Analysis Of Licensing GTX-001 And GTX-002 and Gastrex Team 7 - Animal Pharm Jason Dwyer Scott Gleim Ph.D. Samantha Kennedy Xin Li M.S. Robert Lindner John Nelson Ph.D. Candidate, BBS Internal Medicine MBA/MPH Candidate, 2012 M. A Statistics Candidate M.S. Mol. Biotech Candidate MBA Candidate, 2011

YBPS Healthcare Case Competition, 2009 Agenda Inflammatory Bowel Disease (IBD): Crohn’s Disease (CD) Ulcerative Colitis (UC) Gastrex GTX-001 and GTX-002: Unmet Needs, Target Product Profile Signals For Success Future Clinical Trial Timeline Market Analysis Financial Projection Licensing Recommendation GTX-001 (Biological)(Small Molecule)

YBPS Healthcare Case Competition, 2009 Inflammatory Bowel Disease What is IBD? Inflammatory disorder of the intestinal mucosa Crohn‘s Disease (CD) : small & large intestine Ulcerative Colitis (UC): colon, rectum Symptoms Diarrhea, abdominal pain Anemia, bleeding Multifactorial and multigenic etiology Mucosal integrity Hypersensitivity to intestinal microbes Aberrant T H -Cell mediated immune activation CD UC

YBPS Healthcare Case Competition, 2009 GTX-002: Unmet Needs 5-ASAs Steroids Immuno- modulators Treatment of mild-moderate CD/UC relies on combinations of 5-ASAs, steroids and immunomodulators:

YBPS Healthcare Case Competition, 2009 GTX-002 Target Product Profile 5-ASAs Steroids IM’s GTX-002 Competitive Advantage

YBPS Healthcare Case Competition, 2009 Problems with anti-TNF Drugs: - All require black box warning for fungal infection - Potential for serious/fatal infections - Solid-tissue cancers - Liver injury GTX-001: Unmet Needs 45-70% of severe patients never respond or stop responding to anti- TNF treatment Biologics used for treating severe CD/UC:

YBPS Healthcare Case Competition, 2009 GTX-001 Target Product Profile GTX-001 Competitive Advantage GTX-001

YBPS Healthcare Case Competition, 2009 Signals and Clinical Trial Timeline PharmacokineticsSafetyEfficacy GTX-001SC administration t 1/2 ≥ 4 wks Antigenicity Immunosuppression ≥ infliximab Refractory population GTX-002Oral administration OAD or BID Liver toxicity Kidney toxicity Rapid onset Concomitant Tx

YBPS Healthcare Case Competition, 2009 Market Analysis IBD Severity Rates Mild46% Moderate38% Severe16% IBD Severity Rates Mild46% Moderate38% Severe16% GTX-001GTX-002  High Price, Low Volume  Includes treatment refractory segment  Generic biologics more challenging  3 major competitors  Low Price, High Volume  Established generics  5+ major competitors  Potential to change market?

YBPS Healthcare Case Competition, 2009 Assumptions (per yr) - Discount Rate: 10% - GTX-001 Price: $15k - GTX-002 Price: $2.5k - CD Market Growth: 0.61% - UC Market Growth: 0% Net Income Sensitivity Analysis

YBPS Healthcare Case Competition, 2009 Licensing and Contract Recommendations License GTX-001  Positive NPV  Attractive Target Profile  Strong Market Opportunity  Important therapy for patients Do not license GTX-002 under current agreement……… Contract Renegotiation Options  Decrease milestone payments for GTX-002 or both -001 and -002  More indications for use: Rheumatoid Arthritis, Psoriasis  Profit sharing vs. royalties

YBPS Healthcare Case Competition, 2009 THANK YOU! Team 7 - Animal Pharm Jason Dwyer Scott Gleim Ph.D. Samantha Kennedy Xin Li M.S. Robert Lindner John Nelson Ph.D. Candidate, BBS Internal Medicine MBA/MPH Candidate, 2012 M. A Statistics Candidate M.S. Mol. Biotech Candidate MBA Candidate, 2011

YBPS Healthcare Case Competition, 2009 Competitive Drugs in Development

YBPS Healthcare Case Competition, 2009 DRUG 1DRUG 2, ADRUG 2, B CDUCCDUCCDUC Market Size Segment Segment Segment Segment Segment Segment TOTAL Drug 1Drug 2 Selling Price Profit Margin, Initial20% Market Share18% Market Share growth3% CD Market Growth0.61% Milestone payment 400,000, UC Market Growth0%

YBPS Healthcare Case Competition, 2009 DRUG 11/1/20101/1/20201/1/20211/1/20221/1/20231/1/20241/1/20251/1/20261/1/20271/1/20281/1/20291/1/20301/1/20311/1/2032 Market Size Market Share %18%19% 20% 21% 22%23% 24%25%26% Total Patients 65, , , , , , , , , , , , , Sales $ 977,725, $ 1,010,780, $ 1,044,953, $ 1,080,281, $ 1,116,803, $ 1,154,560, $ 1,193,594, $ 1,233,947, $ 1,275,665, $ 1,318,793, $ 1,363,379, $ 1,409,472, $ 1,457,124, Less 10% to Gastrex $ (97,772,517.17) $ (101,078, ) $ (104,495, ) $ (108,028, ) $ (111,680, ) $ (115,456, ) $ (119,359, ) $ (123,394, ) $ (127,566, ) $ (131,879, ) $ (136,337, ) $ (140,947, ) $ (145,712, ) Upfront Licensing agreement $ (10,000,000.00) Late Stage development Costs Milestone Cost $ (40,000,000.00) Promotional Costs $ (100,000,000.00) NET INCOME $ (50,000,000.00) $ 155,990, $ 161,940, $ 168,091, $ 174,450, $ 181,024, $ 187,820, $ 194,846, $ 202,110, $ 209,619, $ 217,382, $ 225,408, $ 233,705, $ 242,282, NPV $ 127,981, discount rate10% 13% DRUG 2, A1/1/20101/1/20201/1/20211/1/20221/1/20231/1/20241/1/20251/1/20261/1/20271/1/20281/1/20291/1/20301/1/20311/1/2032 Market Size Market Share %18%19% 20% 21% 22%23% 24%25%26% Total Patients Sales Less 10% to Gastrex Upfront Licensing agreement (1,000,000.00) Late Stage development Costs Milestone Cost $ (40,000,000.00) Promotional Costs NET INCOME (41,000,000.00) 58,666, ,325, ,075, ,917, ,856, ,894, ,034, ,281, ,638, ,108, ,695, ,403, ,237,971.51