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BEC2016_AAvanian_3_9_16

The document provides an overview of trends in the healthcare sector and a roadmap for investing in healthcare in 2016. Some of the key points summarized are: 1. The healthcare sector is experiencing several secular trends that are positive, including durable demand driven by aging demographics, growing affluence globally, and a shift from acute to chronic diseases. 2. Innovation is also fueling growth in the sector, including advances in genomics, immuno-oncology, and new therapies for various diseases. 3. Both regulatory and public policy trends have also become more positive recently for healthcare companies and products. The regulatory environment has sped up approval times while expanding pathways for approval.

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FOR INSTITUTIONAL USE ONLY A Roadmap for Investing in Healthcare Alice Avanian, CFA, Managing Director, Leerink Partners March 9, 2016 Please refer to the Disclosure Appendix for Analyst Certification. To access Price Charts and Disclosures specific to Covered Companies, please refer to https://leerink.bluematrix.com/bluematrix/Disclosure2 or send a request to Leerink Partners Editorial Department, One Federal Street, 37th Floor, Boston, MA 02110. The description of Leerink Partners benchmarks is available by contacting the Leerink Partners Editorial Department. Rx trends derived from IMS Health.
FOR INSTITUTIONAL USE ONLY • Alice Avanian, CFA, Managing Director - Associate Director of Equity Research - Past Chair and current Board member, Boston Security Analysts Society - Executive Committee member, Boston Economic Club • Leerink Partners LLC - Leading investment bank specializing in healthcare - Focus on companies which are developing and commercializing innovative products and services, defining the future of healthcare Source: Leerink Partners Equity Research, unless otherwise specified INTRODUCTION 2
FOR INSTITUTIONAL USE ONLY • Secular Trends: Positive - Durable Demand, Innovation • Regulatory, Public Policy: Positive • Cyclical View: Improving - Recent Performance - Financings - Valuation • What to watch: - Reimbursement/ Price - Binary Events - Competition - Cash Runway • Outlook for each Sub-sector 2016 HEALTHCARE ROADMAP: AGENDA 3
FOR INSTITUTIONAL USE ONLY • Secular Trend #1 – Durable Demand: Demographics - Aging population globally - In a century (1960-2060), the number of senior citizens will grow over 5x, with a higher growth rate 2020-2040 • Older folks spend more on healthcare - The most rapidly aging countries are wealthier - Three leading killers involve long periods of decline - heart, cancer, dementia Dementia has the highest cost with the most uncovered costs (not including opportunity cost to caregivers) SECULAR TRENDS POSITIVE FOR HEALTHCARE 4 Source: U.S. Census Bureau, Population Estimates and Projections, 2014; NY Times 10/26/2015
FOR INSTITUTIONAL USE ONLY Source: U.S. Census Bureau, Population Estimates and Projections, 2014 SECULAR TREND #1 – DURABLE DEMAND: DEMOGRAPHICS 5 3.1 4.9 9 16.6 25.5 35 44.7 56.4 82.3 98.2 0 20 40 60 80 100 120 1900 1920 1940 1960 1980 2000 2013 2020 2040 2060 Year (as of July 1, 2014) Number of Persons 65+, 1900 to 2060 (numbers in millions)
FOR INSTITUTIONAL USE ONLY • Secular Trend #1 – Durable Demand: Growing Affluence - Healthcare becomes a right not a privilege Many countries in Latin America have written a right to healthcare into their constitutions - Healthcare spending as a percentage of GDP for OECD countries now in the 9-10% range - U.S. the outlier at 17.5% of 2014 GDP (although more is not necessarily better!) and rising SECULAR TREND #1 – DURABLE DEMAND: GROWING AFFLUENCE 6 Source: Leerink Partners Equity Research, The Economist 2/13/2016
FOR INSTITUTIONAL USE ONLY SECULAR TREND #1 – DURABLE DEMAND: GROWING AFFLUENCE 7 Source: OECD Health Data, 2013
FOR INSTITUTIONAL USE ONLY • Secular Trend #1 – Durable Demand: Export of Western Diet and Diseases - Looking at rates of obesity among children points to a ticking time bomb - As formerly poor countries become richer, children may be stunted in height from poor nutrition and yet obese (BMI) Examples: Brazil, Vietnam, S. Africa, India, Mexico SECULAR TREND #1 – DURABLE DEMAND: EXPORTING OUR DIET 8 Source: “Child and adolescent obesity: part of a bigger picture,” The Lancet 2015
FOR INSTITUTIONAL USE ONLY Source: The Lancet, World Obesity Federation 2015 SECULAR TREND #1 – DURABLE DEMAND: EXPORTING OUR DIET Prevalence trends for child overweight and obesity in the USA and with low-income and middle-income countries. 9
FOR INSTITUTIONAL USE ONLY Source: Immunological complications of obesity. TD Kanneganti, VD Dixit - Nature Immunology, 2012 - nature.com SECULAR TREND #1 – DURABLE DEMAND: EXPORTING OUR DIET 10
FOR INSTITUTIONAL USE ONLY • Secular Trend #1 – Durable Demand: Shift from Acute to Chronic Diseases - Acute/infectious diseases (viruses, malaria) have shorter durations of therapy - Chronic diseases (diabetes, cancer) are treated for years - Already 75% of annual deaths globally are in low & middle income countries SECULAR TREND #1 – DURABLE DEMAND: SHIFT TO CHRONIC 11 Source: Novartis, 2/24/16, https://www.novartis.com/news/news-archive
FOR INSTITUTIONAL USE ONLY SECULAR TREND #1 – DURABLE DEMAND: SHIFT TO CHRONIC Source: cms.gov 12
FOR INSTITUTIONAL USE ONLY • Genomic Revolution - Personalized medicine is revolutionizing drug development and treatment • Drug Development cycle shortening for Targeted Therapeutics – Higher likelihood of regulatory success - Cos. can enrich their studies to better select patients who will benefit - Orphan is “the golden child of biotech” • Immuno-oncology vs. Cancer, “The Emperor of All Maladies” - Policy including the new, national “Moonshot” initiative • More Innovation to come – Combo therapies, Anemia, Neurology, Microbiome, and Retinal Disease, and more • Big Data providing new insights through patient records (EHR, wearable sensors, and even smartphones) SECULAR TREND #2 – INNOVATION ABOUNDS 13 Source: Leerink Partners Equity Research, The Economist 2/27/16, Siddhartha Mukherjee
FOR INSTITUTIONAL USE ONLY TIDAL WAVE FOR IMMUNO-ONCOLOGY – EST. $34B MARKET BY 2025 14 - 10,000 20,000 30,000 40,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Sales(milUSD) WW Total Immuno-Oncology Market - By Tumor (Discounted based on probability of success) Myeloma Leukemia Hodgkins FL DLBCL TNBC ER+/ HER2- BC HER2+ BC Prostate Colorectal Cervical Liver Gastroesophageal Pancreatic Ovarian Bladder Glioblastoma Head/Neck Small Cell Lung Cancer Renal Cancer Squamous NSCLC Non-Squamous NSCLC Melanoma Source: Leerink Partners Equity Research
FOR INSTITUTIONAL USE ONLY • More visible Regulation - Greater transparency, communication. - More receptive to patient advocacy groups. - FDA approvals have speeded up. First cycle approvals at CDER at an all-time high of 95% vs. 50% in ’07-08 - Four mechanisms: Accelerated Approval Priority Review Fast Track Breakthrough Therapy Designation (began 7/9/12) - Rare Is Better – Regulators and payers remain accommodating to orphans Source: Leerink Partners Equity Research, CDER=Center for Drug Evaluation & Research REGULATORY TRENDS – POSITIVE FOR HEALTHCARE PRODUCTS 15
FOR INSTITUTIONAL USE ONLY REGULATORY TREND IMPROVING 16 Source: BloombergView 3/16/2015, 45 Approved New Drugs in 2015 (www.fda.gov)
FOR INSTITUTIONAL USE ONLY Sources: 2016, EvaluatePharma®, Evaluate Ltd. REGULATORY TREND REWARDING INNOVATION 17
FOR INSTITUTIONAL USE ONLY • Affordable Care Act (ACA, Obamacare) and Medicaid expansion increased coverage - 10M adults on Public Exchanges - 31 states expanded Medicaid, 3 more under discussion • Most likely election outcome is Clinton = status quo • What to watch: - Cadillac tax delayed and Medical Device and MCO tax holidays for 2 years & 1 yr., respectively - Major losses on Public Exchanges indicate rates will rise sharply in 2017, economic model remains unstable - The Election! If Republicans win White House & Congress, more efforts to repeal Obamacare PUBLIC POLICY TRENDS – POSITIVE FOR HEALTHCARE 18 Source: Leerink Partners Equity Research
