Biotie Therapies EU recommendation for Selincro and pipeline developments

A perfect tonic for 2013 Pharma & biotech

A recommendation for approval in Europe of dependence drug Selincro and 4 January 2013 positive Phase IIb data for Parkinson’s disease candidate tozadenant are Price €0.41 breakthrough events that enhance Biotie’s investment case. The next key catalyst is Market cap €186m UCB’s decision in Q113 on whether to advance tozadenant into Phase III trials, potentially triggering a c €25m milestone. A positive verdict by UCB could therefore enable Biotie to advance its pipeline candidates, such as SYN120 for cognitive Shares in issue 452.7m disorders, to greater valuation inflection points. With Selincro to be launched in Free float 98% Europe by partner in mid-2013, Biotie is entering a transformational period. Code BTH1V

Primary OMX exchange Year end Revenue (€m) PBT* (€m) EPS* (€) DPS (€) P/E (x) Yield (%) 12/11 1.0 (20.8) (0.04) 0.0 N/A N/A Share price performance 12/12e 4.3 (22.7) (0.05) 0.0 N/A N/A 12/13e 20.9 (0.1) 0.00 0.0 N/A N/A 12/14e 6.0 (17.4) (0.04) 0.0 N/A N/A Note: *PBT and EPS are normalised, excluding intangible amortisation and exceptional items.

Selincro: EU CHMP positive opinion On 13 December 2012 Europe’s recommendation committee adopted a positive opinion on Selincro (nalmefene) 18.6mg tablets to be taken as-needed to reduce alcohol consumption (there are an estimated 16 million alcoholics in Europe). Selincro % 1m 3m 12m reduced consumption by >60% on average in pivotal studies and offers a new and Abs 2.5 5.1 (22.6) more realistic treatment option for many alcohol dependents compared to existing Rel (local) (3.4) (4.7) (28.6) drug therapies, which are minimally effective at maintaining abstinence from drinking. 52-week high/low €0.52 €0.33

Selincro: Lundbeck to launch mid-2013 Business description Biotie Therapies is a Finnish/US biotech Assuming full EC approval in Q113, Lundbeck will start to roll-out Selincro in key company with a focus on clinical European markets in mid-2013, triggering milestones (~€10m over 18 months) and programmes in CNS and niche royalties on sales (~15%). Given Selincro’s new treatment concept, initial uptake is inflammatory diseases. Its lead project likely to be modest but should accelerate significantly, and we now estimate peak Selincro, for the treatment of alcohol sales of €320m by the end of Selincro’s 10 years of market exclusivity in Europe. dependency, is partnered with Lundbeck and recommended for full EU approval. UCB is another strategic partner; a decision Tozadenant: Positive headline data, awaiting UCB decision on tozadenant is expected in Q113.

Also in December, Biotie announced positive headline Phase IIb (n=420) data for Next events tozadenant in significantly reducing ‘off-time’ in Parkinson’s disease patients suffering Selincro: EMA approval Q113 wearing off fluctuations on levodopa. Multiple secondary, non-motor endpoints were Tozadenant: UCB decision on Q113 also met. Full efficacy and safety data were not revealed, but we are hopeful that UCB further development will decide to take tozadenant into Phase III, triggering a significant milestone (~€25m). SYN117: start cocaine Q113 dependence Phase II study Valuation: €242m with near-term upside potential Selincro: Europe launch Mid-13 Pipeline development/deals 2013 Following fresh guidance from Lundbeck on potential pricing and usage rates, we now include detailed forecasts for Selincro which produces a peak sales estimate of Analysts €320m. Our revised model for Biotie now yields a total valuation of €242m, which also Christian Glennie +44(0)20 3077 5727 includes €35m estimated end-2012 cash and an increase in tozadenant’s probability – Lala Gregorek +44(0)20 3077 5736

[email protected] UCB’s support would increase our valuation to c €255m.

