To successfully develop and launch an asset it’s crucial to identify and define its commercial value early in the process. In the third webinar of the series, we briefly present the background and context of early asset development and focus in on how to successfully assess the right markets for maximizing value. Providing questions that need to be answered and an example case study in which we decide the target market for a “newly developed” NSAID.

1. © CELLO HEALTH
EARLY ASSET DEVELOPMENT
AND COMMERCIALIZATION:
ASSESSING THE MARKET
© CELLO HEALTH

2. © CELLO HEALTH 2
Introduce Cello Health
Discuss Early Asset Development
and Commercialization
Discuss Market Assessment
Questions

3. © CELLO HEALTH 3
INSIGHT
CONSULTING
COMMUNICATIONS
With over 400
professionals world-
wide, Cello Health
brings together three
core capabilities
World class
Market research
Strategic Consulting
Medical and scientific
knowledge
Our fusion of expertise generates the
spark of energy needed to unlock the
potential of your early asset

4. © CELLO HEALTH 4
5,995
6,198
6,416
6,994
7,360
7,406
7,737
9,217
9,605
9,737
9,713
10,452
10,479
11,307
12,300
13,718
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Numberofassets
Total WW R&D pipeline size by year 2001–2016
The number of
assets in
development
continues to
grow each year
Sources: 1. Pharmaprojects,
January 2016 2. Analysis Group
Innovation in the Biopharmaceutical
Pipeline: A Multidimensional View,
January 2013.
»
Reaching over
13,000 for 2016

5. © CELLO HEALTH 5
Source: EvaluatePhrma, World
Preview 2015, Outlook to 2020,
PhRMA 2016 profile
Not surprisingly,
the majority of
assets are in early
development
6,061
1,666
2,151
808
169
107
1,140
55
6,861
1,856
2,261
954
197
102
1,273
70
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Preclinical Phase I Phase II Phase III Pre-Reg Registered Launched Suspended
Numberofassets
2015 2016

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Scientific
difference
Patient /
clinical
need
Commercial
relevance
3
Variables
The sources of
value

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How do you
realize the value
from the asset?
Know your limitations
▪ Financially
▪ Operationally
Manage value actively
Understand the source of value
▪ scientific
▪ clinical
▪ commercial

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What is the level of unmet need?
1
Realizing the
commercial value
Assessing the
market, indication,
disease What is the overall epidemiology?
2
What are the diagnosis rates?
3
What are the treatment rates?
4
What is the addressable population?
5
What is the competitor intensity?
6
In order to assess the
best market for an asset
the following questions
need to be answered:

10. © CELLO HEALTH 10
Neurology
4. Sciatica
5. Disc Herniation
6. Cervical Radiculopathy
Immunology
1. Rheumatoid arthritis
2. Osteoarthritis
3. Ankylosing Spondylitis
Musculoskeletal
7. Spinal Stenosis
8. Fibromyalgia
9. Carpal Tunnel Syndrome
Chronic Pain
What diseases
are targets for the
asset?
* Example only, not comprehensive

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CompetitiveDensity
Patient PopulationLow
High
Disease / Market Map
Low
High
What is the
potential market
for the disease?
7
4
5
9
6
8
1
3
2

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NSAIDs have all recently been cited as having
dangerous side effects when used long-term, therefore
making the market prime for safer products
• The prevalence of osteoarthritis (OA) is over 5 and 15 times larger than the prevalence of rheumatoid arthritis (RA) and
ankylosing spondylitis (AS) respectively
• Annual growth rates for OA and RA are fairly similar at almost 1.9% while the growth rate of AS is much lower at around
0.1%
• Potential other indications outside of RA, OA, and AS were utilized in additional scenario analyses
Indication Trends
• The NSAID market is highly genericized with almost no branded products still on the market, providing numerous low
cost options for pain relief and inflammation control for millions of patients. In 2012, over 109 million NSAID
prescriptions were written in the US.
• Despite widespread utilization across multiple indications, existing NSAIDs carry significant safety risks that have
been highlighted and re-emphasized by the FDA in 2015. These risks are linked to dosage and amount of time an
individual takes NSAIDs and include increased risk of heart attack, stroke, and the potential for life threatening
gastrointestinal bleeding.
• OA, RA, and AS patients have historically been significant users of high doses of NSAIDs leading them to be at a
high risk for the potentially disruptive or dangerous side effects, indicating a high unmet need for safer NSAID options
NSAID Market Trends
Unmet Need

