Life Sciences Newsletter - Janney Montgomery Scott

Transcription

J ANNEY M ONTGOMERY S COTT
Life Sciences Newsletter
January 28, 2015
Investment Banking
Josh Muntner
Managing Director
[email protected]
(212) 829-3830
Richard Page
Managing Director
[email protected]
(212) 829-3828
James McNaughton
(215) 665-6032
Managing Director – M&A
[email protected]
Parth Talati
Analyst
[email protected]
(212) 829-3836
Sean Mansoory
(212) 829-3826
Analyst
[email protected]
Equity Capital Markets
Charles Mather, CFA
Managing Director
[email protected]
(212) 829-3831
Andrew Trask
Associate
[email protected]
(212) 829-3832
Sales and Trading
Brian Scollard
Director
[email protected]
(212) 759-6211
Equity Research
Paul Knight, CFA
(646) 840-4616
Life Sciences Technology
[email protected]
David Lebowitz, CFA
Biotechnology
[email protected]
(212) 940-6985
Chiara Russo
(617) 557-2984
Specialty Pharmaceuticals
[email protected]
I N S I D E T H I S I S S UE
Notes from Janney Tools and Diagnostics Research Analyst, Paul Knight, CFA
 ILMN: Mostly Good 4Q; Raising Fair Value
 DHR: Record Organic: 4Q Industry Reads
 TTOO: HHS Reforms Increasing Diagnostics Growth
 WAT: Mostly Good, Partly Bad: 4Q Industry Reads
 Life Sciences Technology: FDA Conversations and VC Data - More Growth Coming
 RGEN: Full Steam Ahead Despite Change at the Helm
 ILMN: Obama Proposing More Gene Sequencing?
 Life Sciences Technology: JPM Week Shows More Healthcare Growth Coming
 FMI: Roche takes a 50+% Stake; Strong Prelim 4Q
 NEOG: Surprise Strategy; Who Else Merits +37% Takeout?
 HBIO: Perfection – A Multiple Expanding Acquisition
 WX : Strong Prelim 4Q14; NextCODE Opens Doors
 RGEN: Bioprocessing Organic Triples; ‘15 Upside
 Life Sciences Technology: LabBook - 2015 “Ten Bagger” Issue
 SIAL: Sad Farewell and Special Praise; Who’s Next?
Notes from Janney Biotechnology Research Analyst, David Lebowitz, CFA
 REGN: CHMP Recommends EYLEA For CRVO/BRVO In Europe
 NVAX: Increasing Visibility On Vaccine Programs Driving Shares
 FOLD: Visibility For Migalastat Path In US Approaches
 CTIC: PERSIST-1 Phase III Pacritinib Data On Tap For March
 VRTX: Guidance Disappointing, Combo PDUFA Set For July
 XLRN: Key Pipeline Advances On Target For 2015
 TKAI: Enters Agreement For Companion Diagnostic
 VRTX: First Look: VRTX Provides 2015 Outlook
 TKAI: Resume Coverage With Buy, $18 Fair Value
 REGN: Initiate Coverage With A Buy, $519 Fair Value
 NVAX: Initiate Coverage With A Buy, $11 Fair Value
 ONTX: Resume Coverage With Neutral; $5 Fair Value
 FOLD: Resume Coverage With A Buy, $11 Fair Value
 CTIC: Resuming Coverage With A Buy, $3 Fair Value
 VRTX: Resuming Coverage With Neutral; $126 Fair Value
 XLRN: Initiate Coverage With A Buy, $51 Fair Value
 Biotechnology: A Biotechnology Renaissance
Notes from Janney Specialty Pharmaceuticals Research Analyst, Chiara Russo
 BDSI: Reacquires Commercialization Rights for Onsolis, A Carrot for Clonidine?
 NPSP: Natpara Approved
 EGLT: Guardian Technology Lives Up to Its Name
 ICPT: 2015 clinical progress should lead away from momentum back to data
 BDSI: The Year Ahead for BDSI: Launches, Approvals and Clinical Development
 EGLT: The Dark Horse of 2015, $17 FV from $14
 CARA: Itch clarity in 1H15, Phase 3s in pain begin in 2H15
 DEPO: First Pass Model Update, $22 FV from $18.50
 DEPO: DEPO puts a BIG Cherry on Top of the Sundae
 AGRX: Better Patients + Better Tech + Experienced Sites = Successful Phase 3
 DEPO: Expecting DEPO to Hit Its Stride in 2015, Sans Acquisition
 MRNS: Expect Value to Increase with Multiple Data Readouts in 2015, $20 FV
 FLXN: A Top Idea for 2015
 NPSP: Shire to Buy NPSP for $46/share
 EGLT: Acquisitions could pay off, but add to an already full plate
 ICPT: Momentum Mover on 2013 FDA Workshop and GILD Dipping Toe into NASH Pond
 FLXN: Updating Fair Value Estimate to $30
Source: S&P Capital IQ as of January 27, 2015
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The Highest Standard of Success in Financial Relationships
PAUL KNIGHT, CFA – TOOLS AND DIAGNOSTICS RESEARCH ANALYST
ILMN: Mostly Good 4Q; Raising Fair Value
 January 28, 2015 – Illumina exceeded 4Q expectations, and while 2015 guidance was light of consensus estimates, we view any price weakness as a
good entry point. With extraordinary 93% YoY growth in sequencing instrument revenues and microarrays, a low-growth business, becoming a much
smaller percentage of overall sales, we raise our fair value estimate to $221 from $192 . (Link to Report)
DHR: Record Organic: 4Q Industry Reads
 January 27, 2015 – Danaher posted its best organic growth rate since the economic recovery in 2011. While the growth was fairly balanced across
divisions and geographies, the Life Science division stood out to us due to signs of acceleration and European markets appeared surprisingly solid
despite FX headwinds. More pure-play life science companies, Thermo Fisher, Bio-Techne, and Illumina, will have upside earnings potential in 2015.
(Link to Report)
TTOO: HHS Reforms Increasing Diagnostics Growth
 January 27, 2015 – The Department of Health and Human Services (HHS) announced plans to implement structural reforms to improve the quality and
delivery of healthcare to patients, with the goal of curbing growth in per enrollee spending. In our view, a shift toward a value-based payment structure
is a net positive for technologies like T2. The T2Dx platform has shown in independent studies that it can reduce patient length of stays, readmittance
rates, and the overall hospital cost burden, saving a top-450 hospital in excess of $3 million per annum. (Link to Report)
WAT: Mostly Good, Partly Bad: 4Q Industry Reads
 January 27, 2015 – Waters’ earnings and revenue exceeded consensus in 4Q, and the company’s decade-high growth in the biopharmaceutical
sector, the largest R&D market globally, further validates our investment thesis of a renaissance in research. Waters’ overall local currency growth
accelerated in the quarter but industrial markets were weaker than expected. We reduce our 2015 estimates in light of FX headwinds. Read-throughs:
Danaher and PerkinElmer are facing increased headwinds, while revenue visibility for Waters, Bio-Techne, and Agilent is improving. (Link to Report)
Life Sciences Technology: FDA Conversations and VC Data - More Growth Coming
 January 26, 2015 – Discussions with FDA economists last week about drug approval data support why investment capital is pouring into life science
tools and drug R&D. For example, Phase III approval rates were revised higher to 78% for 2013 relative to trailing decade average of 46%. Propelled
by increased cooperation and innovation, newly released venture capital surged in 2014, up 29% YoY. We recommend healthcare-exposed names like
Thermo Fisher, Bio-Techne, and Harvard Bioscience, and the broader biotech industry, with Regeneron and Acceleron of particular interest. (Link to
Report)
RGEN: Full Steam Ahead Despite Change at the Helm
 January 21, 2015 – Repligen announced that its current COO, Tony Hunt, will succeed Walt Herlihy as CEO effective May 21, 2015. Despite the news,
we expect minimal changes to the near term direction of the company. Management will remain focused on its core verticals, international expansion,
and upstream and downstream strategic bolt-ons. With the Refine Technologies acquisition performing better than expected and end-market tailwinds
continuing to accelerate, we see little transition risk. Walt’s leadership and personality will be missed. (Link to Report)
ILMN: Obama Proposing More Gene Sequencing?
 January 20, 2015 – The surprising thing about President Obama’s request for Ebola funding on December 2nd was that he actually visited the National
Institute of Health (NIH). Including three years of declining NIH budgets, Obama has taken a passive approach to R&D funding during his Presidency.