FOR INSTITUTIONAL USE ONLY PUBLIC POLICY TRENDS – POSITIVE FOR HEALTHCARE 19 Source: “Status of State Action on the Medicaid Expansion Decision,” KFF State Health Facts, updated 1/12/2016
FOR INSTITUTIONAL USE ONLY CYCLICAL VIEW – OUTPERFORMANCE MAY BE POISED TO RESUME 20 Source: FactSet, S&P Indices, Percentage point outperformance versus indicated index, 3/4/16 -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% 2011 2012 2013 2014 2015 2016 YTD Outperformance of Healthcare Large Caps (v S&P 500) Mid Caps (v S&P 400) Small Caps (v S&P 600)
FOR INSTITUTIONAL USE ONLY Source: FactSet, S&P Indices, Percentage point outperformance versus indicated index, 3/4/16 21 POSSIBLY EVEN FOR BIOTECH… -30% -20% -10% 0% 10% 20% 30% 40% 2011 2012 2013 2014 2015 2016 YTD Outperformance of Biotech (NBI) Large Caps (v S&P 500) Mid Caps (v S&P 400) Small Caps (v S&P 600)
FOR INSTITUTIONAL USE ONLY BIOTECH UNDERPERFORMED BY A WIDE MARGIN SINCE MID-2015 22 Source: FactSet, 2/27/16, Leerink Partners Equity Research
FOR INSTITUTIONAL USE ONLY CYCLICAL VIEW – RECORD CAPITAL INFLOWS Source: FactSet, Leerink Partners Equity Research, FO=Follow-ons, IPO=Initial Public Offerings, P=Peak, T=Trough 23 • The trailing 12-month capital inflow peaked at more than $40B in late 2015, almost double the peak of late 2000
FOR INSTITUTIONAL USE ONLY CYCLICAL VIEW – RETURNS NEGATIVELY CORRELATED TO FINANCINGS 24 Source: FactSet, Leerink Partners Equity Research; NBI represents $698B in Total Mkt. Cap, 190 Stocks, mkt. cap weighted; BTK represents $2B in Total Mkt. Cap, 30 Stocks, equal weighted
FOR INSTITUTIONAL USE ONLY CYCLICAL VIEW – VALUATIONS BACK TO AN ATTRACTIVE RANGE Source: FactSet, 3/4/16 25
FOR INSTITUTIONAL USE ONLY • HC as % of GDP expected to continue rising • Market forces driving Price Pressure throughout the industry • At the margin, we expect reimbursement hurdles to rise - Switch to value-based pricing vs. volume-based - Ongoing privatization of Medicare/ Medicaid (60% of Medicaid spending is still fee-for-service) - MCO/PBM bargaining power rising, including MCO mega-mergers • Headline Risk at least through the election • But we see little appetite for cost containment legislation WHAT TO WATCH: REIMBURSEMENT/ PRICE 26 Source: Leerink Partners Equity Research; MCO=Managed Care Organizations, PBM=Pharmacy Benefit Managers
FOR INSTITUTIONAL USE ONLY HEADLINE RISK 27 Source: Leerink Partners Equity Research
FOR INSTITUTIONAL USE ONLY WHAT TO WATCH: REIMBURSEMENT/ PRICE MORE THAN HEADLINE RISK • Relentless focus on price of products and services growing • Increasing sophistication & cost management by payers - Payers working faster and cooperating with drs. - Accelerating shift to closed formulary, tiers, controlling access, cost-shifting, pricing models may be indication-specific - Availability of Big Data on outcomes & patient data to target usage - Protecting Access to Medicare Act (PAMA) aims to move diagnostics to mkt prices – implementation expected Jan. 2017 • But legislation to impose drug price controls unlikely • Orphan drugs remain a safe haven • Oncology costs a concern, management growing slowly • Biosimilar industry still in infancy: pricing and adoption unknown until ’17-20 28 Source: Leerink Partners Equity Research
FOR INSTITUTIONAL USE ONLY CERTAIN THERAPEUTIC CATEGORIES MORE IMMUNE THAN OTHERS 29 Source: Leerink Partners Equity Research, Company Information, IMS, BiotechNow.org, EvauatePharmaWorldPreview2014
FOR INSTITUTIONAL USE ONLY WHAT TO WATCH: RISING COMPETITION 30 Source: 2016, EvaluatePharma®, Evaluate Ltd.
FOR INSTITUTIONAL USE ONLY July ’15 – February ’16 Biotech Stock Impact by Profitability and Cash Availability WHAT TO WATCH: BIOTECH CASH AFFECTING PERFORMANCE 31 Source: FactSet, Leerink Partners Equity Research; Years of Cash calculation: (Cash & ST Investments) / (Net Income of trailing 4 quarters). NBI components, excluding n=2 companies with insufficient market data. Prices 7/16/15 – 3/2/16.
FOR INSTITUTIONAL USE ONLY • Healthcare investing is uniquely characterized by Binary Events • Investors can take positions and/or hedge ahead of time • Data releases, particularly at medical meetings Example: Intra-Cellular Therapies (ITCI, $31.42) second Ph III schizophrenia data mid-2016. Up/down: +$15-20/shr; -$10-15/shr • FDA approvals open the door to commercialization, watch launch trajectory • Legal decisions • Reimbursement decisions WHAT TO WATCH: BINARY EVENTS: CATALYST TRACKER 32 Source: Leerink Partners Equity Research, Catalyst Tracker, Price as of 3/7/16
FOR INSTITUTIONAL USE ONLY • Major Pharma • Biotech • Specialty Pharma • Life Science Tools & Diagnostics • Medical Technology • Managed Care • Facilities • HCIT (Healthcare Information Technology) • PBMs & Distributors • Digital Health INDUSTRY SECTORS 33
FOR INSTITUTIONAL USE ONLY • Companies can enjoy competitive advantages for years: • Real Intellectual Property - Product Patents run 20 years - Orphan Diseases have 7 years of exclusivity (Orphan Drug Act of 1983) - Biologic data exclusivity is 12 yrs., NCE (New Chemical Entity) is 5 yrs. • Barriers to Entry - FDA and EU regulatory authorities • To minimize risk, investors can wait until after Ph III data to invest in Biopharma - Probability of success for Ph III is 62% BIOPHARMA IS INHERENTLY ATTRACTIVE 34 Source: Tufts University Center for the Study of Drug Development, 11/18/14
FOR INSTITUTIONAL USE ONLY PROBABILITIES OF SUCCESS FOR PRODUCTS IN DEVELOPMENT Permission for use of Cost of Developing a New Drug November 18, 2014, provided by Joseph A. DiMasi, Tufts Univ. 35
FOR INSTITUTIONAL USE ONLY 1-2 years 2-3 years 3-4 years 1-2 years 12-14 years 2x 6-8x 12-24x Scientific insight / promise Proof of concept – phase Ib/II Confirmation of efficacy / expansion of indications Peak expected value Erosion of expected value +100% +2-300% +1-200% Approval / launch Product profile limitations • Efficacy • Side effects emerge Competitors emerge • Same target or pathway • New target or pathway Generic threat looms Indication expansion STOCK SELECTION STRATEGY: Biopharma Product Value Begins to Be Eroded Shortly After First Commercialization in Many Cases; New Indications Can Offset Erosion Source: Leerink Partners Equity Research, FactSet
FOR INSTITUTIONAL USE ONLY • Description of Sector: - Emerging from patent cliffs, in transition from small molecule drugs to biologics with more innovation and faster growth; attractive dividends • Outlook: Mixed - Tailwinds from demographics & higher utilization of drugs - Pharma & Biotech are melding as new therapeutic categories emerge: Examples: Immuno-Oncology (I-O), Gene Therapy - Operating leverage grows after initial product launch, especially if a “pipeline in a product” - Headwinds: Price/ Payer Pressure, competition, patent expirations, Fx – consensus estimates have trended slightly downward since mid-2015 Source: Leerink Partners Equity Research MAJOR PHARMA: OUTLOOK 37
FOR INSTITUTIONAL USE ONLY 38 2016 ESTIMATES TREND SLIGHTLY DOWNWARD SINCE MID-2015 Source: FactSet, Leerink Partners Equity Research 2016 EPS Consensus Estimate Change From 7/31/2015 2016 Sales Consensus Estimate Change From 7/31/2015 PFE SNY MRK NVS AZN GSK LLY NVO BMY -15% -10% -5% 0% 5% 7/1/2015 8/1/2015 9/1/2015 10/1/2015 11/1/2015 12/1/2015 1/1/2016 PFE SNY MRK NVS AZN GSK LLY NVO BMY -10% -5% 0% 5% 7/1/2015 8/1/2015 9/1/2015 10/1/2015 11/1/2015 12/1/2015 1/1/2016 Mean Mean • BMY is an outlier to the downward trend • PFE upward revision reflects AGN transaction
FOR INSTITUTIONAL USE ONLY • Description of Sector: - Transition from internal innovation to line extensions & acquisitions • Outlook: Cautious Near Term, Positive Long Term - Headwinds: Product launches slower & lower, price scrutiny, FX - Mid-2016 and beyond: Reaccelerating growth Fundamentals of drug profitability unchanged, high Returns on Capital Scientific breakthroughs leading to higher success rates Major medical & societal needs still to be addressed Regulators & payers accommodating to genuine breakthroughs - Valuations have fallen sharply - Sector corrections typically last 2-3 Qs, but can persist for 18-24 months LARGE CAP BIOTECH: OUTLOOK 39 Source: Leerink Partners Equity Research
