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A Tale of Two(?) IBDs CYMMBiosis for Cure Colleen Feriod, PhD candidate Yujie Wang, MBA candidate Matthew Fleming, PhD candidate Michael Coggins, PhD Brian Cope, MBA/MEM candidate Executive Summary The CYMMBiosis Team Recommends: License GTX001 “Gastrolux” Pass on GTX002 • High Unmet Need: For patients with severe conditions, roughly 50% fail to respond to current biologics. • High Revenue Potential: Annual Price of Biologics = $10,000 - $15,000 • Barren Competitive Landscape, especially in the EU where few biologics are approved • Greater Market Size, but Higher Consumer Elasticity • Small Molecule: Lower Science and Safety Risks • Ultimately Unprofitable due to Lower Willingness-to-Pay; Negative Expected Value • Breakeven Price Exceeds Market Potential IBD Landscape Crohn’s Disease Ulcerative Colitis • Disease mechanism unknown: genetic, environment, pathogenic factors • Highest incidence and prevalence in age group 20-29 • Disease mechanism unknown: genetic, environment, pathogenic factors • Highest incidence and prevalence in age group 15-30 Patient Population Growth Disease Severity Disease Severity 2008 2020 2032 Mild Moderate Mild Moderate 1,305,000 1,220,000 Severe 16% 15% 1,065,000 46% 896,300 957,500 830,000 30% 38% CD Severe UC 55% Current Treatment Crohn’s Disease Ulcerative Colitis Lines of Therapy % % of of Patient Patient Current treatment Population Population 5-ASA Only 16.69% 37.05% Steroids + 5-ASA 18.21% 14.21% Steroids + IM 28.79% 26.74% Biologics Biologics 10.42% 17.04% Treatment Treatment Refractory Refractory 4.21% 10.34% Effective induction and maintenance mild to cases 5-ASAs are rarely effective, mainly forfor very mild moderate UC; considered safest rapid-acting Steroids are the most effective, rapid-acting therapies;therapies; NOT NOT suitable for long-term use because concerns suitable for long-term use because safetysafety concerns IMs are first-line choice for for maintenance maintenance because because lower lower primary choice high toxicity cost than biologics; HIGH toxicityfor forlong-term long-termuse use More doctors prescribe biologics as first-line treatment. Infliximab most high efficacy for butUC high side is the prescribed, only biologics approved effects. 50-60% Infliximab 45-70% patients patients lose lose response response over over time time to to anti-TNF biologics therapy Target product profile • • • • • Criteria Gastrolux GTX-002 Is it medically plausible? Is there a penetrable market? Is this financially viable? Is it safe? Does it perform better than SOC? Pathophysiology of IBD Crohn’s Disease Unknown (genetic, environment, pathogenic) Initiation Visible and invisible symptoms Immune response Diagnosis of severity: Mild, moderate, severe Treatment depends on: Incident vs. recurrent Severity of diagnosis Ulcerative Colitis Unknown (genetic, environment, pathogenic) Initiation11111 Visible and invisible symptoms Immune 1111 Response1111 Diagnosis of severity: Mild, moderate,111 severe111 Treatment depends on: Incident vs. recurrent111 Severity of diagnosis111 Market Analysis Crohn’s Disease Disease Crohn’s 300,000 250,000 200,000 200,000 150,000 100,000 100,000 50,000 00 Ulcerative Colitis Ulcerative Colitis 400,000 400,000 300,000 200,000 200,000 100,000 00 GTX-002 Gastrolux Competitors Key Assumptions of Financial Modeling Discount Rate: 10% Average WACC for comparable Pharma Cos = 7.2% Probability of Regulatory Science and Safety Risks based on historical drug approval Success: 12% data. Individual Phase hurdles based on professional experience. Cost of Goods Sold: 20% Industry Average = 15% Annual Price: $12,000 Based on Comparable Drug Costs: Infliximab, Natalizumab, Adalimumab, etc Rx Price Growth: 3% Roughly the rate of inflation: very