PLEASE SEE IMPORTANT DISCLOSURES STARTING ON PAGE 19

Cempra, Inc.

Initiating with a Buy - Solithromycin Data, Filings Key Drivers

Cempra is a promising small-cap opportunity in the antibiotics space, in our view. This segment of the market is experiencing a resurgence of activity due to a lifting cloud of regulatory uncertainty as well as a prolonged lack of interest on the part of larger pharmaceutical companies.

We believe Cempra’s lead program, solithromycin, could become the first new macrolide-type antibiotic to reach the market in 10 years. Cempra is currently conducting a phase III program of oral solithromycin in community acquired bacterial pneumonia (CABP). Data from this study are expected in 1H14. A second phase III trial will use the intravenous formulation of solithromycin for an initial dosing period, followed by a step-down to oral dosing. If successful, we believe Cempra will have a dataset potentially enabling the introduction of the first IV-to-oral option for CABP in 20 years.

In our view, solithromycin has a differentiated profile compared with other antibiotics used to treat CABP. The potential availability of both IV and oral formulations, efficacy against macrolide-resistant pneumococcal strains, and potentially improved safety and tolerability combine to create a compelling, differentiated treatment option for this difficult indication. We model a potential product launch in 2016, with U.S. sales ramping to $397M in 2020.

Cempra’s second program, Taksta, is currently in a phase II trial in prosthetic joint infections, with results expected by year-end. While we expect investors to focus on solithromycin as the company’s primary value proposition, we see Taksta as having the potential to generate meaningful incremental upside.

Initiating with a Buy rating and a $12 target, based on a 30x multiple of our probability-adjusted 2019 EPS estimate of $0.94, discounted six years at 15%. Our rating is based on our view that progress with solithromycin over the next 18 months should lead to a share performance that exceeds the broader sector.

FYE – Dec. 2012A 2013E 2014E

EPS Current Previous Current Previous Current

1Q -$0.26A NA -$0.44E NA -$0.64E

2Q -$0.45A NA -$0.43E NA -$0.42E

3Q -$0.24A NA -$0.61E NA -$0.38E

4Q -$0.27A NA -$0.66E NA -$0.24E

Year -$1.23A NA -$2.16E NA -$1.64E

P/E -5.4x -3.1x -4.1x

Mean EPS Estimate -$1.25 -$1.43 -$1.65

Revenue (mil.) Current Previous Current Previous Current

1Q NA NA NA NA NA

2Q NA NA NA NA NA

3Q NA NA NA NA NA

4Q NA NA NA NA NA

Year NA NA NA NA NA

EV/EBITDA NA NA NA

Operating Margin NA NA NA NA NA

March 21, 2013

CEMP Price (Mar. 20, 2013) $6.70

Mkt. Cap. (mil.) $166.9

Biotechnology

Rating: Buy

Previous: NA Price Target: $12.00

Previous: NA Risk Rank: High

Previous: NA Sector Rating: Market Weight

Brian Lian, Ph.D. 212-319-3728

brian.lian@suntrust.com

Market Data: 52-Week Range $9.56-$5.26 Shares Out. (mil.) 24.9 Float (mil.) 11.7 Avg. Daily Vol. (000) 23 Dividend/Yield NA/NA

Financial Highlights: Long-Term Debt (mil.) $7.6 Debt/Cap. 0.1% Debt/EBITDA NA ROE NA Book Value/Share $2.32 Free Cash Flow/Share NA Net Cash/Share $2.82 Shareholders' Equity (mil.) $57.8 Est. 5-Year EPS Growth NA Convertible No

