biotechnology/future of retinal disease: shedding light on ... · august 3, 2015 reason for report:...

August 3, 2015

Reason for report:

PROPRIETARY INSIGHTS

Joseph P. Schwartz(617) [email protected]

Mayank Mamtani, MSc.(617) [email protected]

BIOTECHNOLOGYFuture of Retinal Disease: Shedding Light on New and EvolvingMarkets

• Bottom Line: The retinal disease market is already recognized as thesetting for some of the biggest drug launches in the biopharma industry.We see both a deepening and broadening of investment opportunities,driven by the development of new treatments for age-related retinaldiseases on the one hand and genetically defined causes of pediatricblindness on the other. This white paper takes a look at the evolvingcompetitive dynamics of new drug combinations, reimbursementtrends and technologies in existing markets such as Age-RelatedMacular Degeneration (AMD) and Diabetic Macular Edema (DME).We also examine the impending intersection of retinal and orphandisease, which we believe may introduce new growth opportunities.

• The retinal disease market has shown signs of broadening beyondthe core anti-VEGF markets of wet AMD and retinal vein occlusion(RVO) in 2015, driven by Eylea’s launch in DME and diabetic retinopathy(DR) as well as increasing development activity for many companiestargeting dry AMD and orphan blindness diseases. We expect 2016 tobe the year that combination therapy is finally validated in wet AMD, ashas already occurred in most other major therapeutic categories such ascancer, with pivotal data for OPHT’s (OP) Fovista and Phase II data forREGN2176-3. To date, REGN (OP) has weathered potential competitionfrom longer-acting VEGF inhibitors extremely well, and 2017 looks likethe year that bears watching for pivotal data from NVS’ (OP) RTH258(brolucizumab) and AGN’s (OP) DARPin-VEGF to see whether they canovercome their formulation issues, which have presented challenges tomatching Eylea’s safety/efficacy with less frequent injections.

• Over the foreseeable investment horizon, we believe that REGN’scombination therapy programs may stave off competition from whatappears likely to be incremental dosing frequency improvementswith the longer acting VEGF inhibitors. However, DARPin-VEGFand RTH258’s potential ability to be combined with other growth factorinhibitors longer term may ultimately require REGN to continue toinnovate beyond Eylea as its key foundational VEGF offering. More novelapproaches such as gene therapy have had mixed results to date, andin most cases appear to need more time to evolve/find their niche, in ourview. Targeting pathogenic proteins (such as VEGF, PDGF, amyloid-beta,complement factor) in traditional ways (antibody fragments, aptamers) stilllooks to be the most direct approach to treat major blindness disorderssuch as age-related wet AMD and dry AMD, although new approachessuch as gene therapy, RNA editing and mitochondrial therapy shouldcontinue to be monitored, especially in orphan blindness diseases.

• We find the ongoing convergence of the retinal and orphan drugbusiness models very intriguing, as scientific understanding andthe means to intervene therapeutically continue to advance. Manyinherited forms of blindness are caused by a single gene mutation thatimpacts particular cell types, patient populations are readily identifiable,pricing power may be substantial, and animal models/neuroimaging

S&P 500 Health Care Index: 884.71

Companies Highlighted:AGN, BIIB, EBIO, LLY, NVS, OPHT, PRQR, REGN,

SNY

Please refer to Pages 90 - 92 for Analyst Certification and important disclosures. Price charts and disclosures specific tocovered companies and statements of valuation and risk are available athttps://leerink2.bluematrix.com/bluematrix/Disclosure2 or by contacting Leerink Partners Editorial Department, OneFederal Street, 37th Floor, Boston, MA 02110.

https://leerink2.bluematrix.com/bluematrix/Disclosure2

BIOTECHNOLOGY August 3, 2015

technologies may provide important de-risking information at an earlierstage of development. It is not just small companies that are pursuinguntapped monogenic blindness disorder opportunities. This theme isalso illustrated by BIIB (OP) and REGN entering into collaborations todevelop AGTC and AAVL’s gene therapies in X-Linked Retinoschisis(XLRS), respectively. Interestingly, SNY (OP), which owns a ~23% stakein REGN, is also partnered with OXB-LON for a gene therapy programin a different rare retinal disorder called Stargardt Disease. In smid-cap,ONCE is expected to report Ph. III data by YE15 from its next-generationgene therapy platform SPK-RPE65 in a monogenic orphan disorder calledLeber’s Congenital Amaurosis (LCA), which was granted breakthroughdesignation by the FDA in Jan. 2015.

2

FUTURE OF RETINAL DISEASE: SHEDDING

LIGHT ON NEW AND EVOLVING MARKETS

TABLE OF CONTENTS

Investable Themes .............................................................................................. 4

Overview of The Retinal Disease Market .......................................................... 6

Notable But Still Under-appreciated Market Dynamics In Play ....................... 9

1. Aging Demographics Driving an AMD Epidemic That Payers Are Struggling to Contain ... 13

2. Emergence of Longer Acting VEGF Inhibitors and New Growth Factor Combination Therapies (such as PDGF) in Wet AMD ............................................................................. 18 - Scenario Analysis: REGN’s Eylea/’2176-3/’910-3 vs. OPHT/NVS’s Fovista/Lucentis .... 22

3. Objective Anatomic Endpoints Offer Important Confirmation (or Alternatives as in Dry AMD) to Functional (Vision) Endpoints ................................................................................ 28

4. Availability of Validated Clinical Endpoints De-risks Retinal Drug Development ................ 32

5. Novel Technologies/Pathways Addressing Untapped Orphan Blindness Indications ........ 36

Most Active Retinal Diseases for Biotech Drug Development ...................... 45

Wet Age-Related Macular Degeneration (wAMD)

Diabetic Macular Edema (DME)

Dry Age-Related Macular Degeneration (dAMD)

Leber’s Congenital Amaurosis (LCA)

Stargardt Disease

X-Linked Juvenile Retinoschisis (XLRS)

Company Profiles, Public & Private (21); Includes Upcoming Catalysts ..... 68

AAVL, AERI, Aerpio, AGTC, Alkeus, EBIO, Graybug, Horama, Makindus, Molecular

Partners, OCAT, OCUL, OHRP, ONCE, OPHT, OXB-LO, Neurotech, Panoptica, REGN,

Translatum Medicus, Vision Medicines

3


INVESTABLE THEMES

The retinal disease market is already recognized as the setting for some of the biggest drug

launches in the biopharma industry. We see both a deepening and broadening of investment

opportunities, driven by the development of new treatments for age-related retinal diseases

on the one hand and genetically defined causes of pediatric blindness on the other.

This white paper takes a look at the evolving competitive dynamics of new drug

combinations, reimbursement trends and technologies in existing markets such as AMD and

DME. We also examine the impending intersection of retinal and orphan disease, which we

believe may introduce new growth opportunities.

The retinal disease market has shown signs of broadening beyond the core anti-VEGF

markets of wet AMD and RVO in 2015, driven by Eylea’s launch in DME and DR as well as

increasing development activity for many companies targeting dry AMD and orphan

blindness diseases.

We expect 2016 to be the year that combination therapy is finally validated in wet AMD, as

has already occurred in most other major therapeutic categories such as cancer, with pivotal

data for OPHT’s Fovista and Phase II data for REGN2176-3.

To date, REGN has weathered potential competition from longer-acting VEGF inhibitors

extremely well, and 2017 looks like the year that bears watching for pivotal data from NVS’

RTH258 (brolucizumab) and AGN’s DARPIN-VEGF to see whether they can overcome their

formulation issues, which have presented challenges to matching Eylea’s safety/efficacy with

less frequent injections.

Over the foreseeable investment horizon, we believe that REGN’s combination therapy

programs may stave off competition from what appears likely to be incremental dosing

frequency improvements with the longer-acting VEGF inhibitors. However, DARPin-VEGF

and RTH258’s potential ability to be combined with other growth factor inhibitors longer term

may ultimately require REGN to continue to innovate beyond Eylea as its key foundational

VEGF offering.

More novel approaches such as gene therapy have had mixed results to date, and in most

cases appear to need more time to evolve/find their niche, in our view. Targeting pathogenic

proteins (such as VEGF, PDGF, amyloid-beta, complement factor) in traditional ways

(antibody fragments, aptamers) still looks to be the most direct approach to treat major

blindness disorders such as age-related wet AMD and dry AMD, although new approaches

such as gene therapy, RNA editing and mitochondrial therapy should continue to be

monitored, especially in orphan blindness diseases.

4


We find the ongoing convergence of the retinal and orphan drug business models very

intriguing, as scientific understanding and the means to intervene therapeutically continue to

advance. Many inherited forms of blindness are caused by a single gene mutation that

impacts particular cell types, patient populations are readily identifiable, pricing power may

be substantial, and animal models/neuroimaging technologies may provide important de-

risking information at an earlier stage of development.

It is not just small companies that are pursuing untapped monogenic blindness disorder

opportunities. This theme is also illustrated by BIIB and REGN entering into collaborations to

develop AGTC and AAVL’s gene therapies in X-Linked Retinoschisis (XLRS), respectively.

Interestingly, SNY, which owns a ~23% stake in REGN, is also partnered with OXB-LON for

a gene therapy program in a different rare retinal disorder called Stargardt Disease. In smid-

cap, ONCE is expected to report Ph. III data by YE15 from its next-generation gene therapy

platform SPK-RPE65 in a monogenic orphan disorder called Leber’s Congenital Amaurosis

(LCA), which was granted breakthrough designation by the FDA in Jan. 2015.

5


OVERVIEW OF THE RETINAL DISEASE MARKET

The retinal disease market is already recognized as the setting for some of the biggest drug

launches in the biopharma industry. We see both a deepening and broadening of investment

opportunities, driven by the development of new treatments for age-related retinal diseases on the

one hand and genetically defined causes of pediatric blindness on the other. This white paper

takes a look at the evolving competitive dynamics of new drug combinations, reimbursement

trends, and technologies in existing markets such as AMD and DME. We also examine the

impending intersection of retinal and orphan disease, which we believe may introduce new growth

opportunities.

The extreme success of the Lucentis and Eylea launches surprised many at the time but in

retrospect highlights the axiom that human vision is a critically important trait that is

arguably under-appreciated until it is at risk of being lost. Eye disease is common in

Americans over the age of 65, with one in six Americans over the age of 65 having a vision

impairment that cannot be corrected with glasses or contact lenses. More than 10 million

Americans suffer vision loss from blinding diseases, with age-related macular degeneration being

a leading cause of severe vision loss and blindness, impacting about 1.7MM Americans over the

age of 65. Meanwhile, there are over 220 genetically defined causes of pediatric blindness, and

improvements in science are enabling many of these to be targeted with new treatment strategies

such as gene therapy.

Survey data suggests that people fear losing their vision as much as (or more than)

contracting other illnesses such as cancer or Alzheimer’s disease. Vision health is necessary

for being able to perform basic activities of daily living as well as having adequate personal

independence.

6


Which of the following diseases or ailments is the worst that could happen to

you?

Source: National Public Opinion Poll, National Alliance for Eye and Vision Research/Alliance for Eye

and Vision Research, Sept. 2014.

The robust sales growth and stock price performance of companies like REGN and OPHT

have driven increased investment into the ophthalmology space. Although it is not one of the

largest areas in absolute size, ophthalmology is one of the more rapidly growing areas of drug

R&D from venture capital. Retinal diseases in particular are a source of new drug R&D, as

opposed to drug improvement R&D in areas such as glaucoma. Ophthalmology venture funding

totaled $1.7bn over the last decade, representing just 5% of total venture capital raised; however,

investor interest has been rising. Comparing five-year periods before and after the most recent

financial crisis (2004-2008 vs. 2009-2013), total biopharma R&D funding dropped 22% to $16.7bn

in 2009-2013 from $21.5bn in 2004-2008. Disease areas affecting large populations have

generally seen a decline in novel R&D funding over the five-year period while diseases affecting

orphan populations have seen an increase. Ophthalmology investment has also increased over

this time frame.

7


Change in Novel Drug R&D Venture Funding By Disease Area, 2004-08 vs. 2009-13

Source: Thomas, David and Wessel, Chad. Venture Funding of Therapeutic Innovation. Biotechnology

Industry Organization, February 2015.

Source: Silicon Valley Bank, 2014 & 2015 Annual Reports.

.

8


NOTABLE BUT STILL UNDER-APPRECIATED MARKET

DYNAMICS IN PLAY

Close observers of the current retinal disease market will recognize that there are many

moving parts impacting competitive dynamics. Relative to many other areas of medicine,

retinal surgeons have demonstrated that they are a physician group that is very apt to change

their practices very rapidly in response to new treatment options that meet their needs. As a result

of potentially large shifts in existing markets and breakthroughs in new markets, the stakes in this

field are quite high. As shown in the graphic below, market share has shifted en masse to Eylea in

wet AMD (wAMD) and is in the process of doing so in DME as well.

wAMD Market Share Split between Eylea and Lucentis (2006-2018E)

Source: Biomed Tracker, Leerink Partners estimates.

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DME Market Share Split between Eylea and Lucentis (2006-2018E)

Source: Biomed Tracker, Leerink Partners estimates.

Investors have been closely monitoring potential competition from longer acting VEGF

inhibitors as well as new drug targets such as PDGF inhibitors. The wAMD segment, in

addition to DME more recently, has seen the most development in the past decade with the three

anti-VEGF agents significantly improving upon visual acuity outcome (~8 letters), in a rapid and

sustained manner. With a high bar set already, it is imperative for new mechanisms being

developed in this particular segment to show more than incremental improvement in either

increasing visual acuity and/or reducing the frequency of IVT injections in order to command any

meaningful penetration in a busy ophthalmology practice. The graphic below highlights some of

the programs on our radar.

10


Retinal Diseases Can Be Categorized into Mass Market and Orphan Genetic Eye Disorders,

With the Former Inclusive of The Most Mature wAMD Space

Source: Biomed Tracker, Leerink Partners Research, CT.gov.

The table below summarizes some of the more pronounced dynamics we see driving the

evolution of the retinal market, which are discussed in more detail later in this report. These

include strong demographic trends, development of longer acting VEGF inhibitors and new growth

factor inhibitor combinations, the availability of validated functional (vision) endpoints,

advancement of more precise anatomic (retinal) imaging, and new technologies such as gene

therapy targeting orphan blindness diseases.

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Aging demographics driving an AMD epidemic which payers may struggle to contain

The prevalence of wet AMD increases sharply with age, which is advancing rapidly in many developed countries due to the aging of the baby boom generation. Baby boomers today are around 50 to 70 years old, which

remarkably still only lies at the on-ramp of the age wave. By the year 2030, baby boomers will be between 65-85 years old, where the prevalence of wet AMD is exponentially higher. The average age of patients in the VIEW studies for Eylea was around 75 years of age. The patient population eligible for wet AMD treatments is poised to expand significantly, which we believe is quite striking considering the blockbuster size that the market has already reached. Combined worldwide sales of Eylea and Lucentis reached ~$7bn in 2014, up 14% from the year before. At this growth rate the market would double in just five years.

Emergence of longer acting VEGF inhibitors and combination therapies with new growth factor targets

MEDACorp KOLs generally view the currently available VEGF inhibitors as extremely helpful for most of their wet AMD patients, at least over the short-to-medium term; however, some eyes need to receive injections more frequently to maintain vision gains, and patients’ vision can end up back at baseline over the medium-to-long term. This has set off a high-stakes quest to develop longer acting VEGF inhibitors and agents directed against alternative pathways such as PDGF and ANG2, which may act synergistically. Vision is undeniably important to patients, and fewer intravitreal injections are desirable, but the amount of unmet medical need that is alleviated may vary greatly, thus impacting the market opportunity for new wet AMD drugs. With important data from two large studies of different PDGF combination approaches due next year, we have undertaken a scenario analysis to estimate the impact on OPHT and REGN stock prices.

Validated functional (vision) endpoints de-risks retinal drug development

Clear, achievable endpoints are a necessary requisite for successful drug development in any area of medicine, and many retinal diseases are well positioned in this regard. In different cases, the FDA has stated that it will consider improvements in functional and/or anatomical endpoints from adequate and well-controlled studies that use well-defined and reliable methods of assessment to provide substantial evidence that natural history has been altered for patients with a retinal disease.

Objective anatomic endpoints offer important confirmation or alternatives to functional (vision) endpoints

The availability of robust diagnostic/imaging technology allows retinal specialists to clearly determine the best course of treatment for wet AMD patients. The technology also provides essential information for investors to assess the probability of clinical success for new agents based on the correlation between functional (visual acuity) and structural/anatomic (retinal morphology) responses to treatment. Imaging measures may also be considered primary endpoints in large market opportunities such as dry AMD, which impacts the other 85-90% of patients with AMD.

Novel technologies/pathways addressing untapped orphan blindness indications

MEDACorp KOLs view the management of wAMD (and DME) as multifactorial, which may always require anti-VEGF therapies and regular patient visits with 6 mos. being the ideal time frame between visits. In this regard, longer acting anti-VEGFs administered once-quarterly or semi-annually should be able to address a clear unmet market need, as compared to for instance a gene therapy platform designed as a one-time subretinal procedure theoretically completely knocking out VEGF protein expression. Disappointing functional and anatomical outcomes observed in the recently released Ph. IIa datasets from AAVL’s single-dose gene therapy candidate AVA-101 provide additional validation to the growing concerns on the utility of gene therapy in a polygenic disease like wAMD. Looking beyond established markets, however, we believe that new approaches such as gene therapy, gene editing, new Mab targets and RNA editing have the potential to create value in monogenic and underserved blindness disorders, such as Leber’s Congenital Amaurosis (LCA).

Source: Leerink Partners Research.

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1. Aging Demographics Driving an AMD Epidemic That Payers Are

Struggling To Contain

The prevalence of wet AMD increases sharply with age, and age is advancing rapidly in

many developed countries due to the aging of the baby boom generation. Baby boomers

today are around 50 to 70 years old, which remarkably still only lies at the on-ramp of the

prevalence curves below. By the year 2030, baby boomers will be between 65-85 years old,

where the prevalence of wet AMD is exponentially higher. The average age of patients in the

VIEW studies for Eylea was around 75 years of age. The patient population eligible for wet AMD

treatments is poised to expand significantly, which we believe is quite striking considering the

blockbuster size that the market has already reached. Combined worldwide sales of Eylea and

Lucentis reached ~$7bn in 2014, up 14% from the year before. At this growth rate the market

would double in just five years.

Source: Ocata Therapeutics.

Even if the market becomes more crowded with new wet AMD drugs taking some market

share from incumbents, we believe that accelerating underlying demographic volume

growth can support fertile ground for multiple companies developing new drugs for wet

AMD. African-Americans and Hispanic-Americans appear at lower risk of late AMD than

Caucasians, but the rate of wet AMD appears as high in Asians as in Caucasians. Americans

within this demographic have relatively good access to health insurance in terms of Medicare

plus supplemental plans to afford the use of branded wet AMD drugs.

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wAMD Market Should Continue To Expand With an Aging US Demographics

Source: www.amdbook.com.

Reimbursement has generally not been supportive of development of new products for

retinal diseases. The steady growth in the number intravitreal injections has resulted in

increased reimbursement scrutiny over the widespread use of drugs for wet AMD. The

number of intravitreal injections performed in the US grew from approximately 4,000 procedures

in 2000 to approximately 1,000,000 in 2010. OCT imaging skyrocketed during a similar period,

with approximately 150,000 procedures in 2000 increasing to over 8,000,000 procedures in 2008.

Reimbursement for the intravitreal injection procedure (CPT code 67028) as well as OCT imaging

has been repeatedly reduced by Medicare, justified by shortened procedure times. This has

pressured margins due to increasing practice expenses for clinical space, technology and

specialized nursing.

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http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.amdbook.org/node/5&ei=xBxfVc2WDfj-sASpzIKQBw&bvm=bv.93990622,d.cWc&psig=AFQjCNGqcyanCRDBTfn8sx6nUN8Gjmu7xg&ust=1432383036188379

Source: http://www.reviewofophthalmology.com/content/t/retina/c/48732/.

Reimbursement has been trending to be less accommodative for retinal

physicians/patients over the last few years; however, the changes are generally driving

development of new agents that can ease treatment burden by spacing out injections and

improving vision outcomes. Ophthalmologists have historically drawn as much as two-thirds of

their revenue from Medicare, and recent health care reform measures, including the Patient

Protection and Affordable Care Act, have largely been directed at containing costs. Among the

list of codes affected by reimbursement reductions in 2015 is 67028, the billing code for

intravitreal injections. At a 3% reduction, the loss in revenue is less dramatic versus others such

as vitrectomy codes, which are quite severe; however, this has become an annual occurrence, so

the effect is still significant. Although the data are four years old and focus on an academic

center, the revenue breakdown for Bascom Palmer Eye Institute in Miami, FL, is interesting since

over half of revenue is driven by IVT injections of drugs such as VEGF inhibitors. Private

practices and community centers likely generate an even larger proportion of their revenue from

intravitreal injections.

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http://www.reviewofophthalmology.com/content/t/retina/c/48732/

Source: Murray, T. Evaluation of Economic Efficiencies in Clinical Retina Practice. Clinical

Ophthalmology 2011:5, 913-925.

