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Initiating Coverage Report     BENITEC     Silencing is golden                             1|Page
Date: 28 November 2011    Name:                           Benitec Limited    Country:                        Australia    ...
3|Page
ContentsExecutive Summary ...................................................................................................
Executive Summary                                        BENITEC LIMITED§ Benitec Limited (ASX: BLT) is an Australia-base...
1.           Australian Biotech: An overviewAustralia is the leading location of biotechnology companies in Asia-Pacific w...
CSL: the cervical cancer vaccine Gardasil, marketed by Merck & Co.Biota: the influenza drug Relenza, marketed by GlaxoSmit...
The biotech IPO market remained weak throughout the year. One IPO did get off the ground in the firstquarter, when Brisban...
2.         Company OverviewBenitec Biopharma Limited (ASX:BLT) is an emerging Australian biotechnology company developingi...
Next to these two large partnerships, Benitec is several other relationships in place with organizations like:    •    Rev...
as other biotech companies like Origene and Integrated DNA Technologies. Especially after the positivedecision of the US P...
3.         RNAi TechnologyHistory and backgroundRNA interference (RNAi) is a natural mechanism for silencing specific gene...
In another paper, also published in 1998, Fire determined that dsRNA targets complementary mRNA by base-pairing to it and ...
Current Models of the RNAi MechanismBoth biochemical and genetic approaches have led to the current models of the RNAi mec...
ddRNAi process  •   A DNA construct is inserted into a cell, where it enters the nucleus and continually expresses a form ...
Advantages of ddRNAi over synthetic siRNA are:1. ddRNAi approach, does not activate the cells interferon (stress) response...
•    ddRNAi can be developed for the treatment of cancer in combination with chemotherapy. Benitec is         pursuing thi...
4.          Product PipelineBenitec has a product pipeline in house and partnered therapeutics based on its proprietary tr...
Drugs are the mainstay of pain management and drug treatment for pain represents a tremendous growth area.In 2009, the mar...
Furthermore, recent studies have indicated that the silencing of this spinal PKCγ gene also reduces morphinetolerance resu...
gene expression of HIV is well understood. Synthetic siRNAs and expressed shRNAs have been used to targetseveral early and...
Together with the City of Hope Hospital in California, Benitec initiated the first Phase I/II trial of ddRNAi inlymphoma p...
Hepatitis B and CHepatitis induced by the hepatitis B virus (HBV) and by the hepatitis C virus (HCV) is a major health pro...
Source: BenitecOculopharyngeal muscular dystrophyBenitec has recently entered the field of orphan disease therapeutics by ...
DNA testing for OPMD has been available for several years. Without DNA testing, it’s usually not possible todetect whether...
Source: BenitecStem cell based ddRNAi delivery.The potential application areas of ddRNAi based therapeutics are both numer...
5.        Management CapabilitiesBenitec has been investing in developing a team of experts that have a focus on patient o...
Michael GrahamDr Graham’s research interests are in the field of molecular genetics, with a particular focus on the applic...
Maria KavallarisProfessor Maria Kavallaris is Head of the Pharmacoproteomics Program at the Children’s Cancer InstituteAus...
6.         Competitive LandscapePeer Group Company ProfileAlnylam Inc. (NASDAQ: ALNM)Alnylam Pharmaceuticals, founded in 2...
developed as a novel anti-viral drug in the treatment of Ebola infection. In July 2010, Tekmira was awarded upto a US $140...
in the field of RNAi, including first to demonstrate definitive RNAi delivery after systemic administration andfirst to sh...
7.         Recent headlinesNovember 18, 2011: Chief Investigators Report on progress with therapeutic programsNovember 17,...
8.            Patent CoverageBenitecs core patents and patent rights are based on this early research and are supported by...
US 7,754,697      US                                •   A method of modifying gene expression and to synthetic genes for  ...
Benitec-owned Granted Patents Patent         Country     Description 550284         NZ          A genetic construct compri...
9.         SWOT AnalysisStrengthsDominant patent position in ddRNAiNo direct competitors in ddRNAiStrong management and hu...
10. FinancialsFor the year ended 30 June 2011, Benitec reported a net loss of AUD 3.5 million compared to a net loss ofAUD...
11. Forward Looking StatementsBenitec key events for the next 12-24 months include:    Ø   completion POC in a preclinica...
12. GlossaryClinical Trial: Rigorously controlled test of a drug candidate or a new invasive medical device on humans.DNA ...
Protein: Molecule consisting of a chain of amino acids. Each protein has unique biological functions.RNAi : RNA interferen...
Analyst: Marcel Wijma MScMarcel Wijma, Chief Research Officer and managing partner, has a longstanding history in financia...
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Van Leeuwenhoeck Institute Initiates Coverage of Benitec: Initial Report

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In November 2011 the Van Leeuwenhoeck Institute initiated coverage of Benitec Ltd. This is their initial report.

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Van Leeuwenhoeck Institute Initiates Coverage of Benitec: Initial Report

  1. 1. Initiating Coverage Report BENITEC Silencing is golden 1|Page
  2. 2. Date: 28 November 2011 Name: Benitec Limited Country: Australia Price: AUD 0.014 ISIN Code: AU000000BLT8 Reuters Code: BLT.AX Market Cap (AUD m): 13.2 EV (AUD m): 11.0 Cash & cash eq. (AUD m): 5.6 Shares outstanding (m): 941.3 Volume: 5.1 million Free float: 100% 52-week Range: AUD 0.014-0.045AUD m (1 USD = AUD 0.94) 2009A 2010A 2011A 000s 000s 000sRevenues 311 182 345Net Loss/Profit (2,470) (4,640) (3,535)Net loss per share (cents) (0.80) (1.21) (0.68)R&D costs (1,127) (1,211) 1,280Cash increase/(decrease) (10) (1,211) 6,018Cash and marketable sec. 1,866 651 6,654 Chief Research Analyst Marcel Wijma MSc +1 (917) 460 6185 (US) +31 (6) 1818 0596 (NL) m.wijma@leeuwenhoeck.com 2|Page
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  4. 4. ContentsExecutive Summary .................................................................................................................................. 61. Australian Biotech: An overview ........................................................................................................... 72. Company Overview ................................................................................................................................ 93. RNAi Technology ................................................................................................................................ 124. Product Pipeline................................................................................................................................... 185. Management Capabilities .................................................................................................................... 276. Competitive Landscape ....................................................................................................................... 307. Recent headlines .................................................................................................................................. 338. Patents Coverage ................................................................................................................................. 349. Swot Analysis ....................................................................................................................................... 3710. Financials ........................................................................................................................................... 3811. Forward Looking Statements ............................................................................................................. 3912. Glossary ............................................................................................................................................ 540 4|Page
  5. 5. Executive Summary BENITEC LIMITED§ Benitec Limited (ASX: BLT) is an Australia-based listed biotechnology company with a platform technology in the fast growing area of gene silencing. Benitec holds the dominant IP position in DNA- directed RNA interference (ddRNAi) worldwide as a platform for the development of human therapeutics. Benitec has a pipeline of in-house and partnered therapeutics based on its ddRNAi technology platform.§ Its pipeline is focused on infectious diseases, cancer, orphan diseases and chronic pain associated with cancer, with four programs that are being developed internally. Next to these programs, the company has two programs that are out-licensed (Tacere Therapeutics, USA) or co-developed (Biomics Biotechnologies, China).§ The company holds the predominant patent position in the use of ddRNAi for human therapeutic treatments. This technology has several advantages over the other RNAi modality, siRNA, in long term, and even permanently, silencing the targeted gene and therefore provides a possible cure for many previously untreatable diseases and conditions which are associated with the expression of that gene.§ According to several market reports the global RNAi market is estimated to be worth USD 4 billion by 2017. Next to that, Benitec is targeting multi-billion dollar markets in infectious diseases, cancer and chronic pain. With its strong IP position, Benitec has every opportunity to profit from the strong growth in the RNAi market.§ In a Phase I/II clinical trial in AIDS lymphoma patients, the ddRNAi technology clearly showed that the ddRNAi therapy is safe and feasible. The trial was undertaken together with the City of Hope hospital in Duarte California. The City of Hope announced earlier this year that it will initiate a second clinical trial based on the positive outcome of the first trial. This second trial will test an improved version of the treatment.§ Benitec has funded its research and development activities through equity funding and cash inflows via partnerships. Earlier this year, the company successfully raised AUD 8 million with a rights issue. With a cash balance of AUD 7 million, the company has ample means to further develop its pipeline and to enter into value added partnerships with big pharma.§ Certain important news expected in the next 12 months could drive the stock up. This includes progress on all programs in the preclinical stage, commencement of at least one clinical trial, partnering with or licensing of Benitec’s IP to pharmaceutical companies, further patent application success and expansion of Benitec’s intellectual property. 5|Page
