A Business Development Look at the Cns Landscape

PULLAN’S PIECES, PART II A BUSINESS DEVELOPMENT LOOK AT THE CNS LANDSCAPE

By Linda M. Pullan, PhD, Pullan Consulting

The unmet needs in CNS are huge. With one hundred million Americans affected by neurological disorders and 43 million Americans suffering from some type of mental illness, the societal impact of CNS afflictions is astronomical. There may be no other therapeutic area where the unmet needs are bigger. What’s more, these diseases are often accompanied by a “loss of self,” which in itself is devastating. 100M 43.4M Americans American affected by adults have neurologica&l a mental disorders illness (MID Report 2018) (MID Report 2017) ShareVault and Pullan Consulting

The numbers of indications with drugs in development are also impressive, both in the categories of neurology and psychiatry. Indications shown in orange have over 7 million patients.

Chronic Orphan Neurology • ADHD y y Neurological • Alcohol

• ALS r addiction g • Alzheimer’s • Ataxias t • Anorexia • Chronic • Batten Disease a o Nervosa i l Inflammatory • Broca Aphasia • Autism Demyelinating • Canavan Disease h

o • Binge eating Polyneuropathy • Carnosinemia r

c • Bipolar • Complex • Cerebral Palsy Disorder u Regional Pain • Dravet y • Dementia Syndrome Syndrome s e • Depression • Dyskinesia • Friedreich Ataxia P • Insomnia • Epilepsy • Globoid Cell N • Narcolepsy • Fibromyalgia Leukodystrophy • Panic Disorder • HD • Syringomyelia • PTSD • MCI • Tardive • Schizophrenia • Migraine Dyskinesia • Tourette • MS • Hyperkalemic Syndrome • Multi-focal Motor Periodic Neuropathy Paralysis • Neuropathic • Kluver-Bucy Pain Syndrome • NMO • Lennox Gastaut • PD • Meige’s • Trigeminal Syndrome Neuralgia • Metachromatic Acute and Semi-Acute Leukodystrophy • Pick Disease • Cancer pain • Rett Syndrome • Cataplexy • Schindler • Guollain-Barré Disease • Headaches • Simian B Virus • Pain Infection • Stroke • SMA 2 • TBI A Business Development Look at the CNS Landscape

HOW DOES THE CNS LANDSCAPE COMPARE TO THAT OF CANCER?

Compared to cancer, there are more companies focused on CNS, but there are fewer drugs in Phase I, II, and III. Presumably, this means that many of the CNS companies are young and work in the preclinical and discovery phases.

Sales in CNS Are Big, But Smaller Than Cancer

CNS vs cancer 2018 Sales $B # drugs, # companies $140 10000 $120

8000 $100 CNS Cancer $80 6000 $60 4000 $40 2000 $20

0 $- Drugs in Phase 1,2, 3 Companies CNS cancer

Sales in CNS represent about 7.5% of all pharmaceutical sales. A majority of the sales (55%) are in the US, which is a larger percentage compared to the percentage of sales in the US for the pharmaceutical industry as a whole, which is about 40%.

2018: Top 10 Drug Sales

2018 sales, millions $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 ) l Lyrica (Pfizer, VDCa Channel, small mol., 2004) From Northwestern U Pain a v o r Tecfidera (Biogen, NFE2L2, small mol., 2013) From Fumapharm AG MS p p a

t Botox (Allergan,SNAP25 , protein, 1991) From Mitsubishi Tanabe Aesthetics+ s 1

, Gilenya (Novartis, S1PR1, small mol., 2010) e MS p y T

Invega Sustenna (J&J, amine R, small mol., 2009) . Schizophrenia l o

M Vyvanse (Takeda, monoamine transport, small mol. 2007) From Shire

, ADHD t e

g Ocrevus (Roche,CD20, Ab, 2017) From Biogen/Genentech r MS a T

, Copaxone (Teva, MHC Class II, peptide, 1996) From Weizmann Institute

o MS C ( Aubagio (Sanofi, DHODH, small mol., 2012) From Aventis g MS u r D Avonex (Biogen, IFNAR1, protein, 1996) MS

The magnitude of sales in CNS is significant. To make the top ten list, sales must be over $1.7 billion. From this chart, we can see that there is a heavy emphasis on multiple sclerosis. Also, there are a few peptides and proteins (yellow bars)and an antibody (red bar), but most drugs being marketed for CNS are small molecules. Interestingly, most of the molecules are the result of a licensing deal, partnership, or

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M&A deal. This highlights the tremendous reliance of the pharmaceutical industry on dealmaking and alliances.

