27 May 2020 We are initiating coverage on Hepion Pharmaceuticals, a company

developing therapeutics for chronic liver disease. CRV431, Hepion’s lead

asset, is a cyclophilin inhibitor currently in development for the treatment

of non-alcoholic steatohepatitis (NASH). Hepion is currently conducting a

Phase I multiple ascending dose study with an expected completion in

mid-2020. We are initiating with a value of $56.9m or $6.30 per basic share.

Year end

Revenue ($m)

PBT* ($m)

EPS* ($)

DPS ($)

P/E (x)

Yield (%)

12/18 0.0 (9.8) (55.87) 0.0 N/A N/A

12/19 0.0 (7.9) (4.32) 0.0 N/A N/A

12/20e 0.0 (11.6) (1.43) 0.0 N/A N/A

12/21e 0.0 (9.8) (1.18) 0.0 N/A N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

CRV431: Potential anti-fibrotic liver agent

CRV431 is a cyclosporine derivative that inhibits a class of proteins called

cyclophilins. Cyclophilins have been implicated in liver disease specifically

stemming from inflammation and fibrosis. Hepion claims that by inhibiting

cyclophilins, CRV431 may stall or reverse the progressive deterioration of liver

function seen in late stage NASH patients presenting with fibrosis.

Clinical trial program: Phase I nearing completion

Hepion completed a Phase I single ascending dose study in 32 healthy volunteers

in H218 and reported a favourable safety profile with no serious adverse effects.

The company is currently conducting a Phase I multiple ascending dose study in 16

healthy subjects to assess the safety and tolerability of multiple oral doses of

CRV431. Hepion recently announced it is nearing completion of this study as it

advanced to the last planned dose of 300 mg. The company intends to initiate a

Phase IIa clinical study in June 2020 and expects results by year-end.

Promising findings in human liver slices

The company reported results in January 2020 from a study that utilized human

precision cut liver slices as NASH model systems. Hepion noted that CRV431

demonstrated prevention of experimentally induced liver scarring along with

decreased gene expression and secretion of several markers of inflammation and

fibrosis. The company also cited that CRV431 did not have negative effects on liver

biomarkers relating to the drug’s safety profile.

Valuation: Initiated at $56.9m or $6.30/basic share

Based on a risk adjusted NPV analysis, our initial valuation is $56.9m or $6.30 per

basic share ($6.22 diluted). We model CRV431 for the treatment of NASH with

moderate to advanced fibrosis in both the US and European markets with

commercialization occurring in the US first. We forecast the company will need to

raise $115m in additional financing over the next six years prior to Hepion’s

expected US market entry in 2026.

Hepion Pharmaceuticals Initiation of coverage

Competing in the NASH dash

Price $1.98

Market cap $18m

Net cash ($m) at 31 December 2019 + At-The-Market

25.21

Shares in issue 9.03m

Free float 99.47%

Code HEPA

Primary exchange NASDAQ

Secondary exchange N/A

Share price performance

%

Abs 46.7 (55.0) (74.7)

Rel (local) 39.1 (53.1) (76.1)

52-week high/low $10.11 $1.15

Business description

Hepion Pharmaceuticals is a clinical stage

biopharmaceutical company focused on developing

therapeutics for chronic liver disease. The

company’s lead asset is CRV431, a cyclophilin

inhibitor being developed for the treatment of non-

alcoholic steatohepatitis (NASH).

Next events

Data from Phase I dosing study Mid-2020

Initiate Phase IIa NASH pilot study June 2020

Analysts

Nathaniel Calloway +1 646 653 7036

Wiktoria O’Hare +1 646 653 7028

healthcare@edisongroup.com

Edison profile page

Pharma & biotech

Hepion Pharmaceuticals is a

research client of Edison

Investment Research Limited

Hepion Pharmaceuticals | 27 May 2020 2

Investment summary

Company description: A NASH-focused biopharma

Hepion Pharmaceuticals is a clinical stage biopharmaceutical company currently focused on

developing its NASH drug candidate, CRV431. CRV431 is a cyclophilin inhibitor demonstrated to

have an anti-fibrotic effect in preclinical liver disease models. Hepion has suggested that CRV431

affects two processes in hepatic stellate cells, which are the primary cells implicated in liver

fibrosis. The proposed anti-fibrotic mechanisms of action are decreased expression of fibrosis-

related genes, and decreased cyclophilin B-dependent collagen synthesis and secretion resulting

in CRV431’s potential therapeutic effects in NASH. The company is currently conducting Phase I

multiple ascending dose (MAD) study with expected results in mid-2020, and intends to initiate a

Phase IIa clinical study in June 2020.

Valuation: Initiated at $56.9m or $6.30 per basic share

We arrive at an initial valuation of $56.9m or $6.30 per basic share ($6.22 diluted) based on a risk

adjusted NPV analysis and a 12.5% discount rate (our standard for pre-commercial products). We

model the commercialization of CRV431 in both the US and European markets with entry into the

US in 2026 followed by Europe a year later. In the US, we assume a launch price of $13,000 per

year, while in Europe we expect $8,400 per year due to more stringent regulations on

pharmaceutical pricing. We assign a probability of success of commercialization at 10% for each

market since the company is in early stage clinical trials.

Financials: Significant capital markets activity

Hepion reported a loss from operations of $7.8m in 2019, and we expect R&D spending going

forward to increase as the company progresses in clinical studies. We forecast Hepion will need

$115m in additional capital to complete development of CRV431, which we record as illustrative

debt. In 2019, Hepion raised $21.2m in total gross proceeds, with $20.0m arising from equity

offerings and warrant exercises, and $1.2m in non-dilutive proceeds from the sale of net operating

losses. Since YE19 as of 30 April 2020, also raised $11.3m via an ongoing at-the-market equity

facility. We estimate the company will need to raise an additional $15m (which we model as

illustrative debt) in 2020. Hepion also completed a reverse split at a ratio 70 to 1 in May 2019.

Sensitivities: Associated with early, clinical stage

At this stage, Hepion’s main risks are associated with clinical development of CRV431. While the

company initiated its first clinical trial in June 2018, there are several competitors already in Phase

III with expected product commercialization within the next one to two years. Given the crowded

competitive landscape, the situation is two-pronged relating to Hepion. The company will be

competing for market share against already established players; however, those early-entry

competitors will have had paved the road in establishing reimbursement precedence, physician

education, and patient education, and Hepion could also benefit from the clinical failures and

successes of those before them and tailor its clinical trial designs accordingly. While partnerships

can reduce funding needs, the amount of capital needed to reach commercialisation

independently, which the company estimates will occur 2026, could result in substantial dilution.

Share issuances over the next few years could potentially be multiples of the current shares

outstanding (assuming no sharp increase in the market valuation). Finally, there are some risks to

the company associated with the ongoing COVID-19 pandemic as the pandemic may impact

Hepion’s clinical trials via current study participant retention and future participant willingness to

enrol.

