Jonathan P Gertler MD Managing Director Head, BioPharma Investment Banking

February 27, 2008 Massachusetts Biotechnology Council

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

Better Information Leads to Better Advice

Proprietary Domain Knowledge Differentiated Execution
Equity Issuance 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 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
2

Technology validation Proprietary investor targeting

Sales force education

Buyer due diligence during transaction

Leadership in Healthcare Investment Banking

Most Active in Equity Capital Raising During 2007
($ in millions)

Success Across All Product Types in 2007

9 IPOs Most in the industry Leerink IPOs averaged 19% return vs. Non-Leerink average of 0% 8 Follow-ons Raised 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

Avg. $ Deals $ Raised Raised Leerink Swann Lazard Piper Jaffray JPMorgan UBS CIBC Banc of America Pacific Growth Cowen & Company Jefferies 25 23 21 20 20 19 16 16 15 15 2,605 1,188 2,264 2,189 2,697 1,304 2,782 873 1,314 2,254 104 52 108 109 135 69 174 55 88 150

Multiple Repeat Clients

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

Superior Aftermarket Performance

($ in millions)

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

Deals Leerink Swann Thomas Weisel Merrill Lynch Morgan Stanley UBS Banc of America Piper Jaffray JPMorgan Pacific Growth Jefferies Lazard Cowen & Company Lehman Brothers CIBC 57 40 33 39 50 45 63 52 42 30 58 79 30 59 $ Raised $ 5,860 3,062 5,669 6,467 5,181 4,805 6,299 6,318 2,262 3,048 3,961 5,139 2,572 3,894 Avg. Aftermarket Performance 32.5% 32.3% 26.1% 19.4% 14.5% 11.1% 9.9% 7.7% 3.2% 0.6% (7.2%) (8.0%) (8.3%) (14.0%)

Performance of our deals drives investor confidence

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.

Top Ranked Institutional Equities Platform

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

Leerink Swann Rank #1 #1 #1

1. Leerink Swann
Sector Biotechnology Medical Supplies & Devices Major Pharmaceuticals

1. Lehman Brothers 2. Leerink Swann 3. Merrill Lynch 4. Cowen 5. Citigroup

2. Bear Stearns 3. Cowen

4. Lehman
5. Merrill Lynch 6. Morgan Stanley 7. UBS 8. Citi 9. JPMorgan 10. Banc of America

#1
#1

Specialty Pharmaceuticals
Healthcare Tech & Dist

6. Goldman Sachs
7. Piper Jaffray 8. Bear Stearns 9. Morgan Stanley 10. UBS

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

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

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

Leerink Swann IPO Performance 2006 - 2007

(US$ in millions, except per share values)

Filing Data Shares Filed(1) Midpoint of Range Amt. Date

Offering Data Shares Offered

(1)

Deal Size Price Shares vs Filed Amt vs Filed Amt. vs Mdpt

Post-IPO Stock Price Perf.

One Month After IPO 8.7% (24.0%) 3.0% (7.0%) 10.8% (6.2%) (5.5%) 15.7% 46.1% (8.8%) (0.4%) (6.6%) 33.2% 4.5% -0.4% 6 Months After IPO NA NA NA NA (3.9%) 22.2% 16.9% (5.1%) (0.1%) 69.8% 124.3% (12.3%) 87.4% 33.2% 16.9%

Trading Rank
6 Months After IPO NA NA NA NA 5 3 7 3 3 7 8 3 4 4.8 4 Since IPO 5 3 5 NA 5 2 7 4 4 7 8 3 11 5.3 5.0

Price

5.0 5.0 7.0 5.8 3.8 5.4 6.7 5.8 6.0 6.3 3.5 6.0 3.4

$ 15.00 15.00 15.00 13.00 15.00 12.00 15.00 15.00 12.00 12.00 12.00 13.00 16.00

$ 75.0 75.0 105.0 74.8 56.3 64.8 100.5 86.3 72.0 75.0 42.0 78.0 55.0

11/15/07 11/7/07 11/1/07 10/10/07 8/2/07 5/24/07 5/15/07 5/10/07 4/26/07 11/15/06 8/3/06 5/5/06 4/20/06
Mean Median

5.0 5.0 7.0 5.8 3.8 5.4 8.4 5.0 7.0 6.3 3.5 7.1 3.4

$ 8.00 10.00 14.00 10.00 11.50 9.00 15.00 15.00 12.00 12.00 11.00 15.00 10.00

$ 40.0 50.0 98.0 57.5 43.1 48.6 125.5 75.0 84.0 75.0 38.5 106.5 34.4
$ 67.4 57.5

53% 67% 93% 77% 77% 75% 100% 100% 100% 100% 92% 115% 63%
85.5% 91.7%

100% 100% 100% 100% 100% 100% 125% 87% 117% 100% 100% 118% 100%
103.6% 100.0%

53% 67% 93% 77% 77% 75% 125% 87% 117% 100% 92% 137% 63%
89.3% 87.0%

Leerink Swann IPO's

Excellent performance in the after-market

Strong, consistent trading support

Life Sciences Capital Markets Overview

Market Performance
2006
120 115 110 105 100 95 90

Healthcare IPOs Total Amount Raised

2007 6.4% 3.5% 9.8% -2.0% 2008 -6.7% -7.9% -13.2% -9.1%
$1,000 $814 $800 $1,037 (US$ in millions)

Dow Jones Industrials S&P 500 NASDAQ Composite Russell 2000

16.3% 13.6% 9.5% 17.0%

$600 $446 $400 $271 $200 $327 $329 $318

$567

$598

$589

$309

$283

$51 $-

85 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Dow Jones Industrials S&P 500 NASDAQ Russell 2000