Some physicians have been adjusting their behavior and using the branded VEGF

inhibitors less as a result of increased public scrutiny of their reimbursement, which has

been presented as extreme by the popular press. In April 2014, the Centers for Medicare &

Medicaid Services (CMS) released to the public Medicare Part B physician payments data

reflecting reimbursement for 2012. The release in April 2014, although delayed for many years in

the courts, was intended to increase transparency in government-funded health care programs

and to stimulate research on improving health care outcomes. For a few outliers, physician

payments were quite high, and the media initially focused much of its attention on those

physicians and their specialties. In fact, of the 344 physicians who received more than $3 million

in payments in 2012, 151 (44%) were ophthalmologists. As might be expected, reviews of state-

by-state data revealed that many of the physicians with high payments were retinal specialists.

The greatest impact for ophthalmologists was the decision to include payments for anti-VEGF

drugs in the overall figure. The reimbursement figures also bundled in the 4% markup on the

average sales price payment of anti-VEGF drugs. These dollars essentially pass through a

practice with a great deal of financial risk and little potential benefit from the small markup

permitted. Indeed, this markup was reduced from 6% several years ago due to sequestration.

Contributing to the sensational reaction to the data release was the fact that CMS appears to

have paid little attention to placing this Medicare physician payment data in context. The data

reflected only gross payments and did not include information on how much of the

reimbursement is passed along to the drug manufacturer.

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In June 2013, the General Accounting Office released a report on Part B drug costs for

2010. In this report, ranibizumab was the third highest-expenditure Part B drug for

Medicare beneficiaries at $1.18 billion. In 2010, Medicare expenditure for intravitreal injections

was approximately $200 million. Even with the addition of other related physician services such

as ocular examinations and imaging, the primary driver of expenditures associated with

intravitreal injections is the cost of the drugs. New indications such as diabetic macular edema,

central vein occlusion and branch vein occlusion as well as the advent of aflibercept and

ranibizumab for DME have substantially further increased drug expenditures. In 2013, U.S. sales

of ranibizumab and aflibercept were approximately $1.73 billion and $1.35 billion, respectively,

according to available financial reports. Therefore, in composite, drugs for intravitreal injections

are now likely the highest expenditures for Part B drugs.

The health policy implications of the increasing cost of intravitreal therapies are becoming

apparent. Some payers are now requiring step therapy protocols that mandate the initial

use of bevacizumab, since its cost is around 1% of the branded drugs. Lucentis or Eylea

may sometimes only be used in cases of treatment failure; however, the criteria for treatment

failure are often poorly defined. The Medicare Payment Advisory Commission (MedPAC) is also

considering reinstituting a least-costly alternative policy for drug plans. “The new policy would

require physicians to prescribe the least expensive drug as a first-line therapy,” explains

ophthalmologist Rishi Singh, M.D., Medical Director of Clinical Systems at Cleveland Clinic. “In

order to prescribe a more expensive drug, you’d have to show that the first drug failed as a

therapy.” The American Society of Retina Specialists has sent a letter to MedPAC expressing

concerns about payers dictating the type of drugs that are used for therapy and offering to assist

with alternative methods for cost savings.

Other potential new reimbursement changes on the horizon are driving retinal physicians

to seek longer acting drugs for wet AMD and DME. Medicare Payment Advisory Commission

(MedPAC), the agency designed to deliver to Congress ideas for policy advice on Medicare, has

also proposed a move to per-episode payments for therapeutics. The notion is guided by a

suggestion that impact on functional status is relative to which therapeutics are delivered and

how they are administered, and thus reimbursement should be tied to the type of therapy coded

for. Depending on how new mechanism therapies such as PDGF inhibitors (Fovista and REGN-

2176-3) are priced, such a change could impact their uptake as well. Combination therapies

could also potentially reduce the number of injections required. Another measure under

consideration is a cut in the average sale price, or ASP, modifier, below the current level of 4%.

Since ophthalmologists’ reimbursement has been declining on a per-procedure basis, they are

busier than ever and do not see how they can cut the time necessary to deliver the treatment any

longer; they are very eager for new treatments for wet AMD that would allow them to give fewer

injections without sacrificing safety or efficacy.

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2. Emergence of Longer Acting VEGF Inhibitors and New Growth Factor

Combination Therapies

MEDACorp KOLs generally view the currently available VEGF inhibitors as extremely

helpful for most of their wet AMD patients, at least over the short-to-medium term;

however, some eyes need to receive injections more frequently to maintain vision gains,

and patients’ vision can end up back at baseline over the medium-to-long term. This has set

off a high-stakes quest to develop longer acting VEGF inhibitors and agents directed against

alternative pathways such as PDGF and ANG2, which may act synergistically. Vision is

undeniably important to patients, and fewer intravitreal injections are desirable, but the amount of

unmet medical need that is alleviated may vary greatly, thus impacting the market opportunity for

new wet AMD drugs. With important data from two large studies of different PDGF combination

approaches due next year, we have undertaken a scenario analysis to estimate the impact on

OPHT and REGN stock prices.

MEDACorp retinal specialists believe that a practice-changing and well reimbursed therapy would

need to have a highly differentiated target profile:

For combination therapy, a clinically meaningful visual acuity benefit in a well-defined

set of patients. OPHT is enrolling patients with subretinal hyper-reflective material (SHRM)

documented via OCT in its ongoing ~1,800-patient Phase III study of Fovista on top of

Lucentis. The Phase II enrolled patients with classic or minimally classic CNV (50% of wAMD

pts) documented via fluorescein angiography. The field remains split on the value of SHRM as

a predictive biomarker for response to anti-PDGF therapies, as evident by REGN deciding to

study rinucumab (coformulation of anti-PDGFR mAb + Eylea) in a potentially wider patient

population of classic or minimally classic CNV and stratifying for the presence/absence of

SHRM in its recently initiated 500-patient Phase II study. Data from both the Phase III OPHT

study and the Phase II REGN study are expected to be reported in 2016.

For longer acting VEGF inhibitors, a reduction in the frequency of injections without

compromising efficacy (or safety). AGN’s DARPin and NVS’s ESBA-1008 have both been

plagued by safety issues in their mid-stage programs due to ocular inflammation in around

10% of patients. MEDACorp specialists believe that to be a contender in this market, which

already includes good treatment options, ocular inflammation would have to be 1% or less. In

addition, while detailed data have not been presented, management commentary suggests

that the target product profile has evolved over time to be less revolutionary and more

evolutionary, perhaps eliminating one injection per year for most patients.

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Competitive Space of Multi-Target Combinations May Face a High Efficacy Bar (Visual

Acuity Gain) To Justify Price of Adding on Top of a Branded anti-VEGF


While lagging OPHT in terms of time to market, REGN may have the distinction of having a

VEGF- and PDGF-antagonist (rinucumab/REGN2176-3) available in a single injection at

launch. However, while it is tempting to simply conclude that “less is more” when it comes to

injecting needles in patients’ eyes, the winner in the wet AMD combination therapy market may not

be determined on this factor alone. We see several factors that support OPHT’s combination

approach and all together may determine ultimate market share:

The optimal mix (if there is one) of VEGF- and PDGF-inhibition to maximize efficacy

remains unclear. Fovista may be used with any VEGF-inhibitor in any conceivable ratio in a

“VEGF agnostic” manner (1.5mg Fovista is being combined with either 1.25mg Avastin, 0.5mg

Lucentis, or 2.0mg Eylea in Phase III), whereas REGN is only evaluating two undisclosed

ratios of rinucumab/REGN2176-3 plus Eylea in its recently initiated Ph. II trial. As a result,

Fovista may be able to gain more market share in the roughly 50% of the wet AMD market that

is dominated by compounded Avastin. We believe that while two injections could be an

impediment for some physicians, it could also be a positive feature overall since it enables

Fovista to be used in conjunction with Avastin, which costs very little. In addition, physicians

can also administer Fovista in a single injection by mixing it with a VEGF inhibitor on their own.

We assume that Fovista is priced at $1,500/vial, which would render the Fovista+Avastin

19


combo cheaper than either Eylea or Lucentis alone. It remains to be seen how REGN chooses

to price REGN2176-3; we believe the relative strength of clinical data will likely play a role as

we explore in our scenario analysis below. REGN chose to price Eylea at a $100/vial discount

to Lucentis, and management could potentially charge less than an incremental $1,500/vial for

the Eylea + REGN2176-3 combo and obtain greater market share as a result. However, as the

market expands and becomes a larger proportion of payer budgets, reimbursement could

become more challenging, which depending on the price of Fovista could render the

Fovista+Avastin combo most attractive to physicians. Ultimately, the relative strength of clinical

data will influence pricing power and market share.

Efficacy of rinucumab/REGN2176-3 and Fovista could also diverge due to differences in

the ways in which they inhibit PDGF. There are four PDGF isoforms, named A, B, C and D,

which form homo- and heterodimeric ligands. They bind to two highly homologous PDGF

receptors, named alpha and beta. Fovista is an aptamer directed against the PDGF-B ligand,

which therefore addresses signaling through PDGF receptors A or B. Meanwhile, rinucumab/

REGN2176-3 is an antibody fragment targeting just the PDGF-B receptor. As a result,

rinucumab/REGN2176-3 may not address signaling through the PDGF-A receptor, which may

be important for certain aspects of wet AMD such as fibrosis. It is unclear what science is

directing REGN to target a single receptor subtype, particularly since all current mainstay

VEGF inhibitors (Eylea, Lucentis and Avastin) target the VEGF A ligand, which prevents

interaction with both VEGF 1 and 2 receptors. This versatility allowed the biologics to supplant

Macugen, which was much more focused on a single VEGF isoform. Phase I data for

rinucumab/REGN2176-3 has been extremely limited, making it difficult to determine whether

these differences will be influential. The Phase I open-label study included four cohorts of three

patients who received rinucumab/REGN2176-3 in combination with Eylea at baseline and at

four weeks. Combined anti-PDGF/anti-VEGF dosage ratios were 0.2mg:2.0mg in the first

cohort, 0.5mg:2.0mg in the second cohort, 1.0mg:2.0mg in the third cohort, and 3.0mg:2.0mg

in the fourth cohort. The study showed no dose-limiting toxicities, ocular inflammation or

treatment-related serious adverse events, and visual acuity was stable or increased in the

majority of patients. Central retinal thickness decreased in all four cohorts, with the greatest

decrease in the first and second cohorts, but these cohorts also had a large majority of

treatment-naïve patients, so it is difficult to tell whether the effect was driven by the anti-PDGF

or anti-VEGF treatment.

20


Source: https://www.deduveinstitute.be/growth_factor_receptors.

A single strand of nucleic acids such as Fovista may bind with at least as high

specificity and affinity compared to a monoclonal antibody fragment – and potentially

more. In addition to offering the obvious advantages of economical manufacturing over

peptides and proteins, their small size leads to a high number of moles of target bound per

gram. Beyond the ability to reach a higher concentration within the eye, an Aptamer may also

have improved transport properties allowing cell specific targeting and improved tissue

penetration. Low immunogenicity may also allow for safe and effective target engagement.

Assuming pegylation does not hinder the ability to coformulate with an antibody fragment,

Fovista could later be combined with Lucentis or RTH by NVS, OPHT’s partner in the EU.

There may be times when physicians want to use a PDGF-inhibitor without a VEGF-

inhibitor. Data continues to look intriguing from a small investigator-sponsored study of

Fovista used in anti-VEGF failures or as pretreatment before VEGF inhibitors. OPHT

summarized data presented most recently at ARVO in May 2015 by Pravin Dugel, M.D.,

Managing Partner of Retinal Consultants of Arizona, and Clinical Professor, the University of

Southern California Eye Institute, Keck School of Medicine. In particular, average visual gains

expanded to 8.2 letters at 6 months from 7.1 letters at 3 months when data was reported at the

Bascom Palmer Angiogenesis meeting in December 2015. The data for patients who were

pretreated with Fovista was even more impressive, at 16 letters, up from 11 letters at 3 months.

We believe such data could be helpful in fending off competition from REGN, which is

developing REGN2176-3 as a coformulation of Eylea plus an anti-PDGF in a single injection,

since these are two instances where physicians may want to use anti-PDGF therapy as

pretreatment or alone. Beyond this relatively small investigator-sponsored study, OPHT is

running formal expansion studies to demonstrate the effects of Fovista when used as

pretreatment, in patients with fibrosis or patients who are refractory to VEGF inhibitors. Data

from these expansion trials should begin to be reported in late-2015 and into-2016, before data

is reported from the pivotal Phase III trial in late-2016, helping OPHT to set the agenda for

multiple ways in which Fovista may enhance the standard of care in wet AMD.

21


Based on the data from OPHT’s large Phase II study, we have estimated an 80% probability

that Fovista succeeds in Phase III and is approved by the FDA/EMEA, leading to peak US

sales of $1,501MM in 2027. Considering that different degrees of positive data may ensue for

Fovista in Phase III, and REGN will also report data from a large Phase II study for rinucumab/

REGN2176-3 in 2016, we have performed a scenario analysis to consider how competition within

the anti-PDGF/VEGF segment of the wAMD market may play out between REGN and OPHT in

the coming years, and the stocks may trade on their data next year, assuming minimal impact

from other competitors.

The table and graph below summarize the three general scenarios we envision for Fovista

Phase III data. We believe that investors/physicians will primarily scrutinize how many more

letters patients on Fovista + Lucentis can discern on an EDTRS visual acuity test as compared to

patients treated with Lucentis alone. Recall that patients treated with Fovista + Lucentis could

discern on average four (4) or sixty percent (60%) more letters in the active arm than the control

arm in Phase II. We ascribe the greatest probability (40%) to the likelihood that the Fovista

combination continues to show a visual acuity benefit in the mid-single-digit range (4-6 letters),

with lower probabilities (20%) that the benefit is more or less impressive, with a high-single-digit

number (7+) or low-single-digit number (<3) of letters gained. Although this single factor analysis

ignores a broader set of competitive features that may influence commercial success, we believe it

captures the essence of what investors/physicians may focus on when valuing the two stocks

following clinical data reports in 2016.


As illustrated in the table above and graph below, we see three main scenarios playing out

based on the clinical data reported from the ongoing Ph. III trials in the 2016-17 time

period. Taken together, these scenarios contribute to our assumed 80% probability of success

(PoS) for Fovista to achieve statistical significance on the 12-mos. primary endpoint of BCVA, on

which we assign:

Scenario

Notation

Vision Acuity

Outcome Probability

Pricing

($)

Fovista Peak

Sales* Reasoning

H

high single digit /

stat. sig. 20% 1.5-2K ~2bn

Longer study could allow curves

to separate more than Ph.2

M

mid single digit /

stat. sig. 40% 1.5K ~1.5bn

Ph.3 patient selection based on

SHRM via OCT, vs. Ph.2 patient

selection used classic

presentation via FA

L

low single digit /

stat. sig. 20% 1-1.5K ~0.75bn

Lucentis arm does better in Ph.3

than Ph2, Fovista effect

regresses in Ph.3 vs. Ph.2

80%

Total Probability of Success (PoS)

22


- 20% probability to the L scenario where Lucentis arm does better in Ph. III than Ph. II and

potentially Fovista effect comparably regresses in Ph. III (vs. Ph. II)

- 40% probability to the M scenario where OPHT should be able to replicate Ph. IIb data of

showing mid-single-digit letter gains (~5-6)

- 20% probability to the H scenario where longer treatment duration could potentially allow

curves to separate more than Ph. II.

Source: Leerink Partners Research, Adapted from OPHT & AAVL Company Reports.

Fovista Sales in 3 Scenarios (High-, Mid- and Low-Single-Digit Number of

Letters Gained)


23


Additionally, Fovista peak sales will likely also be influenced by the competitive profile of

REGN2176-3. The tables below provide a more detailed version of the scenario analysis of

peak sales for both Fovista and REGN2176-3.


The following tables represent how OPHT and REGN stock prices may be valued with

different outcomes from late-stage development of Fovista and REGN2176-3. Even in the

most positive scenario for OPHT, where Fovista produces a high-single-digit number of letters

gained and REGN-2176-3 produces a low-single-digit number of letters gained, OPHT’s implied

market value is only ~ $6B, which is likely much less than the value currently embedded within

REGN for its retinal franchise, suggesting that this analysis may be conservative.


L M H L M H

L 984 2,078 2,762 L 994 729 538

M 746 1,529 2,013 M 2,965 2,018 963

H 541 727 1,488 H 3,479 2,476 2,054

Scenario Analysis

REGN2176-3 Peak Sales ($MM)

Fovista's potential outcomes

REGN2176-3's

potential

outcomes

Fovista's potential outcomesScenario Analysis

Fovista Peak Sales ($MM)

REGN2176-3's

potential

outcomes

L M H L M H

L 71 111 205 L 608 594 577

M 63 92 169 M 650 630 614

H 53 77 127 H 694 671 656

Scenario Analysis

REGN Stock Price ($)


REGN2176-3's

potential

outcomes

Scenario Analysis

OPHT Stock Price ($)


REGN2176-3's

potential

outcomes

24


The market penetration for each of the anti-PDGF agents in various scenarios is depicted graphically in the projections below.

Source: Leerink Partners Research; Scenario Analysis.

25


Long Acting Anti-VEGFs Can Be Disruptive to Improve the Economics of the wAMD Space in the

Next 2-3 Years, Only If Their Efficacy/Safety Profiles Are Non-Inferior to Eylea and/or Lucentis


AGN’s abicipar pegol (DARPin) and NVS’ RTH258 (brolucizumab) have recently advanced

to two large Ph. III trials in wAMD using comparator arms as Q4W Lucentis and Q8W Eylea,

respectively, following the 3-mos. induction dosing period. The different comparator arms can be

explained by the difference in trial sizes (1,800 pts in Ph. III DARPin vs. Lucentis program and

2,800 pts in Ph. III RTH258 vs. Eylea program) where Eylea sets a higher efficacy bar to beat and

hence requires a larger sample size to power aptly. But on the flip side, use of Eylea facilitates for

relatively faster recruitment timelines. Abicipar pegol is a novel engineered protein with high

binding affinity, small molecular weight, and prolonged vitreous half-life that has shown to improve

visual acuity numerically greater than ranibizumab at week 16 (following an induction dosing at

week 0, 4 & 8), which was further sustained at week 20. This in turn supported the rationale of

pursuing Q8W and Q12W dosing options in the recently initiated Ph. III trials (NCT02462928

[CDER], NCT02462486). Similarly, non-inferiority was demonstrated by 6mg RTH258 (vs.) Eylea

in visual acuity gains; ~6 letter gains in best corrected visual acuity (BVCA) at 12 wks, ~8 letter

gains at 28 wks. Furthermore, the Ph. II extension study showed a 50% reduced need for rescue

treatment vs. Eylea, which is viewed by MEDACorp KOLs as convincingly non-inferior with

potentially better dosing options/treatment duration. RTH258, formerly known as ESBA1008, is a

small, anti-VEGF single chain antibody fragment that binds to the receptor binding site of VEGF-A,

thereby preventing the interaction of VEGF with important receptors.

26


Both leading programs of long acting anti-VEGFs have been plagued with safety issues in

their respective Ph. II trials, with a) abicipar reporting ocular inflammation rates of as high as

~12%, and b) RTH258 showing inexplicable cardiac event and disproportionate vision loss.

Presumably, in order to reduce this risk of ocular inflammation, AGN may have been successful in

developing an improved formulation with fewer in-process impurities since originally presenting

this data at ASRS’14. Along the same lines, at Macular Society Meeting’15 earlier this year [March

2015], Ph. II safety data for RTH258 included a) one patient death from a heart attack following

the third RTH injection, and (b) 7 poor performers including 3 patients with “profound” 20-25-line

vision loss. All 3 of the "profound vision loss" patients were in the RTH arm in contrast to 0 for

Eylea. Though the heart attack occurred in a patient with known cardiac disease, and the vision

loss was explained by non-macula related causes, such as cataract, we expect these issues to

remain a lingering concern for the Ph. III studies.

While representing encouraging technological advancements, Q8W dosing pursued by

AGN and NVS is viewed by MEDACorp KOLs as a very incremental improvement, one that

only reduces 1-3 injections/year. In current clinical practice, as also revealed in our recent

survey, retinal specialists treat their wAMD pts with an average of roughly 6-7, 7-8 & >8-9

injections/year for Eylea, Lucentis & Avastin, respectively. A lower rate of injections/year is always

better, but not at the cost of exposing pts to significantly increased risk, in particular ocular

inflammation that may lead to additional vision-related complications, in the view of MEDACorp

KOLs. Another interesting indicator of little impact -- AGN mgmt. describes the DARPin program

as a free call option in the $66B deal struck in the ACT buyout of AGN.

Other novel but less validated delivery technologies such as implant-based from Neurotech

and hydrogel/PEG based from Ocular are also considered intriguing by MEDACorp KOLs.

All in all, ophthalmologists’ reimbursement has been declining on a per-procedure basis, they are

busier than ever and do not see how they can cut the time necessary to deliver the treatment any

more. Retinal specialists are very eager for new treatments for wet AMD that would allow them to

give fewer injections without sacrificing on safety or efficacy.

27


3. Objective Anatomic Endpoints Offer Important Confirmation (or

Alternatives) to Functional (Vision) Endpoints

The availability of robust diagnostic/imaging technology allows retinal specialists to clearly

determine the best course of treatment for wet AMD patients. The technology also provides

essential information for investors to assess the probability of clinical success for new agents

based on the correlation between functional (visual acuity) and structural/anatomic (retinal

morphology) responses to treatment. Imaging measures may also be considered primary

endpoints in large market opportunities such as dry AMD, which impacts the other 85-90% of

patients with AMD. In dry AMD, BCVA losses happen slowly and in a pattern that makes vision

tests much less useful as an endpoint. Therefore, slowing the expansion of the geographic

atrophy (GA) lesion area has been evolving as the most clinically suitable primary efficacy

endpoint. Because GA lesion growth is characterized by loss of photoreceptors, it is considered a

surrogate endpoint for vision loss. Detection of GA can be achieved with a number of different

imaging techniques, including color fundus photography, fluorescein angiography, fundus

autofluorescence (FAF), near-infrared reflectance, and spectral-domain optical coherence

tomography.

