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Cure’s Dilemma

Cure’s Dilemma. GTX – A SHOT IN THE ARM, OR A COSTLY MISTAKE by PEER PRESSURE. P P. Harold Matskevich, Min Ji Lee, Asha Jayakumar, & A.J. Calbert. Agenda. Introduction to Diseases. Introduction to Drug Candidates. A bit of Scientific Background. SWOT Analysis.

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Cure’s Dilemma

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  1. Cure’s Dilemma GTX – A SHOT IN THE ARM, OR A COSTLY MISTAKE by PEER PRESSURE P P Harold Matskevich, Min Ji Lee, Asha Jayakumar, & A.J. Calbert

  2. Agenda Introduction to Diseases Introduction to Drug Candidates A bit of Scientific Background SWOT Analysis Summary of Financials Signals for Success Recommendations

  3. What Ails the Market? Inflammatory Bowel Disease (IBD) Crohn’s Disease (CD): • Affects small intestine & colon • Approx. 830,000 cases in the 7 pharma markets • Mild to moderate cases served by steroids and immunomodulators • Moderate to severe cases served mostly by biologics Ulcerative Colitis (UC): • Affects colon & rectum • Approx. 1.12MM cases in US, EU, and China • Mild cases typically served by 5-ASAs • Moderate to severe cases served by biologics and immunomodulators

  4. GTX-001 vs. GTX-002 GTX-001 GTX-002 • Biologic • Target Market: • severe cases of CD and UC • Size: ~ 244,000 US & EU • Key to success: - positive response - few side effects in patients who don’t react to TNF-α inhibitors • IκK Kinase inhibitor • Target Market: • mild-moderate cases of CD • Size: ~ 618,000 US & EU • Key to success: - overwhelmingly positive response in mild and moderate CD sufferers

  5. Novel Approaches to an Old Problem What’s out there New Approach GTX001 TNF-α NFκB inducers LPS VLA-1 IFNγ IKK GTX002 Cytokines, Chemokines, Anti-apoptotic factors VLA-1 NFκB NFκB Source: http://www.crohnsdiseasefocus.com/articles/crohns-disease-treatment/crohns-disease-treatment-anti-tnf.php http://www.healthcentral.com/rheumatoid-arthritis/h/list-of-humira-side-effects.html http://www.empr.com/cimzia-approved-for-rheumatoid-arthritis/article/136790/ Target gene activation

  6. GTX-001 – SWOT Analysis Strengths Weaknesses • Not a TNF-α inhibitor • Humanized (assumption) • Effective at low concentrations • Works for both CD and UC • Can be combined with steroids • IV administered • May require unstable treatment regimen • Unexpected side effects Opportunities Threats • CD: 45 – 70% of severe patients react poorly to TNF-α inhibitors • UC: 50 – 60% of severe patients react poorly to TNF-α inhibitors • Potential to combine with steroids for induction therapy, and continue use for maintenance. • Tough competition from other biologic treatments • Competitor biologics administered subcutaneously • Competitor patent expiry may cause market prices to fall

  7. GTX-002 – SWOT Analysis Strengths Weaknesses • Orally administered • Great in combination with ASA/steroids • Effective at treating mild to moderate CD • May cause liver and kidney toxicities • May alter GI commensal flora • Inhibiting IκB kinases blocks beneficial cellular processes • Not effective for UC sufferers Opportunities Threats • CD: Mild to moderate sufferers don’t react to ASA treatment • Comparable treatments cause serious side effects • Potential to combine with steroids for induction therapy, and continue use for maintenance. • Small target market size • Competitor prices are relatively low • Low probability of FDA approval due to potential serious side effects • Consumers may not differentiate GTX-002 from other IM treatments

  8. Summary of Financials – GTX-001 Pricing NPV and IRR Key assumptions Key considerations • 23-year time period beginning 2010 • Probability of getting FDA’s approval: 60%** • Discount rate: 8% • 1) Competitive products’ patents will expire before 2020 • 2) Patented products have a price range of $10,000-30,000 • GTX-001 should be priced at the low end of patented products (In thousand dollars) Price Range USD 10,000 – 14,000 Market Share Key assumptions • Biologics market: 45-70% of CD patients and 50-60% of UC patients’ needs are unmet • Among them 10%(CD) and 30%(UC) will try GTX-001 in the first year • This will grow by 10% if effective * Exp.Value : Expected value of the project considering 60% chance of getting FDA’s approval Calculated IRR 14% (price $10,000) ** Source: http://www.msnbc.msn.com/id/20321830/

  9. Summary of Financials – GTX-002 Pricing NPV and IRR Key assumptions Key considerations • 23-year time period beginning 2010 • Probability of getting FDA’s approval: 60% • Discount rate: 8% • All other immunomodulator products are currently off-patent Price Range USD 1,000 – 3,000 (In thousand dollars) Market Share Key assumptions • 5% of patients with no treatment or 5-ASA only will try GTX-002 in 1st yr • 10% of patients with steroids will be likely to try GTX-002 due to steroids’ long-term side effects • This will grow by 10% if effective * Exp.Value : Expected value of the project considering 60% chance of getting FDA’s approval

  10. Signals for Success Clinical Stage Preclinical Stage • Anti VLA-1 antibody • Effective & safe • Positive dose response Remission in CD & UC patients unresponsive to TNFα inhibitors GTX-001 With steroids: refractory CD & UC patients Humanized: lower side effects & no change in gut flora • IKK inhibitor • Can be used with ASA and steroids • Toxicity & susceptibility to infections • Distinct gut flora GTX-002 Oral administration and compliance Mild-moderate CD refractory to 5-ASAs

  11. Recommendations License only GTX-001 License Market GTX-001 for both CD and UC Price GTX-001 at $10,000/annual supply • Market GTX-001 primarily to health professionals Marketing • Advertise heavily in professional health journals • Host conferences promoting new treatment

  12. APPENDIX

  13. Appendix 1 Source: Peyrin-Biroulet L, Desreumaux P, Sandborn WJ, Colombel JF Volume 372, Issue 9632, 5 July 2008-11 July 2008, Pages 67-81

  14. Appendix 2 – Market Landscape Projection GTX-001 Market Size (in USD) Patients Population Crohn’s Disease Total number of patients using biologics: 145,000 (US+EU) Ulcerative Colitis Total number of patients using biologics: 99,000 (US+EU) • Competitors’ sales are based on the scenario of 10% drop in price after gone off-patent • Number of patients for competitive products are calculated by 2008 sales divided by yearly cost • Number of patients for GTX-001 is based on the previous assumptions.

  15. Appendix 3 – Assumptions for financials Cost Allocation Revenues • No returns, allowances thus net sales equal total revenues • The probability of getting FDA’s approval • Late-state development costs occur at last 5 years of development (Phase 3) • Equal amount of annual milestone payments

  16. Appendix 4 – Sensitivity Analysis GTX-001 Sensitivity analysis for NPV reflecting 60% chance of getting FDA’s approval (In thousand dollars) GTX-002 (In thousand dollars)

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