February 27, 2008

Massachusetts Biotechnology Council

Jonathan P Gertler MDManaging Director

Head, BioPharma Investment Banking

2

The Healthcare Investment Bank

• Entire firm focused solely on healthcare

• Unmatched domain expertise

• Only investment bank with proprietary MEDACorp resource

• Top-ranked institutional equities platform

• Long heritage as trusted advisor to increasingly sophisticated healthcare investors

• Leading healthcare investment banking franchise

− Most healthcare equity transactions in 2007

− Best aftermarket performance from 2005 to 2007

− Differentiated origination and execution in both financing and M&A

3

Better Information Leads to Better Advice

Differentiated Execution

• Equity Issuance

− Technology validation

− Proprietary investor targeting

− Sales force education

− Buyer due diligence during transaction

• M&A Advisory Services

− Proprietary idea generation

− Proprietary opportunity assessment/ due diligence

−Sophisticated domain expertise

• After-market Support

− Institutional Investor Rankings #1 Ranked Equity Research #1 Ranked Healthcare Sales Force

− Proprietary investor forums with physicians and industry experts

− Unique diversity of MEDACorp education forums

Proprietary Domain Knowledge

• 26,000 healthcare experts

– Physician & thought leaders

– Community physicians

– Academic and clinical researchers

– Regulatory and reimbursement experts

• 2,500 experts exclusive to our Firm

• Broad healthcare footprint

– 55 clinical specialties

– 21 basic sciences

– 20 business specialties

• Banking and Investor Client Focus

– Internal team of healthcare experts identify, analyze, and share industry trends with institutional investors and banking clients

4

Leadership in Healthcare Investment Banking

Note: Includes all 2007 life sciences equity transactions greater than $15MM; Full credit to all managers.

Success Across All Product Types in 2007Most Active in Equity Capital Raising During 2007

9 IPOsMost in the industry

Leerink IPOs averaged 19% returnvs. Non-Leerink average of 0%

8 Follow-onsRaised in excess of $1.6B

9 PIPEs/RDOs Led 5 deals with aggregate value $213.4mm

M&A First healthcare company sold to SPAC

6 Lead Managed Private Placements Aggregate value $174MM

Multiple Repeat Clients

($ in millions)

Deals $ RaisedAvg. $ Raised

Leerink Swann 25 2,605 104

Lazard 23 1,188 52

Piper Jaffray 21 2,264 108

JPMorgan 20 2,189 109

UBS 20 2,697 135

CIBC 19 1,304 69

Banc of America 16 2,782 174

Pacific Growth 16 873 55

Cowen & Company 15 1,314 88

Jefferies 15 2,254 150

5

Performance of our deals drives investor

confidence

Superior Aftermarket Performance

Note: Includes all life sciences equity transactions greater than $5MM and firms with minimum 30 deals; Full credit to all managers. As of end of 2007.

All Healthcare Deals Since 2005 - 2007 Ranked by Post-Deal Performance

($ in millions)

Deals $ RaisedAvg. Aftermarket

Performance

Leerink Swann 57 5,860$ 32.5%

Thomas Weisel 40 3,062 32.3%

Merrill Lynch 33 5,669 26.1%

Morgan Stanley 39 6,467 19.4%

UBS 50 5,181 14.5%

Banc of America 45 4,805 11.1%

Piper Jaffray 63 6,299 9.9%

JPMorgan 52 6,318 7.7%

Pacific Growth 42 2,262 3.2%

Jefferies 30 3,048 0.6%

Lazard 58 3,961 (7.2%)

Cowen & Company 79 5,139 (8.0%)

Lehman Brothers 30 2,572 (8.3%)

CIBC 59 3,894 (14.0%)

6

Best Healthcare Sales Force - 2007 Leading Healthcare Trading – 2006Best Healthcare Research - 2007

Top Ranked Institutional Equities Platform

LeerinkSwannRank

Sector

#1 Biotechnology

#1 Medical Supplies & Devices

#1 Major Pharmaceuticals

#1 Specialty Pharmaceuticals

#1 Healthcare Tech & Dist

• Annual survey for Best Boutique Firms on Wall Street

• 730 portfolio managers and analysts at 400 buy-side institutions voted

• Named #1 from 2001-2007 in all major healthcare categories

• Prior runners-up include: Cowen, Piper Jaffray, Thomas Weisel, Lazard, Jefferies, JMP Securities, Pacific Growth

1. Leerink Swann

2. Bear Stearns

3. Cowen

4. Lehman

5. Merrill Lynch

6. Morgan Stanley

7. UBS

8. Citi

9. JPMorgan

10. Banc of America

• 100% focused on healthcare

• 23 professionals covering 600 institutional accounts

• Access to MEDACorp during transactions and after-market

• Unique distribution capabilities

– Influence decisions

– Insight into latent demand

• Market maker in 500+ healthcare stocks

• Leader in creating liquidity for emerging growth companies

• Corporate venture services

1. Lehman Brothers

2. Leerink Swann

3. Merrill Lynch

4. Cowen

5. Citigroup

6. Goldman Sachs

7. Piper Jaffray

8. Bear Stearns

9. Morgan Stanley

10. UBS

7

Leerink Swann IPO Performance 2006 - 2007

(US$ in millions, except per share values)

Excellent performance in the after-market

Strong, consistent trading support

Filing Data Offering Data Deal Size Post-IPO Stock Price Perf. Trading Rank

Shares Midpoint Shares Price Shares Amt vs 6 Months Since

Filed(1) of Range Amt. Date Offered(1)

