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STONEGATE

S E C U R I T I E S

ADVAXIS, INC. (OTC BB: ADXS) June 23, 2010


$0.29
Price ........................................................................................ $0.18
52-Week Range .......................................................... $0.02 - $0.26 $0.24
Market Capitalization ................................................ $30,474,397
Enterprise Value ......................................................... $35,821,576 $0.19
Basic Shares Outstanding .......................................... 169,302,203
Float (Shares) .............................................................. 142,721,757
$0.14
Insider Ownership (%) ........................................................ 15.7%
Institutional Ownership (%).................................................. 5.5%
$0.09
Daily Volume (3-Month Avg.) .......................................... 905,155
Industry ....................................................................Biotechnology
$0.04
Website ...............................................................www.advaxis.com Jun-09 Aug-09 Sep-09 Nov-09 Dec-09 Feb-10 Mar-10 May-10 Jun-10

Corporate Headquarters.............................. North Brunswick, NJ


Condensed Income Statements (000s) Condensed Balance Sheet (4/30/10)
FY Oct Revs Net Inc EPS P/E Rev Grw (000s) (000s)
2007 A $ 154.2 $ (5,146.8) $ (0.11) nm nm Cash & Cash Equivs $227.2 Working Capital ($7,253.5)
2008 A $ 65.7 $ (5,414.0) $ (0.05) nm nm Cash/Share $0.00 Current Ratio 0.0x
2009 A $ 29.7 $ 929.2 $ 0.01 24.2x nm Equity (book value) ($21,962.3) Total Debt/Equity nm
2010 E $ 292.5 $ (20,064.6) $ (0.14) nm nm Equity/Share ($0.13) Total Debt/Capital nm
Source: Company reports, Stonegate estimates

Company Description
Advaxis, Inc. is a development-stage immune therapy company that is focused on the development of therapeutic cancer
vaccines utilizing attenuated, live Listeria monocytogenes bacteria as a carrier for bioengineered antigens. The Company
exclusively licenses this technology from the microbiology laboratory of Dr. Yvonne Paterson at the University of Pennsylvania.
Advaxis’ started its Phase II CIN trial in April 2010 and anticipates starting two additional clinical trials in 2010 that advance its
previously completed Phase I clinical trial.

Summary
¾ What’s new – Advaxis started its Phase II CIN trial in April 2010. Furthermore, it reported results for its Q2F10 via its 10Q
filing (see pg 10 for details) reached an agreement on its second amendment to its IP licensing agreement with the
University of Pennsylvania, and completed the draw down of its equity line of credit.
¾ Novel immunological treatment for cancer acts as a differentiator – At the core of Advaxis’ product portfolio is its
patented delivery system that uses attenuated, live Listeria monocytogenes (Lm) as its vector to deliver the antigen fusion
protein Listeriolysin-O (LLO), which elicits a powerful and comprehensive immunological response. While the powerful
immunological response comes from both the innate and adaptive tiers, more importantly, Advaxis’ vaccine elicits an
intratumoral affect. This affect inhibits the regulatory T-cells that are acting to “hide” cancerous cells, thus increasing the
ability of the body’s immune system to fight the existing cancer and improve remission.
¾ Strong IP portfolio - Advaxis has 27 issued and 45 pending patents covering multiple compositions of matter, methods and
uses for live Listeria-based vaccines. We note that recently, the Company successfully defended a patent in Europe.
¾ Large addressable market targeted – According to BCC Research, the estimated global market for immunotherapies will
reach $37.2B by 2012, and within that market, the sector with the greatest potential for growth is cancer vaccines.
¾ Valuation – Our Comparison Table on page 16 shows the market placing a median market value on cancer biotech firms of
$112.3M vs. Advaxis’ market cap of $30.5M.

See Important Disclosures and Disclaimer on Page 20


Investment Factors
Advaxis, Inc. is a development-stage biotechnology company that develops proprietary Listeria
monocytogenes-based cancer vaccines. Below we outline important investment points to
consider for Advaxis.

Investment Positives
Novel immunological treatment for cancer acts as a differentiator - At the core of Advaxis’
product portfolio is its patented delivery system that uses attenuated, live Listeria
monocytogenes (Lm) as its vector to deliver the antigen fusion protein Listeriolysin-O (LLO),
which elicits a powerful and comprehensive immunological response. We note that the
immunological response comes from both the innate and adaptive tiers. Furthermore, and more
importantly, Advaxis’ vaccine elicits an intratumoral affect, which inhibits the regulatory T-
cells that are acting to “hide” cancerous cells. Consequently, the body’s immune system finally
“sees” the cancer and begins to attack it, thus enabling a more successful remission. This last
step is where many immunological vaccines have failed in the past.

Strong IP portfolio – Advaxis has 27 issued and 45 pending patents covering multiple
compositions of matter, methods and uses for live Listeria-based vaccines. Advaxis is the
exclusive licensee of these patents based on the work of Dr. Yvonne Paterson at the University
of Pennsylvania, and the Company has the rights to an extensive portfolio of intellectual
property, filed both in the U.S. and internationally, pertaining to the use of Listeria and listerial
products used as vaccine vehicles. Lastly, we note that Advaxis recently defended one of its
key patents in European Patent Court against a challenge made by Anza Therapeutics, Inc.,
formerly Cerus Corp.(NASDAQ: CERS). The patent covers the use of bacteria to deliver an
antigen and generate an anti-tumor immune response. Advaxis successfully defended the
challenge, and the ruling cannot be appealed.

Large addressable market targeted – Currently, cancer is the second leading cause of death
by illness in the U.S. The National Cancer Institute expects cancer to take the lead position in
the U.S. within five years. Advaxis is initially targeting cervical cancer by using its unique
immunological treatment. BCC Research estimates that the global market for immunotherapies
will reach $37.2B by 2012, and within that market, the sector with the greatest potential for
growth is cancer vaccines.

Recent financings provide capital – In September 2009, Advaxis’ signed an equity line of
credit for a maximum of $5M until September 2012. In January, March and May 2010, the
Company drew down the full equity line. The Company also issued about $1M in junior
unsecured convertible notes between Nov-09 and Mar-10.

New clinical trial commencements imminent – 3 clinical trials that advance Advaxis’
original Phase I trial should start this year. Its Phase II trial for CIN started in April 2010. The
Cervical Cancer (India) trial and its UK Head and neck cancer Phase I/II trial are expected to
commence in Q3/Q4 2010.

STONEGATE SECURITIES 2
Investment Challenges
Shareholder dilution – With no reported revenues, Advaxis is highly dependent on raising
capital. Furthermore, the Company can not start/complete its Phase II clinical trials until it
acquires adequate capital. Lastly, many of the recent financings contain anti-dilution
provisions and some debt is convertible into equity. The Company currently has 169.3M
shares outstanding, 18.1M options, 80.3M warrants, and potentially an additionally 49.7M
shares to issue from convertible debt. Coupled with a dependence on capital to continue
operations, current shareholders could be diluted.

Going concern opinion expressed by auditors – Since its inception, Advaxis has not
generated significant revenues and consequently has suffered significant net losses. As of April
30, 2010, Advaxis reported an accumulated deficit of $29.8M, a shareholder deficit of $21.9M
and negative working capital of $7.3M. Given these figures, Advaxis’ auditors continue to
express a going concern opinion.

