Share Price: €10.42(as of June 24th, 2015)

Estimated Price:€15.35High/Low (€)since Mar. 30th, 2015*

12.15/8.75

Market Cap (€M)(as of Jun. 24th, 2015)

104.0

Estimated Net Cash(€M)

19.9

Estimated Market Cap. (€M)

153.2

Number of shares (M) 9.98

Estimated price (€) 15.35

Volume 3-month average* 32,000

Free float 30.6%

12-month Dividend Forecast (€)

0.00

* since OSE Pharma’s IPO, on March 30th, 2015

Coverage Initiation ReportCoverage initiated on June 24th, 2015Aurgalys is contracted by OSE Pharma to provide equity research

OSE PharmaJamila El Bougrini, PhDMickael Dubourd, PhD, SFAFParis & Evry, France

June 24th, 2015Euronext: OSE [FR0012127173]

OSE Pharma: Educate the Immune System to Fight CancerOSE Pharma is a company specializing in cancer immunotherapy. Their lead product, Tedopi, offers new perspectives in lung cancer management, particularly in Non-Small Cell Lung Cancer (NSCLC) that is resistant to chemotherapy and has a poor prognosis. Efficacy of Tedopi has already been demonstrated in a Phase II study, and the product is now ready to enter Phase III clinical studies in Q4-2015. OSE Pharma’s business development strategy is to license its product after the Phase III trial. Developing Tedopi in combination therapy or other cancer indications could represent significant upside for OSE Pharma. Based on the NSCLC indication alone, and with Tedopi given as a monotherapy, we estimate the value of OSE Pharma at €15.35/share. This value accounts for Tedopi’s potential to treat a rare disease (Orphan status obtained in the US), and the risk related to a drug that still needs to confirm efficacy in Phase III.

Tedopi, an immunotherapy to fight NSCLC, a disease of high medical needLung cancer is a very aggressive disease with a high mortality rate and poor prognosis. It is estimated that 14.1 million people worldwide develop lung cancer, while an equivalent number of patients died of this condition every year. The median 5-year survival of lung cancer is low (5-10%). Non-Small Cell Lung Cancer (NSCLC) is a subset of Lung cancer (85%) and is usually resistant to standard chemotherapy.

Tedopi – OSE Pharma’s lead product – is a combination of 10 epitopes (9 antigens, commonly expressed in NSCLC, and 1 T helper cell epitope), and is inoculated via subcutaneous injection. After immunization, the patient’s immune system will be activated to specifically target cancer cells expressing at least one of the 9 cancer antigens. The administration route developed by OSE Pharma, also makes Tedopi an interesting drug candidate in terms of patient compliance.

Efficacy has already been demonstrated in a Phase II study, and OSE Pharma will initiate the confirmatory Phase III trial in Q4-2015. The trial is expected to last 3 years and Tedopi could reach the market at the end of 2019 or 2020. Considering the NSCLC indication alone, we estimate that

Page 2 OSE Pharma

Tedopi could generate €3.45B in sales. This does not take into account revenues that could be generated with combination therapy or in other cancer indications.

OSE Pharma’s business strategy is to license Tedopi after Phase III results. The company could receive upfront and milestone payments, as well as double-digit royalties on sales.

Valuation of OSE PharmaConsidering OSE Pharma’s lead product Tedopi and the NSCLC indication, we value the company at €153.2M or €15.35 per share, a 47.3% upside from the June 24th, 2015 closing price. OSE-1101, indicated for Cystic Fibrosis and the other Tedopi indications (Combination with established NSCLC therapies or in other cancer indications) were not included in our model but could significantly contribute to OSE Pharma’s value should the company decide to pursue their development.

Region Launch Off Patent Peak Sales (€B)**

Success rate

rNPV (€M)

Tedopi NSCLC 2020* 2030 2.1 59% 133.3Estimated net cash

19.9

Total 153.2

*Launch date for US and Europe, launch in Asia is estimated in 2022**Estimated sales according to our assumptions

Valutation of OSE Pharma: €153.2M

OSE Pharma Page 3

Table of Contents

Tedopi, an immunotherapy to fight NSCLC, a disease of high medical need 1

Valuation of OSE Pharma 2

1. Company profile 4

1.1. What is Immunotherapy? 4

1.2. Tedopi: an innovative solution to educate the immune system against cancer 6

1.3. An innovative therapeutic strategy 7

1.4. A business model based on licensing agreement 9

1.5. Company history 9

1.6. Capital structure 11

2. Clinical programs 11

2.1. Tedopi in Non-Small Cell Lung Cancer (NSCLC) 12

2.2. Other opportunities for Tedopi 18

2.3. OSE-1101 19

3. Company valuation 22

3.1. Assumptions 22

3.2. OSE Pharma valuation 23

3.3. Stock performance 24

References 26

Glossary 26

Financials 27

Page 4 OSE Pharma

1. Company profile OSE Pharma is a biotechnology company specializing in cancer immunotherapy. The therapeutic strategy consists in activating the immune system, and more specifically cytotoxic T cells. Their role is to destroy cells considered “foreign”, such as cancer cells.

OSE Pharma has developed a unique platform, Memopi, containing 11,000 epitopes chemically modified, with potential application in several pathologies. The lead product based on the Memopi technology is Tedopi, a phase III-ready drug candidate indicated for Non-Small Cell Lung Ccancer. OSE Pharma patented its technology and the drug candidate Tedopi is protected until 2029 (including a 5-year patent extension).

1.1. What is Immunotherapy?

Immunotherapy is a treatment based on boosting, enhancing, or inhibiting the immune system, in order to counteract a disease mechanism.

The particularity of immunotherapy is that it uses the body’s own cells and defense system to fight a disease. Immunotherapy is an optimized natural defense system because certain of its parts are activated to work harder or smarter, and destroy cancer cells. Immunotherapies are more specific than other therapies currently used in cancer, such as chemotherapy, radiation therapy, even surgery, which can all induce serious side effects.

One of the strategies developed in the past years, precisely consists in specifically targeting the disease and its origin, while avoiding a treatment that would affect healthy cells. Immunotherapy against cancer has proven to be effective and has emerged a strong alternative to standard chemotherapy. Immunotherapy has drawn the interest of healthcare protagonists as demonstrated by the space taken by this therapeutic strategy in the last two ASCO (American Society of Clinical Oncology) meetings. This confirms the growing interest in cancer immunotherapies.

Several therapeutic approaches have been developed to utilize the immune system as a natural weapon to fight cancer:

Monoclonal antibodies: these large molecules are designed in vitro to directly and specifically bind to natural proteins playing a major role in activation or inhibition of the immune system. This leads to a specific targeting of cancer cells.

Cancer vaccines: these vaccines are composed of natural or designed proteins injected into the body to very specifically activate cells of the immune system. Usually, these proteins injected correspond to antigens only present on cancer cell surfaces.

Non-specific immunotherapies: this strategy consists in boosting the whole immune system without any specific activation of immune parts or against a specific target.

OSE Pharma’s Lead Drug Tedopi, ready

for Phase III

OSE Pharma Page 5

A fourth strategy consists in developing a chimeric antigen receptor T-cell (CAR-T), targeting tumor-specific antigens. Patients’ own T cells are genetically modified to express a chimeric antigen receptor, and then reintroduced in the patient to play a role against cancer cells. This method enables patients to get their own defense cells specifically armed against the cancer they contracted.

Recent licensing agreements and M&A transactions confirm the intense interest among pharmaceutical groups in the field of oncology. In the past few years, numerous deals have been concluded between large pharmaceutical groups and biotech companies. Interestingly, some of these deals involve molecules or technologies at an early stage of development (discovery or preclinical steps), indicating the desire of large pharmaceutical groups to position themselves early in this promising field (See Table 1).

