Edison Healthcare Insight - Baystreet.ca...head at Broadfin Capital and as a senior analyst at Mehta Partners. He is a CFA charter holder. Hans joined Edison’s healthcare team in

Edison Healthcare Insight

March 2016

Published by Edison Investment Research

The Edison healthcare team www.edisongroup.com

Christian Glennie Lala Gregorek

Christian joined Edison’s healthcare team in January 2012 and has 11 years’ experience covering the global biotech/pharmaceutical sector as an analyst and a journalist. He came to Edison having held senior analyst and editorial roles at EvaluatePharma and EP Vantage. Christian also has prior experience as a marketing analyst at Zeneca Agrochemicals.

Lala joined Edison’s healthcare team in January 2010 from Canaccord Adams, where the focus of her coverage as a life sciences analyst was on UK and European biotech stocks. Before graduating with an M.Phil in bioscience enterprise from Cambridge University, she worked in risk management as a credit analyst covering European financial institutions and hedge funds at Dresdner Kleinwort and Lehman Brothers.

Pooya Hemami Dr John Savin

Pooya is a licensed optometrist with over five years of experience in life sciences equity research. Prior to joining Edison, he covered the Canadian healthcare sector as a research analyst at Desjardins Capital Markets. He holds a doctor of optometry degree from the University of Montreal, and an MBA (finance concentration) from McGill University. He received his CFA charter in 2011.

John is an analyst working on biotech, pharma, medical device and diagnostics companies. As founder CEO of Physiomics, he devised the strategy, raised funds and took the company to AIM in 2004. At Greig Middleton, John was director in charge of the pharma and biotech analyst team and worked with corporate finance on fund-raising, IPOs and corporate restructuring. He has an industry background in sales and marketing with GE Healthcare and AstraZeneca and is a co-author on a number of scientific publications.

Maxim Jacobs Hans Bostrom

Max joined Edison’s healthcare team in December 2014. Prior to this he worked as a senior analyst at Guidepoint Global. Max has also previously worked as a senior analyst at Ridgemark Capital, a sector head at Broadfin Capital and as a senior analyst at Mehta Partners. He is a CFA charter holder.

Hans joined Edison’s healthcare team in April 2014. He has 16 years’ experience as a medtech analyst on the sell-side (Goldman Sachs, BNP Paribas and Handelsbanken) and two years on the buy-side (Moneta Asset Management) as a general analyst. During 2005-10, Hans was ranked number two in the annual Institutional Investor Survey in the European medical technologies and services sectors.

Dr George Magrath Dr Dennis Hulme

George joined Edison’s healthcare team in early 2015. He has eight years’ experience in seed and venture funding and holds an MD and an MBA. Subsequently, George pursued additional training in surgery, ophthalmology and ophthalmic oncology. He still practices ophthalmology in addition to his research work with Edison.

Dennis joined Edison in December 2014. Prior to this he worked as an analyst at BBY Stockbrokers and as a research scientist at CSIRO. Dennis was ranked number two healthcare stock picker in the 2010 Starmine Analyst Awards and has a PhD in veterinary sciences.

Susie Jana Katherine Genis

Susie joined the team in September 2015 and has 16 years’ experience in the healthcare sector. She is a qualified medical doctor, having studied medicine at UCL. She also holds an intercalated BSc in psychology. After a few years working as a junior doctor in the NHS, Susie joined the investment banking industry for six years on the sell-side covering biotechnology stocks, then mid- to large-cap pharmaceuticals at Société Générale. Most recently she worked as a buy-side analyst, covering European biotech, pharma and medtech stocks at F&C Investments for five years.

Katherine has over 15 years’ experience in equities. She worked as an analyst at BNP Paribas and ING in London covering pharma and healthcare. In 2006, she was ranked among the top 20 sell-side analysts globally by Bloomberg Markets magazine. Katherine also worked as an IR director for the former Applera, where she established the Europe IR programme for its two publicly-listed US companies, Applied Biosystems and Celera. Katherine has an MBA from Boston University and is a CFA.

Dr Charlotte Hetzel Jonas Peciulis

Charlotte joined Edison’s healthcare team in April 2014 having previously worked as a pharmaceuticals sell-side analyst at Lehman Brothers for 10 years, covering large- and mid-cap European pharmaceutical and biotechnology stocks. Before that she worked as a consultant on sales strategies to the pharma industry. Charlotte holds a biology degree and a doctorate from Imperial College London.

Jonas joined Edison in November 2015. He is a qualified medical doctor with several years of clinical practice. He then moved into equity research as a healthcare analyst at Norne Securities, focused on Norwegian companies, and received two StarMine awards for stock picking in 2013. Most recently, he worked for a London-based life sciences venture capital company before completing his MBA degree.

Linda Pomeroy Daniel Wilkinson

Linda joined Edison in early 2016. She has co-founded an orthopaedic company, worked for a number of years as a consultant on various NHS projects, and previously worked at Numis Securities as a life sciences analyst. Linda has a PhD from Imperial College Business School and an MPhil in bioscience enterprise from the University of Cambridge.

Daniel joined Edison’s Healthcare team in January 2016. He spent four years at Imperial College London, where he undertook both a Master’s in Chemical Biology of Health & Disease and a PhD in Biosensors and Biotechnology in Diabetes. Before this he worked at eTect, a spin-out company from the University of Leeds that was focused on biosensor technology. He is currently studying for the Investment Management Certificate (IMC).

Beth Senko Dr Nathaniel Calloway

Beth Senko joined Edison’s healthcare team in early 2015. She has 20 years’ experience covering the healthcare sector as both a buy- and sell-side analyst, including senior analyst roles at Morgan Stanley, Lehman Brothers and ABN AMRO. During her career she has been named twice in the Wall Street Journal’s Best on the Street survey and Institutional Investor named her Best Up-and-Comer in their first survey of young analysts. Beth graduated from Rice University with a degree in materials science and is a chartered financial analyst.

Nathaniel Calloway joined the healthcare team in December 2015. Before Edison, he performed healthcare investment research for a fund at Bishop Rosen and for Wainscott Capital Partners. Prior to his role as an analyst he performed molecular neuroscience research at Cornell Medical School and holds a PhD in chemistry from Cornell. He has published eight scientific papers on topics ranging from physical chemistry to immunology, and he has been recognised as an American Heart Association fellow and an American Chemical Society Medicinal Chemistry fellow.

Contents

Upcoming newsflow 2

Performance tables 3

Company coverage 46

Prices at 18 March 2016 Published 24 March 2016

Welcome to the March edition of the Edison Healthcare Insight. In this edition we have profiled 77 of our healthcare companies under coverage.

We have recently initiated coverage on Oryzon Genomics.

Readers wishing more detail should visit our website, where reports are freely available for download (www.edisongroup.com). All profit and earnings figures shown are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to close to 500 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison is a registered investment adviser regulated by the state of New York.

We welcome any comments/suggestions our readers may have.

Lala Gregorek & Maxim Jacobs

Healthcare Research

http://www.edisongroup.com/

https://register.fca.org.uk/ShPo_FirmDetailsPage?id=001b000000MfYL6AAN

mailto:[email protected]

Edison Healthcare Insight | 24 March 2016 2

Upcoming newsflow

Exhibit 1: Upcoming conferences Start Date End Date Conference Location Mar-16 29 March 2016 31 March 2016 World Vaccine Congress 2016 Washington D.C. 29 March 2016 04 April 2016 HiMSS 2016 Las Vegas, NV Apr-16 02 April 2016 04 April 2016 American College of Cardiology (ACC) 65th Annual Scientific Session & Expo Chicago, IL 04 April 2016 05 April 2016 Boston Biotech Conferences - Cancer Advance Boston Boston, MA 04 April 2016 06 April 2016 BIO-Europe Spring 2016 Stockholm, Sweden 07 April 2016 Credit Suisse 8th Annual Therapeutics Day New York, NY 15 April 2016 21 April 2016 American Academy of Neurology (AAN) 68th Annual Meeting Vancouver, Canada 16 April 2016 20 April 2016 American Association for Cancer Research (AACR) Annual Meeting New Orleans, LA May-16 01 May 2016 05 May 2016 Association for Research in Vision and Opthalmology (ARVO) Annual Meeting Seattle, WA 04 May 2016 05 May 2016 Deutsche Bank Annual Health Care Conference Boston, MA 10 May 2016 11 May 2016 BioEquity Europe Copenhagen, Denmark 10 May 2016 12 May 2016 Bank of America 2016 Health Care Conference Las Vegas, NV 11 May 2016 14 May 2016 American Pain Society (APS) 35th Annual Scientific Meeting Austin, TX 15 May 2016 Oppenheimer 17th Annual Israeli Conference Tel Aviv, Israel 23 May 2016 25 May 2016 UBS Global Healthcare Conference New York, NY 31 May 2016 01 June 2016 Boston Biotech Conferences - Boston CEO Conference Boston, MA Jun-16 01 June 2016 Boston Biotech Conferences - Boston CEO Conference Boston, MA 03 June 2016 2nd Annual Sachs Immuno-Oncology: BD&L and Investment Forum Chicago, IL 03 June 2016 07 June 2016 American Society of Clinical Oncology (ASCO) Annual Meeting Chicago, IL 06 June 2016 09 June 2016 BIO International Convention San Francisco, CA 07 June 2016 10 June 2016 Jefferies 2016 Healthcare Conference New York, NY 10 June 2016 14 June 2016 American Diabetes Association (ADA) - 76th Scientific Sessions New Orleans, LA 14 June 2016 16 June 2016 William Blair 36th Annual Growth Stock Conference Chicago, IL Source: Edison Investment Research


Performance tables

Exhibit 2: Risers and fallers, biotechnology subsector Ticker Company Exchange Currency Share price Market cap (US$) 12-month

performance (%) BTH1V FH Equity Biotie Therapies Corp Helsinki EUR 0.29 350.27 57 VLA AU Equity Viralytics Limited ASE AUD 0.64 114.14 51 TIG BB Equity TiGenix EN Brussels EUR 1.00 224.91 49 AGY LN Equity Allergy Therapeutics London GBP 26.38 218.44 32 PRR AU Equity Prima BioMed Ltd ASE AUD 0.04 65.08 31 PBD NA Equity Probiodrug AG EN Amsterdam EUR 24.45 203.11 27 RGS AU Equity Regeneus ASE AUD 0.18 27.47 17 IMU AU Equity Imugene ASE AUD 0.01 11.72 12 PHO NO Equity Photocure Oslo NOK 36.00 90.95 8 ALNEV FP Equity Neovacs EN Paris EUR 1.15 41.15 7 VSC GY Equity 4SC Xetra EUR 4.10 86.80 -2 RENE LN Equity ReNeuron Group London GBP 3.38 150.48 -4 PTX AU Equity Prescient Therapeutics ASE AUD 0.08 5.85 -8 MF6 GY Equity MagForce Xetra EUR 5.10 145.86 -8 CYAD BB Equity Celyad EN Brussels EUR 40.20 417.91 -11 NANO FP Equity Nanobiotix EN Paris EUR 17.15 298.29 -13 ERYP FP Equity Erytech Pharma SA EN Paris EUR 24.76 219.21 -13 ATHX US Equity Athersys NASDAQ CM USD 2.62 219.35 -19 ATNM US Equity Actinium Pharmaceuticals NYSE MKT LLC USD 2.16 95.95 -23 NWRN SW Equity Newron Pharmaceuticals SIX Swiss Ex CHF 22.70 330.69 -27 ACHN US Equity Achillion Pharmaceuticals NASDAQ GS USD 7.26 992.01 -31 BAVA DC Equity Bavarian Nordic A/S Copenhagen DKK 247.50 1040.03 -33 MSB AU Equity Mesoblast Limited ASE AUD 2.56 733.80 -34 NRT AU Equity Novogen ASE AUD 0.13 40.37 -37 MOR GY Equity MorphoSys Xetra EUR 41.03 1215.36 -42 GTCL FP Equity Genticel EN Paris EUR 4.00 69.39 -43 PHM SM Equity PharmaMar Soc.Bol SIBE EUR 2.35 581.62 -43 MDG1 GY Equity Medigene Xetra EUR 7.50 164.80 -44 ONXEO FP Equity Onxeo EN Paris EUR 3.15 142.58 -47 BLRX US Equity BioLineRx NASDAQ CM USD 1.18 64.93 -48 ALHYG FP Equity Hybrigenics EN Paris EUR 0.89 35.54 -49 OXB LN Equity Oxford BioMedica London GBP 6.19 236.12 -50 MGN GY Equity Mologen AG Xetra EUR 3.81 96.25 -51 OPXA US Equity Opexa Therapeutics NASDAQ CM USD 2.16 15.09 -56 TNG FP Equity Transgene EN Paris EUR 2.72 117.03 -58 ETX LN Equity e-Therapeutics London GBP 15.38 57.38 -61 BIONOR NO Equity Bionor Pharma ASA Oslo NOK 0.78 30.80 -65 RXII US Equity RXi Pharmaceuticals NASDAQ CM USD 0.28 17.97 -69 CERU US Equity Cerulean NASDAQ GM USD 2.71 74.16 -73 ALXA US Equity Alexza Pharmaceuticals NASDAQ CM USD 0.56 12.20 -74 STEM US Equity StemCells NASDAQ CM USD 0.25 28.16 -76 THLD US Equity Threshold Pharmaceuticals NASDAQ CM USD 0.45 32.39 -90 RLMD US Equity Relmada Therapeutics OTC US USD 1.41 16.92 -90 AMBS US Equity Amarantus BioScience OTC US USD 0.06 1.86 -99 ALXA US Equity Alexza Pharmaceuticals NASDAQ CM USD 0.50 10.87 -77 RXII US Equity RXi Pharmaceuticals NASDAQ CM USD 0.28 18.17 -77 THLD US Equity Threshold Pharmaceuticals NASDAQ CM USD 0.50 35.76 -89 RLMD US Equity Relmada Therapeutics OTC US USD 1.38 16.56 -90 OREX US Equity Orexigen Therapeutics NASDAQ GS USD 0.57 83.42 -92 AMBS US Equity Amarantus BioScience OTC US USD 0.09 2.66 -99 Source: Edison Investment Research


Exhibit 3: Risers and fallers, medTech subsector Ticker Company Exchange Currency Share price Market cap (US$) 12-month

performance (%) LSIC LN Equity Lifeline Scientific inc London GBP 228.00 62.84 69 CSRT LN Equity Consort Medical London GBP 1068.00 740.54 27 TRX LN Equity Tissue Regenix London GBP 20.50 219.92 20 ODX LN Equity Omega Diagnostics Group London GBP 15.25 23.40 11 PIX FP Equity Pixium Vision EN Paris EUR 7.57 107.65 11 SBS GY Equity Stratec Biomedical Xetra EUR 43.50 575.52 -3 AGL LN Equity Angle London GBP 76.00 63.26 -3 VNRX US Equity VolitionRx NYSE MKT LLC USD 3.77 85.35 -10 PEB NZ Equity Pacific Edge NZX NZD 0.63 158.89 -10 AAQ GY Equity aap Implantate AG Xetra EUR 1.64 56.27 -40 ALCAR FP Equity CARMAT EN Paris EUR 33.92 162.18 -51 EHP LN Equity Epistem London GBP 95.00 14.16 -61 NXTMH FH Equity Nexstim FN Finland EUR 1.17 10.46 -80 Source: Edison Investment Research

Exhibit 4: Risers and fallers, specialty pharma subsector Ticker Company Exchange Currency Share price Market cap (US$) 12-month

performance (%) HCM LN Equity Hutchison China Meditech Ltd London GBP 1905.00 1620.73 45 SKP LN Equity Skyepharma London GBP 445.75 659.36 39 UDG LN Equity UDG Healthcare London GBP 584.00 2027.83 22 DPH LN Equity Dechra Pharmaceuticals London GBP 1215.00 1589.07 19 VER LN Equity Vernalis London GBP 53.50 336.09 16 CLIN LN Equity Clinigen Group London GBP 602.50 974.16 11 GWP LN Equity GW Pharmaceuticals London GBP 473.50 1755.61 -8 PA8 GY Equity Paion Xetra EUR 2.17 122.65 -8 BTG LN Equity BTG London GBP 626.00 3383.43 -17 4582 JT Equity SymBio Pharmaceuticals Tokyo JPY 209.00 60.20 -33 ORX SS Equity Orexo AB Stockholm SEK 55.75 232.22 -56 MTPH LN Equity Midatech London GBP 135.50 64.00 -57 TNXP US Equity Tonix Pharmaceuticals NASDAQ GM USD 2.38 44.92 -64 OREX US Equity Orexigen Therapeutics NASDAQ GS USD 0.55 80.74 -92 Source: Edison Investment Research

Exhibit 5: Risers and fallers, research services subsector Ticker Company Exchange Currency Share price Market cap (US$) 12-month

performance (%) SLV PW Equity Selvita Warsaw PLN 21.90 75.03 25 C4XD LN Equity C4X Discovery London GBP 99.00 45.40 22 IXI LN Equity Ixico London GBP 39.75 14.84 12 EVT GY Equity Evotec Xetra EUR 3.20 473.42 -19 ABZA LN Equity Abzena London GBP 50.00 96.12 -39 LIO1 GY Equity Sygnis Xetra EUR 1.86 34.89 -40 Source: Edison Investment Research

Exhibit 6: Risers and fallers, investment company subsector Ticker Company Exchange Currency Share price Market cap in US$ 12-month performance (%) IVO LN Equity Imperial Innovations London GBP 397.63 889.25 -17 PDLI US Equity PDL BioPharma NASDAQ GS USD 3.10 509.29 -53 Source: Edison Investment Research


Exhibit 7: Risers and fallers over the last 30 days Ticker Company Exchange Currency Share price Market cap (US$m) 30-day performance

(%) Subsector

RGS AU Equity Regeneus ASE AUD 0.18 27.47 113 Biotechnology ALXA US Equity Alexza Pharmaceuticals NASDAQ CM USD 0.56 12.20 95 Biotechnology THLD US Equity Threshold Pharmaceuticals NASDAQ CM USD 0.45 32.39 93 Biotechnology GWP LN Equity GW Pharmaceuticals London GBP 473.50 1755.61 85 Specialty

pharma PIX FP Equity Pixium Vision EN Paris EUR 7.57 107.65 59 MedTech NXTMH FH Equity

Nexstim FN Finland EUR 1.17 10.46 -79 MedTech

OREX US Equity Orexigen Therapeutics NASDAQ GS USD 0.55 80.74 -64 Specialty pharma

AMBS US Equity Amarantus BioScience OTC US USD 0.06 1.86 -44 Biotechnology STEM US Equity StemCells NASDAQ CM USD 0.25 28.16 -24 Biotechnology MTPH LN Equity Midatech London GBP 135.50 64.00 -21 Specialty

pharma Source: Edison Investment Research

Exhibit 8: Risers and fallers over the last 90 days Ticker Company Exchange Currency Share

price Market cap

(US$m) 90-day performance

(%) Subsector

ATHX US Equity Athersys NASDAQ CM USD 2.62 219.35 152 Biotechnology RGS AU Equity Regeneus ASE AUD 0.18 27.47 82 Biotechnology BTH1V FH Equity Biotie Therapies Corp Helsinki EUR 0.29 350.27 80 Biotechnology MSB AU Equity Mesoblast Limited ASE AUD 2.56 733.80 48 Biotechnology TRX LN Equity Tissue Regenix London GBP 20.50 219.92 36 MedTech AMBS US Equity Amarantus BioScience OTC US USD 0.06 1.86 -89 Biotechnology NXTMH FH Equity Nexstim FN Finland EUR 1.17 10.46 -82 MedTech OREX US Equity Orexigen Therapeutics NASDAQ GS USD 0.55 80.74 -70 Specialty

pharma TNXP US Equity Tonix Pharmaceuticals NASDAQ GM USD 2.38 44.92 -67 Specialty

pharma BIONOR NO Equity

Bionor Pharma ASA Oslo NOK 0.78 30.80 -57 Biotechnology

Source: Edison Investment Research

Exhibit 9: Risers and fallers over the last 12 months Ticker Company Exchange Currency Share price Market cap

(US$m) 12-month performance

(%) Subsector

LSIC LN Equity Lifeline Scientific inc London GBP 228.00 62.84 69 MedTech BTH1V FH Equity Biotie Therapies Corp Helsinki EUR 0.29 350.27 57 Biotechnology VLA AU Equity Viralytics Limited ASE AUD 0.64 114.14 51 Biotechnology TIG BB Equity TiGenix EN Brussels EUR 1.00 224.91 49 Biotechnology HCM LN Equity Hutchison China

Meditech Ltd London GBP 1905.00 1620.73 45 Specialty

pharma AMBS US Equity Amarantus BioScience OTC US USD 0.06 1.86 -99 Biotechnology OREX US Equity Orexigen Therapeutics NASDAQ

GS USD 0.55 80.74 -92 Specialty

pharma RLMD US Equity Relmada Therapeutics OTC US USD 1.41 16.92 -90 Biotechnology THLD US Equity Threshold

Pharmaceuticals NASDAQ CM

USD 0.45 32.39 -90 Biotechnology

NXTMH FH Equity Nexstim FN Finland EUR 1.17 10.46 -80 MedTech Source: Edison Investment Research


Company profiles

Prices at 18 March 2016

US$/£ exchange rate: 0.7058

€/£ exchange rate: 0.7901

C$/£ exchange rate: 0.5214

A$/£ exchange rate: 0.5354

NZ$/£ exchange rate: 0.4743

SEK/£ exchange rate: 0.0855

DKK/£ exchange rate: 0.1060

NOK/£ exchange rate: 0.0836

JPY/£ exchange rate: 0.0063

NIS/£ exchange rate: 0.1836

CHF/£ exchange rate: 0.7243

Sector: Pharma & healthcare

Price: €3.60Market cap: €68mForecast net cash (€m) 20.0Forecast gearing ratio (%) N/AMarket FRAShare price graph (€)

Company description4SC is a Munich-based cancer R&Dcompany. Epigenetic compoundresminostat (HDAC inhibitor) is thelead candidate for CTCL (Phase IIplanned in H116) and partnered withYakult Honsha and Menarini. Partnersfor two Phase I assets are sought.