Attraction of institutional investor capital may prove difficult – Tom Moore, CEO, was
previously the CEO of Biopure Corporation from July 2002 to February 2004 (Other OTC:
BPURQ.PK). During his tenure at Biopure, the SEC alleged that in 2003, he, the head of
regulatory affairs (Howard Richman) and general counsel engaged in misleading public
statements about the status of negative results received from the FDA in regard to the approval
of its key drug Hemopure. Mr. Moore settled with the SEC in February 2007 and is subjected
to a five year injunction from violating antifraud provisions of the federal securities laws and
paid a fine. Importantly, Mr. Moore has stated that he relied on Mr. Richman and was thus also
misled. Given Mr. Richman’s actions since the events at Biopure, Mr. Moore’s statement
appears credible. We note that Mr. Richman was permanently barred from serving as an officer
of a publicly traded company and paid a fine. Moreover, in March 2009, Mr. Richman pleaded
guilty to an obstruction of justice charge for pretending he had terminal cancer and admitted to
impersonating his own doctor to avoid the federal lawsuit filed by federal regulators mentioned
above. While Mr. Richman’s actions lend credibility to Mr. Moore’s statement, institutional
investors may nonetheless be hesitant to commit investment capital to Advaxis. Despite this
opinion, we would note that the Company recently raised a maximum of $5M from Optimus
Capital LLC via an equity line of credit.

Rigorous FDA evaluation and approval process – Pharmaceutical approvals in the U.S. are
stringent and typically unpredictable. What’s more, the clinical trial process is lengthy,
expensive, and often fails at various stages. Recent FDA data show evidence of increased
failure rates with a current 8% probability of a new drug entering Phase I development and its
ability to make it to registration versus a historical 14% probability. Furthermore, the FDA
may require additional testing after successful completion of clinical trials if some required
regulatory criteria are not met. Even if the FDA grants approval, the approval may include
limits on indication uses.

High level of competition may render Advaxis’ technology obsolete – The biotechnology
and biopharmaceutical industries are characterized by rapidly changing markets, technologies,
regulatory standards, and frequent new product introductions. Consequently, changes to any of
the above factors may render Advaxis’ products obsolete, less competitive or less marketable.

News flow dependent – Because Advaxis is an early stage drug development company with no
reported revenues, traditional financial analysis is less relevant. Consequently, we believe, in
general, that companies operating in the realm of this investment landscape are highly
dependent on new flow rather than traditional financial measurement yardsticks. Hence, if
news flow slows down or is not forthcoming, the stock price could drift lower. Additionally,
due to adverse stock market conditions, investors could avoid these types of investments
causing Advaxis’ stock to decline.

STONEGATE SECURITIES 3
Valuation Summary
Advaxis is a development-stage biotechnology company with a novel immunological cancer
vaccine. At the core of Advaxis’ product portfolio is its patented delivery system that uses
attenuated, live Listeria monocytogenes (Lm) as its vector to deliver the antigen fusion protein
Listeriolysin-O (LLO), which elicits a powerful and comprehensive immunological response.

The vaccine has the following affects:


¾ An immunological response from both the innate and adaptive tiers
¾ An increase in cytotoxic T-cells in tumor
¾ A decrease in regulatory T-cells in tumor
¾ Consistently breaking of antigen tolerance (inhibitory Tregs)
¾ Delivers immediate therapeutic effects
¾ Promotes prolonged immunity
¾ Sensitive to antibiotics

Additionally,
¾ it is a stable vaccine that may be stored frozen; can be grown on completely synthetic
media and
¾ can change the antigen to target any type of cancer or infectious disease

While an approved FDA product is not imminent, the target market opportunity is significant.
According to BCC Research, the estimated global market for immunotherapies will reach
$37.2B by 2012, and within that market, the sector with the greatest potential for growth is
cancer vaccines.

Our Comparison Table shows the market placing a median market value on cancer biotech
firms of $112.3M vs. Advaxis’ market cap of $30.5M.

We outline potential catalysts for Advaxis over the next two calendar years:

¾ Capital raise(s) .……….................................................................................... 2010/2011


¾ Commencement of Phase II trials ……..……………………………...….………. 2H10
¾ CIN Phase II trial data …………………………………………………………….. 2011
¾ Definitive licensing agreement ….…………………………..…...……...………… 2011
¾ Approval of Fast Track designation ………………………...………………. 2010/2011

STONEGATE SECURITIES 4
Company Overview
Company Background
Advaxis, Inc. is a development-stage biotechnology company that is developing proprietary
Listeria monocytogenes-based cancer vaccines. Advaxis’ technology is based on over 20 years
of research by Dr. Yvonne Paterson, Professor of Microbiology at the University of
Pennsylvania and Chairperson of the Advaxis Scientific Advisory Board. In July 2002,
Advaxis signed an exclusive 20-year licensing agreement with University of Pennsylvania that
is subject to royalty and milestone obligations. Advaxis trades on the OTC BB under the
symbol ADXS.

Products and Technology


Advaxis’ lead vaccine candidate is called ADXS 11-001, which uses a patented delivery system
to target various cancers. The Company is targeting cervical cancer, cervical dysplasia, head
and neck, breast, and prostate cancers.
Exhibit 1: Product Candidates
Construct Indication
ADXS11-001 (Phase I) Cervical cancer
ADXS11-001 (Phase II) Cervical dysplasia
ADXS11-001 (Phase II) Cervical cancer
ADXS11-001 (Phase II) Cervical cancer
ADXS11-001 (Phase I/II) Head & neck cancer
ADXS31-164 (Phase I) Breast cancer
ADXS31-142 (Phase I) Prostate cancer - PSA secreting cells
Source: Company Reports, Stonegate Securities

At the core of Advaxis’ product portfolio is its patented delivery system that uses attenuated,
live Listeria monocytogenes (Lm) as its vector to deliver a tumor associated antigen fused
(TAA) to the protein Listeriolysin-O (LLO), which elicits a powerful and comprehensive
immunological response. To best understand Advaxis’ technology, it is helpful to briefly
review the human immune system.

Immune System Review


The immune system is composed of two tiers of protection against “foreign invaders.”

Tier 1: Innate immune system – is the body’s first line of defense and provides an immediate
response that is non-specific to a pathogen.

Tier 2: Adaptive immune system – is the second line of defense and is supported by the innate
response. This system is not immediate and requires some time to react. It also is antigen
specific meaning that it reacts only to the “foreign invader” that induced the response.
Importantly, the adaptive system retains this response in its memory and is able to exhibit an
increasingly faster and stronger response to combat the pathogen on subsequent exposure. We
also note that there are two pathways that the adaptive system takes to fight invaders.
Exhibit 2: Mapping The Immune System
Immune System

Bacteria Bacteria Virus

Innate Immunity Adaptive Immunity

Humoral Cell mediated Humoral Cell mediated


(B Cells) (T Cells) (B Cells) (T Cells)

Anatomical
(i.e. Skin)
STONEG A TCompany
Source: E S Reports,
ECUR I T I ECancer
National S Inst., Stonegate Securities 5
Adaptive immune system Exhibit 3: The Body's Immune Response
response - Class II Pathway
(Exogenous)
Antigen-presenting cells (APCs)
roam inside the body and search
for foreign invaders. When they
find an invader, they “eat it”,
break it down, and push pieces of
it to its surface that act as
molecular targets for the immune
system. Here, APCs stimulate T-
cells to action by presenting them Source: Company Reports; Stonegate Securities
with a target.