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0
500
1,000
1,500
2,000
2,500
3,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
ForecastedPopulation
(Thousands)
Rheumatoid Arthritis: Diagnosed Prevalence
• The prevalence of osteoarthritis is over 5 and 15 times
larger than the prevalence of rheumatoid arthritis and
ankylosing spondylitis respectively
• Growth rates for osteoarthritis and rheumatoid arthritis
are fairly similar at almost 1.9% while the growth rate
of ankylosing spondylitis is much lower at 0.09%
Trends
0
500
1,000
1,500
2,000
2,500
3,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
ForecastedPopulation
(Thousands)
Ankylosing Spondylitis: Diagnosed Prevalence
0
4,000
8,000
12,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
ForecastedPopulation
(Thousands)
Osteoarthritis: Diagnosed Prevalence
CAGR: 0.09%
Sources: 1. "Rheumatoid Arthritis Global Drug Forecast and Market Analysis to 2023.". GlobalData. Date Accessed: Mar. 2016. 2. Cisternas MG. "Result
Filters." National Center for Biotechnology Information. U.S. National Library of Medicine, 28 Aug. 2015. Date Accessed: 26 Apr. 2016. 3. “GlobalData Osteoarthritis
EpiCast Model". GlobalData. Date Accessed: Mar. 2016. 4. “GlobalData Ankylosing Spondylitis EpiCast Model.". GlobalData. Date Accessed: Mar. 2016. 5. Dean,
LE. "Global Prevalence of Ankylosing Spondylitis." National Library of Medicine. Pubmed, Apr. 2014. Date Accessed: Mar. 2016.
Epidemiology
All three indications show positive growth rates for diagnosed populations
however OA and RA appear to be growing at a faster rate than AS.

14. © CELLO HEALTH 14
54%
59%
38%
0% 20% 40% 60% 80% 100%
Rheumatoid Arthritis - All
RA - Rheumatologists
RA - Orthopedists
RA - PCPs
Osteoarthritis - All
OA - Rheumatologists
OA - Orthopedists
OA - PCPs
Ankylosing Spondylitis - All
AS - Rheumatologists
SpecialtyandIndication
Average share of patients receiving prescription oral NSAIDs by specialty
and indication
NSAID Utilization
Average total
prescribed oral
NSAID utilization

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23%
54%
24%
78%
Rheumatoid
Arthritis
17%
59%
24%
84%
Osteoarthritis
16%
38%
46%
84%
Ankylosing
Spondylitis
Key
Non-NSAID Treated Patients
NSAID Treated Patients
NSAID Treated Patients –
Oral Prescriptions
NSAID Treated Patients –
Non-oral or Non-Prescription
Indication RA OA AS
Indication Population (2016) 1.7 M 9.5 M 0.6 M
Estimated Treatment Rate of Prescribed
Oral NSAIDs
54% 59% 38%
Oral Rx NSAID Treated Population (2016) 910 K 5,500 K 230 K
Treatment Rates

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Variable Definition
Indication Diagnosed Prevalent
Population
Total diagnosed patients within each indication
Growth Rate The forecasted growth rate of the diagnosed prevalent patient pool
Indication Specific NSAID
Treated Rate
The portion of the diagnosed prevalent patient pool of any included indication that receives
any prescribed oral NSAID (of any formulation)
Total Patient Populations
The total number of patients that fall into one of three categories: 1) Newly diagnosed and
treatment naïve patients, 2) NSAID treated patients and 3) Non-NSAID treated patients
Product Specific Treatment
Naïve Patient Start Rate
The portion of newly diagnosed patients specific to each indication that physicians would
consider starting treatment with the forecasted product
Product Specific NSAID treated
Patient Switch Rate
The portion of diagnosed patients specific to each indication that are already treated with a
prescribed oral NSAID, but physicians would switch onto the forecasted product
Product Specific Non-NSAID
treated Patient Start Rate
The portion of diagnosed patients specific to each indication that are already treated for their
indication, although not with an NSAID, that a physician would start on the forecasted product
Total Patients Per Year
The combined total of the three patient groups: newly diagnosed, NSAID-treated, and non-
NSAID-treated
Diagnosis and
Treatment Flow

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Variable
Indication Diagnosed
Prevalent Population
Growth Rate
Indication Specific NSAID
Treated Rate
Total Patient Populations
Product Specific Treatment
Naïve Patient Start Rate
Product Specific NSAID-
treated Patient Switch Rate
Product Specific Non-NSAID-
treated Patient Start Rate
Total Patients Per Year
5%
59%
1,166,000
Ankylosing
Spondylitis
724 K
Rheumatoid
Arthritis
1870 K
Osteoarthritis
9,860 K
4,072 K
Non-NSAID Treated Patients
183K
Newly Diagnosed Patients
5,817 K
NSAID Treated Patients
Note: Procedure is directional and not comprehensive of all steps,
1.86%
Addressable
Patient Population
18%
16%