Also of note are the first approval dates, some of which are quite old, with first approvals in 1991 and 1996. Yet these early approved drugs are still leading in sales, indicating that it’s possible to build very large sales in CNS and hold on to them for many years.

2018: Top 10 Companies

UCB, $2,652 2018 CNS Sales, $M Otsuka, $2,699 Roche, $2,754 Biogen, $10,319

Shire, $2,799

Pfizer, $7,992 Sanofi, $3,224

Novartis, $3,786

J&J, $4,328 Allergan, $4,826

Again, we see from this chart that sales in CNS are significant. To make the top 10 list of companies, sales must be at least $2.6 billion. Biogen leads the industry with over $10 billion in sales.

WHAT’S IN THE PIPELINE?

# Drugs in CNS Pipelines of Top 10 Companies Based on 2018 CNS Sales 0 5 10 15 20 25 30 35 Biogen Pfizer Allergan J&J Novartis Sanofi Takeda/Shire Roche Otsuka UCB

phase 1 phase 2 phase 3 pre-registration 4 A Business Development Look at the CNS Landscape

When looking at clinical development pipelines, we see that Biogen, Pfizer and Roche have pretty healthy pipelines. UCB, Otsuka and Sanofi, have leaner pipelines. With attrition rates what they are, it takes a lot of molecules to maintain healthy sales. Based on this data, it may be challenging for most of these companies to keep their top-10 slot.

CNS Drugs in Phase 1-3 by Company Revenues 160 140 120 100 80 60 40 20 0 >=$25B $5 to <$25B $1B to <$5 $0.1B to <$1B $1M to $99M 0 to $0.99M revenue companies drugs in Phase 1,2,3

Interestingly, most pipeline drugs are not being developed by the top 10 companies. This chart shows that there are a great deal of drugs in small companies and those with no revenue. This situation presents many potential opportunities for partnering.

PROBABILITY OF SUCCESS BY STAGE

When looking at success rates by stage, it’s apparent that CNS is a tough segment of drug development. The likelihood of approval of all therapeutic areas combined is above 17%, but all CNS categories are much lower.

Registration Overall Phase 1 Phase 2 Phase 3 to Approval LOA

Neurology/CNS 63.6% 36.2% 54.8% 85.1% 10.7%

Psychiatry 57.0% 23.5% 59.5% 84.8% 6.7%

CNS Orphan 85.0% 56.3% 32.0% 5.0%

All Therapeutic Areas 70.6% 47% 61.8% 84.6% 17.3% https://www.alacrita.com/whitepapers/pharmaceutical-probability-of-success

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TOP CNS INDICATIONS IN PHASE II

Top indications in Phase 2, # of Drugs 50 100 150 200 250 300

Neurology Pain Psychiatric Disorders Neurodegenerative Diseases Movement Disorders Alzheimer's Disease Parkinson's Disease Cognitive Disorders Neuropathic Pain (Neuralgia) Mixed Pain (Nociceptive Pain/Neuropathic Pain)

If indications in Phase II are indicative of what’s to come, we see that most of the solutions are focused on neurology, not psychiatric disorders. Despite the unmet need, not a lot of psychiatric drugs are being developed. Pain is a significant focus, as are neurodegenerative diseases, Parkinson’s, Alzheimer’s and cognitive disorders.

ROUTES OF ADMINISTRATION

The routes of administration of intracerebral, Phase II CNS drugs are impressively inhalation, 27 15 buccal or sublingual, 12 varied. Oral is the dominant category, epidural, 4 intraarticular, 37 with intravenous and subcutaneous topical or cutaneous, 58 intradermal, 15 second and third. But observe the intramuscular, 40 numerous specialized routes, such intrathecal, 33 subcutaneous, parenteral, 33 as intrathecal, intracerebral, as well 180 as intramuscular, inhalation, and ophthalmic. There are remarkable diverse routes of administration intravenous, 345 being employed.