Speculation of the President wanting a new, large-scale genomics project during his State of the Union tonight is likely to follow the past trend of
gradual multi-year increases. (Link to Report)
Life Sciences Technology: JPM Week Shows More Healthcare Growth Coming
 January 20, 2015 – We’ve never seen a busier JPM week and, with diagnostic, biotechnology and pharmaceutical customers having access to capital,
we see US spending on laboratory tools accelerating in 2015. Supporting our view that robust domestic demand will continue, Spectris Plc announced
preliminary 4Q14 results last Friday: 8% growth in the US, 6% in Asia, and no growth in Europe. Thermo’s 50% US sales exposure and the unique
product portfolios of BioTechne and Harvard Bioscience position the companies well for 2015. (Link to Report)
FMI: Roche takes a 50+% Stake; Strong Prelim 4Q
 January 15, 2015 – Roche announced a transformative strategic partnership with Foundation Medicine. The company will acquire a majority stake in
FMI at $50 per share, roughly 109% above Friday’s closing price. Roche will immediately acquire 15.6 million shares ($780 million), and once the
transaction closes, expected in 2Q15, Roche will invest an additional $250 million for 5 million newly issued shares. In aggregate, Roche will own 52.456.3% of FMI after the tender offer and direct investment. In light of the news, we place our FMI fair value under review. (Link to Report)
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PAUL KNIGHT, CFA – TOOLS AND DIAGNOSTICS RESEARCH ANALYST (CONT’D)
NEOG: Surprise Strategy; Who Else Merits +37% Takeout?
 January 12, 2015 – Hosting Neogen’s management on the road last week, we came away confident in additional drivers for the company’s growth.
With quality management, an attractive call option with SenesTech, and international market opportunity increasing as food safety standards become
enforced, investors should take advantage of any pullbacks in NEOG’s stock. The recent strengthening of the US dollar will reduce reported results
during NEOG’s 3QFY15, but the long-term growth outlook remains compelling. (Link to Report)
HBIO: Perfection – A Multiple Expanding Acquisition
 January 9, 2015 – The genetic sequencing revolution is creating more demand for animal model and cellular analysis studies. With yesterday’s HEKA
Elektronik acquisition, Harvard Bioscience expanded its leadership in electrophysiology, which enables those studies. The HEKA deal and the two
October acqs will boost HBIO’s sales in molecular, cell, and animal research to 27% in FY15 from 20% of sales in FY14. Immediately accretive, HBIO
can generate additional revenue and cost synergies in 2016 (and beyond). We reiterate our BUY rating and $9 FV estimate. (Link to Report)
WX : Strong Prelim 4Q14; NextCODE Opens Doors
 January 9, 2015 – WuXi released prelim 4Q14 results, beating the Street and previous guidance. In addition, WuXi announced the acquisition of
NextCODE Health, a leading genomic analysis and bioinformatics company. With almost 400 mAbs in pre-clinical and clinical development and
biosimilars right around the corner, the addition of NextCODE will further differentiate WX and enhance its value proposition. After doubling in 2014, we
expect WX’s biologics franchise to grow in excess of 50% in 2015 to 11-12% of total revenues. (Link to Report)
RGEN: Bioprocessing Organic Triples; ‘15 Upside
 January 8, 2015 – Repligen released updated 4Q14 guidance and preliminary 2015 expectations earlier today. Better than expected customer demand
and bolstered by a $1 million royalty payment, Repligen expects to report 2014 revenues above its prior range. The 4Q14 color implies bioprocessing
organic growth of 20-23% vs. 6.6% in 4Q13. With 7 anticipated mAb [40 current] approvals and several intriguing product releases expected in 2015,
Repligen is primed for another beat and raise. We reiterate our BUY rating. (Link to Report)
Life Sciences Technology: LabBook - 2015 “Ten Bagger” Issue
 January 8, 2015 – Coined by Peter Lynch in his book One Up On Wall Street, finding the next “ten bagger” is what we all strive to do in this industry;
they can be true difference makers in a portfolio. Having visited Illumina laboratories, when ILMN’s share price was $1.00 (ILMN; Buy, $192); Flir’s
management at $0.65 per share (NR: $31.48); and others like Celera and Mettler-Toledo (MTD; Neutral, $263) our universe has been target rich. We
enter 2015 looking for more potential “ten baggers.” (Link to Report)
SIAL: Sad Farewell and Special Praise; Who’s Next?
 January 7, 2015 – As we discontinue coverage, Sigma-Aldrich’s exemplary focus on shareholders, quality top-to-bottom team, and compound annual
return of 16.7% over the last decade merit special praise. The high value paid for Sigma, 17x EV/EBITDA, shows the rarity and importance of some
businesses in today’s rapidly evolving healthcare industry, and can help investors identify future acquisition targets. (Link to Report)
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DAVID LEBOWITZ, CFA – BIOTECHNOLOGY RESEARCH ANALYST
REGN: CHMP Recommends EYLEA For CRVO/BRVO In Europe
 January 23, 2015 – Regeneron’s march to label expansion for EYLEA continues, with today’s announcement of a CHMP recommendation for the drug
to be approved for CRVO and BRVO in the E.U. The CHMP’s recommendation is in line with our expectation and will continue to support an
acceleration of growth as we proceed through 2015. We reiterate our BUY rating and $519 fair value estimate. (Link to Report)
NVAX: Increasing Visibility On Vaccine Programs Driving Shares
 January 21, 2015 – We recently initiated coverage on Novavax with a BUY rating and an $11 fair value estimate. 2015 is an important year for the
company with data from three key clinical trials for the company’s RSV F-nanoparticle vaccine expected 3Q:2015. We believe the RSV vaccine is a
potential blockbuster. The company’s influenza program is already enrolling a Phase II dose ranging study for its quadrivalent vaccine, also with data
3Q:2015. These key data releases could set the stage for pivotal Phase III trials to follow. (Link to Report)
FOLD: Visibility For Migalastat Path In US Approaches
 January 16, 2015 – Amicus appears to be set for an important year in 2015. Not only is the MAA for migalastat--a chaperone therapy for the treatment
of Fabry disease in patients with amenable mutations--set to be submitted by mid-year but also a meeting is set for the near-term that will provide
clarity for the path in the U.S. We are optimistic that migalastat could be on the market in both regions by the end of 2016. We reiterate our Buy rating
and $11 fair value estimate. (Link to Report)
CTIC: PERSIST-1 Phase III Pacritinib Data On Tap For March
 January 15, 2015 – CTI BioPharma recently provided a detailed outlook on 2015. Most important in the company’s future is a data readout from the
PERSIST-1 Phase III clinical trial examining pacritinib in myelofibrosis. This is the first of two Phase III trials on the program and will provide great
insight into the potential for approval. We reiterate our Buy rating and $3 fair value estimate. (Link to Report)
VRTX: Guidance Disappointing, Combo PDUFA Set For July
 January 13, 2015 – At an analyst meeting, we received additional flavor on Vertex’s outlook for 2015. Overall, we remain disappointed with the
company’s financial guidance. Though KALYDECO revenue (sans F508del homozygous) were slightly ahead of our estimates, expenses for 2015
were even farther ahead of our numbers. Also, it seems that European revenue from the F508del population is not likely to be a 2015 event. We
maintain our Neutral rating and $126 fair value estimate. (Link to Report)
XLRN: Key Pipeline Advances On Target For 2015
 January 13, 2015 – Acceleron Pharma provided the Street with its outlook for 2015. Overall, the company’s outlook reinforces our view that 2015 is an
important year for the company, with key milestones for both the anemia an oncology franchises. Most important will be the initiation of two Phase III
anemia trials for beta-thalassemia and myelodysplastic syndromes. We are also intrigued to see updates for the oncology therapeutic dalantercept.
