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$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
$SNGX Nnational.2.1.2010
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$SNGX Nnational.2.1.2010

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$SNGX National Securities Feb 2010

$SNGX National Securities Feb 2010

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  • 1. Fundamental Research: Biotechnology NATIONAL SECURITIES February 1, 2010 Established 1947, Member FINRA/SIPCSoligenix Investment Thesis We are initiating coverage of Soligenix with a Buy rating. We see the company’s :Ticker: lead product, orBec® (oral belcomethasone dipropionate or BDP) as a low risk, high reward proposition in acute, prophylactic and chronic GI GvHD (graft-versus-SNGX host disease), as well as for the prevention of acute radiation enteritis (cancer patients). The localized (oral) administration of this corticosteroid (through aCurrent Price: proprietary drug release formulation) has demonstrated efficacy in prior clinical$0.24 trials. The company is now running a confirmatory Phase 3 trial with data expected in the first half of 2011. We view the outcome of this trial as low riskRecommendation: given its design and the prior clinical history demonstrated with orBec®.BUY Highlights orBec® for GI GvHD: Now in a confirmatory Phase 3 trial: orBec® is an oral,Price Target: $1.50 locally acting therapy tailored to treat the gastrointestinal (GI) manifestations of GVHD. We believe the prior clinical record (Phase 2 and Phase 3) have set theTime Frame: stage for a positive outcome with the current pivotal trial.12 Months Is there Clinical Risk? In our opinion this has been minimized. Based on data from the prior Phase 3 study of orBec®, the upcoming confirmatory Phase 3 clinical trial will be a highly powered, double-blind, randomized, placebo-Jason Kolbert controlled, multi-center trial with a target enrollment of 166 patients. The primary(212) 417-8287jkolbert@nationalsecurities.com endpoint on the new study is the treatment failure rate at study day 80. This endpoint was successfully measured as a secondary endpoint (p-value 0.005) in LAST $0.24 the previous Phase 3 study which enrolled 129 patients. This clinical trial has now ANNHIGH $0.38 begun with results expected in the first half of next year. ANNLOW $0.09 Shares O/S-Diluted (model) 185,687 Market Capitalization (mln) $44 Soligenix has reached agreement on the design of the current confirmatory Phase100-Day Average Daily Volume 453 3 clinical trial evaluating orBec® for the treatment of acute GI GVHD with both the FDA and EMEA. The agreement with the FDA was gained via the FDAs Special Protocol Assessment (SPA) procedure. An agreement via the SPA procedure is an agreement with the FDA that a Phase 3 clinical trial design (e.g., endpoints, sample size, control group and statistical analyses) is acceptable to support a regulatory submission seeking new drug approval. The agreement with the EMEA was obtained via the procedure for requesting Protocol Assistance.Source:BigCharts.com Is GvHD an Unmet medical Need? Acute GI GvHD is a debilitating and painful disease and constitutes an unmet medical need. It is a common disorder among immunocompromised cancer patients and occurs after these patients receive hematopoietic cell transplantation (HCT). Unlike organ transplants where the patients body may reject the organ, in GvHD it is the donor cells that begin to attack the patients (hosts) body, most frequently the gastrointestinal tract, liver and skin. Patients with mild-to-moderate GI GvHD typically develop symptoms of anorexia, nausea, vomiting and diarrhea. If left untreated, GI GVHD can progress to ulcerations in the lining of the GI tract, and, in its most severe form, can be fatal. Current treatments include immunosuppresive therapies which themselves have a lot of side-effects and which can be suppressive to the graft itself. The idea of localized administration of steroid keeps systemic exposure low while delivering the drug in a targeted manner where it’s needed the most. National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 2. Fundamental Research:BiotechnologyFebruary 1, 2010 Beyond Acute GvHD: Soligenix currently has an NIH supported grant to study orBec®’s use in the prevention of Acute GvHD. In addition, the company is also studying orBec® for the treatment of chronic GI GvHD. The active ingredient in orBec®, belcomethasone dipropionate or BDP, is also in early stages of development for radiation enteritis (SGX201), where it has been granted fast track status and as SGX203 (Crohn’s Disease) where it has orphan status in the pediatric Crohn’s population. What is the Size of the Market Opportunity for orBec®? We believe the market opportunity in GvHD in all of its various forms represents a significant opportunity between $150 and $300 million, with a 35% royalty back to Soligenix for North America (half the worldwide GvHD marketplace). These estimates do not include the potential in radiation enteritis (SGX-201) or in Crohn’s Disease (SGX-203) which is substantially larger than GvHD. Soligenix is developing orBec® using the 505(b)(2) regulatory pathway: We view this as a lower risk approach to re-tasking already approved drugs in new indications. In this case, orBec® is formulated for oral administration as a single product consisting of two tablets: one tablet is intended to release BDP in the proximal portions of the GI tract, and the other tablet is intended to release BDP in the distal portions of the GI tract. BDP has been marketed in the U.S. and worldwide since the early 1970s as the active pharmaceutical ingredient in nasal sprays and in metered-dose inhalers for the treatment of patients with allergic rhinitis and asthma. Its properties and safety profile are well known. Special Protocol Assessment (SPA): Soligenix has negotiated a “SPA” with the FDA and has a similar agreement with the EMEA. Positive results in the current confirmatory Phase 3 study should lead to market approval in both the US and all 27 EU member states. We note that Soligenix has not yet partnered orBec® in the EU or ROW. In our model we assume a partnership will occur with 35% royalty back to Soligenix. We do not, however, project any partnership milestones in Europe (for the sake of conservatism). Orphan Drug: orBec® has been granted orphan status in the US for acute and chronic GI GvHD, as well as the prevention of acute GVHD. orBec® also has orphan status in the EU for GI GvHD. In terms of patent protection, Soligenix has an issued patent on the treatment and prevention of GI GVHD through 2019. Orphan status provides protection in the US for seven(7) years and in Europe for ten (10) years (post market exclusivity). Fast Track Designation: orBec® has been granted fast track designation. From the FDA website: “Fast track is a process designed to facilitate the development, and expedite the review of drugs to treat serious diseases and fill an unmet medical need. The purpose is to get important new drugs to the patient earlier. Fast Track addresses a broad range of serious diseases”. Once a drug receives Fast Track designation, early and frequent communication between the FDA and a drug company is encouraged throughout the entire drug development and review process. In our discussions with Soligenix management, we find that this is the case. This frequent communication should, in effect, lower risk around trial design and outcomes and lead to an earlier drug approval. Sigma-Tau is the Partner: Soligenix licensed rights for North American and Mexico for orBec® and oral BDP to Sigma-Tau Pharmaceuticals, Inc. Soligenix receives a 35% royalty on all sales, and stands to receive $9 million in additional milestones over the next several years. Sigma-Tau will cover the costs of commercialization. Soligenix maintains manufacturing rights. National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 3. Fundamental Research:BiotechnologyFebruary 1, 2010 The Biodefense Platform: Soligenixs biodefense activities are focused on developing biomedical countermeasures pursuant to the Project BioShield Act of 2004. Specifically, Soligenix’s lead program is a bioengineered vaccine designed to protect against the deadly effects of ricin toxin, which is considered a serious bioterrorism threat. There may also be additional utility in this platform in more traditional vaccines, such as flu. Soligenix is the world leader in ricin toxin vaccine research. Soligenix has achieved positive Phase 1 clinical trial results with RiVax™, demonstrating that the vaccine is well tolerated and induces antibodies in humans that neutralize the ricin toxin, recently shown to be 2,000-fold more toxic than previously thought. Soligenix can also manufacture RiVax™ at scale and under cGMP conditions. Having met these clinical and manufacturing conditions, RiVax™ is eligible for government procurement orders. There are no FDA-licensed vaccines or therapeutics against ricin toxin. Drug Delivery Platform: Soligenix has also developed a proprietary Lipid Polymer Micelle (LPM™) drug delivery technology. This technology is currently being used to enhance the oral delivery of leuprolide for the treatment of prostate cancer and endometriosis. Company Background Soligenix is a late-stage biopharmaceutical company with a significant product in orBec®, currently in a confirmatory Phase 3 pivotal trial for acute gastrointestinal graft-versus-host disease (GI GvHD). The development road for orBec® has been long and the company’s trial and regulatory expertise has grown dramatically since CEO Christopher J. Schaber, PhD took over operations. Soligenix has two (2) strategic areas of focus: 1. A therapeutics platform dedicated to the development of products for life-threatening conditions such as GI GvHD and Cancer; 2. A biodefense platform to develop vaccines for military and civilian applications. We conducted an in-depth review on the outlook for these programs, the catalysts and associated risks, and the commercial opportunities ahead. We conclude that Soligenix is undervalued relative to the opportunities and pipeline potential of the company. The Biotherapeutics Platform: orBec® (oral beclomethasone dipropionate or BDP) is a potent, locally acting corticosteroid being developed for the treatment, as well as the prevention, of acute and chronic gastrointestinal Graft-versus-Host disease (GI