Orphan Drug repOrt 2013

Welcome to the evaluatepharma® Orphan Drug report 2013

The first edition of EvaluatePharma®’s Orphan Drug Report brings together many of our analyses to provide top-level insight, from the world’s financial markets, into the expected performance of the orphan drug market between now and 2018. Based on EvaluatePharma®’s coverage of over 4,000 of the world’s leading pharmaceutical and biotech companies, the Orphan Drug Report 2013 highlights trends in prescription sales for orphan vs. non-orphan drugs, orphan designation analysis in US and Europe, product and company performance, phase III R&D spend and return on investment. Additional copies are available at: www.evaluategroup.com/orphandrug2013.

Since 1996 EvaluatePharma® has been providing senior decision makers within the pharmaceutical industry with an essential service that models the sector from the viewpoint of the world’s financial markets. EvaluatePharma®’s forward-looking view of the market is hugely influential as it displays the consensus of expectations, which influence company stock market valuations. The forecasts of equity analysts reveal their perspectives on individual company performance, industry trends and the macro economic environment.

EvaluatePharma® has captured the consensus forecasts of equity analysts and seamlessly integrated them with the historic results, as reported by companies. From this comprehensive view of the industry, its past and expected future performance emerges and can be analysed using EvaluatePharma®. Analyses range from total market trends and therapeutic overviews to individual company performance and product progress.

Whatever your view on the future of the industry, EvaluatePharma® can help you find value in the pharma and biotech sector.

To find out more about this report and Evaluate’s range of services contact us:

� north america: Debbie Paul Tel: +1 617 573 9453 Email: debbie.paul@evaluategroup.com

� rest of the World: Will Hau Tel: +44 (0)20 7377 0800 Email: will.hau@evaluategroup.com

� Japan: Hiroshi Yamazaki Tel: + 81 (0) 80 1164 4754 Email: hiroshi.yamazaki@evaluategroup.com

� For general questions: Christine Lindgren Tel: +1 617 866 3906 Email: christine.lindgren@evaluategroup.com

Disclaimer

This report may not be relent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published, without the prior consent of Evaluate Ltd. While all reasonable steps have been taken to ensure that the data presented are accurate, Evaluate Ltd. cannot accept responsibility for errors or omissions. Neither does Evaluate Ltd. warrant the accuracy, merchantability or fitness of use for a particular purpose of the data.

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An orphan drug is a pharmaceutical product aimed at rare diseases or disorders. The development of orphan drugs has been financially incentivised through US law via the ‘Orphan Drug Act of 1983’. The National Organization for Rare Disorders (NORD), which was instrumental in establishing the 1983 Act, currently estimates 30 million Americans suffer from 7,000 rare diseases. Prior to the 1983 Act, 38 orphan drugs were approved. To date, 425 indication designations covering 347 drugs have been approved.

The success of the original Orphan Drug Act in the US led to it being adopted in other key markets, most notably in Japan in 1993 and the European Union in 2000.

rare Disease patient populations are Defined in Law as:

� USA: <200,000 patients (<6.37 in 10,000, based on US population of 314m)

� EU: <5 in 10,000 (<250,000 patients, based on EU population of 506m)

� Japan: <50,000 patients (<4 in 10,000 based on Japan population of 128m)

Financial Incentives by Law Include:

Market exclusivity

� USA: 7 Years of marketing exclusivity from approval; Note: Majority of orphan drugs have a compound patent beyond 7 years. The market exclusivity blocks ‘same drug’ recombinant products. E.g. Fabrazyme (Genzyme, now Sanofi) vs. Replagal (Transkaryotic, now Shire). ‘Same drug’ exclusion can be overturned if clinically superior (mix of efficacy/ side effects). E.g. Rebif overturned Avonex’s orphan drug exclusivity (7 MAR 2002)

� EU: 10 Years of marketing exclusivity from approval

reduced r&D Costs

� USA: 50% Tax Credit on R&D Cost

� USA: R&D Grants for Phase I to Phase III Clinical Trials ($30m for each of fiscal years 2008-12)

� USA: User fees waived [FFDCA Section 526: Company WW Revenues <$50m]

Methodology on Classifying an Orphan Drug

EvaluatePharma® has identified all products that have orphan drug designations filed in the US, EU or Japan. These will be made available as part of the core EvaluatePharma® service. To further enhance analysis EvaluatePharma® has defined a clean ‘Orphan’ sub-set of products which excludes products where less than 25% of lifetime sales are expected to come from orphan indications. This has led to the exclusion of products, such as Avastin, Enbrel, Herceptin, Humira and Remicade, all of which have orphan designations for indications contributing less than 25% to lifetime sales. All sales analysis in the report is based on this clean ‘Orphan’ sub-set of products.

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evaluatepharma® Orphan Drug Overview

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The success of the original Orphan Drug Act in the US led to it being adopted in other key markets, most notably in Japan in 1993 and the European Union in 2000.

the first edition of the Orphan Drug Report is in response to requests from our clients for an in-depth, fact-based analysis of the orphan drug market. To facilitate the analysis, EvaluatePharma® has enhanced its core product database to include new orphan drug data fields and has integrated US, EU and Japan orphan drug designation databases.

growth in Orphan Drugs Set to be Double that of Overall prescription Drug Market

In this report we find that the worldwide orphan drug market is set to grow to $127bn (see page 6), a compound annual growth rate of +7.4% per year between 2012 and 2018. This predicted growth rate is double that of the overall prescription drug market, excluding generics, which is set to grow at +3.7% per year. Orphan drugs are set to contribute 15.9% to the overall prescription drug market in 2018, excluding generics, up from 5.1% in 1998.

uplift in uS Designations from 2003

EvaluatePharma® finds that there was a notable uplift in the number of US orphan designations from 2003 (see page 12) to 2010. The uplift in designations, and therefore R&D investment in this area, is due to superior R&D productivity in the orphan drug sector. The success of a second wave of pioneers in orphan drug development, such as Amgen, Biogen Idec, Genentech (Roche), Genzyme and Schering-Plough proved that significant returns could be made in smaller patient populations, through higher prices from innovative new drugs. High R&D costs in developing primary care products, coupled with high profile clinical & regulatory failures and the continuing genericization of primary care markets has further drawn Big Pharma into the orphan sector.