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

# IPOs

10

11

11

Mutual Fund Flows

$35,000 $30,000

Healthcare IPOs Pricing Relative to Range

(US$ in millions)
100% 90% 20% 20% 14% 43% 43% 10% 9% 22% 18% 50% 22% 45% 50% 11% 9%

(US$ in millions)
11%

$25,000 $20,000 $15,000 $10,000 $5,000 $$(5,000) $(10,000) $(15,000)

80% 70% 60% 50% 75%

100% 90% 80% 80% 57% 43% 25% 73% 50% 56% 45% 50% 78%

40% 30% 20% 10% 0%

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

7 -0 ec D -07 ov N t-07 c 7 O p -0 Se -07 g Au -07 l J u -0 7 n 7 J u y -0 a M r-07 Ap r-07 a 7 M b-0 Fe -0 7 n J a c -06 e 6 D v -0 o N t-06 c 6 O p -0 Se -06 g Au 6 l-0 J u -0 6 n 6 J u y -0 a M -06 r 6 Ap r-0 a M -06 b Fe -0 6 n J a c -05 e D v -05 o N t-05 c O -05 p 5 Seg -0 Au -05 l J u -0 5 n 5 J u -0 ay M -05 r 5 Ap r-0 a M -05 b Fe -0 5 n Ja

Priced Below

Priced Within

Priced Above

Correlation of Stage and Status With Investor Subtype

Hedge Funds/Structured Finance

Strategic Investor
Public Investors

PIPE Investors
Private Equity Venture Angel
Start up Pre-clinical Phase I

Crossover Investors
Phase II Phase III Commercial

Private Company Public Company

Selected Metrics for 2007 IPOs

US$ in millions, except per share Offer Company MAKO Surgical Enteromedics BioForm Medical ARYx Therapeutics Nanosphere Novabay Pharmaceuticals Power Medical Interventions TranS1 Targanta Therapeutics MAP Pharmaceuticals Masimo Corp. Sucampo Pharmaceuticals Jazz Pharmaceuticals Amicus Therapeutics Helicos Biosciences Sirtris Pharmaceuticals Eurand Insulet Biodel TomoTherapy NeurogesX Pharmasset Orexigen SenoRx Rosetta Genomics Optimer Pharmaceuticals Accuray 3sBio Synta Pharmaceuticals Molecular Insight XTENT Oculus Innovative Sciences Industry Medtech Medtech Medtech Biotech Medtech Biotech Medtech Medtech Biotech Spec. Pharma Medtech Spec. Pharma Spec. Pharma Biotech Medtech Biotech Spec. Pharma Medtech Biotech Medtech Spec. Pharma Biotech Biotech Medtech Medtech Biotech Medtech Biotech Biotech Biotech Medtech Medtech Ticker MAKO ETRM BFRM ARYX NSPH NBY PMII TSON TARG MAPP MASI SCMP JAZZ FOLD HLCS SIRT EURX PODD BIOD TOMO NGSX VRUS OREX SENO ROSG OPTR ARAY SSRX SNTA MIPI XTNT OCLS Date 2/14/08 11/15/07 11/7/07 11/7/07 11/1/07 10/26/07 10/26/07 10/17/07 10/10/07 10/5/07 8/8/07 8/2/07 6/1/07 5/31/07 5/24/07 5/23/07 5/18/07 5/15/07 5/10/07 5/9/07 5/2/07 4/27/07 4/26/07 3/29/07 2/26/07 2/9/07 2/8/07 2/7/07 2/6/07 2/2/07 2/1/07 1/26/07 Mean Median Shares Filed 5.1 5.0 10.0 5.0 7.0 5.0 3.9 5.5 5.8 5.0 11.9 3.8 6.0 5.0 5.4 5.0 7.0 6.7 5.0 10.9 4.0 6.0 6.0 5.5 3.0 5.3 13.3 7.7 6.0 4.7 4.7 3.1 6.0 5.3 Offer 5.1 5.5 11.5 5.0 8.1 5.0 4.4 6.3 5.8 5.8 13.7 4.3 6.0 5.0 5.8 6.9 7.0 8.4 5.8 11.7 4.0 5.0 8.1 6.3 4.3 8.1 18.4 7.7 5.0 5.0 4.7 3.4 6.8 5.8 Midpoint of Filing Range $ 15.00 15.00 10.00 15.00 15.00 5.00 13.00 13.00 13.00 15.00 17.00 15.00 25.00 15.00 14.00 10.00 18.00 15.00 15.00 16.00 14.00 13.00 12.00 12.00 12.00 13.00 15.00 13.00 15.00 15.00 17.00 13.00 $ 14.16 15.00 Price $ 10.00 8.00 8.00 10.00 14.00 4.00 11.00 15.00 10.00 12.00 17.00 11.50 18.00 15.00 9.00 10.00 16.00 15.00 15.00 19.00 11.00 9.00 12.00 8.00 7.00 7.00 18.00 16.00 10.00 14.00 16.00 8.00 $ 11.98 11.25 $ Amount 51.0 43.9 92.0 50.0 112.7 20.0 48.7 94.9 57.5 69.0 233.0 49.6 108.0 75.0 52.2 69.0 112.0 125.5 86.3 223.1 44.0 45.0 96.6 50.6 30.2 56.4 331.2 123.2 50.0 70.0 75.2 26.8 86.6 69.0 674.2 74.9 57.5 $ 204.2 196.9 $ 278.4 302.4 $ 11.17 11.00 $ 281.2 231.7 (18.8%) (23.1%) (3.2%) (3.9%) 10.5% 10.0% $ IPO Valuation PreMoney 133.4 90.5 276.8 125.4 196.9 64.6 139.5 199.1 152.2 162.3 872.4 425.5 333.9 258.5 136.1 217.9 589.7 269.0 216.2 724.8 93.4 139.7 226.3 75.8 52.6 103.2 759.8 220.4 288.2 275.0 289.5 67.2 255.5 207.7 $ PostMoney 184.4 134.4 368.8 175.4 309.6 84.6 188.2 294.0 209.7 231.3 928.3 468.6 441.9 333.5 188.3 286.9 701.7 394.5 302.4 926.2 137.4 184.7 322.9 126.4 82.8 159.6 947.0 343.6 338.2 345.0 364.7 94.0 331.2 298.2 $ Price 9.55 8.56 5.86 7.75 9.80 2.85 13.71 15.18 8.63 13.94 32.66 11.05 12.27 9.95 11.00 11.58 13.81 17.53 14.24 14.71 6.25 18.37 11.99 8.55 4.99 6.53 10.51 7.89 8.75 7.55 7.65 5.50 $ Current Market Cap. 176.1 143.8 270.1 135.9 216.7 60.2 234.5 297.6 181.0 268.7 1,783.4 463.4 301.2 223.0 231.7 316.3 595.9 453.8 319.9 706.0 108.5 375.1 385.0 147.6 57.7 174.7 578.8 181.4 310.3 184.2 183.4 74.8 316.9 233.1 Midpoint / Pricing (33.3%) (46.7%) (20.0%) (33.3%) (6.7%) (20.0%) (15.4%) 15.4% (23.1%) (20.0%) 0.0% (23.3%) (28.0%) 0.0% (35.7%) 0.0% (11.1%) 0.0% 0.0% 18.8% (21.4%) (30.8%) 0.0% (33.3%) (41.7%) (46.2%) 20.0% 23.1% (33.3%) (6.7%) (5.9%) (38.5%) (15.5%) (20.0%) Performance Offer / Current (4.5%) 7.0% (26.8%) (22.5%) (30.0%) (28.8%) 24.6% 1.2% (13.7%) 16.2% 92.1% (3.9%) (31.8%) (33.7%) 22.2% 15.8% (13.7%) 16.9% (5.1%) (22.6%) (43.2%) 104.1% (0.1%) 6.9% (28.7%) (6.7%) (41.6%) (50.7%) (12.5%) (46.1%) (52.2%) (31.3%) (7.6%) (13.1%) vs. Russ. 2000 (3.1%) 16.9% (16.4%) (12.1%) (17.5%) (13.4%) 40.0% 16.9% 4.0% 33.9% 104.7% 7.4% (13.3%) (15.8%) 37.8% 32.7% 1.9% 31.5% 10.0% (5.9%) (27.1%) 120.3% 16.5% 19.8% (13.1%) 7.1% (26.8%) (35.9%) 1.7% (32.0%) (38.3%) (19.5%) 6.7% 1.8%

