For internal use only

Deal Analysis: Top 10 Oncology

Companies (June 2015 Edition)

Release Date: July 31, 2015

For internal use only

Contents

Executive Summary

Top 10 Oncology Companies by Oncology Revenue (2014)

Group Sales Comparison of Top 10 Oncology Companies (2014, 2013)

R & D Expenditure Comparison of Top 10 Oncology Companies (2014, 2013)

Roche: Product Sales Comparison (Oncology) (2014, 2013)

Novartis: Product Sales Comparison (Oncology) (2014, 2013)

Deals Analysis (Specific to Cancer)

Deal 1: Celgene and Juno

Deal 2: Amgen and Roche

Deal 3: Eli Lilly and Immunocore

Deal 4: Eli Lilly and Saran Cannon Research Institute (SCRI)

Deal 5: Eli Lilly and Dana Farber Cancer Institute

KOL Comments: Analysis of Statements from Various KOLs

Appendix

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Top 10 Oncology Companies by Oncology Revenue

(2014)

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In 2014, Roche was number one oncology company with

oncology portfolio sales of USD 23.1 billion

Top 10 oncology companies by oncology revenue (2014, 2013)

23.1

11.7

7.5 6.7 4.5 3.5 3.4 3 2 1

24.4

11.3

7 5.5

3.8 3 3.3 3.2 1.8 1.2

-5.3

4

7

22

18 17

3

-6

11

-17

Ro

ch

e

No

va

rtis

Am

ge

n

Celg

en

e

J&

J

BM

S

Eli

Lil

ly

As

traZ

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a

Pfi

ze

r

Me

rck

Oncology Revenue 2014 (USD billions) Oncology Revenue 2013 (USD billions) YoY Growth (%)

Sources: 1. Roche: Finance Report 2014; 2. Novartis: 20F 2014; 3. Novartis: 20F 2013; 4. Amgen: 10K 2014; 5. Celgene: 10K 2014; 6. J&J: 10K 2014; 7. J&J: 10K 2013; 8. BMS: 10K 2014; 9.

Eli Lilly: 10K 2014; 10. AstraZeneca: 10K 2014; 11. Pfizer: Financial Report 2014; 12, Merck: 10K 2014

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Group sales (USD billion) of top 10 oncology companies ( 2014, 2013)

74.3

58

50 48.2

42.2

26.1

20 19.6 15.9

7.7

71.3

58

52 51

44

26

18.7 23.1

16.4

6.5

J&J Novartis Pfizer Roche Merck AstraZeneca Amgen Eli Lilly BMS Celgene

In 2014, Roche ranked fourth in group sales comparison of top

10 oncology companies

Sources: 1. Roche: Finance Report 2014; 2. Novartis: 20F 2014; 3. Novartis: 20F 2013; 4. Amgen: 10K 2014; 5. Celgene: 10K 2014; 6. J&J: 10K 2014; 7. J&J: 10K 2013; 8. BMS: 10K 2014; 9.

Eli Lilly: 10K 2014; 10. AstraZeneca: 10K 2014; 11. Pfizer: Financial Report 2014; 12, Merck: 10K 2014

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Research and development expense (USD billion) of top 10 oncology companies ( 2014, 2013)

In 2014, Roche ranked second in R&D expense comparison of

top 10 oncology companies

10

9 8.5 8.4

7.2

5.6

4.7 4.5 4.3

2.4

10

8.8 8.2

6.7

7.5

4.8

5.5

3.7 4.1

2.2

Novartis Roche J&J Pfizer Merck AstraZeneca Eli Lilly BMS Amgen Celgene

Sources: 1. Roche: Finance Report 2014; 2. Novartis: 20F 2014; 3. Novartis: 20F 2013; 4. Amgen: 10K 2014; 5. Celgene: 10K 2014; 6. J&J: 10K 2014; 7. J&J: 10K 2013; 8. BMS: 10K 2014; 9.