The recent licensing deal between AstraZeneca and French Innate Pharma, announced in April 2015, is an example of the kind of deal OSE Pharma could sign, if Tedopi proves to be effective in treating NSCLC.

Immuno-oncology:a growing interest of pharmaceutical

groups

Table 1. Selected Recent Licensing/Fusion deals in the field of immuno-oncology (Source: Medius Associates).

Date Licensor Licensee Deal Information Phase Upfront ($M)

Total Deal ($M)

2013 Immatics Roche Cancer vaccines and immunotherapeutics for non-small cell lung and prostate cancer

PI 17 1017

2013 Compugen Bayer Antibody cancer immunotherapeutics for 2 novel checkpoint regulators

PC 10 540

2013 Immunocore GSK Immune mobilising mTCR Against Cancer (ImmTacs) against multiple targets in oncology

PC ND 510

2014 Ablynx Merck&Co Nanobody candidates (including bi- and tri-specifics) targeting immune checkpoint modulators

Disc. 27 2300

2014 Sutro BioPharma Celgene Expansion of collaboration, option to acquire discovery and ADCs in immuno-oncology, including established targets, such as PD-1 and PD-L1 and novel targets

Disc. 95 1000

2014 Aduro Biotech Johnson & Johnson

Second collaboration for LADD (live-attenuated double-deleted Listeria monocytogenes) immunotherapy platform; to induce tumour-specific T cell-mediated immunity

PC 30 847

2014 CytomX BMS Probodies (mabs that are selectively activated within the cancer microenvironment) for up to 4 immuno-oncology targets including CTLA-4

Disc. 50 298*

2014 Immunocore MedImmune Immune Mobilising Monoclonal T-Cell Receptor Against Cancer (ImmTAC) therapies for immuno-oncology targets

Disc. 20 320*

Page 6 OSE Pharma

These emerging immunotherapies hold great potential for the treatment of several cancers, in particular those without current effective treatment. With its cancer vaccine, OSE Pharma is in line with this therapeutic approach, especially with its lead candidate Tedopi, dedicated to fight Non-Small Cell Lung Cancer.

1.2. Tedopi: an innovative solution to educate the immune system against cancer

The body is naturally equipped with a defense system against foreign substances that penetrate the body. This complex defense system, “the immune system”, is composed of several types of cells, each of them having a very specific role.

Cancer cells are not considered as foreign bodies, but express on their surface, molecules that are not normally present on normal cells. This is the basis of OSE Pharma’s therapeutic strategy: educate the natural immune system to recognize molecules that only exist on the surface of cancer cells.

Several therapies have been developed based on immune system

Date Licensor Licensee Deal Information Phase Upfront ($M)

Total Deal ($M)

2014 Merck KGaA Pfizer Joint development/ commercialisation of MSB0010718C, anti-PD-L1 antibody, as single agent and in combination therapy for multiple types of cancer

PII 850 2850

2014 CureTech Bio Medivation Pidilizumab (CT-011), an immune modulatory anti-PD-1 mab for Diffuse Large B cell lymphoma

PII 5 335

2015 Aurigene Curis 2 programmes including IRAK4 Inhibitors and small molecule antagonist of programmed death [PD-L1]

PC 24 346

2015 Flexus Biosciences

BMS F001287, IDO1 inhibitor + IDO/TDO discovery programme - immuno-oncology

PC 1250

2015 Rigel Pharmaceuticals

BMS Small molecule TGF beta receptor kinase inhibitors - immuno-oncology

PC 30 339

2015 Bavarian Nordic BMS Immuno-oncology treatment for prostate cancer PIII 60 9752015 Aduro Biotech Novartis Preclinical cancer immunotherapies targeting the

STING (Stimulator of Interferon Genes) pathwayPC 200 750

2015 Innate Pharma AstraZeneca IPH2201 an anti NKG2A antibody, a first in class humanised IgG4 antibody.

PII 250 1275

2015 Curadev Pharma Roche IDO1 and TDO inhibitors (enzymes to mediate cancer-induced immune suppression)

Disc. 25 555

* amount per indicationPI, PhaseI; PII, PhaseII; PIII, PhaseIII; PC, Preclinical Phase; Disc., Discovery

Tedopi: educate the immune system to

target cancer

OSE Pharma Page 7

regulation. Most of them are monoclonal antibodies or molecules inhibiting the immune system retro-regulation. Once stimulated, blocking negative feedback pathways enables the immune system to remain switched on, so the defense mechanism against cancer is still active.

Immune checkpoints proteins have become increasingly important targets for pharmacologic inhibition. The most targeted protein remains CTLA-4, an immune checkpoint that downregulates the immune system after it is activated. Ipilimumab, a monoclonal antibody targeting the CTLA-4 protein, is one of the first checkpoint-inhibitors approved in cancer treatment, and marketed by Bristol-Myers Squibb under the trade name Yervoy.

Tedopi’s therapeutic strategy, as detailed in section 1.3 does not consist in keeping the system switched on, but in activating T cells against specific antigens. The main advantage of this strategy is that the activation is very specific to the antigen targeted, thus avoiding unspecific activation of the immune system, and leading to damages such as overreactions or auto-immune reactions.

1.3. An innovative therapeutic strategy

While most cancer immunotherapies are based on developing antibodies blocking checkpoint proteins that negatively regulate the immune system, OSE Pharma developed a new strategy directed to the specific activation of T cells. Tedopi consists in boosting the immune system through the injection of a pool of optimized antigens, specific to a wide panel of NSCLC (Non-Small Cell Lung Cancer), in patients expressing the HLA-A2 receptor. Thus, 90% of the targeted patients respond to at least one of the 9 epitopes/antigens contained in Tedopi. To complete and improve T cytotoxic cell activation, a tenth epitope, which is not a cancer antigen but a T helper epitope, is also present in the Tedopi cocktail. Indeed, the role of T helper cells is to attract T cytotoxic cells and enhance their activation.

Cancer is defined by one cell which accumulated several mutations. This unique cell will then escape from the control of its self-regulation and from immune surveillance, and will proliferate anarchically leading to the formation of cancer. The strategy of Tedopi is based on this cancer specificity. Each cancer is characterized by the expression of very specific antigens. Taking into account this observation, OSE Pharma decided to develop a therapy by screening the antigens expressed in NSCLC, and selecting the most prevalent in order to design epitopes, and educate the immune system to fight against these specific antigens.

The injection of Tedopi results in the absorption of the epitopes by a specific type of cell, the APC (Antigen Presenting Cells), which recognize and swallow foreign agents, and then present them to their surface. Circulating T Helper cells recognize antigens associated to the HLA-A2 receptor, and then secrete cytokines to attract T cytotoxic cells. The

90% of NSCLC patients express at least one Tedopi

epitope

Page 8 OSE Pharma

liaison between the TCR receptor (receptor on T cells), and the antigen bound to HLA-A2, activates T cytotoxic cells. As a result, a single T cell becomes specifically activated against one kind of antigen. All cancer cells exhibiting this antigen will be targeted, and killed by the activated T cell as described in Figure 1.

Figure 1. Mechanism of action of Tedopi (Source: OSE Pharma/Aurgalys)

The nine T cell clones recognize antigens on the cancer cells surfaceThe activated T cells specifically recognize and bind to the targeted antigen before destroying cancer cells.

Tumor cells escape from immune surveillanceT cells, whose role is to provide immuno-surveillance, do not recognize tumor cells as it needs to be activated by a cell presenting the antigen against which it must act.

Tumor cells proliferate anarchicallyBecause of this exhaust, cancer cells escape from the control of the immune system and proliferate uncontrollably, conducting to a cancerous tumor.

