Discussion Materials Prepared by Rakesh Ahuja November 16, 2015

Contents

S  Overview

S  Lead Asset – ZX008

S  Preliminary Valuation

S  Recommendation

Overview

Background

S  Zogenix (ZGNX) is a clinical stage biotechnology company located in San Diego, CA

S  Company Statement: “Zogenix is committed to developing therapies that address specific clinical needs for people living with CNS and pain-related conditions who need innovative treatment alternatives to help them return to normal daily functioning”

S  Executive Team: S  *Stephen Farr, PhD: Board Member and President since August 2006, CEO since April 2015

S  Previously SVP and CSO of Aradigm Corporation where he played a key role in the acquisition and development of sumatriptan DosePro (DosePro technology is used in Zogenix’s Phase 3 ready drug, Relday)

S  Bradley Galer, MD: EVP and CMO since December 2013 S  Previously served as President of the Pain Group at Nuvo Research and Senior Medical Officer/Group VP,

Scientific Affairs at Endo Pharmaceuticals

S  Ann Rhoads: EVP, CFO, Treasurer and Secretary since 2010 S  Previously was CFO and SVP at Premier Inc., a healthcare services company

S  Thierry Darcis, MD, MBA: EVP and GM, Europe since July 2015 S  Previously was GM for NPS Pharmaceuticals and Viropharma Europe

S  Gail Farfel, PhD: EVP and CDO since July 2015 S  Previously was CRO at Marinus Pharmaceuticals and Neuroscience Clinical Development Head at Novartis

S  *Cam Garner: Chairman since August 2006 S  Experience includes co-founding Cadence, Somaxon, Evoke, Elevation, DJ, Verus, Xcel, and Meritage

S  *Roger Hawley: Board Member and CEO from August 2006-April 2015

*Co-Founders have been bolded

Current State

S  Zogenix (ZGNX), which went public in November 2010, closed a follow-on public equity offering in August 2015, resulting in $92M in net proceeds

S  As of 9/30/2015, Zogenix reported ~$17.5M in long-term debt and $162.7M of cash, extending their runway through 2017, coinciding with the planned launch of their lead asset, ZX008 (fenfluramine)

S  Recent Activity: S  In August 2015, ZGNX submitted an Investigational New Drug (IND) Application to the FDA

S  FDA feedback called for more information on normative ranges for ECGs being conducted during the course of the pediatric Phase 3 program and an amended protocol requiring a follow-up ECG 3-6 months after patients discontinue treatment with ZX008

S  Zogenix complied and stated that the schedule for initiating Phase 3 trials in Q4 2015 will not be delayed

S  This scrutiny is related to the 1997 Mayo Clinic study, which reported an increased risk of valvulopathy and pulmonary hypertension associated with higher doses (60 – 120 mg) of fenfluramine in Pondimin and Redux, drugs doctors were prescribing for weight loss that were later withdrawn in September 1997 (ZX008 has a significantly lower therapeutic dose ranging between 10 – 20 mg)

S  Initiated pre-study qualification visits in 11 countries with 34 study sites selected for participation in Phase 3 studies for ZX008

S  Convened an International Pediatric Cardiovascular Advisory Board

S  Received positive top-line Phase 1b pharmacokinetic results in a multi-dose clinical trial of Relday, a long-acting injectable (LAI) used in the treatment of schizophrenia S  Primary endpoint: To establish a therapeutically effective and steady state dose

Data from Company website and Q3 financial statements released 11/9/15

Clinical Stage Assets and Milestones

S  Lead Asset: ZX008 S  Acquired from Brabant Pharma in October 2014 and developed for Dravet Syndrome (DS) S  Phase 3 ready (clinical trials anticipated to begin in Q4 2015)

S  FDA has given ZX008 Orphan Drug status

S  IND submitted in Q3 2015 for Phase 3 trial S  Future Milestones

S  Q4 2015—Initiate ZX008 multi-dose Phase 3 trial in the US

S  Q4 2015—American Epilepsy Society Scientific Presentations

S  Q4 2015/Q1 2016—Apply for fast-track status

S  Q1 2016—Initiate ZX008 Phase 3 trial in Europe

S  2H 2016—Data expected from ZX008 Phase III trials

S  Q4 2016—Planned New Drug Application (NDA) and Marketing Authorization Application (MAA) submission for ZX008

S  2017—Targeted US and EU launch of ZX008

S  Relday S  Once-monthly, needle-free, subcutaneously delivered, reformulation of risperidone used to treat

schizophrenia

S  Future Milestones S  Q4 2015—Initiate global strategic development and commercial partnering discussions

S  Q1 2016—End-of-Phase 2 meeting with the FDA for Relday S  2H 2016—Planned initiation of Phase 3 trials for Relday

S  2018—Targeted launch of Relday

Data from Company Investor Presentation October 2015 and Wall Street analyst estimates

