August 2016Public Market Trends in Ophthalmology

Andrew GitkinHead, West Coast Biotech Investment Banking

Member SIPC and FINRA

3PIPER JAFFRAY

US Markets Had the Worst 10-Day Start in History in 2016Key

Drivers

Uncertainty with

Fed

Weakness in oil prices

VRX Aftermat

h

Decline in China

1/1 1/8 1/15 1/22 1/29(25%)

(20%)

(15%)

(10%)

(5%)

0% Dow Jones NASDAQ S&P 500 NBI

(5.1%)(5.5%)

(7.9%)

(21.0%)

Source: CapitalIQ as of July 29, 2016

4PIPER JAFFRAY

J-16 F-16 M-16 A-16 M-16 J-16 J-16(15.0%)

(10.0%)

(5.0%)

0.0%

5.0%

10.0%

Brexit and

Geopolitical Shocks

Equity Markets Bounce Back Despite Lingering Concerns

Source: CapitalIQ as of July 29, 2016

Key Drivers

DJI NASDAQ S&P 500 Stability in Commoditi

es

Improving Labor

Market

FOMO Rally

Election Uncertain

ty

US Safe Haven Status

Significant Currency

Fluctuations

5PIPER JAFFRAY

Positive Signs of Market Upswing EmergingNet Equity Fund Flows Since 2015 ($BN)

Hedge Funds Playing Catch Up

Largest intra-quarter reversal

since 1933

($50)

($40)

($30)

($20)

($10)

$0

$10 $7

($7)

($24)

($8)

($44)($46)

$0

J-16 F-16 M-16 A-16 M-16 J-16 J-16(15%)

(10%)

(5%)

0%

5%

10% HFRXS&P500

Source: Dealogic, Capital IQ as of July 29, 2016

6PIPER JAFFRAY

Financial Profile of Corporate America Remains RobustS&P 500 Earnings Guidance S&P 500 1-Year Forward P/E

Source: Fidelity, Bloomberg, CapitalIQ as of July 29, 2016

Positive-to-Negative Guidance Ratio

1.0

0.9

0.8

0.7

0.6

0.5

0.4

Ratio (12-Month) Average

2008 2009 2010 2011 2012 2013 2014 2015 2016

Median = 15.2x

2006 2008 2010 2012 2014 20160.0x

5.0x

10.0x

15.0x

20.0x

25.0x

7PIPER JAFFRAY

Equity Market Outlook

Bulls Resilient U.S.

market Limited upside in

the U.S. dollar Treasury yields at

record lows Positive economic

fundamentals Historically low

global rate environment

Subdued inflation and a dovish Fed

Bears Geopolitical risk

(Brexit, Turkey, etc.) Heightened volatility

during elections Changes in the Fed’s

monetary stance Emerging market

stress Shocks of

noneconomic origin

Piper Jaffray forecasts a 2,350 S&P 500 year-end price target, ~8% above current levels

8PIPER JAFFRAY

So What Does This Mean For the Healthcare Market in 2016?S&P Sector Performance - YTD

Source: CapitalIQ as of July 29, 2016-5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

(-1.1%)

4.5%

5.0%

7.0%

8.2%

8.3%

8.6%

10.8%

20.3%

20.7%

9PIPER JAFFRAY

J-14 M-14 S-14 J-15 M-15 S-15 J-16 M-16(60%)

(40%)

(20%)

0%

20%

40%

60%

80%

100%

Sector Rotation out of Biotech in 2016

Source: CapitalIQ as of July 29, 2016

Key Observatio

ns

Political Headwinds

/ Pricing

Heightened Risk Aversion

Healthcare Energy Trade

Decoupled

44

Days

NBI S&P 500Medtech Index Energy Index

VIX

70

Days

VRX News

Slowdown 1

Slowdown 2 90

+

Days

Slowdown 3

Portfolio Rationalization

10PIPER JAFFRAY

J-15 A-15 J-15 O-15 J-16 A-16 J-16(30%)

(20%)

(10%)

0%)

10%)

20%)

30%)

40%)Biotech IndexMedtech IndexBiotech Ophthalmology

Ophthalmology Traded in Line with the Broader Market

1) Medtech Ophthalmology includes: Clearside, Glaukos, J&J, Presbia, and STAAR2) Biotech Ophthalmology includes: Aerie, AGTC, Allergan, Bayer, Gensight, Inotek, Nicox, Novartis/Alcon, Ocular, Omeros, Ophthotech, Regeneron, Shire, Valeant

• Company-specific events and volatile new IPOs caused medtech ophthalmology to trail the medtech index in 2015

• Biotech ophthalmology traded in line with the biotech index and saw a major reversal in 2016 relative to medtech

Source: Capital IQ

11PIPER JAFFRAY

M&AIPO

Nov 2015

Key Events and Investor Themes in Ophthalmology

Jan 15May 15 Sep 15 Jan 16

May 16 Jul 16

July 2015

July 2015

Feb 2015 Aug 2015

July 2016Feb 2016

July 2016

June 2015

Jan 2015

Jan 2015

June 2016Feb 2015

Strong Fundamentals• Growing market• Sustained innovation• Strong pricing dynamics• Favorable reimbursement

environment

IPO Capital Raised M&A Exits

$604m $1.4B+

Source: Public filings, Dealogic

12PIPER JAFFRAY

Historical IPO Activity Has Meaningfully Declined in 2016…

$0.0

$0.0

$0.0

$0.2

$0.2

$0.2

$0.1

$0.3

$0.2

$0.4

$0.1

$0.2

$0.0

$0.0

$0.0

$0.3

$1.1

$1.4

$0.9

$2.1

$1.3

$1.6

$1.8

$0.9

$2.2

$1.8

$0.8

$0.6

$0.6

$0.9

Capital Raised ($BN)

Medtech

Biopharma

Q12013

Q2 Q3 Q4 Q12014

Q2 Q3 Q4 Q12015

Q2 Q3 Q4 Q12016

Q2 Q30

5

10

15

20

25

30

35

5

14 1611

29

17

24

1612

21

1410

610

4

2

3

2

2

3

3

4

1

1 1

Medtech IPOs

Source: Piper Jaffray

13PIPER JAFFRAY

Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16(25%)

0%

25%

50%

2016 IPOs Faced Meaningful Pricing Pressure But Have Performed Well

Data as of 07/29/2016

Biopharma IPO Pricing Trends 2016 Biopharma Rolling IPO Performance

2013 2014 2015 Q12016

Q22016

Q32016

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

42.9% 45.3% 41.5% 42.9%

75.0%

45.2% 41.3%

30.2%

57.1%

25.0%

50.0%

11.9% 13.3%

28.3%

Above In Range Below Historical Performances2014 2015 2016 YTD

47.5% 0.6% 9.5%

50.0%

Source: Public filings, Dealogic

14PIPER JAFFRAY

Key Success Factors for Going Public in Today’s Market

Significant levels of crossover and insider support at launch

Valuable lead program with de-risked development plan for multiple products

Targeting attractive markets with long duration assets

Positive data and near term catalysts

Demonstrated investor interest

Experienced management team and Board of Directors

Valuation at current market levels

Quarterly Insider Support Trends

2Q15

3Q15

4Q15

1Q16

2Q16

3Q16

0% 20%

40%

60%

80%

100%

60.0%

60.0%

50.0%

57.1%

88.9%

100.0%

Source: Public filings, Piper Jaffray

15PIPER JAFFRAY