MIGSYSIan Evans, GeneticsMax Musicant, SOMGrant Patterson, EPHJia Kang, Med InformaticsColin Shaw, Nursing

YBPS Case Competition November 20, 2009

Patient PopulationMarket Landscape

Mild46%

Se-vere16%

Crohn's Disease: 830,000

Moderate38%

Mild55%Mod

erate30%

Severe15%

Ulcerative Colitis: 1,217,500

Steroids

Immunomodulators

5-ASAs

Biologics

5-ASAs

Steroids

Immunomodulators

Biologics

Target MarketDrug Usage By Disease Severity

Mild Moderate Severe

Disease Severity

Mild Moderate Severe

Disease Severity GTX-001 Biologic

GTX-002 Immunomodulator

CD 78,000 (20%)

UC 76,000 (14%)

CD 117,000 (37%)

UC 108,000 (37%)

CD 50,000 (37%)

UC 70,000 (48%)

CD 87,000 (27%)

UC 52,000 (18%)

CD 58,000 (43%)

UC 47,000 (32%)

Opportunity 1: Science Behind GTX-002

Identificati

on•Comput

ational Design

In Vitro

•Kinase Assays in two T- Cell Lines

In Vivo

•Oral toxicity at 50mg/kg

•Altered GI flora

•Combo Therapy most effective

Finances GTX-002

20092010

20112012

20132014

20152016

20172018

20192020

20212022

20232024

20252026

20272028

20292030

20312032

($900,000,000)

($800,000,000)

($700,000,000)

($600,000,000)

($500,000,000)

($400,000,000)

($300,000,000)

($200,000,000)

($100,000,000)

$0

Expected Accumulated Free Cash Flows

Assumptions Outcomes% Chance of GXT-002 Going to Market 5.00% Total Possible Net Investment $523,903,222Discount Rate 8% Expected Value of Investment $471,318,890

Ramp Up Period 1 Year Existing Immunomodulator Users 504,000Discount Rate 8% Expected Market Capture 30%Plateau Customer Growth Rate 1% Expected Users 151,200Growth Rate Price 3%

Price Per Year (2020) $672 NPV ($513,615,221)IRR -8.5%Expected Total Net Revenue ($84,746,706)

Opportunity 2: Science Behind GTX-001

Mechanism of Action: mAb against 11 integrin

Identificati

on

•High Throughput Screening

•Target expression is more TH1 specific (question of use in UC patients)

In Vitro

•Abolished Interaction with Collagen

In Vivo

•IV toxicity at 6mg/kg

•Effective at 2mg/kg every other day

•Reduced inflammation at 4-6 weeks

• Released in 2004 for MS, Tysabri was then removed from market in 2005 due to cases of PML

• Reintroduced in 2005 and since restricted to smaller patient segment– To date 24 cases of PML found in Tysabri users

• GTX-001 is in the same class as Tysabri– mAb against a4-integrin– Decreases extravasation

PML (Progressive Mulitfocal Leukoencephalopathy): a rare neurological disease

Due Diligence

Finances GTX-001

Assumptions Outcomes% Chance of GXT-002 Going to Market 5.00% Total Possible Net Investment $523,903,222Discount Rate 8% Expected Value of Investment $471,318,890

Ramp Up Period 1 Year Existing Biologic Users 244,000Discount Rate 8% Expected Market Capture 20%Plateau Customer Growth Rate 1% Expected Users 48,800Growth Rate Price 3%

Price Per Year (2020) $20,159 NPV $2,139,715,323IRR 21.6%Expected Total Net Revenue $47,919,822

20092010

20112012

20132014

20152016

20172018

20192020

20212022

20232024

20252026

20272028

20292030

20312032

($2,000,000,000)

$0

$2,000,000,000

$4,000,000,000

$6,000,000,000

$8,000,000,000

$10,000,000,000

$12,000,000,000

Expected Accumulated Free Cash Flows

Recommendation: GTX-002

• Pros– A new class of kinase inhibitor

• Cons– Existing market well served by many products– Low market prices for immunomodulators– Signs of side effects in pre-clinical studies– Financial models show inviability

Recommendation: NO GO

Recommendation: GTX-001• Pros

– Large moderate and severe segments are underserved– Biologics command high prices in market– Large therapeutic window– Financial model shows significant profitability

• Cons– Similar mechanism to existing treatment (Tysabri)

• Significant medical risk associated with this class of molecules

Recommendation: NO GO

Thank You from MIGSYS

Ian Evans, GeneticsMax Musicant, SOMGrant Patterson, EPHJia Kang, Med InformaticsColin Shaw, Nursing

Tysabri, A Risky Proposition• PML in patients who have received at least

24 infusions ranges from 0.4 to 1.3 per 1,000 in MS patients

• CD patients make up only 2% of the Tysabri users

• EMEA rejected Tysabri twice in 2007

• Approved for the indication of CD in 2008• Strong warnings not to use Tysabri with PML in family history• Case Report: N Engl J Med 2005;353:362-8.