  6. 6. 1. Australian Biotech: An overviewAustralia is the leading location of biotechnology companies in Asia-Pacific with almost 450 biotechnology companies and 600medical technology companies. The majority of these companies are in human therapeutics that are supported by world-class medicalresearch organisations, and that have been successful in doing multi-million dollar partnerships with international bigpharmaceutical companies. Currently, there are 111 ASX-listed life science companies with 72 core biotechnology companies.Australia is home to numerous world class medical research organizations, including the Garvan Institute, Institute for MolecularBioScience, Menzies Research Institute, John Curtin School of Medical Research, Walter and Eliza Hall Institute of MedicalResearch (WEHI), Australian Institute of Bioengineering and nanotechnology, Brain Institute, Diamentina Institute, The LowyResearch Centre, Victor Chang Cardiac Research Institute, Baker Medical Research Institute, The Burnett Centre and SouthAustralian Research & Development Institute. According to E&Y’s Beyond Borders Global Biotechnology Report 2011,Australia is showing a mixed picture. On the positive side there have been a number of successful acquisitions and signedpartnerships. Less positive is that is very hard for younger companies to gain access to capital.A 2009 survey of listed Australian biotechnology and device companies indicated there were 63 clinical trialsunderway or planned; 13 of which were Phase III and 30 Phase II.The existing biotech business infrastructure and expertise and the burgeoning health care market in Australiamake the future of biotech very lucrative. Australia is the most attractive market for pharmaceutical investmentin the Asia-Pacific region, which is primarily due to its growing and aging population, excellent access tomedicines, and fast-recovering economy. Life expectancy in Australia is 79.2 years for males and 84.1 years forfemales, which is among the highest in the world. High life expectancy amongst Australians has led to anincrease in lifestyle diseases resulting in an increase in healthcare spending.As in 2009, the Australian sector’s financial performance was at least partly colored by exchange ratefluctuations. The Australian dollar, which had declined by about 16% in 2009, essentially regained the ground ithad ceded in 2010. Consequently, the results of Australian public companies look much healthier whenconverted into US dollars than when stated, as reported by Australian companies, in Australian dollars. Theindustry’s revenues grew by 17% in US dollars, but they were essentially flat in Australian dollars. And whileAustralia appears to be bucking the trend seen in other established clusters by increasing R&D spending, thereality is that the industry’s R&D spending actually declined by 2% when measured in Australian dollars. As inthe US and Europe, the bottom line continued to improve, as the Australian sector moved more firmly into theblack, growing net income by 26% (or 6% in US dollars).While CSL continues to dominate the Australian sector, more companies appear to be maturing andcontributing to the sector’s top- and bottom-line growth. Examples include Biota, HalcyGen Pharmaceuticals,Acrux and Cellestis. Australia has a well-established medical device industry, a strong position in nano-biotechnology and is internationally regarded for its expertise in stem cell research. Australian biotechnologycompanies continue to develop and bring drugs to market, including: 6|Page
  7. 7. CSL: the cervical cancer vaccine Gardasil, marketed by Merck & Co.Biota: the influenza drug Relenza, marketed by GlaxoSmithKline.Sirtex Medical: the liver cancer treatment SIR-SpheresArana Therapeutics (now Cephalon): IP related to anti-tumor necrosis factor (TNF) drugs – Remicade,marketed by Centocor, and Humira marketed by Abbott Laboratories.The sector comprises a range of companies, applying biotechnology to health, industrial processing, agricultureand environmental issues, from start-ups to more developed companies selling products in Australia andoverseas. The biotech sector has matured significantly in recent years. By the end of 2010, 72 biotechcompanies were listed at the ASX. These companies had a total market capitalization of USD 21.6 billion. Thiscompares with a total of USD 18.7 billion at the end of 2009. CSL is Australia’s largest biotechnologycompany, with a market cap of over USD 17.5 billion. This is 80% of the total market cap of all listedAustralian biotech companies. The combined market cap of the remaining 62 listed biotechs was USD 4.0billion at the end of 2010, a tremendous gain of 165% per cent from USD 1.5 billion at the end of 2009.Industry Developments: Good and badAccording to E&Y latest report Beyond Borders Global Biotechnology Report 2011, Australia’s biotechinvestment market is a tale of good news and bad. The good news is that investors have several recentexamples of Australian companies that have successfully been acquired by, or signed partnerships with, largercorporations — sometimes for staggering amounts. Since March, cash offers have been made for ChemGenexby Cephalon (US$240 million) and for Celestis by Qiagen (USD 360 million). This comes on the back of anumber of significant technology-validating partnerships secured by Australian biotechs, such as Acrux’s dealwith Lilly, which has driven the Acrux market cap to close to USD 1 billion. Similarly, Mesoblast signed alicense-and-equity deal with Cephalon that has sent its market cap skyrocketing to more than USD 2.5 billion.Waiting in the wings are other public companies that could make attractive targets — including SunshineHeart, Bionomics, Alchemia, CogState and QrXPharma — as well as private biotechs with products in late-stage clinical trials positioning themselves for global exposure.The bad news is that, even as these success stories are proving the viability of biotech investing, capital foryounger companies is close to non-existent. Furthermore, the global financial crisis has driven the largest poolof Australian capital, retirement (superannuation) funds, away from private equity (and, indeed, away from allbut a very small number of venture funds). The funding situation in Australia, which took a turn for the worseafter the global economic downturn, has yet to return to pre-crisis levels. Australian public biotech companiesraised AUD 146 million (USD129 million) in 2010 — less than half the amount raised in 2009. While investorsare certainly investing in the health care sector, relatively less seems to be going to biotech; instead, moneyappears to be primarily headed to medtech companies, which raised approximately AUD 400 million (USD 354million) during the year, including AUD 85 million in a single IPO (Reva Medical). 7|Page
  8. 8. The biotech IPO market remained weak throughout the year. One IPO did get off the ground in the firstquarter, when Brisbane-based CBio raised AUD 7 million (USD 6 million). However, no other Australiancompanies were able to go public during the rest of the year, indicating that the IPO window has not reallyopened up.Yearly performance of the Australian life science sector by market capitalization with major indices 140% 117.60% 120% 100% 80% 60% 40% 30.10% 25.00% 16.90% 20% -0.70% 0% ASX All Ordinaries NASDAQ Composite NASDAQ Biotech Life Sciences (market Life Sciences majors (Index) (Index) (Index) cap A$) (market cap A$) -20% 8|Page
  9. 9. 2. Company OverviewBenitec Biopharma Limited (ASX:BLT) is an emerging Australian biotechnology company developinginnovative, biologics-based therapies. The Company’s principal activity is to develop and commercializetherapies primarily for the treatment of infectious diseases, cancer, orphan diseases and chronic pain. Benitecholds the dominant IP position in DNA-directed RNA interference (ddRNAi) worldwide as a platform for thedevelopment of human therapeutics. Benitec has a pipeline of in-house and partnered therapeutics based on itsddRNAi technology platform. The technology’s potential to address unmet medical needs and, potentially, tocure disease results from its demonstrated ability to permanently silence genes that cause or are stronglyassociated with the condition. According to several market reports, by 2017 the world RNA Interferencemarket will be worth USD 4 billion.Benitec owns an extensive portfolio of products and intellectual property related to ddRNAi, The Companywas founded in 1997 and went public on the ASX in 2001.Benitec has a growing product pipeline which includes programs in cancer associated pain, drug resistant lungcancer, Hepatitis B, oculopharyngeal muscular dystrophy and HIV/AIDS.PartnershipsTacere (Pfizer)In 2006, Benitec made a RNAi licence deal with US company Tacere. As part of this deal Benitec securedupfront payments, milestone payments for using the ddRNAi technology in treating Hepatitis C as well as a 5%equity stake in Tacere. Tacere Therapeutics, Inc. specialises in the development of novel therapeutics for thetreatment of serious infectious diseases such as Hepatitis C (HCV). Combining expertise in RNA interference(RNAi), gene medicine, and novel biologicals, Tacere possesses proprietary skills in the identification anddevelopment of RNAi therapeutics. In 2008, Tacere struck a USD 145 million deal with Pfizer to develop andcommercialize its HCV compound TT-033, using Benitec’s ddRNAi technology. Upon commercialization ofTT-033 Tacere would be entitled to receive royalties on net sales by Pfizer.Biomics (China)In the field of Hepatitis B, Benitec is collaborating with China based Biomics Biotechnologies, successfullyidentifying the genetic target and validating the ddRNAi based gene silencing therapeutic approach . Biomicswas founded by Dr. York Zhu and, since its foundation in 2006, Biomics has grown to be a leading AsianRNAi therapeutics company with combined technology platforms of full-sites siRNA library, drug targetsscreening and identification, siRNA structure modification and drug delivery systems. 9|Page
  10. 10. Next to these two large partnerships, Benitec is several other relationships in place with organizations like: • Revivicor Inc, USA • Sigma Aldrich • Artemis Pharmaceuticals • Promega • Ambion • Carnegie Institute • Alnylam • Children’s Cancer Institute Australia • City of Hope, California, USA • Amsterdam Molecular Therapeutics • Royal Holloway University of London • Institut de Myologie, ParisBusiness StrategyBenitec’s strategy is to demonstrate the power of the ddRNAi approach to treat and potentially cure serioushuman medical conditions by developing a portfolio of ddRNAi-based therapeutics for infectious disease,cancer, orphan diseases and cancer-associated pain. Benitec strives to achieve value creation from itsintellectual property (IP) while minimising risk by developing therapeutics to the point of proof of efficacy inphase II trials. Benitec intends to form either partnerships with large pharmaceutical and/or biotechnologycompanies from early-stage development or for the completion of clinical development. Next to that, Beniteclicences its proprietary technology to reagent suppliers like Sigma Aldrich, Millipor, Promega and Pfizer as well 10 | P a g e
