May 2009

The anatomy of the Financial Crisis

1

Danske Markets Corporate Finance

Leading Nordic investment banking franchise

Corporate Finance offers a wide range of value-adding investment

banking services focused on:

Mergers & acquisitions

Divestments

Equity capital market transactions

Long-term client relationships with Nordic and international

companies, private equity firms, governments and institutional

investors

We identify and add long-term value for clients:

Deep knowledge of the Nordic markets in combination with the broad platform of Danske Bank

Extensive transaction experience

Innovative solutions and outstanding execution

More than 50 professionals based in Copenhagen, Helsinki, Oslo and Stockholm

International M&A and ECM partnership networks

Introduction

2

Danske Markets

More than Corporate Finance

Acquisition & Leveraged Finance

Rating AdvisoryDebt Capital Markets

Equities & Research Trading Financial Markets

Corporate Finance

Equity Capital Markets

Initial public offerings (IPOs) Follow-on offerings Private placements Privatisations Block trades Share buybacks

Mergers & Acquisitions

Exclusive sales and divestitures Acquisitions Mergers and restructuring Public takeovers Private equity and venture capital

transactions Defence advisory Fairness opinions Auction processes

3

Danske Markets is a leading investment bank in the Nordic region

Mergers & Acquisitions (M&A) and Equity Capital Markets (ECM)

Danish M&A sell-side advisory 2004-2008 by €m volume

We build client relationships through continuous dialogue with both existing and future clients, and work in partnership with our clients to achieve their strategic goals

Sources:Mergermarket; Advising Target/Seller; Completed deals in Denmark since 1/1/2004;Dealogic; Completed deals as bookrunner since 1/1/2004; Values apportioned; Excluding investment management companies and listings on First North

Danske Markets ranks #1 by value in both M&A and ECM among Nordic investment banks

Rank Adviser No. of deals Value (€m)

1 Goldman Sachs 5 16,261

2 Danske Markets 28 13,857

3 Nordea 15 7 ,836

4 Dresdner Kleinwort 4 5 ,530

5 Deutsche Bank 6 5 ,197

6 Credit Suisse 5 4 ,987

7 Carnegie 27 4 ,575

8 JPMorgan 9 4 ,430

9 Deloitte 25 3 ,835

10 Morgan Stanley 7 3 ,716

Danish ECM transactions 2004-2008 by €m volume

Rank Bookrunner No. of deals Value (€m)

1 Danske Markets 21 2 ,921

2 Nordea 12 1,948

3 Morgan Stanley 3 1,448

4 Lehman Brothers 2 1,362

5 BNP Paribas 1 1,118

6 Goldman Sachs 4 852

7 ABN AMRO 6 781

8 Citi 2 632

9 SEB Enskilda 7 507

10 FIH Partners 3 311

4

Select healthcare & biotech transactions by Danske Markets

Overview of notable biotech and healthcare related offerings in which Danske Markets has recently participated:

The leading investment bank in Nordic Health Care offerings

Unparalleled track record within healthcare, pharmaceutical & biotech companies

DKK 6.0 billion

Buyback ofLundbeck sharesJoint Bookrunner

DKK 91 million

Rights issue of Pharmexa sharesSole Bookrunner

DKK 409 million

Rights issue of LifeCycle Pharma sharesJoint Bookrunner

DKK 771 million

Rights issue of NeuroSearch sharesGlobal Coordinator

DKK 64 million

Private placement of new Pharmexa sharesJoint Bookrunner

DKK 557 million

IPO ofLifeCycle PharmaJoint Bookrunner

DKK 360 million

Offering of primary TopoTarget sharesJoint Bookrunner

DKK 400 million

IPO of ExiqonSole Bookrunner

DKK 397 million

Rights issue of NeuroSearch sharesGlobal Coordinator

DKK 90 million

Placing of NeuroSearch shares

Joint Global

Coordinator

SEK 1.5 billion

Rights issue of Getinge sharesSole Lead Manager

SEK 1.5 billion

Rights issue of Meda sharesSole Lead Manager

5

Overview of notable biotech and healthcare related offerings in which Danske Markets has recently participated:

