Initiating CoverageJune 8, 2017

Sierra Oncology (SRRA)Initiation Report

LifeSci Investment Abstract

Sierra Oncology (NasdaqGM: SRRA) is a biotechnology company focused on developingoncology treatments that target the DNA Damage Response (DDR) pathways. Lead assetSRA737 is an oral kinase inhibitor of Chk1, a protein that is a key mediator of the cell’sresponse to replication stress and associated DNA damage. The recent clinical success ofPARP inhibitors, an alternative enzyme involved in repairing DNA damage, supports theapproach to target DNA damage repair (DDR) pathways. SRA737 is currently being evaluatedas a treatment for solid tumors in Phase I studies as a single agent and in combination withlow-dose gemcitabine due to potential synergies. Patients are being enrolled in expansioncohorts of both studies who have genetic mutations that are hypothesized to induce syntheticlethality, a goal of DDR cancer treatments, when combined with SRA737. Preliminary datafrom these studies are expected in early 2018. Secondary asset SRA141 inhibitor of the celldivision cycle 7 (Cdc7) protein, a serine-threonine kinase that plays an important role in theinitiation of DNA replication and regulating the DDR network during the S phase of the cellcycle. Sierra expects to file an IND for SRA141 in the second half of 2017.

Key Points of Discussion

■ Sierra is Developing Next Generation Inhibitors of DNA Damage Response (DDR)Pathways. Sierra has in-licensed two oncology assets that target part of the DDR pathway,called SRA737 and SRA141. Lead asset SRA737 is an oral, potentially best-in-class inhibitorof checkpoint kinase 1 (Chk1), a protein that is a key mediator of the cell’s response toreplication stress and associated DNA damage. It is primarily activated downstream ofATR signaling, and plays an important role in inducing cell cycle arrest at the S and G2/M phase checkpoints, stabilizing replication forks, and mediating a DNA repair processcalled homologous recombination repair (HRR). The Chk1 kinase has a complimentarymechanism with other DDR pathways, and so SRA737 may have synergistic effects whencombined with other DDR targeting agents, such as PARP inhibitors. Sierra is currentlyevaluating SRA737 in Phase I studies as a single-agent and in combination with low-dosegemcitabine. Preliminary results from these studies are expected in early 2018.

Secondary asset SRA141 is an orally administered small molecule inhibitor of the celldivision cycle 7 (Cdc7) protein, a serine-threonine kinase that is essential for origin firingduring DNA replication, and is also involved in the DDR network. Along with ATR, itsfunction helps to activate Chk1 in the S phase, and it may be used in combination withSRA737. Sierra expects to file an IND for SRA141 in the second half of 2017.

Expected Upcoming Milestones

■ H2 2017 – File IND for SRA141.■ Early 2018 – Preliminary results from Phase I studies with SRA737 for solid tumors.■ H2 2018 – Present interim data at medical meeting from Phase I studies with SRA737

for solid tumors.■ 2018 – Potentially begin Phase I studies combining SRA737 with PARP inhibitors or

immunotherapy.

 Analysts

Sam Slutsky(212) 915-2573sslutsky@lifescicapital.com

Market Data

Price $1.18Market Cap (M) $62EV (M) $(63)Shares Outstanding (M) 52.3Fully Diluted Shares (M) 59.9Avg Daily Vol 254,04052-week Range: $1.11 - $1.60Cash (M) $125.0Net Cash/Share $2.39Annualized Cash Burn (M) $30.0Years of Cash Left 4.2Debt (M) $0.0Short Interest (M) 0.85Short Interest (% of Float) 2.2%

Financials

FY Dec 2015A 2016A 2017AEPS Q1 NA NA (0.26)A

Q2 NA NA NAQ3 NA NA NAQ4 NA NA NAFY NA NA NA

For analyst certification and disclosures please see page 35Page 1

§ Targeting DDR Pathways Validated by PARP Inhibitors. The DDR pathway has become a growing area of oncology drug development, and was initially validated by the clinical success of PARP inhibitors, which prevent the repair of single stranded breaks. There are 3 PARP inhibitors approved, and 2 additional ones in Phase III development. AstraZeneca’s (NYSE: AZN) PARP inhibitor Lynparza (olaparib) was approved in 2014 to treat ovarian cancer patients who have a deleterious BRCA mutation and have been treated with three or more prior lines of chemotherapy. 2016 sales of Lynparza totaled $218 million. In contrast to PARP inhibitors, Sierra is focused on inhibiting cell cycle regulators that control DNA replication, cell cycle progression, and DNA repair outside of single stranded breaks. Thus, these two agents may have an additive anti-cancer effect when combined.

§ Single Agent Activity with Competing Chk1 Inhibitors in Development Partially De-Risks Target. Sierra, Eli Lilly (NYSE: LLY), and Roche/Genentech (VTX: ROG.VX) are the only companies with active clinical programs targeting Chk1. Eli Lilly’s prexasertib (LY2606368) is an inhibitor of Chk1 and Chk2 in Phase II development. Phase I results showed single-agent activity, with encouraging effects in patients who have oncogene induced replication stress. Notably, preclinical studies indicate that prexasertib’s activity is driven by Chk1 inhibition. Chk2 is a potential tumor suppressor that when inhibited may mitigate the activity of some combination approaches by being radio and chemo protective. In addition, Chk2 inhibition is less selective for cancer cells than Chk1, which could lead to additional off-target toxicities. In contrast to what has been presented by Eli Lilly, Sierra is preselecting patients for SRA737 treatment who have genetic alterations that are hypothesized to induce synthetic lethality when Chk1 is inhibited, and so the response rates with SRA737 may compare favorably to those with prexasertib. Genentech’s GDC-0575 (RG7741) is currently being evaluated with or without gemcitabine in a Phase I study for patients with refractory solid tumors or lymphoma. Durable responses to the combination treatment have been observed in 2 patients with metastatic soft tissue sarcoma, including one complete response.

§ SRA737 Could Induce Synthetic Lethality, a Key Goal of Cancer Treatments. Synthetic lethality is cell death that occurs when there are deficiencies in the normal function of a set of genes in essential parallel or compensatory pathways.1 If the specified set of genes is not fully suppressed, the cell is unlikely to undergo apoptosis. An important aspect of DDR inhibitors is that they can be used to induce synthetic lethality in cancers that have specific genetic alterations, while having a reduced effect on normal cells. This therapeutic approach was validated with PARP inhibitors, which induce synthetic lethality and are most active in patients who have a deleterious BRCA1/2 mutation. Based on preclinical studies, inhibition of Chk1 can induce synthetic lethality in cancer cells that have replication stress caused by loss of function in specific tumor suppressors plus genetic mutations in DNA repair machinery or the presence of certain oncogenes. Using this information, Sierra has amended its studies to enroll patients in expansion cohorts who have genetic mutations that are hypothesized to induce synthetic lethality when combined with SRA737.

§ Two Phase I Clinical Trials Underway with SRA737. When Sierra licensed SRA737 in January 2017, it was being evaluated in two Phase I studies for advanced solid tumors in the UK. Following the acquisition of SRA737, Sierra has extensively studied both the drug’s mechanism of action and the DDR pathway. Based on the potential for SRA737 to induce synthetic lethality in patients who have specific genetic alterations, the Company has amended the trials to enroll patients into expansion cohorts who have predefined mutations that are hypothesized to induce

1 Bingliang, F. 2014. Development of synthetic lethality anticancer therapeutics. Journal of Medicinal Chemistry, 57(19), pp7859-7873.

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synthetic lethality when Chk1 is inhibited. One of the trials is evaluating SRA737 as a monotherapy, and the other is focused on combining SRA737 with low-dose gemcitabine due to the potential for gemcitabine to induce replication stress, which may potentiate SRA737’s activity. Preliminary data from both Phase I studies are expected in early 2018, with a more comprehensive interim analysis during the second half of 2018 at a medical conference.

§ CdC7 May be a Complimentary Target to Chk1. SRA141 is a highly-selective orally administered small molecule inhibitor of the cell division cycle 7 (Cdc7) protein, a serine-threonine kinase that is essential for origin firing during DNA replication, and is also involved in the DDR network during the S Phase of the cell cycle.2, 3 The Company is currently conducting preclinical studies to evaluate dosing and the activity of SRA141 across a number of solid and liquid tumor types. Treatment using SRA141 could have broad implications for cancer since the over-expression of Cdc7 has been correlated with poor outcomes in both solid tumors and hematological malignancies.4 Sierra expects to file an IND for SRA141 during the second half of 2017. Like Chk1, mutations in tumor suppressor genes such as Tp53 can increase expression and reliance on Cdc7. Thus, SRA141 may also induce synthetic lethality in patients with specific genetic alterations, which Sierra intends to exploit in clinical trials.5 Because Cdc7 plays a role in both replication and DDR, inhibition of this kinase may synergize with genotoxic drugs that impair DNA replication.

Financial Discussion Recent Public Listing. Sierra Oncology became publicly listed on the Nasdaq Global Markets Exchange under the ticker symbol SRRA on January 10, 2017. The Company emerged from the re-launch of ProNAi Therapeutics, a publicly listed biotechnology company that was focused on developing antisense oligonucleotides. Both SRA737 and SRA141 are recently in-licensed clinical candidates, and no resources are planned to be dedicated towards ProNAi’s prior work. Recent Financing Activity. In February 2017, Sierra completed a $27.3 million financing net of underwriting discounts, commissions, and offering expenses. 21.8 million shares of common stock were offered at a price of $1.35 per share. As of March 31, 2017 Sierra had $125 million in cash and equivalents, which is expected to fund activities through mid-2019. The Company has 52.3 million shares outstanding, and there are 59.9 million fully diluted shares.

2 Montagnoli, A. et al., 2010. Targeting cell division cycle 7 kinase: A new approach for cancer therapy. Clinical Cancer Research, 16(18), pp4503-4508. 3 Bousset, K. & Diffley, J.F.X. 1998. The Cdc7 protein kinase is required for origin firing during S phase. Genes & Development, 12(4), pp480-490. 4 Hugget, M.T. et al., 2016. Cdc7 is a potent anti-cancer target in pancreatic cancer due to abrogation of the DNA origin activation checkpoint. Oncotarget, 7(14), pp18495-18507. 5 Hugget, M.T. et al., 2016. Cdc7 is a potent anti-cancer target in pancreatic cancer due to abrogation of the DNA origin activation checkpoint. Oncotarget, 7(14), pp18495-18507.