Fluorescein angiography (FAG) and optical coherence tomography (OCT) have become

indispensable tools for retinal specialists managing patients with wet AMD. These

measurements help clinicians determine which patterns of disease activity are present around the

retina, and serial images allow clinicians to follow patients’ progress over time and recognize the

appearance of new signs. FAG and OCT has enabled retinal doctors to evolve their wet AMD

practice from scheduled monthly injections to less-than-monthly treatment with anti-VEGF agents.

A combination of clinical examination and qualitative OCT assessment is now used to guide

treatment decisions on a treat-and-extend or as-needed (prn) basis. FAG has generally been

replaced by OCT in most practices as the technology as improved.

Most retinal doctors now subscribe quite closely to the notion that fluid around the retina is

associated with vision loss. This anatomic characteristic, as well as other potential findings on

OCT such as edema or cysts, influences their decision as to whether or not to treat with VEGF

inhibitors, which are considered very effective at addressing these issues in most patients if used

frequently enough. It is often impractical to use VEGF inhibitors frequently enough to support

satisfactory vision, and vision loss can still continue despite a dry retina.

Although most patients benefit from VEGF inhibitors initially, longer-term follow-up data

from VEGF inhibitor studies such as SEVEN-UP and CATT shows that patients’ vision often

reverts to baseline (and worse levels) over time. A MEDACorp survey of 43 retinal specialists

shows that despite the introduction of more potent VEGF inhibitors such as Eylea, only 53% of

physicians’ wet AMD patients have better visual acuity in their practices since initiating anti-VEGF

treatment. Meanwhile, 32% and 15% have the same or worse visual acuity, respectively,

suggesting that almost half of wet AMD patients are not-well-controlled by the standard-of care

and thus would represent good candidates for add-on treatment. This suggests significant

potential upside to how we model the Fovista market opportunity, off which we generate our $92

28


OPHT price target and $1B in peak Fovista risk-adjusted US sales in 2026E. In our model we

assume that 20% of anti-VEGF treated patients are “non-responders” (i.e., have the same or

worse vision as they did before starting therapy), and model Fovista uptake only in this sub-

population. We believe that our estimates implicitly account for the potential that REGN has a

highly competitive single injection formulation of Eylea coformulated with a PDGF inhibitor with

their REGN2176-3 compound.

Source: MEDACorp Survey, “Wet AMD," June 2014 and Leerink Partners Research.

New agents in development for wet AMD that target growth factors other than VEGF -- such

as Fovista, which targets PDGF – may work in ways that look different on OCT. Fovista has

shown vision gains without the same traditional anatomic patterns of fluid reduction around the

retina; this has caused some physicians and investors to question the reproducibility of the results.

However, the additional visual acuity benefits vs. Lucentis monotherapy have been associated

with reductions in the area of sub-retinal hyper-reflective material (SHRM) on the choroidal

neovascular complex itself. SHRM is seen more in classic choroidal neovascularization (CNV)

cases, and is posited to be a biomarker associated with disturbed retinal architecture when

contact between the retinal pigment epithelium and photoreceptors is broken. SHRM is also

hypothesized to be a precursor of fibrosis and geographic atrophy. OPHT believes that these

different patterns are related to the mechanism of PDGF inhibition, which results in stripping of

pericytes that protect endothelial cells on the neovascular complex and are upregulated as a result

of resistance to prolonged use of VEGF inhibitors.

Debates over the meaningfulness of SHRM notwithstanding, we believe that the importance

of visual benefits outweigh anatomic improvements in terms of the impact that a drug like

Fovista can have in the market and on OPHT stock. However, the four letter (60% relative)

gain versus the Lucentis arm is viewed as modest by some investors, who wonder whether the

effect will hold up in Phase III. Traditional anatomic benefits that correlate with the visual gain

would enhance investor confidence, we believe, considering that the experience with other drugs

29


for AMD has varied considerably. For instance, in the first Phase III trial for Eylea (VIEW1),

patients receiving 2mg Eylea monthly on average gained 10.9 letters, compared to a mean 8.1

letter gain with 0.5mg Lucentis monthly (p<0.01) after one year. However, in the VIEW 2 study, all

dose groups were not statistically different from Lucentis on this secondary endpoint. We believe

that the market value of Eylea embedded within REGN is likely on the order of ~$15-20B, and that

much of the lower market value of OPTH (currently ~$2.3B) can be explained by a hefty risk

premium to account for the nontraditional anatomic impact and recognition that a ~3 letter gain in

VIEW1 was not reproduced in VIEW2. Most retinal specialists surveyed by MEDACorp believe

that the magnitude of effect seen in the 6-month Phase II study for Fovista is clinically significant

to some degree, which we believe provides potential room for improvement in the 12-month Phase

III study (and potentially the 3-month Phase II REGN2176-3 study).

Source: MEDACorp Survey, “Wet AMD," June 2014 and Leerink Partners Research.

VEGF inhibitors have been extremely versatile; however, new agents such as the anti-

PDGFs may require more careful patient selection. OPHT is only enrolling patients with

significant amounts of SHRM on their OCT scans in the Phase III study for Fovista in order to

enhance the probability of success. This is a slight change from the Phase II study, which selected

patients with classic features of wet AMD as judged by fluorescein angiography, but the two

methods are believed to correlate well. Choroidal neovascular membranes can present differently

on angiography. Two main designations are “classic” vs. “occult.” Fluorescein angiographic

features help distinguish classic choroidal neovascularization and occult choroidal

neovascularization. Differences in angiographic patterns are thought to arise from “classic” lesions

penetrating the retinal pigment epithelium, and thus being located in front of the RPE, and “occult”

lesions being sub-RPE. Classic membranes are associated with an early hyperfluorescent area

that is well-demarcated, which increases in intensity and extent beyond the early phase boundary

by mid- to late-frames.

30


Fluorescein angiography is an older form of imaging that uses photography to visualize the

patterns of choroidal neovascularization. Fluorescein dye is injected intravenously, and fundus

photographs are taken up to 10 minutes after the dye is injected. If choroidal neovascularization is

suspected, imaging with fluorescein angiography can confirm its presence and determine whether

treatment is indicated. The composition, size, and location of choroidal neovascularization on

fluorescein angiography can influence the subsequent management and prognosis. Patterns of

fluorescence in these images can categorize choroidal neovascularization as classic or occult.

Classic choroidal neovascularization appears as a bright area of well-demarcated choroidal

fluorescence on the early phase of the angiogram, with leakage of fluorescein beyond the

boundaries of this bright area appearing in the mid-phase frame (1 to 2 minutes after dye injection)

and late-phase frame (5 to 10 minutes after dye injection). Occult choroidal neovascularization is

indicated by an area of stippled or granular hyperfluorescence in the late-phase frames of the

angiogram.

There are large variations in the natural course of AMD with respect to occult and classic

choroidal neovascularization, depending on the composition of the neovascular lesion. In

addition, the size and location of the lesion in relation to the central macula can strongly influence

the course of the condition. Whereas most choroidal neovascular lesions in AMD include occult

neovascularization and are subfoveal (under the center of the fovea), loss of visual acuity is most

rapid in patients who have either classic choroidal neovascularization without occult

neovascularization or predominantly classic choroidal neovascularization (the area of

neovascularization is ≥ 50% of the area of the entire lesion). The average loss of visual acuity is

slower in patients who have occult choroidal neovascularization without classic neovascularization

or who have minimal classic choroidal neovascularization (the area of neovascularization is <50%

but >0% of the area of the entire lesion).

Anatomic endpoints designed to show preservation of structures needed for visual

function have been used to support the approval of drugs for CMV retinitis and

vitreomacular adhesion (VMA). The FDA has also suggested that the extent of spread of

geographic atrophy (GA) can also support approval in dry AMD going forward. Robust,

noninvasive imaging modalities such as OCT and FAF have been developed specifically for retinal

disease to objectively measure the border of various lesions associated with vision loss. We

believe that this provides a productive environment for many of the targeted therapies in

development for retinal diseases.

31


Anatomic endpoints can allow biologic activity to be measured when visual function

assessments may not be able to detect a change. Demonstrating the clinical relevance of

anatomic endpoints is especially important when testing new therapies for slowly progressing

diseases, in which tissue damage can precede vision loss by several years. As in other areas of

medicine, an anatomic endpoint can be used as a surrogate outcome as long as the surrogate

endpoint can be robustly validated in terms of its ability to imply a result on the true endpoint of

interest. For this to satisfy the FDA, the anatomic endpoint must show a strong correlation to

current vision function or future vision gain or loss. For example, many studies are now looking at

endpoints for GA, a form of age-related macular degeneration (AMD) that is a cause of central

visual loss. In GA, visual acuity change is often an underestimate of disease progression because,

in early GA, the fovea may be spared while scotomas surrounding the fovea enlarge and interfere

with reading and other tasks. It has been demonstrated that for eyes with GA, the reading rate is

inversely correlated with the size of the GA, and patients have further reductions in reading rate as

the GA area enlarges. Therefore, the area of atrophy measured by fundus photography is a useful

endpoint for clinical trials because an intervention that would slow or halt the progression of GA

would have a positive impact on daily living activities. This is of utmost importance because, if GA

continues to progress, it will eventually reach the fovea, leading to almost certain vision loss.

32


4. Availability of Validated Clinical Endpoints De-risks Retinal Drug

Development

Clear, achievable endpoints are a necessary requisite for successful drug development in

any area of medicine, and many retinal diseases are well positioned in this regard. In

different cases, the FDA has stated that it will consider improvements in functional and/or

anatomical endpoints from adequate and well-controlled studies that use well-defined and reliable

methods of assessment to provide substantial evidence that natural history has been altered for

patients with a retinal disease. For example, statistically significant improvements in best corrected

visual acuity BCVA are have been accepted by FDA/EMEA for wet AMD several times.

Of particular interest for retinal disorders are measures that document improvements in a

patient’s ability to function on a daily basis. Functional endpoints in retinal diseases are

typically a measurement of visual function that is designed to show an improvement or prevention

of loss. Effectiveness of a treatment is demonstrated when there is a sufficient change in an

endpoint that has been determined to be clinically meaningful. Treatments can also be considered

effective if the endpoints remain stable, indicating protection from a clinically relevant decline in

vision that is expected to occur over the observational period of a trial. This can be achieved by

showing a difference in the mean/median change in the number of letters that are legible in a best

corrected visual acuity (BCVA) test between drug- and placebo-treated groups, or a difference in

the proportion of patients who gain or lose the ability to read three lines in a low or high contrast

visual acuity exam. The duration of treatment may be negotiable, as demonstrated by the FDA’s

recent willingness to approve Eylea in DME based on 12-month data (rather than 24-month data

required for Lucentis), and consider 9-month data for squalamine in AMD (which subsequently

generated mixed data). Ultimately, approval will be based on the risk/ benefit ratio of the

intervention and a combination of its efficacy and safety.

FDA accepts different measures of visual function as a primary endpoint in different

diseases, depending on how they manifest. These include visual acuity (ability to resolve high

contrast visual angles), visual fields (threshold detection of a light source emanating from different

locations), color vision (ability to distinguish among different wavelengths of light), and contrast

sensitivity (ability to distinguish among different amplitudes of the same wavelength of light). The

FDA acknowledges that degradation of these parameters forecasts worsening of functional vision,

although trial sponsors must negotiate which of these endpoints to pursue, based on their ability to

impact it and justify its clinical relevance.

While it is not likely to be accepted as a primary endpoint for registration purposes,

electroretinography (ERG) tests are useful for diagnosis of many retinal disorders and

measurement of drug effects in early clinical trials and animal studies. Objective tests such

as ERG have an important role in de-risking early stage retinal disease drug development, as they

provide information about the function of the retina that is not otherwise available.

Electroretinography measures the electrical responses of various cell types in the retina, including

photoreceptors (rods and cones), inner retinal cells, and ganglion cells. Electrodes are usually

placed on the cornea and the skin near the eye, and the patient's eyes are exposed to

standardized stimuli and the resulting signal is displayed showing the time course of the signal's

33


amplitude (voltage). Signals are very small, and typically are measured in microvolts or nanovolts.

The ERG is composed of electrical potentials contributed by different cell types within the retina,

and the stimulus conditions (flash or pattern stimulus, whether a background light is present, and

the colors of the stimulus and background) can elicit stronger response from certain components.

The FDA has shown a willingness to accept novel mobility/navigation tests as a primary

endpoint when objective tests such as ERG and OCT are not sensitive enough. When retinal

degeneration is very severe in a disease such as Stargardts, a mobility course can be used to test

patients’ ability to ambulate through a room under normal lighting conditions. The course is

changed for each run, so patients cannot memorize the layout kinesthetically. The test is believed

to be indicative of benefits that are relevant to daily living, since a child who before treatment

required assistance ambulating and relied on braille to read and write, may no longer need braille

and be able to attend a regular school.

SPK-RPE65: Measuring functional vision through a validated mobility test

Source: Spark Therapeutics.

Tests of high-contrast visual acuity, in which the subject is asked to read the smallest

possible black letters in a white surrounding field, are the most commonly used clinical

tests of vision. In fact, visual acuity is often the only vision test performed in routine

ophthalmological examinations. The test is relatively quick and easy to administer, and the results

are well correlated with the level of visual system damage in a large number of disorders of the

eye. It is also a good predictor of performance for high-resolution tasks like reading, threading a

needle, or identifying road signs while driving. Some types of diseases, however, can seriously

impair other aspects of visual perception and performance while leaving high contrast acuity

34


nearly unaffected. For example, retinitis pigmentosa is a degenerative disease of the eye that can

destroy peripheral vision almost entirely before it significantly reduces central acuity.

Visual acuity is typically measured while fixating, i.e., as a measure of central (or foveal)

vision, for the reason that it is highest there. Normal visual acuity is commonly referred to as

20/20. At 20 feet, a human eye with nominal performance is able to separate contours that are

approximately 1.75 mm apart. A vision of 20/40 corresponds to lower than nominal performance, a

vision of 20/10 to better performance. In the expression 20/x vision, the numerator (20) is the

distance in feet between the subject and the chart, and the denominator (x) is the distance at

which a person with 20/20 acuity would just discern the same object. Thus, 20/20 means "normal"

vision and 20/40 means that a person with 20/20 vision would discern the same object from 40

feet away. This is equivalent to saying that with 20/40 vision, the person possesses half the

resolution and needs twice the size to discern the optotype. The precise distance at which acuity

is measured is not important as long as the size of the optotype on the retina is the same. That

size is specified as a visual angle, which is the angle, at the eye, under which the optotype

appears. To resolve detail, the eye's optical system has to project a focused image on the fovea, a

region inside the macula having the highest density of cone photoreceptor cells (the only kind of

photoreceptors existing on the fovea), thus having the highest resolution and best color vision.

Acuity and color vision, despite being mediated by the same cells, are different physiologic

functions that do not interrelate except by position. Acuity and color vision can be affected

independently.

Source: Drum, B. et al. Assessment of visual performance in the evaluation of new medicinal products.

Drug discovery today. Vol 4, No. 2 2007.

35


In an integrated analysis of the VIEW 1 and VIEW 2 studies, the visual acuity gain from

baseline in the Eylea group that received 2 mg every 8 weeks was +7.6 letters at week 96

compared to +8.4 letters at week 52, with an average of 11.2 injections over 2 years and 4.2

injections during the second year. The visual acuity gain from baseline in the monthly Lucentis

group was +7.9 letters at week 96 compared to +8.7 letters at week 52, with an average of 16.5

injections over 2 years and 4.7 injections during the second year.

36


5. Novel Technologies/Pathways Addressing Untapped Orphan Blindness

Indications

MEDACorp KOLs view the management of wAMD (and DME) as multifactorial, which will

always require anti-VEGF therapies and regular patient visits with 6 mos. being the ideal

time frame between visits. In this regard, longer acting anti-VEGFs administered once-quarterly

or semi-annually should be able to address a clear unmet market need, as compared to, for

instance, a gene therapy platform designed as a one-time subretinal procedure theoretically

completely knocking out VEGF protein expression. Disappointing functional and anatomical

outcomes observed in the recently released Ph. IIa datasets from AAVL’s single-dose gene

therapy candidate AVA-101 provides additional validation to the growing concerns on the utility of

gene therapy in a polygenic disease like wAMD. While deemed by AAVL as “positive” top-line Ph.

IIa results, investor reaction led to a stock decline of ~55% on the news, largely due to concerns

around a) very incremental improvement in visual acuity (+2.2 letters) over 12 mos. as part of

treatment regimen that allowed 2 Lucentis injections at initiation and 2 rescue Lucentis injections

in addition to single AVA-101 dose, b) an increase in central retinal thickness (on OCT) on

treatment arm, which is indicative of disease worsening (+25 mm vs. -56mm on pbo arm).

Additionally, the fact that the pbo arm constituting a total of 6 Lucentis injections underperformed

significantly by showing a 9.3 letter decline at 12 mos. caused some investors to pause and doubt

trial conduct, issues around which AAVL expects to iron out in a larger and structurally refined Ph.

IIb trial planned to commence in 2H15.

Gene Therapy in wAMD Appears To Be in Its Early Days With Issues Around Trial

Design and Delivery System Still To Be Ironed Out


37


Looking beyond established markets, however, we believe that targeted gene therapy (and

RNA editing) approaches hold immense potential to unlock near-blockbuster value in

monogenic and underserved blindness disorders, such as Leber’s Congenital Amaurosis

(LCA). ONCE’s greater than 3X appreciation in stock since its IPO (valuing the company at

~$500MM at the time) in Jan. 2015 leading up to the Ph. III (binary) data readout in 2H15 in LCA

for its gene therapy lead candidate SPK-RPE65 is one such instance, a late-stage program that

has also been granted breakthrough therapy designation by the FDA. ONCE’s approach involves

targeting the mutation in a single RPE65 gene, which encodes for a protein that helps convert light

entering the eye into electrical signals that eventually transmit to the brain and enable sight.

Accordingly, reintroduction of the wild-type copy of the RPE65 gene aims to restore the proper

functioning protein to rescue the impairment of sight in LCA patients. A similarly de-risked

approach is pursued by PRQR at the mRNA levels by repairing a particular mutation

(C.2991+1655A>G) found on the CEP290 mRNA without permanently altering the genetic

makeup of the LCA patient. However, because mRNAs are transient and more sensitive to

degradation -- efficacy, optimal dosing, and durability are some factors that this drug needs to

excel on to demonstrate its non-inferiority to other more advanced treatments.

With LCA leading the pack, development in other rare pediatric inherited blindness

disorders is fast catching up, with examples such as Stargardt and XLRS, where BIIB,

REGN and SNY have vested interests in validated genetic targets through separate

partnerships with AGTC, AAVL, and OXB-LON, respectively. Stargardt Disease is

characterized as the most common form of inherited juvenile macular degeneration that causes

progressive vision loss, which is known to be caused from a mutation in the ABCA4 gene leading

to dysregulation of vitamin A cycle. The excessive and rapid accumulation of vitamin A dimers in

the RPE during this process results in degeneration of photoreceptor cells and, therefore causes

vision loss. After striking an original $24MM partnership agreement in 2009 with OXB-LN, SNY

has since exercised the option to wholly develop and commercialize the ABCA-4 targeted StarGen

gene therapy candidate, which is currently in a 46-pts Ph. I/II trial expected to generate proof-of-

concept data in 1H17. Other smaller private companies such as Alkeus and Makindus also have

their lead incrementally innovative programs in Stargardt, with the latter potentially moving into a

pivotal Ph. III trial by YE15. In contrast, XLRS typically shows symptoms of central vision

deterioration within 3 mos. of birth, predominantly in males, and is characterized as caused by

mutation in the RS1 gene located on X chromosome that encodes the retinoschisin protein, which

is responsible for facilitating adhesion of photoreceptor and bipolar cells in the retina, thereby

enabling collective function in processing vision. Other early features of XLRS include strabismus

(eyes that do not look in the same direction) and hyperopia (farsightedness), and in severe cases

of XLRS, eye squinting and involuntary movement of the eyes (nystagmus), which all severely

affect quality of life. As part of the $640MM multifactorial collaboration agreement announced with

AAVL in 2014, REGN acquired exclusive worldwide rights to develop AVA-311, which comprises

an optimized AAV vector that intravitreally delivers the RS1 gene in the eye, in addition to owning

the optionality on 8 additional targets that may also be pursued in highly underserved inherited

retinal disorders. More recently, BIIB announced a broad multi-year collaboration and license

agreement with AGTC worth up to ~$1B for developing gene-based therapies for multiple

ophthalmic diseases, beginning with worldwide rights for AGTC’s lead clinical candidate for X-

38


linked Retinoschisis (XLRS) and a pre-clinical candidate for the treatment of X-Linked Retinitis

Pigmentosa (XLRP).