Price performance% 1m 3m 12mActual 15.6 1.4 7.8Relative* 9.9 8.1 29.2* % Relative to local indexAnalystLinda Pomeroy

4SC (VSC)

INVESTMENT SUMMARY

4SC is focused on initiating a potentially pivotal 150-patient Phase II study in Europe withepigenetic compound resminostat (HDAC inhibitor) for cutaneous T-cell lymphoma (CTCL).The trial is due to start mid-2016 with initial data expected by end-2018. Resminostat hasbeen licensed to Yakult Honsha (Japan) and Menarini (rest of Asia-Pacific), regions thataccount for 75% of liver cancer cases. Yakult is accelerating the development ofresminostat in Japan, with Phase II studies ongoing for liver cancer and NSCLC (dataexpected in 2016) and a Phase I study for pancreatic/biliary tract cancer also underway.Partners are also being sought for 4SC's Phase I assets: 4SC-202 (epigenetic HDAC/LSD1inhibitor) in haematological and solid cancers, and 4SC-205 (oral Eg5 inhibitor) in solidtumours. 4SC held €25.8m in cash at Q315, following a €29m equity issue (7.25m shares at€4.00) in July.

INDUSTRY OUTLOOK

Resminostat could become the first HDAC inhibitor to gain EU approval for CTCL (vs fourHDACs approved in the US). CTCL has been validated as a target indication for HDACs,with vorinostat (Merck & Co) and romidepsin (Celgene) FDA-approved on Phase II data.

Y/E Dec Revenue EBITDA PBT EPS P/E P/CF(€m) (€m) (€m) (c) (x) (x)

2013 4.9 (7.8) (8.0) (79.58) N/A N/A

2014 7.1 (8.3) (8.8) (87.62) N/A N/A

2015e 5.0 (10.1) (10.7) (73.15) N/A N/A

2016e 6.8 (10.1) (10.2) (53.64) N/A N/A


Price: €1.30Market cap: €40mForecast net debt (€m) N/AForecast gearing ratio (%) N/AMarket XetraShare price graph (€)

Company descriptionaap Implantate is a German medtechcompany, focused on developing,manufacturing and selling products forbone fractures. These include therecently launched LOQTEQ traumaplating system, in addition to bonecements.

Price performance% 1m 3m 12mActual 2.5 (3.8) (53.0)Relative* (2.5) 2.6 (43.7)* % Relative to local indexAnalystLinda Pomeroy

aap Implantate AG (AAQ)

INVESTMENT SUMMARY

aap is focused on its trauma business, having divested its Biomaterials (bone cements)business for €36m in March 2016. The international roll-out of the LOQTEQ trauma plates isthe key driver. It operates largely through a distribution network and global medtechpartnerships (eg Zimmer and Smith & Nephew). In FY15, group revenues declined by 6% to€28.7m, reflecting a stable development in Biomaterials (+2%), while Trauma (-10%) washeld back mainly due to emerging market volatility and only minor US sales of LOQTEQ(-17%) so far.

INDUSTRY OUTLOOK

Loqteq improves fracture repair by providing more stable fixation, even in weak bones ormulti-fragment fractures. The market for locking plate technology is estimated at up to $1bnin the US alone and is dominated by DePuy Synthes (J&J). Loqteq could offer a number ofadvantages over the nearest competitor, including increased surgeon flexibility and potentialclinical advantages upon plate removal.


2014 30.6 2.3 0.7 0.91 142.9 N/A

2015 28.7 0.4 (1.5) (6.27) N/A 14.7

2016e N/A N/A N/A N/A N/A N/A


7Edison Healthcare Insight | 24 March 2016


Price: 50.0pMarket cap: £68mForecast net cash (£m) 13.0Forecast gearing ratio (%) N/AMarket AIMShare price graph (p)

Company descriptionAbzena offers services/technologies todevelop better biopharmaceuticals.Antitope, PolyTherics, PacificGMP andTCRS are the main business units.

Price performance% 1m 3m 12mActual 2.0 (21.3) (39.2)Relative* (1.8) (22.5) (33.0)* % Relative to local indexAnalystLinda Pomeroy

Abzena (ABZA)

INVESTMENT SUMMARY

Abzena offers fully integrated research and manufacturing services/technologies that enableits customers to develop safer and more effective biological products; via Antitope(immunogenicity assessment and protein/antibody engineering), Polytherics(bioconjugation), PacificGMP (biomanufacturing) and TCRS (chemistry/conjugation).Fee-for-services provides stable revenues today (FY15 £5.7m), while successfulcommercialisation of products created using Abzena’s technologies offers the prospect ofsubstantial future revenues (small % royalties); 11 such products are now in the clinic, egGilead’s GS-5745 (Phase III for gastric cancer), simtuzumab (Phase II for NASH and PSC)and Roche's SDP015. Also, ADC linker technology (ThioBridge) has recently been validatedby a licensing deal with a publicly-listed US biotech company for up to three such ADCproducts. PacificGMP (£4.5m) and TCRS (£10m) acquisitions enable a fully integratedoffering and a recent £20m equity issue supports the required investment across the group.

INDUSTRY OUTLOOK

The biological services industry is highly competitive but Abzena's deepening portfolio oftechnologies and services is compelling, while its ADC technology offers safety and efficacyadvantages over competitors.

Y/E Mar Revenue EBITDA PBT EPS P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2014 5.3 (3.1) (3.4) N/A N/A N/A

2015 5.7 (4.5) (4.7) (5.89) N/A N/A

2016e 9.1 (6.3) (7.2) (5.36) N/A N/A

2017e 16.5 (1.8) (3.5) (2.19) N/A N/A


Price: US$7.26Market cap: US$992mForecast net cash (US$m) 458.0Forecast gearing ratio (%) N/AMarket NASDAQShare price graph (US$)

Company descriptionAchillion Pharmaceuticals is abiopharmaceutical company engagedin discovery and development oftreatments for chronic hepatitis C virus(HCV). Its key drug candidates includeACH-3422, ACH-3102, ACH-2684 andsovaprevir.

Price performance% 1m 3m 12mActual 13.3 (26.0) (36.6)Relative* 6.0 (27.6) (35.0)* % Relative to local indexAnalystKatherine Genis

Achillion Pharmaceuticals (ACHN)

INVESTMENT SUMMARY

Achillion, with partner Janssen, is the only company with candidates in three classes ofHCV, and well placed to develop an oral, once-a-day, single pill treatment more competitivethan leader Harvoni. The company is undergoing a Phase IIa study by Janssen to evaluatethe combination of AL-335, Odalasvir (ACH-3102), and Simeprevir in genotype 1 HCV.Achillion is well funded to progress its oral factor-D programme in rare diseases, such asPNH and myasthenia gravis, as well as in larger market opportunities including dry AMD. InFebruary, the company initiated a Phase I study with its factor-D candidate, ACH-4471,evaluating ascending doses for safety, tolerability, pharmacokinetics andpharmacodynamics - results are expected in Q316. A Phase II is planned in PNH in Q315with results by year end.

INDUSTRY OUTLOOK

More than 150m people are infected with HCV worldwide. Treatment has been transformedin recent years by the approval of Sovaldi (sofosbuvir) and Gilead's combination product;recent pressure from key healthcare groups has led to a drop in HCV prices.

Y/E Dec Revenue EBITDA PBT EPS P/E P/CF(US$m) (US$m) (US$m) (c) (x) (x)

2013 0.0 (53.2) (53.0) (56.4) N/A N/A

2014 0.0 (61.7) (61.7) (62.8) N/A N/A

2015e 0.0 (58.9) (52.7) (43.5) N/A N/A

2016e 0.0 (59.7) (48.0) (35.3) N/A N/A



Price: US$2.04Market cap: US$91mForecast net cash (US$m) 9.4Forecast gearing ratio (%) N/AMarket NYSE MKTShare price graph (US$)

Company descriptionActinium Pharmaceuticals developsdrugs for the treatment of variouscancers. Actimab-A is in Phase I/IIclinical trials for AML. Iomab-B is usedfor myeloconditioning forhematopoietic stem celltransplantation.

Price performance% 1m 3m 12mActual (7.3) (10.1) (31.3)Relative* (13.2) (12.1) (29.6)* % Relative to local indexAnalystMaxim Jacobs

Actinium Pharmaceuticals (ATNM)

INVESTMENT SUMMARY

Actinium Pharmaceuticals is actively developing its portfolio of radio-labelled antibodies totreat various cancers. Its lead product, Iomab-B, is poised to start the pivotal Phase III trialfor use as a conditioning agent before hematopoietic stem cell therapy (HSCT, bonemarrow transplantation) in refractory/relapsing acute myeloid leukaemia (AML). Actimab-Ais completing the Phase I element of a Phase I/II trial in older patients with newly diagnosedAML and recently reported a 29% complete remission rate in the three highest dose cohortsat the American Society of Hematology (ASH).

INDUSTRY OUTLOOK

Actinium Pharmaceuticals' targeted radiation therapies (both alpha- and beta-particlebased) offer the potential of highly selective tumour cell killing with low damage to thesurrounding normal tissue and limited side effects. The company aims to combine the drugdelivery capabilities of antibodies with the cell-killing effect of radiation.


2012 0.0 (7.9) (9.0) (757.7) N/A N/A

2013 0.0 (6.6) (6.6) (47.3) N/A N/A

2014e 0.0 (20.0) (20.0) (88.7) N/A N/A

2015e 0.0 (19.8) (19.8) (58.4) N/A N/A


Price: US$0.50Market cap: US$10mForecast net debt (US$m) 67.9Forecast gearing ratio (%) 85.0Market NASDAQShare price graph (US$)

Company descriptionAlexza develops products for the acutetreatment of CNS disorders using itsproprietary Staccato rapid inhalationdrug delivery system. Adasuve isapproved (US and EU) for the acutetreatment of agitation in patients withschizophrenia or bipolar I disorder.

Price performance% 1m 3m 12mActual 68.4 (44.4) (76.6)Relative* 57.5 (45.6) (76.1)* % Relative to local indexAnalystPooya Hemami

Alexza Pharmaceuticals (ALXA)

INVESTMENT SUMMARY

Alexza's investment case rests on the prospects for Adasuve (Staccato loxapine), as well asfurther opportunities from new product candidates that apply the validated Staccato platformfor rapid drug delivery. Approved for acute agitation in adults with schizophrenia or bipolardisorder, Adasuve was launched in 20 countries in the EU and Latin America by Ferrer, andAlexza recently regained US rights from Teva. Adasuve offers speed, dosing reliability andease of administration advantages vs established anti-agitation treatments. AZ-002(Staccato alprazolam) is also undergoing a Phase IIa study for acute repetitive seizures,and positive interim data were released in late 2015.

INDUSTRY OUTLOOK

Alexza has been undergoing a strategic review since fall 2015, and on 26 February itannounced that it had entered into a letter of intent with Ferrer, who has made anon-binding offer to acquire Alexza. This process can potentially lead to near-term valuegeneration above Alexza's current market valuation.


2013 47.8 5.1 (10.0) (60.16) N/A N/A

2014 5.6 (34.1) (45.1) (253.85) N/A N/A

2015e 6.4 (34.9) (45.4) (223.89) N/A N/A

2016e 9.3 (28.3) (42.1) (190.32) N/A N/A




Company descriptionAllergy Therapeutics is a fullyintegrated speciality pharmaceuticalcompany focused on preventing andtreating allergy with allergyimmunotherapy (allergy vaccines).

Price performance% 1m 3m 12mActual 2.4 (15.5) 23.1Relative* (1.4) (16.8) 35.7* % Relative to local indexAnalystLala Gregorek

Allergy Therapeutics (AGY)

INVESTMENT SUMMARY

November’s £11.5m gross equity issue (41m new shares at 28p) provided funding forpipeline development and expansion into new market segments eg perennial vaccines.AGY's focus is on US PQ Grass pivotal studies data by 2018), Acarovac Quattro (housedust mites) Phase I ahead of named patient launch in Spain for 2017, and newly-licensedVLP technology in Polyvac Peanut. The convenience of the ultra-short course AIT and USphysician preference for subcutaneous immunotherapy (SCIT) could lead PQ to gain a largeshare of the c $2bn AIT market, as potentially the first licensed seasonal SCIT. Interimsreported 12% revenue growth (at constant currency) with revenues of £31.5m (H115:£28.2m), driven by increased market share in all major European markets (vs flat to lowmarket growth) and the Alerpharma acquisition (June 2015). Euro weakening had anegative €2.5m impact on reported revenues (£29.0m, 3% growth).

INDUSTRY OUTLOOK

Pollinex Quattro (c 50% of revenue) is an ultra short-course AIT, given as four shots overthree weeks, with comparable efficacy to existing vaccines (typically requiring 16-50injections under specialist supervision pre-hayfever season). The US AIT market ispotentially large, but still undeveloped (first AIT tablets launched in H114).

Y/E Jun Revenue EBITDA PBT EPS P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2014 42.0 2.7 1.5 0.29 91.7 46.9

2015 43.2 2.2 1.1 0.10 266.0 58.5

2016e 45.2 (7.8) (8.6) (1.69) N/A N/A




Company descriptionAngle is a pure-play specialistdiagnostics company. The proprietaryParsortix cell separation platform canbe used to detect and harvest veryrare cells from a blood sample,including circulating tumour cells.

Price performance% 1m 3m 12mActual 23.7 3.7 (7.5)Relative* 19.1 2.1 1.9* % Relative to local indexAnalystJonas Peciulis

Angle (AGL)

INVESTMENT SUMMARY

Angle's proprietary Parsortix cell separation platform can be used to detect and harvestcirculating tumour cells (CTCs) from blood. On 21 March Angle has announced results froma prostate cancer research study carried out by its KOL partner Barts Cancer Institute (BCI).The final data are yet to be published, but headline results indicate that Parsortix canpotentially perform as well as or better than current standard of care in terms of detectingearly-stage prostate cancer and assessing its severity, and can do so with a simple bloodtest, whereas current standard of care requires invasive biopsy. In December the companyannounced its first sales of Parsortix for research use, a significant milestone incommercialising Parsortix. Other important recent developments include Angle’s decision toseek FDA approval for Parsortix in breast cancer and further positive key opinion leader(KOL) evaluations of Parsortix with a third peer-reviewed article accepted for publication.

INDUSTRY OUTLOOK

The precision medicine approach is a key initiative aiming to improve treatment efficacy andoutcomes by tailoring the treatment to the patient and their disease. CTCs provideinformation about the individual’s cancer, which can be used for prognostic, diagnostic andtreatment stratification purposes.

Y/E Apr Revenue EBITDA PBT EPS P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2014 0.0 (2.0) (2.0) (2.39) N/A N/A

2015 0.0 (3.5) (3.6) (7.50) N/A N/A

2016e 0.3 (5.1) (5.2) (8.50) N/A N/A

2017e 2.2 (3.1) (3.2) (5.12) N/A N/A




Company descriptionAthersys is a US biotech companydeveloping MultiStem (allogeneic,bone marrow-derived stem cells). APhase II trial with MultiStem inischaemic stroke is complete, whilefurther studies in AMI (Phase II) andARDS (Phase IIa) are planned.

Price performance% 1m 3m 12mActual 43.8 135.9 (21.4)Relative* 34.5 130.9 (19.4)* % Relative to local indexAnalystMaxim Jacobs

Athersys (ATHX)

INVESTMENT SUMMARY

Athersys is developing MultiStem, an allogeneic, bone marrow-derived stem cell product.Results from a 140-patient Phase II study in ischaemic stroke revealed a potential benefitwhen dosed <36 hours post stroke (vs 3-5 hours with tPA), although the primary/secondaryendpoints were not met on an intent-to-treat basis. Athersys is assessing next developmentsteps and recently signed a partnership agreeement with Healios in Japan for stroke andother indications. A Phase II trial with MultiStem in acute myocardial infarction is underwaywith data expected in H216, and a Phase IIa study for acute respiratory distress syndrome(ARDS) will be initiated soon.

INDUSTRY OUTLOOK

MultiStem is an allogeneic (off-the-shelf) product that allows it to be used in both acute andchronic treatment settings, and holds potential to be used across a range of indications.Regenerative medicine is gaining traction and recognition by global regulators (egaccelerated approval pathway in Japan).


2014 1.6 (29.3) (28.9) (0.37) N/A N/A

2015 11.7 (18.4) (18.0) (0.22) N/A N/A

2016e 2.7 (28.3) (27.9) (0.33) N/A N/A

2017e 1.0 (30.8) (30.5) (0.36) N/A N/A



Company descriptionBased in Seattle, WA, Atossa Geneticsis focused on the development oflocally administered pharmaceuticalsfor the treatment of pre-cancer andearly-stage breast cancer. Leadcandidate afimoxigene topical gel isexpected to start a Phase II study in2016 in breast hyperplasia or DCIS.

Price performance% 1m 3m 12mActual (29.1) (0.3) (81.7)Relative* (33.7) (2.4) (81.3)* % Relative to local indexAnalystPooya Hemami

Atossa Genetics (ATOS)

INVESTMENT SUMMARY

Atossa is developing afimoxifene topical gel (AfTG), intended to provide transdermalselective estrogen receptor modulation (SERM) to the breast area while reducing theadverse events associated with oral SERM drugs such as tamoxifen. AfTG is beingdeveloped for atypical hyperplasia and potentially cancers of the breast. Atossa is alsoadvancing its proprietary intraductal microcatheter (IDMC) intended to selectively introducedrug to breast ducts, potentially improving drug targeting for chemotherapy. It plans tocombine its IDMC with established cancer drug fulvestrant and recently opened enrolmentfor a 30-patient Phase II study.

INDUSTRY OUTLOOK

Gaining cancer product approval remains challenging, although the regulatory risk forAtossa is somewhat offset by both candidates being paired with an existing approved activepharmaceutical ingredient. For both AfTG and the IDMC-fulvestrant programs, developmentmay also hinge on future FDA guidance on whether the projects can fall under the 505(b)2development pathway, which would reduce the breadth of required clinical data needed tosupport a marketing application.

Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF(US$m) (US$m) (US$m) (c) (x) (x)

2013 0.6 (10.4) (10.8) (69.65) N/A N/A

2014 0.5 (11.9) (12.3) (51.19) N/A N/A

2015e 6.1 (13.4) (13.7) (48.31) N/A N/A

2016e 0.0 (16.5) (16.7) (55.01) N/A N/A



Price: DKK243.00Market cap: DKK6809mForecast net cash (DKKm) 977.0Forecast gearing ratio (%) N/AMarket NASDAQ OMX Mid CapShare price graph (DKK)

Company descriptionBavarian is a Danish biotech focusedon developing and manufacturingnovel cancer immunotherapies andvaccines for infectious diseases. Itslead products are Prostvac (prostatecancer) partnered with BMS andImvamune (smallpox).

Price performance% 1m 3m 12mActual (8.0) (28.5) (28.8)Relative* (11.0) (25.8) (31.4)* % Relative to local indexAnalystLala Gregorek

Bavarian Nordic (BAVA)

INVESTMENT SUMMARY

Bavarian Nordic’s intention to list on NASDAQ is a strategic move to broaden its appeal toUS investors and raise additional funds (c$86m or DKK570m) to accelerate clinicaldevelopment of multi-tumour cancer immunotherapy CV-301 and respiratory syncytial virusvaccine MVA-BN RSV and to expand its manufacturing capacity. As a well-funded revenuegenerating company, it should still appeal to investors despite market headwinds. Whilepricing is to be determined, the likely timing of the proposed IPO represents an attractiveentry point for US investors ahead of a newsflow-rich 2016. Our forecasts are under reviewfollowing FY15 results.

INDUSTRY OUTLOOK

Bavarian Nordic has expertise in both vaccines (with two technology platforms) andmanufacturing (with a multipurpose, approved facility). The pipeline includes two Phase IIIassets (Prostvac and Imvamune) and is largely focused on cancer immunotherapy(Prostvac and CV-301) and infectious diseases (Imvamune/smallpox, RSV and Ebola).