Routes of Phase 2 CNS Drugs, # drugs nasal, 30 ophthalmic, 15 oral, 756

6 A Business Development Look at the CNS Landscape

TARGET CLASSES Target Classes in Phase 2 CNS Drugs

The target classes are receptor perhaps less varied enzyme than one would expect. ion channels Receptors, enzymes, transporter and ion channels other dominate. Transporters amyloid have historically been tau and cytoskeleton growth factor a big category, but it’s cytokines a relatively small chunk membrane protein in Phase II. Amyloid and nerve protein (ataxin, synuclein) tau are still a significant chunk. Cytokines, membrane proteins, and nerve proteins make up the rest.

DESIGNATIONS FOR CNS PHASE II DRUGS Designations for CNS Phase 2 drugs (474 total)

Orphan

breakthru

505b2

Combination

Extended or sustained release

0 20 40 60 80 100 120

Orphan drugs comprise about 20% of Phase II CNS drugs (100 out of 474). Breakthrough designations are fairly rare, and 505b2, where the data from an existing drug is used to substantiate a new formulation of that drug, makes up a significant portion. Combinations are also a significant portion, but much less so than in oncology. Finally, extended or sustained release drugs comprise a surprisingly small piece of CNS designations.

BIOMARKERS

The use of biomarkers in CNS Phase III trials is rarer than in cancer.

The patient selection and stratification biomarkers are particularly small in CNS trials. Some of this has to do with access to materials, as there are probably very 7 ShareVault and Pullan Consulting

few brain biopsies to be utilized for brain biomarkers. Still, it’s surprising how few biomarkers are being used in CNS Phase III trials.

Biomarkers in Phase 3 CNS trials Biomarkers in Cancer Phase 3 trials 657 145 1646

1305 7260 4903

efficacy efficacy biomarkers patient selection/stratification patient selection/stratification no biomarker no biomarker

2025 SALES FORECAST

Sales for the top 10 molecules in 2025 is quite a different list than what we saw for 2018. Most of the molecules that were on the 2018 list are not in the 2025 forecast. However, Botox, Ocrevus (the Roche CD20 antibody), Invega, and Biogen’s MS drug, Tecfidera, will still be on the list.

2025 Sales Forecast Drug (Co, Target, Molecule Type, First Approval) $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000

Ocrevus (Roche,CD20, Ab, 2017) MS Botox (Allergan,SNAP25 , protein, 1991) Aesthetics+ Invega Sustenna (J&J, amine receptor, small mol., 2009) Schizophrenia Tecfidera (Biogen, NFE2L2, small mol., 2013) MS Spinraza (Biogen, SMN2, antisense, 2016) From Cold Spring Harbor Lab SMA SAGE-217 (Sage Therapeutics, GABAR, small mol, Phase III) Depression Rexulti (Otuska, multi DA 5HT R, small mol, 2015) Depression Epidiolex (GW, CB1/CB2/GPR55/TRPV, small mol, 2018) Seizures Spravato (J&J, NMDAR, small mol, 2019) Depression Zolgensma (Novartis, SMN2, AAV gene, 2019) From Nationwide Children’s Hospital, OSU, AveXis SMA

8 A Business Development Look at the CNS Landscape

Not all the top sellers are small molecules, with antisense, gene therapy new entrants. The other big shift is that depression and seizures appear, and the list is no longer dominated by MS. The other phenomenon is that fewer of the molecules will come in via deals, which indicates that some smaller companies will be working hard to develop their own molecules and are expected to do very well.

2025 TOP 10 COMPANIES

When looking at the top 10 companies in expected sales for 2025, we will see some of the same players, such as Biogen, which tops the list. But other companies, such as Lundbeck, Teva, Merck and Lily, are coming into play in 2025 and expected to be substantially bigger in CNS sales than they are today.

