a

A View of the Public Markets & Exit TrendsJoe Gilliam, Managing DirectorHealthcare Investment Banking

J.P. Morgan

2011 2012 2013 2014 2015 2016

10%

15%

39%

23%

5%

2%

Healthcare

Healthcare sector performance 2016YTD

#1 #2 #1 #1 #2 #5Sectorperformance

Source: FactSet as of 09/23/16 1

Healthcare sector returns have been exceptional…

… until the late 2015-2016 pullback…

Energy

Telecom

Utilities

Info. Technology

Materials

Industrials

Transportation

Consumer Staples

Consumer Disc.

Healthcare

Financials

S&P 500

16.0%

13.8%

13.1%

11.1%

9.6%

8.9%

7.6%

5.4%

2.4%

0.1%

(0.3%)

6.1% HMOMedtechS&P HCCROFacilitiesPharmaBiotech

(NBI)

25.7%

10.9%

1.9% 3.5%

(6.9%)

(13.0%)(11.4%)

2016YTD healthcare subsector performance 2016YTD S&P sector performance

2Source: FactSet, as of 09/30/16

Source: EPFR Global as of 10/04/20163

Q3'15 Q4'15 Q1'16 Q2'16 Q3'16(20)

0

20

$5

($1)

($13)($11)

($3)

Healthcare fund flows ($bn)

… leading to fund outflows

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD

50.5

32.5

22.3 27.1

33.6 31.4

48.4 50.3

14.4

25.1 28.9

31.6 29.8

47.5

64.4

97.1

20.4

As a result healthcare public equity offerings have slowed significantly since peaking in 2015…

Equity offering volume ($bn)

26.4% 4.7% 20.5% 15.9% 15.1% 5.6% 43.4% 18.6% 30.0% 14.3%% IPOs 21.8% 10.5% 15.7%26.5%32.6%22.7%22.5%

Source: Dealogic

4

…and a substantial revaluing of biotech IPOs has occurred…

Post-money market cap at IPO ($mm) Proceeds raised ($mm) Valuation step-up at IPO

$81mm$61mm

$159mm

$92mm

$117mm

$75mm

1.5x

0.8x

2.8x

1.2x1.8x

1.0x

25th percentile

75th percentile

Median

January – August 2015 (n = 24) September 2015 – August 2016 (n = 29)

(39%) (47%)

$210mm $198mm

$557mm

$449mm

$390mm

$293mm

(25%)

Source: Company filings, Dealogic, Pitchbook as of 09/30/2016 for biotech IPOs >$50mm

5

2015 2016 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16

32% 32%18%

29% 27%

59%

33% 36%

15%

39%

62%

41%

44%

31%

36%

67% 60%

70%

29%

5%

41%27%

42%

5% 4%

15%

Below

Within

Above

… but after the sustained lull, IPO activity & performance levels have begun to pick up

Above/Below/Within filing range1

6

Source: Dealogic, Bloomberg and FactSet as of 09/16/16. Excludes deals <$50mm, CLEFS, SPACs. Median Offer/30-day represents offer/current for those IPOs that have not reached 30 days 1 By number of deals. Note: 6 SPAC IPOs have priced in 2016YTD for $2.0bn in total proceeds

Offer/30-day% above offer

41% 82% 32% 40% 31% 64% 100% 80% 77%13% 5% 9% 15% 10% 16% 16% 1% 25%

Putting the pullback in context for biotech…

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20160%

500%

1000%

1500%

2000%

2500%

3000%

122%

907%

Biotech indices (BTK and NBI) vs S&P 500 since 1997

Source: FactSet as of 09/19/2016

StagnationThe Genomics

revolutionA volatile

marketBiotech needs

to deliverGaining

momentumInnovation rewarded

A volatile market

2,740% increase over

time to peak

BTK NBI S&P500

7

Feb. trough(40%) / 209

1978%

… and Medtech

FV / EBITDA FV / EBITDA FV / Revenue

10.1x 10.3x

5.0x

12.9x

12.1x

4.6x

14.0x

13.1x

4.3x

Historical (2011-2015 avg) 2015 Avg Current (Last 1-month avg)

Median forward multiplesStock price performance since Aug 2015

Large cap Mid cap Small cap

Source: J.P. Morgan; Dealogic and FactSet as of 08/19/2016Large-cap medtech index includes JNJ, MDT, ABT, SYK, BDX, BSX, BAX, ISRG, ZMH, EW, SN-GB, BCR, HOLX;Mid-cap medtech index includes XRAY, TFX, STE, HRC, CMN, GMED, IART, NUVA, MASI, HAE, HYH, CNMD, MMSI;High-growth medtech index includes PODD, WMGI, NVRO, NXTM, ELGX, SPNC, INGN, MDXG, XENT, GKOS, NVDQ, KTWO, CFMS, TNDM, ENTL, GI

08/15 10/15 01/16 03/16 06/16 08/16

60%

70%

80%

90%

100%

110%

120%

130%

4.4%5.0%

12.2%15.5%

Mid Cap Medtech Small Cap MedtechS&P 500 Large Cap Medtech

8

2 year performance of ophthalmic sector participants

Relative stock price performance

+8% +118% +25% +15% +14%Source: FactSet as of 10/06/161 Ophth index includes Aerie, Alimera, Avalanche, Clearside, Cooper, Eleven, Glaukos, Inotek, Ocular, Ophthotech, QLT, Santen, Spark, STAAR and ThromboGenics2 Diversified / Ophth includes Abbott, Allergan, Bayer, Merck, Novartis, Pfizer, Regeneron, Shire and Valeant3 Return since June 2015 IPO

3

9

Oct-14 Feb-15 Jul-15 Dec-15 May-16 Oct-1680%

90%

100%

110%

120%

130%

140% S&P 500 Ophth Diversified / Ophth

1

212%

10%

(9%)

2

Ophthalmology IPO activity

2006 2008 2010 2014 2016

(withdrawn)04/21/10

$72 / $34207/06/06

€35 / €103

2012

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016YTD

7493

931

65 50 39

83

157 144

66

Healthcare IPOs priced / year (2006 to present)1

Source: Dealogic, FactSet, Company filings1 Includes global healthcare IPOs >$15mm

Date priced / Size / Market value at IPO (in $ millions):

(withdrawn)

09/24/13$192 / $687

10/25/13$67 / $228

07/24/14$75 / $267

07/30/14$117 / $363

02/05/14$57 / $154

06/24/15$124 / $563

01/29/15$185 / $540

02/17/15$40 / $95

10

06/01/16$50 / $150

M&A has remained the primary exit path for Medtech while biopharma M&A activity has picked up with cooling IPO market

M&A transactions 2006 – 2016YTD

Source: Dealogic, EvaluatePharma, press releases, public filingsNote: Based on US targets only and excludes deals <$50mm

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016YTD0

10

20

30

40

50

60

70

3427 27

23 25 28

1721

18

36

25

49 51

32 36

53 5245 46

5046

31

Biopharma Medtech

2015 – 2016YTD ophthalmology M&A

September ‘15 $300mm + undisclosed contingent

11

September ‘16 $4,325mm

$225mm + undisclosed contingentJuly ‘16

February ‘16 Undisclosed terms