Global Biotechnology

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS BEYOND INFORMATION®

Client-Driven Solutions, Insights, and Access

18 July 2014

Americas/United States

Equity Research

Biotechnology (Biotechnology (US)/Biotechnology & Biopharmaceuticals

(Europe)) / MARKET WEIGHT

Global Biotechnology CATALYST ALERT

Q2 Earnings Preview: Pipelines And Domain

Domination An Increasing Focus

Quick reference Q2 preview summaries for our coverage universe included in this document: The CS biotech team covers 50 companies or 86% of the sector’s market-cap (of the Top 100 companies Exhibit 2-Exhibit 3); we provide an earnings calendar for the Top US/EU Biotech and Pharma companies (Exhibit 17-Exhibit 18). Themes going into Q2 reporting season: Large Cap growth still central to sector performance but focus on “Domain Domination” and concomitant post 2020 pipeline impact increasing. The biotech sector has seen notable volatility YTD – starting the year by continuing in its #1 (for 4

th year in a row)

spot vs. other major sectors, but falling to the worst performing sector in March as the drug pricing debate impacted performance. The rally in the sector since March has principally been driven by the market exploiting the “market inconsistencies” toward growth and using large cap biotech as the principal tool (in line with our thesis detailed in 4

th June sector review - LINK) to bring the

sector back to the #4 position (Exhibit 5-Exhibit 6). As such we still view our long standing “generalist GARPy Inflows” hypothesis as intact (LINK). It is notable that FY14 top/bottom-line growth for PE; Biotech 38%/76% for 20x vs. S&P500 3%/8% for 17x (Exhibit 11) and long term growth/valuation matrices are just as compelling (Exhibit 10). Notwithstanding the above argument for continued performance based on near/medium term growth, we note that much of conversations with investors recently has been focused on longer term growth prospects for LC biotech: BIIB – anti-lingo, GILD – “what's next?” (after HCV), CELG – GED0301/MOR202 (ok self-serving! – LINK) and AMGN – PCSK9/Sclerostin. Linked to this, our conversations around “Domain Dominance” in the sector (LINK, LINK) continue to increase. Key picks in sector: Large Cap: CELG and BIIB; SMID: PTCT, CLVS, MDVN.

Exhibit 1: 2014 YTD Biotech (dark blue) vs. major sectors

Source: Company data, Credit Suisse estimates – see Exhibit 5 for granularity

Research Analysts

Ravi Mehrotra PhD

212 325 3487

[email protected]

Jason Kantor, PhD

415 249 7942

[email protected]

Lee Kalowski

212 325 9683

[email protected]

Koon Ching PhD

212 325 6286

[email protected]

Jeremiah Shepard, PhD

415 249 7933

[email protected]

Anuj Shah

212 325 6931

[email protected]

https://plus.credit-suisse.com/u/kY6qRI

https://plus.credit-suisse.com/u/I4Amdy

https://doc.research-and-analytics.csfb.com/docView?language=ENG&source=ulg&format=PDF&document_id=1034225401&serialid=iNhN3ThS8yavRQyLsdbVzS6NMA0Vt6KzroxJLnh83rg%3d

https://plus.credit-suisse.com/u/nT7Xfm

https://plus.credit-suisse.com/r/wgU2gQ

18 July 2014

Global Biotechnology 2

Price Price Rating* Target Price Year EPS EPS FY1E EPS FY2E EPS FY3E

Company ccy 17 Jul 14 Prev. Cur. Prev. Cur. End Ccy Prev. Cur. Prev. Cur. Prev. Cur.

Amgen Inc. (AMGN) US$ 115.39 — N — 125.00 Dec 13 US$ — 8.17 8.39 8.47 8.60 8.68

Biogen Idec (BIIB) US$ 299.29 — O — 400.00 Dec 13 US$ — 11.42 14.06 13.91 16.50 16.36

Celgene Corp. (CELG) US$ 83.13 — O — 112.50 Dec 13 US$ — 3.59 4.85 4.77 6.37 6.29

Corcept Therapeutics (CORT) US$ 2.33 — N — 2.00 Dec 13 US$ — (0.46) — (0.09) 0.24 0.25

Enanta Pharmaceuticals (ENTA)

US$ 37.88 — O — 43.00 Sep 13 US$ — 0.84 5.85 5.87 2.87 2.88

InterMune (ITMN) US$ 40.59 — N — 33.00 Dec 13 US$ — (2.34) — (1.56) — 0.36

Ironwood Pharmaceuticals (IRWD)

US$ 13.33 — O — 16.00 Dec 13 US$ — (1.03) — (0.20) — 1.02

Receptos (RCPT) US$ 34.49 — O — 58.00 Dec 13 US$ — (3.76) — (0.06) — (6.40)

Sucampo Pharmaceuticals (SCMP)

US$ 6.11 — N — 8.00 Dec 13 US$ 0.35 0.16 0.51 0.38 0.54 0.43

United Therapeutics Corp (UTHR)

US$ 89.74 — N — 75.00 Dec 13 US$ — 7.15 — 7.99 — 8.68

XenoPort (XNPT) US$ 4.27 — O — 7.00 Dec 13 US$ — (1.34) — (1.42) — (1.24)

*O – Outperform, N – Neutral, U – Underperform, R – Restricted [V] = Stock considered volatile (see Disclosure Appendix).

Source: Company data, Credit Suisse estimates.

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Exhibit 2: US/EU Biotech Market Cap Ranking (1-50)

Mkt

Cap

Rank

Mkt Cap

in $M Ticker Company name CS Rec.

Current

Price CS TP 1D Perf 1M Perf 3M Perf 12M Perf YTD Perf

Perf.

Since Feb

24th Peak

Short Interest

(% of

Outstanding) Therapeutic Area Lead Asset

1 133,604 GILD GILEAD OUTPERFORM $87 $110 -2% 9% 24% 51% 16% 4% 6.1% HIV/HCV Diversified

2 89,109 AMGN AMGEN NEUTRAL $118 $125 1% 1% 2% 13% 3% -6% 1.1% Diversified Diversified

3 72,047 BIIB BIOGEN IDEC OUTPERFORM $304 $400 -3% 0% 5% 35% 9% -12% 1.3% CNS Diversified

4 68,668 CELG CELGENE OUTPERFORM $86 $113 -1% 8% 22% 26% 2% 5% 1.9% Hem/Onc Diversified

5 31,404 ALXN ALEXION NEUTRAL $159 $174 -1% -1% 6% 46% 19% -14% 1.8% Rare Diseases Soliris

6 30,882 REGN REGENERON OUTPERFORM $306 $340 -2% 1% 3% 14% 11% -12% 3.9% Diversified Eylea

7 22,871 VRTX VERTEX NEUTRAL $97 $94 0% 47% 51% 13% 30% 15% 2.8% Cystic Fibrosis Kalydeco, VX-809

8 14,626 ATLN-VX ACTELION OUTPERFORM CHF 109 CHF 125 -1% -2% 27% 81% 45% 22% PAH Macitentan, Tracleer

9 8,226 BMRN BIOMARIN OUTPERFORM $56 $73 -2% -7% -7% -10% -20% -31% 3.3% Rare Diseases Base business and Vimizim

10 7,887 INCY INCYTE $47 -3% -15% 6% 109% -7% -30% 5.5% Oncology/Inflammatory Jakafi and Baricitinib

11 7,027 PCYC PHARMACYCLICS OUTPERFORM $94 $121 1% 1% 4% -11% -11% -38% 7.5% Oncology Ibrutinib

12 5,571 MDVN MEDIVATION OUTPERFORM $73 $95 -1% -2% 26% 29% 14% -16% 4.9% Oncology Xtandi

13 4,801 CBST CUBIST OUTPERFORM $64 $77 -3% -7% 0% 21% -7% -20% 6.0% Anti-infectives Cubicin

14 4,612 ICPT INTERCEPT $218 -1% -22% -9% 329% 219% -42% 3.8% Liver disease Obeticholic acid

15 4,350 UTHR UNITED THERAPEUTICS NEUTRAL $91 $75 -1% 5% -6% 33% -20% -13% 12.3% PAH Remodulin, Adcirca and Tyvaso

16 4,331 SGEN SEATTLE GENETICS OUTPERFORM $35 $51 0% -10% -9% -9% -12% -35% 13.9% Oncology Adcetris

17 4,110 ITMN INTERMUNE NEUTRAL $42 $33 -3% -11% 47% 216% 182% 198% 10.6% Pulmonology Esbriet

18 4,063 ALNY ALNYLAM $54 1% -23% 0% 17% -16% -39% 8.7% RNAi technology TTR-mediated amyloidosis

19 3,813 BTG-LN BTG PLC GBP 616 -2% 2% 16% 56% 7% 3% MS (RRMS) Lemtrada

20 3,762 MNKD MANNKIND $10 -2% -9% 55% 32% 86% 51% 17.5% Diabetes Afrezza

21 3,622 IDIX IDENIX RESTRICTED $24 0% 0% 340% 547% 302% 237% 9.2% HCV IDX719

22 3,385 ISIS ISIS $29 -1% -16% -15% -8% -28% -51% 11.4% Antisense technology Kynamro

23 3,036 PCRX PACIRA $85 -1% -1% 29% 151% 48% 16% 10.6% Postsurgical Analgaseia Exparel

24 3,012 NPSP NPS $28 1% -14% 15% 57% -7% -27% 6.6% Rare Diseases Gattex/Revestive; Natpara

25 2,451 GEVA SYNAGEVA $74 0% -17% -6% 56% 15% -34% 7.0% Rare Diseases Sebelipase alfa

26 2,407 MOR-XE MORPHOSYS EUR 68 -2% 0% 8% 34% 21% 3% MM, RA Anti-CD38 antibody MOR202; MOR103

27 2,313 XON INTREXON $23 2% -8% 21% -2% -6% 10.0% NA UltraVector, RTS

28 2,149 GEN-KO GENMAB DKK 209 -1% -5% 9% 16% -1% -15% CLL, MM Arzerra, Chlorambucil, and Daratumumab

29 2,004 ACAD ACADIA $20 -3% -13% 4% 2% -19% -28% 15.4% CNS Pimavanserin

30 1,933 IRWD IRONWOOD OUTPERFORM $14 $16 1% -5% 34% 25% 21% -7% 9.8% GI Linzess/Constella

31 1,933 PBYI PUMA $64 2% 6% -13% 21% -38% -51% 5.6% Oncology Neratinib

32 1,715 MDCO THE MEDICINES COMPANYNEUTRAL $26 $28 -1% -7% 7% -14% -32% -15% 6.5% Critical care Marketed products, Cangrelor

33 1,492 PDLI PDL BIOPHARMA $9 -1% -3% 10% 16% 10% 6% 19.5% Antibody technology Royalty revenues

34 1,482 NKTR NEKTAR $12 -1% -16% 6% -8% 3% -14% 5.9% Platform technology Etirinotecan pegol; NKTR-181

35 1,346 RARE ULTRAGENYX $43 2% 1% 1% -26% 4.9% XLH KRN23

36 1,340 OPHT OPHTHOTECH $40 -2% -3% 27% 24% 14% 5.2% Wet AMD Fovista

37 1,277 KERX KERYX $14 -2% -2% 4% 61% 8% -15% 21.8% Kidney disease Zerenex

38 1,275 ABC-LN ABCAM GBP 371 -1% -4% -1% -17% -24% -24% Antibodies Research antibodies

39 1,265 CLVS CLOVIS OUTPERFORM $37 $100 -3% -15% -32% -52% -38% -51% 11.3% Oncology CO-1686 and Rucaparib

40 1,256 ACOR ACORDA $30 0% -6% -13% -20% 3% -17% 11.4% CNS Ampyra

41 1,179 AGIO AGIOS $35 -8% -26% -15% 45% 15% 7.4% Mutations in the enzymes IDH2/IDH1 AG-221

42 1,177 CLDX CELLDEX $13 -2% -25% -8% -37% -46% -58% 19.4% Cancer immunotherapy Rindopepimut

43 1,144 BSLN-EB BASILEA CHF 98 0% -8% 6% 37% -7% -21% Antibiotics Isavuconazole, Ceftobiprole

44 1,144 HALO HALOZYME $9 0% -10% 21% 10% -39% -43% 13.4% Platform technology Hylenex

45 1,144 KPTI KARYOPHARM $35 -1% -22% 13% 53% -11% 7.2% Relapsed/refractory hematological/solid tumor malignanciesKPT-330

46 1,138 DYAX DYAX $8 -2% -5% 25% 103% 11% -17% 4.8% Oncology Kalbitor; Ramucirumab

47 1,099 LGND LIGAND $53 -7% -17% -17% 17% 1% -29% 16.5% Royalties Royalty Revenues

48 1,048 ARNA ARENA UNDERPERFORM$5 $4 -3% -23% -23% -34% -18% -32% 19.0% Obesity Belviq

49 1,028 TSRO TESARO INC $29 -4% 0% 14% -30% 1% -10% 6.9% Chemotherapy induced nausea and vomiting Rolapitant

50 1,023 HZNP HORIZON $14 -6% -12% 4% 429% 82% 14% 19.9% Mild-to-moderate pain/arthritisMorning stiffness with RA Duexis, Lodotra

Source: Company data, Credit Suisse estimates Priced as of July 16, 2014 close

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Exhibit 3: US/EU Biotech Market Cap Ranking (51-100)

Mkt

Cap

Rank

Mkt Cap

in $M Ticker Company name CS Rec.

Current

Price CS TP 1D Perf 1M Perf 3M Perf 12M Perf YTD Perf

Perf.