FOR INSTITUTIONAL USE ONLY HISTORIC SECTOR CORRECTIONS 40 -30% -20% -10% 0% 10% 20% 30% 40% Quarterly Performance of NBI vs. S&P 500 +164%+32%+290% 2-3 quarter period of 12-22% underperformance before recovery Source: Leerink Partners Equity Research
FOR INSTITUTIONAL USE ONLY • Description of Sector: - Smid cap Biotech drives much of industry’s innovation • Outlook: Selectivity Near Term, Positive Long Term - Tailwinds: FDA’s commitment toward increased transparency, receptiveness to patient advocacy groups and accelerated approval timelines - Pricing power for innovation in the US still appears robust, esp. Orphan - Unmet needs to be met by innovation in anemia, neurology, gene therapy, etc. - What to watch: Reimbursement headwinds in EU, US Cash runway SMID CAP BIOTECH: OUTLOOK 41 Source: Leerink Partners Equity Research
FOR INSTITUTIONAL USE ONLY ORPHAN DRUG STOCKS HAVE OUTPERFORMED THE REST OF BIOTECH 42 Orphan drug index constituents: AMAG, BMRN, CYTK, SRPT, IONS, ALNY, PTCT, AEGR, FBIO, ALXN, SHPG, FOLD, GENTY, HPTX, INSM, JAZZ, NPSP, QCOR, RPTP, UTHR, VPHM, PBT-ASX, ORPH, DSCO, BLUE, PRQR, SAGE, GWPH, QURE, ONCE, RTRX, ZFGN Source: FactSet, 2/19/16
FOR INSTITUTIONAL USE ONLY • Description of Sector: - In transition: Legacy cos. focused on drug delivery & generics, now moving to a hybrid model including brands and orphan diseases (e.g., SHPG). - Not the same as “specialty drugs” • Outlook: Mixed - Tailwinds: Demographics & higher utilization of drugs - Low cost of debt & lower tax domiciles have led to accretive M&A, but supply of targets is shrinking due to sector consolidation - Headwinds: Reimbursement pressure for undifferentiated brands, but some categories are more insulated (orphan diseases) - Timeline for Biosimilars unpredictable. Less competition but greater development risk, legal, and regulatory uncertainties SPECIALTY PHARMA & GENERICS: OUTLOOK 43 Source: Leerink Partners Equity Research
FOR INSTITUTIONAL USE ONLY LARGE MARKET POTENTIAL FOR BIOSIMILARS 44 Source: Leerink Partners Equity Research
FOR INSTITUTIONAL USE ONLY • Description of Sector: - Providing the tools for the genomic revolution or “precision medicine.” To help with risk assessment, diagnosis, to guide therapy, and measure progression • Outlook: Mixed - Genomics becoming prevalent throughout Healthcare - Biomedical research funding poised to improve - Many new product cycles in diagnostics - Underleveraged balance sheets and asset scarcity - What to watch: Reimbursement pressure in diagnostics. Regulatory clarity on FDA regulation of lab-developed tests China macro growth slowing, but structural reforms benefit scientific development, HC, testing for environment, food safety LS TOOLS & DIAGNOSTICS: OUTLOOK 45 Source: Leerink Partners Equity Research
FOR INSTITUTIONAL USE ONLY BIOMEDICAL RESEARCH FUNDING POISED TO IMPROVE Source: Leerink Partners Equity Research; Chart represents y/y change in research funding 46 IMPROVEMENT IN U.S. ACADEMIC/GOV’T, PHARMA/BIOTECH DRIVE THE DELTA
FOR INSTITUTIONAL USE ONLY • Description of Sector: - Med Tech cos. develop and manufacture devices and supplies sold to hospitals, physician groups or patients (example of latter: insulin pumps) - Many small innovative cos., which are frequently acquired by large caps • Outlook: Positive - Positive view with improving utilization trends, stable pricing - Strong balance sheets provide significant financial flexibility & M&A potential - What to watch: Shift to value-based system / bundled payments / vendor consolidation – requires alignment with drs. Pricing pressure in some segments MEDICAL TECHNOLOGY: OUTLOOK 47 Source: Leerink Partners Equity Research
FOR INSTITUTIONAL USE ONLY • Implication: Implant price remains the highest priority in vendor selection for hospital admins, highlighting a commoditized large joint product category. Differentiation going forward will likely require increased investment in technologies that can increase procedure efficiency or in manufacturers offering solutions across multiple product lines. BUNDLED PAYMENTS: VALUE OF INNOVATION IS CHANGING Source: Leerink Partners Equity Research, MEDACorp Survey, “Bundled Payments,” February 2016 53% 23% 13% 5% 5% 3% 0% 10% 20% 30% 40% 50% 60% Implant Price Services/Technologies that Increase Procedure Standardization/Efficiency Breadth of Product Offering Across Multiple Service Lines OR Rep Service Availability of New Technologies Breadth of Product Offering within Service Line %ofrespondentsrankingfactorhighest Which factor is most important when considering a vendor for bundled payments? (n=40)
FOR INSTITUTIONAL USE ONLY • Description of Sector: - MCOs are insurance cos. that manage healthcare costs, & provide and finance these services to patients • Outlook: Positive - Bullish with a favorable policy outlook - Ongoing privatization of Medicaid and Medicare - Losses on public exchanges likely to stabilize - Commercial margins poised to expand as pricing hardens and costs muted (value-based care, growth in high-deductible plans) - Mega mergers offer a meaningful call option to the upside, in our view - Benefit from rising interest rates with strong balance sheets, cash flow MANAGED CARE (MCO): OUTLOOK 49 Source: Leerink Partners Equity Research
FOR INSTITUTIONAL USE ONLY 50 SECULAR TAILWINDS SHOULD CONTINUE TO FUEL MEMBERSHIP GROWTH IN MEDICARE ADVANTAGE Source: CMS, Kaiser, MedPac, Leerink Partners Equity Research We Expect 50% Penetration of Medicare Advantage by 2019 in the Base Case No Suppleme ntal Coverage, 10% Medigap, 16% MA, 28% Employer Sponsored , 24% Medicaid, 21% Other Public Coverage, 1% Under 1/3rd of Seniors Covered By Employers As Employers Continue To Drop Retiree Coverage Starting 2011, Baby Boomers Start Aging Into Medicare Eligibility At The Rate Of 10K Per Day Under 1/3rd of Seniors Covered By Employers 0 10 20 30 40 50 60 70 80 90 MedicareEnrollment(MM) Starting 2011, Baby Boomers Start Aging Into Medicaire Eligibiility First Baby Boomer Turns 65 Last Baby Boomer Turns 65 and First Reaches Life Expectancy 66% 46% 36% 40% 40% 40% 35% 36% 35% 32% 34% 32% 29% 28% 26% 26% 25% 28% 25% 23% 0% 10% 20% 30% 40% 50% 60% 70% 1988 1991 1993 1995 1998 1999 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Percentage of Employers (200 + EES) Offering Retiree Health Benefits
FOR INSTITUTIONAL USE ONLY PRIVATIZATION OF 60% of MEDICAID, A $500+B ENTITLEMENT 51
FOR INSTITUTIONAL USE ONLY • Description of Sector: - Hospitals, mental health facilities. • Outlook: Bearish - Bearish on acute hospitals, positive on behavioral health, outsourcing, outpatient care - Headwinds: worsening bad debt, tough volume comps, wage inflation, contract labor rates, drug cost spend - Medium-term pressure from Medicare privatization & value-based care - Behavioral care growth faster with unmet need for mental health treatment, roll-up of fragmented marketplace HEALTHCARE FACILITIES: OUTLOOK 52 Source: Leerink Partners Equity Research
FOR INSTITUTIONAL USE ONLY 53 CMS HAS AN AGGRESSIVE GOAL OF 50% OF PAYMENTS LINKED TO VALUE-BASED CARE BY 2018 Source: CBO; Leerink Partners Equity Research & Estimates
FOR INSTITUTIONAL USE ONLY 54 Source: U.S. BLS, AHA, S&P Healthcare, Leerink Partners Equity Research & Estimates PRIVATIZATION OF MEDICARE PRESSURING INPATIENT ADMISSIONS 79% 73% 76% 83% 80% 72% Aggregate Medicare, only Employer-Sponsored Medicare Advantage Medigap Medicare Cost %RespondentNot Hospitalized In LastTwo Years Per our MEDACorp survey of American Seniors in Nov. 2015, we observed the lower utilization of services and procedures by MA enrollees versus traditional Medicare. While this may be partly driven by self-selection, we believe tighter control by private MCOs is a contributor.
