January 28, 2014

J ANNEY M ONTGOMERY S COTT
Life Sciences Newsletter
January 28, 2014
Investment Banking
Josh Muntner
Managing Director
[email protected]
(212) 829-3830
Richard Page
Managing Director
[email protected]
(212) 829-3828
James McNaughton
(215) 665-6032
Managing Director – M&A
[email protected]
Parth Talati
Analyst
[email protected]
(212) 829-3836
INSIDE THIS ISSUE
Notes from Janney Tools and Diagnostics Research Analyst, Paul Knight
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DHR: “Just the Facts,” DHR 4Q Derivatives
WAT: “Just the Facts,” Drilling into WAT’s Q4 Party
Lab Data 1.1: Easy Earnings Season Preview
DC V: ‘14 Budget Feels Like the “Glory Days”
San Francisco “Love-In” - JPM Recap - PKI, DHR, ILMN
DC IV: NIH Budget in 2014 is Game Changing
Lab Data 1.0: Strong start to 2014
What We All Want in 2014, a “Ten Bagger”
SFE: Company Liquidity Event, 2014 Momentum
PLL: Pall Organic Growth Accelerating with ATMI M&A
NEOG: “Just the Facts,” Revenue Beats, Earnings Miss
Notes from Janney Biotechnology Research Analyst, Kimberly Lee
Sean Mansoory
(212) 829-3826
Analyst
[email protected]
Equity Capital Markets
Charles Mather
Managing Director
[email protected]
(212) 829-3831
Matthew Corrado
Associate
[email protected]
(212) 829-3833
Andrew Trask
Associate
[email protected]
(212) 829-3832
Sales and Trading
Greg McManus
(212) 759-6211
Managing Director
[email protected]
Equity Research
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Company Updates Following Meetings with Management Teams
AEGR: In-Line 2014 Guidance; Government Subpoena an Overhang
VRTX: VX-135 Data Unimpressive; Await VX-809 Data by Mid:14
Time to Invest in Biotech; Top Picks and Expectations for Our Universe
ONTX: Takeaways from Analyst Day
VRTX: R117H Data Not All Bad; Expect Label Expansion
ONTX: Pancreatic Study Outcome Expected; Focus Remains on MDS Data
Notes from Janney Specialty Pharmaceuticals Research Analyst, James Molloy
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BDSI: #Winning! BDSI Hits Positive Top-Line Results on First of Two Phase 3 Trials
IRWD: Linzess Breaks Through Ahead of Schedule
FRX: 3Q14 Beat & Raise, Looking for More Acquisitions in 2014
2014 Looks to Build on 2013 Momentum
ICPT: Lipid Levels Something to Keep an Eye On
BDSI: Goliath, Meet David - Company Looking for Take-downs in 2014
ICPT: NASH-Vegas! Early Trial Halt a Real Positive for the Company
ICPT: Early Halt to NASH Trial a Huge Positive
Specialty Pharma Starts 2014 with a Bang: FRX, IRWD, NPSP, QCOR, ENDP
NPSP: Pediatric Study Could Expand the Population & Extend Gattex Patent Life
QCOR: Competitors Call Surprisingly Positive for Acthar
DEPO: Acquires Cambia, Another Smart, Accretive Acquisition - FV to $10 from $9
80%
50%
Kimberly Lee
Biotechnology
[email protected]
20%
James Molloy
(617) 371-6528
Specialty Pharmaceuticals
[email protected]
64.0%
60%
Paul Knight
(646) 840-4616
Life Sciences Technology
[email protected]
(415) 229-7015
LTM Life Sciences Industry Performance
70%
47.5%
40%
30%
29.5%
17.5%
10%
0%
-10%
Jan-13
Mar-13
NYSE Arca Biotech
May-13
NASDAQ Biotech
Jul-13
Sep-13
PHLX Medical Device
Nov-13
Jan-14
NASDAQ Composite
Source: S&P Capital IQ as of January 27, 2014
Page 1
The Highest Standard of Success in Financial Relationships
PAUL KNIGHT – TOOLS AND DIAGNOSTICS RESEARCH ANALYST
DHR: “Just the Facts,” DHR 4Q Derivatives
 January 28, 2014 – Danaher reported a strong conclusion to 2013 and, while guidance is maintained, the data and the body language imply building
momentum. The biggest surprise was the 4.5% core growth within Test & Measurement after a muted first nine months of 2013; this performance point
bodes well for the 43% of Agilent revenue that will be released on February 13th. Life Science & Diagnostics organic revenue growth of 3.5% was a
solid leading indicator for the industry. At the top-line, all of DHR’s business segments exceeded our expectations and this reality should translate into
increasing organic growth for 2014. We think Danaher is the most attractively priced name in the life science group at 16.6x 2015 estimates, and really
attractive (an implied 14.8x EV to Non-GAAP) if goodwill is added to EPS (like all life science peers) and net cash per share is deducted from NAV.
We raise our fair value to $89 from $83 per share. (Link to Report)
WAT: “Just the Facts,” Drilling into WAT’s Q4 Party
 January 28, 2014 – Waters’ results were so good that there will be clear, broad-based industry implications. End-markets are accelerating, the two
obvious derivatives that benefit are PerkinElmer and Thermo Fisher, and Doug Berthiaume, WAT’s CEO, is not slipping quietly into his retirement next
year. The company cited improving biopharma, academic, and industrial/chemical markets, the industry trifecta, as the reasons for the organic growth
of 10%, far outstripping consensus’ 4%. Organic growth was the best since the economic recovery year of 2010; in reality, the best quality (eg. non
cyclical) since industry growth was 5-10% in the early 2000s. We raise our fair value to $125 from $110 per share. In addition, we expect accelerating
growth rates to drive more earnings leverage for lower margin peers like PerkinElmer, Sigma-Aldrich, and Thermo Fisher. (Link to Report)
Lab Data 1.1: Easy Earnings Season Preview
 January 27, 2014 – Is this the quarter where organic growth shifts into a higher gear? This is the primary question that we have in front of this earnings
season. Organic growth is the key; margin and multiple expansion will follow. We believe that the time is now. Industry data was compelling during the
last month and results from European and domestic peers point to accelerating growth. It’s not a matter of if organic growth will rise higher, in our
opinion, its a matter of when and how quickly things accelerate. We are targeting 5% industry growth in early 2014 and expansion to as high as 10%
later in the year; last year’s industry growth was 3%. In 2013, FDA approval rates hit 71%, biotech capital-raised increased over 300%, and US PMI
concluded the second half of the year with sustained robustness as readings exceeded 55. We review the early reporters below and remain buyers of
Agilent, Danaher, IDEX, Pall Corp, Sigma-Aldrich, and Thermo Fisher. (Link to Report)
DC V: ‘14 Budget Feels Like the “Glory Days”
 January 23, 2014 – It’s funny, boarding on disconcerting, how much wrangling it takes to resolve the National Institute of Health (NIH) budget, as it
accounts for less that 1% of the government’s $3.6 trillion in annual spending. It’s even less funny when realizing that the $3.6 trillion of spending
compares to $2.7 trillion in annual revenues. Nevertheless, there is plenty of good news from the budget deal last week. First, we will have no material
fiscal headlines; a welcomed relief from the last three years of budget cuts and budget brinkmanship. Second, after the total NIH & NIH ARRA
appropriations declined 9.0% in 2013, the increase of 2.0% in 2014 will feel like the halcyon days of 1999-2002 when double digit R&D growth rates
were occurring. This will be positive for the industry and particularly good for Illumina, Thermo Fisher, Sigma-Aldrich, and Techne Corporation. (Link to
Report)
San Francisco “Love-In” - JPM Recap - PKI, DHR, ILMN
 January 17, 2014 – The annual JP Morgan week this year was like a 1970s rock concert: record crowds and building excitement. Held in San
Francisco, the conference, and the hundreds of events around it, is the industry’s biggest gathering of brokers, companies, and investors to review
technologies, assess stocks, and consider mergers. One major pharmaceutical company told us that 2013 was “the most active healthcare investment
and acquisition environment in the last decade”. We can quantify: $3.9 billion of equity capital was raised in 2013 compared to $57 million in 2008.
While most life science stocks had a strong 2013, they appreciated in line with the general equity market last year and we believe that current share
prices do not fully reflect that industry growth will accelerate as biotechnology, diagnostic, and pharmaceutical customers will spend more on R&D
tools. We expect that industry growth of 3% in 2013 will accelerate to 5-10% in 2014. Our takeaway from visiting many private diagnostic companies is
that Danaher, PerkinElmer, and Illumina have undervalued diagnostic assets and those businesses will have an increasing number of acquisition
opportunities. We highlight takeaways from the private and public companies visited this week. (Link to Report)
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The Highest Standard of Success in Financial Relationships
PAUL KNIGHT – TOOLS AND DIAGNOSTICS RESEARCH ANALYST (CONT’D)
DC IV: NIH Budget in 2014 is Game Changing
 January 10, 2014 – We estimate that the National Institute of Health (NIH) budget will dramatically shift from a -7.6% decline in 2013 to 3.2% growth in
2014. Distributing 80% of its funding to academic institutes, the 2014 shift will reverse three years of declines. This transition is a result of last month’s
Bipartisan Budget Act and the slow, final death of stimulus spending comparisons. While the Bipartisan Budget Act of 2013 was signed into law by the
President on December 26, 2013, the allocation of the $1.01 trillion in funds by Appropriation Committee members faces a January 15th deadline. With
no talk of a further continuing resolution is occurring, we view this as a clear sign of likely success. Worst-case, a continuing resolution has been the
normal pattern over the last decade. Spearheaded by leaders in both parties, the Bipartisan Budget Act of 2013 is a growth changer for the Life
Science industry. The FY14 NIH budget may grow 5.0% from expectations of -4.5% to 0.0% in 2014. Globally, combining the major spending
countries, government funding may increase from 0.2% growth in 2013 to 5.0% in 2014; research represents 25% of life science end-markets. NIH
data also indicates that the stimulus or American Reinvestment and Recovery Act (ARRA) has only $398 million remaining from the original 2009
allocation of $10 billion. This will be positive for the industry and particularly good for Illumina, Thermo Fisher, Sigma-Aldrich, and Techne Corporation.
