Company Coverage Report Coverage initiated June 19th, 2009 Aurgalys is contracted by Onxeo to provide equity research Mickael Dubourd, Ph.D., SFAF Paris & Evry, France

Onxeo E URONEXT : ONXEO [FR0010095596 – C OMPARTMENT C] August 1st, 2014

Share Price: €7.19 Onxeo, leader in orphan oncology (as of August 1st, 2014) Onxeo resulted from the merger of French BioAlliance Estimated price: Pharma and Danish Topotarget, both involved in orphan for . The combined entity will benefit €11.12 from experienced teams in this field and from a strong portfolio of products in late stage development. August 1st,

High/Low since 01.01.14 11.74/4.30 2014, was Onxeo’s first day of trading on both Euronext Paris (€) and Nasdaq OMX . We are taking this opportunity to review Onxeo’s business strategy, drug Market Cap (€m) 226.4 pipeline and valuation.

Three approved products, strong cash position, late stage Estimated Cash 27.0 development product portfolio Position (€m) Originating from BioAlliance's historical product portfolio, Sitavig and Estimated market cap. 350.1 Loramyc/Oravig have both been approved in the US and . These two products will help generate short term revenues through licensing deals (€m) upfront and milestone payments as well as long term revenues with royalties nd Number of Shares (m) 31.5 on sales. Moreover, Beleodaq has just been approved in the US for 2 line Peripheral T-Cell (PTCL) and will be marketed by Spectrum Pharmaceutical. This is the first drug in the orphan oncology product portfolio to get US approval. Obtaining three approvals in the US and two in Europe Estimated price (€) 11.12 demonstrates Onxeo’s ability to successfully develop drug and get them to the market. Approval of Beleodaq in the US will strengthen Onxeo’s cash position estimated Volume 3 months 190,000 at around €27M as of August 1st, 2014, with a $25 million payment from average Spectrum, expected at the end of the year. This should help accelerate the development of other high-added value orphan oncology drugs in late stage Free Float 84.9% development: Livatag in phase III for liver cancer, Validive in oral mucositis (phase II results at the end of 2014) and in 1st line PTCL treatment

Dividend Forecast 12 0.0 whose phase III is expected to start in 2015. months (€) Valuation of Onxeo Based on Onxeo’s drug pipeline, we value the company at €350.1M or €11.12/share, a 54.7% upside compared to August 1st, 2014 share price. Product rNPV (€M) rNPV/share % /Total rNPV Beleodaq (PTCL) 2nd Line 40.3 €1.28 11.5% BelCHOP (PTCL) 1st Line 67.6 €2.15 19.3% Livatag 90.8 €2.88 25.9% Validive 20.5 €0.65 5.9% AMEP 8.0 €0.25 2.3% Sitavig 75.3 €2.39 21.5% Loramyc/Oravig 28.3 €0.90 8.1% Belinostat (NSCLC) 19.4 €0.62 5.5% Total 350.1 €11.12 100%

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Table of Contents

1. COMPANY DESCRIPTION AND STRATEGY 3

1.1. ONXEO, THE ORPHAN ONCOLOGY INNOVATOR 3 1.2. ORPHAN DRUG MARKET 3 1.3. ONXEO’S STRATEGY 4 1.4. ONXEO’S ORPHAN DRUG PIPELINE 4 1.5. MANAGEMENT 5 1.6. CAPITAL STRUCTURE 6

2. VALUATION OF €350.1M FOR ONXEO 6

2.1. METHOD AND MAIN HYPOTHESES 6 2.2. VALUATION SUMMARY 6 2.3. UPCOMING NEWS FLOW 7

3. ORPHAN ONCOLOGY DRUGS 7

3.1. BELINOSTAT 7 3.2. LIVATAG IN HEPATOCELLULAR CARCINOMA 10 3.3. VALIDIVE IN ORAL MUCOSITIS 12 3.4. AMEP IN METASTATIC 13

4. MARKETED PRODUCTS (NON-ORPHAN) 14

4.1. SITAVIG FOR HERPES LABIALIS 14 4.2. LORAMYC/ORAVIG 16

5. STOCK PERFORMANCE 18

6. FINANCIALS 19

DISCLAIMER 20

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1. Company description and strategy 1.1. Onxeo, the orphan oncology innovator Onxeo resulted from the merger of French BioAlliance Pharma and Danish Topotarget and was approved by their respective shareholders at the end of June 2014 (see company history on Table 1). Onxeo aims at becoming a leader in the development of drugs for orphan cancer diseases with high unmet medical needs. The two companies were independently developing drugs in orphan oncology and the merger will therefore benefit from the combined know-how of two experienced teams in this field. Onxeo’s pipeline consists of innovative drugs developed from three technology platforms with multiple applications (HDAC inhibitors, Lauriad muco-adhesive tablet, and Transdrug nanoparticle formulation). Onxeo has a strong track record of getting drugs to the market with three proprietary programs approved in the US by the FDA, two of which are also approved in Europe. Onxeo’s drugs in development are also independent programs at different clinical stages; hence mitigating the risks associated with the pharmaceutical business. Onxeo’s drugs are also in late development stages (phase II and III) with short to mid/long term milestones that could contribute significantly to the value of the company. Onxeo is listed on both Euronext Paris and Nasdaq OMX Copenhagen and will benefit from a larger market capitalization resulting from the combined entities, which could increase the attractiveness of Onxeo among specialized investors. Since BioAlliance was the continuating company, 2 newly issued shares of BioAlliance were exchanged for every 27 Topotarget shares held. BioAlliance shareholders hold approximately 2/3 of Onxeo while Topotarget’s shareholders, 1/3. Table 1: BioAlliance Pharma and Topotarget history BioAlliance Pharma Topotarget 1997 Foundation of BioAlliance 2000 Foundation of Topotarget 2002 Acquisition of Prolifix Ltd. Including belinostat 2005 Listing on Euronext Paris Listing on Nasdaq OMX Copenhagen 2006 Approval of Loramyc in France 2008 Belinostat pivotal trial in PTCL (BELIEF Study) 2009 FDA grants orphan drug status to belinostat in PTCL 2010 FDA approval of Loramyc in the US Collaboration agreement with Spectrum Pharmaceuticals for belinostat 2011 New CEO Judith Greciet 2012 Pivotal Phase III initiated for Livatag EMA grants orphan drug designation to belinostat in PTCL Approval of Sitavig in Europe 2013 FDA approval of Sitavig in the US Belinostat meets primary endpoint in BELIEF study NDA submitted to the FDA for belinostat 2014 Feb.: Fast Track for Validive Mar.: Acceptance to file NDA for belinostat in PTCL Apr. BioAlliance and Topotarget enter into merger agreement May: Fast Track for Livatag Jun. Merger approved by shareholders to form Onxeo Onxeo 2014 Jul.: Approval of Belinostat for 2nd line treatment of PTCL Jul.: Sitavig product launch in the US by partner Innocutis