Hepion Pharmaceuticals | 27 May 2020 3

Company description: Joining the NASH race

In 2016, the company, known as ContraVir Pharmaceuticals at the time, merged with Ciclofilin

Pharmaceuticals to strengthen the overall antiviral hepatitis B drug portfolio with the addition of

Cicofilin’s lead asset CPI-431-32, now known as CRV431. Later in 2019, the company adjusted its

focus toward chronic liver disease and is advancing CRV431 as a therapeutic candidate for the

treatment of non-alcoholic steatohepatitis (NASH). Following the strategy shift, the company

officially changed its name in July 2019 to Hepion. Hepion is headquartered in Edison, New

Jersey, while the research and development facility is located in Edmonton, Canada.

CRV431 is a cyclophilin inhibitor being developed for the treatment of non-alcoholic steatohepatitis

(NASH). Cyclophilins are a family of enzymes implicated in several pathologic processes that can

result in liver diseases such as NASH, which is generally defined as liver inflammation and

damage caused by the accumulation of fat in the liver. The company has been testing CRV431 in a

range of NASH model systems with results that suggest CRV431 exhibits anti-fibrotic effects in the

liver. Hepion is currently conducting a multiple ascending dose (MAD) human study with results

expected in mid-2020 and plans to initiate a Phase IIa clinical trial in June 2020 (Exhibit 1).

Exhibit 1: Ongoing and planned clinical trials for CRV431

Event Date

Data from Multiple Ascending Dosing (MAD) study Mid-2020

Initiate Phase IIa NASH biomarker pilot study, 1 month repeat dose June 2020

Data from Phase IIa NASH biomarker pilot study, 1 month repeat dose H220

Initiate Phase II NASH study, once daily 24 weeks H121

Source: Hepion Pharmaceuticals

NASH: The silent co-killer

Nonalcoholic fatty liver disease (NAFLD) is one of the most common causes of chronic liver

disease with an estimated global prevalence as high as one billion.1 NAFLD includes a spectrum of

fatty liver diseases that range in degree of severity from early to chronic liver disease (Exhibit 2).

Early liver disease is characterized by isolated steatosis, which is the abnormal retention of fat

within the liver and tends to be reversible with treatment. NASH, on the other hand, tends to

manifest as the most severe form of NAFLD and is generally characterized by the additional

presence of liver damage with or without fibrosis. If NASH is left untreated, it may lead to chronic

liver conditions such as cirrhosis, hepatocellular carcinoma, or liver failure.2

In the US alone, it is believed that approximately 21% of people have NAFLD, which accounts for

52 million individuals3. Additionally, the rise of several underlying conditions, such as obesity,

diabetes, high blood pressure, and hyperlipidemia, have been implicated in causing liver diseases

such as NAFLD and NASH. Among adults in the US, the prevalence of obesity increased from

33.7% in 2007–08 to 39.6% in 2015-2016.4 In 2013–16, an estimated 9.4% of US adults were

diagnosed with diabetes, as compared to 8.1% in 2009–12.5 With the anticipated increasing

prevalence of conditions leading to NAFLD and NASH following the rising rates of predisposing

factors, the economic burden related to chronic liver disease is expected to be substantial. In a

1 Loomba R, et al. (2013) The Global NAFLD Epidemic. Nat Rev Gastroenterol Hepatol 10, 686-690.

2 Rinella M. (2015) Nonalcoholic Fatty Liver Disease: A Systematic Review. JAMA 22, 2263-2273.

3 Younossi Z, et al. (2017) Global Burden of NAFLD and NASH: Trends, Predictions, Risk Factors and Prevention. Nat Rev Gastroenterol Hepatol 109, 1-10.

4 Hales C, et al. (2018) Trends in Obesity and Severe Obesity Prevalence in US Youth and Adults by Sex and Age, 2007-2008 to 2015-2016. JAMA 319, 1723-1725.

5 Centers for Disease Control and Prevention. National Diabetes Statistics Report, 2020.

Hepion Pharmaceuticals | 27 May 2020 4

2016 study modeled on the population of the US and four European countries, Germany, France,

Italy, and the UK, assessed the associated annual and per patient costs relating to NAFLD. The

study concluded that the annual cost of NAFLD in the US was $103bn and €35bn annually across

the four European countries.

Exhibit 2: Progression of NAFLD

Source: Edison Investment Research

Pathogenesis

While the exact pathogenesis of NASH is not completely known, a commonly proposed hypothesis

is the ‘two-hit’ model where two points of consecutive events lead to the manifestation of NASH

(Exhibit 3). The two events are, first, the accumulation of fat in the liver cells making the liver

sensitive to the second step, that is, a cascade of metabolic responses triggering tissue damage,

inflammation, and ultimately fibrosis.6 Other causative factors have also been proposed, including

genetic predisposition, abnormal lipid metabolism, oxidative stress, lipotoxicity, mitochondrial

dysfunction, altered production of cytokines and adipokines, gut dysbiosis, and endoplasmic

reticulum stress.7 The disease has a degree of molecular complexity which has undoubtedly

complicated efforts to develop NASH-specific therapeutics.

Exhibit 3: ‘Two-hit’ hypothesis for liver fibrosis pathogenesis

Source: Edison Investment Research, Black et al8

Insulin resistance is when cells in the muscles, fat, and liver are unable to easily utilize glucose

from the bloodstream for energy production and if the pancreas is unable to produce enough

6 Peverill W, et al. (2014) Evolving Concepts in the Pathogenesis of NASH: Beyond Steatosis and Inflammation. Int. J. Mol. Sci. 15, 8591-8638.

7 Caliguiri A, et al. (2016) Molecular Pathogenesis of NASH. Int. J. Mol. Sci. 17, 1575.

8 Black D, et al. (2019) The Future R&D Landscape in Non-Alcoholic Steatohepatitis (NASH). Drug Discovery Today 2, 560-566.

Insulin Resistance

Free Fatty Acids, Insulin, & Cytokines

Liver Fibrosis (scarring)

FIRST HIT

SECOND HIT

Steatosis + Metabolic Syndrome

Inflammation Cell Injury

Molecular Stress Factors

Hepion Pharmaceuticals | 27 May 2020 5

insulin, extra glucose will remain in the bloodstream. Over time type 2 diabetes could develop and

trigger an inflammatory response which contributes to the overall degree of inflammation that is

characteristic of NASH manifestation. Another contributing factor to NASH pathogenesis is hepatic

lipotoxicity, which is lipid accumulation within the liver where normal organ function is hampered. In

a compromised liver, the cellular mechanisms are overcome by the flux of free fatty acids (FFAs)

that lead to downstream effects of hepatocyte dysfunction or cell death. The cellular dysfunction or

cell death, in turn, triggers a cascade of inflammatory responses that further exacerbate disease

progression. Additionally, several physiological and pathological conditions can lead to the

accumulation of misfolded proteins and the downstream effects are typically apoptosis. Finally,

metabolic dysfunction and oxidation also trigger a widespread inflammatory response further

exacerbating the situation and causing scarring of the liver. Fibrosis (scarring) can then hamper

liver functionality leading to more severe stages of chronic liver disease.

Diagnosis and potential target market size

The majority of people with NASH do not have disease-specific symptoms and diagnosis usually

occurs incidentally while the individual is undergoing tests for unrelated symptoms or conditions.