We reiterate our Buy rating and $51 fair value estimate. (Link to Report)
TKAI: Enters Agreement For Companion Diagnostic
 January 13, 2015 – Tokai announced that they have entered into an agreement with Johns Hopkins for exclusive worldwide rights to their assay for
detecting castration-resistant prostate cancer (CRPC) patients with the AR-V7 variant. Determining this diagnostic is a key step on the way toward
initiating the Phase III ARMOR3-SV trial in this population. Lead drug galeterone is being examined in the Phase III trial in these patients who are not
effectively treated by currently approved drugs Zytiga & Xtandi. We maintain our Buy rating an $18 fair value estimate. (Link to Report)
VRTX: First Look: VRTX Provides 2015 Outlook
 January 12, 2015 – July 5 PDUFA date for F508del Homozygous CF. Today, Vertex Pharmaceuticals announced their business outlook for 2015 as
the company enters an important year. As part of the announcement, Vertex indicated that the PDUFA date--or the date by which the FDA must render
its decision--for the KALYDECO + LUMACAFTOR combination in F508del homozygous (over 12 years old) Cystic Fibrosis mutants would be July 5,
2015. The company indicated that the current expectations for eligible patients for their CF drugs is 3,700 by year end. Considering that an additional
22,000 patients could become eligible with an F508del homozygous approval, this is clearly an important event for the company. (Link to Report)
TKAI: Resume Coverage With Buy, $18 Fair Value
 January 9, 2015 – We are resuming coverage of Tokai Pharmaceuticals with a Buy rating and YE:2015 fair value of $18 per share. Tokai is focusing its
energies on developing galeterone for the precision treatment of patients with castration resistant prostate cancer (CRPC) that have a specifically
altered androgen receptor. Recently, Tokai presented interim data from the galeterone ARMOR2 Phase II trial in CRPC patients that illustrated the
strong potential of the company’s approach. (Link to Report)
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DAVID LEBOWITZ, CFA – BIOTECHNOLOGY RESEARCH ANALYST (CONT’D)
REGN: Initiate Coverage With A Buy, $519 Fair Value
 January 9, 2015 – We are initiating coverage on Regeneron with an Buy rating and a $519 fair value. Regeneron is a formidable company with the
strongest development pipeline in all of biotechnology. The company’s lead drug EYLEA is a blockbuster that should see accelerated growth in the
near-term due to its expanding treatment label. More intriguing is the late stage pipeline that includes the one-two-three punch of potential blockbusters
in alirocumab (for hypercholesterolemia), sarilumab (for rheumatoid arthritis) and dupilumab (for allergic diseases). (Link to Report)
NVAX: Initiate Coverage With A Buy, $11 Fair Value
 January 9, 2015 – We are initiating coverage of Novavax with a Buy rating and a fair value of $11 per share. The primary driver of Novavax shares is a
development stage vaccine for respiratory syncytial virus (RSV). This is a potential blockbuster vaccine that has key data readouts in 2015. Beyond
RSV, Novavax is developing vaccines for both seasonal and pandemic influenza. This technology has allowed Novavax to enter an agreement with
BARDA and receive up to $167 million in funding for the influenza program. (Link to Report)
ONTX: Resume Coverage With Neutral; $5 Fair Value
 January 9, 2015 – We are resuming coverage of Onconova with a Neutral rating and a $5 YE:2015 fair value. The company’s lead product rigosertib is
being examined as a treatment for MDS. During 2014, the company released disappointing data from a Phase III clinical trial examining high-risk MDS
patients. However, a post-hoc analysis offers some hope that the drug could be approvable for certain subgroups. We seek clarity on the regulatory
path for rigosertib in these subgroups during the upcoming year. (Link to Report)
FOLD: Resume Coverage With A Buy, $11 Fair Value
 January 9, 2015 – We are resuming coverage of Amicus Therapeutics with a Buy rating and $11 Fair Value. The company’s lead product, migalastat,
is a small-molecule chaperon that binds selectively to a target protein to treat Fabry disease. The last several months for the company have been
significant. In August, announced robust 18-month data from the migalastat monotherapy Study 012 in Fabry patients with amenable mutations. More
recently, the company provided additional data from the trial that demonstrated an improvement in cardiac endpoints. (Link to Report)
CTIC: Resuming Coverage With A Buy, $3 Fair Value
 January 9, 2015 – We are resuming coverage of CTI BioPharma with a Buy rating and $3 fair value estimate. The primary value driver for the
company’s shares is pacritinib, a JAK2 inhibitor being developed for the treatment of myelofibrosis. We expect to see key data from pacritinib’s
PERSIST-1 in 1H:2015 and PERSIST-2 by YE:2015. Although the Street remains primarily focused on pacritinib, the company also owns PIXUVRI
(pixanthrone)-a drug that is conditionally approved in Europe and is partnered with Servier. (Link to Report)
VRTX: Resuming Coverage With Neutral; $126 Fair Value
 January 9, 2015 – We are resuming coverage of Vertex Pharmaceuticals with a Neutral rating and a YE:2015 Fair Value Estimate (FV) of $126 per
share. Though we believe that KALYDECO and the rest of the company’s cystic fibrosis franchise has mega blockbuster potential, this expectation
largely incorporated into the shares. As such we believe Vertex has a less than optimal risk-reward profile, with bad news likely to have a greater
impact on shares than good. (Link to Report)
XLRN: Initiate Coverage With A Buy, $51 Fair Value
 January 9, 2015 – We are initiating coverage of Acceleron Pharma with an Buy rating and $51 Fair Value. Acceleron is a development stage
biotechnology company that focuses on anemia and oncology. The company’s anemia franchise has two potential blockbuster therapies in
luspatercept and sotatercept. This franchise also has an industry best partnership with Celgene. Beyond the anemia franchise, the company is
developing the cancer drug dalantercept, an antiangiogenic treatment that could be an even bigger revenue producer than either anemia therapy. (Link
to Report)
Biotechnology: A Biotechnology Renaissance
 January 9, 2015 – We are launching coverage of the biotechnology sector at Janney Montgomery Scott. We believe this sector represents core holding
for not only healthcare specialists, but also generalist investors. The sector is in the early stages of a renaissance, with the pace and quality of drug
development hitting a fever pitch. This is a culmination of advancement in approaches to drug discovery, development and delivery as well as the
emergence of a kinder and gentler set of agencies in the Food & Drug Administration (FDA) and the European Medicines Agency (EMA) in
combination with record R&D investment. (Link to Report)
Page 5
CHIARA RUSSO – SPECIALTY PHARMACEUTICALS RESEARCH ANALYST
BDSI: Reacquires Commercialization Rights for Onsolis, A Carrot for Clonidine?
 January 27, 2015 – BDSI announced this morning that they have reacquired US marketing rights from Meda AB for Onsolis, a fentanyl patch that uses
their proprietary BEMA technology for breakthrough cancer pain. Under the agreement, BDSI will have to share revenues generated from any new US
partnership and sales of the product. Work still needs to be done to get the FDA to approve the new manufacturing process to get Onsolis back to the
US market, but this could be a nice carrot to dangle for potential partners with Clonidine reporting Phase 3 data in 1H15. (Link to Report)
NPSP: Natpara Approved
 January 26, 2015 – Late Friday night, NPSP announced that the FDA had approved Natpara for hypocalcemia in patients with hypoparathyroidism.
This is a positive for NPSP as this will be their second approved product to hit the market; however, as NPSP is awaiting the closing of the Shire
acquisition, the real win goes to Shire. Though there were no stipulations on the deal dependent on the Natpara approval (based on the due diligence
that Shire did, we assume that they were all but certain of an approval), we believe the acquisition will move forward as planned. (Link to Report)
EGLT: Guardian Technology Lives Up to Its Name
 January 22, 2015 – This morning EGLT announced positive results from its Category 3 human abuse liability (HAL) study for Egalet-001, their abusedeterrent (AD), extended-release oral morphine formulation. It is our opinion that EGLT has some of the most robust AD physical barrier technology
currently being developed and though we are not surprised by the positive results from this “real world” test, this should be a nice positive for the name
as it continues to validate their Guardian technology. EGLT remains our Dark Horse for 2015: Maintain Buy Rating, $17 FV. (Link to Report)
ICPT: 2015 clinical progress should lead away from momentum back to data
 January 21, 2015 – ICPT recently provided an outlook into 2015 and after a fairly wild 2014, we believe that ICPT will be making a play to move away
from being a momentum name to focus on their clinical pipeline and data flow management. There are plenty of data points ahead: completing the