GvHD). GI GvHD is a common and potentially life-threatening complication of allogeneic hematopoietic cell transplantation (HCT). orBec® fits ideally into a recent trend we have observed: a re-tasking theme that finds new life for existing therapeutics. A common element in this re-tasking theme is the 505(b)(2) pathway which has certain inherent advantages: typically a faster pathway to marketplace, which allows the sponsor to claim an additional period of market exclusivity (three or five years), depending on the extent of change to the previously approved drug. orBec® (oral BDP) is designed to be an oral, locally acting therapy tailored to treat the GI manifestation of GvHD and reduce the need for systemic immunosuppressive drugs (e.g., prednisone). BDP is a highly potent, topically active corticosteroid that has a local effect on inflamed tissue. It is formulated as a single product consisting of two tablets: one intended to release BDP in the upper portions of the GI tract, and the other in the distal portions. National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 4. Fundamental Research:BiotechnologyFebruary 1, 2010 The Biotherapeutics Platform: (continued): orBec® is currently in a confirmatory pivotal trial with a Special Protocol Assessment (SPA) agreement in place with the FDA for Acute GI GvHD. It is also being evaluated in an NIH- supported Phase 2, randomized, double-blind, placebo-controlled clinical study for the prevention of acute GvHD. In addition, the company plans to initiate a Phase 2 study for the treatment of chronic GI GvHD in 2010. We explore each of these markets and the inter-relations that exist between them. Given orBec® or oral BDP’s utility in GI disease, Soligenix is also investigating its use for the prevention and/or treatment of other GI disorders that are also characterized by inflammation. These include its utility in radiation enteritis (SGX201) and Crohn’s Disease (SGX203), and, on the BioDefense platform, its utility as a countermeasure against radiation injury (SGX202). Exhibit 1: Upcoming Potential Catalysts by Time Sequence Product Indication Event Timing Significance orBec® GVHD Acute FDA Grants SPA for Phase III trial completed orBec® GVHD (all) Sigma Tau Partnership for North American - 35% Royalty to Soligenix completed orBec® GVHD Acute EMEA Agreement of Phase III trial completed orBec® GVHD Acute Phase III Trial Start completed SGX-201 Radiation Enteritis Fast Track Status Granted completed SGX-201 Radiation Enteritis Initiate Phase I/II Radiation Enteritis Starts (4 centers) completed RiVax™ Ricin Vaccine Complete Phase 1a trial (safety in man); Blood titers efficacious in mice completed orBec® GVHD - Prevention US PII Prevention Study - Completes & Reports 1H-2010 ++ orBec® GVHD (all) EU Partnership for orBec® 1H-2010 ++ RiVax™ Ricin Vaccine Complete Phase 1b trial 1H-2010 + orBec® Chronic GVHD Initiate Phase II Study Chronic GVHD 2H-2010 + SGX-202 Radiation Injury Animal Efficacy Studies 2H-2010 + LPM Leuprolide (prostate cancer) Initiate Phase I Pka Study: Proof of Concept in Man 2H-2010 + orBec® GVHD - Prevention US PIII Pivotal Program Begins 1H-2011 + orBec® GVHD Acute Phase III Trial Completes & Reports 1H-2011 +++ orBec® GVHD Acute NDA Filed (class II Amendment to existing NDA - 6 mos review) 2H-2011 +++ SGX-201 Radiation Enteritis Phase I/II Radiation Enteritis Completes & Reports 1H-2011 ++ LPM Leuprolide (prostate cancer) Proof of Concept in Man : Report Data: ≥15% oral bioavailability in man 2H-2011 + SGX-203 Crohns Disease Program Phase II Study 1H-2011 ++ RiVax™ Ricin Vaccine Begin PII in Man: (Safety) & Efficacy (blood titers) in Animal Model 1H-2011 + SGX-201 Radiation Enteritis Pivotal Study Begins 1H-2012 + LPM Leuprolide (prostate cancer) Partnership Deal for "LPM Platform" 1H-2012 ++ orBec® GVHD Acute NDA Approved 1H-2012 ++ orBec® GVHD - Chronic Complete Phase II Study Chronic GVHD 1H-2012 +++ orBec® GVHD - Acute US GVHD Acute Launch 1H-2012 + orBec® GVHD - Acute EU GVHD Acute Launch 2H-2012 + RiVax™ Ricin Vaccine Report PII Data 2H-2012 + orBec® GVHD - Prevention Complete & Report Pivotal Prevention Study 2H-2012 ++ orBec® GVHD - Chronic US GVHD Chronic Pivotal Program 2H-2012 + orBec® GVHD - Prevention US GVHD Prevention Launch 2013 + orBec® GVHD - Prevention EU GVHD Prevention Launch 2013 + orBec® GVHD - Chronic US GVHD Chronic Completes & Reports 2014 ++ orBec® GVHD - Chronic US GVHD Chronic Launch 2014 + orBec® GVHD - Chronic EU GVHD Chronic Launch 2014 + SGX-201 Radiation Enteritis Pivotal Study Completes & Reports 2014 + RiVax™ Ricin Vaccine BARDA-DOD- HHS Review: Procurement 2014 ++ SGX-201 Radiation Enteritis Approval & Launch 2015 ++ Stock Significance Scale: + of moderate importance; ++ higher level; +++ highly Source:National Securities Forecasts and Company reports. National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 5. Fundamental Research:BiotechnologyFebruary 1, 2010 Exhibit 2: Upcoming Potential Catalysts by Product Product Indication Event Timing Significance orBec® GVHD Acute FDA Grants SPA for Phase III trial completed orBec® GVHD (all) Sigma Tau Partnership for North American - 35% Royalty to Soligenix completed orBec® GVHD Acute EMEA Agreement of Phase III trial completed orBec® GVHD Acute Phase III Trial Start completed orBec® GVHD Acute Phase III Trial Completes & Reports 1H-2011 +++ orBec® GVHD Acute NDA Filed (class II Amendment to existing NDA - 6 mos review) 2H-2011 +++ orBec® GVHD Acute NDA Approved 1H-2012 ++ orBec® Chronic GVHD Initiate Phase II Study Chronic GVHD 2H-2010 + orBec® GVHD - Chronic Complete Phase II Study Chronic GVHD 1H-2012 +++ orBec® GVHD (all) EU Partnership for Orbec® 1H-2010 ++ orBec® GVHD - Acute US GVHD Acute Launch 1H-2012 + orBec® GVHD - Acute EU GVHD Acute Launch 2H-2012 + orBec® GVHD - Prevention US PII Prevention Study - Completes & Reports 1H-2010 ++ orBec® GVHD - Prevention US PIII Pivotal Program Begins 1H-2011 + orBec® GVHD - Prevention Complete & Report Pivotal Prevention Study 2H-2012 ++ orBec® GVHD - Prevention US GVHD Prevention Launch 2013 + orBec® GVHD - Prevention EU GVHD Prevention Launch 2013 + orBec® GVHD - Chronic US GVHD Chronic Pivotal Program 2H-2012 + orBec® GVHD - Chronic US GVHD Chronic Completes & Reports 2014 ++ orBec® GVHD - Chronic US GVHD Chronic Launch 2014 + orBec® GVHD - Chronic EU GVHD Chronic Launch 2014 + SGX-201 Radiation Enteritis Fast Track Status Granted completed + SGX-201 Radiation Enteritis Initiate Phase I/II Radiation Enteritis Starts (4 centers) completed + SGX-201 Radiation Enteritis Phase I/II Radiation Enteritis Completes & Reports 1H-2011 ++ SGX-201 Radiation Enteritis Pivotal Study Begins 1H-2012 + SGX-201 Radiation Enteritis Pivotal Study Completes & Reports 2014 + SGX-201 Radiation Enteritis Approval & Launch 2015 ++ LPM Leuprolide (prostate cancer) Initiate Phase I Pka Study: Proof of Concept in Man 2H-2010 + LPM Leuprolide (prostate cancer) Proof of Concept in Man : Report Data: ≥15% oral bioavailability in man 2H-2011 + LPM Leuprolide (prostate cancer) Partnership Deal for "LPM Platform" 1H-2012 ++ RiVax™ Ricin Vaccine Complete Phase 1a trial (safety in man); Blood titers efficacious in mice completed + RiVax™ Ricin Vaccine Complete Phase 1b trial 1H-2010 + RiVax™ Ricin Vaccine Begin PII in Man: (Safety) & Efficacy (blood titers) in Animal Model 1H-2011 + RiVax™ Ricin Vaccine Report PII Data 2H-2012 + RiVax™ Ricin Vaccine BARDA-DOD- HHS Review: Procurement 2014 ++ SGX-202 Radiation Injury Animal Efficacy Studies 2H-2010 + SGX-203 Crohns Disease Program Phase II Study 1H-2011 ++ Stock Significance Scale: + of moderate importance; ++ higher level; +++ highly Source:National Securities Forecasts and Company reports. Exhibit 3: Soligenix development pipeline Development Stage Product Preclinical Phase I Phase II Phase III Market Orbec® GVHD Acute (fast track & orphan) Orbec® GVHD Prophylaxis (orphan) Orbec® GVHD Chronic (orphan) SGX-201 Radiation Enteritis (Fast Track) SGX-203 Crohns Disease (orphan) LPM Platform - DD Program Source: Soligenix Exhibit 4: Soligenix BioDefense pipeline Development Stage Product Proof of Concept Animal Efficacy IND Filing Phase 1 Phase 2/3 BLA Filing RiVax™ (Ricin Vaccine) FDA Animal Rule SGX-202 Radiation Injury FDA Animal Rule Source: Soligenix National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 6. Fundamental Research:BiotechnologyFebruary 1, 2010 Financials: We estimate that Soligenix currently has approximately $7 million in cash and equivalents or about a year’s cash. In February of last year Soligenix out-licensed North American rights of orBec® to Sigma-Tau. The company also raised an additional $4.4 million via a common stock/warrant financing. In the initial deal, Soligenix received an initial payment of $6 million with another $9 million in possible milestones over the next several years. Soligenix has since achieved the first $1 million milestone under the agreement with the recent initiation of the confirmatory phase 3 clinical trial. Soligenix is also entitled to a 35% royalty (inclusive of drug manufacture) on all North American and Mexico sales, and retains manufacturing rights to orBec®. Sigma-Tau will assume all commercialization costs in North America. We note that the company retains all rights to orBec® outside North America. Soligenix, based on these estimates, has about a year’s worth of capital. However, we believe the company is in a strong position to sign additional partnerships for other geographies to generate non-dillutive financing. Lastly, as we will examine, Soligenix has received capital through multiple grant awards which support some of its bioterapeutics research and all of its BioDefense research. Bull Case: Soligenix is undervalued as the potential for orBec® is underappreciated. The prior trials (Phase 2 & 3) and the current confirmatory Phase 3 trial have effectively de-risked the outcome. The current confirmatory trial is highly powered (90%) and of the same design (drug, dose, patient population and expected control group outcomes) as the prior pivotal trial (powered at 80%) The primary endpoint: Treatment failure rate at Study Day 80, was highly statistically significant in the previous Phase 3 trial with p-value of 0.005. Market factors suggest orBec® can acquire significant penetration in the GvHD marketplace as the first approved drug for GI GVHD. The GvHD market is concentrated and closely-knit and information