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Karolinska Development Helsinki, 10 April 2014

Key Learnings from the Karolinska Development Concept Michael Sundström, VP Discovery Research

My Background

• Training @ Uppsala & KI

• Pharmaceutical Industry (9) Pharmacia, Sweden and Italy

• Small & Large Biotech (2) Actar & Biovitrum

• Public Private Partnership (5) University of Oxford, SGC

• University Research Center (5) University of Copenhagen, CPR

• Investment Company, Biotech (3) Karolinska Development; & KDEx

The Essential Proteins Background:

There are ~20,000 unique genes/proteins in human

Proteins constitute the ‘machinery of life’, carrying out a multitude of functions, such as movement, signalling and metabolism

Modifications of unique proteins generate a large number of variants (post translational modifications, splicing, degradation …)

Interactions and expression regulation, makes the combinatorial opportunities enormous ….

In addition:

The vast majority of all drugs, modulate the functions of proteins or are proteins directly

... and there is a gigantic knowledge gap concerning protein function

The Scale - a Conservative Estimate

Post-translational Modifications of proteins

(PTMs)

>10 fold increase ~100,000 validated 3 million sites available P most common

Alternative Splicing and functional SNPs

~5 fold increase Splicing 11,500 validated, likely for 16,000 genes SNPs 2 millions in coding regions 12,000 validated at protein level

~ 20,300 unique Human Genes

Genome

Proteome > 1,000,000

Human Protein Variants ΔFunction

Wikström & Sundström, Bioforum Europe 2010

The (un)Targeted Cancer Kinome From Fedorov et al, 2010 - Nature Chem Biol

“we also highlight kinases identified by RNAi as potential targets that are specifically required for growth and survival of the cancer type with a defined genetic background (bars in red) and statistically relevant driver mutations identified by large-scale sequencing efforts (bars in magenta)”

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Karolinska Development in Summary

Exclusive access to medical innovations from top ranked academic institutions

Large ownership and active management of the portfolio – management team with strong track record

Large portfolio – 28 projects – 20 pharmaceutical and 8 technology projects - 18 in clinical trials

Significant progress and strong focus on business development activities has enabled us to begin making valuable deals

Continued rich news flow with clinical data expected in 2014 and 2015 to prepare for more exits

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Management Team

Dr. Torbjörn Bjerke CEO

Dr. Terje Kalland CSO

Christian Tange CFO

Business Development Otto Skolling VP Business Development Previous: Novozymes, Siemens Life Support, Pharmacia & Upjohn

R&D Team Dr. Gunilla Ekström VP Operations Previous: Orexo, AstraZeneca

IPR Ann-Sofie Sternås VP IPR Previous: Pharmacia, AstraZeneca

Dr. Tomas Odergren VP Clinical Development Previous: AstraZeneca

Michael Sundström VP Discovery Research Previous: Pharmacia, Novo Nordisk Foundation Center for Protein Research, Structural Genomics Consortium at Oxford University

Previous: President & CEO, Orexo AB President & CEO, Biolipox AB EVP R&D, ALK-Abello AS Director Pharmacology, AstraZeneca Visiting scientist, Genentech Inc Board member: Topotarget AS, NeuroSearch AS, DBV Technologies SpA Founder Action Pharma AS, Founder TXP Pharma Gmbh

Previous: SVP, Novo Nordisk AS CSO, Biovitrum AB Head, Oncology Research, Pharmacia Corp Board member: Arts Biologics AS, CBIO LLC, Innate Pharma SpA, Dako AS, Accuro Immunology AB

Previous: Advisor Private Equity CFO CMC Biologics Founder & CEO, Neecos Finance Manager, Haburi.com Financial Controller, Warner Lambert Controller, Max Bank Controller, Skandia

IR & Business Analysis Benjamin Nordin IRO Previous: Kaupthing Bank, JP Nordiska, Karolinska Institutet

Legal Ulf Richenberg General Counsel Previous: Esselte, Vattenfall, Scribona, Stokab Finance Michael Owens Chief Controller Previous: Arthur Andersen & Co, Ernst & Young, Vitamex AB

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Exclusive Access to Innovation and a Clear Route to Exit

EXCLUSIVE AGREEMENT Karolinska Institutet • One of the top ranked medical universities in the world

and one of Europe’s largest

• Around 1,500 scientists, >2,000 MD/PhD students publishing > 4,000 peer reviewed scientific publications annually

• Karolinska Development has an exclusive Deal Flow Agreement with the TTO of Karolinska Institutet - KIAB

COLLABORATION AGREEMENTS • Mayo Clinic, USA • Ospedale San Raffaele, Italy • Medical University in Graz, Austria • Several major Nordic Universities

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Validated target, intervention point Hit compound

– Interacts with target – No obvious liabilities – Suitable chemical starting point

Lead compound – Modulates target function – Selective over anti-targets – Characterized for druggability – Represents series of similar compounds