Adaptive cellular immune system response - Class I Pathway (Endogenous)


The other response occurs when a cell begins to produce unusual proteins within itself
(cytoplasm to be specific). Similar to some of the exogenous steps above, the unusual proteins
are broken down inside the cell, and pieces of it are pushed to the cell surface. Once again,
these pieces act as molecular targets for the immune system and “call” T-cells to come over and
kill it.

T-cells come in many forms and two important ones are: 1) Helper or 2) Killer (cytotoxic).
Helper T-cells (CD4+ T-cells) are the “middlemen” of the immune system that assist in the
immune response by secreting chemicals that enable Killer T-cells to battle. Killer T-cells (also
known as cytotoxic T-cells or CD8+ T-cells) destroy infected cells. The destruction of the
infected cells occurs when killer T-cells (CD8+) release cytotoxins that form pores in the
“foreign” cell’s plasma membrane, enabling granzymes to activate a series of enzymes that lead
to the death of the infected cell.

Why use Listeria?


Central to the Company’s technology is the microbe Listeria monocytogenes. Listeria is a
well-known bacterium in the medical community. It is a pathogen that causes food poising in
someone whose immune system is compromised or who eats a large quantity of it.
Importantly, the body has developed (over hundreds and thousands of years) an immediate and
powerful response should it encounter Listeria. Consequently, Advaxis builds on the very
potent immune response to Listeria bacterium.

Advaxis engineers a modified Listeria (attenuated version of wild Listeria) to deliver specific
cancer antigens. In turn, the modified Listeria vaccine enlists the immune system to attack the
Listeria bacteria and simultaneously “educate” the immune system to attack specific cancer
cells. Importantly, Advaxis’ vaccines trigger the two tiers of the cellular immune system
response as described above.

Simply put, when Listeria enters the body it elicits an immediate innate immune response.
Then, as the Listeria infects antigen-presenting cells (APCs), these APCs direct the immune
system to attack the Listeria as described in the adaptive immune response. In the ADXS 11-
001 vaccine, the bacterium is engineered to secrete fragments of HPV-E7, a molecule found on
the surface of malignant cervical cells. The immune system is then triggered to recognize these
cancer cells and destroy them. This sequence of events has been compared to offering a
bloodhound the scent of its target. By modifying the Listeria bacteria to carry chemical tags
found in a specific type of cancer, the body directs the immune system to focus its attack on the
cancer.

STONEGATE SECURITIES 6
How does Advaxis’ vaccine work?
Below in Exhibit 4, we illustrate how Advaxis’ Listeria vaccine is bioengineered and its main
mechanism of action.
Exhibit 4: Mechanism of Action
STEP 1: THE An attenuated, bioengineered Lm bacterium is
CARRIER selected as the delivery vector. The bacterium
Delivery Vector is attenuated by a factor of 10,000 to 100,000
times so it doesn't offer a health risk, but offers
the strong immunicity of a wild Listeria

STEP 2: THE A genetic sequence is engineered becoming


GENETIC the template for a tumor specific antigen
SEQUENCING (tumor target). It will be “fused” to a modified
Antigen/Adjuvant Lm protein, Listeriolysin-O (LLO) that allows
“Fusing” the bacterium to synthesize and secrete the
active antigen/adjuvant within the target cells

STEP 3: THE A plasmid containing Advaxis bioengineered


BIOENGINEERING genetic information is created. The antigens
Plasmids Created and that are currently in Advaxis vaccines are E7
Inserted (targets cervical cancer), Her-2 (targets breast
cancer) and PSA (targets prostate cancer)

STEP 4: THE The bioengineered plasmids are then inserted


FACTORY into the living Lm delivery vector system.
Advaxis’ Trojan Horse These organisms become small biological
factories

Acting as a Trojan Horse, the finished product


is an immunotherapeutic technology that
makes the active drug and secretes it where it
is used within the cells

THE ADVAXIS Lm After antigen presenting cells (APC) ingest an


VACCINE EFFECT Advaxis bioengineered Lm bacterium, it is
Class I and II Cellular broken down into molecular fragments to be
Immunity directed and used as an immune attack target

Pathogens are digested in the phagosomes and


the fragments are used to stimulate Class II
cellular immunity (the exogenous pathway)
against the Advaxis bioengineered Lm
bacterium

The Advaxis bioengineered Lm bacterium will


perforate the phagosome membrane, escape
into the cytosol and stimulate Class I cellular
immunity (the endogenous pathway)

Source: Company Reports; Stonegate Securities


STONEGATE SECURITIES 7
The intratumoral affect
A very unique and important finding of Advaxis’ vaccine is its ability to alter the tumor
microenvironment. By definition, cancer tumors are cells that have managed to evade the
immune system. It has been discovered that, in essence, cancer cells have “hijacked” parts of
the immune system that help protect the body by aiding the immune system in distinguishing
between self (body) and non-self (foreign invader). Specifically, another type of T cell,
Regulatory T-cells (called Tregs) are what inhibit the anticancer response.

Advaxis’ Listeria vaccines secrete LLO-antigen fusions that reduce intratumoral regulatory T-
cells (Tregs) and alter the tumor microenvironment in constructive ways that are unlike any
other vaccine vector. Consequently, the immune system is “awakened” and “sees” the once
hidden cancer cells. Furthermore, this action enables the body’s immune system to attack any
future growth of the specific cancer and leads to a more successful remission. This last step is
where many immunological vaccines have failed in the past.

Exhibit 5 illustrates the results from a study that compares two vaccines - one that includes the
LLO fusion protein (ADXS11-001), and
Exhibit 5: Intratumoral Affect
one that does not. The inclusion of LLO
in the vaccine increased the cytotoxic Activated Tumor
Inhibitory T-cells
Vaccine Killing T-Cells (In
(tumor killing) T-cell activation by 400% (in the tumor)
the tumor)
and decreased the inhibitory T-cells by Lm-E7 (- LLO) 9.40% 11.80%
80%. ADXS11-001 (+LLO) 36.80% 1.70%
Source: Company Reports; Stonegate Securities
Other effects
Additionally, Listeria stimulates other non-classical mechanisms that act to support the overall
immune response described above. These include: the stimulation of bone marrow to make
more immune cells, the stimulation of blood vessel cells that allow activated immune cells to
leave the blood and enter tumors, and other supportive effects.

Listeria made safe


As mentioned, Listeria is known to cause food poisoning and is responsible for, on average,
500 deaths a year in the U.S. Advaxis addresses the safety issue in several ways. First, as
previously mentioned, Advaxis attenuates its Listeria by a factor of 10,000 to 100,000. Second,
Advaxis’ also performs skin tests on each of the participants in its trials to insure an adequate
immune response before the vaccine is injected. And lastly, following each does, each
participant is given a regimen of antibiotics, which kills the remaining bacteria, but has no
apparent effect on the memory response that is retained by the immune system.

