April 2012N°7

Moving forward

The investment period of BioDiscovery 3 began in 2008 in the midst of the turmoil that resulted from the subprime crisis and in early 2012 we will finalize the last investment in the midst of the European debt and currency crisis with the backdrop of political and economic uncertainty.

In this context we at Edmond de Rothschild Investment Partners are convinced that our strategy of investing in innovative companies addressing highly unmet medical needs will continue to deliver in difficult times.

Indeed, over the last four years we have built a strong portfolio of 14 companies with recent high quality investments such Genkyotex, Vessix Vascular and Sapiens. We have returned money to our LPs each year in the last four years with the disposals of U3 Pharma, Pangenetics and Novexel in 2008-2010 and most recently in 2011 through the sale of the French public ophthalmology company Novagali Pharma to the Japanese company Santen Pharmaceutical for a premium of 75% to its share price. The successful listing of our portfolio company EOS imaging in February 2012 in France, four times oversubscribed and the first on Euronext for 2012, is a positive signal for European biotech and medtech companies which can tap the public markets to support their expansion plan.

Based on our belief and demonstration that the Life Sciences sector represents a truly unique and differentiated investment opportunity we are now excited to market our new BioDiscovery 4 fund with a target size of €200 million. We are confident that the years ahead offer outstanding opportunities for the sector.

Pierre-Michel PASSYCEO

The Life Sciences sector represents a truly unique and differentiated investment opportunity.

The

bioDIScOVERy newsletterEdmond dE Rothschild INVESTmENT PaRTNERS

P.2 | NEWS

Spotlight on devices targeting nerves

P.4-5 | INvEStmENtS

EOS imaging, a successful IPO

GenKyotex: Exploiting the broad therapeutic potential of a new class of enzymes

P.6 | EvENt

the Rothschild family, committed to healthcare for seven generations

EDMOND DE ROTHSCHILD INVESTMENT PARTNERS 47, rue du Faubourg Saint-Honoré - 75401 Paris Cedex 08Tel : +33 (0)1 40 17 25 25 - SAS au capital de 501.500 Euros 444 071 989 R.C.S. Paris - N° TVA FR34444071989

www.edrip.fr

2 ThE biodiscovery NEWSLETTERapril 2012

We co-led the €13 m series a round in Eindhoven-based, Sapiens SBS, a company which develops brain implants and software for Parkinson’s disease, and the $23 m Series B in the US-based Vessix Vascular which develops a balloon catheter for renal denervation to treat resistant hypertension.

Over the last decade, inhibiting nerve activity with implantable devices has helped to manage conditions such as epilepsy, Parkinson’s disease, depression, and chronic pain for patients who no longer respond to drugs. These sophisticated electronic devices apply low-level energy to the nervous system to block nerve signals between the brain and peripheral tissue or organs. Sapiens SBS is a spin-off from Philips Research which has developed new concepts and tools for Deep Brain Stimulation (DBS), a technique delivering electrical current through electrodes implanted deep inside the brain. We believe that with its system, which combines thin-film technology and software-guided surgery, Sapiens SBS can significantly expand the market for DBS by both increasing the safety and efficacy of the therapy and reducing the procedure time and complexity, allowing its expansion to less specialized clinical centers. a clinical study will be performed this year to validate Sapiens’ first system in patients.

a new minimally-invasive technique has already shown very promising clinical results for the treatment of medication-resistant

hypertension: renal denervation which aims at disrupting the nerves surrounding the renal artery. This technique was pioneered by ardian, a company acquired by medtronic in 2011 for $800 m upfront. Vessix Vascular, in which we invested last July, is a company developing a second generation product for renal denervation based on its radiofrequency (RF) balloon catheter technology. Their new V2 Renal Denervation System™ is an over-the-wire, balloon catheter with electrodes and thermistors mounted on the exterior of the balloon. The device is very simple to use and is able to deliver RF treatment in as little as 30 seconds per artery, which is significantly faster than the current marketed system that takes 20-30 minutes to deliver treatment to each renal artery. Reducing RF treatment time offers other benefits to the patients (comfort and safety). Vessix started last February a clinical study designed to validate the clinical performance of its V2 System™.

Targeting nerves with devices can therefore offer solutions to patients affected by serious diseases and with no other treatment available. These solutions represent very large potential markets, for example renal denervation could amount to several billion euros. as clinical research in novel indications is currently very active, new attractive investment opportunities will surely come along.

Spotlight on devices targeting nervesEdmond de Rothschild Investment Partners invests both in medtech and biotech since we believe they complement each other to address significant health problems. In the last 10 months we closed two investments in companies developing medical devices interfering with the nervous system to treat serious diseases when patients do not respond to drug therapy.

NEWS

Sapiens’ probe design allows to deliver electrical current more precisely in the brain thereby reducing the risk of side effects.