Resultantly, there are wide fluctuations and variances in estimates relating to NAFLD and NASH

prevalence rates. The incidental diagnosis is typically found with imaging since there are generally

no characteristic physical examination findings; however, a liver biopsy is the gold standard for

definitively diagnosing NASH. Patients diagnosed with NASH and who present with advanced

fibrosis or have liver cirrhosis are considered to have advanced liver disease and are expected to

be most likely to receive treatment under the care of a healthcare provider. Based on a predicted

NAFLD prevalence rate of 21% among adults, an estimated 52 million Americans and 123 million

Europeans may be living with the disease as of 2019.9 Of those individuals, an estimated 20% are

expected to progress to NASH which accounts for 10.4 million Americans and 24.5 million

Europeans.10

Using Medicare data and a study conducted by Noureddin et al., we extrapolated an estimated

general diagnosis rate of 11%.11,12 This results in an estimated general NASH diagnosis rate of

11%, which translates to 1.1 million Americans and 2.63 million Europeans who have been

diagnosed with the condition. Within the diagnosed population, we estimate that 20% of cases may

progress to bridging fibrosis defined as an advanced stage of liver fibrosis, while another 17.8%

may progress to cirrhosis which is considered the most severe stage of scarring.13,14 This narrows

down a target population of 0.4 million in the US and one million Europe (estimated in 2020). It is

expected that these patients, classified as having bridging fibrosis or cirrhosis, will be ideal

candidates for NASH-specific therapeutics.

9 Younossi Z, et al. (2017) Global Burden of NAFLD and NASH: Trends, Predictions, Risk Factors and Prevention. Nat Rev Gastroenterol Hepatol 109, 1-10.

10 Loomba R, et al. (2019) The 20% Rule of NASH Progression: The Natural History of Advanced Fibrosis and Cirrhosis Caused by NASH. Hepatology 70, 1913.

11 Loomba et al. (2018) Health Care Costs are Double for Nonalcoholic Fatty Liver Disease (NAFLD)/Nonalcoholic Steatohepatitis (NASH) Patients with Compensated Cirrhosis (CC) who Progress to End-Stage Liver Disease (ESLD). EASL International Liver Congress, SAT-251.

12 Noureddin M, et al. (2013) Clinical and Histological Determinants of Nonalcoholic Steatohepatitis and Advanced Fibrosis in Elderly Patients. Hepatology 5, 1644-1654.

13 Estes C, et al. (2018) Modeling the Epidemic of Nonalcoholic Fatty Liver Disease Demonstrates an Exponential Increase in Burden of Disease. Hepatology 67, 123-133.

14 Kabbany M, et al. (2017) Prevalence of Nonalcoholic Steatohepatitis-Associated Cirrhosis in the United States: An Analysis of National Health and Nutrition Examination Survey Data. American Journal of Gastroenterology 4, 581-587.

Hepion Pharmaceuticals | 27 May 2020 6

Prognosis and disease treatment

Prognosis of NASH is dependent on several factors including the stage of liver disease, presence

of other underlying conditions, and overall likelihood of disease progression since it is unclear why

some patients with NASH do not progress past the early stages while others go on to develop

cirrhosis or hepatocellular carcinoma. In general, a reduced survival rate in NASH patients is linked

to higher rates of associated cardiovascular disease and malignancy2. One study found that

patients with NASH had a higher likelihood to die from cardiovascular or liver related causes.15

Authors cited that of the study subjects diagnosed with NASH, 15.5% died from cardiovascular

disease, 5.6% from extrahepatic malignancy, 2.8% from liver-related causes such as metastatic

hepatocellular carcinoma and variceal hemorrhage.

Since there are no NASH specific drugs approved in the US, current management regimens rely

on treating underlying conditions, such as obesity, hypertension, and diabetes, in an effort to stop

or stall the progression of NASH. One study that assessed the effect of weight loss of at least 5%

bodyweight found that 10 of 43 patients had a significant decrease in fat liver.16 Another study

suggested that 19% of patients who lost of mean of 3.8% of bodyweight reported regression of

fibrosis; however only 50% of all patients had achieved that percentage weight loss.17 This implies

that lifestyle change compliance can be low even in supervised clinical trials. There has also been

a rapid increase of patients undergoing liver transplants due to NASH as the waitlist expanded by

80% in 2016.18 Due to this increase, NASH is now the leading indication for liver transplant in

women and expected to become the leading transplant indication for all patients within the next

few years.18 The approval of a NASH-specific therapeutic would be a long-awaited breakthrough

that would change how disease management is approached and the resultant prognoses.

CRV431

CRV431 is a derivative of cyclosporine that has exhibited inhibitory effects of several different

proteins in the cyclophilin family. A widely known cyclophilin antagonist is cyclosporin A (CsA),

which reshaped solid organ transplantation after its approval in 1983 as an immunosuppressant.

The immunosuppressant activity of CsA is driven by its inhibition of calcineurin, and cyclophilin

binding appears secondary to this function. Cyclophilins are enzymes that facilitate proper protein

folding and have been implicated in NASH, liver fibrosis, HCC, and other liver diseases making

these enzymes potential therapeutic targets.19 Specifically, cyclophilins catalyze the cis-trans

isomerization of proline peptide bonds. A high proportion of collagen is comprised of proline, an

amino acid, and cyclophilins regulate a key step in the biochemical process that leads to the

proper folding of proline. If proline is not folded correctly, then collagen formation could be

hampered which would then also possibly affect liver fibrosis.

Three cyclophilins have been implicated in contributing to the manifestation of NASH and liver

fibrosis: CypA contributes to collagen formation in liver cells, CypB modulates collagen cross-

15 Ekstedt M, et al. (2006). Long-Term Follow-up of Patients with NAFLD and Elevated Liver Enzymes. Hepatology 44, 865-873.

16 Patel N, et al. (2015) Effect of Weight Loss on Magnetic Resonance Imaging Estimation of Liver Fat and Volume in Patients with Nonalcoholic Steatohepatitis. Clinical Gastroenterology and Hepatology 13, 561-568.

17 Vilar-Gomez E, et al. (2015) Weight Loss Through Lifestyle Modification Significantly Reduces Features of Nonalcoholic Steatohepatitis. Gastroenterology 149, 367-378.

18 Noureddin M, et al. (2018) NASH Leading Cause of Liver Transplant in Women: Updated Analysis of Indications for Liver Transplant and Ethnic and Gender Variances. Am J Gastroenterology 113, 1649-1659.

19 Ure D, et al. (2020) Cyclophilin Inhibition as a Potential Treatment for Nonalcoholic Steatohepatitis (NASH). Expert Opinion on Investigational Drugs 2, 163-178.

Hepion Pharmaceuticals | 27 May 2020 7

linking, and CypD plays a central role in regulating the mitochondrial pore.20 Theoretically, the

reduction of collagen formation and cross-linking could affect the development of collagenous

tissue, such as skin, tendon, and bone; however, cyclosporine has not been observed to affect

such development. Additionally, Hepion has not reported adverse side-effects stemming from the

downstream effects of cyclophilin inhibition in its preclinical work or human studies.