Key Indices

EPS Est. Changes 2013 2014 NA NA NA NA NA NA NA NA NA

2

Comments

Investment Thesis

We are initiating coverage of Cempra with a Buy rating and a $12 price target. We believe Cempra is a promising

small-cap opportunity in the antibiotics space, a segment of the market in which we see a resurgence of activity due

to a lifting cloud of regulatory uncertainty as well as a prolonged lack of interest on the part of larger pharmaceutical

companies. Cempra is developing antibiotic drug candidates for respiratory tract and bone infections. The

company’s lead program is solithromycin, a novel ketolide antibiotic in phase III development for community

acquired bacterial pneumonia (CABP). A second pipeline program, Taksta, is an oral formulation of fusidic acid in

phase II for prosthetic joint infections. Both programs represent differentiated approaches to their respective

indications. As enthusiasm returns to the antibiotics space, we view companies such as Cempra as well-positioned

to benefit from increased interest in the investor and drug development communities. In our view, progress with

solithromycin over the next several quarters could lead to a share performance that exceeds the broader Nasdaq

Biotechnology Index. The following table highlights the company’s current product pipeline.

Cempra Holdings – Product Pipeline

Source: Cempra Inc. and SunTrust Robinson Humphrey

Our Buy rating is based primarily on our assessment of the opportunity for solithromycin in CABP. We believe

solithromycin could become the first new macrolide-type antibiotic to reach the market in 10 years. Based on

clinician acceptance of macrolides, and solithromycin’s excellent preliminary safety and efficacy profile, we think the

market will embrace its use in CABP and potentially other indications. The CABP market, comprising approximately

four to five million patients per year, represents a significant opportunity, large enough to support multiple agents.

The last novel macrolide, telithromycin, approved in 2004, experienced rapid uptake, with sales of approximately

$190M in its first full year of sales, despite the presence of generic alternatives. Thus, solithromycin’s potentially

improved safety and efficacy profile could lead to a strong initial sales ramp, in our view. We currently estimate a

2016 market entry and 2019 U.S. revenue of approximately $310M. In addition, we believe Taksta could generate

incremental revenue from the osteomyelitis setting. We estimate 2019 Taksta sales of approximately $20M.

Cempra is currently conducting a phase III program of oral solithromycin in CABP. The first of two planned trials

will enroll up to 800 patients worldwide, will evaluate solithromycin vs. the fluoroquinolone moxifloxacin, and will

utilize a trial design in accordance with recent recommendations from the FDA’s Anti-Infective Drugs Advisory

Committee. The primary endpoint will be non-inferiority at 72 hours on improvement in two of four symptoms,

with no worsening or new symptoms, with a 10% margin. Data from this study are expected in 1H14. A second

phase III trial will utilize the intravenous formulation of solithromycin for an initial dosing period, followed by a step-

down to oral dosing. If successful, we believe Cempra will have a dataset potentially enabling the introduction of

the first IV-to-oral option for CABP in 20 years.

Product Indication Status

Solithromycin (CEM-101) - Oral Community-Acquired Bacterial Pneumonia (CABP) Phase III

Solithromycin (CEM-101) - Intravenous Community-Acquired Bacterial Pneumonia (CABP) Phase I complete

Solithromycin (CEM-101) - Oral Urethritis Phase II complete

Taksta (Fusidic Acid) - Oral Chronic Prosthetic Joint Infections Phase II

3

Cempra previously completed a successful phase II trial comparing solithromycin to the fluoroquinolone

levofloxacin in CABP, which demonstrated non-inferiority on test of cure at 5 to 10 days post-therapy. In addition,

the trial demonstrated success using the phase III criteria described above, with clinical response rates of 72% for

solithromycin vs. 71% for levofloxacin in the intent-to-treat population. Solithromycin’s side effect profile suggested

improved tolerability compared with levofloxacin as well. In our view, the efficacy profile establishes a precedent

for the expected phase III endpoints, and tolerability appears potentially superior to established therapy for CABP.

While relatively limited in size (n=132), the data bode well, we believe, for the phase III program.

In our view, solithromycin has a differentiated profile compared with other antibiotics used to treat CABP. The

potential availability of both IV and oral formulations provides flexibility for those physicians seeking to maintain

treatment continuity for hospitalized patients on discharge. Few other CABP therapies have this dosing flexibility.