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Table of Contents Company Description ........................................................................................................................................................ 6SRA737: A Next Generation DDR Therapeutic Targeting Chk1 .............................................................................. 7Chk1 Background ............................................................................................................................................................. 11SRA737 Preclinical Data .................................................................................................................................................. 14Background on DDR Pathways ..................................................................................................................................... 16

Chk1 Inhibition May Synergize with Multiple Drug Classes ................................................................................ 18Oncology Market Information ....................................................................................................................................... 20Clinical Development Strategy for SRA737 ................................................................................................................. 22

Phase I Study with SRA737 Monotherapy .............................................................................................................. 22Phase I Study Combining SRA737 with Gemcitabine .......................................................................................... 23

Other Chk1 Inhibitors in Development ....................................................................................................................... 24DDR Competitive Landscape ........................................................................................................................................ 28SRA141 – Small Molecule Inhibitor of Cdc7 ............................................................................................................... 30Intellectual Property and Licensing Agreements ......................................................................................................... 32Management Team ........................................................................................................................................................... 33Risk to an Investment ...................................................................................................................................................... 35Analyst Certification ......................................................................................................................................................... 36Disclosures ......................................................................................................................................................................... 36

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Company Description Sierra Oncology is a clinical stage biotechnology company focused on developing oncology treatments that target the DNA damage response (DDR) pathways. The Company’s lead asset, SRA737 is an oral kinase inhibitor of checkpoint kinase 1 (Chk1), a protein that is a key mediator of the cell’s response to replication stress and associated DNA damage. It is primarily activated downstream of ATR signaling, and plays an important role in inducing cell cycle arrest at the S and G2/M phase checkpoints, stabilizing replication forks, and mediating a DNA repair process called homologous recombination repair (HRR). It is worth mentioning that Chk1 can also be activated from certain stressors that activate ATM, such as ionizing radiation.6 The Chk1 kinase has a complimentary mechanism with other DNA repair pathways, which could result in anticancer activity as a single agent, in combination with other DNA repair pathway inhibitors such as poly-(ADP-ribose) polymerase (PARP), and chemotherapies that have their effect mitigated by DDR processes. Sierra is currently evaluating SRA737 as a treatment for advanced solid tumors in a Phase I study as a single agent, and a Phase I study in combination with low-dose gemcitabine. Preliminary data from both trials are expected in early 2018, with a more comprehensive interim analysis during the second half of 2018 at a medical conference. Secondary asset SRA141 is an inhibitor of cell division cycle 7 kinase (Cdc7) in preclinical development. Cdc7 is essential for origin firing during DNA replication, and is also involved in the DDR network.7 Along with ATR, its function helps to activate Chk1 in the S phase, and it may be used in combination with SRA737. Sierra expects to file an IND for SRA141 in the second half of 2017. Sierra’s developmental pipeline is illustrated in Figure 1.

Figure 1. Sierra Oncology’s Developmental Pipeline

Source: LifeSci Capital Sierra Oncology was formed in January 2017 following a re-launch of ProNAi Therapeutics. Both SRA737 and SRA141 are recently in-licensed drug candidates, and no resources are expected to be dedicated towards ProNAi’s prior clinical work. Sierra has a strong, veteran management team with extensive experience and a successful track record in drug development.

6 Gatei, M. et al., 2003. Ataxia-telangiectasia-mutated (ATM) and NBS1-dependent phosphorylation of Chk1 on Ser-317 in response to ionizing radiation. Journal of Biological Chemistry, 278(17), pp14806-14811. 7 Bousset, K. & Diffley, J.F.X. 1998. The Cdc7 protein kinase is required for origin firing during S phase. Genes & Development, 12(4), pp480-490.

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SRA737: A Next Generation DDR Therapeutic Targeting Chk1 SRA737 is an orally administered small molecule that could become a first-in-class inhibitor of Chk1 kinase, a protein that plays a critical role in regulating the cell cycle in response to replication stress and DNA damage, and mediating the DNA damage response (DDR). The DDR network is made up of cellular pathways that can monitor, detect, and repair DNA damage. A hallmark of malignancy are DNA mutations that bypass normal processes of the DDR network such as DNA repair, cell cycle arrest, and apoptosis, causing genomic instability. These mutations can occur in proteins that sense damaged DNA, mediate enzymatic DNA repair activity, or control interactions between DNA repair/DDR components and processes. This ultimately can allow cancer cells to rapidly proliferate with high levels of genomic instability.8 There are 3 checkpoints that regulate progression into each subsequent phase of the cell cycle. One of the most common defects in cancer is the loss of G1 cell cycle checkpoint control, which regulates the progression from the G1 phase to S phase of the cell cycle.9 The 4 phases of the cell cycle are depicted in Figure 2, and are G1, S, G2, and M, which occur during interphase and mitosis. SRA737 functions in the S and G2/M phase, whereas Sierra’s secondary asset SRA141 is typically confined to the S phase.10 G1 checkpoint loss combined with oncogenes such as Myc and RAS that promote replication, leads to cancer cells being prematurely rushed through the cell cycle with higher levels of replicative stress and associated stalled replication forks.11,12 High levels of replicative stress and an overabundance of faulty DNA can lead to cellular apoptosis, whereas low levels contribute to genomic instability and mutations that arise in response to environmental pressures specific for cancer. Loss of G1 checkpoint control places greater reliance on subsequent checkpoint regulators like Chk1 at the intra-S and G2/M phase to maintain genomic integrity, and prevent additional mutations and/or apoptosis from occurring. By inhibiting Chk1, Sierra hopes to prevent DNA repair, and facilitate the movement of highly mutated cells through the cell cycle. This can lead to apoptosis due to increased level of replicative stress and an over abundance of faulty DNA. Importantly, normal, non-cancerous cells retain the G1/S checkpoint and complimentary DNA repair pathways, and so are less affected by DDR inhibitors compared to chemotherapy. 8 Jackson, S.P. & Helleday, T. 2016. DNA repair: Drugging DNA repair. Science, 352(6290), pp1178-1179. 9 Chen, T. et al., 2012. Targeting the S and G2 checkpoint to treat cancer. Drug Discovery Today, 17(5/6). 10 Bousset, K. & Diffley, J.F.X. 1998. The Cdc7 protein kinase is required for origin firing during S phase. Genes & Development, 12(4), pp480-490. 11 Croce, C.M. 2008. Oncogenes and cancer. New England Journal of Medicine, 358(5), pp502-511. 12 Halazonetis, T.D. et al., 2008. An oncogene-induced DNA damage model for cancer development. Science, 319(5868), pp1352-1355.

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Figure 2. Cell Cycle and Checkpoints

Source: Sierra Oncology Presentation

SRA737 is being studied in a Phase I trial as a monotherapy, and a Phase I study in combination with low-dose gemcitabine. Preliminary data from both studies with SRA737 are expected in early 2018, with a more comprehensive interim analysis during the second half of 2018 at a medical conference. To optimize the anticancer effect of SRA737, Sierra is enrolling patients in expansion cohorts of these studies who have genetic aberrations that are hypothesized to induce synthetic lethality when Chk1 is inhibited. Synthetic lethality is cell death that occurs when there are deficiencies in the normal function of a set of genes in essential parallel or compensatory pathways.13 If the specified set of genes is not fully suppressed, cell death is unlikely to occur. Synthetic lethality is a goal for DDR targeting therapeutics, and has been clinically validated by the success of inhibitors targeting PARP, such as AstraZeneca’s (NYSE: AZN) Lynparza (olaparib), Tesaro’s (NasdaqGS: TSRO) Zejula (niraparib), and Clovis Oncology’s (NasdaqGS: CLVS) Rubraca (rucaparib). PARP inhibition causes synthetic lethality in patients who have a deleterious BRCA1/2 mutation. SRA737 was initially discovered and developed by the Cancer Research UK Cancer Therapeutics Unit at the Institute of Cancer Research, which has developed successful cancer drugs such as Janssen/Johnson & Johnson’s (NYSE: JNJ) Zytiga (abiraterone), Merck’s (NYSE: MRK) Temodar (temozolomide), and carboplatin. Sierra in-licensed SRA737 in September 2016, and completed the transfer of sponsorship for the ongoing Phase I studies in January 2017. To our knowledge, SRA737 is the only Chk1 inhibitor in clinical development from a small-mid cap biotechnology company, making Sierra an investment opportunity in the DDR space. The molecular structure of SRA737 is shown in Figure 3. 13 Fang, B. 2014. Development of synthetic lethality anticancer therapeutics. Journal of Medicinal Chemistry, 57(19), pp7859-7873.

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Figure 3. SRA737’s Molecular Structure

Source: Rundle, S. et al., 2017 SRA737 Mechanism of Action. SRA737 is an inhibitor of Chk1, a serine-threonine kinase that plays an important role in several DNA replication, DNA repair and DNA checkpoint events. Chk1 is a downstream kinase of ATR, which is activated in response to several types of DNA damage and events including double stranded breaks (DSBs), base adducts, crosslinks, stalled replication forks, replication stress, and nucleoside excision repair (NER).14,15 Cancer cells sustain high levels of genomic instability and damage, making them more dependent on intact components of the DDR network such as Chk1 to sustain viability. By inhibiting Chk1, Sierra hopes to prevent DNA repair from occurring, and facilitate the movement of highly mutated cells through the cell cycle. This can lead to apoptosis due to increased level of replicative stress and an over abundance of faulty DNA. Importantly, normal, non-cancerous cells retain the G1/S checkpoint and complimentary DNA repair pathways, and so are less affected by DDR inhibitors compared to chemotherapy. Synthetic Lethality is a Goal of Treatment with SRA737 & Validated by PARP. Synthetic lethality is cell death that occurs when there are deficiencies in the normal function of a set of genes in essential parallel or compensatory pathways.16 If the specified set of genes is not fully suppressed, the cell is unlikely to undergo apoptosis. An important aspect of DDR inhibitors is that they can be used to induce synthetic lethality in cancers, which commonly have genetic alterations that can be exploited, while having a reduced effect on normal cells. The described process is shown in Figure 4. Based on preclinical studies, inhibition of Chk1 is hypothesized to induce synthetic lethality in cancer cells that have replication stress caused by loss of function in specific tumor suppressors plus genetic mutations in DNA repair machinery or the presence of certain oncogenes. Using this information, Sierra has amended its clinical studies to enroll patients in expansion cohorts who have genetic mutations that are hypothesized to induce synthetic lethality when combined with SRA737. Using its enrollment algorithm, the Company estimates that between 20% and 33% of patients with solid tumors will be eligible to receive SRA737. 14 Cimprich, K.A. & Cortez, D., 2008. ATR: an essential regulator of genome integrity. Nature Reviews Molecular Cell Biology, 9(8), pp616-627. 15 Maréchal, A. & Zou, L. 2013. DNA Damage Sensing by the ATM and ATR kinases. Cold Spring Harbor Perspective in Biology, 5(9), ppa012716. 16 Bingliang, F. 2014. Development of synthetic lethality anticancer therapeutics. Journal of Medicinal Chemistry, 57(19), pp7859-7873.

