Pharma and Biotech MA in Gene Cell Therapy

Pharma and Biotech M&A in Gene & Cell Therapy: What’s Next in Deal Making in the Emerging Advanced Therapeutics Space? Ed Saltzman, Executive Chairman Defined Health, a Cello Health business New York Pharma Forum 23 May, 2018 New York City, NY

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Agenda Are We On Verge of Next Phase of Therapeutics Platform Evolution? How Will Pharma Respond? Can Challenges to Business Model be Surmounted? Key Takeaways New York Pharm Forum, May 2018 © Defined Health, 2018 3

Are We On Verge of Next Phase of Therapeutics Platform Evolution? 4

Over Past 10 Years a Small Molecule Based Industry Became Biological Top‐Selling Products (WW Sales $M) 2007 vs. 2017 (coded by conventional vs. biologics) 2007 2017 Lipitor (Pfizer) Humira (Abb. Vie) Advair (Glaxo. Smith. Kline) Revlimid (Celgene) Nexium (Astra. Zeneca) Rituxan (Roche) Diovan (Novartis) Biologic Zyprexa (Eli Lilly) Conventional Plavix (Bristol‐Myers Squibb) Herceptin (Roche) Avastin (Roche) Remicade (J&J) Rituxan (Roche) Prevnar 13 (Pfizer) Singulair (Merck & Co) Enbrel (Amgen) Herceptin (Roche) Lantus (Sanofi) Seroquel (Astra. Zeneca) Lyrica (Pfizer) 0 5, 000 10, 000 15, 000 Evaluate. Pharma New York Pharm Forum, May 2018 © Defined Health, 2018 5

But Therapeutic Platforms Have Been Evolving for >30 Years Increasing Complexity of Therapeutic Interventions Phenotypic Genotypic 1980 s Small Molecule Modulators Platform Evolution • Immune Modulators • SMIs • Chaperones • Substrate Reduction • Transcription / Translation enhancers • Epigenetics New York Pharm Forum, May 2018 © Defined Health, 2018 1990 s Protein Augmentation Antibodies 2000 s Peptides and Nucleic Acids • Plasma/tissue derived proteins • Plasma derived Polyclonal Igs • Immune Modulator • Recombinant Proteins • Monoclonal antibodies • Exon skipping • m. AB fragments • RNAi /mi. RN – Clotting factors – Cytokines – Hormones – Growth factors • Enzyme Replacement • Scaffolds • Intrabodies • Antisense • Aptamers/ Ribozyme Gene Correction & Augmentation • Viral vectors ‒ Retro/ ‒ Lentiviral ‒ Ad. V, AAV • Non‐viral ‒ Plasmids/ ‒ Fragments • Gene editing with Meganucleases ‒ Zinc Fingers ‒ TALENS ‒ CRISPR/Cas 9 Cell Therapy & Regenerative Med • Autologous/allo‐ geneic cell therapy • Other cells: ‒ e. g. ES, i. PS • Mitochondrial transfer • Devices ‒ Encapsulation ‒ Scaffolds ‒ Implants ‒ Micro‐organs ‒ Aphaeresis 6

Evolution Already in Progress: Over Just the Next Five Years Advanced Therapeutics Revenues Forecast to Grow to $7. 7 Bln Given the unique nature of advanced therapeutics, there is uncertainty as to how the market might grow and mature over the long‐term US Sales of Advanced Therapeutics 2016‐ 2022 e ($B) 9 8 US Sales ($B) 7 Gene Therapy 6 Cell Therapy 5 4 3 2 1 0 2016 2017 2018 e 2019 e 2020 e 2021 e 2022 e Evaluate. Pharma; Leerink, NIGHTSTAR THERAPEUTICS PLC: Initiating at OP; A White Knight for Retinal Dystrophies, Oct 2017 New York Pharm Forum, May 2018 © Defined Health, 2018 7

Novartis Just Cast A Huge Vote of Confidence in Future of Advanced Therapeutics https: //www. reuters. com/article/us‐novartis‐avexis/novartis‐bets‐big‐on‐gene‐therapy‐with‐ 8‐ 7‐billion‐avexis‐deal‐id. USKBN 1 HG 0 FT New York Pharm Forum, May 2018 © Defined Health, 2018 8

Gilead and Celgene Also Just Recently Voted Yes With Their Checkbooks https: //www. bloomberg. com/news/articles/2017‐ 08‐ 28/gilead‐to‐buy‐kite‐for‐ 11‐ 9‐billion‐in‐cancer‐therapy‐megadeal; https: //www. geekwire. com/2018/juno‐therapeutics‐acquired‐celgene‐ 9 b‐dramatic‐deal‐rising‐biotech‐star/ New York Pharm Forum, May 2018 © Defined Health, 2018 9

Advanced Therapeutics M&A Began Only Two Years Ago but Has Just Become Super‐Sized Advanced Therapeutics M&A by Top 20 US Pharma 3 recent major M&A: $29. 6 billion $14, 000 $12, 000 $10, 000 $8, 000 $6, 000 $4, 000 $2, 000 Pfizer Bamboo $645 M Novartis Gamida $635 M Aug 2016 Jun 2017 Gilead Kite $11. 9 B Gilead Cell Design Labs $467 M Novartis Ave. Xis $8. 7 B Celgene Juno $9 B $0 Oct 2017 Dec 2017 Jan 2018 Apr 2018 BCIQ New York Pharm Forum, May 2018 © Defined Health, 2018 10

Although A Slow Year for IPOs, 2017 Marked a Spike in Investment in Advanced Therapeutics Total global investment in gene and cell therapies about $4. 2 B in 2017 – Up from $3. 3 B in 2017 Does not include $13. 5 B in acquisitions in 2017 vs. $1 B in 2016 (Driven by $11. 9 B acquisition of Kite by Gilead) NUMBER OF GENE/CELL THERAPY FINANCINGS BY FINANCING TYPE Annual Sum of Amount raised by Financing Type Number of Financings 38 31 24 18 12 4 2013 18 9 14 9 13 9 2015 2016 1 2014 All IPO financings 25 5 2017 All follow‐on financings All venture financings BCIQ Financings Chart New York Pharm Forum, May 2018 © Defined Health, 2018 11

How Will Pharma Respond? 12

Over The Last 30 Years, Gene Therapy Platforms Have Diversified But Big Pharma Remains for Most Part a Small Player With Main Interest Driver Being T‐Cell Platforms ARM tracks >850 Regenerative Medicines companies (460 US, 234 Europe and 122 Asia, 38 Ro. W) Gene Augmentation Gene Editing AAV Ad. V Lenti‐ Retro Adoptive Cellular Immuno‐Oncology (IO) Plasmid Other Partners Company Websites; Alliance for Regenerative Medicine State of the Industry report 2018; https: //alliancerm. org/event/sotibriefing New York Pharm Forum, May 2018 © Defined Health, 2018 13