1.2. Orphan drug market For many years, the pharmaceutical industry ignored orphan diseases because they apparently affect so few people, but the industry has come to view them as a major business opportunity. Orphan diseases

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are classified in the US as afflicting fewer than 200,000 people and in the European Union as having fewer than five cases per 10,000 people (fewer than 250,000). In the US, it is estimated that 30 million patients suffer from 7,000 disorders classified as orphan diseases. Drug development for orphan diseases is one of the major investment trends worldwide in the pharmaceutical industry. Even though patient populations with orphan diseases are small, a much higher price can be realized per patient treated and can lead to meaningful commercial opportunities. It is estimated that the market for orphan drugs was $45.5B in 2013 and is expected to grow to $80.6B in 2018 at a CAGR of 12.1% (Source: EvaluatePharma). For example, Shire’s Elaprase which costs around $375,000, generated $546M in 2013 for the treatment of Hunter syndrome, a rare genetic disease. On July 18th, 2014, Shire which is dedicated to the development of drugs for orphan diseases accepted Abbvie’s takeover bid of $55B, demonstrating the strong potential for new treatments of rare diseases for the pharmaceutical companies. In addition, there is usually more of an opportunity for longer periods of exclusivity with orphan drugs than with standard products. Drugs designated as orphan are guaranteed 7 years of marketing exclusivity in the US and 10 in Europe. Moreover, in many cases the products are produced by technologies that are more difficult to genericize. As a consequence, the orphan drug business model could offer an integrated healthcare solution that enables pharmaceutical companies to develop newer areas of therapeutics, diagnosis, treatment, monitoring, and patient support. Incentives for drug development provided by governments, as well as support from the FDA and European Union Commission in special protocols are a further boost for the companies developing orphan drugs. 1.3. Onxeo’s strategy Onxeo’s aim is to develop innovative drugs in cancer indications that meet the criteria for orphan designation. Apart from the advantages underlying the development of orphan drugs such as tax incentives, marketing exclusivity or high drug prices, Onxeo will also benefit from reduced sales and marketing costs related to promoting its drugs. Onxeo intends to market orphan drugs directly in Europe but to license them in other territories such as the US. Marketing of recently approved Beleodaq (for Peripheral T-Cell Lymphoma) in the US with Onxeo’s partner Spectrum Pharmaceuticals is an example of this strategy. With a clear focus towards orphan oncology, Onxeo intends to divest its research efforts from the BioAlliance historical specialty pharma product portfolio. Onxeo will still dedicate its business development team to secure licensing deals for its non-strategic products Loramyc/Oravig and Sitavig which are already approved in the US and Europe. 1.4. Onxeo’s orphan drug pipeline Onxeo’s drug pipeline is composed of multiple, independent drug programs at different development stages and originating from both BioAlliance’s and Topotarget’s drug development program. Beleodaq for 2nd line treatment of peripheral T-cell lymphoma, Livatag for treatment of advanced primary liver cancer, and Validive for treatment of radiotherapy-induced oral mucositis in , have all received orphan designation in Europe and Fast Track designation by the US FDA for these indications. The Fast-Track designation is a process which facilitates the development and accelerates the review process of drugs with strong unmet medical needs, by allowing the company to communicate frequently with the FDA and resolve issues quickly. The FDA has granted orphan designation to Beleodaq and Livatag but not Validive. This decision was based upon the fact that oral mucositis affects all cancer patients and therefore is not an orphan disease according to the FDA. The European agency decided to grant the orphan status to Validive based on oral mucositis in head and neck patients only, making the target population meet the 5 in 10,000 prevalence criteria. Onxeo’s pipeline is illustrated in Figure 1.

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Phase I Phase II Phase III Regulatory Market

Beleodaq PTCL Belinostat BelCHOP PTCL Belinostat + CHOP Livatag HCC Doxorubicin Transdrug Validive Mucositis Clonidine Lauriad AMEP Melanoma Synfoldin

Figure 1: Onxeo’s orphan drug pipeline. PTCL, Peripheral T-Cell Lymphoma; CHOP, Cyclophosphamide, Hydroxydaunorubicin, Oncovin, Prednisone; HCC, Hepatocellular Carcinoma. 1.5. Management The executive committee oversees a staff of about 60, whose expertise spans the entire spectrum of pharma development: discovery, clinical development, regulatory approval, intellectual property, business development... Onxeo outsources many tasks, keeping their workforce small for a company with such a large pipeline of drugs, with already three approved products in the US (2 of which are approved in Europe). Judith Greciet, Pharm. D., Chief Executive Officer Judith Greciet, 45 years old, Chief Executive Officer of BioAlliance/Onxeo since June 2011, was previously Chief Operating Officer from March 2011. Before joining BioAlliance, Dr. Greciet has had extensive sales experience in the pharmaceutical industry. After a successful career at the LFB, Zeneca (now AstraZeneca), Pharmacia and Wyeth Pharmaceuticals (now Pfizer) where at the latter she served as head of the oncology product and hospital drug departments. Dr. Greciet was appointed director of Eisai France, a position she held until she joined BioAlliance Pharma in 2011. Dr. Greciet holds a PharmD degree as well as a master’s degree in management and pharmaceutical marketing. She is also an administrator of Theravectys, a developmental company, specializing in vaccines. Nicolas Fellmann, MBA, Vice-President, Chief Finance Officer Nicolas Fellmann, 46 years old, joined BioAlliance as Chief Financial Officer in November 2006. Mr. Fellmann spent more than 10 years in the pharmaceutical industry as Director of Treasury, Tax, and Audit at Pfizer. He was in charge of financial risk management and took care of the financial implementation of the mergers with Warner-Lambert in 2000 and Pharmacia in 2003. Before his experience at Pfizer, Mr. Fellmann worked at Ernst&Young as a financial auditor. He holds an MBA from EM-Lyon Business School. Pierre Attali, M.D., MSc., Chief Operating Officer of Strategy and Medical Affairs Dr. Pierre Attali, 64 years old, joined BioAlliance Pharma in 2008 and is currently Chief Operating Officer of Strategy and Medical Affairs of Onxeo. Dr. Attali was a gastroenterologist and liver disease specialist for 11 years, within Paris Bicêtre and Paul Brousse hospitals before he started his career at Synthelabo (now Sanofi). He was then head of the Clinical Research Department where he was in charge of clinical strategy and worldwide clinical operations. He then co-founded and served as CEO of OSMO, a CRO specializing in oncology. Before joining BioAlliance Pharma, Dr. Attali was CEO of Molecular Engines Laboratories and Urogene. He received his M.D. from University Paris Sud in 1975.

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1.6. Capital Structure Following the merger of BioAlliance and Topotarget, the 8,9% main shareholder is Financière de la Montagne, 3,2% represented by Nicolas Trebouta on the board of Onxeo, with 8.9% of Onxeo’s shares. The other two 2,9% shareholders are IdInvest Partners with 3.2% of the shares (represented by Remi Droller) and Healthcap Funds with 2.9% of the shares (represented by Bo Jesper Hansen).