Price Amt. vs Mdpt vs Filed Filed After IPO After IPO After IPO IPO

5.0 15.00$ 75.0$ 11/15/07 5.0 8.00$ 40.0$ 53% 100% 53% 8.7% NA NA 5

5.0 15.00 75.0 11/7/07 5.0 10.00 50.0 67% 100% 67% (24.0%) NA NA 3

7.0 15.00 105.0 11/1/07 7.0 14.00 98.0 93% 100% 93% 3.0% NA NA 5

5.8 13.00 74.8 10/10/07 5.8 10.00 57.5 77% 100% 77% (7.0%) NA NA NA

3.8 15.00 56.3 8/2/07 3.8 11.50 43.1 77% 100% 77% 10.8% (3.9%) 5 5

5.4 12.00 64.8 5/24/07 5.4 9.00 48.6 75% 100% 75% (6.2%) 22.2% 3 2

6.7 15.00 100.5 5/15/07 8.4 15.00 125.5 100% 125% 125% (5.5%) 16.9% 7 7

5.8 15.00 86.3 5/10/07 5.0 15.00 75.0 100% 87% 87% 15.7% (5.1%) 3 4

6.0 12.00 72.0 4/26/07 7.0 12.00 84.0 100% 117% 117% 46.1% (0.1%) 3 4

6.3 12.00 75.0 11/15/06 6.3 12.00 75.0 100% 100% 100% (8.8%) 69.8% 7 7

3.5 12.00 42.0 8/3/06 3.5 11.00 38.5 92% 100% 92% (0.4%) 124.3% 8 8

6.0 13.00 78.0 5/5/06 7.1 15.00 106.5 115% 118% 137% (6.6%) (12.3%) 3 3

3.4 16.00 55.0 4/20/06 3.4 10.00 34.4 63% 100% 63% 33.2% 87.4% 4 11

Leerink Swann Mean 67.4$ 85.5% 103.6% 89.3% 4.5% 33.2% 4.8 5.3IPO's Median 57.5 91.7% 100.0% 87.0% -0.4% 16.9% 4 5.0

6 MonthsOne Month

8

Life Sciences Capital Markets Overview

Market Performance Healthcare IPOs – Total Amount Raised

Mutual Fund Flows Healthcare IPOs – Pricing Relative to Range

(US$ in millions)

(US$ in millions) (US$ in millions)

2006 2007

Dow Jones Industrials 16.3% 6.4%S&P 500 13.6% 3.5%

NASDAQ Composite 9.5% 9.8%Russell 2000 17.0% -2.0%

2008

-6.7%-7.9%

-13.2%-9.1%

$(15,000)

$(10,000)

$(5,000)

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

Jan-05Feb-05M

ar-05Apr-05M

ay-05Jun-05Jul-05Aug-05Sep-05O

ct-05Nov-05Dec-05Jan-06Feb-06M

ar-06Apr-06M

ay-06Jun-06Jul-06Aug-06Sep-06O

ct-06Nov-06Dec-06Jan-07Feb-07M

ar-07Apr-07M

ay-07Jun-07Jul-07Aug-07Sep-07O

ct-07Nov-07Dec-07

# IPOs 5 5 8 7 7 10 2 11 9 11 2 9 1

$271$329

$446

$318

$567

$814

$1,037

$283

$589

$51

$327

$309

$598

$-

$200

$400

$600

$800

$1,000

Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08

80% 80%

25%

43%

57%

90%

73%

56%45% 50%

78%

100%

20% 20%

75% 43%

43%

50%

18%

22% 45%

50%

11%

14% 10%

50%

22%11%

9%9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08

Priced Below Priced Within Priced Above

9

Start –up Pre-clinical Phase I Phase II Phase III Commercial

Angel

Venture

Private Equity

Strategic Investor

Private Company

Public Company

PIPE InvestorsPublic Investors

Crossover Investors

Hedge Funds/Structured Finance

Correlation of Stage and Status With Investor Subtype

10

US$ in millions, except per share Midpoint IPO Valuation Current Performance

Offer Shares of Filing Pre- Post- Market Midpoint / Offer / vs. Russ.

Company Industry Ticker Date Filed Offer Range Price Amount Money Money Price Cap. Pricing Current 2000