Injection of Tedopi, optimized epitopes specifically directed against NSCLC antigensTedopi is a cocktail of optimized epitopes expressed in 90% of NSCLC antigens. A sub-cutaneousinjection of the cocktail with an adjuvant, allows Antigen Presenting Cells (APC) to be in the presence of the epitopes, APC cells will subsequently activate T cells against cancer cells.

Antigen Presenting Cells activate T cells in a specific mannerAPC are attracted by the injection and recognize the optimized epitopes as foreign agents. They digest and present them to their surface, so they are recognized by T cells, which will be specifically activated against a unique antigen type.

T cells are activated and recognize in a specific manner cancer antigensT cells are informed by the presence of foreign agents: T Helper cells inform by secreting cytokines. AT Helper specific epitope helps reinforce the immune response. T cells bind to APC and are activated to target a unique antigen.

The presence of 9 epitopes allows the activation of 9 specific T cell clonesDue to the combination of 9 epitopes injected, T cells are activated to specifically target 9 cancer antigens representing more than 90% antigens occurring in NSCLC. APC activate 9 types of T cells which proliferate and destroy cancer cells presenting at least one of the 9 antigens.

T cells destroy very specifically cancer cellsOnce bound to cancer cells, T cells start their cytotoxic activity by injecting specific molecules in the tumor cells, leading to their destruction.

2

1

3

4

5

6

7

8

Cancer cell Naive T cell TEDOPI injection TEDOPI epitopes Antigen Presenting Cell Activated T cell

OSE Pharma Page 9

1.4. A business model based on licensing agree-ment

OSE Pharma’s strategy is to develop their lead product Tedopi, and to out-license it to pharmaceutical partners. Indeed, the company does not have the desire to market its products alone. Its core business consists in developing molecules with therapeutic potential until they reach advanced clinical stages (Phase II or Phase III), and to conclude licensing agreements with international partners that could support:

• in the case of NSCLC, regulatory fees and marketing costs

• in the case of combination therapy in NSCLC, or in other indications, Phases II and III costs, regulatory fees and marketing costs

• OSE Pharma could therefore generate revenues through upfront and milestone payments and royalties on sales.

1.5. Company history

Date Event2004 Creation of JT Pharma, a consulting company in the

pharmaceutical sector led by Jean Theron, a biotechnology and pharmaceutical industry market expert.

2011-2012 Emile Loria got back from Takeda, the optimized epitope technology dedicated to cancer immunotherapy. This operation was first completed through the company Biotech Synergy in the US in 2011. The assets were then transferred in April 2012 to the company OSE Pharma International in Geneva (OPI).

April 2012 Participation of Emile Loria and Dominique Costantini in JT Pharma’s capital, and conversion of JT Pharma Corporation to Orphan Synergy Europe – Pharma, dedicated to research and development for innovative medicines using T Cell-specific cancer immunotherapy

July 2012 OSE Pharma signs a licensing agreement with OPI Geneva to develop the international program Tedopi as an innovative lung cancer immunotherapy, in Europe

January 2013 Orphan status obtained in the US for the Tedopi program dedicated to NSCLC HLA-A2-positive patients

March 2014 Acquisition of OPI in Geneva which holds Tedopi’s international rights with this operation, the company acquired assets and international patents relative to the Tedopi technology and all his clinical applications.

June 2014 Phase III protocol in lung cancer submitted and approved by the US FDA and the EMA in Europe

July 2014 €3.2 M financing roundMarch 2015 Initial Public Offering. OSE Pharma raised €21.1M

Page 10 OSE Pharma

Emile Loria, Chairman of the Board of Directors, Physician

Dr. Emile Loria, is the former President/Chairman and CEO of Epimmune (2001-2006, San Diego - Nasdaq-listed company). He developed Tedopi from its discovery stage to its entry into phase II. He acquired Tedopi and all assets related to the epitope technology Memopi from Takeda in 2011-2012, through OPI SA. Emile previously directed biotechnology and consulting companies, and completed numerous worldwide industrial and corporate deals, both in the Biotechnology and Pharmaceutical industries with an international involvement. More specifically, he assisted in business development activities for BioAlliance Pharma (now Onxeo), Epimmune, Biovector, Cygnus, Sanofi, and Ciba-Geigy companies.

Dominique Costantini, Chief Executive Officer, Physician, Immunologist

Dr. Costantini founded OSE Pharma in 2012 and has been the CEO since then. She was the founder and former CEO of BioAlliance Pharma (1997-2011, Paris, a EuroNext-listed company, now Onxeo) where she designed, patented, and developed therapeutic innovations in the field of oncology. She introduced BioAlliance Pharma on Euronext at the end of 2005, the only French Biotech company to have registered 2 products in the US. Dr. Costantini has over 20 years of experience in the pharmaceutical industry. She managed the development of drugs from research to pre-clinical and then clinical development to registration, and obtained product reimbursement in Europe and the US. Dr. Costantini obtained her MD from the Paris V University.

Alexis Peyroles, Chief Financial Officer, MBA.

Alexis Peyroles joined OSE Pharma as Chief Financial Officer in September 2013. Alexis has over 15 years of management experience at an international level, mainly in the healthcare sector. At Sanofi in Japan and in Eastern European countries, he served as a financial controller for Baltic countries and licensing activities (Business Development) for the Eastern Europe area. He then held at Guerbet, the position of Management Control Director and CEO (Chief Executive Officer) of South America from its subsidiary in Brazil, where he was in charge of commercial and industrial operations. Alexis Peyroles graduated from EDHEC Business School and got an « Executive MBA » from « Imperial College » in London.

OSE Pharma Page 11

1.6. Capital structure

As of June 24th, 2015, there are 9,980,947 shares outstanding, 65.0% of which are held by the Concert composed of Emile Loria, Dominique Costantini, Guy Chatelain, and MS Medical Synergy. 4.4% are held by investors, including Aperana Consulting (Alexis Peyroles), Sigma Gestion, Financière Tuileries Développement. The free float represents 30.6% of the shares.

Figure 2. Capital structure (Source: OSE Pharma)

2. Clinical programs Currently, OSE Pharma has 2 products in its pipeline (Figure 3). Its lead molecule Tedopi (OSE-2101) dedicated to cancer treatment, and specific to HLA-A2 patients, is currently in phase III. HLA-A2 patients represent roughly half of the global population. In parallel, OSE Pharma acquired a molecule, OSE-1101, for the treatment of Cystic Fibrosis.

36%

19%

3%

7%2%

2%

31%Emile Loria

Dominique Costantini

Guy Chatelain

MS Medical Synergy

Aperana Consulting

Other

Free float

Figure 3. Pipeline of OSE Pharma

Research Preclinic Phase I Phase II Phase III Registration

OSE-1101

Tedopi(OSE-2101)

NSCLC

Breast cancer

Ovarian cancer

Colon cancer

Cystic fibrosis

R&D process

Page 12 OSE Pharma

2.1. Tedopi in Non-Small Cell Lung Cancer (NSCLC) 2.1.1. Non-Small Cell Lung CancerTedopi was generated from the Memopi technology, and has been developed to target NSCLC. Lung cancer is one of the most lethal cancers, with a high rate of mortality recorded. According to Globocan, 1.59 million patients worldwide died of lung cancer in 2012 worldwide, and it is estimated that this number will reach 2.9 million in 2035. The 5-year median survival is low, at 5-10% (SEER, 2007).

There are 1.82 million new cases of lung cancer worldwide annually, and the incidence is expected to grow in the coming years, mainly due to societal and environmental factors such as pollution, tobacco consumption, or inhalation of carcinogenic products (asbestos). Genetic anomalies may also be the cause of lung cancer development.

