BUSINESS MODEL ANALYSIS CLÉMENT DUBOS JULIETTE PAILLARD MARÍA ALCÁZAR DUQUE SIHEM ALLOTI SOSSANE NOURESTANI BUSINESS MODEL ANALYSIS

PRESENTATION MAP About the company Governance Pipeline Financial statement SWOT

About The Company Features Headquarter: Basel, Switzerland. Innovative pharmaceutical products Bacterial infections, fungal infections, oncology. Resistance and nonresponse. Founded in 2000 as spin-off of Roche. Publicly traded since 2004 on the SIX Swiss Exchange. Spin off means the parent company will list the subsidiary on the public market as an independent public company, so that investors who are only interested in the subsidiary business can invest only in this section rather than invest in the whole chunk of business Spin out means the parent company will sell the subsidiary to another company, where M&A will happen

Basilea Pharmaceutica ltd. About The Company Basilea Pharmaceuticals A/S Basilea Pharmaceuticals ltd. Basilea Pharmaceutica Deutschland gmbh Basilea Pharma SAS Basilea Pharmaceuticals iberia s.l. Basilea Pharmaceutica China ltd. Structure: (mettre adresse pays + voir dans le RA2015 ce qui est fait où. Location des sites de Prod ??? -Parent company : Basilea Pharmaceutica Ltd (« Basilea »). -Swiss operating subsidiary : Basilea Pharmaceutica International Ltd (« Basilea international). -Subholding company : Bph Investitionen Ltd (Bph). -Chinese operating subsidiary held through Bph : Basilea Pharmaceutica China Ltd (« Basilea china »), founded in 2002. -Wholly-owned subsidiaries in Denmark, France, Germany, Italy, Spain, UK. (Voire map archive) Basilea Pharmaceutica ltd. Basilea Pharmaceutica s.r.l.

Research Center In China About The Company Research Center In China -Wholly-owned subsidiary of Basilea -Near Shangai, Jiangsu Province People’s Republic of China -Basilea’s key R&D projects Chemical synthesis Analytical development Process research and development -Awards: High-tech Enterprise “A” class for safety operation Best Safety Performance Development of the local R&D Basilea China represents an important strategic advantage for Basilea, allowing a high degree of flexibility for future growth.

Dr. Thomas M. Rinderknecht Governance Board of Directors Mr. Domenico Scala, Chairman Changements dans le Board of Directors en 2016 Chairman (2013-2016): Dr Martin Nicklasson (PhD) => Avril 2016 : Domenico Scala (economics and executive development), Vice-chairman (2011-2016): Domenico Scala Members: -Hans-Beat Gürtler (2009-2016): commercial diploma -Pr Daniel Lew (2003-2016): clinical infectious disease physician -Dr Thomas M. Rinderknecht (2011-2016): lawyer (PhD) -Steven D. Skolsky (2008-2016): Biologist -Dr Thomas Werner (2011-2016): Chemist (PhD) Dr. Thomas M. Rinderknecht Dr. Martin Nicklasson Prof. Daniel Lew Mr. Steven D. Skolsky Dr. Thomas Werner

Dr. Laurenz Kellenberger Governance Management Committee Ronald Scott, CEO Chief officers: -Economic: Ronald Scott, commercial. -Technology: Dr Ingrid Heinze-Krauss, organic chemistry. -Medical: Pr Achim Kaufholf, professor of medical microbiological and Infectious Diseases.. -Scientific: Dr Laurenz Kellenberger, organic chemistry. -Human resources: Mr Heidi McDaid, business management and human resources qualifications. -Financial: CFO: Mr Donato Spota, business administration and information technology. -Commercial: Mr David Veitch, biology. Dr. Günter Ditzinger Prof. Achim Kaufhold Dr. Laurenz Kellenberger Ms. Heldi McDaid Mr. Donato Spota Mr. David Veitch