As mentioned above, phase II data have demonstrated similar efficacy to levofloxacin, a common CABP therapy.

However, Cempra has an important mechanistic advantage by virtue of having three ribosomal binding sites,

suggesting a more difficult hurdle for resistance mechanisms. In support of this, solithromycin has demonstrated

potency against multiple macrolide-resistant pneumococcal strains. Finally, solithromycin’s side effect profile

appears promising, as described above. We believe the flexibility of dosing IV-to-oral, combined with

solithromycin’s efficacy, activity against resistant strains, and safety, create a compelling, differentiated value

proposition for physicians and patients.

Cempra’s second program, Taksta, is currently in a phase II trial in prosthetic joint infections, with results expected

by year-end. We expect investors to focus on solithromycin as the company’s primary value proposition. However,

positive PJI data could be an incremental driver, as Taksta could receive up to 10 years of market exclusivity by

virtue of being both a new chemical entity and having received designation as a “qualified infectious disease

product” (QIDP) under the recently passed legislation known as the Generating Antibiotic Incentives Now (GAIN)

Act. We therefore view Taksta as a lower-risk asset with the potential to generate relatively inexpensive upside.

We expect Cempra to seek a partner prior to solithromycin’s commercialization. This highlights, in our view, an

important undercurrent in the antibiotics space, and one that should benefit Cempra and others. Over the past two

years, the regulatory landscape for new anti-infectives has evolved significantly, with the FDA clarifying Guidances

and key trial design issues. As the pharmaceutical industry has gradually shifted resources away from antibiotic

development, an innovation vacuum has ensued. We believe the clarified guidance creates a positive backdrop for

late-stage assets as many companies may seek to regain access to hospital-associated therapeutics. As we see it,

this improved environment should benefit firms like Cempra.

Cempra’s management team has excellent industry experience. Prabha Fernandes, CEO, has previously worked on

antibiotic drug discovery at Bristol-Myers Squibb and Abbott Labs, and has served on the board of directors of

Optimer Pharmaceuticals (OPTR, $12.30, Buy). Mark Hahn, CFO, was formerly CFO of the Ag-Bio firm Athenix, which

was acquired by Bayer CropScience in 2009. David Oldach, MD, SVP of Clinical Research, was formerly a clinical

research director at Gilead Sciences. We believe management’s combined experience in microbiology, regulatory

affairs, and drug development creates a strong team for navigating a late-stage asset through regulatory and clinical

hurdles.

4

Upcoming Milestones

Key upcoming events for Cempra include completion of enrollment in the ongoing phase III trial of solithromycin

in CABP, expected to occur by year-end. This trial will serve as a cornerstone of the company’s planned regulatory

filing for CABP. As such, the completion of enrollment and data release timelines will be important events, although,

in our view, not necessarily stock-moving on their own.

An important 2H13 event will be the conclusion of planned QTc studies with the IV and oral formulations of

solithromycin. We believe that, given recent FDA communications related to cardiovascular safety associated with

azithromycin, a widely prescribed macrolide, a successful and uneventful conclusion of the solithromycin studies will

be an important development milestone for the program.

We expect top-line data from the ongoing CABP trial in 1H14. Positive data could be an important catalyst for the

shares, as the results may increase confidence in the outcome of the second phase III trial, leading to an improved

probability of completing successful regulatory filings and achieving subsequent marketing approval.

The company also expects to meet with the FDA in 2Q13 to discuss plans for a phase III trial utilizing an IV-to-oral

step-down regimen in CABP. Pending constructive feedback, Cempra could begin this trial around mid-year. This

trial is expected to take approximately 18 months to complete and would provide data to support a possible NDA

filing. If successful, the trial would serve to establish solithromycin as an option to more-readily facilitate the

discharge of hospitalized CABP patients. Positive data could demonstrate that solithromycin is more convenient

than competitive agents, providing an argument supporting pharmacoeconomic benefits over IV-only therapies.