Table 2: Onxeo’s capital structure (Source: Onxeo, AMF) Shareholder Number of shares %/Total Financière de la Montagne 2,807,570 8.9% 84,9% IdInvest Partners 1,013,725 3.2% Healthcap Funds 924,632 2.9% Financière de la Montagne IdInvest Partners Free Float 26,736,406 84.9% Healthcap Funds Free Float

Total 31,482,333 100.0% Figure 2: Onxeo's capital structure

2. Valuation of €350.1M for Onxeo 2.1. Method and main hypotheses The valuation of Onxeo’s products was performed using the risk-adjusted Net Present Value (NPV) method, which we believe is the most appropriate method for such a company. The NPV of each product is calculated and then adjusted according to the probability of its products to reach the market (see Table 3, updated from Keagan, Wiley Finance, 2008). Table 3: Typical pass rates for drug development Probability to Phase Pass Rate reach the market Phase I/II 66-81% 20-25% Phase IIb 50-57% 30-35% Phase III 57-67% 55-60% Registration 90% 90% Onxeo intends to directly market its orphan oncology products in Europe and license the drugs in other territories. For non-orphan products, Onxeo will rely on the licensee to generate revenues. For sales forecast of orphan oncology products, we considered only the following geographical areas: the European Union (direct sales), the US (royalties) and Asia that includes Japan, South Korea, China, and India (royalties). For the other products, only revenues based on royalties were considered. Milestone payments which can represent a significant part of a license deal have been included only if the licensing terms have been disclosed. Those deals that have not been secured were not included in our valuation model. Revenues are discounted with a 15% rate. Details of peak sale estimates are presented in sections 3 (Orphan oncology drugs) and 4 (other drugs). 2.2. Valuation Summary Table 4 summarizes Onxeo’s valuation. Considering the most advanced products in the pipeline, we obtained a value for Onxeo of €350.1M or €11.12/share (31,482,333 shares in total). The orphan oncology products account for 64.9% of the total value of Onxeo (Belinostat in PTCL, Livatag, Validive, and AMEP). Belinostat in PTCL is the main contributor (30.8%) since its early approval for 2nd line treatment (in the US only). This will allow Onxeo to generate short term revenues thanks to the existing and established sales force for this indication of its partner Spectrum Pharmaceuticals. Onxeo and

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Spectrum have yet to determine which other orphan indications they will develop. They will be taken into account once more information is provided and would potentially contribute to the value of Onxeo. Livatag, with a sales potential of more than €600M according to our estimates, represents 25.9% of Onxeo’s value. Although still in Phase III with a 60% chance of success, Livatag could enter the market as early as 2017. Sitavig is the third largest contributor to Onxeo’s value (21.5%). Sitavig is not an orphan product and its sales price is around 20-30€. However, high sales volumes could compensate for the low price of the drug. Partner Innocutis has already launched the product in the US. Should Onxeo find a partner in Europe, it would increase Onxeo’s value. Belinostat in NSCLC represents €19.4M. Although not for an orphan indication, Spectrum Pharmaceuticals has a Phase I study currently ongoing in combination with placlitaxel and . The value of belinostat in this indication is €19.4M. Should Onxeo decide not to pursue this indication it would marginally affect the value of Onxeo (€330.7M or €10.50/share). Table 4: Onxeo’s valuation summary (Aurgalys estimations) Product Phase Peak Sales (€M) rNPV (€M) rNPV/share % /Total rNPV Beleodaq (PTCL) 2nd Line Approved (US) 40.3 €1.28 11.5% BelCHOP (PTCL) 1st Line Phase III (in 2015) 67.6 €2.15 19.3% Livatag Phase III 90.8 €2.88 25.9% Validive Phase II 20.5 €0.65 5.9% AMEP Phase I/II 8.0 €0.25 2.3% Sitavig Marketed 75.3 €2.39 21.5% Loramyc/Oravig Marketed 28.3 €0.90 8.1% Belinostat (NSCLC) Phase I/II 19.4 €0.62 5.5% Total - 350.1 €11.12 100%

2.3. Upcoming news flow Onxeo's short to mid-term news events are listed below. Validive phase II results and licensing agreements for Sitavig and Loramyc/Oravig could significantly contribute to the value of Onxeo. In the long term, Phase III results for Livatag and belinostat in combination with CHOP represent key milestones for Onxeo should they turn out to be successful.  H2-2014 : Beleodaq product launch  Q4-2014 : Validive phase II preliminary results  Q4-2014 : Livatag 5th DSMB  Q4-2014 : BelCHOP Phase I results  2014/2015 : Licensing of Sitavig  2014/2015 : Licensing of Loramyc/Oravig  2015 : BelCHOP Phase III in 1st line PTCL 3. Orphan oncology drugs 3.1. Belinostat 3.1.1. Partnership with Spectrum Pharmaceutical Belinostat was licensed to Spectrum Pharmaceuticals in 2010 for North America and India with a first right of offer for the Chinese market. Under the term of the agreements Topotarget received $30M upfront and was eligible for another $320M of development and commercial milestones as well as double-digit royalties on sales. Spectrum Pharmaceuticals was to fund 100% of R&D expenses for the then ongoing trial of belinostat in PTCL. Subsequent trials in PTCL and in other indications were to be funded with a 70%/30% ratio for Spectrum and Topotarget. In March 2014, Topotarget received $10M and 1 million shares from Spectrum Pharmaceuticals following the FDA acceptance to review belinostat