conservative estimate. Potential Customers (treatment population) Growth Stable Relative to National Expected Population Growth Low Initial Market Penetrations 1-2% depending on relevance in treatment category. Growth Plateau Market Share capped at levels previously discussed. Shift in Treatment Modeled trend of earlier ‘top-down’ maintenance regime. Financial Analysis Market NPV Scenarios 4.E+09 Best 3.E+09 Ave 2.E+09 Worse 5.E+08 Failure -5.E+082009 2014 2019 2024 2029 2034 • NPV most sensitive to changes in discount rate and price growth • The breakeven values: discount rate = 13.9%; price = $7,554 •Expected Value of Average Scenario = $46,793, 384 NPV vs. Price NPV vs. Discount Rate 4.0E+08 3.5E+08 1.0E+08 3.0E+08 2.5E+08 5.0E+07 2.0E+08 1.5E+08 0.0E+00 1.0E+08 6,000 8,000 10,000 12,000 14,000 16,000 5.0E+07 -5.0E+07 0.0E+00 -5.0E+07 0% -1.0E+08 -1.0E+08 Sales Price NPV vs. Price Growth 1.5E+08 8.0E+08 7.0E+08 6.0E+08 5.0E+08 4.0E+08 3.0E+08 2.0E+08 1.0E+08 5% 10% 15% Discount Rate (WACC) 20% 0.0E+00 -1.0E+08 0% 2% 4% 6% 8% Price Growth Rate 10% 12% Critical Signals in Development Pre-Clinical -In vitro and in vivo studies on animal IBD models Specifics Phase I -Safety assessment -Dosage -Single ascending dose and/or multiple ascending dose studies -Gastrolux vs. SOC -Food effect study Phase III Phase II -Gastrolux efficacy vs. SOC -IIA: Assess dosing requirements -Submit for approval to FDA and EMEA -IIB: Study drug efficacy *Efficacy is defined as decrease in symptom severity, increase in time between flares, reduction in disease severity progression, and/or inducing remission during acute flares Evaluation Signal Risks Medical Market Financial Safety Improved treatment Legislative Long-term surveillance Reward > Risk? Gastrolux is a viable target product •High unmet need •High revenue potential •Barren competitive landscape GTX-002 is not viable •Greater market size but higher consumer elasticity •Breakeven price exceeds market potential Biological Risk Gastrolux – Able to safely and effectively block VLA-1 in humans and in appropriate patient subset? – Is VLA-1 present on T2 cells allowing UC as viable market? GTX-002 – Able to safely and effectively block NFκB in appropriate T cells only? General – Recent science suggests T17 cells are a point of convergence for CD and UC. – Is VLA-1 present on T17 cells? – Can NFκB be targeted in this T cell subset? Scenario Assumptions Realized Market Potential NPV US EU 2032 Best 100% 100% 3.29E+09 Ave 50% 33% 9.98E+08 Worse 33% 0% 4.09E+07 Failure 0% 0% -3.4E+08 Sensitivity Analysis Expected Project Value Sensitivity Analysis Price Growth Rate Discount Rate 0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.05 2.02E+08 3.04E+08 4.27E+08 5.73E+08 7.48E+08 9.56E+08 1.2E+09 1.5E+09 1.85E+09 2.26E+09 0.06 1.39E+08 2.25E+08 3.27E+08 4.49E+08 5.95E+08 7.68E+08 9.74E+08 1.22E+09 1.51E+09 1.86E+09 0.07 87757403 1.6E+08 2.45E+08 3.48E+08 4.69E+08 6.14E+08 7.86E+08 9.9E+08 1.23E+09 1.52E+09 0.08 46060423 1.06E+08 1.79E+08 2.64E+08 3.66E+08 4.87E+08 6.31E+08 8.02E+08 1E+09 1.25E+09 0.09 12097160 63012009 1.24E+08 1.96E+08 2.81E+08 3.83E+08 5.04E+08 6.47E+08 8.17E+08 1.02E+09 0.1 -1.6E+07 27447034 78583167 1.39E+08 2.12E+08 2.97E+08 3.99E+08 5.19E+08 6.62E+08 8.3E+08 0.11 -3.8E+07 -1634442 41613078 92963031 1.54E+08 2.26E+08 3.12E+08 4.13E+08 5.33E+08 6.75E+08 0.12 -5.6E+07 -2.5E+07 11263152 54753681 1.06E+08 1.67E+08 2.4E+08 3.25E+08 4.26E+08 5.46E+08 0.13 -7.1E+07 -4.5E+07 -1.4E+07 23275185 67002090 1.19E+08 1.8E+08 2.52E+08 3.38E+08 4.39E+08 0.14 -8.3E+07 -6.1E+07 -3.4E+07 -2655676 34514043 78470813 1.3E+08 1.92E+08 2.64E+08 3.5E+08 0.15 -9.3E+07 -7.3E+07 -5.1E+07 -2.4E+07 7659580 45074943 89255193 1.41E+08 2.03E+08 2.75E+08 0.16 -1E+08 -8.4E+07 -6.4E+07 -4.2E+07 -1.5E+07 17383517 55038850 99436317 1.52E+08 2.13E+08