With substitutions at amino acids 1 and 3 of the cyclosporine ring, Hepion claims that CRV431

inhibits CypA, CypB, and CypD without the immunosuppressant feature characteristic of CsA. The

company proposes that CRV431 has a very low affinity for binding calcineurin which should

remove the immunosuppression effect. In turn, Hepion believes this would allow CRV431 to

decrease liver fibrosis by affecting the causative processes in hepatic stellate cells, which are the

primary collagen-producing cell types implicated in liver fibrosis. The company noted that: 1)

decreased expression of fibrosis-related genes; and 2) decreased CypB-dependent collagen

synthesis and secretion are a result of CRV431 action.

While CsA was shown to exhibit clinical toxicities, such as nephrotoxicity, hypertension, and

dyslipidemia, it is suggested these side effects appeared to be a function of the

immunosuppressive activity rather than cyclophilin binding.21 The company believes CRV431 is

unlikely to cause these clinical toxicities, specifically nephrotoxicity, since the proposed mechanism

of action excludes calcineurin binding. Additionally, Hepion cited alisporivir, a non-

immunosuppressive CsA analog, was dosed to over 2,000 patients at high doses with no renal

toxicity.21 The company reported that preclinical toxicology studies of CRV431 implied a good

safety profile and is currently conducting a multiple ascending dose Phase I study.

Hepion holds a composition of matter patent (US 9,200,038) on CRV431. This patent extends

through to 2030 and could gain an additional five years under the Hatch-Waxman Act. In 2017, the

company was granted a new patent (US 9,714,271) which ends in 2031. Hepion cited the new

patent significantly extends the claims of the original CRV431 patent family allowing for a broad

coverage of many compounds within their library of cyclophilin inhibitors

Selected preclinical history

Hepion was initially developing CRV431 for the treatment of hepatitis B; however, the company

shifted its focus to NASH in 2019 as Hepion felt the preclinical data for NASH was more

compelling than for hepatitis B. Hepion has reported results from several preclinical animal models

with chemically induced NASH and/or liver injury with liver fibrosis (Exhibit 4). Data across those

studies (mostly conducted by third parties and partially funded by the company) have consistently

shown results suggesting CRV431’s potent anti-fibrotic effects alongside a comparator drug panel

of other NASH-drug candidates currently in development, as explained below.

20 Naoumov N. (2014) Cyclophilin Inhibition as Potential Therapy for Liver Disease. Journal of Hepatology 61, 1166-1174.

21 Kuo J, et al. (2019) A Pan-Cyclophilin Inhibitor, CRV431, Decreases Fibrosis and Tumor Development in Chronic Liver Disease Models. J Pharmacol Exp Ther 317, 231-541

Hepion Pharmaceuticals | 27 May 2020 8

In November 2019, Hepion published CRV431 results in mouse models of liver fibrosis and

NASH.2121 Liver fibrosis in mice was induced via chronic dosing of carbon tetrachloride (CCl4), a

hepatotoxin known to cause liver injury, at which point 50mg/kg/day of CRV431 was orally

administered for six weeks. As a comparator, Ocaliva, which is also in development as a NASH

treatment by Intercept Pharmaceuticals (and already FDA-approved for primary biliary cholangitis),

was included and dosed at 10mg/kg/day. Results showed that CRV431 decreased the amount of

fibrosis by 43% when compared to Ocaliva (at 10mg/kg/day), which showed no significant effect.

Also, in mice treated with a combination of CRV431 and Ocaliva, fibrosis reduction was similar to

that of CRV431 alone21. Of note, Intercept cited that Ocaliva dosed at 25mg/day in humans

significantly improved fibrosis and key components of NASH versus a 10mg/day dose.22

In a second mouse model, streptozotocin followed by a high fat diet was used to induce diabetes

and a fatty liver. Oral daily treatment with CRV431 at 50mg/kg showed decreased fibrosis levels of

37% to 46%, when compared to the control group, at treatment durations of 3-14 weeks, 8-14

weeks, and 20-30 weeks (Exhibit 5).

22 Younossi Z, et al. (2019) Obeticholic Acid for the Treatment of Non-Alcoholic Steatohepatitis: Interim Analysis from a Multicentre, Randomised, Placebo-Controlled Phase 3 Trial. The Lancet 394, 2184-2196.

Exhibit 4: Summary of non-clinical anti-fibrotic activities

Source: Hepion Pharmaceuticals

Hepion Pharmaceuticals | 27 May 2020 9

Exhibit 5: NASH mouse model preclinical data

Source: Hepion Pharmaceuticals

Similar results were seen in different study of rats were treated with thioacetamide to induce liver

injury and fibrosis either in combination with CRV431 or vehicle control. Hepion reported that of the

10 rats treated with CRV431, none displayed development of cirrhosis, while five of 10 rats in the

control group did develop cirrhosis. Using a histological stain to measure fibrotic scarring, a mean

reduction of 49% in the CRV431-treated group was shown when compared to the control group,

which the company claimed to suggest that CRV431 was primarily responsible for attenuating the

progression of cirrhosis during the study.

In November 2019 and January 2020, the company reported results from two studies utilizing

human precision cut liver slices (PCLS) where the tissue was exposed to transforming growth

factor beta (TGF) and platelet-derived growth factor (PDGF) to induce of inflammation and fibrosis.

◼ In the first study, Hepion cited that CRV431 was found to be 100% effective in preventing

fibrosis induction beyond baseline levels when administered concurrently with TGF and PDGF.

The company stated that CRV431 was also shown to be more effective at preventing fibrosis

than Genfit’s elafibranor and Intercept’s Ocaliva with each comparator exhibiting 62% and 9%

effectiveness in decreasing fibrotic activity, respectively.

◼ The second study expanded on the first utilizing three donor PCLS and included the addition

of Madrigal Pharmaceutical’s resmetirom and Galmed Pharmaceutical’s aramchol to the

comparator drug panel. The company cited that the comparator compounds were

administered at equal or higher doses than CRV431, but no specific values were discussed or

provided. For reference, dosages in recent clinical trials of resmetirom and aramchol have

been reported at 100mg and 600mg per day. This implies that while an efficacious dose level

of CRV431 could have been utilized, it is unclear whether the tested concentrations of

resmetirom or aramchol would demonstrate meaningful therapeutic effects. Hepion noted that

CRV431 demonstrated prevention of experimentally induced liver fibrosis more than the other

NASH drug candidates assessed and exhibited decreased gene expression and secretion of

several markers of inflammation and fibrosis, including interleukin-6 (IL-6), monocyte

chemoattractant protein-1 (MCP-1), collagen type I α1, hyaluronic acid, and tissue inhibitors of

matrix metalloproteinases-1 (TIMP-1). The company cited a combined data analysis of the two

studies showed that, on average, CRV431 was the only drug candidate to completely prevent

TGF- and PDGF-induced fibrosis.

In assessing future potential applications of CRV431 following NASH as the initial indication,

Hepion announced results from studies that suggest CRV431 decreased production of

extracellular matrix (ECM) molecules, such as collagen and fibronectin, in fibroblast cells derived

Hepion Pharmaceuticals | 27 May 2020 10

from several different organs. The cell types utilized in the study were lung fibroblasts from a

patient with idiopathic pulmonary fibrosis (IPF), cardiac fibroblasts, dermal fibroblasts, renal

mesangial cells, and LX2 hepatic stellate cell line. The collagen and fibronectin over-production in

these cell types have been implicated in fibrotic scarring of injured organs. The company stated

that CRV431 dose-dependently decreased procollagen and fibronectin secretion in all cell types

with similar magnitude. Hepion believes CRV431’s inhibition of cyclophilin B reduced ECM

molecule production leads to the possibility that CRV431 could be evaluated for a host of other

disorders.