Eli Lilly: 10K 2014; 10. AstraZeneca: 10K 2014; 11. Pfizer: Financial Report 2014; 12, Merck: 10K 2014

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In 2014, the sales of oncology portfolio were driven by

HER2+ breast cancer franchise

Product sales (USD billion) – Oncology ( 2014, 2013)

0.3

0.5

0.7

0.8

0.9

1.3

5.7

6.4

6.5

0.4

0.2

0.8

1.6

0.3

1.4

6.3

6.6

6.8

Zelboraf

Kadcyla

Others

Xeloda

Perjeta

Tarceva

MabThera/Rituxan

Herceptin

Avastin For advanced colorectal, breast, lung, kidney, cervical

and ovarian cancer, and relapsed Glioblastoma

For HER2+ breast cancer and HER2+ metastatic

(advanced) gastric cancer

For NHL, CLL, FL

For advanced NSCLC and pancreatic

cancer

For HER2+ breast cancer

For colorectal, stomach and breast cancer

For HER2+ breast cancer

For BRAF V600E mutation-positive

metastatic melanoma

Sources: 1. Roche: Finance Report 2014

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0.4

0.9

0.9

1.5

1.6

1.7

4.7

0.4

0.9

1.1

1.3

1.3

1.6

4.7

Femara

Exjade

Others

Tasigna

Afinitor

Sandostatin

Glivec

Product sales (USD billion) – Oncology ( 2014, 2013)

For postmenopausal women with HR+

early stage breast cancer

For acromegaly

For HR+, HER2 negative breast cancer, advanced kidney cancer, advanced

pancreatic neuroendocrine tumor, renal angiomyolipoma with tuberous

sclerosis complex, SEGA with tuberous sclerosis complex

Ph+ CML

Chelation therapy for chronic iron

overload

KIT+ GIST, Ph+ CML and other rare

cancers

In 2014, the sales of oncology portfolio were driven by

Afinitor and Tasigna

Sources: 1. Novartis: 20F 2014

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Deal 1: +

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Deal highlights (1/2)

Sources: 1. Fortune: June 30, 2015; 2. CNBC: June 30, 2015; 3. Financial Times: June 30, 2015; 4. Fierce Biotech: June 29, 2015; 5. Reuters: June 29, 2015; 6. Bloomberg Business: June 30,

2015; 7. Forbes: July 3, 2015; 8. Modern Healthcare: June 30, 2015; 9. Motley Fool; 10. 24/7: June 30, 2015; 11. Seeking Alpha: July 1, 2015 .

• Juno has been working on a series of CAR-T drugs (JCAR014 and JCAR015). CAR-T drugs supercharge the body’s immune

response to more directly and effectively target cancers. Celgene’s USD 1 billion investment is a huge sign of confidence in

the emerging therapy

Updated results of the JCAR014 Phase I trials include translational insights of dramatically improved CAR T cell peak and

persistence

JCAR015 Phase I results showed complete remission in a high number of test patients and a median OS of 8.5 months

• The deal gives Celgene 10 percent stake of Juno’s stock and also the rights to sell Juno’s therapies around the world

• The finance part of the deal is straightforward, however assets that will change hands are more confusing

• A Similar type of deal has happened in past between Roche and Genentech (the deal gave Roche access to Genentech's

oncology drugs outside the US)

• The Roche and Genentech deal is a success story and if Celgene-Juno partnership goes similarly well then Celgene might

eventually buy Juno

• Celgene could have purchased Juno now, but the structure of the deal allows a lot more flexibility for Celgene:

Celgene has to pay less up-front to tie up Juno's assets, but gets to sit back and see how Juno's CAR-T performs

There was huge risk involved for Celgene as CAR-T is a relatively new technology and Juno only became a company a

year and a half ago

• The deal highlights the R&D race to develop new drugs that re-engineer T cells, arming them with CARs so that they target

cancer cells

• Juno and Novartis are viewed as the leaders in the field, with Juno from a start-up to a major new force in the biotech world

in less than two years

The deal: Development stage biotech and a large drug company

Why Juno?

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Deal highlights (2/2)

• Generic drug makers are trying to get patent protection for Revlimid, removed

• Q1 2015 Sales of Revlimid: USD 1.3 billion (this revenue can suffer, if generics enter market)

Why this partnership’s success is important for Celgene?

• As part of the deal, Celgene will pay Juno USD 150 million, as well as buy around 9.1 million shares of Juno's common stock

at USD 93.00/share

• Celgene is making USD 1 billion bet on game changing science

• Celgene may have paid too much of a premium for a stake in a company that has no revenue and may be years from

getting a treatment approved and on the market

• Future growth potential is worth the price

Celgene knows its business fairly well and its specialties complement the development Juno is doing

If this immunotherapy can be used for multiple kinds of cancer, that can open up a number of different product lines

Buying into Juno at an early stage, the investment will be cheaper now and Celgene can also influence the direction of

further research

Benefit of CAR-T drugs for cancer patients: They not just improve survival, but they don't require traditional chemotherapy

and radiation. The demand of this type of treatment would be high among healthcare providers and patients and this in turn

increase revenue

This deal gives Celgene a good head start to expand its product lines and maintain financial growth

Is the deal too costly for Celgene?