FOR INSTITUTIONAL USE ONLY • Description of Sector: - HCIT is hospital-based (in-patient) and office-based (ambulatory) systems. • Outlook: Positive - Positive but divergence between winners & losers - Meaningful use incentive program continues to drive adoption of EHR (Electronic Health Records), but market more penetrated - Shift to value-based HC leading to adoption of Population Health Mgt. technologies (data exchange, patient engagement tools) - Hospital consolidation a positive for top vendors to gain share - Shift toward cloud-based solutions benefits recurring revenues - What to watch: Market share shifts in a more mature market HCIT (Healthcare Information Technology): OUTLOOK 55 Source: Leerink Partners Equity Research
FOR INSTITUTIONAL USE ONLY GROWTH IN HCIT SPENDING SLOWING, BUT TOTAL HCIT $ SPEND STABLE 56 Vendor Allscripts Athena Cerner DocuTap eClinical Epic GE Greenway McKesson QSII Practice Fusion Grand Total Source: MEDACorp Survey, "Ambulatory EMR Purchasing Trends," March 2015 If your practice purchase more No - We will not purchase any more licenses, 41.0% Yes - We will buy 5-10% more licenses, 38.5% Yes - We will buy 11-20% more licenses, 17.9% Yes - We will buy 21%+ more licenses, 2.6% Do you plan to purchase more licenses either due to growth or expansion or any other reason? n=39 Source: CDC/NCHS National Ambulatory Medical Care Survey January 2014, Leerink Partners Equity Research PERCENTAGE OF OFFICE-BASED DRS. WITH AN EHR 41% WILL NOT PURCHASE ANY MORE LICENSES
FOR INSTITUTIONAL USE ONLY • Description of Sector: - The convergence of the healthcare system with digital technology leading to “Digital Disruption” The largest community for physicians is online (WBMD), physician services has no clinics (TDOC), repository of data has no patients (FIT) • Outlook: Positive - Demand-pull: Consumer Empowerment, high deductible plans, drive need for cost tools and access to their data - Supply-push: As consumers & drs. have shifted time on-line, ads will follow - Employers spending more on Digital Health benefits - Big data will optimize care with next-generation analytics DIGITAL HEALTH: OUTLOOK 57 Source: Leerink Partners Equity Research
FOR INSTITUTIONAL USE ONLY DIGITAL HEALTH LIFECYCLES 58 Source: Leerink Partners Equity Research
FOR INSTITUTIONAL USE ONLY • Description of Sector: - Supply chain for drugs. Distributors sell to hospitals, retail. PBM (Pharmacy Benefit Managers) process and pay Rx claims, manage formularies, negotiate discounts & rebates. • Outlook: Mixed with a positive bias - Aging demographics favorable for drug usage - Specialty drug spending growing +15% annually, a tailwind - Generic drug launches benefit the supply chain - What to watch: Tailwinds from generic launches and inflation now slowing PBMs & DRUG DISTRIBUTORS: OUTLOOK 59 Source: Leerink Partners Equity Research
FOR INSTITUTIONAL USE ONLY GENERIC LAUNCHES SLOWING 60 Source: CVS, Investor day presentation, December, 2015
FOR INSTITUTIONAL USE ONLY GENERIC PRICE INFLATION SLOWING 61 Source: IMS health, Leerink Partners LLC Note: The quarterly weighted average generic price inflation was calculated by weighting each drug based on its mix of sales for a given calendar year. Only drugs that were available in the year ago period are included in a given quarter's inflation calculation. IMS Health quarterly WAC pricing and sales figures were pulled by NDC code which distinguished each drug by dosage 1.2% 1.2% -3.0% -18.1% -3.2% -5.0% -2.1% -12.4% -2.2% 1.0% 0.9% 5.2% 12.2% 13.5% 11.8% 4.6% 5.4% 8.1% 5.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 1Q:11 2Q:11 3Q:11 4Q:11 1Q:12 2Q:12 3Q:12 4Q:12 1Q:13 2Q:13 3Q:13 4Q:13 1Q:14 2Q:14 3Q:14 4Q:14 1Q:15 2Q:15 3Q:15 Weighted Average y/y WAC Generic Price Inflation by Quarter
FOR INSTITUTIONAL USE ONLY 62 ACKNOWLEDGEMENT: Tessa Romero of Leerink Partners Equity Research contributed to this report. Her contribution is greatly appreciated.
HEALTHCARE March 7, 2016 Disclosures Appendix Analyst Certification I, Alice C. Avanian, CFA, certify that the views expressed in this report accurately reflect my views and that no part of my compensation was, is, or will be directly related to the specific recommendation or views contained in this report.
HEALTHCARE March 7, 2016 Distribution of Ratings/Investment Banking Services (IB) as of 12/31/15 IB Serv./Past 12 Mos. Rating Count Percent Count Percent BUY [OP] 161 73.20 63 39.10 HOLD [MP] 59 26.80 4 6.80 SELL [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 12 months. Underperform (Sell): We expect this stock to underperform its benchmark over the next 12 months.The degree of outperformance or underperformance required to warrant an Outperform or an Underperform rating should be 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 for issuers with a market capitalization of less than $2 billion and the S&P 500® Health Care Index for issuers with a market capitalization over $2 billion.
HEALTHCARE March 7, 2016 Important Disclosures This information (including, but not limited to, prices, quotes and statistics) has been obtained from sources that we believe reliable, but we do not represent that it is accurate or complete and it should not be relied upon as such. All information is subject to change without notice. This is provided for information purposes only and should not be regarded as an offer to sell or as a solicitation of an offer to buy any product to which this information relates. The Firm, its officers, directors, employees, proprietary accounts and affiliates may have a position, long or short, in the securities referred to in this report, and/or other related securities, and from time to time may increase or decrease the position or express a view that is contrary to that contained in this report. The Firm's salespeople, traders and other professionals may provide oral or written market commentary or trading strategies that are contrary to opinions expressed in this report. The Firm's proprietary accounts may make investment decisions that are inconsistent with the opinions expressed in this report. The past performance of securities does not guarantee or predict future performance. Transaction strategies described herein may not be suitable for all investors. Additional information is available upon request by contacting the Editorial Department at One Federal Street, 37th Floor, Boston, MA 02110. Like all Firm employees, analysts receive compensation that is impacted by, among other factors, overall firm profitability, which includes revenues from, among other business units, Institutional Equities, and Investment Banking. Analysts, however, are not compensated for a specific investment banking services transaction or contributions to the Firm's investment banking activities. MEDACorp is a network of healthcare professionals, attorneys, physicians, key opinion leaders and other specialists 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 Leerink Partners Editorial Department, One Federal Street, 37th Floor, Boston, MA 02110. While IMS Health has been used as a source, the analysis contained herein has been arrived at independently by the firm and IMS is not responsible for the analysis or use of the data. The S&P Health Care Claims Index™ is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by Leerink Partners LLC. Standard & Poor's® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); [Trademarks] are trademarks of the [Licensor]; and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Leerink Partners LLC. Leerink Partners research is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P Health Care Claims Index™ Member FINRA/SIPC. ©2016 Leerink Partners LLC. All rights reserved. This document may not be reproduced or circulated without our written authority.
LEERINK PARTNERS LLC EQUITY RESEARCH Director of Equity Research John L. Sullivan, CFA (617) 918-4875 john.sullivan@leerink.com Associate Director of Research Alice C. Avanian, CFA (617) 918-4544 alice.avanian@leerink.com Associate Director of Research James Kelly (212) 277-6096 jim.kelly@leerink.com Director of Therapeutic Research Geoffrey C. Porges, MBBS (212) 277-6092 geoffrey.porges@leerink.com Major Pharmaceuticals Seamus Fernandez (617) 918-4011 seamus.fernandez@leerink.com Le-Yi Wang, Ph.D. (617) 918-4568 leyi.wang@leerink.com Specialty Pharmaceuticals Jason M. Gerberry, JD (617) 918-4549 jason.gerberry@leerink.com Derek C. Archila (617) 918-4851 derek.archila@leerink.com Etzer Darout, Ph.D. (617) 918-4020 etzer.darout@leerink.com Large Cap Biotechnology Geoffrey C. Porges, MBBS (212) 277-6092 geoffrey.porges@leerink.com Mid and Small Cap Biotechnology Joseph P. Schwartz (617) 918-4575 joseph.schwartz@leerink.com Seamus Fernandez (617) 918-4011 seamus.fernandez@leerink.com Michael Schmidt, Ph.D. (617) 918-4588 michael.schmidt@leerink.com Paul Matteis (617) 918-4585 paul.matteis@leerink.com Jonathan Chang, Ph.D. (617) 918-4015 jonathan.chang@leerink.com Richard Goss (617) 918-4059 richard.goss@leerink.com Dae Gon Ha, Ph.D. (617) 918-4093 daegon.ha@leerink.com Mayank Mamtani, MSc. (617) 918-4887 mayank.mamtani@leerink.com Mark Sevecka, Ph.D. (617) 918-4022 mark.sevecka@leerink.com Life Science Tools & Diagnostics Dan Leonard (212) 277-6116 dan.leonard@leerink.com Kevin C. Chen (212) 277-6045 kevin.chen@leerink.com Michael A. Sarcone, CFA (212) 277-6013 michael.sarcone@leerink.com Medical Devices, Cardiology Danielle Antalffy (212) 277-6044 danielle.antalffy@leerink.com Puneet Souda (212) 277-6091 puneet.souda@leerink.com Medical Devices, Orthopedics Richard Newitter (212) 277-6088 richard.newitter@leerink.com Ravi Misra (212) 277-6049 ravi.misra@leerink.com Healthcare Services, Managed Ana Gupte, Ph.D. (212) 277-6040 ana.gupte@leerink.com Care & Facilities Healthcare Technology David Larsen, CFA (617) 918-4502 david.larsen@leerink.com & Distribution Christopher Abbott (617) 918-4010 chris.abbott@leerink.com Digital Health Steven Wardell (617) 918-4097 steven.wardell@leerink.com Matt Dellelo, CFA (617) 918-4812 matt.dellelo@leerink.com Sr. Editor/Supervisory Analyst Mary Ellen Eagan, CFA (617) 918-4837 maryellen.eagan@leerink.com Supervisory Analysts Randy Brougher randy.brougher@leerink.com Robert Egan bob.egan@leerink.com Amy N. Sonne amy.sonne@leerink.com New York 299 Park Avenue, 21st floor New York, NY 10171 (888) 778-1653 Boston One Federal Street, 37th Floor Boston, MA 02110 (800) 808-7525 San Francisco 255 California Street, 12th Floor San Francisco, CA 94111 (415) 905-7200

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BEC2016_AAvanian_3_9_16

  • 1.