Orphan Drugs Offer Superior returns on Investment vs. non-Orphans

This report confirms the hypothesis that orphan drugs currently offer a greater return on investment (RoI) than non-orphans. The current stock of Phase III/ Filed orphan products is expected to yield a return on investment of x10.3 vs. x6.0 for non-orphans (see page 10). This significantly better RoI is primarily due to the fact that orphan drugs require a median phase III trial size of 528 patients vs. 2,234 for non-orphans (see page 9). We estimate the average phase III cost at $85m vs. $186m for the key phase III trial. When factoring in the potential 50% US tax credit, this can reduce the orphan cost to $43m vs. $186m for a non-orphan. Interestingly, we do not find orphan drug development time to be any quicker, with a median of 2.75 years (see page 9) between the start of phase III trials to filing with the FDA.

Orphan Sector Cooling Down?; Designations Decline in 2012

The number of new orphan drug designations declined in 2012 to 188, from a peak of 203 in 2011 (page 12). This could signal a slowdown in investment in the sector.

need for a Common Drug act?

An interesting paradox of the success of the original 1983 Orphan Drug legislation is that it was assumed that common diseases were economically incentivised enough. Is this still the case? There is certainly the need for mass market drugs to combat problems such as drug-resistant infections, but with the development of drugs for large disease populations now costing potentially billions of dollars, will Big Pharma take on the risk? We may well require a ‘Common Disease Drug Act’ before long, to redress the imbalance.

anthony raeside Head of Research

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evaluatepharma® Foreword

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� Worldwide Orphan Drug Sales Forecast to Total $127bn (CAGR 2012 to 2018:

+7.4% ); Double Overall Prescription Market Growth

� Orphan Drugs Set to be 15.9% of Worldwide Prescription Sales by 2018

(excluding generics)

� Novartis Set to Maintain Number One Position in Orphan Drug Sales to 2018

� Bristol-Myers Squibb, GSK and Sanofi Set to March up the Orphan Sales Ranking Table

� Rituxan (rituximab) No.1 Orphan Drug in 2018

� Phase III Orphan Drug Development Cost Half that of Non-Orphan;

Potentially a Quarter with US Tax Breaks

� Phase III Drug Development Time for Orphan is No Quicker than Non-Orphan

� Orphan Drug FDA Approval Time 9 months vs. 10 months for Non-Orphan

� Expected Return on Investment of Phase III/ Filed Orphan Drugs 1.7 Times

Greater than Non-Orphan Drugs

� Elotuzumab (AbbVie/ BMS) is Most Valuable Pure R&D Orphan Drug

� FDA Orphan Designations Decline 7% in 2012; European Designations

up 44%; Japan Designations up 33%

� FDA Approves 15 New Orphan Drugs in 2012 vs. 14 in 2011; Orphans 35%

of Total FDA New Drug Approvals in 2012

� Kyprolis Most Promising New Orphan Drug Approved by FDA in 2012

� 18.5% of EU Orphan Designations for Ultra Rare Diseases

� Acute Myeloid Leukaemia is Indication with Most Filed Orphan Drug

Designations in EU

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Orphan Drugs Set to be 15.9% of Worldwide Prescription Sales by 2018 (excluding generics)

evaluatepharma® Orphan Drug report 2013 – analysis highlights

6 Worldwide Orphan Drug Sales (1998-18)

7 Worldwide Orphan Drug Sales in 2018: Top 20 Companies

8 2018: Top 30 Selling Orphan Drugs in the World

9 Phase III Trial Size & Approval Time: Orphan vs. Non-Orphan

10 R&D Costs (PIII/ Filed) & Expected Investment Returns (NPV)

11 2018: Top 20 Orphan R&D Products based on NPV

12 USA, EU & Japan Orphan Designations per Year & Cumulative (1983-12)

13 FDA Approvals of Designations & New Drugs (NMEs/ BLAs): 1999 to 2012

14 FDA New Drug Approval Analysis (NMEs/ BLAs) 2012: Orphan vs. Non-Orphan

15 EU Orphan Designations: Historic Distribution by Prevalence

16 EU Orphan Designations: Top 20 Indications

17 About EvaluatePharma®

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table of Contents

Worldwide Orphan Drug Sales (1998-18)

Worldwide Orphan & Prescription Drug Sales (2004-18)

WW Prescription Sales ($bn)Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

WW Orphan Drug Sales 28 33 38 46 56 61 69 78 83 90 96 104 110 118 127 Growth per Year +15.7% +15.8% +21.9% +20.4% +9.0% +13.0% +12.8% +7.1% +7.9% +7.7% +8.1% +5.8% +6.9% +8.0% Orphan Sales as a % of Rx 6.6% 7.1% 7.6% 8.4% 9.4% 10.0% 11.0% 11.8% 12.9% 13.7% 14.2% 14.7% 14.9% 15.3% 15.9%

WW Non-Orphan Drug Sales 399 429 463 506 540 550 556 582 562 564 581 605 631 654 675 Growth per Year +7.6% +7.8% +9.3% +6.7% +1.8% +1.2% +4.6% -3.3% +0.3% +3.0% +4.1% +4.3% +3.7% +3.2% WW Prescription (Rx) (less Generics) 427 462 501 552 596 610 625 659 645 653 677 709 741 772 803 Growth per Year +8.1% +8.4% +10.2% +7.9% +2.5% +2.3% +5.5% -2.1% +1.3% +3.7% +4.7% +4.5% +4.2% +3.9%

WW Orphan Drug Market CAGR 12-18WW Non-Orphan Drug Market CAGR 12-18

oitpircserP WW)3102 RPA 32( ®amrahPetaulavE :ecruoS n (Rx) excluding Generics CAGR 12-18 +3.7%