(Link to Report)
Lab Data 1.0: Strong start to 2014
 January 9, 2014 – All indicators point to accelerated industry growth from 0-3% to 5-10% in 2014. FDA approval rates hit 71% last year, biotech capital
raise increased over 300%, and US PMI has seen sustained robustness with readings > 55 for 2H13. FDA approval rates remained the strongest in
over two decades during 2013 and early signs suggest that 2014 will be another banner year. Consensus estimates point to sales growth of 2.8%
within the top 29 pharmaceutical and biotechnology companies during 2014, after what we expect to be a flat 2013. We remain buyers of Agilent,
Danaher, IDEX, Pall, Sigma-Aldrich, and Thermo Fisher as all will benefit from an improving industrial demand appetite and further investment growth
within pharma/biotech. (Link to Report)
What We All Want in 2014, a “Ten Bagger”
 January 9, 2014 – Coined by Peter Lynch in his book One Up On Wall Street, finding the next “ten bagger” is what we all strive to do in this industry.
They can be the true difference makers in a portfolio. Having visited Jay Flatley, the CEO of Illumina, when ILMN’s share price was $1.00 (Neutral:
$112.00); Earle Lewis, the CEO of Flir, at $0.65 per share (NR: $29.00); and others like Celera and Mettler-Toledo (MTD-Neutral: $248.36) our
universe has been target rich. We enter 2014 looking for more potential “ten baggers.” We present our ideas within the framework of three different
investment ideologies. First, our list of our covered names shows that 12 of 17 covered stocks have appreciated more than 10% annually since their
initial public offerings or earliest recorded close, all benefiting from years of consistent market growth. Second, we highlight several small and mid-cap
stocks that are relatively unknown. Third, macro data shows industry growth tailwinds are building and aligning one’s portfolio to benefit from these
improving dynamics can reap substantial rewards. (Link to Report)
SFE: Company Liquidity Event, 2014 Momentum
 December 31, 2013 – Last night, PTC (NASDAQ: PTC; BUY, Janney analyst Yun Kim) announced the acquisition of ThingWorx, a Safeguard partner
company. The deal closed yesterday and is Safeguard’s second liquidity event in as many weeks; in line with management’s stated goal of two
divestments annually. With a 40% stake in ThingWorx, Safeguard will receive cash proceeds of $40.5 million ($1.88 per share to SFE shareholders),
representing a 4x cash-on-cash return, and the company has the potential to recognize up to an additional $6.5 million in contingent milestone ($0.30
per share to SFE shareholders). In light of the deal and improved portfolio visibility, we raise our fair value estimate to $23 and maintain Neutral. (Link
to Report)
PLL: Pall Organic Growth Accelerating with ATMI M&A
 December 23, 2013 – Pall Corporation announced that it was acquiring ATMI Life Sciences for $185 million. This looks like an ideal acquisition for Pall
as it addresses single-use technology (SUT), the fastest growing segment of biotechnology drug production. While Pall is a leader in filtration products,
its single-use or polymer based products for storage, fermentation, liquid handling and other applications has trailed the growth of its primary
competitor, Sartorius Stedim (PAR: DIM). According to industry sources, the biopharma biologics market is growing about 15% per year with singleuse is expected to growth over 50% annually. (Link to Report)
NEOG: “Just the Facts,” Revenue Beats, Earnings Miss
 December 20, 2013 – Neogen reported 2QFY14 results that missed earnings while revenues exceeded the Street. Many of Neogen’s businesses were
robust but acquisition costs and higher costs of goods resulted in reduced margins and muted the flow-through to the bottom-line. Based on 2Q results
and adjustments for the company’s announced 3:2 stock split on October 30, 2013, we revise lower our fair value estimate and outward looking
earnings forecasts. We adjust our FV to $46 from our pre-split estimate of $61. (Link to Report)
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The Highest Standard of Success in Financial Relationships
KIMBERLY LEE – BIOTECHNOLOGY RESEARCH ANALYST
Company Updates Following Meetings with Management Teams
 January 21, 2014 – We are providing company updates following our meetings with management teams last week. (Link to Report)
AEGR: In-Line 2014 Guidance; Government Subpoena an Overhang
 January 10, 2014 – 2014 Juxtapid/Lojuxta sales guidance in line with consensus, but is that enough for the stock to outperform this year? This year,
AEGR expects worldwide revenue of between $190 million and $210 million, which falls in line with consensus of $204 million. Per our estimates, the
guidance implies approximately 13-14 new patient adds per week. Management does not anticipate significant contributions from EU revenues given
the uncertainty surrounding timing of reimbursement but expects a ramp-up this year, albeit a less aggressive one than in the US. Given the Street’s
high expectations, we believe that although guidance was in line with Street estimates, investors may be disappointed that the company did not exceed
expectations. As we had mentioned in our note dated 1/6/14, for the stock to outperform this year, Juxtapid/Lojuxta revenues must exceed
expectations, which we believe are predicated on increasing focus on cardiologists, accelerating scripts and maintaining low dropout and high
compliance rates. Continued future growth should be fueled by geographical expansion into Latin America, Canada and Asia. (Link to Report)
VRTX: VX-135 Data Unimpressive; Await VX-809 Data by Mid:14
 January 9, 2014 – VX-135 plus daclatasvir Phase IIa efficacy data unimpressive and not competitive. Vertex announced sustained viral response rate
four weeks after completion of treatment with VX-135 plus BMY’s daclatasvir (SVR4) of 83% in treatment-naïve genotype 1 patients who received 200
mg of drug and 91% in eleven patients after 12 weeks of treatment. One patient experienced a relapse in the high dose group and low dose group (100
mg). We view the data as disappointing compared to GILD’s Sovaldi Phase III SVR rate of 96%. As such, we believe the VX-135 data is inferior and
would not be competitive in the HCV arena. (Link to Report)
Time to Invest in Biotech; Top Picks and Expectations for Our Universe
 January 6, 2014 – Given the significant run-up in the biotech indices versus the S&P 500 index in 2013, (BTK +55%; NBI +68%; SPX +29%), we find
that investors are focused on what 2014 holds for valuation of the sector and which companies could outperform this year. In this report, we present
reasons why investors should put money to work in this sector, our top ideas for 2014 and our expectations for companies in our coverage universe.
We see numerous investment prospects in this space that warrant a closer look. Even though we are hopeful that the biotech sector could continue to
demonstrate positive performance in 2014, we suggest investing in a basket of stocks that include profitable and non-profitable companies with both
marketed and developmental-stage products and value-driving catalysts to minimize volatility in the portfolio. Concurrent with this report, we are raising
our fair value estimate for MDVN. (Link to Report)
ONTX: Takeaways from Analyst Day
 December 20, 2013 – ONTX hosted an analyst/investor day where management and a panel of thought leaders highlighted and endorsed the
rigosertib program. The speakers focused on rigosertib’s mechanism of action, reviewed the datasets in the higher- and lower-risk MDS populations
and discussed the lack of therapies in MDS. No new data were presented. Overall, the discussions solidified our view that the bar for rigosertib to
demonstrate clinical benefit in the higher-risk population is achievable based on the current dataset and on the lack of adequate treatment options.
Management continues to expect data from the ONTIME study in 1Q14. We continue to recommend shares ahead of nearing catalysts and consider
ONTX a compelling investment based on a burgeoning pipeline, near-term milestones, strong management team, and compelling valuation. Thus, we
reiterate our $40 fair value estimate, which is based on a DCF analysis of cash flows through 2021. (Link to Report)
VRTX: R117H Data Not All Bad; Expect Label Expansion
 December 20, 2013 – Vertex announced that the Phase III Kalydeco study in cystic fibrosis (CF) patients 6 years of age and older with the R117H
mutation did not meet its primary endpoint. However, a pre-specified subset analysis revealed that Kalydeco showed a statistically significant
improvement in lung function and other key secondary endpoints in patients 18 years and older. The company expects to submit an sNDA in early
2014. We believe that the drug could likely be approved in the older population given the clear clinical benefit. Although we view this potential label
expansion as positive, we note that the market opportunity in this niche population is not very meaningful, with approximately 300 affected patients. We
see no negative implications on the Phase III VX-809 combination studies given the differing patient populations and drug regimens. The next major
catalyst for VRTX is Phase III readout for the VX-809 plus Kalydeco study in CF patients with homozygous F508del mutation in mid:14. We reiterate
our Buy rating and $90 fair value estimate, which is based on a DCF analysis of cash flows through 2021. (Link to Report)
ONTX: Pancreatic Study Outcome Expected; Focus Remains on MDS Data
 December 18, 2013 – ONTX announced the discontinuation of the ONTRAC pancreatic Phase III study based on interim results. We and the Street
had low expectations given the high bar set with Abraxane and did not place any value on the pancreatic program. We spoke with management who
supported our notion that rigosertib had to show efficacy that was at least equivalent to Abraxane’s.We believe investors are mainly focused on the
near-term catalyst of Phase III higher-risk MDS data readout, expected in 1Q14. We continue to recommend shares on any weakness and ahead of
nearing catalysts and consider ONTX a compelling investment based on a burgeoning pipeline, near-term milestones, strong management team and
compelling valuation. Thus, we reiterate our $40 fair value estimate, which is based on a DCF analysis of cash flows through 2021. (Link to Report)
Page 4
The Highest Standard of Success in Financial Relationships
JAMES MOLLOY – SPECIALTY PHARMACEUTICALS RESEARCH ANALYST
BDSI: #Winning! BDSI Hits Positive Top-Line Results on First of Two Phase 3 Trials
 January 24, 2014 – After the close yesterday, BDSI and partner Endo Pharmaceuticals (ENDP) announced positive top-line results from the first of two
phase 3 clinical trials of BEMA Buprenorphine (in opioid naïve patients), a novel less-addictive opioid for chronic pain delivered via a small, dissolvable
buccal patch. This is a big win for BDSI as they previously failed a phase 3 trial in 2011, but the re-trial design has paid off. The second phase 3 trial (in
opioid experienced patients) is due to read out top-line data in 2Q14. As a Schedule III opioid (less restrictive/addictive) we believe BEMA
Buprenorphine could fill the ~130M Rx/year “hole” that the re-scheduling of Vicoden to Sched. II (from III currently) could cause to pain docs treatment
algorithm. With ENDP owing BDSI up to $80M in development milestones if both trials succeed and the drug gets approved, we believe that BDSI
could be a very attractive acquisition candidate for ENDP. Reiterate Buy rating, $12 fair value. (Link to Report)
IRWD: Linzess Breaks Through Ahead of Schedule
 January 22, 2014 – On the back of somewhat stronger than expected Linzess sales, IRWD posted an earlier than anticipated $2.9M positive
contribution from the Linzess collaboration for Linzess, which had been a shared expense up to now. The breakthrough to profit-sharing (and cash