  11. 11. as other biotech companies like Origene and Integrated DNA Technologies. Especially after the positivedecision of the US Patent and Trademark Office to reissue the US Graham patent, Benitec’s strategy is aimedat expanding the number of partnerships and licences with its technology.For applications in non-core areas, Benitec is out licensing its technology. Currently, the company hasoutlicensed two programs in organ transplantation and infectious disease. Other programs to be outlicensed arein discussion. These programs bring in revenues from upfront and milestone payments. For HCV it hasoutlicensed its technology to Tacere (see partnerships above). Revivicor is using Benitec’s technology inxenograft organ transplant. 11 | P a g e
  12. 12. 3. RNAi TechnologyHistory and backgroundRNA interference (RNAi) is a natural mechanism for silencing specific genes present in all multicellularorganisms. Genes provide cells with the instructions for making proteins, and proteins — or more specificallydefective proteins — are the cause of a large number of human disease. When a gene is silenced, the cell stopsmaking the protein encoded by that gene, thereby reducing the occurrence of the associated disease. What laterbecame understood as RNAi was first observed in plants in 1990, but the first crucial breakthrough inunderstanding the RNAi mechanism came from studies of worms. This came in 1998 with the recognition thatlong double-stranded RNA (dsRNA) could induce specific gene silencing. Induction of RNAi using dsRNAquickly became a powerful tool for scientists to study the function of genes in many lower organisms, includingworms and fruit flies. However, this approach initially seemed unworkable in mammalian cells, because of thetendency of dsRNA to provoke an immune response and cause cell suicide. Such cell suicide makes biologicalsense in the true, real-life situation where dsRNA is encountered — namely viral infection — because itprevents replication and spread of the virus to neighboring cells. For a time, however, it was a major obstacleto experimental induction of RNAi in mammalian cells. This obstacle was overcome by using relatively smalldsRNAs — long enough to induce RNAi, but small enough to avoid inducing an immune response. SmallerdsRNAs, known as "small interfering RNAs" (siRNAs), bind to messenger RNAs (mRNAs) and silence thedisease causing gene. These discoveries opened the door for application of RNAi as a new therapeutic strategy.Petunias and worms Fire and Mello’s new method of gene silencing was able to explain the anomalous results obtained from an earlier set of experiments on petunia pigmentation. In 1990, Dr. Richard Jorgensen and colleagues attempted to produce a petunia with a deeper color by inserting the gene for purple pigment into its genome under the control of a stronger promoter. Instead of turning dark purple, the new petunias were either entirely white or streaked purple and white. Jorgensen surmised that the additional copy of the gene suppressed both itself and its endogenous counterpart, an event he called co-suppression. Fire and Mello’sfindings several years later explained that the inserted gene produced RNA that interfered with gene expressionin a similar manner to what occurred in the C. elegans study. Scientists who described gene silencing in otherplants and fungi were able to show that silencing occurred after the gene had already been transcribed. 12 | P a g e
  13. 13. In another paper, also published in 1998, Fire determined that dsRNA targets complementary mRNA by base-pairing to it and that regulation occurs because the targeted mRNA is degraded before translation. Soon otherresearchers observed the same phenomenon in fruit flies, trypanosomes, plants, planaria, hydra and zebrafish,and the focus turned to identifying this process in mammalian cells. Previous attempts with long dsRNAcaused nonspecific gene regulation. A significant clue to inducing specific gene regulation emerged during thecharacterization of the RNAi biochemical machinery in fruit flies. Scientists discovered an enzyme that cleaveddsRNA into strands 22 nucleotides (nt) long. With this new data in mind, researchers introduced smallerdsRNA into mammalian cells. This time, the smaller dsRNA molecules specifically interfered with expressionof the targeted gene.For their work in discovering RNAi and its role in gene silencing, Fire and Mello were awarded the 2006 NobelPrize in Physiology or Medicine.The first evidence that dsRNA could lead to gene silencingcame from work in the nematode Caenorhabditis elegans.Several years ago, researchers Guo and Kemphues wereattempting to use antisense RNA to shut down expression ofthe par-1 gene in order to assess its function. As expected,injection of the antisense RNA disrupted expression of par-1,but quizzically, injection of the sense-strand control did too.This result was a puzzle until three years later. It was then thatFire and Mello first injected dsRNA — a mixture of both senseand antisense strands — into C. elegans. This injection resultedin much more efficient silencing than injection of either thesense or the antisense strands alone. Indeed, injection of just a few molecules of dsRNA per cell was sufficientto completely silence the homologous genes expression. Furthermore, injection of dsRNA into the gut of theworm caused gene silencing not only throughout the worm, but also in its first generation offspring.The potency of RNAi inspired Fire and Timmons to try feeding nematodes bacteria that had been engineeredto express dsRNA homologous to the C. elegans unc-22 gene. Surprisingly, these worms developed an unc-22null-like phenotype. Further work showed that soaking worms in dsRNA was also able to induce silencing.These strategies, whereby large numbers of nematodes are exposed to dsRNA, have enabled large-scale screensto select for RNAi-defective C. elegans mutants and have led to large numbers of gene knockout studies withinthis organism. 13 | P a g e
  14. 14. Current Models of the RNAi MechanismBoth biochemical and genetic approaches have led to the current models of the RNAi mechanism. In thesemodels, RNAi includes both initiation and effector steps. In the initiation step, input dsRNA is digested into21-23 nucleotide small interfering RNAs (siRNAs), which have also been called "guide RNAs". Evidenceindicates that siRNAs are produced when the enzyme Dicer, a member of the RNase III family of dsRNA-specific ribonucleases, processively cleaves dsRNA (introduced directly or via a transgene or virus) in an ATP-dependent, processive manner. Successive cleavage events degrade the RNA to 19-21 bp duplexes (siRNAs),each with 2-nucleotide 3 overhangs. In the effector step, the siRNA duplexes bind to a nuclease complex toform what is known as the RNA-induced silencing complex, or RISC. An ATP-depending unwinding of thesiRNA duplex is required for activation of the RISC. The active RISC then targets the homologous transcriptby base pairing interactions and cleaves the mRNA ~12 nucleotides from the 3 terminus of the siRNA (3, 18,27, 29). Although the mechanism of cleavage is at this date unclear, research indicates that each RISC containsa single siRNA and an RNase that appears to be distinct from Dicer.Because of the remarkable potency of RNAi in some organisms, an amplification step within the RNAipathway has also been proposed. Amplification could occur by copying of the input dsRNAs, which wouldgenerate more siRNAs, or by replication of the siRNAs themselves. Alternatively or in addition, amplificationcould be effected by multiple turnover events of the RISC.siRNA versus ddRNAiDNA-directed RNAi or ddRNAi is used to produce a dsRNA inside the cell. By introducing a DNA constructinto a cell, Benitecs ddRNAi technology triggers the production of double stranded RNA (dsRNA), which isthen cleaved into small interfering RNA (siRNA) by Dicer, a specific type of RNAse III, as part of the RNAiprocess. This results in the destruction of the target mRNA and knocks down or silences the expression of thetarget gene. 14 | P a g e
  15. 15. ddRNAi process • A DNA construct is inserted into a cell, where it enters the nucleus and continually expresses a form of double stranded RNA (dsRNA) known as short hairpin RNA (shRNA). • The shRNA then enters the cytoplasm where it is rapidly cleaved into siRNA by the enzyme Dicer, a specific type of RNAse III, as part of the natural RNAi process. • The expressed siRNA, which has been designed to have a specific sequence that corresponds to part of the target gene to be silenced, enters the cellular RNAi pathway where it becomes associated with the enzyme complex known as RISC. • RISC then causes separation of the double stranded siRNi molecule into two single strands. After one of the single RNA strands (known as antisense) binds to the target RNA, the RISC complex cleaves the target mRNA. This results in silencing, also known as "knock down", of the target gene responsible for the disease or condition. 15 | P a g e
  16. 16. Advantages of ddRNAi over synthetic siRNA are:1. ddRNAi approach, does not activate the cells interferon (stress) response. The interferon response is anatural cellular defense mechanism that responds to double-stranded RNA, as in a virus, by shutting downmany normal functions and inducing cell apoptosis.2. ddRNAi produces effective gene silencing with a lower dose than synthetic siRNA because the endogenousdsRNA production is catalytic. siRNA requires higher and repeated doses to approach the same levels that areproduced within the cell from the introduced ddRNAi construct.3. ddRNAi provides the ability to control the silencing effect so that it either knocks down or completelysilences the target gene. Control can also be exerted to make the silencing effect transient or permanent. siRNAtechnologies under development are only capable of transient silencing and are to an extent dependent on howmuch can enter a cell.4. ddRNAi can be used with a range of efficient delivery options not available to the siRNA approach,providing additional versatility for therapeutics development. ddRNAi can deliver the construct as a plasmid inliposomes, in cationic vectors, in viral vectors and in stem cells.5. siRNA is more expensive to produce because of modifications required to produce stable RNA and muchmore material is required to be synthesised to achieve an equivalent dose to that achievable with ddRNAi. Thecost of ddRNAi plasmids is minimal.6. ddRNAi plasmid constructs can be designed to simultaneously express a number of different siRNAsequences, allowing the targeting of multiple regions within a gene to enhance knock-down effects and reducechances of developing mutation-related resistance, as well as simultaneously targeting multiple genes allowingfor tackling of complex genetic disorders.These qualities also make ddRNAi well suited to high throughput functional genomics and target validation,and provide added versatility when developing RNAi targets for drug development. Potential applications ofddRNAi are: • Accelerated drug delivery because ddRNAi that validates the target becomes the therapeutic agent. • Creation of transgenic animals to validate the target. With minimal modifications, the same gene construct can be converted into a therapeutic agent that blocks the genes expression in humans. 16 | P a g e