Long-term exposure to tobacco smoke is the main cause of lung cancer (80 to 90% of cases), although it is estimated that 10 to 15% of lung cancer patients never smoked (Thun et. al., 2008). Lung cancer also affects more men than women (Globocan, 2012). The main symptoms of lung cancer include coughing (with or without blood), shortness of breath, weight loss, fatigue, or pain in adjacent structures (chest pain, bone pain, etc.). However, because some of the symptoms are not specific to lung cancer, a majority of lung cancer patients are diagnosed at a late stage of the disease (stage IIIb or IV), where cancer cells have already spread to lymph nodes, or metastasized (SEER, 2007). It is estimated that between 85% and 90% of lung cancers are Non-Small Cell Lung Cancers (American Cancer Society).

2.1.2. Numerous therapeutic options but with limited efficacyThere are several treatment options for NSCLC which are selected according to the stage of the disease. If lung cancer is diagnosed early and localized, surgery may be a curative therapeutic option. For more advanced stages of the disease, targeted therapies or chemotherapies (mainly platinum-based chemotherapy) are the treatment of choice, although NSCLC is relatively insensitive to chemotherapy and radiotherapy compared to Small Cell Lung Cancer (National Cancer Institute). Patients with resectable cancer may be cured by surgery, which can be followed by adjuvant chemotherapy if necessary. In the case of an unresectable cancer, patients may be treated by radiation therapy for local control. For patients with unresectable advanced cancer, different therapeutic options are available:

• local cancer:long-term treatment by chemotherapy combined with radiation therapy

• metastatic cancer: long-term treatment by chemotherapy, targeted therapies, and other supportive measures with the aim to reduce symptoms and pain

NSCLC, an agressive cancer affecting1.8 million people

each year

OSE Pharma Page 13

2.1.3. A quarter of lung cancer patients eligible to Tedopi

Tedopi is composed of 9 “neo-epitopes”, chemically synthetized and modified to improve their binding to TCR and HLA-A2 receptors. These epitopes were selected for their strong affinity to TCR and HLA-A2, based on 5 cancer antigens present in more than 90% of NSCLC.

OSE Pharma chose to focus its strategy on a niche application by targeting NSCLC HLA-A2-positive patients, and more specifically, those who already received at least one therapy.

We estimate that Tedopi could target a quarter of lung cancer patients. If we consider that 85% of lung cancer are NSCLC and that approximately 45% of the general population is HLA-A2+, there could be as many as 0.7 million cancer patients eligible to OSE Pharma’s therapy. Tedopi is currently indicated for advanced lung cancer (typically stage IIIb and stage IV) patients, accounting for 62% of newly diagnosed patients (SEER, 2007). Overall, a quarter of lung cancer patients could be receiving Tedopi.

To estimate the market potential of Tedopi in NSCLC, we considered the following regions: North America (US and Canada), the European Union, the BRIC region, Japan and South Korea. According to Globocan, the incidence of lung cancer in 2012 was approximately 310,000 cases in the EU, 240,000 in North America, 930,000 in the BRIC region + Japan and South Korea (1.5 million patients in total in these regions, see Table 2). If taken into account the hypotheses listed above, 375,000 patients could be receiving Tedopi in 2015.

Table 2. Lung cancer incidence in Tedopi target market (Source Globocan)

2012 2012 2012 2012 2015Incidence Globocan

% of NSCLC

%HLA-A2 +

% Stage IIIb/IV

% Stage IIIb/IV

85% 45% 62%EU (28 312 645 265 748 119 587 74 144 77 000US 214 226 182 092 81 941 50 804 54 142Canada 25 481 21 659 9 746 6 043 6 440Total US/Can. 239 707 203 751 91 688 56 847 60 582Total EU/US/Can. 552 352 469 499 211 275 130 990 137 582Brazil 34 280 29 138 13 112 8 130 8 848Russia 55 805 47 434 21 345 13 234 14 403India 70 275 59 734 26 880 16 666 18 138China 652 842 554 916 249 712 154 821 168 496Total BRIC 813 202 691 222 311 050 192 851 209 884Japan 94 855 80 627 36 282 22 495 23 215South Korea 22 873 19 442 8 749 5 424 6 020Total BRIC+Jp/S.K. 930 930 791 291 356 081 220 770 239 120Total 376 702

62% of lung cancer patients are

diagnosed at an advanced stage

Page 14 OSE Pharma

We estimated market penetration for each region, and benchmarked the therapy price according to other therapies available to treat NSCLC, or to other immunotherapies. For market penetration, and because of the non-invasive administration route (subcutaneous injection) of Tedopi, we hypothesized that OSE Pharma’s product could claim as much as 20% of the market. On the other hand, we considered that BRIC countries would be more difficult to access, and estimated a 10% penetration rate. Delays in the regulatory processes and the strong pressure of authorities could also reduce market access in these regions.

We applied different prices according to the regions of the world. In France, as seen in Table 3, the average cost for NSCLC therapies is €45,000 per year. Based on this average price, we applied a similar cost across Europe and Japan or South Korea. For the US, therapies are usually set at a higher price. However due to the high disparity of prices, we considered that Tedopi could cost as much as €60,000 per year. Obtaining a higher price in the US could significantly increase Tedopi’s revenues in this region. For the BRIC region and especially India, we considered a lower price, €20,000, half lower than that of Europe.

Based on these hypotheses, Tedopi’s sales could reach as much as €2.1B in the targeted regions. Sales forecast are presented in Table 4, taking into consideration it would take 5 years to reach peak sales, and that Tedopi would be marketed in 2020 in the US and Europe, and in 2022 for Asia and the BRIC region.

Table 3. Immunotherapy prices in Europe and United States (Source: French Health Minsitry/ financial press)

Therapy Company Therapy average price

Mechanism of action

EU (€) US ($)Yervoy(Ipilimumab)

BMS 56,000 120,000 targeting the CTLA-4 checkpoint on activated immune cells

Tarceva(Erlotinib)

Roche 25,560 tyrosine kinase inhibitors

Alimta(pemetrexed)

Eli Lilly 40,800 70,000 chemotherapy, folic acid analog

Avastin(Bevacizumab)

Roche 54,400 targeting vascular endothelial growth factor (VEGF)

Opdivo(nivolumab)

BMS N/A 150,000 targeting the PD-1 checkpoint molecule

Keytruda(Pembrolizumab)

Merck N/A 150,000 targeting the PD-1 checkpoint molecule

Xalkori(crizotinib)

Pfizer 63,600 135,000 tyrosine kinase inhibitors

A non-invasive easy administration route: Tedopi, given

subcutaneously

Peak Sales of €2.1B for Tedopi, in the NSCLC indication

alone

OSE Pharma Page 15

2.1.4. Clinical development of Tedopi

Proof of concept in NSCLC has already been established for Tedopi in a Phase II clinical trial. 135 patients were included and recruited in 10 US centers. The results show that patients treated by Tedopi had a higher survival rate and median overall survival than patients receiving best standard of care (Table 5 and Figure 4).