generation) for the co-marketing partnership, when combined with IRWD’s previously announced 10% across-the-board cost reduction marks a turning
point, in our opinion, where investors can start to see the light at the end of the tunnel to actual profitability for IRWD. While we still expect 2014-2015
to be investment years, our 2015 EPS of $0.85 seems more attainable now that Linzess is throwing off cash instead of consuming it. IRWD even
lowered its 2014 operating expenses to $215M-$245M (from $250M-$300M previously), and this is in advance of the expected launch of FRX &
IRWD’s direct to consumer (DTC) campaign in 1Q14. Net we continue to believe that the launch of Linzess, while not on a “hockey stick” ramp, is on
track to hit our expectations - as well as FRX’s FY14 guidance of $170M - and we continue to like shares of IRWD here. We have adjusted our out
year EPS estimates, we are raising our fair value from $15 to $16, and we are reiterating our Buy rating. (Link to Report)
FRX: 3Q14 Beat & Raise, Looking for More Acquisitions in 2014
 January 22, 2014 – FRX reported 3Q14 (March FY) yesterday, once again beating both top and bottom line estimates and continuing the positive trend
for new CEO Brent Saunders. A revenue beat driven by higher Namenda XR conversion coupled with dramatically lower operating expenses drove the
EPS beat, and the FY14 guidance raise to $1.25-$1.35 (from $0.95-$1.15 previously). We anticipate another solid FY14 as cost savings continue
under project “Rejuvenate” targeting both SG&A and R&D along with the ~$700M contribution from the recent Aptalis acquisition. New CEO Saunders
expressed his desire to focus on execution for the next year on both his cost-cutting “Rejuvenate” project and also refining and supporting current
brands. With one of the premier primary care sales forces in specialty pharma and a new CEO focused on uncovering shareholder value, we continue
to see FRX as a stock with a lot of running room in front of it. We have adjusted our outer year revenue & EPS numbers to account for the recent
Aptalis acquisition, we are raising our fair value to $85 from $75, and we reiterate our Buy rating. (Link to Report)
2014 Looks to Build on 2013 Momentum
 January 21, 2014 – We recently spent a week in San Francisco during a competitor’s iconic health care conference, and we come away as
incrementally positive for the upcoming 2014 as we have been for many a year in specialty pharmaceuticals. The buzz around the conference was
palpable, with the “Healthcare Woodstock” drawing a large and engaged group of institutional investors. The merger & acquisition activity in the space
only looks to heat up as larger pharma are shedding their R&D functions and looking to acquire rather than develop their next technologies, effectively
outsourcing R&D to smaller biopharma. (Link to Report)
ICPT: Lipid Levels Something to Keep an Eye On
 January 13, 2014 – ICPT reported after the close Friday that the National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK) has
disclosed additional details from the nonalcoholic steatohepatitis (NASH) trial which show that there were disproportionate lipid abnormalities of
increased total cholesterol with increased LDL (the "bad" cholesterol) and decreased HDL (the "good" cholesterol). While it's never a good thing to be
impacting lipid levels, especially in this fashion, we would note that this is not an uncommon occurrence with obeticholic acid (OCA), as it also
happened in a 2009 study in Non-alcoholic fatty liver disease (NAFL). Also, it's not uncommon for patients with NASH to have lipid abnormalities, and
all of the patients will be followed for the 24-week period to help determine whether lipids return to pre-treatment levels. NIDDK expecting to complete
the NASH trial in 10-12 months, which could impact the timing for OCA to advance into phase 3, assuming that the currently ongoing phase 2 trial in
Japan by partner Dainippon Pharma isn't sufficient for FDA filing, assuming that trial also stops early, We currently target line data in 2016, but that
could be earlier should the interim look in that trial show the same efficacy that the US trial did. Most drugs have more than one impact on the body,
and while it would be preferable for OCA to not impact lipid levels as the FDA keeps a pretty keen eye on side effects like this one, we would note that
the this disease remains a death sentence when it reaches its acute phase (absent a liver transplant). With no currently approved therapies, the FDA
may be predisposed to be more lenient on side effects like this. ICPT will presenting at a competitors conference in San Francisco on Wednesday AM.
Page 5
The Highest Standard of Success in Financial Relationships
JAMES MOLLOY – SPECIALTY PHARMACEUTICALS RESEARCH ANALYST (CONT’D)
BDSI: Goliath, Meet David - Company Looking for Take-downs in 2014
 January 10, 2014 – This morning, BDSI provided a pipeline and anticipated milestone update for 2014. With Onsolis (for breakthrough pain in opioid
tolerant adult cancer patients) poised for US-relauch in 2H14, Bunavail (for maintenance treatment of opioid dependence) awaiting FDA approval in
June, an “imminent” P3 top-line data readout of BEMA Buprenorphine (for pain) and a 1Q14 P3 trial launch of Clonidine Topical Gel (for painful
diabetic neuropathy), BDSI is looking at a transformative year, moving from development stage to commercial as well as driving shareholder value
through potential milestones. We maintain our Buy rating, $12 fair value. (Link to Report)
ICPT: NASH-Vegas! Early Trial Halt a Real Positive for the Company
 January 10, 2014 – Intercept rallied pretty dramatically yesterday, following the announcement that their phase 2 trial of Obeticholic Acid (OCA) for
Nonalcoholic Steatohepatitis (NASH) had been halted early due to the efficacy shown after analyzing only half the subjects in the trial. This opens up a
faster path to FDA approval for OCA to treat the ~6M US adults with severe NASH in the US. By any estimates this is a huge, huge untreated
population that is facing either liver transplant or death, with no FDA approved therapies currently available. ICPT wouldn’t need to have much
penetration into this massive market to have a real blockbuster drug on their hands, even at a substantially reduced price to the $100,000 we estimate
they may be able to command for OCA to treat Primary Biliary Cirrhosis (PBC), their lead indication. With less than a 5% penetration into the severe
NASH population we estimate that OCA could be a multi-billion dollar opportunity. We are raising our fair value from $55 to $300 and reiterating our
Buy rating. (Link to Report)
ICPT: Early Halt to NASH Trial a Huge Positive
 January 9, 2014 – Trial halted in phase 2 with only half the patients completing it. ICPT announced this morning the halting of its Phase 2b FLINT trial
of obeticholic acid (OCA) for the treatment of nonalcoholic steatohepatitis (NASH) on grounds of efficacy based on highly statistically significant
improvement (p=0.0024) in liver histology from the scheduled interim data analysis. Results were expected in 2H14. This is a very rare event, and a
significant positive for the prospects for the drug. Importantly only ~50% of the trial participants had completed the trial. The non-completing half of
patients were considered non-responders (failures) in the trial, and the trial still hit statistical significance at a p=0.0024 which indicates the half that did
finish the trial had an extremely robust response. (Link to Report)
Specialty Pharma Starts 2014 with a Bang: FRX, IRWD, NPSP, QCOR, ENDP
 January 9, 2014 – FRX: Acquiring Aptalis - Another smart, accretive acquisition, looking for more to come. IRWD: Getting serious about managing
costs - a great place to start. NPSP: 2014 Gattex guidance appears makeable if not conservative to us. QCOR: Competitors lawsuit and possible CDF
withdrawal doesn’t change the fundamental growth story. ENDP: Growth-through-aquisition is getting more expensive for Endo.
NPSP: Pediatric Study Could Expand the Population & Extend Gattex Patent Life
 January 3, 2014 – NPSP announced yesterday that they have started their expected pediatric study for Gattex for Short Bowel Syndrome (SBS), with
top line data in 4Q14/1Q15. We see this as a nice positive (assuming the trials read out on-time and as expected) for NPSP on two fronts: 1) a
pediatric approval could potentially expand the 5K patient population 15%-20%; and 2) NPSP can add 6 months (US) and 2 years (EU) to the patent
life for Gattex. Pediatric SBS has a significant 5-year mortality rate (~30%) with no treatment for the underlying disease currently approved. We believe
that the open label trial design helps increase the odds for a positive outcome, and we believe that securing the pediatric addition to the label could be
a significant positive for NPSP. We are reiterating our Buy rating, $45 fair value. (Link to Report)
QCOR: Competitors Call Surprisingly Positive for Acthar
 December 18, 2013 – A new competitor potentially for Acthar? Potential competitor Retrophin (RTRX) filing an Investigation New Drug (IND) for RE034 with the FDA to develop a synthetic ACTH for use in Infantile Spasms (IS) & Nephrotic Syndrome (NS), plus 2 undisclosed additional indications.
Infantile Spasms the easier route to approval. RTRX held a CC this AM to discuss the prospective clinical trial development process for IS & NS. In
short, it appears that the IS trial may be in phase 3 as early as mid-2H14, while the NS trial likely requires a more traditional phase 1-phase 3 multi
year development process. Details on either trial remain undisclosed, but RTRX directs investors to watch clinical trials.gov for details “soon” on the IS
trial details and the “substantially agreed” upon clinical development process. No word on any potential comparator trials head-head vs. Acthar, but
these seem unlikely given the placebo requirement with the FDA for US approval. (Link to Report)
DEPO: Acquires Cambia, Another Smart, Accretive Acquisition - FV to $10 from $9
 December 18, 2013 – DEPO announced yesterday after the close the acquisition of the oral migraine solution Cambia, which is right in DEPO’s
wheelhouse of core competencies as it is similar to their recent pain drug acquisition Zipsor in that they are both diclofenac products, and to Gralise in
that the call is to neurologists. We believe that Cambia should fit nicely into the DEPO reps bag as an easy additional call for it to make in DEPO’s pain
focused portfolio. DEPO also continued its recent trend of smart purchases, paying $48.7M (~2.7x sales) for an immediately accretive asset in 2014 to
the tune of ~$0.20. Though towards the smaller side of our $20M-$200M acquisition scale, we like this transaction and we continue to like DEPO here.
We are maintaining out Buy rating, and we are raising our fair value to $10 from $9. (Link to Report)
Page 6
The Highest Standard of Success in Financial Relationships
MACRO AND INDUSTRY UPDATE
Stock Performance per Market Capitalization
130%
110%
103.1%
90%
84.6%
79.0%
71.2%
70%
50%
39.5%
30%
10%
-10%
Jan-12
May-12
S&P 500 Index
Sep-12
$10 million - $200 million
Jan-13
May-13
$200 million - $1 billion
Sep-13
$1 billion - $5 billion
Jan-14
$5+ billion
Source: BioCentury Publications, Inc. and S&P Capital IQ as of January 27, 2014
Note: companies within each index are “Market Capitalization Weighted” and indexed using market capitalization as of January 1, 2013
$4,000
45
$3,500
40
35
$3,000
30
$2,500
Difficult Deal Market
$2,000
$1,500
$1,000
Selective Deal Market
25
20
15
10
$500
5
$0
0
CBOE Volatility S&P 500 Index (VIX)
U.S. Life Sciences Deal Activity ($ in millions)
CBOE Volatility S&P 500 Index (VIX) and Equity Issuance
Source: BioCentury Publications, Inc., Ipreo, Private Raise, SEC filings and S&P Capital IQ as of January 27, 2014
Note: Equity issuance in June 2013 includes a $2.3 billion follow-on for Valeant Pharmaceuticals International, Inc.