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Biotie Therapies | 4 January 2013

Biotie Therapies: Data sheet

Exhibit 1: Biotie Therapies’ product portfolio Product Indication/ Partner Notes stage Selincro Alcohol Lundbeck Oral opioid receptor antagonist to be taken on an ‘as needed’ basis. Global deal with (nalmefene) dependence Lundbeck provides up to €89m in upfront and milestone payments (€12m received to date) (EU CHMP and tiered double-digit royalties in EU (lower royalties ex EU/US). Phase III programme positive opinion) (18.6mg nalmefene on demand) conducted by Lundbeck complete with positive top-line results: significant reductions in alcohol intake (less frequent heavy drinking and lower overall alcohol consumption) by >60% over six months. Two 24-week, placebo-controlled Phase III studies: ESENSE1 (598-pts) and ESENSE2 (718-pts) (primary efficacy endpoints: change in baseline in the monthly number of heavy drinking days and total alcohol consumption) and SENSE (a 675-pt, 52-week safety study). Detailed Phase III data presented (by Lundbeck) at the European Congress of Psychiatry, Prague (March 2012) and the Annual Research Society on Meeting, San Francisco (June 2012). EU CHMP positive opinion (Dec 2012) and final EU approval due Q113. Lundbeck to launch in certain EU markets in mid-2013 (triggering up to €10m in milestones).

Tozadenant/ Parkinson’s UCB Selective A2a antagonist. Partnered with UCB globally: deal included $20m equity investment SYN115 disease with up to $370m in regulatory and commercial milestones plus double-digit tiered sales (Phase IIb) royalties (with potential for collaboration expansion). Dec 2012: positive headline data from 420-pt, 12-week, double-blind, Phase IIb (five-arm: four doses and placebo, twice-daily) study: statistically highly significant decrease in ‘off-time’ vs placebo in Parkinson’s disease patients suffering wearing off fluctuations on levodopa. Multiple secondary endpoints – UPDRS scores and clinician/patient assessed global impression scores – were also met. Trial may qualify as a pivotal study for regulatory submission. Full efficacy/safety data to be presented at upcoming medical conferences/scientific publications. UCB to decide on further development in Q113, potentially triggering a ~€25m milestone. 30-pt Phase IIa showed dose-dependent functional activity in brain regions associated with motor function/cognition (clinical improvement in both). Activity in preclinical models of depression, cognition and anxiety. Potential neuro-protective drug. Originally licensed by Synosia from Roche in 2007.

SYN120 Cognitive Partner Oral 5HT6 receptor antagonist. Once-daily oral small molecule drug: can cross the BBB; no disorders sought QTc (cardiovascular) side effects. Phase I single and multiple ascending dose studies in 70 associated with healthy volunteers complete (studied for up to 14 days at doses up to 600mg/day, which is Alzheimer’s >10x the anticipated therapeutic dose). Wide therapeutic window: PET study in nine healthy disease volunteers established that target levels of receptor occupancy expected for efficacy could be (Phase II-ready) achieved with doses an order of magnitude lower than those shown to be safe/well tolerated. Phase II enabling package complete: appropriate dosing established. Originally licensed in 2009 by Synosia from Roche, which subsequently declined to exercise a one-time option to global rights (July 2012). Biotie is seeking a development partner. BTT-1023 Fibrotic diseases Partner Fully-human monoclonal targeting VAP-1. Phase II-ready: manufacturing process (Phase II-ready) sought and scale-up optimisation underway. Partner required for Phase II programme. Previous rheumatoid studies in inflammatory indications, but development strategy now focused on fibrosis disease arthritis/ indications. Repeat-dose Phase I studies in 24 RA pts showed PK consistent with chronic use and some evidence of efficacy at higher doses (ACR50 response in several higher-dose (Phase I patients). Results of similar ascending multiple-dose study in psoriasis showed consistent complete) tolerability and PK, and evidence of efficacy (decrease in PASI score). New opportunity in liver inflammatory fibrotic diseases identified (patent pending). Biotie holds global rights after Asia- Pacific licence with Seikagaku terminated for strategic reasons ($2.7m was received). Nepicastat/ Cocaine Studies Oral dopamine β-hydroxylase inhibitor. Dec 2012: 120-pt Phase II study in combat veterans SYN117 dependence/ funded by suffering PTSD, funded by US Department of Defense, failed to relieve PTSD-associated post traumatic US depts symptoms. 180-pt three-month Phase II cocaine dependency study to start Q113; funded stress disorder under a CRADA with the US NIDA. Positive 16-pt Phase IIa study in non-treatment seeking (Phase II) cocaine addicts (safe, well tolerated and reduced subjective responses to cocaine). Ronomilast COPD/asthma Partner Once-daily oral PDE4 (phosphodiesterase-4) inhibitor (potential best-in-class: differentiated by (Phase II-ready) sought improved side-effects [GI/CNS]). No investment in further clinical development without a partner – deal discussions ongoing. Repeat-dose PK studies in 48 healthy volunteers up to 100mg daily showed ronomilast was well tolerated with no serious or severe adverse events, generated highly statistically significant biomarker responses, and had PK supporting a once- daily dose regime. Total of 126-pts studied in Phase I. Source: Edison Investment Research