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Figure 4. Chk1’s Ability to Induce Synthetic Lethality In Cancer Cells but Not Normal Cells

Source: Sierra Oncology Presentation Selecting patients based on a synthetic lethality approach has been validated by positive results with PARP inhibitors, which induce synthetic lethality in patients who have a deficiency in specific homologous recombination (HR) proteins such as a BRCA1 or BRCA2. As proof of the additive effect synthetic lethality has on treatments, in the Phase III trial using Tesaro’s (NasdaqGS: TSRO) Zejula (niraparib) as a maintenance treatment for ovarian cancer, the median progression free survival (PFS) in patients harboring a germline BRCA mutation treated with Zejula was 21.0 months, whereas patients non-gBRCA mutations had a median PFS of 9.3 months. Genetic Backgrounds that Could Induce Synthetic Lethality with SRA737. Based on preclinical and clinical data, there are multiple genes impacting the cell cycle and DDR pathway that when mutated, could be synthetically lethal with SRA737. These gene classes along with their biological rationale are depicted in Figure 5.

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Figure 5. Genetic Backgrounds that could be Synthetically Lethal with SRA737

Gene Class Example Biological Rationale

Tumor suppressors TP53 & RAD50 Defective G1/S checkpoint should

increase reliance on remaining Chk1-regulated DNA damage checkpoints.

Oncogenic drivers MYC & KRAS

Oncogene-induced hyperproliferation and cell cycle dysregulation

contributes to replication stress and could increase reliance on Chk1

Replicative stress ATR & CHEK1

Amplification of genes encoding ATR or Chk1 suggests greater reliance on

Chk1 pathway to accommodate replication stress.

DNA repair machinery BRCA1/2 & FA

Mutated DNA repair genes results in excessive DNA damage, and may

increase reliance on Chk1-mediated DNA repair and/or cell cycle arrest

functions.

Source: LifeSci Capital & Sierra Oncology Presentation

Chk1 Background Chk1 is a kinase encoded by the CHEK1 gene that plays a key role in regulating cell cycle progression and DNA repair in response to replication stress and DNA damage. It can trigger cell cycle arrest prior to the transition from the S to G2 phase or the G2 to M phase, and it can mediate homologous recombination repair (HRR) following DNA damage. It is primarily activated downstream of ATR, which is activated in response to the detection of RPA-coated single stranded DNA (ssDNA). ssDNA presents following several types of DNA damage and stressors.17 Chk1 can also be activated from certain stressors that activate ATM, such as ionizing radiation.18 A depiction of the ATR pathway is shown in Figure 6.19 The ATR kinase forms a complex with the ATR-interacting protein (ATRIP), which is attracted to sites of DNA damage by replication protein A (RPA) coated ssDNA. Following this, RAD-17 interacts with ATR, leading to the localization of RAD9, RAD1, and HUS1 to form a hetero-trimeric ring complex called 9-1-1. Topoisomerase binding protein-1 (TOPBP1) and claspin are then recruited to the DNA lesion, which is thought to contribute to the phosphorylation of Chk1. Following Chk1 activation, it signals DNA damage proteins to mediate HRR, checkpoint activation, and stabilization of stalled replication forks. By inhibiting Chk1, Sierra intends to prevent DNA damage repair from occurring, and facilitate

17 Chen, T. et al., 2012. Targeting the S and G2 checkpoint to treat cancer. Drug Discovery Today, 17(5/6), pp194-202. 18 Gatei, M. et al., 2003. Ataxia-telangiectasia-mutated (ATM) and NBS1-dependent phosphorylation of Chk1 on Ser-317 in response to ionizing radiation. Journal of Biological Chemistry, 278(17), pp14806-14811. 19 Rundle, S. et al., 2017. Targeting the ATR-CHK1 axis in cancer therapy. Cancers, 9(5).

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the movement of highly mutated cells through the cell cycle to induce apoptosis by creating increased levels of replicative stress and an over abundance of faulty DNA.

Figure 6. ATR-Chk1 Signaling

Source: Rundle, S. et al., 2017 Chk1’s Role in DNA Damage Checkpoints. Following Chk1’s activation, it is released from chromatin and signals DNA damage in the nucleus. As shown in Figure 7, Chk1 phosphorylates Wee1 and cell division cycle proteins (cdc) cdc25A and cdc25C.20 Phosphorylation of cdc25A leads to the inhibition of cyclin-dependent kinase 2 (CDK2), causing S-phase arrest, whereas phosphorylation of cdc25C and Wee1 inhibits the activity of CDK1, causing G2/M arrest. By inhibiting the progression into subsequent cell cycle phases, Chk1 can prevent apoptosis from occurring through mitotic catastrophe or loss of genetic material by stabilizing stalled replication forks and signaling for DNA repair proteins.21 Notably, the ATM DNA repair pathway is also activated following double stranded breaks (DSBs), but typically acts as a mediator of the G1 cell cycle checkpoint, which often loses its function in cancer cells.

20 Nicola, C.J. 2012. DNA repair dysregualtion from cancer driver to therapeutic target. Nature Reviews, 12(12), pp801-817. 21 Rundle, S. et al., 2017. Targeting the ATR-CHK1 axis in cancer therapy, Cancers, 9(5).

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Figure 7. Signaling DNA Damage to Cell Cycle Checkpoints

Source: Curtin, N.J. 2012 Chk1’s Role in Reducing Replication Stress. ATR-Chk1 signaling can inhibit DNA replication from occurring during conditions of replication stress and DNA damage. The exact process that causes this to happen is unknown, but expected to result from CDK2 inhibition. When replication is halted by a DNA lesion that inhibits fork progression, stabilization and repair of the stalled fork is dependent on Chk1 signaling. In the case where Chk1 is absent, the replication fork collapses, replication cannot resume, and cell death may ultimately occur.22,23 Chk1’s Role in Signaling to DNA Repair. ATR-Chk1 signaling is indicated to have an important role in the regulation of DNA repair via HRR. ATR is able to phosphorylate BRCA1, a key HRR regulatory protein, whereas Chk1 phosphorylates RAD51 recombinase and BRAC2, each of which also participate in HRR. Thus, ATR-Chk1 signaling plays an key role in DNA repair that could potentiate the activity of PARP inhibitors and other DNA repair enzyme inhibitors that target complimentary DNA repair pathway. 24 A proposed cause for resistance developing against PARP inhibition is the restoration of BRCA1/2 function due secondary mutations that occur,

22 Zeman, M.K.& Cimprich, K.A. 2013. Causes and consequences of replication stress. Nature Cell Biology, 16(1), pp2-9. 23 Paulsen, R.D. & Cimprich, K.A. 2007. The ATR pathway: fine-tuning the fork. DNA Repair, 6(7), pp953-966. 24 Rundle, S. et al., 2017. Targeting the ATR-CHK1 axis in cancer therapy. Cancers, 9(5).

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which would preclude synthetic lethality from occurring.25 Because Chk1 is in the same pathway as the BRCA proteins, inhibition of Chk1 may down regulate the renewed BRCA activity and resensitize cancers to PARP inhibition following resistance. The DDR pathway is described in more detail in the DDR pathway background section of this report. Expression of Chk1 Linked to Chemotherapy and Radiation Resistance. High expression of Chk1 has been linked to resistance developing against chemotherapy and radiotherapy.26,27,28 This is because chemotherapeutics such as gemcitabine and cisplatin increase replicative stress, which leads to the activation of checkpoint regulators like Chk1 to stabilize stalled replication forks, halt the replication process, and signal repair proteins to reverse the damage induced by the treatment. By inhibiting Chk1 in the presence of gemcitabine and other chemotherapeutics, the repair of replication stress caused by the chemotherapy could be prevented, ultimately leading to apoptosis. Based on this rationale and the results from preclinical studies, Sierra is evaluating the combination of SRA737 and low-dose gemcitabine in a Phase I study for solid tumors.

SRA737 Preclinical Data Synergies Observed with SRA737 and Gemcitabine. The activity of SRA737 was analyzed in cell lines as a monotherapy and in combination with low-dose gemcitabine. Treatment with gemcitabine causes the replication fork to stall, ultimately leading to DNA double strand breaks. SRA737 was hypothesized to synergize with low-dose gemcitabine based on Chk1’s role in stabilizing stalled replication forks to mitigate the gemcitabine induced replication stress, and its ability to mediate HRR. In an in vivo experiment, HT29 colon cancer cells were xenografted into mice and treated with one of the following:

§ Vehicle. § 100 mg/kg gemcitabine. § 150 mg/kg of SRA737. § 100 mg/kg gemcitabine plus 25 mg/kg of SRA737. § 100 mg/kg gemcitabine plus 50 mg/kg of SRA737. § 100 mg/kg gemcitabine plus 100 mg/kg of SRA737.

Gemcitabine was dosed once every 7 days, and SRA737 was given on days 2 and 3 of each 7-day cycle. This occurred for 3 treatment cycles. Figure 8 depicts tumor size following treatment with each of the described cohorts. As shown, the combination treatment inhibited HT29 colon cancer cell growth to a larger degree than each treatment as a monotherapy. This occurred in a dose dependent manner. Notably, these cells do not harbor a combination of mutations that would be hypothesized to be synthetically lethal when combined with SRA737, pointing towards the synergies of combining gemcitabine with SRA737.

25 Yevgeniy, K. et al., 2017. Reverse the resistance to PARP inhibitors. International Journal of Biological Sciences, 13(2), pp198-208. 26 Bartucci, M. et al., 2011. Therapeutic targeting of Chk1 in NSCLC stem cells during chemotherapy, Cell Death and Differentiation, 19, pp768-778. 27 David, L. et al., 2016. Chk1 as a therapeutic target to bypass chemoresistance in AML. Science Signaling, 9(445), pp.ra90. 28 Abdullah, L.N. et al., 2013. Mechanisms of chemoresistance, Clinical and Translational Medicine, 2(3).

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Figure 8. Antitumor Activity of SRA737

Source: Sierra Oncology Presentation

Synergies between gemcitabine and SRA737 were observed in HT29 and SW620 colon cancer cells, Calu-6 NSCLC cells, and MiaPaCa pancreatic cancer cells. As shown in Figure 9, the effect of gemcitabine was potentiated in vitro the least by SRA737 in HT29 colon cancer cells. This suggests that the depicted activity of SRA737 in Figure 8 may have been greater in xenograft mouse models using the other cell lines tested.

