A View of the Public Ophthalmology Market & Exit Trends

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

J.P. Morgan

This presentation does not constitute a commitment by any J.P. Morgan entity to underwrite, subscribe for or place any securities or to extend or arrange credit or to provide any other services. This presentation is for discussion purposes only and is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by J.P. Morgan. Neither this presentation nor any of its contents may be disclosed or used for any other purpose without the prior written consent of J.P. Morgan. Companies and individuals named are for illustrative purposes only. This information should be treated confidentially.

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4

Equity market overview

Fund flows including ETF ($bn)

S&P sector performance 2015YTD Market volatility 2015YTD

Q3’15 corporate earnings

12.8% 8.1%

4.7% 1.0%

(0.2%)(2.0%)

(3.7%)(6.8%)

(10.8%)(12.3%)

(14.3%)2.0%

Consumer Disc.Info. Technology

HealthcareConsumer Staples

FinancialsIndustrials

TelecomMaterials

UtilitiesEnergy

TransportationS&P 500 5

10

15

20

25

30

35

40

45

Jan-15 Mar-15 Jun-15 Aug-15 Nov-15

VIX Volatility Index

Max 40.7 Aug 24

Min 12.0 Jul 17

YTD avg. 16.7

Last 14.7 Nov 6

Source: FactSet, Lipper, Bloomberg as of 11/06/15

$9

$58

$3

($56)($51)

($3)

Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15

Historical fund flows ($bn)2008-2012 ($140)2013 $133 2014 $129 2015YTD ($107)Avg. of last 4 weeks ($1)

37%

16%

47%

71%

7%

22%

Above Meet Below

Revenue EPSS&P 500 companies reported: 440/500

12.8%

8.1%

4.7%

1.0%

(0.2%)

(2.0%)

(3.7%)

(6.8%)

(10.8%)

(12.3%)

(14.3%)

2.0%

Consumer Disc.

Info. Technology

Healthcare

Consumer Staples

Financials

Industrials

Telecom

Materials

Utilities

Energy

Transportation

S&P 500

S&P sector performance 2015YTD

Source: FactSet as of 11/06/15

5

Market volatility 2015YTD

5

10

15

20

25

30

35

40

45

Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Oct-15 Nov-15

VIX Volatility Index

Max 40.7 Aug 24

Min 12.0 Jul 17

YTD avg. 16.7

Last 14.7 Nov 6

Source: FactSet, Bloomberg as of 11/06/15

6

$9

$58

$3

($56)($51)

($3)

Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15

Fund flows including ETF ($bn)

Source: Lipper as of 11/06/15

Historical fund flows ($bn)2008-2012 ($140)2013 $133 2014 $129 2015YTD ($107)Avg. of last 4 weeks ($1)

7

37%

16%

47%

71%

7%

22%

Above Meet Below

S&P 500 companies reported: 440/500

Revenue EPS

Q3’15 corporate earnings

Source: Bloomberg as of 11/06/15

8

7

5x

10x

15x

20x

25x

30x

1995 1999 2002 2005 2008 2012 2015(4.4%)

5.0%

8.3%

12.7%

4.5%

9.6%

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

Equity market outlook

Bulls

S&P 500 1-year forward P/E

16x

Positive outlook for U.S. labor & growth

Inflation remains modest

Fed stance remains accommodative

Corporate earnings growth persists

Volatility in the broader markets subsides

Potential Fed tightening first time in 10 years

Uncertainty in China market persists

Commodity market volatility

Global growth concerns

Geopolitical risks

Bears

J.P. Morgan forecasts a 2,150 S&P 500 year-end price target, 4% above current levelsSource: FactSet and Morgan Markets Note: EPS for S&P 500 calculated as the index weighted consensus estimate of EPS based on individual securities’ standard market convention for EPS (US GAAP or Adjusted)

S&P 500 consensus EPS estimates YoY% chg

8

50%

100%

150%

200%

250%

300%

350%

400%

2010 2011 2012 2013 2014 2015

5-year stock price performance

113%

205%

Biotech and medtech trading performance

Source: FactSet as of 10/27/151 AMEX Biotechnology Index2 Medtech index consists of medical technology companies traded on North American exchanges with market capitalizations over $500mm

75%

Returns summary

5 yr 2 yr YTD

Medtech2

31%

Biotech1

63%

S&P 50017%

3%

4%

0%

9

75%

100%

125%

150%

175%

200%

225%

10/27/2013 3/22/2014 8/15/2014 1/8/2015 6/3/2015 10/27/2015

2 year performance of ophthalmic sector participants

Relative stock price performance

+88% +17% +63% +13% +40%

Ophth1

53%

S&P 50017%

Diversified / Ophth2

30%

Source: FactSet as of 10/27/151 Ophth index includes Aerie, Alimera, Avalanche, Cooper, Eleven, Glaukos, Inotek, Ocular, Ophthotech, QLT, Santen, Spark, STAAR and ThromboGenics2 Diversified / Ophth includes Abbott, Allergan, Bayer, Merck, Novartis, Pfizer, Regeneron, Shire and Valeant3 Return since June 2015 IPO

3

10

Medtech M&A activity has remained strong while biopharma M&A activity has picked up

M&A transactions

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

9

34 27 27 23 25 2817

21 18

36

4249 51

32 36

53 5245 46

50 46

0

10

20

30

40

50

60

70

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Biopharma Medtech

2014 - 2015 ophthalmology M&A

July ‘15 $125mm + undisclosed contingent

August ‘15 $300mm

September ‘15 $300mm + undisclosed contingent

November ‘14 $66bn

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Biopharma lead the IPO market resurgence …

IPO activity, 2005 – 2015 YTD

Source: Dealogic Note: Includes IPOs > $50mm

711 14

0 38

411

28

64

33

5 5 81 1

12 1 2

9 8

0

10

20

30

40

50

60

70

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Biopharma Medtech

$657 $389 $771 $2,699 $7,086 $4,106

$79 $285 $115 $224 $1,375 $788

Total proceeds raised, 2005 – 2015 YTD($mm)

$1,217

$199

$0

$51

$1,137

$1,259

$1,749

$665

$585

$429

12

… however recent healthcare IPOs have seen mixed pricing outcomes

Source: Dealogic, FactSet, Companing Filings for U.S. IPOs > $50mm

Pricing vs. filing range

50%40%

20%27%

60%

100%

67%

20%

80%

36%

33%

50%

33%

50%40% 36%

67%

50%40%

Above

Within

Below

44%

30%

40%

35%

16%

35%

2014 2015

13

Ophthalmology IPO activity

2005 2007 2009 2013 2015

(withdrawn) (withdrawn)

09/24/13$192 / $687

10/25/13$67 / $228

04/21/10$72 / $342

07/06/06€35 / €103

2011

77 74 93

931

65 50 3983

157118

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015YTD

Healthcare IPOs priced / year (2005 to present)1

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

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

07/24/14$75 / $267

07/30/14$117 / $363

02/05/14$57 / $154

06/24/15$124 / $563

01/29/15$185 / $540

02/17/15$40 / $95

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Key success factors observed in recent lifesciences IPOs

Valuable lead product, sufficiently de-risked with significant market opportunity and ownership retained

Products which also address cost to the system vs. efficacy

Strong management teams led by CEOs with prior public market success

Crossover investors to provide validation as well as support on IPO and in aftermarket

Near-term data / strategic catalysts to answer the “why buy now” question

Extensive interaction with public investors 6 months to 1 year before IPO org meeting

Critical to price appropriately for existing market to ensure strong deal and aftermarket performance (prudent / attractive cover valuation range)

Potential for competitive M&A takeout