We also expect Cempra to announce the results of an ongoing phase II trial of Taksta in prosthetic joint infections

in 4Q13. This study could provide the basis for Taksta to represent an important incremental revenue stream given

the relatively higher doses and extended treatment times used in this setting. Pending positive data, we think the

company could initiate a phase III program in 2014.

The following table summarizes key upcoming catalysts for Cempra shares.

Source: Cempra Inc. and SunTrust Robinson Humphrey

Product Event Expected

Solithromycin (CEM-101) End of phase II meeting with FDA on planned IV to oral switch trial 1H13

Conduct IV and oral QTc studies 2013

Initiation of phase III IV-to-oral CABP trial 2H13

Initiation of phase III trial, gonorrhea 2H13

Top-line data, phase III oral CABP trial 1H14

Taksta Top-line data, phase II PJI trial 4Q13/1H14

5

Valuation

Probability-Adjusted Valuation Suggests $12 Equity Price

Our 12-month price target for Cempra shares is $12. This is based on a 30x multiple of our probability-adjusted

2019 EPS estimate of $0.94, discounted six years back at 15%. We believe a 15% discount rate is appropriate given

the probability-adjustment already applied to the EPS estimate. Our 30x multiple is a common earnings multiple for

emerging biopharmaceutical firms, although slightly lower than the 35x we would apply in a less-competitive

environment. Our model reflects an expected partnership for solithromycin, with a profit share of approximately

50-50, as well as an ex-U.S. partnership providing an approximate 20% royalty on sales. We estimate 2019 U.S.

revenue of approximately $381M, consisting largely of sales of solithromycin in the CABP setting ($334M). Royalty

revenue is expected to grow to approximately $28M in 2019. The calculation is highlighted below.

Cempra, Inc. – Present Value of Development Candidates

Source: SunTrust Robinson Humphrey

EPS Multiple Valuation Suggests $12 Equity Price

Applying a 30x multiple to our 2019 EPS estimate of $1.52 and discounting six years back at 25% results in a

theoretical equity value of $11.98. We believe a 30x multiple and 25% discount rate are appropriate as they reflect

the typical multiple for a profitable biotechnology firm and we think they adequately risk-adjust future earnings. We

prefer the probability-adjusted method as it allows a handicapped estimate of a specific product’s chance of

approval and launch. Our EPS multiple valuation derivation is shown below.

Cempra Inc. - Present Value of Development Candidates

Product Candidate

Probability of

Approval

Potential 2019

U.S. Revenue (2)

Approx Net

Margin

2019 Ex-U.S.

Royalty (2)

Total EPS

Contribution*

Weighted EPS

Contribution *

Solithromycin - CABP 60% $311 15% $26 $1.38 $0.83

Solithromycin - Gonorrhea 60% $24 15% $2 $0.10 $0.06

Taksta - Prosthetic Joint 55% $19 25% - $0.09 $0.05

Total Worldwide Revenue $353 - $28 $1.57 $0.94

* Assumes 52 million shares out in 2019. Notes: (1) Assumes off-label use. (2) Assumes 20% royalty on ex-U.S. sales.

Probability-adjusted 2019E EPS: $0.94

Discounted Years 6.0

Discount Rate

EPS Multiple 5% 10% 15% 20% 25% 30% 35%

10 7 5 4 3 2 2 2

15 11 8 6 5 4 3 2

20 14 11 8 6 5 4 3

25 18 13 10 8 6 5 4

30 21 16 $12.17 9 7 6 5

35 25 19 14 11 9 7 5

40 28 21 16 13 10 8 6

45 32 24 18 14 11 9 7

6

Cempra, Inc. – EPS Multiple Valuation

Source: SunTrust Robinson Humphrey

Sales Multiple Valuation Suggests $10 Equity Price

Applying a 5x multiple to our 2019 estimate of total revenue and discounting six years back at 25% result in a

theoretical equity value of $9.68. We believe a 5x multiple and 25% discount rate are appropriate as they reflect a

typical sales multiple for an emerging biotechnology firm and a reasonably conservative discount rate to reflect

development and regulatory risk. Of the methods outlined, we believe the sales multiple approach is least accurate.