Advantages of Advaxis’ Listeria delivery vector vaccines


Advaxis’ therapeutic approach differs from other immunotherapies that simply introduce an
antigen into the immune system to trigger a response. Below we list why Advaxis’ vaccine is
potentially more effective versus other solutions:
¾ Listeria has a strong stimulating effect on the innate immune system, which sets the
stage for a strong adaptive immune response against a specific target
¾ Listeria infects the immune system and tells it what to attack and can thus efficiently
direct an immune response to attack any type of cancer or infectious disease base on
whatever antigen is bioengineered into a vaccine.
¾ The adaptive immune response is triggered via secreted antigens into the cytosol of
APC’s, which quickly activates T-cells and tells them what to attack
¾ Consistently breaks antigen tolerance (inhibitory Tregs)
¾ Promotes prolonged immunity (immune memory)
¾ In pre-clinical research, Advaxis’ Listeria technology has consistently demonstrated
complete therapeutic responses that result in complete tumor regression
¾ Sensitive to antibiotics
¾ Stable vaccine that may be stored frozen; can be grown on completely synthetic media
STONEGATE SECURITIES 8
Intellectual Property
As the exclusive licensee of patents based on the work of Dr. Yvonne Paterson at the
University of Pennsylvania, Advaxis has rights to an extensive portfolio of IP, filed both in the
U.S. and internationally, pertaining to the use of Listeria and listerial products used as vaccine
vehicles. The Advaxis patent portfolio consists of 27 issued patents and 45 pending and in-
process patents covering multiple compositions of matter, methods and uses for live Listeria-
based vaccines. The patents cover 4 different Listeria species and 2 different families of
adjuvant fusions. The patents are filed in the U.S., Japan, Canada, Australia and Europe.

Advaxis works with its patent counsel to surround its product and technology platform with
significant offensive and defensive patent protection. The Company recently defended one of
its key patents in European Patent Court against a challenge made by Anza Therapeutics, Inc.,
formerly Cerus Corp.(NASDAQ: CERS). The patent covers the use of bacteria to deliver an
antigen and generate an anti-tumor immune response. Advaxis successfully defended the
challenge, and the ruling cannot be appealed.

Business Strategy
Advaxis’ business strategy is focused on developing sufficient human clinical data to
demonstrate its effectiveness in combating cancer. Given its early stage business lifecycle, its
business plan has been executed by largely outsourcing virtually all of its major functions.
These include: drug development, manufacturing, R&D, grant applications, and clinical studies
among others. Additionally, the Company is focused on attaining partners to help it conduct its
clinical trials as evidenced by The Cancer Research UK Phase I/II trial, and its GOG/NCI trials.

Longer-term, Advaxis envisions licensing its technology for commercial development. The
Company does not intend to engage in commercial development beyond Phase II clinical trials
without partnerships or license agreements.

Financial Model Review


Given the development stage of Advaxis, a clear financial model is not currently defined.
Needless to say, the Company is highly dependent on financing to continue its operations.
Exhibit 6: Capital Structure
Total Shares Outstanding (000) - as of 4/30/2010 169,302.2

Bridge Notes (convertible) - $ 926.0 Series A Prfd Stock - Equity line of credit $ 5,000.0
Various notes including senior convertible promissory & Equity line drawn down; 10% int rate payable in Series A
junior sub convertible promissory's. @ 4/30/10 total was Prfd stk; non-convertible; redeemable by Company after
$3.4M; subsequent to quarter, 14.2M shares issued in lieu 5yrs; all 33.75M 3yr warrants exercised & payable in a
of cash & $88K pmt made leaving ~ balance listed 4yr note @ 2%; rcvd xtra 2.8M warrants @ xprice of $0.18

Notes Payable - CEO $ 650.0 Warrants 80,254.4


12% interest rate; matures Jan 2010; warrants Almost all warrants contain full ratchet anti-dilution; $0.17
issued on 3-3 basis of $ invested in NP; CEO took trigger price; majority of warrants xprice of $0.17
subordinated position vs. bridge financing note; figure
includes accrued interest Stock Options 18,119.1
Wtd avg price @ $0.16; wtd avg life @ 6 yrs
Notes Payable - BioAdvanced $ 40.0
8% interest rate; matured June 09; lender has Other items
extended payment until draw down of equity LC Pmt to U Penn; there are also various other $ 379.0
royalty/fees & milestone pmts due upon commercialization

Source: Company reports, Stonegate Securities

As of October 2009, Advaxis projects its subsequent annual operating expenses and preclinical
expenses at approximately $4.1M. Its cost of its Phase II trials for CIN, late stage cervical
cancer and Head and Neck cancer (see Pipeline section below), are estimated at approximately
$8M over the 30 month trial period. Given our estimated cash at about $0.8M - $1.2M ($0.2M
STONEGATE SECURITIES 9
[cash as of Q2F10 10Q] + $1.3M from Series A preferred equity LC draw down [May-10] less
payments and cash burn), Advaxis’ needs to raise capital.

Recent results/what’s new


Most significantly, Advaxis started its Phase II CIN clinical trial (see page 12 for details).
Additionally, the Company reached an agreement with the University of Pennsylvania to its
second amendment to its current licensing agreement. This included 27 patents, payment of
$379,000 due in monthly installments over the next 6 months, and an Advaxis exercised option
to 7 additional dockets for cash and stock. In June 2010, Advaxis also plans to sign a
cooperative R&D agreement with a division of the Department of Homeland Security to
conduct a proof-of-concept cattle safety study in late summer 2010. Oral and injection dosing
will be tested in cattle to investigate the safety of Advaxis Listeria in animals. The agreement
should help the Company with additional research and data at a low cost. The Company also
announced a veterinary trial using one of its vaccines for the treatment of Osteosarcoma in dogs
at the University of Pennsylvania of Veterinary Medicine.

Lastly, Advaxis reported Q2F10 financial results via its 10Q filing. $87K in grant revenues
was recognized and the Company reported a net loss of $9.1M. Subsequent to the quarter,
Advaxis drew down the remaining portion of its $5M equity LC. Advaxis received about a net
$1.2M. Warrants given with the equity LC were also exercised and are reflected on Advaxis’
balance sheet as a $4.9M stock subscription receivable. Terms of the note are 2% interest rate
and with payment due in lump-sum 4 years after the transaction.

Earnings Model Assumptions


We modeled $205,000 in revenues for FY10, which represents a NIH grant (awarded in
Q4FY09). We model operating expenses of $6.9M for FY10. Our FY10 expenses are based
on a monthly cash burn of approximately $255,000 plus incremental monthly expenses for
clinical trials commencing (CIN, India trial and Head and neck; see Pipeline section, below).
We also assume that Advaxis raises an additional $5M via a common equity offering (exclusive
of Equity LC which we assume is used to repay existing bridge loans), which drives our FY10
share count.

Pipeline
Advaxis is targeting multiple clinical trials targeting CIN and several HPV-related cancers.
Below we illustrate the Company’s programs. We note that the CIN, Cervical Cancer
(GOG/NCI), Cervical Cancer (India) and Head and Neck Cancer are trials that are building on
Advaxis’ 2007 completed Phase I trial (first one listed below).

Exhibit 7: Clinical Trial Program


Product Cancer Pre- Phase Phase Phase
Name Indication Stage Sponsor Clinical I II III
ADXS11 -001 Cervical cancer Late Advaxis
ADXS11 -001 Cervical dysplasia (CIN) Early Advaxis
ADXS11 -001 Cervical cancer Late GOG/NCI
ADXS11 -001 Cervical cancer Late India
ADXS11 -001 Head & neck cancer Late CRUK
ADXS31 -164 Breast cancer Late US
ADXS31 -142 Prostate cancer Late Advaxis
Source: Company Reports, Stonegate Securities

Pre-clinical results
In pre-clinical studies involving animals that have been injected with cancer cells to generate a
5mm tumor, results showed that administering different Lm vaccines in many cancer models

STONEGATE SECURITIES 10
led to complete tumor clearing of pre-existing tumors in approximately 75% of the animals.
The pre-clinical trial demonstrated:

¾ 100% tumor clearance of pre-existing tumors in 50% to 100% of normal animals


through use of different Lm vaccines in many cancer models.
¾ 25% to 50% tumor clearance in transgenic animals, which tend to be the most difficult
to treat.
¾ In the animals that had a favorable response to the vaccine, re-inoculated tumor cells
would not grow even after waiting several months, indicating long-term immunity.