  17. 17. • ddRNAi can be developed for the treatment of cancer in combination with chemotherapy. Benitec is pursuing this approach in its lung cancer program.Viral infections are also important potential targets for RNAi-based therapies. Reducing the activity of key viralgenes can cripple the virus, and numerous studies have already hinted at the promise of RNAi for treating viralinfections. In laboratory-grown human cells, investigators have stopped the growth of HIV, polio, hepatitis C,Ebola and other viruses using this approach.The strength of RNAi as a research tool will also have an enormous potential impact on medicine. Knockingdown a gene’s activity yields a wealth of information about its functions in cellular pathways. Prior to thediscovery of RNAi, the process was laborious and could take months.Pfizer’s 2009 deal with Tacere Therapeutics Inc. serves as a significant endorsement for Benitec’s ddRNAitechnology. The deal terms entail USD 143 million in upfront and milestone payments. Tacere has strong pre-clinical data demonstrating efficacy and safety of Benitec’s technology to treat and potentially cure hepatitis C.This program is close to moving into a clinical trial. 17 | P a g e
  18. 18. 4. Product PipelineBenitec has a product pipeline in house and partnered therapeutics based on its proprietary transformationaltechnology, DNA-directed RNA interference (ddRNAi) for chronic and life-threatening conditions. Benitechas four development programs underway and expects to enter clinical trials within 2 years. Successful resultsfrom any program could lead to a partnership deal with a major pharma company.Source: Company filings – Annual report 2010Cancer associated painThe chronic pain population is one of the most pressing healthcare issues in the world. Estimates for the sizeof the market range from 50-100M persons in the U.S. alone. Chronic pain is an extremely common afflictionfrom migraine headaches, to fibromyalgia to terminally ill cancer patients. The pharmaceutical market forpowerful, sustained-release painkillers for patients trying to manage chronic pain is estimated at USD 2.3 billionannually. Of the 500,000 Americans who die of cancer annually, nearly 200,000 suffer horrible pain with nodesirable alternatives. Chronic pain disables more people than cancer or heart disease and costs the Americanpublic more than both diseases combined—estimated at upwards of USD 40 billion in medical expensesannually. Cancer is a common cause of chronic pain. Pain occurs in 30% of all cancer patients regardless ofstage of disease, and in 90% of patients in advanced stages of cancer. Not only do these patients experiencepersistent pain, but it has been reported that about 65% of cancer patients experience breakthrough pain aswell. The breakthrough pain is both frequent and intense. According to a survey of cancer patients by HarrisInteractive, 71% of patients experienced breakthrough pain at least weekly, and 53% reported a pain intensityrating of 8, 9, or 10 (0 = no pain; 10 = worst pain imaginable). Breakthrough pain has a negative impact onmany spheres of cancer patients lives. 18 | P a g e
  19. 19. Drugs are the mainstay of pain management and drug treatment for pain represents a tremendous growth area.In 2009, the market totaled USD 20 billion in the U.S. and $34 billion worldwide. The worldwide market isexpected to grow to USD 41 billion by 2012. In 2009, analgesics plus anti-arthritics were the most widelyprescribed medications in the U.S. in 2009, with a combined total of over 278 million prescriptions (SourceIMS Health).Opioid analgesics accounted for approximately USD 8.5 billion of the USD 20 billion U.S. pain market in 2009.We believe that this strong market growth is supported by the increased use of branded opioid formulations innovel delivery forms (such as sustained release or extended release opioids) that greatly improve painmanagement. Further growth also is resulting from their use for treating chronic pain.We believe that additional market growth is supported by:a highly concentrated prescriber basea demographic shift towards a more elderly population with chronic diseasesmore aggressive pain managementBenitec is devising a novel approach to the amelioration of chronic pain, by designing ddRNAi therapeuticsthat target a specific spinal enzyme that has been implicated in contributing significantly to the development ofcentral sensitization-mediated pain (neuropathic pain). The aim of the chronic pain program is to develop asingle intrathecal injection of a ddRNAi construct which results in significant silencing of the spinal enzymegene (PKCγ) to provide pain relief equivalent to that achievable by infusion of opioids. While initially the targetclinical group is terminally ill cancer patients, this could be extended to any group of patients suffering chronicor neuropathic pain as a result of a terminal illness, including HIV/AIDS. 19 | P a g e
  20. 20. Furthermore, recent studies have indicated that the silencing of this spinal PKCγ gene also reduces morphinetolerance resulting from chronic administration. The development of tolerance to opioid analgesics remains amajor hurdle in the clinical treatment of pain, which can currently only be addressed through administration ofhigher doses or rotation of different opioid derivatives, increasing the risk and severity of a large number ofpotential side effects. The therapeutic applications of the ddRNAi construct Benitec is developing cantherefore be vastly expanded to the treatment of any condition where opioid tolerance is a factor.After the current proof of concept studies have been completed, the plan is to then conduct preclinical safetyand biodistribution studies, leading to a Phase I/II clinical trial. For this purpose, Benitec is working togetherwith researchers at the University of Queensland to gather sufficient data for such a trial. In June this year,Benitec announced that China based researchers have proved the concept. Using a form of Benitecs genesilencing technology in a rat model, the researchers silenced PKCγ and achieved a significant reduction in painwithout any apparent adverse side effects.Source: BenitecHIV/AIDSThe development and use of double and triple drug combinations for the treatment of HIV infection has led todramatic improvements in the lives of HIV-infected individuals. But despite the apparent successes of the newanti-retroviral drugs there are the emerging problems of drug-resistant viral variants and toxicities of thecombination drugs now in use. Therefore, there is still great interest in exploring new antiviral therapeuticapproaches. HIV was the first infectious agent targeted by RNAi, perhaps because the lifecycle and pattern of 20 | P a g e
  21. 21. gene expression of HIV is well understood. Synthetic siRNAs and expressed shRNAs have been used to targetseveral early and late HIV-encoded RNAs in cell lines and in primary haematopoietic cells. Despite the successof RNAi-mediated inhibition of HIV-encoded RNAs in cell culture, targeting the virus directly represents asubstantial challenge for clinical applications because the high viral mutation rate will lead to mutants that canescape being targeted. Therefore RNAi mediated down-regulation of the cellular cofactors required for HIVinfection is an attractive alternative or complementary approach.The delivery of siRNAs or shRNAs to HIV-infected cells is also a challenge. The target cells are primarily Tlymphocytes, monocytes and macrophages. As synthetic siRNAs do not persist for long periods in cells, theywould have to be delivered repeatedly for years to effectively treat the infection. Systemic delivery of siRNAs toT lymphocytes is probably not feasible owing to the immense number of these cells. Using viral vectors todeliver anti-HIV-encoding shRNA genes is also problematic, and systemic delivery is not yet practicablebecause the immunogenicity of the vectors themselves precludes performing multiple injections. Therefore thepreferred method is to isolate T cells from patients; these T cells are then transduced, expanded and reinfusedinto the same patients. In a continuing clinical trial, T lymphocytes from HIV-infected individuals aretransduced ex vivo with a lentiviral vector that encodes an anti-HIV antisense RNA. The transduced cells aresubsequently expanded and reinfused into patients. This type of therapeutic approach would also be applicableto use ddRNAi vector constructs that encode siRNAs. A different approach is to transduce isolatedhaematopoietic progenitor or stem cells with vectors harbouring the therapeutic ddRNAi constructs. Thesecells give rise to all the haematopoietic cells capable of being infected by the virus, rendering them immune topotential future infection. Haematopoietic stem cells are mobilized from the patient and transduced ex vivobefore reinfusion (see graph below). Two clinical trials in which retroviral vectors expressing ribozymes weretransduced into haematopoietic stem cells have demonstrated the feasibility of this approach. 21 | P a g e