Mapping of 220 Characterized Genes Directly to Blindness Is Beginning to Carve Out

Niche, Orphan, and Breakthrough Markets


A “basket approach” to gene therapy in monogenic retinal diseases, however, may still not

completely be risk-averse given the importance of several elements contributing to

success for the treatment platform: target cells, vector type, transfection process, promoter,

gene, disease, administration, stage, manufacturing technique, to name a few. As was highlighted

in a recent NEJM publication of an NIH-sponsored trial of RPE65-targeting AAV gene therapy in

LCA, durability of the treatment was questioned by discussants where 3 years after therapy,

improvement in vision was maintained, but the rate of loss of photoreceptors in the treated retina

was the same as that in the untreated retina. Topographic maps of visual sensitivity in treated

regions, nearly 6 years after therapy for two of the patients and 4.5 years after therapy for the third

patient, indicated progressive diminution of the areas of improved vision. Furthermore, in three

evaluable patients, increased sensitivity to light peaked between 1 and 3 years and then started to

39


decline. Notably, the rate of loss of sensitivity and loss of outer nuclear layer (ONL) was much

more rapid in pts 1, 2, and 3 than in control RPE65-mutant patients (without treatment).

Improvement and Decline in Vision with Gene Therapy in Leber’s Congenital

Amaurosis (LCA), a Form of Childhood Blindness

Source: NEJM 2015; Jacobsen et al.

In response to these disappointing results, ONCE’s mgmt. highlighted numerous unique

characteristics of its Ph. III program and next-gen gene therapy platform in order to stress

the minimal read-through from the subpar results observed with the NIH study, including:

- Manufacturing process optimized (over multiple iteration in 12 previous clinical trials) to remove

empty capsids ensuring that higher percentage of vector capsids contain the functional gene,

which in turn do not need to compete with empty capsids for the limited number of cell surface

receptors in a relatively small area in the back of the eye.

40


- Delivery approach allowing for a refined formulation that prevents vector from being lost in the

walls of the delivery device and syringe. This is an extremely important contributor to response

given a) the dose-dependent response observed with RPE65 gene tx., and b) traditional

formulations resulting into up to 80^ of vector being loss on the needle or aggregating in the vial.

- Gene cassette leveraging an optimized promoter that could result in a three log or up to a 100-

fold improvement in gene expression.

- Immunosuppression regimen, including both local and systemic steroids, allowed in Ph. III trial

design to help manage any potential immune responses that may arise in pts and thereby help

to preserve the potency of the gene therapy.

- 1-year mobility testing of functional vision agreed with the FDA as the novel primary endpoint

with full-field light threshold sensitivity testing, visual acuity and papillary light reflex as

secondary endpoints.

Source: Spark Therapeutics (ONCE), March 2015.

The mixed retinal gene therapy data to date is consistent with specialists’ belief that

clinical success may be determined by the load of AAV that is required and where it needs

to be delivered. To date, the technology has produced heterogeneous responses with limited

durability in those who responded best. Unfortunately, RPE65 LCA should be the lowest hanging

opportunity for gene therapy, with the greatest likelihood of success, since RPE cells are more

phagocytic than other disease targets such as photoreceptors, which are designed to keep things

out. Therefore, if gene therapy is unable to replace RPE65 genes in LCA patients, it may have an

even more difficult time working elsewhere in the eye, such as Stargardts disease, unless lentiviral

41


infection is able to overcome the challenges of penetrating photoreceptors. In Stargardts, the

ABCA4 gene is also much larger and needs to be delivered to precisely the right location. Even if

it were possible to pre-select patients who may respond, there would still be risk/benefit questions

given the very invasive surgical procedure required, relative to the durability of effect. While

retreatment may be an option, it may not make sense for most patients given compounding risk

from multiple surgeries.

Modifying AMD disease progression by intervening earlier may finally open up

opportunities to go upstream into larger markets like dry/intermediate AMD, analogous to

treating other slowly progressive diseases like Alzheimer’s. Intriguingly, a growing body of

evidence in literature suggests that deposition of amyloid-beta fragments is also one of the root

causes of pathogenesis in dAMD/GA, as is the case in Alzheimer’s. Alternative complement

pathway activation has been the most active field of research in dAMD, where Roche recently

embarked upon a Ph. III program in ~1,900 pts of its Complement Factor D targeted Fab called

lampalizumab. OPHT is not far behind with its plan to initiate a Ph. II/III trial in 2H15 for its

Complement Factor 5 targeted aptamer called Zimura. Interestingly, NVS, which is partnered with

OPHT in wAMD, has its own internal mAb candidate targeting Factor 5 called LFG316 that is

expected to report data in mid-2015. Some investors attribute the hiatus in OPHT’s late stage

development of Zimura to this key upcoming catalyst after intriguing proof-of-concept was

originally generated in late-2013, and there has been little visible advancement of the program

since then.

Mechanisms of Complement Blockade and Amyloid-Beta Clearance May Radically

Improve Upon the Dire State of Drug Development in i/dAMD


42


Targeting clearance of amyloid-beta (Aβ), which is characterized as resulting in drusen

formation through complement activation, is one of the intriguing (and under-appreciated)

approaches pursued in dry AMD/GA, with GSK’s GSK933776 expected to generate Ph. II

proof-of-concept data in 1H16. More specifically, Aβ increases complement mediated

inflammation via upregulation of Factor B and downstream binding to Complement Factor I (CFI)

in the alternative pathway. This occurs through Aβ’s induction of RPE to recruit macrophage/

microglia, which in turn leads to release of cytokines that further upregulates Factor B.

Structure of Components in the Alternative Pathway

Source: Serruto D Nat Rev Microbiol 3:393 (2010).

- The retinas for both high-risk intermediate AMD (iAMD) and dAMD are known to constitute

toxic Aβ and activated complement, which in turn drives the high drusen load in ~100% of pts

(as published independently by 4 different academic groups). Drusen area is identified as a major

risk factor for progression to advanced AMD (including neovascular AMD), as also published in

the AREDS17 study. Additionally, Aβ’s role is also characterized in pro-angiogenic pathways,

where it has been shown to increase RPE production of VEGF & inhibition of PEDF, both of

which are known to increase risk of wAMD.

43


Drusen Area Characterized as a Major Risk Factor for Progression to Advanced AMD:

AREDS 17 Study Results

Source: Arch Ophthalmol. 2005; 123:1484-1498.

In addition to GSK, Vision Medicines is advancing the anti- Aβ candidate VM100 (previously

known as RN6G, which PFE originally acquired from Rinat in 2006) into the clinic based on

compelling mice data, particularly in intermediate AMD, which generally progresses to dry

AMD/GA and in less frequent cases to wAMD. In an iAMD mice model generated using key risk

factors (age, APOE-KI, high cholesterol diet), VM100 has been shown to a) preserve retinal

structure by preventing deposition of Aβ and complement activation, and b) preserve function, as

assessed by ERG. More notably, VM100 has been shown to rescue rod function, which in its

dysfunctional form leads to dark adaptation problems, a hallmark of iAMD. The specific affinity of a

C-terminal targeted anti-Aβ mAb has additionally been validated in a separate mouse model

generated via CFH polymorphism (implicated with high risk of advancement to dAMD/GA), which

may serve as a critical point of differentiation from GSK’s anti-Aβ mAb that binds to the N-terminal.

44


iAMD Mice Model Data Showing Effect of Anti-Aβ 40/42 in Preventing Deposition of Aβ

and Activated Complement, Which in Turn Results in Preservation of Function (ERG)

Source: Ding PNAS 108:E279 (2011).

Stealth Therapeutics is pursuing an entirely different approach to treat retinal and optic

nerve disorders. Preclinical research suggests that excess retinal fluid results not only from

vascular leakage but also cellular pump failure due to mitochondrial dysfunction. It is believed that

mitochondrial oxidative stress leads to increased inflammation, which drives visual impairment due

to neural dysfunction, apoptosis, capillary degeneration, neovascularization and retinal edema.

VEGF and PDGF inhibitors target the vascular permeability components of the disease that is

caused by capillary endothelial cell dysfunction, but not the other drivers of the disease, which

may be significant contributors to vision loss. This may explain why there appear to be two clear

populations of DME and wet AMD patients that respond to VEGF inhibitors or not, which is

unrelated to the number of injections that patients receive. It is well known that certain lifestyle

factors such as smoking, pollutants, cholesterol, glucose, and chemical exposure increase the risk

of developing retinal diseases such as AMD. Mitochondria are key for processing everything that

people consume, and their structure and function are known to suffer in diseased states, so

improving their function may translate into clinical benefits as has been seen in preclinical models

and pilot clinical studies in several diseases. Stealth’s mitochondrial medicine approach targets

cellular pump dysfunction at the Müller cell and RPE cell levels. Interestingly, beta amyloids have

been shown to localize mainly to inner mitochondrial membranes, where they cause excessive

reactive oxygen species production and respiratory chain injuries. Thus, there appears to be some

overlap among various drug targets such as mitochondria and Aβ, which is itself co-localized with

complement.

45


MOST ACTIVE RETINAL DISEASES FOR BIOTECH DRUG

DEVELOPMENT

Wet Age-related Macular Degeneration (wAMD)

Disease Summary

“Wet” AMD is a more severe form of age-related macular degeneration (AMD),

characterized by an abnormal buildup of fluid in the macula. AMD generally affects older

people (>50, but most common among >65 of age). Anti-VEGF therapy has revolutionized this

space and has established a lucrative and competitive landscape for participating drug

developers. In addition to genetic factors, an individual’s lifestyle can influence the onset of

disease.

An aging population is expected to expand the “wet” AMD market. Of the ~2M AMD patients

in the US (2010), 10-15% is diagnosed with “wet” AMD, with a slight gender bias toward females

and Caucasians. The National Eye Institute (NEI) of the National Institutes of Health (NIH) projects

that the total AMD patient population in the US will exceed 3MM and 5MM by 2030 and 2050,

respectively. Those with “wet” AMD is projected to grow 2.5-fold from 200K in 2010 to >500K by

2050.

The rise in obesity and cardiovascular (CV) incidence may compound the increase in AMD

patient population. In addition to age, genetic factors, and racial bias (more common in

Caucasians), other risk factors include smoking, diet/obesity, CV disease and hypertension, and

inflammation/swelling of body tissues. “Wet” AMD is almost always preceded by “dry” AMD, but

the exact causes behind this transition are unknown. Loss of vision results from leakage of fluid or

blood from abnormal blood vessels under the macula, causing distortion of vision and/or

detachment of the retinal pigment epithelium (RPE). Buildup of fluid is what distinguishes “wet”

from “dry” AMD, and is associated with rapid worsening of the disorder.

Abnormal fluid or blood buildup in the macula is a hallmark of “wet” AMD. Diagnosis of “wet”

AMD relies on any abnormal buildup of fluid and leaking blood vessels in the retina, and distorted

vision. Ophthalmologists will use an Amsler grid to identify any distortion in central vision, whereas

optical coherence tomography (OCT) and fluorescein angiogram are employed to detect retinal

abnormalities and leaking blood vessels, respectively.

46


Source: National Eye Institute, Univ. of Iowa Ophthalmology and Visual Sciences.

Note: Fundus photograph of the eye showing macular patches of hemorrhage from leaky blood vessels

Source: National Eye Institute, Univ. of Iowa Ophthalmology and Visual Sciences. Note: OCT images

comparing a normal (left) and “wet” AMD (right) macula. Macular area is thinnest part of the retina

(purple line), but swollen/thickened because of fluid buildup (fluid is shown as dark patches)

Current Treatment

Eylea, Lucentis, and Avastin are now the front-line treatments for “wet” AMD. Injectable anti-

VEGF (vascular endothelial growth factor) target and inhibit growth and promotion of abnormal

blood vessels in the macula region. High efficacy and satisfactory durability (e.g., once per 8

weeks for Eylea) have made these options popular treatments. Other approved but considered to

be outdated approaches include laser treatment to destroy or seal off new blood vessels. A major

drawback of laser treatment is small retinal scars that cause blind spots, which have led to

improved methods such as Visudyne photodynamic therapy (PDT). Here, a laser-activated dye

(Visudyne) produces a chemical reaction to destroy abnormal blood vessels. Unlike the injectable

therapy, laser therapy and PDT are used on a subset of the AMD population that have choroidal

neovascularization (CNV), which make up 15-20% of all the “wet” AMD population.

47


Diabetic Macular Edema (DME)

Disease Summary

Diabetic Macular Edema (DME) is a complication among diabetic patients leading to

eventual vision loss. Among the roughly 9% of the US population diagnosed with diabetes, ~40-

45% suffer from some stage of diabetic retinopathy (DR) characterized by damages to blood

vessels in the retina. Similar to “wet” AMD, fluid leakage and accumulation in the macula distorts

vision and, if left untreated, could develop into eventual vision loss. Anti-VEGF therapy has

recently been approved for DME indication, and continued incidence of new diabetic patients

equates to a stable market opportunity.

High prevalence of diabetes presents a robust market for DME. As of 2012, approximately

29M Americans, or 9.3% of the population, had diabetes (type I and II), with an annual incidence

predicted at 1.7M. Diabetic retinopathy afflicts 40-45% of Americans with diabetes, which can

develop into macular edema. Overall, lifetime risk of a diabetic patient to develop DME is

estimated at 10%. At present, >560K Americans are projected to have DME, of which 55% remain

unaware of their disease status. Furthermore, duration of diabetes has been shown to correlate

with the occurrence of DME. Though the incidence of diabetes stabilized recently, lack of a cure

for diabetes is likely to introduce new cases of DR and DME.

Diabetic macular edema (DME) can occur at any stage of diabetic retinopathy (DR). Diabetic

retinopathy (DR) can be subdivided into four stages – mild nonproliferative, moderate

nonproliferative, severe nonproliferative, and proliferative – based on the degree of blockage in

retina blood vessels and the formation of new blood vessels to bypass nutrient deprivation.

However, nascent blood vessels are fragile and may leak fluid in a specific and punctate manner

or with greater breadth, the hallmarks of focal and diffuse types, respectively. Although DR, in

general, is not predictive of DME, ~50% of proliferative retinopathy patients also have macular

edema.

Source: National Eye Institute, Univ. of Iowa Ophthalmology and Visual Sciences. Note: Diabetic

macular edema with deposition of cholesterol (yellow dots) and leakage of blood (red dots)

48


Complementary diagnostic tools can provide early detection and prevent vision loss.

Regular dilated eye exams (every 1-2 years for age >50) can identify swelling in the retina,

abnormal blood vessels, or scar tissue on the surface of the retina. In addition, fundus

photographs, fluorescein angiography, and optical coherence tomography (OCT) can complement

the dilated eye exam with precision. A patient also experiences symptoms including blurred or

double vision, loss of contrast, and/or “floaters” (patches of vision loss), associated with DME.

Current Treatment

Anti-VEGF and laser treatments alleviate DME patients. Anti-VEGF treatments previously

approved for “wet” AMD have recently (2015) been granted an indication expansion into DME.

Subsequently, an NIH-sponsored comparative analysis called “Protocol T” or the DRCR study

established Eylea as the most effective in improving vision in DME patients with 20/50 or worse

vision. Laser treatment is an alternative in targeting neovascularization and “spot welding” the

area of leakage. Focal and scatter laser photocoagulation are two commonly used laser

treatments, either to target specific blood vessels (focal) or the broad periphery of the retina

(scatter).

Source: National Eye Institute, Univ. of Iowa Ophthalmology and Visual Sciences. Note: Fundus

photography after pan-retinal photocoagulation (laser procedure) on a proliferative DR eye

49


Pipeline Summary: Combination Therapies in wAMD and DME

Source: Leerink Partners Research, CT.gov.

Company Drug Mechanism of Action

Route of

Administration Stage of Development Trial Design

Estimated

Enrollment Topline Results Trial Identifier

Treatment-naïve wAMD

- classic or minimally classic CNV;

50% of target population

- required presence of SHRM

Ophthotech /

Novartis Fovista PDGF-B only mAb Intravitreal

Ph. 3 expected to report pivotal

data in 2016

Two arms randomized:

- Fovista + Lucentis/Eylea/Avastin (diff. of 30 mins.)

at induction --> PRN basis

- Sham + Lucentis / Eylea / Avastin (diff. of 30 mins)

at Induction --> PRN basis

1866

(622 pts in 3

separate Ph.3

trials) Jul'16 (unclear)

NCT01940900

NCT01944839

NCT01940887

wAMD; includes pts with prior anti-

VEGF injections Regeneron / Bayer REGN2176-3 / Eylea

PDGFR-B / VEGF mAb

co-formulation Intravitreal

Ph. 2 proof-of-concept to initiate

imminently and data expected by

YE16


- REGN2176 + Eylea at induction --> PRN basis

- REGN2176 at induction --> PRN basis 500 2016 (unclear)

NCT02061865

(Ph. 1 safety)

Treatment-naïve wAMD Ohr Squalamine

PDGF/VEGF/bFGF small

molecule TKI Topical / Eye Drops

Ph. 2 missed primary endpoint;

Ph. 3 to initiate in 2H15


- OHR-102 BID for 52 weeks + Lucentis Q4W in 1st

Year --> OHR-102 BID for 52 weeks + Lucentis Q4W in

2nd Year

- pbo + Lucentis Q4W in 1st Year --> pbo + Lucentis

Q4W in 2nd Year 140 Dec'14

NCT01678963

(IMPACT)

Treatment-naïve wAMD Santen DE-120 / Eylea

dual PDGFR/VEGF small

molecule TKI Intravitreal Ph. 2 initiated in Mar'15


- DE-120 monotherapy on a PRN basis

- Eylea induction monotherapy --> DE-120

monotherapy on a PRN basis 120 May'16

NCT02401945

(VAPOR1)

Treatment-naïve wAMD PanOptica PAN-90806

dual PDGFR/VEGF small

molecule TKI Topical / Eye Drops Ph.1/2 ongoing

Dose-ascending (4 doses)

- PAN-90806 QD for 8 weeks 50 Sep'15 NCT02022540

wAMD

Molecular Partners /

Allergan / Actavis

next gen anti-

PDGF/VEGF

DARPin

Designed Ankyrin Repeat

Proteins (DARPin) Intravitreal

Preclinical; expected to enter

clinic in 2015 - - - -

wAMD and DME (accepts only Eylea

as a prior anti-VEGF teatment) Regeneron / Bayer REGN910-3 / Eylea

Ang2 / VEGF mAb co-

formulation Intravitreal Ph. 1 initiated in Nov'14

Two arms randomized

- REGN910 + Eylea at induction --> PRN basis

- REGN910 at induction --> PRN basis 20 Oct'15 NCT01997164

DME Aerpio

AKB-9778 /

Lucentis Tie-2 Subcutaneous

Ph. 2 expected to report data

anytime now

Two arms randomized

- AKB-9778 QD monotherapy for 3 mos.

- AKB-9778 QD + Lucentis for 3 mos. 144 Mar'15 NCT02050828

Unknown Roche RG7716 bispecific Ang2/VEGF N/A Preclinical - - -

PDGF / VEGF combination

Angiopoietin / VEGF combination

50


Pipeline Summary: long acting anti-VEGFs, including gene-therapy, in wAMD and DME


Company Company Drug Mechanism of Action

Route of


Estimated


wAMD Novartis

RTH258

(ESBA 1008)

pan-VEGF humanized single-

chain antibody fragment

(low molecular weight) Intravitreal Ph. 3 initiated in Dec'14

- RTH258 Dose A 3-mos. Induction + Q12W [wk. 92]

- RTH258 Dose B 4-mos. Induction + Q12W [wk. 92]

- Eylea 3 mos. Induction + Q8W [wk. 92] 1600 + 1200 1H17

NCT02307682

NCT02434328

wAMD

Molecular Partners /

Allergan / Actavis AGN 150998 / Abicipar

Designed Ankyrin Repeat

Proteins (DARPin) Intravitreal Ph.3 initiated in June'15

- abicipar 2mg 3-mos. Induction + Q8W [wk. 96]

- abicipar 2mg 3-mos. Induction + Q12W [wk. 96]

- Lucentis 3 mos. Induction + Q4W [wk. 96] 900 + 900 Aug'18

NCT02462928

(CDER)

NCT02462486

wAMD; requires

prior anti-VEGF

injections Neurotech

NT-503-3

Encapsulated Cell

Technology (ECT) I

Implantation for continuous

delivery of anti-angiogenic

factors (VEGF)

Biological sustained

delivery device Ph. 1/2 initiated in Sep'14

Stage 1: Open-label

- NT-503-3 implant for 2 years

Stage 2: Randomized

- NT503-3 Reimplant for additional 12 weeks

- Eylea: Q8W 170 Oct '17 NCT02228304

DME Allegro Ophthalmics Luminate / ALG-1001 Ph.1 initiated in Oct'14 - - Dec'15 NCT02348918

wAMD Graybug GB-101 & GB-102 Polymer-based delivery N/A Preclinical; IND in 2015 - - - -

wAMD or

Ocular Therapeutix /

Regeneron? VEGF Depot

Sustained release formulation

of Eylea Preclinical; IND in 2015 - - - -

DME Eleven BiotherapeuticsEBI-031 IL-6 Intravitreal Preclinical - - - -

wAMD/DME Ascendis / Roche TransCon Lucentis Intravitreal Preclinical - - - -

Gene Therapy

wAMD

Avalanche

(REGN has first rights

to negotiate) AVA-101

Adeno-associated Virus (AAV)

Soluble FLT Subretinal

Ph. 2a Australian trial recently

reported mixed results


- AVA-101 single-dose

- Pbo sham 40 mid-2015 N/A

wAMD

AGTC / Genzyme

(Sanofi) AAV2-sFLT01

Adeno-associated Virus (AAV)

Soluble FLT Subretinal Ph.1 ongoing Open label multiple dose trial 34 July'18 NCT01024998

wAMD

Oxford BioMedica /

Sanofi RetinoStat

Gene therapy producing 2 anti-

angiogenic protein-endostatin

and angiostatin Subretinal Ph.1 ongoing 3 dose cohorts 21 May'15

NCT01301443

(GEM)

Others

DME Alimera Sciences Iluvien

Sustained delivery of

corticosteroids Intravitreal implant FDA approved; EMA pending

DME

Eleven

Biotherapeutics EBI-031 IL-6 Preclinical

Long-Acting VEGF Formulation

51


Dry Age-Related Macular Degeneration (dAMD)

Disease Summary

“Dry” AMD develops slower than “wet”, but can be just as debilitating a chronic eye

disease. Accounting for 85-90% of all AMD population, “dry” AMD causes vision loss, albeit

slower compared to “wet” AMD. Patients experience substantial functional limitations to their

vision, but are likely to remain unaware due to compensatory function of their better eye. Unlike

“wet” AMD, vision loss is associated with an accumulation of debris deposit and thinning of the

macula. Much work remains to be done as there are no approved treatments to reverse “dry”

AMD.

