A Case for Cure: Drug Portfolio Analysis. Team: PharmaKings Anirvan Chaudhuri Neha Madan Xiao Huang Jason Park Anjai Lal

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1 A Case for Cure: Drug Portfolio Analysis Team: PharmaKings Anirvan Chaudhuri Neha Madan Xiao Huang Jason Park Anjai Lal

2 Executive Summary Our team recommends. A Recombinant Protein for treatment of Multiple Sclerosis Relative attractiveness of choice driven by: Significant unmet need in RR and CP patient populations Total market size of $8B by 2027 Potential to beat standard-of-care from novel mechanism action Few competitors focused on CP & neuronal protection and remyelination Easier path to reimbursement at competitive prices Lower risk of generic drugs Lower price sensitivity of patients and payors

need in RR and CP patient populations Total market size of $8B by 2027 Potential to beat standard-of-care from novel

3 What drives success in this industry Market Size, Growth, and Segmentation Competitive landscape Sales in different Geographies Science 2 Disorder Pathology Current Therapies Unmet Needs Ideal Drug profile Synergies with existing portfolio 1 Market Demand 3 Profitability NPV Analysis Revenue drivers Cost drivers Risks and Rewards

4 $ in Millions $ in Millions Bigger Market with Greater Growth Rate for Multiple Sclerosis Psoriasis Multiple Sclerosis Mild Moderate Severe Total CP RR Total Years Drug Target Type Action Mode Years Drug Target Type Action Mode Etanercept Moderate -Severe TNF inhibitor Calcipotriene Mild Topical corticosteroid Efalizumab Moderate -Severe TNF inhibitor Betamethasone Mild Topical corticosteroid mab Topical mab Topical Copaxone RR T cell proliferation suppressor Avonex Rebif RR + Relapsing SP RR + Relapsing SP T cell inhibitor T cell inhibitor Peptide recombinant Interferon recombinant Interferon recombinant Betaseron RR T cell inhibitor Interferon

4 2007 2017 2027 Years Drug Target Type Action Mode 2007 2017 2027 Years Drug Target Type Action Mode Etanercept Moderate -Severe TNF inhibitor Calcipotriene Mild Topical corticosteroid Efalizumab

5 Consumer Needs Unmet Needs & Opportunities Present Status Psoriasis Oral systemic agents: Highly effective 1st line therapy for moderate-severe patients suffers from toxicities Biologic agents: Useful for long-term therapy (needs improved efficacy & safety) Topical agents: Primary therapy for mild segment (limited use in moderate-severe patients) Multiple Sclerosis Polypeptides: 1st line therapy for relapsing patients (RR) Interferon βs: Reduce disability, good efficacy in RR Monoclonal antibodies: Efficacy in refractory patients Unmet Potential Need for oral agents as 1 st line & continuous therapy of moderate-severe patients Biologics with improved safety/efficacy (new mechanisms of action) Patients who aren t being treated currently due to perceived safety/convenience concerns No current drugs address neuronal damage or neural regeneration Too few therapies exist for Chronic progressive Multiple Sclerosis. Need for greater efficacy and safety Need for more convenient therapy Implication Lower scope for innovation Fragmented market Unmet potential not attractive enough to enforce innovation Creation of new niche market addressing neuronal damage First mover advantage Ability to command a premium price 5

$therapy for relapsing patients (RR) Interferon βs: Reduce disability, good efficacy in RR Monoclonal antibodies: Efficacy in refractory patients Unmet Potential Need for oral agents as 1 st line &$

6 Ideal Target Market: Multiple Sclerosis Psoriasis Multiple Sclerosis Unmet Needs Oral Biologic Unmet Needs Recombinant Protein Systemic? Reduces disability/ progression? Continuous therapy? Addresses neural damage? Convenient? Novel mechanism of action? Improved efficacy? Improved safety? (endogenous) Improved safety? Dosing schedule? Method of delivery? Market Potential Reimburseable? Market Potential Market segments? Reimbursable? -mild Market segments: -moderate/severe -Relapse/Remitting -currently untreated -Chronic Progressive Competitive Advantage Competitive Advantage Differentiated? Differentiated? Ability to beat SOC? Ability to beat SOC? Attainable Unknown Unlikely

Method of delivery? Market Potential Reimburseable? Market Potential Market segments? Reimbursable?

7 Mechanism of drug action Psoriasis Multiple Sclerosis Oligodendrocyte Auto-immunity causes pathological growth of the skin cells 1. Inflammation by the immune system 2. Demyelination in Central Nervous System 7

8 Assumptions Overall Parameters Rationale Terminal Growth Assumed 3% growth Conservative rate assumed Discount Rate: Assumed 9% Average WACC for Pharmaceuticals= 7% COGS (for orals) 15% Based on comparables COGS (for biologics) 50% Based on comparables Multiple Sclerosis Price $16000/year Comparable Prices (Interferon Beta) Initial Penetration 3% for RR and 5% for CP Benchmarked with Tysabri (recently launched Biologic drug) Terminal Penetration Rate Psoriasis Plateaus at 24% for RR and 40% for CP Benchmarked with Tysabri Price $13,000/year Average price of similar drugs in class Penetration Plateaus at 30% for Orals and 5% for Biologics Benchmarked with comparables Capture of New Patients 10.8% Oral drug could capture currently untreated population that would use bio/oral drugs Patient Growth Assumed 2% growth Conservative rate assumed 8