  22. 22. Together with the City of Hope Hospital in California, Benitec initiated the first Phase I/II trial of ddRNAi inlymphoma patients carrying the HIV virus. Patients undergoing a bone marrow transplant for their lymphomaalso received a transfusion of their own blood stem cells that had been transfected with a ddRNAi constructwhich expressed a shRNA to knock down a key HIV gene, as well as two other RNA therapeutics in a triplevector. After two years, the City of Hope researchers concluded that the trial clearly showed that the ddRNAitherapy was safe and feasible, with the anti-HIV shRNA continuing to be expressed for at least 3 yearsfollowing a single treatment, and no adverse effects were seen. The City of Hope announced earlier this yearthat it will initiate a second clinical trial based on the positive outcome of the first trial. This second trial willtest an improved version of the treatment. Benitec is exploring options to partner this program so that thepotential of ddRNAi-modified hematopoietic stem cells to treat and ultimately cure HIV/AIDS can berealized.Drug resistant lung cancerMany studies have used siRNAs as an experimental tool to dissect the cellular pathways that lead touncontrolled cell proliferation and to cancer. Moreover, RNAi has been proposed as a potential treatment forcancer. The potential for using RNAi to treat metastatic cancers will of course depend on finding good cellulartargets.Together with the Children’s Cancer Institute Australia at the University of New South Wales, Benitec intendsto develop a ddRNAi-based therapy against chemotherapy resistance in human non-small cell lung cancer(NSCLC) cells. The target gene for silencing is beta III tubulin, and Benitec and CCIA scientists have designedand tested a powerful ddRNAi molecule that significantly knocks down beta III tubulin in human lung cancercells. Beta III tubulin is a gene whose high expression is associated with chemotherapy drug resistance in arange of tumor types, including lung, ovarian, breast and gastric cancers. Benitec is currently working on testingthe ddRNAi molecule in a preclinical model of human lung cancer, as part of the process required for humanclinical trials. Benitec believes that this approach will have the potential to substantially increase the efficacy ofcurrent chemotherapy for lung cancer patients resulting in extension of life and/or decrease in toxicity-relatedadverse side effects of current chemotherapy. The Company will continue to develop this with the UNSWresearchers, in particular Professor Maria Kavallaris. The researchers have demonstrated that silencing beta lll-tubulin in NSCLC using ddRNAi significantly increases the killing of the cancer by chemotherapy drugs. Thescientific team has already published data evidencing the effectiveness of this approach in vitro and in vivo inthe June 2010 edition of Cancer Research. The next stage of the program is focusing on optimizing anddelivering a ddRNAi construct to silence beta III tubulin in human lung cancer cells in an orthotopic model ofhuman lung cancer in vivo, with the aim of significantly increasing the cancer cells’ susceptibility to being killedby anti-cancer drugs. Success in this stage will provide support for a Phase I/II trial. 22 | P a g e
  23. 23. Hepatitis B and CHepatitis induced by the hepatitis B virus (HBV) and by the hepatitis C virus (HCV) is a major health problem.At present hundreds of millions of individuals are infected worldwide. There is an effective vaccine againstHBV, but this treatment is only useful for the prevention of viral infection and there is no vaccine for HCV.Therefore, hepatitis caused by these two viruses is an important target for potential RNAi therapy. The firstdemonstration of RNAi efficacy against a virus in vivo involved hydrodynamic co-delivery of an HBV repliconand an expression unit encoding an anti-HBV shRNA in mice. This study demonstrated that a significantknockdown (99%) of the HBV core antigen in liver hepatocytes could be achieved by the shRNA, providing animportant proof of principle for future antiviral applications of RNAi in the liver.HCV now infects an estimated 3% of the world’s population, and is a major cause of chronic liver disease,which can lead to liver cirrhosis and hepatocellular carcinoma. The market for the next generation of hepatitisC therapies is potentially worth $20 billion by 2020, according to a recent estimate by William Blair & Co..More advanced studies have been carried out for RNAi therapies against HCV. The HCV genome is a positive-strand RNA molecule with a single open reading frame encoding a polyprotein that is processed post-translationally to produce at least ten proteins. The only therapy currently available is a combination ofinterferon and ribavirin, but response to this therapy is often poor, particularly with certain HCV subtypes, andoften leads to the development of drug resistant viral strains due to the genomic mutations under the selectivepressure of therapy.As with HIV therapeutics, delivery of the siRNAs or shRNA vectors is the main challenge for successfultreatment of HCV. The method of delivery used in several in vivo studies — hydrodynamic intravenousinjection — is not feasible for the treatment of human hepatitis. Benitec’s licensee, Tacere Therapeutics, inconjunction with Pfizer, have developed a multicassette ddRNAi construct which the y have shown can bedelivered with very high efficiency in the absence of averse effects, using the adeno-associated virus type 8vector.Together with its partner Biomics Biotechnology, Benitec is undertaking a program to develop a noveltreatment for hepatitis B, which is planned to be delivered also utilising the experience of Tacere with AAV8.Both companies have identified more than 100 effective RNAi candidates that can silence the hepatitis B virusand has selected the five most promising of them for further evaluation and development using ddRNAiconstructs. These constructs will be tested in pre-clinical models of hepatitis B, and ultimately in a China-basedclinical trial of hepatitis B virus-infected patients. 23 | P a g e
  24. 24. Source: BenitecOculopharyngeal muscular dystrophyBenitec has recently entered the field of orphan disease therapeutics by starting a program to develop a cure tooculopharyngeal muscular dystrophy (OMPD). OPMD is a rare form of a degenerative muscle disorder, causedby an autosomal dominant inherited genetic mutation and is a slow progressing, late onset condition, usuallyasymptomatic before the fifth or sixth decade of life. The disease is characterised by drooping of the eyelids(ptosis), swallowing difficulties (dysphagia) and proximal limb weakness due to a decrease in the number ofmuscle fibers, variation in size and muscle tissue fibrosis, but affected individuals show normal intellectual,behavioral, bowel and sexual functions.OPMD is a form of muscular dystrophy in which symptoms usually first appear between the 30s and 60s, andprimarily involve the muscles of the upper eyelids and the swallowing muscles. As these muscles weaken,patients have difficulty keeping their eyes open and find that food and liquids are increasingly hard to swallow.As OPMD progresses, it can weaken the muscles of the limbs, particularly the legs. The disease is morecommon in French Canadians, Jews of Central Asian descent (Bukharan Jews), and Hispanics living in NewMexico, than it is in the general population. The underlying defect is a mutation in a gene on chromosome 14,identified in 1998. The protein made from this gene is called polyadenylate binding protein 1, or PABPN1.Because of the genetic defect in OPMD, the protein is slightly longer than normal, containing extra moleculesof the amino acid alanine. The cellular and molecular effects of this lengthening of the PABPN1 protein are thesubject of ongoing investigations. One effect is that clumps form in the nucleus of OPMD-affected musclecells. OPMD is dominantly inherited, meaning just one mutated PABPN1 gene, passed from one parent to achild, is sufficient to cause disease symptoms. 24 | P a g e
  25. 25. DNA testing for OPMD has been available for several years. Without DNA testing, it’s usually not possible todetect whether or not a person has inherited the OPMD gene defect until he or she reaches middle age.Presently, no cure or effective medical treatment is available for OPMD. The most common treatment is asymptomatic surgical intervention to correct ptosis and improve swallowing in severely affected individuals.However, this does not treat the progressive degradation of the muscular tissue and shows only limited long-term effectiveness. The condition has a severe impact on the quality of life of patients and often leads to anuntimely death due to swallowing difficulties and chocking as a result of the deterioration of the pharyngealmuscles.Oculopharyngeal muscular dystrophy is the result of an abnormal expansion of a trinucleotide repeat in thecoding region of the poly(A) binding protein nuclear 1 gene (PABN1). The genetic mutation is small, wellcharacterised, located on a relatively small gene and expressed in a limited number of cells, making it a goodcandidate to a ddRNAi gene silencing approach. Benitec has entered a collaboration with the Institut deMyologie, France and the Royal Holloway University of London to explore a number of options in differentapproaches to ddRNAi construct development and in vivo delivery options. 25 | P a g e
  26. 26. Source: BenitecStem cell based ddRNAi delivery.The potential application areas of ddRNAi based therapeutics are both numerous and diverse. However, one ofthe major remaining challenges is the development of clinical applications is the efficient and targeted in vivodelivery of ddRNAi vector constructs or siRNA derivatives to specific cells and tissues. Current deliveryvehicles are often based on viral vectors of which the safety and efficacy has been extensively demonstrated buta number factors limit the efficiency of these vehicles, including the selectivity of transfected cell lines, apatients natural resistance to the viral family on which the construct is based or development of such resistanceon repeated administration of the therapeutic compounds. Benitec is looking to overcome these deliveryhurdles though the use of stem cells. Stem cells are undifferentiated cells that can replicate themselves withoutdifferentiating, and under specific conditions can differentiate into various specialized cell types. Stem cellpossess a number of interesting characteristics, most notably; (I) they are able to home to sites of chronicinflammation and cancer tissue thus delivering ddRNAi-based therapeutics selectively to these tissues, (II) theyare able to both supply siRNA to neighboring cells and differentiate in a large number of cell lines, giving wayto large number of therapeutic approaches and (III) they are immune privileged cells, avoiding many problemsassociated with an immunological response and allowing for the development of both autologous andallogeneic stem cell based therapies. The combination of stem cell technology and Benitec’s ddRNAi platformcreates the opportunity to develop new therapeutic applications to a vast range of pathological conditionsincluding infectious diseases, cancer and genetic disorders. Benitec is actively exploring different options toextend its patent portfolio towards stem cell based ddRNAi delivery through collaboration with or acquisitionof dedicated stem cell companies. 26 | P a g e