Since Feb

24th Peak

Short Interest

(% of

Outstanding) Therapeutic Area Lead Asset

51 1,013 PTLA PORTOLA OUTPERFORM $25 $34 1% -13% 5% 5% -4% -9% 4.5% Cardiovascular Betrixiban, PRT4445

52 1,003 ARIA ARIAD NEUTRAL $5 $8 -4% -16% -25% -73% -21% -38% 25.7% Oncology Iclusig, AP26113

53 995 NVAX NOVAVAX $4 -2% -7% 4% 63% -18% -30% 10.2% Anti-Infectives RSV Vaccine and VLP Influenza Vaccine

54 985 NBIX NEUROCRINE $13 -3% -13% -3% -10% 39% -27% 7.1% Diversified Elagolix; NBI-98854

55 967 IMGN IMMUNOGEN NEUTRAL $11 $14 5% -14% -19% -42% -23% -35% 10.4% Oncology Kadcyla

56 956 EPZM EPIZYME $29 -3% 1% 45% -32% 39% -8% 7.1% Oncology EPZM-5676

57 942 GNFT-FR GENFIT $29.8 7% 16% 49% 522% 237% -4% Non-alcoholic steato hepatitis GFT505

58 931 RCPT RECEPTOS OUTPERFORM $35 $58 -5% -9% -3% 86% 21% -21% 5.1% CNS RPC1063

59 874 XLRN ACCELERON $28 2% -19% -28% -30% -39% 4.0% β-thalassemia Sotatercept

60 855 SGMO SANGAMO $13 -1% -25% -10% 23% -9% -37% 14.2% HIV SB-728-T

61 841 EBS EMERGENT $22 1% 1% -12% 24% -2% -12% 8.9% Immune-therapeutics BioThrax

62 841 SRPT SAREPTA $21 -2% -37% -15% -53% 2% -31% 8.4% Rare/infectious diseases Eteplirsen

63 839 BLUE BLUEBIRD EUR 30 -7% -16% 53% -12% 45% 26% 3.2% Childhood cerebral ALD ALD-102

64 818 AEGR AEGERION $28 0% -19% -36% -65% -61% -59% 23.9% Homozygous familial Lomitapide

65 813 KITE KITE PHARMA OUTPERFORM $21.4 $34 -5% Immuno-Oncology Car T (Modified T Cells)

66 795 RLYP RELYPSA $24 0% 2% 3% -6% -43% 4.4% Hyperkalemia, Polymer drug discovery technology Patiromer, RLY6002

67 794 BCRX BIOCRYST $11.1 -4% -8% 33% 466% 46% -4% 7.9% Novel Therapy Novel drugs

68 783 LXRX LEXICON $2 -3% -11% -7% -42% -16% -19% 2.8% Diversified Telotristat etiprate; LX4211

69 773 FMI FOUNDATION MEDICINE $27 -1% 18% 3% 15% -15% 8.3% Cancer diagnostics test FOUNDATIONONE

70 728 RVNC REVANCE $31 2% 4% 11% 6% 3.4% Crow's feat lines RT001

71 727 KYTH KYTHERA $32 -2% -13% -11% 18% -14% -42% 16.3% Aesthetics ATX-101

72 717 CMRX CHIMERIX $20 0% -8% -1% -17% 34% 4% 3.9% Anti-infectives CMX-001

73 717 MDXG MIMEDIX $6.8 -4% 9% 19% 20% -23% -5% 12.8% Chronic Wound Healing AmnioFix

74 713 ENTA ENANTA OUTPERFORM $38 $43 -2% -8% 15% 106% 41% -1% 9.7% HCV ABT-450/r ) and EDP-239

75 711 EXEL EXELIXIS NEUTRAL $4 $4 0% 1% 11% -28% -40% -47% 25.0% Oncology Cometriq

76 706 PTCT PTC THERAPEUTICS OUTPERFORM $23 $40 -3% -8% 25% 32% 38% -22% 4.8% Orphan Diseases Ataluren

77 699 INSM INSMED $18 -3% 43% 33% 51% 5% -5% 10.9% Anti-infectives Arikace

78 694 ANAC ANACOR $17 0% -2% 7% 144% -1% -16% 9.3% Onychomycosis (fungal infection) AN2690

79 663 ACHN ACHILLION NEUTRAL $6.9 $4 -4% -10% 142% -3% 106% 93% 15.8% HCV HCV: Sovaprevir (Phase II, Clinical Hold); ACH3102 (Phase II)

80 658 TSRX TRIUS $14 0% 0% 0% 23% 0% 0% Acute bacterial skin and skin structure infections Torezolid phosphate

81 657 ABLX-BT ABLYNX EUR 9 1% -8% 5% 40% 29% 0% Inflammatory, Musculoskeletal Caplacizumab; ozoralizumab, ALX-0061

82 654 MACK MERRIMACK $6 -3% -18% 40% 27% 19% 27% 17.6% Oncology MM-398

83 651 EVT-XE EVOTEC EUR 4 1% 2% 5% 43% 0% -8% Cardiovascular DiaPep277; EVT302, EVT 100

84 643 VSAR VERSARTIS $26.6 1% -11% 5% 5.3% Growth hormone deficiency VRS-317

85 620 OREX OREXIGEN OUTPERFORM $5 $10 0% -15% 1% -14% -5% -26% 19.1% Obesity Contrave

86 611 OMED ONCOMED $21 -2% -18% -20% -30% -43% 6.2% Advanced solid tumorsPancreatic cancer / SCLC Demcizumab, OMP-59R5

87 606 GLPG-AE GALAPAGOS EUR 15 2% -2% -6% -10% -3% -18% Autoimmune GLPG0634

88 602 IPH-FR INNATE $8.4 4% -3% 21% 229% 69% -23% AML and other tumors Lirilumab

89 600 NLNK NEWLINK $22 -1% -13% 3% 15% -2% -57% 15.1% Oncology Algenpantucel-L, Tergenpumatucel-L

90 594 VELO-KO VELOXIS DKK 2.0 1% 6% 103% 190% 181% 149%

91 585 INO INOVIO $10 0% 6% -4% 103% -16% -35% 16.3% Oncology, Anti-Infectives DNA-based SynCon Technology

92 576 MNTA MOMENTA $10.9 0% -16% -2% -28% -38% -38% 11.9% Deep Vein Thrombosis Enoxaprin Sodium Injection

93 570 MVIR'B-SK MEDIVIR AB-B OUTPERFORM SEK 127 SEK 115 -6% -9% 17% 76% 50% 17% HCV Simeprevir

94 561 BAVA-KO BAVARIAN NORDIC DKK 118.5 0% -2% 22% 93% 33% 16% Vaccine Prostvac; Imvamune

95 560 RPTP RAPTOR $9 -4% -22% 9% -16% -31% -46% 22.2% Cystinosis Procysbi; RP103

96 544 AERI AERIE $23.2 -3% 24% 55% 29% 16% 2.4% Glaucoma patients AR-13324PG324

97 538 PLI-T PROMETIC LIFE $1.1 1% -3% -11% 191% 17% -27% Fibrosis PBI-4050

98 526 ASPX AUSPEX $20 -1% -9% -6% -22% 2.0% Chorea associated with Huntington's disease SD-809

99 526 MGNX MACROGENICS $19 -2% -13% -5% -31% -46% 2.0% HER2 metastic breast cancer MGAH22

100 507 PRTA-US PROTHENA OUTPERFORM $19 $53 -3% -17% -38% 12% -28% -39% 5.0% Neurological NEOD001, PRX002

Source: Company data, Credit Suisse estimates Priced as of July 16, 2014 close

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Exhibit 4: CS Biotech Team – 50 Companies Under Coverage

Company Name Ticker

Market Cap

($M) CS Rating

CS

Target Price Last Price Coverage Company Name Ticker

Market Cap

($M) CS Rating

CS

Target Price Last Price Coverage

Large Cap Hospital Antibiotics

Amgen Inc AMGN $89,109 NEUTRAL $125.00 $117.71 RM/KC Achaogen Inc AKAO $208 OUTPERFORM $22.00 $11.75 JK/JS

Biogen Idec Inc BIIB $72,047 OUTPERFORM $400.00 $303.74 RM/KC Cubist Pharmaceuticals Inc CBST $4,801 OUTPERFORM $77.00 $63.76 JK/JS

Celgene Corp CELG $68,668 OUTPERFORM $112.50 $86.05 RM/KC Durata Therapeutics Inc DRTX $402 OUTPERFORM $22.00 $15.09 JK/JS

Gilead Sciences Inc GILD $133,604 OUTPERFORM $110.00 $87.00 RM/KC Medicines Co MDCO $1,715 NEUTRAL $28.00 $26.38 JK/JS

SMID Cap Obesity

Antibody Arena Pharmaceuticals Inc ARNA $1,048 UNDERPERFORM $4.00 $4.77 LK/RM

Alder Biopharmaceuticals Inc ALDR $463 OUTPERFORM $20.00 $15.03 JK/JS Orexigen Therapeutics Inc OREX $620 OUTPERFORM $10.00 $5.33 LK/RM

Immunogen Inc IMGN $967 NEUTRAL $14.00 $11.27 JK/JS Vivus Inc VVUS $478 NEUTRAL $6.00 $4.63 LK/RM

Regeneron Pharmaceuticals Inc REGN $30,269 OUTPERFORM $340.00 $306.12 JK/JS Oncology SMID

Seattle Genetics Inc SGEN $4,331 OUTPERFORM $51.00 $35.17 JK/JS ARIAD Pharmaceuticals Inc ARIA $1,003 NEUTRAL $8.00 $5.37 JK/JS

XOMA Corp XOMA $418 NEUTRAL $7.00 $3.91 JK/JS BIND Therapeutics Inc BIND $174 OUTPERFORM $20.00 $10.56 JK/JS

Prothena Corporation PLC PRTA $507 OUTPERFORM $53.00 $19.01 JK/JS Clovis Oncology Inc CLVS $1,265 OUTPERFORM $100.00 $37.30 RM/KC

Xencor Inc XNCR $328 OUTPERFORM $14.00 $10.45 JK/JS Endocyte Inc ECYT $259 OUTPERFORM $9.00 $6.25 JK/JS

Commercial-Stage SMID Infinity Pharmaceuticals Inc INFI $490 NEUTRAL $20.00 $10.09 JK/JS

Actelion Ltd ATLN-VX $14,830 OUTPERFORM CHF 125.00 CHF 109.20 RM/KC Kite Pharma Inc KITE $796 OUTPERFORM $34.00 $21.39 JK/JS

Corcept Therapeutics Inc CORT $240 NEUTRAL $2.00 $2.38 RM/KC Pharmacyclics Inc PCYC $7,027 OUTPERFORM $121.00 $93.66 JK/JS

InterMune Inc ITMN $4,110 NEUTRAL $33.00 $41.56 RM/KC Sunesis Pharmaceuticals Inc SNSS $341 NEUTRAL $6.00 $5.66 JK/JS

United Therapeutics Corp UTHR $4,350 NEUTRAL $75.00 $90.68 RM/KC Orphan Drugs

Xenoport Inc XNPT $274 OUTPERFORM $7.00 $4.43 RM/KC Alexion Pharmaceuticals Inc ALXN $31,404 NEUTRAL $174.00 $158.77 LK/RM

Constipation / IBS-C BioMarin Pharmaceutical Inc BMRN $8,222 OUTPERFORM $73.00 $56.37 LK/RM

Ironwood Pharmaceuticals Inc IRWD $1,673 OUTPERFORM $16.00 $14.00 RM/KC PTC Therapeutics Inc PTCT $706 OUTPERFORM $40.00 $23.48 JK/JS

Sucampo Pharmaceuticals Inc SCMP $283 NEUTRAL $8.00 $6.39 RM/KC Prostate Cancer

Synergy Pharmaceuticals Inc SGYP $362 OUTPERFORM $9.20 $3.86 RM/KC Dendreon Corp DNDN $347 NEUTRAL $2.50 $2.17 LK/RM

Development-Stage SMID Exelixis Inc EXEL $711 NEUTRAL $4.00 $3.65 LK/RM

Akebia Therapeutics Inc AKBA $485 OUTPERFORM $25.00 $23.95 RM/KC Medivation Inc MDVN $5,571 OUTPERFORM $95.00 $72.80 LK/RM

Esperion Therapeutics Inc ESPR $216 OUTPERFORM $26.00 $14.03 JK/JS * Last Price as of July 16th, 2014

Portola Pharmaceuticals Inc PTLA $1,014 OUTPERFORM $34.00 $24.65 JK/JS

Receptos Inc RCPT $931 OUTPERFORM $58.00 $35.00 RM/KC

Vical Inc VICL $105 NEUTRAL $1.50 $1.21 LK/RM

HCV

Achillion Pharmaceuticals Inc ACHN $663 NEUTRAL $4.00 $6.85 RM/KC

Enanta Pharmaceuticals Inc ENTA $713 OUTPERFORM $43.00 $38.44 RM/KC

Idenix Pharmaceuticals Inc IDIX $3,622 RESTRICTED $24.01 RM/KC

Medivir AB MVIR'B-SK $3,886 OUTPERFORM SEK 115.00 SEK 127.00 RM/KC

Vertex Pharmaceuticals Inc VRTX $22,871 NEUTRAL $94.00 $96.83 RM/KC

Source: Company data, Credit Suisse estimates

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Exhibit 5: 2014 YTD Biotech (dark blue) vs. major sectors on a biweekly basis

Jan 1 - Jan

15

Jan 15 -

Jan 31

Feb 1 - Feb

15

Feb 15 -

Feb 28

Mar 1 - Mar

15

Mar 15 -

Mar 31

Apr 1 - Apr

15

Apr 15 -

Apr 30

May 1 -

May 15

May 15 -

May 31

Jun 1 - Jun

15

Jun 15 -

Jun 30

Jul 1 -

Jul 15

Healthcare Utilities Biotech Cons Disc Utilities Telecom Utilities Biotech Telecom Biotech Energy Utilities Telecom