is disseminated rapidly among the Key Opinion Leaders (KOL’s). Beyond GvHD (Acute, Prevention and Chronic) a wide range of other indications, such as Radiation Enteritis and Crohn’s Disease exists. North American rights are partnered with Sigma-Tau, EU and rest of world, however, are open for partnership. Soligenix also has an attractive drug delivery platform with Lipid Polymer Micelles (LPM) platform technology and a very active BioDefense program led by RiVax™ (Ricin Toxin Vaccine). All this, with a market capitalization of under $50 million. Bear Case: orBec® is similar to generic enteric-coated budesonide and other steroids which are cheaply available and used today off-label to treat GvHD. orBec® will not be able to achieve the price we project even with the pharmacoeconomic justifications, as hospitals will continue to use cheaper steroids to treat GvHD. Bears may also argue that the clinical risk is being underestimated in the current orBec® confirmatory trial. Soligenix has given away too much of the economics in the license deal with Sigma-Tau. The GvHD marketplace is small and treatment paradigm is shifting away from BMT toward new biologic therapies; as such, the market is becoming smaller, not larger, over time. The treatment paradigm in GvHD is not likely to shift towards prevention and that market opportunity is over-estimated. The market opportunity in chronic is unique in that these patients have a different set of immunological problems. As such, the clinical risk that a true benefit can be demonstrated in these patients is high. The remaining opportunities at the company, include the drug delivery platform (Lipid Polymer Micelle -LPM™) which is unproven and the company lacks the resources to continue to develop this platform. Lastly, the biodefense platform deserves minimal value as the company is totally dependent on the US Government as a client. Prior experiences with other companies suggest that the road to generate meaningful profit Is an arduous and difficult one. National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 7. Fundamental Research:BiotechnologyFebruary 1, 2010 Our Take: We know that while cheaper steroids are a potential commercial threat, multiple examples of therapeutics that were re-tasked exist in other marketplaces, and once on label, off- label use of cheap generics was eliminated. In addition, the two tablet system of immediate and time release makes orBec® unique in treating this disease. We see orBec® as the key driver for Soligenix. Based on our analysis of the Phase 2 and Phase 3 trials, we see low clinical risk in the current Phase 3 confirmatory trial. This trial uses a favorable endpoint and greater statistical powering, while keeping all other variables the same. As such, we see a high likelihood of success. The best case scenario for Soligenix is a positive outcome in the current confirmatory Phase 3, Acute GI GvHD trial, followed by positive outcome in the Phase 2 NIH sponsored prevention trial. Mechanistically, we believe a good outcome in acute GvHD does set the stage for off- label use in the prevention and chronic marketplaces. Beyond orBec® in GvHD we see tremendous potential in other GI diseases (Crohn’s), Radiation Enteritis and on the BioDefense side, Radiation Injury (orBec® as a counter-measure). We view the Biodefense and LPM platforms as creating a positive upside option for investors. On the BioDefense side, little value is TM ascribed for RiVax and/or the vaccine development platform (vaccines stable at room temperature), but investors should note that Soligenix has recently received a $9.4 million dollar development award to support the heat stabilization platform. What is GvHD? Graft-versus-host disease is a frequent complication of allogeneic hematopoietic cell transplantation (HCT). In GvHD, the donors bone marrow or stem cells attacks the patients organs and tissues, impairing his ability to function, and increasing the patients susceptibility to infection. Approximately 50 per cent of patients undergoing an allogeneic HCT with a related HLA-matched donor develop GI GvHD. GvHD is not usually a complication of autologous BMTs although there is an approximate 8% incidence after these procedures as well. GvHD is often thought of as a single disease. In fact, it is two diseases: acute GvHD and chronic GvHD. Patients may develop one, both or neither. Acute and chronic GvHD are similar in their symptoms, but different in their clinical signs and time of onset. (Clinical signs are the result of physical exams, x-rays or lab tests that confirm the existence and extent of a disease.) (See Exhibit 5.) GvHD can be a temporary inconvenience or a serious, life-threatening disease. Older transplantation patients are more likely to develop GvHD than younger patients. The incidence and severity of GVHD is also higher among patients whose bone marrow donor or stem cells are unrelated or not perfectly matched. The symptoms of GvHD are many and varied, and the list may at first be overwhelming. pp Exhibit 5: A normal upper GI Mucosa (left side) and one being attacked (Acute GvHD) Source: Soligenix National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 8. Fundamental Research:BiotechnologyFebruary 1, 2010 How is GvHD treated today? There are no approved therapies to prevent or treat GvHD, but there are many off-label therapies used to treat the condition. These include the use of immunosuppressive drugs such as cyclosporine (alone or in combination with systemic steroids, namely prednisone) and methotrexate prior to the transplant as a preventive measure. These have proven effective in reducing the severity, but not necessarily the incidence, of GvHD. They may be administered for several months post-transplant, particularly if acute GvHD progresses to Stage II, or if the patient develops chronic GvHD. These therapeutics weaken the ability of the donors immune system to launch an attack against the patients organs and tissues and they have side effects. Cyclosporine can be very toxic to the kidneys. It can cause an increase in hair growth on the body, especially facial hair on women, and, on rare occasions, can result in neurological problems such as seizures, confusion, anxiety, and changes in thought processes. Methotrexate may cause inflammation of the mouth, nose and/or throat. Side effects of prednisone include weight gain, fluid retention, elevated blood sugar level, insomnia, mood swings and/or confused thinking. One of the key concerns with using prednisone is that it suppresses the graft (bone marrow and stem cell transplantation) itself. Additionally, and, perhaps, most dangerously, prednisone suppresses the immune system and leaves the body open to opportunistic infections. Multiple studies have shown the positive correlation between infection rates and increasing doses of prednisone. Exhibit 6: orBec® - A Targeted Approach to GI GvHD. orBec® is delivered in a two-pill system. Each tablet contains 1 mg BDP, 1 Immediate Release (IR) tablet designed to release in the upper GI tract and 1 Enteric Coated (EC) tablet designed to release in the lower GI tract. The total dose is only 8 mgs BDP per day. We believe that by comparison to traditional systemic steroids regimens (prednisone), the BDP doses are substantially lower and, thus, safer. Diagram showing dispersion of Diagram showing dispersion IR tablet in the stomach of IR and EC tablets in small intestine Source: Soligenix Clinical Data – orBec® is currently in a confirmatory Phase 3 trial. In January 2007, Soligenix (at that time called DOR BioPharma) reported results from the first pivotal Phase 3 trial. The trial was 129 patient, randomized, double-blind, placebo-controlled, and multicenter. In that trial, orBec® showed statistically significant results, with reductions of risk of treatment failure and mortality rates compared to control (placebo). Unfortunately, the trial’s primary endpoint was time to treatment failure through day 50 where statistical significance was not achieved (p=0.1177), but a positive trend established. A secondary endpoint of time to treatment failure through day 80 was met (p=0.0226). Additionally, with the secondary endpoint of mortality through day 200 post transplant, orBec® did show a statistically significant improvement (p=0.014). This statistical improvement was maintained at one year post randomization (p=0.04), demonstrating that orBec® not only had an effect on controlling acute GI GvHD, but also had a positive impact on patients’ underlying cancer. National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 9. Fundamental Research:BiotechnologyFebruary 1, 2010 Exhibit 7: orBec® - Previous Phase 3 Study Results Key Results orBec n=62 Placebo n=67 p-value Time to Treatment Failure through Day 50 (primary endpoint) 0.118 Treatment Failure Rate at Day 50 18 (31%) 30 (48%) 0.051 Time to Treatment Failure through Day 80 0.023 Treatment Failure Rate at Day 80 22 (39%) 39 (65%) 0.005 Mortality Rate at 200 Days 5 Post-Transplant (8%) 16 (24%) 0.014 Source: Soligenix Exhibit 8: orBec® - Kaplan-Meier Survival Curves: Time to Treatment Failure through Day 80 p=0.0226. The curve shows a clear separation between control arm and ? Source: Hockenbery et al. 2007. Blood National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 10. Fundamental Research:BiotechnologyFebruary 1, 2010 Exhibit 9: orBec® - Comprehensive Mortality Data Percentage Long-Term Survival p-value orBec reduction in Outcomes orBec Placebo vs. placebo mortality Mortality Rate at 200 days post transplant - Pivotal Phase 3 study 5 (8%) 16 (24%) 0.013 66% Mortality Rate at 200 days post transplant - Prior Phase 2 study 3 (10%) 6 (21%) 0.18 55% Mortality Rate among mismatched donors at 200 days post transplant Pivotal Phase 3 study 1(4%) 10 (42%) 0.02 94% Mortality Rate at 1 year post randomization - Pivotal Phase 3 study 18 (29%) 28 (42%) 0.04 46% Mortality Rate at 1 year post randomization - Prior Phase 2 study 6 (19%) 9 (31%) 0.26 45% Mortality Rate at median time periods at 3.5 years – Both studies combined 37 (40%) 49 (51%) 0.03 37% Source: Hockenbery et al. 2007. Blood What is the Clinical Development Path Forward for orBec®? A Special Protocol Assessment (SPA) for confirmatory, pivotal Phase 3 clinical trial has been cleared by FDA. This confirmatory trial is highly powered and of similar design to the previous Phase 3 study with a targeted enrollment of approximately 