+7.4%+3.1%

5.1%

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Worldwide Orphan Drug Sales & Share of Prescription Drug Market (1998-18) Source: EvaluatePharma® (23 APR 2013)

WW Orphan Sales

WW Orphan as % of WW RX

WW

Orphan Sales as a %

of WW

Rx Sales (excl. G

enerics)

Worldwide Orphan Drug Sales Forecast to Total $127bn (CAGR 2012 to 2018: +7.4% ); Double Overall Rx Market GrowthOrphan Drugs Set to be 15.9% of Worldwide Prescription Sales by 2018 (excluding generics) EvaluatePharma® finds that the market for orphan drugs, based on the consensus forecast for the leading 500 pharmaceutical and biotechnology companies, will grow by 7.4% per year (CAGR) between 2012 and 2018 to $127bn. The growth of the orphan drug market is almost double that of the overall prescription drug market, which is set to grow by 3.7% over the period 2012-2018.Orphan drugs are set to account for 15.9% of global prescription sales in 2018, excluding generics, up from 5.1% in 1998.In 2012 orphan drug sales increased 7.1% to $83bn vs. 2011, in contrast to overall prescription drug sales (excluding generics) which declined 2.1% to $645bn.

Note: Industry sales based on Top 500 pharmaceutical and biotech companies.Sales to 2012 based on company reported sales data. Sales forecasts to 2018 based on a consensus of leading equity analysts' estimates for company product sales and segmental sales.All sales analysis based on EvaluatePharma®'s clean ‘Orphan’ sub-set of products, which excludes products where less than 25% of lifetime sales come from orphan indications.

+7.4% CAGR 2012-18

Worldwide Orphan Drug Sales (1998-18)

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Worldwide Orphan Drug Sales in 2018: Top 20 Companies

Worldwide Orphan Drug Sales (2012/18): Top 20 Companies & Total Market

RankCompany 2012 2018 % CAGR 12-18 2012 2018 Chg. (+/-) Chg. (+/-)

1 Novartis 10.9 11.8 +1% 13.1% 9.3% -3.8% -2 Roche 9.0 9.4 +1% 10.8% 7.4% -3.4% -3 Celgene 4.9 8.6 +10% 6.0% 6.8% +0.8% +24 Pfizer 5.4 7.2 +5% 6.6% 5.6% -0.9% -15 Sanofi 2.9 5.5 +11% 3.5% 4.3% +0.8% +46 Bayer 4.2 5.2 +3% 5.1% 4.1% -1.0% -7 Bristol-Myers Squibb 1.7 4.7 +18% 2.1% 3.7% +1.6% +98 GlaxoSmithKline 1.4 4.1 +20% 1.6% 3.3% +1.6% +129 Alexion Pharmaceuticals 1.1 3.7 +22% 1.4% 2.9% +1.5% +12

10 Baxter International 2.5 3.2 +4% 3.0% 2.5% -0.6% +211 Eli Lilly 2.6 3.0 +2% 3.1% 2.3% -0.8% -112 Biogen Idec 2.9 2.9 +0% 3.5% 2.3% -1.2% -413 Shire 1.7 2.8 +9% 2.0% 2.2% +0.2% +414 Merck KGaA 3.0 2.6 -2% 3.6% 2.0% -1.6% -715 Johnson & Johnson 1.8 2.6 +7% 2.1% 2.0% -0.1% -16 Novo Nordisk 1.5 2.4 +8% 1.9% 1.9% +0.0% +217 Vertex Pharmaceuticals 0.2 2.2 +53% 0.2% 1.7% +1.5% +2818 Amgen 2.6 2.0 -4% 3.1% 1.6% -1.5% -719 Actelion 1.8 1.8 -0% 2.2% 1.4% -0.8% -520 Merck & Co 1.8 1.6 -2% 2.2% 1.3% -0.9% -7

Total Top 20 64.0 87.3 +5.3% 77.1% 68.5% -8.6%Other 19.0 40.1 +13.2% 22.9% 31.5%Total 83.0 127.4 +7.4% 100.0% 100.0%

Source: EvaluatePharma® (23 APR 2013)

WW Market Share WW Orphan Sales ($bn)

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WW Orphan Prescription Drug Sales in 2018: Top 10 Companies Source: EvaluatePharma® (23 APR 2013)

Note: All sales analysis based on EvaluatePharma®'s clean ‘Orphan’ sub-set of products, which excludes products where less than 25% of lifetime sales come from orphan indications.

Sales ($bn)CAGR 2012-18 (%)

Ranking Chg. 2012-18

Novartis Set to Maintain Number One Position in Orphan Drug Sales to 2018Bristol-Myers Squibb, GSK and Sanofi Set to March up the Orphan Sales Ranking Table EvaluatePharma® finds that Novartis will maintain its position as the world's number one orphan drug company in 2018with sales of $11.8bn. Novartis has a strong orphan portfolio built around Gleevec and Tasigna for chronic myelogenous leukaemia and gastrointestinal stromal tumors. Celgene is set to climb 2 places to rank third with $8.6bn in sales in 2018.Within Global Majors Sanofi, up 4 places to 5th, Bristol-Myers Squibb, up 9 places to 7th, and GlaxoSmithKline, up 12 to 8th, show the increased focus on the orphan sector.