filing of the NDA/MAA in 1H15, initiation of the NASH Phase 3 followed quickly by the lipid metabolism study both in 1H15 and lastly, Phase 2 NASH
data from Japanese partner Dainippon Sumitomo set to read out by year end. (Link to Report)
BDSI: The Year Ahead for BDSI: Launches, Approvals and Clinical Development
 January 20, 2015 – BDSI has a telling year ahead as it continues with the launch of Bunavail, awaits the acceptance and potential approval of BEMA
Buprenorphine and continues the clinical development of Clonidine gel. We expect Bunavail, for pain killer addiction to continue to ramp throughout
2015, with initial 4Q14 revenue to be a non-factor. We believe that the NDA for BEMA Buprenorphine for chronic pain will be accepted and a PDUFA
assigned for 3Q15 and we anticipate Phase 3 data in 1H15 for Clonidine gel, indicated for painful diabetic neuropathy (PDN). (Link to Report)
EGLT: The Dark Horse of 2015, $17 FV from $14
 January 20, 2015 – We come away from our recent management meeting incrementally more positive on the EGLT name. We believe that the
risk/reward profile surrounding the name is attractive going into 2015 with the additional revenue via the two recently acquired assets and the initiation
of the three Phase 3 trials. We feel investors will be slow to embrace the recent pivot to a fully commercial company, but that this move backstops the
valuation and depending on execution, gives EGLT needed commercial insight before 001 & 002 are brought to the market. (Link to Report)
CARA: Itch clarity in 1H15, Phase 3s in pain begin in 2H15
 January 20, 2015 – One of the most intriguing data points that will come out of CARA this year is the Phase 2 Proof-of-Concept (POC) trial in Uremic
Pruritus (UP). UP currently is an underserved orphan patient population with approximately 180k-190k patients suffering from this severe itch. The
POC trial is expected to initiate in 1Q15 with top line results by the end of 2Q15. If positive, we believe that the opportunity to offer these patients not
only itch relief, but also pain relief is a compelling one, with potential partnering opportunities. (Link to Report)
DEPO: First Pass Model Update, $22 FV from $18.50
 January 16, 2015 – We are increasing our FV for DEPO to $22/share. We believe that the Nucynta franchise will experience revenue upside with the
increased sales support and pricing potential. Though DEPO did pay ~6.3x 12 month trailing sales of $166M, we believe that this neglected asset
could quickly assume annual revenue of over $250M, which makes the purchase price easier to swallow. This is a first pass update; we expect to
tweak the numbers as more clarity around the financing emerges and guidance is issued in late February. (Link to Report)
DEPO: DEPO puts a BIG Cherry on Top of the Sundae
 January 16, 2015 – After the close of the market on Thursday, DEPO announced the acquisition of the Nucynta franchise from Janssen for $1.05B in
cash. Our initial impression is that the Nucynta product, now the flagship product is a great strategic fit to lead DEPOs legacy pain and CNS
franchises. Already pulling in over $166M in net revenue over the last 12 months, we believe that this asset has some excellent growth potential in
terms of market penetration, pricing leverage, and the support of a growing DEPO sales force. 2015 looks to be an exceptional year. (Link to Report)
Page 6
CHIARA RUSSO – SPECIALTY PHARMACEUTICALS RESEARCH ANALYST (CONT’D)
AGRX: Better Patients + Better Tech + Experienced Sites = Successful Phase 3
 January 15, 2015 – We walked away from our AGRX management meeting incrementally more positive that AGRX is executing on exactly what they
said they were going to do in order to have a successful Phase 3 outcome. With the Twirla contraceptive patch Phase 3 enrollment underway, we
believe that AGRX has the right mix of experienced study coordinators, responsible patients and integrated technology to produce clean, robust
positive data in 1Q16. If AGRX announces full enrollment by end of 1Q15, we also believe some balance sheet overhang could potentially lift. (Link to
Report)
DEPO: Expecting DEPO to Hit Its Stride in 2015, Sans Acquisition
 January 16, 2015 – After the close of the market on Thursday, DEPO announced the acquisition of the Nucynta franchise from Janssen for $1.05B in
cash. Our initial impression is that the Nucynta product, now the flagship product is a great strategic fit to lead DEPOs legacy pain and CNS
franchises. Already pulling in over $166M in net revenue over the last 12 months, we believe that this asset has some excellent growth potential in
terms of market penetration, pricing leverage, and the support of a growing DEPO sales force. 2015 looks to be an exceptional year. (Link to Report)
MRNS: Expect Value to Increase with Multiple Data Readouts in 2015, $20 FV
 January 13, 2015 – We are increasing our FV on MRNS to $20 from $13 based on the potential of multiple data point readouts in 2015, and if positive,
the increase in share value. MRNS looks to have a busy 2015 with all three indications (focal onset seizures, Fragile X Syndrome and PCDH19)
reporting interim data by mid-year and full data sets by year end. We believe that if MRNS generates positive data for these chronic, highly refractory
and orphan populations, that investors will start to close the value gap between MRNS and its contemporary, SAGE (not covered). (Link to Report)
FLXN: A Top Idea for 2015
 January 13, 2015 – We come away from our Monday meeting with FLXN management incrementally more positive on the name, if that’s even
possible. With the December raise lifting any financial overhang, several catalysts in 2015, if positive should continue to add value to the name; start of
the Phase 3 in 1Q15 and top-line data from the Phase 2 in 2H15. There is also a potential end-of-year tailwind in the form of an academic study that
could disrupt the anecdotal-based thesis of corticosteroid joint damage. Maintain Buy rating, $30 FV. (Link to Report)
NPSP: Shire to Buy NPSP for $46/share
 January 12, 2015 – NPSP announced Sunday afternoon that they will be acquired by Shire for $46/share or a 51% premium to the Dec 16th share
price of $30.47. The deal is an all-cash deal and is expected to close in 1Q15. Though we feel that the 51% premium is unusually high for spec
pharma, we believe that this was more likely a bid that kept other suitors off the playing field. As 2015 rolls on, we are curious to see what other
acquisition premiums shape up to be. This could be indicative of higher premiums to come. (Link to Report)
EGLT: Acquisitions could pay off, but add to an already full plate
 January 8, 2015 – EGLT announced Thursday morning the acquisition of two complimentary products to their pain franchise. While we like the idea of
EGLT commercially “cutting their teeth” before their proprietary programs, with much larger market potential, get into the market, there is risk as well;
cash flow risk if revenues don’t offset some expenses and considering that EGLT is planning on initiating several Phase 3 trials in 1Q15, this is another
ball for management to keep in the air. EGLT should provide more details later in the quarter. (Link to Report)
ICPT: Momentum Mover on 2013 FDA Workshop and GILD Dipping Toe into NASH Pond
 January 6, 2015 – A busy 2015: First the publication of the 2013 FDA recommendations for drug development for NASH came out on Monday which
was a positive mover for the name as it mirrored closely what ICPT management has suggested for their potential Phase 3 design and endpoints.
Come Tuesday and the name is down as the announcement of GILD purchasing privately-held Phenex that has FXR agonist assets. Though having
GILD in the NASH race isn’t the best news, any development is still lagging way behind ICPT with not much known about what GILD actually bought.
(Link to Report)
FLXN: Updating Fair Value Estimate to $30
 January 6, 2015 – We are updating our model following the lift of the clinical halt on FLXN’s pivotal Phase 2b trial for FX006. We are allowing for the
2.5 month delay due to the halt, though there is potential in the clinical timeline to make that up further in the process. We are also factoring in the
recent news of the $98M offering, which should easily bring FLXN through to the NDA filing in 2H16. Slight adjustments are made to 4Q14 EPS where
we model a ($0.37) with YE14 at ($1.82), accounting for the share increase. (Link to Report)
Page 7
MACRO AND INDUSTRY UPDATE
2014 to Present Life Sciences Industry Performance
70%
60.5%
60%
50%
43.7%
40%
30%
20%
13.0%
10%
0%
-10%
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
NYSE Arca Biotech
Aug-14
Sep-14
Oct-14
Nov-14
NASDAQ Biotech
Dec-14
Jan-15
NASDAQ Composite
Source: S&P Capital IQ as of January 27, 2015
CBOE Volatility S&P 500 Index (VIX) and Equity Issuance
(1)
$6,000
45
40
35
$4,000
30
Difficult Deal Market
$3,000
25
Selective Deal Market
20
$2,000
15
10
CBOE Volatility S&P 500 Index (VIX)
U.S. Life Sciences Deal Activity ($ in millions)
$5,000
$1,000
5
Jan-15
Nov-14
Sep-14
Jul-14
May-14
Mar-14
Jan-14
Nov-13
Jul-13
Sep-13
Mar-13
Jan-13
Nov-12
Sep-12
Jul-12
May-13
Sources: BioCentury Publications, Inc., Ipreo, Private Raise, SEC filings and S&P Capital IQ as of January 27, 2015
Note: (1) Equity issuance in June 2013 includes a $2.3 billion follow-on for Valeant Pharmaceuticals International, Inc.