Y/E Dec Revenue EBITDA PBT EPS P/E P/CF(DKKm) (DKKm) (DKKm) (ore) (x) (x)

2013 1213.0 181.0 154.0 38.8 626.3 39.6

2014 1217.0 62.0 110.0 27.3 890.1 18.4

2015e 1036.0 19.0 65.0 21.1 1151.7 224.4

2016e 1299.0 209.0 159.0 52.3 464.6 51.2


Price: US$1.05Market cap: US$58mForecast net debt (NISm) N/AForecast gearing ratio (%) N/AMarket NASDAQ, TASEShare price graph (US$)

Company descriptionBioLineRx is an Israel-based biotechcompany focused on the in-licensingand early development of therapeutics.It has a pipeline with six clinical andfour preclinical candidates for a varietyof indications.


BioLineRx (BLRX)

INVESTMENT SUMMARY

Lead cancer drug BL-8040 is in development for multiple oncology indications. Top linePhase II results are expected in H116 for BL-8040 in AML. A Ph IIa trial in two bone marrowfailure conditions should yield interim results by end 2016. BL-7010 is in development forcoeliac disease with EU classification as a medical device. A Phase II trial will start in 2016and positive results should lead to a significant partnering opportunity (management is alsoevaluating the food supplement pathway). BioLineRx has out-licensed its novel skin lesionproduct to Omega Pharma (Perrigo). Strong positive clinical data would allow launch in2016 and BioLineRx’s first royalty revenue. BioLineRx also has strategic collaborations withtwo big pharma companies: Novartis (9% shareholder) to co-develop selected Israeliprogrammes, and US Merck to support a Ph II study of BL-8040 starting in H116 withpembrolizumab in pancreatic cancer.

INDUSTRY OUTLOOK

BioLineRx was founded with the intent to provide development for early-stage assets inIsrael, and holds a strong track record of in-licensing clinical candidates through itsextensive long-term relationships with academic and research centres.

Y/E Dec Revenue EBITDA PBT EPS P/E P/CF(NISm) (NISm) (NISm) (a) (x) (x)

2013 0.0 (57.1) (62.5) (25.9) N/A N/A

2014 0.0 (57.7) (47.5) (11.3) N/A N/A





Price: €0.29Market cap: €314mForecast net debt (€m) N/AForecast gearing ratio (%) N/AMarket OMXShare price graph (€)

Company descriptionBiotie Therapies is a Finnish/USbiotech company focused on CNSdisorders. Selincro for alcoholdependence is partnered withLundbeck and launched in Europe.Parkinson's therapy tozadenant hasentered Phase III; two otherprogrammes are in Phase II studies.

Price performance% 1m 3m 12mActual 1.8 77.8 58.2Relative* (2.0) 83.7 77.2* % Relative to local indexAnalystLala Gregorek

Biotie Therapies (BTH1V)

INVESTMENT SUMMARY

Acorda Therapeutics has made an all-cash offer for Biotie at €0.2946 per share, a 95%premium to the previous close price, valuing Biotie at €321m (ex options). Subject to 90%shareholder acceptance (59% support on announcement), the deal is expected to close inApril 2016. Biotie is conducting a 450-patient pivotal Phase III study of tozadenant (A2aantagonist) in Parkinson's disease (PD), with results expected by end-2017. A Phase IIastudy with SYN120 (dual 5HT6/5HT2a antagonist) in PD patients (n=80) with dementia, anda 41-patient Phase IIa study with BTT-1023 for primary sclerosing cholangitis are ongoing,with top-line data from both programmes expected by end 2016. Biotie receives a steadystream of royalties from alcohol dependence drug Selincro, which is partnered withLundbeck across Europe (€3m in royalties in FY15).

INDUSTRY OUTLOOK

The Phase IIb data for tozadenant are robust and competitive against current and pipelineParkinson's agents. Selincro is a new treatment concept for alcohol dependence, providingan alternative to complete abstinence, often not an attainable goal.


2014 14.9 (8.5) (7.6) N/A N/A N/A

2015 3.7 (29.3) (28.3) N/A N/A N/A




Price: 629.0pMarket cap: £2409mForecast net cash (£m) 136.6Forecast gearing ratio (%) N/AMarket LSEShare price graph (p)

Company descriptionBTG is a UK-based specialisthealthcare company with a directcommercial presence with itsinterventional medicine portfolio and inUS acute care medicine. It alsoreceives royalties from a number oflicensing agreements.

Price performance% 1m 3m 12mActual 4.3 (3.8) (19.6)Relative* 0.4 (5.2) (11.4)* % Relative to local indexAnalystLala Gregorek

BTG (BTG)

INVESTMENT SUMMARY

BTG is establishing itself as a leader in the growing Interventional Medicine (IM) marketthrough the successful integration of a number of IM acquisitions, combined with strongexecution. The IM portfolio spans oncology, vascular and pulmonary indications, with fivecommercial-stage products, targeting sales of >£1.25bn in 2021. Investment in the IMfranchise is being supported by strong cash flows from the three specialty pharmaceutical(SP) antidote products, and licensing revenues. BTG remains in a strong capital position toconduct bolt-on acquisitions should suitable opportunities arise. Following interim financialresults, BTG continues to expect 2015/16 revenues at constant currency (£1:$1.61) to be inthe lower half of guidance (£410-440m), with double-digit growth driven by the IM business,including integration of the most recent PneumRx acquisition. Full-year results are due on17 May.

INDUSTRY OUTLOOK

BTG's focus is on IM following a number of acquisitions (Biocompatibles, TheraSphere,EKOS and most recently RePneu), which combines medical device and drug technologiesto deliver targeted therapies. The markets are relatively small, but fast-growing.


2014 290.5 74.0 76.6 19.0 33.1 40.3

2015 367.8 71.1 57.4 17.5 35.9 36.9

2016e 437.6 83.4 88.9 21.4 29.4 33.1

2017e 490.5 106.4 106.4 21.4 29.4 36.1




Company descriptionC4X Discovery is a UK business usingits proprietary NMR-based technologyto enable rational drug design, aimedat selecting safer and better drugs in areduced timeframe. An OX1 receptorantagonist is the lead pre-clinicalcandidate.

Price performance% 1m 3m 12mActual (8.8) 10.6 22.2Relative* (12.2) 8.9 34.7* % Relative to local indexAnalystLinda Pomeroy

C4X Discovery Holdings (C4XD)

INVESTMENT SUMMARY

C4X Discovery’s (C4XD) proprietary drug discovery platform allows the accuratemeasurement of molecular shapes in solution, enabling improved and accelerated drugdiscovery. It aims to become a highly efficient and productive discovery R&D engine;currently there are five programmes targeting validated clinical targets, but the plan is torapidly expand this to up to 15 new projects in the next three years. The Orexin programme,a selective OX1 antagonist, is the lead candidate undergoing formal pre-clinical studies,with Phase I anticipated by mid-2017. Net cash of £5.m at 31 January 2016 (£11m raised atIPO in October 2014) should be sufficient to fund operations through to end-FY16.

INDUSTRY OUTLOOK

C4XD's NMR-based technology can be used to solve the 3-D conformations ofbiomolecules in solution, which the company believes will enable data-driven rational designof superior drug candidates, on a significantly faster timescale than conventionaltechniques, which should appeal to the global pharma industry. Existing partnerships(Evotec, AstraZeneca and Takeda) and the Structural Genomics Consortium collaborationprovide external validation of the technology.

Y/E Jul Revenue EBITDA PBT EPS (fd) P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2014 0.6 (1.2) (1.3) N/A N/A N/A

2015 0.3 (3.8) (3.8) (10.75) N/A N/A

2016e 0.5 (4.4) (4.3) (13.95) N/A N/A

2017e 0.7 (5.2) (5.2) (16.87) N/A N/A


Price: €34.80Market cap: €149mForecast net cash (€m) 10.7Forecast gearing ratio (%) N/AMarket Alternext ParisShare price graph (€)

Company descriptionCarmat is developing a biocompatible,artificial heart to satisfy the lack ofdonor hearts available for terminalheart failure patients. The developmentprocess combines the expertise of awide range of technical and medicalexperts.

Price performance% 1m 3m 12mActual 6.3 (17.1) (47.3)Relative* 1.0 (14.3) (40.8)* % Relative to local indexAnalystPooya Hemami

Carmat (ALCAR)

INVESTMENT SUMMARY

As part of the feasibility stage of the CE-mark approval process, Carmat's bioprostheticheart was implanted in the required four patients. Clinical studies could be completed in2016, potentially leading to CE-mark awarding and EU market entry. In the US, Carmat'soptions for attaining regulatory approval include a humanitarian use device (HUD) approvalor a broader pre-market approval (PMA) process, providing an addressable market of up to50,000 US patients. Carmat raised €50m in equity in February 2016, which we estimate canfinance operations for at least two years.

INDUSTRY OUTLOOK

The Carmat artificial heart is being developed as a permanent replacement or destinationtherapy (DT) for chronic heart failure or acute myocardial infarction patients, who do nothave access to a human donor heart. Despite the high worldwide prevalence of heart failure(c 100,000 patients), the shortfall in donor hearts is such that only around 3,800 humanheart transplants were performed in Europe and the US in 2013.


2013 2.9 (15.2) (16.2) (336.5) N/A N/A

2014 0.0 (18.8) (19.8) (403.4) N/A N/A

2015e 0.2 (18.7) (19.8) (368.3) N/A N/A

2016e 1.7 (18.6) (19.0) (332.1) N/A N/A



Price: €41.80Market cap: €389mForecast net cash (€m) 94.8Forecast gearing ratio (%) N/AMarket Euronext BrusselsShare price graph (€)

Company descriptionCelyad is developing C-Cure, anautologous Phase III stem cell therapyfor chronic ischaemic heart disease.An innovative cell cancer CAR T-celltherapy, NKG2D, is in Phase I.

Price performance% 1m 3m 12mActual 23.0 (9.6) (0.2)Relative* 20.3 (3.6) 8.7* % Relative to local indexAnalystDr John Savin

Celyad (CYAD)

INVESTMENT SUMMARY

Management has indicated that the C-Cure cardiac regeneration project (Phase III data inmid-2016) may be fully partnered from 2017. This will enable the main focus to move on toChimeric Antigen Receptor (CAR) T-cell cancer therapies and the associated allogeneicdevelopment. We estimate that 2015 year-end cash was c €107m. Results and US R&Dupdate on 24 March

INDUSTRY OUTLOOK

The Phase III (CHART-1) outcome should be reported by mid-2016, potentially allowing anEMA regulatory filing. A recent paper (Bartunek et al, 2015) discussed the complexCHART-1 endpoint and expected outcomes The part-US Phase III CHART-2 240 patientstudy is now recruiting with results possible from H119. The CAR T-cell Phase I is nowrecruiting the second, three million dose cohort. There have been no safely issues reported.The trial recruits both acute myeloid leukaemia (AML) and multiple myeloma (MM) patients.A solid tumour indication may be added if an efficacy signal is seen.


2013 0.0 (10.8) (12.6) (306.43) N/A N/A

2014 0.1 (18.3) (18.5) (273.51) N/A N/A

2015e 0.0 (30.6) (30.0) (345.79) N/A N/A

2016e 0.0 (38.3) (37.7) (404.90) N/A N/A



Company descriptionCerulean is an oncology company witha proprietary platform using NDCs.Lead product CRLX101 combined withAvastin is in Ph II trials in 3rd- and4th-line RCC and 2nd- and 3rd-lineovarian cancer.


Cerulean Pharma (CERU)

INVESTMENT SUMMARY

Cerulean is a US oncology company developing nanoparticle-drug conjugates(NDCs).Recent positive Phase I/IIa data was reported at the International Congress on TargetAnticancer Therapies for CRLX-301 with docetaxel in solid tumours showing the compoundwas well tolerated with hints of anti-tumour activity, exhibiting a differentiatedpharmacokinetic profile vs docetaxel. Cerulean will announce critical results from arandomized Phase II trial for CRLX101 plus Avastin in metastatic renal cancer in H116following highly encouraging Phase Ib/II efficacy data. In H116 Cerulean will also reportpreliminary Phase 1b results for CRLX101 with weekly paclitaxel in relapsed ovarian cancerwith the GOG Foundation. Positive results from these studies should support growinginvestor confidence in Cerulean’s pipeline and NDC technology. Additionally, a Phase I/IIatrial for the Cerulean-Astra Zeneca-NCI collaboration will commence in the coming months.

INDUSTRY OUTLOOK

CRLX101, with its differentiated mechanism of action, represents a new approach toadvanced RCC patients. Potential for CRLX101 is significant in mRCC, a cancer where~30% of patients experience disease recurrence. There are limited treatment options forthird/fourth-line use and little in development.


2014 0.1 (20.4) (21.4) N/A N/A N/A

2015 0.0 (37.4) (39.6) N/A N/A N/A

2016e 0.0 (40.0) (40.4) N/A N/A N/A

2017e 0.0 (42.3) (42.7) N/A N/A N/A



Price: 1094.0pMarket cap: £537mForecast net debt (£m) N/AForecast gearing ratio (%) N/AMarket LSEShare price graph (p)

Company descriptionConsort is an international medicaldevices business. Having acquiredAesica Pharmaceuticals for £230m in2014, it now consists of Bespak’soperations (inhalation, injection andother drug delivery technologies) andAesica’s CDMO businesses.

Price performance% 1m 3m 12mActual 12.2 3.2 27.6Relative* 8.0 1.6 40.6* % Relative to local indexAnalystLala Gregorek

Consort Medical (CSRT)

INVESTMENT SUMMARY

Consort Medical is a full-service contract development and manufacturing operation(CDMO) that operates across most areas of the pharmaceutical supply chain. Bespak’sstrength in high-margin disposable drug delivery devices is complemented by Aesica’sservices from drug manufacture to finished product packaging. Consort Medical capitaliseson the growing trend for drug majors to outsource more of their non-core activities tospecialist providers, as it addresses more of the development and manufacturing functionswhile also striving to build operational scale.

INDUSTRY OUTLOOK

Management has positioned Consort Medical to generate sustainable revenue and profitgrowth, with the latter targeted at a double-digit rate. Improvements in operating efficiencies,coupled with investment in innovation and development capabilities, has laid the foundationfor establishing a broader range of contract services.

Y/E Apr Revenue EBITDA PBT EPS P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2014 100.0 24.4 17.5 42.3 25.9 20.0

2015 184.8 33.2 22.7 47.8 22.9 20.2





Company descriptionDechra is a global distributor anddeveloper of veterinarypharmaceuticals and diets. Its principaloperations are European and USpharma, and product development,supplying companion animal andfood-producing animal products.


Dechra Pharmaceuticals (DPH)

INVESTMENT SUMMARY

Dechra Pharmaceuticals’ forecast solid growth is underpinned by a sharpened portfoliofocus, new product launches and geographic expansion. The global strategy centres onsustained organic and acquisitive growth: recent transactions include the £139m acquisitionof US companion animal generics business, Putney Inc (expected to complete US antitrustclearance by end-April) and Croatia-based Genera in October 2015. H116 sales showedrevenue growth of 14.9% CER, with strong sales performances in all business units, thephasing of sales in advance of regional price rises and the contribution from newsubsidiaries. Our financial forecasts are under review subject to an evaluation of the aboveacquisitions.

INDUSTRY OUTLOOK

The animal health market is attractive, particularly the companion animal segment. As dogsand cats increasingly become members of the modern family, people in both developed andemerging markets are purchasing a broader range of products to help their pets live longerand healthier lives. Companion animals forms the majority of Dechra Pharmaceuticals’current and prospective revenues.


2014 193.6 45.5 39.9 36.4 32.6 44.3

2015 203.5 47.5 45.1 40.2 29.5 22.2






Company descriptione-Therapeutics is a drug discovery anddevelopment company with aproprietary network pharmacologydiscovery platform and a clinicalpipeline (with potential to beout-licensed post-Phase IIproof-of-concept trials).


e-Therapeutics (ETX)

INVESTMENT SUMMARY

e-Therapeutics is a leader in network pharmacology, an innovative approach to drugdiscovery. Significant progress has been made in the preclinical discovery projects. Initialfocus areas are cancer immunotherapy and therapeutic resistance rescue; formal preclinicaldevelopment is anticipated to begin in H116. Success in these projects would validate thenetwork pharmacology discovery platform and could present significant commercialisationopportunities. Existing clinical assets (ETS6103 as a second-line therapy for depression andcancer drug ETS2101) may also have licensing potential. Deal execution (early-stageout-licensing or discovery collaborations) would unlock valuation upside. e-Therapeutics iswell funded, through to 2019, which encompasses a number of value inflection points. FY16results report on 22 March.

INDUSTRY OUTLOOK

Network pharmacology could potentially revolutionise drug discovery and shorten the pathto market by minimising technical risks and drug development costs. e-Therapeutics is wellpositioned, with limited direct competition and growing industry interest in systemsbiology-based multi-target approaches to drug discovery.

Y/E Jan Revenue EBITDA PBT EPS P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2014 0.0 (6.6) (6.1) (2.0) N/A N/A

2015 0.0 (10.0) (9.7) (2.9) N/A N/A

2016e 0.0 (12.2) (12.0) (3.5) N/A N/A

2017e 0.0 (12.4) (12.2) (3.5) N/A N/A


Price: 95.0pMarket cap: £10mForecast net debt (£m) N/AForecast gearing ratio (%) N/AMarket AIMShare price graph (p)

Company descriptionEpistem has a profitable contractservices business and an emergingclinical biomarker technology. Epistemis preparing to launch Genedrive, itsnovel molecular diagnostic device,initially in the TB market.

Price performance% 1m 3m 12mActual (19.2) (20.8) (61.6)Relative* (22.2) (22.1) (57.7)* % Relative to local indexAnalystDr John Savin

Epistem Holdings (EHP)

INVESTMENT SUMMARY

Epistem planned to start Indian sales of the Genedrive diagnostic PCR system fortuberculosis from November 2015. FY15 income was £4.5m with an operating loss of £4.0mincluding capitalised R&D of £758k. Revenues in Preclinical research were £2.3m, downfrom £2.9m as a US contract ended. Pharmacogenomics had sales of £1.8m, down from£2.4m due to the early termination of a large clinical trial. Diagnostic sales were £0.4mincluding £0.1m from Genedrive. June 2015 cash was £4.9m after net funding from aconvertible bond issue of £4.6m. Our forecasts are under review. David Budd will join as thenew CEO in Mid April

INDUSTRY OUTLOOK

Epistem believes Genedrive (a DNA-based diagnostic point-of-care system) will change theshape of DNA diagnostics, but there is no peer reviewed data. Indian data is anticipated bymanagement from Q116. A French assessment of a research-phase HCV test was positive.A US defence contract on Genedrive is worth £1.5m over 2016.


2013 5.4 (1.2) (1.5) (12.5) N/A N/A

2014 5.8 (1.6) (2.3) (17.4) N/A N/A





Price: €22.27Market cap: €176mForecast net cash (€m) 48.4Forecast gearing ratio (%) N/AMarket NYSE EuronextShare price graph (€)

Company descriptionErytech is a French oncology companywith a red blood cell encapsulationtechnology. Lead product Graspa hassuccessfully completed a Ph III ALLtrial; a Ph IIb in AML is ongoing, inaddition to a Ph II in pancreatic cancer.

Price performance% 1m 3m 12mActual 6.6 (13.3) (22.1)Relative* 1.3 (10.4) (12.5)* % Relative to local indexAnalystJonas Peciulis

Erytech Pharma (ERYP)

INVESTMENT SUMMARY

Erytech's lead product Graspa has been filed in Europe for ALL following positive Phase IIIdata; if approved by YE16 first launches could be in 2017 with EU partner Recordati. In theUS, where ALL development is ongoing, the strategy is evolving, with some protocolamendments potentially accelerating timelines, in addition to the potential for earlier initialapproval in the ultra-orphan indication of ‘double-allergic’ ALL patients. Erytech recentlycompleted a private placement of €22.7m (net), boosting its cash position to €45.6m at endof December. These funds will help to broaden Eryasp's potential and further accelerate USdevelopment. An EU-based Phase IIb AML trial is ongoing and Erytech plans to commencedevelopment in NHL. Graspa/Eryasp could also have use in solid tumours and a Phase IIpancreatic cancer trial is ongoing.

INDUSTRY OUTLOOK

Erytech’s red blood cell (RBC) encapsulation technology captures therapeutic proteinswithin RBCs. This process protects both the molecule from degradation, extending thehalf-life, and the patient from exposure, reducing severe reactions. The increased half-lifeallows smaller quantities of molecule to achieve similar efficacy, thereby improving safety.


2013 1.8 (7.4) (8.2) (174.32) N/A N/A

2014 2.0 (8.7) (9.0) (150.66) N/A N/A

2015e 2.6 (14.9) (14.6) (197.86) N/A N/A

2016e 2.8 (15.4) (14.8) (187.94) N/A N/A



Company descriptionEvotec is a drug discovery businessthat provides outsourcing solutions topharmaceutical companies, includingBayer, Boehringer Ingelheim, Janssenand Roche. It has operations inGermany, the UK and the US.