Cell Therapy Deals and Value Dominated by Oncology, No Other Therapeutic Areas Have Seen “Mega‐Deals” Cell Therapy Deal Timeline 2015 -2017 Jan 2015 Acquisition ‐ $415 M Autologous DCs Mar 2015 $200 M Ischemic stroke SC tpx Jun 2015 Undisclosed CAR‐T/TCR Nov 2015 Undisclosed CAR‐T Apr 2016 Undisclosed Pluripotent induced SCs 2015 Jan 2015 $3 M Respiratory distress syndrome SC tpx Apr 2015 $44 M Mesenchymal SCs Jul 2016 $438 M Perianal fistula cell tpx May 2017 Undisclosed Immune disorder cell tpx Aug 2015 $332 M Diabetes SC tpx May 2016 $40 M Mesenchymal SCs May 2017 Undisclosed CAR‐T Dec 2017 $16 M CAR‐T 2017 2016 Jan 2016 Undisclosed Parkinson’s disease cell tpx Oct 2017 Undisclosed Oct 2016 Undisclosed T Cell Tpx May 2017 $96 M CAR‐T Jun 2017 $33 M NK Cell Therapy Aug 2017 Acquisition ‐ $12 B CAR‐T Jan 2018 Acquisition ‐ $9 B CAR‐T/TCR 2018 Dec 2017 $350 M CAR‐T Dec 2017 $497 M Immune Cell tpx BCIQ, Company website; tpx = therapeutic; SC = stem cells New York Pharm Forum, May 2018 © Defined Health, 2018 14

By Contrast Before Novartis/Ave. Xis, Big Pharma Was an Infrequent and Risk‐Adverse Player in Gene Therapy Platform and Rare Disease Gene Therapy Deal Timeline 2015 -2018 Apr 2017 Undisclosed AAV tech Jan 2015 $6 M Hemophilia A&B Apr 2015 $64 M CRISPR platform Aug 2015 $53 M CV Oct 2015 $105 M AAV tech Dec 2015 Jan 2016 $105 M Undisclosed Rare diseases Rare disease Oct 2015 $337 M IBD 2016 2015 Jan 2015 $11 M CRISPR platform Feb 2015 $845 M Parkinson’s Disease Apr 2015 $1 B CV May 2016 Undisclosed AAV tech Aug 2016 $495 M Rare diseases Aug 2015 $124 M Rare diseases Sep 2015 Acquisition $845 M CV Jan 2016 Undisclosed AAV tech Aug 2016 Undisclosed Retinal disease May 2017 $545 M Hemophilia A Jun 2017 Undisclosed DMD Dec 2017 Undisclosed Rare disease 2017 Jan 2017 Acquisition Undisclosed Gene delivery May 2017 Undisclosed Rare disease Sep 2017 Acquisition $151 M Rare disease Jan 2018 $170 M RPE 65 Retinal dystrophy 2018 Nov 2017 Undisclosed Promoter Apr 2018 Acquisition $8. 7 B BCIQ, Company website New York Pharm Forum, May 2018 © Defined Health, 2018 15

Who’s Next? Kite, Juno and Ave. Xis are Far From Only Late Stage Opportunities in Advanced Therapeutics Recent And Expected Upcoming US/EU Approvals Kymriah (Novartis): ALL Yescarta (Gilead): DLBCL Strimvelis (GSK): ADA‐SCID Luxturna (Spark): LCA/RP Cx 601 (Ti. Genix/Takeda): Crohns ATA 129 (Atara): EBV cancers PLX‐PAD (Pluristem): PAD Habeo (Cytori): Scleroderma ECCI‐ 50 (Cytori): UI AVXS‐ 101 (Ave. Xis): SMA Lenti‐D (bluebird): ALD Neo. Cart (Histogenics): Cartilage JCAR 014 (Juno): CLL CMV‐CTL (Atara): CMV Infections DCCI‐ 10 (Cytori): Burns MAGE‐A 10 (Adaptimmune): NSCLC JCAR 015 (Juno): ALL JCAR 017 (Juno): NHL BPX‐ 501 (Bellicum): Gv. HD Lenti. Globin (bluebird): β‐Thalassemia SPK‐ 7001 (Spark): CHM DTX 301 (Dimension): Urea Cycle ABO‐ 102 (Abeona): MPS III AMT‐ 060 (uni. Qure): Hemophilia B EB‐ 101 (Abeona): EB LN‐ 144 (Iovance): Melanoma Nur. Own (Brain. Storm): ALS NK‐ 92 (Nant. Kwest): NE Tumor ECCO‐ 50 (Cytori): Osteoarthritis Multi. Stem (Pfizer): Stroke Strata. Graft (Mallinckrodt): Burns Anti‐CD 19 CAR‐T (ZIOPHARM): NHL UCARTCS 1 (Cellectis): ALL SPK‐ 8011 (Spark): Hemophilia A BMN‐ 270 (Bio. Marin): Hemophilia A DTX 401 (Dimension): Glycogen Storage VY‐AADC 01 (Voyager): Parkinson's Ad‐RTS‐h. IL‐ 12 (Ziopharm): Breast Cancer AT 132 (Audentes): Myotubular Myopathy AT 342 (Audentes): Crigler‐Najjar AAV‐CNGB 3 (AGTC): ACHM SAR 422459 (Sanofi): Stargardt Pexa‐Vec (Transgene): Hepatoma SPK‐TPP 1 (Spark): Batten 2016 / 2017 2018 2019 2020 Evaluate. Pharma New York Pharm Forum, May 2018 © Defined Health, 2018 16

Strategic Fork in Road Pharma’s Strategic Interest/Approach to Date in Advanced Therapeutics Differs: • As Part of Therapeutic Strategy in Broader Oncology • As Platform Strategy for Expansion in Monogenic/Rare Diseases • Only Novartis pursuing both • Pfizer now more committed to gene therapeutics for rare diseases than T‐Cell platforms (e. g. Allogene deal as “exit” for Pfizer) Majority of companies still watching from sidelines • Less or no interest in Rare Diseases • Unwilling to take on business model challenges especially in autologous T‐cell therapies Presentermedia. com New York Pharm Forum, May 2018 © Defined Health, 2018 17

First Gen CAR‐T Programs Have Significant Safety, Manufacturing and Commercialization Challenges: But Valuations Suggest At Least Some Pharmas Are Undeterred Novartis New York Pharm Forum, May 2018 © Defined Health, 2018 18

Limited Access to Patients (both Reimbursement and Treatment Center Throughput) Creating a Long Waiting List Warrants Development of Broadly Accessible “Off‐the‐Shelf” Solutions Individualized treatments have significant challenges to overcome if they are to ever become broadly available: • Manufacturing is laborious and takes several weeks until it is ready for patient dosing. • COGS are exorbitant (raw materials including lentiviral vectors, cell processing and skilled labor) • High cost (Kymriah is $475, 000 and Yescarta is $373, 000 for a one‐time treatment) • Need for skilled hem/oncs physicians to collect cells and treat patients • Only tertiary care centers equipped to deal with potential AEs such as CRS • Reimbursement and risk sharing strategies still work in progress. Limited number of eligible patients have been treated with approved CARTs, since launch. (Current Kymriah sites are red; current Yescarta sites are blue; sites where both therapies are available are green; and planned Kymriah sites are orange. ) Although allogeneic and universally available ACT products are as yet moving slowly in very early stages, the market expects that such late entrants will provide competitive advancements in COGs, availability and convenience. https: //www. technologyreview. com/s/609890/gene‐therapy‐could‐make‐cancer‐care‐more‐unequal‐and‐this‐map‐shows‐why/ New York Pharm Forum, May 2018 © Defined Health, 2018 19

