1. Cure’s GTX Licensing Opportunity
One Opportunity Too Good to Miss

2. Summary
Cure is considering licensing from Gastrex two potential new drugs to treat Crohn’s Disease and Ulcerative Colitis
GTX-001 is a biologic that may be easier to administer and have fewer side effects than biologics currently in use
If successful in trials, GTX-001 is likely to be preferred over existing treatments at a price point making licensing profitable
GTX-002 is a small molecule kinase inhibitor that may be effective in combination with steroids and/or 5-ASAs, and may replace immuno-modulators for Crohn’s
If successful in trials, GTX-002 is likely to be preferred over existing treatments, but at a price too low to make licensing profitable
Recommendation:
Cure should license GTX-001, but not GTX-002 from Gastrex
November 2009
J, P, Morgan and Associates

3. Bowel disease has unmet need
Mild/Moderate
Steroids unsafe for long-term use
5-ASAs not always effective with Crohn’s
Immuno-modulators have side effects
Biologics hard to administer (IV) and can have severe side effects
No effective drugs
GTX-002 Target
Severe
GTX-001 Target
Refractory
November 2009
J, P, Morgan and Associates

4. Ulcerative colitis: Unmet needs
40,000 severe cases fail to respond to Remicade (TNF-a inhibitor). No current alternatives. High need
99,000 severe cases respond to Remicade would benefit from drug that provides longer remission rates and remains effective over time. Moderate need
150,000 mild to severe cases treated with steroids for induction. Moderate need to diminish amount used to minimize side-effects
155,000 mild to severe cases treated with immunomodulators for maintenance. Moderate need for safer alternatives
GTX-002 target
GTX-001 target
November 2009
J, P, Morgan and Associates

5. Crohn’s disease: Unmet needs
65,000 severe cases fail to respond to current TNF-a inhibitors. Tysabri presents safety concerns. High need
145,000 severe cases respond to TNF-a inhibitors. Moderate need for drug with longer remission rates administered subcutaneously
180,000 mild to severe cases treated with steroids for induction. Moderate need to diminish amount used to minimize side-effects
227,000 mild to moderate cases treated with 5-ASAs. Moderate need for drug that increases remission rates
135,000 mild to severe cases treated with immunomodulators for maintenance. Moderate need for safer drug
GTX-002 target
GTX-001 target
November 2009
J, P, Morgan and Associates

6. Market size is sufficient for development
GTX-001 could serve 30% of Biologics; 50% of Refractory patients
GTX-002 could serve 80% of 5-ASA Crohn’s; 80% of Steroids and IM patients
This shows: GTX-001 wins 30% of Biologics for both diseases and 50% of Refractory market for both diseases (3rd bar is sum of both diseases)
GTX-002 wins 80% of target markets, Ims and steroids for both diseases, 5-ASA for Crohn’s only
November 2009
J, P, Morgan and Associates

7. Comparison of GTX-001 to competitors
Key + Favorable for patients - Harmful to patients
November 2009
J, P, Morgan and Associates 7

8. Comparison of GTX-002 competitors
Key + Favorable for patients - Harmful to patients
November 2009
J, P, Morgan and Associates 8

9. Delayed milestone payments lowers cost
Option to license
Safe
Continue testing: Effective
Continue testing: Effective, Favored, Affordable
FDA Approval
Successful marketing
Late-stage withdrawal
No FDA Approval
Continue testing: Not effective, not favored, or cost-prohibitive
Continue testing: Not effective or not favored
Unsafe
Start
Phase I: Human safety/ dosage (63% success)
Phase II: Limited human efficacy/ adverse drug reactions (40% success)
Phase III: Expanded human efficacy
(55% success)
FDA Approval (80% success)
Phase IV post-market safety tests (86% success)
Milestone Payment
Milestone Payment
Milestone Payment
Milestone Payment
Success defined as passing stage of trial AND Cure making the decision to move forward with testing
November 2009
J, P, Morgan and Associates

10. Milestones Specified Successful in trials on primates
No physical harm evident
Human derived biologic
Adverse reactions less severe
Dose Response Rates equally promising or better than Remicade
Compare to Remicade on other metrics
Clinical Remission rates
Fistula Rates of Recovery –CD
FDA approves or drug qualifies for Fast Track
Positive post-market study results supporting earlier data
$20 Million Payment
$50 Million Payment
$150 Million Payment
$180 Million in overall Payments
For GTX-001 only

11. Conclusion/Results: NPV of licensing option
GTX- 001
NPV: $94 million through 2032
Capital recovery by 2026
Conservative assumptions
GTX-002
NPV: -$13 million through 2032
Best case scenario
Considering only US and EU
November 2009
J, P, Morgan and Associates

12. J, P, Morgan and Associates
Sensitivity Analysis Discounted Cash Flows over Time Positive NPV for GTX-001 Robust with Changing Assumptions
November 2009
J, P, Morgan and Associates

13. Appendix A: Assumptions
Price=average price of competitors
5 years to maximum adoption rate
Population growth rates .5% for UC; for Crohn’s population growth rates in document
50% operating margin
Tax percentage = 21.2% from comparables
WACC = 6.06% from comparables
Clinical trial phase lengths
No cannibalization (we are not current producer)
Trial success probabilities
Cure has ready access to capital for investment
Cure has operating profits against which to apply tax credits
November 2009
J, P, Morgan and Associates

14. Appendix B: Remicade Clinical Trials Data
Drug
Different Dose response rates
Clinical remission rates at week 8
Clinical remission rates at week 30
Mucosal healing rates at week 8, at week 30
Rate of discontinuing corticosteroid therapy at week 30
Patients with fistulas recover (CD)
GTX-001 Studies ?
Remicade (Infliximab)
5mg-69% 10mg-62% compared to 37% of placebo group
5mg/kg compared to
34%, 37% vs 18% in placebo group
62%, 59% vs 34% in placebo group
24%, 19% vs 10% in placebo group
68% vs 28% in placebo group
Source:

15. Appendix C.1: Financial Model
November 2009
J, P, Morgan and Associates

16. Appendix C.2: Financial Model
November 2009
J, P, Morgan and Associates

17. Appendix E: Comparables
November 2009
J, P, Morgan and Associates