3% 3% 5% 2% 1% 6% 3% 5% 3% 5% 3% 5% 4%

Biotech Biotech Materials Healthcare Financials Energy Energy Energy Biotech IT Financials Biotech IT

2% 3% 5% 2% 0% 4% 2% 3% 0% 4% 1% 3% 3%

Financials Telecom IT Materials Cons Stap Financials Cons Stap Industrials Materials Cons Disc IT Healthcare Industrials

1% -2% 4% 2% 0% 3% 0% 3% 0% 4% 1% 2% 1%

IT Healthcare Healthcare Energy Materials Industrials Telecom Healthcare Industrials Healthcare Industrials Cons Disc Biotech

1% -2% 4% 2% 0% 2% 0% 3% 0% 3% 1% 2% 1%

S&P 500 IT Cons Disc S&P 500 Telecom IT Materials IT Energy Materials S&P 500 Energy Cons Disc

0% -3% 4% 1% -1% 2% -1% 2% 0% 3% 1% 2% 1%

Industrials S&P 500 S&P 500 Cons Stap S&P 500 Utilities Industrials Cons Stap Healthcare S&P 500 Materials Materials S&P 500

0% -4% 3% 1% -1% 2% -1% 2% 0% 3% 0% 1% 1%

Utilities Energy Energy Industrials Industrials S&P 500 S&P 500 S&P 500 Cons Stap Financials Cons Disc S&P 500 Financials

0% -4% 3% 1% -1% 2% -2% 2% -1% 3% 0% 1% 1%

Materials Cons Stap Financials Biotech Energy Cons Stap IT Materials S&P 500 Cons Stap Biotech IT Cons Stap

-1% -4% 3% 1% -1% 2% -2% 2% -1% 2% 0% 1% 1%

Cons Stap Materials Utilities IT Cons Disc Materials Cons Disc Cons Disc IT Industrials Healthcare Financials Energy

-1% -4% 3% 0% -2% 1% -3% 2% -1% 2% 0% 1% 1%

Cons Disc Cons Disc Industrials Financials Healthcare Healthcare Financials Utilities Cons Disc Utilities Utilities Cons Stap Materials

-2% -4% 3% 0% -2% 0% -3% 2% -1% 2% -1% 0% 0%

Energy Industrials Cons Stap Utilities IT Cons Disc Healthcare Financials Financials Energy Cons Stap Telecom Healthcare

-3% -4% 2% 0% -2% -1% -3% 2% -1% 2% -1% 0% 0%

Telecom Financials Telecom Telecom Biotech Biotech Biotech Telecom Utilities Telecom Telecom Industrials Utilities

-3% -5% -1% 0% -5% -6% -5% 0% -3% 1% -1% -1% -3%


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Exhibit 6: YTD Performance of Large, Mid, Small and Micro Cap Indices

80

90

100

110

120

130

140

Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14

Re

lati

ve

YT

D P

erf

orm

an

ce

Large: $30Bn+ Mkt Cap Mid: $3 - $30 Bn Mkt Cap Small: $1 - $3 Bn Mkt Cap Micro: < $1 Bn Mkt Cap

Micro: < $1B Mkt Cap

Small: $1B - $3 Mkt Cap

Mid: $3B - $30 Mkt Cap

Large: $30B+ Mkt Cap+9%

+5%+2%

-5%

Source: Company data, Credit Suisse estimates Comapanies sorted by market cap on Jan 1st, 2014.

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Exhibit 7: Biotech vs. Major Sectors Index Performance*

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD

Biotech Biotech Utilities Cons Disc Cons Stap IT Energy Energy Telecom Energy Biotech IT Cons Disc Biotech Biotech Biotech Utilities

93% 130% 52% 2% -6% 47% 29% 29% 32% 32% 10% 60% 26% 22% 38% 74% 12%

IT IT Healthcare Materials Materials Cons Disc Utilities Biotech Energy Materials Cons Stap Materials Industrials Utilities Financials Cons Disc Energy

78% 78% 36% 1% -8% 36% 20% 18% 22% 20% -18% 45% 24% 15% 26% 41% 12%

Telecom Cons Disc Financials Biotech Energy Materials Industrials Utilities Cons Disc Utilities Healthcare Cons Disc Materials Cons Stap Cons Disc Healthcare IT

49% 24% 23% -4% -13% 35% 16% 13% 17% 16% -24% 39% 20% 11% 22% 39% 11%

Healthcare Materials Cons Stap Industrials Financials Industrials Telecom Healthcare Utilities IT Utilities S&P 500 Energy Healthcare Healthcare Industrials Biotech

42% 23% 14% -7% -16% 30% 16% 5% 17% 16% -32% 23% 18% 10% 15% 38% 10%

Cons Disc Industrials Energy Cons Stap Healthcare Biotech Cons Disc Financials Financials Cons Stap Telecom Industrials S&P 500 Cons Disc S&P 500 Financials Healthcare

40% 20% 13% -8% -20% 29% 12% 4% 16% 12% -34% 17% 13% 4% 13% 33% 10%

S&P 500 S&P 500 Industrials Financials Biotech Financials Materials S&P 500 Materials Industrials Cons Disc Healthcare Telecom Energy IT S&P 500 Materials

27% 20% 5% -11% -20% 28% 11% 3% 16% 10% -35% 17% 12% 3% 13% 30% 8%

Cons Stap Telecom Biotech Energy S&P 500 S&P 500 S&P 500 Materials S&P 500 Telecom Energy Financials Financials IT Telecom IT S&P 500

14% 17% -5% -12% -23% 26% 9% 2% 14% 8% -36% 15% 11% 1% 12% 26% 7%

Utilities Energy S&P 500 Healthcare Cons Disc Energy Financials Cons Stap Cons Stap Healthcare S&P 500 Energy Cons Stap Telecom Industrials Materials Telecom

10% 16% -10% -13% -24% 22% 8% 1% 12% 5% -38% 11% 11% 1% 12% 23% 5%

Financials Financials Materials S&P 500 Industrials Utilities Biotech IT Industrials S&P 500 Industrials Cons Stap IT S&P 500 Materials Cons Stap Financials

10% 2% -18% -13% -28% 21% 8% 0% 11% 4% -42% 11% 9% 0% 12% 23% 5%

Industrials Healthcare Cons Disc Telecom Utilities Healthcare Cons Stap Industrials IT Biotech IT Utilities Biotech Industrials Cons Stap Energy Cons Stap

9% -12% -21% -14% -33% 13% 6% 0% 8% -3% -44% 7% 2% -3% 8% 22% 5%

Energy Utilities Telecom IT Telecom Cons Stap IT Cons Disc Healthcare Cons Disc Materials Telecom Utilities Materials Energy Utilities Industrials

-2% -13% -40% -26% -36% 9% 2% -7% 6% -14% -47% 3% 1% -12% 2% 9% 4%

Materials Cons Stap IT Utilities IT Telecom Healthcare Telecom Biotech Financials Financials Biotech Healthcare Financials Utilities Telecom Cons Disc

-8% -17% -41% -32% -38% 3% 0% -9% -3% -21% -57% -7% 1% -18% -3% 6% 1%

Source: Company data, Credit Suisse estimates *Sector Performance derived using S&P500 Sector Indices

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Exhibit 8: Healthcare Sub-sector Performance*

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD

Biotech Biotech Distributors Distributors Mgd Care Mgd Care Mgd Care Mgd Care S&P 500 Services Biotech Lifesci tools Lifesci tools Mgd Care Biotech Biotech Mgd Care

93% 130% 85% -1% 1% 41% 53% 43% 14% 57% 10% 57% 24% 33% 38% 74% 15%

Distributors S&P 500 Mgd Care Biotech Equip/Sup Equip/Sup Services Services Pharma Lifesci tools Services Distributors Distributors Biotech Lifesci tools Distributors Equip/Sup

54% 20% 77% -4% -13% 31% 17% 32% 13% 23% -17% 44% 18% 22% 30% 62% 11%

Pharma Equip/Sup Equip/Sup Equip/Sup Distributors Biotech Equip/Sup Distributors Healthcare Mgd Care Pharma Services S&P 500 Pharma Services Lifesci tools Pharma

47% -5% 43% -6% -14% 29% 12% 29% 6% 16% -21% 41% 13% 13% 20% 52% 10%

Equip/Sup Mgd Care Healthcare Mgd Care Healthcare S&P 500 S&P 500 Biotech Services Healthcare Healthcare Mgd Care Mgd Care Healthcare Healthcare Mgd Care Distributors

42% -9% 36% -8% -20% 26% 9% 18% 5% 5% -24% 28% 8% 10% 15% 46% 10%

Healthcare Healthcare Pharma Healthcare Biotech Healthcare Biotech Healthcare Equip/Sup Equip/Sup Equip/Sup Equip/Sup Services Distributors Equip/Sup Healthcare Biotech

42% -12% 34% -13% -20% 13% 8% 5% 3% 5% -28% 27% 8% 8% 15% 39% 10%

S&P 500 Pharma Biotech S&P 500 Pharma Distributors Healthcare S&P 500 Distributors Distributors Distributors S&P 500 Biotech S&P 500 Distributors Pharma Healthcare

27% -13% -5% -13% -22% 8% 0% 3% -2% 4% -38% 23% 2% 0% 15% 31% 10%

Mgd Care Distributors S&P 500 Pharma S&P 500 Pharma Distributors Equip/Sup Biotech S&P 500 S&P 500 Healthcare Healthcare Equip/Sup S&P 500 S&P 500 S&P 500

-10% -59% -10% -16% -23% 6% -3% 0% -3% 4% -38% 17% 1% -2% 13% 30% 7%

Lifesci tools Lifesci tools Lifesci tools Lifesci tools Lifesci tools Lifesci tools Pharma Pharma Mgd Care Pharma Lifesci tools Pharma Pharma Services Pharma Equip/Sup Lifesci tools

N/A N/A N/A N/A N/A N/A -9% -6% -7% 2% -39% 14% -3% -8% 11% 26% 4%

Services Services Services Services Services Services Lifesci tools Lifesci tools Lifesci tools Biotech Mgd Care Biotech Equip/Sup Lifesci tools Mgd Care Services Services

N/A N/A N/A N/A N/A N/A N/A N/A N/A -3% -55% -7% -4% -18% 5% 20% 1%

Source: Company data, Credit Suisse estimates *Sector Performance derived using S&P500 Sector Indices

18 July 2014


Exhibit 9: YTD Performance S&P500 vs. S&P500 Biotech

100

120

140

160

180

200

220

S&P 500 S&P500 Biotech


Exhibit 10: Biotech is trading at a discount to the S&P 500 on 2016 and 2017 PE despite ~4x EPS growth rates

Company 2014 P/E 2015 P/E 2016 P/E 2017 P/E Rev CAGR '14-'17 (%) EPS CAGR '14-'17 (%)

AMGN 14.3x 13.8x 13.5x 12.1x 1% 6%

BIIB 27.3x 22.4x 19.1x 16.7x 11% 18%

CELG 24.2x 18.2x 13.8x 11.2x 20% 29%

GILD 12.4x 12.0x 10.7x 10.4x 6% 6%

LC Biotech Average 19.6x 16.6x 14.3x 12.6x 9.5% 14.8%

US Pharma Average 19.2x 18.2x 15.6x 13.9x 3.9% 11.5%

EU Pharma Average 18.6x 17.1x 15.6x 15.3x 3.7% 8.1%

S&P 500 16.9x 15.6x 15.0x 14.4x 5.2% 5.6%


Exhibit 11: Biotech Has Sector Leading Revenue and EPS Growth

Sector Revenues YoY Growth EPS YoY Growth

2014 2015 2016 2017 2014 2015 2016 2017

Biotech 38% 12% 11% 6% 76% 16% 16% 13%

Consumer Discretionary 11% 9% 10% 7% 3% 148% 41% 30%

Telecom 7% 2% 2% 0% 22% 22% 14% -4%

IT 6% 11% 10% 1% 9% 16% 14% 3%

Materials 4% 6% 5% 3% 18% 24% 15% 1%

Utilities 4% 3% 3% 0% 5% 5% 4% 5%

S&P 500 3% 5% 4% 6% 8% 8% 4% 5%

Industrials 2% 4% 6% 6% 9% 11% 11% 11%

Energy 2% 3% 4% 1% 11% 15% -3% 6%

Consumer Staples 0% 3% 4% 4% 1% 6% 8% 11%

Financials 0% 3% 4% 7% 4% 20% 8% 9%

Pharma -2% -1% 4% 4% 3% 2% 13% 11%


18 July 2014


Large-Cap Biotech

■ BIIB (TP$400, Outperform) – Pre-open release/call at 9:00am ET on Wednesday

7/23: For Q2 earnings, we are in-line on revenues (CS: $2.15B/+25% Y/Y vs.

Consensus: $2.14B/+24%) and EPS (CS: $2.79/+21% vs. Consensus: $2.80/+22%).

Tecfidera remains a key area of focus, with specific attention on the recent EU launch.

We currently estimate Q2 Tecfidera sales of $570M/+197% (vs. $556M/+189% for

consensus), Tysabri sales of $419M/+8% (vs. $442M/+14% for consensus) and

Avonex sales of $761M/-2% (vs. $744M/-4% for consensus). We expect most of the

call will be focused on: (1) Early experience from the recent US launch of Alprolix in

Hemophilia B and preparations for recently FDA-approved Eloctate in Hemophilia A;

(2) Granularity on the Tecfidera launch/ramp in the EU; (3) Any visible impact from the

February-launched 3-times-a-week Copaxone, and potential impact from a '14/'15

generic Copaxone launch; and (4) Whilst no significant updates on the pipeline are

expected we expect (continued) call attention on particularly Anti-LINGO-1 (RENEW

PIII trial in AON due in Dec) and Tysabri (ASCEND PIII trial in SPMS due mid 2015).

