Confidential | © 2013 Third Rock Ventures Building Biotechnology Companies from Scratch: Strategy and Approaches Robert I. Tepper, MD PAGE1

Confidential | © 2013 Third Rock Ventures AGENDA 2PAGE General Principles The Changing Landscape of Biotech & Healthcare Creating the Biotechnology Ecosystem Stages of NEWCO Development Decision Criteria for NEWCO Investment & Build Presentation Outline

Confidential | © 2013 Third Rock Ventures BUILDING GREAT COMPANIES THAT MAKE A DIFFERENCE FOR PATIENTS 3PAGE Hard to Build GREAT Companies Complex Evolving Landscape Innovation Trumps Group Genius Helps Building a Powerful Ecosystem GENERAL PRINCIPLES

Confidential | © 2013 Third Rock Ventures 4 Deals/ Partnerships Pharma needs innovation; Big Biotech stepping up; Deals are done earlier Investors/ Financial Markets 2013 robust for life sciences; 2014 continues to be active but investors more selective Innovation While innovative therapies are changing healthcare, cost pressures are rising Regulatory FDA is creating faster approval paths for innovation Payers/ Reimbursement Applying pressure on drug prices while trying to balance with the benefits of innovation THE CHANGING LANDSCAPE OF BIOTECH AND HEALTHCARE

Confidential | © 2013 Third Rock Ventures INNOVATION GAP CONTINUES IN BIG PHARMA PAGE5 Source: FDA, PhRMA, Forbes * 2013 R&D spend is estimated Pharma R&D Spend ($B) New Drug Approvals PhRMA Member R&D Spend* Innovation Gap 0 New Drug Approvals (NMEs) $0 $10 $20 $60 $30 $40 $

Confidential | © 2013 Third Rock Ventures PHARMA RECOGNIZING THE NECESSITY FOR EXTERNAL INNOVATION 6 Top 12 big pharma’s late-stage pipeline valuations by source, SOURCE: Deloitte Consulting and Thomson Reuters Pharma continues to access innovation externally through deals Big pharma spent ~$18B for M&A deals in 2013 Big pharma entered into 65 partnering deals with an average $375M deal value for a total of ~$24B in 2013 The deal pace continues in 2014 Pharma continues to access innovation externally through deals Big pharma spent ~$18B for M&A deals in 2013 Big pharma entered into 65 partnering deals with an average $375M deal value for a total of ~$24B in 2013 The deal pace continues in 2014

Confidential | © 2013 Third Rock Ventures THE CHANGING LANDSCAPE OF BIOTECH AND HEALTHCARE 7 Deals/ Partnerships Investors/ Financial Markets Innovation RegulatoryPayers/ Reimbursement

Confidential | © 2013 Third Rock Ventures RECENT TRENDS IN M&A AND PARTNERING Deal-making continues at a robust pace in both M&A and partnering Continued shift to early-stage deal-making at increasing upfront values Big biotech has become a major player in M&A and Partnering Deal-making momentum shows every sign of continuing through H and beyond 8

Confidential | © 2013 Third Rock Ventures 1H 2014 M&A CONTINUES POSITIVE TREND 9 SOURCE: Thomson Reuters Recap 1H 2014 trend towards early-stage M&A activity: 25%of deals involve preclinical companies vs where average was 10% Medtronic/Covidien ($42.9B); Actavis/Forest Labs ($28B)

Confidential | © 2013 Third Rock Ventures PARTNERING ALSO CONTINUES AT A ROBUST PACE IN Overall, robust partnering activity in 2013 Continuing in H SOURCE: Thomson Reuters Recap

Confidential | © 2013 Third Rock Ventures BIG BIOTECH REWARDED IN THE MARKETPLACE FOR ACCESSING INNOVATION 11 BiotechPharma CompanyMarket CapCompanyMarket Cap Gilead$161BJ&J$295B Novo$123BRoche$251B Amgen$106BNovartis$229B Biogen Idec$77BPfizer$188B Celgene$74BMerck$173B Shire$50BSanofi$146B Teva$44BBayer$114B Regeneron$35BGSK$113B Alexion$33BAstraZeneca$93B Vertex$22BAbbVie$92B BMS$84B Eli Lilly$70B SOURCE: Yahoo Finance as of 9/11/14

Confidential | © 2013 Third Rock Ventures DEALS/PARTNERSHIPS – CONCLUSIONS AND IMPLICATIONS Today’s environment generally upbeat for doing early deals Still a mix of Pharma out there: –Those who are more aggressive about accessing innovation –Those who resist the changing ecosystem Great Biotech companies should continue to push the envelope on deals focusing on: –Retaining value –High valuations –Creative structures that work for company building and value creation In Device and Dx companies –More likely need to take products further towards sales before able to consummate value creating partnerships In the trenches, capturing high value in early deals remains challenging: –Time consuming effort –Senior level experience makes a difference –Building relationships, finding champions inside pharma are key factors –Early success on the science remains key ingredient 12

Confidential | © 2013 Third Rock Ventures 13 Recruiting Great Team Accessing Best Science Value Creation Strategy Partnering Financing Resource Management Accessing Best Technology Platforms Building Best Board Outsourcing Strategy Building Best Culture Clinical & Regulatory Strategy Pipeline Strategy Manufacturing Effective Execution Payer & Commercial Strategy BUILDING BIOTECH COMPANY - CHALLENGES TO NAVIGATE

Confidential | © 2013 Third Rock Ventures 14 BUILDING GREAT COMPANY BUILDING GREAT COMPANY CEO Board Finance/ Bankers Advisors CREATING THE BIOTECHNOLOGY ECOSYSTEM: GROUP GENIUS Investors Partners Pharma Big Bio Partners Pharma Big Bio Manage- ment Team

Confidential | © 2013 Third Rock Ventures STAGES OF NEWCO DEVELOPMENT PAGE FOUNDING GROUP GENIUS C PROJECTS B PROJECTS A PROJECTS Creating the Idea Investing Time in the Idea Initiate Early Teams & Plan Business Plan & Founding Teams VISIONING NEW COS Series A BUILT TO LAST People Plan Execution DISCOVERLAUNCHBUILD 15

Confidential | © 2013 Third Rock Ventures TALENT NETWORK – A CRITICAL COMPONENT Over 7,000 vetted potential candidate in our database 500+ in person talent meet ups each year Bi-weekly in-depth reviews of the People Pipeline 16

Confidential | © 2013 Third Rock Ventures People ? Outstanding World Leaders (PLURAL) ? Multi-institutional ? Team Of Rivals Portfolio Requirements High technical POS? 1+ path to the clinic within 36 mo? In a highly attractive area for partners? Firm core competency? Portfolio fit? Financial Requirements Likely 5X+ returns on >$20M from TRV? Unmet need and value creation (>$300M in 5y)? Showstopper issues? Liquidity? Location Boston/SF Area? DECISION CRITERIA FOR NEWCO INVESTMENT 17

Confidential | © 2013 Third Rock Ventures DISCOVER, LAUNCH, BUILD PROCESS PAGE Put in place a continually evolving operating process to support the growing portfolio Develop a team-based culture; Group Genius; VIBRANT ECOSYSTEM CRITICAL Provide highly leverageable expertise and resources for launching and building companies Looking into future areas that will impact our companies as they evolve and putting new teams/resources in place Put in place a continually evolving operating process to support the growing portfolio Develop a team-based culture; Group Genius; VIBRANT ECOSYSTEM CRITICAL Provide highly leverageable expertise and resources for launching and building companies Looking into future areas that will impact our companies as they evolve and putting new teams/resources in place DISCOVERLAUNCHBUILD 18