Previous FDA Alert: [issued 2/2006]The FDA has lifted the clinical hold on Biogen-IDEC's trials of natalizumab for patients with multiple sclerosis (MS). Biogen-IDEC can now resume administration of natalizumab to patients with relapsing-remitting MS who had previously been treated with the drug in clinical trials. Biogen-IDEC had previously suspended marketing of natalizumab and all further dosing of patients in on-going clinical trials. This decision was made after confirmation of one fatal case and one additional case of severely disabling progressive multifocal leukoencephalopathy (PML) in

patients receiving natalizumab for MS. A third case of PML, this one fatal, in a patient with Crohn's Disease had been identified shortly thereafter.

Pro Forma GTX-001

Launch Date Steady Sales2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

GTX-001Licensing FeeLate Stage Development CostsPromotion $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000Milestone PaymentsDistribution

Total Costs $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000

Sales $491,873,395 $983,746,790 $1,023,391,785 $1,023,391,785 $1,033,625,703 $1,043,961,960 $1,054,401,580 $1,064,945,596 $1,075,595,052 $1,086,351,002 $1,097,214,512 $1,108,186,657 $1,119,268,52410% Fee to Gastrex $49,187,339 $98,374,679 $102,339,179 $102,339,179 $103,362,570 $104,396,196 $105,440,158 $106,494,560 $107,559,505 $108,635,100 $109,721,451 $110,818,666 $111,926,852Net Revenue $442,686,055 $885,372,111 $921,052,607 $921,052,607 $930,263,133 $939,565,764 $948,961,422 $958,451,036 $968,035,546 $977,715,902 $987,493,061 $997,367,991 $1,007,341,671

Customers 24,400 48,800 49,288 49,288 49,781 50,279 50,781 51,289 51,802 52,320 52,843 53,372 53,906Price $20,159 $20,159 $20,764 $20,764 $20,764 $20,764 $20,764 $20,764 $20,764 $20,764 $20,764 $20,764 $20,764

Net Income $342,686,055 $785,372,111 $821,052,607 $821,052,607 $830,263,133 $839,565,764 $848,961,422 $858,451,036 $868,035,546 $877,715,902 $887,493,061 $897,367,991 $907,341,671

Balance of Payments ($367,313,945) $418,058,166 $1,239,110,773 $2,060,163,380 $2,890,426,512 $3,729,992,277 $4,578,953,698 $5,437,404,734 $6,305,440,281 $7,183,156,183 $8,070,649,244 $8,968,017,235 $9,875,358,906

Discount Rate 8%Plateau Growth Rate Customers 1%

3%2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

GTX-001Licensing Fee $10,000,000Late Stage Development Costs $300,000,000PromotionMilestone Payments $100,000,000 $100,000,000 $100,000,000 $100,000,000Distribution

Total Costs $310,000,000 $0 $0 $100,000,000 $0 $100,000,000 $0 $100,000,000 $0 $100,000,000 $0

Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $010% Fee to Gastrex $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Net Revenue $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Customers 0 0 0 0 0 0 0 0 0 0 0Price

NPVNet Income $2,139,715,323 ($310,000,000) $0 $0 ($100,000,000) $0 ($100,000,000) $0 ($100,000,000) $0 ($100,000,000) $0

Balance of Payments ($310,000,000) ($310,000,000) ($310,000,000) ($410,000,000) ($410,000,000) ($510,000,000) ($510,000,000) ($610,000,000) ($610,000,000) ($710,000,000) ($710,000,000)

IRR 22%

Best and Worst Case GTX-001Assumptions% Chance of GXT-002 Going to Market 5.00%Discount Rate 8%

Ramp Up Period 1 YearDiscount Rate 8%Plateau Customer Growth Rate 1%Growth Rate Price 3%

Price Per Year (2020) $26,878

OutcomesTotal Possible Net Investment $710,000,000Expected Value of Investment $400,000,000