The results are also impressive when compared with other live vaccines in an independent
animal trial. The National Cooperative Drug Discovery Group at the National Cancer Institute
asked several labs to provide their most effective cancer vaccine to participate in a comparison
test. As indicated in Exhibit 8, ADXS 11-001 outperformed the participants that included
Vaccinia, DNA and peptide vaccines.
Exhibit 8: NCI Tumor Vaccine Test

Vaccine % Tumor Free Mice

ADXS11-001 50 - 100
LmE7 0
Vac-SigE7 0 - 25
Vac E7 0
E7-DNA 0
E7-DNA in SBAS2 0
Db peptide in SBAS2 0
Source: Company Reports, Stonegate Securities

Phase I ADXS11-001 cervical cancer trial


In October 2007, Advaxis concluded its first human clinical trial using live attenuated Lm
vaccine (ADXS 11-001). The clinical trial included 15 patients with progressive, recurrent,
metastatic squamous cell carcinoma of the cervix who had failed to respond to chemotherapy,
radiotherapy and/or surgery. The participants were divided in three cohorts of five patients:
Cohort I - 1 x 109 , Cohort II - 3.3 x 109 and Cohort III - 1 x 1010 . Each of the cohorts received
two infusions of ADXS 11-001 that were administered 21 days apart. Each of the doses was
followed after five days with a regimen of ampicillin. Follow up visits were at three weeks and
three months following the second dose.

Toxicity was limited to flu-like symptoms comprised of fever, chills and nausea. Higher fever
and hypotension occurred in Cohort III; however, the patients’ side effects, including the
hypotension, promptly responded to symptomatic treatment with non-prescription non-steroidal
anti-inflammatory drugs (NSAIDs) and anti-emetics without the need for early antibiotics.

Although the trial was not designed to evaluate efficacy, RECIST criteria survival data from 13
eligible patients were analyzed. The overall median survival for patients in the Advaxis trial
was 347 days, and over two years for two patients who are alive at the time of this writing.
This is particularly noteworthy given that the survival of patients in the metastatic, refractory or
recurrent ICC is only three to six months. Additionally, we note that 4 of 13 (30%) evaluable
patients experienced tumor reduction.
Exhibit 9: Survival - ADXS11-001 vs. GOG Historical Data
12-Month Median
Still Alive
Survival Survival
(Days)
(%) (Days)
GOG Standard 5 180 NA
ADXS11-001 Phase I 53 347 1,000+
Clinical Trial
Source: Gynecologic Oncology Group (GOG), Advaxis, Inc., Stonegate Securities
STONEGATE SECURITIES 11
Exhibit 10: ADXS11-001 Phase 1 Efficacy Trial Study
# Patients Percent
Tumor progression 5 38.5%
Tumor stablization 7 53.8%
Tumor reduction 4 30.7%
Unconfirmed partial tumor response 1 7.7%
Source: Company Reports, Stonegate Securities

Phase II ClN clinical trial


On April 15, 2010, Advaxis initiated its first site for its multicenter CIN trial. The trial is a
randomized, single blind, placebo-controlled Phase II clinical trial of ADXS11-001 for the
treatment of cervical intraepithelial neoplasia (CIN). The study is designed to assess safety and
efficacy. Numoda Corporation will administer the clinical trial. The Company completed
dosing of three patients in June 2010.

Other vaccines in the Advaxis pipeline


Advaxis technology can bioengineer dual antigen systems that have the capability of attacking
two different cancer targets using a single vaccine. Recently, Advaxis announced the Company
is a recipient of a $210,000 grant from the U.S. National Institutes of Health (NIH) to develop a
single Lm vaccine that delivers two different antigen-adjuvant proteins to attack two separate
and distinct tumor targets. Further research is Exhibit 11: Other Vaccines in the Pipeline
focused on a dual delivery system using a tumor
cell surface marker to kill tumor attack tumor cells, Antigen Indication
combined with anti-angiogenesis to impair a HWM-MAA Anti-angiogenesis, melanoma
p53 Many types of cancer
tumor’s ability to grow by reducing its blood WT-1 Lymphomas; leukemias
supply. PSCA Prostate cancer
Telomerase Many types of cancer
In Exhibit 15 (see appendix on page 15), we Survivin Ovarian cancer
provide an estimated timeline as it relates to
Advaxis’ clinical trials. Source: Company Reports, Stonegate Securities

Industry Overview
Industry Background
The goal of immunology research is to develop methods that exploit the natural tendency of the
human body to defend itself against disease. Researchers once believed that the immune
system was limited to combating infectious diseases caused by bacteria and viruses; however,
years of research have created some successful examples of immunotherapies for cancer. The
launches of Merck (NYSE: MRK) and Sanofi Pasteur MSD's Gardasil® (FDA approved in
2006) and GlaxoSmithKline’s (NYSE: GSK) Cervarix® (approved in EU in 2007) have
significantly boosted clinical interest in cancer vaccines. BCC Research estimates that the
global market for immunotherapies will reach $37.2B by 2012, and within that market, the
sector with the greatest potential for growth is cancer vaccines.

The cancer vaccine market consists of two types of vaccines:

¾ Prophylactic cancer vaccines - designed to prevent the development of cancer; given to


healthy subjects to prevent infection with cancer-causing viruses
¾ Therapeutic cancer vaccines - designed to treat existing cancers; given to cancer
patients to stimulate the immune system into recognizing and attacking existing cancer

Prophylactic vaccines (Gardasil® and Cervarix®) control the cancer vaccine sector, and
research firm Espicom Business Intelligence expects that portion of the market to reach $4B by
2011. While there are currently no sales in the therapeutic market (where Advaxis is
positioned), Espicom is optimistic regarding the potential of that market, forecasting sales to

STONEGATE SECURITIES 12
reach $5B by 2012. The optimism is largely predicated on the recent changes in the landscape
of the therapeutic cancer vaccine market, which is shifting from a product pipeline filled with
vaccines in Phase I and II stages, to a more mature pipeline with multiple products in Phase III
trials (see Exhibit 14 on page 14). The Phase III candidates are targeting high profile cancers,
including melanoma, prostate, non-small lung, renal cell, and colorectal cancers.

Current target markets


Currently, cancer is the second leading cause of death by illness in the U.S. The National
Cancer Institute expects cancer to take the lead position in the U.S. within five years. The
National Institutes of Health estimate overall costs of cancer in 2008 at $228.1B, of which
$93.2 is in direct medical costs, $18.8M in costs due to lost productivity, and $116.1M in costs
due to lost productivity from premature death.