Price performance% 1m 3m 12mActual (0.7) (22.6) (12.5)Relative* (5.6) (17.5) 4.8* % Relative to local indexAnalystJonas Peciulis

Evotec (EVT)

INVESTMENT SUMMARY

Evotec's business is in a strong position, with 43% revenue growth in 2015. EVT Innovateand EVT Execute should remain the near- to mid-term drivers with prospects furtherunderpinned by the acquisition of Sanofi’s Toulouse facility. These should help drive futurecollaborations and allow the company to maintain double-digit revenue growth in comingyears (>15% guided for 2016 excluding milestones, upfronts and licences). Together with itsFY15 results Evotec has announced a spin-off Topas Therapeutics with a €14m series Afinancing round co-led by three venture capital companies, but Evotec will remain the majorshareholder. Topas has a nanoparticle-based platform with clinical stage projects forimmunological disorders. Also recently new and broadened collaborations have beenexecuted, including in tissue fibrosis with Pfizer, diabetes and immuno-oncology with Sanofi,also in Alzheimer's and Huntington's diseases, broadening and diversifying Evotec'spipeline of opportunities. Note: our estimates do not yet reflect FY15 results.

INDUSTRY OUTLOOK

Evotec is a German healthcare company that provides high-quality drug discovery servicesto the pharmaceutical industry and has collaborations with academic institutions to createnovel drug discovery programmes.


2013 85.9 13.3 5.1 4.0 79.8 54.6

2014 89.5 4.1 (0.7) (2.0) N/A N/A

2015e 129.6 7.2 (1.1) (2.9) N/A 253.0

2016e 161.1 18.4 8.4 5.3 60.2 27.5



Price: €4.11Market cap: €64mForecast net cash (€m) 11.7Forecast gearing ratio (%) N/AMarket Euronext ParisShare price graph (€)

Company descriptionGenticel is developing a therapeuticvaccine, GTL001, to treat early-stageHPV 16 and 18 infections. The PhaseII trial missed the primary endpoint butmore data is due in mid 2016. Amultivalent therapeutic vaccine,GTL002 is in preclinical.

Price performance% 1m 3m 12mActual 3.5 (33.7) (40.3)Relative* (1.6) (31.4) (33.0)* % Relative to local indexAnalystDr John Savin

Genticel (GTCL)

INVESTMENT SUMMARY

Genticel has announced the Phase II results of its GTL001 vaccine to treat early-stagehuman papillomavirus 16 and 18 (HPV 16 and 18) infections. The primary 12-monthendpoint, focused on women with early cervical cellular abnormalities, was not achieved.Positively, in the subgroup of women with normal cytology, a significant clearance rate wasseen. Further clearance data after 18 months are expected by Q316. To save cash,Management has deferred manufacturing of Phase III clinical material for 12 months untilclearer clinical data is available and until the partnering position is resolved. Cash was€21.8m in Dec 2015 giving funding till Q4 2017.

INDUSTRY OUTLOOK

The aim of the Phase II was to gain sufficient data to enable a partnering deal. Genticel isconfident of finding a partner but may need 18-month (Q316) and possibly 24-month data(Q117) to close a deal. A US 20-patient safety Phase I for GTL001 has treated the firstpatient. GTL002 (a multivalent vaccine) could enter trials in 2017.


2014 0.0 (10.7) (10.7) (77.0) N/A N/A

2015 0.1 (11.4) (11.3) (72.6) N/A N/A

2016e 0.0 (8.8) (8.7) (56.1) N/A N/A

2017e 0.0 (6.4) (6.3) (40.5) N/A N/A


Price: 420.8pMarket cap: £1105mForecast net cash (£m) 221.9Forecast gearing ratio (%) N/AMarket AIM, NASDAQShare price graph (p)

Company descriptionGW is a UK-based speciality pharmacompany developing cannabinoidmedicines. Lead pipeline candidateEpidiolex is undergoing Phase III trialsfor childhood epilepsy. Sativex ismarketed by partners in a number ofEU countries for MS spasticity.

Price performance% 1m 3m 12mActual 55.3 12.0 (23.2)Relative* 49.5 10.2 (15.4)* % Relative to local indexAnalystMaxim Jacobs

GW Pharmaceuticals (GWP)

INVESTMENT SUMMARY

GW Pharmaceuticals (GW) is developing an extensive cannabinoid portfolio with potentialto treat a broad range of diseases. The lead pipeline asset is Epidiolex, now undergoing amultiple Phase III clinical study programme for refractory childhood epilepsies; initial top-linePhase III data from their trial in Dravet syndrome was statistically and clinically significantwith a 39% reduction in the number of convulsive seizures (p=0.01). A second trial inDravet is expected in H216. A Phase III trial in Lennox-Gastaut syndrome is due in Q216and a second is due mid-year.

INDUSTRY OUTLOOK

GW is the leading player in cannabinoid medicines. Cannabinoids are diverse chemicalcompounds that GW extracts from cannabis plant varieties (chemotypes) it has bred.Epidiolex has the potential to treat a broad range of treatment-refractory epilepsy conditions,while the portfolio extends to other orphan indication such as TSC epilepsy and NHIE.

Y/E Sep Revenue EBITDA PBT EPS P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2013 27.3 (8.9) (9.7) (2.6) N/A N/A

2014 30.0 (17.0) (18.3) (6.4) N/A N/A

2015e 24.7 (37.2) (38.2) (12.5) N/A N/A

2016e 24.1 (41.1) (42.0) (13.7) N/A N/A



Price: 1860.0pMarket cap: £1052mForecast net cash (US$m) 5.4Forecast gearing ratio (%) N/AMarket AIM, LSEShare price graph (p)

Company descriptionHutchison China MediTech is thehealthcare arm of Hutchison Whampoa(with 30% listed on AIM) thatcapitalises on the economic anddemographic shifts in China with novelhigh-technology therapies, TCM drugs,organic foods and consumer products.

Price performance% 1m 3m 12mActual (13.3) (30.3) 38.3Relative* (16.5) (31.4) 52.4* % Relative to local indexAnalystDr Susie Jana

Hutchison China MediTech (HCM)

INVESTMENT SUMMARY

The next 12-18 months should be the defining period, as Hutchison China MediTechtransitions into a fully-fledged pharmaceutical business. The company has successfullyraised gross proceeds of approximately US$101.25 m via a secondary listing of ADRs onthe Nasdaq exchange. The overall investment case is increasingly centered on innovationplatform (Hutchinson MediPharma), where the broad portfolio of small molecule tyrosinekinase inhibitors for oncology continues to advance. The pipeline is progressing well, withmaterial clinical results due during the coming year, with potential for savolitinib's US NDAsubmission under breakthrough therapy designation by year end. We . Our forecasts arecurrently under review.

INDUSTRY OUTLOOK

Chinese demographics and government support for the healthcare industry will continue todrive demand in the medium term, while the clinical, regulatory and technologicalenvironments are highly conducive to novel drug development. In the longer term, if theoncology pipeline comes to fruition, Hutchison China MediTech has the potential to becomeglobal.


2013 46.0 13.5 11.0 17.0 157.4 345.7

2014 91.8 10.6 7.8 8.7 307.7 121.5

2015e 157.0 14.4 11.3 15.3 174.9 129.1

2016e 186.5 18.4 15.1 18.8 142.4 174.5



Company descriptionHybrigenics is a French biotechcompany. It provides protein-proteinand small molecule analysis servicesand is conducting anti-cancer studieson lead drug inecalcitol, primarily inadult leukaemias.

Price performance% 1m 3m 12mActual (9.3) (9.3) (48.5)Relative* (13.8) (6.2) (42.2)* % Relative to local indexAnalystKatherine Genis

Hybrigenics (ALHYG)

INVESTMENT SUMMARY

Hybrigenics has adopted a development strategy with vitamin D3 derivative inecalcitol, firstfocusing on adult haematological cancers. In addition to chronic lymphocytic leukaemia(CLL) and chronic myeloid leukaemia (CML), Hybrigenics is prioritising acute myeloidleukaemia (AML)given inecalcitol's orphan status in the US and Europe and the scarcity oftreatment options in this aggressive and difficult to treat leukaemia. A Phase II study isplanned to start in France and the US in 2016. Interim Phase II data are expected in Q216in CML. Inecalcitol is supported by strong anti-proliferative potency and excellent safetyprofile demonstrated in the 2014 CLL study. The investment case rests on inecalcitol’spotential to enhance rather than replace approved therapies, particularly in view of theweakened general health of older leukaemia patients who are unable to tolerate therapieswith harmful side effects. Our peak sales estimate is US$727m across the three indications.

INDUSTRY OUTLOOK

Inecalcitol faces competition from existing drugs and those in development. However, agood safety profile could give it an advantage. Preclinical models show that it has additionalpotential in breast cancer. Hybrigenics has a cash-generative subsidiary in protein researchand genomics services.


2013 6.1 (2.1) (2.2) (8.2) N/A N/A

2014 5.9 (3.3) (3.4) (11.1) N/A N/A

2015e 6.6 (4.8) (4.9) (12.5) N/A N/A

2016e 7.1 (7.2) (7.1) (17.4) N/A N/A




Company descriptionImperial Innovations is a technologytransfer, incubation and ventureinvestment company. It invests inventures from Imperial CollegeLondon, Cambridge and OxfordUniversities and UCL. The majority ofits investments are bio/med tech.


Imperial Innovations (IVO)

INVESTMENT SUMMARY

Imperial Innovations (IVO) has an estimated £239m available for investment in its portfolioof rapidly maturing and emerging companies; this follows a recent £100m (£97.5m netestimate) equity raise (23.5m new shares at 425p), added to £91.6m in cash as of 29January and a £50m EIB loan facility. Having invested £60.8m into 30 portfolio companies(including six new) during FY15 (vs £32.8m into 25 companies in FY14), Innovations has sofar invested/committed £41.4m in FY16 (since 1 August 2015) and added six newcompanies to the portfolio. We expect the higher investment rate will continue, which shouldhelp to bring potential valuation inflection points and/or ‘exits’ (IPO/M&A) for a number ofcompanies into view.

INDUSTRY OUTLOOK

The investment case rests on the real value of the portfolio and the success of investmentsin maturing companies. There is potential for significant value creation if 'exits'(IPOs/M&A/license deals) are achieved at valuations in excess of typically modest carryingvalues, which justifies IVO's current share price premium (net portfolio value of £347m as of31 December 2015, vs £327m at 31 July 2015).

Y/E Jul Revenue EBITDA PBT EPS P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2014 3.6 (8.4) (8.3) (8.1) N/A N/A

2015 5.1 (8.2) (7.4) (5.4) N/A N/A

2016e 5.3 (8.7) (8.3) (5.6) N/A N/A

2017e 5.4 (9.2) (9.3) (5.8) N/A N/A


Price: A$0.01Market cap: A$17mForecast net debt (A$m) 0.4Forecast gearing ratio (%) 7.0Market ASXShare price graph (A$)

Company descriptionImugene is an immune oncologycompany developing HER-Vaxx, aproprietary HER2 +ve cancer vaccine.A Ph Ib dose study is planned ingastric cancer starting in mid-2016 witha direct Ph II follow-on study in 68patients.

Price performance% 1m 3m 12mActual 0.0 (9.1) 11.1Relative* (3.7) (10.5) 23.2* % Relative to local indexAnalystDr Dennis Hulme

Imugene (IMU)

INVESTMENT SUMMARY

Imugene has completed manufacture of its strongly immunogenic gastric (stomach) cancertherapeutic vaccine, HER-Vaxx, in preparation for a randomised Phase Ib/II trial in 2016.HER-Vaxx could replicate or improve on the combination of two proven therapeuticantibodies, Herceptin and Perjeta (Roche), a combination that significantly improvessurvival in breast cancer and may do so in gastric cancer. In HER-Vaxx Phase I,management observes that patient antibodies displayed potent anti-tumour activity with animmune response. A new formulation of HER-Vaxx stimulated a 10-fold increase in antibodyresponse in recent animal model testing, while a preclinical study showed that purifiedHER-Vaxx antibodies were almost 3x as potent as Herceptin at inhibiting breast cancer cellgrowth. Cash at 31 December was A$3.7m.

INDUSTRY OUTLOOK

Global gastric cancer incidence is 934,000 cases with few current therapeutic options.Gastric cancer trials are faster to run than in breast cancer as median survival in metastaticgastric cancer is less than 12 months. An 18-patient Phase Ib dose-finding study is plannedfrom H116, followed by a Phase II in 68 patients. HER2 is overexpressed in up to 20% ofgastric cancers.

Y/E Jun Revenue EBITDA PBT EPS P/E P/CF(A$m) (A$m) (A$m) (c) (x) (x)

2015 0.6 (2.0) (2.0) (0.17) N/A N/A

2016 0.8 (2.4) (2.4) (0.15) N/A N/A

2017e 0.8 (2.5) (2.5) (0.14) N/A N/A

2018e 0.9 (2.5) (2.5) (0.15) N/A N/A




Company descriptionIXICO offers medical imagingtechnologies and services to pharmacompanies and healthcare serviceproviders. Its digital technologies aimto improve the diagnosis and treatmentoutcomes of diseases of the brain,notably dementia.


Ixico (IXI)

INVESTMENT SUMMARY

IXICO sells technologies and services aiming to improve diagnosis, assess progression andmeasure treatment outcomes of diseases of the brain. It offers clinical data managementand analysis products and services to pharma companies and healthcare service providers.We expect strong growth mainly driven by the expansion of its clinical trial business intonew indications, new markets and bigger contracts. It is also well placed to capitalise on theburgeoning use of digital technologies in disease management. Using DCF, we value IXICOat £10.7m or 62p/share.

INDUSTRY OUTLOOK

IXICO’s expertise is quantification of disease pathophysiologies, notably in dementia (AD), ahuge addressable market that remains underdeveloped owing to inadequate treatments.IXICO’s technological prowess is endorsed by commercial relationships with nine of the top15 global pharma companies and the award of £4.5m grant funding in the past three years.In November, it announced the £1.5m acquisition of Optimal Medicine, also a specialist inbrain health with a strong position in ADHD and behavioural health. In January, itannounced the award of four global clinical trial contracts with a combined value of £3.0m.

Y/E Jun / Sep Revenue EBITDA PBT EPS P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2013 3.6 0.4 0.5 9.9 3.8 6.0

2014 3.4 (1.5) (1.5) (8.9) N/A N/A

2015e 3.1 (1.6) (1.6) (10.8) N/A N/A

2016e 4.2 (1.2) (1.3) (6.8) N/A N/A



Company descriptionMagForce has a European approvednanotechnology-based therapy to treatbrain cancer. Nanoparticles areinjected into the tumour and activatedby an external magnetic field,producing heat and thermallydestroying or sensitising the tumour.

Price performance% 1m 3m 12mActual 3.6 (9.5) (8.5)Relative* (1.5) (3.5) 9.6* % Relative to local indexAnalystDr Susie Jana

MagForce (MF6)

INVESTMENT SUMMARY

MagForce continues to drive forward its strategy to increase uptake of its NanoThermtherapy for cancer. NanoTherm is approved in Europe for brain cancer and commercialpatients are being treated in Germany. Further revenues are targeted from neighboringcountries and the focus broadened to include primary brain cancers. Six NanoActivators arecurrently installed in Germany. In the US, an IDE for prostate cancer is filed andmanagement is working with the FDA to advance the IDE approval. In parallel, managementis developing the clinical treatment sites. The first clinical treatment site is operational andwill be used in the short-term to provide the required preclinical study data. Note: Ourfinancial forecasts have not been updated post publication of FY14 and H115 results.

INDUSTRY OUTLOOK

MagForce’s NanoTherm therapy has been designed to directly affect tumours from within,while sparing surrounding healthy tissue. Magnetic nanoparticles are directly injected into atumour and are then heated in the presence of an external magnetic field generated byspecialist equipment (NanoActivator). This can destroy or sensitise the tumour for additionaltreatment.


2013 0.0 (6.6) (6.7) (33.7) N/A N/A

2014 0.0 (8.0) (7.9) (32.8) N/A N/A

2015e 3.6 (7.6) (7.5) (29.4) N/A N/A

2016e 6.8 (4.5) (4.6) (18.0) N/A N/A




Company descriptionMedigene is a German biotechcompany with a core business incancer immunotherapy. Dendritic cell(DC) vaccines are in Phase I/II clinicalstudies, while a T-cell receptor (TCR)candidate should enter the clinic in2016.

Price performance% 1m 3m 12mActual 3.9 13.1 19.0Relative* (1.2) 20.5 42.6* % Relative to local indexAnalystLinda Pomeroy

Medigene (MDG1)

INVESTMENT SUMMARY

Medigene is focused on the rapid development of its cancer immunotherapy technologyplatforms: dendritic cell (DC) cancer vaccines, adoptive T-cell therapy (TCR) and T-cellspecific antibodies (TAB). Phase I/II studies are underway with DC vaccines for prostatecancer (investigator-sponsored) and acute myeloid leukaemia (Medigene). For TCRs,Medigene plans to start up to three clinical trials; the first in 2016 (investigator-led), andothers in 2017 and 2018. Investment will also be made in the process development of TCRsaccording to GMP, and preclinical work on TABs. Recent non-core business deals haveproved beneficial for Medigene (transference of EndoTAG(R) to SynCore and sale of itsspin-off Catherex to Amgen) and further strengthens its immune-oncology focus. Medigeneheld €50.8m in cash at Q315, following a €46m equity issue (5.6m shares at €8.30) in July.

INDUSTRY OUTLOOK

Cancer immunotherapy is attracting huge biotech investor interest. Medigene's DC vaccinetechnology is a new generation, with multiple potential efficacy and manufacturing benefitsover the forerunners (e.g. Provenge). The TCR programme has similarities to CAR-Tproducts, but with potentially significant efficacy and safety advantages.


2013 7.6 (8.2) (9.7) (1.01) N/A N/A

2014 13.8 (2.0) (5.3) (0.42) N/A N/A

2015e 7.4 (9.2) (12.2) (0.72) N/A N/A

2016e 8.1 (10.3) (12.8) (0.64) N/A N/A


Price: A$2.70Market cap: A$1030mForecast net cash (US$m) 87.8Forecast gearing ratio (%) N/AMarket ASXShare price graph (A$)

Company descriptionMesoblast is developing adult stem celltherapies based on its proprietary MPCand culture-expanded MSC platforms.It has six late-stage clinical trialsacross four areas.

Price performance% 1m 3m 12mActual 95.7 50.4 (30.2)Relative* 88.5 48.0 (22.7)* % Relative to local indexAnalystKatherine Genis

Mesoblast (MSB)

INVESTMENT SUMMARY

Mesoblast's pipeline continues to mature. The company recently announced impressiveearly results from the first cohort of its Phase II trial of MPC therapy in RA patients refractoryto biologics. The data are comparable to response rates seen with TNF alpha-biologics infirst-line therapy and better than approved JAK inhibitor Xeljanz in comparable biologicrefractory patients. JCR-031 was launched in Japan for acute graft versus host disease(GVHD) in February following approval in September 2015. In September 2015 thecompany announced Phase II trial results for MPC-150-IM, showing greatestcardioprotective effect in patients with advanced heart failure. Clinical data from two phaseIII studies will support regulatory approval; interim analysis of the first trial is anticipated inQ216. An ADR listing November 2015 on Nasdaq, attracting US$68m in gross proceeds,allows a cash runway for the company to end FY17 enabling Mesoblast to deliver potentialvalue inflection points in GvHD, back pain and RA.

INDUSTRY OUTLOOK

Mesoblast is the leading mesenchymal stem cell development company, with two platforms(MPCs, MSCs) and nine clinical candidates in Phase II and III. Alliances with Teva, JCR,Celgene and Lonza underpin the key late-stage programmes.

Y/E Jun Revenue EBITDA PBT EPS (fd) P/E P/CF(US$m) (US$m) (US$m) (c) (x) (x)

2014 25.1 (83.9) (75.5) (23.64) N/A N/A

2015 32.4 (99.0) (94.9) (29.59) N/A N/A

2016e 22.0 (81.0) (76.6) (21.55) N/A N/A

2017e 23.4 (80.4) (77.8) (20.46) N/A N/A



Price: 147.5pMarket cap: £49mForecast net cash (m) 14.7Forecast gearing ratio (%) N/AMarket LSEShare price graph (p)

Company descriptionMidatech Pharma is an ambitiousspeciality pharmaceutical company,founded in 2000. The patented goldnanoparticle technology platform isdeveloping therapeutics for severaldiseases such as diabetes and variouscancers.


Midatech Pharma (MTPH)

INVESTMENT SUMMARY

Midatech is a clinical-stage specialty pharma company. Its two technology platforms offerthe potential to transform the bioavailability of many existing therapeutic agents. The coreplatform is a drug conjugate delivery system based on gold nanoparticles (lead project is thetransbuccal delivery of insulin). The second platform is a sustained release Q chiptechnology; proprietary microspheres can be tailored to deliver a precise release profile fornumerous drugs. An agreement is in place with Ophthotech to explore the use of thetechnology for sustained delivery formulations. Recently the company acquired USoncology care business DARA in an all-share transaction for US$21.0m (£14.0m) andmaximum conditional payments of US$5.7m. Subsequently, in January Midatech enteredinto a deal with UK Emergex Vaccines for the use of Midatech's technology in infectiousdiseases while Bristol Royal hospital selected Midatech for delivery of a treatment for a rarepaediatric brain tumour.