    FOR INSTITUTIONAL USEONLY A Roadmap for Investing in Healthcare Alice Avanian, CFA, Managing Director, Leerink Partners March 9, 2016 Please refer to the Disclosure Appendix for Analyst Certification. To access Price Charts and Disclosures specific to Covered Companies, please refer to https://leerink.bluematrix.com/bluematrix/Disclosure2 or send a request to Leerink Partners Editorial Department, One Federal Street, 37th Floor, Boston, MA 02110. The description of Leerink Partners benchmarks is available by contacting the Leerink Partners Editorial Department. Rx trends derived from IMS Health.
  • 2.
    FOR INSTITUTIONAL USEONLY • Alice Avanian, CFA, Managing Director - Associate Director of Equity Research - Past Chair and current Board member, Boston Security Analysts Society - Executive Committee member, Boston Economic Club • Leerink Partners LLC - Leading investment bank specializing in healthcare - Focus on companies which are developing and commercializing innovative products and services, defining the future of healthcare Source: Leerink Partners Equity Research, unless otherwise specified INTRODUCTION 2
  • 3.
    FOR INSTITUTIONAL USEONLY • Secular Trends: Positive - Durable Demand, Innovation • Regulatory, Public Policy: Positive • Cyclical View: Improving - Recent Performance - Financings - Valuation • What to watch: - Reimbursement/ Price - Binary Events - Competition - Cash Runway • Outlook for each Sub-sector 2016 HEALTHCARE ROADMAP: AGENDA 3
  • 4.
    FOR INSTITUTIONAL USEONLY • Secular Trend #1 – Durable Demand: Demographics - Aging population globally - In a century (1960-2060), the number of senior citizens will grow over 5x, with a higher growth rate 2020-2040 • Older folks spend more on healthcare - The most rapidly aging countries are wealthier - Three leading killers involve long periods of decline - heart, cancer, dementia Dementia has the highest cost with the most uncovered costs (not including opportunity cost to caregivers) SECULAR TRENDS POSITIVE FOR HEALTHCARE 4 Source: U.S. Census Bureau, Population Estimates and Projections, 2014; NY Times 10/26/2015
  • 5.
    FOR INSTITUTIONAL USEONLY Source: U.S. Census Bureau, Population Estimates and Projections, 2014 SECULAR TREND #1 – DURABLE DEMAND: DEMOGRAPHICS 5 3.1 4.9 9 16.6 25.5 35 44.7 56.4 82.3 98.2 0 20 40 60 80 100 120 1900 1920 1940 1960 1980 2000 2013 2020 2040 2060 Year (as of July 1, 2014) Number of Persons 65+, 1900 to 2060 (numbers in millions)
  • 6.
    FOR INSTITUTIONAL USEONLY • Secular Trend #1 – Durable Demand: Growing Affluence - Healthcare becomes a right not a privilege Many countries in Latin America have written a right to healthcare into their constitutions - Healthcare spending as a percentage of GDP for OECD countries now in the 9-10% range - U.S. the outlier at 17.5% of 2014 GDP (although more is not necessarily better!) and rising SECULAR TREND #1 – DURABLE DEMAND: GROWING AFFLUENCE 6 Source: Leerink Partners Equity Research, The Economist 2/13/2016
  • 7.
    FOR INSTITUTIONAL USEONLY SECULAR TREND #1 – DURABLE DEMAND: GROWING AFFLUENCE 7 Source: OECD Health Data, 2013
  • 8.
    FOR INSTITUTIONAL USEONLY • Secular Trend #1 – Durable Demand: Export of Western Diet and Diseases - Looking at rates of obesity among children points to a ticking time bomb - As formerly poor countries become richer, children may be stunted in height from poor nutrition and yet obese (BMI) Examples: Brazil, Vietnam, S. Africa, India, Mexico SECULAR TREND #1 – DURABLE DEMAND: EXPORTING OUR DIET 8 Source: “Child and adolescent obesity: part of a bigger picture,” The Lancet 2015
  • 9.
    FOR INSTITUTIONAL USEONLY Source: The Lancet, World Obesity Federation 2015 SECULAR TREND #1 – DURABLE DEMAND: EXPORTING OUR DIET Prevalence trends for child overweight and obesity in the USA and with low-income and middle-income countries. 9
  • 10.
    FOR INSTITUTIONAL USEONLY Source: Immunological complications of obesity. TD Kanneganti, VD Dixit - Nature Immunology, 2012 - nature.com SECULAR TREND #1 – DURABLE DEMAND: EXPORTING OUR DIET 10
  • 11.
    FOR INSTITUTIONAL USEONLY • Secular Trend #1 – Durable Demand: Shift from Acute to Chronic Diseases - Acute/infectious diseases (viruses, malaria) have shorter durations of therapy - Chronic diseases (diabetes, cancer) are treated for years - Already 75% of annual deaths globally are in low & middle income countries SECULAR TREND #1 – DURABLE DEMAND: SHIFT TO CHRONIC 11 Source: Novartis, 2/24/16, https://www.novartis.com/news/news-archive
  • 12.
    FOR INSTITUTIONAL USEONLY SECULAR TREND #1 – DURABLE DEMAND: SHIFT TO CHRONIC Source: cms.gov 12
  • 13.
    FOR INSTITUTIONAL USEONLY • Genomic Revolution - Personalized medicine is revolutionizing drug development and treatment • Drug Development cycle shortening for Targeted Therapeutics – Higher likelihood of regulatory success - Cos. can enrich their studies to better select patients who will benefit - Orphan is “the golden child of biotech” • Immuno-oncology vs. Cancer, “The Emperor of All Maladies” - Policy including the new, national “Moonshot” initiative • More Innovation to come – Combo therapies, Anemia, Neurology, Microbiome, and Retinal Disease, and more • Big Data providing new insights through patient records (EHR, wearable sensors, and even smartphones) SECULAR TREND #2 – INNOVATION ABOUNDS 13 Source: Leerink Partners Equity Research, The Economist 2/27/16, Siddhartha Mukherjee
  • 14.
    FOR INSTITUTIONAL USEONLY TIDAL WAVE FOR IMMUNO-ONCOLOGY – EST. $34B MARKET BY 2025 14 - 10,000 20,000 30,000 40,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Sales(milUSD) WW Total Immuno-Oncology Market - By Tumor (Discounted based on probability of success) Myeloma Leukemia Hodgkins FL DLBCL TNBC ER+/ HER2- BC HER2+ BC Prostate Colorectal Cervical Liver Gastroesophageal Pancreatic Ovarian Bladder Glioblastoma Head/Neck Small Cell Lung Cancer Renal Cancer Squamous NSCLC Non-Squamous NSCLC Melanoma Source: Leerink Partners Equity Research
  • 15.
    FOR INSTITUTIONAL USEONLY • More visible Regulation - Greater transparency, communication. - More receptive to patient advocacy groups. - FDA approvals have speeded up. First cycle approvals at CDER at an all-time high of 95% vs. 50% in ’07-08 - Four mechanisms: Accelerated Approval Priority Review Fast Track Breakthrough Therapy Designation (began 7/9/12) - Rare Is Better – Regulators and payers remain accommodating to orphans Source: Leerink Partners Equity Research, CDER=Center for Drug Evaluation & Research REGULATORY TRENDS – POSITIVE FOR HEALTHCARE PRODUCTS 15
  • 16.
    FOR INSTITUTIONAL USEONLY REGULATORY TREND IMPROVING 16 Source: BloombergView 3/16/2015, 45 Approved New Drugs in 2015 (www.fda.gov)
  • 17.
    FOR INSTITUTIONAL USEONLY Sources: 2016, EvaluatePharma®, Evaluate Ltd. REGULATORY TREND REWARDING INNOVATION 17
  • 18.
    FOR INSTITUTIONAL USEONLY • Affordable Care Act (ACA, Obamacare) and Medicaid expansion increased coverage - 10M adults on Public Exchanges - 31 states expanded Medicaid, 3 more under discussion • Most likely election outcome is Clinton = status quo • What to watch: - Cadillac tax delayed and Medical Device and MCO tax holidays for 2 years & 1 yr., respectively - Major losses on Public Exchanges indicate rates will rise sharply in 2017, economic model remains unstable - The Election! If Republicans win White House & Congress, more efforts to repeal Obamacare PUBLIC POLICY TRENDS – POSITIVE FOR HEALTHCARE 18 Source: Leerink Partners Equity Research
  • 19.
    FOR INSTITUTIONAL USEONLY PUBLIC POLICY TRENDS – POSITIVE FOR HEALTHCARE 19 Source: “Status of State Action on the Medicaid Expansion Decision,” KFF State Health Facts, updated 1/12/2016
  • 20.
    FOR INSTITUTIONAL USEONLY CYCLICAL VIEW – OUTPERFORMANCE MAY BE POISED TO RESUME 20 Source: FactSet, S&P Indices, Percentage point outperformance versus indicated index, 3/4/16 -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% 2011 2012 2013 2014 2015 2016 YTD Outperformance of Healthcare Large Caps (v S&P 500) Mid Caps (v S&P 400) Small Caps (v S&P 600)
  • 21.
    FOR INSTITUTIONAL USEONLY Source: FactSet, S&P Indices, Percentage point outperformance versus indicated index, 3/4/16 21 POSSIBLY EVEN FOR BIOTECH… -30% -20% -10% 0% 10% 20% 30% 40% 2011 2012 2013 2014 2015 2016 YTD Outperformance of Biotech (NBI) Large Caps (v S&P 500) Mid Caps (v S&P 400) Small Caps (v S&P 600)
  • 22.