2007-2008 Total

$ 2,772.4 $ $ $ $ 10.91 9.88 $

2007-2008 Total

$ 6.3 5.8 $ 14.33 15.00 $ 11.61 11.50 $

Leerink Swann IPOs

Mean Median

5.5 5.4

Leerink deals shaded gray

Biopharma IPO Pricing and Performance

Pricing vs. Initial Filing Range
(33.3%) ARYx Novabay Pharma (23.1 %) Targanta (23.3%) MAP Pharma. Sucampo (23.3%) (28.0%) Jazz Amicus Sirtris (1 .1 1 %) Eurand Biodel (21 .4%) NeurogesX (30.8%) Pharmasset Orexigen (46.2%) Optimer 3sBio (33.3%) Synta (6.7%) Molecular Insight Affymax Obagi Medical (53.8%) (1 6.7%) Emergent (50.0%) Catalyst (23.3%) Achillion Cadence (25.0%) (7.1 %) Trubion (8.3%) Osiris (33.3%) Replidyne (45.8%) Novacea (23.1 %) Vanda (25.0%) Targacept (27.3%) Alexza (40.0%) Acorda (1 8.2%) Valera (50.0%) SGX Altus (23.1 %) Nucryst (21 .4%) Somaxon CombinatoRx (36.4%) (1 .1 1 %) Accentia (4.5%) Avalon (30.0%) Sunesis Coley ALS (58.3%) (30.0%) XenoPort (21 .4%) Aspreva (53.3%) Threshold (27.3%) Icagen (46.2%) Favrille (1 2.5%) ViaCell

After Market Performance

0.0%

0.0% 0.0% 0.0% 0.0%

8.7%

0.0%

6.7%

(22.0%) ARYx (43.0%) Novabay (1 3.7%) Targanta MAP Pharma. (3.9%) Sucampo (31 .8%) Jazz (33.7%) Amicus Sirtris (1 3.7%) Eurand (5.1 %) Biodel NeurogesX (43.2%) Pharmasset (0.1 %) Orexigen (6.7%) Optimer (50.7%) 3sBio (1 2.5%) Synta (46.1 %) Molecular Affymax (23.5%) Obagi (43.4%) Emergent (45.0%) Catalyst (58.9%) Achillion (33.7%) Cadence (37.7%) Trubion Osiris (81 %) .1 Replidyne (57.7%) Novacea (55.1 %) Vanda (8.7%) Targacept (22.0%) Alexza Acorda (1 8.4%) Valera (35.7%) SGX (61 .9%) Altus Nucryst (80.5%) (58.8%) Somaxon (28.6%) CombinatoRx (67.0%) Accentia (77.1 %) Avalon Sunesis (79.7%) (50.0%) Coley ALS (82.0%) XenoPort Aspreva (93.4%) Threshold Icagen (79.3%) (73.3%) Favrille ViaCell