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in PTCL for accelerated approval. On July 3rd, 2014, the FDA approved belinostat in 2nd line treatment of PTCL triggering a $25M milestone for Onxeo, to be paid by year end 2014. 3.1.2. Belinostat in Peripheral T-Cell Lymphoma (PTCL) PTCL Beleodaq (Belinostat) has just been approved by the FDA for the treatment of relapsed/refractory Peripheral T-Cell Lymphoma (PTCL). PTCL is a subtype of non-Hodgkin , with an incidence of 18,000 cases every year (US and European Union) and a 5-year survival rate of only 30%. PTCL is a very heterogeneous disease with many subtypes, the most common being PTCL Not Otherwise specified (PTCL-NOS), Anaplastic Large Cell Lymphoma (ALCL), and Angioimmunoblastic T-Cell Lymphoma (AITL), accounting for 25%, 20% and 15%-20% of all PTCL cases respectively. Most patients are treated in first- line therapy with CHOP, although only the ALCL, positive for ALK truly benefit from this therapy. There are no standard therapies for this condition. Development status As previously indicated, belinostat obtained marketing authorization in the US for 2nd line treatment of PTCL, through the FDA accelerated the approval process. The pivotal single-arm which supported the accelerated approval showed that patients receiving belinostat had an overall response rate of 26%, a comparable performance compared to other 2nd line treatment for PTCL (see next section). Among the 129 patients receiving belinostat, 11% had a complete response, 15% a partial response, and 15% a stable disease. Interestingly, it seems that the AITL patients benefited the most from belinostat since the ORR was 46% in this subtype of PTCL, although this figure should be interpreted with caution (n=22). However, the FDA requires supplementary clinical trials to confirm the efficacy of drugs which get accelerated approval, usually in a different patient population. Onxeo and Spectrum Pharmaceuticals will be required to conduct a phase III confirmatory trial in 1st line treatment of PTCL. The aim of the upcoming study is to measure the efficacy of the combination therapy CHOP + belinostat compared to CHOP alone which is the that PTCL patients usually receive. A phase I study to determine the maximum dose of belinostat tolerated in combination with CHOP is currently ongoing. The results expected at the end of 2014 will help set up the phase III study which is anticipated to start in 2015. Other therapies for PTCL There is no standard therapy for PTCL and patients are usually treated with CHOP-based regimen as a first line treatment like B-cell lymphomas. However, it has been established that except for the ALCL, ALK+ PTCL subtype, patients do not benefit from CHOP . A number of treatment options obtained marketing authorization in the US for 2nd line treatment of PTCL and those include Celgene’s romidepsin (Istodax) and Spectrum Pharmaceuticals’ pralatrexate (Folotyn). Spectrum Pharmaceuticals obtained accelerated approval for pralatrexate in 2009 for 2nd line treatment of PTCL. Similar to belinostat, Spectrum Pharmaceuticals is committed to demonstrating the efficacy of pralatrexate in front-line therapy. A phase III trial is currently ongoing and according to clinicaltrials.gov, results are expected in 2017. Pralatrexate costs approximately $60,000 per cycle and Spectrum Pharmaceuticals generated $44M in 2013. With belinostat approved for PTCL, Spectrum Pharmaceuticals can now offer two products with different mechanisms of action to treat this disease. There are 4 classes of HDAC in human. Romidepsin is another HDAC inhibitor approved for the treatment of both CTCL (Cutaneous T-Cell Lymphoma) and PTCL. Contrary to belinostat, romidepsin is a Class I HDAC inhibitor whereas belinostat can inhibit both Class I and Class II HDACs. Romidepsin was first approved for CTCL in 2009 and then for PTCL in 2011 (accelerated approval). Cost of romidepsin has been estimated around $20,000 per cycle and Celgene generated $54M in 2013. Phase III results of romidepsin in combination with CHOP in front line treatment of PTCL are expected in 2019 (clinicaltrials.gov).

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In the US National Comprehensive Cancer Network management guidelines for Non-Hodgkin Lymphomas, clinical trials are preferred when treating PTCL since there are no standard therapies for this indication. Belinostat, romidepsin and pralatrexate have all been approved for PTCL in 2nd line treatment based on ORR (Objective Response Rate) results on single-arm studies. Belinostat shows fewer side effects with comparable ORR (26% for belinostat, 25% for romidepsin, and 29% for pralatrexate) compared to the other drugs (see Table 5) which represents a strong competitive advantage for belinostat. Table 5: Comparison of Grade 3 and 4 adverse reactions for belinostat, romidepsin and pralatrexate Grade 3 /4 adverse reactions Belinostat Romidepsin Pralatrexate (n=129) (n=131) (n=111) Any 61% 66% 74% Neutropenia 13% 20% 20% Leukopenia 13% 6% 7% Anaemia 11% 11% 17% Thrombocytopenia 7% 24% 33% Pneumonia/infections 7% 19% 1% Dyspnea 6% 2% 7% Fatigue 5% 8% 7% Hypokalemia 4% 2% 5% QT prolongation 4% n/a n/a Diarrhea 2% 2% 2% Pyrexia (fever) 2% 5% 2% Nausea 1% 2% 4% Vomiting 1% 5% 2% Mucositis n/a n/a 21% (Sources: belinostat, romidepsin and pralatrexate label information; Onxeo)

rNPV of belinostat in PTCL PTCL is a subtype of Non-Hodgkin Lymphoma accounting for 10-15% of all cases. According to Globocan 2012, there were 63,000 new cases of Non-Hodgkin Lymphomas in the US and 80,000 in the European Union. Considering a rate of PTCL of 12.5%, there would be about 18,000 new cases of PTCL in these regions. In Asia (China, Japan, South Korea and India) we estimate the incidence for PTCL to be around 12,000. For 2nd line PTCL (US only), we considered that 70% of patients would relapse and that belinostat would get a 15% market share given the fact that clinical trials are the method of choice and that there are other existing therapies used for this indication. Revenues for 2nd line treatment have 100% chance of success since the FDA approved the therapy. However, Spectrum is allowed to sell the drug provided that the company confirms the efficacy of belinostat in 1st line treatment in combination with CHOP. Therefore, revenue stream for 2nd line PTCL has a 60% chance of occurring after the end of the Phase III for 1st line treatment expected in 2018. It is estimated that 65% of PTCL patients are treated with CHOP as 1st line. We assumed that Spectrum would get a 25% share of these patients. With a cost of €65,000, we obtain a peak sales estimate of €142M for the US. For Europe, we considered a treatment price of €50,000 (25% market penetration) and between €40,000 and €50,000 for Asia (market penetration of 15%), giving peak sales of €58M and €60M respectively. rNPV was calculated with a 15% discount rate with revenues based on direct sales in Europe and royalties in the rest of the world (10% to 18% depending on regions). Considering these assumptions, rNPV for belinostat in PTCL 1st and 2nd line is €107.8M.

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Table 6: rNPV of belinostat in PTCL Beleodaq Peak sales €284M Product launch 2nd line PTCL Q3-2014 Product launch 1st line PTCL 2019 Treatment price €40,000-€65,000 Probably to reach market (1st line) 60% rNPV €107.9M 3.1.3. Other indications Onxeo and Spectrum Pharmaceuticals will discuss potential orphan indications for belinostat in cancer. The good tolerability profile of the drug makes it an interesting compound for combination therapy. According to the original Topotarget/Spectrum Pharmaceuticals deal, the costs should be shared with 70% for Spectrum and 30% for Onxeo. Adding more indications for belinostat will definitely contribute to the value of the drug. 3.2. Livatag in Hepatocellular carcinoma 3.2.1. Hepatocellular Carcinoma Hepatocellular carcinoma (HCC) is the third largest cause of cancer-related death with a worldwide incidence of approximately 780,000 cases (Globocan 2012). HCC is usually secondary to an initial pathology of the liver such as viral infection by hepatitis B and C viruses or cirrhosis. Symptoms usually involve jaundice, abdominal pain, loss of appetite and weight loss. Prognosis is very poor with a median 5-year survival of less than 10%. HCC is most commonly staged according to the Barcelona Clinic Liver Cancer (BCLC) system that takes into account tumor stage, liver function, patient physical status, and other cancer-related symptoms such as lymph node invasion and . Appropriate staging of newly diagnosed liver cancer can help in the treatment choice for the patients. As shown in Figure 3, treatment choices for stage A HCC include surgical resection, liver transplantation or Radiofrequency Ablation (RFA)/Percutaneous Ethanol Injection (PEI). For stage B HCC, when surgery is no longer a treatment option, transarterial chemoembolization (TACE) remains the treatment of choice. For more advanced HCC (stage C), Bayer’s Nexavar (sorafenib) is the standard of care whereas palliative symptomatic treatment is given to stage D patients where HCC has metastasized elsewhere.