Figure 9. Observed Synergies Between SRA737 and Gemcitabine

Cell Line Tissue Origin SRA737 Potentiation of

Gemcitabine

HT29 Colon 7.9-fold SW620 Colon 16.9-fold Calu-6 NSCLC 9.1-fold

MiaPaCa Pancreas 23-fold

Source: LifeSci Capital Synthetic Lethality with SRA737 Induces Strong Tumor Growth Inhibition. SRA737’s ability to induce synthetic lethality was evaluated in a transgenic mouse model using human MYCN-driven neuroblastoma cells. This model is of a highly proliferative tumor that is genetically unstable and has chromosomal abnormalities that are comparable to human cancers. MYCN-dependent proliferation is correlated with replication stress, and synthetic lethality was hypothesized to occur when treated with SRA737. Mice whose tumors were around 450 mm3 in size at day 0 were dosed with 150 mg/kg of SRA737 or placebo for 7 consecutive days. As shown in Figure 10, mice treated with SRA737 had a median tumor weight of roughly 0.25 grams after 7 days compared to more than 2.0

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grams for placebo treated mice. The magnitude and speed of the tumor burden reduction may be representative of synthetic lethality occurring, and supports the Company’s plan to enroll patients in the ongoing Phase I studies whose tumors have genetic alterations that are expected to induce synthetic lethality when combined with SRA737.

Figure 10. SRA737’s Ability to Induce Synthetic Lethality

Source: Sierra Oncology Reports

Background on DDR Pathways All cells in the human body experience DNA lesions induced by extrinsic and intrinsic stressors during the cell cycle such as UV exposure and endogenous reactive oxygen species. Most of these defects are safely corrected by DDR processes that are triggered by DNA damage and replication stress. As shown in Figure 11, the DDR pathway is a highly coordinated system that incorporates cell cycle checkpoints, which help to prevent DNA damage from being replicated or passed on to daughter cells at mitosis, and DNA repair pathways that are activated following DNA damage. Notably, the most common form of DNA damage is single stranded breaks, but the most damaging is double-stranded breaks. When DNA damage is detected in normal cells, they will either undergo cell cycle arrest while proteins signaled by DDR components correct the damage, or apoptosis if the extent of the damage is too much to fix. This process is monitored by regulators of checkpoints such as Chk1 and Cdc7, which influence the transition from the G1 to S phase, S phase to G2 phase, and G2 to M phase.

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Figure 11. DDR Pathways

Source: Ljungman, M. & Lane, D.P. 200429

Malignancy is often caused by mutations in DNA that dysregulate normal DDR processes such as cell cycle arrest and apoptosis. DNA abnormalities contribute to genomic instability, which is a key characteristic of cancer, and can occur in the genes encoding proteins that sense damaged DNA, mediate enzymatic DNA repair activity, or control interactions between DNA repair/DDR components.30 These mutations result in high levels of replicative stress, making cancer cells more dependent on the intact DDR pathways for survival. This creates an opportunity for therapeutic approaches that target key DDR components such as Chk1 and Cdc7. Importantly, normal, non-cancerous cells have redundant cell cycle checkpoints, and complimentary DNA repair pathways, and so are less affected by DDR inhibitors compared to chemotherapy or radiation, which are less selective for cancer cells. PARP inhibitors have validated the approach of targeting DDR, and function best in cancers that have deficiencies in genes mediating homologous recombination (HR), such as BRCA1/2. One of the most common defects in cancer is the loss of G1 cell cycle checkpoint control, which is typically due to p53 and/or Rb pathway mutations, or a deficiency in inhibitors of cyclins or CDKs.31, 32 Combined with oncogenes such as Myc and RAS that promote replication, cancer cells are prematurely rushed through the cell cycle with higher levels of replicative stress and

29 Ljungman, M & Pane, D.P. 2004. Transcription – guarding the genome by sensing DNA damage, Nature Reviews, 4, pp727-737. 30 Jackson, S.P. & Helleday, T. 2016. DNA repair: Drugging DNA repair, Science, 352(6290), pp1178-1179. 31 Massague, J., 2004. G1 cell-cycle control and cancer, Nature, 432(7015), pp298-306. 32 Sherr, C.J. 1996. Cancer cell cycles. Science, 274(5293), pp1672-1677.

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stalled replication forks.33, 34 The enhanced replicative stress contributes to genomic instability and can lead to apoptosis if excessive DNA damage is not resolved prior to mitosis. As a result, subsequent checkpoints at the intra-S and G2/M phase are important components to maintain genomic integrity and cancer cell viability. Chk1 is primarily activated downstream of ATR, which signals for DNA repair following the identification of stalled replication forks and DNA damage and stressors that include double stranded breaks (DSBs), base adducts, crosslinks, stalled replication forks, and nucleoside excision repair (NER).35,36 Chk1 can also be activated from certain stressors that activate ATM, such as ionizing radiation.37 By inhibiting Chk1, Sierra intends to facilitate the movement of highly mutated cells through the cell cycle, causing apoptosis due to increased levels of replicative stress and an over abundance of faulty DNA. Chk1 Inhibition May Synergize with Multiple Drug Classes SRA737 has the potential to synergize with both immune-oncology and DDR targeting agents, and Sierra is currently evaluating these combinations in preclinical studies. As shown in Figure 12, PARP plays a complementary and non-overlapping role to Chk1 in the DNA repair pathway. The PARP protein helps to repair damage following single stranded breaks (SSBs) in DNA. Following PARP inhibition, SSBs are converted into DSBs, which cannot be repaired in patients who have deficiencies in DSB repair proteins BRCA1/2. This results in synthetic lethality. A proposed cause for resistance developing against PARP inhibition is the partial restoration of BRCA1/2 function due secondary reversion mutations that occur in the genes, which would preclude synthetic lethality from occurring.38 Because Chk1 activates components within the same pathway as the BRCA proteins, inhibition of Chk1 may down regulate the renewed BRCA activity and resensitize cancers to PARP inhibition following resistance. Because SSBs and DSBs both occur in cancer cells, dual inhibition of PARP and Chk1 to induce replication fork collapse could result in a synergistic effect. Importantly, PARP inhibition in cancer cells has been shown to increase reliance on the ATR/Chk1 pathway for survival since PARP inhibition leads to an upregulation in DSBs and cell arrest during the G2 phase. The combined inhibition of PARP and Chk1 has been supported by preclinical studies suggesting a synergistic anti-tumor effect when used together.39

33 Croce, C.M. 2008. Oncogenes and cancer. The New England Journal of Medicine, 358(5), pp502-511. 34 Halazonetis, T.D. et al., 208. An oncogene-induced DNA damage model for cancer development. Science, 319(5868), pp1352-1355. 35 Cimprich, K.A. & Cortez, D., 2008. ATR: an essential regulator of genome integrity. Nature Reviews Molecular Cell Biology, 9(8), pp616-627. 36 Maréchal, A. & Zou, L. 2013. DNA Damage Sensing by the ATM and ATR kinases. Cold Spring Harbor Perspective in Biology, 5(9), ppa012716. 37 Gatei, M. et al., 2003. Ataxia-telangiectasia-mutated (ATM) and NBS1-dependent phosphorylation of Chk1 on Ser-317 in response to ionizing radiation. Journal of Biological Chemistry, 278(17), pp14806-14811. 38 Yevgeniy, K. et al., 2017. Reverse the resistance to PARP inhibitors. International Journal of Biological Sciences, 13(2), pp198-208. 39 Kim, H. et al., 2016. Targeting the ATR/CHK1 axis with PARP inhibition results in tumor regression in BRCA-mutant ovarian cancer models. Clinical Cancer Research,

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Figure 12. DDR Pathway for Damaged DNA

Source: Sierra Oncology Presentation PD-1/L1 inhibitors such as Bristol-Myers Squibb’s (NYSE: BMY) Opdivo (nivolumab) and Merck’s Keytruda (pembrolizumab) work by blocking the immune inhibitory interaction between the PD-L1 ligands on tumor cells, and the PD-1 receptor on T cells. PD-1/L1 inhibitors block a key immune checkpoint that often prevents T cells from recognizing and attacking tumor cells. This class of therapeutics have become an important treatment option for patients with renal cell carcinoma (RCC), melanoma, non-small cell lung cancer (NSCLC), Hodgkin lymphoma, head and neck squamous cell carcinoma (HNSCC), and urothelial carcinoma, and are also being developed for other tumor types such as small-cell lung cancer (SCLC), gastric cancer, mesothelioma, and prostate cancer. Responses to PD-1/L1 inhibition varies by cancer type, although key predictors of response include the following:

§ High levels of tumor infiltrating lymphocytes (TILs). § High mutational burden in cancer cells. § High PD-L1 expression.

By inhibiting Chk1, SRA737 has the potential to increase the mutational burden in cancer cells and induce apoptosis. Both of these events could improve antigen presentation to T cells, leading to a higher level of TILs, and a better response to PD-1/L1 inhibition. At the American Society of Clinical Oncology (ASCO) 2017, data from Memorial Sloan Kettering Cancer Center were presented on the response to anti-PD-1/L1 therapy in patients with platinum-treated metastatic urothelial carcinoma.40 Results showed that the ORR in patients who had a DDR alteration was 72% (18/25) compared to 23% (6/26) for patients without a DDR alteration, which was defined by a DDR gene

40 Teo, M.Y. et al., 2017. DNA damage repair and response gene alterations and response to PD1/L1 blockade in platinum-treated metastatic urothelial carcinoma. American Society of Clinical Oncology.

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panel that included CHEK1. By inhibiting Chk1, SRA737 could induce DDR alterations in patients who do not have them at presentation, and ultimately improve response to PD-1/L1 inhibitors.

Oncology Market Information The American Cancer Society estimates that 1.69 million new cancer cases will be diagnosed in 2017, and 601,000 individuals will die from the disease.41 Sierra is developing SRA737 for patients with solid tumors that have specific combinations of genetic mutations making them amenable to the induction of synthetic lethality. Their target patients have genetic alterations that will consist of a deleterious mutation in a tumor suppressor gene, as determined by next generation sequencing, such as TP53 or RB1, and at least one of the following:

§ Loss of function or deleterious mutation in the DNA damage repair machinery such as ATM, BRCA1/2 or other genes in the DDR pathway implicated in Chk1 pathway sensitivity.

§ A genetic indicator of replicative stress, defined as gain of function or amplification of CHEK1 or ATR or other related gene; or

§ A gain of function mutation or amplification of an oncogenic driver such as MYC, RAS, or other gene implicated in Chk1 pathway sensitivity.

At this time, Sierra is evaluating SRA737 as a treatment for patients with locally advanced or metastatic colorectal cancer, ovarian cancer, castration-resistant prostate cancer, non-small cell lung cancer (NSCLC), head and neck squamous cell carcinoma (HNSCC), bladder cancer, and pancreatic cancer. Based on the genetic algorithm that Sierra is using to enroll patients, the Company predicts that between 20% and 33% of total patients in a given tumor type could be eligible for treatment with SRA737. Figure 13 highlights the patients in the US each year diagnosed with the regional or metastatic cancers that Sierra is initially targeting. Depending on the number of indications and line of therapy for which SRA737 is approved, as many as 116,260 patients could be eligible each year to receive treatment in the US. The Company may also study SRA737’s use in additional cancer types that are not included in our analysis. While this is a considerable market opportunity, we do acknowledge that it may take many years before SRA737 could receive approval in each of these indications, and that some patients will instead receive competing therapies approved for these indications.