166 patients, (powered at 90% to detect the treatment failure rate at day 80), which was highly statistically significant in the previous Phase 3 trial (p-value of 0.005). This provides us with a strong basis for our confidence in the efficacy of the outcome of the current confirmatory trial. In addition, there is EMEA agreement on the Phase 3 protocol for potential EU approval. The trial has been initiated, and completion is targeted for 1H 2011. Exhibit 10: Confirmatory Phase 3 Replicates Prior Study: Improvements in design include changing the primary endpoint to time to treatment failure at day 80 (achieved in the prior trial with a p-value of 0.005) which should increase the likelihood of success. Other key factors; drug, dose, patient population and expected control group outcomes have remained constant from the prior Phase 3 study. Prior Phase 3 Confirmatory Phase 3 Number of Sites Multicenter Multicenter Number of patients 129 166 Allogenic transplant patients with Patient Population Grade 2 GI GvHD Same Powering 80% 90% Treatment Failure Rate at Time to Treatment Failure Through Day 80 (p-value of 0.005 in Primary endpoint Day 50 prior Phase 3) 8 mg beclomethasone / 1mg BDP Delivered dose and per table / 2 tablets 4 times per day / frequency of dose 50 days Same 2 Randomized groups: High dose prednisone for 10 days with rapid taper with 50 days on placebo or Design drug Same Source: Soligenix National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 11. Fundamental Research:BiotechnologyFebruary 1, 2010 Soligenix – Intellectual Property Orphan Drug: orBec® has been granted orphan status in the US for treatment of acute and chronic GI GvHD, as well as for the prevention of acute GvHD. orBec® also has orphan status in the EU for GI GvHD. In terms of patent protection, Soligenix has an issued patent on the treatment and prevention of GI GvHD through 2019. Orphan status provides protection in the US for seven (7) years and in Europe for ten (10) years (post market exclusivity). Orphan status should extend patent protection for orBec® in the prevention markets in the EU through 2023, and in the US / EU chronic marketplace through 2020, 2024 respectively. Model Assumptions: orBec® : In Figures 11 and 12 we present annual and quarterly sales projections for orBec® in the Acute, US and European markets, in the Prevention, US and European markets and in the Chronic, US and European markets for GvHD. We have built into these models several assumptions that are critical to the Soligenix story. 1. We assume that the size of the annual allogenic stem cell transplant marketplace in the US is approximately 10,000 patients per year and is growing at just over 3% per year. Approximately 50% of these patients will develop acute GvHD, typically within the first 100 days of treatment. 2. Prevention versus Acute GvHD. A critical element in our thesis is our position that the treatment paradigm for GvHD will rapidly shift from treating acute patients to prevention. As such, the prevention market essentially cannibalizes the acute marketplace. Our thesis is based on conversations with thought leaders and market research data that Soligenix’s partner, Sigma-tau, has performed. The driving force behind prevention will be a combination of the benign nature of orBec® (small dose, local delivery) versus alternative treatments such as methotrexate, cyclosporine or prednisone. 3. Market Share Penetration. We assume a modest penetration rate of 4% in the acute marketplace (beginning in 2012), versus a much more rapid penetration in the prevention marketplace (beginning in 2H-2013) which rises to 66% by 2016. We have noted that in the US, 15 centers represent more than half of all the transplants, so market penetration can occur rapidly as key opinion leaders adopt a new treatment regimen. 4. We assume the European marketplace will follow the US market with approximately a year’s lag time. We assume US pricing in the Acute GvHD marketplace of $15,000 base cost of therapy with annual price increases, and assume that EU pricing will be approximately 75% of US pricing. Prevention pricing is modeled at $20,000 based on 80 days of therapy) versus 50 days in Acute. In the chronic marketplace, we assume a course of therapy of between 2 and 50 days, or $30,000 annual cost of therapy. 5. Pricing assumptions have been based on our discussions with Soligenix management, and our understanding of the pharmaco-economic value that orBec® brings to the over- all cost of treating transplant patients. It is critical to note that some may argue that there is some treatment today off label with other oral steroids such as budesonide which is generically available at a cost of a few dollars per day. We believe the combination of orBec’s® novel two pill deliver system and an approved label will eliminate the use of cheaper non approved oral steroids. There are a number of examples of this dynamic occurring in the marketplace. 6. We assume a 35% royalty will be paid to Soligenix from partner Sigma-Tau and we further assume a 35% royalty to Soligenix for European sales based on a new partnership. We have not included any other milestones or upfront payments for European rights to be conservative in our model assumptions. 7. We have not included any sales projections outside of the European and US marketplaces. Please see our models for detailed forecasts presented in Exhibits 11 and 12. National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 12. Fundamental Research:BiotechnologyFebruary 1, 2010 SGX201 (Radiation Enteritis): SGX201 (oral beclomethasone dipropionate – BDP) is in development for the treatment of radiation enteritis, a side effect of radiation therapy used to treat certain cancers which involve treatment to the abdomen, pelvis or rectum. During delivery of treatment, some level of radiation is also delivered to healthy tissue, including the bowel. This can result in acute and chronic toxicities. The large and small bowel are very sensitive to radiation. The larger the dose of radiation, the greater the damage to normal bowel tissue. Radiation enteritis is a condition in which the lining of the bowel becomes swollen and inflamed during or after radiation therapy to the abdomen, pelvis or rectum. Most tumors in the abdomen and pelvis need large doses of radiation, and almost all patients receiving radiation to the abdomen, pelvis or rectum will show signs of acute enteritis. Patients with acute enteritis may experience nausea, vomiting, abdominal pain, diarrhea and bleeding, among other symptoms. Some patients may develop severe dehydration and require hospitalization. With diarrhea, the gastrointestinal tract does not function normally, and nutrients such as fat, lactose, bile salts, and vitamin B12 are not well absorbed. Symptoms usually resolve within two (2) to six (6) weeks after therapy is completed. Radiation enteritis is often not a self-limited illness, as over 80% of patients who receive abdominal radiation therapy complain of a persistent change in bowel habits. Moreover, acute radiation injury increases the risk of development of chronic radiation enteropathy, and overall 5% to 15% of the patients who receive abdominal or pelvic irradiation will develop chronic radiation enteritis. Patients today are typically treated with antidiarrheals, pain killers, or enzymes which essentially treat the symptoms and not the underlying cause. In severe cases, systemic steroids are used; however, their use often leaves patients vulnerable to other forms of infection, as these steroids are known to weaken the immune system. SGX201 is entering a Phase 1/2 multicenter, open-label, sequential, dose-escalation study of approximately 36 patients. Patients with rectal cancer who are scheduled to undergo concurrent radiation and chemotherapy prior to surgery will be enrolled in four (4) dose groups. The objectives of the study are to evaluate the safety and maximum tolerated dose of escalating doses of SGX201, as well as the preliminary efficacy of SGX201 for prevention of signs and symptoms of acute radiation enteritis. In support of the Phase 1/2 study, Soligenix has received a Small Business Innovation Research (SBIR) grant award of approximately $500,000 over a two (2) year period from the National Institutes of Health (NIH) . The FDA has also designated SGX201as a “Fast Tracked Product”. Top line data from the study is expected in 1H 2011. Model Assumptions: We assume commercialization of SGX201 in 2015 in our model. We assume a lower cost of therapy at $2,000 per cycle with an average of two (2) cycles per treatment. We further assume Soligenix will partner out this product and receive a 25% royalty. We have not included milestone or upfront payments for the sake of conservatism. Market share penetration rates for SGX201 begin at 10% in 2015. National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 13. Fundamental Research:BiotechnologyFebruary 1, 2010 Exhibit 11: Soligenix (annual) model: orBec® Estimates Acute GI GVHD US 2012 2013 2014 2015 2016 10,000 US Allogenic stem cell transplants 11,486 11,898 12,309 12,716 13,121 Market Size Growth (Annual) 3.6% 3.4% 3.3% 3.2% % Develop GvHD within 100 days post-transplant 50.0% 50.0% 50.0% 50.0% Target Market Acute GI GVHD 5,949 6,154 6,358 6,560 No. of Patients on Prevention 0 864 3,274 5,671 8,153 Market Share Penetration 3.8% 11.6% 13.1% 13.2% 8.8% Number of Patients Procedures 434 1,380 1,617 1,679 1,154 Cost of Therapy - (1-50 day course) $ 15,455 15,630 $ 16,104 16,593 $ 17,096 Price Growth 1% 3% 3% 3% U.S. Annual Sales $ 7 $ 22 $ 26 $ 28 $ 20 % Growth (qtrly) 216% 21% 7% -29% Royalty Rate 35% of Net Sales $ 2 $ 8 $ 9 $ 10 $ 7 Acute GI GVHD EU 2012 2013 2014 2015 2016 10,000 US Allogenic stem cell transplants 11,486 11,898 12,309 12,716 13,121 Market Size Growth (Annual) 3.6% 3.4% 3.3% 3.2% % Develop GvHD within 100 days post-transplant 50.0% 50.0% 50.0% 50.0% Target Market Acute GI GVHD 5,949 6,154 6,358 6,560 No. of Patients on Prevention 0 0 1,944 4,298 6,826 Market Share Penetration 0.6% 8.5% 12.2% 13.6% 14.6% Number of Patients Procedures 73 1,012 1,498 1,725 1,920 Cost of Therapy $ 11,591 11,722 $ 12,078 12,444 $ 12,822 Price Growth 1% 3% 3% 3% EU Annual Sales $ 1 $ 12 $ 18 $ 21 $ 25 % Growth (qtrly) 1320% 52% 19% 15% Assume an EU Partnership - Royalty Rate 35% of Net Sales $ 0 $ 4 $ 6 $ 8 $ 9 Prevention GI GVHD US 2012 2013 2014 2015 2016 10,000 US Allogenic