Amount undisclosed

Sale of Carmetec to NNEFinancial Adviser

Select healthcare M &A transactions by Danske Markets

... and is a leading investment bank in Health Care M&A

Unparalleled track record within healthcare, pharmaceutical & biotech companies

SEK 875 million

Acquisition of Carlsson Research by NeuroSearchFinancial Adviser

DKK 108 million

Acquisition ofApoxisFinancial Adviser

DKK 4.4 billion

Public takeover of Radiometer by Danaher Securities Adviser

SEK 158 million

Public offer for Diffchamb by RaisioFinancial Adviser

EUR 210 million

Acquisition of Tamro by Phoenix Pharmahandel Financial Adviser

EUR 105 million

Acquisition of Orion by Kronans DroghandelFinancial Adviser

EUR 125 million

Instrumentarium’s sale of its optical retail division to PearleFinancial Adviser

EUR 80 million

Schering’s divestment of Leiras to NycomedFinancial Adviser

EUR 175 million

BioTie Therapies’ merger with Contral Pharma and CarbionFinancial Adviser

Amount undisclosed

Acquisition of 51% stake in Meddoc by RemediumFinancial Adviser

Amount undisclosed

Sale of AB BIODISK to bioMérieux S.A.Financial Adviser

6

The anatomy of a financial crisis and consequences for biotech

Why is this relevant for biotechs ? What will happen next ?What is going on ?

Credit crisis

Re-financing crisis

Liquidity crisis

Earnings crisis

Credibility crisis

Share crisis

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

Jan

-01

Jul-

01

Jan

-02

Jul-

02

Jan

-03

Jul-

03

Jan

-04

Jul-

04

Jan

-05

Jul-

05

Jan

-06

Jul-

06

Jan

-07

Jul-

07

Jan

-08

Jul-

08

Jan

-09

Ind

ex m

ark

et c

ap

dev

elo

pm

ent

20

01

=1

00

0

5

10

15

20

25

30

35

40

45

P/E

Market cap. development P/ E

T

tt

to

WACC

FCFNPV

1 1

95 100 10186

6755 53 49 44 43

89 85 84

87

72

67 67 7167 62

0

20

40

60

80

100

120

140

160

180

200

Q4 2

006

Q1 2

007

Q2 2

007

Q3 2

007

Q4 2

007

Q1 2

008

Q2 2

008

Q3 2

008

Q4 2

008

28/0

4/2009

DK

K b

n

Rest of EU 5 largest companies

Upstart &

Venture

IPO hopefuls

Listed

Companies

7

Healthcare pricing development what happening

Jan 01 –Jul 02

Average PE 30X

Increasing Earnings

Jul 02 .- Jan 07

Average PE at 22X

Increasing earnings

Jan 07 – Jul 08

Average PE at 18X

Zero earnings growth

Jul 08- now

Average PE at 12X

Declining earnings growth

Highlights MSI EU Healthcare P/E Index

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

Ja

n-0

1

Ju

l-0

1

Ja

n-0

2

Ju

l-0

2

Ja

n-0

3

Ju

l-0

3

Ja

n-0

4

Ju

l-0

4

Ja

n-0

5

Ju

l-0

5

Ja

n-0

6

Ju

l-0

6

Ja

n-0

7

Ju

l-0

7

Ja

n-0

8

Ju

l-0

8

Ja

n-0

9

Ind

ex

ma

rket

ca

p d

evelo

pm

en

t 2

00

1=

10

0

0

5

10

15

20

25

30

35

40

45

P/E

Market cap. development P/ E

8

Price development since 2007 – anatomy of a crisis

Jan -07 – Dec 07

Equities decline

Bonds increase slightly

Jan 08 - Jul 08

Equities decline

Bonds increase

Aug 08- Dec 08

Equities free fall

Bonds decline

Jan 09 – now

Equities flat

Bonds increase

Highlights Share price development (1/1/2007 – Today)