■ GILD (TP$110, Outperform) – Post-close release/call at 4:30pm ET on

Wednesday 7/23: The most important headline number is Sovaldi Q2 revenues. We

are forecasting WW Sovaldi Q2 sales of $2.98B, which is slightly above consensus of

$2.92B. Based on IMS Rx data, we estimate US Sovaldi Q2 sales of $2.61B, which is

comprised of in-demand sales (adjusted by our capture rate) of $2.56B and inventory

stocking of $53M. This sales estimate assumes a WAC price of $1,000 per pill and a

15.0% gross-to-net adjustment. On high-level financial metrics, we are slightly above

consensus on both total revenues (CS: $6.00B/+117% Y/Y vs. Consensus:

$5.67B/+105% Y/Y) and EPS (CS: $1.87/+296% Y/Y vs. Consensus: $1.70 Y/Y

+265%). For the HIV franchise, we project Atripla sales of $891M/-5% (vs. $893M/-5%

for consensus), Truvada sales of $779M/-4% (vs. $800M/-1% for consensus), Viread

sales of $260M/+4% (vs. $240M/-4% for consensus), Stribild sales of $262M/+164%

(vs. $260M/+162% for consensus), and Complera sales of $287M/+52% (vs.

$280M/+48% for consensus). We anticipate that the majority of the call to be centered

on: (1) Pricing strategy for Sofosbuvir/Ledipasvir in HCV especially in light of recent

political scrutiny of Sovaldi's pricing; (2) Granularity on Sovaldi launch dynamics in the

US specifically on "anticipatory" warehousing as all-oral, interferon regimens are

expected to launch later this year; (3) Further details on the mid- to long-term strategy

to build a sustainable HCV market; (4) Potential impact of TAF on sustaining GILD's

position in HIV in the face of generics later in the decade (5) “What's next?” after HCV

and (6) Agency cost/Capital allocation/M&A.

■ CELG (TP$112.5, Outperform) – Pre-open release/call at 9:00am ET on Thursday

7/24: We are forecasting both in-line total revenues (CS: $1.85B/+15% Y/Y vs.

Consensus: $1.84B/+15% Y/Y) and EPS (CS: $0.91/+19% Y/Y for CS vs. Consensus:

$0.89/+17% Y/Y). Revlimid continues to be the primary focus. We project Revlimid

sales ($1.22B/+16%) to be in-line with consensus ($1.22B/+16%). In addition, we are

in-line on sales for Abraxane (CS: $207M/+34% vs. Consensus: $212M/+37%),

Pomalyst/Imnovid (CS: $157M/+138% vs. Consensus: $149M/+126%) and Otzela

(CS: $1.5M vs. Consensus: $4M). Based on IMS Rx data, we estimate in-demand

Otezla sales to be $6.5M. Recall, CELG will be using the sell-through method to report

Otezla sales during the early phases of the launch. Our estimates are based on a

WAC price of $1,627 per Rx, 15% gross to net discount, and ~4000 Rx's (~61

pills/TRx). We expect the call to be focused primarily on: (1) Updates on the ongoing

Revlimid patent litigation case against Actavis/Natco; (2) Details on the US launch

dynamics for Otezla in psoriatic arthritis; (3) Granularity on ongoing launches of

Abraxane in pancreatic cancer and Pomalyst/Imnovid in multiple myeloma and (of

course!)…(4) Domain Domination and the pipeline particularly on MOR-202 (data is

expected to be released in multiple myeloma at ASH in December 2014) and GED-

18 July 2014


0301 (detailed PII data in Crohn's Disease is expected to be released at UEG in

October 2014).

■ AMGN (TP$125, Neutral) – Post-close release/call at 5:00pm ET on Tuesday 7/29:

Our Q2 earnings estimates are slightly above consensus on total revenues (CS:

$5.05B +8% Y/Y vs. Consensus: $4.92B +5% Y/Y) and EPS (CS: $2.14/+13% vs.

Consensus: $2.07/+10%). We are forecasting sales of $1.49B/+0% for

Neupogen/Neulasta (vs. $1.42B/-3% for consensus), $1.22B/+5% for Enbrel (vs.

$1.18B/+2% for consensus), $565M/+30% for Prolia/Xgeva (vs. $537M/+22% for

consensus), $490M/-2% for Epogen (vs. $482M/-4% for consensus), and $101Mfor

Kyprolis (vs. $81Mfor consensus). We expect the call to be focused on the following

topics: (1) Updates on the upcoming ASPIRE and FOCUS PIII data readouts for

Kyprolis; (2) Potential impact from possible launches of Roche's Mircera as early as

July 2014 and EPO biosimilars in Mid'15; (3) Updates on the commercial strategy and

timelines for Evolocumab and Ivabradine.

18 July 2014


Exhibit 12: AMGN – CS vs. Consensus Q2'14 Estimates and FY’14 Estimates

In $M except for EPSCS

Q2'14EYoY Growth

Consensus

Q2'14EYoY Growth

CS vs. Cons

Δ

CS

FY'14EYoY Growth

Consensus

FY'14EYoY Growth

CS vs. Cons

Δ

Enbrel 1,218 5% 1,182 2% 3% 4,576 1% 4,588 1% 0%

Neulasta 1,185 6% 1,123 0% 6% 4,630 5% 4,473 2% 4%

Neupogen 300 -7% 304 -6% -1% 1,179 -16% 1,185 -15% -1%

Epogen 490 -2% 482 -4% 2% 1,832 -6% 1,868 -4% -2%

Aranesp 465 -11% 465 -11% 0% 1,760 -8% 1,803 -6% -2%

Sensipar 273 5% 279 8% -2% 1,113 2% 1,129 4% -1%

Nplate 117 11% 128 22% -9% 466 9% 507 19% -8%

Prolia 245 30% 229 22% 7% 941 26% 898 21% 5%

Xgeva 320 29% 308 24% 4% 1,304 28% 1,253 23% 4%

Vectibix 110 18% 104 12% 6% 440 13% 425 9% 4%

Kyprolis 101 - 82 - 23% 453 538% 344 385% 32%

Revenue 5,054 8% 4,923 5% 3% 19,597 5% 19,418 4% 1%

Gross Product Margin 84.4% -6bp 84.2% -26bp 20bp 84.4% 13bp 84.1% -12bp 25bp

R&D 1,082 15% 1,031 9% 5% 4,240 8% 4,178 6% 1%

SG&A 1,096 -11% 1,091 -1% 0% 4,318 -12% 4,309 -12% 0%

Operating Income 2,109 18% 2,051 15% 3% 8,061 16% 7,954 14% 1%

Tax Rate 15.5% 380bp 15.6% 390bp -10bp 15.5% 646bp 15.2% 617bp 29bp

Net Income 1,647 14% 1,596 11% 3% 6,273 8% 6,211 7% 1%

Total Shares Outstanding 768 1% 766 0% 0% 768 0% 768 0% 0%

EPS (Pre-Option) $2.14 13% $2.08 10% 3% $8.17 8% $8.09 6% 1% Source: Amgen, Thomson Reuters, Credit Suisse estimates, Bloomberg

Exhibit 13: BIIB – CS vs. Consensus Q2'14 Estimates and FY’14 Estimates In millions except for

EPS

CS

Q2'14EYoY Growth

Consensus

Q2'14EYoY Growth

CS vs. Cons

Δ

CS

FY'14EYoY Growth

Consensus

FY'14EYoY Growth

CS vs. Cons

Δ

Avonex $761 -2% $744 -4% 2% $2,981 -1% $2,939 -2% 1%

Tecfidera $570 197% $556 189% 3% $2,361 169% $2,373 171% -1%

Tysabri $419 8% $442 14% -5% $1,703 12% $1,796 18% -5%

Fampyra $20 16% $20 19% -3% $80 9% $82 11% -2%

Rituxan $299 4% $296 2% 1% $1,196 6% $1,209 7% -1%

Fumaderm $16 0% $16 1% -2% $64 6% $65 8% -2%

Revenues $2,150 25% $2,142 24% 0% $8,822 27% $8,875 28% -1%

Gross Product Margin 86.9% 29bp 86.7% 9bp 20bp 86.9% -73bp 86.8% -83bp 10bp

R&D $438 34% $442 35% -1% $1,868 30% $1,902 32% -2%

SG&A $511 19% $492 14% 4% $2,036 19% $2,024 19% 1%

Operating Income $924 25% $924 25% 0% $3,778 32% $3,777 32% 0%

Tax Rate 26.7% 238bp 27.1% 278bp -40bp 26.7% 231bp 26.9% 253bp -22bp

Net Income $665 21% $666 21% 0% $2,720 27% $2,736 28% -1%

Total Shares Out 238 0% 238 0% 0% 238 0% 237 -1% 1%

EPS (Pre-Option) $2.79 21% $2.80 22% 0% $11.42 27% $11.52 28% -1% Source: Biogen Idec, Thomson Reuters, Credit Suisse estimates, Bloomberg

18 July 2014


Exhibit 14: CELG – CS vs. Consensus Q2'14 Estimates and FY’14 Estimates

In millions except EPSCS

Q2'14EYoY Growth

Consensus

Q2'14EYoY Growth

CS vs. Cons

Δ

CS

FY'14EYoY Growth

Consensus

FY'14EYoY Growth

CS vs. Cons

Δ

Revlimid $1,218 16% $1,216 16% 0% $4,900 14% $4,925 15% (1%)

Abraxane $207 34% $212 37% (2%) $867 33% $881 36% (2%)

Pomalyst/Imnovid $157 138% $149 126% 5% $663 117% $624 104% 6%

Thalomid/Thalomide $52 -21% $52 -21% 0% $212 -13% $202 -17% 5%

Vidaza $152 -28% $147 -30% 3% $605 -25% $596 -26% 2%

Revenue $1,847 15% $1,838 15% 0% $7,492 15% $7,539 16% (1%)

Gross Product Margin 95.2% 14bp 95.0% -6bp 20bp 95.3% 21bp 95.1% 6bp 16bp

R&D $391 14% $413 20% (5%) $1,712 14% $1,688 12% 1%

SG&A $421 10% $423 10% (0%) $1,688 11% $1,716 13% (2%)

Operating Income $947 19% $913 15% 4% $3,737 19% $3,773 20% (1%)

Tax Rate 16.6% -50bp 16.6% -50bp 0bp 16.5% -26bp 16.6% -21bp -6bp

Net Income $765 17% $745 14% 3% $3,020 18% $3,074 20% (2%)

Total Shares 842 -2% 841 -2% 0% 841 -2% 840 -2% 0%

EPS (Pre-Option) $0.91 19% $0.89 17% 2% $3.59 20% $3.66 23% (2%) Source: Celgene, Thomson Reuters, Credit Suisse estimates, Bloomberg

Exhibit 15: GILD – CS vs. Consensus Q2'14 Estimates and FY’14 Estimates

In millions except EPSCS

Q2'14EYoY Growth

Consensus

Q2'14EYoY Growth

CS vs. Cons

Δ

CS

FY'14EYoY Growth

Consensus

FY'14EYoY Growth

CS vs. Cons

Δ

Key Products:

Atripla $891 -5% $893 -5% (0%) $3,460 -5% $3,420 -6% 1%

Truvada $779 -4% $800 -1% (3%) $3,104 -1% $3,142 0% (1%)

Viread $260 4% $240 -4% 8% $1,014 6% $929 -3% 9%

Complera $287 52% $280 48% 3% $1,184 46% $1,142 41% 4%

Stribild $262 164% $260 162% 1% $1,149 113% $1,110 106% 3%

Sofosbuvir/Ledipasvir $2,975 - $2,919 - - $10,774 7627% $10,131 7166% 6%

Product Sales $5,845 120% - - - $22,269 106% - - -

Revenue $6,000 117% $5,678 105% 6% $22,735 103% $22,236 99% 2%

Gross Margins 88.8% 1267bp 84.7% 858bp 410bp 85.4% 1055bp 83.8% 893bp 161bp

R&D $552 13% - - - $2,225 14% - - -

SG&A $528 40% - - - $2,132 37% - - -

Operating Income $4,248 242% $3,740 201% 14% $15,886 218% $14,383 188% 10%

Tax Rate 22.7% -548bp 22.6% -558bp 11bp 22.8% -362bp 20.2% -623bp 13%

Net Income $3,140 293% $2,754 245% 14% $11,698 258% $10,872 233% 8%

Total Shares Out 1,682 -1% 1,601 -6% 5% 1672 -1% 1,660 -2% 1%

EPS (Pre-Option) $1.87 296% $1.72 265% 9% $7.00 262% $6.55 239% 7%

EPS (Post-Option) $1.91 285% - - - $7.16 250% - - - Source: Gilead, Thomson Reuters, Credit Suisse estimates, Bloomberg

18 July 2014


Exhibit 16: Large-Cap Revenue and Earnings Guidance

Revenue Guidance Earnings Guidance

AMGN 2014: $19.2B - $19.6B

2015: Upper End of $16 - $18B

2014 EPS: $7.90 - $8.20

2015 EPS: >$8.00

BIIB 2014: ~26%-28% ($8.7B - $8.9B) 2014 EPS: Similar to Topline Growth: 26%-28%

($11.30 - $11.50)

CELG

(Pre Stock

Split)

2014: ~$7.5B

2015: $8.5B - $9.5B

2017: $13B - $14B

2014 EPS: $7.00 - $7.20

2015 EPS: $9.00 - $9.50

2017 EPS: ~$15.00

GILD 2014: $11.3B - $11.5B (excluding Sovaldi) 2014 "Implied" EPS: $2.16 - $2.60 (excluding

Sovaldi)

Source: FactSet, Company data, Credit Suisse estimates

18 July 2014


Small-Mid Cap Stocks

■ ACHN (TP$4, Neutral) – Release/call likely in early August: The Q2 financials for

ACHN, a development-stage company, will likely not have a material impact on the

stock. ACHN is still working on finding the right combination to compete in HCV. Given

Merck's announced acquisition of Idenix in June 2014 and competitiveness of the

process, we expect that investors are likely to focus on any updates concerning

ACHN's 2nd

generation uridine nuc inhibitor, ACH-3422. ACH-3422 just entered PI

proof-of-concept trials with data expected in Fall 2014. We also expect continued

focus on ACHN's planned all-oral, interferon-free combinations – ACH-3422 + ACH-

3102 +/- Protease Inhibitor in G1/2/3/4/5/6 and ACH-2684 + ACH-3102 in G1b. An

ongoing PII trial examining Sofosbuvir + ACH-3102 could allow ACHN to expedite the

clinical development of ACH-3422 + ACH-3102 +/- Protease Inhibitor in G1/2/3/4/5/6

in early 2015.