Since CypB is expressed in all cell types, its downstream inhibition could have adverse effects on

collagenous tissue. One study conducted in mouse models of osteogenesis imperfecta (OI), brittle

bone disease, suggested that deletion of CypB resulted in abnormal bone development in newborn

mice and osteoporotic features in adult mice.23 CRV431 is known to down-regulate CypB, but gene

deletion (knockout) is often expected to show more severe phenotypic effects than protein down-

regulation using a drug, in part because gene deletion eliminates the protein during animal growth

and development. Moreover, Hepion’s chief scientific officer, Dr Daren R. Ure, and colleagues

noted that even though the genetic deletion of CypB results in severe effects on collagenous tissue

development, pharmacologic inhibition (such as through CRV431) has not shown such significant

tissue disturbances.24

Clinical trial program

While still focusing on hepatitis B, Hepion completed a Phase I single ascending dose (SAD) study

October 2018 to evaluate the safety and tolerability of single doses of CRV431 at increasing

dosages, while also assessing the pharmacokinetics (PK).25 A total of 32 healthy subjects were

enrolled and dosages of 75mg, 225mg, 375mg, and 525mg were administered. The company

reported a favorable safety profile and no serious adverse effects (SAEs) occurred and noted only

mild to moderate adverse effects (AEs) mostly unrelated to the study. The types of AEs reported

included gastrointestinal and (non-specified) nervous system disorders, among others. None of the

AEs were grade 3 or 4 and rates were similar to that of the placebo group. Following the

completion of the SAD study, Hepion shifted its focus to NASH and initiated the Phase I multiple

ascending dose (MAD) study in August 2019 to evaluate the safety and tolerability of multiple oral

doses of CRV431. Utilizing 16 healthy volunteers, study doses were set at 75mg, 150mg, 225mg,

and 300mg and administered over 28 days. The company reported that the 75mg, 150mg, and

225mg levels were safe and well tolerated, which allowed commencement of the 300mg dosage

level in May 2020. Hepion cited that higher doses may need to be explored to fully assess

CRV341’s safety and maximum tolerated dose, but that will be determined following completion of

the 300mg cohort.

Hepion intends to initiate a Phase IIa pilot trial, dubbed AMBITION, in June 2020 with expected

results by year end. The main objective of the study is to assess the safety and tolerability of a

once daily 75mg dose of CRV431 over 28 days. The secondary objective is to assess anti-fibrotic

activity of CRV431 and to generate exploratory anti-fibrotic biomarker data, such as collagen

biomarkers, matrix metalloproteinases, lipidomics, and genomics. The study will be a multi-center,

single-blind, placebo-controlled design with a cohort of 18 subjects who have presumed NASH

with stage 2 or 3 fibrosis. Twelve subjects will receive the drug and six will receive placebo. The

23 Cabral WA, et al. (2014) Abnormal Type I Collagen Post-translational Modification and Crosslinking in a Cyclophilin B KO Mouse Model of Recessive Osteogenesis Imperfecta. PLoS Genet 6, 1-17.

24 Ure D, et al. (2020) Cyclophilin Inhibition as a Potential Treatment for Nonalcoholic Steatohepatitis (NASH). Expert Opinion on Investigational Drugs 2, 163-178.

25 Armas D, et al. (2019) A Phase 1 Single Ascending Dose Study of CRV431. Poster Presentation at The International Liver Congress, FRI-171.

Hepion Pharmaceuticals | 27 May 2020 11

company also plans to initiate another Phase II NASH study in H121 with approximately 100

patients to assess the efficacy of CRV431 over the course of 24 weeks.

Competition: A crowded space

There are currently no approved medications for NAFLD or NASH in the US, but given the high

prevalence of NAFLD and NASH, there has been significant effort to develop drugs for these large

markets with an FDA decision on Ocaliva is expected in coming weeks. Hence, there is a

reasonable probability that at least one NASH therapeutic will be approved and on the market by

the time CRV431 completes clinical development.

There are currently over 200 ongoing clinical studies for NAFLD and NASH on clinicaltrials.gov

representing the scope of activity seen in this space. Moreover, there have been a large number of

deals in the space. Gilead alone signed three NASH deals in 2019: with Insitro (preclinical, $15m

upfront, $235m milestones, low double digit royalties), Glympse Bio (biomarker collaboration,

terms undisclosed), and Novo Nordisk (combination therapy partnership, terms undisclosed).

Other prominent recent deals include Boehringer Ingelheim’s preclinical deal with Yuhan ($40m

upfront, $830m milestones, tiered royalties), and Novartis’s preclinical deal with Pliant ($80m

upfront, undisclosed milestones, tiered royalties).

Clinical trial timelines were significantly shortened once the FDA adjusted its guidelines so that

new drug candidates only need to show a reduction of severity of liver inflammation

(steatohepatitis) and fibrosis as primary endpoints, compared to the previous standard of having to

demonstrate that fewer patients progressed to cirrhosis or died of liver failure. The former

standards could take several decades to observe outcomes, while the updated guidelines are

much shorter with tissue changes that can be measured over 6–24 months.26 NASH therapeutics

currently in development fall under several different drug classes (Exhibit 6), which can generally

be grouped into two categories: those that aim to treat liver disease directly by addressing fibrosis

(such as CRV431) or inflammation, and those that aim to treat the underlying causes, such as

glucose metabolism or hyperlipidaemia. Drugs that inhibit apoptosis signal-regulating kinase 1

(ASK1) and C-C motif chemokine receptors 2/5 (CCR2/5) target liver disease directly, while

farnesoid X nuclear receptor (FXR), peroxisome proliferator activated receptors alpha/delta

(PPARα/δ), and thyroid hormone receptor beta (THR-β) agonists treat the underlying causes.

Exhibit 6: Selected companies with NASH drug candidates in Phase III trials

Company & compound MOA Clinical Trial Phase Timelines

Intercept Pharmaceuticals;

Obeticholic acid (OCA)

FXR Phase III (REGENERATE) NDA submitted in September 2019; market

approval potentially in H220

Phase III (REVERSE) Estimated study completion by June 2021

Madrigal Pharmaceuticals;

Resmetirom

THR-β Phase III Interim analysis results expected H121

Allergan; Cenicriviroc

(CVC)

CCR2/5 Phase III Currently enrolling patients; estimated study

completion in H220

Source: Edison Investment Research

Intercept Pharmaceuticals filed a New Drug Application (NDA) to the US Food and Drug

Administration (FDA) in September 2019 for its synthetically modified bile acid Ocaliva in the

treatment of fibrosis and in May 2020 it announced that the 9 June 2020 FDA advisory committee

meeting relating to the NDA has been postponed to accommodate the review of additional data

requested by the FDA, which we anticipate would push back a potential NDA decision into H220.

