Company Presentation

November 2010

Dr Julian Gilbert

Introduction

• Acacia Pharma is a focused, cancer supportive care company– A significant, growing commercial opportunity with high unmet needs

• Experienced management team, track record of value creation• Investment from Gilde Healthcare Partners & Management• Generated a clinical pipeline with multiple, near term, value

inflection points, using proprietary in-house R&D “engine”– High probability of success, based on established drugs– High value, unmet medical need

• Investment of £6.5 million from Gilde & Management– Cash through to December 2011 delivering

• Phase I & II for APD515 (xerostomia)• Phase IIa PoC for APD421 & APD403 (PONV & CINV)• Phase IIa PoC for APD209 (cancer cachexia)

Team

• Dr Julian Gilbert – CEO– Commercial Director & Co-founder, Arakis

• SK&F, BTG, Mundipharma, Chiroscience• Dr Robert Gristwood – CSO

– CSO & Co-founder, Arachnova• Pfizer, SK&F, Almirall, Chiroscience

• Andrew Muncey – CFO– CEO, Amura

• Swiss Bank Corp, PwC, Lorantis• Dr Gabriel Fox – CMO

– Head, Global Oncology Marketing, Roche• NeXstar, Gilead

• Dr Ian Walker – Head of Project Leadership– Head of Development, Arakis

• Reckitt & Colman, Ethical, Quadrant

Focus

• Acacia Pharma is a hospital focused pharmaceutical company• Advantages of a hospital focus:

– Target areas of high unmet medical need– Be competitive (many large pharma focused on primary care)– Develop products through to the marketplace – Retain product rights, thereby value, through own sales

• Acacia Pharma has a therapeutic focus in cancer supportive care– The management of symptoms of cancer and the side effects of

treatment of cancer• This therapeutic focus provides

– Focused sales route via specialty hospital physician, the oncologist– A clear commercial opportunity with a coherent set of conditions

19981999200020012002200320042005200620070

100

200

300

400

Cancer supportive care publications

Healthier patients can tolerate higher doses of cancer therapy Improve the patients’ quality of life (QoL)

Cancer supportive care – the opportunity

Cancer supportive care – the commercial opportunity

• Significant commercial successes within cancer supportive care– Erythropoietins for cancer related anaemia (eg Aranesp, $4.4bn*) – GCSFs for neutropenia (eg Neupogen, $1.4bn)– 5HT3-antagonists for nausea & vomiting (eg Zofran, $1bn)

– Bisphosphonates for metastatic bone disease (eg Zometa, $1.2bn)– CR opioids for cancer pain (eg Oxycontin, $3bn)– IR opioids for cancer breakthrough pain (eg Actiq, $284m)

• Despite this there appear to be – Limited product opportunities in development (PharmaProjects &

Datamonitor 2007)– Few companies focused within the space

• Significant opportunity existed for Acacia to become a leading cancer supportive care company

* 30-40% sales in CSC

Discovery & development

• Discovery & development based on established drugs– Higher probability of success, more rapid development, lower cost

• Commercially led process, driven by unmet needs of the oncologist• Product differentiation (from marketed drug) and patent protection

key– Significant internal experience

• Process has been used to nominate the four clinical development opportunities:– APD209 – cancer cachexia– APD421 & APD403 – nausea & vomiting (PONV & CINV)– APD515 – xerostomia in advanced cancer patients

ConditionUnmet need

Required biology

Drug/ delivery

Patents

Cancer cachexia – market need

• Cancer cachexia is an area of enormous unmet need– Complex condition, multiple metabolic dysfunctions and cytokine

abnormalities, present in 50% of cancer patients; strong association with poorer survival and reduced QoL

• Major unmet needs exists - no approved therapy or gold standard– Physicians seek

• Increased body weight, specifically muscle mass and function• Increased appetite, normal function and fuel for increased mass

• Multiple mechanisms are required to get broad efficacy in this highly complex condition– Modulation of key cytokines– Anabolism, and preferably anti-catabolism

ConditionUnmet need

Required biology

Cancer cachexia – APD209

• Pharmacological target profile (PTP) – multifactorial pharmacology– Down-regulation of cytokines TNFα, IL-1, IL-6 and IFNγ

• Rectify abnormalities and stimulate appetite – Down-regulation of ubiquitin and caspase pathways

• Produce anabolism and anti-catabolism

• Acacia identified a product having the required pharmacological profile• APD209 is an oral combo product, based on a known drug delivered

currently by a “non-oral” route, for the new use cancer cachexia– New use and delivery provides both differentiation and IP– Sales estimated ~£300 million per annum

• Significant upside available in other muscle wasting conditions (eg frailty)

• Currently being investigated in a Phase IIa clinical study

Required biology

Drug/ delivery

Patents

APD209 – preclinical data

• APD209 tested in Yoshida AH130 hepatoma model– Seven day model which rapidly produces cachexia– APD209 increased

• Appetite (food intake)• Overall weight (body & carcass)• Muscle mass (gastrocnemius – calf muscle)

