Good morning, everyone. And welcome to Scinai Immunotherapeutics Investor Webinar. My name is Liat Halpert, and I'm Head of Business Development at Scinai. Thank you for joining us. Today, Mr. Amir Reichman, Scinai's CEO, will present our Q2 financial results and provide a business update of our activities in 2024, including an update about our R&D pipeline development, our CDMO business unit and our upcoming strategic milestones. I want to remind everyone that this recording will be available later on our website at www.scinai.com/investorrelations in one word. And now for some housekeeping. In this webinar, we will contain projections or other forward-looking statements regarding future events or the future performance of the company. These statements are only predictions, and Scinai can't guarantee that they will occur. Actual results may differ from those projected. For more information, please refer to our forward-looking statement section at the start of this presentation. At the end of this presentation, we will allow for a Q&A session. Anyone who has a question is invited to submit it through the system. I will collect the questions and will present the most popular ones to Amir at the end of his presentation. We will try to answer all questions even those that have not been addressed on the live session by posting them on our Web site alongside a link to this recording. The presentation will last 40 minutes. And in the end of it, we will allow for 20 minutes. And now please let me introduce Mr. Amir Reichman, Scinai's CEO. Amir, the stage is yours.

Thank you very much, Liat, for the nice introduction. And for the sake of housekeeping here is the safe harbor statement. It's going to be also available on our Web site, together with the recording. So thank you, everybody, for joining us today. Let me introduce Scinai, our Q2 2024 financial results and provide some business updates. So who are we, Scinai Immunotherapeutics? We are a biotechnology company located in Jerusalem, Israel, with a mission to building a healthier and happier world by developing, manufacturing and commercializing innovative inflammation and immunology biological products primarily for the treatment of autoimmune and infectious diseases. And here, you can see the teams, one of the holiday year celebrations. Scinai Immunotherapeutics is a biotech start-up company with two business units, as you can see on the screen in front of you. An innovative R&D unit, discovering novel VHH antibodies under a research agreement with the Max Planck Society in Germany, and developing those antibodies in its facility in Israel under an exclusive license from the Max Planck. The second business unit is a drug development service unit, CDMO, providing services to early stage biological drug development projects for customers in Israel and plans to expand in the future also to serve customers from Europe and the United States. Our executive team is highly experienced with pharmaceutical drug development and manufacturing. Myself -- I myself had the experience as a former entrepreneur, who was one of the founders of the company that traded on the NASDAQ until 2017 and was acquired by Mitsubishi Tanabe Pharma for $1.1 billion. I then earned an MBA degree with the Wharton School of Penn University before spending five more years with Novartis North America in the United States, an additional six years with GSK in Europe. Together with me…

Thank you, Amir. One question that was asked, what do you see as the long term future and share price of Scinai? And will there be continued growth of this company?

So of course, we believe that Scinai is an undervalued company. I cannot say my personal projections, that would not be fair. But if you -- but I invite people to look at comparable companies that -- at a preclinical stage, where -- which are projected to start clinical trials within a year. We have a deep pipeline of products, which is very derisked. The source of the products and the IPs from a highly prestige universities from the Max Planck Institute in Germany and from UMG, the PEI are highly complex and won many prizes. And the targets are derisked, as I mentioned before. We also have the CDMO business unit. So it's abnormal for a small company like us to also own its own facility for CDMO services. And the main hurdle for value growth as of now, in our view, was the large liability that was on our balance sheet amounting for a book recording a carrying value of $19.6 million. The actual debt was already amounting to $29 million. And so if you look at the balance sheet, it really crushed our shareholder equity. Now with this new debt-to-equity agreement with our lender, we believe that this cleared a lot of the potential concerns of investors to come and chime in and build value for the company. The biobetter approach that we bring is -- you can look at other companies like, for example, Apogee, that looked at already targets -- molecules that were already created by other companies, but they created a biobetter approach by extending their half life and providing for fewer injections per year, and this company’s now traded on several billion dollars. If you look at nanobody specifically, you can look at Moonlake Immunotherapeutics, it's a Swiss company, also traded at approximately $3 billion value. And they have an nanobody for psoriasis to be injected systemically, which validates the thinking about nanobodies and also the neutralization of IL-17A/F. However, they are going after different diseases, Hidradenitis Suppurativa and psoriatic arthritis. They might go after psoriasis but again for moderate to severe, and their pipeline is basically this one module. And in our case, we have nine nanobodies for different diseases, for example, IL-4 receptor alpha, which we plan to use for atopic dermatitis. We have IL-13. We have TSLP, IL-4, Angiopoietin 2 and VEGF. So altogether, we can build different bispecifics. We can build different constructs. So the potential with the company is massive.

Your recent positive regulatory news for your lead antibody candidate is quite exciting. Can you elaborate on the clinical and commercial potential and time line of this program?