A larger fraction of AMD patient population suffers from the “dry” type. Based on 2010

estimates, approximately 2M patients in the US were believed to suffer from AMD. “Dry” AMD is

believed to account for 85-90% of all AMD cases, equating to 1.8M in the US alone. As mentioned

previously, AMD cases are projected to surpass 3M and 5M by years 2030 and 2050, respectively,

correlated with an aging population. The proportionately larger “dry” AMD population will therefore

increase >2x to 4.5M by 2050. Compared to “wet” AMD, “dry” AMD presents a considerably larger

market.

In lieu of fluid or blood leakage, “dry” AMD accumulates debris under the macula. For as yet

unidentified reasons, acellular and amorphous deposits of lipids accumulate on the retina known

as drusen. The size and distribution of drusen can be implicit of worsening disease as a larger,

softer and closer together format is associated with a greater risk of developing “wet” AMD and

disrupting the retina layers to cause retinal pigment epithelium detachment (PED). Thinning and

drying out of macula can also result from drusen accumulation, leading to vision loss. Drusen itself

is not indicative of “dry” AMD, however, since nearly all people >50 years of age have at least one

drusen in one or both eyes.


Note: Numerous drusen within and surrounding the macula

52


A thorough diagnosis identifies markers of both “dry” and “wet” AMD. Similar to “wet” AMD,

state of the retina, signs of abnormal blood vessel formations, and vision acuity are evaluated

using dilated eye exams, fluorescein angiograms, optical coherence tomography (OCT), and the

Amsler grid. A particular focus is placed on drusen and its accumulation, and also whether “wet”

AMD is an imminent concern. Patients are asymptomatic in the early stage of “dry” AMD, but

experience geographic atrophy characterized by blurred vision, difficulty seeing in low light, and

slower adaptation to illumination as the disease progresses. A well-defined area of blurred vision

will often signify an advanced stage accompanied by an extensive breakdown of cells in the

macula. Therefore, individuals at risk are recommended to be proactive in seeking preemptive

diagnosis and/or at the onset of these symptoms.

Source: www.amd.org.

Note: Example of the Amsler grid for normal vision (left) versus impaired vision (right)

Drusen are very small yellow or white spots that appear in Bruch's membrane, one of the

layers of the retina in the eye. A possible cause of drusen is that the eye is unable to eliminate

some waste products from cells of the rods and cones. Beginning essentially at birth and

continuing throughout life, cells of the retinal pigment epithelium layer accumulate cell debris. The

remaining damaged cells (called lipofuscin) from the oxidative stress accumulate in Bruch’s

membrane and create drusen, which is the earliest visible sign of dry macular degeneration. The

lipofuscin/drusen is a cluster of protein and oxidized lipids that do not degrade. It is possible that

the oxidation induces inflammation that can continue to worsen the entire macular degeneration

process.

53


http://www.amd.org/

Source: Am J Ophthalmol. 2009 September; 148(3): 439–444. doi:10.1016/j.ajo.2009.04.022.

Current Treatment

There are currently no approved treatments for “dry” AMD. Based on correlation, however,

drusen formation is believed to be linked to hypertension and excessive dietary sodium.

Anecdotally, reduction of drusen within the central macular retina and improved vision have been

observed under an extended low salt diet. Nevertheless, effective and rapid-acting drug therapy

remains an unmet need.

54


http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.myvisiontest.com/newsarchive.php?id=934&ei=3UNbVcK5Ce61sATkyIDoBw&bvm=bv.93564037,d.cWc&psig=AFQjCNFe_7_GfBN_ZpJfX_28v6-OKnn3Jg&ust=1432130884009718


Company Drug Mechanism of Action

Route of


Estimated


Roche

Lampalizumab /

RO5490249

Antigen-binding fragment

(Fab) of a humanized mAb

directed against Complement

Factor D Intravitreal Ph. III initiated in 3Q14

Three arms randomized

- 10 mg lampalizumab Q4W

- 10 mg lampalizumab Q6W

- Sham

1872

(936 pts each in

two trials) Oct'18

NCT02247479

(CHROMA)

NCT02247531

(SPECTRI)

GSK GSK933776

anti amyloid-beta mAb (N-

terminal) Intravenous Ph. II expected to report data in 1H16

Four arms randomized:

- Three dose-escalation (3, 6 and 15 mg/kg) arms

- Placebo 184 Apr'16 NCT01342926

Ophthotech Zimura / ARC1905

Aptamer directed against

Complement Factor 5 Intravitreal

Ph. II/III expected to initiate in

2015 - - - -

Novartis LFG316

mAb directed against

Complement Factor 5 Intravitreal

Ph. II expected to report data in

mid-2015

Three arms randomized

- LFG316 higher dose

- LFG316 lower dose

- Sham 158 June'15 NCT01527500

Pfizer RN6G / PF4382923

anti amyloid-beta mAb (C-

terminal) Intravenous Ph. 1 completed; status unknown

Dose escalation from 5 mg/kg up to 15 mg/kg, incl.

randomization with placebo 24 Mar'13 NCT01003691

Ocata Therapeutics MA09-hRPE

Human Embryonic Stem cell

Derived Retinal Pigmental

Epithelial (MA09-hRPE) Subretinal

Ph.1/2 ongoing; expected to

report data in 2H15 - 16 Sep'15 NCT01344993

Alkeus ALK-001 Vitamin A aggregate Oral Preclinical - - - -

55


Leber’s Congenital Amaurosis (LCA)

Disease Summary

Leber’s Congenital Amaurosis (LCA) is a retinal disorder with many genetic roots and no

treatment available. Patients suffer from severe visual impairment from infancy (20/200 or less),

which remains stable through the years. It is one of the most common causes of blindness in

children, making up approximately 10-18% of congenital blindness/severely reduced vision.

Without any approved interventional therapy, patients often suffer from other vision problems,

including an increased sensitivity to light (photophobia), involuntary movement of the eyes

(nystagmus), and extreme farsightedness (hyperopia). LCA is considered a type of retinitis

pigmentosa (RP) since it involves retinal degeneration and loss of vision.

Multiple genetic targets complicate a therapeutic approach. To date (Jan. 2015), 20 genetic

causes of LCA have been identified. Based on animal models encompassing these mutations, the

etiology of LCA ranges from direct abnormalities of photoreceptors to aberrations in light-detecting

mechanisms. While most of these genes are inherited in an autosomal recessive manner (a child

receiving a defective gene from both parents), certain mutations such as CRX and IMPDH1 genes

are known to be autosomal dominant (one defective copy is sufficient to manifest LCA). Despite

advancements in molecular techniques and genetics, the identity of the encoded proteins, their

molecular pathways, and how they contribute to the pathology of LCA remain largely unknown.

Though rare, certain genetic mutations are also associated with non-LCA disorders including

nephronophtisis (IQCB1/NPHP5) and muscular dystrophy (DTHD1).

LCA is one of the most common causes of blindness in children. The prevalence of LCA is

estimated at 2-3/100,000, or approximately 6-9K in the U.S. First symptoms appear early in

infancy – 2-3 months – with vision ≤20/200. By early adolescence, blood vessels often become

narrow and constricted. Meanwhile, a variety of pigmentary (color) changes can also occur in the

retinal pigment epithelium (RPE; a layer beneath the macula). Other behavioral signs include the

oculo-digital, where a child habitually pokes, presses, and rubs eyes with knuckle or finger. Less

common symptoms include cataracts, glaucoma, and corneal problems (keratoconus).

Illustration of keratoconus & an electroretinogram (ERG) of a LCA patient with a LCA5 mutation


Unchanged eye appearance can lead to delayed diagnosis of LCA. The word “amaurosis”

encompasses any condition of blindness or marked loss of vision with little to no change in

appearance of the eye. For this reason an in-depth diagnosis with an electroretinogram (ERG) is

56


the most reliable in diagnosing LCA. Unlike healthy individuals, LCA retina has abnormally low

electric response (from either rod or cone photoreceptors), which is identified upon examination.

Furthermore, family history and genetic tests can also help identify the cause due to the disorder’s

hereditary nature.

Current Treatment

Current amelioration is limited to providing support to LCA patients. To date, there are no

approved treatments for LCA. Upon diagnosis, patients are recommended to supportive

approaches including low vision aids and educational programs for the visually impaired to assist

the patient’s poor prognosis.

Drug Candidates in Development

Demonstrated success in gene therapy provides a glimmer of hope. Identification of the

genetic causes underlying LCA is an ongoing endeavor. Thus far, 20 genes have been identified

encoding proteins with varying functions and subcellular localizations (see table below), but a

precise understanding of their contribution to the overall disease remains largely elusive.

Nevertheless, the identification of genetic causes as well as the increasing likelihood of gene

therapy via recombinant viral vectors opens an attractive and exciting chapter for LCA patients.

Exploratory attempts using adeno-associated virus (AAV) carrying a “normal” copy of the RPE65

gene were tested in three patients to replace the defective gene. While the method is currently

undergoing formal clinical trials, the three treated subjects have reported improved vision without

any apparent side effects. Such developments warrant optimism provided there are no alternative

measures to inhibit, let alone cure, a progressive visual impairment.

Gene name LCA# Occurrence frequency (if known)

GUCY2D 1 10-20%

RPE65 2 6-16%

SPATA7 3 1.7%

AIPL1 4 5-10%

LCA5 5 1-2%

RPGRIP1 6 4-6%

CRX 7 1-3%

CRB1 8 9-13%

NMNAT1 9 -

CEP290 10 -

IMPDH1 11 -

RD3 12 -

RDH12 13 4%

LRAT 14 -

TULP1 15 1.7%

MERTK - -

IQCB1/NPHP5 - -

KCNJ13 - -

DTHD1 - -

PNPLA6 - -

Source: National Eye Institute.

57


LCA patients can benefit from multiple shots on goal with three distinct approaches hitting

the developmental pipeline. Like many other rare diseases with an underlying genetic

component, LCA is gaining increased attention from developers of gene therapy such as Spark

Therapeutics (ONCE), Applied Genetic Technologies (AGTC), and AmpliPhi Biosciences/Targeted

Genetics (APHB). However, alternative approaches of retinoid replacement and messenger RNA

(mRNA) repair are also being pursued by QLT (QLTI) and ProQR (PRQR). Ranging from pre-

clinical to Phase III in development, demonstrated efficacy in any one or more interventions could

address a huge unmet need in the LCA patient population.

Gene therapy candidates from ONCE and AGTC are primarily targeting the RPE65 gene. As

indicated previously, mutation in the RPE65 gene accounts for ~6-16% of all LCA occurrences.

RPE65 encodes a protein that helps convert light entering the eye into electrical signals that

eventually transmit to the brain and enable sight. Accordingly, reintroduction of the wild-type copy

of the RPE65 gene aims to restore the proper functioning protein to rescue the impairment of sight

in LCA patients. AAV currently serves as the de facto vector for delivering the RPE65 gene and is

currently in one Phase III (ONCE) and two Phase I/II (AGTC, APHB) studies. SPK-RPE65,

developed by Spark Therapeutics (ONCE), has finished enrolling patients and is expected to

report data in the second half of 2015. The drug has already received breakthrough designation

from the FDA as well as orphan designation from both the FDA and EMA. Living up to this hype,

patients randomized to the non-intervention control group voluntarily crossed over to receive the

drug at the one-year mark of the study and were treated. Meanwhile, earlier stage candidates from

AGTC and APHB are also benefiting from the halo effect, but are unlikely to demonstrate

meaningful clinical efficacy any time soon. We are aware of a recent NEJM case report (May 14,

2015) highlighting the deficiencies of gene therapy in treating LCA but believe that neither the

small sample size (n=3) nor the described approach is directly representative of other gene

therapy approaches.

Other approaches to LCA treatment should complement gene therapy. QLT091001 (QLTI) is

an orally administered synthetic retinoid replacement therapy for LCA patients. With a chemical

structure analogous to vitamin A, the upcoming Phase II study should clarify the medicinal merits

of such compounds in a congenital disorder like LCA. Alternatively, PRQR is developing its

second product candidate, QR-110, to treat a subset of patients afflicted by LCA with a mutation in

CEP290, which is believed to account for at least 11k of the 116,000 LCA patients WW. Like

PRQR’s lead program QR-010 in CF, QR-110 works by repairing mRNA to enable the production

of wild-type proteins. QR-110 (PRQR) is tackling the disease at the molecular level, but on the

mRNA rather than the DNA. As a blueprint for protein synthesis, this intervention seeks to repair a

particular mutation (C.2991+1655A>G) found on the CEP290 mRNA without permanently altering

the genetic makeup of the LCA patient. Promising preclinical data has demonstrated full

restoration of wild-type CEP290 mRNA in various types of cells; however, because mRNAs are

transient and sensitive to degradation, optimal dosing needs to be determined that supports

efficacy in patients. QR-110 has completed the lead optimization phase and plans to enter the first

stage of clinical trials in 2016.

58


Upcoming Catalysts

Company Product Stage Topline Data

Spark (ONCE) SPK-RPE65 Phase III YE15

AGTC (AGTC) rAAV2-CB-hRPE65 Phase I/II YE15

QLT Inc. (QLTI) QLT091001 Phase III N/A

ProQR (PRQR) QR-110 Pre-clinical N/A

Source: Leerink Partners Research, Company Reports.

59


Stargardt Disease

Disease Summary

Stargardt disease is the most common form of inherited juvenile macular degeneration that

causes progressive vision loss. This disorder affects the macula, an area of the retina

responsible for sharp central vision. Inherited as an autosomal recessive trait, Stargardt disease

typically develops during childhood and adolescence usually to the point of legal blindness. The

retinal pigment epithelium (RPE), a region beneath the macula, is involved in Stargardt disease.

A mutation in the ABCA4 gene leads to dysfunctional protein in the photoreceptor cells in

the eye. Specifically, vitamin A transport is affected whereby vitamin A dimers (bisretinoids)

accumulate in the RPE. This accumulation forms fluorescent granules called lipofuscin in RPE,

and these are believed to cause the degeneration of photoreceptor cells, and therefore, vision

loss. While formation of vitamin A dimers is a natural phenomenon even in healthy individuals,

patients with Stargardt disease are characterized by a significantly rapid accumulation from

childhood resulting in juvenile vision loss. Under rarer circumstances, mutations in ELOVL4 and

PROM1 genes have been linked to Stargardt disease; however, the exact roles of these mutations

in the etiology of Stargardt disease are unknown.

Stargardt disease is a rare yet debilitating condition. As the most common form of inherited

juvenile macular degeneration, Stargardt prevalence is about 30,000 people in the US (about 1 in

8,000 to 10,000 people). Quite distinct from the previously described “wet” AMD, fatty yellow

pigment (lipofuscin) builds up in cells underlying the macula. And though both lipofuscin and

drusen (found in “dry” AMD) are composed of cellular debris and lipids, they have distinct

histological features and their precise relationship is not established.

Fundus autofluorescence showing lipofuscin accumulation (center of image)

Source: Univ. of Utah Medical School, June 2011.

60


Stargardt is the leading cause of childhood blindness. Almost all of those affected by

Stargardt disease will live legally blind during their adult lives. The symptom that brings most

people to an eye doctor is a change in visual acuity (20/50 to 20/200); wavy vision, blind spots,

blurriness, impaired color vision, and difficulty adapting to low light are other symptoms. Age of

onset is typically about 10 years old with significant variability in the rate of decline in visual acuity

across individuals. The diagnosis of Stargardt disease is based on family history, visual acuity,

fundus examination, visual field testing, fundus autofluorescence (FAF), electroretinography

(ERG) and optical-coherence tomography (OCT). Fluorescein angiography is not routinely used,

but can be informative at the initial stages when fundus changes are not obvious. Also, despite

advances in genetics, the utility of sequencing the ABCA4 gene as a diagnostic is unreliable

because >490 disease-associated variants have been identified thus far. ABCR400, a microarray

containing all currently known disease-associated genetic variants and many ABCA4

polymorphisms, circumvents this issue with a detection rate of 65-75%.

Current Treatment

There are currently no treatment options available for patients with Stargardts disease.

Eventual loss of central vision leads to an impossibility to perform simple tasks such as reading,

writing, driving or recognizing faces. Even in earlier stages, a slower adaptation to the intensity of

light as well as blurry or distorted vision negatively impacts quality of life. Supportive measures

include UV blocking sunglasses and low vision aids to accommodate rapidly impaired vision.

Meanwhile, patients are advised to limit vitamin A supplementation since it contributes and

accelerates lipofuscin synthesis and deposition, thus exacerbating vision loss.


Makindus is developing MI-100 in Stargardts disease via the 505(b)(2) route. MI-100, an

echothiophate/phospholine iodide, mechanistically acts as an irreversible acetylcholinesterase

inhibitor and has been used in the past for glaucoma. Makindus positions it as a legacy Ph. III-

ready molecule with 50 years of safety history in humans. The company recently received orphan

designation for MI-100 from the FDA and started a Ph. III. However, the agent has been

associated with pupil constriction, accommodative discomfort (forces the eyes to focus on nearby

objects), brow ache, and sometimes iris cysts. Given the unfavorable tolerability profile and

modest efficacy, this generic drug is no longer used in glaucoma. There is minimal to no literature

published to establish a direct mechanistic link between acetylcholinesterase and Stargardt

disease. One hypothesis indicates that MI-100 induces a pinhole effect with the pupil to make the

most of the vision that Stargardt patients have, which in principle could be achieved with optimized

spectacles or contact lenses. Makindus licensed IP and associated clinical data in 2013.

Ocata Therapeutics (formerly Advanced Cell Technology) (OCAT) is sponsoring a Phase I/II

trial utilizing stem cell therapy that was anticipated to finish in 2H14. The open-label, multi-

center, prospective study determines the safety and tolerability of sub-retinal transplantation of

human embryonic stem cell derived retinal pigmented epithelial (MA09-hRPE) cells in 16 adults

with advanced Stargardt disease. The current status of the trial is unknown.

61


SNY has remained involved in OXB-LON’s StarGen (gene therapy candidate) despite

voluntarily paused recruitment in a Ph. I/II study. The companies continued the study after

voluntarily pausing recruitment into the study due to adulteration and remains convinced of the

safety, integrity and quality of its LentiVector platform products based on all pre-clinical and clinical

data generated to date. Oxford BioMedica is sponsoring a Phase I/IIa dose escalation safety study

of subretinally injected StarGen administered to 28 patients with Stargardt disease who have at

least one pathogenic mutation in ABCA 4 gene on each chromosome.

Alkeus’ product ALK-001 is administered orally and prevents the formation of toxic vitamin

A dimers that lead to Stargardt disease. ALK-001 was awarded $167K through the FDA’s

Orphan Products Grants Program for an ongoing Ph. I trial. Alkeus is also partnered with

Columbia University to develop this treatment for Stargardt disease. In a mouse model, results

showed that modified vitamin A slows RPE lipofucin accumulation. The disease is characterized

by premature accumulation of lipofuscin in the retinal pigment epithelium (RPE) of the eye.

Research results demonstrated that modified vitamin A slows disease-related, retinal physiological

changes and perhaps vision loss.

Vision Medicines’ candidate VM200 is an oral small molecule that sequesters toxic all-trans

retinal to prevent retinal cell death, and is currently in preclinical IND-enabling studies. In a

mouse model of Stargardt disease, VM200 has previously shown preservation of retinal structure

and function, with no significant tox findings in a 2-week rodent tox study.

ClinicalTrials.gov (from NIH) currently lists other potential treatments, including saffron

supplementation and a stem cell treatment using cells derived from autologous bone

marrow.

Saffron supplementation targets photoreceptor oxidative damage in ABCR-related retinal

degenerations. The Catholic University of the Sacred Heart is conducting a 30-person clinical

study of saffron for the treatment of Stargardt disease. Saffron contains high concentrations of

crocin and crocetin, compounds with anti-oxidative properties. Saffron supplementation has

inhibited retinal degeneration in lab studies.

Retinal Associates of South Florida is conducting a study of stem cell treatment, with

intraretinal injection of stem cells derived from autologous bone marrow, exploring whether

there is improvement in visual acuity and visual fields in 300 patients with Stargardt and other

retinal diseases.