May-12
Mar-12
Jan-12
Nov-11
Sep-11
Jul-11
Mar-11
May-11
Jan-11
Nov-10
Sep-10
Jul-10
May-10
Jan-10
0
Mar-10
$0
Page 8
IPO MARKET UPDATE
IPO Equity Offering Activity
Proceeds ($ in millions)
Number of Deals
100
$7,241
90
$6,352
80
70
$3,279
50
$3,623
40
$2,320
$1,695
30
$1,271
$980
20
$880
$158
$57
2005
2006
2007
Number of Deals
60
10
0
2008
2009
2010
2011
2012
Quarterly IPO Equity Offering Backlog
2013
2014
2015 YTD
(1)
Number of Deals
45
40
$2,456 $2,400
35
$1,557
$1,439 $1,415
30
$1,446
$1,223
25
20
$971
$770 $775 $818
$563
15
$764
$563
$546
$641 $576
Number of Deals
$1,885
10
5
0
4Q'10 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15
Sources: Ipreo and S&P Capital IQ as of January 27, 2015
Note: (1) Quarterly IPO Offering Backlog shows deals filed in the six months prior to the start of each quarter that have not yet priced or been withdrawn
Page 9
$800
$300
$200
$0
0%
Mean
Median
AMDA
BIOC
SGNL
ROKA
REPH
PARN
SMLR
EVAR
NEOT
GLMD
MDWD
GNCA
RTGN
EARS
AKBA
GBIM
NRX
CDNA
HSGX
EGLT
TRIV
ORPN
CFRX
AFMD
TKAI
TRVN
CORI
LOXO
NERV
VSAR
GLYC
LMNS
INNL
MCUR
DPRX
AKAO
AQXP
CNCE
CARA
ARGS
SIEN
RVNC
EYES
ADMS
PRTO
DERM
SCYX
FWP
PFNX
CERU
EBIO
NDRM
QURE
EGRX
AGRX
KTWO
BLCM
ALDX
MRNS
DRNA
FOMX
RWLK
PRQR
QTNT
CHRS
VTL
FGEN
FLXN
AMPH
ARDX
JUNO
PAHC
TTOO
XENT
INGN
AGTC
CALA
IMDZ
XENE
OCUL
OTIC
VTAE
SAGE
ATRA
CLDN
AAVL
ZFGN
NVRO
ZSPH
VBLT
RARE
ALDR
KITE
ASPX
RDUS
-200%
RTGN
SCYX
SMLR
BIOC
REPH
SGNL
ALDX
GBIM
AMDA
AGRX
AQXP
DPRX
GLMD
PFNX
MRNS
NRX
CERU
QTNT
HSGX
CDNA
NERV
VBLT
PARN
VTAE
GLYC
XENE
FOMX
PRTO
CORI
CLDN
CALA
AFMD
RWLK
EBIO
ARGS
MCUR
AGTC
EARS
TRVN
ORPN
EVAR
ZSAN
NDRM
EGLT
NEOT
FLXN
IMDZ
AKAO
SIEN
LOXO
GNCA
ROKA
TRIV
TTOO
CNCE
ATRA
EGRX
DRNA
RDUS
ARDX
DERM
CARA
ASPX
RVNC
PRQR
XENT
VTL
OCUL
QURE
ADMS
MDWD
INGN
ALDR
OTIC
TKAI
AKBA
AMPH
ZSPH
ZFGN
NVRO
ASND
AAVL
SAGE
CHRS
LMNS
BLCM
VSAR
KTWO
PAHC
RARE
KITE
IPO MARKET UPDATE
Offer to Current Performance for 2014 / 2015 Life Sciences IPOs
500%
400%
300%
200%
100%
40.7%
13.6%
-100%
Pre and Post Money Valuations for 2014 / 2015 Life Sciences IPOs
(1)
($ in millions)
$700
$600
$500
$400
Mean Post-Money: $230.9
Mean Pre-Money: $158.9
$100
Sources: Ipreo, Private Raise, SEC filings and S&P Capital IQ as of January 27, 2015
Note: (1) Analysis excludes ContraFect Corporation, FibroGen, Inc., Forward Pharma A/S, Innocoll GmbH, Juno Therapeutics, Inc., and Second Sight Medical Products, Inc.
Page 10
IPO MARKET UPDATE
Offer to Current Performance for 2012 / 2013 Life Sciences IPOs(1,2)
800%
700%
600%
500%
400%
300%
200%
114.5%
73.8%
100%
0%
(3)
Pre and Post Money Valuations for 2012 / 2013 Life Sciences IPOs
$1,200
Mean
Median
-200%
KBIO
SPHS
ONTX
RGDO
ICEL
BIND
EVOK
CNAT
LPDX
HTBX
VCYT
VSTM
CGIX
TLOG
FATE
TNDM
ADHD
CCXI
KIN
OXFD
NSTG
ADMA
OMED
MACK
STML
EPZM
RNA
OMTH
ZTS
SUPN
AMBI
KPTI
XON
MGNX
PTLA
GMED
FPRX
KYTH
LDRH
OPHT
FMI
HPTX
DRTX
XLRN
CMRX
PETX
AERI
XNCR
TSRO
ENTA
ESPR
RLYP
PTCT
CEMP
RGLS
TTPH
BLUE
INSY
AGIO
RCPT
-100%
(1,2)
($ in millions)
$1,000
$800
$600
$400
Mean Post-Money: $255.4
$0
Mean Pre-Money: $180.2
SPHS
HTBX
CGIX
STML
RGDO
EVOK
ADMA
KIN
ADHD
TTPH
RGLS
CEMP
SUPN
FATE
AMBI
LPDX
PETX
DRTX
XNCR
NSTG
TLOG
CNAT
HPTX
KBIO
OMTH
OXFD
ESPR
INSY
ICEL
FPRX
VSTM
AERI
ICPT
BIND
RCPT
ENTA
TNDM
KYTH
VCYT
PTCT
ONTX
CMRX
RLYP
LDRH
TSRO
BLUE
CCXI
MGNX
XLRN
EPZM
KPTI
PTLA
RNA
OMED
FMI
AGIO
OPHT
MACK
$200
Sources: Ipreo and S&P Capital IQ as of January 27, 2015
Notes: (1) Analysis excludes Intercept Pharmaceuticals, Inc.
(2) Omthera Pharmaceuticals, Inc.’s current performance calculated using acquisition price of $12.70
(3) Analysis excludes Globus Medical, Inc., Intrexon Corporation, and Zoetis Inc.
Page 11
IPO MARKET UPDATE
IPO Pricing Statistics Relative to Initial Filed Range
3
2
1
1
1
1
1
3-
2
1
1
6
7
3
2
4
5
4
17
2
3
7
7
4
3
16
8
4
15
4
1
1
6
7
3
6
11
1
3
4Q'10 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15
Below
In Range
Above
Recent U.S. Life Sciences IPO Pricings (4Q’14 to Present)
Shares (mm)
Date
01/27/2015
01/27/2015
12/18/2014
12/17/2014
12/02/2014
11/19/2014
11/18/2014
11/13/2014
11/13/2014
11/06/2014
11/05/2014
11/05/2014
10/28/2014
10/21/2014
10/15/2014
10/14/2014
10/02/2014
10/01/2014
Company
Ascendis Pharma A/S
Zosano Pharma Corporation
Juno Therapeutics Inc.
Bellicum Pharmaceuticals, Inc.
Histogenics Corporation
Neothetics, Inc.
Second Sight Medical Products, Inc.
NeuroDerm Ltd.
FibroGen, Inc.
Coherus Biosciences, Inc.
Nevro Corp.
Xenon Pharmaceuticals Inc.
Sientra, Inc.
Proteon Therapeutics Inc
Atara Biotherapeutics, Inc.
Forward Pharma A/S
Dermira, Inc.
Calithera Biosciences, Inc.
Ticker Industry
ASND
ZSAN
JUNO
BLCM
HSGX
NEOT
EYES
NDRM
FGEN
CHRS
NVRO
XENE
SIEN
PRTO
ATRA
FWP
DERM
CALA
Biotechnology
Medtech
Biotechnology
Biotechnology
Biotechnology
Biotechnology
Medtech
Spec Pharma
Biotechnology
Biotechnology
Medtech
Biotechnology
Medtech
Biotechnology
Biotechnology
Biotechnology
Spec Pharma
Biotechnology
2014
Stage of Lead
Share Price
% Change
% of Insider
Pre
Post
Initial /
(mm)
Participation
Money
Money
Offer
N/A
N/A
$45.40
$25.88
$7.81
$6.87
$9.57
$12.14
$31.70
$22.26
$46.51
$18.95
$15.65
$10.79
$24.64
$23.85
$17.35
$20.43
$108.0
$49.5
$304.2
$160.6
$65.0
$65.1
$36.2
$45.0
$167.7
$91.8
$144.9
$41.4
$86.3
$70.3
$63.3
$235.2
$125.0
$80.0
20.4%
10.1%
5.7%
31.1%
23.1%
4.5%
0.0%
0.0%
0.0%
38.1%
4.5%
24.2%
0.0%
43.4%
23.9%
0.0%
2.4%
20.6%
$304.8
$123.0