    FOR INSTITUTIONAL USEONLY BIOTECH UNDERPERFORMED BY A WIDE MARGIN SINCE MID-2015 22 Source: FactSet, 2/27/16, Leerink Partners Equity Research
  • 23.
    FOR INSTITUTIONAL USEONLY CYCLICAL VIEW – RECORD CAPITAL INFLOWS Source: FactSet, Leerink Partners Equity Research, FO=Follow-ons, IPO=Initial Public Offerings, P=Peak, T=Trough 23 • The trailing 12-month capital inflow peaked at more than $40B in late 2015, almost double the peak of late 2000
  • 24.
    FOR INSTITUTIONAL USEONLY CYCLICAL VIEW – RETURNS NEGATIVELY CORRELATED TO FINANCINGS 24 Source: FactSet, Leerink Partners Equity Research; NBI represents $698B in Total Mkt. Cap, 190 Stocks, mkt. cap weighted; BTK represents $2B in Total Mkt. Cap, 30 Stocks, equal weighted
  • 25.
    FOR INSTITUTIONAL USEONLY CYCLICAL VIEW – VALUATIONS BACK TO AN ATTRACTIVE RANGE Source: FactSet, 3/4/16 25
  • 26.
    FOR INSTITUTIONAL USEONLY • HC as % of GDP expected to continue rising • Market forces driving Price Pressure throughout the industry • At the margin, we expect reimbursement hurdles to rise - Switch to value-based pricing vs. volume-based - Ongoing privatization of Medicare/ Medicaid (60% of Medicaid spending is still fee-for-service) - MCO/PBM bargaining power rising, including MCO mega-mergers • Headline Risk at least through the election • But we see little appetite for cost containment legislation WHAT TO WATCH: REIMBURSEMENT/ PRICE 26 Source: Leerink Partners Equity Research; MCO=Managed Care Organizations, PBM=Pharmacy Benefit Managers
  • 27.
    FOR INSTITUTIONAL USEONLY HEADLINE RISK 27 Source: Leerink Partners Equity Research
  • 28.
    FOR INSTITUTIONAL USEONLY WHAT TO WATCH: REIMBURSEMENT/ PRICE MORE THAN HEADLINE RISK • Relentless focus on price of products and services growing • Increasing sophistication & cost management by payers - Payers working faster and cooperating with drs. - Accelerating shift to closed formulary, tiers, controlling access, cost-shifting, pricing models may be indication-specific - Availability of Big Data on outcomes & patient data to target usage - Protecting Access to Medicare Act (PAMA) aims to move diagnostics to mkt prices – implementation expected Jan. 2017 • But legislation to impose drug price controls unlikely • Orphan drugs remain a safe haven • Oncology costs a concern, management growing slowly • Biosimilar industry still in infancy: pricing and adoption unknown until ’17-20 28 Source: Leerink Partners Equity Research
  • 29.
    FOR INSTITUTIONAL USEONLY CERTAIN THERAPEUTIC CATEGORIES MORE IMMUNE THAN OTHERS 29 Source: Leerink Partners Equity Research, Company Information, IMS, BiotechNow.org, EvauatePharmaWorldPreview2014
  • 30.
    FOR INSTITUTIONAL USEONLY WHAT TO WATCH: RISING COMPETITION 30 Source: 2016, EvaluatePharma®, Evaluate Ltd.
  • 31.
    FOR INSTITUTIONAL USEONLY July ’15 – February ’16 Biotech Stock Impact by Profitability and Cash Availability WHAT TO WATCH: BIOTECH CASH AFFECTING PERFORMANCE 31 Source: FactSet, Leerink Partners Equity Research; Years of Cash calculation: (Cash & ST Investments) / (Net Income of trailing 4 quarters). NBI components, excluding n=2 companies with insufficient market data. Prices 7/16/15 – 3/2/16.
  • 32.
    FOR INSTITUTIONAL USEONLY • Healthcare investing is uniquely characterized by Binary Events • Investors can take positions and/or hedge ahead of time • Data releases, particularly at medical meetings Example: Intra-Cellular Therapies (ITCI, $31.42) second Ph III schizophrenia data mid-2016. Up/down: +$15-20/shr; -$10-15/shr • FDA approvals open the door to commercialization, watch launch trajectory • Legal decisions • Reimbursement decisions WHAT TO WATCH: BINARY EVENTS: CATALYST TRACKER 32 Source: Leerink Partners Equity Research, Catalyst Tracker, Price as of 3/7/16
  • 33.
    FOR INSTITUTIONAL USEONLY • Major Pharma • Biotech • Specialty Pharma • Life Science Tools & Diagnostics • Medical Technology • Managed Care • Facilities • HCIT (Healthcare Information Technology) • PBMs & Distributors • Digital Health INDUSTRY SECTORS 33
  • 34.
    FOR INSTITUTIONAL USEONLY • Companies can enjoy competitive advantages for years: • Real Intellectual Property - Product Patents run 20 years - Orphan Diseases have 7 years of exclusivity (Orphan Drug Act of 1983) - Biologic data exclusivity is 12 yrs., NCE (New Chemical Entity) is 5 yrs. • Barriers to Entry - FDA and EU regulatory authorities • To minimize risk, investors can wait until after Ph III data to invest in Biopharma - Probability of success for Ph III is 62% BIOPHARMA IS INHERENTLY ATTRACTIVE 34 Source: Tufts University Center for the Study of Drug Development, 11/18/14
  • 35.
    FOR INSTITUTIONAL USEONLY PROBABILITIES OF SUCCESS FOR PRODUCTS IN DEVELOPMENT Permission for use of Cost of Developing a New Drug November 18, 2014, provided by Joseph A. DiMasi, Tufts Univ. 35
  • 36.
    FOR INSTITUTIONAL USEONLY 1-2 years 2-3 years 3-4 years 1-2 years 12-14 years 2x 6-8x 12-24x Scientific insight / promise Proof of concept – phase Ib/II Confirmation of efficacy / expansion of indications Peak expected value Erosion of expected value +100% +2-300% +1-200% Approval / launch Product profile limitations • Efficacy • Side effects emerge Competitors emerge • Same target or pathway • New target or pathway Generic threat looms Indication expansion STOCK SELECTION STRATEGY: Biopharma Product Value Begins to Be Eroded Shortly After First Commercialization in Many Cases; New Indications Can Offset Erosion Source: Leerink Partners Equity Research, FactSet
  • 37.
    FOR INSTITUTIONAL USEONLY • Description of Sector: - Emerging from patent cliffs, in transition from small molecule drugs to biologics with more innovation and faster growth; attractive dividends • Outlook: Mixed - Tailwinds from demographics & higher utilization of drugs - Pharma & Biotech are melding as new therapeutic categories emerge: Examples: Immuno-Oncology (I-O), Gene Therapy - Operating leverage grows after initial product launch, especially if a “pipeline in a product” - Headwinds: Price/ Payer Pressure, competition, patent expirations, Fx – consensus estimates have trended slightly downward since mid-2015 Source: Leerink Partners Equity Research MAJOR PHARMA: OUTLOOK 37
  • 38.
    FOR INSTITUTIONAL USEONLY 38 2016 ESTIMATES TREND SLIGHTLY DOWNWARD SINCE MID-2015 Source: FactSet, Leerink Partners Equity Research 2016 EPS Consensus Estimate Change From 7/31/2015 2016 Sales Consensus Estimate Change From 7/31/2015 PFE SNY MRK NVS AZN GSK LLY NVO BMY -15% -10% -5% 0% 5% 7/1/2015 8/1/2015 9/1/2015 10/1/2015 11/1/2015 12/1/2015 1/1/2016 PFE SNY MRK NVS AZN GSK LLY NVO BMY -10% -5% 0% 5% 7/1/2015 8/1/2015 9/1/2015 10/1/2015 11/1/2015 12/1/2015 1/1/2016 Mean Mean • BMY is an outlier to the downward trend • PFE upward revision reflects AGN transaction
  • 39.
    FOR INSTITUTIONAL USEONLY • Description of Sector: - Transition from internal innovation to line extensions & acquisitions • Outlook: Cautious Near Term, Positive Long Term - Headwinds: Product launches slower & lower, price scrutiny, FX - Mid-2016 and beyond: Reaccelerating growth Fundamentals of drug profitability unchanged, high Returns on Capital Scientific breakthroughs leading to higher success rates Major medical & societal needs still to be addressed Regulators & payers accommodating to genuine breakthroughs - Valuations have fallen sharply - Sector corrections typically last 2-3 Qs, but can persist for 18-24 months LARGE CAP BIOTECH: OUTLOOK 39 Source: Leerink Partners Equity Research
  • 40.
    FOR INSTITUTIONAL USEONLY HISTORIC SECTOR CORRECTIONS 40 -30% -20% -10% 0% 10% 20% 30% 40% Quarterly Performance of NBI vs. S&P 500 +164%+32%+290% 2-3 quarter period of 12-22% underperformance before recovery Source: Leerink Partners Equity Research
  • 41.
    FOR INSTITUTIONAL USEONLY • Description of Sector: - Smid cap Biotech drives much of industry’s innovation • Outlook: Selectivity Near Term, Positive Long Term - Tailwinds: FDA’s commitment toward increased transparency, receptiveness to patient advocacy groups and accelerated approval timelines - Pricing power for innovation in the US still appears robust, esp. Orphan - Unmet needs to be met by innovation in anemia, neurology, gene therapy, etc. - What to watch: Reimbursement headwinds in EU, US Cash runway SMID CAP BIOTECH: OUTLOOK 41 Source: Leerink Partners Equity Research
  • 42.