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Update: Selincro and tozadenant strengthen Biotie

Selincro is poised to become Biotie’s first marketed product, a significant achievement that will build an important revenue stream – annual royalties from Lundbeck could reach €55m. Meanwhile, positive tozadenant Phase IIb results suggest a decent chance that UCB will decide to advance the product into a Phase III programme. With the total UCB deal valued at $370m overall, we estimate ~10% or ~€25m could be owing to Biotie for successful completion of the Phase IIb study and UCB exercising its development option. Crucially, this could enable Biotie to consider advancing its own pipeline

candidates, such as SYN120 (potentially best-in-class 5-HT6 receptor antagonist) for cognitive disorders, to a greater valuation inflection point. A potential UCB milestone would also strengthen Biotie’s negotiating position in ongoing partnership discussions for SYN-120 as well as its other Phase II-ready assets: VAP-1 antibody, BTT-1023, for fibrotic disorders and ronomilast for COPD/asthma. UCB’s decision in Q113 is therefore a key near-term share price and strategic catalyst for Biotie.

Selincro – a new approach to alcohol dependency Europe’s committee for medicinal products for human use (CHMP) has recommended approval of Selincro tablets for the reduction of alcohol consumption in adults with alcohol dependence who have a high drinking risk level, without physical withdrawal symptoms and who do not require immediate detoxification. A high drinking risk level is defined by the WHO at >60g of alcohol per day for men and >40g per day for women. For reference, one normal drink equates to ~10g of alcohol, a standard bottle of wine ~70g alcohol and a bottle of beer ~13g alcohol.

Selincro can be prescribed by specialists and general practitioners, and should be used in conjunction with psycho-social support (counselling/support groups) focused on treatment adherence and the reduction of alcohol consumption. Selincro should be given only to patients who continue to have a high drinking risk level two weeks after the initial assessment. Selincro will be taken ‘as-needed’; that is, on each day the patient perceives a risk of drinking alcohol, one tablet should be taken, preferably one to two hours prior to drinking.

This approach to treating alcohol dependency offers a much-needed alternative for many patients for whom complete abstinence from drinking is not an acceptable or attainable treatment goal. This is in contrast to existing drug treatment options, which are targeted more at maintaining abstinence. These products have been available for many years in Europe and include Campral (acamprosate), to reduce alcohol craving; Antabuse (disulfiram), which makes a person sick when he/she drinks; and Revia/Vivitrol (naltrexone), which interferes with the pleasurable effects of drinking. Pivotal studies of acamprosate and naltrexone have shown superior efficacy compared to placebo in improving the rate and duration of abstinence (for acamprosate) and alcohol consumption (for naltrexone), although the 1 actual patient response rates are not always consistent and relatively modest.0F For example, under 30% of patients treated with acamprosate are continuously abstinent after 12 months and two-thirds of patients receiving naltrexone experienced at least one heavy drinking day after 16 weeks of treatment. Peak annual sales for Campral in Europe by Merck KGaA were c €40m.

Selincro moderates consumption Nalmefene is a selective opioid receptor ligand with antagonist activity at the μ and δ receptors and partial agonist activity at the κ receptor of the opioid system. Acute alcohol intake has been shown to result in mesolimbic dopamine release (facilitated by the release of β-endorphins), the so-called ‘reward pathway’. Nalmefene is thought to counteract the reinforcing effects of alcohol consumption, possibly by modulating these cortico-mesolimbic functions.

1 Guideline on the development of medicinal products for the treatment of alcohol dependence. European Medicines Agency. 18 February 2010.

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Results from three pivotal studies (ESENCE 1, ESENCE 2 and SENSE) showed that Selincro (18.6mg as needed) is safe, well tolerated and effective in reducing the monthly number of heavy drinking days (HDDs) and the monthly total alcohol consumption (TAC in g/day) by over 60% after six or 12 months in alcohol-dependent patients. Two-thirds of these patients had never previously received treatment for alcohol-dependency. Detailed results from all three studies were presented at medical conferences in 2012 (European Congress of Psychiatry in March and the Annual Research Society on Alcoholism in June) and a summary of all three trial results are presented in Exhibit 2.