MAKO Surgical Medtech MAKO 2/14/08 5.1 5.1 15.00$ 10.00$ 51.0$ 133.4$ 184.4$ 9.55$ 176.1$ (33.3%) (4.5%) (3.1%)Enteromedics Medtech ETRM 11/15/07 5.0 5.5 15.00 8.00 43.9 90.5 134.4 8.56 143.8 (46.7%) 7.0% 16.9%BioForm Medical Medtech BFRM 11/7/07 10.0 11.5 10.00 8.00 92.0 276.8 368.8 5.86 270.1 (20.0%) (26.8%) (16.4%)ARYx Therapeutics Biotech ARYX 11/7/07 5.0 5.0 15.00 10.00 50.0 125.4 175.4 7.75 135.9 (33.3%) (22.5%) (12.1%)Nanosphere Medtech NSPH 11/1/07 7.0 8.1 15.00 14.00 112.7 196.9 309.6 9.80 216.7 (6.7%) (30.0%) (17.5%)Novabay Pharmaceuticals Biotech NBY 10/26/07 5.0 5.0 5.00 4.00 20.0 64.6 84.6 2.85 60.2 (20.0%) (28.8%) (13.4%)Power Medical Interventions Medtech PMII 10/26/07 3.9 4.4 13.00 11.00 48.7 139.5 188.2 13.71 234.5 (15.4%) 24.6% 40.0%TranS1 Medtech TSON 10/17/07 5.5 6.3 13.00 15.00 94.9 199.1 294.0 15.18 297.6 15.4% 1.2% 16.9%Targanta Therapeutics Biotech TARG 10/10/07 5.8 5.8 13.00 10.00 57.5 152.2 209.7 8.63 181.0 (23.1%) (13.7%) 4.0%MAP Pharmaceuticals Spec. Pharma MAPP 10/5/07 5.0 5.8 15.00 12.00 69.0 162.3 231.3 13.94 268.7 (20.0%) 16.2% 33.9%Masimo Corp. Medtech MASI 8/8/07 11.9 13.7 17.00 17.00 233.0 872.4 928.3 32.66 1,783.4 0.0% 92.1% 104.7%Sucampo Pharmaceuticals Spec. Pharma SCMP 8/2/07 3.8 4.3 15.00 11.50 49.6 425.5 468.6 11.05 463.4 (23.3%) (3.9%) 7.4%Jazz Pharmaceuticals Spec. Pharma JAZZ 6/1/07 6.0 6.0 25.00 18.00 108.0 333.9 441.9 12.27 301.2 (28.0%) (31.8%) (13.3%)Amicus Therapeutics Biotech FOLD 5/31/07 5.0 5.0 15.00 15.00 75.0 258.5 333.5 9.95 223.0 0.0% (33.7%) (15.8%)Helicos Biosciences Medtech HLCS 5/24/07 5.4 5.8 14.00 9.00 52.2 136.1 188.3 11.00 231.7 (35.7%) 22.2% 37.8%Sirtris Pharmaceuticals Biotech SIRT 5/23/07 5.0 6.9 10.00 10.00 69.0 217.9 286.9 11.58 316.3 0.0% 15.8% 32.7%Eurand Spec. Pharma EURX 5/18/07 7.0 7.0 18.00 16.00 112.0 589.7 701.7 13.81 595.9 (11.1%) (13.7%) 1.9%Insulet Medtech PODD 5/15/07 6.7 8.4 15.00 15.00 125.5 269.0 394.5 17.53 453.8 0.0% 16.9% 31.5%Biodel Biotech BIOD 5/10/07 5.0 5.8 15.00 15.00 86.3 216.2 302.4 14.24 319.9 0.0% (5.1%) 10.0%TomoTherapy Medtech TOMO 5/9/07 10.9 11.7 16.00 19.00 223.1 724.8 926.2 14.71 706.0 18.8% (22.6%) (5.9%)NeurogesX Spec. Pharma NGSX 5/2/07 4.0 4.0 14.00 11.00 44.0 93.4 137.4 6.25 108.5 (21.4%) (43.2%) (27.1%)Pharmasset Biotech VRUS 4/27/07 6.0 5.0 13.00 9.00 45.0 139.7 184.7 18.37 375.1 (30.8%) 104.1% 120.3%Orexigen Biotech OREX 4/26/07 6.0 8.1 12.00 12.00 96.6 226.3 322.9 11.99 385.0 0.0% (0.1%) 16.5%SenoRx Medtech SENO 3/29/07 5.5 6.3 12.00 8.00 50.6 75.8 126.4 8.55 147.6 (33.3%) 6.9% 19.8%Rosetta Genomics Medtech ROSG 2/26/07 3.0 4.3 12.00 7.00 30.2 52.6 82.8 4.99 57.7 (41.7%) (28.7%) (13.1%)Optimer Pharmaceuticals Biotech OPTR 2/9/07 5.3 8.1 13.00 7.00 56.4 103.2 159.6 6.53 174.7 (46.2%) (6.7%) 7.1%Accuray Medtech ARAY 2/8/07 13.3 18.4 15.00 18.00 331.2 759.8 947.0 10.51 578.8 20.0% (41.6%) (26.8%)3sBio Biotech SSRX 2/7/07 7.7 7.7 13.00 16.00 123.2 220.4 343.6 7.89 181.4 23.1% (50.7%) (35.9%)Synta Pharmaceuticals Biotech SNTA 2/6/07 6.0 5.0 15.00 10.00 50.0 288.2 338.2 8.75 310.3 (33.3%) (12.5%) 1.7%Molecular Insight Biotech MIPI 2/2/07 4.7 5.0 15.00 14.00 70.0 275.0 345.0 7.55 184.2 (6.7%) (46.1%) (32.0%)XTENT Medtech XTNT 2/1/07 4.7 4.7 17.00 16.00 75.2 289.5 364.7 7.65 183.4 (5.9%) (52.2%) (38.3%)Oculus Innovative Sciences Medtech OCLS 1/26/07 3.1 3.4 13.00 8.00 26.8 67.2 94.0 5.50 74.8 (38.5%) (31.3%) (19.5%)

2007-2008 Total 2,772.4$

Mean 6.0 6.8 14.16$ 11.98$ 86.6$ 255.5$ 331.2$ 10.91$ 316.9$ (15.5%) (7.6%) 6.7%Median 5.3 5.8 15.00 11.25 69.0 207.7 298.2 9.88 233.1 (20.0%) (13.1%) 1.8%

2007-2008 Total 674.2$

Mean 5.5 6.3 14.33$ 11.61$ 74.9$ 204.2$ 278.4$ 11.17$ 281.2$ (18.8%) (3.2%) 10.5%Median 5.4 5.8 15.00 11.50 57.5 196.9 302.4 11.00 231.7 (23.1%) (3.9%) 10.0%

Leerink Swann IPOs

Leerink deals shaded gray

Selected Metrics for 2007 IPO’s

11

Biopharma IPO Pricing and Performance

Pricing vs. Initial Filing Range After Market Performance

Most recent IPOs listed at the top

(12.5%)(46.2%)

(27.3%)(53.3%)

(21.4%)(30.0%)

(58.3%)6.7%

(30.0%)(4.5%)

(11.1%)(36.4%)

(21.4%)(23.1%)

0.0%

(18.2%)

(27.3%)

(23.1%)

(33.3%)

(7.1%)

(23.3%)

(16.7%)

8.7%(6.7%)

(46.2%)0.0%

(30.8%)(21.4%)

0.0%(11.1%)

0.0%0.0%

(28.0%)(23.3%)(23.3%)(23.1%)

0.0%(33.3%)

(50.0%)

(40.0%)

(25.0%)

(45.8%)

(8.3%)

(25.0%)

(50.0%)

(53.8%)

(33.3%)

(65.0%) (55.0%) (45.0%) (35.0%) (25.0%) (15.0%) (5.0%) 5.0% 15.0%

ViaCellFavrilleIcagen

ThresholdAsprevaXenoPort

ALSColey

SunesisAvalon

AccentiaCombinatoRx

SomaxonNucryst

AltusSGX

ValeraAcordaAlexza

TargaceptVanda

NovaceaReplidyne

OsirisTrubion

CadenceAchillionCatalyst

EmergentObagi Medical

AffymaxMolecular Insight

Synta3sBio

OptimerOrexigen

PharmassetNeurogesX

BiodelEurandSirtris

AmicusJazz

SucampoMAP Pharma.