Validation/Enthusiasm of IO Cell Therapy in Heme Malignancies, but Massive Valuation Hinges on Ability to Demonstrate Efficacy Against Solid Tumors Whereas there an equivalent number of IO cell therapy programs in Phase 2 clinical development for both solid and heme malignancies, there a much higher proportion of early‐stage clinical trials and preclinical programs in the solid tumor space This likely reflects the fact that, while striking initial Po. C has been demonstrated for anti‐CD 19 CARTs in ALL, especially now with approval of Novartis’ Kymriah, and Kite’s Yescarta in DLBCL , the massive valuations for IO cell therapy companies largely hinges on the ability of these technologies to address broader solid tumor markets Clinicaltrials. gov, Adis R&D, Clarivate Analytics Cortellis, Fierce. Pharma, Gilead press release New York Pharm Forum, May 2018 © Defined Health, 2018 20

While CARTs Enter or Approach Market, Majority of Gene Therapy Programs Remain In Early Clinical Phases of Gene Therapy Clinical Trials http: //www. abedia. com/wiley ‐ Gene Therapy Clinical Trials Worldwide, Provided by the Journal of Gene Medicine New York Pharm Forum, May 2018 © Defined Health, 2018 21

But Path to Approval May be Rapid http: //investors. avexis. com/phoenix. zhtml? c=254285&p=irol‐news. Article&ID=2254564 New York Pharm Forum, May 2018 © Defined Health, 2018 22

As Many Therapies Carry RMAT Designation January 8, 2018 https: //smanewstoday. com/2018/01/08/fda‐gives‐avexis‐the‐lowdown‐on‐approving‐its‐therapy‐for‐sma‐type‐ 1 New York Pharm Forum, May 2018 © Defined Health, 2018 23

Creation Of FDA Office Of Tissues And Advanced Therapies (OTAT) And RMAT Designation Expediting Review Of Advanced Therapeutics Created in 2016, the Regenerative Medicine Advanced Therapy (RMAT) designation was established under the 21 st Century Cures Act to help reduce development times in the field of regenerative medicine Regenerative medicine therapies are defined as: The RMAT designation gives the sponsor of a new drug access to: • Cell therapy • Increased meeting opportunities with FDA, in a manner comparable to those offered to sponsors of breakthrough‐ • Tissue engineering product designated therapies • Human cell/tissue product • Type B development meetings are normally restricted to one • Any combination product using the above RMAT designation given to drugs intended to cure serious/life‐ each at pre‐IND, end of Phase II/pre‐Phase III and pre‐BLA RMAT designation given to drugs intended to cure serious/life‐ submission threatening conditions where preliminary clinical data suggests • Priority review reduces the BLA assessment from 10 months to the potential to address an unmet need 6 months • Requested with new IND or as an amendment to an existing • Accelerated approval, which bases approval on an effect on a IND predictive surrogate endpoint or an intermediate clinical • The agency has 60 days to review the request for RMAT endpoint. May require post‐approval clinical studies as well as designation real‐world data such as patient registries and health record Analogous to breakthrough therapy designation analysis • More frequent FDA interactions • Option to qualify for fast‐track approval allows for “rolling • Include fast track features review” of the BLA, which can be submitted for assessment Must apply separately for accelerated approval or priority review following agreement of a review timetable with CBER FDA, Federal Register, BCIQ New York Pharm Forum, May 2018 © Defined Health, 2018 24

Gene Tx Field Crosses All Therapeutic Areas But Two‐Thirds of Programs are In Oncology Indications Addressed by Gene Therapy Clinical Trials http: //www. abedia. com/wiley ‐ Gene Therapy Clinical Trials Worldwide, Provided by the Journal of Gene Medicine New York Pharm Forum, May 2018 © Defined Health, 2018 25

But Majority of Pharmas Not Yet Bought Into Gene Therapy Approaches to Cancer, Even for P 3 Programs Does obsession with T‐cell directed therapies lead to less or no interest in gene based approaches to Immuno‐Oncology? Readout expected end of 2019 Market Cap: $187. 97 M https: //tocagen. com/wp‐content/uploads/pipeline‐ 10‐ 25‐ 17. pdf; Yahoo Finance (stock chart), Market Cap as of 20‐May‐ 2018 New York Pharm Forum, May 2018 © Defined Health, 2018 26

Though Much Smaller Percentage of Inventory, Gene Therapies for Rare Monogenic Disorders Have Garnered the Most Attention From Both Pharma and Investors Market Cap: $9. 21 B Market Cap: $2. 86 MB Yahoo Finance; Market Cap as of 20‐May‐ 2018 New York Pharm Forum, May 2018 © Defined Health, 2018 27

While Oncology Players Can Probably Safely Sit on Sidelines and Wait for Data, Inactivity in Gene Therapy By Ophthalmology, Hemophilia and IEM Companies May Carry Threat of Therapeutic Franchise Obsolescence Ophthalmology New York Pharm Forum, May 2018 © Defined Health, 2018 Hemophilia Inborn Errors of Mechanism (IEM) 28

Approximately 75 Products Are In Development For One Or More Inherited Retinal Dystrophies, With Gene Therapies the Leading Approach Retinitis Pigmentosa (RP) and Leber’s Congenital Amaurosis (LCA) Gene/cell therapy pipeline is competitive; but market is fragmented with numerous patient segments The eye is an ideal organ for gene‐replacement therapy given its accessibility, immune privilege, small size and compartmentalization Clinical studies have already shown that in vivo gene addition approaches can benefit specific groups of RP patients (e. g. , RPE 65 for patients with LCA Gene editing approaches are also being developed with Po. C studies focused on LCA patients with mutations in CEP 290, a gene too large to address with AAV vectors) # Products by Type Cell therapy; 9 # Products by Indication* 70 60 58 50 40 Other biologic; 12 Gene therapy; 38 Small molecule; 17 30 20 10 10 8 3 0 RP LCA Usher Syndrome Other IRD Adis R&D Insight; Clarivate Analytics Cortellis; DH Analysis; *products may be in development for more than one indication New York Pharm Forum, May 2018 © Defined Health, 2018 29