INDUSTRY OUTLOOK

The proprietary platforms develop products that address debilitating conditions withsignificant clinical needs. Applications that target larger market sizes are expected to beout-licensed for development and niche indications likely developed/marketed in-house.

Y/E Dec Revenue EBITDA PBT EPS P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2013 0.1 (4.3) (4.9) N/A N/A N/A

2014 0.2 (7.6) (8.0) N/A N/A N/A

2015e 0.8 (11.3) (11.7) N/A N/A N/A

2016e 7.9 (15.2) (16.5) N/A N/A N/A



Company descriptionMologen is a German biotechcompany developing cancerimmunotherapies. The lead productsare MGN1703 for metastatic colorectalcancer maintenance and SCLC; andMGN1601, an allogeneic renal cancercell vaccine.

Price performance% 1m 3m 12mActual (5.3) (20.3) (19.0)Relative* (9.9) (15.0) (2.9)* % Relative to local indexAnalystDr Susie Jana

Mologen (MGN)

INVESTMENT SUMMARY

Mologen is developing novel immunotherapies for use in the post-chemo maintenancesetting in cancer and for the treatment of infectious diseases. Lead candidatelefitolimod/MGN1703 (TLR9 agonist) is in four clinical trials. IMPALA is a 540-pt pivotalstudy in metastatic colorectal cancer (mCRC) maintenance; full enrolment is expected byend-2016. Recruitment has completed for the 100-patient Phase II trial (IMPULSE) insmall-cell lung cancer (SCLC) and the Phase I TEACH study to treat HIV (the firstnon-cancer study for MGN1703). A 50-60 patient Phase I combination study of MGN1703with Yervoy in solid tumours is now being conducted by MD Anderson. A Phase II trial inrenal cancer with unique cancer vaccine candidate MGN1601 is planned, subject topartner/finance. Cash of €30.5m at end-Q315 should be sufficient to complete recruitmentof IMPALA, and could reach top-line data from IMPULSE.

INDUSTRY OUTLOOK

IMPALA is scheduled to produce headline data by end-2017/early-2018. Final overallsurvival (OS) data from IMPACT (Phase II in mCRC), and initial OS data from IMPULSE(expected H117) may offer fresh financing/partnering opportunities for MGN1703 beforethen.


2013 0.2 (9.8) (9.9) (64.18) N/A N/A

2014 0.0 (17.0) (17.0) (101.46) N/A N/A

2015e 0.0 (19.0) (19.0) (89.79) N/A N/A

2016e 0.0 (21.0) (21.0) (92.99) N/A N/A




Company descriptionMorphoSys is a German biotechnologycompany that uses its proprietaryantibody platforms to produce humanantibodies for therapeutic use across arange of indications for partners and todevelop its own pipeline.

Price performance% 1m 3m 12mActual 7.3 (27.8) (40.0)Relative* 2.1 (23.1) (28.1)* % Relative to local indexAnalystMaxim Jacobs

MorphoSys (MOR)

INVESTMENT SUMMARY

MorphoSys has a broad portfolio with 103 total programmes, 14 of those proprietary,including programmes for MOR208, MOR202 and MOR209. MOR208 is an Fc-enhancedantibody targeting CD19. MorphoSys will begin two Phase II trials of MOR208 in DLBCLand CLL soon, with a pivotal study in DLBCL planned for 2017. MOR202 is an anti-CD38antibody in Phase I/IIa for multiple myeloma. A Phase I/IIa study of MOR202 in combinationwith dexamethasone in relapsed or refractory multiple myeloma patients is nearingcompletion. MOR209, an anti-PSMA/CD3 antibody, is in Phase I trials for prostate cancer.Among the partnered programmes, J&J has now initiated five Phase III studies withguselkumab in psoriasis, a programme with blockbuster potential.

INDUSTRY OUTLOOK

The pharmaceutical industry is out-licensing more drug discovery and developing morebiological products, both trends that should benefit MorphoSys. Also, there is increasingdemand for novel therapies, such as those in MorphoSys's proprietary pipeline.


2013 78.0 18.1 14.0 43.5 96.0 11.3

2014 64.0 (1.8) (1.6) (1.3) N/A N/A

2015e 104.9 23.7 23.7 74.4 56.1 N/A

2016e 48.5 (72.6) (72.3) (188.0) N/A N/A



Company descriptionNanobiotix is a French nanomedicinecompany developing radiotherapyenhancers for the treatment of cancer.Lead product NBTXR3 is in pivotalclinical development in STS in Europeand is partnered with PharmaEngine inAsia-Pacific.

Price performance% 1m 3m 12mActual 4.4 6.6 (18.2)Relative* (0.8) 10.2 (8.2)* % Relative to local indexAnalystJonas Peciulis

Nanobiotix (NANO)

INVESTMENT SUMMARY

On 30 December the FDA approved the investigational new drug application (IND) forNBTXR3 to enter clinical trials for intermediate- and high-risk prostate cancer patients. Aswell as a potentially large new indication, this is Nanobiotix’s first trial to be conducted in theUS. On 5 January the company announced new plans to expand preclinical research intoimmuno-oncology, which is based on sound scientific rationale, in our view. CurrentlyNBTXR3 is being investigated for a total of six indications including STS (Europe/Asia;Phase II/III; in partnership with PharmaEngine), liver cancers (Europe; HCC andmetastases; Phase I/II), head and neck cancers (Europe; Phase I/II) and rectal cancer (pilot,run by PharmaEngine in Asia). 2016 will provide a number of triggers with the milestoneevent being the CE-mark approval in Europe potentially by end 2016. Nanobiotix boosted itscash position with gross proceeds of €21.3m on 11 March.

INDUSTRY OUTLOOK

Radiotherapy is a cornerstone cancer treatment used in around 60% of all cancer patients.NanoXray aims to improve the benefits of current radiotherapy without increasing the risksto surrounding healthy tissue. The purely physical mechanism of action is supported byclinical data that have demonstrated encouraging efficacy with no serious adverse events.


2013 1.6 (7.9) (8.1) (75.5) N/A N/A

2014 2.8 (9.3) (9.5) (74.9) N/A N/A

2015e 3.9 (18.6) (18.3) (129.6) N/A N/A

2016e 7.0 (28.4) (28.6) (201.0) N/A N/A




Company descriptionNeovacs is a French biotech companyfocused on the development of activeimmunotherapies for the treatment oflupus and dermatomyositis. A Phase IIprogramme with IFN-alpha-Kinoid inlupus is underway.

Price performance% 1m 3m 12mActual (1.7) 46.9 11.2Relative* (6.5) 51.9 24.9* % Relative to local indexAnalystDr John Savin

Neovacs (ALNEV)

INVESTMENT SUMMARY

Neovacs's lead project, IFN-alpha-Kinoid is in a Phase II in lupus (SLE) with data due inH117. A Korean partnering deal with CKD Pharmaceutical, could allow a 2018 launch inKorea. The deal is worth €5m of which €1m was upfront in FY15. Positive Phase II data willtrigger the development of a manufacturing operation through an new 70%:30% jointventure (Neostell) with Stellar Biotechnologies. This has €5m grant funding agreed. Dec2015 cash was €6.1m before the CKD payment. Neovacs has €5m of grants and repayableadvances from PIAVE/Bpifrance to be paid over 4 years.

INDUSTRY OUTLOOK

Neovacs has a 160-patient EU and RoW Phase IIb in SLE underway. Nine-month efficacydata is due in H117. A US Phase IIa with 50 patients could start in early 2016, possiblyreporting by Q317. There is a new development programme in dermatomyositis (DM), anorphan skin and muscular condition. Neovacs also plans to evaluate products forimmunotherapy in cancer and Macular Degeneration (MD).


2013 0.0 (7.9) (8.0) (34.8) N/A N/A

2014 0.2 (9.6) (9.8) (34.7) N/A N/A

2015e 0.1 (7.5) (7.6) (22.8) N/A N/A

2016e 0.1 (7.5) (7.6) (19.0) N/A N/A


Price: CHF22.70Market cap: CHF323mForecast net cash (€m) 37.6Forecast gearing ratio (%) N/AMarket Swiss Stock ExchangeShare price graph (CHF)

Company descriptionNewron is an Italian CNS-focusedbiotech. Safinamide/Xadago for PDhas been approved in mid-late PD inEurope and launched in Germany; theUS PDUFA date is 29 Dec 2015.Safinamide is partnered with Zambonand Meiji Seika.


Newron Pharmaceuticals (NWRN)

INVESTMENT SUMMARY

Newron's lead product, Xadago (safinamide) for Parkinson's disease (PD) has beenlaunched in Germany, Italy, Switzerland and Spain and is now generating sales throughcommercial partner Zambon (ex-Japan/Asia). In the US, Xadago's FDA PDUFA decisiondate is 29 March 2016; Zambon has announced a US sub license agreement with US Worldmeds. Newron's nextpipeline asset is sarizotan for Rett syndrome (RS), a genetic neurodevelopmental disorderthat generally affects girls. Newron plans to commence a placebo-controlled Phase II/III trialto investigate breathing disorders associated with RS during Q216, following advice fromregulators, which could potentially support filings. A Phase II study of NW-3509 forschizophrenia as an add-on to antipsychotics has also started; this could be a candidate forout-licensing.

INDUSTRY OUTLOOK

Parkinson's disease is a growing market. Xadago could have a unique position, withonce-a-day dosing and a clean safety profile.


2013 3.5 (7.7) (7.7) (61.59) N/A N/A

2014 1.6 (11.2) (10.7) (79.47) N/A N/A

2015e 3.0 (15.0) (15.1) (110.71) N/A N/A

2016e 4.1 (15.4) (15.0) (105.67) N/A N/A



Price: €1.21Market cap: €10mForecast net debt (€m) N/AForecast gearing ratio (%) N/AMarket NASDAQ OMX First NorthShare price graph (€)

Company descriptionNexstim sells a non-invasive brainstimulation technology (nTMS) used asa diagnostic device for brain surgeryplanning (NBS System). The therapysystem (NBT) failed in Phase III forstroke but has other potentialindications like severe depression.

Price performance% 1m 3m 12mActual (78.8) (81.0) (79.1)Relative* (79.6) (80.4) (76.6)* % Relative to local indexAnalystDr John Savin

Nexstim (NXTMH)

INVESTMENT SUMMARY

Nexstim is focused on improving the precision of brain surgery using non-invasive brainstimulation. The ongoing US-based Phase III trial in stroke failed its second futility analysis,management are considering whether to compete the study. Nexstim raise €5.3m in cash inlate 2015 and is funded till Q3 2016. Forecasts have been suspended whilst managementreevaluates the strategy.

INDUSTRY OUTLOOK

Nexstim has developed a technology platform for diagnosis (NBS) and treatment (NBT) ofvital motor and speech cortices in the brain. While we see NBS as a niche product, NBTfocuses stimulation on targeted locations in the brain. It may have other indications insevere depression (where non-invasive brain stimulation is already accepted), tinnitus,chronic pain and, speculatively, in memory enhancement.


2014 2.2 (7.4) (10.2) N/A N/A N/A

2015 2.5 (10.0) (9.6) N/A N/A N/A




Price: A$0.12Market cap: A$49mForecast net cash (A$m) 33.6Forecast gearing ratio (%) N/AMarket ASXShare price graph (A$)

Company descriptionNovogen's two main drug technologyplatforms are super-benzopyrans andanti-tropomyosins. SBP compoundsshow potent activity against cancerstem cells with potential application indegenerative diseases; ATMS showsynergy with anti-mitotics in cancer.

Price performance% 1m 3m 12mActual 15.0 (8.0) (43.4)Relative* 10.8 (9.5) (37.3)* % Relative to local indexAnalystDr Dennis Hulme

Novogen (NRT)

INVESTMENT SUMMARY

Novogen is developing two groups of anti-cancer compounds that have shown promise inpreclinical studies. Its super-benzopyran drugs, which include Cantrixil and Trilexium, arepotent against cancer stem cells that are resistant to standard chemotherapy drugs, both invitro and in animal models. Its lead anti-tropomyosin dug, Anisina, shows strong synergywith standard-of-care anti-mitotic vinca alkaloid drugs. Anisina has been granted orphandrug designation for neuroblastoma by the US FDA. The company is well-funded withA$37.6m cash at 31 December 2015, and is on track to have Cantrixil in clinical trials inH216 and Anisina in the clinic in 2017. Novogen has strengthened its management teamwith the appointment of Dr James Garner (ex Sanofi) as CEO and John O'Connor asChairman.

INDUSTRY OUTLOOK

Novogen is a biotechnology company listed on the ASX and NASDAQ. Its two main drugtechnology platforms are super-benzopyrans (SBP) and anti-tropomyosins (ATM). SBPcompounds show potent activity against cancer stem cells and also have potentialapplication in degenerative diseases.


2014 0.3 (5.8) (7.6) (4.76) N/A N/A

2015 1.6 (7.6) (8.4) (2.99) N/A N/A

2016e 2.8 (12.0) (10.9) (2.57) N/A N/A

2017e 4.9 (12.2) (11.3) (2.67) N/A N/A




Company descriptionOmega Diagnostics is a UK-Germancompany with an Indian salessubsidiary. It develops and markets invitro diagnostic products for allergy,infectious diseases and foodintolerance. A point-of-care CD4 testfor HIV monitoring and an automatedallergy test system are in development.

Price performance% 1m 3m 12mActual (2.4) (7.6) 7.0Relative* (6.0) (9.0) 17.9* % Relative to local indexAnalystDr John Savin

Omega Diagnostics (ODX)

INVESTMENT SUMMARY

H1 results noted that the Allersys allergy system could launch in spring 2016; there are now37 optimised assays out of 40 targeted for launch. Omega’s Visitect CD4 test to monitor HIVpatients shows a variability related to the ambient temperature; a solution is beingdeveloped. Overall H1 sales were up 8% at £6.2m. Adjusted EPS was higher at 0.6p vs0.5p due to a £135k tax credit.

INDUSTRY OUTLOOK

The Allersys range runs on the iSYS system using modern chemistry and magneticparticles. An initial Spanish trial on 10 allergens went well and further trials in Italy, Germanyand France are planned. Visitect detects the threshold level of CD4+ immune white cells inHIV patients. It is a robust, point-of-care test for use in the field; this has presenteddevelopment challenges given the sophisticated chemistry and materials involved. New fieldtrials are unlikely before H216. An Indian production facility in Pune starts operation in FY17and should lead to sales gains in infectious disease products.


2014 11.6 1.3 1.1 1.2 12.7 9.6

2015 12.1 1.7 1.4 1.3 11.7 13.2

2016e 12.6 1.6 1.2 1.3 11.7 11.9

2017e 13.5 1.9 1.5 1.4 10.9 10.8



Company descriptionOnxeo is focused on orphan cancerand has three late-stage orphanoncology assets it could commercialisealone in Europe (Livatag, Beleodaqand Validive). Royalty-earningBeleodaq is launched in the US, withtwo non-core, partnered, specialtyproducts.

Price performance% 1m 3m 12mActual 3.0 (13.4) (48.8)Relative* (2.1) (10.4) (42.6)* % Relative to local indexAnalystJonas Peciulis

Onxeo (ONXEO)

INVESTMENT SUMMARY

Onxeo announced an acquisition of DNA Therapeutics, a private biotech companydeveloping signal-interfering DNA repair technology and the lead clinical stage compound,DT01, will diversify Onxeo’s R&D pipeline. Discussions with regulatory authorities led to aconclusion that two Phase III studies will be required for Validive in oral mucositis (in H&Ncancer). Onxeo will now focus on partnering this program. A second lead product, Livatag,is in Phase III ReLive and liver cancer data are expected in H117; the 400-patient trial,which began in 2012, is >65% enrolled. Onxeo’s third lead asset, Beleodaq, is alreadylaunched in the US with partner Spectrum for relapsed/refractory peripheral T-celllymphoma (r/r PTCL) generating royalty income for Onxeo. The start of the Phase IIIBeleodaq trial in frontline PTCL is expected in 2016, supported by the recent Phase I datapresented at ASH.

INDUSTRY OUTLOOK

Onxeo's strategy is to commercialise the orphan oncology products alone in Europe,seeking efficiencies across the sales and marketing infrastructure to drive operatingleverage. Livatag could potentially launch by by 2018, followed by Validive and Beleodaq in2019.


2013 1.5 (15.2) (15.3) (74.05) N/A N/A

2014 22.1 (4.5) 0.2 (5.03) N/A N/A

2015e 3.6 (22.1) (21.5) (60.30) N/A N/A

2016e 7.0 (19.6) (19.6) (55.67) N/A N/A



Price: US$2.08Market cap: US$15mForecast net cash (US$m) 11.9Forecast gearing ratio (%) N/AMarket NASDAQ OTCQXShare price graph (US$)

Company descriptionOpexa is developing personalizedT-cell immunotherapy to treat multiplesclerosis (MS) and other autoimmunediseases such as neuromyelitis optica(NMO). Lead candidate Tcelna is inPhase IIb studies for secondaryprogressive MS (SPMS), with dataexpected in Q416.

Price performance% 1m 3m 12mActual 2.0 (31.1) (60.7)Relative* (4.6) (32.6) (59.7)* % Relative to local indexAnalystPooya Hemami

Opexa Therapeutics (OPXA)

INVESTMENT SUMMARY

Opexa’s Tcelna is advancing in Phase IIb studies in secondary progressive MS (SPMS),with data expected in early Q416. Tcelna is a patient-specific (autologous) immunotherapythat aims to suppress myelin-reactive T-cells (MRTCs), and thereby curb autoimmuneresponses against myelin. Following the collection of a patient’s own blood, the T-cells arescreened against predefined self-reacting myelin protein targets. The dominant MRTC linesare isolated and expanded. An attenuated end-product is re-injected into the patient, aimingto generate a feedback response that will suppress the undesired circulating MRTCs.

INDUSTRY OUTLOOK

The firm is fully funded into Q117, and thus through the forecast attainment of Phase II datawhich, if positive, could sharply increase investor and stakeholder interest. Merck KGaA hasan option to in-license Tcelna in MS. Opexa is also developing OPX-212 in neuromyelitisoptica (NMO), a rare autoimmune disorder leading to vision loss and paralysis.


2013 1.3 (11.6) (14.2) (850.45) N/A N/A

2014 1.3 (14.7) (15.1) (432.89) N/A N/A

2015e 2.6 (12.4) (12.7) (216.43) N/A N/A

2016e 26.6 10.6 10.4 141.65 1.5 1.7


Price: US$0.57Market cap: US$83mForecast net debt (US$m) N/AForecast gearing ratio (%) N/AMarket NASDAQ OTCQXShare price graph (US$)

Company descriptionOrexigen is a biopharmaceuticalcompany focusing on obesitytreatments. The company sells its soleproduct, the weight managementtreatment, Contrave in the US throughits partner, Takeda. Contrave waslaunched in the US in October 2014and approved in the EU in March 2015under the trade name Mysimba.Price performance% 1m 3m 12mActual (66.7) (68.7) (92.3)Relative* (68.8) (69.4) (92.1)* % Relative to local indexAnalystKatherine Genis

Orexigen Therapeutics (OREX)

INVESTMENT SUMMARY

Orexigen’s obesity drug, Contrave, is an extended-release oral combination oflong-marketed bupropion (Wellbutrin for depression) and Naltrexone (Revia for addiction).Now the leading branded obesity treatment in the US, Orexigen announced in mid-Marchthe acquisition of US rights to Contrave in the US from partner Takeda. The company nowplan to market Contrave in the US with a new dedicated salesforce of 160 reps. Contrave isapproved under the brand Mysimba in the EU. The company recently announced acollaborative agreement with Valeant in 18 Central and Eastern European countriesincluding 12 in the EU where we can expect first launch by year end. Orexigen has alsosigned a commercialisation agreement with Kwang Dong in South Korea and we anticipatefirst sales by year end upon regulatory approval. Our forecasts for Orexigen are currentlyunder review.

INDUSTRY OUTLOOK

Orexigen is a biopharmaceutical company focusing on obesity treatments. The companysells its sole product, the weight management treatment, Contrave in the US through itspartner, Takeda. Contrave was launched in the US in October 2014 and approved in the EUin March 2015 under the trade name Mysimba.


2014 55.5 (30.7) (37.5) N/A N/A 2.5

2015 24.5 (60.3) (67.3) N/A N/A N/A





Price: SEK58.00Market cap: SEK1998mForecast net debt (SEKm) 310.0Forecast gearing ratio (%) 114.0Market NASDAQ OMX Mid CapShare price graph (SEK)

Company descriptionOrexo is a Swedish speciality pharmacompany, with expertise in drugdelivery/reformulation technologies inparticular sublingual formulations, anda US commercial infrastructure foropioid dependence therapy, Zubsolv.