Sources: 1. Fortune: June 30, 2015; 2. CNBC: June 30, 2015; 3. Financial Times: June 30, 2015; 4. Fierce Biotech: June 29, 2015; 5. Reuters: June 29, 2015; 6. Bloomberg Business: June 30,

2015; 7. Forbes: July 3, 2015; 8. Modern Healthcare: June 30, 2015; 9. Motley Fool; 10. 24/7: June 30, 2015; 11. Seeking Alpha: July 1, 2015 .

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Company’s highlights

Companies

Ticker CELG JUNO

Description Celgene is a global biopharmaceutical

company engaged in the discovery,

development and commercialization of

innovative therapies for the treatment of

cancer and immune-inflammatory

related diseases

• Portfolio of commercial products:

Revlimid, Vidaza, Thalomid,

Pomalyst/ Imnovid, Abraxane and

Istodax

Juno Therapeutics is a clinical-stage

company developing novel cellular

immunotherapies based on two distinct

and complementary platforms –CARs

and TCRs technologies

Full time employees (as of December

31, 2014)

6,012 95

Revenue (2014) (USD billion) 7.7 Net loss: 0.2

Sources: Company Websites

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Collaboration details: A billion dollar bet by

Celgene on game-changing science

Parameter Description

Development and commercialization collaboration

Duration Ten years

Celgene and Juno will use T cell therapeutic strategies to develop treatments for patients with cancer and

autoimmune diseases with an initial focus on CAR-T and TCR technologies

On closure of the deal, Juno will receive an upfront payment of ~ USD 150 million. Celgene will purchase

9,137,672 shares of Juno's common stock at USD 93.00/share or USD 850 million and in conjunction with this

stock purchase:

• Celgene will receive the right to nominate a member to Juno's board of directors (Celgene will add its head of

R&D, Tom Daniel, to Juno’s board)

• During the ten years of the collaboration, Celgene will have the right to purchase additional equity in Juno

during specified windows and at specified market premiums subject to satisfaction of certain conditions by

each party including Juno opting in on select Celgene programs, such that, at a maximum, Celgene could own

up to 30 percent of Juno's common stock then outstanding

• Celgene has entered into a standstill agreement and agreed to certain lock-up provisions on its share

ownership

Sources: Company Websites; Bloomberg

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Development and commercialization options for

Celgene and Juno

Terms of the agreement

Celgene will have the option to be the commercialization

partner for Juno's oncology and cell therapy auto-immune

product candidates, including Juno's CD19 and CD22 directed

CAR-T product candidates

For Juno-originated programs co-developed under the

collaboration:

• Juno will be responsible for R&D in North America and will

retain commercialization rights in those territories

For Juno-originated programs co-developed under

collaboration:

• Celgene will be responsible for development and

commercialization in the RoW, and will pay Juno a royalty

on sales in those territories

• Celgene has certain co-promotion options:

Celgene will initially be eligible to select two programs,

excluding CD19 and CD22, to be subject to a global

profit sharing agreement under which the companies will

share worldwide expenses and profits equally, except in

China

Juno will have the option to enter into a co-development and

co-commercialization agreement on certain Celgene-

originated development candidates that target T Cells. For any

such collaboration:

• The parties will share global costs and profits with 70

percent allocated to Celgene and 30 percent allocated to

Juno

• Celgene will lead global development and

commercialization, subject to a Juno co-promote option in

the US and certain EU territories

Sources: Company Websites

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The science: CAR Technology

The patient receives lymphodepleting

chemotherapy to reduce the level of

WBCs and help the body accept the

reprogrammed T cells White blood cells, including T cells,

are separated from the patient’s

blood in a process called

leukapheresis. They are then sent

to a manufacturing facility for

reprogramming

1

Reprogrammed T cells

Ex vivo, in a manufacturing

facility, genes encoded to

recognize specific cancer

cells are transferred into the

patient’s T cells using an

inactive virus (viral vector)