■ AKAO (TP$22, Outperform) – Call likely in the first half of August: AKAO is

currently not an earnings driven story. Investors will be most focused on (1) progress

of the Phase III study of plazomicin, (2) updates on any FDA discussions, (3) updates

for plans for the "supportive" Phase II plazomicin study, and (4) any updates for the

Pseudomonas program. We forecast GAAP Q2 EPS of ($0.44) vs. consensus of

($0.30).

■ AKBA (TP$25, Outperform) – Release/call likely in early August: AKBA is

currently not an earnings driving story. The spotlight remains on AKB-6548, which

could offer a more effective way to maintain/modulate Hb and improve upon

cardiovascular safety. The highly effective ESAs are currently relegated to treat more

severe anemia because of FDA/EMA restrictions on their use due to cardiovascular

safety concerns. Despite these concerns, the WW ESA market for anemia is still

substantial at ~$6B, of which the majority (~$4B) is generated from CKD-ND and

CKD-D. The current PIIa data have shown that AKB-6548 can increase Hb levels

gradually in a clinically meaningful way without highly elevated levels of EPO,

improves iron metabolism allowing for the potential to remove iron supplementation,

and appears to be generally safe and well-tolerated. We expect focus to be on an

updates regarding the CI-0007 PIIb trial, which is due in Q4'14 and remains the key

valuation-inflection catalyst.

■ ALDR (TP$20, Outperform) - Earnings release likely in the first half of August:

ALDR is not currently an earnings driven story. This will be the company's first quarter

call since the IPO in May 2014. The primary focus of the release will be 1) insights on

the recent six-month data released for ALD403, 2) timing and design of Phase IIb trial

for ALD403 in migraine, and 3) timing of clazakizumab Phase II data in psoriatic

arthritis to be released by Bristol around YE:14.

■ ALXN (TP $174, Neutral) - Pre-open release, call at 10am ET on 7/24. We forecast

Q2 revenues of $511M, in-line with consensus of $510M. We forecast Q2 gross

margins of 92%, R&D of $88M and SG&A of $139M -- our Q1 EPS estimate is $1.08,

just above consensus of $1.07. For full-year 2014, we forecast revenues of $2.19B (vs

consensus of $2.18B) and EPS of $4.90 (vs consensus of $4.87). ALXN has a track

record of raising revenue and EPS guidance with quarterly calls – in Q1, full-year 2014

EPS was raised to $4.75-$4.85 (from $4.37-$4.47), while revenue of $2.15-$2.17B

was maintained. We would look for updates on the progress of the pipeline, including:

progress on the global filings for asfotase alfa (HPP), enrollment progress on the

various new indications for Soliris and any updates on 1007, 1102/1103 and next-gen

Soliris.

■ ATLN (TP Sfr125, Outperform) – Pre Open Release/Call at 8am on 7/22: We

forecast in-line Tracleer revenues of SFr364M (vs. consensus of SFr366M). The more

18 July 2014


important headline number is Opsumit revenues. We forecast in-line Opsumit

revenues of SFr34M vs. Consensus SFr32M. We expect the call to be focused on the

early launch dynamics around Opsumit especially around "real-world" physicians'

views on the morbidity/mortality label. Given recently announced positive PIII

selexipag/GRIPHON data, we anticipate focus on the call to be on further details

surrounding filing/launch dates, launch preparations, and marketing strategy. Given

Tracleer's patent expiration in the US/EU in late 2015/2016, Opsumit and now

Selexipag revenues are expected to help sustain ATLN's long term topline and bottom

line growth which in turn are required to fundamentally justify ATLN.VX's multiple.

■ ARIA (TP$8, Neutral) – Call on August 6 at 8:30am EST: The primary metric for

ARIA is its top-line sales. We forecast US Iclusig sales of $15.9M (up from $8.0M in

Q1) vs consensus of $11.1M. The primary focus will be (1) Iclusig re-launch in the US

(topline number, patients on drug, line of therapy), (2) plans on restarting trials and

additional trials now that partial clinical hold was lifted; (3) plans to move to flat pricing

across doses; (4) progress on EU roll-out, including the Pharmacovigilance Risk

Assessment Committee (PRAC) delay that was recently announced. We forecast Q2

GAAP EPS of ($0.26) and revenue of $16.0M vs. consensus of ($0.29) and $13.7M.

■ ARNA (TP $4, Underperform) – release/call likely in early August; Eisai reports

net sales on August 1. The primary driver continues to be Belviq (for obesity). We

forecast $14M for Q2 Belviq US net sales, below consensus of $16M. IMS data

suggests Q2 could be even lower, with implied demand of around $12M (of which

ARNA would receive a 31.5% royalty, but is resposible for COGS). The exact number

depends in part on what Eisai reports for its ASP and the quarterly fluctuations have

been significant (as well as higher than what is implied by IMS prescription data). End-

user sales are booked by its partner, Eisai, and revenues are recognized on the sell-in

method (at the time of sale to the wholesaler). Revenues have been running higher

than Rx-implied patient demand, suggesting stocking. A television DTC is now

underway, though its effects may have been muted somewhat, with only 400 reps in

the field. In early July, Eisai expanded the field force to 600. Seasonality may be a

headwind in the second half of the year as would be a Contrave (OREX/Takeda)

approval/launch in September, which does not seem to be reflected in current

published sell-side consensus. We are below consensus for the next several quarters

($70M vs $78M for 2014).

■ BIND (TP$20, Outperform) – Call likely in first full week of August: BIND is

currently not an earnings driven story. Investors will be most focused on (1) updates

on the timing of Phase II data for BIND-014 in prostate and lung cancer (outside

chance of announcing data on the call), (2) potential updates on enrollment progress

of the KRAS mutant NSCLC trial and initiation of the multi-cohort trial in a variety of

rarer tumor types, and (3) progress on partner INDs and internal clinical candidates.

Our Q2 GAAP EPS estimate is ($0.64) vs. consensus of ($0.55).

■ BMRN (TP $73, Outperform) – Post-close release. Call at 4:30pm on July 30. We

forecast Q2 revenues of $162M, largely in-line with consensus of around $160M. We

forecast EPS of $(0.41), in-line with consensus $(0.41). This is the first full quarter

since the Vimizim approval earlier this year -- we model $8.7M in revenues for the

quarter. Several data releases are due next year (BMN 111, dwarfism; BMN 190,

Batten disease; PEG-PAL, PKU; BMN-701, Pompe disease) – we think BMRN will

trade higher into these events.

■ CLVS (TP$100, Outperform) – Release/call likely in early August: CLVS is

currently not an earnings-driven story. The spotlight remains on CO-1686 as a

treatment for first-line EGFRm+ and second-line EGFRm-T790M+ NSCLC. PI data

presented at ASCO showed that CO-1686 and AZD9291's efficacy was highly

comparable. Safety was the key focus with the street positioning AZD9291 having a

cleaner safety profile than CO-1686 (hyperglycemia (22% Grade 3) and QTc

18 July 2014


prolongation (7% Grade 3)). The call may provide mgnt to expand the IGF1R

hypothesis. We anticipate additional attention on: (1) Updates on Lucitinib PII trials in

advanced breast cancer (FGFR1-amp, 11q-amp, FGF-WT) and squamous NSCLC

(FGFR1-amp); (2) Updates on ARIEL2 PII biomarker trial and ARIEL3 PIII trial both

for Rucaparib in platinum-sensitive, relapsed ovarian cancer.

■ CORT (TP$2, Neutral) – Release/call likely in Early August: The key headline

number is still Korlym Q2 sales. We forecast sales of $5.9M, which is in-line with

consensus ($6.0M). We expect that the focus will be on any commentary about the

ongoing Korlym launch. Other areas of interest include any updates on the PI trial for

Mifeprostone + Halaven in patients with triple negative breast cancer (TNBC) and EU

filing for Korlym in endogenous Cushing's Syndrome.

CBST (TP$77, Outperform) - Call on July 22 at 5:00pm EST: Cubist is primarily a

top-line story, and we forecast $252.1M in US Cubicin sales vs. consensus of

$251.4M. Our analysis of Q2 sales based on IMS and WK estimates predicts a range

of $232M-$243M assuming June sales are 0-5% higher than the April/May average.

This $232M-$243M range is lower than our estimate and the consensus estimate,

suggesting some risk in the quarter. Estimates based on IMS and WK have been

unpredictable over the last several quarters due to a fluctuating capture rate, and this

could impact this quarter as well. Focus of the call is expected to be (1) ongoing

litigation in Hospira dispute (a ruling or settlement is expected any day), (2)

commercial strategy for recently-approved tedizolid, and (3) update on bevenopran

program (opioid-induced constipation) following recent AdCom (Ph III safety data is

expected in Q3:14). We forecast GAAP Q2 EPS of $(0.15) and revenues of $306.3M

vs. consensus of $0.01 and $299.6M.

■ DNDN (TP $2.50, Neutral) – Call likely in August. We model Provenge revenues of

$75M, just above consensus of $74M. We would look for any commentary on early Q3

trends, price/volume mix (there is a stated y/y price tailwind, although the effective

increase is much less) and any commentary on the debt restructuring, although

typically little is said. The debt restructuring remains the most meaningful overhang on

DNDN equity. CEO John Johnson is stepping down in August – this may signal that a

successful restructuring is not on the near-term horizon.

■ DRTX (TP$22, Outperform) – Call likely in the first full week of August: DRTX is

currently not an earnings driven story. The recent FDA approval for Dalvance will likely

shift the focus of the earnings call to launch activities (timing of US launch, feedback

on pricing from the field, etc.) and timing of the EU filing. Durata will likely highlight

progress with additional clinical trials in potential expansion indications, such as

osteomyelitis and its "once and done" trial. We forecast GAAP Q2 EPS of ($0.71) vs.

consensus of ($0.67).

■ ECYT (TP$9, Outperform) – Call likely late July/early August: ECYT is not

currently an earnings driven story. After failure of vintafolide in ovarian cancer and the

termination of the Merck partnership, focus has shifted to the pipeline, particularly

ECYT's proprietary folate-tubulysin drug (EC1456) in Phase I. Any updates on the trial

(initial data expected in H2:14) will be a focus. Another focus is the timing and venue

for presenting the primary PFS and survival data for the TARGET Phase II lung cancer

study, as this data will guide whether or not ECYT pursues the program on its own.

We forecast Q2 GAAP EPS of $0.55 on revenues of $48.2M vs. consensus of $0.13

on revenues of $22.1M. Our revenue estimate includes the non-cash accelerated

recognition of deferred revenue from the discontinued Merck partnership.

■ ENTA (TP$43, Outperform) – Release/call likely in Mid August: ENTA is currently

not an earnings-story. The key asset for ENTA is ABT-450. ABBV announced in

April/May that it had filed an NDA/MAA for the all-oral, interferon-free fixed dose ABT-

450/r-based regimen for GT1 patients. This combination though is less convenient

18 July 2014


than GILD's Sofosbuvir/Ledipasvir, generally on treatment duration and pill burden.

We expect that the focus of the call will be on updates regarding pricing strategies to

compete against GILD and minimize payer pushback. We also anticipate some

interest in ENTA's earlier stage pipeline, particularly on ABT-493 and EDP-239. ABT-

493, a second-generation protease inhibitor, has been paired with ABT-530, a second-

generation NS5A inhibitor, in a PII trial. ABT-493 could enable ENTA to obtain more

favorable economics on sales of all-oral, interferon-free regimens for HCV from ABBV.

EDP-239, a NS5A inhibitor partnered with NVS, is currently in a PI trial.

■ ESPR (TP$26, Outperform) – Call likely in first half of August: ESPR is currently

not an earnings driven story. We expect ESPR will likely highlight the ongoing Phase II

studies with ETC-1002 in statin intolerant patients (Study 008) and in residual risk

patients (Study 009). Enrollment completed in both, data expected in Oct 2014 and

YE:14, respectively. Investors will likely focus on (1) the evolving competitive and

regulatory landscape for lipid lowering drugs – specifically the PCSK9 inhibitor class

and potential need for outcomes studies, (2) clinical assumptions for defining success

in Studies 008 and 009, and (3) the status of ongoing preclinical studies (carc study,

etc.) which are important for lifting the partial clinical hold and removing the PPAR

inhibitor classification. Our Q2 GAAP EPS estimate is ($0.58) vs. consensus of

($0.60).

■ EXEL (TP $5, Neutral) – Post-close release, call at 5pm ET on 7/31. We model

$5.5M in Cometriq revenues for Q2, in-line with consensus of $5.6M for its currently

approved medullary thyroid cancer indication, which is a relatively modest setting.