stem cell transplants 11,486 11,898 12,309 12,716 13,121 Market Size Growth (Annual) 3.6% 3.4% 3.3% 3.2% % of GVHD Market where Prophylaxis is Desirable 90.0% 90.0% 90.0% 90.0% Target Market Prevention GI GVHD 10,708 11,078 11,445 11,809 Market Share Penetration 7.3% 26.6% 44.6% 62.1% Number of Patients Procedures 864 3,274 5,671 8,153 Cost of Therapy (80 days - Prevention) $ 24,728 33,344 $ 25,766 26,548 $ 27,354 Price Growth -23% 3% 3% U.S. Annual Sales $ - $ 22 $ 84 $ 151 $ 223 % Growth (qtrly) 288% 78% 48% Royalty Rate 35% of Net Sales $ - $ 8 $ 30 $ 53 $ 78 Prevention GI GVHD EU 2012 2013 2014 2015 2016 10,000 US Allogenic stem cell transplants 11,486 11,898 12,309 12,716 13,121 Market Size Growth (Annual) 3.6% 3.4% 3.3% 3.2% % of GVHD Market where Prophylaxis is Desirable 90.0% 90.0% 90.0% 90.0% Target Market Prevention GI GVHD 10,708 11,078 11,445 11,809 Market Share Penetration 0.0% 15.8% 33.8% 52.0% Number of Patients Procedures 1,944 4,298 6,826 Price per procedure $ - $ 19,373 19,961 $ 20,566 Price Growth 3% 3% EU Annual Sales $ - $ 2 $ 38 $ 86 $ 141 % Growth (qtrly) 127% 64% Assume an EU Partnership - Royalty Rate 35% of Net Sales $ - $ 1 $ 13 $ 30 $ 49 Chronic GI GVHD U.S. 2012 2013 2014 2015 2016 10,000 US Allogenic stem cell transplants 11,486 11,898 12,309 12,716 13,121 Market Size Growth (Annual) 3.6% 3.4% 3.3% 3.2% 2,500 = 3 years Annual Chronic GvHD patients 2,687 2,497 2,134 1,738 1,416 Growth Rate of Chronic Prevalance 93% 85% 81% 81% % of GVHD Market that develops chronically post 100 days 25.0% 25.0% 25.0% 25.0% Target Market Chronic GI GVHD: New & Existing 2,975 3,077 3,179 3,280 Market Share Penetration 7.8% 27.5% 47.5% Number of Patients procedures 960 3,503 6,239 Cost of Therapy (assumes 2-50 day courses) $ - $ 32,208 33,185 $ 34,192 Price Growth 3% 3% U.S. Annual Sales $ - $ - $ 31 $ 116 $ 214 % Growth (qtrly) 275% 83% Royalty Rate 35% of Net Sales $ - $ - $ 11 $ 41 $ 75 Chronic GI GVHD EU 2012 2013 2014 2015 2016 10,000 EU Allogenic stem cell transplants 11,486 11,898 12,309 12,716 13,121 Market Size Growth (Annual) 3.6% 3.4% 3.3% 3.2% 2,500 = 3 years Annual Chronic GvHD patients 2,748 2,652 2,428 2,027 1,651 Growth Rate of Chronic Prevalance % of GVHD Market that develops chronically post 100 days 25.0% 25.0% 25.0% 25.0% Target Market Chronic GI GVHD: New & Existing 2,975 3,077 3,179 3,280 Market Share Penetration 1.8% 18.5% 38.5% Number of Patients procedures 218 2,359 5,058 Cost of Therapy (assumes 2 50 day courses) $ - $ 12,168 24,889 $ 25,644 Price Growth 3% EU Annual Sales $ - $ - $ 5 $ 59 $ 130 % Growth (qtrly) 121% Royalty Rate 35% of Net Sales $ - $ - $ 2 $ 21 $ 45 Radiation Enteritis SGX201 2012 2013 2014 2015 2016 50,000 US & EU Radiation Enteritis Cases 54,693 56,659 58,613 60,554 62,480 Market Size Growth (Annual) 3.6% 3.4% 3.3% 3.2% Market Share Penetration 0.0% 10.5% 26.0% Number of Patients procedures 0 6,378 16,266 Cost of Therapy $ - $ 2,023 2084 $ 2,147 Number of Cycles 2 2 2 Price Growth 3% 3% U.S.& EU Annual Sales $ - $ - $ - $ 27 $ 70 % Growth (qtrly) 162% Royalty Rate 25% of Net Sales $ - $ - $ - $ 7 $ 17 US orBec® Soligenix Royalties $ 39 $ 50 $ 103 $ 160 EU orBec® Soligenix Roylaties $ 0 $ 5 $ 21 $ 58 $ 103 Radiation Enteritis SGX201 $ - $ - $ 7 $ 17 Source: National Securities Estimates National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 14. Fundamental Research:Biotechnology NATIONAL SECURITIESFebruary 1, 2010 Established 1947, Member FINRA/SIPC Exhibit 12: Soligenix GvHD Quarterly Model: orBec® Estimates Acute GI GVHD US Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 10,000 US Allogenic stem cell transplants 2,625 2,651 2,677 2,703 2,729 2,755 2,781 2,807 2,833 2,858 2,884 2,910 2,936 2,962 2,987 3,013 3,039 3,064 3,090 3,116 3,141 3,166 3,192 3,217 3,242 3,268 3,293 3,318 Market Size Growth - qtrly 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% % Develop GvHD within 100 days post-transplant 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% Target Market Acute GI GVHD 1,313 1,325 1,338 1,351 1,364 1,377 1,390 1,403 1,416 1,429 1,442 1,455 1,468 1,481 1,494 1,507 1,519 1,532 1,545 1,558 1,571 1,583 1,596 1,609 1,621 1,634 1,646 1,659 No. of Patients on Prevention 0 0 0 0 0 80 323 461 602 745 890 1,037 1,187 1,339 1,494 1,650 1,809 1,970 2,134 2,240 Market Share Penetration 1.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% 55.0% 60.0% 65.0% 70.0% 71.0% 72.0% 73.0% 74.0% 75.0% Number of Patients Procedures 14 71 144 218 294 346 351 389 367 392 417 442 408 426 445 399 353 306 258 236 Cost of Therapy - (1-50 day course) $ 15,000 $ 15,113 $ 15,226 $ 15,340 $ 15,455 $ 15,571 $ 15,688 $ 15,805 $ 15,924 $ 16,043 $ 16,164 $ 16,285 $ 16,407 $ 16,530 $ 16,654 $ 16,779 $ 16,905 $ 17,032 $ 17,159 $ 17,288 Price Growth 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% U.S. QTRLY Sales ($) $ - $ - $ 0.2 $ 1.1 $ 2.2 $ 3.3 $ 4.5 $ 5.4 $ 5.5 $ 6.1 $ 5.8 $ 6.3 $ 6.7 $ 7.2 $ 6.7 $ 7.0 $ 7.4 $ 6.7 $ 6.0 $ 5.2 $ 4.4 $ 4.1 % Growth (qtrly) 103% 52% 36% 19% 2% 12% -5% 7% 7% 7% -7% 5% 5% -10% -11% -13% -15% -8% Royalty Rate 35% of Net Sales $ 0.1 $ 0.4 $ 0.8 $ 1.2 $ 1.6 $ 1.9 $ 1.9 $ 2.2 $ 2.0 $ 2.2 $ 2.4 $ 2.5 $ 2.3 $ 2.5 $ 2.6 $ 2.3 $ 2.1 $ 1.8 $ 1.6 $ 1.4 Acute GI GVHD EU Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 10,000 US Allogenic stem cell transplants 2,625 2,651 2,677 2,703 2,729 2,755 2,781 2,807 2,833 2,858 2,884 2,910 2,936 2,962 2,987 3,013 3,039 3,064 3,090 3,116 3,141 3,166 3,192 3,217 3,242 3,268 3,293 3,318 Market Size Growth - qtrly 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% % Develop GvHD within 100 days post-transplant 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% Target Market Acute GI GVHD 1,313 1,325 1,338 1,351 1,364 1,377 1,390 1,403 1,416 1,429 1,442 1,455 1,468 1,481 1,494 1,507 1,519 1,532 1,545 1,558 1,571 1,583 1,596 1,609 1,621 1,634 1,646 1,659 No. of Patients on Prevention 0 81 273 414 556 701 848 997 1,149 1,303 1,459 1,617 1,778 1,971 Market Share Penetration 0.0% 0.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% 55.0% 60.0% 65.0% 66.0% 67.0% 68.0% 69.0% Number of Patients Procedures 0 0 0 73 147 222 299 344 346 371 396 386 404 422 440 459 413 367 586 553 Cost of Therapy $ 11,250 $ 11,334 $ 11,419 $ 11,505 $ 11,591 $ 11,678 $ 11,766 $ 11,854 $ 11,943 $ 12,033 $ 12,123 $ 12,214 $ 12,305 $ 12,398 $ 12,491 $ 12,584 $ 12,679 $ 12,774 $ 12,870 $ 12,966 Price Growth 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% EU QTRLY Sales ($) $ - $ - $ - $ - $ - $ 0.8 $ 1.7 $ 2.6 $ 3.5 $ 4.1 $ 4.1 $ 4.5 $ 4.8 $ 4.7 $ 5.0 $ 5.2 $ 5.5 $ 5.8 $ 5.2 $ 4.7 $ 7.5 $ 7.2 % Growth (qtrly) 103% 52% 36% 16% 1% 8% 7% -2% 5% 5% 5% 5% -9% -11% 61% -5% Assume an EU Partnership - Royalty Rate 35% of Net Sales $ - $ - $ - $ 0.3 $ 0.6 $ 0.9 $ 1.2 $ 1.4 $ 1.4 $ 1.6 $ 1.7 $ 1.6 $ 1.7 $ 1.8 $ 1.9 $ 2.0 $ 1.8 $ 1.6 $ 2.6 $ 2.5 Prevention GI GVHD US Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 10,000 US Allogenic stem cell transplants 2,625 2,651 2,677 2,703 2,729 2,755 2,781 2,807 2,833 2,858 2,884 2,910 2,936 2,962 2,987 3,013 3,039 3,064 3,090 3,116 3,141 3,166 3,192 3,217 3,242 3,268 3,293 3,318 Market Size Growth - qtrly 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% % of GVHD Market where Prophylaxis is Desirable 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% Target Market Prevention GI GVHD 2,363 2,386 2,409 2,433 2,456 2,479 2,503 2,526 2,549 2,573 2,596 2,619 2,642 2,666 2,689 2,712 2,735 2,758 2,781 2,804 2,827 2,850 2,873 2,895 2,918 2,941 2,964 2,986 Market Share Penetration 0.0% 3.0% 12.0% 17.0% 22.0% 27.0% 32.0% 37.0% 42.0% 47.0% 52.0% 57.0% 62.0% 67.0% 72.0% 75.0% Number of Patients Procedures 0 80 323 461 602 745 890 1,037 1,187 1,339 1,494 1,650 1,809 1,970 2,134 2,240 Cost of Therapy (80 days - Prevention) $ 24,728 $ 24,914 $ 25,100 $ 25,289 $ 25,478 $ 25,669 $ 25,862 $ 26,056 $ 26,251 $ 26,448 $ 26,647 $ 26,846 $ 27,048 $ 27,251 $ 27,455 $ 27,661 Price Growth 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% U.S. QTRLY Sales ($) $ - $ - $ - $ - $ - $ - $ - $ 2.0 $ 8.1 $ 11.7 $ 15.3 $ 19.1 $ 23.0 $ 27.0 $ 31.2 $ 35.4 $ 39.8 $ 44.3 $ 48.9 $ 53.7 $ 58.6 $ 61.9 % Growth (qtrly) 307% 44% 31% 25% 20% 17% 15% 14% 12% 11% 10% 10% 9% 6% Royalty Rate 35% of Net Sales $ - $ - $ - $ - $ - $ - $ - $ 0.7 $ 2.8 $ 4.1 $ 5.4 $ 6.7 $ 8.1 $ 9.5 $ 10.9 $ 12.4 $ 13.9 $ 15.5 $ 17.1 $ 18.8 $ 20.5 $ 21.7 Prevention GI GVHD EU Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 10,000 US Allogenic stem cell transplants 2,625 2,651 2,677 2,703 2,729 2,755 2,781 2,807 2,833 2,858 2,884 2,910 2,936 2,962 2,987 3,013 3,039 3,064 3,090 3,116 3,141 3,166 3,192 3,217 3,242 3,268 3,293 3,318 Market Size Growth - qtrly 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% % of GVHD Market where Prophylaxis is Desirable 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0% Target Market Prevention GI GVHD 2,363 2,386 2,409 2,433 2,456 2,479 2,503 2,526 2,549 2,573 2,596 2,619 2,642 2,666 2,689 2,712 2,735 2,758 2,781 2,804 2,827 2,850 2,873 2,895 2,918 2,941 2,964 2,986 Market Share Penetration 0.0% 3.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% 55.0% 60.0% 66.0% Number of Patients Procedures 81 273 414 556 701 848 997 1,149 1,303 1,459 1,617 1,778 1,971 Price per procedure $ 18,825 $ 19,014 $ 19,156 $ 19,300 $ 19,445 $ 19,590 $ 19,737 $ 19,885 $ 20,035 $ 20,185 $ 20,336 $ 20,489 $ 20,642 $ 20,797 Price Growth 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% EU QTRLY Sales ($) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 1.5 $ 5.2 $ 8.0 $ 10.8 $ 13.7 $ 16.7 $ 19.8 $ 23.0 $ 26.3 $ 29.7 $ 33.1 $ 36.7 $ 41.0 % Growth (qtrly) 52% 35% 27% 22% 18% 16% 14% 13% 12% 11% 12% Assume an EU Partnership - Royalty Rate 35% of Net Sales $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 0.5 $ 1.8 $ 2.8 $ 3.8 $ 4.8 $ 5.9 $ 6.9 $ 8.1 $ 9.2 $ 10.4 $ 11.6 $ 12.8 $ 14.3 Chronic GI GVHD U.S. Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 10,000 US Allogenic stem cell transplants 2,625 2,651 2,677 2,703 2,729 2,755 2,781 2,807 2,833 2,858 2,884 2,910 2,936 2,962 2,987 3,013 3,039 3,064 3,090 3,116 3,141 3,166 3,192 3,217 3,242 3,268 3,293 3,318 Market Size Growth - qtrly 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 2,500 = 3 years Annual Chronic GvHD patients 625 631 638 644 650 657 663 670 677 684 670 656 643 630 618 606 575 546 519 493 469 445 423 402 382 363 344 327 Growth Rate of Chronic Prevalance 1% 1% 1% 1% 1% 1% 1% 1% 1% -2% -2% -2% -2% -2% -2% -5% -5% -5% -5% -5% -5% -5% -5% -5% -5% -5% -5% % of GVHD Market that develops chronically post 100 days 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% Target Market Chronic GI GVHD: New & Existing 1,281 1,294 1,307 1,320 1,333 1,346 1,359 1,372 1,385 1,398 1,391 1,384 1,377 1,371 1,365 1,359 1,335 1,313 1,292 1,272 1,254 1,237 1,221 1,206 1,192 1,179 1,168 1,157 Market Share Penetration 1.