1 6.2%

1 5.8%

1 % 04.1

46.1 %

7.4%

1 36.4%

7.3%

(65.0%)

(55.0%)

(45.0%)

(35.0%)

(25.0%) (15.0%)

(5.0%)

5.0%

15.0%

(1 0.0%) 1

(60.0%)

(1 0.0%)

40.0%

90.0%

1 40.0%

1 90.0%

Most recent IPOs listed at the top

10

Recent IPO Characteristics

($ in millions) Company ARYx Therapeutics Novabay Pharmaceuticals Targanta Therapeutics MAP Pharmaceuticals Sucampo Pharmaceuticals Jazz Pharmaceuticals Amicus Therapeutics Sirtris Pharmaceuticals Eurand Biodel NeurogesX Pharmasset Orexigen Therapeutics Optimer Pharmaceuticals 3sBio Synta Pharmaceuticals Molecular Insight Affymax Obagi Medical Emergent Biosolutions Achillion Pharmaceuticals Cadence Pharmaceuticals Trubion Pharmaceuticals Osiris Therapeutics Replidyne Novacea Vanda Targacept Alexza Pharmaceuticals Acorda Therapeutics Valera Pharmaceuticals Iomai Corp. Altus Pharmaceuticals SGX Pharmaceuticals
Shaded column represents companys lead program.

Therapeutic Focus Gastro / Cardio Infections Infections Pediatric Asthma Idiopathic constipation Daytime sleepiness Fabry Disease Diabetes / Aging Allergy Diabetes Hepatitis Hepatitis Obesity Anti-infective Anemia Cancer Cancer - Imaging Anemia Dermatology/Aesthetics Biodefense/Vaccines Anti-virals Pain & Anti-infective Inflammation & Cancer Stem Cells Anti-infective Oncology CNS CNS Migraines CNS Urology Metabolic Disorders Oncology

Pre-money Value Pre-clin. $ 125.4 64.6 152.2 162.3 432.7 333.9 258.5 217.9 589.7 216.2 93.4 139.7 226.3 103.2 220.4 288.2 275.0 265.3 180.9 280.3 119.0 190.3 167.8 260.0 219.3 104.1 156.8 126.9 137.2 77.9 98.2 83.3 210.0 60.6 0 2 2 0 8 0 2 2 1 2 0 0 0 3 0 2 1 0 0 4 1 0 2 0 1 0 0 1 0 3 2 1 2 1

Number of Drug Candidates (1) Phase I Phase II Phase III 0 1 1 1 1 1 1 0 1 0 1 1 0 1 0 0 1 1 0 3 1 0 1 1 1 1 0 1 3 0 1 2 0 1 3 0 1 1 1 1 2 0 0 1 1 1 1 1 0 2 2 1 0 1 1 0 1 2 1 1 2 3 1 0 1 1 2 2 0 1 1 2 1 2 0 0 2 1 1 1 1 2 3 0 0 0 0 0 0 2 0 1 1 1 2 0 0 1 1 0 0 2

Marketed 0 0 0 0 1 2 0 0 1 0 0 0 0 0 6 0 0 0 5 1 0 1 0 1 NDA 0 0 0 0 1 1 0 0 0

Mean

195.2

1.3

0.8

1.1

0.9

0.6

11

Biopharma IPO Step-Up Analysis

Initial Public Offering
Company
ARYx Therapeutics Novabay Pharmaceuticals Targanta Therapeutics MAP Pharmaceuticals Sucampo Pharmaceuticals Jazz Pharmaceuticals Amicus Therapeutics Sirtris Pharmaceuticals Orexigen Therapeutics Optimer Pharmaceuticals Molecular Insight Affymax Achillion Pharmaceuticals Cadence Pharmaceuticals Trubion Pharmaceuticals Osiris Therapeutics Replidyne, Inc. Novacea, Inc. Vanda Pharmaceuticals Targacept, Inc. Alexza Pharmaceuticals Acorda Therapeutics Valera Pharmaceuticals Altus Pharmaceuticals SGX Pharmaceuticals

Filing Range Low High

Price

Size

Pre-Money Valuation 125.4 64.6 152.2 162.3 432.7 333.9 258.5 217.9 254.6 103.2 275.0 265.3 119.0 198.4 167.8 258.9 219.3 104.5 158.9 126.9 137.2 81.3 98.5 210.0 61.2

Post-Money Valuation $

Last Private Post-Money Valuation (1) 150.0 31.6 150.0 171.6 79.0 279.9 208.4 190.7 149.9 95.4 90.5 155.0 102.0 94.0 52.9 250.0 189.6 137.6 64.7 125.0 118.6 132.5 60.1 244.9 79.6

Last Private Financing 07-Feb-06 01-Sep-06 09-Feb-07 27-Mar-07 31-Mar-06 24-Mar-04 16-Sep-06 23-Jan-07 22-Nov-06 29-Jul-05 14-Apr-05 15-Jul-05 16-Dec-05 21-Feb-06 14-Jul-04 15-Jun-05 08-Sep-05 20-Dec-05 28-Sep-04 06-Dec-04 31-Dec-04 04-Mar-04 16-Aug-04 21-May-04 22-Apr-05