$1,606.0
$351.5
$75.3
$125.6
$280.1
$125.0
$873.7
$347.7
$297.8
$86.2
$137.3
$88.8
$158.4
$741.6
$184.7
$98.8
$412.8
$172.5
$1,910.2
$512.1
$140.3
$190.7
$316.4
$170.0
$1,041.4
$439.6
$442.7
$127.6
$223.5
$159.1
$221.7
$976.8
$309.7
$178.8
5.9%
0.0%
45.5%
18.8%
- 21.4%
0.0%
0.0%
- 31.0%
2.9%
0.0%
12.5%
- 18.2%
0.0%
- 23.1%
- 26.7%
0.0%
6.7%
- 28.6%
$14.31
$21.24
$107.7
14.0%
$333.7
$441.4
-3.2%
14.6%
17.5%
$13.75
$19.69
$83.1
7.9%
$171.5
$266.6
0.0%
3.6%
2.3%
28.8%
-
$24.00
$46.51
$304.2
43.4%
$1,606.0
$1,910.2
45.5%
121.9%
103.0%
158.4%
-
$9.00
$6.87
$36.2
0.0%
$75.3
$127.6
-31.0%
-16.7%
-24.4%
-50.9%
Offered
Phase 2
Phase 2
Phase 1
Phase 1/2
Phase 3
Phase 2
Commercial
Phase 2
Phase 3
Phase 3
Commercial
Approved
Commercial
Phase 3
Phase 2
Phase 2
Phase 2
Phase 1
5.0
4.3
9.3
6.3
4.3
4.3
3.5
4.5
7.1
6.3
6.3
4.0
5.0
4.7
5.0
9.5
5.4
6.0
6.0
4.5
12.7
8.5
5.9
4.7
4.0
4.5
9.3
6.8
8.1
4.6
5.8
7.0
5.8
11.2
7.8
8.0
Mean
5.6
6.9
-
Median
5.0
6.4
-
High
9.5
12.7
Low
3.5
4.0
Product
Valuation (mm)
Proceeds
Initial
Filing Range
Offer
$16.00 - $18.00 $18.00
$10.00 - $12.00 $11.00
$15.00 - $18.00 $24.00
$15.00 - $17.00 $19.00
$13.00 - $15.00 $11.00
$13.00 - $15.00 $14.00
9.00
$9.00
$13.00 - $16.00 $10.00
$16.00 - $19.00 $18.00
$12.00 - 15.00 $13.50
$15.00 - $17.00 $18.00
$10.00 - $12.00 $9.00
$14.00 - $16.00 $15.00
$12.00 - $14.00 $10.00
$14.00 - $16.00 $11.00
$20.00 - $22.00 $21.00
$14.00 - $16.00 $16.00
$13.00 - $15.00 $10.00
Current
1 Day
1 Week Current
N/A
N/A
N/A
N/A
N/A
N/A
45.8% 103.0% 89.2%
25.7%
1.6% 36.2%
6.8%
0.0% - 29.0%
- 14.3% - 24.4% - 50.9%
121.9% 92.2%
6.3%
- 8.5% - 16.2%
21.4%
22.2% 26.8%
76.1%
- 6.6%
3.0% 64.9%
39.9%
41.2% 158.4%
16.7% 49.0% 110.6%
11.7%
19.8%
4.3%
0.3%
0.1%
7.9%
- 3.2% 20.7% 124.0%
- 16.7%
- 8.9%
13.6%
- 2.8% - 11.8%
8.4%
- 5.9% - 15.8% 104.3%
46.6%
Sources: Ipreo, Private Raise, SEC filings and S&P Capital IQ as of January 27, 2015
Page 12
IPO MARKET UPDATE
Publicly Filed IPOs (1)
Initial
Date
Company
Ticker
Industry
Stage of Lead
Product
Filing Range
Amended
Proceeds
(mm)
Filing Range
Diluted Valuation
Proceeds
(mm)
Latest
% Shares
Post Money
Shares (mm) Outstanding Last Round (mm)
Pre-Money
Implied Step-
Value (mm)
Up
01/13/2015 Bellerophon Therapeutics LLC
BLPH Biotechnology
Phase 2
-
$69.0
-
-
-
-
01/09/2015 Inv itae Corporation
NVTA Medtech
Commercial
-
$86.3
-
-
-
-
$293.9
-
12/30/2014 Av inger, Inc.
AVGR Medtech
Commercial
$12.00 - $14.00
$60.0
-
-
4.6
46.9%
$72.1
$68.0
0.9x
12/30/2014 Spark Therapeutics, Inc.
ONCE Biotechnology
Phase 3
$15.00 - $17.00
$88.0
-
-
5.5
25.0%
$132.1
$263.8
2.0x
12/30/2014 Nex v et Biopharma
NVET Spec Pharma
Dev elopment
$13.00 - $16.00
$58.0
-
-
4.0
36.1%
$53.8
$102.7
12/30/2014 HTG Molecular Diagnostics, Inc.
HTGM Medtech
Commercial
-
$60.0
-
-
-
-
$57.8
12/29/2014 Tracon Pharmaceuticals, Inc.
TCON Biotechnology
Phase 2
$12.00 - $14.00
$46.8
-
-
3.6
30.1%
$67.7
$108.9
1.6x
12/29/2014 Carby lan Therapeutics, Inc.
CBYL Spec Pharma
Phase 3
$12.00 - $14.00
$75.4
-
-
5.8
38.0%
$43.1
$122.8
2.8x
12/29/2014 Flex Pharma, Inc.
FLKS Biotechnology
Phase 1
$12.00 - $14.00
$60.0
-
-
4.6
27.1%
$96.2
$161.3
1.7x
12/23/2014 Entellus Medical, Inc.
ENTL Medtech
Commercial
$15.00 - $17.00
$70.0
-
-
4.4
25.1%
$102.3
$208.6
2.0x
12/23/2014 AltheaDx , Inc.
IDGX
Medtech
Commercial
$12.00 - $14.00
$60.0
-
-
4.6
37.3%
$16.3
$100.8
6.2x
12/23/2014 Infraredx , Inc.
REDX Medtech
Commercial
$13.00 - $15.00
$56.0
-
-
4.0
28.1%
$131.5
$143.4
1.1x
12/19/2014 Asante Solutions, Inc.
PUMP Medtech
Commercial
$13.00 - $15.00
$49.0
-
-
3.5
29.3%
$82.2
$118.3
1.4x
11/17/2014 Adv anced Accelerator Applications S.A.
AAAP Medtech
Commercial
$13.00 - $15.00
$75.0
-
-
5.4
14.5%
-
$442.6
11/04/2014 Inotek Pharmaceuticals Corporation
ITEK
Phsae 2
$13.00 - $15.00
$65.0
-
-
4.6
34.0%
$55.1
$126.3
2.3x
10/14/2014 Poly Pid Ltd.
PLPD Spec Pharma
Pilot Clinical
$10.00 - $12.00
$20.0
-
-
1.8
19.4%
$21.1
$83.0
3.9x
10/03/2014 S1 Biopharma, Inc.
SXB
Phase 2
$12.00 - $14.00
$22.8
-
-
1.8
21.5%
-
$82.9
-
09/19/2014 Ex agen Diagnostics, Inc.
EXDX Medtech
Commercial
-
$69.0
-
-
-
-
$25.6
-
-
09/12/2014 Kolltan Pharmaceuticals, Inc.
KLTN Biotechnology
Phase 1
-
$86.3
-
-
-
-
$150.7
-
-
09/11/2014 Mev ion Medical Sy stems, Inc.
MEVI
Medtech
Commercial
-
$69.0
-
-
-
-
$143.0
-
09/05/2014 EndoStim, Inc.
STIM
Medtech
Commercial
$10.00 - $12.00
$35.2
-
-
3.2
38.3%
$52.2
$56.7
1.1x
08/27/2014 Jaguar Animal Health, Inc.
JAGX Biotechnology
N/A
$7.00 - $9.00
$40.0
-
-
5.0
50.2%
$16.5
$39.6
2.4x
08/26/2014 NeuroSigma, Inc.
NSIG
Approv ed
$13.00 - $15.00
$50.0
-
-
3.6
28.3%
-
$126.9
07/30/2014 Ey eGate Pharmaceuticals, Inc.
EYEG Spec Pharma
Phase 3
$12.00 - $14.00
$25.0
$6.00 - $8.00
$10.0
1.4
20.8%
$66.3
$38.1
07/01/2014 Viking Therapeutics, Inc.
VKTX Biotechnology
Phase 2
$10.00 - $12.00
$65.0
-
-
5.0
32.9%
-
$132.5
-
06/25/2014 rEVO Biologics, Inc.
RBIO
Commercial
$13.00 - $15.00
$50.4
-
-
3.6
19.5%
-
$207.7
-
06/24/2014 Lantheus Holdings, Inc.
LNTH Diagnostics
Commercial
$12.00 - $15.00
$125.0
-
-
9.3
33.9%
-
$244.1
06/23/2014 Tobira Therapeutics, Inc.
TBRA Biotechnology
Phase 2
$12.00 - $14.00
$60.0
-
-
4.6
42.0%
$97.9
$82.7
06/13/2014 Silenseed Ltd.
RNAI
Phase 1/2
-
$36.4
-
-
-
-
$10.3
-
-
05/23/2014 Clarus Therapeutics, Inc.
CLRS Spec Pharma
Registration
-
$86.3
-
-
-
-
$125.0
-
-
03/26/2014 Mapi - Pharma Ltd.