We prefer the probability-adjusted method as it allows a handicapped estimate of a specific product’s prospects for

approval and launch. That said, our sales multiple approach is shown below.

Cempra, Inc. – Sales Multiple Valuation

Source: SunTrust Robinson Humphrey

Pipeline Overview

Cempra’s pipeline includes two clinical-stage programs: Solithromycin, a novel ketolide antibiotic for community

acquired bacterial pneumonia (CABP), and Taksta (fusidic acid), for joint and bone infections. We believe

solithromycin will be the key value driver, representing the first potential new oral and IV macrolide-type therapy to

reach the market since azithromycin, now generic, was approved approximately 20 years ago. Solithromycin’s

differentiating features include potent activity against problematic bacteria, improved convenience from both oral

and IV dosing options, and an encouraging safety profile, based on preliminary data. Taksta represents a potential

therapy for prosthetic joint infections, with an excellent long-term safety and tolerability profile demonstrated over

several decades in ex-U.S. commercial settings (fusidic acid is approved in Europe and other geographies). Cempra’s

novel dosing approach for Taksta may result in improved efficacy and a reduced propensity for resistance. We

expect the company to explore partnering opportunities as each program moves further along the development

path.

Multiple of 2019E EPS

2019E EPS $1.52

Multiple 30

Value $46

Discount 25%

Years 6

Discounted value $11.98

Multiple of 2019E Sales

2019E sales $381

Discount 25%

Years 6

Shares out in 2019 52

Discounted value $1.94

Multiple 5

Value per share $9.68

7

Solithromycin

Cempra’s lead program is solithromycin, a novel ketolide antibiotic for Gram positive infections. Solithromycin’s

potent activity against Streptococcus pneumoniae makes it an attractive therapeutic candidate for infections for

which these bacteria are problematic, most notably the respiratory tract setting, including CABP, acute bronchitis,

pharyngitis, and otitis media. In addition, solithromycin is active against certain Gram negative strains, such as

Neisseria gonorrhoeae, which allow for development of a potential treatment of gonorrhea infections. We believe

solithromycin’s activity against a variety of difficult to treat bacterial strains creates development opportunities in a

similarly broad range of potential markets.

In our view, solithromycin possesses multiple differentiating properties compared to currently marketed

antibiotics, and that should help to mitigate its commercial risk. Four key areas in which the drug appears to have

advantages vs. existing therapies are potency, activity against resistant bacteria, an improved side effect profile, and

the convenience of both oral and intravenous dosing formulations. These areas are summarized briefly below.

Potency: Solithromycin has demonstrated potent, broad-spectrum activity against key pathogens

responsible for community based infections. Importantly, its activity has been shown to be at least

comparable to that of azithromycin. As a reminder, azithromycin is the most commonly prescribed

macrolide antibiotic, accounting for approximately 80% of all macrolide prescriptions in 2012 (Symphony

Health data). We believe the observation that approximately 30% of North American S. pneumoniae strains

exhibit resistance to azithromycin, nearly twice the level observed just 10 years ago, suggests a compelling

need for safe and effective new therapies. The following table briefly summarizes comparative data for

solithromycin and azithromycin across various Gram positive and negative organisms. Cempra has

previously published these data in numerous scientific forums.

Summary Comparison: Solithromycin and Azithromycin

Source: Cempra, Inc.