Cometriq also has trials underway in prostate cancer, renal cancer and liver cancer.

The primary focus has been prostate cancer and COMET-1, the overall survival trial

required for approval in that setting (COMET-2 should be viewed as more of a

marketing study). EXEL has announced that COMET-1 missed overall survival at the

single interim analysis (387 events). Final OS (after 578 events) is expected later this

year. We continue to view COMET-1 as seemingly a make-or-break trial and one

that's difficult to predict. Besides COMET-1 and COMET-2, full results from

cobimetinib (melanoma), out-licensed to Roche, will be presented. EXEL and Roche

announced the primary endpoint of PFS has been met, although the category is

becoming increasingly competitive.

■ IMGN (TP$14, Neutral) – Call on August 1st at 8 AM EST: IMGN is not an earnings

driven story. The primary focus for investors will likely be the upcoming data for

proprietary programs IMGN529, IMGN853, and IMGN289. Toxicity issues have been a

key focus lately for these programs. The focus of the call is expected to be (1) plans to

advance the IMGN853 program, (2) status, plan, and toxicity issues with IMGN529,

and (3) timing of first data for IMGN289 (EGFR). Another key focus for investors will

be the ongoing launch and ultimate market potential of Roche’s Kadcyla (royalty to

IMGN), though IMGN is not likely to provide any details not already provided by

Roche. IMGN is expected to report FYQ4:14 royalties of approximately $3.4M based

on the Roche reported Q1:14 sales of CHF102M (~$114M). FYQ3:14 royalties will be

based on Q2:14 sales to be reported by Roche. Partner Sanofi reports earnings on

July 31 at 8:30 AM EST. We may hear some update on plans for the anti-CD38 drug

for myeloma (SAR650984) and potentially its CD19 ADC (SAR3419). Both had data at

the recent ASCO meeting. We forecast FY:Q4 EPS of ($0.32) on revenues of $7.7M

vs. consensus of ($0.32) on revenues of $9.7M.

■ INFI (TP$20, Neutral) – Call likely August 5 before market open: INFI is not

currently an earnings driven story. We expect investors will be most focused on any

updates to enrollment in the ongoing clinical program. This includes updates on

recruitment for DYNAMO (relapsed/refractory NHL) and DUO (head-to-head vs.

ofatumumab in relapsed CLL), and expected initiation of DYNAMO+R (Rituxan vs.

18 July 2014


Rituxan+IPI-145 in relapsed iNHL) and new studies in iNHL and in front-line CLL

(+FCR). We forecast Q2 GAAP EPS of ($0.80) vs. consensus of ($0.86).

■ IRWD (TP$16, Outperform) – Post-close release/call at 4:30pm ET on 8/4: The key

number to look at is Linzess end-user US sales. IRWD launched its DTC campaign in

early April. Linzess TRx and NRx scripts have shown a noticeable uptick since DTC

launch and we forecast underlying demand to be $70.2M given IMS reported Q2 TRx

of ~326K (and assuming a net price of $205 per script). Our modeled estimated

Linzess revenue of $71.3M (vs. consensus of $72.0M) assumes only $1.1M of

stocking/inventory. Our low estimate for inventory stocking is driven by expectations of

a reduced pace of stocking by distributors after higher than expected stocking in Q1 in

anticipation of the DTC launch (4-5 weeks inventory at the end of Q1 vs. 2-3 weeks

longer term guidance). We expect focus on the conference call to be on (1) more

granularity on the DTC launch (2) Concomitant changes in cash burn expectations and

requirement for capital (3) Linzess granularity such as marketing mix, sampling rates,

net discounts, and rebates.

■ ITMN (TP$33, Neutral) – Release/call likely in late July: The most important

headline number is Esbriet Q2 sales. We are forecasting Esbriet Q2 sales of $33.3M,

which is in-line with consensus of $34.1M. Focus on the call is likely to be on going

launch preparations for Esbriet in the US expected in Q1'15, with potential for an

earlier launch, given the FDA PDUFA date of November 23, 2014. We expect ongoing

focus on the extent morbidity/mortality outcomes makes it into the final label. Other

areas of interest include commentary regarding treatment dynamics (especially

persistence rates) in Germany, France, UK, Italy, and various mid-sized European

countries in which reimbursement has already been secured as well as any

observable impact on Esbriet use in the EU after the positive ASCEND PIII data

release. Additional attention will likely be on the ongoing reimbursement negotiations

with Spain and granularity on EU relabeling to reflect ASCEND-related data at the end

of 2014.

■ KITE (TP$34, Outperform) – Earnings release likely first half of August: KITE is

not currently an earnings driven story. We expect investors will be most focused on

any updates to KITE's clinical strategy, progress with its new manufacturing process,

and plans for its pipeline candidates. We forecast Q2 GAAP EPS of ($0.65).

■ MDCO (TP$28, Neutral) – Call on July 23 at 8:30am EST: We expect that investors

will be largely focused on (1) plans for refiling Cangrelor following its recent rejection,

(2) generic challengers for Angiomax, and (3) the upcoming PDUFA for oritavancin.

The expectations for oritavancin approval are high given the recent approval of

Dalbavance. We also expect that MDCO will begin to attempt refocus investor

attention on other near term product opportunities, including Fibrocaps and IONSYS,

neither of which the Street gives much credit. WK and IMS Angiomax sales estimates

have been difficult to predict over the last four quarters because of the unusually large

final month. If we assume a final month in line with the average of the last four final

months, Angiomax is tracking in line. For the first two months of Q2, WK sales

estimates are down 1.0% y/y and IMS estimates are down 6.5% y/y. Our Angiomax

estimate is $142.0M (up 2.9% y/y). We forecast Q2 GAAP EPS of $0.04 on revenue of

$186.4M vs. consensus of ($0.02) on revenue of $183.7M.

■ MDVN (TP $95, Outperform) – Release/call post-close August 7th; Astellas

reports Aug 1. For Q2, we forecast $133M in total US net sales (consensus is

$131M), representing just under a 7% sequential increase from Q1. Of this, MDVN

receives 50% ($66.3M). We also forecast $59M in collaboration revenue (milestones

and amortized revenues) and $8M in ex-US (12%) royalties on $63M net sales

(consensus is $59M). For the year, we forecast $562M (guidance: $540-$575M;

consensus is $576M) in US end-user net sales and around $300M in EU/JPN end-

user net sales on which MDVN receives royalties. Current sales are largely relegated

18 July 2014


to the post-chemo setting, but full Xtandi pre-chemo (PREVAIL) data were released

earlier this year and the US/EU pre-chemo applications have been filed (the PDUFA

date on the US application is Sept 18th). Key to watch is the ongoing Xtandi

performance (particularly after the disappointing guidance earlier this year – we think

Xtandi will likely beat at least in Q2) and the pre-chemo approval/uptake. Notably,

Xtandi Rx data will eventually be trackable, as Astellas is in the process of removing

channel data reporting prohibitions, although it's been a very gradual process. Beyond

PREVAIL, further catalysts are "TERRAIN" (Xtandi vs Casodex), fully enrolled since

last May, and breast cancer Phase II data - "TERRAIN" could come late this year or

early next year.

■ MVIR (TP SEK115, Outperform) – Release/call on 8/21: The most important asset

for MVIR is Olysio (Simeprevir), a second-generation protease inhibitor, for treatment

of HCV. MVIR's marketing and commercialization partner, JNJ, reported Olysio sales

of $831M in Q2 (US: $725M; Intl: $106M). Assuming a royalty rate of 7.0% and an

exhange rate of SEK6.60/per dollar, we estimate Olysio sales of SEK384M. We

expect focus on the call to be on the ongoing near-term as well as medium-term

launch dynamics associated with Olysio. On other financial metrics, we also forecast

Q2 Biophausia sales of SEK45M. The focal points remains on the ongoing PII trials

involving all-oral, interferon-free regimens containing Simeprevir in 2014.

■ OREX (TP $10, Outperform) – Release/call likely in August: The key asset for the

company is NB32 (formerly Contrave), the combination of bupropion and naltrexone,

for the treatment of obesity, which will be marketed in conjunction with Takeda.

Importantly, Takeda said it will launch NB32 with a sizeable sales force (900 reps vs.

the 150 and 200 that VVUS and Eisai initially put behind Qsymia and Belviq,

respectively). NB32 received a 90-day extension and now has a PDUFA date of

September 11th. The delay apparently relates to the handling of the CVOT post-

approval. OREX is guiding to a potential CHMP recommendation by Q3'14 and EU

approval by year-end. Following the positive interim read of the Light Study CVOT, we

anticipate approval both in the US and EU. There is likely little additional commentary

management can make ahead of this. For 2014, we model $12M in NB32 end-user

product sales. Following the sluggish launches of both VVUS' Qsymia and

Eisai/ARNA's Belviq, and the lack of progress on EU approval for both of those

products, we think the Street's expectations for the NB32 US roll-out and EU

approval/partnering are pretty modest.

■ PCYC (TP$121, Outperform) – Call likely in the at the end of July/early August:

Q2:14 will be the second full quarter of Imbruvica sales, and weekly IMS script data

suggests strong Q2 sales, tracking in a $90M - $102M range, assuming a 79% ± 5%

capture rate (based on last quarter's actuals). Our Imbruvica Q2 estimate is $94.2M vs

the consensus estimate of $75.7M. We expect PCYC will raise its overly conservative

Imbruvica guidance. Investors are most focused on the new guidance, given the

negative reaction to last quarter's conservative guidance. As is typical for PCYC, we

anticipate detailed updates for the entire ibrutinib clinical program. Our Q2 GAAP EPS

estimate is ($0.35) vs. consensus of ($0.26).

■ PTLA (TP$34, Outperform) – Call likely first full week of August: PTLA is not an

earnings driven story. Investors will be most focused on (1) clinical and regulatory

progress on andexanet alfa (potential Phase III readouts in Q4:14), (2) update and

recent data readout on the Lovenox program; (3) plans for a go/no-go decision on the

cerdulatinib program, and (4) the planned futility analysis for betrixaban (early 2015).


■ PRTA (TP$53, Outperform) – Earnings release likely August 4th

or 5th

(no call

expected): PRTA is not an earnings driven story. Investors will be most focused on

the next data release for the NEOD001 program in AL amyloidosis, particularly data

on longer-term follow-up. For the call, investors will focus on: (1) the clinical/ regulatory

18 July 2014


plan and FDA discussions for the NEOD001 program, (2) insight into ongoing Phase I

for PRX002 with Roche, and (3) initiation timing of the PRX003 trial. Our Q2 GAAP

EPS estimate is ($0.06) vs. consensus of ($0.14).

■ PTCT (TP$35, Outperform) – Call likely August 7 before market open: PTCT is not

an earnings driven story. After an initial rejection, PTCT gained CHMP

recommendation for approval of Translarna in Europe on re-examination, a better than

anticipated outcome. Investors are now focusing on (1) the EU launch plan and rollout,

(2) potential early DMD filing in the US (could be in Q4:14), (3) potential early filing for

CF in Europe (potentially H1:15), (4) progress in the Phase III DMD trial (data

expected in Q3:15), (5) updates on the recently initiated confirmatory Phase III in

cystic fibrosis, and (6) any update on the ongoing Phase I trial for the SMA program.


■ RCPT (TP$58, Outperform) – Release/call likely in Early August: RCPT is

currently not an earnings-driven story. RCPT announced positive topline RADIANCE

PII data readout in June'14 with additional granularity expected to be presented at

ACTRIMS-ECTRIMS in Boston, September 10-13th. RPC1063 could be a significant

winner in the multiple sclerosis “revolution”. We believe that RPC1063’s clinical profile

– notably shorter half-life, faster recovery of lymphocytes, as well as improved cardio-

and hepato-toxicity safety – could provide RPC1063 with a competitive advantage

over Gilenya. Additional focus will likely be on updates on the going PII trial for

RPC1063 in ulcerative colitis (topline TOUCHSTONE PII data due Q4'14) and the PII

trial for RPC4046 in eosinophilic esophagitis.

■ REGN (TP$340, Outperform) – Call likely early late July / early August: Investors

will be primarily interested in US and ex-US Eylea sales. Any new information on

Avastin compounding and market share dynamics will be a focus. Our US sales

forecast is $391.9M vs. Consensus of $416.3M (ThomsonOne). Eylea ex-US

commercial partners Bayer and Santen report on July 30 and August 4, respectively.

Partner Sanofi reports Q1 earnings on July 31 at 8:30 AM EST, and could provide

some update to their shared pipeline programs. On the Q2 call, we expect investors

will focus on (1) current and future market dynamics in AMD and DME, (2) ongoing

clinical data and regulatory plan for alirocumab (PCSK9), (3) clinical plan for

dupilumab in asthma and atopic dermatitis, and (4) the expanding pipeline programs.

We forecast Q2 GAAP EPS of $0.79 on revenue of $616.3M vs. consensus of $0.89

on revenue of $644.6M (ThomsonOne).

■ SCMP (TP$8, Neutral) – Release/call likely in Early August: For Q2, our estimates

are essentially in-line with consensus for total revenues ($23.8M vs. $24.1M) and

above consensus on EPS ($0.04 vs. $0.02). We expect the primary focus of the call to

be on updates regarding the alternate formulation of liquid lubiprostone as well as

updates on topline PIb ion-channel activator for LSS expected in Q4'14.

■ SGEN (TP$51, Outperform) - Call at 4:30 pm EST on July 31: We forecast US

Adcetris sales of $40.7M vs consensus of $46.3M (excluding one outlier, consensus is

$41.2M), While an in-line or better quarterly Adcetris sales number is important for

continued outperformance, investor focus is largely dependent on upcoming clinical

data for Adcetris, including Phase 3 AETHERA data (post-transplant setting) in H2:14,

and the pipeline. We expect investors to focus on the following updates during the Q2

call (1) plans for modifying endpoints in the Adcetris frontline trials (ECHELON 1 and

ECHELON 2), (2) upcoming AETHERA data and potential expanded use in that

indication, and (3) upcoming data presentations including SGN-33a for AML. We

forecast Q2 EPS of $(0.18) on revenue of $69.0M vs. consensus of $(0.22) on

revenue of $65.0 M.