MAPI
Preclinical
$13.00 - $15.00
$37.3
$8.00
$18.0
2.3
15.3%
-
$100.0
-
03/20/2104 Presbia, PLC
LENS Medtech
Commercial
$11.00 - $13.00
$50.0
-
-
4.2
31.3%
-
$110.0
-
Biotechnology
Biotechnology
Medtech
Biotechnology
Biotechnology
Spec Pharma
-
-
-
1.9x
-
-
-
-
0.6x
0.8x
Source: Dow Jones VentureSource, Ipreo, and S&P Capital IQ as of January 27, 2015
Notes: (1) Backlog includes all healthcare IPOs filed or amended within the last twelve months; not withdrawn; initial filed proceeds of greater than $20 million
Page 13
TRADITIONAL FOLLOW-ON MARKET UPDATE
Follow-On Equity Offering Activity (1,2)
Number of Deals
350
$11,650
300
$10,803
250
$9,286
$8,215
200
$6,460
150
$4,367
$3,691
$3,252
$3,844
$3,504
Number of Deals
$8,332
100
50
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015 YTD
Sources: Ipreo, Private Raise, and S&P Capital IQ as of January 27, 2015
Notes: (1) Excludes facilities and managed care
(2) Follow-On Equity Offerings include CMPOs prior to 2009
Quarterly Shelf Filings
Amount Registered ($ in millions)
(1)
Number of Filings
70
$7,368
60
50
$4,222
40
$3,441
$2,486
$2,248 $2,405 $2,296 $2,353 $2,344
$2,381
$1,100
$1,535 $1,382
30
$1,180
Number of Filings
$4,669
$4,915
20
$899
10
0
1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15
Note: (1) Quarterly shelf filings are cumulative totals recorded at the end of each period
Page 14
Follow-On Pricing Statistics
Oct-14
Nov-14
Dec-14
-3.7%
Jan-15
-2.2%
-4.2%
-3.8%
-7.0%
-10.4%
-12.4%
-14.3%
File to Offer
LTM Issuance by Sector (Deals)
Med Devices /
Diagnostics
10%
Last Trade to Offer
LTM Issuance by Mkt. Cap.
Greater than
$1B
41%
Biotech /
Pharma
90%
Less than
$300mm
22%
$499mm
- $300mm
11%
$1B
- $500mm
26%
Page 15
Recent U.S. Life Sciences Follow-On Pricings (4Q’14 to Present)
Date
Company
Ticker
Industry
Market Cap
Shares
Filing Range
Offer
Current
Offered
/ Price
Price
Price
Proceeds
File /
Offer
1 Day
1 Week
Current
01/22/2015 Auspex Pharmaceuticals, Inc.
ASPX
Biotechnology
$1,722.2
4.0
$52.24
$56.50
$60.73
$226.0
8.2%
0.7%
N/A
7.5%
01/22/2015 Vitae Pharmaceuticals, Inc.
VTAE
Biotechnology
$254.8
3.0
$18.39
$11.90
$17.34
$35.7
-35.3%
25.5%
N/A
45.7%
01/22/2015 Otonomy , Inc.
OTIC
Biotechnology
$693.9
2.6
$35.66
$29.25
$34.42
$74.6
-18.0%
12.6%
N/A
17.7%
01/22/2015 Zafgen, Inc.
ZFGN
Biotechnology
$914.7
3.4
$39.56
$35.00
$40.84
$120.0
-11.5%
11.3%
N/A
16.7%
01/22/2015 Verastem, Inc.
VSTM
Biotechnology
$215.4
7.3
$8.99
$6.50
$7.45
$47.1
-27.7%
16.6%
N/A
14.6%
01/22/2015 Radius Health, Inc.
RDUS
Biotechnology
$1,355.2
4.6
$39.37
$36.75
$44.29
$169.1
-6.7%
5.2%
N/A
20.5%
01/21/2015 Oculus Innov ativ e Sciences, Inc.
OCLS
Spec Pharma
$6.3
6.3
$1.49
$1.00
$0.81
$6.3
-32.9%
0.0%
N/A
-18.8%
01/21/2015 Versartis, Inc.
VSAR
Biotechnology
$492.4
5.0
$23.46
$17.25
$18.51
$86.2
-26.5%
1.8%
N/A
7.3%
01/21/2015 Arena Pharmaceuticals, Inc.
ARNA
Biotechnology
$1,206.6
21.0
$5.29
$5.00
$4.77
$105.0
-5.5%
-5.8%
N/A
-4.6%
01/21/2015 Kery x Biopharmaceuticals Inc.
KERX
Biotechnology
$1,213.7
9.2
$13.81
$12.00
$13.07
$110.0
-13.1%
11.2%
N/A
8.9%
01/21/2015 Intrex on Corporation
XON
Biotechnology
$2,816.3
4.3
$32.39
$27.00
$31.88
$116.4
-16.6%
6.1%
N/A
18.1%
01/21/2015 Puma Biotechnology , Inc.
PBYI
Biotechnology
$5,912.4
1.2
$216.97
$190.00
$226.13
$218.5
-12.4%
2.4%
N/A
19.0%
01/21/2015 BioMarin Pharmaceutical Inc.
BMRN
Biotechnology
$14,540.8
9.8
$96.14
$93.25
$99.58
$911.5
-3.0%
0.0%
N/A
6.8%
01/20/2015 Alny lam Pharmaceuticals, Inc.
ALNY
Biotechnology
$7,845.8
4.7
$100.77
$95.00
$95.50
$450.0
-5.7%
-8.0%
N/A
0.5%
01/08/2015 Cy tosorbents Corporation
CTSO
Medtech
$202.2
1.3
$0.24
$8.25
$8.11
$10.3
3337.5%
-1.6%
1.0%
-1.7%
01/08/2015 Alder Biopharmaceuticals Inc.
ALDR
Biotechnology
$1,085.8
6.0
$28.33
$29.50
$29.09
$177.0
4.1%
-0.4%
-0.3%
-1.4%
01/07/2015 Av alanche Biotechnologies, Inc.
AAVL
Biotechnology
$1,444.3
2.4
$50.45
$59.00
$42.05
$141.6
-10.0%
0.1%
-3.6%
-28.7%
01/07/2015 Cempra, Inc.
CEMP
Spec Pharma
$1,028.6
5.3
$24.55
$24.50
$26.31
$128.6
16.9%
0.3%
-12.6%
7.4%
01/07/2015 Ov aScience, Inc.
OVAS
Biotechnology
$1,329.0
2.6
$47.18
$50.00
$49.40
$132.3
-0.2%
1.6%
1.1%
-1.2%
01/06/2015 Fiv e Prime Therapeutics, Inc.
FPRX
Biotechnology
$548.6
3.8
$26.92
$22.00
$27.34
$84.3
6.0%
0.1%
-5.0%
24.3%
01/06/2015 Cerus Corporation
CERS
Medtech
$494.6
12.7
$6.57
$5.50
$5.36
$70.0
-18.3%
7.5%
18.4%
-2.5%
01/06/2015 Sy nagev a BioPharma Corp.
GEVA
Biotechnology
$3,425.7
3.5
$100.48
$94.19
$119.77
$325.0
-16.3%
8.2%
10.4%
27.2%
01/06/2015 Kary opharm Therapeutics, Inc.
KPTI
Biotechnology
$1,176.2
3.0
$35.97
$33.00
$28.32
$99.0
-6.3%
10.4%
18.0%
-14.2%
12/16/2014 Ex act Sciences Corporation
EXAS
Biotechnology
$2,281.0
4.0
$26.94
$25.75
$28.23
$103.0
-4.4%
-2.4%
5.7%
9.6%
12/15/2014 bluebird bio, Inc.
BLUE
Biotechnology
$2,665.0
3.0
$86.20
$85.00
$97.36
$259.0
-1.4%
1.0%
0.6%
14.5%
12/11/2014 MEI Pharma, Inc.
MEIP
Biotechnology
$127.2
11.5
$5.39
$4.00
$3.69
$46.0
-25.8%
5.0%
3.3%
-7.8%
12/11/2014 Flex ion Therapeutics, Inc.
FLXN
Biotechnology
$351.3
5.8
$16.25
$17.00
$23.06
$98.5
4.6%
11.2%
25.1%
35.6%
12/10/2014 Agios Pharmaceuticals, Inc.
AGIO
Biotechnology
$4,056.7
2.3
$110.56
$110.75
$126.14
$253.0
0.2%
7.6%
8.1%
13.9%
12/10/2014 Kite Pharma, Inc.
KITE
Biotechnology
$2,259.2
3.5
$42.96
$54.00
$74.78
$188.2
25.7%
0.7%
-2.3%
38.5%
12/04/2014 Trev ena, Inc.
TRVN
Biotechnology
$150.5
12.8
$5.59
$4.00
$5.73
$51.4
-28.4%
0.3%
0.3%
43.3%
11/20/2014 Lex icon Pharmaceuticals, Inc.
LXRX
Biotechnology
$717.4
49.8
$1.25
$1.01
$0.94
$50.0
-19.6%
-5.5%
1.5%
-6.4%
11/20/2014 Amedica Corporation
AMDA
Medtech
$13.0
11.4
$2.11
$1.14
$0.74
$13.0
-46.0%
-11.4%
-25.4%
-35.1%
$21,263.1
6.8
$158.81
$152.00
$156.01
$1,035.0
-4.3%
1.6%
5.4%
2.6%
$427.7
6.5
$10.58
$9.00
$11.07
$58.5
-14.9%
-1.0%
0.1%
23.0%
11/20/2014 Perrigo Company Public Limited Company PRGO
Spec Pharma
11/19/2014 Rockw ell Medical, Inc.