Table 5. Tedopi Phase II results in NSCLC (Source: OSE Pharma)

Standard therapy

Tedopi P Value

Survival rate 49% 59% 0.063Median overall survival (Months) 12.0 17.3 0.086

Table 4. Tedopi sales forecasts in NSCLC (Source: Globocan, Aurgalys estimations)

2015e 2016e 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024eEuropePatients Treated 77000,4 77 977 78 966 79 967 80 981 82 008 83 048 84 101 85 168 86 248Market Penetration 0 0% 0% 0% 0% 0% 1% 3% 10% 17%Sales Europe (€M) 0 0,0 0,0 0,0 0,0 6,2 29,9 128,3 383,3 644,6USA/CanadaPatients Treated 60582,1 61 881 63 208 64 563 65 947 67 362 68 806 70 281 71 788 73 327Market Penetration 0 0% 0% 0% 0% 1% 4% 10% 16% 19%Sales USA/Can. (€M) 0 0,0 0,0 0,0 0,0 40,4 154,1 421,7 700,7 835,9BRICPatients Treated 209884 215 099 220 444 225 921 231 535 237 288 243 184 249 227 255 419 261 766Market Penetration 0 0% 0% 0% 0% 0% 0% 0% 0% 2%Sales BRIC (€M) 0 0,0 0,0 0,0 0,0 0,0 0,0 4,4 21,4 93,1Japan/S. KoreaPatients Treated 29235,7 29 962 30 707 31 470 32 252 33 053 33 874 34 716 35 579 36 463Market Penetration 0 0% 0% 0% 0% 0% 0% 0% 1% 3%Sales Jp/S.K. (€M) 0 0,0 0,0 0,0 0,0 0,0 0,0 2,6 12,8 55,6Total Sales (€M) 0 0,0 0,0 0,0 0,0 46,6 184,0 557,0 1 118,2 1 629,3

2025e 2026e 2027e 2028e 2029e 2030e 2031e 2032e 2033e 2034eEuropePatients Treated 87 341 88 449 89 571 90 706 91 857 93 021 94 201 95 396 96 605 97 830Market Penetration 19% 20% 20% 20% 20% 2% 0% 0% 0% 0%Sales Europe (€M) 754,6 789,3 804,7 816,1 826,7 83,7 8,5 0,9 0,1 0,0USA/CanadaPatients Treated 74 900 76 506 78 146 79 821 81 533 83 281 85 067 86 891 88 754 90 657Market Penetration 20% 20% 20% 20% 20% 2% 0% 0% 0% 0%Sales USA/Can. (€M) 888,1 915,5 937,2 957,7 978,4 99,9 10,2 1,0 0,1 0,0BRICPatients Treated 268 270 274 936 281 767 288 769 295 944 303 297 310 833 318 557 326 472 334 584Market Penetration 5% 8% 10% 10% 10% 1% 0% 0% 0% 0%Sales BRIC (€M) 281,3 478,8 567,2 600,4 619,5 63,5 6,5 0,7 0,1 0,0Japan/S. KoreaPatients Treated 37 369 38 297 39 249 40 224 41 223 42 248 43 297 44 373 45 476 46 606Market Penetration 10% 17% 19% 20% 20% 2% 0% 0% 0% 0%Sales Jp/S.K. (€M) 168,2 286,2 339,1 359,0 370,4 38,0 3,9 0,4 0,0 0,0Total Sales (€M) 2 092,1 2 469,9 2 648,2 2 733,2 2 794,9 285,1 29,1 3,0 0,3 0,0

Page 16 OSE Pharma

30%

40%

50%

60%

70%

Standard therapy

TEDOPI

Survival rate

5

10

15

20

Standard therapy

TEDOPI

Median overall survival

Mon

ths

Figure 4. Tedopis’ results on survival rate and median overall survival com-pared to conventional treatment (Source: OSE Pharma).

In addition, the results demonstrated that more than 90% of patients responded to the Tedopi specific T cell mechanism of action. This indicates that more than nine in ten patients responded to at least one of the 9 neo-epitopes. Increased survival and T immune response were strongly correlated, with a P value under 0.001.

Interestingly, patients in the Tedopi-treated arm were all HLA-A2+, whereas patients in the control group were all HLA-A2-. At the time of the trial, little was known about the correlation between HLA-A2 genotype and cancer prognosis, and patients with either genotype were thought to be identical in terms of disease progression. E. Andersson et al., showed that HLA-A2 positivity was correlated with a poor prognosis. Therefore this indicates that although Tedopi-treated patients (HLA-A2+) had a worse prognosis than patients in the control group (HLA-A2-), Tedopi (HLA-A2+ group) still showed a higher median survival rate. Interestingly, it was also observed that the 4-year overall survival of patients treated with Tedopi was 25% (Figure 5). The reported 5-year survival of lung cancer is less than 16% (SEER, 2007).

Figure 5. Four-year survival of Tedopi-treated patients (source: OSE Pharma)

Tedopi improves patient survival compared to

standard treatment

Time (days)

Surv

ival

rat

e

OSE Pharma Page 17

Based on these results, OSE Pharma decided to pursue the clinical development of Tedopi and to proceed with a confirmatory Phase III clinical trial. The study, expected to start in Q4-2015, will be an open-labelled, randomized, international 500-patient study in NSCLC patients expressing HLA-A2. Tedopi will be administered by subcutaneous injection in stage IIIb or stage IV patients, in second line treatment, and will be compared to standard treatment (docetaxel and permetrexed). The study is expected to last 3 years and results are expected at the end of 2018, depending on patient survival, recruitment, and tolerance. The US FDA (Food and Drug Administration) and EMA (European Medicines Agency), have already approved the main points of the Phase III protocol. The trial will be conducted in several international cancer centers such as the Gustave Roussy Institute (Villejuif, France), the National Cancer Institute, (Bethesda, Maryland, US), and the Mary Crowley Cancer Research (Dallas, Texas, US).

2.1.5. A first licensing deal secured with Rafa Laboratories

Tedopi’s Phase III is expected to start at the end of 2015. On May 11th, 2015, OSE Pharma signed its first licensing deal with Israeli RAFA laboratories. Financial details were not provided but OSE Pharma received an upfront payment and will be eligible to milestone payments. If Tedopi succeeds in its Phase III trial, OSE Pharma would equally share profits with RAFA Laboratories, which will be in charge of registering and marketing the drug in Israel. Although Israel represents a small market, this first agreement represents a significant step for OSE Pharma and is recognition by Israeli Key Opinion Leaders of Tedopi’s strong therapeutic potential.

2.1.6. Other drugs in development

As previously indicated, there are several therapeutic options for NSCLC management but most of them have limited efficacy. Several therapies are currently being developed with different strategies to treat this disease.

Table 6 gives an overview of current development in NSCLC therapy.

Table 6. NSCLC therapies currently in development (Source: Cancer Research)

Therapy Company Stage

Immunotherapy

Monoclonal antibodies

Bavituximab Peregrine Pharmaceuticals

Phase III

Patritumab Daiichi Sankyo Inc. / Parexel Phase III

Rilotumumab Southwest Oncology Group Phase II/III

Amgen Phase II/III

Cixutumumab Eli Lilly / Genentech Phase II

Cetuximab Swiss Group for Clinical Cancer Research

Phase II

IMMU-132 Immunomedics PhaseI/II

Tedopi’s Phase III, to start at the end of

2015

First licensing deal with Rafa Laboratories

Page 18 OSE Pharma

Therapy Company Stage

Checkpoint inhibitors Dendreon

Ipilimumab (Yervoy®) Bristol-Myers Squibb Phase III

Tremelimumab MedImmune Phase II

Nivolumab (Opdivo®) Bristol-Myers Squibb Phase III

Pembrolizumab (Keytruda®) Merck Phase III

MPDL3280A Genentech Phase II

MEDI4736 Southwest Oncology Group Phase II/III

Therapeutic Vaccines

GV1001 Kael-GemVax Phase III

Tergenpumatucel-L (HyperAcute®) NewLink Genetics Corporation Phase II/III

TG4010 (MVA-MCU1-IL2) Transgene Phase II/III

DRibbles (DPV-001) UbiVac Phase II

MUC1 Phase I/II

CV9202 RNActive®-derived cancer vaccine

CureVac GmbH Phase I

WT1 antigen Phase II

TroVax® Phase II

Vx-001 Vaxon Phase Iib

TUMAPs (IMA930) Immatics Discovery/Preclinical

Adoptive T Cell Transfer (CAR T-Cell)

T cells against NY-ESO-1 Phase II

T cells against VEGFR2 Phase I/II

T cells against MAGE-A3 Phase I/II

T cells against mesothelin Phase I/II

Other therapies

Tyrosine kinase inhibitors

Tarceva (Erlotinib) Roche Market

Xalkori (crizotinib) Pfizer Market

gefitinib (Iressa) AstraZeneca Market

Alimta (pemetrexed) Eli Lilly Market

Avastin (Bevacizumab) Roche Market

2.2. Other opportunities for Tedopi

In addition to the upcoming Phase III trial and depending on strategic priorities and partnerships that could occur, OSE Pharma may also launch other Phase II studies with Tedopi. However, OSE Pharma does not intend to conduct clinical trials alone. The company’s strategy is to find a partner for the development of other indications in order to reduce costs.