Page 7
The Highest Standard of Success in Financial Relationships
IPO MARKET UPDATE
IPO Equity Offering Activity
Proceeds ($ in millions)
Number of Deals
60
$6,352
50
$3,279
$3,623
30
$2,320
20
$1,695
$1,271
$980
$880
Number of Deals
40
10
$64
$57
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014 YTD
Note: Amount of proceeds raised in 2013 initial public offerings include a $2.6 billion IPO for Zoetis Inc.
Quarterly IPO Equity Offering Backlog
Proceeds ($ in millions)
Number of Deals
35
$1,758
30
$1,557
$1,439
25
20
$971
$770
$775
$818
$563
$764
$563
15
$546
$641
$576
Number of Deals
$1,223
10
5
0
4Q'10
1Q'11
2Q'11
3Q'11
4Q'11
1Q'12
2Q'12
3Q'12
4Q'12
1Q'13
2Q'13
3Q'13
4Q'13
1Q'14
Source: Ipreo and S&P Capital IQ as of January 27, 2014
Note: Quarterly IPO Offering Backlog shows deals filed in the six months prior to the start of each quarter that have not yet priced or been withdrawn
Page 8
0%
-30%
Mean
Median
RNA
LPDX
KBIO
HTBX
SPHS
ONTX
BIND
EVOK
CNAT
ADMA
FATE
ESPR
GLYC
VCYT
ZTS
BLUE
FPRX
CMRX
AMBI
OPHT
ICEL
TLOG
RGDO
CGIX
AGIO
XNCR
OMTH
TNDM
AERI
LDRH
FMI
OXFD
NSTG
PTCT
PTLA
KPTI
OMED
XON
KIN
ENTA
EPZM
TTPH
MGNX
STML
ADHD
RCPT
PETX
XLRN
RLYP
INSY
100%
Mean
Median
RNA
SPHS
LPDX
ONTX
HTBX
AMBI
STML
KBIO
BLUE
RGDO
CGIX
PETX
AGIO
TLOG
CMRX
FATE
ICEL
CNAT
EPZM
FMI
ESPR
EVOK
ADHD
GLYC
AERI
FPRX
OMED
ENTA
XNCR
XLRN
TNDM
BIND
OPHT
NSTG
XON
KIN
PTLA
RCPT
PTCT
ZTS
LDRH
TTPH
VCYT
OXFD
OMTH
KPTI
INSY
MGNX
RLYP
ADMA
The Highest Standard of Success in Financial Relationships
IPO MARKET UPDATE
Offer to Current Performance for 2013 and 2014 Life Sciences IPOs
700%
600%
500%
400%
300%
200%
69.9%
54.3%
0%
-100%
52-Week High to Present Performance for 2013 and 2014 Life Sciences IPOs
-10%
-20%
-23.7%
-26.9%
-40%
-50%
-60%
-70%
-80%
Source: Ipreo and S&P Capital IQ as of January 27, 2014
-90%
Page 9
$0
Sophiris Bio
Heat Biologics
Cancer Genetics
Stemline Therapeutics
Regado Biosciences
Evoke Pharma
ADMA Biologics
Kindred Biosciences
Alcobra
Tetraphase Pharmaceuticals
Fate Therapeutics
Ambit Biosciences
LipoScience
GlycoMimetics
Aratana Therapeutics
Xencor
NanoString Technologies
TetraLogic Pharmaceuticals
Conatus Pharmaceuticals
KaloBios Pharmaceuticals
Omthera Pharmaceuticals
Oxford Immunotec
Esperion Therapeutics
INSYS Therapeutics
Cellular Dynamics
Five Prime Therapeutics
Aerie Pharmaceuticals
BIND Therapeutics
Receptos
Enanta Pharmaceuticals
Tandem Diabetes Care
Veracyte
PTC Therapeutics
Onconova Therapeutics
Chimerix
Relypsa
LDR
bluebird bio
MacroGenics
Acceleron Pharma
Epizyme
Karyopharm Therapeutics
Portola Pharmaceuticals
Prosensa
OncoMed Pharmaceuticals
Foundation Medicine
Agios Pharmaceuticals
Ophthotech
The Highest Standard of Success in Financial Relationships
IPO MARKET UPDATE
IPO Pricing Statistics Relative to Initial Filed Range
3
2
4Q'10
1Q'11
1
2Q'11
1
3Q'11
1
1
3
3
1
4Q'11
1Q'12
Below
1
2Q'12
3
3Q'12
In Range
2
4Q'12
1
1
1Q'13
1
7
4
2Q'13
5
7
3Q'13
6
6
4Q'13
1
4
8
4
3
1
3
1Q'14
Above
Pre and Post Money Valuations
$800 ($ in millions)
$700
$600
$500
$400
$300
Mean Post-Money: $253.3
$200
Mean Pre-Money: $177.1
$100
Source: Ipreo, Private Raise, SEC filings and S&P Capital IQ as of January 27, 2014
Note: Excludes Zoetis Inc. and Intrexon Corporation
Page 10
The Highest Standard of Success in Financial Relationships
IPO MARKET UPDATE
Recent U.S. Life Sciences IPO Pricings
Shares (mm)
Date
1/9/2014
Company
Gly coMimetics, Inc.
Ticker Industry
Product
Share Price
Initial
Offered
Filing Range
Offer
Current
Valuation
% Change
Proceeds
% of Insider
Pre
Post
Initial /
(mm)
Participation
Money
Money
Offer
1 Day
1 Week Current
Phase 2
4.0
8.1
$14.00 - $16.00
$8.00
$9.09
$64.4
21.7%
$84.4
$148.8
-46.7%
12.6%
35.6%
12/11/2013 TetraLogic Pharmaceuticals Corporation
TLOG Biotechnology
Phase 1/2
6.4
8.2
$13.00 - $15.00
7.00
9.70
57.6
56.4%
97.8
155.3
-50.0%
0.0%
0.0%
38.6%
12/11/2013 Kindred Biosciences, Inc.
KIN
Piv otal Study
5.8
8.6
$6.00 - $8.00
7.00
14.66
60.4
0.0%
52.8
113.2
0.0%
70.7%
76.0%
109.4%
12/2/2013
56.2%
Xencor, Inc.
GLYC Biotechnology
Stage of Lead
Biotechnology
13.6%
XNCR Biotechnology
Phase 2
5.0
14.6
$14.00 - $16.00
5.50
8.59
80.5
25.5%
91.8
172.3
-63.3%
51.6%
63.5%
11/21/2013 Ox ford Immunotec Global PLC
OXFD Medtech
Commercial
5.4
6.2
$13.00 - $15.00
12.00
20.84
74.0
0.0%
132.9
206.8
-14.3%
28.3%
32.2%
73.7%
11/14/2013 Rely psa, Inc.
RLYP Spec Pharma
Phase 3
6.9
7.9
$16.00 - $19.00
11.00
36.93
86.7
22.9%
240.0
326.6
-37.1%
9.7%
20.9%
235.7%
11/13/2013 Tandem Diabetes Care, Inc.
TNDM Medtech
Commercial
7.1
9.2
$13.00 - $15.00
15.00
24.35
138.0
0.0%
200.7
338.7
7.1%
28.4%
45.5%
62.3%
11/5/2013
KPTI
Phase 1
5.7
7.8
$14.00 - $16.00
16.00
29.93
125.1
0.0%
350.9
476.0
6.7%
0.3%
0.1%
87.1%
Kary opharm Therapeutics, Inc.
Biotechnology
10/29/2013 Veracy te, Inc.
VCYT Medtech
Commercial
4.7
5.0
$13.00 - $15.00
13.00
15.16
65.0
0.0%
207.9
272.9
-7.1%
1.9%
-11.5%
16.6%
10/24/2013 Aerie Pharmaceuticals, Inc.
AERI
Spec Pharma
Phase 2
5.3
7.7
$12.00 - $14.00
10.00
16.74
77.3
12.9%
154.9
232.1
-23.1%
6.1%
5.0%
67.4%
10/16/2013 ADMA Biologics, Inc.
ADMA Biotechnology
Phase 3
2.1
3.4
$13.50 - $15.50
8.50
8.80
28.5
24.6%
49.9
78.4
-41.4%
0.6%
-1.2%
3.5%
10/9/2013
MacroGenics, Inc.
MGNX Biotechnology
Phase 2
4.0
5.8
$14.00 - $16.00
16.00
37.90
92.0
0.0%
304.3
396.3
6.7%
56.2%
57.3%
136.9%
10/8/2013
LDR Holding Corporation
LDRH Medtech
Market
5.0
5.8
$14.00 - $16.00
15.00
25.23
86.3
18.0%
264.9
351.1
0.0%
29.0%
39.7%
68.2%
9/30/2013
Fate Therapeutics, Inc.
FATE Biotechnology
Phase 2
4.0
7.7
$14.00 - $16.00
6.00
6.26
46.0
32.6%
74.9
120.9
-60.0%
10.3%
32.3%
4.3%
9/24/2013
Ophthotech Corporation
OPHT Biotechnology
Phase 2
5.7
8.7
$16.00 - $19.00
22.00
30.09
192.3
7.8%
495.2
687.5
25.7%
19.5%
48.8%
36.8%
9/24/2013
Ev oke Pharma, Inc.
EVOK Spec Pharma
Phase 2
2.1
2.4
$12.00 - $14.00
12.00
10.71
29.0
0.0%
44.2
73.2
-7.7%
-2.2%
1.3%
-10.8%
9/24/2013
Foundation Medicine, Inc.
FMI
Biotechnology
Market
5.0
6.8
$14.00 - $16.00
18.00
31.10
121.9
0.0%
383.1
505.0
20.0%
96.4%
104.7%
72.8%
9/19/2013
BIND Therapeutics, Inc.
BIND
Biotechnology
Phase 2
4.7
4.7
$14.00 - $16.00
15.00
13.04
70.5
20.9%
166.2
236.7
0.0%
-6.1%
-2.3%
-13.1%
9/18/2013
Acceleron Pharma, Inc.