■ SGYP (TP$9.20, Outperform) – Release/call likely in Early August: SGYP is

currently not an earnings-driven story. The key asset for SGYP is Plecanatide. Focus

18 July 2014


will likely be on updates regarding the PIII trial in CIC (topline data in Q2'15).

Competitor Linzess's launch progress is important as this drug is seen as building the

market for Plecanatide, which uses the same mechanism of action and targets the

same indications. Discussion on potential partnerships will be important as SGYP

currently has 100% economics. Management has made clear that their end goal is to

be acquired by a larger pharmaceutical company.

■ SNSS (TP$6, Neutral) – Call likely on August 5: SNSS is not an earnings driven

story, and we do not expect any major update on the call. SNSS completed enrollment

in the Phase III VALOR trial at the end of September, 2013, and is guiding to a data

release in Q3 or Q4:14. The readout has been pushed back a few times due to a lower

than anticipated event rate; any insight on timing will be the focus. Our Q2 GAAP EPS

estimate is ($0.17) vs. consensus of ($0.17).

■ UTHR (TP$75, Neutral): Release Call likely in Late July: For Q2, we are forecasting

in line total revenues ($315M vs. $308M for consensus) and GAAP EPS ($1.57 vs.

$1.62 for consensus). We project Remodulin sales of $136M (vs. $133M for

consensus) and Tyvaso sales of $125M (vs. $121M for consensus). UTHR launched

Oral Remodulin/Orenitram in May'14. Investor attention is likely to be focused on any

commentary on the initial launch and expected ramp for Orenitram in the US and

remodulin in Japan. Additional focus will be on any updates on litigation between

UTHR and Sandoz in response to Sandoz filing an ANDA against Remodulin (trial

expected to begin in mid-2014). The 30 month stay will expire in Aug-2014 potentially

allowing for generic competition to Remodulin as early as September. Investors will

also keenly watch for any updates on the launch of the Synchromed II (implantable)

"pump" expected in 2015/2016.

■ VICL (TP $1.50, Neutral) – Release/call likely July/August. Following the

termination of Allovectin, the focus turns to ASP0113, a vaccine partnered with

Astellas. It’s now generally quiet - upcoming catalysts are Phase II results from the

ASP0113 SOT trial as well as potentially a progress update of some sort from the first

100 patients of the Phase III ASP0113 HCT trial, but these updates would seem to be

relatively minor catalysts (the final Phase III HCT data is still a few years away).

■ VRTX (TP$94, Neutral) – Pre-open release/call at 9:00am ET on 7/23: For Q2

earnings, we are below consensus on total revenues (CS: $111.7M vs. Consensus:

$128.6M) and EPS (CS: ($0.92) vs. Consensus: ($0.74)). We forecast slightly below

consensus Kalydeco sales (CS: $111.7M vs. Consensus: $117.7M). Given the recent

positive PIII TRAFFIC/TRSNPORT data, we expect that investors will be paying more

attention to filing updates (expected in Q4'14) and launch timelines. Any additional

granularity on the PIII data is expected to be presented at NACFC from 9th-11

th

October, 2014. We expect further focus on any updates on VRTX's triple combination

for Homozygous and Heterozygous F508del CF. Additional focus could include

dynamics of the ongoing Kalydeco launch, updates on partnership discussions for VX-

509 for RA, and further details on VRTX's earlier stage assets in oncology and

multiple sclerosis.

■ VVUS (TP $6, Neutral) – Release/call likely in August: The launch of VVUS’

Qsymia is ongoing. When the anti-obesity agent was approved, the product was

saddled with a restrictive REMS that limited distribution to mail order. The REMS was

relaxed in April 2013 and VVUS began launching Qsymia into the normal retail

distribution channels last July. Over the past couple of months, prescription growth

has stalled, likely due to rebates being curtailed, the sales force being restructured

and Eisai expanding its sales force (the latter suggests Takeda's expected Contrave

launch in September could impact both Qsymia and Belviq performance further

following the expected September launch). For Q2 we are below consensus on

revenues: $15.7M vs $17.7M. Expanding the sales force or finding a partner are now

18 July 2014


past-due. It's difficult to see what could take the stock higher short of a partnership at

this point, but any deal would require relinqiushing meaningful economics.

■ XNCR (TP$14, Outperform) – Call likely in first half of August: XNCR is currently

not an earnings driven story. The focus will be on the progress of the proprietary early

stage pipeline, including (1) timing and expectations for XmAb7195 Phase I data,

expected H1:15, (2) timing of readout for XmAb5871 Phase IIa trial in RA, expected in

Q4:14, and (3) announcement of a lead bispecific program, potentially multiple

myeloma (CD38xCD3) or acute myeloid leukemia (CD123xCD3), including timing of

preclinical data presentation and IND filing. Our Q2 GAAP EPS estimate is ($0.19) vs.


■ XNPT (TP$7, Outperform) – Release/Call likely in Early August: For Q2, we are

forecasting Horizant sales of $3.6M, which is in line with consensus of $4.4M. Investor

attention is likely to focus on XP'829. XP'829 entered PII trials in moderate to severe

psoriasis in Q2'14. Recall, the PII trial will evaluate QD and BID at doses that produce

daily MMF exposures similar to that of BIIB's Tecfidera as well as QD at a lower dose.

Topline data is still expected 12-14 months afterwards (Mid'15). XNPT currently has

enough cash at hand to fund operations through 2015 to the readout of the PII trials

for XP'829.

■ XOMA (TP$8, Outperform) – Call likely in August 7 after the close: XOMA is

currently not an earnings driven story. On the Q2 call, we expect investors will focus

on (1) timeline refinement for the Phase III EYEGUARD B readout of gevokizumab in

Behcet's uveitis (previously guided to hitting the number of events required by end of

June, but has pushed back due to a slower rate of summer exacerbations), (2)

updates on enrollment for EYEGUARD A and C trials, and (3) regulatory plans for

gevokizumab in pyroderma gangrenosum. Our Q2 EPS estimate is ($0.19) vs.


18 July 2014


Exhibit 17: Comprehensive Calendar of Events in July (Earnings – Black/Blue, PDUFA – Green, Conferences/Analyst

Days – Red, Annual General/Shareholder Meetings - Purple)

Monday Tuesday Wednesday Thursday Friday

Ticker

Time / Telephone

(PIN)

14 15 16 17 18

21 22 23 24 25

Actelion

08:00/866.305.6290

Cubist

17:00/855.139.7654

(Psw: 55596186)

Biogen Idec

9:00/877.650.1145

(Psw:70022353)

GlaxoSmithKline

9:00/TBA

The Medicines Company

8:30/877.359.9508

(Psw: 68208610)

Gilead Sciences

16:30/877.359.9508

Illumina

17:00/888-679-8034

(60693837)

Lonza

1:30, 8:30/631.570.5613

(Psw: 0516363)

BristolMeyrsSquibbs

10:30/ 913.312.6681

(Psw: 3903092)

Celgene

9:00/TBA

Eli Lilly

09:00/TBA

Alexion

10:00/800.967.7137

(Psw: 3903092)

Roche

07:00/631-570-5613

AACC - The American

Association for Clinical

Chemistry - Annual Meeting

- July 27 - 31, Chicago, IL

ACRX (Zalviso) PDUFA - July

27

28 29 30 31

Almirall SA

4:00/+44.20.3427.1901

(Psw: 5071598)

Merck

8:00/877.381.5782

(Psw: 62998996)

Pfizer

10:00/866.246.2545

(Psw: Second Quarter

Earnings)

Vertex

17:00/866-501-1537

Amgen

17:00/706.679.5823

(59061932)

BMO Capital Markets

Biotech Corporate Access

Day, Boston, MA

ANCR (Tavabrole) PDUFA

Biomarin Pharmaceuticals

16:30/877.303.6313

(Psw: 59207209)

Bayer

08:00/855-272-3513

Shire Plc

TBA

UCB

TBA

Exelixis

17:00/800.706.7745

Seattle Genetics

16:30/800.839.7875

(Psw: 7088135)

Astrazeneca

07:00/866-977-7645

(29614047)

Sanofi

08:30/866-907-5928

BMO Capital Markets

Biotech Corporate Access

Day - San Francisco, CA

July

Estimated 28th - 31st July: Allergan, Vical, Pharmacyclics, Forest, Abbvie, Intermune, United Therapeutics Source: Company data, Credit Suisse estimates

18 July 2014


Exhibit 18: Comprehensive Calendar of Events in August (Earnings – Black/Blue, PDUFA – Green, Conferences/Analyst

Days – Red, Annual General/Shareholder Meetings - Purple)

Monday Tuesday Wednesday Thursday Friday

1

Ticker

Time / Telephone

(PIN)

Immunogen

08:00/TBA

4 5 6 7 8

Ironwood

16:30/877.643.7155

(Psw: 67488246)

Infinity

TBA

Sunesis

TBA

Ariad

08:30/888.771.4371

(37600188)

MDCO (Oritavancin) PDUFA

GILD (Idelalisib) PDUFA

Lundbeck

TBA

Novo Nordisk A/S

TBA

Medivation

TBA

PTC Therapeutics

TBA

XOMA

TBA

SPPI (Beleodaq) PDUFA -

August 09

11 12 13 14 15

Wedbush Life Sciences

Management Access

Conference - August 12 - 13,

New York, NY

Meda

16:30/TBA

Canaccord Genuity Annual

Growth Conference -

August 13 -14, Boston, MA

Piper Jaffray Heartland

Summit - August 14 - 15,

Minneapolis, MN

18 19 20 21 22

REGN (Eylea) PDUFA

Medivir AB

TBA

BIIB (Plegridy) PDUFA

25 26 27 28 29

PFE/BMY (Eliquis) PDUFAIspen SA

TBA

August

Estimated 11th - 15th August: Ambit Biosciences, Myriad Genetics, Enanta, Ultragenyx, Esperion, Xencor

Estimated 18th - 22nd August:

Estimated 25th - 29th August:

Estimated 04th - 08th August: Bind, Prothena, Clovis, Endocyte, Synergy, Dendreon, Vivus, Synageva, Corcept, Orexigen, Durata, XenoPort,

Sucampo, Regeneron, Idenix, Achillion, Akebia, Arena, Achaogen, Kite, Portola, Receptos


18 July 2014


Companies Mentioned (Price as of 17-Jul-2014)

Achaogen (AKAO.OQ, $11.05) Achillion Pharmaceuticals Inc. (ACHN.OQ, $6.65) Actelion (ATLN.VX, SFr109.2) Akebia (AKBA.OQ, $23.49) Alexion Pharmaceuticals Inc. (ALXN.OQ, $155.06) Amgen Inc. (AMGN.OQ, $115.39, NEUTRAL, TP $125.0) Arena Pharmaceuticals Inc (ARNA.OQ, $4.81) Ariad Pharmaceuticals, Inc. (ARIA.OQ, $5.0) BIND Therapeutics (BIND.OQ, $9.3) BioMarin Pharmaceutical, Inc. (BMRN.OQ, $55.78) Biogen Idec (BIIB.OQ, $299.29, OUTPERFORM, TP $400.0) Celgene Corp. (CELG.OQ, $83.13, OUTPERFORM, TP $112.5) Clovis Oncology, Inc. (CLVS.OQ, $36.44) Corcept Therapeutics (CORT.OQ, $2.33) Cubist Pharmaceuticals (CBST.OQ, $63.24) Dendreon Corp. (DNDN.OQ, $2.05) Durata Therapeutics (DRTX.OQ, $14.59) Enanta Pharmaceuticals (ENTA.OQ, $37.88, OUTPERFORM, TP $43.0) Endocyte, Inc. (ECYT.OQ, $6.14) Esperion Therapeutics (ESPR.OQ, $14.01) Exelixis (EXEL.OQ, $3.43) Gilead Sciences Inc. (GILD.OQ, $85.07) ImmunoGen, Inc. (IMGN.OQ, $10.79) Infinity Pharmaceuticals, Inc. (INFI.OQ, $9.54) InterMune, Inc. (ITMN.OQ, $40.59) Ironwood Pharmaceuticals, Inc. (IRWD.OQ, $13.33) Medivation (MDVN.OQ, $69.58) Medivir SE (MVIRb.ST, Skr129.75) Orexigen Therapeutics Inc. (OREX.OQ, $5.05) PTC Therapeutics, Inc (PTCT.OQ, $23.19) Pharmacyclics, Inc. (PCYC.OQ, $91.5) Portola Pharmaceuticals (PTLA.OQ, $23.96) Prothena Corp (PRTA.OQ, $17.26) Receptos (RCPT.OQ, $34.49) Regeneron Pharmaceutical (REGN.OQ, $296.41) Seattle Genetics (SGEN.OQ, $33.75) Sucampo Pharmaceuticals (SCMP.OQ, $6.11, NEUTRAL[V], TP $8.0) Sunesis Pharmaceuticals (SNSS.OQ, $5.55) Synergy Pharmaceuticals (SGYP.OQ, $3.64) The Medicines Company (MDCO.OQ, $25.59) United Therapeutics Corp (UTHR.OQ, $89.74) VIVUS, Inc. (VVUS.OQ, $4.6) Vertex Pharmaceuticals Inc. (VRTX.OQ, $94.49) Vical Inc. (VICL.OQ, $1.25) XOMA Corporation (XOMA.OQ, $3.7) Xencor, Inc (XNCR.OQ, $9.85) XenoPort (XNPT.OQ, $4.27)

Disclosure Appendix

Important Global Disclosures

Ravi Mehrotra PhD, Jason Kantor, PhD and Lee Kalowski each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

18 July 2014


3-Year Price and Rating History for Amgen Inc. (AMGN.OQ)

AMGN.OQ Closing Price Target Price

Date (US$) (US$) Rating

01-Aug-11 53.77 59.00 N

07-Nov-11 58.43 R

08-Dec-11 58.41 59.00 N

09-Dec-11 58.59 71.00

25-Jul-12 77.96 85.00 O

26-Jul-12 79.30 90.00

03-Jan-13 88.59 100.00

22-Jan-13 83.29 90.00 N

04-Mar-13 92.73 100.00

04-Apr-13 105.90 115.00

17-May-13 105.63 120.00

10-Dec-13 114.10 125.00

* Asterisk signifies initiation or assumption of coverage.