OSE Pharma Page 19

2.2.1. Tedopi in combination therapy

The original mechanism of action of Tedopi also makes it a good candidate for combination therapy in NSCLC. Should Tedopi demonstrate efficacy in NSCLC, its combination with other immunotherapies could also show synergistic effects in NSCLC treatment, especially in combination with checkpoint inhibitors. Nivolumab (Bristol-Myers Squibb), a monoclonal antibody directed against checkpoint protein PD-1 has recently been approved in the US for Squamous NSCLC (a subtype of NSCLC). This could significantly increase the market potential of Tedopi in this indication, and makes the drug a good candidate for licensing.

2.2.2. Tedopi in other cancers

OSE Pharma’s therapeutic strategy can also be applied to other cancer types, in patients expressing the HLA-A2 receptor. OSE Pharma is already considering the launch of Phase II studies in various cancer types, such as ovarian, breast or colon cancer, in patients that must be HLA-A2 carriers. This could extend the clinical potential of Tedopi, and provides strong commercial upside.

The number of patients falling within these different indications is significant and reflects a growing medical need. Considering the same geographical regions as in NSCLC (section 2.1.3), we estimate there are 28,000, 190,000, and 320,000 HLA-A2+ patients in ovary, breast, and colon cancer, respectively, in 2015 (Table 7). Based on our estimates, we believe that Tedopi could generate up to €5.0 billion per year on these indications. According to Globocan, this number could reach 960,000 in 2035, a 77% growth in 20 years.

2.3. OSE-1101

This molecule, tritoqualine, has been developed and used in allergy treatment. OSE Pharma has “re-profiled” this molecule to evaluate its clinical relevance in the treatment of cystic fibrosis.

Cystic fibrosis is a pathology resulting from a genetic modification of a receptor present on the lung cell surface. This disorder leads to chronic respiratory infections, pancreatic enzyme insufficiency, and associated complications in untreated patients. It is characterized by the buildup of

Mutlibillion market potential for Tedopi,

in other cancer indications

Table 7. Incidence of cancers potentially candidate for Tedopi (Source: Globocan).

2015 2035 2015 2035 2015 2035 2015 2035

Cancer Ovary Breast Colon TotalIncidence Globocan 62,765 108,982 426,794 739,519 712,714 1,279,049 1,202,273 2,127,550HLA-A2 + 28,244 49,042 192,057 332,783 320,721 575,572 541,023 957,397

Page 20 OSE Pharma

thick mucus in the lungs. End-stage lung disease is the principal cause of death.

Figure 6. Cystic fibrosis – CFTR alteration

The CFTR protein (Cystic Fibrosis Transmembrane conductance Regulator) is a channel protein that controls the flow of H2O and Cl- ions in and out of lung cells. When the CFTR protein is working correctly, as shown in Figure 6, Panel 1, these ions freely flow in and out of the cells. However, when the CFTR protein is malfunctioning (Panel 2), these ions cannot flow out of the cell due to a blocked channel, causing cystic fibrosis.

Cystic fibrosis is the most common serious genetic hereditary disease in the Caucasian population. It involves about 1 birth out of 2,500 in Europe and North America. Although life expectancy of patients has increased considerably over the last 40 years, no treatment is currently available to overcome the disease. The incidence varies according to regions of the world. The most affected countries are localized in North America, Europe, New Zealand, and Australia.

Several therapeutic strategies have already been developed to treat cystic fibrosis, and these treatments have been greatly improved in recent years. These strategies involve different mechanisms of action:

• Preventing and controlling lung infections

• Loosening and removing thick, sticky mucus from the lungs

• Preventing or treating blockages in the intestines

• Providing enough nutrition

• Preventing dehydration

Most of available therapies for cystic fibrosis consist in managing symptoms, and reducing daily complications (Table 8). Few strategies have been developed to directly treat the mutated gene with the aim of modifying the abnormal CFTR gene, and restore its normal function. Ivacaftor, commercialized under the Kalydeco name by Vertex, is the first drug to target the underlying cause of cystic fibrosis.

Normal CFTR

Mucus

Mutated CFTR

Ions

OSE-1101, a second product for Cystic Fibrosis, Phase II-

ready

OSE Pharma Page 21

Table 8. Cystic fibrosis main therapies (Source: Cystic Fibrosis Foundation)

Augment airway clearance• Physical techniques (eg, physical therapy, high-frequency chest wall

oscillation)• Pharmaceuticals (eg, dornase alfa, hypertonic saline, albuterol)• ExerciceTreat bacterial infections• Systemic antibiotics• Aerosolized antibiotics (eg, aztreonam for inhalation, tobramycin

inhalation solution)Reduce inflammation• Ibuprofen• Azithromycin• SteroidsReplace damaged lungsLung transplantationModify CFTR• Ivacaftor• Investiagtional agents

OSE-1101 is a well-known product commercialized since 1960 by Novartis (Tritoqualine, marketed as Hypostamine). Because cystic fibrosis is a rare disease, the market is limited in terms of target population. However, because cystic fibrosis a serious condition of high unmet needs, OSE Pharma’s product has a real potential in providing a therapeutic solution to these patients.

Since OSE-1101’s tolerance and safety profile has already been established, the drug candidate could therefore enter Phase II clinical trial directly, in this indication. OSE-1101 acts as an anti-inflammatory molecule, by reducing the presence of the IL8 protein (Interleukin 8), known to degrade the lung epithelium and to increase cystic fibrosis symptoms. IL8 is highly present in cystic fibrosis. Decreasing its concentration may preserve lung tissue and reduce serious infections due to tissue weakness. However, since OSE Pharma is dedicating its R&D budget to the Tedopi program, OSE-1101 will not enter clinical trials in the short term.

Page 22 OSE Pharma

3. Company valuation

3.1. Assumptions

Our estimate of OSE Pharma’s value with the rNPV method (risk-adjusted Net Present Value) is based on licensing agreements that the company could sign after phase III. Cash flows forecasted over the period between 2015 and 2034 were discounted at a 15% discount rate.

We used clinical phase success rates to account for the risk associated with clinical development. Success rates applied in our model are presented in Table 9 (updated from Keegan, 2008). We can estimate that Tedopi has a 59% chance to reach the market.

Table 9. Success Rates in Cancer clinical trials (Source: adapated from K. Keegan).

