1. Please see end of document for important disclosures.
RedChip Virtual Conference Keynote Address
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Raghuram Selvaraju, Ph.D., M.B.A.
Managing Director / Head of Healthcare Equity Research
646.502.2464 (O)
646.784.2027 (C)
rselvaraju@aegiscap.com
July 16, 2014

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Perspectives on Healthcare Sector Market Performance
 Recent healthcare sector market performance has been extremely strong
 Biotechnology has been one of the standouts
 Broad index performance has returned >30% within the past 12 months
 Substantial asset inflows have occurred over the past four years and significant growth has taken place in the small / micro-cap sector
 Healthcare stocks are non-correlated investments, to a certain extent
 Defensive characteristics abound, as people must pay for medicines regardless of the prevailing macroeconomic condition
 Healthcare is the only sector that provides more of the only truly priceless commodity, which is time
 Innovations in therapeutic and diagnostic development are driving growth

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IPO Activity – Healthcare Looking Strong

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Follow-On Healthcare Offerings Also Showing Strength

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Risk-Tolerant Regulatory Environment
 The pace of regulatory approvals has recently picked up in the United States, as well as elsewhere
 Drugs, devices and diagnostics are being aimed at more and more specialized “niche” markets
 The FDA Amendments Act (FDAAA) of 2007 ushered in new and more effective safety standards for the approval and monitoring of new drugs
 FDA approvals in 2012 and 2013 soared to a new high of 39 novel drugs annually, 63% above the 2003 – 2011 pace of 24 novel drugs annually
 Regulators have adopted a more risk-tolerant, pragmatic stance towards new medicines
 Products that “ought to be approved” are getting approved
 Several new approval pathways have been put in place that accelerate approval of life-saving medicines
 Examples: Breakthrough Therapy designation (starting in 2012), 505(b)(2) approval route (introduced in 2002)

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Pharmaceutical Sector M&A
 Pharmaceutical sector M&A activity represents a leading indicator for market sentiment in healthcare
 The number of transactions has increased in recent months, with big pharmaceutical firms seeking tax inversions and new pipeline products
 Transaction values have also soared, from $39 billion in 2009 to $74 billion in 2013
 Several mega-mergers have been announced, but not yet consummated, in 2014 (e.g., Valeant / Allergan, AbbVie / Shire, Pfizer / AstraZeneca)
 Investors look at valuations in M&A and licensing transactions to assess potential for exits
 Valuation premiums are also on the rise
 Capital that is liberated through M&A transactions can be redeployed into funding new innovations

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Growth Projections by Therapeutic Indication
Source: EvaluatePharma

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Disclosures
Required Disclosures
I, Raghuram Selvaraju, Ph.D., the author of this research report, certify that the views expressed in this report accurately reflect my personal views
about the subject securities and issuers, and no part of my compensation was, is, or will be directly or indirectly tied to the specific recommendations
or views contained in this research report.
Research analyst compensation is dependent, in part, upon investment banking revenues received by Aegis Capital Corp.
Aegis Capital Corp. expects to receive or intends to seek compensation for investment banking services from the subject companies mentioned
within the next three months.
Neither the research analyst nor any member of the research analyst’s immediate household own shares of any company mentioned herein or any
derivative thereof.
Neither Aegis Capital Corp. nor any of its affiliates hold more than 1% of the shares of any company mentioned herein.
Other Disclosures
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