April 2009 An Inside Look at the Public Capital Markets Donald Notman Managing Director Equity Capital Markets

1 Overview of Healthcare Financings Examples of Successful Transactions

2 U.S. Equity Mutual Fund Flows (US$ in billions) Market Performance (1/1/08 – Present) DJIA S&P 500 NASDAQ Composite Russell (33.8%) (38.5%) (40.5%) (34.8%) 2009 (4.1%) 7.4% (4.2%) (9.3%) Market Performance (4/17/09 Close – Present)) % 3.5% 9.8% (2.8%) NBI(12.6%) (10.5%)4.6% % (1.4%) (2.0%) (14.5%)(19.4%) (32.1%) (37.0%) (54.8%) (1.9%) (6.8%) 10.2% 16.2% DJ/W Medical Equip. MS HC Providers AMEX Pharma. MS HC Payors DJIA S&P 500 NASDAQ Composite Russell 2000 % Change (2.1%) (0.4%) 1.3% (0.1%) NBI (2.6%) DJ/W Medical Equip. MS HC Providers AMEX Pharma. MS HC Payors % Change (3.3%) 3.6% (4.5%) (5.5%) Source: FactSet, Placement Tracker, ici.org, sec.gov, company press releases Public Market Performance U.S. Equity Mutual Fund Flows

3 Healthcare IPOs – Pricing Relative to Range Note: Numbers below “Healthcare IPOs – Pricing Relative to Range” graph represent total number of IPOs per quarter Source: FactSet, Placement Tracker, ici.org, sec.gov, company press releases IPO Pricing and Performance Since 1/1/2008 Healthcare IPOs Since 1/1/2008

4 Source: FactSet, Placement Tracker - Includes transactions >$5MM in size Historical PIPE and RDO Volume Annual Healthcare RD & PIPE Volume Total Raised ($ in millions)

5 Source: FactSet, Placement Tracker Healthcare PIPEs and RDOs Completed Since 1/1/08 Total Raised ($ in millions) # of Transactions Completed Pre-Offer Market Cap Ranges Gross Proceeds Raised

6 Source: FactSet, Placement Tracker Healthcare PIPEs and RDOs Completed Since 1/1/09

7 Current Trends Separation of the “haves” and “have-nots” Public investors remain risk adverse and are moving upstream in market cap size Venture investors filling some but by no means all of the void – Mostly, if not exclusively, participating in financings for portfolio companies that are already public Must fund through important milestones Issuers looking more closely at “bought deals” and ATM offerings Critical deal considerations: – Market capitalizations less than $100 million are difficult – Later-stage programs and depth of pipeline important – Less than 12 months of cash takes away all leverage

8 Overview of Healthcare Financings Examples of Successful Transactions

9 Leerink Swann acted as sole placement agent for Momenta Pharmaceuticals in the Company’s $25.2 million registered direct offering announced on 12/12/08 Transaction highlights: – Superior execution in a challenging market – Accomplished critical financing goal of Company to extend cash runway to two years – Launched and priced transaction with only four days of marketing – Momenta stock price traded up 30% during the intra-week marketing period; the NASDAQ Biotechnology index was flat over the period – Transaction priced at a 3% premium to the closing price prior to launch and required no warrants – Book consisted of significant, high-quality new investors as well as participation by selected existing investors Momenta is a leader in developing bio-generics with compelling value proposition in current environment – Near-term value catalyst in potential approval of M-Enoxaparin, generic of Sanofi’s Lovenox with $3.6 billion of global sales in 2007 – Significant technical hurdles for competitors Amphastar, Hospira, and Teva – Momenta technology and scientists helped resolve global heparin contamination crisis – ANDA filed for M356, generic version of Teva’s Copaxone, with $1.4 billion of global sales in 2007 – Major collaboration with industry leader Novartis / Sandoz – Proprietary follow-on biologics capabilities and pipeline $25.2 million Registered Direct Offering Sole Placement Agent December 2008 Case Example: Momenta Registered Direct Offering

10 Leerink Swann LLC acted as sole placement agent in the 1/30/09 announced Pharmasset (Nasdaq: VRUS) $45.5 million registered direct offering Superior execution –Accomplished critical financing goal of Company, removing financing overhang –Achieved maximum deal size with oversubscribed book and stock trading up on announcement –Tight, intra-week marketing with minimal share price impact –Priced at a 7% discount to the prior day’s closing price and required no warrants –World-class book with significant participation from both new and existing blue chip healthcare investors –Sales and trading coordinated with research to organize several high quality non-deal marketing events –MEDACorp resources were used to craft selling and positioning points to investors Pharmasset is a world-class company developing blockbuster potential anti-viral drugs –R7128 represents a multi-billion dollar blockbuster drug candidate for the treatment of HCV –Clevudine represents a late-stage potential paradigm-shifting therapy for HBV –Pharmasset has the leading nucleoside analogue development platform, a key strategic asset –Management has consistently delivered on data and timelines attracting a leading healthcare institutional investor base Case Example: Pharmasset Registered Direct $45.5 million Registered Direct Offering Sole Placement Agent January

11 Background: –Market Cap: $286.7 mm –Market Price: $5.24 (H - $28.42 ; L - $2.80) –PDUFA on July 30, 2009 for lead product Transaction: –$31 million –Unit Offering: 1 share of common 1 warrant to buy 0.85 common share –Price - $5.23 per unit –Warrant Pricing: Initial strike at $10.46 with adjustable pricing and expiration based on FDA outcome (PDUFA – 7/30/09) Pricing: –Approval, strike of $10.46 –If Complete Response Letter (CRL): Repriced based on 5-day VWAP at T days Floor of $1.56 Expiration: –Approval or rejection – 9 months post CRL –If neither approval nor rejection, earlier of: 15 months after CRL 9 months post Company Response –If no CRL, 7 years Case Example: Savient Pharmaceuticals (SVNT) $31 million Registered Direct Offering April

12 Factors For a Successful PIPE / RDO Non-Deal Roadshows are important in this environment – Identification of anchor order is critical – Anchor is 10% - 20% of deal Prior validation of strategic support or interest Existing base of solid institutions attracts more and creates good support Creative deal structures may be more frequent (Savient)