GLOBAL SALES OF LEADING SCHIZOPHRENIA DRUGS

Leading Schizophrenia Drugs Global Sales $9,000

$8,000

$7,000 Abilify $6,000

$5,000 Zyprexa Invega Sustenna $4,000

$3,000 Rexulti Seroquel XR $2,000 Latuda Abilify Maintena

$1,000 Vraylar

$0 2011 2012 2013 2014 2015 2016 2017 2018 2019(F) 2020(F) 2021(F) 2022(F) 2023(F) 2024(F) 2025(F)

Invega Sustenna (J&J, 2009-2019) Rexulti (Otsuka and Lundbeck, 2015-2026) Abilify Maintena (Otsuka and Lundbeck, 2013-2024) Vraylar (Allergan, 2015-2027) Latuda (Sumitomo Dainippon, 2010-2026) Zyprexa (Lilly, 1992-2001) Abilify (BMS and Otsuka, 2002-2014) Vraylar (MTPC, 2015-2027) Seroquel XR (AstraZeneca, 2007-2009)

Looking at the indication of schizophrenia, this chart demonstrates the impact on sales of patent expirations. For example, when Abilify went generic in 2014, sales dropped drastically.

Though some drugs are forecast to have an increase in sales, these increases will not reach the levels of the large sales in the past for schizophrenia. Because the generic price pressures will be so substantial, the new drugs will not achieve the sales that were realized in the past. Despite the huge unmet needs, without new mechanisms, large sales are not forecast for schizophrenia.

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MECHANISMS

One reason that this segment will not have sufficient sales to make up for losses due to patent expirations is that there are few new mechanisms. We’re seeing the same mechanisms that have been used for a long time, such as dopaminergic and other neural transmitter signaling. Since they are not novel, it’s hard to achieve blockbuster sales in the face of patent expirations

on the old schizophrenia drugs. Source: GlobalData, Proprietary Marketed Products Database SCHIZOPHRENIA’S UNMET NEEDS

There are still many unmet medical needs in schizophrenia. The existing drugs are predominantly effective on the positive symptoms, such as acting out, but also result in a dampening of effect. They don’t address the negative symptoms and other side effects that patients complain about, such as cognitive impairment. Often this results in problems with patient compliance, and it highlighting the urgent need for new approaches to treat schizophrenia.

MS SALES FORECASTS MS Sales Forecasts $4,500

$4,000 Tecfidera (Biogen, 2013, 2020) NFE2L2 oral $3,500 Tysabri (Biogen, 2004, 2020) Integrin A4 $3,000 Mayzent (Novartis, 2019, 2024) SIPR oral

$2,500 Arzerra (Novartis, 2020?, 2023) CD20

$2,000 Avonex (Biogen, 1996, 2007) interferon Vumerity (Biogen, 2020?, 2030) NFE2L2 oral $1,500 Gilenya (Novartis, 2010, 2019) S1PR oral $1,000 Plegridy (Biogen, 2014, 2025) peg interferon $500 Copaxone (Teva, 1996, 2014) MHC $0 2019(F) 2020(F) 2021(F) 2022(F) 2023(F) 2024(F) 2025(F)

10 A Business Development Look at the CNS Landscape

In 2018, MS was the dominant indication for the top 10 drugs. Seven years later, MS is not nearly as dominant in the top 10 drugs. Again, future patent expirations and the generic price pressures will really impact MS drug sales. We have yet to see the next wave of therapeutics that differ sufficiently from the targeted immunosuppressants to make an impact in sales.

SMA SALES FORECASTS

In SMA, we see a rapid rise in sales for first entrants. This is a classic example of the power of being the first to enter a new market space. With SMA, there have been six entrants into a disease that previously had no effective treatments. We therefore see a rapid increase in sales in the early years and then a gradual slowing.

Leading Drugs in SMA Drug (Co., 1st approval, expiry) 2,500

Spinraza (Biogen, 2016-2025) antisense SMN 2,000 Spinraza Zolgemsa Zolgemsa (Novartis, 2019-2031) gene Tx SMN 1,500 Risdiplam (Roche, ?-2029) small mol SMN

1,000 Reldesemtiv (Astellas, ?-2032) troponin small mol Risdiplam Sales, $ millions Reldesemtiv (Cytokinetics, ?-2032) troponin small mol 500 Branaplam (Novartis, ?-2031) small mol SMN

2016 2017 2018 2019(F) 2020(F) 2021(F) 2022(F) 2023(F) 2024(F) 2025(F)

ALZHEIMER’S SALES FORECASTS

Alzheimer’s has proven to be a very tough therapeutic area. Aricept was approved in 1996, and the patent expired in 2006. This acetylcholinesterase inhibitor has hung in there for a long, long time. It has benefits for some patients, but certainly can’t be said to be a significant cure.

Sales Forecasts in Alzheimer's $1,400 vafidemstat (Oryzon, 2024, 2034) MAO-B, LSD1 $1,200 Solanezumab (Lilly, 2020?, 2032) Amyloid $1,000 Bryostatin-1 (Neurotrope, 2022, 2033) PKCepsilon

$800 Azeliragon (vTV, 2025, 2033) AGER

$600 Aricept (Eisai, 1996, 2006) AChE

$400 Donanemab (Lilly, 2021, 2033) amyloid Elenbecestat (Eisai, 2022?, 2031) beta secretase $200 Dexmedetomidine (BioXcel, 2021?, 2031) ADRA2 $0 2019(F) 2020(F) 2021(F) 2022(F) 2023(F) 2024(F) 2025(F) 11 ShareVault and Pullan Consulting

Alzheimer’s sales remain fairly stagnant and analyst forecasts are generally not optimistic. The one drug showing substantial sales in the 2025 time frame is an epigenetics and MAOB approach. This is a disease with a huge unmet need, and there isn’t much on the horizon that has the potential to be a blockbuster. Again, we need new approaches.

2019 DRUG DEVELOPMENT PIPELINE

y S Source: Cummings, J et al, Translational Research and Clinical Interventions 5:272 (2019)

PARKINSON’S SALES FORECASTS Parkinson's Sales Forecasts $1,200 AXO-Lenti-PD (Axovant, 2022?, 2034) gene tx $1,000 Inbrija (Accorda, 2018, 2032) levodopa inhaled $800 Accordion Pill (Intec, 2021?, 2031) levodopa, carbidopa $600 VYAADC-01 (Voyager, 2023?, 2034) gene tx

$400 Ongentys (Neurocrine, 2020?, 2026) COMT

$200 (Carbidopa + Levodopa) (MTPC, 2021? 2029)

Blarcamesine (Anavex, 2021?, 2029) NMDAR $0 12 2019(F) 2020(F) 2021(F) 2022(F) 2023(F) 2024(F) 2025(F) A Business Development Look at the CNS Landscape

In Parkinson’s we also see that fairly stagnant growth is expected, but we do see that gene therapy has the potential to be a significant player in the future. Most of the other drugs on this list are well-known mechanisms and combinations, that is, drugs that may see incremental improvement, but are not expected to gain blockbuster status. It’s difficult to get to those blockbuster sales forecasts with things that are only incrementally superior to generics.

DEPRESSION SALES FORECASTS

Sales Forecast in Depression $2,000 $1,800 SAGE-217 (Sage, 2021?, 2031) GABA $1,600 AV-101 (VistaGen, 2021?, 2031) AMPA $1,400

$1,200 ((Bupropion + Dextromethorphan), $1,000 Axsome, 2021?, 2031) nChR+ NMDA $800 Viibryd (Allergan, 2011, 2019) 5HTT $600 Zoloft (Pfizer, 1991, 1999) 5HTT $400

$200 Effexor (Pfizer, 1997, 2003) 5HTT $0 2019(F) 2020(F) 2021(F) 2022(F) 2023(F) 2024(F) 2025(F)

In depression, most of the serotonergic transport inhibitors have been generic for some time. They continue to have decent sales, but nowhere near the sales of the past. Dollar volume has declined dramatically, but patient volume has not been responsible. A few new approaches may have some impact, such as those employing GABAA, AMPA, and the NMDA receptor. Though Esketamine had generated tremendous hope, so far it hasn’t delivered significant sales, since its benefit of the more rapid effect has the trade-off of side effects.

MIGRAINE SALES FORECASTS

Migraine, much like SMA, is an area where the world has changed. Prior to 2019, we saw the expiration of almost all of the triptans—Sumatriptan, Zomig, Maxalt, and so forth, which had been a huge revolution at their release and represented the dominant sales in migraine. Now the CGRP agonists, mostly antibodies, have been selling well, and some oral CGRP molecules have potential. And there is one 5HT1F molecule in the list from Lilly.

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Migraine Sales Forecasts $1,800 $1,600 Aimovig (Amgen, 2019, 2031)

$1,400 Emgality (Lilly, 2018, 2031)

$1,200 Zydis (Biohaven, 2020?, 2030) oral $1,000 Eptinezumab (Alder, 2020?, 2032) $800 Aimovig (Novartis, 2018, 2031) $600 lasmiditanm (Lilly, 2019?, 2029) oral 5HT1F $400 Ubrogepant (Allergan, 2020?, 2030) oral $200

$0 Atogepant (Allergan, 2022?, 2032) oral 2019(F) 2020(F) 2021(F) 2022(F) 2023(F) 2024(F) 2025(F)

THE DEALS

This chart, which shows the fraction of deals M&A, 619 that are M&A, VC deals, VC deals, 907 and partnerships, is consistent with other CNS deals 2014 thru 8/6/2019 therapeutic areas, in that licensing partnerships are the predominant form of deals and is a much Partnerships, 1428 larger share than the number of VC deals or the number of M&A deals. Number of M&A Deals per Year 140 120 100 80 60 40 20 0 2014 2015 2016 2017 2018 2019 14 A Business Development Look at the CNS Landscape

CNS M&A DEALS

2019 is shaping up to be a strong year for M&A, but will likely not compete with 2016, when M&A deals in CNS peaked. The number of deals in CNS per year is relatively small, generally between 60 and 100 per year.

MOST ACTIVE COMPANIES IN CNS M&A Most Active in CNS M&A 2014 to 8/8/2019

Allergan Pfizer Merck &Co Mallinckrodt Teva Novartis Juno Lundbeck Astellas Abbott

0 1 2 3 4 5 6 7 8 9 10 Number of Deals This chart shows the top companies that are doing M&A deals in CNS.

NUMBER OF M&A DEALS IN CNS BY COUNTRY

Number of M&A Deals in CNS by Country, 2015 thru 8/8/2019 80

0 United States United Kingdom Canada India Australia Germany 2015 2016 2017 2018 2019 Most CNS acquisitions are for US companies. Note that China is not on this list, which differs from oncology, where China is responsible for a slightly larger number of the M&A deals.

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CNS M&A DEALS BY STAGE OF MOST ADVANCED ASSET

Compared to Discovery, 4 Preclinical, 26 cancer, marketed drugs are more # CNS M&A deals by stage prevalent in M&A of most advanced asset Phase 1, 19 deals in CNS, but a significant number Marketed, 64 of preclinical deals are taking place, along with deals in Phase I, II and III. Most deals take place at Phase II and beyond. Phase 3, 21 Phase 2, 37

CNS M&A DEALS BY MOLECULE TYPE

CNS M&A Deal Number by Molecule Type (Note: deals often include more than one type.) 0 20 40 60 80 100 120 140 160 small molecule protein peptide Ab gene therapy cell oligo or antisense vaccine polysaccharide

Small molecules dominate M&A deals in CNS, but these deals are getting done across a wide variety of types of molecules.

VC DEALS CNS VC Rounds by Year 250 $4,500 The number of VC $4,000 200 $3,500 rounds per year $3,000 150 in CNS has been $2,500 $2,000 100 generally steady for # rounds $1,500 the last five years, 50 $1,000 $500 and the number of 0 $- 2015 2016 2017 2018 2019 VC deals and the No Of Deals Value (US$m) deal value in 2019 are on track with the previous four years. 16 A Business Development Look at the CNS Landscape

NUMBER OF VC DEALS IN CNS BY COUNTRY

#VC deals in CNS by Country 200

150

100

0 United States United France Israel Canada China Kingdom 2015 2016 2017 2018 2019

NUMBER AND VALUE OF SERIES A AND B ROUNDS IN CNS

Who’s doing Series A and B round in CNS? This area looks quite different from oncology, a field where a number of corporate venture arms are among the most active in early round deals. Instead, in CNS, the players who have been the most active in series A and B rounds includes only one corporate VC. # and Value of Series A and B rounds in CNS 18 $900 16 $800 14 $700 12 $600 10 $500 8 $400 # rounds 6 $300 4 $200 2 $100 0 $0 ARCH Venture Alexandria Orbimed Fidelity Johnson & Cormorant Partner Fund Polaris Partners Atlas Venture Dolby Family Partners LP Venture Advisors LLC Management & Johnson Asset Management LLC Inc Ventures LP Investments Res ea rch Innovation - Management LP Comp any JJDC Inc LLC

No.of Deals Value (US$m)

LICENSING DEALS

CNS licensing deals have been steady in recent years, both in number and value, and 2019 looks to be no different. Note (on the next page) that there are many more deals here in licensing than in M&A and VC.

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CNS Licensing Deals since 1/2015 350 $18,000 $16,000 300 $14,000 250 $12,000 200 $10,000 $8,000 # deals 150 Value $M Value $6,000 100 $4,000 50 $2,000 0 $0 2015 2016 2017 2018 2019 YTD number value

CNS LICENSING DEALS BY STAGE Discovery CNS Licensing Deals by Stage 11%

CNS licensing deals are most Preclinical often done in the preclinical and 26% marketed stages. This is somewhat Marketed 32% different than in oncology, where the percentage for marketed drugs is much smaller. The preclinical percentage is similar to oncology, Pre-Registration and the Phase II percentage is a bit 2% Phase 2 Phase 1 Phase 3 14% smaller than in oncology, but the 8% 7% basic message is the same—most deals are done in preclinical, Phase II, and beyond. Phase I is a tougher arena for deals. Phase III is also often a tougher arena because companies need lead time to be ready to launch, and often the best opportunities are perceived to have been

picked up in Phase II when there are signs of Oligo or RNAi Enzyme efficacy, but everything’s still not complete. Cell Therapy Antisense 1% 1% 3% 5% Protein 5% COMMON MOLECULE TYPES IN CNS LICENSING Peptide 6% Small molecules own the dominant share Antibody of CNS licensing deals, but there are 8% a significant variety of other molecule gene therapy types, which could reflect a desire for 8% Small Molecule diversification of platforms. 63%

18 A Business Development Look at the CNS Landscape

LICENSING DEALS IN CNS SINCE JANUARY 2015

Licensing Deals in CNS since 1/2015 0 5 10 15 20 25

Biogen Inc Takeda Pharmaceutical Co Ltd Janssen Pharmaceuticals Inc Eisai Co Ltd Pfizer Inc AstraZeneca Plc Grunenthal GmbH Therapix Biosciences Ltd Sanofi

Biogen and Takeda have been the most active in-licensors in the last five years, but it’s notable that Biogen has only done about five deals a year. Therefore, if you’re looking for a partner, you might not be able to count on even a big dealmaker like Biogen.

CNS LICENSING DEALS BY COUNTRY AND TERRITORY

US companies are the most active in doing licensing deals in CNS.

CNS Licensing Deals by Country of HQ 160 140 120 100 80 60

Number of Deals 40 20 0 United States United Kingdom Japan France Germany Canada 2015 2016 2017 2018 2019

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Licensing deals in CNS generally include the US even if they are not global. This is consistent with the US having the biggest sales in CNS drugs.

Deal Territories for CNS Licensing Deals Since 1/2015 600

500

400

300

200

100

0 US Global Japan UK China Germany N. America Europe US global Japan,(not w itnoth UK,(no tnot with US China,(not wit hUK Germany,(not with N America(not Europe(not UK UKUK oror UUSS) US) UorK o rUS US) notU SUS) US) or Germany)

In summary, with tremendous unmet needs, large patient populations, CNS is a potentially exciting area.

But many diseases show pricing pressure of generics against the incremental improvements. With new approaches, new unserved diseases, the future is likely to be very different.

20 A Business Development Look at the CNS Landscape

About Linda Pullan, PhD Pullan Consulting

Linda and her team at Pullan Consulting offer biotech and pharmaceutical companies consulting in all aspects of partnering. Linda has a PhD in Biochemistry, a BS in Chemistry, and over twenty years of drug industry experience, including work on more than 75 deals. About Pullan Consulting

STRATEGY

Pullan Consulting can help you decide which studies will be more important for a partner or an investor. They can also help assess partnerability of new indications or programs.

OUTREACH

Pullan Consulting can mount an email partnering campaign, represent you at partnering meetings, and introduce you to investors. They have a very large database of industry contacts, along with notes on their interests, and they subscribe to databases to facilitate searches for companies in your space.

EVALUATIONS AND VALUATIONS

Pullan Consulting can assess differentiation from competition, both existing and in the pipeline. They can also model risk-adjusted discounted cash flow value of your drug candidate or of a deal.

NEGOTIATIONS

Pullan Consulting can help you prepare for a deal, both by considering the alternatives of deals and by evaluating your priorities. They can also lead negotiations for you or give advice on how to negotiate.

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