Tiziana Life Sciences : Annual Report for the year ended 31 December 2020

COMPANY NUMBER 03508592

TIZIANA LIFE SCIENCES PLC

ANNUAL REPORT & FINANCIAL STATEMENTS

YEAR ENDED 31 DECEMBER 2020

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31ST DECEMBER 2020

CONTENTS	PAGE
STATUTORY AND OTHER INFORMATION	1
STRATEGIC REPORT	2
DIRECTORS' REPORT	13
DIRECTORS' REMUNERATION REPORT	22
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF TIZIANA LIFE	33
SCIENCES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	39
CONSOLIDATED STATEMENT OF FINANCIAL POSITION	40
COMPANY STATEMENT OF FINANCIAL POSITION	41
CONSOLIDATED STATEMENT OF CASH FLOWS	42
COMPANY STATEMENT OF CASH FLOWS	43
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	44
COMPANY STATEMENT OF CHANGES IN EQUITY	46
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS	47

STATUTORY AND OTHER INFORMATION

Directors:	Mr G. M. A. Cerrone
	Dr K. Shailubhai
	Mr W. Simon
	Mr J. Brancaccio
Secretary:	Accomplish Secretaries Limited
Registered Office:	3rd Floor, 11-12 St James's Square, London, SW1Y 4LB
Principal Bankers:	Barclays Bank, 2 Churchill Place, London, E14 5RB
Auditors:	Mazars LLP, Tower Bridge House, St Katharine's Way,
	London, E1W 1DD
Nominated Advisors:	Cairn Financial Advisers LLP, 62-63 Cheapside, London,
	EC2V 6AX
Nominated Brokers:	Optiva Securities Limited, 49 Berkeley Square, London,
	W1J 5AZ
Solicitors:	Orrick, Herrington & Sutcliffe (UK) LLP, 107 Cheapside,
	London, EC2V 6DN
Registrars:	Link Asset Services, The Registry, 34 Beckenham Road,
	Beckenham, BR3 4TU

1	TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020

STRATEGIC REPORT: EXECUTIVE CHAIRMAN'S STATEMENT

I am pleased to report on the Company (Tiziana Life Sciences PLC) and its subsidiaries, together the 'Group', results for the year ended 31 December 2020.

Tiziana Life Sciences is a dual-listed (NASDAQ: TLSA, LSE:TILS) clinical stage biotechnology company that specializes in the developing transformative therapies for autoimmune and inflammatory diseases, degenerative diseases and cancer related to the liver. Our clinical pipeline includes drug assets for Crohn's Disease, COVID- 19, Secondary Progressive Multiple Sclerosis and Hepatocellular Carcinoma. Tiziana is led by a team of highly qualified executives with extensive drug development and commercialization experience.

Background

The Group is focused on the discovery and development of novel molecules and related diagnostics to treat high unmet medical needs in oncology and immunology. Our mission is to design and deliver next generation therapeutics and diagnostics for oncology and immune diseases of high unmet medical need by combining deep understanding of disease biology with clinical development expertise. We have a drug discovery pipeline of small molecule new chemical entities, or NCEs, and biologics. We employ a lean and virtual research and development, or R&D, model using highly experienced teams of experts for each business function to maximize value accretion by focusing resources on the drug discovery and development processes.

Development Pipeline

Foralumab (TZLS-401 /NI-0401)

Our lead product candidate in immunology is Foralumab (TZLS-401), which we believe is the only fully human anti- CD3 monoclonal antibody, or mAb, in clinical development. MAbs represent a single pure antibody produced by single clones and are an important class of human therapeutics for treating cancers and autoimmune diseases. We are developing Foralumab, for which we in-licensed the intellectual property from Novimmune, SA, a Swiss biotechnology company, or Novimmune, as a potential treatment for neurodegenerative diseases such as progressive Multiple Sclerosis, or MS, and Crohn's disease. As the only fully human engineered human anti-CD3 mAb in clinical development, Foralumab has significant potential advantages such as a shorter treatment duration and reduced immunogenicity. We believe that oral or intranasal administration of Foralumab has the potential to reduce inflammation while minimizing the toxicity and related side effects.

To date, Foralumab has been studied in one Phase 1 and two Phase 2a clinical trials conducted by Novimmune in 68 patients dosed by the intravenous route of administration. In these trials, Foralumab was observed to be safe and well-tolerated and produced immunologic effects consistent with potential clinical benefit while demonstrating mild to moderate infusion related reactions. With completion of the intravenous dosing for Phase 2a trial in Crohn's Disease, Foralumab's ability to modulate T-cell response enables potential extension into a wide range of other autoimmune and inflammatory diseases, such as graft versus host disease, ulcerative colitis, MS, type-1 diabetes, inflammatory bowel disease, psoriasis and rheumatoid arthritis.