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Top Selling Products in 2016 (USD m)
Product Name Company Mechanism of Action
2016 WW Sales
(USD m)
Celebrex / Celecox (celecoxib) Pfizer COX2 inhibitor 1,168
Cymbalta (duloxetine
hydrochloride DR)
Eli Lilly Serotonin and norepinephrine reuptake inhibitor 1,105
Voltaren (diclofenac sodium) Novartis COX1 and COX2 inhibitor 626
Arcoxia (etoricoxib) Merck COX2 inhibitor 450
Loxonin (loxoprofen) Daiichi Sankyo COX1 and COX2 inhibitor 330
Pennsaid (diclofenac sodium) Horizon COX1 and COX2 inhibitor 304
Duexis (ibuprofen + famotidine) Horizon
COX1 and COX2 inhibitor + Histamine H2
antagonist
174
Vimovo (esomeprazole
magnesium + naproxen)
AstraZeneca /
Horizon
COX1 and COX2 inhibitor + Potassium
Transporting ATPase Alpha Chain 1 inhibitor
121
Source: 1. Global Data, accessed April 2017
Competitive
Density: Marketed
Products

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Late Stage Pipeline
Product Name Company Phase MOA Geography
triamcinolone acetonid sodium
phosphate SR (FX-006)
Zilretta Pre-Reg Glucocorticoid Receptor Agonist US
amlodipine besylate + celecoxib
(KIT 302)
Kitov Pharma III
COX2 inhibitor, voltage dependent L
Type Ca Channel blocker
Global
Ampion Ampio Pharma III Pro-inflammatory cytokine suppressor Global
fasinumab Regeneron III Beta NGF or NGF inhibitor Global
tanezumab Pfizer III Beta NGF or NGF inhibitor EU, Japan, US
zoledronic acid
Axsome
Therapeutics
III
Farnesyl Pyrophosphate Synthase
Inhibitor
US
21
5
23
5 1
0
5
10
15
20
25
Preclinical Phase I Phase II Phase III Pre-Registration
No.ofPipelineProducts
Future Landscape
Source: 1. Global Data, accessed April 2017
Competitive
Density: Pipeline
Overview

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Key
Factor Osteoarthritis
Rheumatoid
Arthritis
Ankylosing
Spondylitis
Unmet Need
Diagnosis rates
Treatment rates
Addressable Patient
Population
Current Competitive Intensity
Future Competitive Intensity
Lowest Highest
How do we
evaluate potential
markets?

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CompetitiveDensity
Patient PopulationLow
High
Disease / Market Map
Low
High
*Size of circle
equals CAGR
What is the best
potential market
for the disease?
2
6
5
3 1
7
4
8
9

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Launch
Value has to be
managed across
the early asset
development
process
▪ Does this asset fit a gap
in our portfolio?
▪ Can this asset be
developed for success?
▪ What is the value
proposition?
▪ What is the proof of
concept?
▪ What is the market
opportunity?
▪ What are the
commercial endpoints?
▪ What are the clinical
endpoints?
▪ Does the market
understand the value
proposition?
▪ Have the clinical and
commercial endpoints
been met?
▪ Epidemiology Models
▪ High Level Forecast
▪ Value Proposition
▪ Target Product Profile
▪ Epidemiology Models
▪ High Level Forecast
▪ Proof of Concept
▪ Value proposition
▪ Commercial Endpoints
▪ Forecast and Valuation
▪ Investment Strategy
▪ Market Assessment
▪ Payor Acceptance
▪ Target Product Profile
▪ Competitive Positioning
▪ Forecast and Valuation
▪ Launch Readiness
▪ Go to Market Plan
▪ Pricing Strategy
▪ Unmet Need
▪ Early Economic Models
▪ Clinical Endpoints
▪ Burden of Disease
▪ Clinical Endpoints
▪ Early Economic Models
▪ Patient Need
▪ Clinical/PRO Endpoints
▪ Core Economic Model
▪ KOL Engagement
▪ Evidence Gap Analysis
▪ Target Product Profile
▪ Disease Awareness
▪ HEOR Evidence
▪ Stakeholder Mapping
▪ Market Models
▪ Patient Segmentation
Asset
Identification or
Acquisition
Phase I Phase IIA and IIB Phase III
Key value
questions
Commercial
Clinical

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Passion and Profit
Product and Market