Because cancer disproportionately strikes older people, demographic trends present a strong
push for long-term growth. In the U.S., the Census Bureau estimates that there are about 303M
people. Of this, approximately 13% is aged 65+ with expansion to about 20% in 2030. In
2006, people over 65 accounted for over one-third of the U.S.’s total consumption of
prescription medicines. Additionally, world population stands at about 6.6B with projections
by the United Nations to reach 9.1B in 2050. The percentage of people aged 60+ will increase
from 11% in 2006 to 22% in 2050. The prediction for Europeans aged 60+ is to move from
21% of the population in 2006 to 34% by 2050, and developing countries’ forecast is to move
from 8% in 2006 to 20% in 2050.
Exhibit 12: Demographics As A Driver
US Developing

100% 100%
80% 80%
60% 60%
40% 40%
20% 20%
0% 0%
2006 2030 2006 2050
Age <65 Age 65+ Age <60 Age 60+

Europe World Wide

100% 100%
80% 80%
60% 60%
40% 40%
20% 20%
0% 0%
2006 2050 2006 2050
Age <60 Age 60+ Age <60 Age 60+
Source: US Census Bureau, United Nations, Stonegate Securities

Advaxis’ primary focus is on cancer and pre-cancer conditions relating to the human papilloma
virus (HPV). This is an enormous market with limited treatment alternatives. An estimated
95% of cervical cancers are associated with Exhibit 13: Estimates of New Cases 2009 (U.S. only)
HPV. These proteins interfere with normal
Cervical Cancer 11,270
cell functions that generally inhibit cell CIN (low grade) 1,400,000
growth. At some point in their lives, 80% of CIN (high grade) 330,000
sexually active men and women are infected Prostate Cancer 192,280
by genital HPV. Unfortunately, the immune Breast Cancer 192,370
system often fails to recognize the HPV- Head and Neck Cancer 55,000
Ovarian Cancer 21,550
infected cells, enabling the cancer to
Pancreatic Cancer 42,470
develop. The World Health Organization
estimates there are 630M HPV-infected Sources: National Cancer Institute; American Academy of Otolaryngology; Dept.
Health and Human Services; Stonegate Securities
individuals worldwide.
STONEGATE SECURITIES 13
Advaxis’ lead product candidate ADXS11-001 targets cervical cancer, the second leading cause
of cancer death for women, and cervical intraepithelial neoplasia (CIN), a condition that is
characterized by the presence of abnormal cells on the cervix that can develop into cancer.
According to the National Cancer Institute (NCI), in 2009 an estimated 11,270 women will be
diagnosed with cervical cancer. The NCI projects that in 2009 another 1.7M women will be
diagnosed with CIN. There is currently no FDA-approved therapeutic for cervical cancer, and
although CIN can be treated with Loop Electrosurgical Excision Procedure (LEEP) or with
cryotherapy, the recurrence rates following these treatments vary from 10% to 15%.

Additionally, many head and neck cancers are also related to the human papilloma virus. The
American Academy of Otolaryngology estimates that 55,000 people in the U.S. will develop
some form of head and neck cancer in 2009. An estimated 25% of head and neck cancers
express HPV antigens. Studies suggest that HPV may also play a role in cancers of multiple
areas of the body including the lung, prostate and other areas.

Competition
The biotechnology and biopharmaceutical industries are characterized by intense competition,
rapid technological change and a high degree of uncertainty. Furthermore, the industry is fairly
fragmented with various sized companies attempting to develop and commercialize new
treatments for cancer. Although therapeutic vaccines have shown great promise in clinical
trials, these results have not yet translated into approved therapies. Therapeutic cancer vaccine
companies are using a variety of vectors that have very different mechanisms of action. The
advantages of Listeria monocytogenes over other vectors are listed on page eight.

Exhibit 14 lists several immunotherapy companies with therapeutic cancer vaccines that are in
late-stage trials. We note that none of these companies employs Listeria as a delivery vector.
Exhibit 14: Therapeutic Cancer Vaccines in Late-Stage Clinical Trials
Antigenics' patient-specific cancer vaccine, Oncophage® is currently approved in Russia for the
Oncophage® approved in Russia; adjuvant treatment of kidney cancer patients. In October 2008, Antigenics submitted a marketing
Antigenics, Inc QS-21 in Phase III trials for authorization application to the European Medicines Agency (EMEA) requesting conditional
(AGEN) treatment of melanoma and non- approval for Oncophage in earlier-stage, localized renal cell carcinoma. Antigenics’ QS-21 is an
small cell lung cancer immune adjuvant in Phase III trials including non-small cell lung cancer, melanoma and malaria

Biovest International develops personalized immunotherapies for cancers of the blood system.
Biovest is the holder of a Cooperative Research and Development Agreement (CRADA) with the
Biovest International Phase III trials for treatment of non- National Cancer Institute for the commercialization of BiovaxID, a personalized biologic
(BVTI.OB) Hodgkin's lymphoma therapeutic cancer vaccine for the treatment of non-Hodgkin’s lymphoma. This therapy, referred to
as BiovaxID, is currently in a phase III pivotal trial at 24 major medical institutions in the US.

GenVec’s discontinued its pivotal, Phase III clinical trial of TNFerade™for locally advanced
Phase III trials for advanced pancreatic cancer on March 29, 2010. Interim results showed it was unlikely to prove effective.
GenVec
pancreatic cancer (canceled TNFerade has also been and is currently being evaluated for its potential use in the treatment of
(GNVC)
3/29/10) several other cancers, including esophageal cancer, rectal cancer, and head and neck cancer.

Provenge, which is used to fight advanced prostate cancer, will possibly become America's first
approved cancer vaccine either later this year or sometime in 2010. The FDA has stated that
Dendreon Two Phase III trials completed Provenge would be approved if the vaccine met survivability endpoints in the recently completed
(DNDN) targeting advanced prostate cancer IMPACT trial. Results from an integrated analysis of two Phase III studies of PROVENGE, D9901
and D9902A, demonstrated a survival advantage for patients randomized to PROVENGE versus
those randomized to placebo.
Onconthyreon just announced positive results of a study involving patients who received treatment
Phase IIb trials for advanced non- with the cancer vaccine, Stimuvax, for between 2 and 8.2 years as part of the Phase IIb trial in
Onconthyreon's small cell lung cancer and Phase III patients with stage IIIb/IV non-small cell lung cancer. Merck KGaA is responsible for the world-
(ONTY) trials for non-small cell lung cancer wide development and commercialization of Stimuvax under license from Oncothyreon and is
and breast cancer currently conducting Phase III trials of Stimuvax in both NSCLC and breast cancer.