Financing Interval (Mos.) 21 14 8 6 16 39 9 4 5 19 22 17 10 8 28 14 10 5 19 16 14 24 18 21 9 Mean Median Min Max

Step Up To Pricing 0.8x 2.0x 1.0x 0.9x 5.5x 1.2x 1.2x 1.1x 1.7x 1.1x 3.0x 1.7x 1.2x 2.1x 3.2x 1.0x 1.2x 0.8x 2.5x 1.0x 1.2x 0.6x 1.6x 0.9x 0.8x 1.6x 1.2x 0.6x 5.5x

$14.00 $16.00 $15.00 $ 50.0 $ 4.00 6.00 4.00 20.0 12.00 14.00 10.00 57.5 14.00 16.00 12.00 69.0 14.00 16.00 11.50 43.1 24.00 26.00 18.00 108.0 14.00 16.00 15.00 75.0 9.00 11.00 10.00 69.0 11.00 13.00 12.00 96.6 12.00 14.00 7.00 49.0 14.00 16.00 14.00 70.0 22.00 24.00 25.00 92.5 14.00 16.00 11.50 51.8 11.00 13.00 9.00 54.0 13.00 15.00 13.00 52.0 11.00 13.00 11.00 38.5 14.00 16.00 10.00 45.0 11.00 13.00 6.50 40.6 12.00 14.00 10.00 57.5 11.00 13.00 9.00 45.0 10.00 12.00 8.00 44.0 11.00 13.00 6.00 33.0 10.00 12.00 9.00 33.8 14.00 16.00 15.00 105.0 11.00 13.00 6.00 24.0

175.4 $ 84.6 209.7 231.3 468.6 441.9 333.5 286.9 351.2 152.2 345.0 357.8 170.8 252.4 219.8 297.4 264.3 145.1 216.4 171.9 181.2 114.3 132.3 315.0 85.2

Average step-up from postmoney of last private to IPO premoney

12

Select Biotech Crossover Rounds

Crossover investors focus on late-stage differentiated assets when investing in private securities
Date Company Business Description Developer of a light-activated treatment for solid tumors Developer of therapeutic compounds for the treatment of endocrine, metabolic, and cardiovascular diseases. Developer of therapeutics for acute and chronic cardiovascular and vascular disease. Developer of novel therapeutics for the treatment of diabetes and related metabolic disorders. Stage Round P3 P3 P2 P3 P2 P2 P2 P3 P2 P2 P3 P2 P2 P2 B E C D D C F C C E B E E C Amount $ Val. Investors 10-Jul-07 Light Sciences Oncology 22-May-07 QuatRx Pharmaceuticals 7-May-07 Portola Pharmaceuticals 19-Apr-07 Metabolex 30.0 $ 106.1 Unnamed 44.0 70.0 32.0 50.0 55.0 50.0 70.0 17.7 35.6 21.0 65.0 75.0 25.3 120.0 T. Rowe Price W/H Alliance Bernstein LP; Brookside Capital; T. Rowe Price; Goldman Sachs; Teachers Private Capital W/H Alliance Bernstein LP; Deerfield Capital Management; T. Rowe Price; Lombard Odier; MPM BioEquities 121.6 Brookside Capital; Perseus-Soros BioPharmaceutical Fund; D.E. Shaw Group 82.7 Baker Brothers; JPMorgan Partners W/H Ridgeback Capital; Morgan Stanley; and other investors 80.0 Brookside Capital W/H Jennison Associates; OrbiMed Advisors 104.4 FrontPoint Partners 41.2 Great Point Partners; OrbiMed Advisors; Vivo Ventures W/H Jennison Associates; Noonday Asset Management; TPG-Axon W/H Sigma Capital; Jennison Associates; Maverick Capital; and other investors 45.4 Brookside Capital; Perseus-Soros BioPharmaceutical Fund; Pequot Ventures

27-Mar-07 MAP Pharmaceuticals Developer of treatments for respiratory and CNS diseases. 8-Mar-07 Phenomix 1-Mar-07 Microbia 9-Feb-07 Targanta Therapeutics 24-Aug-06 ChemoCentryx 16-Aug-06 Tolerx 2-Aug-06 Biodel 3-Apr-06 Merrimack Pharmaceuticals Developer of a therapeutic portfolio of kinase and protease inhibitors for the treatment of immune disease and metabolic syndrome. Developer of drug candidates for the treatment of gastrointestinal disorders, dyslipidemia, pain, and fungal infections. Developer of antibacterial agents. Developer of orally-administered therapeutics for autoimmune diseases, inflammatory disorders, and cancer. Developer of therapies to treat patients with immune-mediated diseases. Developer of insulin-based products to treat endocrine disorders including diabetes and osteoporosis. Discoverer and developer of drugs for the treatment of diseases in the areas of autoimmune disease and cancer. Developer of drug candidates for the treatment of gastrointestinal disorders, dyslipidemia, pain, and fungal infections.

27-Feb-06 Microbia

25-Jan-06 MAP Pharmaceuticals Developer of treatments for respiratory and CNS diseases.

13

Biotech IPO and M&A Activity Summary

Biotech IPOs: 2006 2007

8 $600
$14,000

Biotech M&A: 2006 2007

$635.9

7 6

$13,937 $12,000 $10,000 $8,000 $6,000

$14,098

15

12

$450

$399.8
$300

$286.7 $194.9

$299.6 $196.5

3 2 1

6 $4,000 $2,000 $193 $Q1-06 Q2-06 Q3-06 Q4-06 $ Volume Q1-07 Q2-07 # Deals Q3-07 Q4-07 $3,133 $721 $2,567 $1,870 0 $4,537 3

$150

$Q1-06 Q2-06

$38.5
Q3-06 Q4-06 Q1-07 Q2-07

$49.6
Q3-07 Q4-07

$ Raised

# Deals

M&A deals under $5 billion.