Ocaliva (obeticholic acid, OCA) is an FXR agonist and in 2019, Intercept reported interim Phase III

clinical trial results from its REGENERATE study for OCA and one of two primary endpoints were

met. The first primary endpoint, improvement in fibrosis, was met with data showing OCA led to an

26 Drew L. (2017) Drug Development: Sprint Finish. Nature 551, S86-S89.

Hepion Pharmaceuticals | 27 May 2020 12

improvement of one stage or greater in fibrosis without worsening of NASH after 18 months. Of the

second primary endpoint, resolution of NASH, OCA did not lead to significantly more frequent

resolution of NASH without the worsening of fibrosis.27 Of note, 51% of patients taking OCA

reported experiencing mild to moderate itching as a side effect and 9% of those individuals

stopped take the drug as a result. Meanwhile, the company completed enrolment in January 2020

for its other Phase III study, REVERSE, which aims to evaluate OCA in the treatment of

compensated cirrhosis due to NASH.

Madrigal Pharmaceuticals is solely focused on the treatment of NASH and initiated two Phase III

studies in March 2019. The company’s lead asset, MGL-3196 (resmetirom), is a thyroid hormone

receptor beta (THR-β) selective agonist and the first Phase III study, MAESTRO-NASH, will assess

resmetirom’s efficacy in the treatment of NASH in patients with stage 2-3 fibrosis, while the second

Phase III, MAESTO-NAFLD-1, is a safety and biomarker study. Madrigal expects interim data

results in H121 following the second liver biopsy in patients after 52 weeks of treatment and the

company stated it plans to file for accelerated approval based on those results. In a Phase II study

completed in February 2018, 25% of all patients treated with resmetirom and 37% of patients

treated who were on adequate doses of the drug met the Phase III NASH resolution endpoint.

Allergan entered the NASH space by acquiring Tobira Therapeutics in 2016 after the lead drug,

cenicriviroc (CVC), a CCR2/5 antagonist that had failed a Phase IIb trial when it missed the

primary endpoint of reducing a NASH activity score (NAS) score by two points. However, CVC did

meet one secondary endpoint of improving fibrosis by at least one stage without worsening of

NASH. Allergan is running the Phase III trial now with an expected top-line readout in Q420. In

April 2017, Allergan initiated a Phase IIb study to test CVC’s efficacy as a combination with

Novartis’ FXR agonist, tropifexor. The study is still enrolling approximately 200 patients and the

estimated trial completion date is H220.

Previously at the Phase III stage was Genfit’s elafibranor, a dual PPAR α/δ agonist, which was

recently reported to have failed to meet the primary endpoint (of NASH resolution without

worsening of fibrosis). Elafibranor previously also missed the primary endpoint in a Phase II NASH

study in 2015 as Genfit cited that inclusion of too many patients presenting with early-stage NASH

led to the study’s failure; however, the company proceeded to design the Phase III trial by focusing

on patients with more severe NASH progression. Genfit was also expected to initiate a proof-of-

concept combination drug study in Q120, but had delayed it due to COVID-19. In light of the recent

Phase III failure, the future of this study is unknown. The study was expected to evaluate

elafibranor efficacy in combination with other diabetes drugs, such as sodium-glucose transport

protein (SGLT2) inhibitor or glucagon-like peptide 1 (GLP-1) receptor agonist.

Sensitivities

As an early-stage biopharmaceutical company, Hepion is faced with risks associated with clinical

development. Since the company recently initiated its clinical trials in NASH, their immediate

hurdle is establishing efficacy in humans as it has no such data yet. There are several other

competitors already in Phase III clinical trials that expect to enter the market within the next one to

two years; however, this situation is two-pronged relating to Hepion. First, Hepion will be

competing for patients in similar target markets with companies who may have already had a few

years to establish themselves within the healthcare industry making it more difficult for Hepion to

achieve optimal penetration. However, there is a benefit to not being first to market as those

companies with commercialized products will have had paved the road in establishing

27 Eslam M, et al. (2019). Obeticholic Acid for the Treatment of Non-Alcoholic Steatohepatitis: Interim Analysis from a Multicentre, Randomised, Placebo-Controlled Phase 3 Trial. The Lancet 394, 2184-2196.

Hepion Pharmaceuticals | 27 May 2020 13

reimbursement precedence, physician education, and patient education along with demonstrating

which clinical trial designs proved most effective and favourable with the FDA. The company also

faces risks due to the relatively variable estimates relating to NASH. Since there are no approved

NASH-specific drugs, little is known in terms of true addressable market size and what percentage

of patients with late-stage NASH will choose and adhere to therapy.

The company will require a minimum of $115m in additional financing to complete their clinical trial

program. We expect Hepion to seek this funding primarily in the capital markets, which could result

in substantial dilution as share issuance over the next few years could be multiples of the current

shares outstanding (assuming no sharp increase in the market valuation). Alternatively, the

company may try to secure money through partnership or licensing deals, but this cannot be

assured. Several members of the current executive group at Hepion previously worked together at

Aurinia Pharmaceuticals as part of the team that discovered voclosporin, a Phase III

immunosuppressant therapeutic for lupus nephritis, which led to a $215 million licensing deal with

Hoffman-La Roche.

There are some risks to the company associated with the ongoing COVID-19 pandemic. The

pandemic may impact the company’s clinical trials as current participants may get infected or

choose to no longer participate in the study, while future participants may be harder to enrol.

Hepion has not yet stated any disruptions, but as the situation evolves, we may revisit our

assumptions.

Financials

Hepion reported a loss from operations of $7.8m in 2019, compared to $14.6m in 2018, with the

reduced loss mainly attributable to costs associated with clinical development of other assets in

2018, but Hepion has since stopped any further development on such and is focusing all resources

on CRV431. The company had R&D expenses of $3.2m in 2019, as compared to $7.6m in 2018,

and ended 2019 with $13.9m in cash and cash equivalents. R&D costs are expected to increase in

the coming quarters as the company continues to progress with clinical trials. We forecast R&D

expenses to be $7.1m in 2020 and $5.1m in 2021. We also expect the company will need $115m

in additional capital to complete development of CRV431, which we record as illustrative debt

amounting to $15m in 2020, $50m 2023, and $50m in 2025. The $15m in 2020 is in addition to the

$11.3m the company has already raised as of 30 April 2020 via an ongoing at-the-market equity

facility.

In May 2019, Hepion initiated a reverse stock split at a ratio of 1 for 70, which reduced the

common shares outstanding from 41.3m shares to approximately 560,500 shares at that time. In

2019, Hepion raised total gross proceeds of $21.2m, primarily from a $15.6m equity offering in

June, along with $4.4m in other equity issuances and warrant exercises, and $1.2m in non-dilutive

proceeds from the sale of New Jersey state net operating losses (NOLs).. As stated above, since

YE19 as of 30 April 2020, the company also raised $11.3m via an ongoing at-the-market equity

facility. Hepion also has a small amount (20,024 common shares worth) of outstanding convertible

preferred stock from previous offerings. In April 2020, the company took out a $0.18m loan (0.98%

pa interest, maturing in April 2022) in relation to the Paycheck Protection Program to use for

payroll costs, rent, and utilities.