XLRN Biotechnology
Phase 2
4.7
6.4
$13.00 - $15.00
15.00
46.08
96.3
0.0%
324.5
420.7
7.1%
33.3%
47.6%
207.2%
9/18/2013
Fiv e Prime Therapeutics, Inc.
FPRX Biotechnology
Phase 1
4.0
5.5
$12.00 - $14.00
13.00
16.56
71.8
7.4%
145.8
217.6
0.0%
0.6%
7.3%
27.4%
8/21/2013
Regado Biosciences, Inc.
RGDO Biotechnology
Phase 2
5.0
11.7
$14.00 - $16.00
4.00
5.68
46.7
67.8%
38.5
85.2
-73.3%
17.5%
19.5%
41.9%
8/15/2013
Sophiris Bio, Inc.
SPHS Biotechnology
Phase 2
5.0
13.0
$13.00
5.00
3.98
65.0
34.5%
15.7
80.7
-61.5%
-17.0%
-7.6%
-20.4%
103.9%
8/7/2013
Intrex on Corporation
XON
Market
8.3
11.5
$14.00 - $16.00
16.00
32.62
184.0
16.3%
1,363.4
1,547.4
6.7%
54.6%
61.3%
7/24/2013
Conatus Pharmaceuticals Inc.
CNAT Biotechnology
Biotechnology
Phase 2
5.0
6.0
$10.00 - $12.00
11.00
10.91
66.0
15.2%
105.3
171.3
0.0%
-13.6%
-17.5%
-0.8%
7/24/2013
Onconov a Therapeutics, Inc.
ONTX Biotechnology
Phase 3
4.6
5.9
$12.00 - $14.00
15.00
11.97
89.1
30.5%
231.7
320.8
15.4%
32.5%
45.3%
-20.2%
7/24/2013
Cellular Dy namics International, Inc. ICEL
Commercial
3.8
3.8
$12.00 - $14.00
12.00
16.53
46.2
18.6%
142.7
188.8
-7.7%
-20.8%
-17.9%
37.8%
7/23/2013
Heat Biologics, Inc.
HTBX Biotechnology
Phase 1
1.7
2.7
$10.00 - $12.00
10.00
7.57
27.0
0.0%
35.9
62.9
-9.1%
-4.3%
-0.7%
-24.3%
7/23/2013
Agios Pharmaceuticals, Inc.
AGIO
Pre-Clinical
5.0
6.6
$14.00 - $16.00
18.00
27.43
119.5
10.7%
436.3
555.8
20.0%
73.8%
62.0%
52.4%
7/17/2013
OncoMed Pharmaceuticals, Inc.
OMED Biotechnology
Phase 1
4.0
5.5
$14.00 - $16.00
17.00
32.88
93.8
14.8%
378.5
472.3
13.3%
59.9%
18.4%
93.4%
6/27/2013
Prosensa Holding N.V.
RNA
Phase 3
5.0
6.9
$11.00 - $13.00
13.00
6.18
89.7
16.7%
377.0
466.7
8.3%
48.1%
51.2%
-52.5%
6/26/2013
Aratana Therapeutics, Inc.
PETX Spec Pharma
Dev elopment
4.3
6.6
$11.00 - $13.00
6.00
18.21
39.7
15.1%
84.7
124.3
-50.0%
37.7%
33.3%
203.5%
6/26/2013
Esperion Therapeutics, Inc.
ESPR Biotechnology
Phase 2
4.5
5.8
$13.00 - $15.00
14.00
15.08
80.5
20.4%
134.1
214.6
0.0%
3.6%
4.4%
7.7%
6/25/2013
NanoString Technologies, Inc.
NSTG Medtech
Market
5.4
5.4
$13.00 - $15.00
10.00
17.61
54.0
18.6%
91.9
145.9
-28.6%
-19.4%
-14.3%
76.1%
6/19/2013
PTC Therapeutics, Inc.
PTCT Biotechnology
Registration
6.9
9.6
$13.00 - $16.00
15.00
26.91
144.4
33.8%
229.6
374.0
3.4%
9.9%
-9.1%
79.4%
6/18/2013
bluebird bio, Inc.
BLUE Biotechnology
Phase 1/2
5.0
6.8
$14.00 - $15.00
17.00
20.74
116.1
0.0%
286.8
402.9
17.2%
58.3%
47.5%
22.0%
5/30/2013
Epizy me, Inc.
EPZM Biotechnology
Phase 1
4.3
5.9
$13.00 - $15.00
15.00
32.51
88.7
12.4%
337.5
426.2
7.1%
53.3%
73.3%
116.7%
5/21/2013
Portola Pharmaceuticals, Inc.
PTLA
Biotechnology
Phase 3
6.9
9.7
$13.00 - $16.00
14.50
26.30
140.4
14.4%
369.2
509.6
0.0%
4.5%
18.6%
81.4%
5/21/2013
Alcobra Ltd.
ADHD Spec Pharma
Phase 2
1.4
3.1
$10.00 - $12.00
8.00
20.32
25.0
0.0%
64.0
89.0
-27.3%
-5.6%
-14.4%
154.0%
5/15/2013
Ambit Biosciences Corporation
AMBI
Biotechnology
Phase 2
4.6
8.1
$13.00 - $15.00
8.00
10.82
65.0
0.0%
76.7
141.7
-42.9%
-7.6%
-10.4%
35.3%
5/8/2013
Receptos, Inc.
RCPT Biotechnology
Phase 2
4.7
5.2
$14.00 - $16.00
14.00
39.13
72.8
22.9%
173.7
246.5
-6.7%
0.0%
2.9%
179.5%
Biotechnology
Biotechnology
Biotechnology
5/2/2013
INSYS Therapeutics, Inc.
INSY
Commercial
4.0
4.6
$16.00 - $18.00
8.00
54.77
36.8
0.0%
134.4
171.2
-52.9%
18.8%
34.8%
584.6%
4/11/2013
Chimerix , Inc.
CMRX Biotechnology
Biotechnology
Phase 2
6.1
8.4
$13.00 - $15.00
14.00
18.16
117.9
12.7%
239.3
357.1
0.0%
34.2%
34.8%
29.7%
4/11/2013
Omthera Pharmaceuticals, Inc.
OMTH Spec Pharma
Phase 3
5.8
8.0
$12.00 - $14.00
8.00
N/A
64.0
26.1%
131.3
195.3
-38.5%
-7.1%
-3.6%
58.8%
4/4/2013
Cancer Genetics, Inc.
CGIX
Commercial
4.0
0.7
$11.00 - $13.00
10.00
14.29
6.9
0.0%
36.0
42.9
-16.7%
12.5%
20.0%
42.9%
3/20/2013
Enanta Pharmaceuticals, Inc.
ENTA Biotechnology
Phase 3
4.0
4.6
$14.00 - $16.00
14.00
29.93
64.4
29.2%
179.7
244.1
-6.7%
22.7%
30.0%
113.8%
3/19/2013
Tetraphase Pharmaceuticals, Inc.
TTPH Biotechnology
Phase 2
6.8
10.7
$10.00 - $12.00
7.00
15.90
75.0
32.0%
64.1
139.1
-36.4%
0.0%
0.4%
127.1%
1/31/2013
Zoetis Inc.
ZTS
Spec Pharma
Commercial
86.1
99.0
$22.00 - $25.00
26.00
31.36
2,574.4
N/A
10,761.4
13,335.8
10.6%
19.3%
27.1%
20.6%
1/31/2013
KaloBios Pharmaceuticals, Inc.
KBIO
Biotechnology
Phase 2
3.9
8.8
$12.00 - $14.00
8.00
4.65
70.0
21.1%
123.0
193.0
-38.5%
0.0%
-6.3%
-41.9%
1/28/2013
Stemline Therapeutics, Inc.
STML Biotechnology
Phase 1/2
3.5
3.8
$11.00 - $13.00
10.00
25.24
38.2
0.0%
36.4
74.6
-16.7%
18.0%
8.8%
152.4%
1/24/2013
LipoScience, Inc.
LPDX
Commercial
5.0
5.8
$13.00 - $15.00
9.00
4.40
51.8
7.8%
80.0
131.7
-35.7%
16.1%
18.7%
-51.1%
Mean
6.4
8.7
-
$12.03
$20.28
$128.3
15.1%
$412.5
$540.8
-14.5%
18.9%
22.3%
69.9%
Median
5.0
6.6
-
$12.00
$17.61
$72.3
14.8%
$144.2
$216.1
-6.9%
12.6%
19.1%
54.3%
High
86.1
99.0
-
$26.00
$54.77
$2,574.4
67.8%
$10,761.4
$13,335.8
25.7%
96.4%
104.7%
584.6%
Low
1.4
0.7
-
$4.00
$3.98
$6.9
0.0%
$15.7
$42.9
-73.3%
-20.8%
-17.9%
-52.5%
Biotechnology
Biotechnology
2013/2014
Source: BioCentury Publications, Inc., Ipreo, Private Raise, SEC filings and S&P Capital IQ as of January 27, 2014
Note: Ambit Biosciences Corporation completed a $25.1 million private placement of unregistered shares to insiders concurrent with its IPO
% change from offering for Omthera Pharmaceuticals, Inc. calculated using acquisition price of $12.70
Celgene Corporation invested $10.0 million via a private placement concurrent with Acceleron Pharma Inc.’s IPO
Page 11
The Highest Standard of Success in Financial Relationships
IPO MARKET UPDATE
Filed IPOs
Initial
Date
Company
Ticker
Industry
Stage of Lead
Product
Filing Range
Diluted Valuation
Proceeds
(mm)
Latest
% Shares
Post Money
Shares (mm) Outstanding Last Round (mm)
Pre-Money
Implied Step-
Value (mm)
Up
1/24/2014
Achaogen, Inc.
AKAO Biotechnology
Phase 2
-
$74.8
-
-
$129.2
-
-
1/13/2014
Concert Pharmaceuticals, Inc.
CNCE Biotechnology
Phase 2
-
74.8
-
-
158.5
-
-
1/10/2014
Applied Genetic Technologies Corp.
AGTC Biotechnology
Pre-Clinical
-
70.0
-
-
58.9
-
-
1/10/2014
MicroLin Bio, Inc.
MCLB Diagnostics
Pre-Clinical
$6.00 - $8.00
25.0
-
-
-
-
-
1/8/2014
Flex ion Therapeutics, Inc.
FLXN Spec Pharma
Phase 2
-
86.3
-
-
89.3
-
-
1/7/2014
KineMed, Inc.