TargantaNovabay Pharma

ARYx

7.3%(73.3%)

(79.3%)(93.4%)

136.4%

(82.0%)(50.0%)

(79.7%)(77.1%)

(67.0%)(28.6%)

(58.8%)(80.5%)

(61.9%)(35.7%)

(18.4%)

(22.0%)(8.7%)

(55.1%)(57.7%)

(81.1%)7.4%

(37.7%)(33.7%)

(58.9%)(45.0%)(43.4%)

46.1%(23.5%)

(46.1%)(12.5%)

(50.7%)(6.7%)(0.1%)

104.1%(43.2%)

(5.1%)(13.7%)

15.8%(33.7%)(31.8%)

(3.9%)16.2%

(13.7%)(43.0%)

(22.0%)

(110.0%) (60.0%) (10.0%) 40.0% 90.0% 140.0% 190.0%

ViaCellFavrilleIcagen

ThresholdAsprevaXenoPort

ALSColey

SunesisAvalon

AccentiaCombinatoRx

SomaxonNucryst

AltusSGX

ValeraAcordaAlexza

TargaceptVanda

NovaceaReplidyne

OsirisTrubion

CadenceAchillionCatalyst

EmergentObagi

AffymaxMolecular

Synta3sBio

OptimerOrexigen

PharmassetNeurogesX

BiodelEurandSirtris

AmicusJazz

SucampoMAP Pharma.

TargantaNovabay

ARYx

12

Recent IPO Characteristics

Shaded column represents company’s lead program.

($ in millions)Therapeutic Pre-money Number of Drug Candidates (1)

Company Focus Value Pre-clin. Phase I Phase II Phase III Marketed

ARYx Therapeutics Gastro / Cardio 125.4$ 0 0 3 0 0Novabay Pharmaceuticals Infections 64.6 2 1 0 1 0Targanta Therapeutics Infections 152.2 2 1 1 1 0MAP Pharmaceuticals Pediatric Asthma 162.3 0 1 1 2 0Sucampo Pharmaceuticals Idiopathic constipation 432.7 8 1 1 1 1Jazz Pharmaceuticals Daytime sleepiness 333.9 0 1 1 2 2Amicus Therapeutics Fabry Disease 258.5 2 1 2 0 0Sirtris Pharmaceuticals Diabetes / Aging 217.9 2 0 0 0 0Eurand Allergy 589.7 1 1 0 2 1Biodel Diabetes 216.2 2 0 1 1 0NeurogesX Hepatitis 93.4 0 1 1 1 0Pharmasset Hepatitis 139.7 0 1 1 1 0Orexigen Therapeutics Obesity 226.3 0 0 1 1 0Optimer Pharmaceuticals Anti-infective 103.2 3 1 1 2 03sBio Anemia 220.4 0 0 0 3 6Synta Pharmaceuticals Cancer 288.2 2 0 2 0 0Molecular Insight Cancer - Imaging 275.0 1 1 2 0 0Affymax Anemia 265.3 0 1 1 0 0Obagi Medical Dermatology/Aesthetics 180.9 0 0 0 0 5Emergent Biosolutions Biodefense/Vaccines 280.3 4 3 1 0 1Achillion Pharmaceuticals Anti-virals 119.0 1 1 1 0 0Cadence Pharmaceuticals Pain & Anti-infective 190.3 0 0 0 2 1Trubion Pharmaceuticals Inflammation & Cancer 167.8 2 1 1 0 0Osiris Therapeutics Stem Cells 260.0 0 1 2 1 1Replidyne Anti-infective 219.3 1 1 1 1 NDANovacea Oncology 104.1 0 1 1 1 0Vanda CNS 156.8 0 0 2 2 0Targacept CNS 126.9 1 1 3 0 0Alexza Pharmaceuticals Migraines 137.2 0 3 1 0 0Acorda Therapeutics CNS 77.9 3 0 0 1 1Valera Pharmaceuticals Urology 98.2 2 1 1 1 1Iomai Corp. 83.3 1 2 1 0 0Altus Pharmaceuticals Metabolic Disorders 210.0 2 0 2 0 0SGX Pharmaceuticals Oncology 60.6 1 1 2 2 0

Mean 195.2$ 1.3 0.8 1.1 0.9 0.6

13

Last Private Financing StepPre-Money Post-Money Post-Money Last Private Interval Up To

Company Low High Price Size Valuation Valuation Valuation (1) Financing (Mos.) Pricing

