Fueling life sciences through transformative transactions Q3 2016: TRENDS IN BIOTECH TRANSACTIONAL ACTIVITY October 25th, 2016 BOSTON l SAN FRANCISCO l TOKYO 1 Locust Walk focuses on building companies across three distinct segments Emerging Biopharma Growth Biopharma Medical Device Finance innovation by parallel Rapidly expand product mix Commercialize products processing global and and grow pipeline via strategic partnerships regional deals with private to maximize value and innovative capital and public capital tracks and mitigate risk sourcing to maximize value 2 Locust Walk is uniquely positioned to bring your transaction from search to signature Investment Banks Full-Time Hire • Significant financial • Industry operating analytic capability experience • Board level network • Deep company and contacts understanding through longer ‘engagement’ timeline Locust Walk Investment bank support, Board level strategy and insight, CBO expertise, flexible engagement term Consulting Firms Individual Consultant • Strategic analytics • Industry expertise and insights operating experience • Primary & secondary • Temporary research capabilities commitment • Board-ready deliverables 3 Locust Walk has helped build many successful biopharma companies Collaboration to develop & Advised on IPO process and Sell-side Asian Licensing Sell-side Asian Licensing Buy-side licensing agreement Buy-side product acquisition commercialize KHK’s anti- syndicate selection Agreement for fasinumab Agreement for Tecarfarin for ALT1103 for Acromegaly of Somatoprim for Acromegaly LIGHT mAb $55M Upfront, $270M $5M Upfront, $105M Undisclosed $25M NASDAQ IPO Milestones Undisclosed Value Milestones, Plus Royalties $30M in Cortendo Equity Advised private placement to Sell-side North American Advised on Advised private placement to Sell-side Option Agreement Sell-side regional Licensing leading healthcare investors Oravig® rights Series B financing leading healthcare investors for OTC Topical Ibuprofen Agreement for TSX-002 Life Science Leading Consumer Investors Health Co $15M Upfront, $80M $33.2M Private Placement Undisclosed Value $24.3M Series B $26.4M Private Placement Undisclosed Value Milestones, Plus Royalties Advised on Sell-side US Commercialization M&A Advisory on Fabrus / Advised on Follow-on Buy-side Collaboration for Sell-side Actimmune® Series A financing Agreement for Sitavig Senesco Merger Strategic Investment Digital Technology Commercial Product Family Office Investors $7M Series A Undisclosed Value $20M Transaction Value $63M Series F Undisclosed Value $55M Upfront, $4M Royalty Sell-side Deal Strategy and Sell-side Licensing Agreement Sell-side License/Research Spinoff and Partnership for Sell-side Licensing Agreement Sell-side Japan Licensing Valuation Support for AT-406 Collaboration for ANG1005 Synthetic Genomics Vaccines for OTC Topical Ibuprofen Agreement for Salirasib Leading Consumer $35M Upfront, Milestones Health Co $200M Upfront, $1.8B Total Undisclosed Value Undisclosed Undisclosed Value Undisclosed Value Undisclosed Value Locust Walk has closed 25 transactions across a variety of deal types, stages of development and therapeutic areas * Sorted in Reverse Chronological Order 4 Our leadership includes successful biopharma operating, investing and transaction executives supported by a strong analytical team Geoff Meyerson* Chris Ehrlich* Managing Partner & Co-founder l Boston Managing Director l San Francisco • Bus Dev: MedImmune, Zelos • Life Science VC: InterWest • Healthcare Banker: UBS • Bus Dev: Purdue, Genentech • Life Science VC: SR One • Healthcare Consulting: L.E.K • MBA: Wharton, MB: Penn, BS: Duke • MBA: Kellogg, BA: Dartmouth [email protected] l Direct Line: 617.300.0162 [email protected] l Direct Line: 415.697.0763 Steve Engen* Stewart Davis, MD Managing Director l Japan Senior Vice President l Medical Device • Country President: Shire • C-level: SafeStitch, Dermasensor, Bioceptive • CEO: Solasia Pharma • Bus Dev/Consulting: Giteliscope, Vestagen, Innovia • Country President: Purdue • MD & BS: University of Miami • MBA: Temple, BS: Univ of Utah [email protected] l Direct Line: +81 3 6853 7920 [email protected] l Direct Line: 954.263.7839 Josh Hamermesh* Michael McCully Vice President l Boston Vice President l San Francisco • BD: Infinity, GENZ, MIP, Pervasis • CBO: Charleston Labs • Product Mgmt: Genzyme • BD: Coherus, Elan, ForSight • Healthcare Consulting: Monitor • Life Sci Advisor: Deloitte, ReCap • MBA: Harvard: BA: Amherst • Hybrid MS: Kellogg, BS: Purdue [email protected] l Direct Line: 617.300.0178 [email protected] l Direct Line: 415.579.2620 *Registered Reps with Locust Walk Securities, LLC. 5 Locust Walk Quarterly Update – Financial environment improves • Biopharma public markets continue