Candidate drug – Extensive profiling, meeting TPP criteria

Search Learn Confirm

Exlporatory Lead Opt Pre-Clin Dev Phase I Phase II Phase III

Safety study • 20 – 80 people

Safety study • Identify side effects • Measure effectiveness • Often 100 – 300 people

Measure effectiveness • Monitor side effects • >1000 people

Where We Focus

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• Great science, novelty, true innovation • Through collaborator: access to know-how, network & tools

• Established Mechanism of Action • Target dependent effects • Feasibility (e.g. druggable target class) • Defined and validated disease link

• Medical need and defined patient population • Differentiation/benefits vs. existing treatment • Clinical development & regulatory path • Intellectual property rights

Scientific and Technical Considerations

Academia

• Karolinska Institutet • Leading Nordic and EU based • US/Canada • Drug Discovery Organizations

Unsolicited Proposals

Commercial

• Conferences • Networking Events • Cooperation with similar

organizations

200-250 per year

Project Flow – Primary Sources

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Process

Initial Review Science/technology based

~15%

In-House Second Opinion

~85%

No

OK by R&D Team

CDA Based Review

External

Opinion(s)

Due Diligence

Including

formalities

Investment Proposal

BoD

1%

Project Flow – Distribution (2013)

Cancer

CNS

Inflammation

Infectious Diseases

Womens Health

Other TA

MedTech

Medtech

Lead Discovery

Lead Opt

Potential CD

40% from Biotech companies 60% from Universities

20% from Sweden 60% from EU 10% US 10% ROW

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Most Common Reasons for a No

Technical: • Pre-clinical data not supportive of claims • Unclear Mechanism of Action • Sub-optimal compound properties • Intellectual Property Rights • Clinical and/or Regulatory hurdles Business • Outside KD priority areas • Unclear medical need or lack of specified target population • Competitive landscape (too much; too little) • Business plan/proposition • Valuation • Management team

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Accepted Projects

Have:

• Strong scientific foundation • Defined Mechanism of Action • Technical feasibility • Indication with clear medical need & differentiation • Defined patient population (e.g. genetic, stage, biomarkers) • Supportive pre-clinical data with (prototype) compound • Favourable IPR or possibility to generate • Defined clinical path forward • Strong management team • Identified future potential partners

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Many projects in or near value inflection points

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New Potential Treatment for Endometriosis

Status

Forendo Pharma is based on research from University of Turku, Finland and incudes leading academic professionals in endocrinology

Efficacy demonstrated in preclinical models A candidate drug has been selected for further

preclinical development and Phase I The company is also pursuing a project targeting

patients with low testosterone levels – efficacy demonstrated in Phase II with fispemifene

Market Overview

In endometriosis, cells from the lining of the uterus (endometrium) grows in the abdominal cavity causing infertility and pain

The disease affects up to 10% of women in fertile age Endometriosis treatment includes surgery – often

multiple procedures, pain management and hormonal treatment

No treatment available today cures the disease and endometriosis therefore has a profound health economic impact

Company: Forendo Pharma Oy

Active ingredient: Small molecule

Primary indication: Endometriosis

Current Phase: Preclinical

Sources: Medtrack, Giudice & Kao, Lancet 2004

Ownership: 21%

HSD17B1 enzyme leverages tissue estradiol level up to 10x from systemic level

Estrone (E1) •low activity

HO

OH

HO

O

Estradiol (E2) •Highly active

HSD17B1

HSD17B2

• Expressed in: – Endometrium, endometriosis – Breast , most breast cancers – Uterine fibroids – Present in ovary with other HSDs and aromatase

• HSD17B2 eliminates estradiol

Endometriosis model in marmoset monkeys best surrogate for the human disease

Detection of blood flow using color doppler

Endometriotic lesions on the peritoneal surface of uterus and bladder

Endometriotic lesions show strong HSD17B1 and a decreased HSD17B2 expression like the human disease (Einspanier et al. 2006) Animals show pain related behavior (Arnold & Einspanier 2013) Disease responds to human endometriosis therapies

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The Technology Portfolio

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Innovative Approach to Cranioplasty

Status OssDsign Cranio PSI is a novel bioceramic implant for

skull surgery Early clinical data for OssDsign Cranio PSI are very

promising PET/CG imaging has confirmed that bone grows on the

ceramic material Registration certificate from the Swedish Medical

Product Agency for the cranial implant has been received Clinical trial ongoing with OssDsign Cranio PSI

Market Overview Complications in connection to cranioplasty multiplies

total treatment costs each time

OssDsign’s approach is applicable in other indications such as trauma to large bones

The market for bone replacement products was worth EUR 1bn in 2012

Ownership: 26%

Company: OssDsign AB

Product: OssDsign Cranio PSI

Primary indication: Cranioplasty

Current Phase: Product

At 6 months Post-op

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Karolinska Development AB (publ) Tomtebodavägen 23A SE-171 65 Solna +46 (0)8 524 860 70 info@karolinskadevelopment.com www.karolinskadevelopment.com