
CEO of AZCO from 1992 to 2000. The company was listed on the Toronto and Ameri-
can Stock Exchanges. During his tenure at AZCO, the Company sold the Sanchez
copper deposit to Phelps Dodge for $55 million CAD and established a joint venture
with Phelps Dodge on the Piedras Verdes copper deposit with 2.1 billion pounds of
copper reserves. Mr. Lindsay co-founded Uranium Energy Corp., an AMEX listed
uranium exploration company (UEC) and has served as chairman of the Company
since December 2005. Mr. Lindsay also co-founded Anatolia Minerals Development
and New Oroperu Resources, two publicly traded companies with significant gold
discoveries. Mr Lindsay has been chairman of TapImmune since December 2005 and
has helped reorganize the company and arranged the acquisition of the technology
from The University of British Columbia.

Dr. Glynn Wilson, Dr. Wilson has served as a director of the Company since February 2005. He has
Director broad experience in product development, is an internationally renowned expert in
drug delivery technologies, and served as worldwide head of Drug Delivery at Smith-
Kline Beecham from 1989 to 1994. He then served as chief scientific officer of Tacora

TapImmune Inc. (TPIM) 13

 Analyst: Victor Sula, PhD
Initial Report
May 26th, 2008

Corp. from 1994 to 1997. In addition, Dr. Wilson served as vice president, R&D, at
Access Pharmaceuticals from 1997 to 1998. Most recently Dr. Wilson served as presi-
dent and chief scientific officer of Auriga Pharmaceuticals, a publicly traded specialty
pharmaceutical company. He is also president and CEO of the GW Group. Dr. Wil-
son obtained his doctorate in biochemistry from Heriot-Watt University in Edinburgh
in 1972. He has been an adjunct professor, pharmaceutics and pharmaceutical chem-
istry, at the University of Utah since 1994, and was a faculty member at Rockefeller
University, New York, in the laboratory of Nobel Laureates Sanford Moore and Wil-
liam Stein, from 1974 to 1979.

Research and development team

The following scientists serve on TPIM’s research and development team:

Professor Wilfred A. Jefferies, D.Phil. (Oxford) – Scientific Advisor - UBC professor, founder of Synapse Tech-
nologies;

Professor Terry Pearson, Ph.D. – Scientific Advisor - Professor of biochemistry and microbiology at the Univer-
sity of Victoria;

Dr. Tim Vitalis, Ph.D. – Consultant Scientist for Research and Clinical Programs; and

Lee-Anne Corin, B.Sc Hons, Director of Clinical Development.

TapImmune Inc. (TPIM) 14

 Analyst: Victor Sula, PhD
Initial Report
May 26th, 2008

Disclaimer
Beacon Equity Reserach (otherwise known as BER) is an independent research firm specializing in small and micro capitalization compa-
nies. BER has no investment banking or consultation conflicts thereby minimizing the inherent conflicts of interest between the research
analysts and the companies they cover. BER is not a registered investment advisor or broker dealer. No information in this report should
be construed as an endorsement to either buy or sell any securities mentioned in this report. The analyst(s) who prepared this report rely
on publicly avail­able information which neither the analyst, nor BER, can guarantee to be error-free or factually accurate. All conclusions
in this report are deemed reasonable and appropriate by the author. The Private Securities Litigation Reform Act of 1995 provides inves-
tors a “safe harbor” in regard to forward-looking statements. To fully comply with the requirements of this law, BER cautions all inves-
tors that such forward-looking statements in this report are not guarantees of future performance. Unknown risk, uncertainties, as well
as other uncontrollable or unknown factors may cause actual results to materially differ from the results, performance or expectations
expressed or implied by such forward-look­ing statements. Investors should exercise good judgment and perform adequate due-diligence
prior to making any investment. Beacon Equity Resources and its affiliates have been compensated a total of forty seven thousand five
hundred dollars from a non-controlling third party (StocksJournal) for enrollment of TPIM in its research program and other services.
Ratings and price targets in this report should not be construed as recommendations or stock price predictors. Readers of this report
are urged to use due-diligence in any purchase of security listed herein. Readers should consult the Company’s SEC filings as well as
our initial report on the firm to better understand the inherent risks associated with this security. There may be many uncontrollable or
unknown factors which may cause actual results to materially differ from the results, performance or expectations expressed or implied
by such forward-looking statements. Investors should exercise good judgment and perform adequate due-diligence prior to making any
investment.

All decisions are made solely by the analyst and independent of outside parties or influence.

I, Victor Sula, PhD, the author of this report, certify that the material and views presented herein represent my personal opinion regard-
ing the content and securities included in this report. In no way has my opinion been influenced by outside parties, nor has my compen-
sation been either directly or indirectly tied to the performance of any security listed. I certify that I do not currently own, nor will own
and shares or securities in any of the companies featured in this report.

Victor Sula, PhD - Senior Analyst

Victor Sula, PhD has held the position of Senior Analyst with several independent investment research firms since 2004. Prior to 2004, Mr.
Sula held Senior Financial Consultant positions within the World Bank sponsored Agency for Restructuring and Enterprise Assistance
and TACIS sponsored Center for Productivity and Competitiveness of Moldova, where he was involved in corporate reorganization
and liquidation. He is also employed as Associate Professor at the Academy of Economic Studies of Moldova. Mr. Sula earned his PhD
degree in 2001 and bachelor’s degree in Finance in 1997 from the Academy of Economic Studies of Moldova. Mr. Sula is currently a level
III candidate in the CFA program.

TapImmune Inc. (TPIM) 15