Exhibit 2: Summary Phase III Selincro results Trial Decrease in mean number of HDD/month from Decrease in mean TAC (g/day) at Secondary endpoints baseline month six ESENSE1 (n=604) Superior to placebo at month six: -2.3 HDD Superior to placebo at month six: Improvement in Clinical (p=0.0021) -11g/day (p=0.0003) Global Impression and liver Selincro (n=306) 19 to 8 (58%) 84 to 33 (60%) enzymes GGT and ALAT Placebo (n=298) 20 to 11 (45%) 85 to 45 (47%) vs placebo (p<0.05) at month six ESENSE 2 (n=718) Superior to placebo at month six (p<0.05) Superior to placebo (p<0.088) Not disclosed Selincro (n=358) 20 to 7 (65%) 93 to 30 (68%) Placebo (n=360) 18 to 7 (61%) 89 to 33 (63%) SENSE (n=675) Superior to placebo (p<0.05) at most time Superior to placebo (p<0.05) at most Not disclosed points, including 52 wks, but not at month six time points, including 52 wks, but not month six Selincro (n=509) Month six: 15 to 5 (67%), with a further drop to Month six: 75 to 22 (71%) with a 3 at 52 wks (80%) further decrease to 16 (79%) at 52 wks Placebo (n=166) Month six: 15 to 6 (60%), no further decrease Month six: 75 to 27 (64%), no further at 52 wks decrease at 52 wks Source: Edison Investment Research, Lundbeck reports.

2 Results from the ESENCE 1 trial were recently published in the journal of Biological Psychiatry.1F Exhibits 3 and 4 show the monthly changes in alcohol consumption, with nalmefene having a significant effect from month one and sustained throughout the six months. Even though the numerical differences in HDD and TAC between nalmefene and placebo appear similar at first glance, the 3 p-values are highly statistically significant and given that both therapy arms included medical advice,2F it is not surprising that a strong placebo effect was also observed.

Exhibit 3: Monthly change in HDD from baseline Exhibit 4: Monthly change in TAC from baseline

Source: ESENCE 1 study. Note: Adjusted mean change Source: ESENCE 1 study. Note: Adjusted mean change from baseline in monthly heavy drinking days (HDDs). from baseline in monthly total alcohol consumption (TAC; *=p<0.05. B=baseline. g/day). *=p<0.05. B=baseline.

Although no specific treatment goal was defined (ie both abstinence and reduced consumption were accepted) and no information was collected on individual treatment goals, the differences between nalmefene and placebo of two fewer heavy drinking days per month and 11g less alcohol per day are

2 Mann K, et al. Extending the Treatment Options in Alcohol Dependence: A Randomized Controlled Study of As-Needed Nalmefene. Biological Psychiatry. Available online 11 December 2012. 3 All patients took part in a motivational and adherence-enhancing intervention (BRENDA) to support them in changing their behaviour and to enhance adherence to treatment.

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clinically relevant. Evidence from epidemiological data have shown that every heavy drinking day 4 carries an increased risk of accidents, aggression, suicide and cardiac arrest,3F and any reduction in alcohol consumption for a person who consumes more than 10g of alcohol per day will reduce the 5 annual and lifetime risk of an alcohol-related death.4F

With regard to safety/tolerability, the adverse event profile was consistent with previous studies and reflective of the pharmacological profile of nalmefene. During the main treatment period, 246 (81%) of the patients in the nalmefene group and 198 (67%) of the patients in the placebo group had treatment- emergent adverse events. Of the most common treatment-emergent adverse events (incidence ≥5%), dizziness (28%), nausea (28%), fatigue (18%), sleep disorder (11%), insomnia (10%), vomiting (8%) and excessive sweating (5%) had an incidence two-times higher with nalmefene compared to placebo. However, the vast majority of the most common adverse events in the nalmefene group were mild or moderate and occurred within one day of dosing. The drop-out rate due to treatment-related adverse events was 23% on nalmefene vs 7% with placebo.

Although the prevailing opinion of government agencies and the medical community across Europe holds abstinence as the primary treatment goal for alcohol dependency, abstinence is not desirable or acceptable to many patients. Reducing total alcohol consumption is therefore a more viable and acceptable option for patients and clinicians alike, suggesting Selincro offers a new treatment paradigm, both in terms of the treatment goal and the ‘as-needed’ dosing regimen.