    FOR INSTITUTIONAL USEONLY ORPHAN DRUG STOCKS HAVE OUTPERFORMED THE REST OF BIOTECH 42 Orphan drug index constituents: AMAG, BMRN, CYTK, SRPT, IONS, ALNY, PTCT, AEGR, FBIO, ALXN, SHPG, FOLD, GENTY, HPTX, INSM, JAZZ, NPSP, QCOR, RPTP, UTHR, VPHM, PBT-ASX, ORPH, DSCO, BLUE, PRQR, SAGE, GWPH, QURE, ONCE, RTRX, ZFGN Source: FactSet, 2/19/16
  • 43.
    FOR INSTITUTIONAL USEONLY • Description of Sector: - In transition: Legacy cos. focused on drug delivery & generics, now moving to a hybrid model including brands and orphan diseases (e.g., SHPG). - Not the same as “specialty drugs” • Outlook: Mixed - Tailwinds: Demographics & higher utilization of drugs - Low cost of debt & lower tax domiciles have led to accretive M&A, but supply of targets is shrinking due to sector consolidation - Headwinds: Reimbursement pressure for undifferentiated brands, but some categories are more insulated (orphan diseases) - Timeline for Biosimilars unpredictable. Less competition but greater development risk, legal, and regulatory uncertainties SPECIALTY PHARMA & GENERICS: OUTLOOK 43 Source: Leerink Partners Equity Research
  • 44.
    FOR INSTITUTIONAL USEONLY LARGE MARKET POTENTIAL FOR BIOSIMILARS 44 Source: Leerink Partners Equity Research
  • 45.
    FOR INSTITUTIONAL USEONLY • Description of Sector: - Providing the tools for the genomic revolution or “precision medicine.” To help with risk assessment, diagnosis, to guide therapy, and measure progression • Outlook: Mixed - Genomics becoming prevalent throughout Healthcare - Biomedical research funding poised to improve - Many new product cycles in diagnostics - Underleveraged balance sheets and asset scarcity - What to watch: Reimbursement pressure in diagnostics. Regulatory clarity on FDA regulation of lab-developed tests China macro growth slowing, but structural reforms benefit scientific development, HC, testing for environment, food safety LS TOOLS & DIAGNOSTICS: OUTLOOK 45 Source: Leerink Partners Equity Research
  • 46.
    FOR INSTITUTIONAL USEONLY BIOMEDICAL RESEARCH FUNDING POISED TO IMPROVE Source: Leerink Partners Equity Research; Chart represents y/y change in research funding 46 IMPROVEMENT IN U.S. ACADEMIC/GOV’T, PHARMA/BIOTECH DRIVE THE DELTA
  • 47.
    FOR INSTITUTIONAL USEONLY • Description of Sector: - Med Tech cos. develop and manufacture devices and supplies sold to hospitals, physician groups or patients (example of latter: insulin pumps) - Many small innovative cos., which are frequently acquired by large caps • Outlook: Positive - Positive view with improving utilization trends, stable pricing - Strong balance sheets provide significant financial flexibility & M&A potential - What to watch: Shift to value-based system / bundled payments / vendor consolidation – requires alignment with drs. Pricing pressure in some segments MEDICAL TECHNOLOGY: OUTLOOK 47 Source: Leerink Partners Equity Research
  • 48.
    FOR INSTITUTIONAL USEONLY • Implication: Implant price remains the highest priority in vendor selection for hospital admins, highlighting a commoditized large joint product category. Differentiation going forward will likely require increased investment in technologies that can increase procedure efficiency or in manufacturers offering solutions across multiple product lines. BUNDLED PAYMENTS: VALUE OF INNOVATION IS CHANGING Source: Leerink Partners Equity Research, MEDACorp Survey, “Bundled Payments,” February 2016 53% 23% 13% 5% 5% 3% 0% 10% 20% 30% 40% 50% 60% Implant Price Services/Technologies that Increase Procedure Standardization/Efficiency Breadth of Product Offering Across Multiple Service Lines OR Rep Service Availability of New Technologies Breadth of Product Offering within Service Line %ofrespondentsrankingfactorhighest Which factor is most important when considering a vendor for bundled payments? (n=40)
  • 49.
    FOR INSTITUTIONAL USEONLY • Description of Sector: - MCOs are insurance cos. that manage healthcare costs, & provide and finance these services to patients • Outlook: Positive - Bullish with a favorable policy outlook - Ongoing privatization of Medicaid and Medicare - Losses on public exchanges likely to stabilize - Commercial margins poised to expand as pricing hardens and costs muted (value-based care, growth in high-deductible plans) - Mega mergers offer a meaningful call option to the upside, in our view - Benefit from rising interest rates with strong balance sheets, cash flow MANAGED CARE (MCO): OUTLOOK 49 Source: Leerink Partners Equity Research
  • 50.
    FOR INSTITUTIONAL USEONLY 50 SECULAR TAILWINDS SHOULD CONTINUE TO FUEL MEMBERSHIP GROWTH IN MEDICARE ADVANTAGE Source: CMS, Kaiser, MedPac, Leerink Partners Equity Research We Expect 50% Penetration of Medicare Advantage by 2019 in the Base Case No Suppleme ntal Coverage, 10% Medigap, 16% MA, 28% Employer Sponsored , 24% Medicaid, 21% Other Public Coverage, 1% Under 1/3rd of Seniors Covered By Employers As Employers Continue To Drop Retiree Coverage Starting 2011, Baby Boomers Start Aging Into Medicare Eligibility At The Rate Of 10K Per Day Under 1/3rd of Seniors Covered By Employers 0 10 20 30 40 50 60 70 80 90 MedicareEnrollment(MM) Starting 2011, Baby Boomers Start Aging Into Medicaire Eligibiility First Baby Boomer Turns 65 Last Baby Boomer Turns 65 and First Reaches Life Expectancy 66% 46% 36% 40% 40% 40% 35% 36% 35% 32% 34% 32% 29% 28% 26% 26% 25% 28% 25% 23% 0% 10% 20% 30% 40% 50% 60% 70% 1988 1991 1993 1995 1998 1999 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Percentage of Employers (200 + EES) Offering Retiree Health Benefits
  • 51.
    FOR INSTITUTIONAL USEONLY PRIVATIZATION OF 60% of MEDICAID, A $500+B ENTITLEMENT 51
  • 52.
    FOR INSTITUTIONAL USEONLY • Description of Sector: - Hospitals, mental health facilities. • Outlook: Bearish - Bearish on acute hospitals, positive on behavioral health, outsourcing, outpatient care - Headwinds: worsening bad debt, tough volume comps, wage inflation, contract labor rates, drug cost spend - Medium-term pressure from Medicare privatization & value-based care - Behavioral care growth faster with unmet need for mental health treatment, roll-up of fragmented marketplace HEALTHCARE FACILITIES: OUTLOOK 52 Source: Leerink Partners Equity Research
  • 53.
    FOR INSTITUTIONAL USEONLY 53 CMS HAS AN AGGRESSIVE GOAL OF 50% OF PAYMENTS LINKED TO VALUE-BASED CARE BY 2018 Source: CBO; Leerink Partners Equity Research & Estimates
  • 54.
    FOR INSTITUTIONAL USEONLY 54 Source: U.S. BLS, AHA, S&P Healthcare, Leerink Partners Equity Research & Estimates PRIVATIZATION OF MEDICARE PRESSURING INPATIENT ADMISSIONS 79% 73% 76% 83% 80% 72% Aggregate Medicare, only Employer-Sponsored Medicare Advantage Medigap Medicare Cost %RespondentNot Hospitalized In LastTwo Years Per our MEDACorp survey of American Seniors in Nov. 2015, we observed the lower utilization of services and procedures by MA enrollees versus traditional Medicare. While this may be partly driven by self-selection, we believe tighter control by private MCOs is a contributor.
  • 55.
    FOR INSTITUTIONAL USEONLY • Description of Sector: - HCIT is hospital-based (in-patient) and office-based (ambulatory) systems. • Outlook: Positive - Positive but divergence between winners & losers - Meaningful use incentive program continues to drive adoption of EHR (Electronic Health Records), but market more penetrated - Shift to value-based HC leading to adoption of Population Health Mgt. technologies (data exchange, patient engagement tools) - Hospital consolidation a positive for top vendors to gain share - Shift toward cloud-based solutions benefits recurring revenues - What to watch: Market share shifts in a more mature market HCIT (Healthcare Information Technology): OUTLOOK 55 Source: Leerink Partners Equity Research
  • 56.
    FOR INSTITUTIONAL USEONLY GROWTH IN HCIT SPENDING SLOWING, BUT TOTAL HCIT $ SPEND STABLE 56 Vendor Allscripts Athena Cerner DocuTap eClinical Epic GE Greenway McKesson QSII Practice Fusion Grand Total Source: MEDACorp Survey, "Ambulatory EMR Purchasing Trends," March 2015 If your practice purchase more No - We will not purchase any more licenses, 41.0% Yes - We will buy 5-10% more licenses, 38.5% Yes - We will buy 11-20% more licenses, 17.9% Yes - We will buy 21%+ more licenses, 2.6% Do you plan to purchase more licenses either due to growth or expansion or any other reason? n=39 Source: CDC/NCHS National Ambulatory Medical Care Survey January 2014, Leerink Partners Equity Research PERCENTAGE OF OFFICE-BASED DRS. WITH AN EHR 41% WILL NOT PURCHASE ANY MORE LICENSES
  • 57.