Existing Biologic Users 244,000Expected Market Capture 50%Expected Users 122,000

NPV $9,145,777,201IRR 34.0%Expected Total Net Revenue $1,824,893,151

Assumptions% Chance of GXT-002 Going to Market 5.00%Discount Rate 8%

Ramp Up Period 1 YearDiscount Rate 8%Plateau Customer Growth Rate 1%Growth Rate Price 3%

Price Per Year (2020) $6,720

OutcomesTotal Possible Net Investment $710,000,000Expected Value of Investment $400,000,000

Existing Biologic Users 244,000Expected Market Capture 10%Expected Users 24,400

NPV ($362,449,634)IRR -0.3%Expected Total Net Revenue ($56,955,342)

20092011

20132015

20172019

20212023

20252027

20292031

($800,000,000)($700,000,000)($600,000,000)($500,000,000)($400,000,000)($300,000,000)($200,000,000)($100,000,000)

$0

Accumulated FCF

GTX-002 Pro Forma

Launch Date Steady Sales2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

Licensing FeeLate Stage Development CostsPromotion $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000Milestone PaymentsDistribution

Total Costs $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000

Sales $50,800,039 $101,600,078 $105,694,561 $109,954,052 $114,385,201 $118,994,924 $123,790,420 $128,779,174 $133,968,974 $139,367,924 $144,984,451 $150,827,325 $156,905,66610% Fee to Gastrex $5,080,004 $10,160,008 $10,569,456 $10,995,405 $11,438,520 $11,899,492 $12,379,042 $12,877,917 $13,396,897 $13,936,792 $14,498,445 $15,082,732 $15,690,567Net Revenue $45,720,035 $91,440,070 $95,125,105 $98,958,647 $102,946,681 $107,095,432 $111,411,378 $115,901,256 $120,572,077 $125,431,131 $130,486,006 $135,744,592 $141,215,099

Customers 75,600 151,200 152,712 154,239 155,782 157,339 158,913 160,502 162,107 163,728 165,365 167,019 168,689Price $672 $672 $692 $713 $734 $756 $779 $802 $826 $851 $877 $903 $930

Net Income ($54,279,965) ($8,559,930) ($4,874,895) ($1,041,353) $2,946,681 $7,095,432 $11,411,378 $15,901,256 $20,572,077 $25,431,131 $30,486,006 $35,744,592 $41,215,099

Balance of Payments ($764,279,965) ($772,839,894) ($777,714,789) ($778,756,142) ($775,809,461) ($768,714,030) ($757,302,652) ($741,401,396) ($720,829,319) ($695,398,188) ($664,912,182) ($629,167,590) ($587,952,490)

Discount Rate 8%Plateu Growth Rate Customers 1%Price Growth Rate 3%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Licensing Fee $10,000,000Late Stage Development Costs $300,000,000PromotionMilestone Payments $100,000,000 $100,000,000 $100,000,000 $100,000,000Distribution

Total Costs $310,000,000 $0 $0 $100,000,000 $0 $100,000,000 $0 $100,000,000 $0 $100,000,000 $0

Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $010% Fee to Gastrex $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Net Revenue $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Customers 0 0 0 0 0 0 0 0 0 0 0Price 0 0 0 0 0 0 0 0 0 0 0

NPVNet Income ($513,615,221) ($310,000,000) $0 $0 ($100,000,000) $0 ($100,000,000) $0 ($100,000,000) $0 ($100,000,000) $0

Balance of Payments ($310,000,000) ($310,000,000) ($310,000,000) ($410,000,000) ($410,000,000) ($510,000,000) ($510,000,000) ($610,000,000) ($610,000,000) ($710,000,000) ($710,000,000)

IRR -8.5%

Best Case GTX-002

20092011

20132015

20172019

20212023

20252027

20292031

($800,000,000)

($600,000,000)

($400,000,000)

($200,000,000)

$0

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

Accumulated Free Cash FlowsAssumptions% Chance of GXT-002 Going to Market 5.00%Discount Rate 8%

Ramp Up Period 1 YearDiscount Rate 8%Plateau Customer Growth Rate 1%Growth Rate Price 3%

Price Per Year (2020) $1,344

OutcomesTotal Possible Net Investment $710,000,000Expected Value of Investment $400,000,000

Existing Immunomodulator Users 504,000Expected Market Capture 100%Expected Users 504,000

NPV ($164,347,817)IRR 5.3%Expected Total Net Revenue ($13,795,249)