Tozadenant – positive Phase IIb data leave the ball in UCB’s court Originally licensed by Synosia from Roche in 2007, Biotie has successfully completed a 420-patient Phase IIb (potentially pivotal) study of tozadenant in patients experiencing levodopa related end of dose wearing off. Headline results, without specifics of response rates etc, were released in mid- December and UCB is expected to decide in Q113 on whether to take tozadenant into a Phase III programme. We estimate a positive decision by UCB could trigger a ~€25m milestone payment, which would almost double Biotie’s cash reserve (estimated at €35m at end-2012).

Although the absence of detailed data is an important consideration, we are encouraged by the language used of a ‘statistically highly significant’ improvement in primary and multiple secondary endpoints. These include: a decrease vs placebo in ‘off’ time, an increase in ‘on’ time, an improved score on UPDRS part III and UPDRS parts I-III combined, as well as improvements on clinician- and patient-assessed global impression scores. Patients received one of four doses (60mg, 120mg, 180mg and 240mg) matching placebo, twice-daily for 12 weeks, in addition to their standard Parkinson’s disease medications. The study identified the minimally efficacious and maximum feasible dose levels, as well as the clinically useful target doses for Phase III trials. Tozadenant was also reported to be generally well tolerated.

At face value the study information released and tozadenant’s clear fit within UCB’s CNS franchise (including Neupro for Parkinson’s) point towards a positive verdict from UCB. However, it is worth noting some competitive developments in Q113 that could have a bearing on UCB’s decision. By 21 January 2013 the FDA is expected to rule on Impax Laboratories/GlaxoSmithKline’s NDA on Rytary (IPX066), an extended-release capsule formulation of carbidopa-levodopa (CD-LD), which has shown in pivotal trials to produce clinically relevant reductions in ‘off time’ in early and advanced stage Parkinson’s. Also in Q113, Merck & Co may announce the results of multiple Phase III studies of preladenant (MK-3814), an adenosine A2a antagonist like tozadenant, which is also primarily targeted at reducing ‘off-time’.

4 Rehm J, et al. (2010): The relation between different dimensions of alcohol consumption and burden of disease: An overview. Addiction 105: 817–843. 5 Rehm J, et al. (2011): Epidemiology and alcohol policy in Europe. Addiction 106 (suppl 1): 11–19.

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Valuation

We have revised our model for Biotie, which now yields a total valuation of €242m. Our valuation now includes €35m estimated end-2012 cash, a detailed forecast model for Selincro (prompted by fresh guidance from Lundbeck on potential pricing, usage and target market), and an increase in tozadenant’s probability of success from 35% to 50%. Our net cash figure excludes Biotie’s long-term financial liabilities of €23.5m that mostly relate to loans from Tekes, which are largely repayable only on sustainable profitability. We use a standard 12.5% cost of capital and include a base running cost for the business. Our valuation compares favourably with Biotie’s market capitalisation of €186m.

A decision by UCB to advance tozadenant into Phase III studies could increase our valuation to c €255m, by applying a Phase III probability (65%) to tozadenant and adding in ~€25m receivable from UCB – we currently assume a 50% chance (ie we include €12.5m in our model) that UCB exercises its option on tozadenant. We also include €10m in launch-based milestones for Selincro within the first 12 months. Our model assumptions are summarised in Exhibit 5.

Exhibit 5: Biotie valuation model Products Status Probability Est launch Est peak Est market Est maximum Est peak of success year market share value royalty sales Selincro – alcohol dependency EU approval 100% Mid-2013 35% $750m 17% $400m Tozadenant (SYN115) – Phase IIb 50% 2018 6% $2,750m 15% $265m Parkinson’s disease SYN120 – cognitive disorders Phase II-ready 25% 2019 5% $5,000m 10% $602m Ronomilast – COPD/asthma Phase II-ready 35% 2016 3% $15,000m 18% $681m BTT-1023 – fibrotic disease Phase II-ready 35% 2017 15% $750m 15% $234m Total product rNPV €207m Cash (FY 2012e) €35m Total valuation €242m Source: Edison Investment Research

A key revision to our valuation model has been the fresh inclusion of a detailed forecast model for Selincro sales in Europe, made possible by fresh guidance from Lundbeck following the CHMP’s positive opinion. Our new peak sales estimate of €320m (previously €450m) is in line with Lundbeck’s peak sales estimate of DKK2.5bn (€330m). A summary of our assumptions for modelling Selincro forecast sales is presented in Exhibit 6.