    FOR INSTITUTIONAL USEONLY • Description of Sector: - The convergence of the healthcare system with digital technology leading to “Digital Disruption” The largest community for physicians is online (WBMD), physician services has no clinics (TDOC), repository of data has no patients (FIT) • Outlook: Positive - Demand-pull: Consumer Empowerment, high deductible plans, drive need for cost tools and access to their data - Supply-push: As consumers & drs. have shifted time on-line, ads will follow - Employers spending more on Digital Health benefits - Big data will optimize care with next-generation analytics DIGITAL HEALTH: OUTLOOK 57 Source: Leerink Partners Equity Research
  • 58.
    FOR INSTITUTIONAL USEONLY DIGITAL HEALTH LIFECYCLES 58 Source: Leerink Partners Equity Research
  • 59.
    FOR INSTITUTIONAL USEONLY • Description of Sector: - Supply chain for drugs. Distributors sell to hospitals, retail. PBM (Pharmacy Benefit Managers) process and pay Rx claims, manage formularies, negotiate discounts & rebates. • Outlook: Mixed with a positive bias - Aging demographics favorable for drug usage - Specialty drug spending growing +15% annually, a tailwind - Generic drug launches benefit the supply chain - What to watch: Tailwinds from generic launches and inflation now slowing PBMs & DRUG DISTRIBUTORS: OUTLOOK 59 Source: Leerink Partners Equity Research
  • 60.
    FOR INSTITUTIONAL USEONLY GENERIC LAUNCHES SLOWING 60 Source: CVS, Investor day presentation, December, 2015
  • 61.
    FOR INSTITUTIONAL USEONLY GENERIC PRICE INFLATION SLOWING 61 Source: IMS health, Leerink Partners LLC Note: The quarterly weighted average generic price inflation was calculated by weighting each drug based on its mix of sales for a given calendar year. Only drugs that were available in the year ago period are included in a given quarter's inflation calculation. IMS Health quarterly WAC pricing and sales figures were pulled by NDC code which distinguished each drug by dosage 1.2% 1.2% -3.0% -18.1% -3.2% -5.0% -2.1% -12.4% -2.2% 1.0% 0.9% 5.2% 12.2% 13.5% 11.8% 4.6% 5.4% 8.1% 5.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 1Q:11 2Q:11 3Q:11 4Q:11 1Q:12 2Q:12 3Q:12 4Q:12 1Q:13 2Q:13 3Q:13 4Q:13 1Q:14 2Q:14 3Q:14 4Q:14 1Q:15 2Q:15 3Q:15 Weighted Average y/y WAC Generic Price Inflation by Quarter
  • 62.
    FOR INSTITUTIONAL USEONLY 62 ACKNOWLEDGEMENT: Tessa Romero of Leerink Partners Equity Research contributed to this report. Her contribution is greatly appreciated.
  • 63.
    HEALTHCARE March 7,2016 Disclosures Appendix Analyst Certification I, Alice C. Avanian, CFA, certify that the views expressed in this report accurately reflect my views and that no part of my compensation was, is, or will be directly related to the specific recommendation or views contained in this report.
  • 64.
    HEALTHCARE March 7,2016 Distribution of Ratings/Investment Banking Services (IB) as of 12/31/15 IB Serv./Past 12 Mos. Rating Count Percent Count Percent BUY [OP] 161 73.20 63 39.10 HOLD [MP] 59 26.80 4 6.80 SELL [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 12 months. Underperform (Sell): We expect this stock to underperform its benchmark over the next 12 months.The degree of outperformance or underperformance required to warrant an Outperform or an Underperform rating should be 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 for issuers with a market capitalization of less than $2 billion and the S&P 500® Health Care Index for issuers with a market capitalization over $2 billion.
  • 65.
    HEALTHCARE March 7,2016 Important Disclosures This information (including, but not limited to, prices, quotes and statistics) has been obtained from sources that we believe reliable, but we do not represent that it is accurate or complete and it should not be relied upon as such. All information is subject to change without notice. This is provided for information purposes only and should not be regarded as an offer to sell or as a solicitation of an offer to buy any product to which this information relates. The Firm, its officers, directors, employees, proprietary accounts and affiliates may have a position, long or short, in the securities referred to in this report, and/or other related securities, and from time to time may increase or decrease the position or express a view that is contrary to that contained in this report. The Firm's salespeople, traders and other professionals may provide oral or written market commentary or trading strategies that are contrary to opinions expressed in this report. The Firm's proprietary accounts may make investment decisions that are inconsistent with the opinions expressed in this report. The past performance of securities does not guarantee or predict future performance. Transaction strategies described herein may not be suitable for all investors. Additional information is available upon request by contacting the Editorial Department at One Federal Street, 37th Floor, Boston, MA 02110. Like all Firm employees, analysts receive compensation that is impacted by, among other factors, overall firm profitability, which includes revenues from, among other business units, Institutional Equities, and Investment Banking. Analysts, however, are not compensated for a specific investment banking services transaction or contributions to the Firm's investment banking activities. MEDACorp is a network of healthcare professionals, attorneys, physicians, key opinion leaders and other specialists 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 Leerink Partners Editorial Department, One Federal Street, 37th Floor, Boston, MA 02110. While IMS Health has been used as a source, the analysis contained herein has been arrived at independently by the firm and IMS is not responsible for the analysis or use of the data. The S&P Health Care Claims Index™ is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by Leerink Partners LLC. Standard & Poor's® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); [Trademarks] are trademarks of the [Licensor]; and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Leerink Partners LLC. Leerink Partners research is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P Health Care Claims Index™ Member FINRA/SIPC. ©2016 Leerink Partners LLC. All rights reserved. This document may not be reproduced or circulated without our written authority.
  • 66.
    LEERINK PARTNERS LLCEQUITY RESEARCH Director of Equity Research John L. Sullivan, CFA (617) 918-4875 john.sullivan@leerink.com Associate Director of Research Alice C. Avanian, CFA (617) 918-4544 alice.avanian@leerink.com Associate Director of Research James Kelly (212) 277-6096 jim.kelly@leerink.com Director of Therapeutic Research Geoffrey C. Porges, MBBS (212) 277-6092 geoffrey.porges@leerink.com Major Pharmaceuticals Seamus Fernandez (617) 918-4011 seamus.fernandez@leerink.com Le-Yi Wang, Ph.D. (617) 918-4568 leyi.wang@leerink.com Specialty Pharmaceuticals Jason M. Gerberry, JD (617) 918-4549 jason.gerberry@leerink.com Derek C. Archila (617) 918-4851 derek.archila@leerink.com Etzer Darout, Ph.D. (617) 918-4020 etzer.darout@leerink.com Large Cap Biotechnology Geoffrey C. Porges, MBBS (212) 277-6092 geoffrey.porges@leerink.com Mid and Small Cap Biotechnology Joseph P. Schwartz (617) 918-4575 joseph.schwartz@leerink.com Seamus Fernandez (617) 918-4011 seamus.fernandez@leerink.com Michael Schmidt, Ph.D. (617) 918-4588 michael.schmidt@leerink.com Paul Matteis (617) 918-4585 paul.matteis@leerink.com Jonathan Chang, Ph.D. (617) 918-4015 jonathan.chang@leerink.com Richard Goss (617) 918-4059 richard.goss@leerink.com Dae Gon Ha, Ph.D. (617) 918-4093 daegon.ha@leerink.com Mayank Mamtani, MSc. (617) 918-4887 mayank.mamtani@leerink.com Mark Sevecka, Ph.D. (617) 918-4022 mark.sevecka@leerink.com Life Science Tools & Diagnostics Dan Leonard (212) 277-6116 dan.leonard@leerink.com Kevin C. Chen (212) 277-6045 kevin.chen@leerink.com Michael A. Sarcone, CFA (212) 277-6013 michael.sarcone@leerink.com Medical Devices, Cardiology Danielle Antalffy (212) 277-6044 danielle.antalffy@leerink.com Puneet Souda (212) 277-6091 puneet.souda@leerink.com Medical Devices, Orthopedics Richard Newitter (212) 277-6088 richard.newitter@leerink.com Ravi Misra (212) 277-6049 ravi.misra@leerink.com Healthcare Services, Managed Ana Gupte, Ph.D. (212) 277-6040 ana.gupte@leerink.com Care & Facilities Healthcare Technology David Larsen, CFA (617) 918-4502 david.larsen@leerink.com & Distribution Christopher Abbott (617) 918-4010 chris.abbott@leerink.com Digital Health Steven Wardell (617) 918-4097 steven.wardell@leerink.com Matt Dellelo, CFA (617) 918-4812 matt.dellelo@leerink.com Sr. Editor/Supervisory Analyst Mary Ellen Eagan, CFA (617) 918-4837 maryellen.eagan@leerink.com Supervisory Analysts Randy Brougher randy.brougher@leerink.com Robert Egan bob.egan@leerink.com Amy N. Sonne amy.sonne@leerink.com New York 299 Park Avenue, 21st floor New York, NY 10171 (888) 778-1653 Boston One Federal Street, 37th Floor Boston, MA 02110 (800) 808-7525 San Francisco 255 California Street, 12th Floor San Francisco, CA 94111 (415) 905-7200