2

Inactive viral vector

Once the gene transfer is

complete, T cells are now

reprogrammed to “hunt”

cancer cells by expressing a

CAR on its surface

3 4 The reprogrammed T cells are

expanded in the manufacturing

facility

5

6 T cell

Lymphodepleting chemotherapy

The reprogrammed T cells are

reintroduced into the patient’s blood

7 Within the patient’s body, the T cells expand. The

reprogrammed T cells “hunt” cancer cells, attach to them,

and initiate direct cell death

T cell attaches with

cancer cell

cancer cell death

Sources: Company Websites

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KOL Comments: Perspectives and opinions

CAR-Ts overcomes two clinical problems when it comes to fighting cancer:

1. Cancer can effectively hide itself from the body’s immune system, so regular T cells aren’t able to find the intruder

2. Cancer often dampens the immune system

CAR-T drugs, work around these two challenges

……………….” CAR-T is a promising therapy, It effectively works its way around the body, eradicating cancer, but it’s

a bit of a wild beast that one needs to keep on a leash. Working out how to do that is where the challenges lie”

Stephen Ansell, a doctor at the Mayo Clinic

“Celgene is a world class oncology company that is investing a billion dollars in our company, and I do think that

reinforces our belief in the potential of using Car-T in solid tumors……………It's clearly a very significant deal

financially, but more important is the potential of the science and the potential together to be a broader leader in

the immuno-oncology space”……………

”This unique collaboration is designed to catalyze and create tremendous ongoing scientific and product development

synergy by leveraging each company's strengths and assets……In addition to its established global presence and

commercial reach, Celgene has leading small molecule and protein capabilities that complement Juno's advanced

engineered T cell capabilities. By doing this together, we believe we can more quickly and effectively develop

potentially disruptive therapies in this new field of medicine and make them more readily available to patients

worldwide”

“We are now in a stronger than ever position to become a leader in the cellular immunotherapy space ……The

collaboration also brings together unique and complementary strengths that promise to create a leader in immuno-

oncology more broadly”

Hans Bishop, chief executive

Sources: 1. Fortune: June 30, 2015; 2. CNBC: June 30, 2015; 3. Financial Times: June 30, 2015; 4. Fierce Biotech: June 29, 2015; 5. Reuters: June 29, 2015; 6. Bloomberg Business: June 30,

2015; 7. Forbes: July 3, 2015; 8. Modern Healthcare: June 30, 2015; 9. Motley Fool; 10. 24/7: June 30, 2015; 11. Seeking Alpha: July 1, 2015 .

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KOL Comments: Perspectives and opinions

“This deal comes as a surprise to us given the very limited validation for Car-T cell approaches" outside some blood

cancers……………. Juno's management and investors are to be congratulated for securing such favourable early

financing for their company, well in advance of the delivery of much value from their platform”

“Celgene’s management are to be congratulated on the audacity of their deal making, but we expect investors to bridle

at the company’s increasingly aggressive front-end loading of their transactions………. This transaction amounts to

pre-paying much of the cost of a distant asset well in advance of the delivery of the asset”

Geoff Porges, an analyst at Bernstein

“Celgene is making a big commitment to CAR-T as we think this will be an important hematological platform……….. but

certainly would agree with the likely pending consensus view that the price tag is also big”

Michael Yee, RBC Capital Partners analyst

“We're only starting to understand the full impact" of this therapeutic approach…………..

A slate of new deals is expected to start generating significant revenue by 2020”…..

”Juno has the best-in-class CAR-T and T cell receptors”…………. “This transaction strengthens Celgene's position

in the emerging and transformative area of immuno-oncology…………Juno has assembled world-class experts and

built impressive capabilities and technologies in the areas of T-cell biology and cellular therapy; we believe this long-

term collaboration enhances the potential of both companies to deliver transformational therapies to patients with

significant unmet medical needs”

Bob Hugin, chief executive

Sources: 1. Fortune: June 30, 2015; 2. CNBC: June 30, 2015; 3. Financial Times: June 30, 2015; 4. Fierce Biotech: June 29, 2015; 5. Reuters: June 29, 2015; 6. Bloomberg Business: June 30,

2015; 7. Forbes: July 3, 2015; 8. Modern Healthcare: June 30, 2015; 9. Motley Fool; 10. 24/7: June 30, 2015; 11. Seeking Alpha: July 1, 2015 .

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Deal 2: +

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Company highlights

Companies

Ticker AMGN RHHBY

Description Amgen is a global biopharmaceutical

company engaged in the discovery,

development and commercialization of

innovative therapies Amgen focuses on

areas of high unmet medical need and

leverages its biologics manufacturing

expertise to strive for solutions

Roche is world's number one in biotech

with 14 biopharmaceuticals on the

market. Over half of the compounds in

product pipeline are biopharmaceuticals.