Vessix’ s balloon covered with electrodes and thermistors allows to simultaneously deliver RF energy to different locations in the renal artery.

3EDmOND DE ROThSchILD iNvesTMeNT PArTNers

Recent investments

PORtFOLIO

Company aCtivity Date & rounD edrip role

vESSIx vaScuLaR (US and France)

catheter-based system for cardio-vascular diseases

2011- B (€16 m)Lead Director

SaPIENS SBS(Germany and Netherlands)

Deep brain stimulation system 2011 – a (€13 m)Lead Director

GENKyOtEx(Switzerland and France)

Small molecule inhibitors of NOX enzymes for fibrotic diseases

2011 – c(€11.5 m)Lead Director

cELLNOvO(United Kingdom)

Type 1 Diabetes management system

2011 -B (€36 m)Lead Director

PaRvuLuS(France)

annuloplasty rings 2011 – a (€3 m)Lead Director

POxEL (France)

Type 2 Diabetes therapeutics 2010 – a (€16 m)Lead Director

cOvaGEN (Switzerland)

Protein Scaffold Therapeutics2010 & 2011 Seed & a (€9.5 m)

Director

REGadO BIOScIENcES (USa)

anti-Thrombotic Reversible aptamers 2009 – D (€28 m)LeadDirector

PROBIOdRuG (Germany)

alzheimer’s Disease Products 2009 – B (€36 m)co-LeadDirector

Pdc BIOtEch (austria)

Women’s health Products 2009 – a (€4 m)co-LeadDirector

ENdOSENSE (Switzerland)

cardiac ablation catheter 2009 – B (€25 m)LeadDirector

GLycOvaxyN (Switzeland)

Vaccines 2009 – B (€17 m)LeadDirector

SuPERSONIc ImaGINE (France)

Ultrasound Imaging 2008 – B (€26 m)LeadDirector

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4 ThE biodiscovery NEWSLETTERapril 2012

How was EOS imaging born?

mm: From the dream of a Nobel Prize winner in physics who wanted to contribute to healthcare! Georges charpak invented a technology to detect rare particles and help understand the origin of the Universe. In the 1990’s, he thought that this technology could have medical applications and patented it. Preliminary work on what is now EOS was pursued in the early 2000’s. By 2005 the company got started, raising a €7.5 m first round led by Edmond de Rothschild Investment Partners, and followed by two other rounds of €12 m each in 2007 and 2009. Edmond de Rothschild Investment Partners' active participation on the company’s Board has been instrumental in refining a go to market strategy mixing opinion leadership leverage and direct business approaches.

What is the current paradigm of imaging modalities used by orthopedists and what disruptive advantages does EOS bring to the market?

mm: Orthopedists need to see the bones and joints globally in their weight-bearing upright position, and in all three dimensions: a need that was not met before EOS.

EOS captures large size X-ray images of standing patients in their natural position, and produces a weight-bearing 3D skeletal image, whereas cT-scanners and mRI imaging systems require patients to lie down. moreover, EOS captures the whole body in

a single scan, and does not require stitching such as conventional X-ray, allowing for fast and efficient exams of large areas of the body. Busy orthopedic clinics can therefore get high productivity gains from EOS on their imaging sessions.

EOS is also at the forefront of the battle for patient radiation exposure reduction, providing exams at up to a hundred times less dose than existing 3D imaging modalities based on X-rays. With medical imaging usage increasing over the last 25 years, reducing the patient’s exposure to X-ray dosage has been a top priority of the medical imaging community for several years.

Why this IPO for the company and what is your strategy for the near future?

mm: EOS is going through a worldwide commercial expansion, and needs to increase

EOS imaging, a successful IPO

Last February, EOS imaging raised €38 million in a 4 times oversubscribed public offering of shares on the NYSE Euronext. The company, which developed the world's first 2D/3D imaging system dedicated to orthopaedic applications, is valued at more than €120 million based on the IPO pricing.

marie meynadier CEO EOS Imaging

INvEStmENtS

Interview

5EDmOND DE ROThSchILD iNvesTMeNT PArTNers INvEStmENtS

In June 2011, Edmond de Rothschild Investment Partners led the €14.5 million capital increase of GenKyoTex to develop the company’s NOX enzymes inhibitors together with Vesalius, MPH and existing investor Eclosion. Nicotinamide-adenine dinucleotide phosphate (NADPH) oxidases - the NOX enzymes - exist in seven forms and produce reactive oxygen species (ROS). ROS can cause tissue damage and modify biological pathways that may be important in a number of pathologies including metabolic, cardiovascular, pulmonary and neurological diseases.