Source: Company Reports, Stonegate Securities

STONEGATE SECURITIES 14
Appendix
Exhibit 15: Clinical Trial Estimated Timeline
Product
Candidate Indication (Sponsor) 2010 2011 2012 2013 2014 2015 2016 2017

ADXS11-001 CIN (Advaxis) (1) (2) Phase II Phase III

Patients (80); Est


cost ($5.7M-$6.0M)

ADXS11-001 Cervical cancer Phase II Phase III


(GOG/NCI) (1) (2)
Patients (63); Est
cost ($2.5M-$3.0M)

ADXS11-001 Cervical cancer (India)


Phase II Phase III
(1) (2)
Patients (110); Est
cost ($2.1M-$2.3M)

ADXS11-001 Head & neck cancer Phase I/II Phase III


(CRUK) (2) (3)
Patients (~45); Est
cost ($0.5M; $2.5M-
$3.0M funding from
CRUK)

ADXS31-164 Breast cancer (DOD) (2) Phase II Phase III


Phase I

Patients (TBD); Est


cost ($3.0M-$3.5M)

ADXS31-142 Prostate cancer


Phase I Phase II Phase III
(Advaxis) (2)
Patients (TBD); Est
cost ($3.0M - $3.5M)
(1) These trials are using clinical data derived from the 2007 completed Phase I cervical cancer trail
(2) Subject to financing
(3) CRUK is the Cancer Research UK; announced February 2010

Source: Company Reports, Stonegate Securities estimates based on Company input and FDA averages

STONEGATE SECURITIES 15
Comparison Table

Exhibit 16: Comparative Analysis


Advaxis Inc (OTCBB: ADXS)
(all figures in $M expect per share information)

Name Ticker Price (1) Sh Mrkt Cap EV


Cancer Vaccines
Dendreon Corp DNDN $ 34.56 135.2 $ 4,673.9 $ 4,089.8
GenVec Inc GNVC $ 0.50 128.9 $ 64.5 $ 21.3
Oncothyreon Inc ONTY $ 3.48 25.8 $ 89.6 $ 60.6
Biovest International Inc BVTI $ 1.40 96.5 $ 135.0 $ 108.5
Antigenics, Inc AGEN $ 0.88 94.2 $ 82.9 $ 9.0
Hi $ 4,673.9 $ 4,089.8
Low $ 64.5 $ 9.0
Average $ 1,009.2 $ 857.8
Median $ 89.6 $ 60.6
Other Cancer
Seattle Genertics, Inc SGEN $ 12.69 100.8 $ 1,279.5 $ 961.2
Allos Therapeutics, Inc ALTH $ 6.34 105.2 $ 667.2 $ 530.0
Infinity Pharmaceuticals, Inc INFI $ 6.22 26.2 $ 163.0 $ 30.1
Idera Pharmaceuticals, Inc IDRA $ 3.71 23.49 $ 87.1 $ 53.5
Sunesis Pharmaceuticals Inc SNSS $ 0.55 57.98 $ 31.9 $ 17.2

Hi $ 1,279.5 $ 961.2
Low $ 31.9 $ 17.2
Average $ 445.7 $ 318.4
Median $ 163.0 $ 53.5
Universe:
Hi $ 4,673.9 $ 4,089.8
Low $ 31.9 $ 9.0
Average $ 727.5 $ 588.1
Median $ 112.3 $ 57.0

Advaxis Inc. (2) ADXS $ 0.18 169.3 $ 30.5 $ 35.8


(1) Previous day's closing price
(2) ADXS' EV calculated using face value of debt outstanding and preferred stock value
Source: Company reports, CapitalIQ, Stonegate Securities

STONEGATE SECURITIES 16
Balance Sheets

Advaxis Inc (OTCBB: ADXS)


Consolidated Balance Sheets (in thousands $)
Fiscal Year: October
2008 2009 Q1 Q2
ASSETS Jan-10 Apr-10
Current Assets
Cash & cash equivalents $59.7 $659.8 $1,114.0 $227.2
Prepaid expenses 38.9 36.4 42.9 65.0
Total Current Assets 98.6 696.3 1,156.9 292.2

Property and equipment, net 91.1 54.5 55.1 45.4


Intangible assets, net 1,137.4 1,371.6 1,449.9 1,486.3
Deferred costs - 288.5 247.5 206.5
Other assets 3.9 303.4 6.1 20.7
Total Assets $1,331.0 $2,714.3 $2,915.5 $2,051.2

LIABILITIES AND STOCKHOLDERS' EQUITY


Current Liabilities
Accounts payable $998.9 $2,368.7 $2,659.5 $1,782.9
Accrued expenses 603.3 917.3 673.0 748.5
Convertible bridge notes & FV of derivative - 2,078.9 2,646.0 4,073.7
Notes payable & interest payable 563.3 1,121.1 1,155.8 940.7
Total Current Liabilities 2,165.5 6,485.9 7,134.3 7,545.8

Long-Term Liabilities
Notes payable 4.8 - -
Commonp stock
y warrants - 11,961.7 12,665.2 16,467.8
Total Long-Term Liabilities 4.8 11,961.7 12,665.2 16,467.8

Stockholders' Equity
Issued shares 109.3 115.6 127.2 142.8
Additional paid-in capital 16,584.4 754.8 5,619.7 12,572.1
Stock subscription receivable - - - (4,881.7)
Accumulated
y deficit (17,533.0) (16,603.8) (22,630.9) (29,795.5)
Total Stockholders' Equity (deficit) (839.3) (15,733.3) (16,883.9) (21,962.3)
Total Liabilities and Stockholders' Equity $1,331.0 $2,714.3 $2,915.5 $2,051.2

Ratios
Liquidity
Current Ratio 0.0x 0.1x 0.2x 0.0x
Quick Ratio 0.0x 0.1x 0.2x 0.0x
Working Capital ($2,066.9) ($5,789.6) ($5,977.4) ($7,253.5)
Leverage
Debt To Equity nm nm nm nm
Debt To Capital nm nm nm nm
Capital Usage -Annualized
A/R Turns nm nm nm nm
Inv Turns nm nm nm nm
A/P Turns nm nm nm nm

Source: Company Reports, Stonegate Securities

STONEGATE SECURITIES 17
Income Statements
Advaxis Inc (OTCBB: ADXS)
Consolidated Statements of Income (in thousands $, except per share amounts)
Fiscal Year: October
Q1 Q2 Q3 Q4 Q1 Q2 Q3 E Q4 E
FY 2008 Jan-09 Apr-09 Jul-09 Oct-09 FY 2009 Jan-10 Apr-10 Jul-10 Oct-10 FY 2010 E
Revenues
Revenues $ 65.7 $ - $ - $ (5.4) $ 35.1 $ 29.7 $ - $ 87.2 $ 102.6 $ 102.6 $ 292.5
Total revenue 65.7 - - (5.4) 35.1 29.7 - 87.2 102.6 102.6 292.5

Cost of revenues
Cost of sales - - - - - - - - - - -
Total cost of revenues - - - - - - - - - - -
Gross (loss) profit 65.7 - - (5.4) 35.1 29.7 - 87.2 102.6 102.6 292.5
Operating expenses
Research and development 2,481.8 179.2 283.8 476.4 1,376.2 2,315.6 997.3 1,084.7 1,150.0 1,200.0 4,432.0
General and administrative 3,035.7 545.5 488.5 985.7 681.5 2,701.1 589.0 779.5 700.0 725.0 2,793.5
Total operating expenses 5,517.5 724.6 772.3 1,462.1 2,057.6 5,016.7 1,586.4 1,864.2 1,850.0 1,925.0 7,225.5

Income (loss) from operations (5,451.8) (724.6) (772.3) (1,467.5) (2,022.6) (4,987.0) (1,586.4) (1,776.9) (1,747.4) (1,822.4) (6,933.0)

Other income (expense):


Interest expense (11.3) (15.4) (20.7) (374.6) (440.4) (851.0) (1,666.1) (1,647.1) (1,651.6) (1,651.6) (6,616.4)
Other income 49.0 0.0 - 2,014.2 3,831.0 5,845.2 (1,087.8) (5,706.4) - - (6,794.2)
Total other income (expense): 37.8 (15.4) (20.7) 1,639.7 3,390.6 4,994.2 (2,754.0) (7,353.4) (1,651.6) (1,651.6) (13,410.6)