Worldwide Orphan Drug Sales in 2018: top 20 Companies

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Worldwide Top 30 Selling Orphan Drugs in 2018

Rank Product Generic Name Company Phase (Current) Pharmacological Class 2012 2018 CAGR1 Rituxan 551,7bAM 02DC-itnAdetekraMehcoRbamixutir 6,948 -0%2 Revlimid 767,3rotaludomonummIdetekraMenegleCedimodilanel 6,598 +10%3 Soliris eculizumab Alexion Pharmaceuticals Marketed Anti-complement factor C5 MAb 1,134 3,404 +20%4 Afinitor everolimus Novartis Marketed Rapamycin analogue (mTOR inhibitor) 797 2,919 +24%5 Tasigna nilotinib hydrochloride Novartis Marketed Signal transduction inhibitor 998 2,584 +17%6 Velcade 53,2rotibihni emosaetorPdetekraMadekaT /J&Jbimozetrob 8 2,381 +0%7 Avonex interferon beta-1a Biogen Idec Marketed Interferon beta 2,913 2,085 -5%8 Alimta pemetrexed disodium Eli Lilly Marketed Thymidylate synthase inhibitor 2,594 2,017 -4%9 Yervoy 607bAM 4ALTC-itnAdetekraMbbiuqS sreyM-lotsirBbamumilipi 2,005 +19%10 Sprycel dasatinib Bristol-Myers Squibb Marketed Tyrosine kinase inhibitor 1,019 1,917 +11%11 Rebif interferon beta-1a Merck KGaA / Pfizer Marketed Interfero 334,2ateb n 1,766 -5%12 Kalydeco ivacaftor Vertex Pharmaceuticals Marketed CFTR potentiat 271ro 1,702 +47%13 Jakavi ruxolitinib phosphate Incyte/ Novartis Marketed Janus kinase (JAK)-1/2 inhibitor 150 1,559 +48%14 Sutent anik enisoryt elpitluMdetekraMrezifPetalam binitinus se inhibitor 1,236 1,555 +4%15 Kyprolis carfilzomib Onyx Pharmaceuticals Marketed Proteasome inh 46rotibi 1,521 +70%16 Kogenate 025,1IIIV rotcaFdetekraMreyaBafla gocotco 1,516 -0%17 NovoSeven 345,1IIV rotcaFdetekraMksidroN ovoNafla gocatpe 1,499 -0%18 Nexavar sorafenib tosylate Bayer/ Onyx Marketed Multi-kinase in 810,1rotibih 1,463 +6%19 Copaxone glatiramer acetate Teva/ Sanofi Marketed MS agent 4,027 1,295 -17%20 Ibrutinib ibrutinib Pharmacyclics Phase III Bruton's tyrosine kinase (Btk) inhibitor - 1,283 n/a21 Advate factor VIII (procoagulant) Baxter International Markete 432,2IIIV rotcaFd 1,229 -9%22 Cerezyme 418esadisorberecoculGdetekraMifonaSesareculgimi 1,211 +7%23 Myozyme 495esadisoculg ahplAdetekraMifonaSafla esadisoculgla 1,128 +11%24 Gleevec imatinib mesylate Novartis Marketed Tyrosine kinase inhibitor 4,675 1,025 -22%

25 Sandostatin LAR octreotide acetate Novartis Marketed Growth hormone & IGF-1 inhibitor 1,512 989 -7%

26 Exjade 078rotalehc norIdetekraMsitravoNxorisarefed 978 +2%27 Opsumit macitentan Actelion Filed Endothelin receptor antagonist - 969 n/a28 Xalkori 211rotibihni esanik teM-c & KLAdetekraMrezifPbinitozirc 936 +42%29 Xyrem sodium oxybate Jazz Pharmaceuticals Marketed CNS depress 973tna 925 +16%30 Pomalyst -rotaludomonummIdevorppAenegleCedimodilamop 922 n/a

Other 36,238 69,071 +11%Total 83,033 127,399 +7%

Source: EvaluatePharma® (23 APR 2013)

WW Product Sales ($m)

2018: Top 30 Selling Orphan Drugs in the World

Note: Sales represent company reported sales where available, otherwise based on an average of equity analyst estimates.Worldwide sales represent sales for all indications. All sales analysis based on EvaluatePharma®'s clean ‘Orphan’ sub-set of products, which excludes products where less than 25% of lifetime sales come from orphan indications.

Rituxan (rituximab) No.1 Orphan Drug in 2018EvaluatePharma® finds that Rituxan is the world's largest orphan drug in 2018, with sales of $6.9bn for all indications. Rituxan from Roche was first approved in November 1997 for the orphan treatment of non-Hodgkin B-cell lymphoma. Rituxan is also approved for the orphan disease chronic lymphocytic leukaemia and has non-orphan approval for rheumatoid arthritis. Celgene's Revlimid for multiple myeloma & myelodysplastic syndromes is set to be a close second with $6.6bn in worldwide sales.

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Top 30 Orphan Drugs in 2018Source: EvaluatePharma® (23 APR 2013)

2018: top 30 Selling Orphan Drugs in the World

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EU Prescription Drug Sales (2009/11): Top 20 Companies

Average Phase III Trials Sizes (All New Drug Products Entering Phase III from 1 JAN 2000)

TotalProduct Type Median Average Patients % of Median Average Total Median AverageOrphan 528 633 244 154,446 7% 96 85 20,793 48 43Non-Orphan 2,234 3,758 585 2,198,234 93% 151 186 108,658 151 186ALL 1,094 2,838 829 2,352,680 100% 125 156 129,451

1.91%9.54%5.36%7.14%8.61%6.32 = nahprO-noN / nahprO % 31.8% 22.9%Source: EvaluatePharma® Success Rates (23 APR 2013)

Average Phase III & FDA Approval Times

Product Type Median Average Median AverageOrphan 2.75 2.92 97 9.04 9.65 82Non-Orphan 07170.3180.0140238.227.2ALL 2.74 2.86 301 9.99 11.96 252

+0.9% +2.9% -10.3% -26.2%

Source: Provisional Data from EvaluatePharma®'s Forthcoming Success Rates & Clinical Trial Timelines (23 APR 2013)

Orphan / Non-Orphan

Phase III Trial Size & Approval Time: Orphan vs. Non-Orphan

Phase III Trial Size

)shtm( devorppA ot deliF ADF)sry( htgneL III esahP

Phase III Cost ($m)Estimated *

Potential50% US Tax CreditNo. of

Products (n=)

No. of Products (n=)

No. of Products (n=)