41American Cancer Society: Cancer Facts and Figures 2017. Atlanta, Ga: American Cancer Society, 2017. http://www.cancer.org/acs/groups/content/@research/documents/webcontent/acspc-042151.pdf.

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Figure 13. Eligible Patients for SRA737 in the US

Cancer Type US

Incidence

% of Patients Diagnosed with Regional or

Metastatic Cancer*

Patients Diagnosed with Regional or

Metastatic Cancer

Patients Eligible for SRA737 (20% - 33%)

Colorectal 135,430 56% 75,841 15,168 – 25,027

Ovarian 22,440 80% 17,952 3,590 – 5,924

Prostate 161,360 17% 27,431 5,486 – 9,052

NSCLC 189,125 79% 149,409 29,882 – 49,305

HNSCC 44,703 66% 29,504 5,900 – 9,736

Bladder 79,030 11% 8,693 1,739 – 2,869

Pancreatic 53,670 81% 43,473 8,694 – 14,346

Total 685,758 - 352,303 70,461 – 116,260 *SEER data from 2007-2013; Does not include unstaged patients

Source: ACS: Cancer Facts and Figures 2017 & LifeSci Capital

Favorable Pricing for Approved DDR Targeting Agents. Lynparza, Rubraca, and Zejula are approved treatments that target PARP, an enzyme within the DDR pathway. The monthly cost for Rubraca and Zejula, which were approved in 2016 and 2017, respectively, is roughly $13,750 per month. When including the average time on treatment, which can range from 10 months in the treatment setting to 12 months per year in the maintenance setting, the annual cost for these treatments range from $137,500 to $165,000. Based on its comparable mechanism of action to PARP inhibitors, we believe that SRA737 and SRA141 could receive similar pricing. This could enable Sierra to achieve strong sales even when penetrating a fraction of patients eligible for treatment. Lynparza was approved in 2014 to treat ovarian cancer patients who have a BRCA mutation and have been treated with three or more prior lines of chemotherapy. In 2016, sales of Lynparza totaled $218 million. AstraZeneca’s DDR Franchise Highlights Potential. AstraZeneca’s Lynparza was approved in 2014. Recognizing the potential for treatments targeting the DDR pathway, AstraZeneca has broadened its oncology pipeline to include a franchise of next-generation medicines dedicated to targeting DDR. In addition to expanding Lynparza’s use beyond fourth line ovarian cancer, AstraZeneca also has treatments in clinical development to target Wee1, ATR, and ATM. Each of these proteins plays a role in the DDR pathway. Wee1 is activated by the Chk1 kinase to then inhibit the activity of CDK1, causing G2/M arrest, but is not expected to have an effect on the S phase. ATR is upstream of Chk1, and so its inhibition could lead to additional off target effects. ATM helps to promote the activation of the ATR pathway, although its inhibition could also prevent the activity of its downstream kinase Chk2, which may mitigate the activity of some combination approaches by being radio and chemoprotective when inhibited.42,43,44

42 Antoni, L. et al., 2007. CHK2 kinase: cancer susceptibility and cancer therapy – two sides of the same coin? Nature, 7, pp925-936. 43 Lowery, C.D. 2017. The checkpoint kinase 1 inhibitor prexasertib induces regression of preclinical models of human neuroblastoma. Clinical Cancer Research. 44 Jobson, A.G. et al., 2009. Cellular Inhibition of Checkpoint Kinase 2 (Chk2) and Potentiation of Camptothecins and Radiation by the Novel Chk2 Inhibitor PV1019 [7-Nitro-1H-indole-2-carboxylic acid {4-[1-(guanidinohydrazone)-ethyl]-phenyl}-amide], The Journal of Pharmacology and Experimental Therapeutics, 331(3), pp816-826.

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Merck KGaA’s Acquisition of Vertex’s VX-970 and VX-803 Shows Interest in ATR Pathway Inhibition. In January 2017, Vertex entered into a licensing agreement with Merck KGaA for the worldwide development and commercialization of 2 clinical programs, called VX-970 and VX-803, targeting the ATR pathway and 2 novel-preclinical programs. The most advanced of these is VX-970, which is in Phase II development. Under the terms of agreement, Merck paid Vertex an upfront payment of $230 million, in addition to royalties on future net sales. Considering Phase II studies have not yet been completed for any of the programs involved in this transaction, we view the size of the upfront payment encouraging, and a signal of Merck KGaA’s confidence in targeting DDR pathways.

Clinical Development Strategy for SRA737 When Sierra licensed SRA737 in January 2017, it was being evaluated in 2 Phase I studies for advanced solid tumors in the UK. Following the acquisition of SRA737, Sierra has extensively studied both the drug’s mechanism of action and the DDR pathway. Based on the potential for SRA737 to induce synthetic lethality in patients who have specific genetic alterations, the Company has amended the studies to enroll patients with predefined alterations into indication-specific cohort expansions. One of the trials is evaluation SRA737 as a single-agent. The second study is combining SRA737 with low-dose gemcitabine due to the potential for SRA737’s activity to be enhanced by chemotherapy induced replication stress. Both studies will enroll patients with a minimum of two different types of genetic alterations in order to select patients with tumors that are hypothesized to be more sensitive to Chk1 inhibition. These genetic alterations will consist of a deleterious mutation in a tumor suppressor gene, as determined by next generation sequencing, such as TP53 or RB1, and at least one of the following:

§ Loss of function or deleterious mutation in the DNA damage repair machinery such as ATM, BRCA1/2, or other genes in the DDR pathway implicated in Chk1 pathway sensitivity.

§ A genetic indicator of replicative stress, defined as gain of function or amplification of CHEK1 or ATR or other related gene; or

§ A gain of function mutation or amplification of an oncogenic driver such as MYC, RAS, or other gene implicated in Chk1 pathway sensitivity.

The below information provides an overview of the Phase I trial designs. Sierra announced that it has dosed patients with up to 600 mg/day of SRA737, with no Grade 2 or higher TRAEs or dose limiting toxicities (DLTs) reported. In addition, plasma concentrations of SRA737 have exceeded the proposed minimum efficacious threshold for 24 hours following treatment. Preliminary data from both Phase I studies are expected in early 2018, with a more comprehensive interim analysis during the second half of 2018 at a medical conference. Phase I Study with SRA737 Monotherapy Phase I Study Design. This is a two-part open-label, single arm, Phase I dose-escalation study evaluating SRA737 monotherapy in patients with advanced solid tumors.45 Sierra expects to enroll 90 patients in total. During the first part, cohorts consisting of a single patient are receiving escalating doses of SRA737 daily for 28-day treatment cycles.

45 https://clinicaltrials.gov/show/NCT02797964

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Once a treatment-related grade 2 toxicity occurs, that cohort will be expanded to include between 3 and 6 patients, and subsequent cohorts will have a rolling 6 design until the MTD is identified.

The expansion phase of the study will run concurrently to the dose escalation portion once an acceptable Cmin is reached in part 1. 40 adult patients with locally advanced or metastatic disease who have no available treatments and contain the genomic alterations described above are being enrolled in indication-specific cohorts that include the following:

§ Colorectal cancer. § Platinum-resistant ovarian cancer. § Castration-resistant prostate cancer. § Non-small cell lung cancer. § Head and neck squamous cell carcinoma.

Patients who have colorectal cancer with high microsatellite instability are also eligible if they have evidence of a deleterious mutation in a key tumor suppressor gene. For patients with HPV-positive HNSCC, a deleterious mutation in a key tumor suppressor gene is not needed for enrollment since the virus inhibits the activity of P53.46 The primary endpoints of the study are safety, determining an MTD, determining a recommended Phase II dose, and ORR. Update from Monotherapy Study. Sierra recently announced that treatment with SRA737 has been well-tolerated using doses of 20, 40, 80, 160, 300 and 600 mg/day, and that no Grade 2 or higher treatment related AEs have been reported. There have been no dose limiting toxicities, and the maximum tolerated dose has not bee reached. Notably, plasma concentrations of SRA737 have exceeded the proposed minimum efficacious threshold of 100 nM, and were maintained for 24 hours following treatment at the 160 mg/day dose and higher. Based on the minimum efficacious exposure threshold being surpassed, Sierra initiated the cohort expansion phase of the trial, which is enrolling patients who have one of the 5 tumor types described above, and genetic alterations hypothesized to induce synthetic lethality when Chk1 is inhibited. Phase I Study Combining SRA737 with Gemcitabine Phase I Study Design. This is an open-label, non-randomized Phase I trial evaluating SRA737 as a combination treatment with gemcitabine for patients with advanced solid tumors.47 This study is being conducted in two stages, and is expected to enroll 65 patients in total. The first stage is being carried out in a dose-escalation format, and patients with solid tumors are being treated with a combination of SRA737, gemcitabine, and cisplatin. In the second stage, which is ongoing, patients are being treated in a dose-escalation and dose-expansion phase with SRA737 and low-dose gemcitabine. The primary endpoints of the study are safety, determining an MTD, and identifying an optimal dose to test in Phase II dose in combination with gemcitabine. Below are the dosing schedules utilized in the study.

46 Lechner, M.S. & Laimins, L.A. 1994. Inhibition of p53 DNA binding by human papillomavirus E6 proteins. Journal of Vriology, 68(7), pp4262-4273. 47 https://clinicaltrials.gov/show/NCT02797977

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§ Stage 1 – Patients will receive a lead in dose of oral SRA737 on a single day between days -7 and -4 to determine PK, and then on days 2, 3, 9, and 10 of each 21 day cycle. Gemcitabine will be given by IV on days 1 and 8, and cisplatin on day 1 of each treatment cycle. Patients are being enrolled in a dose-escalation format in cohorts of 3 to 6 until a recommended Phase II dose is determined. Patients who receive clinical benefit and can tolerate treatment will have the option to remain on study. The starting dose was 20 mg for SRA737, 1,250 mg/m2 for gemcitabine, and 80 mg/m2 for cisplatin.

§ Stage 2 – This portion of the study contains a dose-escalation and dose-expansion phase. During the dose

escalation phase, cohorts of 3 to 6 patients will be given escalating doses of SRA737 on an intermittent schedule, plus low-dose gemcitabine until an MTD is reached. Patients will receive a lead in dose of oral SRA737 on a single day between days -7 and -4 to determine PK, and then on days 2, 3, 9, 10, 16, and 17 of each 28 day cycle. Low-dose gemciatabine will be given on days 1, 8, and 15 of each 28-day cycle. The starting dose was 40 mg for SRA737, and 300 mg/m2 for gemcitabine.

Patients with bladder cancer or pancreatic cancer who have the genomic alterations described above are being enrolled into the stage 2 dose expansion cohort once and MTD is reached. Patients who receive clinical benefit and can tolerate treatment will have the option to remain on study.