Price performance% 1m 3m 12mActual 13.7 (5.7) (54.0)Relative* 11.2 (3.6) (48.1)* % Relative to local indexAnalystLala Gregorek

Orexo (ORX)

INVESTMENT SUMMARY

Focus remains on Zubsolv sales (loss of favourable reimbursement status at CVSCaremark has, as expected, eroded its 6.4% market share at end-FY15 by 1%-point todate). However, a 5% price rise, effective February, coupled with a targeted sales effort andstronger marketing message should help drive sales particularly as Zubsolv’sreimbursement position improves. With changes in federal legislation on the cusp ofsignificantly increasing the available market, expanding use of medical-assisted treatmentand increasing prescriber numbers, Zubsolv remains well-positioned. Global expansion witha potential new partner represents further upside. Ex-Zubsolv, Astra Zeneca has exercisedits option to rights to preclinical asset OX-CLI for $5m; Orexo will be eligible for downstreampayments.

INDUSTRY OUTLOOK

The US buprenorphine/naloxone market is worth >$2bn. Opioid dependencediagnosis/treatment rates are low due to social stigma, limited access to therapy in parts ofthe US and affordability. Competition includes Suboxone film (Indivior), Bunavail (BDSI) andsix generic bup/nal tablets.

Y/E Dec Revenue EBITDA PBT EPS P/E P/CF(SEKm) (SEKm) (SEKm) (öre) (x) (x)

2013 429.0 (45.0) (110.0) (360.0) N/A N/A

2014 570.0 (13.0) (53.0) (164.8) N/A N/A

2015e 600.0 (156.0) (191.0) (574.5) N/A N/A

2016e 973.0 (153.0) (180.0) (494.0) N/A N/A


Price: €3.10Market cap: €88mForecast net cash (€m) 4.8Forecast gearing ratio (%) N/AMarket Madrid Stock ExchangeShare price graph (€)

Company descriptionOryzon is a Spanish biotechnologycompany focused on developing novelepigenetic compounds. Leadcompound ORY-1001 is partnered withRoche and is undergoing a Phase I/IIastudy for acute leukaemia. ORY-2001has potential for Alzheimer’s diseaseand has been approved to enter PhaseI.Price performance% 1m 3m 12mActual (9.4) (12.7) N/ARelative* (16.9) (6.3) N/A* % Relative to local indexAnalystJonas Peciulis

Oryzon Genomics (ORY)

INVESTMENT SUMMARY

Oryzon’s core expertise lies in developing small molecule inhibitors for epigenetic targets.The lead product ORY-1001 is a first-in-class inhibitor of lysine specific demethylase 1(LSD1) and currently is in Phase I/IIa for acute leukaemia with the results potentially out byend 2016. Preclinical models showed that LSD1 is a key effector causing arrest in celldifferentiation in subtypes of acute myeloid leukaemia (AML) and that the inhibition of thistarget could potentially lead to an effective treatment. ORY-1001 is partnered with Roche,which can take over further development after the end of the ongoing Phase I/IIa. Oryzon’ssecond product, ORY-2001, targets Alzheimer’s disease (AD) and has been approved toenter a Phase I trial in 2016. ORY-2001 has a dual activity, inhibiting LSD1 and monoamineoxidase B (MAO B) with preclinical data indicating a potential disease-modifying effect.

INDUSTRY OUTLOOK

Epigenetics is relatively young field in terms of drug development and HDACs were amongthe first epigenetic therapeutics brought to market, which although effective, but suffer dueto side effects. Oryzon is among the leading clinical stage drug developers with a secondgeneration of epigenetic therapeutics, which have greater selectivity and are expected toshow favorable safety/efficacy profile.


2014 15.5 11.7 11.3 48.32 6.4 6.0

2015 7.2 0.7 (0.1) (0.58) N/A 70.6

2016e 2.8 (3.0) (2.8) (10.00) N/A N/A

2017e 2.1 (3.8) (3.7) (12.87) N/A N/A




Company descriptionOxford BioMedica is a leader ingene-based therapy. The LentiVectortechnology is wide ranging andunderpins much of the developmentpipeline, notably the ophthalmologyprojects, and increasingly themanufacturing capabilities.


Oxford BioMedica (OXB)

INVESTMENT SUMMARY

Oxford BioMedica’s near-term outlook has been transformed by its specialist productioncapabilities. The expansion of the manufacturing capacity for Novartis’s CTL019/CART-019clinical development programme is ongoing; this contract is important, not onlycommercially, but in validating the company’s expertise. The company is also progressingits proprietary gene and cell therapy based development pipeline, with a number of potentialvalue inflection points expected over the medium term. With Novartis indicating a mid-2017launch for CTL019, Oxford should start earning royalties and substantial manufacturing fees(up to $76m over three years). In the longer term, additional collaborations for the late-stageprojects, licence income from the patent estate and pipeline progress can be expected.Phase I/II studies for OXB-102 for Parkinson's disease and OXB-202 for corneal graftrejection could start mid 2016 and end 2016/early 2017 respectively.

INDUSTRY OUTLOOK

Cell- and gene-therapy is the focus of much industry attention as it can dramatically alter theoutcomes of many diseases. The proprietary lentivector platform is a flexible and efficientsystem that is particularly promising in many indications, where a single administrationcould safely provide a sustained (or even permanent) effect.


2013 5.4 (11.8) (12.4) (0.76) N/A N/A

2014 13.6 (9.5) (10.4) (0.41) N/A N/A

2015e 15.1 (9.7) (10.6) (0.34) N/A N/A

2016e 24.0 (6.3) (8.3) (0.25) N/A N/A


Price: NZ$0.57Market cap: NZ$215mForecast net cash (NZ$m) 26.9Forecast gearing ratio (%) N/AMarket NZSXShare price graph (NZ$)

Company descriptionPacific Edge develops and sellsmolecular diagnostic tests based onbiomarkers for the early detection andmanagement of cancer. CxbladderDetect is sold in NZ, Australia and theUS; complementary product CxbladderTriage was launched in NZ in Dec (USlaunch planned mid-2015).

Price performance% 1m 3m 12mActual 35.7 26.7 (16.8)Relative* 26.5 18.0 (22.9)* % Relative to local indexAnalystKatherine Genis

Pacific Edge (PEB)

INVESTMENT SUMMARY

Pacific Edge's lead product, Cxbladder Detect, is a molecular diagnostic for the earlydetection and management of bladder cancer in patients with haematuria. Launched in theUS, New Zealand and Australia, we expect news related to the success of numerous userprogrammes over the next 12 months. Kaiser Permanente Southern California is recruiting~2k patients in a large user program evaluating follow-on diagnostic test Cxbladder Triagefor use across all of Kaiser Permanente (~10m patients). In late February the companyannounced the signing of a Federal Supply Schedule to the Veterans Administrationallowing the marketing of Cxbladder tests within the organization - the largest integratedhealthcare system in the US. The company also recently entered into a commercialagreement with the Canterbury District Health Board for the initial sampling of Cxbladdertests for the replacement of cytology in its health plan.

INDUSTRY OUTLOOK

Molecular diagnostics is a growing, but increasingly competitive field. Lead time from theinitiation of user programmes to payment can be long.

Y/E Mar Revenue EBITDA PBT EPS P/E P/CF(NZ$m) (NZ$m) (NZ$m) (c) (x) (x)

2014 0.5 (9.3) (9.8) (3.4) N/A N/A

2015 3.7 (10.5) (11.1) (3.5) N/A N/A

2016e 8.5 (14.4) (15.1) (4.1) N/A N/A

2017e 28.2 2.0 1.7 0.4 142.5 209.8




Company descriptionPaion is an emerging specialty pharmacompany developing anaesthesiaproducts. Its lead product,remimazolam, is partnered withYichang in China, Hana Pharma in SKorea, Pendopharm in Canada andR-Pharm in CIS, Turkey and MENA.

Price performance% 1m 3m 12mActual 4.4 16.7 18.8Relative* (0.8) 24.4 42.4* % Relative to local indexAnalystDr Dennis Hulme

Paion (PA8)

INVESTMENT SUMMARY

The first of Paion’s two US pivotal studies of short-acting anaesthetic remimazolam inprocedural sedation is nearing completion; results of the placebo and midazolam-controlledtrial in 460 patients undergoing colonoscopy are expected mid-2016. Paion is allocatingadditional resources to complete recruitment in the second Phase III, in bronchoscopypatients by the end of 2016. Planned changes in the US reimbursement of day proceduresfavouring less supervision by anaesthetists could incentivise gastroenterologists to useremimazolam. A European Phase III in cardiac surgery patients has been discontinued, witha new trial in general surgery patients contingent on additional funding. The Pre-NDAmeeting with Japanese regulators in February was positive, with the PMDA stating that thenon-clinical and clinical data packages were ready for filing. We expect Paion to file forapproval of remimazolam for general anaesthesia in Japan in 2016/17. Paion'send-September cash of €41m is sufficient to fund the US Phase III studies of remimazolam.

INDUSTRY OUTLOOK

Remimazolam has important advantages over competing products, including fast onset andoffset of action with lower risk of cardiopulmonary events than the standard of caremidazolam and propofol and a reversal agent exists if there is oversedation.


2013 4.2 (2.4) (2.6) (7.2) N/A N/A

2014 3.5 (11.5) (11.6) (22.9) N/A N/A

2015e 0.0 (33.9) (33.8) (55.9) N/A N/A

2016e 1.0 (30.8) (30.8) (52.2) N/A N/A


Price: US$3.16Market cap: US$519mForecast net cash (US$m) 52.7Forecast gearing ratio (%) N/AMarket NASDAQ OTCQXShare price graph (US$)

Company descriptionPDL has reinvented itself through atwo-pronged strategy: investing inroyalty streams of marketed anddevelopment-stage therapeutics andproviding high-yield debt financing todevice & diagnostic companies withnear-term product launches.

Price performance% 1m 3m 12mActual 3.6 (16.6) (56.5)Relative* (3.1) (18.4) (55.4)* % Relative to local indexAnalystMaxim Jacobs

PDL BioPharma (PDLI)

INVESTMENT SUMMARY

PDL BioPharma is reinventing itself as a healthcare-focused finance company through atwo-pronged strategy: investing in royalty streams and providing high-yield financing lifescience companies with near-term product launches. This strategy allows investors to gainexposure in healthcare through a relatively low-risk, diversified vehicle. It recently loweredit's dividend in order to give it more financial flexibility as weakness and in debt and equitymarkets has led to more opportunities to invest.

INDUSTRY OUTLOOK

PDL BioPharma is one of the only companies that will give broad exposure to diverseroyalty streams as well as corporate debt.


2014 581.2 546.3 501.3 203.66 1.6 1.7

2015 590.4 550.4 530.1 203.69 1.6 1.7

2016e 206.5 167.5 149.4 58.29 5.4 7.4

2017e 73.8 31.7 13.7 5.23 60.4 N/A



Price: €2.34Market cap: €520mForecast net debt (€m) 45.2Forecast gearing ratio (%) 56.0Market Madrid Stock ExchangeShare price graph (€)

Company descriptionPharmaMar is a Spanishbiopharmaceutical group with a corefocus on the development ofmarine-based drugs for cancer.Yondelis is approved in the EU andUS, and partnered with Janssen (J&J)in the US and Taiho in Japan.

Price performance% 1m 3m 12mActual 15.0 (17.6) (36.3)Relative* 5.4 (11.5) (22.3)* % Relative to local indexAnalystDr Dennis Hulme

PharmaMar (PHM)

INVESTMENT SUMMARY

PharmaMar has undergone a restructure that foregrounds its potentially high-growth marineoncology activities, before seeking a US IPO. In the restructure the oncology divisionPharmaMar absorbed the former parent company, Zeltia. PharmaMar has built a pipeline offirst-in-class cancer drugs for development with strategic partners. Royalty income flowingfrom the recent approvals for Yondelis for soft tissue sarcoma in Japan and the US inSeptember and October should drive strong profit growth from 2017 onwards. The420-patient Phase III trial of PM1183 in platinum-resistant ovarian cancer was cleared tocontinue in February after an interim safety analysis on the first 80 patients. Potentialnear-term catalysts include Aplidin Ph III data in multiple myeloma (Q116). Its Sylentisdivision recently reported positive results from a Phase II trial of SYL1001 in dry eyesyndrome.

INDUSTRY OUTLOOK

Repositioning the group behind the PharmaMar name and conducting a US IPO could betransformational. The oncology portfolio has been validated through multiple globalpartnerships, eg J&J in the US and Taiho in Japan (over Yondelis) and Chugai in certain EUcountries (for Aplidin).


2013 141.8 23.8 15.6 6.3 37.1 33.3

2014 149.7 25.7 16.3 6.8 34.4 22.1

2015e 162.5 22.1 9.4 4.4 53.2 57.5

2016e 177.0 23.4 11.1 4.3 54.4 25.7


Price: NOK35.00Market cap: NOK752mForecast net cash (NOKm) 126.8Forecast gearing ratio (%) N/AMarket OsloShare price graph (NOK)

Company descriptionPhotocure specialises in photodynamictherapy. Its bladder cancer imagingproduct is sold as Hexvix in Europeand Cysview in the US. Photocurehandles the marketing in Nordiccountries and the US, while Ipsen is itsmarketing partner in the EU.

Price performance% 1m 3m 12mActual (6.4) (10.3) 2.6Relative* (11.7) (11.1) 12.4* % Relative to local indexAnalystMaxim Jacobs

Photocure (PHO)

INVESTMENT SUMMARY

Photocure specialises in photodynamic therapy. Its bladder cancer imaging product is soldas Hexvix in Europe and Cysview in the US. It improves detection rates and helps prolongrecurrence-free survival. Photocure handles the marketing in Nordic countries and the US,while Ipsen is its marketing partner in the EU. Cevira is a Phase III-ready product forHPV-related diseases of the cervix and Visonac is a Phase III-ready product for acne. BothCevira and Visonac are the subject of partnership discussions.

INDUSTRY OUTLOOK

Photocure is a photodynamic therapy company focused on bladder cancer imaging,HPV-related diseases and acne. As its products typically are a combination of a drug and adevice, hurdles for generics are typically higher than with other therapeutics.

Y/E Dec Revenue EBITDA PBT EPS P/E P/CF(NOKm) (NOKm) (NOKm) (öre) (x) (x)

2013 83.6 (71.8) (63.2) (258.72) N/A N/A

2014 129.0 (5.6) 1.5 7.16 488.8 N/A

2015e 124.8 (23.3) (16.9) (78.87) N/A N/A

2016e 138.8 (16.7) (10.1) (46.54) N/A N/A




Company descriptionPixium is a French medical devicecompany developing retinal implantsfor patients with complete vision loss.Its lead product Iris is an epi-retinalimplant scheduled for CE markapproval in mid-2016; a sub-retinalimplant (Prima) is in pre-clinical.

Price performance% 1m 3m 12mActual 56.8 34.8 10.8Relative* 49.0 39.4 24.4* % Relative to local indexAnalystGeorge Magrath

Pixium Vision (PIX)

INVESTMENT SUMMARY

Pixium Vision is developing two different retinal implant systems that transform images intoelectrical signals to create vision. The devices are being developed for profoundly blindpatients suffering from retinitis pigmentation or macular degeneration, and consist of aretinal implant and a pair of glasses with an embedded camera. Pixium is conducting EUclinical trials with Iris, its first generation epiretinal implant; patients have tolerated theirimplants well and improvements in visual perception have been observed; CE markapproval is expected by mid-2016. Positive pre-clinical data with Prima, thesecond-generation subretinal implant, should support first human testing in Q316. Pixiumheld €24m in cash at 31 December 2015.

INDUSTRY OUTLOOK

Second Sight (EYES) is commercialising an epiretinal implant (Argus II) in the US and EU,that creates vision to allow a patient to see large objects and lights, similar to Pixium’s Irisimplant. Pixium’s Iris is the first potentially explantable and upgradable epiretinal implant,while Prima has the potential for higher visual acuity and is less surgically invasive.

Y/E Jun Revenue EBITDA PBT EPS P/E P/CF(€m) (€m) (€m) (c) (x) (x)

2014 2.4 (10.8) (11.6) (118.4) N/A N/A

2015 3.3 (14.6) (15.6) (122.9) N/A N/A

2016e 4.4 (15.9) (16.2) (127.3) N/A N/A

2017e 6.5 (19.1) (19.6) (153.9) N/A N/A



Company descriptionPrescient Therapeutics (previouslyVirax) is an ASX-listed biotechnologycompany focused on developing novelproducts for the treatment of cancer. Ithas two products, PTX-100 andPTX-200 in clinical development for arange of cancers.


Prescient Therapeutics (PTX)

INVESTMENT SUMMARY

Prescient acquired two promising anti-cancer compounds that target major tumour survivalpathways in 2014. The company’s most advanced compound, PTX-200, is in Phase Ib/IItrials in breast and ovarian cancers, while a Phase Ib trial in acute myeloid leukaemia isplanned for H116. The breast cancer study has identified the recommended Phase II dose,and researchers will soon initiate an expansion cohort in 12 patients to better characterisethe safety profile; interim data are expected to report in mid 2016. The company’s otherdrug candidate, PTX-100, is expected to begin a Phase Ib trial in breast cancer in 2017,subject to funding. Cash at 31 December was A$1.9m. Prescient appointed StevenYatomi-Clarke as CEO in February 2016.

INDUSTRY OUTLOOK

PTX-200 is a specific inhibitor of Akt, a key component of one of the Ras signallingpathways. The three Ras genes in humans (HRAS, KRAS and NRAS) are the mostcommon oncogenes in human cancer; mutations that permanently activate Ras are found in20-25% of all human tumours. Recent positive results from Merck in breast cancer validateAkt as an anti-cancer target. PTX-100 blocks the enzyme GGT1, which is required for thefull function of the Ras signalling pathway.


2014 0.0 (1.8) (1.8) (5.94) N/A N/A

2015 0.3 (2.1) (2.1) (4.28) N/A N/A

2016e 0.2 (6.9) (6.9) (11.97) N/A N/A

2017e 1.1 (11.2) (11.2) (19.60) N/A N/A



Price: A$0.04Market cap: A$87mForecast net cash (A$m) 2.3Forecast gearing ratio (%) N/AMarket ASXShare price graph (A$)

Company descriptionPrima's pipeline is based on threeproducts using a LAG-3 immunecontrol system: IMP321 for cancerchemo-immunotherapy and partneredproducts IMP731 (GSK) and IMP701(Novartis). Ph II asset CVac is anautologous dendritic cell vaccine.

Price performance% 1m 3m 12mActual 5.0 (17.6) 35.5Relative* 1.1 (18.9) 50.2* % Relative to local indexAnalystDr Dennis Hulme

Prima BioMed (PRR)

INVESTMENT SUMMARY

Prima BioMed has a pipeline of three clinical assets (one partnered with GSK and thesecond partnered with Novartis), all based on a promising and versatile immunotherapytarget Lymphocyte activation gene-3, LAG-3. The lead in-house LAG-3 product IMP321, isbeing developed initially in metastatic breast cancer in combination with chemotherapy(211-patient randomised Phase IIb initiated Q415) and in melanoma in combination with theanti-PD1 check point inhibitor Keytruda (Phase I initiated January 2016). Novartis and GSKhave commenced clinical trials of partnered LAG3 programmes, providing additionalvalidation for the LAG3 technology. Prima is seeking to out-licence its CVac dendriticvaccine, which improved overall survival in second remission ovarian cancer patients in theCAN-003 Phase II trial.

INDUSTRY OUTLOOK

Immunotherapies are among the most promising class of products for cancer andautoimmune diseases. The LAG-3 products are potentially first-in-class, each with distinctmechanisms and applications.


2014 2.0 (14.0) (13.3) (1.1) N/A N/A

2015 1.3 (13.3) (12.9) (0.9) N/A N/A

2016e 1.1 (14.6) (14.5) (0.8) N/A N/A

2017e 1.2 (14.7) (14.4) (0.7) N/A N/A


Price: €24.25Market cap: €180mForecast net cash (€m) 21.1Forecast gearing ratio (%) N/AMarket Euronext AmsterdamShare price graph (€)

Company descriptionProbiodrug is a biopharma companydeveloping its clinical pipeline for thetreatment of Alzheimer’s. Lead productcandidate, PQ912, has entered Ph IIa.PQ912 is a small molecule inhibitor ofQC, which is essential for theformation of pGlu-Abeta. Two furtherproducts are in preclinical stages.

Price performance% 1m 3m 12mActual 8.5 4.1 29.9Relative* 1.0 1.6 45.1* % Relative to local indexAnalystJonas Peciulis

Probiodrug (PBD)

INVESTMENT SUMMARY

Probiodrug is developing a clinical pipeline focusing on the novel target of pGlu-Abeta, atoxic variant of amyloid-beta (Abeta) that has been implicated in the initiation andsustainment of the pathological cascade that leads to Alzheimer’s disease (AD). Leadcandidate PQ912 is an inhibitor of the enzyme glutaminyl cyclase, which is essential for theformation of pGlu-Abeta. Recruitment is on track for the Phase IIa study, SAPHIR, in earlyAD, with safety/tolerability data expected by end of 2016 and exploratory efficacy data 3-4months later. The capital raise of €13.5m (gross) in November 2015 should extend the cashrunway into 2017, incorporating the SAPHIR initial data readout, when Probiodrug may seekto partner PQ912. Note: our estimates do not yet include FY15 results.