Phase III Orphan Drug Development Cost Half that of Non-Orphan; Potentially a Quarter with US Tax BreaksPhase III Drug Development Time for Orphan is No Quicker than Non-OrphanOrphan Drug FDA Approval Time 9 months vs. 10 months for Non-OrphanEvaluatePharma® estimates that the average phase III clinical trial cost for an orphan drug is roughly half that of non-orphan drugs at $85m, vs. $186m for a non-orphan. In addition, with 50% US tax credit, available via the Orphan Drug Act, the potentialcost could be a quarter of non-orphan at $43m vs. $186m for non-orphans.Orphan drugs required a median 528 patients for phase III trials, versus a median 2,234 patients for non-orphan drugs. The average phase III trial sizes came in at 633 patients for orphan drugs versus 3,758 for non-orphans. EvaluatePharma® found that there was no statistically significant difference in phase III trial length, at a median of 2.75 years. Median FDA approvaltimes were 9 months for orphan vs. 10 months for non-orphans, due to orphans tending to receive Priority Review.

528

2,234

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Median Phase III SizePhase III Trials Sizes: Orphan vs. Non-OrphanSource: EvaluatePharma® (23 APR 2013)

2.75

2.72

2.74

0 1 2 3

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Non

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Phase III Trials Length (yrs): Orphan vs. Non-Orphan

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FDA Approval Time: Orphan vs. Non-Orphan

phase III trial Size & approval time: Orphan vs. non-Orphan

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Value Creation Cost of Phase III

irT lacinilC III esahPsEMN rof )VPN( noitaerC eulaV al Cost (estimated) Expected Return Phase III/ Filed with NPV I esahP sunim VPNstsoC III esahP tnerruC elbaliavA II Cost

% a sA)nb$( VPNepyT

Avg. Product NPV ($m)

No. of Products

(n=) No. of PatientsPhase III

Cost ($bn) As a %

No. of Products

(n=)

Net Return NPV - Phase III

CostNPV/ Phase

III Cost3.012.15+06%025.5815,2319226%0375nahprO

0.60.901+221%088.12146,126181327%07131nahprO-noN986%001781latoT 272 654,159 27.3 100% 182 +160.1 6.9

Orphan/ Non-Orphan %0.74+%2.94+%1.52+%2.5+%3.05+%1.68+%3.34+Orphan/ Total %0.23+%0.33+%1.02+%0.5+%5.33+%3.09+%2.03+

Investment Return Relative to Non-Orphan 1.72

Source: Provisional Data from EvaluatePharma®'s Forthcoming Success Rates & Clinical Trial Timelines (23 APR 2013)

R&D Costs (PIII/ Filed) & Expected Investment Returns (NPV)Expected Return on Investment of Phase III/ Filed Orphan Drugs 1.7 Times Greater than Non-Orphan DrugsPhase III/ Filed Orphan Drugs are 20% of Industry Phase III R&D Spend, but 32% of the Value Creation in the IndustryEvaluatePharma® finds that the current value, based on NPV, of pipeline phase III/ filed orphan drugs is $57bn versus $131bn for non orphans. When looking at the Industry's expected phase III costs to bring all products to market, orphan drugs cost $5.5bn versus $21.8bn for non orphans. We have not assumed any US tax credits in the calculation. The main difference in cost is driven by the differing phase III trial sizes, with all current phase III/ filed orphans set to require a total of 32,500 patients for phase III trials, versus 621,600 patients for non-orphans.The current expected return on investment can be calculated taking the NPV divided by the phase III cost. The Industry's expected return on orphan drugs is 10.3 times the investment (phase III), versus 6.0 times the investment on non-orphans.

20%

80%

Phase III R&D Costs ($bn)

Orphan

Non-Orphan

30%

70%

R&D NPV for Phase III/ Filed ($bn)

Orphan

Non-Orphan

57

131

Orphan Non-Orphan

R&D (Phase III/ Filed): NPV ($bn)

5.5

21.8

Orphan Non-Orphan

Phase III Cost ($bn)

Note: The sample size for product NPVs (n=272) is greater than the estimates of phase III trial sizes (n=182). This is due to NPVs being split by licensing deals. Not all products have an estimate of Phase III trial costs, mainly due to the fact certain products entered Phase III prior to 1 JAN 2000 (the current starting date of EvaluatePharma®'s Success Rate Model). Phase III trial costs have been estimated based on an algorithm using cost per patient per year.

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Worldwide Top 20 Orphan R&D Products based on NPV (Sales, NPV, PIII Cost & Expected Return) Sales ($m) WW R&D PIII Phase III

Rank Product Company Phase (Current) Pharma Class 2018 NPV Cost $m) Trial Size Strategy

1 IMC-1121B Eli Lilly Phase III Anti-VEGFr MAb 813 3,529 110 1,144 32 Company acquisition

2 RG3638 Roche Phase IIIAnti-mesenchymal epithelial transition (c-Met) MAb

660 3,456 135 490 26 Company acquisition

3 Ibrutinib Pharmacyclics Phase III Bruton's tyrosine kinase (Btk) inhibitor 1,283 3,427 96 350 36 In-licensed

4 Opsumit Actelion Filed Endothelin receptor antagonist 969 2,546 124 1,292 20 Organic

5 Riociguat Bayer Filed Guanylate cyclase activator 749 1,964 129 1,339 15 Organic

6 N9-GP Novo Nordisk Phase III Factor IX 487 1,766 64 156 27 Product acquisition

7 GSK2118436 GlaxoSmithKline Filed B-Raf kinase inhibitor 549 1,743 119 1,234 15 Organic

8 BAX 111 Baxter International Phase III Von Willebrand factor 397 1,675 15 36 113 Organic

9 Elotuzumab Bristol-Myers Squibb Phase III Anti-CD37 MAb 418 1,507 134 1,390 11 In-licensed

10 BAY 86-6150 Bayer Phase III Factor VIIa 301 1,323 27 65 49 Product acquisition

11 Trametinib GlaxoSmithKline Filed MEK inhibitor 432 1,285 128 1,331 10 In-licensed

12 rFVIIIFc Biogen Idec Filed Factor VIII 526 1,271 108 394 12 Company acquisition