ARYx Therapeutics $14.00 $16.00 $15.00 $ 50.0 $ 125.4 175.4$ $ 150.0 07-Feb-06 21 0.8xNovabay Pharmaceuticals 4.00 6.00 4.00 20.0 64.6 84.6 31.6 01-Sep-06 14 2.0xTarganta Therapeutics 12.00 14.00 10.00 57.5 152.2 209.7 150.0 09-Feb-07 8 1.0xMAP Pharmaceuticals 14.00 16.00 12.00 69.0 162.3 231.3 171.6 27-Mar-07 6 0.9xSucampo Pharmaceuticals 14.00 16.00 11.50 43.1 432.7 468.6 79.0 31-Mar-06 16 5.5xJazz Pharmaceuticals 24.00 26.00 18.00 108.0 333.9 441.9 279.9 24-Mar-04 39 1.2xAmicus Therapeutics 14.00 16.00 15.00 75.0 258.5 333.5 208.4 16-Sep-06 9 1.2xSirtris Pharmaceuticals 9.00 11.00 10.00 69.0 217.9 286.9 190.7 23-Jan-07 4 1.1xOrexigen Therapeutics 11.00 13.00 12.00 96.6 254.6 351.2 149.9 22-Nov-06 5 1.7xOptimer Pharmaceuticals 12.00 14.00 7.00 49.0 103.2 152.2 95.4 29-Jul-05 19 1.1xMolecular Insight 14.00 16.00 14.00 70.0 275.0 345.0 90.5 14-Apr-05 22 3.0xAffymax 22.00 24.00 25.00 92.5 265.3 357.8 155.0 15-Jul-05 17 1.7xAchillion Pharmaceuticals 14.00 16.00 11.50 51.8 119.0 170.8 102.0 16-Dec-05 10 1.2xCadence Pharmaceuticals 11.00 13.00 9.00 54.0 198.4 252.4 94.0 21-Feb-06 8 2.1xTrubion Pharmaceuticals 13.00 15.00 13.00 52.0 167.8 219.8 52.9 14-Jul-04 28 3.2xOsiris Therapeutics 11.00 13.00 11.00 38.5 258.9 297.4 250.0 15-Jun-05 14 1.0xReplidyne, Inc. 14.00 16.00 10.00 45.0 219.3 264.3 189.6 08-Sep-05 10 1.2xNovacea, Inc. 11.00 13.00 6.50 40.6 104.5 145.1 137.6 20-Dec-05 5 0.8xVanda Pharmaceuticals 12.00 14.00 10.00 57.5 158.9 216.4 64.7 28-Sep-04 19 2.5xTargacept, Inc. 11.00 13.00 9.00 45.0 126.9 171.9 125.0 06-Dec-04 16 1.0xAlexza Pharmaceuticals 10.00 12.00 8.00 44.0 137.2 181.2 118.6 31-Dec-04 14 1.2xAcorda Therapeutics 11.00 13.00 6.00 33.0 81.3 114.3 132.5 04-Mar-04 24 0.6xValera Pharmaceuticals 10.00 12.00 9.00 33.8 98.5 132.3 60.1 16-Aug-04 18 1.6xAltus Pharmaceuticals 14.00 16.00 15.00 105.0 210.0 315.0 244.9 21-May-04 21 0.9xSGX Pharmaceuticals 11.00 13.00 6.00 24.0 61.2 85.2 79.6 22-Apr-05 9 0.8x

Mean 1.6xMedian 1.2x

Min 0.6xMax 5.5x

Filing RangeInitial Public Offering

Biopharma IPO Step-Up Analysis

Average step-up

from post-money of

last private to IPO pre-

money

14

Select Biotech Crossover Rounds

Date Company Business Description Stage Round Amount Val. Investors

10-Jul-07 Light Sciences Oncology

Developer of a light-activated treatment for solid tumors P3 B 30.0$ 106.1$ Unnamed

22-May-07 QuatRx Pharmaceuticals

Developer of therapeutic compounds for the treatment of endocrine, metabolic, and cardiovascular diseases.

P3 E 44.0 120.0 T. Rowe Price

7-May-07 Portola Pharmaceuticals

Developer of therapeutics for acute and chronic cardiovascular and vascular disease.

P2 C 70.0 W/H Alliance Bernstein LP; Brookside Capital; T. Rowe Price; Goldman Sachs; Teachers Private Capital

19-Apr-07 Metabolex Developer of novel therapeutics for the treatment of diabetes and related metabolic disorders.

P3 D 32.0 W/H Alliance Bernstein LP; Deerfield Capital Management; T. Rowe Price; Lombard Odier; MPM BioEquities

27-Mar-07 MAP Pharmaceuticals Developer of treatments for respiratory and CNS diseases. P2 D 50.0 121.6 Brookside Capital; Perseus-Soros BioPharmaceutical Fund; D.E. Shaw Group

8-Mar-07 Phenomix Developer of a therapeutic portfolio of kinase and protease inhibitors for the treatment of immune disease and metabolic syndrome.

P2 C 55.0 82.7 Baker Brothers; JPMorgan Partners

1-Mar-07 Microbia Developer of drug candidates for the treatment of gastrointestinal disorders, dyslipidemia, pain, and fungal infections.

P2 F 50.0 W/H Ridgeback Capital; Morgan Stanley; and other investors

9-Feb-07 Targanta Therapeutics

Developer of antibacterial agents. P3 C 70.0 80.0 Brookside Capital

24-Aug-06 ChemoCentryx Developer of orally-administered therapeutics for autoimmune diseases, inflammatory disorders, and cancer.

P2 C 17.7 W/H Jennison Associates; OrbiMed Advisors

16-Aug-06 Tolerx Developer of therapies to treat patients with immune-mediated diseases.

P2 E 35.6 104.4 FrontPoint Partners

2-Aug-06 Biodel Developer of insulin-based products to treat endocrine disorders including diabetes and osteoporosis.

P3 B 21.0 41.2 Great Point Partners; OrbiMed Advisors; Vivo Ventures

3-Apr-06 Merrimack Pharmaceuticals

Discoverer and developer of drugs for the treatment of diseases in the areas of autoimmune disease and cancer.

P2 E 65.0 W/H Jennison Associates; Noonday Asset Management; TPG-Axon

27-Feb-06 Microbia Developer of drug candidates for the treatment of gastrointestinal disorders, dyslipidemia, pain, and fungal infections.

P2 E 75.0 W/H Sigma Capital; Jennison Associates; Maverick Capital; and other investors

25-Jan-06 MAP Pharmaceuticals Developer of treatments for respiratory and CNS diseases. P2 C 25.3 45.4 Brookside Capital; Perseus-Soros BioPharmaceutical Fund; Pequot Ventures

Crossover investors focus on late-stage differentiated assets when investing in private securities

15

Biotech IPO and M&A Activity Summary

Biotech IPOs: 2006 – 2007 Biotech M&A: 2006 – 2007

M&A deals under $5 billion.