Exhibit 6: Summary assumptions to model Selincro forecasts Total estimated alcoholic 16m (based on 500m total EU population, alcoholism rates of 5% for men and population (EU) 1.4% for women) Diagnosis rate % 15% (current) increasing to 25% (at peak) Diagnosed patients 2.4m (current) increasing to 4m (at peak) Drug treatment rate % 8% (current) increasing to 12.5% (at peak) Patients receiving drugs 1.3m (current) increasing to 2m (at peak) Selincro market penetration gradual initial uptake, peaking at 35% by 2021 Patients using Selincro 700,000/year at peak Effective annual cost €450 (assumes 1 pill/2.5 days = 145 days at €3 per pill, Lundbeck estimate) Peak annual sales €320m Royalty rate % (10-17%) tiered double-digit (10-17%) Peak annual royalties €55m Milestones (€m) €10m (launch milestones in first 12 months) Source: Edison Investment Research, Lundbeck estimates

Aside from the potential near-term milestones from Lundbeck (€10m) and UCB (€25m), we note that Biotie could receive significant further milestones from Lundbeck (up to €67m) and UCB (up to c $335m), contingent on successful development and commercialisation of Selincro and tozadenant. We also exclude possible development of Selincro outside the EU – US commercialisation is unlikely for IP reasons, but development and commercialisation in other European countries (e.g. Russia) and Japan is likely to represent additional upside.

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As part of Lundbeck’s €10m investment in Biotie in September, Biotie agreed to reduced royalties on sales of Selincro outside the European Union, the European Free Trade Area and the United States. In return, Lundbeck may consider conducting the clinical trials required to gain approval in Japan, with Biotie set to receive a potential additional sales milestone of €5m.

Sensitivities

Biotie is subject to sensitivities common to most biotech companies: potential clinical or regulatory failure or delay, commercialisation risks (launch, uptake, pricing, reimbursement, competition) and a high degree of reliance on partners. The key stock-specific sensitivities are connected to Lundbeck’s success in commercialising Selincro in Europe and UCB’s decision on tozadenant (which currently accounts for c 15% of our valuation). Our estimates for Selincro could be significantly higher or lower depending on the extent to which the drug is adopted by European healthcare agencies. Lundbeck may secure a commercial partner(s) in Europe for Selincro which could add upside. A positive decision by UCB on tozadenant and/or securing fresh partnerships for SYN120, BTT-1023 or ronomilast should enhance Biotie’s share price and financial situation. A successful Phase II study of nepicastat (SYN117) for cocaine dependence (to start in Q113 and to be conducted by US NIDA) would also provide upside potential, given that we do not currently include nepicastat in our valuation model.

Financials

Revenue estimates for 2012 have increased significantly to €4.3m (previously €0.45m), following the receipt in Q312 of c €3.5m from pre-agreed development funding from UCB, which was recognised in the third quarter.

In keeping with changes to our valuation model, a key change to our financial forecasts for Biotie is the inclusion within total revenues of Selincro royalties, potential launch-based milestones for Selincro (€7m in 2013 and €3m in 2014) and a risk-adjusted €12.5m (of a potential €25m) milestone in 2013 from UCB for advancing tozadenant into Phase III studies. Revenues for 2013 and 2014 are now estimated at €21m and €6m respectively. Assuming these royalties and milestones start to flow in 2013 and 2014, Biotie’s financial position will be greatly strengthened, with cash of €8m by the end of 2014. Receiving the full €25m from UCB could extend Biotie’s cash runway to the end of 2015.

However, Biotie’s cash burn over the next few years is heavily dependent on the outcome of UCB’s review of tozadenant and Biotie’s subsequent decisions on pipeline development and business development activities. The company is not currently investing in new R&D, but affirmation from UCB would enable Biotie to consider multiple options, which could include fresh in-licensing deals and/or investment in further clinical studies of SYN120. Therefore we retain our prior R&D expense estimates for 2012 and 2013 at €21m and €15m, respectively, acknowledging that these could be subject to significant changes. Based on Q312 financial statements, we have modestly downgraded our G&A costs for 2012 to €6.5m (vs €7m) and to €7m for 2013 (vs €7.5m).