GenKyoTex’s founders are the academic leaders in the biology of NOX enzymes. Their knowledge is the basis of the company’s discovery

platform and the development of screening assays capable to identify molecules specific for the 7 members of the NOX family. The lead compound GKT137831, a NOX1/4 inhibitor, entered phase I clinical trials in November 2011 and will be further developed for the treatment of diabetic nephropathy as a first indication. As this is the first NOX specific inhibitor to enter the clinic it is an exciting time for the entire field of NOX inhibition.

At the same time the company is advancing additional compounds, currently at preclinical stages, in other programs in order to further explore and validate the NOX pathway which has the potential to address debilitating and difficult to treat diseases like diabetic nephropathy.

GenKyoTex: Exploiting the broad therapeutic potential of a new class of enzymes

FOcuS

its sales force. It is not profitable yet, net loss was 6.6m€ in 2011, and this change of scale requires investment and working capital. The company also needs to sustain its internal pipeline of innovation, to keep answering the needs of its market.

This IPO represents an outstanding opportunity for the company to become a profitable business and take a leadership in orthopedic imaging, a specialty where the large size players have no differentiation. Today orthopedists use images captured by systems which were not developed specifically for them. EOS is a dedicated piece of equipment which answers their specific needs, and from which we can further develop specific software such as surgical simulation or predictive tools to help therapeutic decisions.

Very few women create and lead high tech companies. How did you make it?

mm: as everyone, from a mix of hard work and opportunities! I am an engineer and a physics PhD, and started my career in the US in the semi-conductor industry. I was about to join a microelectronics company when I met Georges charpak, who convinced me to step into healthcare, and I thank him for it. Being a woman never struck me as easier or harder, but I am quite happy to see that 40% of the employees, 60% of the management team and 40% of the Board of EOS imaging are women.

6 ThE biodiscovery NEWSLETTERapril 2012 EvENt

ariane de Rothschild, Vice-President of the Edmond de Rothschild Group, opened the evening with an introduction to the historic dedication of the Group to Life Sciences and medical Research, particularly through the Edmond de Rothschild Foundations. Since its creation in 1886, the main priority of the adolphe de Rothschild Ophthalmic Foundation has been to allow as many people as possible to benefit from medical and technology innovation. Specialized in diseases of the eye and the head, it is recognized as a center of excellence in its areas of expertise. The Rothschild family also supported the creation of the “Institut de Physico-chimie de Paris”, the curie Foundation and the Radium Institute, just to name a few, and in 1927 Edmond de Rothschild created the first Institute of molecular Biology in the world which is attached to the cNRS today. On an ongoing basis, the Edmond de Rothschild Foundations seek to sponsor international scientific collaborations with high social impact and economic durability.

Jean-hervé Lorenzi, President of the cercle des économistes, then moderated two successive round tables with much talent. Four of the most prestigious professors in France participated in the first debate: Professor alain Prochiantz and Professor yves agid, both members of the académie des Sciences, as well as Professor Denis castaing, head of hepatobiliary diseases and liver transplant unit at the Paul Brousse hospital and Professor Philippe menasché, cardiac surgeon at the Georges Pompidou hospital. They gave their views on how biotechnologies have transformed medicine in their respective fields

of expertise, especially with the advent of stem cell therapies, and what challenges remain ahead. The second debate revolved around the evolution of biotechnologies within the overall medicine paradigm. Iain Buchanan, cEO of Noxxon Pharma, and christophe Jean, cOO of Ipsen, explained how biotechnologies made their way from a niche market to a real pillar of current therapeutic arsenals. andré choulika, cEO of cellectis, went further saying we stand at the eve of a revolution in the management of diseases, as illustrated by the advances in genome sequencing. claude Le Pen, Professor in Economics at Paris-Dauphine University, insisted on the outstanding market potential that innovative therapies represent, as long as they provide a solution for the large number of remaining unmet medical needs.

Pierre-michel Passy concluded the evening by highlighting the tremendous value created by the BioDiscovery franchise over the past ten years by participating in investments that provided a total of over 1 billion euros to small companies and supported more than 1,500 jobs.

The Rothschild family, committed to healthcare for seven generations

On the 14th of March Edmond de Rothschild Investment Partners hosted a conference addressing the economic importance of biotechnologies and medical innovation, gathering investors, industry executives and renowned scientists at the Palais de la Découverte in Paris.

From left to right: Jean-Hervé Lorenzi (La Compagnie Financière Edmond de Rothschild), Claude Le Pen (Paris Dauphine University), André Choulika (Cellectis), Christophe Jean (Ipsen), Iain Buchanan (Noxxon Pharma).

This event which gathered not less than 150 guests marked successfully the 150th anniversary of the Rothschild family’s commitment to Life Sciences.

7EDmOND DE ROThSchILD iNvesTMeNT PArTNers

Portfolio companies in the news

PORtFOLIO NEWS

cellnovo receives cE mark approval for the world’s first mobile diabetes management system, a significant milestone for the company and for people living with diabetes. Eos imaging raises €38 million on NySE EuroNext in an oversubscribed IPO. The funds will be used principally to accelerate its international presence on existing markets and to develop new geographical zones.