$3,133

$1,870$2,567

$4,537

$13,937 $14,098

$721 $193

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07

0

3

6

9

12

15

$ Volume # Deals

$194.9

$399.8

$299.6

$635.9

$196.5

$49.6$38.5

$286.7

$-

$150

$300

$450

$600

Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07

0

1

2

3

4

5

6

7

8

$ Raised # Deals

16

Biotech M&A Activity: 2006-2007

Includes deals under $5 billion

($ in US millions) Equity Target Information

Date Purchase Enterprise Financial Info. Lead Product Info. Premium

Announce Target Acquirer Price Value LTM Rev. Cash Stage Indication

2/25/08 Proprius Pharmaceuticals, Inc. Cypress Bioscience, Inc. 37.5 37.5 NA NA P2 Rheumatoid Arthritis, Osteoarthritis2/20/08 Encysive Pharmaceuticals Inc. Pfizer, Inc. 195.0 195.0 28.6 54.1 Mkt EU Pulmonary Arterial Hypertension (PAH)2/3/08 CellGate, Inc. Progen Pharmaceuticals Limited (ASX:PGL) 21.8 21.8 NA NA P1 Cancer

1/22/08 CoGenesys, Inc. Teva Pharmaceutical Industries Ltd. 400.0 400.0 NA NA NA NA (Biotechnology research)12/24/07 Illumigen Biosciences Cubist Pharmaceuticals 341.5 341.5 NA NA Preclin. Hepatitis C Virus12/18/07 CovX Pfizer Inc. (NYSE:PFE) NA NA NA NA Preclin. Cancer12/17/07 PDL BioPharma (IV Busulfex) Otsuka Phamaceutical 200.0 200.0 NA NA Mkt Cancer12/10/07 MGI Pharma, Inc. Eisai Corporation (N. Amer.) 3,900.0 3,900.0 NA NA Mkt Oncology and acute care 12/5/07 Ester Neurosciences Amarin (NAsdaqNM:AMRN) 32.0 32.0 NA NA Preclin. CNS

11/29/07 Axcan Pharma Inc. (TSX:AXP) TPG Capital 1,293.7 1,123.8 328.7 170.7 Mkt Gastrointestinal11/26/07 Agensys, Inc. Astellas Pharma US, Inc. 537.0 537.0 NA NA P1 Cancer11/21/07 Reliant Pharmaceuticals, Inc. GlaxoSmithKline plc (LSE:GSK) 2,751.3 2,784.2 474.9 181.0 Mkt Cardiovascular11/18/07 Pharmion Corp. (NasdaqNM:PHRM) Celgene Corporation (NasdaqNM:CELG) 2,967.0 2,832.0 255.9 135.0 Mkt Hematology, Oncology11/15/07 Coley Pharmaceutical Group, Inc. (NasdaqNM:COLY)Pfizer Inc. (NYSE:PFE) 230.3 146.0 31.2 87.8 P3 Cancer11/12/07 Raven biotechnologies, inc. VaxGen Inc. (OTCPK:VXGN) 38.6 38.6 NA NA P1 Cancer10/29/07 Bradley Pharmaceuticals Inc. (NYSE:BDY) ALTANA Inc. 429.7 438.4 142.9 53.7 Mkt Spec pharma10/19/07 Celldex Therapeutics AVANT Immunotherapeutics 66.7 66.7 NA NA Mkt Oncology, autoimmune10/17/07 Aspreva Pharmaceuticals Corporation (NasdaqNM:ASPV)Galenica Holding AG (SWX:GALN) 932.2 579.0 237.8 353.2 P3 Lupus10/9/07 Crawford Pharmaceuticals Limited York Pharma plc (AIM:YRK) 35.5 35.5 NA NA Mkt Dermatology10/9/07 ForSight Newco II QLT (NasdaqNM: QLTI) 42.0 42.0 NA NA P1 Glaucoma10/5/07 Haptogen Wyeth (NYSE: WYE) NA NA NA NA Disc. Antibodies10/1/07 ViaCell Inc. (NasdaqNM:VIAC) PerkinElmer Inc. (NYSE:PKI) 300.5 256.6 59.0 44.0 Mkt Stem cell bank9/27/07 Symphony GenIsis Inc. ISIS Pharmaceuticals Inc. (NasdaqNM:ISIS) 120.0 120.0 NA NA P1 Diabetes9/24/07 Adnexus Therapeutics Inc. Bristol-Myers Squibb Co. (NYSE:BMY) 553.7 534.9 3.0 22.7 P1 Oncology9/18/07 Esprit Pharma, Inc. Allergan Inc. (NYSE:AGN) 370.0 370.0 NA NA Mkt. Genitourinary9/18/07 Renovis Inc. (NasdaqNM:RNVS) Evotec AG (DB:EVT) 145.7 145.7 11.4 85.8 Preclin. Platform / CNS8/1/07 Brookwood Pharmaceuticals, Inc. SurModics Inc. (NasdaqNM:SRDX) 62.0 62.0 NA NA Prod. Drug delivery

7/25/07 NovaCardia, Inc. Merck & Co. Inc. (NYSE:MRK) 352.7 312.8 NA 42.5 P3 CHF7/24/07 Systems Medicine, Inc. Cell Therapeutics Inc. (NasdaqNM:CTIC) 35.0 35.0 NA NA P2 Cancer7/20/07 MedPointe, Inc. Meda AB (OM:MEDA A) 792.9 792.9 243.3 NA Mkt Allergy7/9/07 JDS Pharmaceuticals, LLC Noven Pharmaceuticals Inc. (NasdaqNM:NOVN) 135.0 135.0 NA NA Mkt Depression, bi-polar disorder6/6/07 Alantos Pharmaceuticals Holding, Inc. Amgen Inc. (NasdaqNM:AMGN) 300.0 300.0 NA NA P2 Type 2 diabetes6/4/07 Ilypsa, Inc. Amgen Inc. (NasdaqNM:AMGN) 420.0 420.0 NA NA P2 Chronic kidney disease