14

Biotech M&A Activity: 2006-2007

($ in US millions) Date Announce Target 2/25/08 2/20/08 2/3/08 1/22/08 12/24/07 12/18/07 12/17/07 12/10/07 12/5/07 11/29/07 11/26/07 11/21/07 11/18/07 11/15/07 11/12/07 10/29/07 10/19/07 10/17/07 10/9/07 10/9/07 10/5/07 10/1/07 9/27/07 9/24/07 9/18/07 9/18/07 8/1/07 7/25/07 7/24/07 7/20/07 7/9/07 6/6/07 6/4/07 5/29/07 5/18/07 5/7/07 4/24/07 4/9/07 4/2/07 3/30/07 3/22/07 3/12/07 3/5/07 3/2/07 Acquirer Equity Purchase Price 37.5 195.0 21.8 400.0 341.5 NA 200.0 3,900.0 32.0 1,293.7 537.0 2,751.3 2,967.0 230.3 38.6 429.7 66.7 932.2 35.5 42.0 NA 300.5 120.0 553.7 370.0 145.7 62.0 352.7 35.0 792.9 135.0 300.0 420.0 308.2 451.1 125.0 177.3 31.8 56.5 180.0 325.0 30.7 315.0 131.7 Enterprise Value 37.5 195.0 21.8 400.0 341.5 NA 200.0 3,900.0 32.0 1,123.8 537.0 2,784.2 2,832.0 146.0 38.6 438.4 66.7 579.0 35.5 42.0 NA 256.6 120.0 534.9 370.0 145.7 62.0 312.8 35.0 792.9 135.0 300.0 420.0 287.6 451.1 118.3 177.3 31.3 56.5 180.0 325.0 30.7 315.0 131.7 Financial Info. LTM Rev. Cash NA 28.6 NA NA NA NA NA NA NA 328.7 NA 474.9 255.9 31.2 NA 142.9 NA 237.8 NA NA NA 59.0 NA 3.0 NA 11.4 NA NA NA 243.3 NA NA NA 14.1 297.7 1.3 NA NA NA NA NA NA NA NA NA 54.1 NA NA NA NA NA NA NA 170.7 NA 181.0 135.0 87.8 NA 53.7 NA 353.2 NA NA NA 44.0 NA 22.7 NA 85.8 NA 42.5 NA NA NA NA NA 20.6 NA 6.7 NA 0.5 NA NA NA NA NA NA Target Information Lead Product Info. Stage Indication P2 Mkt EU P1 NA Preclin. Preclin. Mkt Mkt Preclin. Mkt P1 Mkt Mkt P3 P1 Mkt Mkt P3 Mkt P1 Disc. Mkt P1 P1 Mkt. Preclin. Prod. P3 P2 Mkt Mkt P2 P2 Mkt Mkt P1 Mkt Preclin Disc. Mkt P1/2 P2 P2 Mkt Rheumatoid Arthritis, Osteoarthritis Pulmonary Arterial Hypertension (PAH) Cancer NA (Biotechnology research) Hepatitis C Virus Cancer Cancer Oncology and acute care CNS Gastrointestinal Cancer Cardiovascular Hematology, Oncology Cancer Cancer Spec pharma Oncology, autoimmune Lupus Dermatology Glaucoma Antibodies Stem cell bank Diabetes Oncology Genitourinary Platform / CNS Drug delivery CHF Cancer Allergy Depression, bi-polar disorder Type 2 diabetes Chronic kidney disease Pediatric ALL Generic Antibodies Spec Pharma - Inflammation / ADHD Shingles Antibodies Estrogen replacement therapy Ovarian cancer HBV, Melanoma Insomnia ALL