BCLC Staging and Treatment Strategy

HCC PS 0, Child-Pugh A PS 0-2, Child-Pugh A-B PS > 2, Child-Pugh C

Very early stage (0) Early stage (A) Intermediate stage Advanced stage (C) Terminal Single < 2 cm Single or 3 nodules (B) Portal invasion, stage (D) < 3 cm, PS 0 N1, M1, PS 1-2 Multinodular, PS 0

Single 3 nodules ≤ 3 cm

Portal pressure/bilirubin Increased Associated diseases

Normal No Yes

Resection Liver transplantation RFA/PEI TACE Sorafenib Symptomatic Curative treatments Non curative treatments Figure 3 : Treatment protocol for Hepatocellular Carcinoma

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3.2.2. Development status of Livatag Livatag is an innovative nanoparticular formulation of the chemotherapy agent doxorubicin. Doxorubicin, widely used in cancer therapy, has proven to be ineffective in the treatment of chemotherapy resistant liver cancer. The combination of doxorubicin with a proprietary formulation of nanoparticles (Transdrug Technology) overcomes the resistance mechanism of these cancer cells by masking the drug, allowing it to penetrate cancer cells then to act as a cytotoxic agent destroying the tumor. A phase II study showed the effectiveness of Livatag in improving overall survival of Livatag-treated patients compared to chemoembolization in Stage B patients (+17 months). However, due to severe adverse side effects (acute respiratory distress syndrome), leading to the death of some patients, the clinical trial was halted in 2008. The design of a new administration protocol with intravenous injection compared to the intra-arterial route originally used led to the approval by regulatory agents to launch new phase III clinical trials. The aim of this randomized, open-labeled clinical trial (400 patients) is to prove the efficacy of Livatag in stage C patients that fail to respond or do not tolerate sorafenib. As of August 2014, 25% of the patients have been recruited for the phase III trial, in multiple centers in France and Europe. Onxeo received Livatag’s IND (Investigational New Drug) approval from the FDA at the end of 2013, allowing the company to recruit patients in the US. Onxeo has already received 4 positive recommendations to pursue the phase III trial without modifications of the protocol, from the Data Safety Monitoring Board (DSMB), a committee of independent experts whose role is to check the good safety and tolerability profile of the drug candidate. Receiving positive recommendations from the DSMB on four occasions demonstrates that the new administration route developed by Onxeo seems to remove the serious adverse reactions observed in the 2008 trial. Onxeo has yet to show efficacy in the target population. The last patient in is expected in 2015 and results are to be published in 2016. On May 19th, 2014, Onxeo announced that Livatag was granted the Fast Track designation by the FDA, allowing Onxeo to benefit from a faster reviewing process from the American regulatory agency. Livatag also got orphan designation in both Europe and the US. 3.2.3. Other therapies in development for HCC As previously stated, advanced HCC is a difficult to treat disease of strong unmet medical needs. Traditional chemotherapies are not effective in treating HCC and Nexavar is the only approved targeted therapy for this indication. In the past few years, numerous drug candidates in phase III or phase II trials, have failed to demonstrate efficacy in HCC 2nd line therapy. Those include BMS’s Brivanib, ’s Everolimus, Transgene’s Pexa-Vec, and more recently, Eli Lilly’s Ramucirumab. Bayer, which markets Nexavar, is currently testing Stivarga in 2nd line HCC in a 530-patient phase III trial whose results are expected in October 2016 (clinicaltrials.gov). Stivarga has already been approved in the US for gastrointestinal cancer and metastatic colorectal cancer. Another drug candidate from Polaris, ADI-PEG 20 is also being tested in phase III and results are expected in 2016. ADI-PEG 20 is an enzyme that degrades arginine, a compound that is necessary for tumor growth. Also, Arqule partnered with Daiichi Sankyo is currently evaluating the efficacy of Tivantinib and the phase III results are expected at the end of 2015. Another phase III trial in 2nd line HCC includes Cabozantinib (Exelixis), already approved for thyroid cancer (results in 2016). Should these drugs arrive on the market before Livatag, they would not directly compete with Onxeo’s drug. For instance they are all targeted therapies and Livatag could be used as a complementary treatment for HCC. Except for Livatag, there are no chemotherapy drugs in development. 3.2.4. rNPV of Livatag in HCC According to Globocan 2012, there were 30,000 cases of HCC in the US, 50,000 in the EU and 475,000 in Asia (China, Japan, South Korea and India). Livatag is indicated for stage C patients (40% of newly diagnosed HCC patients) intolerant or refractory to sorafenib. According to Onxeo, 80% of such patients escape sorafenib after treatment. We obtain a worldwide target population of around 100,000 patients every year. We aligned the treatment price to that of sorafenib (~€45,000) and obtained a peak sales

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estimate of €590M worldwide (15% market share in Asia, 25% elsewhere). rNPV was calculated with a 15% discount rate with revenues based on direct sales in Europe and royalties in the rest of the world (10% to 18% depending on regions). Considering these assumptions, rNPV for Livatag is €90.8M. Table 7: rNPV of Livatag in HCC Livatag Peak sales €600M Product launch 2017 Treatment price €30,000-€45,000 Probably to reach market 50% rNPV €90.8M 3.3. Validive in Oral Mucositis 3.3.1. Oral Mucositis Oral mucositis (OM) is a condition of the oral mucosa that can occur following radiotherapy and/or chemotherapy. After cancer treatment, the oral mucosa becomes inflamed with the development of ulcers from 0.5 to 4.0 cm. OM has been graded in terms of severity from 0 to 4. Grade 3 and 4 OM is highly debilitating and can lead to the hospitalization of the patient with enteral or parenteral nutrition and breaks or delays in the cancer treatment. There are currently no curative or preventive treatments for this affliction in cancer patients but only palliative such as mouth washes and oral hygiene. Kepivance, commercialized by Biovitrum, is a formulation of Keratinocyte Growth Factor (KGF) that is the only product currently used for the treatment of OM in patients suffering from blood cancer and receiving chemo-radiation therapy before a bone marrow transplant. Since the standard treatment of head and neck cancer (HNC) is radiotherapy, OM is particularly frequent in these patients. This is explained by the radiation beam which is aimed directly at the oral cavity leading to damage of the oral mucosa. It is estimated that 50% of HNC patients treated by radiotherapy would suffer from oral mucositis. According to Globocan 2012, there are more than 680,000 new cases of cancer of the oral cavity worldwide. OM is not specific to radiotherapy and HNC. It can also be induced by chemotherapy treatment in all types of cancer. It is estimated that the prevalence of OM is 40% in all cancer indications. 3.3.2. Development status Validive is an innovative formulation of clonidine with the Lauriad technology, a muco-adhesive tablet allowing the release of an active substance at a high concentration in the oral mucosa. Clonidine has been widely used for its antihypertensive properties. However, it has been demonstrated that clonidine also has strong anti-inflammatory characteristics that Validive utilizes to treat OM. It would be the first time that clonidine has been used as an anti-inflammatory drug. The innovative delivery system for Validive limits the release of clonidine in the bloodstream thus reducing the potential antihypertensive effects of the agent. All patients for the phase II trial have been recruited. This double-blind randomized study aims to evaluate the efficacy of a daily application of Validive compared to placebo, during the 8-week radiotherapy treatment and measure the incidence of OM in HNC patients. Preliminary results are expected at the end of 2014. Validive has already been granted the Fast Track designation in the US at the beginning of 2014 and also obtained the orphan designation in Europe. 3.3.3. Competitors As previously mentioned, there is no preventive or curative treatment for oral mucositis except for Kepivance, but Kepivance is not approved for cases involving solid tumor. Amgen who owns the rights of Kepivance is currently testing this drug in a phase III trial in HNC patients.