62


Upcoming Catalysts

Company Product Event Timing

Makindus MI-100 Phase III Initiation 1H15

Ocata

(OCAT)

MA09-

hRPE

Phase I/II Readout (US) 4Q14

Phase I/II Readout (EU) 4Q14

SNY /

OXB-LON StarGen Phase I/II Readout 4Q15

Alkeus ALK-001

Phase I Initiation 2H14

Source: Leerink Partners Research, Company Reports

63


X-Linked Juvenile Retinoschisis (XLRS)

Disease Summary

X-linked juvenile retinoschisis (XLRS) is a disease of the photoreceptor cells whereby the

retinal layer splits into two separate layers. XLRS is also known as vitreous veils, congenital

vascular veils in the vitreous, or congenital cystic retinal detachment. Though its prevalence is low,

visual acuity deteriorates throughout childhood and negatively impacts the quality of life. Patients

usually suffer a loss in central vision, but peripheral vision loss has also been reported; site of

detachment determines the affected vision. Research has identified a genetic basis for XLRS –

RS1 gene – found on the X-chromosome, and hence the preponderance of males among afflicted

population.

XLRS is a rare, predominantly male disease. By estimates, XLRS is believed to affect between

1/5,000 to 1/25,000 men, or roughly 140K-700K men worldwide. Unlike senile retinoschisis, a

similar degenerative disorder that affects men and women equally in an older demographic, XLRS

is inherited through the X-chromosome (X-linked) and primarily affects boys or young men.

Nevertheless, asymptomatic females could be a carrier of the mutated RS1 gene and under rare

occasions will present disease symptoms. By definition of X-linkage, this would necessitate that

both parents have a mutant RS1 gene.


Note: An intravenous fluorescein angiogram of an eye with XLRS. Arrow indicates the “spoke-wheel”, a

typical hallmark of the affected eye due to tiny splits (schisis) of the retina.

Splitting of the retinal layer can occur at different layers of the retina, and for different

reasons, but all are debilitating. Mutations in the RS1 gene, encoding the retinoschisin protein,

cause most cases of X-linked juvenile retinoschisis. A fully functional retinoschisin protein is

believed to facilitate adhesion of photoreceptor and bipolar cells in the retina enabling their

collective function in processing vision. Faulty, mutant retinoschisin leads to defective cell-cell

adhesion leading to tiny splits (schisis) or tears forming in the retina. This abnormality often

64


manifests as a “spoke-wheel” pattern in the macula and is observed during an eye examination.

Other early features of XLRS include strabismus (eyes that do not look in the same direction) and

hyperopia (farsightedness), and in severe cases of XLRS, eye squinting and involuntary

movement of the eyes (nystagmus) may also accompany other symptoms. Affected males have

20/60 to 20/120 or less vision in early stages, which stabilizes throughout adulthood until rapid

decline resurfaces during a man’s 50s and 60s. In addition to vision deterioration, a rare

occurrence (<10%) of vitreous hemorrhages (leakage of blood in the retina) and retinal

detachment leads to blindness. To reduce such risk, XLRS patients are advised to avoid head

trauma and high-contact sports.


Note: An eye of an XLRS patient shows extensive retinal detachment occupying the left half of image.

Hallmark traits and early symptoms can facilitate diagnosis. Impaired vision begins in early

childhood as early as the first three months; however, symptoms are more likely recognized in

grade school when poor vision and difficulty reading becomes more apparent. Diagnosis of XLRS

may incorporate Fundus photography (fundography), spectral domain optical coherence

tomography (SD-OCT), and genetic testing/family history. Fundography provides a visual of the

interior surface of the eye, and is able to capture identifiable traits such as schisis of the retina

(i.e., spoke-wheel pattern), noticeable perturbation to the macula, and an occasional color change

in the retina known as the Mizuo-Nakamura phenomenon. Genetic testing/family history may help

identify RS1 mutations; the root cause in non-RS1 XLRS patients remains unknown.

65



Note: Mizuo-Nakamura phenomenon: a metallic yellow appearance with vessels of intense color (left)

with slow adaptation to darkness.

Current Treatment

Supportive (non-pharmacological) therapies remain the only option for XLRS patients.

There are no approved drugs for XLRS, and despite efficacy of vitamin A in other genetic retinal

diseases (e.g. retinal pigmentosa), it does not appear to help retinoschisis. Upon diagnosis of

XLRS, monitoring and frequent checkups with ophthalmologists are recommended. Glasses and

low-vision aids can help patients make the most of the vision they have, while surgery may be

necessary to address infrequent complications of vitreous hemorrhage or complete retinal

detachment. None of these measures are reparative in nature, but rather serve to mitigate the

exacerbation of the disease.


Private company Vision Medicines has secured $7.5M in non-dilutive funding from a

prestigious foundation for VM200 for Stargardt disease. The company expects to file an IND

in early 2016, allowing Phase I and II to begin in 2016 and 2017, respectively. VM200 is an oral

small molecule that sequesters toxic all-trans retinal to prevent retinal cell death. Mouse model

studies have shown the ability to preserve retinal structure and function and no significant findings

were seen in a two week rodent toxicology study.

Other early stage candidates rely on gene therapy to re-introduce corrected copy of the

affected gene. There are currently two pre-clinical stage therapeutic candidates targeting the

same gene – retinoschisin (RS1) – in XLRS patients. Avalanche Biotech (AAVL), in partnership

with Regeneron (REGN), is developing AVA-311 utilizing an optimized AAV to intravitreally deliver

the RS1 gene. Similarly, Florida-based AGTC aims to deliver a wild-type copy of the RS1 gene

also using an AAV as a vector. Studies have shown that RS1 mRNA and protein levels are

specifically found in the retina and the pineal gland, which reduces concerns surrounding non-

specific or an unregulated expression of the gene following a successful gene therapy.

Furthermore, documentation of 191 unique variants of RS1 mutations (as of 2012) associated with

the XLRS phenotype underscores the strategic approach of introducing a wild-type copy of the

gene rather than repairing the particular mutation.

66


Without any clinical data generated to date, both assets from AAVL and AGTC appear to

hold similar promise if we are to draw any inferences from published pre-clinical work. Both

approaches share many things in common – MoA, targeted gene, and mode of delivery.

Unfortunately, beyond the generic descriptions that encompass both gene therapy candidates lie

the differentiation factors, which include binding and uptake efficiency by the RPE, expression

level of the “new” RS1 gene, and the durability of the effects, among others. As of 2Q15, neither

AAVL nor AGTC had commenced a clinical trial in XLRS; however,

AGTC anticipates that the recently commenced Phase I/II trial of rAAV2tYF-CB-hRS1 should

generate preliminary top-line results by the study’s primary completion date of December 2016.

Biogen’s recent partnership with and investment in AGTC illustrates the attraction of rare

blindness disorders and their potential to offer growth opportunities. Biogen will make an

upfront payment in the amount of $124 million to AGTC, which includes a $30 million equity

investment in AGTC at a price equal to $20.63 per share and certain prepaid research and

development expenditures. Biogen will be granted a license to AGTC’s XLRS and XLRP programs

and the option to license discovery programs for three additional indications at the time of clinical

candidate selection. Under the collaboration, AGTC is eligible to receive upfront and milestone

payments exceeding $1 billion. This includes up to $472.5 million collectively for the two lead

programs, which also will carry royalties in the high-single-digit to mid-teen percentages of annual

net sales. In addition, Biogen will make payments up to $592.5 million across the discovery

programs, along with royalties in the mid-single-digits to low-teen percentages of annual net sales.

AGTC has an option to share development costs and profits after the initial clinical trial data are

available, and an option to co-promote the second of these products to be approved in the United

States. AGTC will lead the clinical development programs of XLRS through product approval and

of XLRP through the completion of first-in-human trials. Biogen will support clinical development

costs, subject to certain conditions, following the first-in-human study for XLRS and IND-enabling

studies for XLRP. Under the manufacturing license, Biogen will receive an exclusive license to use

AGTC's proprietary technology platform to make AAV vectors for up to six genes, three of which

are in AGTC's discretion, in exchange for payment of milestones and royalties.

67



ACKNOWLEDGEMENTS:

Dae Gon Ha and Tessa Romero of Leerink Partners Equity Research contributed to this report. Their contributions are greatly appreciated.

Company Company Drug Mechanism of Action

Route of


Estimated


Orphan Pediatric Genetic Indications

Leber Congenital Amaurosis (LCA)

Nyctapia, or

Spark Therapeutics /

ONCE

(Breakthrough

Designation)

SPK-RPE65 /

AAV2-hRPE65v2

RPE65 mutation in the visual

cycle Subretinal

Ph. III pivotal data expected in

2H15

Open label randomized

- AAV2-hRPE65v2 in both eyes via surgical

procedures on separate days (n=19(

- No intervention : control (n=9) --> crossover 28 June'15

NCT00999609(partnered with

Children's Hospital

of Philadelphia)

Leber Congenital Amaurosis (LCA) AGTC AAV-RPE65

RPE65 mutation in the visual

cycle Subretinal Ph.1/2 ongoing Open-label 12 Sep'14 NCT00749957

Leber Congenital Amaurosis (LCA) QLT Inc. QLT091001

11-cis retinal replacement (lost

due to RPE65 gene mutation) Oral Ph.1 completed in 2014

Two arms non-randomized

- lower dose

- higher dose 27 June'14 NCT01521793

Leber Congenital Amaurosis (LCA) ProQR QR-110

C.2991+1655A>G mutation in

CEP290 gene - Preclinical; initiate Ph.1 in 1H16 - - - -

Stargardt Disease Alkeus ALK-001

Removal of Vitamin A toxic

aggregates leading to visual

cycle repair Oral Ph. 2 initiated in Mar'15

Two arms randomized

- Daily, oral for 24 mos.

- Placebo 50 Dec'17

NCT02402660

(TEASE)

Stargardt Disease

Oxford BioMedica /

Sanofi

StarGen /

SAR422459

Lentivector platform to deliver

ABCR gene Subretinal Ph. 1 ongoing - 46 Feb'17 NCT01367444

Stargardt Disease Ocata Therapeutics MA09-hRPE

Human Embryonic Stem cell

Derived Retinal Pigmental

Epithelial (MA09-hRPE) Subretinal Ph.1/2 ongoing (status unclear) - 16 Nov'14 NCT01345006

rAAV2tYF-CB-hRS1

RS1 gene mutation causing

schisis (splitting) of the layers

of the retina IVT

Ph.1/2 rAAV-hRS1 initiating in

May'15 Dose-escalation in 3 separate cohorts 27 Apr'16 NCT02416622

Natural Disease

History - - Ph. 1/2 data by YE15 Natural Disease History 45 Dec'16 NCT02331173

X-Linked Juvenile Retinoschisis

(XLRS) Regeneron / Avalanche AVA-311 Target Undisclosed IVT Preclinical - - - -

X-Linked Juvenile Retinoschisis

(XLRS)

AGTC in collaboration

with Foundation

Fighting Blindness

68


Avalanche Biotechnologies, Inc. (NASDAQ: AAVL) 1035 O’Brien Drive, Suite A

Menlo Park, CA 94025

Products and Pipeline

- Mixed results recently reported from Ph. 2a trial of subretinal AVA-101

(rAAV-sFlt-1; VEGF antagonist protein) in wet-AMD after Ph.1 had

previously shown early signs of efficacy such as reduction in retinal

thickness and trend toward improved visual acuity

o Incremental improvement in visual acuity (+2.2 letters) over 12 mos. as part of tx.

regimen that allowed 2 Lucentis injections at initiation and 2 rescue Lucentis

injections in addition to single AVA-101 dose

o An increase in central retinal thickness (on OCT) on treatment arm, which is

indicative of disease worsening (+25mm vs. -56mm on pbo arm)

- Intravitreal AVA-201 in prevention setting for at-risk wet AMD

o Next generation AAV vector delivery technology to deliver the same sFLT1 gene

o ~7.3M pts in the US identified to be at high risk of developing wet AMD

Regeneron collaboration (May 2014)

- Time-limited right of first negotiation for certain rights of AVA-101

- AVA-311 in X-Linked Juvenile Retinoschisis (XLRS)

- Covers up to 8 distinct targets; options to share up to 35% on

profits/development costs for 2 targets

Upcoming Catalysts (2015 – 2017)

- AVA-101 Ph. IIb wet AMD study to be initiated in 2H15

- AVA-101 IND-enabling studies in DME and RVO to be continued in 2015

- AVA-201 preclinical studies in prevention of wet-AMD expected to finish by YE15

Financials

- Market Cap: ~$365MM

- Series B: $55M in April 2014

- Series A: $3.1M in Nov. 2013

- IPO: $106.5M in July 2014; concurrent $10M private placement with REGN

- ~$160M cash on-hand

- REGN deal: $8M upfront; up to $640M in milestones, plus royalties

Management Team

Hans Hull, Interim CEO & President, following recent resignation by

Thomas Chalberg, CEO (Genentech, Stanford, Harvard)

Samuel Barone, CMO (FDA, UCSD, Penn State School of Medicine)

Linda Bain, CFO (BlueBird Bio, Genzyme, Fidelity, AZ, Deloitte)

Notable Investors - Series A: Zygtech, REGN

- Series B: Venrock, Deerfield, Adage Capital Management, Redmile Group,

Rock Springs Capital, Sabby Capital, affiliate of Cowen & Co.

Company Description AAVL envisions developing one-time transformative treatments for sight-

threatening major and orphan diseases in ophthalmology by:

- leveraging its next-gen gene therapy platform Ocular BioFactory technology

that secretes therapeutic protein for years following a single administration of

gene therapy

- building an industry-leading management team with extensive industry

experience in ophthalmology drug development and commercialization

- protecting IP portfolio around novel AAV variant with improved function (12

issued patents & 27 pending applications)

Recent News

- July, 2015: AAVL Announces Leadership Transition

- June, 2015: AAVL Announces Positive Top-Line Ph. 2a Results for AVA-

101 in Wet Age-Related Macular Degeneration

- Mar, 2015: Exclusive license agreement with Uwashington for color vision

Source: Company Reports, Websites, Factset

69


Applied Genetic Technologies Corp. (NASDAQ: AGTC)

Company Description AGTC envisions dominating the field of ophthalmology gene therapy, in

particular the rare pediatric eye disorders with no current treatments and highly

predictive animal models (both dog and mice)

- In a pool of ~260 known genetic causes of blindness mapped to a specific

genetic locus, AGTC is focused on >140 well-characterized autosomal or X-

linked disorders

- Adeno-associated virus (AAV) vectors already optimized to show safety and

sustained expression in the clinic; >100 pts treated in Ph. I/II trials

- >100 patents protecting gene, vector capsid, manufacturing and/or delivery

methodologies associated with each candidate

11801 Research Drive, Suite D

Alachua, FL 32615


- X-linked Juvenile Retinoschisis (XLRS) – Ph. I/II assets targeting inherited

RS1 gene mutation, which causes macular degeneration in males and

results in poor vision by school age, which further worsens during teenage

- Achromatopsia (ACHM) – preclinical asset targeting inherited mutation in

one of several genes, incl. CNGB3 and CNGA3, causing absence of cone

photoreceptor function resulting in severely impaired vision & day blindness

- X-linked Retinitis Pigmentosa (XLRP) – preclinical asset targeting Inherited

RPGR mutation that causes night blindness in first decade of life and leads

to progressive constriction of visual fields eventually translating to legal

blindness by age ~40-50 years

Biogen collaboration (July 2015)

- Broad collaboration/licensing agreement to develop gene-based therapies for

multiple ophthalmic diseases, beginning with WW rights for AGTC’s lead candidates

for XLRS and XLRP; add’l option to license discovery programs for 3 more

indications at the time of clinical candidate selection

Sanofi / Genzyme collaboration (since 2004)

- Ongoing Ph. 1 Intravitreal AAV2-sFLT01 in wet AMD: AAV combined with sFLT-1

protein, a VEGF-antagonist protein

Recent News

- July, 2015: BIIB And AGTC Enter Collaboration to Develop Gene

Therapies in Ophthalmology

- May, 2015: AGTC Announces New Data Supporting Novel Gene-Based

Therapies for Rare Inherited Retinal Diseases

- Apr, 2015: Collaboration announced with 4D Molecular Therapeutics on

next-generation adeno-associated virus (AAV) technology


- Genzyme to readout Ph. 1 data of AAV2-sFLT01in wet-AMD (NCT01024998; 19 pts)

- Finish natural history study in XLRS (NCT02331173)

- IND filing for ACHM in 2H; Ph. I/II preliminary data expected in 1H16

- Target announcement followed by proof-of-concept data for internal wet AMD

program by YE15

- Initiate additional preclinical studies for XLRP and other eye indications in late

2016/early 2017

Financials


- Seed and Series A: $43M; Series B: $38M; Grants: $11M

- IPO: $57M in May 2014; Secondary: $34M

- ~$100M cash on-hand; $2.5M per month cash burn projected for 2014/15

- BIIB collaboration:

o $124MM upfront

o Add’l milestones of up to ~$470MM and high single digit to mid-teen

percentage royalties for 2 lead programs (XLRS & XLRP)

o Add’l milestones of up to ~$590MM and mid single digit to low-teen

percentage royalties for other discovery programs

Management Team

Sue Washer, CEO (Abbott, LLY)

Jeff Chulay M.D., CMO (AlphaVax, GSK, Northwestern-MD)

Larry Bullock, CFO (Sirna, Biomimetic, La Jolla Pharmaceuticals)

Stephen W. Potter, CBO (NeoStem, Osiris Therapeutics, Genzyme, HBS-MBA)

Notable Investors - Series A: InterWest Partners, InterSouth Partners, MedImmune Ventures,

Skyline Ventures

- Series B: Alta Partners, S.R. One, Osage University Partners


70


Aerie Pharma (NASDAQ: AERI)

Company Description Aerie Pharmaceuticals, Inc. (NASDAQ:AERI), a clinical-stage pharmaceutical

company focused on the discovery, development and commercialization of first-

in-class therapies for the treatment of patients with glaucoma and other

diseases of the eye.

135 US Highway 206, Suite 15

Bedminster, NJ 07921


- Ongoing Ph. III registration trials of Triple-action Rhopressa™ for treatment

of patients with glaucoma (1,300 total pts.); ~2.7M pts. in US suffer from

glaucoma, expected to reach ~4.3M by 2030

o Rocket 1: 90-day efficacy registration trial

o Rocket 2: 90-day efficacy, as well as safety over one year, registration trial

o Rocket 3: One-year, safety-only registration trial in Canada

- Roclatan™ (combination of Triple-action Rhopressa™ and latanoprost) is

being investigated for treatment of patients with glaucoma

- Preclinical candidate AR-13154 (ROCK/JAK2/PDGFRb Inhibitor) is being

investigated in age-related macular degeneration (AMD)

Recent News

- June, 2014: Completion of Phase IIb clinical trial of Roclatan™ (trial met

primary efficacy endpoint, demonstrating the statistical superiority of

Roclatan™ to each of its components)


- Rhopressa™ 3-mos. efficacy results are expected in mid-2015 for Rocket 1 and

3Q15 (400 pts.) for Rocket 2 (690 pts.)

- Rhopressa™ NDA filing by mid-2016

- Phase III registration trials for Roclatan™ are expected to commence in mid-2015

Financials

- Market Cap: ~$455M

- IPO: Raised $68M

- As of Dec, 2014: $158M in cash, cash equivalents, and investments

Management Team

Vincente Anido, Jr., Ph.D., CEO and Chairman of the Board (ISTA

Pharmaceuticals, CombiChem, Allergan)

Casey C. Kopczynski, Ph.D., CSO (Ercole Biotech, Exelixis, Indiana

University)

Brian Lev, O.D., M.Sc., CMO (Nexis Vision, Bausch + Lomb)

Notable Investors Vanguard, Quantitative Management Associates, Point72 Asset Management


71


Aerpio Therapeutics (Private)

Company Description Aerpio Therapeutics is a new, clinical-stage biotechnology company focused on

the development of novel small molecules and monoclonal antibodies for the

treatment of vascular disease and enhancement of wound healing. Aerpio was

created in a spin-out transaction from Akebia Therapeutics to enable more rapid

development of its exciting compounds.

- Leveraging its lead program, a first-in-class stabilizer of the Tie2 pathway,

and is in clinical development for diabetic macular edema (DME)

9987 Carver Rd

Blue Ash, OH 45242


- AKB-9778 is a first-in-class small molecule that works by inhibiting the

human protein tyrosine phosphatase β (HPTPβ) enzyme, which acts as a

negative regulator of the Tie2 receptor

- Ongoing Ph. II 144-pt trial (TIME-2) in DME recently reported positive top-

line 3-mos. data confirming the efficacy of ‘9778 alone and in combination

with ranibizumab in patients with DME

o ‘9778 15 mg BID + Lucentis arm reduced central subfield thickness (CST) and

more DME pts reached > 3 lines of visual acuity, in comparison to Lucentis alone

o Results from the safety analysis showed no clinical differences between the three

study arms in terms of ocular or non-ocular adverse events

o Ph. Ib/II was well tolerated throughout 28 days of dosing, with evidence of disease

improvement in some patients

- Preclinical data showed evidence of reduction in abnormal blood vessel

growth and leakage in mouse models of preclinical disease (including DME,

age-related macular degeneration)

Recent News

- September, 2014: Pre-clinical data on AKB-9778 for common eye

diseases


- Ph. Ib/II TIME-2 long-term follow-up results may read out data in 2016

Financials

- Series B: $22M in April 2014: OrbiMed; Series A: $27M venture round in

August 2012: Novartis BioVenture

Management Team

Joseph H. Gardner, CEO (Procter & Gamble, University of Wisconsin –

Ph.D.)