Phase Success Rates in Cancer

Phase Probability to reach

Phase III 66% Phase III 100%Regulatory 90% Regulatory 66%

Market 100% Market 59%

OSE Pharma’s valuation is based on its most advanced programs. In this model, we only valued Tedopi in NSCLC as a second line monotherapy in HLA-A2+ patients. Because OSE Pharma has yet to find a partner for co-development, Tedopi in combination therapy or in other indications, were not taken into account in our valuation model. Although OSE-1101 in cystic fibrosis is Phase II-ready, the drug candidate was not valued because OSE Pharma has clearly indicated it would first dedicate its resources to the development of Tedopi in NSCLC. Potential news events are not valued in our models, but that could represent significant upside should OSE Pharma provide corporate updates:

• licensing of Tedopi outside the US/EU region (milestones)

• launch of a Phase II with Tedopi combination therapy

• launch of a Phase II with Tedopi in another cancer indication

• launch of OSE-1101 clinical development in cystic fibrosis

Also, we decided not to value the deal concluded with Israeli RAFA Laboratories because of the small market size.

Our estimated timeline for Tedopi’s development is presented in Figure 7.

Valuation of Tedopi in the NSCLC indication

alone

OSE Pharma Page 23

3.2. OSE Pharma valuation

After taking these assumptions listed in section 3.1 into consideration, our valuation for OSE Pharma is €153.2M (Table 10) or €15.35/per share (9,980,947 outstanding shares), including an estimated net cash of €19.9 M€ (net debt 2014 of €67k, cash raised during the IPO of €21.1M and €1.15M of convertible bond reimbursed in April and May 2015).

Table 10. Sales forecast and Present Value (Source: Aurgalys)

Region Launch Off Patent Peak Sales (€B)

Success rate

rNPV (€M)

Tedopi NSCLC 2020* 2030 2.1 59% 133.3Estimated net cash

19.9

Total 153.2

*Launch date for US and Europe, launch in Asia is estimated in 2022**Estimated sales according to our assumptions

Cash flows are presented in Table 11. We estimated that Tedopi’s Phase III would start at the end of 2015, with results expected in 2018. After registration in 2019, Tedopi could be commercially available in 2020 in the US/EU region. In our model, we modeled a licensing deal with the following details: a €434M deal, including an upfront payment of €64M, a 25% royalty rate on sales. In our assumptions, we considered that OSE Pharma would keep 55% of the value of Tedopi, since they would have supported all R&D costs. Concerning the licensing deal, we only considered the NSCLC indication, with treatment using Tedopi as a standalone therapy. It is possible that given the possible use of Tedopi in other indications, or in combination therapy (chemotherapy or checkpoint inhibitors) to treat NSCLC, OSE Pharma could secure a larger deal that would include rights to all potential use of Tedopi in cancer management.

Phase III

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2028 2029

RegistrationMarketing

Phase IIIRegistration

Marketing

Phase II

Phase II

….

Phase II

Lead program

2nd options

Tedopi NSCLC EU / North America

Tedopi NSCLCBRIC / Asia

Tedopi1 NSCLC in combinationTedopi in otherindications

OSE-1101 in CysticFibrosis

Figure 7. OSE Pharma R&D Timeline (Source: Aurgalys estimations)

Valuation of €153.2M for OSE Pharma

Page 24 OSE Pharma

These amounts are in line with other licensing deals secured in the field of oncology (Table 1). For other regions (BRIC, Asia), it is likely that there would be other clinical trials to be performed. For instance, Chinese and Japanese authorities usually require clinical trials in their respective population to account for genetic variations that could affect drug efficacy. OSE Pharma has already indicated it would find a local partner that would conduct such a trial. Because we do not have visibility on where and when OSE Pharma would secure a partner, we decided to only value royalties on sales (20% of sales in these countries). OSE Pharma would only bear the costs related to the phase III trial (€10M) and single-digit royalties to Takeda that we estimated at 6% of Tedopi sales. With a 59% chance of reaching the market, we obtain an rNPV of €153.2M for Tedopi in NSCLC.

3.3. Stock performance

On March 25th, 2015, OSE Pharma announced it successfully concluded its Initial Public Offering which was oversubscribed 3.6 times. The price was set at the upper end of the indicated price range (€10.80). After exercising the extension clause, OSE Pharma raised €21.1M. With the

A €434M deal modelized for the

US/EU region in our valuation model

Table 11. Tedopi Cash Flow forecasts (Source: Aurgalys)

€M 2015e 2016e 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024eSales EU/USA/Can 0,0 0,0 0,0 0,0 0,0 46,6 184,0 550,0 1084,0 1480,6Sales BRIC, Jp & S.K. 0,0 0,0 0,0 0,0 0,0 0,0 0,0 7,0 34,2 148,7Total Sales 0,0 0,0 0,0 0,0 0,0 46,6 184,0 557,0 1118,2 1629,3Milestones EU/USA/Can. 0,0 0,0 0,0 0,0 63,8 114,5 53,3 37,8 0,0 82,3Roy. EU/Can/USA (25%) 0,0 0,0 0,0 0,0 0,0 11,7 46,0 137,5 271,0 370,1Roy. BRIC/Jp + S.K. (20%) 0,0 0,0 0,0 0,0 0,0 0,0 0,0 1,4 6,8 29,7Total Revenues 0,0 0,0 0,0 0,0 63,8 126,2 99,3 176,7 277,8 482,1Costs Development 1,0 3,5 4,0 1,5 0,0 0,0 0,0 0,0 0,0 0,0Milestone to Takeda 11,5Royalties to Takeda (6%) 0,0 0,0 0,0 0,0 0,0 2,8 11,0 33,4 67,1 97,8Total Costs 1,0 3,5 4,0 1,5 0,0 14,3 11,0 33,4 67,1 97,8EBITDA -1,0 -3,5 -4,0 -1,5 63,8 111,9 88,3 143,3 210,7 384,4Tax (33%) 0,0 0,0 0,0 0,0 21,1 41,6 32,8 57,8 89,4 149,3CF -1,0 -3,5 -4,0 -1,5 42,8 70,3 55,5 85,4 121,3 235,1

€M 2025e 2026e 2027e 2028e 2029e 2030e 2031e 2032e 2033e 2034eSales EU/USA/Can 1642,7 1704,9 1741,9 1773,8 1805,0 183,6 18,7 1,9 0,2 0,0Sales BRIC, Jp & S.K. 449,4 765,0 906,3 959,4 989,9 101,4 10,4 1,1 0,1 0,0Total Sales 2 092,1 2 469,9 2 648,2 2 733,2 2794,9 285,1 29,1 3,0 0,3 0,0Milestones EU/USA/Can. 0,0 82,3 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0Roy. EU/Can/USA (25%) 410,7 426,2 435,5 443,4 451,3 45,9 4,7 0,5 0,0 0,0Roy. BRIC/Jp + S.K. (20%) 89,9 153,0 181,3 191,9 198,0 20,3 2,1 0,2 0,0 0,0Total Revenues 500,6 661,5 616,7 635,3 649,2 66,2 6,8 0,7 0,1 0,0Costs Development 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0Milestone to TakedaRoyalties to Takeda (6%) 125,5 148,2 158,9 164,0 167,7 17,1 1,7 0,2 0,0 0,0Total Costs 125,5 148,2 158,9 164,0 167,7 17,1 1,7 0,2 0,0 0,0EBITDA 375,0 513,3 457,8 471,3 481,5 49,1 5,0 0,5 0,1 0,0Tax (33%) 135,5 167,8 143,7 146,3 148,9 15,2 1,5 0,2 0,0 0,0CF 239,5 345,5 314,1 325,0 332,6 33,9 3,5 0,4 0,0 0,0

OSE Pharma Page 25

9,980,947 shares admitted for trading on Euronext Paris, the market capitalization of OSE Pharma following the IPO was €108M. However, on March 26th, 2015, Innate Pharma announced that the Data Safety Monitoring Board recommended stopping one treated arm of its EffiKir immune-oncology trial in leukemia, because the effect could not be superior to placebo. Innate Pharma will continue with only one of the two doses originally planned for the trial. Concomitantly, Genfit published disappointing Phase II results for its GFT505 drugs. These two pieces of news were not well received by investors. OSE Pharma’s shares lost 3.4% on its first trading day on March 30th, 2015, compared to the IPO price. Interestingly, on April 24th, 2015, it seemed that OSE Pharma’s share was positively impacted (+4.6%) by the $1.3B Innate Pharma/AstraZeneca immuno-oncology deal (Figure 8).