Spark Therapeutics' Luxturna, Indicated For Biallelic RPE 65‐mediated IRDs, First FDA Approved In-vivo Gene Addition Therapy Approved by the FDA In the pivotal trial, Luxturna showed statistically significant and clinically meaningful improvement following: • Primary endpoint of mean bilateral MLMT change score (patients’ ability to navigate a mobility course under a variety of specified light levels) • Gain in functional vision based on MLMT in 93% (27/29) with 72% achieving maximum improvement (to 1 lux) – no product‐related SAEs observed • 3‐year data (n=20) and 4‐year data (n=4) from Phase 3 add evidence to durability of effect; no statistically significant signs of a waning of therapeutic effect • Met two of three secondary endpoints • There were no drug‐related serious adverse events observed and no deleterious immune responses The FDA’s Advisory Committee voted 16 to 0 to recommend approval of Luxturna (Priority Review PDUFA date of Jan 12, 2018) Luxturna is indicated as a one‐time gene therapy for the treatment of patients with vision loss due to confirmed biallelic RPE 65‐mediated inherited retinal dystrophies. http: //ir. sparktx. com/static‐files/eb 8 d 4229‐ 6 ab 2‐ 48 b 9‐ 9 d 0 e‐c 1 b 1 d 604 caf 7; https: //www. genengnews. com/gen‐news‐highlights/fda‐advisory‐panel‐unanimously‐recommends‐approval‐of‐spark‐therapeutics‐gene‐therapy‐luxturna/81255043 New York Pharm Forum, May 2018 © Defined Health, 2018 30

Substantial Competition Between Advanced Therapeutics Platforms for Both Hemophilia A & B Gene therapy, other autologous stem cell therapy Preclinical(University of California Davis) Retroductal gene delivery systems Phase 1 (Genteric Inc, ) Gene therapy, in vivo, lentiviral enzyme/protein replacement therapy (Immusoft) Factor VIII gene Phase 2 restoration therapy (Tool. Gen/Seoul National Univ/K‐STEMCELL) Phase 3 genetically engineered cell strains Marketed (Sernova Corp) hemophilia A/B gene therapy (Biogen/TIGET) 2 b. FVIII gene therapy (Medical College of Wisconsin) Gene therapy, in vivo, gene editing hemophilia A gene therapy (uni. Qure) Gene therapy, in vivo, AAV hematopoietic Factor VIII gene therapy (Discovery Genomics/ Univ. of Minnesota) SB‐FVIII (Sangamo Bio. Sciences) SPK 8011 (Spark Therapeutics) GREF 8 (Greffex) Factor VIII gene therapy (Sangamo Bio. Sciences) [CELLREF] BMN 270 (Bio. Marin/UCL/ St Jude) BAX 888 (Shire/Baxalta) LG 889 (Opus Bio/Expression/ Emory) DTX 201 (Dimension/Bayer) Adis Insight; Thomson Reuters Cortellis New York Pharm Forum, May 2018 © Defined Health, 2018 31

Hemophilia A, In Particular, May be Battleground for Multiple Competing Therapeutic Platforms: Factor VIII Case ♦ Global sales of FVIII drugs are projected to grow from ~$8. 7 B to $11 B over the next 5 years ♦ Long‐acting products are expected to drive growth but disruptive innovation could change the future landscape Bispecific Antibodies: Although questions remain about the long‐term safety and durability of Roche/Chugai’s bispecific FIXa/X antibody, ACE 910 has the potential to change the management of inhibitors in the near term and could disrupt the broader hemophilia A landscape in the long term if proven to be as effective as Factor VIII replacement in the on‐demand prophylaxis treatment settings RNAi Agents: Alnylam’s ALN‐AT 3 (fitusiran), an RNAi agent designed to knock down antithrombin showed promising efficacy, safety and tolerability Phase 1 b data at WFH 2016 Gene Therapy: Several gene therapies for Hemophilia A are in development (Spark/Pfizer, Uni. Qure, Dimension/Bayer, Bio. Marin, and Shire). Bio. Marin reported encouraging data from a cohort of eight hemophilia A patients dosed with AAV 5‐based gene therapy BMN 270 in April 2016 Evaluate Pharma (Obizur and Nuwiq sales are captured in the “Other” category) New York Pharm Forum, May 2018 © Defined Health, 2018 32

Further Disruption Potential in Hemophilia: In-vivo Gene Editing Already In The Clinic • Sangamo’s IND application for ZFP Therapeutic (SB FIX) for hemophilia B and (SB‐ 525) for hemophilia A was approved by the FDA • The two hemophilia programs are the first in a platform of IVPRP assets that use intravenous AAV‐delivered ZFP/ZFNs to target the albumin locus and drive permanent expression of therapeutic proteins for a wide range of deficiency diseases, including the hemophilias, LSDs and other metabolic diseases http: //investor. sangamo. com/releases. cfm New York Pharm Forum, May 2018 © Defined Health, 2018 33

Disruption in Commercial Markets for Enzyme Replacements: Gene Therapy Approaches Also Advancing in Clinic http: //www. avrobio. com/pipeline/ New York Pharm Forum, May 2018 © Defined Health, 2018 34

A Big Pharma’s Commitment to Rare Disease May be a “Marker” for Next Up Gene Therapy Acquirers Rare Disease Portfolio (excl. oncology) of the Top 10 Pharma Companies by Source of Program & % of Portfolio Top 10 Pharma Companies External Source Internal Source % of Overall Portfolio 33 22 18 14 15 37 25 7 6 8 11 24 7 3 5 5 5 7. 6% 9. 9% 8. 3% 4. 7% 5. 1% 9. 3% 7. 3% 4. 5% 7. 1% 8. 1% (M&A, Licensing, Product Acq. ) Pfizer Novartis Roche Merck & Co Johnson & Johnson Sanofi Glaxo. Smith. Kline Abb. Vie Gilead Sciences Amgen (Organic) 1 2 Evaluate. Pharma; includes preclinical‐marketed assets full portfolio for percent rare disease calculation New York Pharm Forum, May 2018 © Defined Health, 2018 35

Japanese Pharmas Show Clear Differences in Commitment to Rare Disease Portfolio (excl. oncology) of the Top 10 Japanese Pharma Companies by Source of Program & % of Portfolio Top 10 Japanese Pharma Companies External Source Internal Source % of Overall Portfolio 13 9 4 4 3 2 2 5. 4% 2. 8% 1. 3% 5. 4% 8. 4% 6. 8% 4. 4% 7. 9% 2. 8% (M&A, Licensing, Product Acq. ) Takeda Astellas Pharma Daiichi Sankyo Otsuka Holdings Eisai Chugai Pharmaceutical Sumitomo Dainippon Pharma Mitsubishi Tanabe Pharma Kyowa Hakko Kirin Ono Pharmaceutical 10 2 8 4 6 1 (Organic) 5 1 2 2 1 Evaluate. Pharma; includes preclinical‐marketed assets full portfolio for percent rare disease calculation New York Pharm Forum, May 2018 © Defined Health, 2018 36

Allogene Deal Sees Pfizer Exit From CART and Become Passive Investor Instead https: //www. pfizer. com/news/press‐release‐detail/pfizer_and_allogene_therapeutics_enter_into_asset_contribution_agreement_for_pfizer_s_allogeneic_car_t_immuno_oncology_portfolio New York Pharm Forum, May 2018 © Defined Health, 2018 37

But With Rare Disease Set Forth as Clear Priority, Pfizer Will Very Likely be Shopping for Gene Therapies https: //www. pfizer. com/health‐wellness/disease‐conditions/rare‐disease New York Pharm Forum, May 2018 © Defined Health, 2018 38