RMTI
Medtech
11/18/2014 Amicus Therapeutics, Inc.
FOLD
Biotechnology
$605.2
15.9
$6.70
$6.50
$8.14
$103.5
-3.0%
0.5%
25.1%
25.2%
11/18/2014 Receptos, Inc.
RCPT
Biotechnology
$2,817.0
4.1
$104.22
$100.00
$116.69
$414.0
-4.0%
8.0%
29.5%
16.7%
11/13/2014 Horizon Pharma plc
HZNP
Spec Pharma
$1,432.2
11.7
$13.10
$12.05
$16.66
$140.5
-8.0%
1.7%
-1.0%
38.3%
10/30/2014 Chimerix , Inc.
CMRX
Biotechnology
$1,132.6
4.2
$29.79
$29.00
$39.66
$121.7
-2.7%
7.0%
6.0%
36.8%
10/29/2014 Inogen, Inc.
INGN
Medtech
$421.8
2.4
$20.53
$21.50
$32.01
$51.9
4.7%
11.1%
14.4%
48.9%
10/28/2014 AtheroNov a Inc.
AHRO
Spec Pharma
$3.0
4.0
$0.38
$0.75
$0.30
$3.0
102.7%
-56.0%
-4.7%
-60.0%
10/28/2014 Regulus Therapeutics Inc.
RGLS
Biotechnology
$812.5
6.1
$18.47
$17.00
$18.90
$103.5
-8.0%
6.4%
11.7%
11.2%
10/23/2014 Celator Pharmaceuticals, Inc.
CPXX
Biotechnology
$63.7
7.6
$2.39
$1.95
$2.88
$14.8
-18.4%
15.4%
12.3%
47.7%
10/22/2014 DBV Technologies S.A.
DBVT
Medtech
$386.9
4.9
$25.57
$21.64
$25.94
$106.5
-15.4%
5.8%
15.5%
19.9%
10/21/2014 CEL-SCI Corporation
CVM
Biotechnology
$6.0
7.9
$0.85
$0.76
$0.72
$6.0
-10.6%
-11.8%
-13.2%
-5.3%
10/16/2014 Tetraphase Pharmaceuticals, Inc.
TTPH
Spec Pharma
$569.4
4.5
$23.66
$19.00
$36.40
$86.3
-19.7%
26.9%
26.4%
91.6%
10/15/2014 Esperion Therapeutics, Inc.
ESPR
Biotechnology
$393.9
4.9
$25.92
$20.00
$47.12
$97.8
-22.8%
3.5%
26.4%
135.6%
10/09/2014 PTC Therapeutics, Inc.
PTCT
Biotechnology
$1,200.0
3.5
$39.42
$36.25
$54.96
$125.1
-8.0%
-4.6%
2.2%
51.6%
10/03/2014 Titan Pharmaceuticals Inc.
TTNP
Biotechnology
$55.0
21.0
$0.66
$0.50
$0.50
$10.5
-24.1%
3.2%
26.6%
0.8%
10/02/2014 Portola Pharmaceuticals, Inc.
PTLA
Biotechnology
$1,237.5
6.2
$29.32
$26.00
$29.72
$161.2
-11.3%
6.2%
-1.4%
14.3%
10/02/2014 Vital Therapies, Inc.
VTL
Biotechnology
$413.2
2.1
$20.11
$17.50
$21.11
$35.9
-13.0%
-3.5%
-22.4%
20.6%
$1,915.8
7.1
$36.66
$34.73
$40.21
$151.6
58.6%
2.6%
5.6%
15.9%
$863.6
4.8
$25.06
$21.57
$27.79
$103.5
-9.0%
1.7%
2.7%
14.4%
High
$21,263.1
49.8
$216.97
$190.00
$226.13
$1,035.0
3337.5%
26.9%
29.5%
135.6%
Low
$3.0
1.2
$0.24
$0.50
$0.30
$3.0
-46.0%
-56.0%
-25.4%
-60.0%
Mean
Median
Page 16
PIPE, REGISTERED DIRECT AND CMPO MARKET UPDATE
Annual PIPE / RD Market Issuance(1)
Issuance Amount ($ in millions)
Number of Deals
300
$6,034
250
$5,132
$4,975
$4,652
$4,860
$3,324
$3,014
$3,505
150
$2,108
100
Number of Deals
200
$4,023
50
$451
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
Quarterly PIPE / RD Market Issuance
Issuance Amount ($ in millions)
Number of Deals
2014
2015 YTD
(1)
90
$2,752
80
70
$1,564
$1,449
$1,193 $1,183
$1,122
$664
$465
50
$1,330 $1,307
$1,190
40
$1,027
$997
30
$824
$581
$501
$451
Number of Deals
60
20
10
0
1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15
Sources: Private Raise, and S&P Capital IQ as of January 27, 2015
Note: (1) Only includes common stock transactions
Page 17
PIPE, REGISTERED DIRECT AND CMPO MARKET UPDATE
LTM Issuance by Type
Debt: Nonconvert.
2%
Preferred
Stock:
Convert.
8%
Other
2%
Equity Line
7%
Debt:
Convert.
13%
ATM
13%
LTM Issuance by Sector
Common
Stock
55%
LTM Issuance by Mkt. Cap.
$1B $500mm
7%
Med Devices /
Diagnostics
25%
Greater than
$1B
5%
$499mm $300mm
8%
Biotech /
Pharma
75%
Less than
$300mm
80%
Page 18
Healthcare Investment Banking
Josh Muntner
Managing Director
(212) 829-3830
[email protected]
Richard Page
Managing Director
(212) 829-3828
[email protected]
James McNaughton
Managing Director – M&A
(215) 665-6032
[email protected]
Parth Talati
Analyst
(212) 829-3836
[email protected]
Healthcare Equity Capital Markets
Charles Mather, CFA
Managing Director
(212) 829-3831
[email protected]
Sean Mansoory
Analyst
(212) 829-3826
[email protected]
Sales and Trading
Andrew Trask
Associate
(212) 829-3832
[email protected]
Brian Scollard
Director
(212) 759-6211
[email protected]
Healthcare Equity Research
Research Analyst
Paul Knight, CFA
Life Sciences Technology
(646) 840-4616
[email protected]
David Lebowitz, CFA
Biotechnology
(212) 940-6985
[email protected]
Chiara Russo
Specialty Pharmaceuticals
(617) 557-2984
[email protected]
Coverage Universe
Agilent Technologies (A)
Pall (PLL)
Bio-Techne (TECH)
PerkinElmer (PKI)
Bruker (BRKR)
Qiagen (QGEN)
Danaher (DHR)
Repligen (RGEN)
Foundation Medicine (FMI)
Safeguard Scientifics (SFE)
Harvard Bioscience (HBIO)
T2 Biosystems (TTOO)
IDEX (IEX)
Thermo Fisher Scientific (TMO)
Illumina (ILMN)
Veracyte (VCYT)
Mettler-Toledo (MTD)
Waters (WAT)
Neogen (NEOG)
WuXi PharmaTech (Cayman) (WX)
Amicus (FOLD)
Onconova (ONTX)
Acceleron (XLRN)
Regeneron (RGEN)
CTI Biopharma
Tokai (TKAI)
Novavax (NVAX)
Vertex (VRTX)
Agile Therapeutics (AGRX)
Flexion (FLXN)
BioDelivery Sciences (BDSI)
Intercept (ICPT)
CARA Therapeutics (CARA)
Marinus (MRNS)
DepoMed (DEPO)
NPS Pharmaceuticals (NPSP)
Egalet (EGLT)
This material is a publication of Janney Montgomery Scott LLC’s Investment Banking Department and for informational Purpose only and shall in no event be construed as an offer to sell or a solicitation of an offer to buy any securities. The views expressed in this
publication may differ from those expressed by other areas of the Firm including the Firm’s Research Department. To view the firm’s current research on the Healthcare sector please go to www.janney.com. Janney Montgomery Scott LLC’s Investment Banking
Department is independent of the Firm’s Research Department.
The factual information described herein is taken from sources which we believe to be reliable, but the accuracy and completeness of such information is not guaranteed by us. The opinions expressed herein may be given only such weight as opinions warrant.
Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situations or needs of individual investors. This Firm, its officers, directors, employees, or members of their families may have
positions in the securities mentioned and may make purchases or sales of such securities from time to time in the open market or otherwise and may sell to or buy from customers such securities on a principal basis. Supporting information related to the
recommendation, if any, made in this material is available upon request.
Janney Montgomery Scott LLC is a registered broker-dealer member of FINRA, NYSE, and SIPC.
Page 19

Life Sciences Newsletter - Janney Montgomery Scott

Transcription

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