Pipeline - overview

Pipeline - overview

New Antifungal Market : ANTIFUNGALS Medical Need New Antifungal Market : USD 2.35 billion sales CANDIDA ASPERGILLUS MUCORALES CAGR 2004-2015 : + 17% Mortality rates for invasive fungal infections WW sales (mn standard units) Commercial potential AR2006 Rationel d’utilisation (mode d’action / résultats) Fungal infections are caused by fungi, a group of organisms abundant in nature such as molds and yeast. Fungal infections are quite common, affecting 20-25% of the general population, are typically superficial restricted to the skin or mucosal surfaces and do not cause much harm. Invasive or systemic fungal infections are infections where the molds or yeasts have entered the bloodstream or airways and are life-threatening if not treated timely. Mortality rates are high in invasive fungal infections ranging between 25-35% in candida (yeast) infections, 34-58% in aspergillus (mold) infections, and 40-80% in mucorales (emerging mold) infections. Timely intervention with an effective broad-spectrum antifungal is key to improve outcomes. Invasive fungal infections on the rise with frequent use of immunosuppressants Almost 8 mn patients globally per year with an average 30-40 treatment days Availability of generic versions of Pfizer’s Vfend in the US Pfizer = voriconazole Astellas = amphoB liposomale, micafungine Merck = caspofungine CRESEMBA targets a USD 2.3 bn global invasive fungal infection market. Three major drug classes target invasive fungal infections, including: 1. (Tri)azoles 2. (Echino)candins 3. Amphotericin B reformulations COMMERCIAL POTENTIAL

Weakening of fungal cell membrane structure & function Mechanism of action Prodrug activation process Weakening of fungal cell membrane structure & function Plasma esterase Acetyl CoA Squalene Lanosterol PharmacoD : L’isavuconazole démontre un effet fongicide en bloquant la synthèse de l’ergostérol, un composant essentiel de la membrane des cellules fongiques, via l’inhibition de l’enzyme lanostérol 14-alpha- démethylase dépendant du cytochrome P-450, qui est responsable de la conversion du lanostérol en ergostérol. Cela entraîne une accumulation des précurseurs stéroliques méthylés et une diminution de la quantité d’ergostérol dans la membrane cellulaire, ce qui affaiblit la structure et le fonctionnement de la membrane de la cellule fongique. Prodrug de l’isavuconazonium sulfate, metabolisme par CYP 3A4 (inhibiteur) et CYP 3A5 The phase III program with CRESEMBA to investigate its role in treating invasive fungal infections included three trials: 1. “SECURE” a global double-blind randomized phase III trial, designed to evaluate the safety and efficacy of once-daily CRESEMBA versus Pfizer’s twice-daily Vfend (voriconazole) in the primary treatment of invasive fungal disease caused by Aspergillus species or other filamentous fungi: Primary & secondary endpoints met 2. “VITAL” an open-label phase III trial of CRESEMBA in the treatment of aspergillosis patients with pre-existing renal impairment or patients with invasive fungal disease caused by emerging and often fatal molds, yeasts or dimorphic fungi: Effective in aspergillosis patients with renal impairment & effective in mucormycosis 3. “ACTIVE” a phase III trial evaluating the safety and efficacy of intravenously (IV) and orally administered CRESEMBA versus Merck & Co’s IV Cancidas (caspofungin) followed by Pfizer’s oral Vfend in the treatment of invasive Candida infections: Primary endpoint missed, secondary endpoints met Lanosterol 14α-demethylase Ergosterol Fungi cell Completed three phase 3 clinical trials: ACTIVE SECURE VITAL Cell membrane CANDIDA ASPERGILLUS MUCORALES

DEVELOPMENT & REGULATORY STATUS Europe the USA MENA Latin America Currently marketed by Basilea in Germany, Italy, the United Kingdom, Austria and France,  Collaboration with Quintiles Orphan Drug designation  10 years of market exclusivity Marketed by Basilea’s license partner :  Astellas Pharma US 2Q16 sales = USD 12 million Orphan drug status + Qualified Infectious Disease Product designation  12 years of market exclusivity MENA Quintiles : CRO services. Assistance prix et remboursement. En France SMR important mais ASMR V (HAS) PIP en cours (2 years of additional protection when the Pediatric Investigation Plan is completed) Potentielle extension pédiatrique. Développé en collaboration avec Astellas (license exclusive pour les US et le Canada) Basilea announced in september 2016 that it has entered into a supply, distribution and license agreement with Grupo Biotoscana for CRESEMBA® (isavuconazole) and antibiotic Zevtera® (ceftobiprole) in 19 countries in Latin America including Brazil, Mexico, Argentina and Colombia. Under the terms of the agreement, GBT holds an exclusive license to commercialize isavuconazole and ceftobiprole in key Latin American countries. Latin America Distribution agreement with HIKMA License agreement with GBT