13 VX-809 Vertex Pharmaceuticals Phase III

Cystic fibrosis transmembrane conductance regulator (CFTR) corrector

527 1,188 96 1,002 12 Company acquisition

14 Defibrotide Gentium Filed Cathepsin G inhibitor 205 1,125 n/a Organic

15 BAX 817 Baxter International Phase III Factor VIIa 234 983 14 34 70 Organic

16 HyperAcute Pancreas NewLink Genetics Phase III Cancer vaccine 447 951 109 722 9 Organic

17 Vimizim BioMarin Pharmaceutical Filed N-acetyl-galactosidase-

6-sulfatase 483 939 89 324 11 Organic

18 Turoctocog alfa Novo Nordisk Filed Factor VIII 274 850 101 667 8 Organic

19 RLX030 Novartis Filed Angiotensin II antagonist 547 843 112 1,161 8 Company acquisition

20 Obeticholic acid Intercept Pharmaceuticals Phase III Farnesoid X receptor

(FXR) agonist 231 816 n/a Organic

Other 7,745 23,456Total 18,279 56,642 5,483 32,518 10.3

vs. Non-Orphan: 40,425 130,793 21,831 621,641 6.0

Source: EvaluatePharma® (23 APR 2013)

Return NPV/ PIII Cost

2018: Top 20 Orphan R&D Products based on NPV

Note: Sales represent company reported sales where available, otherwise based on an average of equity analyst estimates.Phase III trial costs represent an assumption on current phase III trial size for lead indication(s), derived from the enrolment size listed on clinicaltrials.gov via Evaluate Clinical Trials. *IMC-1121B: Majority of sales expected to be from non-orphan indications, but in Phase III for gastric and liver cancer (orphan).Factor VIII products for haemophilia A & B classified as orphan drugs.

Lilly's IMC-1121B World's Most Valuable R&D Orphan Drug*Elotuzumab (AbbVie/ BMS) is Most Valuable Pure Orphan DrugEvaluatePharma® finds that Lilly's anti-VEGFr MAb IMC-1121B* in development for gastric and liver cancer (orphan), and a range of non-orphan cancers, is the world's most promising R&D orphan drug, with an NPV of $3.5bn.Elotuzumab (AbbVie/ BMS) for multiple myeloma, is the most valuable R&D product (NPV: $1.5bn) expected to derive all its sales from orphan indications.

3,529 3,456 3,427

2,546

1,9641,766 1,743 1,675

1,5071,323

0

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IMC

-112

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RG

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436

BAX

111

Elot

uzum

ab

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86-6

150

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uct N

PV (

$m)

Top 30 Orphan Drugs in 2018 (Phase III/ Filed)Source: EvaluatePharma® (23 APR 2013)

2018: top 20 Orphan r&D products Based On npV

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USA, EU & Japan Orphan Designations per Year & Cumulative (1983-12)

US, EU & Japan Orphan Designations per Year (1999-12)

Orphan DesignationsYear 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

USA OD Applications 94 88 129 115 167 174 174 191 181 185 250 323 306 264 Growth per Year -6% +47% -11% +45% +4% +0% +10% -5% +2% +35% +29% -5% -14%USA Designations Accepted 78 70 78 64 95 131 123 142 117 165 165 194 203 188 Growth per Year -10% +11% -18% +48% +38% -6% +15% -18% +41% +0% +18% +5% -7% % Accepted 83% 80% 60% 56% 57% 75% 71% 74% 65% 89% 66% 60% 66% 71%EU Designations per Yr 0 8 31 31 36 56 69 63 79 66 91 119 102 147 Growth per Year +288% +0% +16% +56% +23% -9% +25% -16% +38% +31% -14% +44%Japan Designations per Yr 20 12 7 5 7 8 5 14 10 16 7 10 24 32

-40% -42% -29% +40% +14% -38% +180% -29% +60% -56% +43% +140% +33%Source: EvaluatePharma® (23 APR 2013); USA OD applications per year from PAREXEL Consulting

Cumulative US, EU & Japan Orphan Designations & US Approvals per Year (1999-12)

Orphan Designations Cumulative TotalYear 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

USA Designations Total 994 1,064 1,142 1,206 1,301 1,432 1,555 1,697 1,814 1,979 2,144 2,338 2,541 2,729 Growth per Year +7% +7% +6% +8% +10% +9% +9% +7% +9% +8% +9% +9% +7%EU Designations Total 8 39 70 106 162 231 294 373 439 530 649 751 898 Growth per Year +388% +79% +51% +53% +43% +27% +27% +18% +21% +22% +16% +20%Japan Designations Total 136 148 155 160 167 175 180 194 204 220 227 237 261 293 Growth per Year +9% +5% +3% +4% +5% +3% +8% +5% +8% +3% +4% +10% +12%Source: EvaluatePharma® (23 APR 2013)

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2002

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2004

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igna

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USA Designations per Yr

EU Designations per Yr

Japan Designations per Yr

USA, EU & Japan Designation per Year (1983-2012)Source: EvaluatePharma® (23 APR 2013)

FDA Orphan Designations Decline 7% in 2012; European Designations up 44%; Japan Designations up 33%EvaluatePharma® found that the number of US orphan drug designations declined 7% in 2012 to 188. This is the first decline since2007. European orphan designations expanded 44% to 147, reversing the decline seen in 2011.US orphan designations accepted noticeably accelerated from 64 in 2002 to a peak of around 203 in 2011.Orphan designations in Japan continued to surge ahead, up 33% to 32 designations.