Lead Asset – ZX008

Market Opportunity

S  Dravet Syndrome (DS) a.k.a. Severe Myoclonic Epilepsy of Infancy S  70-80% of DS cases are associated with mutations in SCN1A, a gene coding for a neuron-specific

voltage-gated sodium channel

S  Based on a study published in November 2015, clinical DS has an incidence of 1/15,700, with roughly 75% of those individuals having a pathogenic missense mutation of SCN1A

S  US and EU each has ~20,000 DS patients, qualifying DS as an orphan disease

S  Severe epilepsy beginning in infancy causes significant childhood mortality and devastating long-term cognitive, behavioral, motor, and developmental deficits

S  DS is drug resistant and polypharmacy is the current standard of care as no long-term treatment exists: S  3 pronged approach to limit seizure frequency by preventing hyperthermia, control severe convulsions with

benzodiazepines, and maintain seizure control with anti-epileptics

S  Treatment includes a mix of up to 4 drugs from: valproate, topiramate, levetiracetam, clobazam, lamotrigine, ethosuxamide, and ethyl-loflazepate

S  Note: Stiripentol (available from Biocodex in France as Diacomit) is an anticonvulsant approved in Europe with a label for DS in combination with valproate and clobazam, but is not approved in the US (Biocodex is not currently seeking regulatory approval in the US for its drug)

S  As there are currently no FDA-approved treatments specifically indicated for DS, a new therapy would likely achieve a steep adoption curve and a high annual cost of therapy, which is reasonable given general orphan drug pricing data in the market

S  Zogenix has worldwide rights to ZX008, which has received Orphan Drug status by the FDA, and expects to commercialize directly in the US and EU (ZGNX is also open to an Asia-Pacific partnering opportunity for ZX008)

DS population data from Wu YW et. al. Pediatrics, Nov 2015: Incidence of Dravet Syndrome in US Population US population ~320M and EU (Germany, France, UK, Italy, and Spain) population ~319M based on US Census and 2015 Eurostat, respectively

Competitive Landscape

S  While it is known that ZX008 (fenfluramine) is a serotonergic agonist (promotes the release and inhibits the reuptake of serotonin), the exact mechanism of action in its treatment for DS remains unknown

S  There are currently 3 other notable competitors using different mechanisms of action:

S  GW Pharma’s Epidiolex

S  Was granted Orphan Drug and fast-track status by the FDA in June 2014

S  Currently has two phase 3 trials underway for the treatment of DS

S  Top-line data from the 150 patient trial should be available in early 2016

S  Mechanism of action utilizes cannabinoid receptors

S  Insys Therapeutics’ Cannabidiol

S  Currently in Phase 1 trials

S  Mechanism of action utilizes cannabinoid receptors

S  Biocodex’s Diacomit

S  Currently approved in Europe

S  Limited availability in the US through FDA’s Personal Importation Policy or direct order from Biocodex

S  Could possibly out-license rights to its product in the US to a willing buyer

S  Has not been studied in a placebo-controlled trial in DS patients in the US, serving as a potential gating factor to launch in the US

S  Mechanism of action is through GABA regulation

Company websites and Wall Street research

Competitive Advantage

S  Established clinical history with long-term treatment data S  Pre-clinical and clinical evidence dating back to the 1980’s link fenfluramine’s activity in the blocking of epileptic activity

S  Over 40 studies have been published evaluating the use of fenfluramine in over 400 children

S  2012 data from a 12 patient, open-label, continuing study (study continued from original 10 patient cohort in 2010 along with 2 additional patients in 2011) show promise in the safety and efficacy of low dose (10 – 20 mg daily) fenfluramine to reduce seizures in DS patients

S  Positive results presented in May 2015 from a 5 year follow-up of the above study

S  2015 UCSF study identified fenfluramine and dimethadione as two important therapeutic targets in patients with DS after screening a chemical library of ~1,000 compounds

S  Open-label Phase 3 study will test at therapeutic doses 6X less than doses associated with cardiotoxicity S  To further mitigate risk, ZX008 would likely be commercialized through a well controlled distribution

channel as part of its risk evaluation and mitigation strategy (REMS), similar to Jazz Pharmaceutical’s Xyrem which is approved for narcolepsy

S  81% of US and 57% of EU neurologists claim they would use ZX008 as a 1st or 2nd adjunct therapy for DS and believe it would be clinically appropriate in 78% of DS patients

S  Clear regulatory path to approval via 505 (b)(2)

S  Avoids stigma associated with cannabinoid compounds used by Insys Therapeutics and GW Pharma, especially considering the pediatric DS population

Gentsch K. et. al. Epilepsia, Aug 2000: Fenfluramine blocks low Mg2+ induced epileptiform activity in rat entorhinal cortex Dinday MT. et al. eNeuro, Aug 2015: Large-Scale Phenotype Based Antiepileptic drug screening in Zebrafish Model of Dravet Syndrome BioStrategeies Market Research, May 2015

Detailed Data from Open-Label Study in Dravet Syndrome (n=12) as Published in 2012

Epilepsia 53(7): 1131-1139, 2012

May 2015 Data from a 5 Year Follow-Up

Ceulemans, Berten, et al. Five-Year Follow-Up of Fenfluramine as Add-on Treatment in Dravet Syndrome. 11th European Paediatric Neurology Society Congress, online poster presentation, May 2015.