August 1st, 2014 – Onxeo Company Coverage Report PAGE 13

3.3.4. rNPV of Validive in Oral Mucositis Validive is indicated for OM in HNC patients. There are 100,000 new cases of HNC cases every year in Europe and 50,000 in the US. In Asia (China, Japan, South Korea, India), this number reached 250,000. Considering that 75% of patients would receive radiotherapy treatment and that the incidence of OM is 50% in HNC following radiotherapy, we obtain a target population of about 175,000 for Validive. Kepivance is the only approved treatment for Oral Mucositis (only in hematological cancer after bone marrow transplants) and cost around €5,000 per course of treatment. With similar price estimation for Validive, we forecast €200M peak sales for Validive (between 15%to 30% market penetration depending on regions), in line with Onxeo’s target. rNPV for Validive was calculated based on direct sales in Europe and royalties elsewhere with a discount rate of 15%. Revenues do not take into account OM in all cancer indications. Should Validive be extended to these cases, it would significantly contribute to the value of the product. Considering these assumptions, rNPV for Validive is €20.5M. Table 8: rNPV of Validive in oral mucositis Validive Peak sales €200M Product launch 2019 Treatment price €5,000 Probably to reach market 30% rNPV €20.5M 3.4. AMEP in Metastatic Melanoma 3.4.1. Metastatic Melanoma Melanoma is the least common form of skin cancer but the most dangerous due to its aggressiveness. Melanoma is staged according to the thickness of the tumor and the level of ulceration as well as the invasion of regional lymph nodes and distant areas. Stage I and II have a 5-year survival rate of 85-99% and 40-85% respectively. In more advanced melanoma, 5-year survival drops to 25-65% for stage III (lymph nodes invasion) and 9-15% for stage IV (distant metastasis). When diagnosed at early stage, surgery is the standard care for melanoma usually with high success rates in healing the pathology. Radiation therapy and systemic therapy are often used at later stages. There are currently few treatment options for metastatic melanoma (stages III and IV), the most common being ipilimumab (Bristol-Myers Squibb, BMS), vemurafenib (Roche), interferon, and interleukin therapies, and more recently GlaxoSmithKline’s dabrafenib and trametinib, as single or combination therapies. 3.4.2. Development status AMEP is a biotherapy indicated for the treatment of stage III and IV melanoma. AMEP is a plasmid (DNA) that codes for the protein AMEP. AMEP has been shown to interact with specific integrins, proteins that have been shown to be involved in tumor growth and blood vessel formation. In experimental models, AMEP demonstrated its ability to prevent the proliferation of tumor cells and also to stop endothelial cells from forming new blood vessels. A first Phase I clinical trial was initiated in order to evaluate the safety of AMEP biotherapy and reveal the first proof of concept in humans. It has been shown that AMEP, injected by intratumoral route, stabilized the growth of melanoma in 60% of the cases, whereas control tumors not treated with AMEP were still growing. In 20% of the cases, the tumor regressed. This first clinical trial results, that also showed positive safety and tolerance results, led to the initiation of a systemic administration clinical trial via the intramuscular route. This trial has not yet started, probably due to resources allocated to Livatag and Validive clinical development. 3.4.3. Competitors As indicated in the previous sections, there are now numerous therapies available for metastatic melanoma. BMS’s ipilimumab was approved in 2011 and costs $120,000 per course of treatment and

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generated $960M in 2013. Vemurafenib, which targets only patients with a mutation on the BRAF gene, generated $390M in 2013. Vemurafenib approximately costs $11,000/month. GSK’s recently approved dabrafenib and trametinib generated $26M and $16M respectively in 2013. Similar to Roche’s drug, they target metastatic melanoma with BRAF mutation but cost less than vemurafenib ($7,600 and $8,700 per month, respectively; source Hayes E., Elsevier, 2013). 3.4.4. rNPV for AMEP AMEP is still in Phase I/II. Chances of success are still low despite positive results obtained with the intratumoral trial. Melanoma is the least common form of skin cancer but the most aggressive. There are more than 150,000 new cases of melanoma in the US and Europe every year (Globocan 2012). Less than 10% of them are diagnosed at an advanced stage. We estimate our peak sales for this drug at around €150M based on a market penetration of 20% and a price of €50,000 for AMEP. rNPV for AMEP is estimated at €8.0M taking into account a success rate of 20% and revenues based on direct sales in Europe and royalties in the US. Table 9: rNPV of AMEP in metastatic melanoma AMEP Peak sales €150M Product launch 2019 Treatment price €50,000 Probably to reach market 20% rNPV €8.0M 4. Marketed products (non-orphan) Prior to the merger, BioAlliance was developing specialty pharma drugs which were to be marketed via licensing agreements. With the merger to form Onxeo and its dedication to the development of orphan drugs in cancer, the company does not intend to pursue the development of products in the specialty pharma portfolio. However, with two drugs already approved in Europe and the US, Onxeo will capitalize on these products and dedicate substantial efforts to partner these drugs and generate short term revenues with upfront/milestone payments and royalties on sales. 4.1. Sitavig for Herpes Labialis 4.1.1. Herpes Labialis Herpes labialis is a highly recurring pathology caused by the Herpes Simplex Virus (HSV). There are two types of viruses, HSV-1 and HSV-2, causing oral and genital herpes respectively, although cases of HSV-2 inducing oral herpes and vice-versa have been documented. There are currently no vaccines and no cure for herpes labialis. Herpes labialis is responsible for cold sores and blisters on the lips and usually heals within 1 to 2 weeks. However, since the HSV virus can remain dormant in facial nerves, recurrent outbreaks usually occur. Infection can occur with direct contact with the lesion or contaminated secretion (saliva, tears…) or by sharing items in contact with the mouth. Herpes labialis can cause pain and difficulties in eating or talking which forces patients to change their routine with family members or acquaintances to prevent the virus from spreading. Not only are patients suffering from the physical symptoms of the disease, they are also affected by the stigma associated with herpes labialis. Therefore, when patients are affected with high degrees of recurrence, it can negatively impact their quality of life. 4.1.2. Sitavig, an innovative solution for herpes labialis patients Acyclovir and related compounds (valaciclovir and famciclovir) is an off-patent antiviral drug traditionally used for the treatment of herpes labialis and is usually formulated as a topical cream or as tablets. Sitavig is an acyclovir muco-adhesive tablet (Lauriad Technology) which releases the active