N EU T RA L

REST RICT ED

O U T PERFO RM

3-Year Price and Rating History for Biogen Idec (BIIB.OQ)

BIIB.OQ Closing Price Target Price


22-Sep-11 94.54 126.00 O

08-Feb-12 119.60 150.00

12-Sep-12 152.26 165.00

08-Oct-12 151.22 175.00

08-Feb-13 164.44 185.00

04-Mar-13 169.96 200.00

04-Apr-13 195.68 225.00

17-May-13 226.85 255.00

02-Oct-13 246.23 290.00

10-Dec-13 285.23 375.00

13-Feb-14 328.62 400.00


O U T PERFO RM

3-Year Price and Rating History for Celgene Corp. (CELG.OQ)

CELG.OQ Closing Price Target Price


29-Jul-11 29.65 31.00 N

19-Jan-12 36.10 37.50

12-Nov-12 37.83 40.00

03-Jan-13 40.86 42.50

04-Mar-13 52.78 55.00

04-Apr-13 57.98 62.50

17-May-13 62.46 67.50

24-Oct-13 78.98 82.50

10-Dec-13 85.38 105.00 O

18-Jun-14 80.54 112.50


N EU T RA L

O U T PERFO RM

18 July 2014


3-Year Price and Rating History for Enanta Pharmaceuticals (ENTA.OQ)

ENTA.OQ Closing Price Target Price


15-Apr-13 20.35 29.00 O *

10-Dec-13 38.14 36.00

09-Feb-14 36.61 43.00


O U T PERFO RM

3-Year Price and Rating History for Sucampo Pharmaceuticals (SCMP.OQ)

SCMP.OQ Closing Price Target Price


21-Jun-13 6.78 8.00 N *


N EU T RA L

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities

As of December 10, 2012 Analysts’ stock rating are defined as follows:

Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark*over the next 12 months.

Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months.

Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months.

*Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ra tings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least at tractive investment opportunities. For Latin American and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractivene ss of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, 12 -month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively. Prior to 10th December 2012, Japanese ratings were based on a st ock’s total return relative to the average total return of the relevant country or regional benchmark.

Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.

Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.

Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation:

Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months.

Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months.

Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months.

18 July 2014


*An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cov er multiple sectors.

Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution

Rating Versus universe (%) Of which banking clients (%)

Outperform/Buy* 45% (54% banking clients)

Neutral/Hold* 40% (50% banking clients)

Underperform/Sell* 13% (47% banking clients)

Restricted 3%

*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, an d Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdin gs, and other individual factors.

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Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties.

Price Target: (12 months) for Amgen Inc. (AMGN.OQ)

Method: Our $125 target price for AMGN implies about 14.9x our 2015 ex-option EPS estimate of $8.39, representing about a 2% premium to the S&P 500 2015 PE multiple. This multiple for AMGN is justified due to its <10% growth to 2017 and lower visibility in growth post 2017.

Risk: We see several risks to AMGN's achievement of our $125 target price. (1) More or less biosimilar competition relative to our model. (2) Denosumab could exceed or miss our expectations. (3) Erythropoietin safety concerns could be more or less than our model. (4) Pipeline exceeds expectations. (5) Share buyback could be less aggressive than our model.

Price Target: (12 months) for Biogen Idec (BIIB.OQ)

Method: Our $400 target price for BIIB is about 28x our 2015 option-adjusted EPS estimate of $14.06. This multiple for BIIB is justified due to its >15% growth in 2017, minimal patent risk through 2020, and significant pipeline potential.

Risk: We see several risks to BIIB's achievement of our $400 target price. (1) Tecfidera peak sales could be below our estimates. 2) Avonex share losses are more than expected, slowing down revenue growth. 3) Tysabri net patient additions accelerate less than expected. 4) Significant portion of the mid-stage pipeline fails. 5) BIIB's share buyback program could be less aggressive than expected. 6) Sales of the Hemophilia franchise could be below our estimates.

Price Target: (12 months) for Celgene Corp. (CELG.OQ)

Method: Our $225 target price for CELG is about 23.2x our option-adjusted 2015 EPS estimate of $9.71, representing about a 40% premium to the S&P 500 PE multiple. This multiple for CELG is justified due to >20% growth to 2017.

Risk: We see several risks to CELG's achievement of our $225 target price. (1) Revlimid could face a further delay in Europe. (2) Increases in treatment duration and penetration in the first-line setting for multiple myeloma could be lower than our expectations. (3) Otezla, Pomalyst, and other marketed products could underperform our current estimates. (4) Pipeline failures.

Price Target: (12 months) for Enanta Pharmaceuticals (ENTA.OQ)

Method: Our DCF-derived TP of $43 is based on annual cash flows through 2025 10% discount rate, and no terminal value. The cash flows are based on royalties on the protease inhibitor portion of the sales for protease inhibitor based regimens and add-back of all R&D expenses not associated with ABT-450.

Risk: The risks to our TP of $43 are: (1) The protease inhibitor based regimens are not approved or significantly delayed; (2) The protease inhibitor based reigmens do not demonstrate efficacy and safety expected from studies to date; (3) The protease inhibitor based regimens could underperform our expectations for the product launch ramp or peak sales; (4) Competition is more acute than we model; (5) HCV market may not become as large as expected.

18 July 2014


Price Target: (12 months) for Sucampo Pharmaceuticals (SCMP.OQ)

Method: Our DCF-derived target price of $8 is based on cashflows of Amitiza and Rescula, and do not include pipeline assets: SPI-8811 and SPI-017. Additional regional partnerships or approved indications will represent upside from our estimates. We use a standard 10% discount rate on cashflows and add back net cash.

Risk: Risks to our $8 PT include: (1) Better then expected launch of Amitiza in EU and Japan (2) Invalidation of patents in current patent challenge (3) Better than expected uptake of Linzess or competitor products (4) Loss of market share to competitors (5) Poor Amitiza uptake in ex-US launches

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the target price method and risk sections.

See the Companies Mentioned section for full company names

The subject company (AMGN.OQ, BIIB.OQ, CELG.OQ, ENTA.OQ, DRTX.OQ, BMRN.OQ, ECYT.OQ, ITMN.OQ, AKAO.OQ, IMGN.OQ, BIND.OQ, OREX.OQ, IRWD.OQ, CLVS.OQ, ATLN.VX, CORT.OQ, AKBA.OQ, GILD.OQ, ESPR.OQ, SGYP.OQ, PTLA.OQ, XNPT.OQ, SGEN.OQ, PTCT.OQ, RCPT.OQ, SNSS.OQ, PRTA.OQ, REGN.OQ, XOMA.OQ, XNCR.OQ) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.

Credit Suisse provided investment banking services to the subject company (AMGN.OQ, BIIB.OQ, CELG.OQ, ENTA.OQ, DRTX.OQ, ECYT.OQ, AKAO.OQ, BIND.OQ, OREX.OQ, CLVS.OQ, AKBA.OQ, ESPR.OQ, SGYP.OQ, PTLA.OQ, XNPT.OQ, PTCT.OQ, RCPT.OQ, PRTA.OQ, REGN.OQ, XOMA.OQ, XNCR.OQ) within the past 12 months.

Credit Suisse provided non-investment banking services to the subject company (AMGN.OQ, BIIB.OQ, CELG.OQ, IMGN.OQ, ATLN.VX, GILD.OQ, REGN.OQ) within the past 12 months

Credit Suisse has managed or co-managed a public offering of securities for the subject company (AMGN.OQ, CELG.OQ, ECYT.OQ, AKAO.OQ, BIND.OQ, OREX.OQ, AKBA.OQ, PTLA.OQ, XNPT.OQ, PTCT.OQ, RCPT.OQ, PRTA.OQ, XOMA.OQ, XNCR.OQ) within the past 12 months.

Credit Suisse has received investment banking related compensation from the subject company (AMGN.OQ, BIIB.OQ, CELG.OQ, ENTA.OQ, DRTX.OQ, ECYT.OQ, AKAO.OQ, BIND.OQ, OREX.OQ, CLVS.OQ, AKBA.OQ, ESPR.OQ, SGYP.OQ, PTLA.OQ, XNPT.OQ, PTCT.OQ, RCPT.OQ, PRTA.OQ, REGN.OQ, XOMA.OQ, XNCR.OQ) within the past 12 months

Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (AMGN.OQ, BIIB.OQ, CELG.OQ, ENTA.OQ, DRTX.OQ, BMRN.OQ, MDVN.OQ, ECYT.OQ, ITMN.OQ, AKAO.OQ, IMGN.OQ, BIND.OQ, OREX.OQ, CBST.OQ, IRWD.OQ, CLVS.OQ, ACHN.OQ, DNDN.OQ, ALXN.OQ, ARIA.OQ, CORT.OQ, AKBA.OQ, GILD.OQ, ESPR.OQ, SGYP.OQ, VRTX.OQ, PTLA.OQ, VVUS.OQ, XNPT.OQ, MDCO.OQ, SGEN.OQ, PTCT.OQ, RCPT.OQ, SNSS.OQ, PRTA.OQ, REGN.OQ, XOMA.OQ, XNCR.OQ) within the next 3 months.

Credit Suisse has received compensation for products and services other than investment banking services from the subject company (AMGN.OQ, BIIB.OQ, CELG.OQ, IMGN.OQ, ATLN.VX, GILD.OQ, REGN.OQ) within the past 12 months

As of the date of this report, Credit Suisse makes a market in the following subject companies (AMGN.OQ, BIIB.OQ, CELG.OQ, ENTA.OQ, SCMP.OQ, DRTX.OQ, BMRN.OQ, MDVN.OQ, ECYT.OQ, ARNA.OQ, ITMN.OQ, AKAO.OQ, IMGN.OQ, BIND.OQ, OREX.OQ, CBST.OQ, IRWD.OQ, CLVS.OQ, ACHN.OQ, DNDN.OQ, ALXN.OQ, ARIA.OQ, CORT.OQ, AKBA.OQ, EXEL.OQ, GILD.OQ, INFI.OQ, ESPR.OQ, SGYP.OQ, VRTX.OQ, PCYC.OQ, PTLA.OQ, UTHR.OQ, VVUS.OQ, XNPT.OQ, MDCO.OQ, SGEN.OQ, RCPT.OQ, SNSS.OQ, PRTA.OQ, REGN.OQ, XOMA.OQ, VICL.OQ, XNCR.OQ).

As of the end of the preceding month, Credit Suisse beneficially own 1% or more of a class of common equity securities of (BMRN.OQ, ATLN.VX, VVUS.OQ, PTCT.OQ).

Credit Suisse has a material conflict of interest with the subject company (CLVS.OQ) . Clovis Oncology is a development-stage biotechnology company focused on developing drugs and associated diagnostics for treatment of various cancers.

For other important disclosures concerning companies featured in this report, including price charts, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683.

Important Regional Disclosures

Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report.

The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (AMGN.OQ, BIIB.OQ, CELG.OQ, ENTA.OQ, SCMP.OQ, DRTX.OQ, BMRN.OQ, MDVN.OQ, ECYT.OQ, ARNA.OQ, ITMN.OQ, AKAO.OQ, IMGN.OQ, BIND.OQ, OREX.OQ, MVIRb.ST, CBST.OQ, IRWD.OQ, CLVS.OQ, ACHN.OQ, DNDN.OQ, ALXN.OQ, ATLN.VX, ARIA.OQ, CORT.OQ, AKBA.OQ, EXEL.OQ, GILD.OQ, INFI.OQ, ESPR.OQ, SGYP.OQ, VRTX.OQ, PCYC.OQ, PTLA.OQ, UTHR.OQ, VVUS.OQ, XNPT.OQ, MDCO.OQ, SGEN.OQ, PTCT.OQ, RCPT.OQ, SNSS.OQ, PRTA.OQ, REGN.OQ, XOMA.OQ, VICL.OQ, XNCR.OQ) within the past 12 months

Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares.

Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report.

18 July 2014


For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit http://www.csfb.com/legal_terms/canada_research_policy.shtml.

The following disclosed European company/ies have estimates that comply with IFRS: (ATLN.VX).

Credit Suisse has acted as lead manager or syndicate member in a public offering of securities for the subject company (AMGN.OQ, CELG.OQ, ENTA.OQ, DRTX.OQ, MDVN.OQ, ECYT.OQ, AKAO.OQ, BIND.OQ, OREX.OQ, CLVS.OQ, ATLN.VX, CORT.OQ, AKBA.OQ, EXEL.OQ, ESPR.OQ, SGYP.OQ, PTLA.OQ, XNPT.OQ, PTCT.OQ, RCPT.OQ, PRTA.OQ, XOMA.OQ, VICL.OQ, XNCR.OQ) within the past 3 years.

As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.

Principal is not guaranteed in the case of equities because equity prices are variable.

Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that.

For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683.

18 July 2014


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Global Biotechnology

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