Update from Chemotherapy Combination Study. Sierra has concluded stage 1 of the chemotherapy combination study, and has begun enrolling patients in stage 2. Once an MTD and dosing schedule have been determined, patients with bladder and pancreatic cancer who have genetic alterations hypothesized to be more sensitive to Chk1 inhibition will begin enrolling in indication specific cohorts. Potential for Combination Studies with PARP Inhibitors or Checkpoint Inhibitors in 2018. Based on the potential synergies, Sierra may conduct clinical studies as early as 2018 combining SRA737 with PARP or PD-1/L1 inhibitors. Both of these therapeutic classes have become important components of cancer treatment regimens, and the addition of SRA737 could potentiate their effect. Sierra is currently conducting preclinical studies to evaluate the effects of SRA737 in combination with immuno-oncology treatments and other DDR-targeted agents.

Other Chk1 Inhibitors in Development As shown in Figure 14, Sierra, Eli Lilly, and Roche/Genentech are the only companies with active programs targeting Chk1 in clinical development. Eli Lilly’s prexasertib (LY2606368) is an inhibitor of Chk1 and Chk2 in Phase II development. Results from a Phase I study showed single-agent activity, with a preference for patients who have oncogene induced replication stress. Notably, Chk2 is a potential tumor suppressor, and when inhibited may mitigate the activity of some combination approaches by being radio and chemoprotective.48,49,50, This may give

48 Antoni, L. et al., 2007. CHK2 kinase: cancer susceptibility and cancer therapy – two sides of the same coin? Nature, 7, pp925-936. 49 Lowery, C.D. 2017. The checkpoint kinase 1 inhibitor prexasertib induces regression of preclinical models of human neuroblastoma. Clinical Cancer Research. 50 Jobson, A.G. et al., 2009. Cellular Inhibition of Checkpoint Kinase 2 (Chk2) and Potentiation of Camptothecins and Radiation by the Novel Chk2 Inhibitor PV1019 [7-Nitro-1H-indole-2-carboxylic acid {4-[1-(guanidinohydrazone)-ethyl]-phenyl}-amide], The Journal of Pharmacology and Experimental Therapeutics, 331(3), pp816-826.

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SRA737 a competitive advantage over prexasertib.51 Genentech’s GDC-0575 (RG7741) is currently being evaluated with or without gemcitabine in a Phase I study for patients with refractory solid tumors or lymphoma. GDC-0575 is being developed in collaboration with Array BioPharma (NasdaqGM: ARRY). Preliminary results showed that two patients with metastatic soft tissue sarcoma were treated with GDC-0575, and experienced durable responses. Below we discuss the programs with prexasertib and GDC-0575 in more detail.

Figure 14. Background of Competing Chk1 Inhibitors in Clinical Development

Company Drug Target Development

Phase Indication

Eli Lilly Prexasertib

(LY2606368) Chk1/2 I/II

Ovarian Cancer, SCLC,

HNSCC, and Solid tumors

Roche/Genentech GDC-0575 (RG7741)

Chk1 I Solid tumors

Source: LifeSci Capital

Prexasertib - Eli Lilly Prexasertib is an intravenously administered inhibitor of Chk1 and Chk2. It is being evaluated in Phase II studies for small cell lung cancer and ovarian cancer, and Phase I studies for solid tumors and head and neck cancer.52,53,54 Results have been presented at the European Society for Medical Oncology (ESMO) 2016 from the single-arm Phase II ovarian cancer trial. Patients in this study were administered 105 mg/m2 of prexasertib once every 14 days. As shown in Figure 15, 35% (7/20) of evaluable patients with high-grade serous ovarian cancer (HGSOC) experienced a partial response (PR) with prexasertib monotherapy, whereas and 0% (0/6) with a germ-line BRCA1/2 mutation responded to treatment. 4 of the evaluable patients who had a germline BRCA1/2 mutation, and 5 with HGSOC achieved stable disease (SD) lasting for at least 4 months. The BRCA mutated patients were heavily pretreated, making subsequent therapies difficult to show activity. The median number of prior treatments for these patients was 7. All patients received a prior PARP inhibitor, and 6 of 7 received Avastin (bevacizumab) prior to study entry. For HGSOC patients, the median number of prior treatments was 5. Approximately 25% of HGSOC patients received a prior PARP inhibitor, and roughly 66% had prior Avastin. Because BRCA1 is in the Chk1 pathway, cancer cells with this mutation are hypothesized to be more sensitive to

51 Lowery, C.D. 2017. The checkpoint kinase 1 inhibitor prexasertib induces regression of preclinical models of human neuroblastoma. Clinical Cancer Research. 52 https://clinicaltrials.gov/show/NCT02735980 53 https://clinicaltrials.gov/show/NCT02203513 54 https://clinicaltrials.gov/show/NCT02555644

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Chk1 inhibition.55 2 patients in the germline BRCA cohort experienced tumor reductions of roughly 20%, whereas the other patients had their tumor size remain stable.

Figure 15. Change from Baseline in Tumor Size Using Prexasertib

Source: Lee, J. et al., ESMO 2016 At AACR 2017, Eli Lilly presented data from a Phase Ib expansion study with prexasertib monotherapy in patients who have advanced, metastatic HNSCC or squamous cell carcinoma of the anus (SCCA). Treatment was administered through an IV once every 14 days. Of evaluable patients, the disease control rate, which consists of patients who have a complete response (CR), PR, and SD was 60% (28/47) for HNSCC and 75% (18/24) for SCCA.56 Importantly, patients who had favorable clinical responses had oncogene induced replication stress, including loss of function in FBXW7 and PARK2 genes, and mutations and/or germline variants in BRCA1, BRCA2, MRE11A, and ATR, supporting Sierra’s approach of focusing on this patient population. Because Sierra is preselecting patients for SRA737 treatment who have genetic alterations that are hypothesized to be more sensitive to Chk1 inhibition, the response rates with SRA737 may compare favorably to those with prexasertib. There are several disadvantages regarding prexasertib’s product profile compared to SRA737. First, it is administered as an IV once every two weeks. Based on the half-life of the agent, it is unlikely that patients are achieving continuous inhibition of Chk1/2 with this dosing regimen. SRA737 on the other hand is oral and dosed daily in its monotherapy study, which could provide continuous coverage. In addition, prexasertib also inhibits Chk2, which is a potential tumor suppressor that when inhibited may mitigate the activity of some combination approaches by being radio and chemoprotective.57,58,59

55 Lee, J. et al., 2016. A Phase II study of the cell cycle checkpoint kinases 1 and 2 inhibitor (LY2606368; prexasertib monomesylate monohydrate) in sporadic high-grade serous ovarian cancer (HGSOC) and germline BRCA mutation-associated ovarian cancer (gBRCAm+ OvCa), The European Society for Medical Oncology, abstract#855O. 56 Martinez, R. et al., 2017. A clinical genomic biomarker study of the Chk1 inhibitor prexasertib in advanced head and neck squamous cancer and squamous cell carcinoma of the anus. The American Association for Cancer Research, abstract#1778. 57 Antoni, L. et al., 2007. CHK2 kinase: cancer susceptibility and cancer therapy – two sides of the same coin? Nature, 7, pp925-936.

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The safety profile of prexasertib could hinder its commercial success. In the discussed ovarian cancer study, 86% - 88% of patients in the 2 cohorts experienced Grade 3 or 4 neutropenia, 8% (2/25) of patients with HGSOC had febrile neutropenia, 43% (3/7) of patients with germline BRCA mutations had Grade 3 lymphocytopenia, and 76% (19/25) of patients with HGSOC had Grade 3/4 lymphocytopenia. 14% (1/7) of patients in the germline BRCA cohort had a Grade 3/4 reduction in platelets, whereas 24% (6/25) of patients with HGSOC experienced Grade 3/4 platelet reductions. Neutropenia was typically transient, and resolved to Grade 2 or lower within 8 days. SRA737 is more selective for its target than prexasertib, and so the rate and severity of these toxicities may be less. This is highlighted by the fact that patients have been dosed with up to 600 mg/day of SRA737, without any Grade 2 or higher SRA737 related AEs being reported. In addition, the ATM/Chk2 pathway regulates the G1/S checkpoint. Many cancer cells have a deficiency in this pathway, which Sierra is leveraging by inhibiting subsequent S and G2/M checkpoints to induce cancer cell death. By also inhibiting the G1/S checkpoint through the inhibition of Chk2, it is likely that more normal cells will be impacted by treatment, creating off target toxicities. In addition, since replication errors frequently occur in normal cells, taking away each of the three cell cycle checkpoints with Chk1/2 inhibition could lead to new forms of cancer developing. By being specific for Chk1, SRA737 could be more tolerable, specific for cancer cells, and efficacious than prexasertib. GDC-0575 – Roche/Genentech GDC-0575 is an orally administered Chk1 inhibitor being evaluated in a Phase I study with or without gemcitabine in patients with refractory solid tumors or lymphomas.60 This open-label, dose-escalating trial is being conducted in two parts. The first part is enrolling patients to receive escalating doses of GDC-0575 alone or in combination with gemcitabine. The second part of the study will dose patients at or below the MTD of GDC-0575 determined in part 1, along with gemcitabine. The primary endpoints include safety, determining the recommended Phase II dose, determining the MTD, and PK/PD parameters. Secondary endpoints include ORR, PFS, and duration of response. This trial is expected to conclude in mid-2017. Preliminary results were presented at 29th EORTC-NCI-AACR Symposium in December 2016, and showed that two patients treated with the agent experienced an objective response. Both patients had advanced soft tissue sarcoma. One with metastatic leiomyosarcoma experienced a partial response for one year. The second patient had lung metastases, and experienced a complete response that was ongoing for 9 months as of the December 2016 presentation. Notably, both patients received low-dose gemcitabine, indicating that part of the anti-cancer effect could have been a result of Chk1 inhibition.

58 Lowery, C.D. 2017. The checkpoint kinase 1 inhibitor prexasertib induces regression of preclinical models of human neuroblastoma. Clinical Cancer Research. 59 Jobson, A.G. et al., 2009. Cellular Inhibition of Checkpoint Kinase 2 (Chk2) and Potentiation of Camptothecins and Radiation by the Novel Chk2 Inhibitor PV1019 [7-Nitro-1H-indole-2-carboxylic acid {4-[1-(guanidinohydrazone)-ethyl]-phenyl}-amide], The Journal of Pharmacology and Experimental Therapeutics, 331(3), pp816-826. 60 https://clinicaltrials.gov/show/NCT01564251

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DDR Competitive Landscape The DDR market has become increasingly competitive and there are now several treatments in development targeting components of the DDR network. This therapeutic approach has been validated by the clinical success of PARP inhibitors, which prevent the repair of single stranded breaks. There are 3 PARP inhibitors approved, and 2 additional ones in Phase III development. In contrast to PARP, Sierra is focused on inhibiting cell cycle regulators that control DNA replication, cell cycle progression, and DNA repair outside of single stranded breaks. Additional targets of the DDR network being explored in clinical studies worth noting include inhibitors of ataxia telangiectasia mutated (ATM), Rad3-related (ATR), the cell-cycle–related kinase WEE1, CDC7, and APEX1, which is an enzyme involved with base excision repair (BER), and being targeted by Tracon Pharma (NasdaqGM: TCON). Programs exploring these targets in the clinic are shown in Figure 16.