  27. 27. 5. Management CapabilitiesBenitec has been investing in developing a team of experts that have a focus on patient outcomes and candeliver results. Its board and senior management team are highly experienced in the development and earlystage commercialisation of new therapeutics. Unusually for a company of its size it also has a very highlyregarded group of Chief Investigators assisting in developmentManagement TeamPeter French, Chief Executive OfficerPeter French, Ph.D, is a cell and molecular biologist who has been extensively involved in both basic andclinical medical research and commercialisation of biological intellectual property. His research areas ofexpertise include cell biology, immunology, infectious disease (including HIV/AIDS), neurobiology andoncology. Over the past 10 years, Peter has been extensively involved in leadership roles in Australiasbiotechnology industry, including founding the stem cell storage company Cryosite Ltd, a listed publiccompany, and in 2004 launched six new probiotic-based products in pharmacies Australia-wide withProbiomics. Peter is a Past President of the Australia and New Zealand Society for Cell and DevelopmentalBiology and represented Australias biological scientists on the Board of FASTS, Australias peak governmentlobbying organisation for science and technology. He is currently on the Board of the International Society ofDifferentiation. He joined Benitec Ltd as CSO in August 2009 and was appointed CEO in June 2010.Greg West, Chief Financial OfficerGreg West is a Chartered Accountant and over recent years has worked on ASX listing start-ups. He is aDirector and audit committee Chairman of ITC Limited (a business arm of Wollongong University), IDPEducation Pty Ltd, Education Australia Limited, and Sydney International Film School Pty Limited. Gregcompleted his studies with Price Waterhouse and worked in senior finance executive roles in investmentbanking with Bankers Trust, Bain & Company (now Deutsche Bank), NZI, and was CFO at the largestAustralian credit union. Greg was formally appointed to the position of Company Secretary in May 2011 andCFO in August 2011.Benitec’s Management is assisted by its ‘Chief Investigators Group’, which brings together a number ofinternationally renowned scientists in the field of RNAi who are actively working with Benitec to progress itsin-house pipeline and to review the progress of the company’s R&D programs. Peter French is the chairman ofthe CIG. Other members are: 27 | P a g e
  28. 28. Michael GrahamDr Graham’s research interests are in the field of molecular genetics, with a particular focus on the applicationsof RNAi in biotechnology. He commenced the development of Benitec’s ddRNAi technology while working inplant biotechnology at CSIRO and continued this work at QDPI and Benitec, focusing on medicalapplications; the core Benitec patent portfolio was developed at this time. Following Benitec’s restructure DrGraham moved to the University of Queensland where he continues to work on developing applications ofRNAi in plant biotechnology in an industry collaborative program.Ken ReedDr Reed was the scientific founder of Benitec, whose gene silencing technology came from research conductedat the Queensland Agricultural Biotechnology Centre (QABC) and CSIRO. Dr Reed was the founding directorof QABC and previously a co-founder of Advanced Breeding Technology Pty Ltd, the first company tocommercialise the use of PCR. He was Deputy Chair of the inaugural Australian Biotechnology AdvisoryCouncil and served for many years on the Australian Governments Genetic Manipulation Advisory Committeeand the Board of the Australian Genome Research Facility. Dr Reed is a Fellow of the Academy ofTechnological Sciences and Engineering.John J RossiProfessor Rossi is the Lidow family Professor and Chair of the Division of Molecular Biology, BeckmanResearch Institute of the City of Hope, and Dean, Graduate School of Biological Sciences, Beckman ResearchInstitute of the City of Hope, Duarte, Califormia. Dr. Rossi received his doctoral training in genetics at theUniversity of Connecticut in Storrs and postdoctoral training in molecular genetics at Brown University. Hisresearch has focused on RNA biology and clinical applications of small RNAs. He has published over 200 peerreviewed articles and numerous reviews and commentaries on RNAi based therapeutics.York ZhuDr. York Zhu, the founder of both Biomics and NT Omics Inc., has 20 years R&D and business experience.He started his industrial R&D career at Clontech Labs (1993) as an R&D Manager following several years as anacademic in Memorial Foundation in Nagoya, Japan (1987-1989). In 2000, Dr. Zhu worked as ChiefTechnology Officer in Genemed R&D headquarters for 4 years, where he was an inventor in several patentsand led the R&D team to develop a gene drug discovery technology platform. Then as Vice President andChief Scientist of Zytogene (a spin-off of Genemed) he managed R&D operations to successfully develop over200 new products for Zymed, which brought the company to a high market value and was acquired byInvitrogen. In 2005, Dr, Zhu founded NT Omics, and invented Entire siRNA targets (EsT) library technologywhich filled the gap in this field. In 2006 Dr. Zhu established Biomics in Nantong, China, where he now servesas CEO and Chairman. The company is a leading player in RNAi in China. 28 | P a g e
  29. 29. Maria KavallarisProfessor Maria Kavallaris is Head of the Pharmacoproteomics Program at the Children’s Cancer InstituteAustralia, and holds a conjoint academic appointment in the Faculty of Medicine, University of New SouthWales. Her research contributions are internationally regarded and include identifying the mechanisms of actionand resistance to anticancer drugs that target cell division; discovering new cytoskeleton interactions in cancer;and the development of less toxic cancer therapies using nanotechnology. Her programs researchcontributions include the identification of novel mechanisms of resistance to anticancer agents that target keyproteins involved in cell division in childhood cancer.George DicksonProfessor George Dickson is the Director of the Institute of Biomedical and Life Science at the RoyalHolloway, University London. He is a member of a number of influential bodies in the area of gene therapy,including the European Medicines Agency Committee for Advanced Therapies; the British Society of GeneTherapy and the European Society of Gene and Cell Therapy. His research includes studying thepathophysiology and treatment of the muscular dystrophies, atherosclerosis and hyperlipidaemia, andneurodegenerative disease. Professor Dickson heads Benitec’s OPMD program, along with Dr CapucineTrollet, at the Institut de Myologie in Paris. 29 | P a g e
  30. 30. 6. Competitive LandscapePeer Group Company ProfileAlnylam Inc. (NASDAQ: ALNM)Alnylam Pharmaceuticals, founded in 2002, focuses on a wide array of human diseases and is developingtechnology that can specifically and potently silence disease-causing genes. Alnylam has unique access to thecritical IP in the field of RNAi therapeutics and is expanding its portfolio by developing and patenting methodsfor the delivery of RNAi-based therapeutics in a wide variety of diseases. Alnylam is developing Systemic RNAitherapeutics, drugs that travel through the bloodstream to reach diseased parts of the body to treat a broadrange of diseases, including cancer, metabolic and autoimmune diseases. The company has three partneredprograms in development: RSV infection in Phase II ([partnered with Cubist), Liver cancer in Phase I(partnered with Tekmira and Huntington’s Disease (partnered with Medtronics). By 2015, the company expectsto have five RNAi therapeutic programs in advanced clinical development. These include ALN-TTR (for thetreatment of transthyretin-mediated amyloidosis (ATTR), ALN-PCS for the treatment of hypercholesterolemia,ALN-HPN for the treatment of refractory anemia, and two additional programs that will be named andadvanced into development later in 2011.Marina Biotech (NASDAQ: MRNA)Marina Biotech is a biotechnology company, focused on the development and commercialization ofoligonucleotide-based therapeutics utilizing multiple mechanisms of action including RNA interference (RNAi)and messenger RNA translational blocking. The Marina Biotech pipeline currently includes a clinical programin Familial Adenomatous Polyposis (a precancerous syndrome) and two preclinical programs -- in bladdercancer and malignant ascites. Marina Biotech entered into an exclusive agreement with Debiopharm Group forthe development and commercialization of the bladder cancer program. Marina Biotechs goal is to improvehuman health through the development of RNAi- and oligonucleotide-based compounds and drug deliverytechnologies that together provide superior therapeutic options for patients.Tekmira (NASDAQ: TKMR)Tekmira Pharmaceuticals Corporation is a biopharmaceutical company focused on advancing novel RNAitherapeutics and providing its leading lipid nanoparticle delivery technology to pharmaceutical partners.Tekmira has been working in the field of nucleic acid delivery for over a decade and has broad intellectualproperty covering LNPs. In addition to delivery platform research and development, Tekmira is advancingthree internal RNA interference (RNAi) product candidates: TKM-PLK1, TKM-Ebola and TKM-ApoB.TKM-PLK1 is being developed as a novel anti-tumour drug in the treatment of cancer. It uses its LNP deliverysystem for siRNA to treat cancer. Once at the target site, LNPs are taken up by tumor cells and the siRNApayload is delivered inside the cell where it reduces expression of the target protein. TKM-Ebola is being 30 | P a g e
  31. 31. developed as a novel anti-viral drug in the treatment of Ebola infection. In July 2010, Tekmira was awarded upto a US $140 million contract from the United States Governments Transformational Medical Technologies(TMT) Program to advance TKM-Ebola. TKM-ApoB is being developed for the treatment ofhypercholesterolemia, or elevated cholesterol, a condition associated with increased risk of atherosclerosis, abuild-up of cholesterol and fat in artery walls that underlies many cardiovascular diseases, such as angina,myocardial infarction, congestive heart failure, stroke, transient ischemic attacks or peripheral artery disease.Silence Therapeutics (LSE: SLN)Silence Therapeutics plc (AIM: SLN) is a biotechnology company aimed at the discovery, development anddelivery of targeted, systemic RNA interference (RNAi) therapeutics for the treatment of serious diseases.Silence has a comprehensive short interfering RNA (siRNA) therapeutic platform based on a strong intellectualproperty portfolio and large clinical safety database. The Company possesses multiple proprietary siRNAdelivery technology platforms including AtuPLEX™, DACC and DBTC. AtuPLEX enables the broadfunctional delivery of siRNA molecules to targeted diseased tissues and cells, while increasing theirbioavailability and intracellular uptake. The DACC delivery system allows functional delivery of siRNAmolecules selectively to the lung endothelium with a long duration of target mRNA and protein knock-down.The DBTC delivery system enables functional delivery of siRNA molecules selectively to liver cells includinghepatocytes. Additionally, the Company has a platform of novel siRNA molecules based around its AtuRNAichemical modification technology, which provides a number of advantages over conventional siRNAmolecules. Silence’s unique RNAi assets also include structural features for RNAi molecules and specific designrules for increased potency and reduced off-target effects of siRNA sequences.The Company’s lead internal drug candidate is Atu027, a liposomal formulation in clinical development forsystemic cancer indications. Atu027 incorporates two of the Company’s technologies, AtuRNAi andAtuPLEX™. Silence is currently conducting an open-label, single-centre, dose-escalation Phase I study withAtu027 in patients with advanced solid tumors involving single, as well as repeated, intravenous administration.Interim safety and pharmacokinetic data were presented at the American Society of Clinical Oncology AnnualMeeting in June 2011. The study is expected to be completed in the first half of 2012.CalandoCalando is a clinical stage nanobiotechnology company at the forefront of RNAi therapeutics. The companydevelops nanoparticle therapeutics that use its patented sugar (cyclodextrin)-based polymer technologies as adrug delivery system for siRNA. Calando is a majority-owned subsidiary of Arrowhead Research Corporation(NASDAQ: ARWR), is a biopharmaceuticals company using proprietary technologies developed at Caltech tocreate targeted siRNA-based therapeutics and small molecule nanoparticle drug conjugates. Calando is focusedon the clinical development of RONDEL™, its siRNA delivery technology, and CALAA-01, the associateddrug candidate. Interim clinical results show that CALAA-01 is well tolerated and has demonstrated preliminaryproof of RNAi activity in patients treated with the highest doses. These results represent several notable "firsts" 31 | P a g e