Food intake Body weight Carcass weight Gastrocnemius0

5

10

15

20

25

30

35Effect of APD209 in cachexia model

APD 209

% i

ncr

ease

vs

con

tro

l

* *

***

p<0.05*p<0.001***

***

Nausea & vomiting – market need

• Nausea & vomiting (NV) is a complex multi-pathway condition – Dopamine, neurokinin, serotonin, opioid, histamine involved

• Despite the products available on the market, a clear unmet needs still exists (MR and KOLs)– Improved efficacy, in particular

• Ability to reduce nausea• Late stage CINV• Effective against opiate induced sickness• Safe D2 antagonist for PONV

• Particular need for safe D2 antagonism following the demise of droperidol, a particularly good anti-nauseant

ConditionUnmet need

Required biology

Nausea & vomiting – APD421 & APD403

• Pharmacological target profile (PTP) generated• Identified a widely marketed, safe, oral drug, that meets the above

– APD421/APD403 appears to be a “safe droperidol”• APD421/APD403 is an IV formulation of this known drug for the new

use of nausea & vomiting– IV route is route of choice for the anaesthetist and oncologist

• Ability to formulate drug in non-invasive presentations for use at home– New use and delivery route provides both differentiation and IP– APD421 sales estimated >£200 million pa in post-operative N&V (PONV)– Similar sales estimated for APD403 in chemotherapy-induced N&V (CINV)

• Clinical proof-of-concept to be initiated 1Q2011

Required biology

Drug/ delivery

Patents

APD421 – preclinical data (PONV)

VEHICLE 3mg/kg 6mg/kg 12mg/kg0

10

20

30

40

50

APD421 vs morphine challenge

Retches Vomits Emesis periods

• APD421 tested in gold standard ferret model– Morphine (a risk factor for PONV) used as emetogen– Significant anti-emetic effects seen in this challenging model

APD403 – preclinical data (CINV)

VEHICLE 0.2mg/kg 0.6mg/kg 2mg/kg 6mg/kg Droperidol 3mg/kg0

10

20

30

40

50

60

70

80

90

APD403 vs cisplatin challenge

Retches Vomits Emesis periods

• APD403 tested in gold standard ferret model– Cisplatin (highly emetogenic chemotherapy) used as emetogen– Significant anti-emetic effects seen at very low doses

Xerostomia – market need

• Xerostomia is dry mouth due to change in composition or amount of secreted saliva– Discomfort, difficulty eating, dental caries and infection

• Up to 80% of advanced cancer patients suffer from the condition primarily associated with chemo & concomitants (MR and KOLs)– No registered treatment– Systemic salivary stimulants used off label

• High side effect and high tablet burden– Patient and physician seeks local treatment

• Local salivary stimulation required– Targeting the local salivary glands which are responsible for production of

mucins and mouthfeel

ConditionUnmet need

Required biology

Xerostomia – APD515

• Pharmacological target profile (PTP) generated– Salivary stimulant with appropriate physical chemistry for local delivery

• Identified a marketed, oral drug, that meets the above criteria• APD515 is an optimised buccal formulation of this known drug for

the new use of xerostomia in advanced cancer– Buccal delivery meets physician and patient requirements– New use and delivery provides both differentiation and IP– Sales estimated >£120 million per annum in initial indication– Significant upside in hospital - early cancer, head & neck, Sjögren's, but

also in the general geriatric primary care market• Phase I to be initiated 4Q2010 with Phase II starting 2Q2011

Required biology

Drug/ delivery

Patents

APD515 – preclinical data• APD515 tested in rabbit model (similar physiology to humans)

– Up to five fold increase in salivary flow for duration of experiment (2hrs)

Milestones to the end of 2011

Product opportunity Value adding milestone Date

APD209 - cachexia

Complete Phase II PilotInitiate licensing plan

Mar 2011May 2011

APD421 & APD403- nausea & vomiting

Initiate Phase II PoC in cancer ptsComplete Phase II PoC

Jan 2011Mar 2011

APD515 - xerostomia

Initiate and complete Phase I PKInitiate Phase II dose rangingComplete Phase II dose ranging

Dec 2010Jun 2011Oct 2011

APD421- PONV

Initiate Phase II dose ranging*Complete Phase II dose ranging

Jun 2011Dec 2011

* Subject to further funding

Exit opportunities

• Acacia Pharma provides investors with a number of exit opportunities– Trade sale based on cancer supportive portfolio at end of Phase II (2012)

• Valuations could be up to £150m at the end of Phase II (based on the sum of heavily discounted NPVs)

– Divestment of specific products at the end of Phase II (PanGenetics model)• Value linked to project’s NPV, we know there is an appetite for our projects

– Other exit options exist• Exit post Phase III - substantially improved valuation, but more time and more

investment required• IPO, not currently available, but our model supports this (late stage pipeline with

opportunity to sell in-house)

• Key is to provide Board with options– Management experienced in deal doing– Significant number of companies are interested in the space– Portfolio lends itself to having different options available

Summary

• Focused cancer supportive care company with a leadership position in the area

• Lower risk development business model, that delivers product opportunities of high value in a cash efficient manner

• Experienced management team supported by appropriate external experts

• Supportive investor base• Pipeline comprising four clinical stage developments

– Rapid milestone achievement• Commercially attractive products providing the opportunity to

deliver significant return to stakeholders