Roche is global leader in cancer

treatments

Full time employees (as of December

31, 2014)

6,012 88,509

Revenue (2014) (USD billion) 20 48.2

Sources: Company Websites

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Collaboration details

• Amgen and Roche have collaborated on a Phase Ib study:

To evaluate the safety and efficacy of Talimogene Laherparepvec (Amgen's investigational oncolytic immunotherapy) in

combination with Atezolizumab (Roche's investigational anti-PDL1 therapy), in patients with triple-negative breast cancer

and colorectal cancer with liver metastases

According to Roche, it is the first trial to combine investigational immunotherapies for triple-negative breast cancer and

colorectal cancer with liver metastases

• Talimogene Laherparepvec:

It is an investigational oncolytic immunotherapy designed to selectively replicate in tumors (but not normal tissue) and to

initiate an immune response to target cancer cells

• Atezolizumab:

It is an investigational monoclonal antibody designed to interfere with the PD-L1 proteins

• Talimogene Laherparepvec + Atezolizumab:

Combining these two investigational agents will activate an anti-tumor immune response with Talimogene Laherparepvec

and will block inhibitory T cell checkpoints with Atezolizumab, to potentially increase the anti-tumor activity relative to each

agent alone

Sources: 1. Amgen: Press Release June 1, 2015; 2. Reuters: June 2, 2015

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Talimogene laherparepvec (T-Vec): Mechanism

of action (MoA)

T-Vec invades

both normal cells

and tumor cells

T-Vec is an attenuated

virus that does not

replicate in normal cells

Normal cells

remain undamaged

T-Vec invades

both normal cells

and tumor cells

T-Vec selectively

replicates and

generates GM-CSF

in tumor cells Tumor cells rupture to

release replicated viruses

and GM-CSF; TSAs are

exposed

Replicated viruses repeat

cell lysis cycle in nearby

tumor cells

GM-CSF recruits

dendritic cells to tumor

sites

Dendritic cells process

and present TSAs to

mediate a tumor specific

immune response

Adaptive immune

response identifies

and destroys tumor

cells systemically

Systemic effect

Local effect

T-Vec

GM-CSF: Granulocyte-macrophage

colony stimulating factor

TSAs: Tumor specific antigens

Normal healthy cells

Tumor cells

Mature dendritic cells

• T-Vec is an oncolytic immunotherapy designed to selectively replicate in tumors (but not normal tissue)

and to initiate an immune response to target cancer cells that have metastasized

First, T-Vec is injected directly into tumors where it replicates inside the tumor's cells causing the cell to

rupture and die in a process called lysis

The rupture of the cancer cells can release TSAs, along with GM-CSF, that can stimulate a system-wide

immune response where WBCs are able to seek out and target cancer that has spread throughout the

body

Sources: Company websites

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Atezolizumab: Mechanism of action (MoA)

T cell receptor Antigen

PD-1 PD-L1

T cell receptor Antigen

PD-1 PD-L1

Anti PD-1

Anti PD-L1: Atezolizumab

• Atezolizumab is an monoclonal antibody. It is designed to interfere with a protein called PD-L1

Atezolizumab is designed to target PD-L1 expressed on tumor cells and tumor-infiltrating immune cells, preventing it from binding to

PD-1 on the surface of T cells

By inhibiting PD-L1, Atezolizumab may enable the activation of T cells, restoring their ability to effectively detect and attack tumor cells

Sources: Company websites

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KOL Comments: Perspectives and opinions

“Atezolizumab is our most advanced cancer immunotherapy with 10 ongoing Phase 3 pivotal trials across lung,

bladder, breast and kidney cancers............ We are looking forward to working with Amgen on this trial, which can

inform potential future treatment options for patients affected by very difficult-to-treat tumor types”

Sandra Horning, M.D., chief medical officer and head of Global Product Development

“We believe that talimogene laherparepvec has potential to help patients in several cancer types based on its

mechanism of action to promote tumor antigen release and presentation, important steps in activating a systemic

immune response............ This further builds our alliance network in oncology and we look forward to collaborating with

Roche on this study as part of our increasing efforts in immuno-oncology”

Sean E. Harper, M.D., executive vice president of Research and Development

Sources: 1. Amgen: Press Release June 1, 2015

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Eli Lilly Deals: +

+

+

+ 3

4

5

- 25 - For internal use only

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