ANTIBIOTICS Medical Need Over the last 30 years, no major new types of antibiotics have been developed

MRSA HAP HAP is the second most common nosocomial infection Frequent Methicillin-resistant Staphylococcus aureus (MRSA) is one of the most frequent causes of hospital-acquired bacterial pneumonia Between 10-30% of patients with Staphylococcus aureus bacterieia will die from the infection MRSA HAP is the second most common nosocomial infection Among the highest mortality rates (62 %) Main causes of HAP: MRSA +++ (> 20 %) CAP up to 60 % hospitalisations HAP

COMMERCIAL POTENTIAL

Synthesis of Peptidoglycane Zevtera®/ Mabelio® Mechanism of action Prodrug activation First broad-spectrum anti-MRSA cephalosporin authorized for HAP (excl. VAP) + CAP (Community Acquired Pneumonia) Single agent with broad-spectrum bactericidal activity that includes MRSA and Pseudomonas spp Ceftobiprole Modecaril (sodium) Ceftobiprole Enzymatic cleavage (Plasmatique esterase) Diacetyl Potential to replace antibiotic combinations Synthesis of Peptidoglycane Ceftobiprole Bacterial Lysis

DEVELOPMENT & REGULATORY STATUS Europe The USA Latin America Currently marketed by Basilea in Germany, Italy, the United Kingdom , France , Austria, and Switzerland → Collaboration with Quintiles Marketed in the Nordic Countries sept 2016 → Collaboration with Unimedic Pharma Market access activities ongoing in Spain Not approved yet → Two cross-supportive phase 3 trials (ABSSSI and Bacteriema) Special Protocol Assessment’s agreement by the FDA on going → phase III development program H1 2017 Qualified Infectious Disease Product Designation (ABSSSI and CABP) → 10 years of market exclusivity Fundings: Biomedical Advances Research and Development Authority (BARDA) under contract Latin America CHANGEMENT Licence agreement with Biotoscana S.L

Intellectual Property MA 2015 EU MA 2014 Industrial property Industrial property PATENT PATENT SPC 1 2000 2020 2030 1999 2019 2024 2025 Commercial exclusivity Commercial exclusivity Industrial prop Exclusivite commerciale : on peut la perdre. Au bout de 5 ans des 10 ans si on respecte plus la prévalence ou si on a le retour sur investissement 2014-2009 – 5 ans = 0 pour le SPC USA ORPHAN QIDP NCE QIDP 2015 2022 2027 MA MA+5 MA+10 EU ORPHAN PIP 2015 2025 2027

ANTIBIOTICS Medical Need Cystic Fibrosis prevalence Infections caused by multidrug ­resistant Gram­ negative bacteria with newly acquired resistance mechanisms  Chronic bacterial pulmonary infection: serious concern in patients with cystic fibrosis bronchiectasis 70,000 and 100,000 people worldwide COMMERCIAL POTENTIAL

BAL30072 Mechanism of action Non Cinical data Novel siderophore (iron-binding) sulfactam antibiotic potent bactericidal activity againts GN pathogens. Stable towards many of the extended-spectrum beta lactamase enzymes and metalo-beta-lactamase. Mechanism of action Non Cinical data Potent antibacterian in vitro- in vivo activity against: Enterobacter spp., Klebsiella spp, Acinetobacter spp. Pseudomonas aeruginosa

Synergy with Meropenem Clinical studies Development of IV formulations with the US BARDA Inhaled formulation : ND4BB Program 15 august 2016 Completed PH1 study Discontinuation of the inhaled formulation

ONCOLOGY Global cancer burden 12.7 mn new cases in 2008, 21.4 mn by 2030 During the past two decades, cancer incidence has steadily increased due to aging populations, lifestyle and environmental factors Oncology research and development (R&D) has the highest failure rate for new molecular entities (NME) and significantly higher development costs Témozolomide. http://globocan.iarc.fr/Pages/fact_sheets_cancer.aspx Increase of cancer incidence : Aging populations Lifestyle Environmental factors 2/3 of all cancer diagnoses occurring in LMIC