So as I mentioned, we will be commencing the longer proof of concept in animals just to mitigate any risk. It's preferable for us to go now and test the exact scheduling to be tested in humans. So we want to do it first in animals. So we don't waste a lot of investors' money on trying something with a specific schedule of dosing in humans and then bring a new schedule and a new synopsis and then try on humans again. So that's a very expensive approach. Instead of that, we want to do it again in animals and try and see whether we can extend the time span between injections from one month up to three months. After the conclusion of this in vivo study, which we are about to commence in September, just in a couple of weeks, this study will end in the first quarter of 2025. We will then do toxicity studies based on the very confirmed and better confident schedule of the treatment. And then right after, we will start the Phase 1/2a in the second half of 2025. This study will last until the first quarter of 2026. And if that's successful, we will be going to the regulatory agencies to discuss already prior to that a potential combined Phase 2/3 or Phase 2b and then 3, but it will position the company in a much better stage -- place in order to negotiate potential additional sublicensing or commercial rights with other companies. The other thing I want to mention is that the IL-17 nanobody as a construct can be targeted to different indications and can be constructed to be used with different other antibodies on bispecifics, for example. So we do have the ability to continue and develop that molecule for multiple users in different formats, different route of administrations and with different diseases. So the potential of this molecule is quite large. In addition to that with available capital, we will exercise our option. We have an exclusive option for exclusive license under pre-agreed financial terms with the Max Planck Institute to bring on board our next nanobodies for the next drugs. And that will be an additional value creation for the company, expanding the potential of the company and diversifying risks for our investors.

Can you remind us of what total shareholders' equity will be after the EIB restructuring?

The total shareholder equity after the EIB restructuring. Yes, let me show you the slide, it's here. Yes. So the EIB will receive at the closing, 1,000 preferred shares. If the preferred shares are converted in full to ADSs, it will add 364,000 ADSs to the outstanding. So fully diluted including all the warrants if they are exercised, we will have 1.865 million shares. As of today, we have 838,000. And I want to remind, these 1,000 preferred shares are not convertible for the next year. And when convertible, they can be converted so that the holder can only hold -- can only receive up to 4.99% of the share capital of the company in any given year. So the pace of conversion is going to be quite slow. And again, these warrants, if exercised, will, of course, inject additional capital to the company, further accelerating our ability to generate additional value and meet milestones and catalysts.

What are some of the key regulatory considerations and strategies Scinai is employing to navigate the approval process for its nanoAb candidate?

So first of all, we are working with one of the best regulatory affairs agencies and regulatory affairs advisers in Europe and also with knowledge and high experience in the United States. We are working always to develop the right package to present to the regulatory agencies the justification for either an accelerated path, as I described and demonstrated just now, going directly to Phase 1/2a with patients that are sick instead of going through the traditional Phase 1 with healthy volunteers, Phase 2 and then Phase 3. We argued that we have the right data package to support and write clinical arguments to support the approval of a Phase 1/2a. The other thing is, for example, what type of animal to use in toxicology study. So again, we came with a very robust package to the PEI, demonstrating that the toxicology study can provide the regulatory agency with the right and sufficient data for safety in order to approve our IMPD going into in human trials. Such an approach will result with the significant cost saving for the company and time saving, because the ability to acquire to buy today NHPs and initiate studies in NHPs with all the applications and requirements in the market today is significantly delaying such an approach. The market, the industry standard for antibodies is to use NHPs. Again, with a very thorough regulatory strategy and knowledge and experience, we were able to come with a significant -- basically guidance that will help us to have a shorter time to market and at lower costs. And we expect to continue with this strategy going forward so that our time to market will be at a competitive pace. Nevertheless, with reducing any potential risk for failure in the Phase 3 before launch.

Last question. As a CEO, what is your long term vision for Scinai and how do you envision the company shaping the future of immunotherapy and disease management?

So I see the strategy of the company in several phases. In the first phase, the company is now sitting in the value creation process between the universities and research centers and the medium to large pharma companies. As of today, we do not have the capability and capacity to launch commercial products and manage their distributions and sales. Therefore, over the coming years, our focus will be to take patented technology that we have full license for, bring it through preclinical Phase 1, Phase 2. And during this time, be anywhere between the preclinical proof of concept to the in-human proof of concept, engage with larger pharma companies in partnering deals and sublicensing the commercial rights to them so that we can ensure reliable commercial launch and supply and sales. And of course, large partners that will help us with the financing of the Phase 3 clinical trials. This strategy will allow us to go back every time and restart developing new molecules and expanding the diversification of the risk, lowering the risk for our investors while generating cash inflows through upfronts, milestones and royalties. With time, once we see that we have enough cash, we will then consider to get engaged in commercial sales, do our own launch or do the sales in our own territories. That's one thing. The other business unit is the CDMO business unit. We believe that this category of very early stage biotech is a very attractive category during the COVID pandemic, there was a massive consolidation in the CDMO space. And a lot of the small CDMOs disappeared from the area. Now there was a trough in the financing of a lot of biotechs, so [many] biotechs became short with cash. Now they are able to raise capital, but the offering of…

Thank you. Thank you, everyone.

Right. So we are before -- I want to take the opportunity to say thank you for everybody that came here to listen to our investor webinar. We invite you to visit our Web site at www.scinai.com. Lots of slides and brochures and very insightful information there. You are more than welcome to contact us directly at ir@scinai.com with any questions. And thank you very much, everybody, for your valuable time, and thank you very much, Liat, for guidance.