2

TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2018

STRATEGIC REPORT: EXECUTIVE CHAIRMAN'S STATEMENT

Foralumab is being developed as both an immunosuppressive and immunomodulatory agent, with therapeutic benefits of rendering T-cells unable to orchestrate an immune response and induction of immune tolerance via maintenance of regulatory T-cells. There is further potential for Foralumab to be combined with our TZLS-501, a fully human anti-IL-6R mAB in development to target autoimmune and inflammatory diseases. In November 2016, we announced new data for oral efficacy in humanized mouse models with Foralumab, a major milestone and a potential breakthrough for the treatment of nonalcoholic steatohepatitis and autoimmune disease. This unique oral technology stimulates the natural gut immune system and potentially provides a therapeutic effect in inflammatory and autoimmune diseases with greatly reduced toxicity. Positive therapeutic effects with Foralumab were consistently demonstrated in animal studies conducted by Prof. Kevan Herold (Yale University) and Prof. Howard Weiner (Harvard University).

In April 2018, we entered into an exclusive license agreement with The Brigham and Women's Hospital, Inc. relating to a novel formulation of Foralumab dosed in a medical device for nasal administration. An investigational new drug application, or IND, for the first-in-human evaluation of the nasal administration of Foralumab in healthy volunteers for progressive MS indication was filed in the second quarter of 2018. Subsequent to IND approval, a single-site,double-blind,placebo-controlled,dose-ranging Phase 1 trial with nasally administered Foralumab at 10, 50 and 250 µg per day, consecutively for 5 days to evaluate biomarkers of immunomodulation of clinical responses was initiated in November 2018. The trial was conducted at the Brigham and Women's Hospital, Harvard Medical School, Boston, MA, in healthy volunteers in which 18 subjects received Foralumab treatment and 9 patients received placebo. The study was completed in September 2019, and data demonstrated that nasally administered Foralumab was well- tolerated and no drug-related safety issues were reported at any of the doses. No drug-related changes were observed in vital signs among subjects at predose during treatment and at discharge. Nasally administered Foralumab at the 50 µg dose suppressed cytotoxic CD8+ as well as perforin-secreting CD8+ cells, which have been implicated in neurodegeneration in MS. Treatment at 50 µg stimulated production of anti-inflammatory cytokine IL- 10 and suppressed production of pro-inflammatory cytokine interferon-gamma(IFN-γ). Taken together, the treatment showed significant positive effects on the biomarkers for activation of mucosal immunity, which are capable of inducing site-targeted immunomodulation to elicit anti-inflammatory effects. Based on the results we intend to conduct a Phase 2 trial in progressive MS patients starting in the second quarter of 2021.

On July 31, 2020, we announced that we had submitted a patent application for the potential use of nasally administered Foralumab, a fully human anti-CD3 mAb, for the treatment of COVID-19 either alone or in combination with other anti-viral drugs. Recent clinical studies implied that a combination of anti-inflammatory and anti-viral drugs may be more effective to treat patients at different stages of COVID-19 disease.

A collaborative clinical study was initiated on November 2, 2020, investigating nasally administered Foralumab either alone or in combination with orally administered dexamethasone in COVID-19 patients in Brazil. In view of the importance and urgency, scientific teams at the Harvard Medical School, Santa Casa de Misericórdia de Santos Hospital (Jabaquara, Santos, Brazil) and at our company closely collaborated to facilitate initiation of this study in expedited time frames. The clinical trial was coordinated by the team at INTRIALS, a leading, full-service Latin America Clinical Research Organization, (CRO) based in Sao Paulo City, Brazil. The trial was completed in January 2021, and the clinical data from this trial is expected to be available by the first quarter of 2021. This trial, the first- ever trial on nasal administration of Foralumab for treatment of COVID-19, is of enormous significance given the underlying scientific approach is to modulate the immune system, which is dysregulated and crippled to protect against the virus. If successful, we believe this approach could be good for treatment of all COVID-19 variants and potentially other viruses.

An enteric-coated capsule formulation using a proprietary and novel technology has been developed for oral administration of Foralumab. cGMP manufacturing of clinical trial materials for a Phase 1 study has been completed and an IND was submitted in March 2019.

On September 9, 2019, the U.S. Food and Drug Administration, or FDA, granted approval to initiate the Phase 1 clinical trials to evaluate the safety and pharmacokinetics of oral Foralumab at 1.25, 2.5 and 5.0 mg/day as a single ascending dose study. The study was completed in December 2019 at the Brigham and Women's Hospital. Formulated Foralumab powder encapsulated in enteric-coated capsule was well-tolerated at all doses tested and there were no drug-related safety issues observed even at the highest dose of 5 mg in this trial. Based on successful Phase 1 data, we intend to conduct a Phase 2 study using Crohn's Disease patients starting in the second quarter of 2021.

In addition, on August 18, 2020 the United States Patent and Trademark Office, or USPTO, granted us a patent on use and methods of treatment of Crohn's disease with Foralumab, its proprietary fully human monoclonal antibody, and all other anti-CD3 mAbs. The CD3 (cluster of differentiation 3) is a protein complex on T-cells, which is important for the regulation of the immune system. The patent was published by the USPTO on September 1, 2020 as Patent No. 10,759,858. Recently, we also announced the issuance of the first-ever patent on oral administration of anti- CD3 mAbs for treatment of human diseases (Patent No. 10,688,186). We believe the grant of this additional composition-of-matter and use patent further strengthens our intellectual property, consisting of proprietary technologies on oral and nasal administration of Foralumab and other anti-CD3 mAbs for the treatment of human diseases.

3	TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020