Prem

Proprius Pharmaceuticals, Inc. Cypress Bioscience, Inc. Encysive Pharmaceuticals Inc. Pfizer, Inc. CellGate, Inc. Progen Pharmaceuticals Limited (ASX:PGL) CoGenesys, Inc. Teva Pharmaceutical Industries Ltd. Illumigen Biosciences Cubist Pharmaceuticals CovX Pfizer Inc. (NYSE:PFE) PDL BioPharma (IV Busulfex) Otsuka Phamaceutical MGI Pharma, Inc. Eisai Corporation (N. Amer.) Ester Neurosciences Amarin (NAsdaqNM:AMRN) Axcan Pharma Inc. (TSX:AXP) TPG Capital Agensys, Inc. Astellas Pharma US, Inc. Reliant Pharmaceuticals, Inc. GlaxoSmithKline plc (LSE:GSK) Pharmion Corp. (NasdaqNM:PHRM) Celgene Corporation (NasdaqNM:CELG) Coley Pharmaceutical Group, Inc. (NasdaqNM:COLY) Inc. (NYSE:PFE) Pfizer Raven biotechnologies, inc. VaxGen Inc. (OTCPK:VXGN) Bradley Pharmaceuticals Inc. (NYSE:BDY) ALTANA Inc. Celldex Therapeutics AVANT Immunotherapeutics Aspreva Pharmaceuticals Corporation (NasdaqNM:ASPV) Holding AG (SWX:GALN) Galenica Crawford Pharmaceuticals Limited York Pharma plc (AIM:YRK) ForSight Newco II QLT (NasdaqNM: QLTI) Haptogen Wyeth (NYSE: WYE) ViaCell Inc. (NasdaqNM:VIAC) PerkinElmer Inc. (NYSE:PKI) Symphony GenIsis Inc. ISIS Pharmaceuticals Inc. (NasdaqNM:ISIS) Adnexus Therapeutics Inc. Bristol-Myers Squibb Co. (NYSE:BMY) Esprit Pharma, Inc. Allergan Inc. (NYSE:AGN) Renovis Inc. (NasdaqNM:RNVS) Evotec AG (DB:EVT) Brookwood Pharmaceuticals, Inc. SurModics Inc. (NasdaqNM:SRDX) NovaCardia, Inc. Merck & Co. Inc. (NYSE:MRK) Systems Medicine, Inc. Cell Therapeutics Inc. (NasdaqNM:CTIC) MedPointe, Inc. Meda AB (OM:MEDA A) JDS Pharmaceuticals, LLC Noven Pharmaceuticals Inc. (NasdaqNM:NOVN) Alantos Pharmaceuticals Holding, Inc. Amgen Inc. (NasdaqNM:AMGN) Ilypsa, Inc. Amgen Inc. (NasdaqNM:AMGN) Bioenvision Inc. Genzyme Corp. (NasdaqNM:GENZ) Taro Pharmaceutical Industries Ltd. (OTCPK:TARO.F) Pharmaceutical Industries Ltd. (BSE:524715) Sun Evogenix Pty Ltd. (ASX:EGX) Peptech Ltd. (ASX:PTD) Alliant Pharmaceuticals, Inc. Sciele Pharma Inc. (NasdaqNM:SCRX) Fermavir Pharmaceuticals Inhibitex Inc. Therapeutic Human Polyclonals Roche Holding AG VIVUS, Inc., EvaMist KV Pharmaceutical Co. Morphotek, Inc. Eisai Corporation (N. Amer.) Oxxon Therapeutics, Inc. Oxford BioMedica plc Hypnion Eli Lilly & Co. OPi EUSA

15
Includes deals under $5 billion

Biotech M&A Activity: 2006-2007

($ in US millions) Date Announce Target 2/22/07 2/20/07 2/1/07 1/19/07 1/4/07 1/4/07 12/20/06 12/13/06 12/11/06 12/11/06 12/8/06 11/19/06 11/15/06 11/9/06 11/5/06 10/31/06 10/30/06 10/22/06 10/16/06 10/12/06 10/7/06 10/2/06 9/29/06 8/31/06 7/19/06 6/8/06 6/7/06 5/31/06 5/23/06 5/15/06 5/9/06 5/9/06 5/3/06 4/13/06 4/12/06 4/6/06 4/3/06 3/15/06 2/1/06 1/27/06 1/9/06 INO Therapeutics, Inc. New River Pharmaceuticals Arrow Therapeutics DOR Biopharma Syntonix Caprion Praecis Cerexa Valera MacroMed Domantis CoTherix Cabrellis Pharmaceuticals Tanox KOS Pharmaceuticals ProlX Pharmaceutiacals Sirna Therapeutics Connetics Corporation ICOS Corp. RxKinetix, Inc. AnorMed Myogen Avidia Avidex Corus Pharma TorreyPines Therapeutics NeuTec Pharma Plc Fumapharm AG Alamo Pharmaceuticals Cambridge Antibody Technology Glycofi, Inc. Abmaxis, Inc. Conforma Therapeutics Eximias Pharmaceutical Corp. Infinity Pharmaceuticals Rinat Neuroscience Predix Pharmaceuticals Vela Pharmaceuticals Resistys, Inc. Montigen Pharmaceuticals Micromet AG Acquirer Ikaria Inc. Shire AstraZeneca Cell Therapeutics Biogen Idec Ecopia BioSciences GSK Forest Laboratories Indevus Protherics GSK Actelion Pharmion Genentech Abbott Laboratories Biomira Merck Stiefel Laboratories Eli Lilly & Co. Endo Pharmaceuticals Genzyme Corporation Gilead Amgen MediGene AG Gilead Axonyx Novartis Biogen Idec Avanir Pharmaceuticals AstraZeneca Merck Merck Biogen Idec YM Biosciences Discovery Partners Intl. Pfizer EPIX Pharmaceuticals Pharmos Avantogen Oncology, Inc. (OTCBB:AVTO) SuperGen, Inc. CancerVax Corporation Mean Median Equity Purchase Price 670.0 2,600.0 150.0 49.3 40.0 45.0 54.8 480.0 120.0 23.7 453.2 418.4 59.0 905.0 4,161.0 24.2 1,133.4 712.7 2,287.2 20.0 584.0 2,500.0 290.0 65.8 365.0 83.2 569.0 NA 29.0 1,065.5 400.0 80.0 150.0 33.0 141.8 500.0 81.6 29.7 59.2 18.0 86.3 $294.4 45.0 Enterprise Value 670.0 2,600.0 150.0 49.3 40.0 45.0 2.0 480.0 101.2 23.7 453.7 334.7 59.0 740.8 3,647.4 24.2 1,050.5 758.4 2,459.5 20.0 542.0 2,311.9 290.0 65.8 365.0 56.2 569.0 NA 29.0 823.2 400.0 80.0 150.0 33.0 141.8 500.0 81.6 29.7 NA 18.0 86.3 $392.4 142.4 Financial Info. LTM Rev. Cash NA 31.9 NA 2.5 NA NA 4.5 NA 19.9 NA NA 60.0 NA 60.9 849.3 NA 4.2 158.1 76.7 NA 0.2 11.5 NA NA NA NA NA NA 10.0 93.3 NA NA NA NA 32.4 NA NA NA NA NA NA $118.5 60.0 NA 162.8 NA 0.6 NA NA 63.4 NA 18.9 NA NA 83.7 NA 164.2 543.7 NA 82.8 244.3 106.4 NA 42.0 188.1 NA NA NA 27.0 44.7 NA NA 334.0 NA NA NA NA 80.0 NA NA NA NA NA NA $114.8 81.4 Target Information Lead Product Info. Stage Indication NA Mkt P2 P3 P1 P2 P1 P2 Mkt Mkt Preclin Mkt P2 Mkt Mkt P1 P2 Mkt Mkt P2 P3 P3 P1 Preclin P3 P2 Mkt Mkt Mkt Mkt Preclin Preclin P1 P3 P1 P2 P3 P2 NA Preclin P2 Chronic lung disease, hypertension ADHD, Pain Anti-viral GVHD Anemia Cancer Cancer Anti-bacterial Urology Critical Care, Oncology Immunology PAH Cancer Asthma Cardiovascular Cancer Acute Macular Degeneration Dermatology Erectile dysfunction Oral mucositis, cancer Stem Cells PAH Auto-immune Rheumatoid arthritis Cystic fibrosis Migraine Fungal & Bacterial Infections Psoriasis Schizophrenia Rheumatoid Arthritis Technology Technology Oncology Oncology Cancer Osteoarthritis pain Anxiety Irritable Bowel NA Cancer Breast Cancer