5/29/07 Bioenvision Inc. Genzyme Corp. (NasdaqNM:GENZ) 308.2 287.6 14.1 20.6 Mkt Pediatric ALL5/18/07 Taro Pharmaceutical Industries Ltd. (OTCPK:TARO.F)Sun Pharmaceutical Industries Ltd. (BSE:524715) 451.1 451.1 297.7 NA Mkt Generic5/7/07 Evogenix Pty Ltd. (ASX:EGX) Peptech Ltd. (ASX:PTD) 125.0 118.3 1.3 6.7 P1 Antibodies

4/24/07 Alliant Pharmaceuticals, Inc. Sciele Pharma Inc. (NasdaqNM:SCRX) 177.3 177.3 NA NA Mkt Spec Pharma - Inflammation / ADHD4/9/07 Fermavir Pharmaceuticals Inhibitex Inc. 31.8 31.3 NA 0.5 Preclin Shingles4/2/07 Therapeutic Human Polyclonals Roche Holding AG 56.5 56.5 NA NA Disc. Antibodies

3/30/07 VIVUS, Inc., EvaMist KV Pharmaceutical Co. 180.0 180.0 NA NA Mkt Estrogen replacement therapy3/22/07 Morphotek, Inc. Eisai Corporation (N. Amer.) 325.0 325.0 NA NA P1/2 Ovarian cancer3/12/07 Oxxon Therapeutics, Inc. Oxford BioMedica plc 30.7 30.7 NA NA P2 HBV, Melanoma3/5/07 Hypnion Eli Lilly & Co. 315.0 315.0 NA NA P2 Insomnia3/2/07 OPi EUSA 131.7 131.7 NA NA Mkt ALL

17

Biotech M&A Activity: 2006-2007

Includes deals under $5 billion

($ in US millions) Equity Target Information

Date Purchase Enterprise Financial Info. Lead Product Info. Premium

Announce Target Acquirer Price Value LTM Rev. Cash Stage Indication

2/22/07 INO Therapeutics, Inc. Ikaria Inc. 670.0 670.0 NA NA NA Chronic lung disease, hypertension2/20/07 New River Pharmaceuticals Shire 2,600.0 2,600.0 31.9 162.8 Mkt ADHD, Pain2/1/07 Arrow Therapeutics AstraZeneca 150.0 150.0 NA NA P2 Anti-viral1/19/07 DOR Biopharma Cell Therapeutics 49.3 49.3 2.5 0.6 P3 GVHD1/4/07 Syntonix Biogen Idec 40.0 40.0 NA NA P1 Anemia1/4/07 Caprion Ecopia BioSciences 45.0 45.0 NA NA P2 Cancer

12/20/06 Praecis GSK 54.8 2.0 4.5 63.4 P1 Cancer12/13/06 Cerexa Forest Laboratories 480.0 480.0 NA NA P2 Anti-bacterial12/11/06 Valera Indevus 120.0 101.2 19.9 18.9 Mkt Urology12/11/06 MacroMed Protherics 23.7 23.7 NA NA Mkt Critical Care, Oncology12/8/06 Domantis GSK 453.2 453.7 NA NA Preclin Immunology

11/19/06 CoTherix Actelion 418.4 334.7 60.0 83.7 Mkt PAH11/15/06 Cabrellis Pharmaceuticals Pharmion 59.0 59.0 NA NA P2 Cancer11/9/06 Tanox Genentech 905.0 740.8 60.9 164.2 Mkt Asthma11/5/06 KOS Pharmaceuticals Abbott Laboratories 4,161.0 3,647.4 849.3 543.7 Mkt Cardiovascular

10/31/06 ProlX Pharmaceutiacals Biomira 24.2 24.2 NA NA P1 Cancer10/30/06 Sirna Therapeutics Merck 1,133.4 1,050.5 4.2 82.8 P2 Acute Macular Degeneration10/22/06 Connetics Corporation Stiefel Laboratories 712.7 758.4 158.1 244.3 Mkt Dermatology10/16/06 ICOS Corp. Eli Lilly & Co. 2,287.2 2,459.5 76.7 106.4 Mkt Erectile dysfunction10/12/06 RxKinetix, Inc. Endo Pharmaceuticals 20.0 20.0 NA NA P2 Oral mucositis, cancer10/7/06 AnorMed Genzyme Corporation 584.0 542.0 0.2 42.0 P3 Stem Cells10/2/06 Myogen Gilead 2,500.0 2,311.9 11.5 188.1 P3 PAH9/29/06 Avidia Amgen 290.0 290.0 NA NA P1 Auto-immune8/31/06 Avidex MediGene AG 65.8 65.8 NA NA Preclin Rheumatoid arthritis7/19/06 Corus Pharma Gilead 365.0 365.0 NA NA P3 Cystic fibrosis6/8/06 TorreyPines Therapeutics Axonyx 83.2 56.2 NA 27.0 P2 Migraine6/7/06 NeuTec Pharma Plc Novartis 569.0 569.0 NA 44.7 Mkt Fungal & Bacterial Infections5/31/06 Fumapharm AG Biogen Idec NA NA NA NA Mkt Psoriasis5/23/06 Alamo Pharmaceuticals Avanir Pharmaceuticals 29.0 29.0 10.0 NA Mkt Schizophrenia5/15/06 Cambridge Antibody Technology AstraZeneca 1,065.5 823.2 93.3 334.0 Mkt Rheumatoid Arthritis5/9/06 Glycofi, Inc. Merck 400.0 400.0 NA NA Preclin Technology5/9/06 Abmaxis, Inc. Merck 80.0 80.0 NA NA Preclin Technology5/3/06 Conforma Therapeutics Biogen Idec 150.0 150.0 NA NA P1 Oncology4/13/06 Eximias Pharmaceutical Corp. YM Biosciences 33.0 33.0 NA NA P3 Oncology4/12/06 Infinity Pharmaceuticals Discovery Partners Intl. 141.8 141.8 32.4 80.0 P1 Cancer4/6/06 Rinat Neuroscience Pfizer 500.0 500.0 NA NA P2 Osteoarthritis pain4/3/06 Predix Pharmaceuticals EPIX Pharmaceuticals 81.6 81.6 NA NA P3 Anxiety3/15/06 Vela Pharmaceuticals Pharmos 29.7 29.7 NA NA P2 Irritable Bowel2/1/06 Resistys, Inc. Avantogen Oncology, Inc. (OTCBB:AVTO) 59.2 NA NA NA NA NA1/27/06 Montigen Pharmaceuticals SuperGen, Inc. 18.0 18.0 NA NA Preclin Cancer1/9/06 Micromet AG CancerVax Corporation 86.3 86.3 NA NA P2 Breast Cancer