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% 55.0% Number of Patients procedures 30 153 309 467 628 792 958 1,126 1,297 1,470 1,646 1,825 Cost of Therapy (assumes 2-50 day courses) $ 31,848 $ 32,087 $ 32,327 $ 32,570 $ 32,814 $ 33,060 $ 33,308 $ 33,558 $ 33,810 $ 34,063 $ 34,319 $ 34,576 Price Growth 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% U.S. QTRLY Sales ($) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 1.0 $ 4.9 $ 10.0 $ 15.2 $ 20.6 $ 26.2 $ 31.9 $ 37.8 $ 43.9 $ 50.1 $ 56.5 $ 63.1 % Growth (qtrly) 408% 103% 52% 35% 27% 22% 18% 16% 14% 13% 12% Royalty Rate 35% of Net Sales $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 0.3 $ 1.7 $ 3.5 $ 5.3 $ 7.2 $ 9.2 $ 11.2 $ 13.2 $ 15.3 $ 17.5 $ 19.8 $ 22.1 Chronic GI GVHD EU Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 10,000 EU Allogenic stem cell transplants 2,625 2,651 2,677 2,703 2,729 2,755 2,781 2,807 2,833 2,858 2,884 2,910 2,936 2,962 2,987 3,013 3,039 3,064 3,090 3,116 3,141 3,166 3,192 3,217 3,242 3,268 3,293 3,318 Market Size Growth - qtrly 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 2,500 = 3 years Annual Chronic GvHD patients 625 631 638 644 650 657 663 670 677 684 690 697 683 670 656 643 630 618 605 575 546 519 493 468 445 423 402 382 Growth Rate of Chronic Prevalance 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% -2% -2% -2% -2% -2% -2% -2% -5% -5% -5% -5% -5% -5% -5% -5% -5% % of GVHD Market that develops chronically post 100 days 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% Target Market Chronic GI GVHD: New & Existing 1,281 1,294 1,307 1,320 1,333 1,346 1,359 1,372 1,385 1,398 1,411 1,425 1,417 1,410 1,403 1,396 1,390 1,384 1,378 1,354 1,332 1,311 1,291 1,273 1,256 1,240 1,225 1,211 Market Share Penetration 1.0% 6.0% 11.0% 16.0% 21.0% 26.0% 31.0% 36.0% 41.0% 46.0% Number of Patients procedures 31 187 346 507 670 836 1,005 1,176 1,350 1,526 Cost of Therapy (assumes 2 50 day courses) $ 24,246 $ 24,427 $ 24,611 $ 24,795 $ 24,981 $ 25,169 $ 25,357 $ 25,548 $ 25,739 $ 25,932 Price Growth 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% EU QTRLY Sales ($) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 0.7 $ 4.6 $ 8.5 $ 12.6 $ 16.7 $ 21.1 $ 25.5 $ 30.1 $ 34.7 $ 39.6 % Growth (qtrly) 48% 33% 26% 21% 18% 16% 14% Royalty Rate 35% of Net Sales $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 0.3 $ 1.6 $ 3.0 $ 4.4 $ 5.9 $ 7.4 $ 8.9 $ 10.5 $ 12.2 $ 13.9 Radiation Enteritis SGX201 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 50,000 US & EU Radiation Enteritis Cases 12,500 12,624 12,747 12,871 12,995 13,118 13,242 13,365 13,489 13,612 13,735 13,858 13,981 14,103 14,226 14,348 14,471 14,592 14,714 14,836 14,957 15,078 15,199 15,320 15,440 15,560 15,680 15,800 Market Size Growth - qtrly 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% Market Share Penetration 5.0% 10.0% 12.0% 15.0% 20.0% 25.0% 28.0% 31.0% Number of Patients procedures 0 0 0 0 748 1,508 1,824 2,298 3,088 3,890 4,390 4,898 Cost of Therapy $ 2,000 $ 2,015 $ 2,030 $ 2,045 $ 2,061 $ 2,076 $ 2,092 $ 2,107 $ 2,123 $ 2,139 $ 2,155 $ 2,171 Number of Cycles 2 2 2 2 2 2 2 2 2 2 2 2 Price Growth 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% U.S. & EU QTRLY Sales ($) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 3.1 $ 6.3 $ 7.6 $ 9.7 $ 13.1 $ 16.6 $ 18.9 $ 21.3 % Growth (qtrly) 103% 22% 27% 35% 27% 14% 12% Royalty Rate 25% of Net Sales $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 0.8 $ 1.6 $ 1.9 $ 2.4 $ 3.3 $ 4.2 $ 4.7 $ 5.3 US orBec® Soligenix Royalties $ - $ - $ - $ - $ - $ - $ - $ - $ 0.1 $ 0.4 $ 0.8 $ 1.2 $ 1.6 $ 2.6 $ 4.8 $ 6.2 $ 7.8 $ 10.6 $ 13.9 $ 17.3 $ 20.5 $ 24.0 $ 27.7 $ 31.1 $ 34.6 $ 38.1 $ 41.8 $ 45.2 EU orBec® Soligenix Roylaties $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 0.3 $ 0.6 $ 0.9 $ 1.2 $ 2.0 $ 3.3 $ 4.4 $ 5.7 $ 8.1 $ 10.6 $ 13.2 $ 15.8 $ 18.6 $ 21.1 $ 23.8 $ 27.6 $ 30.7 Radiation Enteritis SGX201 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 0.8 $ 1.6 $ 1.9 $ 2.4 $ 3.3 $ 4.2 $ 4.7 $ 5.3 Source: National Securities Estimates National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 15. Fundamental Research:BiotechnologyFebruary 1, 2010 SGX203 Crohns Disease: Crohns Disease is an ongoing disorder that causes inflammation of the gastrointestinal (GI) tract. Crohns Disease can affect any area of the GI tract, from the mouth to the anus, but it most commonly affects the lower part of the small intestine called the ileum. The swelling caused by the disease extends deep into the lining of the affected organ. The swelling can induce pain and can make the intestines empty frequently, resulting in diarrhea. Because the symptoms of Crohns Disease are similar to those of other intestinal disorders, such as irritable bowel syndrome and ulcerative colitis, it can be difficult to diagnose. Soligenix is currently developing oral beclomethasone dipropionate (BDP) for the treatment of Crohns Disease. The FDA has granted Orphan Drug Designation for the treatment of pediatric Crohns Disease. While Crohns Disease can appear at any age, it is most often diagnosed in adults in their 20s and 30s. Approximately 30% of people with Crohns disease, however, develop symptoms before 20 years of age. Pediatric Crohns Disease is a subpopulation of patients 0-19 years of age. In the United States, about 100,000 teens and pre-teens have Crohns Disease. Crohns Disease presents special challenges for children and teens. In addition to bothersome and often painful symptoms, the disease can stunt growth, delay puberty and weaken bones. Crohns Disease’s symptoms may sometimes prevent a child from participating in enjoyable activities. The emotional and psychological issues of living with a chronic disease can be especially difficult for young people. Lipid Polymer Micelle (LPM™) Delivery System: The LPM™ technology is a drug-delivery platform technology for oral administration that uses reverse micelles stabilized by polymers. Reverse micelles are generally described as a lipid system and are similar to water-in-oil emulsions, in that the hydrophilic lipid head groups are directed towards the micelle core, with the hydrophobic tails imbedded in the oil phase. This results in a drug-delivery system that is a thermodynamically stable clear dispersion of the water-soluble drug in the lipid phase. But unlike water-in-oil systems, stabilized reverse micelles do not depend on the presence of other surfactants and are thermodynamically stable. In the LPM™ system, water-soluble drugs are contained in the water space in the core of the micelles and are protected against degradation. LPM™ is thought to promote intestinal absorption through the action of the micelles to open up small channels that allow only molecules of a certain dimension, excluding extremely large molecules, bacteria and viruses, to pass through The reverse micelles also structurally prevent the rapid inactivation of peptides by enzymes in the upper gastrointestinal tract. Other sensitive drugs that can be delivered orally with the LPM™ system include various classes of peptides, and nucleic acids and proteins, which are degraded in the stomach and small intestine. Oral Leuprolide Utilizing LPM™: Soligenix anticipates proceeding towards clinical development of an oral form of the peptide hormone drug leuprolide using the LPM™ technology. Leuprolide is a synthetic peptide agonist of gonadotropin releasing hormone (GnRH) that is used in the treatment of endometriosis in women and prostate cancer in men. In preclinical studies in rats and dogs, Soligenix has demonstrated that the LPM™ technology results in high systemic bioavailability of intestinally absorbed leuprolide. In both animal models, the bioavailability of leuprolide ranged from 20 to 40 percent, compared with 2.2 percent for the control oral solution. Leuprolide is one of the most widely used anti-cancer agents for advanced prostate cancer in men. Injectable forms of leuprolide marketed under trade names such as Lupron® and Eligard® had worldwide sales of approximately $1.8 billion in 2006. Injectable leuprolide is also widely used in non-cancer indications, such as endometriosis in women (a common condition in which cells normally found in the uterus become implanted in other areas of the body), uterine fibroids in women (noncancerous growths in the uterus) and central precocious puberty in children (a condition causing children to enter puberty too soon). Leuprolide is currently available only in injectable, injectable depot and subcutaneous implant routes of delivery. National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 16. Fundamental Research:BiotechnologyFebruary 1, 2010 Oral Leuprolide Utilizing LPM™ : (continued): Soligenix has received a European patent which addresses its Lipid Polymer Micelle (LPM™) technology for the improved oral delivery of drugs. The issued European patent, EP 1460992, entitled "Stabilized Reverse Micelle Compositions and Uses Thereof" covers lipid structures (reverse micelles) that promote the intestinal absorption of peptides and other sensitive drugs that cannot otherwise be given orally. Corresponding patents in the United States and elsewhere are currently pending. Model Assumptions: We do not include any revenues for Lipid Polymer Micelle (LPM™) Delivery System in our model. As such progress with these programs represents upside to our forecast. Soligenix and BioDefense Project BioShield 2003: President George Bush, in his State of the Union Address, proposed Project BioShield. The project was signed into law as the BioShield Act of 2004. Project BioShield is designed to fund countermeasures against chemical, biological, radiological or nuclear (CBRN) attack. The project allows the government to purchase next generation medical countermeasures (improved vaccines, diagnostics and therapeutics). The 2004 budget appropriation set aside $5.6 billion over the next 10 years (the funds have already been allocated to the BioShield Special Reserve Fund, or SRF) to fund the development and procurement