Can Challenges to Business Model be Surmounted? 39

While All Therapeutic Platforms Face Increasing Pressure on TPPs; Advanced Therapeutics Programs Encounter Unique Challenges, Especially to Business Model Biological / Pathophysiology Understanding • Scale‐up, delivery, stability, immunogenicity • Safety – e. g. anaphylaxis, insertional mutagenesis, cytokine storm Patient Advocacy UNMET NEEDS Bio log ics Translational Medicine Biology more tractable but risk still associated with clinical translation Advanced Therapeutics all m S el ules v No olec M More favorable regulatory environment • However, innovative clinical endpoints necessary Reimbursement Does not fit nicely into pharma scalability model • Complicated IP and stacking royalties • Individualized vs. one‐size fits all Defined Clinical Endpoints Regulatory Disruptive Technologies • Involves devices and process Commercial Market Building Manufacturing: Reproducibility, scalability, high cost of goods Market access: Value‐based pricing in different payer systems • Degree of improvement – restore to normal or somewhere in between? Market Access • Durability – short effect of long term cure? New York Pharm Forum, May 2018 © Defined Health, 2018 Bioethics: Boundaries of use, testing in vulnerable populations 40

Pricing And Market Access For Gene & Cell Therapies Brand Glybera Strimvelis Kymriah Yescarta Company Indication Uni. Qure/ Chiesi Lipoprotein lipase deficiency patients who have acute and chronic pancreatitis attacks GSK Novartis Gilead/ Kite Pharma Luxturna New York Pharm Forum, May 2018 © Defined Health, 2018 cs ADA‐SCID or “bubble boy syndrome” B‐cell precursor ALL for patients <25 years Relapsed/refractory large B‐cell lymphoma, including DLBCL Confirmed biallelic RPE 65 mutation‐associated retinal dystrophy Price $1 M+ Comments • First gene therapy approved in Europe; however, none of the price setting markets provided access. HTA groups in Germany and France concluded that the benefit is insufficient to justify reimbursement. • Uni. Qure decided not to renew marketing authorization in Europe and abandoned plans for commercialization in the US $714, 000 (£ 594, 000) • Extremely rare condition affecting ~15 patients per year in Europe • Faced reimbursement and payment hurdles ‐ despite the money back guarantee and pay‐for‐performance pricing model, GSK struggled to make Strimvelis a commercial success $475, 000 • First CAR‐T therapy approved in the US • Outcomes‐based reimbursement model ‐ full payment only if the patients respond to therapy 30 days after initiating treatment $373, 000 • 2 nd CAR‐T therapy approved in the US for a much larger patient population • Has a boxed warning for cytokine release syndrome (CRS) and neurologic toxicities, thus part of a REMS program • CMS & some private insurers lack billing codes for CAR‐T treatments; Yescarta reimbursement situation still being worked out with CMS and private insurers $850, 000 or $425, 000/eye • Three innovative programs to improve access: 1) Outcomes‐based rebate linked to short‐ and long‐term efficacy; 2) Installment payment option negotiated with CMS with greater rebates tied to clinical outcomes; 3) Agreement with commercial payers for alternative contracting to “buy and bill” • Favorable for US launch anticipated based on these programs 41

Emerging Advanced Therapeutics are Likely to be Associated with Significant Payer Value Uncertainty Gene and Cell Therapies Usually “One‐ Off” treatments Promising long‐term benefits Limited follow up duration at time of reimbursement dossier submission Strong uncertainty on sustainability of effects 4 Pharma and biotech companies communicating to financial investors prices based on multiples of expensive drugs for chronic therapies – unlikely to be accepted by payers 4 Pharma and biotech companies suggesting annuity programs – may be impossible currently from a practical point of view in most health systems © Therapeutic Challenges Analysis, 2016 , Compass Strategic Consultants New York Pharm Forum, May 2018 © Defined Health, 2018 42

Luxturna Launched At $850 K With Payment Linked To Both Short‐term Efficacy (30‐ 90 Days) And Longer‐Term Durability (30 Months) Measures Spark sets off gene therapy debate with $850 K sticker on Luxturna There's a new medicine atop of pharma's global pricing charts, and it's Spark Therapeutics' Luxturna. After winning FDA approval in December, the company said Wednesday its gene therapy will cost $850, 000, or $425, 000 per eye before discounts. To soften the blow, Spark is introducing outcomes‐based deals with Harvard Pilgrim and Express Scripts affiliates—and it's in talks for more. Under those arrangements, the company won't collect full payment if its superpricey drug doesn't work. The company is also working on a proposal with the CMS that would allow payments over multiple years. “We believe that access to therapy is a shared responsibility among Spark Therapeutics, payers, health benefit providers, physicians and treatment centers. We have been working with stakeholders across the health care sector to help ensure that appropriate patients have access to a product that challenges all of the current conventions of how patients are treated, how products are delivered and how payments are handled. ” Jeffrey D. Marrazzo, CEO of Spark Therapeutics To soften the blow, Spark is introducing outcomes‐ based deals with Harvard Pilgrim and Express Breazzano said Spark is "clearly focused on moving Scripts affiliates—and it's in talks for more. Under away from this one‐time upfront payment to an those arrangements, the company won't collect annuity‐like model with payments over multiple full payment if its super‐pricey drug doesn't work. years. " But for now, those efforts are in early The company is also working on a proposal with stages, according to the analyst. Breazzano said Spark is "clearly focused on moving away from this one‐time upfront payment to an annuity‐like model with payments the CMS that would allow payments over multiple years. " But for now, those efforts are in early stages, according to the analyst. How does Luxturna's price compare to some of pharma's other superpricey drugs? The first year of Biogen's Spinraza costs $750, 000— years. Luxturna treats a rare inherited disease that can lead to blindness and works by delivering a gene called RPE 65 into a patient's retinal cells, which then produce a protein to restore vision loss. While $850, 000 is a staggering figure on its face, the price actually came in lower than a $1 million estimate by Wall Street analysts. Before the launch, Spark CEO Jeffrey D. Marrazzo said the one‐time treatment offers "a value in excess" of $1 million. In a statement Wednesday, Marrazzo said his company believes "access to therapy is a shared responsibility among Spark Therapeutics, payers, health benefit providers, physicians and treatment centers. “ To that end, the company has "been working with stakeholders across the health care sector to help ensure that appropriate patients have access to a product that challenges all of the current conventions of how patients are treated, how products are delivered and how payments are handled, " the helmsman said. But even though Evercore ISI analyst Steve Breazzano said the price came in "generally within expectations, " the company quickly ran into criticism from patient advocates. "Spark Therapeutics is charging as much for Luxturna as they think they can get away with, " Patients for Affordable Drugs president David Mitchell said in a statement shortly after the announcement. "Our system cannot handle unjustified prices like this, and the new payment models announced today are merely a way to disguise a price that is simply too high. " the med is $375, 000 for subsequent years—while Bio. Marin's Brineura, approved last year, costs $702, 000 before discounts. Both are recurring treatments versus the one‐time nature of Luxturna. Uni. Qure's Glybera, now discontinued, cost $1. 2 million in Europe, but its commercial use was limited and the drugmaker opted to stop pouring resources into marketing the drug. Spark's gene therapy approval followed FDA clearance of CAR‐T cell therapies from Novartis in August and Gilead in October. Novartis also has an outcomes‐ based contract on its Kymriah, which costs $475, 000 to treat a rare form of acute lymphoblastic leukemia. Both drugmakers plan to expand the technology into other uses. http: //sparktx. com/investors‐media/; https: //www. fiercepharma. com/pharma/spark‐prices‐gene‐therapy‐luxturna‐at‐ 850 k‐grabbing‐top‐spot‐pharma‐s‐costliest‐drugs New York Pharm Forum, May 2018 © Defined Health, 2018 43