INDUSTRY OUTLOOK

There are 44 million dementia sufferers worldwide, 60% of whom have AD. The lack ofdisease-modifying therapies leaves a vast unmet clinical need. Results from Biogen and EliLilly have revived confidence in the amyloid hypothesis. This, combined with a greaterunderstanding of the disease process and the development of biomarkers, has led toincreased optimism that a disease-modifying therapy may be found.


2013 0.0 (9.4) (9.8) (229.88) N/A N/A

2014 0.0 (11.2) (11.4) (234.69) N/A N/A

2015e 0.0 (14.0) (14.1) (197.81) N/A N/A

2016e 0.0 (13.5) (13.3) (178.36) N/A N/A




Company descriptionRegeneus is a clinical-stageregenerative medicine companydeveloping innovative cell-basedtherapies for the human & animalhealth markets.

Price performance% 1m 3m 12mActual 118.8 82.3 20.7Relative* 110.7 79.4 33.8* % Relative to local indexAnalystDr Dennis Hulme

Regeneus (RGS)

INVESTMENT SUMMARY

Regeneus is developing and commercialising its adipose-derived mesenchymal stem celltechnology for musculoskeletal conditions in animals and humans. A review of the safetydata from the first cohort of 10 patients its randomised Phase I/II study of Progenza(allogeneic) in human osteoarthritis did not identify any safety concerns; enrolment of thefinal cohort of 10 patients is underway. Recent Japanese legislation offers an acceleratedpath to market for regenerative medicine products and the company aims to finalisemanufacturing and clinical development partnerships in Japan in Q216. Regeneus alsoholds global rights to autologous cancer vaccine technologies for human (RGSH4K - PhaseI began in Q215) and veterinary (Kvax) applications. Cash at 31 December was A$3.4m.

INDUSTRY OUTLOOK

Regeneus has firmed up its strategy to partner its product opportunities for developmentand commercialisation, allowing it to focus on its expertise in early-stage productdevelopment. It has partnered with a top-5 global animal health company for developmentof canine CryoShot, and will seek to identify wider applications of its off-the-shelf Progenzahuman stem cells, beyond the initial development for osteoarthritis. Cancer immunotherapy,including cancer vaccines such as RGSH4K, is a biotech hotspot.


2014 2.0 (10.8) (7.5) (4.51) N/A N/A

2015 1.9 (9.8) (6.6) (3.15) N/A N/A

2016e 1.4 (7.0) (4.6) (2.19) N/A N/A

2017e 1.9 (6.9) (4.5) (2.15) N/A N/A


Price: US$1.38Market cap: US$17mForecast net debt (US$m) 1.6Forecast gearing ratio (%) 10.0Market OTCShare price graph (US$)

Company descriptionRelmada is an emerging pharmaproduct company focusing on paintreatment. Its four key products,LevoCap ER, d Methadone, BuTab ERand MepiGel, focus on large, lucrativesegments of the pain market. LevoCapshould enter Ph III this year.


Relmada Therapeutics (RLMD)

INVESTMENT SUMMARY

Relmada is a pain therapeutics company with four products in development. LevoCap ER isan extended release formulation of levorphanol, a potent opioid, as well as a SNRI andNMDA antagonist. It should enter Phase III in the next 6-12 months. d-Methadone is ad-isomer of methadone that inhibits pain through antagonism at the NMDA receptor. Thecompany performed a single ascending dose study and a multiple ascending dose studyand expects to start a proof-of-concept Phase II study in neuropathic pain in H116. BuTabER, if approved, would be the only orally absorbed buprenorphine on the market and justcompleted Phase I. MepiGel is a topical form of the local anesthetic mepivacaine andshould enter Phase I in 2016. Relmada is preparing for an uplisting to NASDAQ.

INDUSTRY OUTLOOK

Relmada is an emerging pharmaceutical product company focusing on the treatment ofpain. It has four key products, LevoCap ER, d-Methadone, BuTab ER and MepiGel thatfocus on large segments of the pain market.

Y/E Jun Revenue EBITDA PBT EPS P/E P/CF(US$m) (US$m) (US$m) (c) (x) (x)

2014 N/A N/A N/A N/A N/A N/A

2015 0.0 (17.1) (20.8) (1.92) N/A N/A

2016e 0.0 (24.6) (24.6) (2.23) N/A N/A

2017e 0.0 (26.9) (29.2) (2.54) N/A N/A




Company descriptionReNeuron is a UK biotech companydeveloping allogeneic cell therapies:CTX neural stem cell products forstroke disability (Phase IIa) and criticallimb ischaemia (Phase I); and humanretinal progenitor cells for retinitispigmentosa (Phase I/II).

Price performance% 1m 3m 12mActual 8.7 8.7 (13.8)Relative* 4.6 7.0 (5.0)* % Relative to local indexAnalystLinda Pomeroy

ReNeuron Group (RENE)

INVESTMENT SUMMARY

ReNeuron is fully funded (£72m in cash at 30 September 2015) to potentially completepivotal studies with two cell therapy-based programmes. This includes the CTX neural stemcell programme (a 21-patient Phase II study ongoing in stroke disability + six-patient PhaseI for critical limb ischaemia) and the hRPC (human retinal progenitor cells) programme forretinitis pigmentosa (a 15-patient Phase I/II trial is underway in the US). Pivotal Phase II/IIIstudies are planned for the stroke and RP programmes. Preclinical work continues on theexosome nanomedicine programme in oncology. The company recently relocated to a newGMP cell manufacturing and research facility in South Wales (funded by a £7.8m Welshgovernment grant).

INDUSTRY OUTLOOK

Stroke is a high-risk indication, but ReNeuron is attempting to demonstrate a meaningfulreduction in disability that would offer a compelling case for further development and/orpartnering (Phase IIa data in H116 will determine next steps). The hRPC programme hasOrphan (EU/US) and Fast Track (US) designation with a potentially pivotal Phase II/III studyplanned for 2017.


2014 0.0 (7.9) (7.8) (0.50) N/A N/A

2015 0.0 (10.3) (10.3) (0.50) N/A N/A

2016e 0.0 (15.5) (15.2) (0.50) N/A N/A

2017e 0.0 (27.6) (27.3) (0.76) N/A N/A



Company descriptionRXi is a clinical-stage RNAi companydeveloping therapeutics indermatology and ophthalmology. Leadprojects, RXI-109 in dermal indications(Ph II) and in ocular for wet AMD (PhI/II), stem from its proprietaryself-delivering (sd-rxRNA) platform.


RXi Pharmaceuticals (RXII)

INVESTMENT SUMMARY

RXi is advancing numerous projects in clinical programmes based on its novel,self-delivering RNAi technology. A Phase I/II trial for RXI-109 for the prevention of subretinalscarring in wet AMD began in November. RXI-109’s lead indication of dermal scarringreports six-month data in mid 2016 in the ongoing 1402 study, following positive results of athree-month read-out. RXi has also initiated a Phase II trial with in-licensed Samcyprone incommon warts. Two nominated candidates targeting collagenase and tyrosinase havemoved into functional and safety testing for use in the large cosmetic market for skinlightening and skin rejuvenation, which holds the potential for a faster development path. InMarch 2014, RXi out-licensed its sd-rxRNA technology to MirImmune for ex vivo use indeveloping cell-based cancer immunotherapies, signifying validation of RXi’s technologyplatform and paving the way for similar future agreements.

INDUSTRY OUTLOOK

RXi focuses primarily on dermatology and ophthalmology. Lead clinical projects, RXI-109 indermal indications (Phase II) and in ocular for wet AMD (Phase I/II), stem from itsproprietary self-delivering (sd-rxRNA) platform. Licensed-in immunomodulator Samcyproneis initially being developed for warts, alopecia areata and melanoma.

Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF(US$m) (US$m) (US$m) (c) (x) (x)

2013 0.4 (6.8) (6.7) (65.24) N/A N/A

2014 0.1 (7.1) (7.0) (42.50) N/A N/A

2015e 0.0 (8.1) (8.1) (20.32) N/A N/A

2016e 0.0 (10.9) (10.8) (16.66) N/A N/A



Price: 22.00PLNMarket cap: PLN289mForecast net cash (PLNm) 38.0Forecast gearing ratio (%) N/AMarket Warsaw Stock ExchangeShare price graph (PLN)

Company descriptionSelvita is a drug discovery servicesprovider based in Poland. It employs300 staff (30% PhDs) and operatestwo main business units: InnovationsPlatform (internal NME pipeline) andResearch Services (medicinalchemistry/biology, biochemistry).

Price performance% 1m 3m 12mActual 6.3 8.9 34.4Relative* 0.4 3.2 60.6* % Relative to local indexAnalystJonas Peciulis

Selvita (SLV)

INVESTMENT SUMMARY

Selvita is a rapidly emerging drug discovery and research services company. Operating offa solid base from its profitable contract research business, the company is also developingits own novel oncology compounds, currently self-financed but potentially throughpartnerships. Most advanced are two preclinical kinase inhibitor programmes: SEL24 (dualPIM/FLT3 inhibitor, for AML) to enter Phase I in mid-2016, and SEL120 (CDK8 inhibitor,colon cancer and other malignancies) to begin IND-enabling studies in Q216 and move toPhase I in 2017. Multiple collaborations signed with partners such as Merck KGaA and H3Biomedicine (Eisai) validate Selvita’s research capabilities. Net cash of PLN28.8m at end2015, bolstered by profits from research service contracts, is sufficient to fund currentactivities. Note: FY15 results are not yet reflected in our estimates.

INDUSTRY OUTLOOK

The profiles of SEL24 and SEL120 are potentially unique when compared to existingclinical-stage competitors and both candidates may offer efficacy and safety advantages.Contract research is a fiercely competitive, but still rapidly growing market and we believeSelvita’s geographical location and lower cost benefits make it well placed to compete.

Y/E Dec Revenue EBITDA PBT EPS P/E P/CF(PLNm) (PLNm) (PLNm) (gr) (x) (x)

2013 21.9 (0.1) (2.4) (0.23) N/A N/A

2014 41.6 7.6 5.4 0.56 3928.6 N/A

2015e 55.4 10.4 6.8 0.51 4313.7 N/A

2016e 64.0 9.3 6.0 0.45 4888.9 N/A



Company descriptionSkyepharma is an expert oral andinhalation drug development company.It combines proven scientific expertisewith validated proprietary drug-deliverytechnologies to develop innovative oraland inhalation pharmaceuticalproducts.

Price performance% 1m 3m 12mActual 11.0 22.8 30.4Relative* 6.8 20.9 43.7* % Relative to local indexAnalystDr Susie Jana

Skyepharma (SKP)

INVESTMENT SUMMARY

Vectura and Skyepharma (SKP) have announced they have reached a merger agreement;under the terms of the deal SKP shareholders will be entitled to receive 2.7977 new Vecturashares for every SKP share, valuing the company at £441.3m or 410.15p per share. Therationale for the merger is to combine the complementary inhalation businesses and createan industry-leading respiratory speciality business to accelerate growth in the global inhaledmarket and provide shareholders of the enlarged company with a broader product anddevelopment portfolio. Based on the closing share price on 15 March, the newly enlargedgroup would have had a pro-forma market capitalisation of £1,014.3m.

INDUSTRY OUTLOOK

The combination creates an industry leading inhaled airways focused business withproprietary formulation and devices across pMDI, DPI and smart nebulisation platforms.


2014 73.8 26.1 17.5 18.4 23.1 12.0

2015 95.9 35.0 31.4 26.0 16.3 17.2






Company descriptionStemCells is focused on developingand commercialising stem cell-basedtherapeutics. Its lead product,HuCNS-SC (human neural stem cells),is in clinical development for spinalcord injury and age-related maculardegeneration.


StemCells (STEM)

INVESTMENT SUMMARY

Preclinical research suggests StemCells' human neural stem cells (HuCNS-SC) act likenormal neural stem cells, offering potential continual replenishment of normal human neuralcells. StemCells reached a critical juncture in late 2015 with a highly encouraging interimanalysis of its Phase II PATHWAY study in HuCNS-SC in lead indication spinal cord injury(SCI) providing first meaningful signs of efficacy of its stem cells technology. Patients withno motor function from the point of injury downward showed signs of improvement at sixmonths in muscle function and dexterity on traditional neurological tests and patientself-assessed quality-of-life scales. We expect 12-month data from cohort 1 in the H116 andan interim analysis on the larger cohort 2 by end 2016. In late 2015 StemCells realigned itsoperations to focus efforts solely on SCI to optimize financial resources. In March thecompany raised $7m in net funds through an over subscribed public offering of commonstock and warrants (full exercise of warrants would yield an additional $14m).

INDUSTRY OUTLOOK

StemCells is a US company developing stem cell-based therapeutics. Stemcells'HuCNS-SC are allogeneic cells derived from donor human neural stem cells, adopting ahomologous approach.


2013 1.2 (29.6) (29.7) (68.2) N/A N/A

2014 1.0 (32.2) (32.2) (56.3) N/A N/A

2015e 0.2 (35.0) (34.1) (34.6) N/A N/A

2016e 0.2 (36.4) (35.2) (32.5) N/A N/A


Price: €42.34Market cap: €502mForecast net cash (€m) 49.9Forecast gearing ratio (%) N/AMarket Deutsche BörseShare price graph (€)

Company descriptionStratec designs and manufacturesOEM diagnostic instruments. Designand assembly of systems frommodules is in Germany andSwitzerland. There is a US subsidiary,a UK middleware company and aBerlin business.

Price performance% 1m 3m 12mActual (19.0) (25.2) (5.8)Relative* (22.9) (20.2) 12.9* % Relative to local indexAnalystDr John Savin

Stratec Biomedical (SBS)

INVESTMENT SUMMARY

Stratec, the German designer and builder of automated OEM diagnostic systems, hasrevised its guidance for 2016 and 2017 due to volatile client sales forecasts. Preliminary2015 results show revenues up 1.4% at €146.9m and a high EBIT Margin of 18.3% due tomore service part sales. Sales in 2016 are likely to be about €151m, up 2.5% with 2017potentially increasing 7% to €162m.

INDUSTRY OUTLOOK

Stratec has a strong technology and software base with industry expertise and stronglong-term prospects; the growth reduction relates to medium-term client issues. A particularclient concern is increased local competition in the Chinese market on commoditydiagnostics. The emerging liquid-biopsy diagnostic area is one of several new development activities.Stratec is considering acquisitions to broaden its technology base but does not wish todilute its eps.


2013 128.0 19.5 25.3 182.6 23.2 18.2

2014 144.9 24.1 29.7 215.6 19.6 12.9

2015e 148.4 26.7 32.6 229.4 18.5 16.1

2016e 165.2 30.6 36.4 252.1 16.8 13.6



Price: €1.92Market cap: €32mForecast net cash (£m) 4.0Forecast gearing ratio (%) N/AMarket FRAShare price graph (€)

Company descriptionSygnis develops tools for molecularbiologists. Its main focus is in the fieldof polymerases for the amplificationand sequencing of DNA. Sygnislaunched its own TruePrime andSunScript branded products in 2015.

Price performance% 1m 3m 12mActual 9.7 1.0 (30.8)Relative* 4.3 7.7 (17.1)* % Relative to local indexAnalystDr John Savin

Sygnis (LIO1)

INVESTMENT SUMMARY

Sygnis sells its own-brand TruePrime and SunScript kits through an international distributornetwork and direct though its website. Kits may also be sold as OEM products for use withNext Generation Sequencing systems. Revenues to September 2015 were €307k withcash outflow of €3.1m. Cash at 30 Sept was €0.6m. The Q415 rights issue at €1.90 raised€5.6m gross in cash plus conversion to shares of a €0.6m loan.

INDUSTRY OUTLOOK

Sygnis’s core IP is a range of novel engineered enzymes. TruePrime kits copy and amplifythe whole genome, which enables a single cell to be analysed and sequenced. SunScriptkits convert RNA messages in cells to DNA for analysis. The range was extended inDecember 2015 with the SunScript One Step RT-qPCR Kit. Sunscript can be combined withTruePrime for sequencing. A new 2016 research market may be in cell-free tumour DNA for'liquid biopsy' in cancer.


2013 0.5 (2.8) (3.1) N/A N/A N/A

2014 0.4 (1.7) (1.9) N/A N/A N/A

2015e 0.7 (2.3) (2.5) N/A N/A N/A

2016e 2.5 (0.9) (0.9) N/A N/A N/A


Price: ¥222.00Market cap: ¥7191mForecast net cash (¥m) 736.0Forecast gearing ratio (%) N/AMarket TokyoShare price graph (¥)

Company descriptionSymBio is a specialty pharmacompany with a focus on oncology,haematology and pain management.Treakisym was in-licensed fromAstellas in 2005. Rigosertib wasin-licensed from Onconova andIONSYS in-licensed from TheMedicines Company.

Price performance% 1m 3m 12mActual 20.0 13.3 (29.5)Relative* 17.0 29.4 (17.1)* % Relative to local indexAnalystBeth Senko

SymBio Pharmaceuticals (4582)

INVESTMENT SUMMARY

SymBio is well on the path to becoming a key specialty pharma partner for Asia-Pacificmarkets. The company has in-licensing deals for two orphan blood cancer products andrecently signed a deal for a pain management device. Treakisym is approved for r/riNHL/MCL patients and is awaiting approval for additional indications. Rigosertib is indevelopment for myelodysplastic syndromes and is starting a pivotal Phase III global studywith interim results expected in 2017. IONSYS was in-licensed from The MedicinesCompany and SymBio expects to launch IONSYS in 2019. SymBio plans to build its ownsalesforce to support rigosertib and IONSYS.

INDUSTRY OUTLOOK

SymBio is focused on in-licensing niche opportunities in hard-to-treat indications oftenoverlooked by big pharma. Building its own commercial infrastructure in the future shouldhelp establish SymBio more firmly as a partner of choice in Asia-Pacific. An in-housescreening process to select additional pipeline candidates for development andcommercialisation will be key to driving operating leverage.

Y/E Dec Revenue EBITDA PBT EPS P/E P/CF(¥m) (¥m) (¥m) (¥) (x) (x)

2014 1955.0 (1134.0) (1116.0) (36.39) N/A N/A

2015 1933.0 (2641.0) (2640.0) (81.61) N/A N/A

2016e 2140.0 (2078.0) (2096.0) (64.83) N/A N/A




Price: €5.95Market cap: €26mForecast net debt (€m) 4.3Forecast gearing ratio (%) 1882.0Market Euronext ParisShare price graph (€)

Company descriptionTheraclion, based in southern Paris,sells a high-precision, high-intensityultrasound system (EchoPulse) inEurope and Asia for non-invasivetreatment of benign breast and thyroidgrowths. A US clinical programme isunderway. A single-use consumable isrequired per treatment.

Price performance% 1m 3m 12mActual 4.4 (9.2) (44.0)Relative* (0.8) (6.0) (37.2)* % Relative to local indexAnalystDr John Savin

Theraclion (ALTHE)

INVESTMENT SUMMARY

Theraclion sells the CE-marked EchoPulse ultrasound device and disposable EPack skincooling unit to treat benign but troublesome breast fibroadenomas (lumps) and palpablethyroid nodules. EchoPulse leaves no ugly scars and carries zero infection risk. In 2015,Theraclion sold or leased 12 systems for evaluation, mainly in Germany and Asia. It hascompleted 180 thyroid procedures to date. In 2016, management expects to sell at least 20systems. Cash at 31 August 2015 was €4.7m.

INDUSTRY OUTLOOK

At least 10% of women develop fibroadenomas: usually at a young age. Fibroadenomas arebenign and usually stable, but only up to 50% regress. After a year, 67% of FAs treated withEchoPulse decreased by 60% or more in volume. Theraclion may start to sell EchoPulse inthe US from 2019 after a trial. About 5% of adults develop palpable nodules; 95% arebenign and need monitoring. EchoPulse can ablate nodules with over 40% mean shrinkageand has reported. The Beamotion upgrade speeds therapy to about 20 minutes.


2014 0.8 (4.7) (4.8) (122.0) N/A N/A

2015 1.8 (6.5) (6.5) (146.6) N/A N/A

2016e 5.9 (4.2) (4.2) (83.8) N/A N/A

2017e 8.9 (2.2) (2.3) (39.1) N/A N/A


Price: US$0.50Market cap: US$36mForecast net debt (US$m) N/AForecast gearing ratio (%) N/AMarket NASDAQShare price graph (US$)

Company descriptionThreshold is focused on tumourhypoxia, a low-oxygen condition foundin most solid tumours and some bloodcancers. Evofosfamide is in Ph III forSTS and pancreatic cancer and earliertrials in other cancers. It is partneredwith Merck KGaA.


Threshold Pharmaceuticals (THLD)

INVESTMENT SUMMARY

Evofosfamide has not met the primary endpoint of improving overall survival in two Phase IIItrials in soft tissue sarcoma (STS) and pancreatic cancer. Although some benefit was seenin pancreatic cancer, partner Merck KGaA will not file either indication with regulators andwill return the product to Threshold. Threshold is considering all options for futureevofosfamide development, which could include in combination with checkpoint inhibitors.We have placed our valuation and forecasts under review pending further updates.Threshold is now trading broadly in line with expected YE15 cash of $40-45m. THLDestimates that this should be sufficient to fund operations to end 2016.