of countermeasures. The project also has provisions to expedite research through a range of instruments, including grants which have been accessed by many companies for a wide range of CBRN countermeasures. Soligenix is addressing the development of products and technologies that can be used to protect against several biological threats considered agents of bioterrorism, consistent with biological warfare threats and emerging diseases that the National Institute of Allergy and Infectious Diseases (NIAID), a division of the NIH, has identified as high priorities. To accomplish this, the company is developing several potential products to prevent morbidity and mortality due to the threat of biological toxins for which preventive vaccination is the most feasible means to protect a susceptible population. This approach is being taken because the known mechanism of protection against toxin exposure is mediated through antibodies in the serum, or present on mucosal surfaces that can be elicited by vaccination with subunit immunogens. To this end, Soligenix was recently awarded a $9.4 million grant from NIAID, which will fund, over a five-year period, the development of formulation and manufacturing processes for vaccines, including RiVax™, that are stable at elevated temperatures. The grant will also fund the development of improved thermostable adjuvants expected to result in rapidly acting vaccines that can be given with fewer injections over shorter intervals. In addition, Soligenix is expanding the range of applicability of its lead product, oral beclomethasone dipropionate (BDP), for radiation injury following exposure to environmental radiation. National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 17. Fundamental Research:BiotechnologyFebruary 1, 2010 RiVax™ Ricin Toxin Vaccine: This is Soligenixs proprietary vaccine developed to protect against exposure to ricin toxin and is the most advanced vaccine product in the companys portfolio. The immunogen in RiVax™ induces a protective immune response in animal models of ricin exposure and functionally active antibodies in humans. The immunogen consists of a genetically inactivated subunit ricin A chain that is enzymatically inactive and lacks residual toxicity of the holotoxin. One Phase 1 human clinical trial was completed, and a second trial is currently being conducted. The development of RiVax™ has been sponsored through a series of overlapping challenge grants (UC1) and cooperative grants (U01) from the NIH, granted to Soligenix and to the University of Texas Southwestern Medical Center (UTSW) where the vaccine originated. The second clinical trial is being supported by a grant from the FDAs Office of Orphan Products to UTSW. Soligenix and UTSW have collectively received approximately $15 million in grant funding from the NIH for RiVax™. Results of the first phase 1 human trial of RiVax™ established that the immunogen was safe and induced antibodies anticipated to protect humans from ricin exposure. The antibodies generated from vaccination, concentrated and purified, were capable of conferring immunity passively to recipient animals, indicating that the vaccine was capable of inducing functionally active antibodies in humans. The outcome of the study was published in the Proceedings of the National Academy of Sciences (Vitetta et al., 2006, PNAS, 105:2268-2273). The second trial, sponsored by the UTSW, is currently evaluating a more potent formulation of RiVax™ that contains a conventional adjuvant (salts of aluminum), anticipated to result in higher antibody titers of longer duration in human subjects. Soligenix has adapted the original manufacturing process for the immunogen contained in RiVax™ for large scale manufacturing and is further establishing correlates of the human immune response in non- human primates. What is next for RiVax™? The Phase 1 clinical trial is complete. The trial demonstrated safety and immunogenicity in humans. A non-human primate study has been initiated. The Phase 1b clinical trial underway and is expected to be completed in 1H 2010. The scale-up GMP process optimization and development is completed. The next milestones will be the completion of the phase 1B clinical trial, manufacturing at a large scale for commercial grade batches for future clinical trials and potential procurement contracts. Development will continue under the new $9.4 million heat stabilization grant recently received. Model Assumptions: We do not include any revenues for Biodefense in our model. As such, progress with these programs represents upside to our forecast. National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 18. Fundamental Research:BiotechnologyFebruary 1, 2010 Valuation: Our valuation for Soligenix is based on several metrics, including FCFF, DCF EPS and Sum of the Parts models. These metrics all suggest a substantially higher target in the mid-to high teens. The key assumptions we make are that orBec® reports positive data in the current Phase III confirmatory pivotal trial in acute GvHD (1H-2011). Positive data from the Phase 2 prevention study (2H-2010) will be important as well. Investors should pay close attention to the catalysts presented in time sequence. Each catalyst’s outcome should impact valuation. For example, should Soligenix announce favorable terms for a partnership for orBec® European rights, it should drive valuation higher. Exhibit 13: Valuation Models for Soligenix: Cash Flow Average $ 1.5 Year 2010 DCF Valuation Using FCFF (mln): 2009 2010 2011 2012 2013 2014 2015 2016 units (millions - $) 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E EBIT (7,306) (7,579) (7,080) 272 16,883 54,686 145,953 252,537 Tax Rate 0% 0% 0% 10% 15% 25% 30% 38% EBIT(1-t) (7,306) (7,579) (7,080) 245 14,351 41,015 102,167 156,573 CapEx (11) (16) (33) (36) (40) (44) (48) (53) Depreciation 126 139 145 150 156 163 169 176 Change in NWC (729) 160 195 - - - - - FCFF (6,462) (7,616) (7,163) 359 14,467 41,134 102,288 156,696 PV of FCFF (7,754) (7,616) (5,969) 249 8,372 19,837 41,107 52,477 Discount Rate 20% Long Term Growth Rate 1% Terminal Cash Flow 832,964 Terminal Value YE2009 278,958 NPV 387,415 NPV-Debt - Shares out (thousands) 4Q-09E 185,687 NPV Per Share $ 2.1 Source: National Securities estimates Exhibit 14: Valuation Models for Soligenix: EPS Current Year 2010 Discount Rate and Earnings Multiple Varies, Year is Constant Year of EPS 2015 2015 EPS Earnings Multiple 10 1.3 20% 25% 30% 35% 40% 45% Discount Factor 30% 10 $1.96 $1.60 $1.31 $1.09 $0.91 $ 0.76 Selected Year EPS $ 0.49 15 $2.94 $2.40 $1.97 $1.63 $1.36 $ 1.14 NPV $ 1.3 20 $3.92 $3.19 $2.63 $2.17 $1.81 $ 1.52 Source: National Securities estimates Earnings 25 $4.90 $3.99 $3.28 $2.72 $2.27 $ 1.90 PlusNet Cash Per Share Multiple 30 $5.88 $4.79 $3.94 $3.26 $2.72 $ 2.28 Share Price $ 1.31 35 $6.86 $5.59 $4.60 $3.81 $3.17 $ 2.66 40 $7.84 $6.39 $5.25 $4.35 $3.63 $ 3.04 45 $8.82 $7.19 $5.91 $4.89 $4.08 $ 3.42 Exhibit 15: Valuation Models for Soligenix: Sum of the Parts Soligenix Sum of the Parts LT Gr Discount Rate Yrs. to Mkt % Success Peak Sales MMs Term Val orBec® GvHD U.S. Acute 3% 30% 2 80% $7 $26 NPV $0.07 orBec® GvHD EU Acute 3% 30% 2 80% $9 $32 NPV $0.08 orBec® GvHD US Prophylactic 3% 30% 4 60% $78 $289 NPV $0.33 orBec® GvHD EU Prophylactic 3% 30% 4 60% $49 $182 NPV $0.21 orBec® GI GvHD US Chronic 3% 30% 5 75% $75 $277 NPV $0.30 orBec® GI GvHD EU Chronic 3% 30% 6 75% $45 $168 NPV $0.14 SGX 201 (Radiation Enteritis) 3% 30% 6 50% $17 $65 NPV $0.01 Net Margin Note: US & EU orBec sales are Royalty at 30% 30% MM Shrs OS 185 Total $1 Net Cash/Shr $0.03 Grand Total $1.17 Source: National Securities estimates National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 19. Fundamental Research:BiotechnologyFebruary 1, 2010 Risks To Price Target Soligenix is a late stage biotechnology company and therefore subject to a number of financial and development risks. The key near term risk investors face is the outcome of the current confirmatory Phase 3 trial evaluating orBec® in GvHD for safety and efficacy. Clinical efficacy that meets or exceeds prior published results is the key area where investors are focused. Longer term risks include commercialization risk and risk off off-label use of cheaper generics. National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 20. Fundamental Research:Biotechnology NATIONAL SECURITIESFebruary 1, 2010 Established 1947, Member FINRA/SIPCExhibit 16: Soligenix Income StatementSoligenix, Inc. Income Statement ($ 000)SNGX: YE Dec. 31 2008A 2009E 1Q10E 2Q10E 3Q10E 4Q10E 2010E 2011E 2012E 2013E 2014E 2015E 2016EProduct Revenue (000s)US orBec® Revenues (35% Royalty) 2,393 15,168 49,575 103,258 159,739% Chg - - 1505% 355% 172% 77%EU orBec® Revenues 293 4,703 21,416 58,182 103,257% Chg - - 1505% 355% 172% 77%DOR-201 - - - 6,665 17,487Total Revenues (Product Sales, Grants & Milestones) - - - - - - - - 2,686 19,871 70,991 168,105 280,484Contract Research (grant) Revenues 2,310 2,319 568 568 568 568 2,273 2,227 2,183 2,139 2,096 2,054 2,013% ChgCost of Grant Revenues 1,886 1,781 436 436 436 436 1,746 1,711 1,677 1,643 1,610 1,578 1,546% ChgSigma Tau Milestones (9 mln over 5 years starting in 2010) - - - - - 1,000 2,000 6,000 - - -% Chg - -EU Partership Milestones for orBec - - -% Chg - -LPM Platform: >15% bioavailability (Leuprolide) in man 5,000 5,000 2,500 2,500 2,500Total Revenues (Product Sales, Grants & Milestones) 424 538 132 132 132 132 527 1,517 10,192 31,367 73,977 171,082 283,451% Chg -20% 0% 0% 0% -2% 188% 572% 208% 136% 131% 66%ExpensesCOGS (5% of Sales, includes small royalty to Orbec Licensor) 510 1,568 3,699 8,554 14,173 COGS % Product Sales 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%R&D 1,552 4,956 1,462 1,462 1,462 1,462 5,848 6,316 6,947 7,989 9,187 10,106 10,207 R&D % RevsG&A 1,942 2,352 565 565 565 565 2,258 2,281 2,463 4,927 6,404 6,469 6,533 G&A % RevsStk Optns 386 536 119 120 121 122 481 501 1,032 1,595 1,660 1,728 1,798Non-GAAP, Adj. 386 536 119 120 121 122 481 501 1,032 1,595 1,660 1,728 1,798Total expenses 3,880 7,844 2,026 2,026 2,026 2,026 8,106 8,596 9,920 14,484 19,291 25,129 30,913Oper. Inc. (Loss) (3,456) (7,306) (1,895) (1,895) (1,895) (1,895) (7,579) (7,080) 272 16,883 54,686 145,953 252,537 Oper Margin NM NM NM NM NM NM 3% 54% 74% 85% 89%Other Income Expense (net) 34 23 - - - - -Pre-tax income (3,422) (7,283) (1,895) (1,895) (1,895) (1,895) (7,579) (7,080) 272 16,883 54,686 145,953 