  32. 32. in the field of RNAi, including first to demonstrate definitive RNAi delivery after systemic administration andfirst to show dose dependent accumulation in target cells. In addition, CALAA-01 has been shown to mediatespecific gene inhibition in humans as evidenced by mRNA knockdown and protein knockdown in tumorbiopsies.Quark PharmaceuticalsQuark Pharmaceuticals, Inc., is a clinical-stage pharmaceutical company engaged in discovering and developingnovel RNAi interference or RNAi-based therapeutics. The Company has a fully integrated drug developmentplatform that spans therapeutic target identification based on its proprietary gene discovery science andtechnology, to clinical drug development. The Company has initially been focusing on RNAi-basedtherapeutics for the treatment of diseases associated with oxidative stress and ischemic injury. Quark has threeproduct candidates in clinical development in five different indications of which four are in Phase II. PF-655(formerly REDD14NP and RTP801i) is a synthetic siRNA designed to inhibit the expression of Quark’sproprietary target, RTP801. PF-655 is licensed to Pfizer on an exclusive worldwide basis. PF-655 was welltolerated in a Phase I/IIa study completed by Quark on Pfizer’s behalf in patients with wet AMD and iscurrently being evaluated in Phase II studies for DME and wet AMD.QPI-1002 is being developed by Quark for the prevention of Acute Kidney Injury (AKI) following majorcardiovascular surgery, and for the prophylaxis of Delayed Graft Function (DGF) following deceased donorrenal transplantation. Phase I studies in both of these patient populations have been completed and anindependent Data Safety Monitoring Board (DSMB) recommended that clinical development of QPI-1002 inboth indications continue to the next phase of development. Phase II clinical studies have been initiated. InAugust 2010 Quark granted to Novartis an option for a worldwide exclusive license to QPI-1002 for allindications.QPI-1007 is a synthetic siRNA designed to temporarily inhibit expression of the pro-apoptotic protein,Caspase 2. QPI-1007 utilizes a novel siRNA structure developed by Quark that preserves activity whileattenuating off-target and immunostimulatory effects. QPI-1007 is being developed as a neuroprotectant forthe treatment of non-arteritic ischemic optic neuropathy (NAION) and potentially other optic neuropathiessuch as glaucoma that result in the death of retinal ganglion cells (RGCs). Quark is conducting a Phase I dose-escalation safety study using QPI-1007 in patients suffering from Optic Nerve Atrophy and NAION.. 32 | P a g e
  33. 33. 7. Recent headlinesNovember 18, 2011: Chief Investigators Report on progress with therapeutic programsNovember 17, 2011: Benitec reports on significant progress made across all therapeutic programsOctober 31, 2011 : New Europe-based collaboration to develop a novel therapeutic for life threateningmuscular dystrophyOctober 28, 2011 : Benitec’s lead pain program to also target morphine toleranceOctober 24, 2011 : Additional Benitec gene silencing patents granted and allowed in Europe and the USOctober 6, 2011 : Hepatitis programs boosted by grant and notice of allowance of further ddRNAi patentsSeptember 27, 2011: Benitec presents at the Australian Showcase: Amsterdam 2011 and at BioPartneringEuropeSeptember 19, 2011: Pain Program Receives Clinical Endorsement and Moves Towards the ClinicAugust 8, 2011 : IP Position Strengthened with Allowance of Gene Silencing Graham Family Patent in USJuly 27, 2011 : Patent granted in Graham Family in the USJune 20, 2011 : Pain Program Validated by Independent StudyMay 31, 2011 : Gene Silencing Technology Used by John Hopkins Scientists in the Development of a Treatment for Radio Resistant Prostate CancerMay 25, 2011 : RNAi Patent Granted in Japan, Further Expansion of the IP for the HCV ProgramMay 17, 2011 : Benitec Raises AUD 8 million to Forge Ahead with its PipelineMay 4, 2011 : Significantly Strengthening of IP Position by more patents granted in US and EuropeMarch 29, 2011 : Benitec Technology Used by University of Queensland to Develop Treatment for Cervical CancerMarch 21, 2011 : Second US Clinical Study Announced Using the ddRNAi TechnologyFebruary 22, 2011 : HBV RNAi Program Moves to Next Stage 33 | P a g e
  34. 34. 8. Patent CoverageBenitecs core patents and patent rights are based on this early research and are supported by subsequent filingsthat extend the scope and jurisdiction of its intellectual property. Benitecs patent estate represents a dominantposition in DNA-directed gene silencing, and potentially the dominant position in RNAi applications forhumans and mammals. Benitec has over 60 filed patents and has licensed several additional patents that extendthe scope of its patent estate and enhance the utility and value of ddRNAi. Benitecs main patented technologyis DNA-directed RNA interference (ddRNAi), whereby transiently transfected or stably integrated DNAconstructs are transcribed to form double-stranded RNA that induces gene silencing. The issued claims coverthe design of such DNA constructs, whether they are inverted repeats coding for hairpin RNA or sense andantisense sequences under the control of separate promoters and regardless of the means of delivery.A major distraction for Benitec resulted from litigation initiated by the Company against Nucleonics in defenseof its Graham family of patents. While Benitec ultimately prevailed, the Company was forced to defend itspatents in re-examinations in all major jurisdictions. Following the conclusion of this litigation in the mid-2000s, Benitecs patents were re-examined and re-issued in all major jurisdictions except Europe and the US. Apivotal breakthrough for the companys IP portfolio came in September 2010 when the US Patent OfficesBoard of Appeal reversed all previous objections and in effect re-issued Benitecs US patent. This was followedby the issuance of the Re-Examination Certificate in March 2011, which is the final formal step in reinstatingthe patent.Benitec currently has more than 40 granted or allowed patents globally, including the key jurisdictions of theUS, the UK, Japan, Europe, India, Canada and Australia. There are nearly 50 more patents pending. Benitechas the dominant patent position for the use of ddRNAi-based gene silencing for humans.Granted patents exclusively licensed from CSIRO Patent Country Description US 6,573,099 US • Synthetic genes for modifying endogenous gene expression in a cell, tissue or organ of a transgenic organism, in particular a transgenic animal or plant. More particularly, the invention provides novel synthetic genes and genetic constructs which are capable of repressing delaying or otherwise reducing the expression of an endogenous gene or a target gene in an organism when introduced thereto. 34 | P a g e
  35. 35. US 7,754,697 US • A method of modifying gene expression and to synthetic genes for modifying endogenous gene expression in a cell, tissue or organ of a transgenic organism, in particular a transgenic animal or plant. MoreUS 7,855,071 US particularly, the present invention utilises recombinant DNA technology to post-transcriptionally modify or modulate the expression of a target gene in a cell, tissue, organ or whole organism, thereby producing novelUS 8,067,383 phenotypes. Novel synthetic genes and genetic constructs which are capable or repressing delaying or otherwise reducing the expression of an endogenous gene or a target gene in an organism when introducedUS 8,048670 thereto are also provided.US 8,053,419743316 AUS • A method of modifying gene expression and to synthetic genes for2005202658 AUS modifying endogenous gene expression in a cell, tissue or organ of a2005211538 AUS transgenic organism, in particular a transgenic animal or plant. More particularly, the invention utilises recombinant DNA technology post-2005209648 AUS transcriptionally modify or modulate the expression of a target gene in a2008249157 AUS cell, tissue, organ or whole organism, thereby producing novel phenotypes. Novel synthetic genes and genetic constructs which are2323726 Canada capable or repressing delaying or otherwise reducing the expression of295108 Czech Rep an endogenous gene or a target gene in an organism when introduced thereto are also provided.GB2353282 UK1035742 HK3413/DELNP/2005 India3901/DELNP/20052000/00169/DE India2000-537990 India2005-223953 Japan2007-302237 Japan506648 Japan547283 NZ75542 NZ200205122.5 Singapore141233 Singapore287538 Singapore2000/4507 Slovenia S. Africa29514/99 Australia Methods for reducing the phenotypic expression of a nucleic acid of interest in eukaryote cells by providing aberrant RNA molecules, preferably unpolyadenylated RNA molecules comprising at least one target specific nucleotide sequence homologous to the nucleic acid of interest, preferably a sense strand, into the nucleus of the cells.29514/99 Australia Methods for reducing the phenotypic expression of a nucleic acid of interest in eukaryote cells by providing aberrant RNA molecules, preferably unpolyadenylated RNA molecules comprising at least one target specificZL99805925.0 China nucleotide sequence homologous to the nucleic acid of interest, preferably a sense strand, into the nucleus of plant cells.99910592.7 Europe507093 New Zealand 35 | P a g e