KNMD Diagnostics
Dev elopment
-
50.9
-
-
49.2
-
-
1/6/2014
Aldex a Therapeutics, Inc
ALDX
Phase 1
-
20.0
-
-
20.5
-
1/2/2014
uniQure B.V.
QURE Biotechnology
Approv ed
$13.00 - $15.00
64.4
4.6
27.4%
201.1
170.7
0.8x
12/31/2013 Dicerna Pharmaceuticals, Inc.
DRNA Biotechnology
Pre-Clinical
$11.00 - $13.00
60.0
5.0
32.0%
74.4
127.5
1.7x
12/31/2013 Rev ance Therapeutics, Inc.
RVNC Spec Pharma
Phase 3
$14.00 - $16.00
75.0
5.0
29.6%
200.0
178.2
0.9x
12/30/2013 Elev en Biotherapeutics, Inc.
EBIO
Biotechnology
Phase 2
$13.00 - $15.00
60.2
4.3
29.3%
91.8
145.5
1.6x
12/30/2013 Argos Therapeutics, Inc.
ARGS Biotechnology
Phase 3
$13.00 - $15.00
59.5
4.3
24.0%
104.9
187.9
1.8x
12/23/2013 NephroGenex , Inc.
NRX
Spec Pharma
Phase 2
$12.00 - $14.00
40.3
3.1
35.0%
32.9
74.7
12/23/2013 Genocea Biosciences, Inc.
GNCA Biotechnology
Phase 1
$12.00 - $14.00
71.5
5.5
31.9%
80.9
12/20/2013 Auspex Pharmaceuticals, Inc
ASPX Biotechnology
Phase 3
$10.00 - $12.00
60.5
5.5
26.2%
100.9
12/20/2013 Eagle Pharmaceuticals, Inc.
EGRX Spec Pharma
Registration
-
50.0
-
-
122.9
-
-
12/6/2013
LMNS Medtech
Commercial
-
115.0
-
-
240.9
-
-
11/27/2013 Inogen, Inc.
INGN
Medtech
Commercial
-
86.3
-
-
102.1
-
-
11/12/2013 GeNO Healthcare Corp.
GNO
Medtech
Phase 2
-
50.0
-
-
90.5
-
-
11/8/2013
Amedica Corp.
AMDA Medtech
Commercial
-
35.0
-
-
232.2
-
11/8/2013
Cara Therapeutics, Inc.
CARA Biotechnology
Phase 2
$11.00 - $13.00
60.0
5.0
22.9%
64.0
202.1
11/8/2013
Ultrageny x Pharmaceutical Inc.
17.2%
202.6
361.2
-
-
Lumenis, Ltd.
Biotechnology
-
2.3x
-
170.8
1.7x
3.2x
RARE Biotechnology
Phase 1/2
$14.00 - $17.00
75.0
4.8
10/24/2013 Recro Pharma, Inc.
REPH Spec Pharma
Phase 1
-
32.2
-
10/16/2013 Egalet Corp.
EGLT Spec Pharma
Phase 1
$11.00 - $13.00
42.0
3.5
25.2%
-
124.8
10/11/2013 CardioDx , Inc.
CDX
Diagnostics
Commercial
$14.00 - $16.00
75.0
5.0
29.2%
185.5
181.5
10/11/2013 Vital Therapies Inc.
VTL
Biotechnology
Phase 3
$16.00 - $18.00
74.8
4.4
25.7%
95.4
202.6
10/10/2013 Celladon Corp.
CLDN Biotechnology
Phase 2
$14.00 - $16.00
75.0
-
-
67.5
10/9/2013
Trev ena, Inc.
TRVN Biotechnology
Phase 2
$12.00 - $14.00
75.0
5.8
33.7%
166.0
215.7
1.3x
9/23/2013
Biocept, Inc.
BIOC
Commercial
$10.00 - $12.00
20.0
1.8
10.6%
41.6
27.4
0.7x
Diagnostics
1.8x
-
1.0x
2.1x
-
-
Source: Dow Jones VentureSource, Ipreo, and S&P Capital IQ as of January 27, 2014
Note: Backlog includes all healthcare IPOs filed or amended within the last twelve months; not withdrawn; initial filed proceeds of greater than $20 million
Page 12
The Highest Standard of Success in Financial Relationships
TRADITIONAL FOLLOW-ON MARKET UPDATE
Follow-On Equity Offering Activity
Proceeds ($ in millions)
Number of Deals
350
$11,650
300
250
$9,286
$8,215
200
$6,460
150
$4,367
$3,691
$3,252
$3,504
Number of Deals
$8,332
100
$751
50
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014 YTD
Source: Ipreo, Private Raise, and S&P Capital IQ as of January 27, 2014
Note: Excludes facilities and managed care
Follow-On Equity Offerings include CMPOs prior to 2009
Quarterly Shelf Filings
Amount Registered ($ in millions)
Number of Filings
50
$3,441
45
40
$2,248
$2,405
$2,296
$2,353
$2,344
35
$2,486
30
25
$1,535
20
$1,382
$1,180
$1,100
Number of Filings
$2,381
15
$673
10
5
0
1Q'11
2Q'11
3Q'11
4Q'11
1Q'12
2Q'12
3Q'12
4Q'12
1Q'13
2Q'13
3Q'13
4Q'13
1Q'14
Source: Ipreo, Private Raise, and S&P Capital IQ as of January 27, 2014
Note: Quarterly shelf filings are cumulative totals recorded at the end of each period
Page 13
The Highest Standard of Success in Financial Relationships
TRADITIONAL FOLLOW-ON MARKET UPDATE
Follow-On Pricing Statistics
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
-0.5%
-5.2%
-5.2%
-5.5%
-6.9%
-8.8%
-9.3%
-15.2%
-15.7%
-17.5%
-20.5%
-21.3%
File to Offer
LTM Issuance by Sector (Deals)
Med Devices /
Diagnostics
17%
Last Trade to Offer
LTM Issuance by Mkt. Cap.
Greater than
$1B
24%
Biotech /
Pharma
83%
$1B $500mm
25%
Less than
$300mm
35%
$499mm $300mm
16%
Source: Ipreo, Private Raise, and S&P Capital IQ as of January 27, 2014
Page 14
The Highest Standard of Success in Financial Relationships
TRADITIONAL FOLLOW-ON MARKET UPDATE
Recent U.S. Life Sciences Follow-On Pricings
% Change
Date
Company
Ticker
Industry
Market Cap
Shares
Filing Range
Offer
Current
Offered
/ Price
Price
Price
Proceeds
Initial /
Offer
1 Day
1 Week
Current
01/23/2014 Akers Biosciences Inc.
AKER
Medtech
$26.9
2.7
$5.50
$5.50
$5.19
$15.0
0.0%
0.2%
N/A
-5.6%
01/23/2014 NanoString Technologies, Inc.
NSTG
Medtech
325.4
3.0
19.51
18.50
17.61
55.0
-5.2%
-3.9%
N/A
-4.8%
01/23/2014 Xenoport, Inc.
XNPT
Spec Pharma
358.4
12.0
6.48
6.00
5.91
72.0
-7.4%
0.2%
N/A
-1.5%
01/23/2014 Kips Bay Medical, Inc.
KIPS
Medtech
22.7
5.3
0.83
0.70
0.72
3.7
-15.7%
2.9%
N/A
2.9%
01/22/2014 Acceleron Pharma, Inc.
XLRN
Biotechnology
1,537.4
2.8
48.99
50.00
46.08
138.0
2.1%
2.0%
N/A
-7.8%
01/22/2014 Kery x Biopharmaceuticals Inc.
KERX
Biotechnology
1,293.6
6.9
15.38
14.50
15.10
100.1
-5.7%
6.6%
N/A
4.1%
01/22/2014 Nektar Therapeutics
NKTR
Spec Pharma
1,593.7
8.5
13.51
12.75
12.75
108.4
-5.6%
9.7%
N/A
0.0%
01/10/2014 Retrophin, Inc.
RTRX
Biotechnology
196.2
4.7
7.45
8.50
10.82
40.0
14.1%
33.5%
54.1%
27.3%
01/08/2014 GW Pharmaceuticals plc
GWPH
Spec Pharma
253.2
2.8
32.70
36.00
47.03
101.1
10.1%
30.6%
35.3%
30.6%
01/08/2014 Receptos, Inc.
RCPT
Biotechnology
666.3
3.8
28.37
30.75
39.13
117.4
8.4%
15.4%
30.2%
27.3%
12/12/2013 Adamis Pharmaceuticals Corporation
ADMP
Spec Pharma
59.0
3.7
0.58
5.95
6.68
22.1
-39.7%
0.0%
5.9%
12.3%
12/11/2013 MiMedx Group, Inc.
MDXG
Biotechnology
703.5
5.0
6.98
6.80
7.55
34.0
-2.6%
16.6%
14.0%
11.0%
12/04/2013 Celldex Therapeutics, Inc.
CLDX
Biotechnology
2,158.6
8.1
27.18
24.50
25.77
197.2
-9.9%
2.5%
-9.2%
5.2%
12/03/2013 Clov is Oncology , Inc.
CLVS
Biotechnology
1,948.9
2.0
62.99
57.50
65.38
115.0
-8.7%
-2.6%
-11.4%
13.7%
11/26/2013 Lipocine Inc.
LPCN
Spec Pharma
103.5
1.7
10.00
8.25
9.00
14.2
-17.5%
0.0%
0.6%
9.1%
11/07/2013 ZELTIQ Aesthetics, Inc.
ZLTQ
Medtech
471.8
5.2
15.34
13.00
20.71
67.3
-15.3%
23.2%
25.9%
59.3%
11/06/2013 Tetraphase Pharmaceuticals, Inc.
TTPH
Biotechnology
11/06/2013 Integra LifeSciences Holdings Corporation
IART
Medtech
11/05/2013 Zogenix , Inc.
ZGNX
11/05/2013 InterMune Inc.
251.8
4.5
12.97
10.00
15.90
45.0
-22.9%
0.4%
20.6%
59.0%
1,264.1
4.0
46.23
40.00
45.55
161.0
-13.5%
5.9%
13.4%
13.9%
Spec Pharma
302.5
30.7
2.92
2.25
4.27
69.0
-22.9%
11.1%
20.7%
89.8%
ITMN
Biotechnology
1,150.1
7.5
14.95
13.00
15.86
97.2
-13.0%
-6.3%
-0.7%
22.0%
10/29/2013 Mazor Robotics Ltd.