ICER Releases Its Evidence Report On Luxturna For Public Comment At $850, 000, price for new childhood blindness gene therapy four times too high, analysis says The $850, 000 list price for a new medicine that treats a genetic form of childhood blindness is about four times too high for the value the drug provides, a nonprofit that studies the cost‐effectiveness of new drugs said Friday, though it added that the price of the drug is cost‐ effective for select patients and with certain assumptions. The report from the Institute for Clinical and Economic Review focused on the medicine Luxturna, the first‐of‐its‐kind gene therapy approved for the U. S. market and the most expensive medicine by list price. It is the latest flashpoint in the debate over how to afford an innovative medicine — in this case, a therapy that corrects a genetic mutation in people’s cells — that carries, and in some views, deserves, a pricey list cost. “While the evidence is clear therapy improves vision for patients over several years, the long‐term duration of this benefit remains unknown, ” Dr. David In its report, ICER said a cost‐effective price for Luxturna would be $153, 000 to $217, 000 — a discount of 75 percent or more. ICER cited a lack of data that Luxturna causes permanent improvements in vision as a key reason that its developer, Spark Therapeutics, should not be Rind, ICER’s chief medical officer, said in a statement. charging so much. ICER reached its suggested list price for Luxturna by assuming that a 15‐year‐old person (the average of the patients enrolled in the clinical trials) would experience improvements for a decade or two and taking into account the benefits to the health care “Assuming a 10‐ to 20‐year period of benefit, at list system. It added that when it also took into account the benefits related to education, caregiver burdens, and productivity, the drug’s list price should still be cut in half. ICER, however, did say that the drug’s list price met its standards for “cost‐effectiveness thresholds” when it price the treatment does not meet standard cost‐ analyzed treating 3‐year‐old patients. In that case, it took into account both medical and societal benefits, and assumed the vision improvements would last for the patients’ whole lives. effectiveness thresholds, even after accounting for the Ahead of Spark’s pricing announcement earlier this month, some analysts forecasted the price could reach $1 million. Between the list price coming in under those expectations and the reimbursement arrangements the company struck, some experts credited Spark with crafting a broader societal benefits improved vision has on thoughtful payment plan and picking a price that was in the range of other medicines that pushed the boundaries of what past therapies could do. The Food and Drug Administration approved Luxturna in December to treat people with a rare and progressive retinal disease caused by a mutation in the RPE 65 gene. People with the mutation can eventually go completely blind. The pricing of gene therapies like productivity and education costs. ” Luxturna has been closely watched, and raised a fascinating question: How much are we willing to pay for a cure? While Luxturna is a one‐time therapy, it does not “cure” people born with mutated RPE 65 genes; instead, it is meant to stop disease progression and restore some visual strength. But other gene therapies in pipelines could, by replacing faulty genes with functional ones, actually amount to cures. If they are able to reverse or prevent disease — and avoid all the future medical costs that accompany long‐ lasting conditions — how much is fair for the drug makers to recoup? Spark has said it is negotiating deals with health plans to repay them should patients not be successfully treated. It is also discussing allowing insurers to pay for therapy over several years instead of all at https: //www. statnews. com/2018/01/12/price‐gene‐therapy‐childhood‐blindess/? utm_source=STAT+Newsletters&utm_campaign=3098 c 86 d 3 c‐Daily_Recap&utm_medium=email&utm_term=0_8 cab 1 d 7961‐ 3098 c 86 d 3 c‐ 149648341 once. New York Pharm Forum, May 2018 © Defined Health, 2018 44

ICER Final Report: Broader Benefits of Voretigene Neparvovec to Affected Individuals and Society Provide Reasonable Long‐Term Value Despite High Price BOSTON, February 14, 2018‐The Institute for Clinical and Economic Review (ICER) today released a Final Evidence Report and Report‐at‐a‐Glance on voretigene neparvovec (VN; Luxturna™, Spark Therapeutics) for treatment of vision loss associated with RPE 65‐mediated retinal disease. Approved in Key recommendations from the roundtable discussion include: 2017, VN is the first treatment for this condition. • Manufacturers should reach out to public and private payers ahead of FDA approval to negotiate ICER's report was reviewed at a public meeting of the Midwest Comparative Effectiveness Public Advisory Council (Midwest CEPAC), where the Council innovative pricing and reimbursement strategies for high‐cost therapies like VN that are delivered unanimously voted that therapy provides a net health benefit to those affected by RPE 65‐mediated retinal disease. Results of votes on value were once but offer potentially long‐term benefits. Spark Therapeutics' development of reimbursement mixed, with the majority of the members voting that VN provided intermediate long‐term value for money. Uncertainty remains around the long‐term effectiveness of therapy, and ICER's analyses found cost‐effectiveness to far exceed commonly accepted thresholds; however, therapy's role as strategies for VN should be considered as potential best practice by other manufacturers of high the only treatment option available for an ultra‐rare condition, and as the first therapy approved in the US targeting a disease caused by mutations in a cost therapies for ultra‐rare conditions. specific gene, created special considerations that weighed heavily in many Council members' votes. • The CMS should take steps to permit private payers to use innovative payment mechanisms "Voretigene neparvovec has a very high cost, and the long‐term durability of its effect is uncertain. However, this is an effective treatment that gives without triggering Medicaid Best Price constraints. people with a serious, ultra‐rare condition a treatment option where they previously had none, " noted David Rind, MD, MSc. "Payers and other • Clinical societies, patient groups, and the manufacturer of VN should work to educate all policymakers must strike a difficult balance in judging the value of this therapy, recognizing the treatment's broader benefits to affected individuals and society while simultaneously working to maintain health insurance affordability. As an increasing number of therapies for ultra‐rare conditions optometrists and ophthalmologists about RPE 65‐mediated retinal diseases and develop referral enter the market, stakeholders must collaborate to develop new approaches to pricing and payment that can reward innovation while preserving networks to facilitate rapid diagnosis. access to high‐value care for all patients. " • Payers and the manufacturer should collaborate with retinal specialists to develop policies that promote appropriate access to genetic testing for individuals at high‐risk of treatable genetic Following the voting session during the Midwest CEPAC meeting, a policy roundtable of experts, including a physician, an individual who had received retinal diseases. treatment with voretigene, a former commissioner of rehabilitative services who also has retinal disease, and pharmacy benefit manager Policy Recommendations representatives convened to discuss the implications of the evidence for policy and practice. https: //icer‐review. org/material/voretigene‐final‐report/? utm_source=VN+final+report&utm_campaign=TD+Evidence+Report&utm_medium=email New York Pharm Forum, May 2018 © Defined Health, 2018 45