GenKyotex’s lead compound GKT137831, a NOX1/4 inhibitor, enters phase I clinical trials and will be further developed for the treatment

of diabetic nephropathy as a first indi-cation.

Poxel sA announces that Imeglimin, a novel com-pound in development for Type 2 diabetes, showed incremental efficacy as an add-on therapy to met-formin, the reference first-line treatment, in patients

inadequately controlled by metformin monotherapy.

Probiodrug raises additional €15

million for the ongoing development of its glutaminyl cyclase (Qc) inhibitor program. The lead compound, PQ912, its first Qc inhibitor, is in clinical development for the treatment of alzheimer’s disease. The financing was supported by the existing investors BB Biotech, Edmond de Rothschild Investment Partners, Life Sciences Partners, Biogen Idec New Ventures, TVm capital, hBm BioVentures, Goodvent/ IBG as well as private investors. Funds advised by Wellington management company, joined the company as a new shareholder.

Endosense appoints Jan Keltjens as president and chief executive officer. Keltjens

brings to Endosense more than two decades of leadership experience in the medical device and technology sectors. he has previously served as chief executive officer of angioDynamics Inc. (NaSDaQ: aNGO) and cryocath Technologies Inc. (now medtronic cryocath) and held a number of senior leadership positions at cordis corp.

JenaValve JenaValve Technology Gmbh receives cE mark approval for its second generation transapical TaVI (Trans aortic Valve Implantation) system and is now selling in several EU countries. This system is used to treat severe aortic valve stenosis in elderly high-risk patients, especially in patients for whom conventional open-heart surgery is not an option.

novagali Pharma Santen Pharmaceutical co., Ltd., a leading Japanese pharmaceutical company, Novagali and certain of its shareholders, including the funds managed by Edmond de Rothschild Investment Partners enters into a share purchase agreement whereby Santen shall acquire shares representing 50.55% of the share capital of Novagali for a cash consideration of €6.15 per share, representing a premium of 71.3% over the last traded price.

Parvulus medicalParvulus receives a cE mark for its Intra-annular Ring and launches the device on to the market. The Intra-annular Ring is indicated for the reinforcement or repair of the human cardiac mitral or tricuspid valves and the treatment of valve insufficiency. It is the only annuloplasty ring that can be utilized in children because it does not constrict the growth of the annulus as the child matures and can be implanted quickly & easily while avoiding contact with blood and the subsequent use of anti-coagulation therapy.

8 ThE biodiscovery NEWSLETTERapril 2012

The life sciences activity has approximately €210 million under management, principally through two dedicated funds, BioDiscovery 1, 2 and 3. The first fund, BioDiscovery 1, was raised in 2000 and has been fully invested in 19 companies. BioDiscovery 2 was raised in 2005 and its investment period is now closed with 9 active portfolio companies. We have distributed 55% of the called in capital thanks to the sale of U3 Pharma in may 2008, part of Pangenetics BV in December 2009, Novexel in march 2010 and Novagali in 2011.

With the Biodiscovery 3 fund of €155 million Edmond de Rothschild Investment Partners acts as a lead investor in the financing of European life sciences companies. Its investment policy focuses on European companies in the areas of therapeutic products, molecular diagnostics and medical technology.

Edmond de Rothschild Investment Partners can invest up to €15 million in a company. The L i fe Sc iences team combines complimentary know-how in venture capital and industry and all individuals have had extensive exposure to international environments. The team works with a high profile, international network of scientific and medical advisors connected to industry and academia. The specialised support throughout the different development stages of the portfolio companies makes the team a highly valuable partner for entrepreneurs.

a team dedicated to Life Sciences activity

Edmond de Rothschild Investment Partners is dedicated to minority investments in privately owned companies. With a staff of 31, it currently has more than €900 million under management which is being invested in three areas: Life Sciences venture capital, mid-cap growth capital and small-cap growth capital.

thE tEam

Pierre-Michel PassyCEO

Olivier LitzkaPartner

Gilles NobécourtPartner

Raphaël WisniewskiPartner

Thierry HercendVenture Partner

Geoffroy de Ribains Investment Director

Sofia IoannidouAssociate

Sarah Doyle Director Investor Relations

Emilie Finiels Analyst

Sybille HuretAsset Management Assistant

Investment strategyThe strategy of the team is to build a balanced portfolio of companies, focused on key value creation steps in the drug and medical device development processes. The target companies lead project should be reaching development, downstream from the discovery phase, based on a strong scientific rationale and supported by an outstanding and experienced team. A main focus of the team is to provide regular liquidity to LPs primarily through trade sales.

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