(recently launched Biologic drug) Terminal Penetration Rate Psoriasis Plateaus at 24% for RR and 40% for CP Benchmarked with Tysabri Price $13,000/year Average price of similar drugs in class

9 Financial Analysis Scenario Penetration Rate Probability Move Forward Total cash flows Development Costs NPV of cash flows Psoriasis: Oral Treatment Case 1 Plateaus at 30% 15% $782,178,125 $800,000,000 $2,332,084 Case 2 Majority Market 15% $1,981,126,077 $800,000,000 $258,241,000 Psoriasis: Biologics Treatment Case 1 Plateaus at 5% 19% $998,176,778 $1,200,000,000 ($1,006,178,026) Case 2 Plateaus at 30% 19% $4,689,535,964 $1,200,000,000 ($49,439,835) Multiple Sclerosis Likely Case Plateaus at 30% 39% $2,734,107,693 $1,000,000,000 $388,345,264 Product Differentiat ion Market growth rate Market size at launch NPV Probability of drug approval Market penetration Psoriasis Multiple Sclerosis Target Segment Moderate-Severe Relapsing Remitting Price per patient $13,000 $16,000 Target Patient 25% 4% - 28% Potential Market 30% 22% Potential Sales $8 mm-$121 mm $146 mm - $1,440 mm Treatment for Multiple Sclerosis yields the highest NPV of $388 million

2 Plateaus at 30% 19% $4,689,535,964 $1,200,000,000 ($49,439,835) Multiple Sclerosis Likely Case Plateaus at 30% 39% $2,734,107,693 $1,000,000,000 $388,345,264 Product Differentiat ion Market growth

10 Scenario Analysis $1,500 NPV (in mm) vs WACC $1,000 $1,000 $500 $500 NPV (in mm) vs Maximum $0 Penetration (RR=25% and CP=40%) ($500) 7% 8% 9% 10% 11% 12% 13% 14% $1,000 $800 $600 $400 NPV (in mm) vs Price Growth $0 ($500) -15% -10% -5% 0% 5% 10% Change in Penetration Rate $200 $0 5% 10% 15% 20% 25% 30% Price Growth NPV is most sensitive to penetration rate and discount rate (WACC) WACC between 7% and 14% gives an NPV ranging from $1.2B to -$337M Price growth between 5% and 15% increases NPV from $458M to $805M Plateau penetration rate of 10% for RR and 25% for CP = NPV of $240M; plateau penetration rate of 35% for RR and 50% for CP = NPV of $813M

most sensitive to penetration rate and discount rate (WACC) WACC between 7% and 14% gives an NPV ranging from $1.

11 Recommendations We recommend Pursue Novel Recombinant Protein Therapy for Multiple Sclerosis REWARDS Potential Market for MS by 2027 estimated at $8B Novel recombinant protein capture at 22% ($1.7B) Increased growth in Europe and ROW Off-label usage will increase revenues Successful launch of drug will increase Brand equity Increased valuation of firm RISKS Biological risks Approval risks Re-positioning of competitor drugs Entry of Biosimilars Synergy with firm s existing portfolio

7B) Increased growth in Europe and ROW Off-label usage will increase revenues Successful launch of drug will increase

12 BACKUP SLIDES

13 Potential Candidate Targets for Proposed drug Identified by seven Human Genetic studies Activating natural ability of remyelination Supported by Preclinical and Clinical Data FDZ1 GGF-2 Wnt Notch GGF-1 BDNF IGF-1 CXCR4 FGF-2

natural ability of remyelination Supported by

Recombinant Fusion protein targeting CNS IGF PTD CNS Oligodendrocyte Blood brain barrier IGF Insulin-like Factor -1 Oligodendrocyte Progenitor PTD Protein transduction domains of HIV-1

14 Recombinant Fusion protein targeting CNS IGF PTD CNS Oligodendrocyte Blood brain barrier IGF Insulin-like Factor -1 Oligodendrocyte Progenitor PTD Protein transduction domains of HIV-1 transactivator TAT protein BBB Transferrin Receptor Transduced PTD-BDNF fusion protein protects against beta amyloid peptide induced learning and memory deficits in mice Brain Research 2007 Zhou et al.

transactivator TAT protein BBB Transferrin Receptor Transduced PTD-BDNF fusion protein protects

Optimal R&D Allocation Modern Portfolio Theory. Efficient F R O N T I E R. Ryan Catania, Jacqueline Heiss, Xiaoting Huo, Dan Su, Cheng Yang

& Optimal R&D Allocation Modern Portfolio Theory Efficient F R O N T I E R Ryan Catania, Jacqueline Heiss, Xiaoting Huo, Dan Su, Cheng Yang Multiple Sclerosis - Pathophysiology T Cell Barrier Antigen Presenting