Kevin Peters, CSO (Bristol Myers Squibb, Procter & Gamble, Duke

University Medical Center – Associate Professor, University of Iowa – MD,

UCSF – Research Fellow)

Mitchell Brigell, Director of Clinical Science (Novartis Institutes for

BioMedical Research, Novartis)

Notable Investors Orbimed, Novartis Venture Funds, Satter Investment Management, Kearny

Venture Partners, Venture Investors, Triathlon Medical Ventures and

Athenian Venture Partners


72


http://www.akebia.com/



http://www.aerpio.com/

Alkeus (Private)

Company Description Alkeus Pharmaceuticals is a clinical stage biotechnology company focused on

discovering and developing treatments against serious and untreatable

diseases of the eye.

2103 Massachusetts Ave

Cambridge, MA 02140


- Ongoing Ph. II trial of ALK-001 in Stargardt disease

o ALK-001 is an orally delivered drug candidate tested for the treatment of

Stargardt disease

o The compound is a vitamin A enriched with deuterium that slows formation

of toxic vitamin A dimers and lipofuscin in the eye, resulting in preserved

visual function in the animal models of dry-AMD/Stargardt disease

Columbia University collaboration (Jan. 2011)

- License agreement announced for a set of potential therapies for the

treatment of dry-AMD,Stargardt disease, and other degenerative eye

conditions


- ALK-001 IND-enabling studies in Stargardt Disease (NCT02402660; 50 pts)

estimated to complete in 2017/2018

Financials

- Seed Financing - MassChallenge grant: $100,000 awarded in Oct. 2011

- FDA’s Orphan Products Grants Program: Leonide Saad receives $167,000

for one year towards the Ph. I study of ALK-001 in Stargardt disease in Oct.

2013

Management Team

Leonide Saad, Ph.D., President & CEO (Proteus Venture Partners, MIT)

Joshua Boger, Ph.D., Executive Chairman (Vertex, Chair of the Board of

Harvard Medical School, NEHI, BIO, Whitehead Institute for Biomedical

Research, MassChallenge, among others)

Ilyas Washington, Ph.D., Scientific Founder (Columbia University Medical

Center – Department of Opthalmology, UCLA)

Notable Investors MassChallenge

Recent News

- November, 2011: ALK-001 Receives FDA orphan Drug Designation for

the Treatment of Stargardt’s disease


73


Eleven Biotherapeutics (NASDAQ: EBIO)

Company Description Eleven Therapeutics is designing and developing targeted protein therapeutics

that are able to effectively target key points in disease pathways that drive both

surface and back-of-the-eye ocular diseases

- Leveraging its proprietary technology platform (AMP-Rx platform) to create

first-of-a-kind recombinant protein therapeutics to treat ocular diseases

- Lead candidate EBI-005 is a topical, eye-drop treatment current being tested

in Dry Eye Disease (DED) and Allergic Conjunctivitis (AC)

215 First Street, Suite 400

Cambridge, MA 02142


- EBI-005 is a recombinant protein that binds to the IL-1 receptor and blocks,

or antagonizes, IL-1 receptor signaling

o Negative results recently reported for Ph. III pivotal study of EBI-005 in moderate to

severe DED, which led to discontinuation of the program; previously reported Ph.

Ib/IIa study found EBI-005 had shown modest efficacy

- Ph. II EBI-005 data in allergic conjunctivitis supports advancing to Ph. III

o EBI-005 demonstrated clinically relevant, statistically significant improvement in

multiple symptoms associated with late phase allergen response in a modified

direct conjunctival allergen model

o Clinically relevant improvements in ocular itching compared with vehicle in a

modified direct conjunctival allergen model at the final two efficacy time point

- Preclinical candidates: EBI-031 for the treatment of DME; EBI-028 is being

evaluated for the treatment of uveitis

ThromboGenics collaboration and license agreement (May 2014)

- Technology licensing fee of $1,750,000 fee + future payments if achieves

specified preclinical and clinical milestone

Recent News

- June, 2015: Pivotal Ph.3 Study of EBI-005 Moderate-to-Severe DED Did Not

Achieve Primary Endpoint; Program to Focus on Allergic Conjunctivitis

- April, 2015: Ph. II Data on EBI-005 for the Treatment of Allergic Conjunctivitis


- EBI-005 Ph. III clinical trial to be initiated for the treatment of moderate to severe

allergic conjunctivitis in 2H15

Financials

- Market Cap: $54M

- Series A: $35M; Third Rock Ventures and Flagship Ventures

- IPO: $50M in February 2014

Management Team

Abbie Celniker, Ph.D., CEO (Alexion, Taligen Therapetuics, Novartis AG,

Millenium Pharmaceuticals, Wyeth, University of Arizona – Ph.D.)

Eric S. Furfine, Ph.D., CSO (Adnexus Therapeutics / Bristol-Myers

Squibb), Regeneron, GSK plc., Brandeis University – Ph.D.)

Michael H. Goldstein, M.D., MBA, CMO (Tufts University/New England

Eye Center & School of Medicine, Northwestern University Medical School

– MD, Kellogg Graduate School of Management – MBA)

Notable Investors BlackRock Fund Advisors, Morgan Stanley, Merrill Lynch, Goldman Sachs


74


http://www.elevenbio.com/index.html

Graybug (Private)

Company Description GrayBug is developing a continuum of proprietary micro – and nanoparticle

controlled release technologies and implants for strategic partnership and its

own therapeutic products for major ocular disease indications including wet

AMD and Glaucoma

- Leveraging its controlled-release drug delivery to improve drug efficacy

- Co-developed by several founders in collaboration with leading

ophthalmology clinician-scientists from the Wilmer Eye Institute, licensed

from Johns Hopkins University

855 N. Wolfe St.

Baltimore, MD, 21205


- GB-101 is the most advanced preclinical candidate being developed for the

treatment of wet AMD, followed by GB-102 for the treatment of wet AMD

- A single agent that inhibits multiple pathogenic angiogenesis signals

- Five pipeline candidates with POC in animal models, including glaucoma

therapies (for controlled-released of intraocular pressure & for long-term

protection of the optic nerve to prevent blindness)


- GB-101 IND-enabling preclinical studies to continue in 2015

Financials

- Series A2 (to support GB-102 drug candidate): $1.74M; Hatteras Venture

Partners and Maryland Venture Fund

- >2.5M capital raised

Management Team

Michael O’Rourke, President & CEO (Bausch + Lomb U.S.

Pharmaceuticals)

Justin Hanes, Ph.D., Founder & CSO (Center for Nanomedicine at the

Wilmer Eye Institute, Johns Hopkins University School of Medicine)

Ming Yang, Director of Research (Johns Hopkins University – Ph.D.,

Genentech)

Notable Investors Hatteras Venture Partners and Maryland Venture Fund


Recent News

75


Horama S.A.S. (Private)

Company Description Founded in 2014 with licenses to a portfolio of recombinant adeno associated

virus (rAAV) technologies from the Institut National de la Sante et de la

Recherche Medicale (INSERM), AFM-Telethon, University Hospital of Nantes

and University Hospital of Montpelier

- Focus is on retinopathies (90%) and maculopathies (10%)


- HORA-PDE6B: PDE-6B-mediated retinitis pigmentosa and retinitis punctata

albescens

o A serotype 5 rAAV encoding the phosphodiesterase 6B (PDE-6B) gene

o Received Orphan Drug designation in Europe

- HORA-RPE65

o A serotype 4 rAAV delivering the RPE65 gene

o Received Orphan Drug designation in Europe

- HORA-RLBP1: retinitis punctata albescens

o A serotype 5 rAAV delivering the retinaldehyde binding protein 1 (RLBP1)


- Initiate clinical trials for HORA-PDE6B (2016)

Financials

- €450,000 private funding from shareholders and Vendee entrepreneurs in

2014

- €450,000 private funding from Public Investment Bank (BPIfrance) in

March 2015

- Total funds raised to-date: €1.5M

Management Team

Dominique Constantini M.D., Ph.D, Co-Founder & CEO

Denis Cayet, Co-Founder & President

Fabienne Rolling, Ph.D, Research Director

Notable Investors - Simone Bougro (from Sodebo), Joel Soulard (from Ernest Soulard), and

Denis Cayet (founder of Horama)

Recent News

- Completed an academic-led Phase I/II study for its LCA program; data not

disclosed

- Preclinical data in PDE-6B deficient dog model of retinal dystrophy

published in Molecular Therapy show improved rod phototransduction for

at least 18 months and restored dim-light vision in all treated dogs

9 Rue de l’Eperon

75 006 Paris, France


76


Makindus (Private)

Company Description Founded in 2013, Makindus Inc. is a clinical-stage biotechnology company

focused on the development of late stage products specifically for opthalmic

indications

- Initial efforts are directed toward rare eye diseases


- MI-100: Stargardt disease

o Reformulated version of a legacy compound

o Repackaged as single container to use as multi-use eye dropper

o Received Orphan Drug designation from the FDA and EMA


- Initiate Phase III clinical program in Stargardt disease (YE2015)

Financials

- Unknown

Management Team

Manohar Katakam, Ph.D, Founder, President & CEO (Centocor, Aventis,

Onconova Therapeutics, Pfizer, Auburn – Ph.D)

Mary Beth Cicero, MBA, Vice President – Business Development (Serono,

Dermik, Babson – MBA)

Carroll “Bo” Allen, Ph.D, Vice President – Scientific Affairs (Sandoz,

Boehringer Ingelheim, Ciba Geigy)

David Eveleth, Ph.D, Vice President – Clinical Affairs (Pfizer, UCI – Ph.D)

Notable Investors - Unknown

Recent News

- The European Medicines Agency (EMA) grants orphan designation for MI-

100 (May 2015)

- FDA grants orphan designation for MI-100 (Jun 2014)

3805 Old Easton Road

Doylestown, PA 18902


77


Molecular Partners (SWX: MOLN)

Company Description Founded in 2004, team includes many of the scientists who discovered

DARPins. The company works with industry leaders in the field of

ophthalmology, oncology and immunology to leverage the full potential and

reach of DARPin platform

- DARPin (designed ankyrin repeat proteins) platform combines multiple small

proteins with high-specificity, potency and versatility in one therapy

- Mono-DARPin enables targeting a single validated disease pathway

- Company currently licenses the platform on an exclusive basis

- Current and past collaborators include AGN, Janssen & Roche


- MP0112 (Abicipar pegol): DARPin-based anti-angiogenic drug being studied

in wet AMD and diabetic macular edema (DME); in collaboration with AGN

o Antagonist of vascular endothelial growth factor A (VEGF-A)

o Phase I/II showed half-life of ~2 weeks with stabilization or improvement in visual

acuity and reduction of retinal edema for up to 12-16 weeks

o Phase IIb data showed equal or higher vision gains with potential for fewer

injections (every 12 weeks) compared to Lucentis

o Ph. III 1800-pt trial recently initiated; Lucentis as a comparator arm

- Multi-VEGF/PDGF DARPin, also in partnership with AGN: currently in

preclinical studies

- MP0250, a dual inhibitor of VEGF and HGF: ongoing Ph. I trial in solid tumor

cancers (gastric, kidney, and liver)

- MP0274 has shown anti-HER activity to target HER2+ breast cancer in

preclinical studies, with data suggesting better cell death than Herceptin


- Ongoing MP0112 (Abicipar) Ph. III trial in wet AMD expected to generate pivotal

data in 2018

- Ph.1/2 study of MP0250 in advanced solid tumors expected to report data in mid-

2016

Financials

- Market cap: 717.9M CHF

- IPO: 106.2M CHF (104.1M net proceeds) in Dec 2014

- 188.4M CHF in cash and cash equivalents

- AGN collaboration (ophthalmology): $107.5M upfront with up to $1.7B for

milestones and tiered royalties

- Janssen collaboration (immunology): upfront of $190M for multi-product

partnership

- Roche collaboration (oncology; recently terminated): CHF 55MM for upfront and

additional payments up to 1B CHF from Roche for milestones/royalties

Management Team

Christian Zahnd, Co-Founder & CEO (U of Zurich – Ph.D)

Patrick Amstutz, Co-Founder & COO (U of Zurich – Ph.D))

Michael Tobias Stumpp, Co-Founder & CSO (Tokyo Institute of

Technology, Imperial College London, ETH Zurich, U of Zurich – Ph.D)

Andreas Emmenegger, CFO (Glycart, Genentech, Interroll Holding, Piqur

Therapeutics)

Notable Investors - Endeavour Vision, Index Ventures, BB Biotech Ventures, Johnson &

Johnson Development Corporation, Essex Woodlands Health Ventures

Recent News

- Mar 2015: Appoints Andreas Harstrick, M.D. as Chief Medical Officer

- Dec 2014: Janssen executes option in DARPin collaboration, Molecular

Partners receives $2M milestone payment

Wagistrasse 14

8952 Zurich-Schlieren, Switzerland


78


Ocata Therapeutics (NASDAQ: OCAT)

Company Description Ocata Therapeutics, Inc. (“Ocata”; NASDAQ Global Market: OCAT), formerly

named Advanced Cell Technology, is a clinical-stage biotechnology company

focused on the development and commercialization of new therapies in the field

of regenerative medicine

- Leveraging its intellectual property portfolio, which includes pluripotent stem

cell platforms – hESC and induced pluripotent stem cell (iPSC) – and other

cell therapy research programs

33 Locke Drive

Marlborough, MA 01752


- Pivotal trial of hESC Derived RPE (MA09-hRPE) cells in Stargardt Macular

Dystrophy (SMD)

- Ongoing Ph. I/II trial of Sub-retinal Transplantation of hESC Derived RPE

(MA09-hRPE) Cells in dry AMD

- Granted Advanced Therapy Medicinal Product (ATMP) designation for its

RPE therapy for SMD; orphan status in EU and the US

Recent News

- Mar, 2015: Phase I/II RPE dosing complete

- Feb, 2015: Listed on NASDAQ


- hESC Derived RPE studies to be initiated in SMD (NCT01345006) and dry AMD

(NCT01344993; 38 pts.)

Financials


- As of Dec, 2014: $5MM in cash and cash equivalents

Management Team

Paul Wotton, Ph.D, President and CEO (Antares Pharma, Topigen

Pharmaceuticals, SkyePharma PLC, University of Nottingham)

Robert Lanza, M.D., CSO (Institute for Regenerative Medicine at Wake

Forest University School of Medicine, University of Pennsylvania – M.D.)

Ted Myles, COO and CFO (PrimeraDx, Pressure BioSciences, EMD

Pharmaceuticals – Merck KGaA)

Eddy Anglade, M.D., CMO (Lux Biosciences, Enzon Pharmaceuticals,

Hoffmann-LaRoche, Yale School of Medicine)

Notable Investors William Blair & Co. LLC, Columbia Management Investment


79


Ocular Therapeutix (NASDAQ: OCUL)

Company Description OCUL is focused on the development and commercialization of innovative

therapies for diseases and conditions of the eye using its proprietary hydrogel

platform technology

- Hydrogel technology uses polyethylene glycol (PEG)

- Drug-eluting punctum plugs (dexamethasone [DP], travoprost [TP],

moxifloxacin); no need for manual removal after completion of therapy

- PEG-based materials have been used extensively in medical products with

minor risks or complications

36 Crostby Dr. #101

Bedford, MA 01730


- First product, ReSure sealant ,is FDA-approved to seal corneal incisions

following cataract surgery

- Drug-eluting punctum plugs functioning to provide extended release

dexamethasone (DP), travoprost (TP), moxifloxacin; differentiated by no

need for manual removal after completion of therapy

o OTX-DP (DEXTENZA): Two Ph. 3 trials in post-surgical ocular pain indication

reported generally positive data in 1H15 with 2nd study missing on statistical

significance on co-primary endpoints due to high pbo response; OCUL expects to

file NDA in 2H15

o OTX-DP: Ph. 2 completed for allergic conjunctivitis; Ph. 3 currently enrolling pts

o OTX-TP: Ph. 2a completed for ocular hypertension and glaucoma; sustained

delivery of travoprost for convenience and efficacy

o Moxifloxacin: Ph. 1 completed for bacterial conjunctivitis; sustained moxifloxacin

delivery for convenience and efficacy

• Sustained release anti-VEGF hydrogel depot (potential dosing of once every

6 mos.) in pre-clinical testing for retinal diseases

Recent News

- June, 2015: Begins enrollment in Ph.3 clinical trial for DEXTENZA for the

treatment of allergic conjunctivitis

- Apr, 2015: Reports topline data for second Ph. 3 trial for OTX-DP for post-

surgical ocular inflammation and pain

- Mar, 2015: Reports topline data for first Ph. 3 trial for OTX-DP for post-

surgical ocular inflammation and pain


- OTX-DP Ph. 2/3 data for chronic allergic conjunctivitis (NCT02062905) in 2015

- OTX-TP Ph. 2b data for open angle glaucoma or ocular hypertension

(NCT02312544) in 4Q15

Financials

- Market Cap: $585M

- IPO: $66.5M net proceeds reported on Aug. 19, 2014

- Cash and cash equivalents: $67.9MM reported as of March, 2015

Management Team

Amar Sawhney Ph.D, President & CEO (Augmenix, Incept LLC, UT

Austin, IIT-Delhi)

Jim Fortune, COO (Augmenix, Intrinsic Therapeutics, JNJ, RPI)

Peter Jarrett Ph.D, CSO (Genzyme, American Cyanamid, Conn College,

Uconn – PhD)

Brad Smith, CFO (OmniGuide Surgical, NeuroMetrix, Tufts, UNH – MBA)

Notable Investors - By Dec 31, 2014: Versant Ventures (13.9%), SV Life Sciences (12.1%),

Ascension Health Ventures (9.8%)


80


Ohr Pharmaceutical (NASDAQ: OHRP)

Company Description Founded in 2008, OHR is a relatively under-appreciated story with several

upcoming catalysts around novel delivery technologies for ocular diseases

- Clinical-stage topical agent aimed at improving upon the current standard of

care in wet-AMD; preclinical microparticle ocular sustained drug delivery

platform for glaucoma, retinal disease & allergy

- Mgmt. team with extensive academic experience in ophthalmology drug

development; research agreement with Alcon

- Cost-effective manufacturing of small molecules potentially translating into

high margins

800 Third Avenue, 11th Floor

New York, NY 10022


- Lead Ph. 3 ready candidate OHR-102 (or squalamine eye drops) is an

inhibitor of multiple angiogenic growth factors (VEGF/PDGF/bFGF). Ph. 2

IMPACT study in 142 tx.-naïve wAMD pts . generated mixed results for

OHR-102+Lucentis vs. Lucentis alone in 1Q15

o Ph. 2 full data failed to show stat. sig. benefit in the ITT population with

classic containing choroidal neovascularization (CNV); however, OHR-102

did show numerical benefit in vision acuity (>3 line gain at 9 mos.): 42% on

OHR-102+Lucentis vs. 28% in Lucentis monotherapy arm

o Mgmt. views data to support progressing to Ph. 3 650-pt trial in occult CNV

with an area < 10mm2

- SKS-1002: sustained release technology acquired with SKS Ocular in 2Q14

showing a potential of once-quarterly protein release and ability to load

different drugs into same particle though a simplified process designed

particularly for fragile biologics

Recent News - July, 2015: OHRP Announces Positive Results of a Phase II Clinical Study for

OHR-102 in Retinal Vein Occlusion

- May, 2015: OHRP Presents Data From OHR-102 Ph. II IMPACT Study in Wet-

AMD at ARVO Conference

- March, 2015: OHRP Announces Additional Positive Anatomic Data From the

OHR-102 IMPACT Study Interim Analysis Presented at Annual Macula Society

Meeting

- March, 2015: Positive final topline clinical data from Ph. II IMPACT study of

Squalamine Eye Drops (OHR-102) in wet-AMD


- OHR-102 Ph. III trial in wet-AMD patients with occult only choroidal

neovascularization (and patients with a diagnosis of diabetes) to initiate in 2H15

Management Team

Irach Taraporewala, CEO (Mystic Pharmaceuticals, PAREXEL, Advanced

Viral Research Corporation, NIH, University of Bombay – Ph.D.)

Jason Slakter, CMO (SKS Ocular LLC, Digital Angiography Reading

Center, Potentia Pharmaceuticals / Novartis, New York University School

of Medicine)

Sam Backenroth, CBO (The Benchmark Company LLC)

Notable Investors AIGH Investment Partners, Broadfin Capital, Visium Asset Management

Financials

- Market Cap: ~$95M

- ~$32.8MM cash on hand, as of Mar. 2015


81


Ophthotech (NASDAQ: OPHT)

Company Description Founded in 2007, OPHT specializes in novel therapeutics to treat diseases of

the back of the eye, with a focus on developing therapeutics for age-related

macular degeneration (AMD)

- Lead candidate Fovista is a PDGF-BB inhibitor with the potential to enhance

visual outcomes in wAMD pts. when used in combo with anti-VEGF therapy

- Seasoned mgmt. team with previous experience and success in developing

Macugen, the first anti-VEGF therapy at Eyetech Pharmaceuticals

One Penn Plaza. Suite 1924

New York, NY 10110


- Fovista inhibits the activity of PDGF (Platelet-derived growth factor), which is

responsible for pericyte recruitment, survival, and maturation. In combination

with anti-VEGFs, Fovista intravitreal injection (IVT) holds the potential to

disrupt the formation of abnormal new blood vessels in wet AMD (wAMD).

o Ph. 2b demonstrated statistically significant improvement in visual acuity over anti-

VEGF monotherapy: 10.6 on Fovista+Lucentis vs. 6.5 letters on Lucentis alone

(p=0.019)

o Intriguing Ph. 2 investigator-sponsored trial data suggests activity of Fovista add-on

therapy in anti-VEGF failures and monotherapy as pretreatment before VEGF

inhibitors

o Ongoing Ph. 3 program of Fovista add-on therapy to anti-VEGFs is expected to

generate pivotal data beginning 2H16

- Zimura is a Complement Factor 5 targeted pegylated aptamer that dampens

the pathological inflammation afflicting AMD (dry & wet) pts.