Prem

16
Includes deals under $5 billion

Reverse Merger Overview

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

Newcos 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)

17

Precedent Reverse Merger Transactions

(US$ in millions) Announced/ Completed Public / Private Company Private Company Description
Developing monoclonal antibody therapeutics for oncology Developing monoclonal antibody therapeutics to target the immune system Developing small molecules for multiple indications; pain, diabetes, dermatology

Equity Value $ 38.1 $

Enterprise Value (8.7)

Pro Financing Info Forma # Days Post Ownership Merger Amount 50% 50% 42% 58% 4% 96% 24% 73% NA NA 38% 62% 53% 47% 33% 68% 20% 80% 38% 62% 28% 72% 22% 78% 55% 45% 28.5% 71.5% NA NA

Current Market Value $ 22.5

Current Price $ 0.67

Mkt Val @ Ann. $ 38.1

Price @ Ann. $ 1.15

Mkt Val. 3M Since Ann. $ 44.4

Price 3M Since Ann. $ 0.67

Public / Private Mergers Nov-07 VaxGen Pending Raven Biotechnologies Oct-07 Pending Sep-07 Pending Jan-07 May-07 Dec-06 Dec-06 Jun-06 Oct-06 Apr-06 Aug-06 Jan-06 May-06 Dec-05 Mar-06 Sep-05 Dec-05 Sep-05 Jan-06 Mar-05 Aug-05 Jun-04 Mar-05 Dec-04 Dec-04 AVANT Immunotherapeutics Celldex Therapeutics Point Therapeutics Dara Biosciences Corautus Genetics Inc. VIA Pharmaceuticals

71.7

64.8

NA

NA

54.4

0.73

51.9

0.70

97.2

0.55

37.7

35.4

NA

NA

5.9

0.19

1.6

0.04

186.7

0.19

Developing small-molecule compounds for cardiovascular diseases

19.7

7.7

24

25.0

57.2

2.95

7.3

0.37

25.1

0.34

Develops products for HIV, cancer, and Intrabiotics Pharmaceuticals inflammatory Ardea Biosciences (Valeant Pharmaceuticals) diseases

23.0

(25.4)

253

20.0

187.8

14.40

23.0

3.90

31.0

5.25

Axonyx TorreyPines Therapeutics EPIX Pharmaceuticals Predix Pharmaceuticals CancerVax Corporation Micromet AG Xcyte Cyclacel Corgentech (Anesiva) AlgoRx Maxim Pharmaceuticals EpiCept Epimmune Inc Immuno-Designed Molecules SA V.I. Technologies Inc Panacos Pharmaceuticals, Inc. Intrac, Inc. IDDS (Javelin Pharmaceuticals)

Develops small molecule drugs for CNS diseases Develops small-molecule GPCRs for neuro disorders Developes novel antibody based drugs to treat cancer Develops mechanism targeted drugs for treatment of cancer Develops and commercializes therapeutics for pain Developes novel drugs for the treatment of cancer. Develops antibody-based therapeutics for cancer. Discovers and develops drugs for the treatment of HIV. Develops genomics analysis solutions

83.2

56.2

NA

NA

35.4

2.15

134.2

7.60

141.3

8.00

81.5

75.3

NA

NA

106.7

2.87

153.8

3.50

191.1

4.35

86.3

125.9

NA

NA

55.7

1.91

211.4

7.40

206.9

7.23

25.2

6.3

28

45.3

89.3

4.32

31.5

3.20

69.9

7.10

121.8

181.4

NA

NA

182.8

4.68

196.1

10.64

184.4

9.98

97.9

136.2

34

11.6

67.0

1.37

136.9

1.34

124.8

1.23

75.0

37.4

NA

NA

42.2

2.24

96.1

9.24

62.6

6.02

245.7

236.7

20.0

35.9

0.59

107.0

10.80

89.5

9.00

18.0

163.6

3.28

Mean Median

77.4 75.0

71.5 56.2

68 28

24.4 20.0

72.5 55.7

3.01 2.15

91.5 96.1

4.61 3.50

111.9 97.2

4.61 5.25

18

Challenges and Caveats

Match stage to financing source Dilution less critical than capitalization Transfer of risk without clear quantum accomplishment doesnt 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

19