Some Unmet Medical Needs Growth sector TNBC NSCLC Pancreatic cancer Glioblastoma Balisea’s product targets markets such as the USD 3.5 bn taxane market increasing need for new agents in taxane-resistant cancer patients. COMMERCIAL POTENTIAL

Some Unmet Medical Needs Growth sector TNBC NSCLC Pancreatic cancer Glioblastoma Balisea’s product targets markets such as the USD 3.5 bn taxane market increasing need for new agents in taxane-resistant cancer patients. COMMERCIAL POTENTIAL

Some Unmet Medical Needs Growth sector TNBC NSCLC Pancreatic cancer Glioblastoma Balisea’s product targets markets such as the USD 3.5 bn taxane market increasing need for new agents in taxane-resistant cancer patients. COMMERCIAL POTENTIAL

Highly water-soluble lysine prodrug BAL101553 Tumor checkpoint controller Highly water-soluble lysine prodrug La tubuline possède 3 sites de liaison, qui sont les cibles de médicaments anticancéreux ; le site du Taxol, de la Vinblastine et de la colchicine. La colchicine et la Vinblastine se lient à la tubuline et inhibent sa polymérisation, c'est-à-dire la formation de microtubules, immobilisant les neutrophiles et abaissant l'inflammation. Le Taxol inhibe la dépolymérisation des microtubules. Lysine décarboxylase ? Lisavanbulin Binds the colchicine site of tubulin prevents tubulin polymerization and destabilizes microtubules, ultimately leading to cell cycle arrest, blockage of cell division and an induction of cell death in cancer cells. Address the issue of frequent resistance to approved microtubule-targeting agents (MTA’s) No other approved oncology agent targets BAL27862’s binding site Address the issue of resistance to (MTA’s)

Highly water-soluble lysine prodrug Non-clinical data : Good oral bioavailability Passes through the blood-brain-barrier Potent activity in many tumor cell lines Activity in treatment-refractory glioblastoma models. (AARC) Clinical trials : IV : phase 2 : Potential  colorectal, gastric, non-small cell lung, ovarian, pancreatic and triple- negative breast cancer Oral : Phase 1/2a, patients with advanced solid tumor cancers + glioblastoma new arm by year-end BAL101553 Protease Phase 2 ongoing : results in 2017 Passes through the blood-brain-barrier potential to open up development opportunities not addressed by standard MTA’s, such as brain cancer (glioblastoma). Potent activity in many tumor cell lines that are insensitive or resistant to taxanes or other microtubule-targeting agents BAL27862

biomarker strategy What’s next? Could trigger a lucrative partnering agreement with a major cancer player :  phase III development  broader range of phase IIb indications Forecast : Peak sales of CHF 500+ mn Optimize dose selection Identify cancer patient groups more likely to respond. BubR1 EB1 BubR1, controller of the spindle assembly checkpoint and tumor cell division  required for BAL101553 activity in vitro EB1, microtubule regulator, required for optimal BAL101553 activity in glioblastoma stem-like tumor models in vitro and in vivo Forecast : Peak sales of CHF 500+ mn or if the compound proves to provide clinical benefit in multiple indications.

Estimated rates of deaths by melanoma worldwide (2012) ONCOLOGY Medical Need BRAF mutant in 50% of the melanoma Estimated rates of deaths by melanoma worldwide (2012)

BAL3833 Commercial potential Mechanism of action Research: Launch Profit (2015) Vemurafenib ROCHE 2011 US, CA, EU CHF 214 millions Dabrafenib/Trametinib NOVARTIS 2014 US, EU CHF 453 millions BAL3833: targets BRAF, CRAF and SRC. Orally active drug targeting kinase inhibitors Vemurafenib: inhibition of mutant BRAF Dafrabenib: inhibition of mutant BRAF Trametinib: inhibition of MEK1 and MEK2 Research: University of Manchester at The Institute of Cancer Research Fundings: Wellcome trust Cancer Research UK Cancer Institute