to stabilize ▶ Nasdaq Biotech Index (NBI) reached all-time high July 2015 at $397, closed 2015 at $338 (-14.9%) ▶ In January 2016, NBI slid to $267 and to $251 in February 2016 (-36.8% from peak, -25.7% from EoY) ▶ Market tested $250 in April 2016, again in June 2016, ending Q2 at $257 ▶ July 2016 had steady gains, continuing into August, with a high close for Q3 at $300 on September 22 • Biopharma IPOs remain low ▶ Dollar raise in IPOs lowest in 2 years ($400M raised in 7 deals completed during Q3) ▶ Post market performance of class of 2015 improved, but majority still under IPO offering price • Follow-ons are down significantly ▶ Only $7.5B raised YTD, compared to $24.6B in first three quarters of 2015 ▶ Pressure increasing for many companies with depressed valuations that have delayed secondaries • IPO queue remains robust, and overall market momentum may pick up in Q4 ▶ Significant capital returned to investors through acquisitions 6 Markets stabilize after major drops in 3Q 2015 and 1Q 2016, with potential momentum to the upside in 4Q 2016 and 2017 3Q 2016 and Historical Performance of Key BioPharma Indices 1Q 2015 2Q 2015 3Q 2015 4Q2015 1Q 2016 2Q 2016 3Q 2016 ΔS&P% 60% 0.5% (0.2%) (6.9%) 6.5% 0.8% 1.9% 3.1% 50% ΔNBI% 12.3% 7.4% (18.0%) 11.5% (23.0%) (1.2%) 8.7% 40% ΔNYSE Bio% 15.4% 4.9% (18.2%) 11.7% (22.4%) 2.2% 10.2% 30% C 20% F E 10% 0% -10% A -20% B D -30% S&P 500 NYSE Biotech NASDAQ Biotechnology Key Event A Nasdaq Biotech Index (NBI) peaked in July 2015 at $397, an all time high B Pull-back in August 2015 $339 (-14.6%), October 2015 $310 (-21.9%) C Closed year at $338 (-14.9% from peak) D January 2016 slide down to $267, continuing in February 2016 to $251 (-36.8% from peak, -25.7% from EoY) E Market tested $250 in April, again in June, ending Q2 at $257 F July 2016 had steady gains, continuing into August, high close for Q3 $300 on September 22 SOURCE: Locust Walk Analytics, Yahoo! Finance 7 IPOs have declined to the lowest level in two years, both in terms of the number of completed offerings and the amount of capital raised Number of IPOs and Aggregate Total Raised By Quarter 2.50 25 21 2.00 20 IPOs on US Exchange Therapeutic Total 14 1.50 15 10 10 10 1.00 $2.0B 10 7 7 $1.4B 0.50 5 Total Amount Raised ($USD Raised ($USD Amount B) Total $0.8B $0.6B $0.6B $0.6B $0.4B 0.00 0 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 Amount Raised ($USD B) Volume SOURCE: Thomson Reuters Life Sciences Dealmaking 2015; HBM Pharma/Biotech M&A Report 2016 8 Only seven deals completed with total proceeds of $400M in 3Q16 Price Expected Public Phase of Lead Offer Total Insider Change Biopharma Issuer Ticker Therapeutic Area Price Offering Product Date Raise Participation to Range Price ($) 9/30 3Q 2016 AC Immune SA Neurology / Alzheimer's ACIU Phase 3 9/23/2016 $11-$13 $11.00 $66.0M 0% 50.0% Lausanne, Switzerland NASDAQ Disease low-end Novan Phase 3 $11.00 NOVN Dermatology 9/21/2016 $11-$13 $51.9M 0% 85.3% Durham, NC NASDAQ Ongoing low-end Protagonist Therapeutics Phase 2 $12.00 PTGX IBD 8/11/2016 $11-$13 $93.0M 43% 76.8% Milpitas, CA NASDAQ Ready middle Gemphire Therapeutics Phase 2b $10.00 GEMP Hypercholesterolemia 8/5/2016 $11-$13 $30.3M 0% 9.7% Livonia, MI NASDAQ Ongoing below Audentes Therapeutics $15.00 BOLD Gene Therapy Preclinical 7/20/2016 $14-$16 $85.1M 13.5% 18.7% San Francisco, CA NASDAQ middle Kadmon Holdings Phase 2 $12.00 KDMN Autoimmune and fibrotic 7/27/2016 $16-$20 $75.0M 0% (39.2%) New York, NY NASDAQ Ongoing below Mean $66.9M 9.4% 33.6% Median $70.5M 0% 34.4% Max $93.0M 43% 85.3% Min 30.3M 0% (39.2%) SOURCE: Locust Walk Analytics, EDGAR Company Filings, Yahoo!Finance, BioCentury 9 -100% 100% 150% 200% 250% -50% 50% 0% trading significantly below significantly IPO hamperingabilityto raisetrading price, capital Recent performance has however improved, many IPOs 2015are still SOURCE: Locust Walk Analytics, Yahoo! Finance. Note: Prices as of 2016 of as Prices Note: Finance. Yahoo! Analytics, Walk Locust SOURCE: CBYL ZSAN DNAI BLPH CHMA HTGM VKTX JAGX NK LIFE MIRN OPGN CHEK RTTR of 2015 and Date 2016 to Performance Aftermarket AVGR NEOS ADAP KMPH NVCR ADRO KURA STDY NVET RGNX LENS CATB NVLS NBRV 2015 2015 IPOs NVTA SBBP GI Median: XBIT Mean: NTRA - FLKS 10 DMTX - - 01. CERC 21% - CFMS 40% GBT TCON AXON MCRB CDTX VTVT ZYNE VYGR AIMT AXSM BPMC ASND EDGE CTMX IVTY ENTL ONCE LNTH ITEK COLL MYOK WVE AAAP GKOS BioPharma ACRS PEN CLCD PZRX KDMN AGLE ONS APOP EDIT HCM IPOs NTLA 2016 IPOs SBPH SELB 11% Median: CRVS 28% Mean: GEMP 3Q 20163Q IPO SYRS BOLD SNDX BGNE ACIU PTGX MRUS NOVN PTI AVXS RETA 10 CLSD There continue to be notable companies lining up in the queue for initial public offerings – select examples Summary RA Pharma is a clinical stage biopharma CRISPR Therapeutics is a gene Myovant