Strong increase from 2003

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USA Designations Total

EU Designations Total

Japan Designations Total

USA, EU & Japan Designations Cumulative TotalSource: EvaluatePharma® (23 APR 2013)

uSa, eu & Japan Orphan Designations per Year & Cumulative (1983-12)

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FDA Approvals of Designations & New Drugs (NMEs/ BLAs): 1999 to 2012

FDA Approved Orphan Designations & Drugs

Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012No. of FDA Approved OD Designations 20 13 6 14 12 13 19 24 16 14 20 14 26 26 % Chg. -35% -54% +133% -14% +8% +46% +26% -33% -13% +43% -30% +86% +0%No. of Orphan Drugs (NMEs/ BLAs) 10 8 8 9 15 6 14 15 % Chg. -20% +0% +13% +67% -60% +133% +7%

NME - Orphans 6 5 5 2 5 3 7 11BLA - Orphans 1 2 1 2 4 3 4 3

Biologicals - Orphans 3 1 2 5 6 0 3 1

Total FDA Approval Count (Orphan & Non-Orphan)

Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012No. of NMEs Approved 35 27 24 17 21 31 18 18 16 21 19 15 24 33No. of Biologicals Approved 5 6 8 9 14 7 10 11 10 10 15 11 11 10Total NMEs + Biologicals 40 33 32 26 35 38 28 29 26 31 34 26 35 43 % Chg. -18% -3% -19% +35% +9% -26% +4% -10% +19% +10% -24% +35% +23%No. of Orphan Drugs (NMEs/ BLAs) 10 8 8 9 15 6 14 15as a % of Total 36% 28% 31% 29% 44% 23% 40% 35%

FDA Approves 15 New Orphan Drugs in 2012 vs. 14 in 2011; Orphans 35% of Total FDA New Drug Approvals in 2012FDA Approves 26 Designations in 2012, No Change on 2011EvaluatePharma® finds that 15 new orphan drugs (NMEs/ BLAs and biologicals) were approved in 2012 out of 43 new drugs. Orphan drugs represented 35% of the Industry's new drug output in 2012.Overall the FDA approved 26 designations, flat vs. 2011. This includes new indication approvals of already marketed products.

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No. of FDA Approved OD Designations

No. of Orphan Drugs (NMEs/ BLAs)

USA & EU Designation per Year & Cumaltive TotalSource: EvaluatePharma® (20 APR 2013)

USA & EU Designation per Year & Cumaltive TotalSource: EvaluatePharma® (20 APR 2013)

USA & EU Designation per Year & Cumaltive TotalSource: EvaluatePharma® (20 APR 2013)

FDA Orphan Drug Marketing Approvals & Orphan Drugs New Drugs (NMEs/ BLAs)Source: EvaluatePharma® (23 APR 2013)

Note: Audited orphan drug NME count currently available from 2005+.

FDa approvals of Designations & new Drugs (nMes/ BLas): 1999 to 2012

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FDA New Drug Approval Analysis (NMEs/ BLAs) 2012: Orphan vs. Non Orphan

Top 10 Orphan New Molecular Entities approved in 2012: Ranked on USA Consensus Sales in 2017

Phase III R&D PIIIProduct OD Indication 2012 2017 Trial Size Cost ($m)

1 Kyprolis 811030,179846slacituecamrahP xynOamoleym elpitluM2 Kalydeco 511955607271slacituecamrahP xetreVsisorbif citsyC3 Iclusig Acute lymphoblastic leukemia

(Ph+ALL); CML08869835-slacituecamrahP DAIRA

4 Jetrea Adjunct to surgery in cases of pediatric vitrectomy [R&D]

ThromboGenics - 382 652 98

5 Signifor Cushing's disease Novartis 3 352 465 1286 Inlyta Renal cell carcinoma Pfizer 59 252 1,215 1177 Gattex 89753052-slacituecamrahP SPNemordnys lewob trohS8 Juxtapid Homozygous familial

hypercholesterolemia2245442-slacituecamrahP noiregeA

9 Elelyso Gaucher's disease Pfizer 6 148 122 5010 Bosulif Chronic myelogenous leukemia Pfizer 7 147 502 76

Top 10 310 3,916 5,924 901

Other 14 62

Total 325 3,977

Average for Top 10: 392 592As a % of non-orphans 43% 7% 29%

Top 10 Non-Orphan New Molecular Entities approved in 2012: Ranked on USA Consensus Sales in 2017

Phase III R&D PIIIProduct 2012 2017 Trial Size Cost ($m)

1 Stribild Gilead Sciences 58 1,959 1,408 1352 Eliquis 059746,43329,1-bbiuqS sreyM-lotsirB3 Xeljanz Pfizer 18 1,183 9,117 2824 Xtandi Astellas Pharma 87 1,158 2,879 2765 Linzess 212481,691892seirotarobaL tseroF6 Perjeta Roche 58 598 4,614 2217 Tudorza Pressair 422756,499332seirotarobaL tseroF8 Belviq Eisai 6 394 7,794 2679 Aubagio Sanofi 9 384 5,530 183

10 Myrbetriq Astellas Pharma 27 295 9,307 319

Top 10 314 9,112 86,137 3,070

Other 203 1,662

Total 517 10,774

Source: EvaluatePharma® (23 APR 2013) Average for Top 10: 911 8,614

May 2012Sep 2012

US Sales Company Approved

Oct 2012

Dec 2012Jan 2012Dec 2012Dec 2012

Jul 2012Jan 2012Dec 2012

Company ApprovedUS Sales

Aug 2012Dec 2012Nov 2012Aug 2012Aug 2012

Jun 2012

Jun 2012Jul 2012Jun 2012Sep 2012

Kyprolis Most Promising New Orphan Drug Approved by FDA in 2012Top 10 Orphan Drugs have 43% the Sales Potential of Non-Orphan but Delivered at 29% of the Phase III Trial CostEvaluatePharma® finds that Kyprolis, from Onyx, for multiple myeloma is the most promising new orphan drug approved in 2012, with expected US sales in 2017 of $897m.The top 10 orphan drugs approved in 2012 are expected to sell on average $392m in the USA market, five years post launch. This compares with $911m for non-orphans approved in 2012.The average Phase III trial size for the top 10 orphans was 592 patients vs 8,614 for top 10 non-orphans approved in 2012.