0

25

50

75

100

125

150

Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09

Jan 0

7 =

Index 1

00

OMX COPENHAGEN 20 INDEX NASDAQ 100 STOCK INDX

FTSE 100 INDEX NORDIC GOVERNMENT BONDS

9

European biotech – market value development

Value under pressure

Full group has fallen 43%

Top Five companies has fallen 30%

Rest has fallen 56%

1.1.07 4% of companies has MC below1 bn DKK

Now:47% has MC below 1 bn DKK

Approximately 30% of companies trading or below cash position

Conclusions

Market Cap. as of 28/04 2009 (DKKbn)

7.9

7.2

3.7

3.4

3.4

2.5

2.3

2.3

2.1

1.4

1.4

1.3

1.1

1.1

0.9

0.8

0.8

0.8

0.6

0.6

0.5

0.5

0.4

0.4

0.3

0.2

0.1

0.1

0.1

0.1

0.1

0.7

0.4

0.3

0.3

0.6

1.3

1.9

3.2

4.8

9.7

Acthelion

Genmab

Crucell

Intercell

Stallergenes

Basilea

ALK -Abello

Jerini

Nicox

Transgene

Morphosys

Biovitrum

Active Biotech

Thrombogenics

AntiSoma

Bavarian Nordic

Prostrakan

NeuroSearch

Medigene

Galpagos

Devgen

Santhera

Medivir

Karo Bio

Orexo

ExonHit

PhotoCure

LifeCyclePharma

Evotec

Exiqon

Renovo

GPC Biotech

Pharming group

Innate

Wilex

Cytos

TopoTarget

Alizyme

Vernalis

Arpida

BioXell

Pharmexa

33.7

Market cap European biotech (DKKbn)

95 100 10186

6755 53 49 44 43

89 85 84

87

72

67 67 7167 62

0

20

40

60

80

100

120

140

160

180

200

Q4 2

006

Q1 2

007

Q2 2

007

Q3 2

007

Q4 2

007

Q1 2

008

Q2 2

008

Q3 2

008

Q4 2

008

28/0

4/2009

DK

K b

n

Rest of EU 5 largest companies

Market Cap. as of 01/01 2007 (DKKbn)

9.9

6.0

10.0

14.8

1.7

2.2

3.0

3.9

2.6

2.1

4.3

1.9

1.8

1.6

2.5

1.5

0.7

1.1

1.6

2.6

2.8

1.2

2.8

5.3

3.1

2.4

1.6

1.6

3.2

1.5

0.9

16.0

3.8

7.4

2.4

4.7

1.3

1.4

1.5

3.0

1.9

Acthelion

Genmab

Crucell

Intercell

Stallergenes

Basilea

ALK -Abello

Jerini

Nicox

Transgene

Morphosys

Biovitrum

Active Biotech

Thrombogenics

AntiSoma

Bavarian Nordic

Prostrakan

NeuroSearch

Medigene

Galpagos

Devgen

Santhera

Medivir

Karo Bio

Orexo

ExonHit

PhotoCure

LifeCyclePharma

Evotec

Exiqon

Renovo

GPC Biotech

Pharming group

Innate

Wilex

Cytos

TopoTarget

Alizyme

Vernalis

Arpida

BioXell

Pharmexa

33.2

10

Why is Biotech valuations declining

WACC = Equity cost + debt cost

= (risk premium*beta+risk free rate)*equity ratio +

(risk premium on debt+risk free rate) * debt ratio

NPV formula

Free cash flow (DKKm)