August 1st, 2014 – Onxeo Company Coverage Report PAGE 15

ingredient in the mouth area at high concentrations. Clinical trials have demonstrated that a single dose of Sitavig not only shortens the length of herpetic episode, it also delays the next outbreak. Therefore, patients suffering from herpes labialis can reduce the impact of the infection during an outbreak and also diminish the frequency of the recurrence leading to a better quality of life. 4.1.3. Sitavig marketed in the US and approved in 10 European countries A year after obtaining FDA approval for Sitavig, Onxeo signed a licensing deal with Innocutis for marketing of the drug in North America in March 2014. Onxeo is to receive €5M in upfront and milestones payments and double-digit royalties on sales. Innocutis is a privately-held US company based in South Carolina with an established sales force specialized in dermatology products. Formerly known as JSJ Pharmaceuticals Inc., the company changed its name to Innocutis following a $6.5M financing round from venture capitalists in 2011. In 2010, JSJ Pharmaceuticals generated $10M of revenue. Innocutis sells a variety of prescription products for skin repair, nail dystrophy, and . With about 50 employees, the company is dedicated to promoting its products to the highest-prescribing dermatologists and key opinion leaders of the field. Sitavig was launched in the US in July 2014. Innocutis intends to sublicense the product to other US-based pharmaceutical companies to promote Sitavig to general practitioners and increase revenues. Other exclusive licensing agreements for Sitavig include Israeli Abic Marketing Limited, a subsidiary of Teva (since June 2012), South Korean Daewoong (since April 2014), and Brazilian EMS (since June 2014). These three companies will be responsible for gaining marketing approval in their respective territories and Onxeo should receive milestones and double-digit royalties on sales. Sitavig was approved in December 2012 in , Italy, Spain, Norway, Poland, , Sweden, and Finland. European approval was then extended to and France in March 2014. Onxeo has yet to secure a European license to market Sitavig, which is anticipated in the coming months. 4.1.4. Competitors Sitavig clearly exhibits advantages compared to the current generic formulations of acyclovir (cream or pills with application several times a day). However, Onxeo’s commercial partners will have to compete with these products as well as formulations of famciclovir or valaciclovir that are widely used for the treatment of herpes labialis. 4.1.5. rNPV for Sitavig According to a Nielsen survey ordered and disclosed by BioAlliance, herpes labialis affects approximately 50 million people in the US and 45 million in Europe. On average, affected people usually suffer from 6 episodes of herpetic outbreaks per year. More than a third of them (35%) are experiencing 4 or more episodes per year. This represents approximately 17 million patients in the USA and 15 million in Europe. Sitavig’s rNPV is based on European and US sales as well as other territories where Onxeo has secured a licensing agreement (South Korea and Brazil). Peak sales are estimated at €230M for these regions. By taking into account royalties on sales for Sitavig (up to 15%) we obtain an rNPV of €75.3M, with a 15% discount rate for Onxeo. Table 10: rNPV of Sitavig Sitavig Peak sales €230M Product launch Marketed (US) Treatment price €20-€30 Probably to reach market 100% rNPV €75.3M

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4.2. Loramyc/Oravig 4.2.1. Oropharyngeal Candidiasis and Loramyc/Oravig Oropharyngeal Candidiasis (OPC) is a pathology occurring on the oral mucosa mainly caused by the yeast Candida Albicans. Although normally present in the oral microbial flora of the general population, the proliferation of Candida Albicans can arise when changes in the oral or systemic environment occur. Most OPC events are asymptomatic although some patients can experience a change in their sense of taste or a “cotton”-like feeling in their mouths. However, if left untreated, OPC can spread to the esophagus and provoke difficulty in swallowing and pain. Changes in the oral or systemic environment that can lead to OPC include hypo-salivation or tissue damage induced by chemotherapy, radiation therapy, immune-suppressive drugs, or antibiotic therapy. Therefore, OPC is frequently affecting patients suffering from cancer and undergoing chemo/radiotherapy or HIV/AIDS-infected patients. It has been reported that the overall prevalence of Oropharyngeal Candidiasis (OPC) is about 40% in HIV patients and 30% in cancer patients. Loramyc is a formulation of miconazole with the Lauriad technology. Miconazole has been used as an antifungal agent for skin and mucosal infections. The development of Loramyc allows the release of a high concentration of miconazole in the mouth area for the treatment of OPC in immunocompromised patients, with limited release in the bloodstream. Oravig is the brand name of Loramyc in the US. 4.2.2. Licensing deals Loramyc was approved in Europe in 2006 (launched in France in 2007) and in the US in 2010. Onxeo has secured many deals with international players for the commercialization of Loramyc. However, marketing of Loramyc/Oravig has not been uneventful. After the poor sales performance of SpeBio (joint venture of BioAlliance and SpePharm, now Norgine), BioAlliance took back the European rights from SpeBio and decided to license the drug to Belgian Therabel in 2010. €9.5 million of the €48.5 million deal have already been received. Loramyc is currently marketed in France, Germany, and Italy, where Therabel got reimbursement for the drug. However, despite double-digit royalties from Therabel, sales in Europe are plateauing. In the USA, BioAlliance licensed the rights for Loramyc/Oravig to Par-Strativa for a $65-million deal of which €26 million has already been collected. However, due to Par/Strativa’s change of strategy, BioAlliance decided to regain the rights of Loramyc/Oravig in 2011 without any financial impact. In July 2012, BioAlliance licensed Oravig in the USA to Vestiq Pharmaceuticals for $44 million plus royalties on sales. However, a year after the product was launched by Vestiq, BioAlliance took back the rights due to poor sales performance in April 2014. This is a second step back for BioAlliance in the US. Onxeo will now pursue its business development efforts for the acquisition or license of Oravig in the US. In Asia, Loramyc has been licensed to SciClone in China, Handok in East Asia, and Sosei in Japan. For the Asian region, approximately €4 million have been collected from commercial deals amounting to $34.5 million plus royalties on sales. Sosei is currently undertaking a phase III confirmatory trial in the Japanese population and has already set up its marketing strategy by securing an agreement with Fujifilm Pharma. Despite having difficulties in marketing Loramyc/Oravig, Onxeo has already booked €55 million of revenues for this product thanks to the numerous licensing agreements. 4.2.3. rNPV for Loramyc/Oravig For Loramyc’s NPV in Europe, we removed our assumptions for milestone payments since Loramyc’s sales performance will probably not trigger any commercial milestones. Only France, Germany, and Italy have been taken into account regarding sales since there is no visibility regarding Therabel’s ability to obtain reimbursement of Loramyc in other European territories. These elements have negatively impacted our rNPV calculations compared to our last valuation of Loramyc. In the US, Oravig’s rNPV was reduced due to the delay related to finding a new licensee for this territory. Onxeo is still expecting Sosei Phase III results that could trigger the approval of the drug in Japan.