Figure 16. Background of Competing DDR Targets Development

Company Drug Target Most

Advanced Study

Indication

Merck KGaA VX-970 ATR II Ovarian, bladder, SCLC,

HNSCC, NSCLC, solid tumors Merck KGaA VX-803 ATR I Solid tumors AstraZeneca AZD0156 ATM I Solid tumors

AstraZeneca AZD6738 ATR I/II Solid tumors, CLL, NHL,

HNSCC

AstraZeneca AZD1775 Wee1 II Ovarian, bladder, SCLC,

NSCLC, GBM, solid tumors Merck KGaA VX-803 ATR I Solid tumors AstraZeneca AZD0156 ATR I Solid tumors

AstraZeneca AZD6738 ATR I/II Solid tumors, CLL, NHL,

HNSCC Takeda

Pharmaceuticals TAK-931 Cdc7 I Solid tumors

Tracon Pharma TRC102 APEX1 I Solid tumors, GBM,

mesothelioma, NSCLC

Source: LifeSci Capital Although it is unclear at this time which DDR targets will produce the best results, patient selection based on the ability to induce synthetic lethality may allow treatments against multiple targets to reach the market. Sierra is following this synthetic lethality approach in its development with SRA737. Based on its selection criteria, the Company estimates that between 20% and 33% of total patients in a given solid tumor type will be eligible for treatment with SRA737. In addition, Chk1’s activity is non-redundant with PARP and APEX1, and is partially overlapping with ATR, Cdc7, and Wee1, which could allow combination approaches to be explored. Preclinical studies combining first-generation Chk1 inhibitors with Wee1 and ATR inhibitors have supported the proposed

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synergies.61 We believe Chk1 is an attractive DDR target. Wee1 is activated by the Chk1 kinase to then inhibit the activity of CDK1, causing G2/M arrest, but is not expected to have an effect on the S phase. ATR is upstream of Chk1, and so its inhibition could lead to additional off target effects. ATM helps to promote the activation of the ATR pathway, although its inhibition could also prevent the activity of its downstream kinase Chk2, which may mitigate the activity of some combination approaches by being radio and chemoprotective when inhibited.62,63,64

SRA737 is a Potent, Selective, Oral Inhibitor of Chk1. As mentioned, the two competing Chk1 inhibitors currently in clinical development are Eli Lilly’s prexasertib (LY2606368) and Roche/Genentech’s GDC-0575. Prexasertib is an intravenously administered inhibitor of Chk1 and Chk2. It is being evaluated in Phase II studies for small cell lung cancer and ovarian cancer, and Phase I studies for solid tumors and head and neck cancer.65,66,67

Encouraging single agent activity has been demonstrated with prexasertib, although AEs that may be linked to its inhibition of Chk2 could negatively impact its therapeutic window. In preclinical studies, Chk2 knockdown did not increase double-stranded DNA breaks, induce a DNA damage response, or cause cell death, whereas Chk1 knockdown recapitulated the activity of prexasertib. 68 These results indicate that the anticancer activity of prexasertib stem from Chk1 inhibition. GDC-055 is currently being evaluated as a treatment for patients with refractory solid tumors or lymphoma in a Phase I study both as a single agent and in combination with gemcitabine.69 Durable responses to treatment have been observed in patients with metastatic soft tissue sarcoma. Despite this competition, SRA737 could have an advantage over prexasertib since it is orally administered and a more potent and selective inhibitor of Chk1. GDC-0575’s affinity for Chk2 is unknown at this time, but SRA737 is slightly more potent against Chk1. Intravenous infusions are impractical to deliver daily, and prexasertib is dosed every 2 weeks. Based on its half-life, this dosing regimen is unlikely to have continuous target coverage. SRA737 is dosed daily, allowing for continuous inhibition of Chk1. This is supported by the profile of each Chk1 inhibitor shown in Figure 17. IC50 is a measurement of the concentration of an inhibitor needed to reduce a specific biological process, such as Chk1 activity, by half. 61 Rundle, S. et al., 2017. Targeting the ATR-Chk1 axis in cancer therapy. Cancers, 9(5). 62 Antoni, L. et al., 2007. CHK2 kinase: cancer susceptibility and cancer therapy – two sides of the same coin? Nature, 7, pp925-936. 63 Lowery, C.D. 2017. The checkpoint kinase 1 inhibitor prexasertib induces regression of preclinical models of human neuroblastoma. Clinical Cancer Research. 64 Jobson, A.G. et al., 2009. Cellular Inhibition of Checkpoint Kinase 2 (Chk2) and Potentiation of Camptothecins and Radiation by the Novel Chk2 Inhibitor PV1019 [7-Nitro-1H-indole-2-carboxylic acid {4-[1-(guanidinohydrazone)-ethyl]-phenyl}-amide], The Journal of Pharmacology and Experimental Therapeutics, 331(3), pp816-826. 65 https://clinicaltrials.gov/show/NCT02735980 66 https://clinicaltrials.gov/show/NCT02203513 67 https://clinicaltrials.gov/show/NCT02555644 68 68 Lowery, C.D. 2017. The checkpoint kinase 1 inhibitor prexasertib induces regression of preclinical models of human neuroblastoma. Clinical Cancer Research. 69 https://clinicaltrials.gov/show/NCT01564251

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Figure 17. Profile of Chk1 Inhibitors in Clinical Development

Criterion SRA737 Prexasertib GDC-0575

Development Phase Phase I Phase II Phase I

Dosing Oral I.V. Oral

Biochemical IC50: Chk1 1.4 nM �1 nM 2 nM

Biochemical IC50: Chk2 1850 nM 8 nM Unknown

Selectivity Chk1 vs. Chk2 1320x �10x Unknown

Source: LifeSci Capital and Sierra Oncology Presentation

Potential for Tissue Agnostic Approval. Based on the potential for SRA737 and Sierra’s secondary asset SRA141 to induce synthetic lethality across a range of solid tumor types that have specific genetic mutations, it is possible that these agents could receive a tissue agnostic label. This means that SRA7373 and/or SRA141 could be approved for all tumor types harboring the predefined genetic mutations that Sierra is using to enroll patients in its clinical studies. Ultimately, this decision will likely be based on an encouraging overall response rate (ORR) and duration of response (DOR) across a number of tumor types. Merck’s Keytruda (pembrolizumab) received the first ever tissue agnostic label in May 2017, which was for adult and pediatric patients with unresectable or metastatic, microsatellite instability-high (MSI-H) or mismatch repair deficient solid tumors that have progressed following prior treatment. In addition, both Ignyta (NasdaqGM: RXDX) and LOXO Oncology (NasdaqGM: LOXO) are seeking tissue agnostic approvals for their pan-NTRK inhibitors entrectinib and larotrectinib. The FDA has provided written notice to both companies acknowledging that based on the results, it may grant a tissue agnostic approval.

SRA141 – Small Molecule Inhibitor of Cdc7 SRA141 is a highly-selective orally administered small molecule inhibitor of the cell division cycle 7 (Cdc7) protein, a serine-threonine kinase that plays an important role in the initiation of DNA replication and regulating the DDR network during the S Phase of the cell cycle.70 Sierra in-licensed SRA141 from Carna Biosciences (TYO: 4572) in 2016. The Company is currently conducting preclinical studies to evaluate dosing and the activity of SRA141 across a number of solid and liquid tumor types. Treatment using SRA141 could have broad implications for cancer since the over-expression of Cdc7 has been correlated with poor outcomes in both solid tumors and hematological malignancies.71 Sierra expects to file an IND for SRA141 during the second half of 2017. If the IND is accepted, Sierra may evaluate SRA141 as a monotherapy, or in combination with DNA-damaging chemotherapy or radiation. There are currently no drugs approved that specifically target Cdc7. The only treatment in clinical development against the target is Takeda’s (TYO: 4502) TAK-931, which is being studied in a Phase I trial for non-hematological

70 Montagnoli, A. et al., 2010. Targeting cell division cycle 7 kinase: A new approach for cancer therapy. Clinical Cancer Research, 16(18), pp4503-4508. 71 Hugget, M.T. et al., 2016. Cdc7 is a potent anti-cancer target in pancreatic cancer due to abrogation of the DNA origin activation checkpoint. Oncotarget, 7(14), pp18495-18507.

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malignancies, and Eli Lilly has a Cdc7 inhibitor called LY3143921, that is expected to soon begin dosing patients in a Phase I study.72,73 As shown in Figure 18, Cdc7 plays important roles in DNA replication and DDR activity, making it an attractive oncology target. Cdc7 is part of the Cdc7-Dbf4/Drf1 complexes that phosphorylate sites on the minichromosome maintenance proteins 2-7 (Mcm2-7). Mcm2-7 are subunits of the DNA helicase that when phosphorylated, initiate DNA replication by unwinding parts of the double helix.74 As previously mentioned, checkpoint signaling occurs after DNA damage is detected, and can facilitate DNA repair, or apoptosis depending on the extent of damage incurred. Cdc7 helps to regulate checkpoint activation during the S Phase of the cell cycle by phosphorylating claspin, which is required for the activation of the Chk1 kinase and downstream cell cycle arrest and DNA repair. 75 As evidence, overexpression of Cdc7 has been linked with cell-cycle arrest occurring in the S Phase.76 Notably, following Cdc7 inhibition, ATR undergoes normal activation, whereas Chk1 does not, indicating that Cdc7 plays an important role in the direct activation of Chk1 during the S-phase.77 Like Chk1, mutations in tumor suppressor genes such as TP53 can increase expression and reliance on Cdc7. Thus, SRA141 may also induce synthetic lethality in patients with specific genetic alterations, which Sierra intends to exploit in clinical trials.78

72 https://clinicaltrials.gov/show/NCT02699749 73 https://clinicaltrials.gov/ct2/show/NCT03096054 74 Montagnoli, A. et al., 2008. A cdc7 kinase inhibitor restricts initiation of DNA replication and has antitumor activity. Nature Chemical Biology, 4(6), pp357-365. 75 Swords, R. et al., 2010. Cdc7 kinase – A new target for drug development. European Journal of Cancer, 46(1), pp33-40. 76 Guo, B. et al., 2005. High levels of Cdc7 and Dbf4 proteins can arrest cell-cycle progression. European Journal of Cell Biology, 84(12), pp927-938. 77 Montagnoli, A. et al., 2010. Targeting cell division cycle 7 kinase: A new approach for cancer therapy. Clinical Cancer Research, 16(18), pp4503-4508. 78 Hugget, M.T. et al., 2016. Cdc7 is a potent anti-cancer target in pancreatic cancer due to abrogation of the DNA origin activation checkpoint. Oncotarget, 7(14), pp18495-18507.