Proving Durable Benefit May Be Relatively More Critical in Ophthalmology Than in Rapidly Fatal Diseases (Such as SMA): Nightstar Example Nightstar Therapeutics, Corporate Overview May 2018 New York Pharm Forum, May 2018 © Defined Health, 2018 46

Unlike Luxturna, Ave. Xis 101 Has a Drug Pricing “Precedent” in Spinraza (nusinersen) is an antisense oligonucleotide that is designed to increase expression of the SMN protein, which is deficient in SMA FDA approval was based mainly upon an interim analysis of the multicenter, double‐blind, unpublished ENDEAR trial • Enrolled infants with SMA who were <7 months of age were randomly assigned to intrathecal nusinersen or sham treatment • In an interim analysis of 82 eligible patients, improvement in motor milestones (eg, head control, sitting, kicking in supine position, rolling, crawling, standing, and walking) as measured by the Hammersmith Infant Neurological Examination (HINE) was observed in 40 percent of patients treated with nusinersen, versus none for those who received the sham procedure Spinraza is administered by intrathecal injection; each dose is 12 mg per 5 m. L supplied in a single vial • Initiated with four loading doses; the first three loading doses are given at 14 day intervals, while the fourth loading dose is given 30 days after the third; Thereafter, a maintenance dose is given once every 4 months The cost of each dose is listed as $125, 000 • In addition, the FDA noted that data from uncontrolled, open label studies evaluating nusinersen for symptomatic patients (ages 30 days to 15 years) and presymptomatic patients (ages 8 to 42 days) were supportive of the clinical benefit as was seen in the ENDEAR trial Cure. SMA; Up. To. Date. com; https: //www. spinraza‐hcp. com/en_us/home/about/mechanism‐of‐action. html New York Pharm Forum, May 2018 © Defined Health, 2018 47

Spinraza Discussion Quickly Turned From Breakthrough Therapy To Value And Access Debate New York Pharm Forum, May 2018 © Defined Health, 2018 48

Although Spinraza Has The Potential To Change The Course Of SMA, A Number Of Ethical Challenges Revolve Around Its Use Spinal Muscular Atrophy Researchers Identify Spinraza Ethical Challenges In an article in the journal JAMA Pediatrics, they maintained that the healthcare system needs to address six issues to ensure that SMA patients “benefit from treatment, are protected from harm, and are treated fairly. ” The title of the piece is “Ethical Challenges Confronted When Providing Nusinersen Treatment for Spinal Muscular Atrophy, ” The group, led by Dr. Alyssa M. Burgart of Stanford University, said the biggest challenge is cost. Spinraza’s pricetag is $750, 000 the first year, and $375, 000 each year thereafter. A cost that hefty can make insurers reluctant to cover the treatment, the group said. It also creates the possibility of hospitals bearing partial or full costs if an insurer refuses to reimburse them. In fact, this is a major reason why some hospitals are not offering Spinraza (nusinersen) treatments, the team wrote. Availability of treatment centers, which also affects therapy allocation, is the fifth ethical challenge revolving around Spinraza. While it is possible to open more centers The third ethical challenge is dealing with limited information on Spinraza’s long‐term effectiveness. Since Spinraza trials involved small patient samples and were relatively short term, the verdict is out on whether most patients will benefit long term. It is also not clear if the improvements seen in the trials will translate into improvements in muscle strength and function when doctors treat patients. While patients and their families may be prepared to accept these with the expertise to administer Spinraza, this solution is also linked to cost. Some uncertainties, health insurers may not be. This may lead to situations in which insurers approve a treatment only if patients can prove with arbitrarily determined measurements that it is effective. Limited access to such testing may further disadvantage a patient, the team argued. In addition, there is no agreement on what a treatment benefit is. This has a bearing on a third ethical issue — informed consent. If a treatment is failing to provide benefits, a doctor may decide centers may choose not to offer Spinraza or to develop the expertise needed to that it should be dropped. Since there is no consensus on what a treatment benefit is, patients, families and physicians may find themselves holding differing views on the issue. The best way to deal with this is to discuss it before a patient starts treatment, the team contended. “Although these complex discussions occur at the bedside, institutions should ensure that clinicians [doctors] and patients have the support they need while facing prognostic uncertainty, ” they wrote. administer it, leaving just a few centers to tackle patients’ needs. “Such a system may The fourth ethical challenge is how to allocate treatment. Granting access to everyone who is eligible will likely lead to treatment delays. The question is: Who gets treatment first. As an example, doctors may need to use special procedures to administer a spinal tap drug, including sedating a patient and having them hospitalized afterward. Researchers agree that Spinraza should be started as soon as possible. Logistical obstacles could cause delays that make it less increase overall wait times and strain the participating centers in an unsustainable and effective. Since drug administration resources are limited, hospitals may need to come up with ways to decide who gets priority access to treatment. These could include allocation criteria, case by case circumstances, or even lotteries. Each method has pros and cons in terms of fairness and other considerations. unfair fashion, ” the team argued. “Patients who live far from a participating center may Availability of treatment centers , which also affects therapy allocation, is the fifth ethical challenge revolving around Spinraza. While it is possible to open more centers with the expertise to administer Spinraza, this solution is also linked to cost. Some centers may choose not to offer Spinraza or to develop the expertise needed to administer it, leaving just a few centers to tackle patients’ needs. “Such a system may increase overall wait times and strain the participating not have the resources or clinical stability to travel, creating further disequilibrium centers in an unsustainable and unfair fashion, ” the team argued. “Patients who live far from a participating center may not have the resources or clinical stability to travel, creating further disequilibrium of justice. ” A second ethical challenge is the possibility that people with similar levels of disease severity will receive different treatments because of cost. This generates “concerns for the just distribution of healthcare, ” the scientists wrote. While unequal health insurance coverage is an inherent flaw of the U. S. healthcare system, Spinraza’s enormous cost makes the problem particularly daunting. Healthcare insurers and hospitals are not the only ones bearing the cost burden, the team wrote. The lifelong cost of therapy may force families to opt out of treatment or become impoverished. The sixth ethical challenge is ensuring transparent communication between patients, families, doctors and others in the SMA community about these issues. On the one hand, patients and families need reliable information about a medical center’s care processes to make treatment decisions. This means the centers need to be up‐front about how they allocate resources. The transparency will help patients obtain Spinraza at a center that offers the most advantages for their situation. “As we pass through the initiation phase of nusinersen treatment among prevalent and newly diagnosed patients, pressure must be applied to reduce the cost and its effect on access, learn more details of medication benefit and safety, and examine different ways to initiate treatment and manage clinical workflows for this therapy, ” the researchers concluded. https: //smanewstoday. com/2017/12/20/spinal‐muscular‐atrophy‐researchers‐shine‐spotlight‐on‐spinraza‐ethical‐challenges/ New York Pharm Forum, May 2018 © Defined Health, 2018 49