Above example was valued at DKK 1.9 bn with a WACC of 10%

In the meantime equity beta and risk premium on debt have risen from 1.6 to 2.0 and 200 bps to 500 bps respectively – imposing a new WACC of 12.5%

The value of the company with the new WACC is DKK 1.4 bn – a decrease of 26%

Illustrative example – Biotech Company

As WACC decreases NPV increase and vice versa

During the financial crisis both risk premium and beta have increased – leading to a higher WACC

Especially a problem for valuations of companies with long horizon to positive cash flows (such as biotech companies), as cash flows will be discounted more

WACC impact on NPV

T

tt

to

WACC

FCFNPV

1 1

-19

-100

-48.1

2558

137

227

381 394

2006R 2007F 2008F 2009F 2010F 2011F 2012F 2013F 2014F

11

European biotech

0%

20%

40%

60%

80%

100%

Market Cap.

28/ 04/ 09

(DKK bn. 105)

Cash posit ion

Q1 2009

(DKK bn. 19)

Cash Burn

2008

(DKK bn. 10)

Share turnover

04/ 09

(liquidity)

Rest

Top 5

Market Cap. as of 28/04 2009 (DKKbn)

7.9

7.2

3.7

3.4

3.4

2.5

2.3

2.3

2.1

1.4

1.4

1.3

1.1

1.1

0.9

0.8

0.8

0.8

0.6

0.6

0.5

0.5

0.4

0.4

0.3

0.2

0.1

0.1

0.1

0.1

0.1

0.7

0.4

0.3

0.3

0.6

1.3

1.9

3.2

4.8

9.7

Acthelion

Genmab

Crucell

Intercell

Stallergenes

Basilea

ALK -Abello

Jerini

Nicox

Transgene

Morphosys

Biovitrum

Active Biotech

Thrombogenics

AntiSoma

Bavarian Nordic

Prostrakan

NeuroSearch

Medigene

Galpagos

Devgen

Santhera

Medivir

Karo Bio

Orexo

ExonHit

PhotoCure

LifeCyclePharma

Evotec

Exiqon

Renovo

GPC Biotech

Pharming group

Innate

Wilex

Cytos

TopoTarget

Alizyme

Vernalis

Arpida

BioXell

Pharmexa

33.7

Top five has 58% of market cap, 50% of Cash, 50% Cash burn and 75% of share trading

50% of the companies has less than 40 DKK in monthly trading volume in the share

50% of the companies has less than 230 DKK in cash

Those who have shall get more……..

12

European biotech – Raising public money

EU biotech sector – now reaching maturity

0

20

40

60

80

100

120

140

160

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Num

ber

of lis

ted c

om

panie

s

0.0

1.0

2.0

3.0

4.0

5.0

6.0

EU

R b

n. r

ais

ed

EU companies Danish companies EUR bn. raised

?Phase I Phase II Phase III

The profile of the IPO hopefull

There are approximately 150 public biotech in Europe today compared to 20 in 20 in 1999

Cash needs have increased

There are several companies with phase III programmes

Several companies are profitable/getting close to profitability

Increased competition for the biotech money

Raising money more competitive than ever

13

Consequences for biotech

IPO Hopefuls Listed CompaniesUpstart & Venture companies

Cash is scarce

Venture financing market is facing a structural crisis

The trade sale exit will be the exit for more than 90% of start ups

Focus on asset development instead of company building

Be realistic: is an IPO achievable and attractive exit for investors?

Conserve cash & Focus on core value

Build company – bloody big is beautiful

Go public at first opportunity

Raise truckloads of cash: Limit Overhang Ensure Share Liquidity Financial Strength

Conserve cash

Focus on partnerships

Deliver on promises

Divest non core activities

Grow the company – consolidate

Prepare to raise cash at first window opening Limit overhang Ensure Share liquidity Financial strength

Consolidation needed: Larger companies:

Stronger pipelines

More efficient use of capital

Strengthen management

Strengthen cash position

Strengthen liquidity and shareholder base