INDUSTRY OUTLOOK

Threshold is focused on tumour hypoxa, conditions of low oxygen. Hypoxic regions arecommonly found in solid tumours and can lead to resistance to traditional chemo andradiotherapy.


2013 N/A N/A N/A N/A N/A N/A

2014 14.7 (29.9) (21.8) (35.8) N/A N/A






Company descriptionTissue Regenix is a UK-basedcompany developing andcommercialising medical devices forregeneration of soft tissue. It has threedivisions including a US-based woundcare subsidiary, orthopaedics/sportsmedicine and a cardiac division.

Price performance% 1m 3m 12mActual 35.2 60.2 15.3Relative* 30.1 57.7 27.1* % Relative to local indexAnalystLinda Pomeroy

Tissue Regenix Group (TRX)

INVESTMENT SUMMARY

Tissue Regenix’s investment case is built on dCELL, a versatile regenerative medicaltechnology, and its potential across wound care, orthopaedics and cardiac implants. Weforecast that US wound care will be the initial driver of rapid sales growth from £0.1m inFY15, rising to £74m in FY21 boosted by product launches from all three divisions. Recentlythe company has made progess on a multiple fronts including: 1) an increase in distributionreach for DermaPure, a dermal substitute, for hard-to-heal chronic wounds and acutewounds,in the US and 2) Approval of SurgiPure XD, a procine dermis Xenograft for use inhernia repair in the US. Meanwhile, the Orthopaedics division targets the significant medicalneed in meniscus and anterior cruciate ligament (ACL) repair. Further, TRX took a first steptowards the commercialisation of human dCELL® heart valves and DermaPure® in the EUthrough a Joint Venture Agreement with German tissue bank in January.

INDUSTRY OUTLOOK

The adoption of biological, as opposed to standard treatments, is driven by the need forearlier intervention and cost savings and for longer-term healing solutions.

Y/E Jan Revenue EBITDA PBT EPS P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2014 0.0 (6.5) (6.3) (0.88) N/A N/A

2015 0.1 (8.2) (8.2) (1.19) N/A N/A

2016e 0.5 (10.7) (10.6) (1.42) N/A N/A

2017e 3.5 (12.4) (12.6) (1.57) N/A N/A



Company descriptionTonix is an emerging specialtypharmaceutical focused on psychiatricand neurological disorders. TNX-102SL for fibromyalgia is the mostadvanced programme, entering Ph III.It is also being developed for PTSD.


Tonix Pharmaceuticals (TNXP)

INVESTMENT SUMMARY

Tonix has two programmes in development. TNX-102 SL is a sublingual version ofcyclobenzaprine (CBP), which is being developed for both fibromyalgia and post-traumaticstress disorder (PTSD). The company recently initiated the Phase III AFFIRM trial infibromyalgia with data expected in Q316. It is also recruiting for its Phase II study in PTSD,with data expected in Q216. It recently ended development of TNX-201 for episodic tensiontype headache due to a negative proof of concept trial.

INDUSTRY OUTLOOK

Tonix is an emerging specialty pharmaceutical company focused on psychiatric andneurological disorders, with three programmes. TNX-102 SL for fibromyalgia and PTSD andTNX-201 is being developed for ETTH.


2013 0.0 (10.9) (10.9) N/A N/A N/A

2014 0.0 (27.7) (27.6) N/A N/A N/A

2015e 0.0 (50.6) (50.5) N/A N/A N/A

2016e 0.0 (45.8) (45.6) N/A N/A N/A



Price: €2.86Market cap: €110mForecast net debt (€m) N/AForecast gearing ratio (%) N/AMarket Euronext ParisShare price graph (€)

Company descriptionTransgene is a French companydeveloping immunotherapy agents forcancer and infectious diseases.Oncolytic virus Pexa-Vec (Phase III forHCC) and cancer vaccine TG4010(Phase II for NSCLC) are the leadclinical candidates.

Price performance% 1m 3m 12mActual 1.4 13.5 (56.2)Relative* (3.6) 17.4 (50.8)* % Relative to local indexAnalystDr Dennis Hulme

Transgene (TNG)

INVESTMENT SUMMARY

Transgene has completed its restructuring plan (launched June 2015) and is now focusedon advancing the clinical development of its cancer immunotherapy products (oncolytic virusPexa-Vec and MUC1 cancer vaccine TG4010) in combination with immune checkpointinhibitors (ICIs). Discussions with clinical/pharma partners are underway to start five PhaseII trials, including: TG4010+ICI in the 1st/2nd-line treatment of NSCLC, and Pexa-Vec+ICI inthe 1st-line treatment of liver cancer/other solid tumours. The first studies should start inmid-2016 with potential read-outs by end-2017. Meanwhile partner Sillajen has now initiateda global 600-patient Phase III study in liver cancer. Transgene recently secured freshfinance of up to €30m, via a €20m EIB loan and a €10m commitment by the Institut Mérieux(52% majority shareholder), adding significant financial flexibility when added to end-2015cash of €31.7m. Our valuation and financials remain under review.

INDUSTRY OUTLOOK

Immunotherapies are among the most promising class of products for cancer. Increasedattention is now being paid to the use of combination therapy approaches to improve cancerresponse-rates further.


2014 11.1 (35.5) (38.9) N/A N/A N/A

2015 9.6 (25.7) (28.9) N/A N/A N/A




Price: 589.0pMarket cap: £1449mForecast net cash (€m) 163.0Forecast gearing ratio (%) N/AMarket LSEShare price graph (p)

Company descriptionUDG is a leading international providerof services to healthcaremanufacturers and pharmacies. Itemploys 8,300 staff and is present in22 countries. Its three divisions areAshfield Commercial & MedicalServices, Supply Chain Services andSharp Packaging Services.


UDG Healthcare (UDG)

INVESTMENT SUMMARY

UDG Healthcare is a rare European play in the dynamic market for outsourcing in thecommercial healthcare sector. The proposed divestment of its drug distribution and travelhealth businesses should enable UDG to reinvest €700m in its faster-growing outsourcingactivities, Sharp and Ashfield. European Commission clearance has come through, hencedivestment is expected to complete by end-March. Our valuation based on DCF rangesfrom 521p (no acquisitions) to 649p (€700m acquisitions at 11x EBIT). It reported continuedstrong trading in Q1FY16. H1FY16 reports on May 19.

INDUSTRY OUTLOOK

The market for outsourcing in the commercial healthcare sector grows by 6-8% per year,some 1.5-2pt higher than the underlying markets. The strong growth stems from the driveby healthcare products manufacturers to reduce their fixed costs and improve theirefficiency, but also the growing complexity of the marketplace. We consider UDG wellplaced to gain market share, since its strong compliance culture differentiates it from smallercompetitors.

Y/E Sep Revenue EBITDA PBT EPS (fd) P/E P/CF(€m) (€m) (€m) (c) (x) (x)

2014 2127.0 123.0 87.0 28.8 26.6 19.9

2015 919.0 114.0 84.0 27.4 27.9 11.3

2016e 1016.0 121.0 91.0 29.7 25.8 15.8

2017e 1056.0 130.0 103.0 32.8 23.3 15.4



Price: 51.0pMarket cap: £227mForecast net debt (£m) N/AForecast gearing ratio (%) N/AMarket AIMShare price graph (p)

Company descriptionVernalis has an FDA-approvedprescription-only cough cold treatment,an FDA-approved Moxatag(amoxicillin) and a late-stage UScough cold pipeline of four products. Italso has an early- to mid-stage R&Dpipeline of CNS and cancer projects.

Price performance% 1m 3m 12mActual (1.9) (26.4) 7.4Relative* (5.6) (27.5) 18.3* % Relative to local indexAnalystLala Gregorek

Vernalis (VER)

INVESTMENT SUMMARY

US Tuzistra XR launch is an important step towards Vernalis's goal of becoming asustainably profitable speciality pharma. As a 12-hourly dosed narcotic cough coldtreatment with codeine and chlorpheniramine as active ingredients, it is positioned to garnera share of the c $1.8bn prescription-only (Rx) narcotic cough cold market segment.Significant investment has been made into Tuzistra XR launch into the 2015/16 wintercough cold season. The season has been unusually mild, albeit also with a later peak; H116wholesaler sales in the four mths post-launch were £0.6m. The focus is on increasingphysician awareness of Tuzistra XR and minimising out of pocket costs for patients; bothare key to increasing uptake. The four other US cough cold Rx extended release (ER)products should also achieve development and regulatory milestones by end-calendar2016.

INDUSTRY OUTLOOK

Generic IR liquid products dominate the US Rx cough cold market reflecting difficulties informulating ER liquids that satisfy current FDA regulations; Tuzistra XR meets thesestandards. Favourable pricing and reimbursement of the five cough cold products indevelopment by Vernalis would value the addressable market at up to $3.3bn.

Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2013 14.1 (4.7) (4.7) (0.8) N/A N/A

2015 19.9 (8.9) (6.9) (1.0) N/A N/A




Price: A$0.68Market cap: A$161mForecast net cash (A$m) 14.3Forecast gearing ratio (%) N/AMarket ASX, OTC QXShare price graph (A$)

Company descriptionViralytics is a biopharmaceuticalcompany developing Cavatak oncolyticvirotherapy to target late-stagemelanoma and other solid tumourtypes. It is trialling Cavatak as amonotherapy and in combination withcheckpoint inhibitors.


Viralytics (VLA)

INVESTMENT SUMMARY

Viralytics is well-positioned to benefit from industry interest in oncolytic virotherapy. In thePhase II CALM melanoma trial Cavatak achieved a durable response rate of 21%, and animpressive 38% of assessable non-injected lung and liver lesions shrank by at least 30%.Ongoing trials include the Phase I/II STORM study in multiple solid cancers, the Phase ICANON trial in superficial bladder cancer, and open-label Phase Ib trials of Cavatak incombination with immune checkpoint inhibitors Yervoy (ipilumumab) and Keytruda(pembrolizumab) in late-stage melanoma. Preliminary results from the STORM trial showeda partial tumour response and tumour-specific secondary viral replication after IV dosing.Viralytics and Merck will jointly fund a Phase Ib trial of Cavatak and Keytruda combinationtherapy in advanced lung and bladder cancer; combination with Cavatak improved theefficacy of checkpoint inhibitors in preclinical studies. Cash at 31 December was A$47mfollowing a A$28m placement in December that was supported by US institutional investors.

INDUSTRY OUTLOOK

The emergence of targeted and immunotherapy agents in recent years is redefining thetreatment paradigm in metastatic melanoma. The FDA approval of Amgen's T-vec hasmade oncolytic virotherapy a commercial reality.

Y/E Jun Revenue EBITDA PBT EPS (fd) P/E P/CF(A$m) (A$m) (A$m) (c) (x) (x)

2014 2.5 (4.9) (4.7) (3.9) N/A N/A

2015 2.5 (6.0) (5.5) (3.0) N/A N/A

2016e 4.4 (8.2) (7.6) (4.2) N/A N/A

2017e 4.4 (8.2) (7.9) (4.3) N/A N/A



Price: US$3.55Market cap: US$67mForecast net cash (US$m) 3.7Forecast gearing ratio (%) N/AMarket NYSE MKTShare price graph (US$)

Company descriptionVolitionRx is a Belgium-baseddiagnostics company focused ondeveloping blood-based cancerdiagnostics based on its proprietaryNuQ technology. Its lead program is incolorectal cancer, which may enter theEuropean market in 2016.


VolitionRx (VNRX)

INVESTMENT SUMMARY

VolitionRx's proprietary NuQ technology detects the level and structure of nucleosomes inthe blood using one drop of blood serum. It is currently focused on colorectal cancer (CRC),a very large opportunity with around 225 million people eligible for screening (US/EU).Interim data from a 4,800 subject trial suggested 81% sensitivity and 78% specificity indetecting CRC with consistent results across multiple stages of disease. Importantly, thetest is able to detect up to 75% of precancerous polyps. In a smaller 121 pt. study in CRCNuQ achieved 91% sensitivity and 90% specificity. NuQ also has the potential to detectmultiple cancers and has had promising data in both lung and pancreatic cancers, where itrecently had study data published in a peer-reviewed journal.

INDUSTRY OUTLOOK

The blood-based cancer screening market is in its nascent stages with great potential andserve an unmet medical need. Currently there are few, if any, non-invasive screeningmethods for the vast majority of cancers.


2013 0.0 (4.6) (4.6) (42.24) N/A N/A

2014 0.0 (5.9) (8.4) (62.08) N/A N/A

2015e 0.0 (10.4) (10.1) (56.93) N/A N/A

2016e 0.8 (14.3) (14.3) (77.67) N/A N/A



Company coverage

Company Note Date published

4SC Update; Outlook 06/10/2015; 21/03/2016

aap Implantate AG Update; Update 30/06/2015; 24/08/2015

Abzena Update; Update 15/12/2015; 10/02/2016

Achillion Pharmaceuticals Update; Update 21/07/2015; 26/01/2016

Actinium Pharmaceuticals Update; Update 09/02/2015; 18/03/2015

Alexza Pharmaceuticals Update; Update 01/12/2015; 08/03/2016

Allergy Therapeutics Outlook; Update 03/12/2014; 07/07/2015

Amarantus BioScience Outlook 27/07/2015

Angle Update; Update 24/02/2016; 21/03/2016

Animalcare Group Update; Update 22/01/2015; 13/07/2015

Athersys Outlook; Update 14/12/2015; 04/03/2016

Atossa Genetics Initiation 17/02/2016

Avacta Group Update; Flash 05/06/2015; 16/07/2015

Balda Update; Flash 19/05/2015; 25/09/2015

Bavarian Nordic Update; Update 21/08/2015; 17/02/2016

BioLineRx Update; Flash 11/12/2014; 09/02/2016

Bionomics Update; Outlook 10/03/2014; 09/02/2015

Bionor Pharma Update; Update 13/08/2015; 01/03/2016

Biotie Therapies Corp Update; Flash 20/11/2015; 19/01/2016

Brainstorm Cell Therapeutics Initiation 23/09/2015

BTG Update; Update 30/10/2015; 30/11/2015

C4X Discovery Initiation; Flash 05/01/2016; 02/03/2016

Carmat Update; Update 04/02/2015; 30/11/2015

Celyad Update; Update 13/11/2015; 28/01/2016

Cerulean Pharma Update; Update 19/11/2015; 16/03/2016

Clinigen Group Update; Update 13/10/2015; 25/01/2016

Consort Medical Update; Outlook 29/06/2015; 16/03/2016

Cytori Therapeutics Update; QuickView 11/06/2015; 02/10/2015

DBV Technologies Update; Update 11/06/2015; 09/12/2015

Dechra Pharmaceuticals Flash; Flash 03/08/2015; 10/09/2015

Derma Sciences Outlook; Update 30/03/2015; 26/05/2015

e-Therapeutics Update; Update 12/10/2015; 18/02/2016

Erytech Pharma Update; Update 15/10/2015; 17/12/2015

Evolva Update; Update 11/02/2015; 18/05/2015

Evotec Update; Update 02/07/2015; 20/11/2015

Genticel Initiation; Update 04/01/2016; 10/02/2016

GW Pharmaceuticals Outlook; Update 10/02/2015; 08/04/2015

Halozyme Therapeutics Update 13/04/2015

Hutchison China Meditech Update; Update 20/01/2015; 05/03/2015

Hybrigenics Outlook; Update 28/07/2015; 15/02/2016

Imperial Innovations Update; Outlook 21/01/2015; 17/06/2015

Imugene Update; Outlook 09/07/2015; 21/02/2016

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http://www.edisoninvestmentresearch.com/research/company/imugene


IXICO Outlook; Update 11/06/2015; 02/09/2015

MagForce Update; Update 02/12/2014; 09/02/2015

Medigene Update; Update 22/09/2015; 08/02/2016

Mesoblast Update; Update 25/01/2016; 18/02/2016

Midatech Outlook; Update 30/06/2015; 18/12/2015

Mologen Update; Outlook 20/08/2015; 14/12/2015

MorphoSys Update; Update 20/10/2015; 17/12/2015

Nanobiotix Flash; Update 08/07/2015; 01/02/2016

Neovacs Update; Update 27/01/2015; 23/04/2015

Newron Pharmaceuticals Update; Update 18/12/2015; 15/03/2016

Nexstim Update; Update 01/10/2015; 01/03/2016

Novogen Outlook; Update 22/06/2015; 19/10/2015

Omega Diagnostics Update; Update 12/11/2015; 07/12/2015

Oncolytics Biotech Update; Update 11/06/2014; 11/11/2014

Onxeo Outlook; Update 08/09/2015; 22/12/2015

Opexa Therapeutics Initiation; Update 30/11/2015l; 23/03/2016

Orexigen Therapeutics Initiation 14/12/2015

Orexo Update; Outlook 09/11/2015; 17/02/2016

Oryzon Genomics Initiation 10/03/2016

Oxford BioMedica Update; Outlook 05/05/2015; 27/07/2015

Pacific Edge Update; Update 17/08/2015; 17/11/2015

Paion Update; Update 10/02/2016; 17/02/2016

PDL BioPharma Update; Update 19/11/2015; 04/03/2016

PharmaMar Outlook; Update 16/11/2015; 10/03/2016

Photocure Update; Update 12/11/2015; 07/03/2016

Prescient Therapeutics Update; Update 28/09/2015; 02/03/2016

Pixium Vision Outlook; Update 21/09/2015; 08/01/2016

Prima BioMed Update; Update 19/10/2015; 04/01/2016

Probiodrug Update; Update 23/09/2015; 10/11/2015

Regeneus Update; Update 09/09/2015; 02/12/2015

Relmada Therapeutics Update; Flash 12/10/2015; 10/12/2015

ReNeuron Group Update; Update 23/04/2015; 29/10/2015

RXi Pharmaceuticals Initiation 03/11/2015

Selvita Update; Outlook 25/03/2015; 09/12/2015

Skyepharma Update; Update 04/12/2015; 18/01/2016

SQI Diagnostics Update; Outlook 29/09/2014; 06/02/2015

StemCells Update; Update 01/09/2015; 05/02/2016

Stratec Biomedical Update; Update 15/05/2015; 02/11/2015

Sygnis Pharma Update; Update 18/06/2015; 27/11/2015

SymBio Pharmaceuticals Update; Update 30/11/2015; 23/03/2016

Tissue Regenix Outlook; Update 22/01/2016; 22/03/2016

Threshold Pharmaceuticals Update; Flash 15/09/2015; 09/12/2015

TiGenix Outlook; Update 28/01/2015; 20/04/2015

Tonix Pharmaceuticals Update; Update 21/10/2015; 24/11/2015

Transgene Update; Update 27/03/2015; 03/06/2015

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UDG Healthcare Update; Update 11/12/2015; 09/02/2016

Vernalis Update; Outlook 17/06/2015; 12/11/2015

Viralytics Outlook; Update 13/08/2015; 26/11/2015

VolitionRx Update; Update 27/10/2015; 07/01/2016

Wilex Update; Update 24/07/2014; 05/11/2015

Investment companies

BB Biotech AG Investment trust review 11/03/2015; 09/02/2016

Biotech Growth Trust (The) Investment trust review 18/02/2015; 15/12/2015

International Biotechnology Trust Investment trust review 03/03/2015; 11/12/2015

Worldwide Healthcare Trust Investment trust review 30/09/2014; 23/07/2015

QuickViews

To view the following QuickViews see the healthcare sector profile page on our website.

Acucela 30/06/2015

AFT Pharmaceuticals 21/12/2015

Alimera Sciences 20/05/2015

Amarin 17/02/2015

Amplifon 06/03/2015; 05/05/2015

arGEN-X 30/01/2015

Ascendis Pharma 18/05/2015

Atossa Genetics 17/11/2015

Avalanche Biotechnologies 22/05/2015

Bone Therapeutics 14/12/2015

Cerulean 11/05/2015; 10/08/2015

Crossject 17/12/2015

Emergent BioSolutions 30/01/2015

Epigenomics 10/11/2015; 13/01/2016

Forward Pharma 02/06/2015

Genticel 01/09/2015

Immunicum 24/07/2015

Imprimis Pharmaceuticals 19/05/2015

Islet Sciences 09/03/2015

Iridex 15/06/2015

LifeWatch 29/01/2016

Lipocine 05/06/2015

MediciNova 01/05/2015

Momenta 27/02/2015

Ocata 17/04/2015

Oryzon Genomics 06/01/2016

Photocure 06/08/2015

Prescient Therapeutics 07/01/2015

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Smith & Nephew 09/02/2015; 07/05/2015

TearLab Corp 14/05/2015

Theraclion 28/05/2015; 02/11/2015

Titan Pharmaceuticals 23/02/2016

Trimel Pharmaceuticals 01/12/2014; 20/03/2015

Universal Biosensors 04/03/2014; 24/08/2015

VolitionRx 15/05/2015

Wilex 05/05/2015

Healthcare quarterly | 10 April 2013 2

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Edison Healthcare Insight - Baystreet.ca...head at Broadfin Capital and as a senior analyst at Mehta Partners. He is a CFA charter holder. Hans joined Edison’s healthcare team in