When the company announced its licensing agreement with Rafa Laboratories (Israel), OSE Pharma’s share was trading above its IPO price and reached €11.70, but closed at €10.44, on May 12th, 2015. Then, the company’s share price has remained relatively steady, just below €10.00, until it reached an all-time high of €12.15 on June 22nd, 2015. OSE Pharma’s shares closed at €10.42 on June 24th, 2015.

Euronext since Mar. 30th, 2015

OSE Pharma -3.5%Alys France* +12.9%Next Biotech +26.6%CAC Pharma.&Bio. +1.7%CAC 40 +0.2%CAC Small +5.6%* Index of French smallcaps (less than €1B market capitalization at time of inclusion) in the healthcare and life sciences sector, listed on Euronext Paris.See http://www.aurgalys.com/aurgalys-indices

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

01/01/2015 01/02/2015 01/03/2015 01/04/2015 01/05/2015 01/06/2015

OSE Pharma Alys France

-3.5%

+12.9%

Figure 8. OSE Pharma’s stock performance as of June 24th, 2015, compared to other French smallcaps of the healthcare and life sciences sector (Alys France Index), since the company’s initial public offering on to Euronext (March 30th, 2015)

Page 26 OSE Pharma

References• http://www.cancercenter.com/lung-cancer/stages/tab/non-small-cell-lung-

cancer-stage-4/

• h t t p : / / w w w . f i g h t c a n c e r w i t h i m m u n o t h e r a p y . c o m /ImmunotherapyAndCancer/TypesOfCancerImmunotherapy.aspx

• http://www.openicon.com/biotech/glossary/checkpoint.html

• http://contemporarypediatrics.modernmedicine.com/contemporary-pediatrics/news/cystic-fibrosis-essential-update?page=full

• http://www.cancerresearch.org/cancer-immunotherapy/impacting-all-cancers/lung-cancer

• http://www.cancer.gov/types/lung/hp/non-small-cell-lung-treatment-pdq

• Provencio M, Isla D, Sánchez A, and Cantos B. Inoperable stage III non-small cell lung cancer: Current treatment and role of vinorelbine. J Thorac Dis. 2011 Sep; 3(3): 197–204. doi: 10.3978/j.issn.2072-1439.2011.01.02

• Ramalingam S1, Belani C. Systemic chemotherapy for advanced non-small cell lung cancer: recent advances and future directions. Oncologist. 2008;13 Suppl 1:5-13. doi: 10.1634/theoncologist.13-S1-5.

• O’Connell KE, Frei P & Dev KK. The premium of a big pharma license deal. ature Biotechnology 32, 617–619 (2014) doi:10.1038/nbt.2946

• Journal of Clinical Oncology, 2008 ASCO Annual Meeting Proceedings (Post-Meeting Edition). Vol 26, No 15S (May 20 Supplement), 2008: 16544

• Thun MJ, Hannan LM, Adams-Campbell LL, et al. Lung Cancer Occurrence in Never-Smokers: An Analysis of 13 Cohorts and 22 Cancer Registry Studies . Adami H-O, ed. PLoS Medicine. 2008;5(9):e185. doi:10.1371/journal.pmed.0050185.

GlossaryAPC: Antigen Presenting Cell

CF: Cystic Fibrosis

CFTR: Cystic Fibrosis transmembrane conductance regulator

EMA: European Medicines Agency

FDA: Food and Drug Administration

HLA : Human Leukocyte Antigen

IL : Interleukin

NSCLC: Non-small Cell Lung Cancer

rNPV: risk-adjusted Net Present Value

OSE Pharma Page 27

Financials

INCOME STATEMENT 31/12/2013 31/12/201412 months 12 months

Revenue 0 0 Miscellaneous Revenue 0 0 Purchased goods 0 0 R&D Costs (154) (2 015) General and Administrative expenses (90) (665) Share-based payments (6) (135) CURRENT OPERATING INCOME (LOSS) (250) (2 815) Income from cash and cash equivalents 0 8 Financial expenses 0 (26) INCOME BEFORE TAX (LOSS) (250) (2 833) Income Tax 0 (2) NET INCOME (LOSS) (250) (2 835)

ASSETS 31/12/2013 31/12/2014Non-current assetsIntangible assets 0 0 Tangible assets 0 25 Financial assets 28 28 Total non-current assets 28 53 Current AssetsInventory and work in progress 0 0 Trade and similar receivables 0 0 Other receivables 29 816 Cash and cash equivalents 280 1 111 Total current assets 308 1 927 TOTAL ASSETS 336 1 980

EQUITY AND LIABILITIESEquityShare capital 527 1 605 Premiums 1 1 700 Reserves (1 141) (1 273) Net Income (loss) (250) (2 835) Total Equity (864) (803) Non-current liabilitiesLong-term financial debt 1 147 894 Total non-current liabilities 1 147 894 Current liabilitiesLoans and short-term financial debt 0 284 Trade payables 50 1 518 Other current liabilities 3 87 Total current liabilities 53 1 889 TOTAL EQUITY AND LIABILITIES 336 1 980

DisclaimerThis study has been prepared based on general and public information assumed to be complete, exact and pertinent. Although all necessary precautions have been taken to assure that the information used originates from reliable sources, Aurgalys does not guarantee the accuracy or completeness of this report.

Neither Aurgalys nor any of its associates may be held liable in any manner whatsoever in the event that any of the documents and other information on which the study has been based proves to be inaccurate and in any way resulting in the possible misrepresentation of the economic and financial position of the Company or any other relevant information.

The valuation contained herein has been prepared in accordance with the best assessment of Aurgalys as at the date of preparation of this study and has been based on the information as described above. Neither Aurgalys nor its associates guarantee that the value so obtained will correspond or coincide with the price that could effectively be paid in a transaction or established in a negotiation or any transaction or calculation involving the Company.

This document does not constitute an offer or an invitation to buy or subscribe to negotiable or other securities. It may not be used in any manner in support of or in connection with any contract or commitment. This document is being supplied for information purposes only and may not be reproduced or passed on to any third party without the written authorization of Aurgalys. This document has been provided to the Company prior to its distribution.

Aurgalys 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.

You may call +33(0)1 60 87 89 66 or write to m.dubourd@aurgalys.com to request a copy of this independent research

Aurgalys4, rue Pierre Fontaine91058 Evry CedexFrancewww.aurgalys.com

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Acknowledgements

Special thanks to Chris Wilkinson (B.Sc. Pharmacy, US trader) for her detailed and constructive comments

About Aurgalys indicesAurgalys launched on October 2013, the Alys France index measuring the performance of the 40 French smallcap companies (less than €1B of market capitalization) listed on Euronext/Alternext Paris. Three other indices also measure the performance of companies dedicated to the development of therapeutic molecules (Alys Therapeutics), diagnostic tests (Alys Diagnostics), medical devices (Alys Medtech) and Greentech (Alys Greentech). You can find our reports on our website at http://www.aurgalys.com/aurgalys-indices

About AurgalysFirst company dedicated to life sciences and healthcare company financing, Aurgalys assists private or listed companies during capital increase, provides equity research or valuation services, takes care of investor relations and assists the management for their strategy and business development. Listing Sponsor Alternext (NYSE Euronext). Conseil en Investissement Financier ORIAS n°730782 ACIFTE.

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