As part of the merger with Ciclofilin, the company owed former Ciclofilin shareholders $17m in

milestones and up 10% of shares outstanding from the time of the merger (shares to be issued at

the same time(s) of the milestone payments), of which $1m and 2.5% have been delivered to date.

Upon completion of the first segment of Phase I clinical activities for CRV431 in October 2018, a

milestone payment was triggered. The payment was made to Ciclofilin Pharmaceuticals’ former

shareholders (including Hepion’s current CEO and members of executive team) and consisted of

Hepion Pharmaceuticals | 27 May 2020 14

$1m in cash along with 1,439 shares of common stock (pre-reverse split). Future milestone

payments will consist of up to a combined $16m in cash: $3m and the remaining stock on

completion of Phase II, $5m on completion of Phase III, and $8m on acceptance of an NDA. The

remaining stock issuable is negligible as it was determined at the time of signing the deal and on a

pre-reverse split basis. Additionally, the company owes a royalty of 2.5% to Aurinia

Pharmaceuticals for the original acquisition of CRV431 by Ciclofilin.

Valuation

We arrive at an initial valuation of $56.9m or $6.30 per basic share ($6.22 diluted) based on a risk

adjusted NPV analysis and a 12.5% discount rate (our standard for pre-commercial products). We

model the commercialization of CRV431 in both the US and European markets with entry into the

US in 2026 followed by Europe a year later. While our model assumes that Hepion will bring

CRV431 to commercialization, we believe it is more likely for the company to partner the asset

since NASH is a mass, broad-market indication.

Our estimated target population size (year 2026) is 0.5m adults in the US with peak market

penetration of 5%, and 1.2m adults in Europe with 3.5% peak penetration. Market penetration is

based on a treatment population estimated to be diagnosed with advanced fibrosis and cirrhosis

during the launch years of 2026 in the US and 2027 in Europe. We assume that there will be

improvements in diagnosis and include a 2% growth in diagnosis rates per year. In the US, we

assume a launch price of $13,000 per year, which we based on a combination of reported market

research and current prices of drug candidates already approved in other indications. In Europe,

we expected a launch price of $8,400 per year, which is based on a discount to the US product

price due to more strict reimbursement regulations in Europe, as compared to the US.

We include a include 2% price growth over the life of the product in both the US and Europe. We

include a gross/net sales discount of 70% in both the US and European markets. COGS are 7.5%,

which includes the royalty payable to Aurinia Pharmaceuticals. We also include costs of selling in

our models, which is $10m +15% of revenue for each geography (eg US and Europe) and model

revenue through 2036. In our model we assume a traditional approval timeline requiring a

minimum of approximately 1,026 patients (across all Phase I through registration trials) at a cost of

$40,000 per patient which totals to $41m in direct trial costs. For the US market, we assign a 10%

probability of success and assume product commercialization in 2026. Peak revenue in the US is

expected to be $371m and is currently valued at $23.03m based on our current assumptions.

For the European market, we also assign a 10% probability of success and assume product

commercialization in 2027. Peak revenue in Europe is expected to be $373m and is currently

valued at $18.9m based on our current assumptions.

We separately include a negative NPV of $10.2m to account for R&D costs. This value includes

milestones payable to Ciclofilin shareholders ($3m in 2020, $5m in 2024, $8m in 2025).

Due to the wide variances in estimates and data relating to the NASH treatment population along

with limited information on the optimal treatment price, below is a sensitivity table depicting

valuation as a function of market penetration and drug price (Exhibit 8).

Hepion Pharmaceuticals | 27 May 2020 15

Exhibit 7: Valuation

Program Market Prob. of success

Launch Year

Peak Revenue ($m)

Valuation ($m)

CRV431 US 10% 2026 370.8 23.03 Europe 10% 2027 373.0 18.86

R&D & Milestones 100%

(10.20)

Total

31.68

Net cash and equivalents (2019 + ATM)

25.21

Total firm value ($m)

56.90

Total basic shares (m)

9.03

Value per basic share ($)

6.30

Convertible preferred stock

0.02

Dilutive options and warrants (m)

2.6

Total diluted shares (m)

11.7

Value per diluted share ($)

6.22

Source: Hepion Reports, Edison Investment Research

Exhibit 8: Valuation sensitivity ($m)

#### 11,000 12,000 13,000 14,000 15,000

US

Pen

etra

tio

n

(%)

2% 25.5 27.0 28.4 29.9 31.4

3% 33.5 35.7 37.9 40.1 42.3

4% 41.6 44.5 47.4 50.3 53.2

5% 49.6 53.2 56.9 60.5 64.2

6% 57.6 62.0 66.4 70.8 75.1

7% 65.7 70.8 75.9 81.0 86.1

8% 73.7 79.5 85.3 91.2 97.0

Source: Edison Investment Research. Note: In this analysis, European prices 65% of US prices, European penetration 70% of US.

Hepion Pharmaceuticals | 27 May 2020 16

Exhibit 9: Financial summary

$'000 2018 2019 2020e 2021e

31-December

IFRS IFRS IFRS IFRS

INCOME STATEMENT

Revenue 0.0 0.0 0.0 0.0

Cost of Sales

0.0 0.0 0.0 0.0

Gross Profit

0.0 0.0 0.0 0.0

R&D

(7,593.7) (3,184.1) (7,095.6) (5,147.3)

SG&A

(7,000.4) (4,586.0) (4,605.9) (4,744.1)

EBITDA (14,340.9) (7,677.2) (11,611.3) (9,801.2)

Normalised operating profit (14,359.6) (7,703.9) (11,635.3) (9,825.2)

Amortisation of acquired intangibles

0.0 0.0 0.0 0.0

Exceptionals

0.0 0.0 0.0 0.0

Share-based payments

(234.5) (66.2) (66.2) (66.2)

Reported operating profit

(14,594.2) (7,770.1) (11,701.5) (9,891.3)

Net Interest and financial income

4,608.9 (175.9) 0.2 0.0

Joint ventures & associates (post tax)

0.0 0.0 0.0 0.0

Exceptionals

0.0 0.0 0.0 0.0

Profit Before Tax (norm) (9,750.8) (7,879.8) (11,635.1) (9,825.2)

Profit Before Tax (reported) (9,985.3) (7,946.0) (11,701.3) (9,891.3)

Reported tax

536.0 1,227.3 1,807.4 1,527.8

Profit After Tax (norm)

(10,274.2) (8,832.6) (13,540.6) (11,730.6)

Profit After Tax (reported)

(9,449.3) (6,718.7) (9,894.0) (8,363.5)

Minority interests

0.0 0.0 0.0 0.0

Deemed Dividend

(8,451.9) (5,442.9) 0.0 0.0

Discontinued operations

0.0 0.0 0.0 0.0

Net income (normalised)

(10,274.2) (8,832.6) (13,540.6) (11,730.6)

Net income (reported)

(17,901.1) (12,161.6) (9,894.0) (8,363.5)

Basic average number of shares outstanding (m)

184 2,043 9,476 9,950

EPS - basic normalised (c) (55.87) (4.32) (1.43) (1.18)

EPS - diluted normalised (c) (55.87) (4.32) (1.43) (1.18)