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Figure 18. Cdc7’s Role in DNA Replication and Chk1 Activation

Source: Sierra Oncology Presentation

Preclinical studies have been conducted using small interfering RNA (siRNA) Cdc7 knockdown models with several cancer lines. 79 Results showed that Cdc7 knockdown resulted in faulty progression through the S Phase. Without Cdc7, incomplete and/or abnormally replicated DNA was produced, resulting in cell death by either p53-independent apoptosis or aberrant mitosis. Importantly, normal cells maintain viability during low Cdc7 conditions in part because they have an intact G1 check point that regulates progression to the S Phase.80 This highlights the potential specificity of targeting cancer cells with SRS141. Because Cdc7 plays a role in both replication and DDR, inhibition of this kinase may synergize with genotoxic drugs that impair DNA replication.

Intellectual Property and Licensing Agreements Sierra holds a number of issued and pending US and ex-US patents relating to SRA737 and SRA141. These patents are expected to expire between 2031 and 2035. As of December 31, 2016, the Company has exclusively in-licensed the rights to 1 pending US patent related to composition of matter and methods of use for SRA737 as a single agent and in combination with DNA damaging agents. Rights to SRA737 include 4 issued patents and 13 pending foreign patent applications in 13 foreign jurisdictions that include Australia, Canada, China, Europe and Japan. As of now,

79 Montagnoli, A. et al., 2010. Targeting cell division cycle 7 kinase: A new approach for cancer therapy. Clinical Cancer Research, 16(18), pp4503-4508. 80 Hugget, M.T. et al., 2016. Cdc7 is a potent anti-cancer target in pancreatic cancer due to abrogation of the DNA origin activation checkpoint. Oncotarget, 7(14), pp18495-18507.

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all patents are expected to expire in 2033. The Company intends to file additional patents related to the composition of matter and method of use for SRA737. For SRA141, Sierra, exclusively inlicensed patents related to its composition of matter, alone or in combination with an M-Phase inhibitor, and methods of use using the combination. As of December 31, 2016, the Company has rights to one US patent that expires in 2032, and one pending US patent, both related to composition of matter. Sierra also in-licensed 4 issued foreign patents and 7 pending foreign patents that comprise 7 foreign jurisdictions that include Australia, Canada, Europe, Japan, India, Korea, and Mexico. Each of these relate to composition of matter for SRA141. If granted, these patents are expected to expire in 2032. In addition, SRA141’s patent portfolio includes 1 pending US patent application and 2 pending foreign patent applications in Europe and Japan comprising composition of matter and methods of use claims related to the combination of SRA141 and an M-phase inhibitor. If granted, these patents are expected to expire in 2035. The Company intends to file additional patents related to the composition and methods of use for SRA141. Sierra in-licensed the exclusive worldwide rights to SRA737 from CRT Pioneer Fund LP. As a result, Sierra made a one-time upfront payment of $7.0 million in October 2016, and a $2.0 million payment in January 2017 following the transfer of 2 ongoing Phase I studies with the agent. CRT is eligible for additional milestone payments of up to $319.5 million based on certain developmental, regulatory, and commercial milestones being met. If SRA737 is commercialized, Sierra will also owe a tiered high single-digit to low double-digit royalty on net sales on a country-by-country basis. This will occur until the later of the following:

§ The date when such licensed product is no longer covered by a valid patent claim within the licensed intellectual property.

§ The expiration of any data, marketing or other statutory exclusivity rights covering the licensed product. § A specified period after the first commercial sale of the licensed product.

For SRA141, Sierra in-licensed the exclusive worldwide rights for this candidate from Carna Biosciences (TYO: 45772). As a result, Sierra paid an upfront payment of $0.9 million in June 2016. Carna is eligible for up to $270 million in additional milestone payments based on certain developmental, regulatory, and commercial milestones being met. If SRA141 is commercialized, Sierra will be obligated to pay a tiered single-digit royalty on net sales on a country-by-country basis.

Management Team Nick Glover, PhD President and Chief Executive Officer Dr. Glover is an accomplished life sciences professional, with extensive strategic, financial and operational experience in the biotechnology sector, evidenced by demonstrable value creation and successful outcomes. Previously, Dr. Glover served as the President and Chief Executive Officer at YM BioSciences Inc., a publically traded oncology drug development company acquired by Gilead Sciences Inc. in February 2013. YM’s lead drug candidate, momelotinib, was an orally administered JAK inhibitor being developed for the treatment of myelofibrosis and other hematological disorders. Prior to that, Dr. Glover served as the President and Chief Executive Officer of Viventia Bio Inc., a publically traded biopharmaceutical company focused on the development

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of monoclonal antibody technologies. Dr. Glover also previously served as an investment manager for MDS Capital, a life sciences venture capital firm. He currently serves on the board of directors of MEI Pharma Inc., a company developing novel therapies for hematology and oncology. Dr. Glover holds a BSc (Hons) in chemistry from the University of East Anglia, a MSc in chemistry from the University of British Columbia and a PhD in chemistry from Simon Fraser University. Angie You, PhD Chief Business & Strategy Officer and Head of Commercial Dr. You, Chief Business & Strategy Officer & Head of Commercial, leads the Company’s strategic and transactional business and commercial efforts. Previously, Dr. You served as the Chief Business Officer of Aragon Pharmaceuticals, a private oncology drug discovery and development company, where she was responsible for finance, operations, HR and business development. During her tenure, she helped raise $90M in two successful rounds of financing for the company, and led the business development process resulting in the $1B acquisition of Aragon Pharmaceuticals by Johnson & Johnson for an upfront payment of $650M and $350M in contingent milestones. Prior to Aragon, Angie served as Chief Business Officer at a number of life science companies including Synosia Therapeutics and Ren Pharmaceuticals. She also previously served as Vice President at Venrock, a venture capital firm, and as a consultant at McKinsey Consulting. Dr. You holds an AB and PhD from Harvard University. Barbara Kencke, M.D. Chief Development Officer Dr. Klencke is an accomplished oncology drug developer with a demonstrable track record of success, having made substantial contributions to the development and approval of numerous significant oncology products. Previously, Dr. Klencke served as the Senior Vice President, Development at Onyx Pharmaceuticals, a subsidiary of Amgen Inc., from January 2011 to June 2015, and prior to that was the Group Medical Director in Product Development, Oncology at Genentech, Inc., having joined the company in July 2003. In this period, she led a variety of oncology programs including those for Kyprolis (carfilzomib), Kadcyla (ado-trastuzumab emtansine), Avastin (bevacizumab), and Tarceva (erlotinib). Prior to that, Dr. Klencke served as the Medical Director at Chiron Corporation, a biotechnology company later acquired by Novartis International AG, and as an Assistant Professor of Medicine at the University of California, San Francisco Medical Center. Dr. Klencke holds a BS from Indiana University and an MD from the University of California, Davis. Mark Kowalski, M.D., PhD Chief Medical Officer Dr. Mark Kowalski has extensive experience in Phase I through Phase IV drug development and clinical trial execution in a wide variety of therapeutic areas, including oncology. Dr. Kowalski was most recently the Chief Medical Officer and Senior Vice President at Arbutus Biopharma, a biotechnology company devoted to discovering and developing a cure for chronic Hepatitis B. Prior to that, he held the same position at Tekmira, a biopharmaceutical company focused on developing therapeutics based on RNA interference utilizing lipid nanoparticle delivery technology in oncology, infectious disease, metabolic and other clinical indications. Prior to joining Tekmira, Dr. Kowalski worked in the oncology and inflammation therapeutic area at Gilead Sciences, Inc. following Gilead’s $510-million acquisition of YM BioSciences Inc., at which Dr. Kowalski had been CMO and Vice President of Regulatory Affairs. Dr. Kowalski’s experience also encompasses being the CMO and Vice President of

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Medical/Regulatory Affairs at Viventia Biotechnologies Inc. and the Senior Director of Medical Affairs at AAIPharma Inc. Dr. Kowalski holds a B.A. from Rutgers University and an M.D. and Ph.D. from the University of Kansas School of Medicine. He completed his postgraduate training in internal medicine and infectious diseases at Duke University and Harvard Medical School and is Board certified in both. Sukhi Jagpal, CA, CBV, MBA Chief Financial Officer Sukhi Jagpal joined Sierra Oncology in February 2015 as our Chief Financial Officer (CFO). Previously, Sukhi was the CFO of QLT Inc., a dual-listed biotechnology company also based in Vancouver (Nasdaq:QLTI; TSX:QLT). During his tenure, he assisted QLT in developing its finance capabilities to deal with several growth phases, which included raising capital and completing several acquisitions. Prior to joining QLT in 2003, Sukhi held senior finance positions with Pivotal Corporation, 360networks inc., and KPMG LLP. Sukhi is a Chartered Professional Accountant, a Chartered Business Valuator, and holds a MBA from the S.C. Johnson Graduate School of Management, Cornell University and a MBA from Queen’s University, Kingston.

Risk to an Investment We consider an investment in Sierra Oncology to be a high-risk investment. Sierra Oncology is a development stage company with no history of taking a treatment to market and currently has no FDA approved drugs in its portfolio. The Company’s programs have limited data to date. Furthermore, early indications of efficacy do not necessarily translate into positive late-stage results. Clinical trials will result in significant additional expenses to the Company and may require additional rounds of dilutive financing. As with any company, Sierra Oncology may be unable to obtain sufficient capital to fund planned development programs. There are regulatory risks associated with the development of any drug and Sierra Oncology may not receive FDA approval for its candidates despite significant time and financial investments. Regulatory approval to market and sell a drug does not guarantee that the drug will penetrate the market, and sales may not meet expectations.

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Analyst CertificationThe research analyst denoted by an “AC” on the cover of this report certifies (or, where multiple research analysts are primarily responsiblefor this report, the research analyst denoted by an “AC” on the cover or within the document individually certifies), with respect to eachsecurity or subject company that the research analyst covers in this research, that: (1) all of the views expressed in this report accuratelyreflect his or her personal views about any and all of the subject securities or subject companies, and (2) no part of any of the researchanalyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the researchanalyst(s) in this report.

DISCLOSURESThis research contains the views, opinions and recommendations of LifeSci Capital, LLC (“LSC”) research analysts. LSC (or an affiliate)has received compensation from the subject company for producing this research report. Additionally, LSC expects to receive or intendsto seek compensation for investment banking services from the subject company in the next three months. LSC (or an affiliate) has alsoprovided non-investment banking securities-related services, non-securities services, and other products or services other than investmentbanking services to the subject company and received compensation for such services within the past 12 months. LSC does not makea market in the securities of the subject company.

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