Biotie also has the ability, at its discretion, to raise up to €20m in additional capital under its standby equity distribution agreement (SEDA) with Yorkville, a facility that was recently extended from September 2012 and is now valid until November 2015 (€1.1m has been drawn to date). Biotie’s long- term financial liabilities of €23.5m mostly relate to loans from Tekes, which are largely repayable only on sustainable profitability.

Our financial forecasts, now extended to 2014, are summarised in Exhibit 7.

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Biotie Therapies | 4 January 2013

Exhibit 7: Financial summary Year end 31 December €'000s 2009 2010 2011 2012e 2013e 2014e Accounting basis IFRS IFRS IFRS IFRS IFRS IFRS PROFIT & LOSS Revenue 5,628 1,955 1,007 4,300 20,900 6,000 Cost of sales 0 0 0 0 0 0 Gross profit 5,628 1,955 1,007 4,300 20,900 6,000 R&D expenses (continuing operations, excludes write-downs) (15,341) (5,216) (23,615) (21,000) (15,000) (17,000) G&A expenses (continuing operations, excludes exceptionals) (3,737) (4,174) (7,221) (6,500) (7,000) (7,500) EBITDA (11,832) (7,269) (28,310) (21,950) (300) (18,000) Operating profit (before GW and except) (12,230) (7,633) (28,310) (21,950) (300) (18,000) Exceptionals (5,400) (13,111) (13,200) 0 0 0 Currency translation differences 0 0 5,449 0 0 0 Operating profit (17,630) (20,744) (36,061) (21,950) (300) (18,000) Net interest (311) (829) 2,028 (750) 200 600 Profit before tax (norm) (12,541) (8,462) (20,833) (22,700) (100) (17,400) Profit before tax (FRS 3) (17,941) (21,573) (34,033) (22,700) (100) (17,400) Tax 1,859 0 7,755 600 600 680 Profit after tax (norm) (10,682) (8,462) (13,078) (22,100) 500 (16,720) Profit after tax (FRS3) (16,082) (21,573) (26,278) (22,100) 500 (16,720) Average number of shares outstanding (m) 145.5 163.1 370.0 409.3 452.7 452.7 EPS - normalised (€) (0.07) (0.05) (0.04) (0.05) 0.00 (0.04) EPS - FRS 3 (€) (0.11) (0.13) (0.07) (0.05) 0.00 (0.04) BALANCE SHEET Fixed assets 10,241 5,885 82,446 82,435 82,735 82,935 Intangible assets 7,565 4,042 80,755 80,755 80,755 80,755 Tangible assets 2,666 365 305 430 580 780 Investment in associates 10 1,478 1,386 1,250 1,400 1,400 Current assets 21,285 5,320 35,790 37,560 28,627 10,646 Debtors 1,507 1,261 1,852 2,500 2,500 2,500 Cash 19,778 4,059 33,938 35,060 26,127 8,146 Current liabilities (6,060) (6,792) (10,303) (6,157) (5,657) (5,157) Creditors (3,890) (3,242) (10,067) (6,082) (5,582) (5,082) Short-term borrowings (217) (2,544) (116) (75) (75) (75) Deferred revenue (1,953) (1,006) (120) 0 0 0 Long-term liabilities (34,404) (33,880) (34,596) (36,477) (36,194) (35,913) Long-term borrowings (25,597) (25,640) (23,492) (23,492) (23,609) (23,728) Provisions (703) (430) (435) (435) (435) (435) Other long-term liabilities (incl. defered taxes/revenues) (8,104) (7,810) (10,669) (12,550) (12,150) (11,750) Net assets (8,938) (29,467) 73,337 77,361 69,511 52,511 CASH FLOW Operating cash flow (11,408) (14,867) (21,171) (25,287) (800) (18,500) Net interest (58) 0 78 (750) 200 600 Tax (1,859) 0 6 0 0 0 Capex (165) 0 (63) (125) (150) (200) Expenditure on intangibles 0 (54) (2) 0 0 0 Acquisitions/disposals 0 0 16,339 0 0 0 Financing 7,202 (797) 27,870 26,829 0 0 Dividends 0 0 0 0 0 0 Net cash flow (6,288) (15,718) 23,057 667 (750) (18,100) Opening net debt/(cash) (295) 6,036 21,725 (2,526) (3,193) (2,443) Other (43) 29 1,194 0 0 0 Closing net debt/(cash) 6,036 21,725 (2,526) (3,193) (2,443) 15,657 Source: Edison Investment Research, Biotie accounts

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