MZOR
Medtech
40.8
2.8
16.70
17.00
23.68
46.9
2.0%
2.2%
11.5%
39.3%
10/24/2013 Sorrento Therapeutics, Inc.
SRNE
Biotechnology
152.7
4.8
8.90
7.25
9.81
34.8
-18.5%
18.9%
30.9%
35.3%
10/24/2013 Alcobra Ltd.
ADHD
Spec Pharma
216.6
2.3
21.47
16.50
20.32
38.0
-23.2%
3.1%
-2.8%
23.2%
10/23/2013 Mirati Therapeutics, Inc.
MRTX
Biotechnology
231.1
3.3
18.48
17.50
21.64
56.9
-5.3%
-0.2%
-3.7%
23.6%
10/23/2013 ZIOPHARM Oncology , Inc.
ZIOP
Biotechnology
342.9
14.3
4.93
3.50
4.43
50.1
-29.0%
3.4%
0.9%
26.6%
10/22/2013 Cancer Genetics, Inc.
CGIX
Biotechnology
123.5
3.3
18.75
14.00
14.29
46.0
-25.3%
0.9%
1.5%
2.1%
10/18/2013 Chimerix , Inc.
CMRX
Biotechnology
435.6
2.5
21.91
16.50
18.16
40.9
-24.7%
1.9%
-4.8%
10.1%
10/17/2013 Portola Pharmaceuticals, Inc.
PTLA
Biotechnology
941.2
6.4
26.74
23.75
26.30
151.2
-11.2%
0.4%
0.6%
10.7%
10/16/2013 Adv ax is, Inc.
ADXS
Biotechnology
47.1
6.6
0.06
4.00
4.86
26.5
-46.7%
-7.8%
-15.0%
21.5%
10/08/2013 Ky thera Biopharmaceuticals, Inc.
KYTH
Biotechnology
972.1
2.6
44.31
45.75
43.18
120.0
3.2%
-0.1%
-2.8%
-5.6%
10/08/2013 Intercept Pharmaceuticals, Inc.
ICPT
Biotechnology
1,203.9
1.7
76.82
62.50
281.00
104.1
-18.6%
-4.2%
-3.8%
349.6%
10/02/2013 Prothena Corporation plc
PRTA
Biotechnology
465.9
6.6
20.22
22.00
25.63
144.4
8.8%
0.4%
-4.5%
16.5%
09/25/2013 KaloBios Pharmaceuticals, Inc.
KBIO
Biotechnology
126.9
7.5
5.14
4.00
4.65
30.0
-22.2%
11.3%
16.3%
16.3%
09/24/2013 Sy nagev a BioPharma Corp.
GEVA
Biotechnology
1,713.3
3.2
54.22
56.63
86.70
179.1
4.4%
8.9%
20.5%
53.1%
09/10/2013 Sagent Pharmaceuticals, Inc.
SGNT
Spec Pharma
674.4
5.3
23.64
21.25
19.98
112.4
-10.1%
1.7%
7.3%
-6.0%
08/16/2013 Sophiris Bio, Inc.
SPHS
Biotechnology
80.7
13.0
5.00
5.00
3.98
65.0
0.0%
-17.0%
-7.6%
-20.4%
08/13/2013 Cancer Genetics, Inc.
CGIX
Biotechnology
58.2
1.6
11.25
10.00
14.29
16.1
-11.1%
-9.0%
-7.5%
42.9%
08/13/2013 The Medicines Company
MDCO
Spec Pharma
1,887.3
6.7
32.14
30.25
36.19
201.2
-5.9%
-0.6%
0.6%
19.6%
08/13/2013 GenMark Diagnostics, Inc.
GNMK
Medtech
397.0
7.6
10.03
9.84
12.88
75.0
-1.9%
4.3%
6.7%
30.9%
08/13/2013 Aastrom Biosciences, Inc.
ASTM
Biotechnology
22.4
30.0
0.69
0.30
3.42
9.0
-56.5%
0.0%
-0.5%
-43.0%
08/13/2013 Brainstorm Cell Therapeutics Inc.
BCLI
Biotechnology
30.0
23.5
0.25
0.17
0.28
4.0
-32.0%
-9.6%
5.9%
61.8%
08/08/2013 Tonix Pharmaceuticals Hld. Corp
TNXP
Biotechnology
20.7
3.1
6.25
4.25
14.80
13.1
-32.0%
-0.7%
-10.8%
248.2%
08/08/2013 Ax oGen, Inc.
AXGN
Medtech
51.4
6.2
4.60
3.00
3.94
18.6
-34.8%
-0.7%
-0.7%
31.3%
08/07/2013 Opex a Therapeutics, Inc.
OPXA
Biotechnology
30.2
12.7
1.68
1.50
1.71
19.0
-10.7%
-6.0%
-9.3%
14.0%
07/31/2013 BioCry st Pharmaceuticals, Inc.
BCRX
Biotechnology
256.3
4.6
3.98
4.40
9.81
20.2
10.6%
21.1%
23.9%
123.0%
07/17/2013 Insmed Incorporated
INSM
Biotechnology
395.6
6.9
10.92
10.40
20.17
71.8
-4.8%
13.3%
9.1%
93.9%
07/16/2013 Regulus Therapeutics Inc.
RGLS
Biotechnology
384.4
5.2
9.20
9.50
7.86
49.2
3.3%
1.7%
8.6%
-17.3%
07/11/2013 Merrimack Pharmaceuticals, Inc.
MACK
Biotechnology
507.1
5.8
6.99
5.00
5.55
28.8
-28.5%
1.6%
-3.4%
11.0%
07/09/2013 Amarin Corporation plc
AMRN
Biotechnology
991.5
21.7
6.17
5.75
1.70
124.8
-6.8%
-3.0%
-3.8%
-70.4%
06/19/2013 Repros Therapeutics Inc.
RPRX
Spec Pharma
425.5
4.3
17.93
19.00
19.50
81.9
6.0%
7.4%
-4.6%
2.6%
06/18/2013 Valeant Pharmaceuticals Int'l, Inc.
VRX
Spec Pharma
27,823.2
27.1
84.82
85.00
131.40
2,300.0
0.2%
1.7%
-0.1%
54.6%
06/18/2013 Intercept Pharmaceuticals, Inc.
ICPT
Biotechnology
614.0
2.0
33.65
33.01
281.00
65.7
-1.9%
16.4%
22.7%
751.3%
06/14/2013 Mast Therapeutics, Inc.
MSTX
Biotechnology
25.0
50.0
0.73
0.50
0.88
25.0
-31.5%
-13.0%
-8.0%
76.5%
06/13/2013 Echo Therapeutics, Inc.
ECTE
Medtech
27.2
4.6
5.35
2.70
3.36
12.5
-49.5%
3.0%
-7.8%
24.4%
06/12/2013 Clov is Oncology , Inc.
CLVS
Biotechnology
2,127.7
0.9
72.10
72.00
65.38
65.5
-0.1%
-1.2%
-13.9%
-9.2%
06/11/2013 Clov is Oncology , Inc.
CLVS
Biotechnology
2,127.7
2.4
71.83
72.00
65.38
174.5
0.2%
0.1%
-10.3%
-9.2%
05/30/2013 Kamada Ltd.
KMDA
Biotechnology
317.3
6.4
10.47
9.25
15.59
59.4
-11.7%
9.2%
9.2%
68.5%
05/23/2013 Venax is, Inc.
APPY
Biotechnology
12.5
11.5
1.72
1.25
2.38
14.4
-27.3%
0.0%
0.0%
90.4%
05/21/2013 Ironw ood Pharmaceuticals, Inc.
IRWD
Biotechnology
1,208.1
11.2
13.83
13.00
13.65
145.7
-6.0%
-0.7%
0.5%
5.0%
Source: Ipreo, Private Raise, and S&P Capital IQ as of January 27, 2014
Note: Adamis Pharmaceuticals Corp. Initial / Offer discount adjusted for 1:17 reverse stock split
Advaxis, Inc. and Aastrom Biosciences, Inc. % Change to Current adjusted for 1:125 and 1:20 reverse stock splits, respectively
Clovis Oncology completed two concurrent offerings under two separate registration statements
Page 15
The Highest Standard of Success in Financial Relationships
TRADITIONAL FOLLOW-ON MARKET UPDATE
Recent U.S. Life Sciences Follow-On Pricings (cont’d)
% Change
Date
Company
Ticker
Industry
Market Cap
Shares
Filing Range
Offer
Current
Offered
/ Price
Price
Price
Proceeds
Initial /
Offer
1 Day
1 Week
Current
05/21/2013 NPS Pharmaceuticals, Inc.
NPSP
Biotechnology
$1,457.8
6.9
$14.11
$14.53
$35.96
$100.3
3.0%
2.9%
3.9%
05/16/2013 Stemline Therapeutics, Inc.
STML
Biotechnology
169.1
4.1
15.25
14.50
26.52
60.0
-4.9%
1.7%
6.6%
82.9%
05/10/2013 Santarus, Inc.
SNTS
Biotechnology
1,179.5
4.3
20.20
18.25
49.01
77.6
-9.7%
10.2%
20.1%
168.5%
05/09/2013 Tornier N.V.
TRNX
Spec Pharma
749.7
8.1
18.13
16.15
18.30
130.0
-10.9%
3.2%
1.7%
13.3%
05/08/2013 Isis Pharmaceuticals, Inc.
ISIS
Biotechnology
2,122.2
9.6
21.89
19.00
48.42
182.7
-13.2%
-2.7%
6.1%
154.8%
05/08/2013 Nanosphere, Inc.
NSPH
Biotechnology
150.6
1.9
2.60
2.60
2.44
5.0
0.0%
-4.2%
16.2%
-6.2%
05/01/2013 Idera Pharmaceuticals, Inc.
IDRA
Biotechnology
8.6
17.5
0.67
0.49
4.02
8.6
-26.9%
0.0%
0.0%
720.4%
05/01/2013 GW Pharmaceuticals plc
GWPH
Spec Pharma
31.2
3.7
5.00
8.90
49.15
32.7
78.0%
0.9%
1.1%
452.2%
05/01/2013 Nov adaq Technologies Inc.
NVDQ
Medtech
606.6
4.5
13.51
12.90
18.84
57.9
-4.5%
0.2%
1.1%
46.0%
04/25/2013 The Spectranetics Corporation
SPNC
Medtech
713.5
5.5
19.28
18.00
24.99
98.3
-6.6%
4.6%
4.1%
38.8%
04/16/2013 ChemoCentry x , Inc.