Recent Published Results On AVXS‐ 101, An AAV 9‐Based Gene Therapy, Signify Potential To Offer Patients A One‐Time Durable Treatment For SMA Type 1 And Possibly Broader Subtypes Ave. Xis presented a positive interim analysis of data from 15 SMA Type 1 patients in its ongoing Phase 1 safety trial of AVXS‐ 101, a one‐time, intravenous AAV 9 based gene therapy carrying SMN complementary DNA encoding the missing SMN protein As of data cutoff, all 15 patients were alive and event‐free at 20 months, compared with survival rate of 8% in a historical cohort Of the 12 patients who had received the high dose: • a rapid increase from baseline in CHOP INTEND score followed gene delivery, with an increase of 9. 8 points at 1 month and 15. 4 points at 3 months, as compared with a decline in a historical cohort • 11 sat unassisted, 9 rolled over, 11 fed orally and could speak, and 2 walked independently AVXS‐ 101 was safe and tolerable. Elevated serum aminotransferase levels occurred in 4 patients and were attenuated by prednisolone Efficacy endpoints: • time until death or need for permanent ventilatory assistance • Comparison of CHOP INTEND scale of motor function (0 to 64) • Motor milestones in the high‐dose cohort with scores in studies of the natural history of the disease (historical cohorts) ASGCT; Ave. Xis website; J. Mendell http: //www. nejm. org/doi/full/10. 1056/NEJMoa 1706198 New York Pharm Forum, May 2018 © Defined Health, 2018 50

The Ultimate Business Model Puzzle: Given The Unique Nature Of Advanced Therapeutics, There Is Uncertainty As To How New Revenue Stage Companies Can Succeed Over the Long Term Depictive Revenue Model for a Portfolio of One-Time Treatments and Implications for Pipeline Portfolio Strategy For any particular advanced therapeutics player, especially those with potentially curative therapies, unique challenges exist to sustain growth beyond lifecycle of initial products. • For example, assume a successful launch of “one‐and‐done” curative treatment for a rare inherited monogenetic disease. Initial uptake into prevalent pool is soon tempered once “warehoused” patients are cured. Future sales come only from few very small number of newly diagnosed patients entering treatment eligibility. R&D and aggressive BD/M&A needed to support pipeline that delivers new products to new rare disease populations every 4 ‐ 5 years or less. NIGHTSTAR THERAPEUTICS Ideal scenario: Stage‐gapped development pipeline for ultra‐rare monogenetic disease (new product launched every 3 years) High unmet need, severe conditions § 6 K prevalence, 30% eligible § 300 new annual births § $1 M One‐time treatments § § Equates durable cure Rapid uptake, 4 years to peak No direct competition Evaluate. Pharma; Leerink, NIGHTSTAR THERAPEUTICS PLC: Initiating at OP; A White Knight for Retinal Dystrophies, Oct 2017 New York Pharm Forum, May 2018 © Defined Health, 2018 51

Advanced Therapeutics Companies, Even if Initially Successful, Face Unique Risks to Sustainability What if next up “curative” product: Does not support the clinical value and payers constrain access or demand high rebates? “Proof” of durable benefit not accepted by payers? Does not avoid all clinical complications, needs other support? New product launches are delayed or pipeline projects fail? Companies without balanced and full “stage gapped” pipelines are vulnerable! GENE THERAPY MONOGENE PORTFOLIO Mono. Gene 1 Mono. Gene 2 Mono. Gene 3 Mono. Gene 4 Mono. Gene 5 Mono. Gene 6 Mono. Gene 7 Mono. Gene 8 New York Pharm Forum, May 2018 © Defined Health, 2018 Mono. Gene 1 Mono. Gene 2 Year 30 Year 28 Year 26 Year 24 Year 22 Year 20 Year 18 Year 16 Year 14 ‐$500 Year Year Year Year 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 Year 12 $500 Year 10 $1, 500 $3, 000 $2, 500 $2, 000 $1, 500 $1, 000 $500 $0 Year 8 $2, 500 ($US MILLIONS) Year 6 $3, 500 GENE THERAPY MIXED PORTFOLIO Year 0 ($US MILLIONS) Year 4 • • • Year 2 Broad Indication 1 52

Key Takeaways (1) Advanced Therapeutics very clearly represent the next step in evolution of therapeutics platforms and will, in less than a decade, be as important as today’s “conventional” small molecule and biological approaches currently are to treating disease, especially rare disease. Few, if any Pharmas will play (at least over the short‐term) across all advanced therapeutics platforms (Novartis so far appears to be the notable exception). Many will move to gene therapy/editing platforms for rare and monogenic diseases as part of their larger focus on rare diseases. Celgene and Gilead have jumped into CAR‐T, presumably for different reasons (the former to expand a core business and protect against downstream disruption and the latter to improve on a fledgling start in hematological cancers). Expect interest from other companies to be limited unless more progress is made against solid tumors. If not, the “next generation“ of CAR‐T players promising less cumbersome approaches may see comparatively less interest from strategics. Indeed, Pfizer’s recent “exit” from active development of Cellectis programs is a sign of evolving views of this space by large pharma. • In any case, the market will be intensely competitive among numerous developers of more convenient and effective CAR‐Ts; the only question is how large the overall opportunity will be. Meanwhile, the Novartis acquisition of Ave. Xis is a potential game changer and a signal to all companies serious about rare disease that a gene therapy platform is a must have. Given the number of attractive late stage gene therapy programs aimed at rare disease, Novartis/Ave. Xis will almost certainly not be a one‐off. Curative therapies fit more comfortably into the more diversified revenue mix of a large pharma portfolio than as stand alone companies. New York Pharm Forum, May 2018 © Defined Health, 2018 53

Key Takeaways (2) It will be almost impossible to be serious player in rare/monogenic disease lacking a strong platform and presence in gene therapy/editing. More M&A activity by Novartis, Pfizer, and Sanofi is a near certainty as these are most committed rare disease players and will be a valuation driver. However, valuations may be tempered by a number of factors including: • Intensity of competition with otherapeutic platform approaches in more advanced diseases such as hemophilia • Continued uncertainty around commercial models, pricing/market access issues (especially around uncertain “permanence” of the effect) BD&L will be the single most important critical competency for achieving sustainability and long term value for stand‐alone “one and done” gene therapy rare disease companies as both a serially full pipeline and staged new product launches will be critical to growth. • These smaller specialist companies can and should consider portfolio diversification with the addition of “conventional” pharmaceutical products within selected therapeutic areas New York Pharm Forum, May 2018 © Defined Health, 2018 54

Pharma and Biotech M&A in Gene & Cell Therapy: What’s Next in Deal Making in the Emerging Advanced Therapeutics Space? Ed Saltzman, Executive Chairman Defined Health, a Cello Health business New York Pharma Forum 23 May, 2018 New York City, NY