- Ph. 2a clinical data in dAMD showed early signs of efficacy

- OPHT plans to develop Zimura in a sub population of wAMD pts who do not

respond adequately to anti-VEGF monotherapy and are defined as resistant

on the basis complement mediated inflammation

Recent News

- May, 2015: Completes Patient Recruitment of the First Phase 3 Pivotal

Trial of Fovista® Anti-PDGF Therapy in Combination with Lucentis® in

Wet Age-Related Macular Degeneration Program

- Mar, 2015: Received second $50M enrollment milestone from NVS

- Sept, 2014: Received first $50M enrollment milestone from NVS


- Fovista + Lucentis Ph. 3 data (NCT01940887, NCT01944839) in 2H16

- Fovista NDA and MAA application in both US and EU before end of 2016

- Fovista + Eylea / Avastin Ph. 3 data in 2017

- As part of Fovista expansion program, Ph. 2 studies (NCT02387957,

NCT02214628) to read out data in 1Q17

- Zimura + anti-VEGF Ph. 2 trial (NCT02397954) in Idiopathic Polypoidal Choroidal

Vasculopathy (IPCV) completion by 4Q15

Financials

- Market cap: ~$2.3B

- IPO: $175.7M in Sept, 2013; follow-on: $55.5M in Feb, 2014

- ~$433M cash on hand as of March 2015

- NVS deal: $200M upfront, up to $130M for Ph. 3 enrollment milestones, up to

$300M and $400M for ex-US marketing and sales milestones, respectively, in

Mar, 2014

- AVEO deal: OPHT pays $500K upfront and additional fees based on progress

and future sales in Nov, 2014

Management Team

David R. Guyer M.D., CEO (SV Life Sciences, Eyetech Pharma, John’s

Hopkins – MD, Yale)

Michael G. Atieh, CFO (Eyetech Pharma, Merck)

Kourous A. Rezaei, M.D., CMO (Uchicago, University of Cologne – MD)

Evelyn Harrison, COO (Eyetech Pharma, Hoffmann-La Roche, Manhattan

College – MBA, Hofstra)

Notable Investors - NOVO A/S

- HBM Healthcare Investments ltd

- Clarus lifesciences II, LP


82


Spark Therapeutics (NASDAQ: ONCE)

Company Description Founded in 2013, ONCE focuses on developing gene therapy products for

patients suffering from debilitating genetic diseases. Current focus is on treating

inherited retinal dystrophies

- ONCE leverages integrated gene therapy platform at The Children’s Hospital

of Philadelphia (CHoP) spanning manufacturing, regulatory, translational,

and clinical areas to facilitate product development

- Founders and scientific personnel have deep expertise in gene therapy

3737 Market Street, Suite 1300

Philadellphia, PA 19104


- Ongoing Ph. 3 trial of subretinal administration of SPK-RPE65 for Leber’s

Congenital Amaurosis (LCA) due to RPE65 mutations

o Neutralized viral vector-mediated gene transfer of human RPE65 gene

(AAV2-hRPE65v2)

o Ph. 1 dose-escalation trial shows no significant AE after 5 years, and

recipient children no longer rely on visual aids after single injection

o Received orphan product designation in US and EU for LCA due to RPE65

mutation; received US FDA’s breakthrough designation for nyctalopia (night

blindness) for same indication in Nov, 2014

o Market: ~3,500 in US & 5 major EU markets

- Initiation of Ph. 1/2 (NCT02341807) dose escalation trial of subretinal

administration of SPK-CHM for choroideremia (CHM) in Jan, 2015

o SPK-RPE65 follow-on; gene transfer of human CHM gene (AAV2-hCHM)

o Pre-clinical data showed restoration of REP-1 protein production,

membrane trafficking, and retinal structure

o Market: ~12,500 in US & 5 major EU markets

- 2 pre-clinical and 1 IND candidates for inherited retinal dystrophies and

hematologic disorders

Recent News

- Apr, 2015: Exclusive option announced with Clearside Biomedical to

license microinjector delivery technology

- Mar, 2015: US FDA grants orphan drug designation for AAV2-hRPE65

- Dec, 2014: Gene therapy collaboration with PFE for hemophilia B


- SPK-RPE65 Ph. 3 (NCT00999609) data expected in 2H15

- BLA (biologics licensing application) submission for SPK-RPE65 in 2016

- IND-enabling studies ongoing and Ph. 1/2 trial

Financials

- Market cap: ~$1.5B

- IPO: $169.2M in Feb, 2015

- ~$75M of cash-on-hand as of end of 4Q14

- PFE hemophilia deal: $20M upfront; up to $260M in milestones

Management Team

Jeffrey D. Marrazzo, Co-Founder & CEO (Wharton/Harvard - MBA/MPA,

UPenn)

Katherine A. High M.D., Co-Founder & CSO (CHoP, FDA, UNC – MD,

UPenn – Master’s, Harvard)

Stephen Webster, CFO (Optimer Pharma, Adolor Corp, Wharton – MBA,

Dartmouth)

J. Fraser Wright, Ph.D, Co-Founder & CTO (CHoP/UPenn, Avigen,

U.Toronto – PhD)

Notable Investors - Children’s Hospital of Philadelphia (CHoP)

- Sofinnova Venture Partners VIII, LP

- Baker Bros. Advisors, LP


83


Oxford BioMedica (LSE: OXB-LO)

Company Description Our mission is to build a valuable, profitable biopharmaceutical company for our

shareholders through the successful development and commercialization of

breakthrough gene and cell-based medicines that improve the lives of patients.

- Leveraging proprietary LentiVector® technology: one of the best gene

delivery systems available, invented by the company’s founders through

pioneering work initially at Oxford University and then through in-house

development

Windrush Court, Transport Way

Oxford OX4 6LT, United Kingdom


- Ongoing Ph. I trial of RetinoStat is ongoing

o Gene-based treatment for neovascular “wet” AMD and could also be used

for diabetic retinopathy (DR)

o Ph. 1 met primary safety and tolerability endpoint at 6 months post-surgery

(Nov, 2014)

- Two retinal disease gene therapies (StarGen™ for Stargardt disease, and

UshStat® for Usher syndrome type IB) were licensed

o ~80,000-100,000 patients in the US and EU suffer from Stargardt disease –

it is the most common juvenile degenerative retinal disease

- Pipeline of preclinical candidates including EncorStat® for Corneal graft

rejection and Glaucoma-GT for the prevention of wet-AMD

Sanofi partnership agreement (Jun. 2012) & license acquisition (Mar. 2014)

- Sanofi was granted global development and commercialization rights to

StarGen™ and UshStat® across all ocular indications

- OXB is entitled to development and commercialization milestone payments

& royalties from future sales of StarGen™and UshStat®

Recent News

- May, 2014: Announced that it will regain worldwide rights to RetinoStat


- RetinoStat® Ph. I final data results expected in mid-2015 (NCT01301443; 21 pts)

- EncorStat® Phase I/II studies to start in 2016

- Glaucoma-GT preclinical studies in prevention of wet-AMD expected to finish by

YE16

Financials

- Market Cap: ~$300M

- As of Dec, 2014: $20.9M in total cash

- Sanofi deal (StarGen™/ UshStat®) – $24M for development funding + $3M

for license acquisition from Sanofi

Management Team

John Dawson, CEO (Cephalon, Serono Laboratories)

Tim Watts, CFO (Archimedes Pharma, AstraZeneca PLC, H J Heinz,

Coopers & Lybrand)

Peter Nolan, CBO (UK Department of Trade & Industry, Laboratory of the

Government Chemist, Metropolitan Police Laboratory in London)

Paul Blake, CDO (Æterna Zentaris, Cephalon, SmithKline Beecham

Pharmaceuticals, London University – Royal Free Hospital)

Notable Investors UBS Investment Management, M&G Investment Management, HSBC


84


http://www.oxfordbiomedica.co.uk/

Neurotech (Private)

Company Description Neurotech is focused on the development of transformative therapies for

chronic eye diseases

- Patented core technology platform: encapsulated cell therapy (ECT) enables

continuous production of therapeutic proteins to the eye for at least 2 years

- Implantable device separates product from host, but diffusion of therapeutics

is unperturbed

900 Highland Corporate Dr.

Cumberland, RI 02864


- Lead product: NT-503 for wet-AMD (anti-VEGF)

o Device configurations enable dose customization of 0.3-12 μg/day

- NT-506, a combination therapy for wet-AMD (anti-VEGF & anti-PDGF)

o Single implant produces both receptor proteins for at least 2 years

- NT-501 for retinal degenerative diseases including retinitis pigmentosa (RP)

and macular telangiectasia (MacTel) (ciliary neurotrophic factor, CNTF)

o Granted orphan-drug designation for MacTel in Jul, 2012

o Granted fast track designation for two indications – RP and dry-AMD – in

Sept, 2008

o Demonstrated photoreceptor preservation and slowed vision loss

o Exclusive license to develop and market CNTF granted from AMGN in Jan

2002

Recent News

- March, 2015: FDA accepts IND for NT-503

- March, 2015: appointment of new CMO, Dr. Charles Johnson

- April, 2014: appointment of new CEO, Quinton Oswald


- NT-501 Ph. 1 trial data (NCT01327911) in MacTel expected in 3Q16

- NT-501 Ph. 2 trial data (NCT01530659) in early stage RP expected in 3Q17

- NT-501 Ph. 2 trial data (NCT01949324) for MacTel expected 3Q16

- NT-503 Ph. 1/2 trial data (NCT02228304) in choroidal neovascularization

secondary to AMD expected in 4Q17

Financials

- Series A: $14.6M in Oct, 2003

- Series B: $35M in Nov, 2006

- RI State financing: $4M in Jan, 2008

- FDA Orphan Product division grant: $1.5M in Sept, 2012

- Series C: $3M bridge loan in Mar ,2013

- Series F: undisclosed in YE14

Management Team

Quinton Oswald, President & CEO (SARcode/Shire, Genentech, NVS)

Charles Johnson M.D, CMO (VRTX, INSP, APT Pharmaceuticals,

Genentech, U of Cape Town - MD)

Richard Small, CFO (Point Therapeutics, Immunologic, Northeastern)

Notable Investors - Apax Partners France, Merlin Biosciences, Atlas Venture, Mayflower, Avida

Group, and Alpha Associates, 3i Plc, GIMV, West LB, Ergo Equity

- Versant Ventures, SV Life Sciences, Omega Fund, Nexus Medical partners,

and Pound Capital (participated in Series B)


85


PanOptica (Private)

Company Description PanOptica seeks to license and develop innovative therapeutics including

improvements to existing therapies or entirely new treatments for previously

untreatable disorders

- Identified and evaluated >70 assets since inception

- Lead candidate PAN-90806 is a novel, small-molecule selective VEGF

receptor antagonist that shows promise as a topical treatment for wet age-

related macular degeneration and diabetic retinopathy

150 Morristown Road, Suite 205

Bernardsville, NJ 07924


- PAN-90806 is a potent and selective inhibitor of VEGF, a protein that plays a

critical role in angiogenesis (the formation of new blood vessels) and

increased permeability (leakage from blood vessels)

o Preclinical neonatal CNV mice study performed in conjunction with

investigators at the Wilmer Eye Institute at John Hopkins University

showed that that PAN-90806 decreased lesion size compared with a

control group that received no treatment

o Similarly, in mice with oxygen-induced ischemic retinopathy, PAN-90806

demonstrated significant reduction of the mean area of pre-retinal

neovascularization compared with controls, an experimental model relevant

to diabetic retinopathy

o Ongoing Ph.1 dose-escalation study in active, subfoveal CNV with

neovascular AMD, comparing PAN-90806 vs. pbo.

Recent News

- Apr, 2014: Appointment of Colin Goddard, former CEO of OSI

Pharmaceuticals to Board of Directors

- Apr, 2014: Completes $45M Series B financing


- PAN-90806 Ph. 1 data (NCT02022540) expected in YE15

Financials

- Series A: $30M in Jan, 2011

- Series B: $45M in Apr, 2014

Management Team

Paul Chaney, President & CEO (OSI Pharmaceuticals, Eyetech

Pharmaceuticals, U of Delaware)

Martin Wax M.D., CMO (Alcon, UT Southwestern, USC – MD, U of

Rochester)

Lori Forest, Director of Finance (Helsinn Therapeutics, Vivus, Rutgers)

Notable Investors - Series A: SV Life Sciences and Third Rock Ventures

- OSI Pharmaceuticals (Astellas) takes equity interest after PAN-90806

licensing

- Series B (new): Novo Ventures


86


Regeneron Pharmaceuticals (NASDAQ: REGN)

Company Description A leader in human antibody technologies with a diversified pipeline of antibody

drug candidates against both novel and validated drug targets in diseases

ranging from ophthalmology to oncology and auto-immune disorders

(rheumatoid arthritis, atopic dermatitis, etc.) and hypercholesterolemia

- Strategic multi-year profit-sharing collaboration with SNY

- Partnered with Bayer ex-US for its leading ophthalmology anti-VEGF product

Eylea, now approved in four indications (wAMD, DME, RVO, DR)

Products and Pipeline (ophthalmology only)

- EYLEA, also referred to in scientific literature as VEGF Trap-Eye and

intravitreal aflibercept injection, has increasingly proven to be the anti-VEGF

of choice in wAMD among retina specialists since its original FDA approval

in 2011.

o Recent sales growth driven by NIH-sponsored comparative study results showing

superior improvement with EYLEA in DME patients vs. Lucentis and Avastin

- Rinucumab/REGN2176-3, anti-PDGF receptor-beta monoclonal antibody co-

formulated with Eylea, currently being studied in 500-pt. Ph. 2 study

o Ph.1 trial showed no DLTs, ocular inflammation or TR-SAEs; visual acuity was

stable or increased in majority of patients. Central retinal thickness decreased in all

4 dose cohorts, with the greatest decrease in the first and second cohorts

- REGN910-3, an anti-ANG2 antibody monoclonal antibody co-formulated with

Eylea, currently being studied in a Ph.1 trial enrolling wAMD & DME pts.

- Partnership with AAVL to pursue gene therapy candidates in orphan

monogenic retinal disorders such as XLRS


- Ph. I trial of Rinucumab/REGN-910-3 (anti-ANG2 mAb co-formulated with Eylea)

in wAMD or DME to read out data in 2H15

- Ph. II trial of REGN-2176-3 (anti-PDGF co-formulated with Eylea) in wAMD to

read out data in 2Q16

Financials

- Market cap: $57.5B

- EYLEA US net product sales: 1Q15: $541M (2015), FY14: $1.8B

- EYLEA ex-US sales: $292M (2015), $218M (2014)

- Cash and cash equivalents: $1.2B, as of Mar, 2015

Management Team

Leonard S. Schleifer, M.D., Ph.D., Founder, President & CEO (Univ. of

Virginia)

George D. Yancopoulos, M.D., Ph.D., Founder & CSO (Columbia – MD

PhD)

Notable Investors - SNF (22.56%), George D. Yancopoulos (1.06%)

Recent News

- July, 2015: REGN and SNY Launch Major New Immuno-Oncology Collaboration

- July, 2015: FDA Approval of Praluent® (alirocumab) Injection, the First PCSK9

Inhibitor in the U.S., for the Treatment of High LDL Cholesterol in Adult Patients

- May 2015: Announce Positive Topline Results from Phase 3 Studies with

Sarilumab in Patients with Rheumatoid Arthritis

- May, 2015: Positive Pivotal Phase 2b Dupilumab Data in Asthma Presented at the

American Thoracic Society 2015 International Conference

- March, 2015: EYLEA® Receives FDA Approval for the Treatment of Diabetic

Retinopathy in Patients with Diabetic Macular Edema (DME)

777 Old Saw Mill River Road

Tarrytown, NY 10591


87


Translatum Medicus (Private)

Company Description TMi has reverse-engineered its scientific program and developed a translational

platform that extends from disease model, to biomarker, to a short pipeline of

compounds that have pre-clinical efficacy with known clinical safety. TMi is

dedicated to saving sight for patients with Age-Related Macular Degeneration

- The company’s goal is to accelerate & de-risk drug development for non-

exudative “dry” Age-Related Macular Degeneration


- Pre-clinical studies to treat dry AMD

- TMI-018 is a first-in-class transcriptional modulator that has demonstrated

safety in Ph. II & III trials for autoimmune disease


- Seed funding

- Ongoing pre-clinical toxicity studies

- Phase I, IIa, IIb clinical trials

Management Team

Shelley Boyd, MD, FRCSC, President & CSO (Toronto Center for

Phenogenomics, Association Professor, University of Toronto, Novartis)

Notable Investors Unknown

Recent News

- October, 2014: Selected to present in the BioPharma Company Showcase

at the Ophthalmology Innovation Summit

- May, 2014: TMi’s novel method wins “Outstanding poster award” at ARVO

Financials

- Unknown


88


Vision Medicines (Private) Company Description Vision Medicines is a biopharmaceutical company focused on developing an

ophthalmology pipeline for retinal diseases, including orphan diseases for which

there are no treatments


VM100 Phase 2-ready for intermediate age-related macular degeneration

(iAMD)

• Systemically administered anti-Aβ mAb to reduce retinal deposits of toxic Ab

fragments and activated complement

• Potential first treatment to prevent progression from iAMD to advanced AMD

(wet AMD or geographic atrophy)

No current treatments

Opportunity to treat patients earlier in their disease

Prevent progression to irreversible blindness

• Additional indication of geographic atrophy

• Phase 1a and 1b study demonstrated favorable safety profile (61 patients

treated)

VM200 Preclinical (IND-enabling) for Stargardt disease (orphan disease)

• No current treatments

• Severe blinding disease that affects children

• 100K in US/EU5/JP

• Oral, small molecule

• Sequesters toxic all-trans retinal to prevent retinal cell death

• In mouse model of Stargardt disease, preserved retinal structure and

function

• No significant tox findings in a 2-week rodent tox study


VM100 for iAMD • Phase 2 will begin in 4Q 2015

• 1st PoC readout at the end of 2016

• Final PoC data at the end of 2017

VM200 for Stargardt disease (orphan disease) • IND filing early 2016

• Phase 1 will begin in 2016

• Phase 2 will begin in 2017

• PoC data in 1H 2018

Financials

Vision Medicines is a privately held company

Management Team

Chris Varma, PhD, Chairman, President and CEO (Blueprint Medicines,

Third Rock Ventures, Flagship Ventures, Novartis, Millennium)

Robert Kim, MD, EVP, Research and Development and Chief Medical

Officer (Novartis/Alcon, GSK, Genentech, UCSF)

Jonae Barnes, SVP, Corporate Development, Investor Relations and

Corporate Communications (Agenus, Sepracor)

Brinda Balakrishnan, MD, PhD, VP, Product Development and Corporate

Strategy (Beth Israel, McKinsey, Genzyme, Cordis)

Notable Investors Vision Medicines has received non-dilutive funding from a prestigious

foundation.

Recent News

Vision Medicines has secured $7.5M in non-dilutive funding from a prestigious

foundation for VM200 for Stargardt disease.

One Marina Park Drive, Suite 315

Boston, MA 02110


89



Disclosures AppendixAnalyst CertificationI, Joseph P. Schwartz, certify that the views expressed in this report accurately reflect my views and that no part of mycompensation was, is, or will be directly related to the specific recommendation or views contained in this report.

90


Distribution of Ratings/Investment Banking Services (IB) as of 06/30/15IB Serv./Past 12

Mos.Rating Count Percent Count PercentBUY [OP] 165 73.66 66 40.00HOLD [MP] 59 26.34 1 1.69SELL [UP] 0 0.00 0 0.00

Explanation of Ratings

Outperform (Buy): We expect this stock to outperform its benchmark over the next 12 months.

Market Perform (Hold/Neutral): We expect this stock to perform in line with its benchmark over the next 12months.

Underperform (Sell): We expect this stock to underperform its benchmark over the next 12 months.The degreeof outperformance or underperformance required to warrant an Outperform or an Underperform rating shouldbe commensurate with the risk profile of the company.

For the purposes of these definitions the relevant benchmark will be the S&P 600® Health Care Index forissuers with a market capitalization of less than $2 billion and the S&P 500® Health Care Index for issuers witha market capitalization over $2 billion.

91


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Like all Firm employees, analysts receive compensation that is impacted by, among other factors, overall firmprofitability, which includes revenues from, among other business units, Institutional Equities, and InvestmentBanking. Analysts, however, are not compensated for a specific investment banking services transaction.

MEDACorp is a network of healthcare professionals, attorneys, physicians, key opinion leaders and otherspecialists accessed by Leerink and it provides information used by its analysts in preparing research.

For price charts, statements of valuation and risk, as well as the specific disclosures for covered companies,client should refer to https://leerink2.bluematrix.com/bluematrix/Disclosure2 or send a request to LeerinkPartners Editorial Department, One Federal Street, 37th Floor, Boston, MA 02110.

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92

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