S  >80% of patients achieved 75% or better reduction in seizure frequency

S  3/12 patients were seizure free for all 5 years of treatment

S  5/12 patients were seizure free for 2-4 years

S  No clinically significant findings related to cardiotoxicity based on ECG

S  Side effects included mild loss of appetite, somnolence, and fatigue

Planned Phase 3 Study

S  Zogenix is planning to launch two identical studies, one in the US and another multi-national (mainly in Europe) to study the efficacy of ZX008 in the treatment of DS

S  The primary endpoint will be to see diminished convulsive seizures from the baseline of patients

S  Secondary endpoints include: responder analysis, convulsive seizure-free interval, episodes of status epilepticus, quality of life, caregiver global impression of change, etc.

S  In order to establish statistical significance of p < .05, each trial will be comprised of 105 patients between the ages of 2-18

S  The studies will be randomized, multi-dose (low and high doses at .2 and .8 mg/kg respectively), and placebo-controlled (35 patients per arm) with planned data readouts by 2H 2016 and follow-up monitoring conducted 3-6 months after stopping ZX008 treatment

Preliminary Valuation

Model Assumptions

S  DS Population: Based on recent incidence studies, there are roughly 40,000 patients in the US and EU combined with a growth rate of ~2.5%/year

S  Assumes 60% of patients diagnosed with DS would be suitable for treatment (as opposed to 78% based on survey)

S  Considering standard of care for DS is polypharmacy and neurologist preference for using ZX008 as a 1st or 2nd adjunct therapy, conservatively assumes use ~30% of cases (as opposed to 60 – 80% based on survey)

S  There are no currently FDA-approved treatments specifically indicated for DS, likely resulting in a steep adoption curve for ZX008 S  Assumes 3 years to peak adoption (30%) as adjunct therapy, starting with 10% in year one.

S  Considering the context of orphan drug pricing, assumes annual cost of treatment at launch to be $75,000 with annual price increases of 5%

S  ZX008 to launch at the beginning of 2017, with approval probability of 60%

S  ZX008 has orphan status granting exclusivity for 7 years, after which generics will likely enter the market and cause a precipitous drop in market share

S  Assumes Zogenix will reduce pricing to retain market share for 2 years before dropping out entirely

S  Assumes Phase 3 trial costs of $20M and REMS maintenance program at 3% net revenue

S  Assumes SG&A base level and incorporates additional field force of 30 reps with all in cost of $200K/rep

S  Conservatively excludes Asia/Pacific partnering opportunity

*Relday has been excluded from the model; however, its approval and competitive advantages would substantively add value to ZGNX given the ~$1.7Bn antipsychotic US market according to 2014 IMS data (grew from ~$1.3Bn in 2013)

ZX008 Sales Projections

*Sales projection excludes consideration of a ZX008 Asia/Pacific partnership

ZX008 DCF Valuation

*Valuation excludes consideration of a ZX008 Asia/Pacific partnership

Sensitivity

*Excludes consideration ZX008 Asia/Pacific partnership

Recommendation

Final Analysis

S  Strengths: S  For the treatment of DS, ZX008 (fenfluramine) has a promising and established clinical history that sets it

apart from its competitor drugs at Insys Therapeutics and GW Pharma

S  Potentially high reward/low risk treatment outcomes for pediatric patients DS patients

S  ZX008 would likely be able to quickly capture market share and be adopted as an adjunct therapy because:

S  There are no other FDA-approved treatments for DS in the US

S  Surveys suggest ZX008 would be recommended by a majority of neurologists

S  ZX008 has been granted 7 years of exclusivity with Orphan Drug status in the US by the FDA

S  Conservative intrinsic valuation of ZGNX based on ZX008 in US and EU alone is currently at a ~58% premium to its market closing price as of 11/13/2015

S  Note: Additional revenues from an Asia/Pacific partnership and, more importantly, the large market potential of Phase 3 ready Relday would add significant long-term value, giving ZGNX an even higher upside potential

S  Weakness: S  Strong team with relevant, translational experience; however, besides the co-founders (Stephen Farr, Cam Garner,

and Roger Hawley), most of the senior management team is relatively new to Zogenix

S  While encouraging, the current data set uses a very small patient population S  Phase 3 results in 2H 2016 will be critical

S  Despite ZX008’s low dose levels, the association of fenfluramine with cardiotoxicity has stigma and will likely continue to draw increased scrutiny by the FDA during and possibly after the approval process

S  While there is a low probability due to additional studies that would be required, Biocodex could seek regulatory approval for Diacomit or attempt to out-license it in the US, taking away market share from ZX008

S  Recommendation S  Per the valuation analysis, Zogenix presents a decent investment opportunity

ZGNX price as of market close 11/13/2015 was $14.41/share