CCXI
Biotechnology
502.1
5.8
13.58
12.00
7.02
69.0
-11.6%
0.3%
7.7%
-41.5%
04/11/2013 Durata Therapeutics, Inc.
DRTX
Biotechnology
178.9
8.2
9.00
7.00
12.45
57.6
-22.2%
7.0%
7.1%
77.9%
04/10/2013 Sy nergy Pharmaceuticals, Inc.
SGYP
Biotechnology
496.0
16.4
7.24
5.50
5.26
90.1
-24.0%
-3.3%
-7.5%
-4.4%
04/10/2013 Infinity Pharmaceuticals, Inc.
INFI
Biotechnology
1,913.2
11.4
46.66
40.00
13.37
456.7
-14.3%
8.5%
0.1%
-66.6%
03/14/2013 TherapeuticsMD, Inc.
TXMD
Spec Pharma
219.6
29.4
3.58
1.70
5.80
50.0
-52.5%
0.0%
6.5%
241.2%
03/12/2013 Heartw are International Inc.
HTWR
Medtech
1,392.4
1.7
87.50
86.45
98.78
149.1
-1.2%
3.4%
4.9%
14.3%
03/08/2013 Pharmacy clics Inc.
PCYC
Biotechnology
6,821.6
2.2
94.20
94.20
135.20
207.2
0.0%
-2.1%
-4.6%
43.5%
03/07/2013 Hy perion Therapeutics, Inc.
HPTX
Biotechnology
405.1
3.3
19.30
20.75
28.64
68.6
7.5%
12.7%
12.5%
38.0%
03/05/2013 Jazz Pharmaceuticals Public Ltd.
JAZZ
Spec Pharma
3,395.1
5.4
60.00
58.50
149.19
314.4
-2.5%
1.1%
1.6%
155.0%
02/28/2013 Neogenomics Inc.
NEO
Medtech
144.4
3.2
3.28
3.00
3.87
9.5
-8.5%
11.3%
25.0%
29.0%
02/27/2013 Tesaro, Inc.
TSRO
Biotechnology
573.4
5.4
20.56
18.00
35.14
97.7
-12.5%
10.3%
35.4%
95.2%
02/21/2013 Achillion Pharmaceuticals, Inc.
ACHN
Biotechnology
795.1
16.9
9.53
8.40
3.67
141.9
-11.9%
5.5%
-3.0%
-56.3%
02/08/2013 Medgenics, Inc.
MDGN
Biotechnology
94.0
5.6
7.25
5.25
7.69
29.4
-27.6%
-1.1%
-2.7%
46.5%
02/07/2013 Imprimis Pharmaceuticals, Inc.
IMMY
Spec Pharma
45.2
2.1
0.68
5.25
7.25
11.1
-34.4%
-5.7%
-9.0%
38.1%
02/05/2013 Celldex Therapeutics, Inc.
CLDX
Biotechnology
591.0
12.0
7.42
7.50
27.14
90.0
1.1%
1.9%
5.3%
261.9%
01/30/2013 Kery x Biopharmaceuticals Inc.
KERX
Biotechnology
610.7
8.2
8.36
8.49
15.70
69.9
1.6%
6.9%
-21.2%
84.9%
01/17/2013 AVEO Pharmaceuticals, Inc.
AVEO
Biotechnology
378.0
7.7
8.12
7.50
1.99
57.5
-7.6%
1.5%
2.9%
-73.5%
01/16/2013 Ony x Pharmaceuticals, Inc.
ONXX
Biotechnology
5,855.3
4.4
83.43
81.50
N/A
358.6
-2.3%
-2.7%
-5.0%
N/A
01/15/2013 InterMune Inc.
ITMN
Biotechnology
785.8
15.5
9.99
9.90
16.85
153.7
-0.9%
4.8%
-1.8%
70.2%
01/15/2013 Alny lam Pharmaceuticals, Inc.
ALNY
Biotechnology
1,217.7
9.2
20.55
20.13
83.60
185.2
-2.0%
10.0%
17.5%
315.3%
01/04/2013 Insulet Corporation
PODD
Medtech
1,083.5
4.1
21.72
20.75
43.28
85.1
-4.5%
5.1%
10.2%
108.6%
01/03/2013 Sy nagev a BioPharma Corp.
GEVA
Biotechnology
1,265.1
2.5
47.87
47.53
88.61
117.5
-0.7%
0.0%
2.9%
86.4%
$1,078.6
7.8
$20.69
$19.76
$32.19
$110.3
-10.4%
3.3%
4.7%
69.2%
$435.6
5.3
$13.51
$12.75
$16.57
$68.6
-7.6%
1.7%
1.3%
31.7%
High
$27,823.2
50.0
$94.20
$94.20
$295.25
$2,300.0
78.0%
33.5%
54.1%
794.4%
Low
$8.6
0.9
$0.06
$0.17
$0.29
$3.7
-56.5%
-17.0%
-21.2%
-73.5%
Mean
Median
147.5%
Source: Ipreo, Private Raise, and S&P Capital IQ as of January 27, 2014
Note: Imprimis Pharmaceuticals, Inc. % Change Initial / Offer adjusted for 1:5 reverse stock split
Page 16
The Highest Standard of Success in Financial Relationships
PIPE, REGISTERED DIRECT AND CMPO MARKET UPDATE
Annual PIPE / RD Market Issuance
Issuance Amount ($ in millions)
Number of Deals
450
400
$9,942
$9,100
350
$8,108
250
$5,801
$4,337
$4,522
$3,983
$4,953
200
150
Number of Deals
300
$6,758
100
$1,436
50
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014 YTD
Quarterly PIPE / RD Market Issuance
Issuance Amount ($ in millions)
Number of Deals
120
$3,170
$2,897
100
$2,687
$2,402
$2,230
80
$1,846
$1,502
$1,645
$1,592
$1,436
$1,071
60
40
Number of Deals
$2,165
$789
20
0
1Q'11
2Q'11
3Q'11
4Q'11
1Q'12
2Q'12
3Q'12
4Q'12
1Q'13
2Q'13
3Q'13
4Q'13
1Q'14
Source: Private Raise, and S&P Capital IQ as of January 27, 2014
Page 17
The Highest Standard of Success in Financial Relationships
PIPE, REGISTERED DIRECT AND CMPO MARKET UPDATE
LTM Issuance by Type
Debt: Nonconvert.
1%
Preferred
Stock:
Convert.
9%
Other
1%
Equity Line
5%
Debt:
Convert.
9%
ATM
14%
LTM Issuance by Sector
Common
Stock
61%
LTM Issuance by Mkt. Cap.
0%
$1B $500mm
5%
$499mm $300mm
7%
Med Devices /
Diagnostics
25%
Biotech /
Pharma
75%
Greater than
$1B
5%
Less than
$300mm
83%
Source: Ipreo, Private Raise, and S&P Capital IQ as of January 27, 2014
Page 18
The Highest Standard of Success in Financial Relationships
Healthcare Investment Banking
Josh Muntner
Managing Director
(212) 829-3830
[email protected]
Richard Page
Managing Director
(212) 829-3828
[email protected]
James McNaughton
Managing Director – M&A
(215) 665-6032
[email protected]
Parth Talati
Analyst
(212) 829-3836
[email protected]
Healthcare Equity Capital Markets
Charles Mather, CFA
Managing Director
(212) 829-3831
[email protected]
Matthew Corrado
Associate
(212) 829-3833
[email protected]
Sean Mansoory
Analyst
(212) 829-3826
[email protected]
Sales and Trading
Andrew Trask
Associate
(212) 829-3832
[email protected]
Greg McManus
Managing Director
(212) 759-6211
[email protected]
Healthcare Equity Research
Research Analyst
Paul Knight, CFA
Life Sciences Technology
(646) 840-4616
[email protected]
Coverage Universe
Agilent Technologies (A)
PerkinElmer (PKI)
Bruker (BRKR)
Qiagen (QGEN)
Danaher (DHR)
Safeguard Scientifics (SFE)
IDEX (IEX)
Sigma-Aldrich (SIAL)
Illumina (ILMN)
Techne (TECH)
Mettler-Toledo (MTD)
Thermo Fisher Scientific (TMO)
National Instruments (NATI)
Waters (WAT)
Neogen (NEOG)
WuXi PharmaTech (Cayman) (WX)
Pall (PLL)
Kimberly Lee, DO
Biotechnology
(415) 229-7015
[email protected]
James Molloy
Specialty Pharmaceuticals
(617) 371-6528
[email protected]
Aegerion Pharmaceuticals (AEGR)
Medivation (MDVN)
Alexion Pharmaceuticals (ALXN)
Onconova Therapeutics (ONTX)
Amicus Therapeutics (FOLD)
PDL BioPharma (PDLI)
BioMarin Pharmaceutical (BMRN)
Raptor Pharmaceuticals (RPTP)
Cell Therapeutics, Inc. (CTIC)
Sarepta Therapeutics (SRPT)
Corcept Therapeutics (CORT)
Synageva BioPharma (GEVA)
Cyclacel Pharmaceuticals (CYCC)
Vertex Pharmaceuticals (VRTX)
BioDelivery Sciences (BDSI)
Forest Laboratories (FRX)
Cubist Pharmaceuticals (CBST)
Impax Laboratories (IPXL)
DepoMed (DEPO)
Intercept Pharmaceuticals (ICPT)
Durata Therapeutics (DRTX)
Ironwood Pharmaceuticals (IRWD)
Emergent BioSolutions (EBS)
NPS Pharmaceuticals (NPSP)
Endo Health Solutions (ENDP)
Questcor Pharmaceuticals (QCOR)
Flamel Technologies S.A. (FLML)
Salix Pharmaceuticals (SLXP)
This material is a publication of Janney Montgomery Scott LLC’s Investment Banking Department and for informational Purpose only and shall in no event be construed as an offer to sell or a solicitation of an offer to buy any securities. The views expressed in this
publication may differ from those expressed by other areas of the Firm including the Firm’s Research Department. To view the firm’s current research on the Healthcare sector please go to www.janney.com. Janney Montgomery Scott LLC’s Investment Banking
Department is independent of the Firm’s Research Department.
The factual information described herein is taken from sources which we believe to be reliable, but the accuracy and completeness of such information is not guaranteed by us. The opinions expressed herein may be given only such weight as opinions warrant.
Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situations or needs of individual investors. This Firm, its officers, directors, employees, or members of their families may have
positions in the securities mentioned and may make purchases or sales of such securities from time to time in the open market or otherwise and may sell to or buy from customers such securities on a principal basis. Supporting information related to the
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Page 19