392

911

0100200300400500600700800900

1,000

Orphan (Top 10) Non-Orphan (Top 10)

Avg. USA Sales 5 Years After Launch(2012 FDA Approvals)

592

8,614

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,000

Orphan (Top 10) Non-Orphan (Top 10)

Avg. Phase III Trial Size(2012 FDA Approvals)

FDa new Drug approval analysis (nMes/ BLas) 2012: Orphan vs. non Orphan

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EU Orphan Designations: Historic Distribution by Prevalence

Distribution and Count of EU Orphan Designations Based on Prevalence

Source: EvaluatePharma® (23 APR 2013)

40.5%52.9%76.6%89.2%97.7%

Cumulative % of Total

-26.4%34.9%

12.4%

12.6%8.5%2.3%

23.7%

100.0%

% of Total

18.5%7.9%

5.6%8.5%

0 - 10,000

EU Prevalence

10,000 - 20,000

100.0%

Designation Count

198859160

1332541359125

1072200,000 - 250,000

Total

20,000 - 30,00030,000 - 40,000

50,000 - 100,000100,000 - 150,000150,000 - 200,000

40,000 - 50,000

0%

10%

20%

30%

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0 50000 100000 150000 200000 250000

Perc

enta

ge o

f EU

Des

igna

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(%)

Total EU Disease Prevalence Population

Historic Distribution of Orphan Drug Designations in the EUSource: EvaluatePharma® (23 APR 2013)

% of Designations

18.5% of EU Orphan Designations for Ultra Rare DiseasesEvaluatePharma® found that 18.5% (198 out of 1,072) of EU Orphan drug designations are for an ultra rare orphan disease. An ultra rare designation is classed as having an EU prevalence of 10,000 or less individuals (0.20 per 10,000). In the ultra rare segment 23% (46) orphan drug designations were granted for designations with a prevalence of less than 500 individuals. At the other end of the prevalence scale just 2% (3) of designations were granted for diseases with a prevalence of 240,000 or more individuals.

Ultr

aR

are

Note: Based on available EU prevalence data for a specific designation, as of the 28th of February 2013. EU total population taken to be 506,300,000. EvaluatePharma® used Alexion Pharmaceuticals' definition of an ultra rare orphan drug, disease affecting fewer than 20 individuals per million of population (0.2 per 10,000).

Per 10,000 EU Population

0.20 0.99 1.98 2.96 3.95 4.94

eu Orphan Designations: historic Distribution by prevalence

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Top 20 Orphan Drug Designation Indications in the EU

Rank Indication Total EU Designations As a %1 Leukaemia, acute myeloid (AML) 45 4%2 Non-Hodgkin lymphoma (NHL) 38 3%3 Glioma 37 3%4 Pancreatic cancer 35 3%5 Cystic fibrosis (CF) 35 3%6 Ovarian cancer 28 3%7 Multiple myeloma 27 2%8 Renal cell carcinoma (RCC) 27 2%9 Hepatoma, liver cancer 21 2%10 Leukaemia, chronic lymphocytic (CLL) 20 2%11 Leukaemia, acute lymphocytic (ALL) 20 2%12 Graft vs host disease (GvHD) 19 2%13 Duchenne muscular dystrophy 18 2%14 Pulmonary hypertension 16 1%15 Pulmonary fibrosis, idiopathic 13 1%16 Soft tissue sarcoma 13 1%17 Leukaemia, chronic myeloid (CML) 10 1%18 Hodgkin Lymphoma 10 1%19 Myelodysplastic syndrome 9 1%20 Anaemia, sickle cell 9 1%Sub Total 450 41%Other 647 59%Total 1097 100%Source: EvaluatePharma® (23 APR 2013)

2.50.522.52.4

1.6

1.23.03.0

1.6

2.21.02.74.04.2

EU Orphan Designations: Top 20 Indications

2.4

3.5

3.2

2.21.3

3.5

EU Prevalence(per 10,000)

Note: Designations assigned based on closest possible match to existing indications within EvaluatePharma®. For example: EU Designation: Adult acute myeloid leukaemia with 11q23 (MLL) abnormalities is mapped to Leukaemia, acute myeloid (AML).

Acute Myeloid Leukaemia is Indication with Most Filed Orphan Drug Designations in EUEvaluatePharma® finds that acute myeloid leukaemia is the indication with the most orphan designations in the EU. A number of blood malignancies appear in the top 20 including chronic and acute lymphocytic leukaemia (No. 10 & 11) and chronic myeloid leukaemia (No. 17). In fact, accounting for all of these, 8 indications out of the top 20 fall within EvaluatePharma's® Blood and Blood Forming Malignancies categorization. Other notable indications include historically well defined populations and indications such as cystic fibrosis and Duchenne muscular dystrophy. Hodgkin lymphoma was the only indication in the top 20 to have an EU prevalence of less than 1.0.

991010

1313

1618

192020

212727

283535

3738

45

0 5 10 15 20 25 30 35 40 45 50

Anaemia, sickle cell Myelodysplastic syndrome

Hodgkin Lymphoma Leukaemia, chronic myeloid (CML)

Soft tissue sarcoma Pulmonary fibrosis, idiopathic

Pulmonary hypertension Duchenne muscular dystrophy Graft vs host disease (GvHD)

Leukaemia, acute lymphocytic (ALL) Leukaemia, chronic lymphocytic (CLL)

Hepatoma, liver cancer Renal cell carcinoma (RCC)

Multiple myeloma Ovarian cancer

Cystic fibrosis (CF) Pancreatic cancer

Glioma Non-Hodgkin lymphoma (NHL)

Leukaemia, acute myeloid (AML)

Number of EU OD Designations

Number of EU OD Designations

Top 20 EU Orphan DesignationsSource: EvaluatePharma® (23 APR 2013)

eu Orphan Designations: top 20 Indications

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evaluate’s Solutions for the Life Science Industryat evaluate, our focus is on the business success of our clients.

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