Currently ongoing for patients with advanced solid tumors Preclinical studies -Results presented at the AACR conference -Mutant BRAF cancers: melanoma, colorectal, ovarian Treatment of refractory melanoma Inhibition of mutant BRAF and cRAF/SRC -Potential in K-RAS driven cancers : pancreatic, colorectal, non-small-cell lung New therapeutic option Inhibition of panRAF/and SRC kinase Phase 1/2a study Currently ongoing for patients with advanced solid tumors Biomarker evaluation initiated : tumor type selection AACR = American Association for Cancer Research

Action Plan against antimicrobial resistance Commercial Strategies Funding partners & Academic institutions : DISARM BARDA iABC ADAPT Action Plan against antimicrobial resistance SPA NCE BBND QIDP

Commercial Strategies Partnering and Licensing deals :

Financial Statement (in CHF thousands) 2012 2013 2014 2015 Revenue 58 336 41 376 42 634 52 825 R&D (58 863) (53 350) (54 377) (60 075) 100.9% 128.9% 127.5% 113% Net profit (53 033) (33 019) (41 520) (61 520) Equity 105 502 70 874 57 931 14 856 Cash 223 956 118 898 156 125 313 064 Earning per share (5.53) (3.40) (4.17) (6.09) Burn rate (in years) 2.0 1.6 1.8 2.7

Financial Statement

Financial Statement Evolution of stock price in 2016 :

Financial Statement TOCTINO’s timeline Bottom line : Developped by Basilea in the early 2000’s License agreement with Stiefel (GSK), → Contract with 200 CHF million and subsequent milestones for FDA approval FDA denied the approval in 2016 GSK isn’t willing to continue developing Toctino Impacted the stock price of Basilea (-35%) Basilea is considering buying it back in order to find another partner in the future Bottom line : Even though it didn’t get the FDA’s approval, it still was a great help in Basilea’s development strategy

Financial Statement

Financial Statement

O W T S 2 products on the market 3 products in development Several therapeutic areas with high medical needs Numerous partners and license agreement Growth employment Communication force Cash increase Commercialization dependent on external partners No dedicated sell force outside major EU countries Loss of WW Cresemba license in 2027 Toctino’s discontinuation Discontinuation of BAL30072 Positive regulatory environment Unmet medical needs Incentives & encouraging initiatives across the globe BAL101553 : solid preclinical & early clinical data → could trigger major cancer player Implantation in China Price and reimbursement policies reinforcement Antimicrobial stewardship Oncology R&D (solid tumors) : highest failure rate for NME, higher development costs Upcoming drugs M&A activity → Basilea becoming a potential target O W S T SWOT SOCIETE

RESISTANCE MARKETING RECOGNITION MARKETING PARTNERS INCENTIVES BOLDNESS SCIENTIFIC RECOGNITION BOLDNESS BOLDNESS INAPPROPRIATE DANS LA TENDANCE : EN GROS Immature : Maria S rec : sihem Inappropriate marketing + Trend follower : Juliette (manque un élément pour faire la différence) Incentives & partners: Clément Boldness & Resistance Clément : partners + incentives Sihem : scientific recognition Marketing, anappropriate : juliette Boldness et résistance Maria : immature Trend follower MARKETING IMMATURE RESISTANCE

DANS LA TENDANCE : EN GROS Immature : Maria S rec : sihem Inappropriate marketing + Trend follower : Juliette (manque un élément pour faire la différence) Incentives & partners: Clément Boldness & Resistance Clément : partners + incentives Sihem : scientific recognition Marketing, anappropriate : juliette Boldness et résistance Maria : immature Trend follower

Thank you for your attention !

Sources … Basilea website (www.basilea.com) Half-year report 2016 (Basilea Ltd) Annual report 2015 (Basilea Ltd) Financial analysis of Basilea Pharmaceutica (Valuation LAB) http://globocan.iarc.fr/Pages/fact_sheets_cancer.aspx The role of funding and policies on innovation in cancer drug development Smpc Cresemba Smpc Zevtera/Mabelio Investors presentation Bellevue 2016 European Patent Office website WHO website WIPO website Pubmed …