  36. 36. Benitec-owned Granted Patents Patent Country Description 550284 NZ A genetic construct comprising a multi-promoter expression cassette comprising at least three promoter/RNAi/terminator components 200522084 Australia wherein each promoter/RNAi/terminator component comprises a promoter element, a terminator element and an RNAi species operably linked to the promoter element and the terminator element, 1725660 Europe and wherein each of the RNAi species is different from one another. 2007-502094 Japan 7727970 US GB2377221 UK A method of inducing, promoting or otherwise facilitating a change in the phenotype of an animal cell or group of animal cells including an animal. The modulation of phenotypic expression is accomplished 91678 Singapore via genotypic manipulation by inducing, promoting or otherwise facilitating the silencing of expressible genetic sequences thus reducing translation of transcript to protein. Expressible genetic 2002/07428 S. Africa sequences contemplated by the invention include not only genes normally resident in a particular cell (i.e. indigenous genes) but also genes introduced through recombinant means or through infection by pathogenic agents such as viruses. 2004243347 Australia A ribonucleic acid (RNA) for use as interfering RNA in gene silencing techniques to silence a target gene comprising in a 5’ to 3’ direction at least four sequences being a first and second effector 543815 NZ sequence 17 to 21 nucleotides in length; a sequence substantially complementary to the second effector sequence; and a sequence substantially complementary to the first effector sequence; wherein 2005/09813 S. Africa the complementary sequences are capable of forming double stranded regions with their respective effector sequences and wherein at least one of the four sequences is substantially identical to the 200507474-5 Singapore predicted transcript of a region of the target gene; and the RNA further comprising a spacing sequence of one or more nucleotides, the spacing sequence being located between and spacing the first effector sequence and the second effector sequence, or between the sequence substantially complementary to the second effector sequence and the sequence substantially complementary to the first effector sequence. 7,803,611 US Compositions and methods suitable for expressing 1-x RNAi agents against a gene or genes in cells, tissues or organs of interest in vitro and in vivo so as to treat diseases or disorders. 2006210443 Australia 560936 NZ 36 | P a g e
  37. 37. 9. SWOT AnalysisStrengthsDominant patent position in ddRNAiNo direct competitors in ddRNAiStrong management and human therapy development expertiseWeaknessOperating losses accumulating year-on-yearMost of the products are still at the initial development phaseField of RNAi is still in early stages of developmentOpportunitiesPartnerships and license agreement with large pharmaceuticals and early stage bio-tech companies.Transition from conservative business model to drug developer allows for potential significant valuation re-ratingPotential markets for RNAi and gene silencing for therapeutic use is enormousExpansion of patent position through new program results, new target identification and acquisition and celltherapy delivery opportunityThreatsUncertainty of the outcome of Benitec’s research resultsUncertainty about the outcome of clinical trial of the productsHigher level of expenditure than budgeted 37 | P a g e
  38. 38. 10. FinancialsFor the year ended 30 June 2011, Benitec reported a net loss of AUD 3.5 million compared to a net loss ofAUD 4.6 million in the previous year. Operating revenue amounted to AUD 342,545, up from AUD 181,417.The rise was due to an unexpected dividend received from Tacere Therapeutics, a US company in whichBenitec has a small interest. Expenses were AUD 3.2 million, up from AUD 2.8 million. Net loss decreased by30 percent to AUD 3.5 million, with the increase in research & development costs and higher employment andother costs. The Company has a sound financial position with substantial cash reserves of AUD 6.6 million asat 1 July 2011.Financial Summary AUD $ millions June FY2011 June FY2010 % Income Statement 50.0% Gross Revenue 0.3 0.2 8.3% Research & Development -1.3 -1.2 22.2% Employment costs -1.1 -0.9 14.3% Other costs -0.8 -0.7 -65.0% Settlements -0.7 -2 -23.9% Net Income (Loss) -3.5 -4.6 -43.8% Earnings per share (loss) -0.68 -1.21 Balance Sheet 857.1% Cash & Cash Equivalents 6.7 0.7 -50.0% Current Assets 0.2 0.4 20.0% Current Liabilities 1.2 1 Long-term Debts - - 12.0% Shareholders’ Equity 86.8 77.5 4.3% Accumulated losses -84.4 -80.9 Cash Flow Cash from: 37.5% Operating Activities -3.3 -2.4 100.0% Investing Activities 0.2 0.1 736.4% Financing Activities 9.2 1.1Source: Company filings 38 | P a g e
  39. 39. 11. Forward Looking StatementsBenitec key events for the next 12-24 months include: Ø completion POC in a preclinical model of pain in vivo Ø Toxicology studies in chronic pain program Ø Progress to Phase I trial in chronic pain program Ø Toxicology studies in NSCLC program Ø Start Phase I/II clinical trial Ø Preclinical testing using in vitro and in vivo models of chronic HBV disease Ø Expand licenses in areas of research use, reagents and human therapeutics Ø Secure new partnerships in disease areas beyond core focus 39 | P a g e
  40. 40. 12. GlossaryClinical Trial: Rigorously controlled test of a drug candidate or a new invasive medical device on humans.DNA : Deoxyribonucleic acid (DNA) is a nucleic acid that contains the genetic instructions used in thedevelopment and functioning of all known living organisms with the exception of some viruses. The main roleof DNA molecules is the long-term storage of informationFDA: Food and Drug Administration based in Rockville, Maryland, US, responsible for the drug approvalprocess in the US.HIV : a virus that attacks white blood cells in the blood, reducing the bodys ability to fight off illness. HIVcauses AIDS and can be transmitted through unprotected sex, by drug users who use similar equipment andfrom an infected mother to her unborn child.In vitro: In glass or plastic vessels rather than in living systems.In vivo: In living systems.Lentivirus: Represents a class of animal and human viruses. Human Immunodeficiency Virus (HIV), the virusthat causes AIDS, is a type of lentivirus.Lymphocytes: A form of small leukocyte (white blood cell) with a single round nucleus, occurring esp. in thelymphatic systemMonocytes: Monocyte is a type of white blood cell, part of the human bodys immune system. Monocytes haveseveral roles in the immune system and this includes: (1) replenish resident macrophages and dendritic cellsunder normal states, and (2) in response to inflammation signals, monocytes can move quicklyMacrophages: Large white blood cells that engulf and digest antigens.Pharmacokinetics: The study of the bodily absorption, distribution, metabolism, and excretion of drugs.Phase I clinical trial: Clinical trial to test a new biomedical intervention in a small group of people for the firsttime to evaluate safety (e.g., to determine a safe dosage range and to identify side effects).Phase II clinical trial: Clinical trial to study a new biomedical intervention in a larger group of people todetermine efficacy and to further evaluate its safety.Pre-Clinical Trial: Laboratory test of a new drug candidate or a new invasive medical device on animals or cellcultures that is conducted to gather evidence justifying a clinical trial. 40 | P a g e
  41. 41. Protein: Molecule consisting of a chain of amino acids. Each protein has unique biological functions.RNAi : RNA interference (RNAi) is a system within living cells that helps to control which genes are activeand how active they are. Two types of small RNA molecules – microRNA (miRNA) and small interfering RNA(siRNA) – are central to RNA interferenceRibonuclease: Ribonuclease (commonly abbreviated RNase) is a type of nuclease that catalyzes the degradationof RNA into smaller components.siRNA: Small interfering RNA (siRNA), sometimes known as short interfering RNA or silencing RNA, is aclass of double-stranded RNA molecules, 20-25 nucleotides in length, that play a variety of roles in biology.Viral vector: Viral vectors are a tool commonly used by molecular biologists to deliver genetic material intocells. This process can be performed inside a living organism (in vivo) or in cell culture (in vitro). Viruses haveevolved specialized molecular mechanisms to efficiently transport their genomes inside the cells they infect 41 | P a g e
  42. 42. Analyst: Marcel Wijma MScMarcel Wijma, Chief Research Officer and managing partner, has a longstanding history in financial biotech research.After selling Van Leeuwenhoeck Research (VLR) to SNS Securities in 2006, he established an award winning analystteam in biotech/life sciences at SNS Securities. In 2009, Marcel was awarded by Financial Times/Starmine as beingone of the Top-3 biotech analysts in Europe. Later that year, Marcel purchased VLR from SNS Securities after whichthe company was reconstituted. At VLR, he leads the professional VLR research organisation, which is augmented byselected external financial researchers with a specialisation in Life Sciences. Mr. Wijma has a Masters degree inFinancial Economics from Erasmus University in Rotterdam.DisclaimerThe facts stated and the opinion and prognoses given in this publication are based on data and information consideredto be reliable and have been carefully worked into our analyses and prognoses. However, no guarantee can be given asto their fairness, accuracy or completeness. Van Leeuwenhoeck Research B.V. does not accept responsibility orliability in any way in respect to the information stated herein. Van Leeuwenhoeck Research does not hold or havepositions in securities as referred to in this publication.The views expressed in this publication accurately reflect the analyst’s personal views on the subject securities orissuer. Neither the analyst’s compensation nor the compensation received by Van Leeuwenhoeck Research is in anyway related to the specific recommendations or views contained in this publication.Any investments referred to herein may involve significant risk, are not necessarily available in all jurisdictions, maybe illiquid and may not be suitable for all investors. The value of, or income from, any investments referred to hereinmay fluctuate and/or be affected by changes in exchange rates. Past performances are not indicative for future results.Investors should make their own investment decisions without relying on this publication.Only investors with sufficient knowledge and experience in financial matters to evaluate the merits and risks shouldconsider an investment in any issuer or market discussed herein and other persons should not take any action on thebasis of this publication.Information, opinions or recommendations contained in this publication are submitted solely for advisory andinformation purposes. The information used and statements of fact made, have been obtained from sources consideredreliable, but we neither guarantee nor represent the completeness or accuracy. Such information and the opinionsexpressed are subject to change without notice. This publication is not intended as an offering or a solicitation of anoffer to buy or sell the securities mentioned or discussed.Van Leeuwenhoeck Research does not accept any equity compensation. Reports are performed on behalf of the public,and are not a service to any company. The analysts are responsible only to the public, and are paid in advance toeliminate pecuniary interests and insure independence.Periodic Research reports and research notes on this Company are available at our web site: www.leeuwenhoeck.com© Copyright 2011 by Van Leeuwenhoeck Institute Inc. 42 | P a g e

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