August 1st, 2014 – Onxeo Company Coverage Report PAGE 17

We considered a royalty rate between 10% and 15% for this product, giving us an rNPV of €28.4M for Loramyc with at 15% discount rate. Table 11: rNPV of Loramyc/Oravig Loramyc/Oravig Peak sales €65M Product launch Marketed (US, EU) Treatment price €60-€150 Probably to reach market 100% rNPV €28.3M

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5. Stock Performance As with other European companies in the life sciences and healthcare sectors, Onxeo’s share price has shown strong performance since the beginning of the year (+68.0%). The increase was initiated when the company received the Fast-Track status from the FDA for Validive. After a correction in March 2014, due to a strong decline in US and European Biotech stocks, Onxeo’s share price has remained relatively steady (around €8.00) despite positive news: licensing deals for Sitavig in the US, South Korea, and more recently Brazil. This could be partially explained by the difficult geopolitical situation in the Ukraine and Middle-East as well as the more recent issues with Portuguese Banco Espirito Santo, which have negatively impacted European markets (See performance of Onxeo compared to other indices on ). Table 12: Performance of Onxeo compared to other indices Performance since Jan 1st, 2014 Onxeo +68.0% Alys France +15.3% Next Biotech +21.6% CAC Pharma.&Bio. +2.7% CAC 40 -2.2% CAC Small +9.0%

When comparing Onxeo to other French smallcap companies in the healthcare and life sciences sector, Onxeo has largely outperformed these companies in the past year with a 74.1% increase for Onxeo compared to 18.5% for Alys France. This is mainly explained by the positive news events of the past months. Trading volumes have also increased in the past year with an average daily volume of approximately 75,000 in 2012; 95,000 in 2013 and 667,000 for the first 7 months of 2014 alone. Onxeo’s share price closed at €7.19 on August 1st, 2014. We believe that the €226.4M market capitalization does not reflect Onxeo’s value and believe there is a significant upside for this company.

160%

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80% +74,1% 60%

Performance 40%

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-20% 01/08/2013 01/10/2013 01/01/2014 01/04/2014 01/07/2014 Onxeo Alys France

Figure 4: Onxeo's one-year stock chart dated August 1st, 2014 compared to other French smallcaps of the healthcare and life sciences sector (Alys France Index)

August 1st, 2014 – Onxeo Company Coverage Report PAGE 19

6. Financials

INCOME STATEMENT (€) 31/12/2013 30/06/2014 30/06/2014 Pro forma* 12 months 6 months 6 months TOTAL REVENUES 1 466 712 652 824 13 872 146 Other Income 16 10 10 Purchased goods (264 271) (113 820) (113 820) Personnel costs (5 346 986) (2 879 564) (4 030 015) External expenses (10 687 094) (5 853 194) (6 935 787) Taxes other than on income (297 740) (280 918) (280 918) Depreciation and amortization, net (232 994) 113 782 60 120 Allowances to provisions, net 60 417 150 862 150 862 Other operating income 5 381 0 0 Other operating expenses (125 028) (325 196) (325 196) CURRENT OPERATING INCOME (LOSS) (15 421 585) (8 535 213) 2 397 403 Share of results by the equity method (28 556) (43 642) (43 642) Other non-current operating income and expenses 0 (4 396 969) (9 270 096) OPERATING INCOME (LOSS) (15 450 141) (12 975 823) (691 635) Financial Income (Loss) 125 527 24 327 73 759 INCOME BEFORE TAX (LOSS) (15 324 614) (12 951 497) (6 842 576) Income Tax 0 0 (816 463) NET INCOME (LOSS) (15 324 614) (12 951 497) (7 659 040)

ASSETS (€) 31/12/2013 30/06/2014 Non-current assets Intangible assets 22 785 74 987 549 Tangible assets 908 313 832 390 Financial assets 368 998 295 298 Total non-current assets 1 300 096 76 115 237 Current Assets Inventory and work in progress 3 145 2 375 Trade and similar receivables 338 113 431 621 Other receivables 4 762 374 3 386 216 Marketable securities 7 357 014 6 642 244 Cash 3 971 707 12 428 043 Total current assets 16 432 355 22 890 499 TOTAL ASSETS 17 732 451 99 005 736

EQUITY AND LIABILITIES (€) Equity Share capital 5 170 748 7 872 661 Less: treasury shares (58 512) (223 432) Premiums 128 044 120 208 756 401 Reserves (109 943 374) (125 003 285) Minority interests 0 0 Net Income (loss) (15 324 614) (12 951 497) Total Equity 7 888 368 78 450 848 Non-current liabilities Provisions 456 878 444 845 Other debts 3 030 220 3 930 295 Total non-current liabilities 3 487 098 4 375 140 Current liabilities Loans and short-term financial debt 91 182 109 292 Trade payables 4 095 749 10 842 599 Other current liabilities 2 170 054 5 227 856 Total current liabilities 6 356 984 16 179 748 TOTAL EQUITY AND LIABILITIES 17 732 451 99 005 736 *Pro forma data is for information only and reflects Onxeo’s income statement as if the merger occurred on Jan. 1st 2014 (Source: Onxeo).

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Disclaimer

This study has been prepared based on general and public information assumed to be complete, exact and pertinent. Although all necessary precautions have been taken to assure that the information used originates from reliable sources, Aurgalys does not guarantee the accuracy or completeness of this report.

Neither Aurgalys nor any of its associates may be held liable in any manner whatsoever in the event that any of the documents and other information on which the study has been based proves to be inaccurate and in any way resulting in the possible misrepresentation of the economic and financial position of the Company or any other relevant information.

The valuation contained herein has been prepared in accordance with the best assessment of Aurgalys as at the date of preparation of this study and has been based on the information as described above. Neither Aurgalys nor its associates guarantee that the value so obtained will correspond or coincide with the price that could effectively be paid in a transaction or established in a negotiation or any transaction or calculation involving the Company.

This document does not constitute an offer or an invitation to buy or subscribe to negotiable or other securities. It may not be used in any manner in support of or in connection with any contract or commitment. This document is being supplied for information purposes only and may not be reproduced or passed on to any third party without the written authorization of Aurgalys. This document has been provided to the Company prior to its distribution.

Aurgalys does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

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Acknowledgements

Special thanks to:  Chris Wilkinson (B.Sc. Pharmacy, US trader) for her detailed and constructive comments

About Aurgalys indices

Aurgalys launched on October 2013, the Alys France index measuring the performance of the 40 French smallcap companies (less than €1B of market capitalization) listed on Euronext/Alternext Paris. Three other indices also measure the performance of companies dedicated to the development of therapeutic molecules (Alys Thérapeutique), diagnostic tests (Alys Diagnostic) and medical devices (Alys Medtech). You can find our reports on our website at http://www.aurgalys.com/aurgalys-indices/

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