252,537Taxes - - - (139) 2,532 13,672 43,786 95,964Tax Rate 0% 0% 0% 10% 15% 25% 30% 38%Net Income (3,057) (5,543) (1,895) (1,895) (1,895) (1,895) (7,579) (7,080) 411 14,351 41,015 102,167 156,573Net Margin NM NM NM NM NM NM 4% 46% 55% 60% 55%EPS (0.03) (0.04) (0.01) (0.01) (0.01) (0.01) (0.04) (0.04) 0.00 0.07 0.19 0.48 0.71Non GAAP EPS (dil) (0.03) (0.04) (0.01) (0.01) (0.01) (0.01) (0.04) (0.03) 0.01 0.08 0.20 0.49 0.72Wgtd Avg Shrs (Bas) - 000s 101,882 171,806 185,780 190,965 191,920 192,880 192,959 204,151 208,727 209,982 211,245 212,515 213,793Wgtd Avg Shrs (Dil) - 000s 101,882 171,806 185,795 190,980 191,935 192,895 192,974 204,166 208,742 209,997 211,260 212,530 213,808Source: Company reports and National Securities National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 21. Fundamental Research:Biotechnology NATIONAL SECURITIESFebruary 1, 2010 Established 1947, Member FINRA/SIPCExhibit 17: Soligenix Balance SheetSoligenix Balance Sheet ($)Assets 2008A 2009E 1Q10E 2Q10E 3Q10E 4Q10E 2010E 2011E 2012E 2013E 2014E 2015E 2016ECash and cash equiv. $1,475 $5,795 $3,956 $5,666 $3,920 $2,189 $2,189 $1,544 $3,171 $19,509 $63,765 $171,205 $336,348Grants Receivable 278 762 762 762 762 762 762 762 762 762 762 762 762Inventory, net 82 109 109 109 109 109 109 109 109 109 109 109 109Prepaid Expenses 87 163 163 163 163 163 163 163 163 163 163 163 163Total current assets $1,923 $6,829 $4,990 $6,700 $4,954 $3,224 $3,224 $2,579 $4,205 $20,543 $64,799 $172,240 $337,382Office & Lab Equipment & Other - PPE 21 26 (5) (36) (66) (97) (97) (209) (323) (439) (558) (679) (802)Intangible Assets, net 1,419 1,432 1,432 1,432 1,432 1,432 1,432 1,432 1,432 1,432 1,432 1,432 1,432Total assets $3,363 $8,286 $6,417 $8,096 $6,319 $4,558 $4,558 $3,802 $5,314 $21,536 $65,672 $172,992 $338,012Liabilities:Accounts Payable 1,015 1,491 1,491 1,491 1,491 1,491 1,491 1,491 1,491 1,491 1,491 1,491 1,491Accrd Compensation 371 223 223 223 223 223 223 223 223 223 223 223 223Total current liabilities $1,386 $1,714 $1,714 $1,714 $1,714 $1,714 $1,714 $1,714 $1,714 $1,714 $1,714 $1,714 $1,714Commitments & Contingencies - - - - - - - - - - - -Total liabilities $1,386 $1,714 $1,714 $1,714 $1,714 $1,714 $1,714 $1,714 $1,714 $1,714 $1,714 $1,714 $1,714Stockholders equity:Pfd Stk 5,000,000 shares authorized, none issued or outstandingCommon Stock $0.001 Par Value, 400,000,000 shares authorized; 119 186 186 186 186 186 186 186 186 186 186 186 186Additional Paid In Capital 104,176 115,988 116,047 119,656 119,809 119,978 119,978 126,445 127,697 129,724 133,009 138,331 146,953Accum. Deficit (102,318) (109,601) (111,530) (113,460) (115,389) (117,319) (117,319) (124,543) (124,282) (110,088) (69,236) 32,762 189,159Total Shareholders Equity 1,977 6,572 4,703 6,382 4,606 2,845 2,845 2,088 3,600 19,822 63,959 171,278 336,298Total Liab & Equity $3,363 $8,286 $6,417 $8,096 $6,319 $4,558 $4,558 $3,802 $5,314 $21,536 $65,672 $172,992 $338,012Shares Issd (000) 97,761 185,687 185,872 196,058 196,450 196,843 196,843 208,067 209,318 210,577 211,843 213,117 214,398Shares Out (000) 97,761 185,687 185,872 196,058 196,450 196,843 196,843 208,067 209,318 210,577 211,843 213,117 214,398Treasury StockCommon Authzd 250,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000Source: Company reports and National Securities National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 22. Fundamental Research:BiotechnologyFebruary 1, 2010 REG AC ANALYST CERTIFICATION The research analyst named on this report, Jason Kolbert, certifies the following: (1) that all of the views expressed in this research report accurately reflect his personal views about any and all of the subject securities or issuers; and (2) that no part of his compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by him in this research report. IMPORTANT DISCLOSURES This publication does not constitute and should not be construed as an offer or the solicitation of any transaction to buy or sell any securities or any instruments or any derivatives of the securities mentioned herein, or to participate in any particular trading strategies. Although the information contained herein has been obtained from recognized services, and sources believed to be reliable, its accuracy or completeness cannot be guaranteed. Opinions, estimates or projections expressed in this report may make assumptions regarding economic, industry, company and political considerations, and constitute current opinions, at the time of issuance, which are subject to change without notice. This report is being furnished for informational purposes only, and on the condition that it will not form a primary basis for any investment decision. Any recommendation(s) contained in this report is/are not intended to be, nor should it / they construed or inferred to be, investment advice, as such investments may not be suitable for all investors. When preparing this report, no consideration to one’s investment objectives, risk tolerance and other individual factors was given; as such, as with all investments, purchase or sale of any securities mentioned herein may not be suitable for all investors. By virtue of this publication, neither the Firm nor any of its employees shall be responsible for any investment decisions. Before committing funds to ANY investment, an investor should seek professional advice. Any information relating to the tax status of financial instruments discussed herein is not intended to provide tax advice, or to be used by anyone to provide tax advice. Investors are urged to consult an independent tax professional for advice concerning their particular circumstances. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, either expressed or implied, is made regarding future performance. National Securities Corporation (NSC) and its affiliated companies, shareholders, officers, directors and / or employees (including persons involved with the preparation or issuance of this report) may, from time to time, have long or short positions in, and buy or sell the securities or derivatives (including options) thereof, of the companies mentioned herein. 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Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Additional information relative to securities, other financial products, or issuers discussed in this report is available upon request. Neither this entire report, nor any part thereof, may be reproduced, copied or duplicated in any form or by any means without the prior written consent of National Securities Corporation. All rights reserved. NSC is a member of both the Financial Industry Regulatory Authority (FINRA) and the Securities Investors Protection Corporation (SIPC). For disclosures inquiries, please call us at 1-800-417-8000 and ask for your NSC representative, or write us at National Securities Corporation, Attn. Rhonda Jungquist - Compliance Department, 1001 Fourth Avenue, 22nd Floor, Seattle, WA 98154, or visit our website at www.nationalsecurities.com. National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com
  • 23. Fundamental Research: NATIONALBiotechnology SECURITIES Established 1947, Member FINRA/SIPCFebruary 1, 2010 Research Disclosures Legend Relevant Disclosures 2 1 National Securities (NSC) is a market maker in the securities of the subject company 2 In the past twelve (12) month period, NSC and / or its affiliates have received compensation for investment banking for services from the subject company 3 In the past twelve (12) month period, NSC and / or its affiliates have received compensation from the subject company for services other than those related to investment banking. 4 In the past twelve (12) month period, NSC was a manager or co-manager of a public offering of one or more of the securities of the issuer. 5 In the past twelve (12) month period, NSC was a member of the selling group of a public offering of the security (ies) of the issuer. 6 One or more directors, officers, and / or employees of NSC and / or its affiliated companies is / are a director (S) of the issuer of the security which is the subject of this report. 7 NSC and / or its affiliates expects to receive or intends to seek compensation for investment banking services from the subject company at some point durring the next three (3) months. 8 A research analyst or a member of his / her household has a financial interest in the securities if the subject company as follows a) long common stock; b) short common stock;c)long calls; d) short calls; e) long puts f) short puts; g) long rights; h)short rights; i)long warrants; j) short warrants; k)long futures; l)short futures m)long preferred stock; n) short preferred stock. 9 As of the end of the month immediately preceeding the date of publication of this report, or the end of the prior month if the publication is within ten (10) days following the end of the month, NSC and / or its affiliates beneficially owned one per cent (1%) or more of any class of common equity securities of the subject company. 10 Please see below for other relevant disclosures Shares of this security may be solicited in the following states AK, AL, AR,AZ, CA, CO,CT,DC,DE,FL,GA,HI,IA,IS,IL, IN,KS,KY,LA,MA,MD,ME,MI, MN,NC,ND, NE,NJ,NM,NV,NY,OH,OK,OR,PA,RI,SC,SD,TN,UT,VA,VI,VT,WA,WI,WV,WY Rating Companies Covered Rating Distibution Investment Banking Clients Investment Banking Clients % BUY 6 86% 0 0% NEUTRAL 1 14% 0 0% SELL 0 0% 0 0% Total 7 100% 0 0% FIRM-WIDE RATING DISTRIBUTION: MEANING OF RATINGS BUY: the total return of the investment strategy is likely to appreciate at least 15% over the next 12 months. NEUTRAL: the stock price is likely to consolidate over the next 12 months. SELL: the stock price is likely to decline in value at least 15% over the next 12 months. RATING AND PRICE TARGET HISTORY: [SNGX], (BUY) as of February 1, 2010 $1.00 $0.90 $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 2.1.10 BUY $0.00 7/10/2007 8/10/2007 9/10/2007 10/10/2007 11/10/2007 12/10/2007 1/10/2008 2/10/2008 3/10/2008 4/10/2008 5/10/2008 6/10/2008 7/10/2008 8/10/2008 9/10/2008 10/10/2008 11/10/2008 12/10/2008 1/10/2009 2/10/2009 3/10/2009 4/10/2009 5/10/2009 6/10/2009 7/10/2009 8/10/2009 9/10/2009 10/10/2009 11/10/2009 12/10/2009 1/10/2010 National Securities Corporation Please refer to important disclosures at the end of this document 120 Broadway, 27th Floor New York, NY 10271 www.nationalsecurities.com

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