EPS - basic reported (c) (97.35) (5.95) (1.04) (0.84)

Dividend (c)

0.00 0.00 0.00 0.00

BALANCE SHEET

Fixed Assets 5,221.2 6,043.9 5,855.9 5,667.9

Intangible Assets

1,870.9 1,870.9 1,870.9 1,870.9

Tangible Assets

32.4 57.2 33.2 9.2

Investments & other

3,317.8 4,115.9 3,951.9 3,787.9

Current Assets 2,968.0 14,388.7 31,496.3 23,163.8

Stocks

0.0 0.0 0.0 0.0

Debtors

0.0 0.0 0.0 0.0

Cash & cash equivalents

2,832.4 13,923.0 31,030.6 22,698.1

Other

135.6 465.7 465.7 465.7

Current Liabilities (2,849.9) (1,251.9) (1,709.3) (1,486.2)

Creditors

(748.4) (491.6) (1,442.6) (1,219.5)

Tax and social security

0.0 0.0 0.0 0.0

Short term borrowings

(1,440.0) 0.0 0.0 0.0

Other

(661.4) (760.3) (266.7) (266.7)

Long Term Liabilities (3,364.3) (2,995.1) (17,995.3) (17,995.3)

Long term borrowings

0.0 0.0 (15,000.2) (15,000.2)

Other long term liabilities

(3,364.3) (2,995.1) (2,995.1) (2,995.1)

Net Assets 1,975.1 16,185.6 17,647.6 9,350.3

Minority interests

0.0 0.0 0.0 0.0

Shareholders' equity 1,975.1 16,185.6 17,647.6 9,350.3

CASH FLOW

Op Cash Flow before WC and tax

(14,340.9) (7,677.2) (11,611.3) (9,801.2)

Working capital

(970.5) (754.6) 457.5 (223.2)

Exceptional & other

(870.7) (360.6) 164.0 164.0

Tax

536.0 1,227.3 1,807.4 1,527.8

Net operating cash flow (15,646.0) (7,565.1) (9,182.5) (8,332.5)

Capex

0.0 (51.5) 0.0 0.0

Acquisitions/disposals

900.0 0.0 0.0 0.0

Net interest

0.0 0.0 0.0 0.0

Equity financing

12,192.5 19,826.5 11,290.0 0.0

Dividends

0.0 0.0 0.0 0.0

Other

(1,000.0) (1,119.4) 0.0 0.0

Net Cash Flow

(3,553.5) 11,090.5 2,107.5 (8,332.5)

Opening net debt/(cash) (5,954.0) (1,392.5) (13,923.0) (16,030.5)

FX

0.0 0.0 0.0 0.0

Other non-cash movements

(1,008.0) 1,440.0 0.0 0.0

Closing net debt/(cash) (1,392.5) (13,923.0) (16,030.5) (7,698.0)

Source: Hepion Reports, Edison Investment Research

Hepion Pharmaceuticals | 27 May 2020 17

Contact details Revenue by geography

399 Thornall Street, 1st Floor Edison, NJ 08837 US (732) 902 - 4000 www.hepionpharma.com

N/A

Management team

Chief Executive Officer: Robert Foster, PhD, PharmD Chief Financial Officer: John Cavan, MBA

Dr Foster served as CEO of Hepion since October 2018 and first began working

on cyclophilins in 1988 bringing more than 30 years of pharmaceutical and

biotech experience to the company. Prior to Hepion, he was CEO and Founder

of Ciclofilin Pharmaceuticals, which merged with Hepion in 2016. He founded

Isotechnika Pharma (TSX:ISA) in 1993, and was its chairman and CEO for

approximately 21 years. Dr Foster was founding CEO, and later CSO, of Aurinia

(NASDAQ:AUPH) after it was acquired by Isotechnika. During his tenure at

Isotechnika, together with a core team, he discovered the immunosuppressive

drug voclosporin. In 2002, while CEO of Isotechnika, he structured a US$215m

licensing deal, Canada’s largest at the time, for voclosporin with Hoffman-La

Roche (Basel, Switzerland).

John Cavan brings more than 20 years of financial management experience in both public and private companies. Prior to joining Hepion as CFO, he was a consultant with The Pine Hill Group, where he played an important role in completing several financial transactions, including initial public offerings, business combinations and strategic transactions. Prior to his role with the Pine Hill Group, Mr Cavan served as chief accounting officer at Stemline Therapeutics. Preceding his role at Stemline, he was VP and chief accounting officer at Aegerion Pharmaceuticals.

Chief Scientific Officer: Daren Ure, PhD Senior Vice President: Daniel J. Trepanier, PhD

Dr Ure began working on cyclosporins and cyclophilins in 2003 and has been

focused on furthering the understanding of cyclophilins in physiology and

disease. He was a research scientist with Isotechnika Pharmaceuticals, and then

the director of R&D at Ciclofilin Pharmaceuticals, which merged with Hepion in

2016. While Dr Ure focused on characterization of the enhanced calcineurin

inhibitor, voclosporin, earlier in his career, he more recently played a central role

in the development and characterization of a library of synthetic, non-

immunosuppressive analogs of cyclosporine A, which led to the selection of the

optimized compound, CRV431. He earned his PhD in neurobiology at the

University of Alberta (Canada) and conducted postdoctoral work at Mayo Clinic

(Rochester, Minnesota) in viral immunology.

Dr Trepanier first began working on cyclophilins in 1996 and has 22 years of field experience in the pharmaceutical industry, with a strong emphasis on cyclosporine and novel cyclophilin inhibitors. He is the developer of Aurinia Pharmaceuticals’ voclosporin formulation, which has been tested in more than 2,600 patients and is nearing commercialization. He was director of drug development at Ciclofilin Pharmaceuticals and retained this position following a merger with Hepion Pharmaceuticals in 2016. Dr Trepanier holds a BSc degree in chemistry and an MSc degree in biochemistry (Concordia University, Quebec), and a PhD in clinical chemistry (University of Windsor, Ontario). He completed a postdoctoral fellowship (University of Alberta) specializing in analytical chemistry. He is the author or co-author of numerous scientific papers, abstracts and patents.

Principal shareholders (%)

Donald E. Garlikov 0.78

Companies named in this report

Aurinia Pharmaceuticals (AUPH), Intercept Pharmaceuticals (ICPT); Madirgal Pharmaceuticals (MDGL); Genfit SA (GNFT); Galmed Pharmaceuticals (GLMD); Gilead (GILD); Allergan (AGN); Novo Nordisk (NVO); Yuhan (000100:KS); Novartis (NVS)

Hepion Pharmaceuticals | 27 May 2020 18

General disclaimer and copyright

This report has been commissioned by Hepion Pharmaceuticals and prepared and issued by Edison, in consideration of a fee payable by Hepion Pharmaceuticals. Edison Investment Research standard fees are £49,500

pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the

provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of

this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information

or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other

factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in

connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or

prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of

investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any

positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to

Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Austral ian Financial

Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice

given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having

regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like

instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the

purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the

topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in

relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is

intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making

an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A

marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any

prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article

19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49

of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be

distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide

publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not

offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that

any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia