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Strategy Analysis

March 2009 Josselin Courselle Rebecca Deprez Julien Maurin Thomas Patard 1 This is an independent study performed by students from the Faculté des Sciences Pharmaceutiques of Lille.

The opinions expressed are our own and not necessarily those of Actelion.

2 From ambition … − 1990 : Roche discovered the first ENTDOANHELIN RECEPTOR TAGONIST − 1996 : Roche drops clinical trials on bosentan (liver toxicity). − 1997: Founding Actelion. (Allschwil, Switzerland)

JP Clozel M Clozel A Muller W Fischli T Widmann CEO VP Drug Discovery, Chairman Board VP Drug Discovery, Former CEO Pharmacology Former CFO Biology Preclinical Dev 3 … to realization 10 years on

− 20 countries worldwide − 1949 employees − 2000 : IPO Swiss New Market (256Mio CHF) − In the top-15 biopharmaceutical companies − 2008 : Entry into the SwissMarketIndex , Best performing stock !

Sales Marketing

Development 4 3 Marketed products Zavesca® (miglustat) Type 1 Gaucher’s disease

Ventavis® (iloprost) Inhaled prostacyclin for PAH therapy

Tracleer® (bosentan) Oral dual endothelin receptor antagonist « Entan » For PAH & Digital Ulcers

5 Actelion : A strong communication on Pulmonary Arterial Hypertension, Endothelin,« Entans »

PAH_info.com

Endothelin.org

Owns visual and verbal nomenclature of an entirely new class of compounds 6 Actelion in Mid-2003

Acquisition

Partnership Veletri tezosentan

In-Licencing

Reward Risk

Generics Specialty Orphan drugs Hospital drugs GP products Pharmaceuticals

Actelion : A Clinical Developement Company

7 2003-2004: moving upward the DD pipeline

Sept-2003 :Axovan acquisition

• Phase II clazosentan GPCR • Numerous pre-clinical projects • Chemistry platform • GPCR platform

Actelion : A Drug discovery Company

8 2003-2008 : Niche extension PAH & CardioVascular diseases

Acquisition

PGI2 agonist

Partnership

In-Licencing Pivlaz Reward Macitentan Clazosentan Risk

Veletri tezosentan

Generics Specialty Orphan drugs Hospital drugs GP products Pharmaceuticals 9 2003-2008 : Moving towards GP market Acquisition S1P1 Agonist

Partnership Orexin Antagonist

In-Licencing CRTH2 Antagonist Reward Risk Renin Inhibitor

Generics Specialty Orphan drugs Hospital drugs GP products Pharmaceuticals 10 Major therapeutic areas & Marketed Products

− Pulmonary Arterial Hypertension −Gaucher’s disease

11 What is PAH?

-Sustained elevation of pulmonary vascular resistance : >25 mmHg (at rest) >30 mmHg (while exercising) right ventricular failure and premature death (median survival 2.8 y)

-Small pulmonary arteries obstruction due to Vasoconstriction Thrombosis Smooth muscle and endothelial cell proliferation

12 WHO functionnal classes

Class I PAH but without limitation of physical activity. Slight limitation of unsual physical activity : dyspnoea or Class II fatigue, chest pain or near syncope Comfortable at rest Marked limitation of ordinary physical activity. Class III Comfortable at rest. Inability to carry out any physical activity without Class IV symptoms. Signs of right heart failure. Dyspnoea and/or fatigue may even be present at rest

mean age of diagnosis: 36 years1

prevalence of 30-50 cases per million2 1: Sitbon O et al. Am J Resp Crit Care Med 2008 ; 2: Peacock AJ. BMJ 2003 13 Why does it develop?

− Reduced production of vasodilators – Prostacyclin – NO − Increased production of vasoactive compounds – Endothelin (ET)

14 PAH therapy & Actelion portfolio

15 PGI2 pathway : Competitors

® ® Flolan (epoprostenol: PGI2) Remodulin (treprostinil) Natural prostacyclin Synthetic analogue

Short half-life Preferentially given subcutaneously  Intraveinous perfusion (small infusion pump)

Low impact on quality of life and Pain and discomfort (85% of patients) mortality

75,000 $/year 45,000 $/year

16 Ventavis® (Iloprost) for PAH GPCR PGI2 receptor agonist

2007: CoTherix acquisition 17 Ventavis®, freedom from iv prostacyclins

Inhaled formulation of iloprost

↑ stability and ↑ half-life vs natural PGI2

Approved for PAH Class III or IV

Cost: 3100€ / year

The only inhaled PAH therapy on the US market

18 Ventavis®, contributing to growth − Developed by Schering − 2004 :Approval & Licenced to CoTherix in US − 2007 :Acquisition of CoTherix Bayer Schering Pharma sales in EU & other countries; Actelion in US − 2008 : Sales reach CHF 94.6 m 34% increment

19 Ventavis® : Improve access to treatment

I-neb Adaptative Aerosol Delivery System

Pulmonary drug delivery device Battery powered

Adaptive Aerosol Delivery (AAD®) technology: −Constant amount of drug is inhaled −No waste

Ann Pharmacother. 2005 Jul-Aug;39(7-8):1265-74. Prodose AAD Inhaled iloprost in pulmonary arterial hypertension. Baker SE, Hockman RH. 20 Tracleer® (bosentan) for PAH

GPCR Mixed ETA/ETB entan 1st in class

21 2000: in-licenced from Roche ET mediated effects in PAH

British Journal of Pharmacology (2008) 153, 1105–1119 22 Bosentan Tracleer®

- 2002 : PAH class III & IV - 2008 : PAH class II (EARLY) - 2008 : Digital Ulcers (PAH with connective tissue diseases like systemic sclerodermia) - Sales : CHF 1.2 b ; +17%; constant growth

23 Entans competition

ICOS/Encysive/Pfizer Launched

Myogen/Gilead/GSK Launched

−Ambrisentan (Letairis® Volibris ® ) 2008 : $112.9 million (US); EU launched −Sitaxsentan (Thelin ® ) acquired by Pfizer in 2008

Gilead Phase III

Updated from Nature Reviews Drug Discovery 986 | 2002 | VOLUME1 24 Other PAH competitors in NO pathway

− Sildenafil (Revatio ® Pfizer) PDE5 inhibitor (03/2005).

− Riociguat (Bayer Schering Pharma) soluble guanylate cyclase (sGC) stimulators. Phase III

25 Miglustat (ZavescaTM)

Targeting Genetic disorders

2002: in licenced from OGS / then Celltech 26 Type 1 Gaucher : A bone disease

− Inherited autosomal recessive disorder − Reduced activity of lysosomal ß-glucocerebrosidase − Accumulation of glucosylceramide − Necrosis of bone marrow infiltrated with Gaucher cells − Bone pain, osteonecrosis due to abnormal remodeling

27 Type 1 Gaucher : Treatment

− Enzyme replacement − Substrate Reduction therapy (inb. Glucosylceramide synthase) − Chemical chaperone

Glucosylceramide

Defective Enzyme- glucosylceramide ß-glucocerebrosidase replacement synthase therapy (ERT) Substrate reduction CEREZYME® therapy Ceramide 60 IU/kg/2 weeks ~86 140 - 430 700 € /y Chemical chaperones to reactivate defective enzymes 3*100 mg/day ~91 881 € /y

Future Lipidol. 2008 June ; 3(3): 273–300. NATURE REVIEWS | MOLECULAR CELL BIOLOGY V5 | JULY 2004 | 554 NATURE REVIEWS | CANCER V4 | AUGUST 2004 | 604 28 Miglustat sales

+20%

29 Niemann-Pick type C disease

− Very rare − Reduced activity of lysosomal sphingomyelinase − Accumulation of sphingomyelin − Severe SNC disabilities − Zavesca® Approved in 2008 as a sphingomyeline synthase inhibitor

Substrate reduction therapy

30 Broad Clinical Portfolio

31 Life cycle management & current drug families

Miglustat Iloprost & other PGI2r agonists Entans

32 Zavesca® in Cystic Fibrosis

− Autosomal recessive genetic disorder − Progressive lung & pancreas dysfunction − Caused by defected CFTR chloride channel

−Norez C., Noel S., Wilke M., Bijvelds M., Jorna H., Melin P., DeJonge H. and Becq F. Rescue of functional delF508-CFTR channels in cystic fibrosis epithelial cells by the alpha-glucosidase inhibitor miglustat. FEBS Lett. 508, 2081-86; 2006. 33 Zavesca® in Cystic Fibrosis

Chemical chaperones to reactivate defective enzymes

− Acts as a chemical chaperone of the CFTR (del508) − Phase IIa results expected Q2-2009

−Norez C., Noel S., Wilke M., Bijvelds M., Jorna H., Melin P., DeJonge H. and Becq F. Rescue of functional delF508-CFTR channels in cystic fibrosis epithelial cells by the alpha-glucosidase inhibitor miglustat. FEBS Lett. 508, 2081-86; 2006. −Antigny et al, Cell Calcium, 43, 175-183 2008 34 PGI2 agonists :Improve patient access to treatment

Q2 2009 – PROWESS 15 New device to ↓ inhalation time and ↑ patient compliance Study design: 64 patients, crossover study

35 PGI2 agonists : New combinations ?

2006 :phase II/III STEP Efficacy and added benefit of using Ventavis® in patients with PAH already undergoing treatment with bosentan, or sildenafil

Mc Laughlin et al., AJRCCM, 2006 Ghofrani et al., JACC, 2003 36 GPCR Improve patient access to treatment :

PGI2 agonists in a pill ?

− Discovered by Nippon Shinyaku − 2008: Actelion outside Japan & co-development & commercialization in Japan

− First-in-class , Non-prostanoid PGI2 receptor agonist − Pro-drug offers protection to gastro-intestinal tract

37 ACT-293987: current status Results of phase I Good safety profile Linear PK after single oral dose Half-life supports twice-a-day oral dosing No accumulation after multiple dosing

2008 : A phase IIa study in PAH Objective: evaluate acute hemodynamic effects and tolerability of up-titration to 800μg bid

Results are expected in Q3 2009

−Kuwano et al (2008). J Pharmacol Exp Ther 326: 691-699. 38 Bosentan : Extension of Indications

2002

Chronic Thrombo Embolic Pulmonary Hypertension

2007

2008 + Sildenafil

39 Bosentan in IPF (Idiopathic Pulmonary Fibrosis ) Ph.III − Orphan disease − Easily diagnosed (unlike PAH) − Death in 3-years − Bosentan normalizes cells with fibers − Results expected in Q2-2009 − If Bosentan goes in IPF, Fast track status and double revenue in 2 years

King T.E. et al. High-resolution computed tomography (HRCT) features correlate with response to bosentan in idiopathic pulmonary fibrosis (IPF): the BUILD 1 study [abstract]. Am J Respir Crit Care Med. 175:A567; 2007. 40 Macitentan in PAH Ph.III

− 100 times more potent than bosentan − Mixte ETA/ETB − Directed towards tissues to avoid vascular effects − SERAPHIN study − Expected results in 2009

US5,292,740 Tracleer Patent Extension till Nov-2015 (US) 2017 (EU) 41 Clazosentan in cerebral vasospasm. Ph.III − Cerebral vasospasm occurs after subarachnoid hemorrhage from a ruptured aneurysm − 10-15% die or permanent disability

− ETA antagonist designed for parenteral use − Used as prevention of rebleeding of coiled or clipped aneurysms

J Neurosurg 103:9–17, 2005 CONCIOUS Ro 61-1790, VML 588, and AXV-034343 42 Tezosentan VeletriTM in post cardiac surgery

− 2001 VERITAS study for Acute Heart Failure does not meet primary efficacy objective. − 2004 VERITAS study being stopped for futility. − 2008 in cardiac bypass separation was lower than expected.

43 New therapeutic areas

Autoimmune disorders Asthma Sleep disorders

44 GPCR ACT-S1P1 agonist for autoimmune diseases

(S1P = Sphingosine-1-phosphate)

45 Sphingosine-1-phosphate receptor & S1P − S1P : − Bioactive lipid − Released by platelets, mast and other cells. − Regulate migration of lymphocytes

− S1P receptors : − GPCRs ; 5 subtypes − Agonists lock lymphocyte migration and prevent lymphocyte recruitment to sites of inflammation

46 Autoimmune Diseases

− Diseases that involve migration of pathogenic lymphocytes from lymph node to tissues

Psoriasis Multiple sclerosis Rheumatoid Arthritis

47 ACT-S1P1 receptor agonist

− First-in-class since selective S1P1 − once-a-day oral dosing − Competitor : FTY520 (Novartis) Phase III (not selective)

OH

OH

NH2

− Program initiated in 2004 − 2006 Partnership with Roche − 2008 Phase II in Psoriasis

Kappos L. et al. N Engl J Med 355(11):1124-40; 2006 48 GPCR CRTH2 antagonists for allergic airway inflammation

49 GPCR CRTH2 receptor

Chemoattractant Receptor – homologous molecule expressed on Th2 lymphocytes − Cognate receptor for PGD2 − Role in Th2-dependent allergic inflammation − Involved in patients suffering from asthma

Novel oral treatment for allergic airway disease

50 Mode of action Allergen

Mast cell

PGD2

CRTH2

Migration Local activation Cytokine release Amplification of symptoms Th2 cells

Allergen induces release of PGD2 51 Mode of action

Mast cell

PGD2

Receptor antagonist

CRTH2

recruitment ↓ activation amplification Th2 cells symptoms

CRTH2 receptor antagonist prevents recruitment and stops the process 52 GPCR Current status CRTH2 antagonists

Preclinical − inhibits secretion of pro- inflammatory cytokines by Th2 cells − inhibits migration of eosinophils Clinical data − Well tolerated in healthy volunteers − Phase IIa double-blind, placebo controlled, crossover study (proof of mechanism) in asthma completed − Phase IIb in asthma initiated in 2009

53 Almorexant for sleep disorders Oral orexin receptor antagonist GPCR

54 Almorexant

− Orexins = A pair of highly excitatory neuropeptide hormones − First-in-class orexin receptor antagonist − Treatment for insomnia or jetlag − The only compound in Phase III

Hoever P, et al.SLEEP 2008 22nd Annual Meeting of the Associated Professional Sleep Societies, LLC (APSS) June 7-12, 2008 55 Almorexant and Sleep cycle

56 The Sleep-Wake Switch: Wakefulness

Orexin Orexin

VLPO = ventrolateral preoptic area Circadian “alerting” signal

Saper CB et al. Hypothalamic regulation of sleep and circadian rhythms. Nature 2005;437:1257-1263. 57 Key data for Almorexant

− Partnership with GSK and the two companies sharing profit.

− GSK finances 40% of development cost

− Clinical trial end of phase III

− Results in Q3 2009

58 Almorexant partnership

− Actelion received an up front payment of CHF 150 million − About CHF 3 billions for all milestones

Possibilities for Actelion to develop another research program

59 Why Almorexant could be a blockbuster ?

− 25-30% of western populations suffer from insomnia1

− In US direct health effects of insomnia cost at least 15 billion USD2 - Up to 2-3 billion USD market/year3

− 7 of the 10 best pharma were at the door after 1 week3

1:WHO 2:Hublin, C., Kaprio, J., Partinen, M. & Koskenvuo, M. Insufficient sleep — a population-based study in adults. Sleep 24, 392–400 (2001) 3: Reuters 60 Summary of Expectations for 2009

Healthcare Conference 27th Annual Healthcare Conference J.P. Morgan is pleased to announce the 27th Annual Healthcare Conference, January 12-15, 2009 in San Francisco 61 Our Opinion About Actelion

Financial Analysis SWOT Would we join Actelion?

62 Financial data

IPO: about CHF 250 m Market capitalization as of IPO: CHF 1 Billion 2008: CHF 7,4 Billion

Major shareholders as per 31-12-2008 −Management and Directors > 5% −BB Biotech > 5% −Fidelity Management and Research > 5% −Rudolf Maag > 5% −Actelion Ltd > 3% −Barclays PLC > 3% −MFS Investment Management > 3% −Credit Suisse > 3%

63 Operating Income

CHF millions 400

300

200 371.4 268.2 100 152.3 142.6 85.6 0 2004 2005 2006 2007 2008

64 Cash EBIT

CHF millions 600

500 FX impact

400

300 471.4 476.8 200 320.4 100 178.6 105 0 2004 2005 2006 2007 2008

65 Key financial results

− Strong financial performance – Cash ↑ – 2-digit growth − Financial independance − Strong performance of all marketed products

Healthcare Conference 27th Annual Healthcare Conference January 12-15, 2009 in San Francisco 66 Progression of revenues

1473.5

Company report 2007 & 2008 67 Tracleer in total net revenues

2007 2008

− Tracleer is 90% revenue − Sales will progress in 2009 (new indications) − Competitors

68 Actelion: Inside Analysis

Strengths Weaknesses −Important partnerships −Only one blockbuster (2015 US −Cash 2017 EU) −Efficient technological platforms −Lack of diversification the −Clinical expertise «Entans » company −Independence of research −First-in-class −Rapid development −First-in-class −Blockbuster: Tracleer® −Possible blockbuster: Almorexant®

69 Actelion : Outside analysis

Opportunities Threats

−New partnerships −Sildenafil (Revatio®)

−New candidates (cash) −Sitaxsentan (Thelin®) −Actelion buyout (?) −Actelion buyout

70 Would we join Actelion?

− In R&D (309 + 495 employees): – Good technical platforms; – 25 active projects in drug discovery – 10 compounds in clinical development – R&D expenses growth:

71 Would we join Actelion?

− In Sales & Marketing (852 employees): – Sales in GP products will be done in Partnership Ex for Almorexant : • In key markets, Actelion books sales. • In emerging markets GSK books sales. – Still a lot to do in specialists areas • Creating and shape a long-term PAH franchise and Digital Ulcer market • Build the IPF market – Markets in Latin America, Middle East and Asia − In Regulatory affairs

72 Some job offers

73 PGI2PGI2 agonist agonist S1P1 Agonist

Orexin Antagonist PivlazPivlaz MacitentanMacitentan ClazosentanClazosentan CRTH2 Antagonist

Renin Inhibitor First in class products Therapeutic niches

Nevertheless:

1 blockbuster Generics Specialty Orphan drugs Hospital drugs GP products Pharmaceuticals A Rich pipeline Good perspectives

74 Thank you for your attention

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