Mean $294.4 $392.4 $118.5 $114.8Median 45.0 142.4 60.0 81.4

18

Reverse Merger Overview

• Three flavors:– Private company “merger of equals” with a public company focused on the same business

– Private company merges with a publicly traded shell company (typically with no assets or liabilities)

– Private company merges with a distressed public entity that is currently trading based on cash and debt valuation with little value attributed to the actual business

• Newco’s management, board of directors and company name is highly influenced by private company

• Reverse merger allows a private company to go public typically with more control over outcome than an IPO

• The timing, feasibility and costs of a reverse merger process will depend on the profile of the target company (e.g. shell company, distressed company or MOE)

A "reverse merger" is an alternative method by which a private company gains access to the public equity market:

19

Precedent Reverse Merger Transactions

(US$ in millions)Pro Financing Info Current Mkt Val. Price

Announced/ Public / Private Company Equity Enterprise Forma # Days Post Market Current Mkt Val @ Price @ 3M Since 3M SinceCompleted Private Company Description Value Value Ownership Merger Amount Value Price Ann. Ann. Ann. Ann.

Public / Private MergersNov-07 VaxGen 38.1$ (8.7)$ 50% NA NA 22.5$ 0.67$ 38.1$ 1.15$ 44.4$ 0.67$ Pending Raven Biotechnologies 50%

Oct-07 AVANT Immunotherapeutics 71.7 64.8 42% NA NA 54.4 0.73 51.9 0.70 97.2 0.55 Pending Celldex Therapeutics 58%

Sep-07 Point Therapeutics 37.7 35.4 4% NA NA 5.9 0.19 1.6 0.04 186.7 0.19 Pending Dara Biosciences 96%

Jan-07 Corautus Genetics Inc. 19.7 7.7 24% 24 25.0 57.2 2.95 7.3 0.37 25.1 0.34 May-07 VIA Pharmaceuticals 73%

Dec-06 Intrabiotics Pharmaceuticals 23.0 (25.4) NA 253 20.0 187.8 14.40 23.0 3.90 31.0 5.25 Dec-06 Ardea Biosciences (Valeant Pharmaceuticals) NA

Jun-06 Axonyx 83.2 56.2 38% NA NA 35.4 2.15 134.2 7.60 141.3 8.00 Oct-06 TorreyPines Therapeutics 62%

Apr-06 EPIX Pharmaceuticals 81.5 75.3 53% NA NA 106.7 2.87 153.8 3.50 191.1 4.35 Aug-06 Predix Pharmaceuticals 47%

Jan-06 CancerVax Corporation 86.3 125.9 33% NA NA 55.7 1.91 211.4 7.40 206.9 7.23 May-06 Micromet AG 68%

Dec-05 Xcyte 25.2 6.3 20% 28 45.3 89.3 4.32 31.5 3.20 69.9 7.10 Mar-06 Cyclacel 80%

Sep-05 Corgentech (Anesiva) 121.8 181.4 38% NA NA 182.8 4.68 196.1 10.64 184.4 9.98 Dec-05 AlgoRx 62%

Sep-05 Maxim Pharmaceuticals 97.9 136.2 28% 34 11.6 67.0 1.37 136.9 1.34 124.8 1.23 Jan-06 EpiCept 72%

Mar-05 Epimmune Inc 75.0 37.4 22% NA NA 42.2 2.24 96.1 9.24 62.6 6.02 Aug-05 Immuno-Designed Molecules SA 78%

Jun-04 V.I. Technologies Inc 245.7 236.7 55% 0 20.0 35.9 0.59 107.0 10.80 89.5 9.00 Mar-05 Panacos Pharmaceuticals, Inc. 45%

Dec-04 Intrac, Inc. 28.5% 1 18.0 163.6 3.28 Dec-04 IDDS (Javelin Pharmaceuticals) 71.5%

Mean 77.4$ 71.5$ 68 24.4$ 72.5$ 3.01 91.5$ 4.61 111.9 4.61 Median 75.0 56.2 28 20.0 55.7 2.15 96.1 3.50 97.2 5.25

Develops antibody-based therapeutics for cancer.

Developing small molecules for multiple indications; pain, diabetes, dermatology

Developing monoclonal antibody therapeutics to target the immune system

Develops and commercializes therapeutics for pain

Developes novel antibody based drugs to treat cancer

Discovers and develops drugs for the treatment of HIV.

Develops mechanism targeted drugs for treatment of cancer

Develops small-molecule GPCRs for neuro disorders

Developes novel drugs for the treatment of cancer.

Developing monoclonal antibody therapeutics for oncology

Develops small molecule drugs for CNS diseases

Developing small-molecule compounds for cardiovascular diseases Develops products for HIV, cancer, and inflammatory diseases

Develops genomics analysis solutions

20

Challenges and Caveats

• Match stage to financing source

• Dilution less critical than capitalization

• Transfer of risk without clear quantum accomplishment doesn’t work

• Beware the timing of anticipated step-ups in valuation

• Public markets are demanding integrated programs and later stage assets

• Building for M&A is fruitful with: differentiated discovery/manufacturing, lead program of differentiated capability in unmet need, gap pipeline filler for specific situations, commanding IP, demonstrated commercial uptake

• Exits are a multi-step process – company building and leveraging existing public company assets can work in the setting of financing potential and interest, sponsorship and rational valuation