Pre-tax income (loss) (5,414.0) (740.0) (792.9) 172.1 1,368.0 7.2 (4,340.3) (9,130.4) (3,399.0) (3,474.0) (20,343.6)

Total income taxes (benefit) - (922.0) - - (0.0) (922.0) (279.0) - - - (279.0)


Net income (loss) $ (5,414.0) $ 182.0 $ (792.9) $ 172.1 $ 1,368.0 $ 929.2 $ (4,061.4) $ (9,130.4) $ (3,399.0) $ (3,474.0) $ (20,064.6)

Net income (loss ) to common $ (5,414.0) $ 182.0 $ (792.9) $ 172.1 $ 1,368.0 $ 929.2 $ (4,061.4) $ (9,130.4) $ (3,399.0) $ (3,474.0) $ (20,064.6)
EPS (loss) $ (0.05) $ 0.00 $ (0.01) $ 0.00 $ 0.01 $ 0.01 $ (0.03) $ (0.07) $ (0.02) $ (0.02) $ (0.14)

Average shares outstanding 108,715.9 110,222.5 112,319.5 115,243.7 118,264.2 118,264.2 118,277.6 133,124.2 167,788.7 169,466.6 147,164.3

Growth Rate Analysis Y/Y


Total revenue -57.4% nm nm nm nm -54.8% nm nm nm 192.7% 885.1%
Total cost of revenues nm nm nm nm nm nm nm nm nm nm nm
General and administrative 15.5% -29.4% -49.7% 62.8% -0.7% -11.0% 8.0% 59.6% -29.0% 6.4% 3.4%
Research and development 16.6% -73.7% -57.3% -27.5% 188.2% -6.7% 456.6% 282.2% 141.4% -12.8% 91.4%
Operating income -18.4% 49.4% 52.3% -18.9% -73.4% 8.5% -118.9% -130.1% -19.1% 9.9% -39.0%
Prex-tax income -5.2% 47.2% 50.7% 114.0% 217.0% 100.1% -486.5% -1051.5% -2074.5% -353.9% -281828.5%
Net income -5.2% 113.0% 50.7% 114.0% 217.0% 117.2% -2331.5% -1051.5% -2074.5% -353.9% -2259.2%
EPS - fully diluted 54.8% 112.7% 52.4% 113.2% 208.1% 115.8% -2179.6% -871.5% -1456.2% -277.2% -1835.2%
Share count - fully diluted 132.9% 2.1% 3.6% 5.6% 8.2% 8.8% 7.3% 18.5% 45.6% 43.3% 24.4%

Source: Company Reports, Stonegate Securities estimates

STONEGATE SECURITIES 18
Cash Flows

Advaxis Inc (OTCBB: ADXS)


Consolidated Statements of Cash Flows
Fiscal Year: October
2008 2009 Q1 Q2
Cash Flow from Operations Jan-10 Apr-10
Net income (loss) (5,416.4) 929.2 (4,061.4) (13,191.7)
Adjustments to reconcile net income to net cash :
Depreciation of property and equipment 36.1 36.6 9.4 19.1
Amortization of expense of intangibles 161.2 74.5 21.3 43.5
Amortization of deferred financing costs - 61.5 41.0 82.0
Amortization of discount on bridge loans - 123.8 225.3 480.7
Non-cash charges to consultants 355.4 571.5 188.2 268.7
Gain on note retirement - - - (64.4)
Accrued interest on note payable - - - -
Value of penalty shares issued 31.8 - - -
Non cash interest charge 7.9 698.7 1,433.4 2,818.7
(Gain)/loss on change in value of warrants - (5,845.2) 1,090.1 6,875.4
Changes in operating assets and liabilities:
Other assets - - - (14.5)
Accounts payable 211.6 1,421.8 441.8 (461.0)
Deferred revenue - - - -
Accrued expenses 298.3 (109.5) (244.2) (168.8)
Prepaid expenses 161.1 2.4 (6.5) (28.6)
Deferred expenses - - - -
Interest payable - - - (161.2)
Impairments of intangible assets - - - -
Net cash provided by operating activities ($4,153.1) ($2,034.6) ($861.5) ($3,502.0)
Cash Flow from Investing
Purchase of property and equipment (10.8) - (10.0) (10.0)
Costs of intangible assets (200.5) (308.7) (99.5) (158.2)
Net cash used by investing activities ($211.3) ($308.7) ($109.5) ($168.2)
Cash Flow from Financing
Net proceeds (payments) on convertible debt - - -
Net proceeds (payments) on notes payable 460.2 3,243.0 259.1 (135.2)
Net proceeds from issuance of preferred stock - - 1,166.0 3,202.8
Proceeds from issuance of common stock (78.0) - - -
Proceeds from exercise of warrants - - - 170.0
Cash paid for deferred financing costs - (299.5) - -
Net cash provided (used) by financing activities $382.2 $2,943.5 $1,425.1 $3,237.7

Net increase (decrease) in cash (3,982.2) 600.1 454.1 (432.6)


Cash and cash equivalents, beginning of year 4,042.0 59.7 659.8 659.8
Cash and cash equivalents, end of period 59.7 659.8 1,114.0 227.2
Source: Company Reports, Stonegate Securities

STONEGATE SECURITIES 19
Important Disclosures and Disclaimer
(a) Stonegate Securities, Inc. (“Stonegate”) expects to receive or intends to seek compensation for
investment banking or other business relationships with the covered companies mentioned in this
report in the next three months.
(b) The Research Analyst principally responsible for the preparation of this report has received compensation that
is based upon, among other things, Stonegate’s investment banking revenues.
(c) Within the last twelve months, Stonegate has received compensation for investment banking services from
the Company and has a non-exclusive placement agency agreement in place as of 6/24/2009; Stonegate is
engaged to provide research and institutional investor awareness for the Company and may assist the
company in raising capital. As compensation, Stonegate received compensation of $100,000.
(d) Within the last twelve months, Stonegate has not managed or co-managed a public offering for the Company.
(e) Stonegate and/or its employees, officers, directors and owners do not own options, rights or warrants to
purchase this security.
(f) Stonegate does not make a market in this security.
(g) No employee of Stonegate serves on the Company’s Board of Directors.
(h) A Research Analyst and/or a member of the Analyst’s household do not own shares of this security.
(i) A Research Analyst and/or a member of the Analyst’s household do not serve as an officer, director, or
advisory board member of the Company.
(j) This security is eligible for sale in one or more states.
(k) This security is not subject to the Securities and Exchange Commission’s Penny Stock Rules, which may set
forth sales practice requirements for certain low-priced securities.
(l) Stonegate or its affiliates do not beneficially own 1% or more of an equity security of the Company.
(m) Stonegate does not have other actual, material conflicts of interest in the securities of the Company.

Meaning of Ratings - Stonegate does not rate the securities covered in its information memorandums.
Distribution of Ratings - Stonegate does not rate the securities covered in its information memorandums.
Price Chart - Stonegate does not have, nor has previously had, a rating for any securities of the Company.
Price Targets - Stonegate does not have a price target for any securities of the Company.

Regulation Analyst Certification:


I, Marco Rodriguez, CFA, hereby certify that all views expressed in this report accurately reflect my personal
views about the subject company or companies and its or their securities. I also certify that no part of my
compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed
in this report.
For Additional Information Contact:
Stonegate Securities, Inc.
Marco Rodriguez , CFA
214-987-4121
Marco@stonegateinc.com

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