Activity against resistant strains: A second key property of solithromycin is its activity against multidrug

resistant pathogens, including both macrolide and quinolone-resistant strains. Based on structural

differences on both the macrolide ring and a key side-chain, Cempra believes solithromycin incorporates

features that impart improved resistance to common bacterial mutations. These changes require bacteria

to develop mutations at three ribosomal sites in order to affect resistance, vs. one or two for older-

generation macrolides. The company has published extensive data demonstrating solithromycin’s activity

against macrolide-resistant pneumococci with ermB, mefA, ermB-mefA, and L4 mutations. We believe this

profile creates an attractive therapeutic option for patients who may be exposed to highly virulent

MIC90 (ug/mL)

Strain (# of organisms) Solithromycin Azithromycin

Streptococcus pneumoniae (150) 0.25 >16

Haemophilus influenzae (100) 2 2

Streptococcus pyogenes (100) 0.03 >16

Legionella pneumophila (30) < 0.015 2

Mycoplasma pneumoniae (36) 0.000125 0.0005

Chlamydophila pneumoniae (10) 0.25 0.125

8

community bacteria. The following table highlights comparative data for solithromycin against common

macrolide resistant strains.

Summary of Solithromycin Activity in Macrolide Resistant Bacteria

Safety and side effect profile: We expect solithromycin’s promising preliminary safety profile to

differentiate it from prior macrolide antibiotics, most notably telithromycin (Ketek, Sanofi). Cempra believes

solithromycin’s novel chemical structure should obviate certain problematic side effects observed with

Ketek, such as liver failure, blurred vision, and confusion. While certain of the macrolides and

fluoroquinolones have been associated with QTc prolongation, solithromycin has not shown any significant

cardiovascular safety signal. The side effect profile to-date has shown the drug to be safe and well-

tolerated. Phase II data, discussed below, have also demonstrated a lower incidence of treatment-emergent

adverse events compared with levofloxacin (generic), the most commonly prescribed quinolone for CABP.

We believe solithromycin’s relatively benign safety profile suggests an excellent benefit-risk payoff

compared with competing therapies.

Convenience, single drug regimen available in oral and intravenous dosing formulations: An important

potential benefit to solithromycin is its activity as a monotherapy in the CABP setting. Many patients receive

two drugs for CABP, such as a cephalosporin and a macrolide. A single drug regimen provides for a

simplified dosing regimen.

Cempra is also developing both intravenous and oral dosing formulations of solithromycin. This should

facilitate broader potential uptake, as physicians can initiate therapy for more severely ill patients utilizing

the IV formulation and can transition them to oral therapy on discharge. The ability to continue use of the

same drug on discharge is attractive, particularly when initial therapy shows benefit. Certain competing

options require switching from IV to an alternative drug when patients are discharged, due to a lack of an

oral formulation. We view the convenience of both formulations as a positive differentiator for

solithromycin.

We expect solithromycin’s differentiated profile to resonate with infectious disease specialists, leading to market

uptake, despite the presence of generic competitors.

Solithromycin: Current Status

Cempra initiated a phase III trial of oral solithromycin in community acquired bacterial pneumonia in 4Q12. The

trial is a randomized, double-blind, international study comparing the oral formulation of solithromycin to

fluoroquinolone moxifloxacin in approximately 800 CABP patients. Solithromycin patients will receive an initial

800mg loading dose followed by once-daily doses of 400mg for four days. Moxifloxacin patients will receive oral

doses of 400mg once daily for seven days.

MIC90 (ug/mL)

Resistance type

(# of strains)Solithromycin Azithromycin Telithromycin Clindamycin

Amoxicillin/

Clavulanic acidLevofloxacin Penicillin G

erm(B) (54) 0.5 >64 1 >64 8 2 4

mef(A) (51) 0.125 8 0.25 0.06 2 2 4

erm(B)+mef(A) (31) 0.25 >64 1 >64 8 16 4

L4 mutations 0.125 >64 0.25 0.125 8 2 16

Source: AAC, 54:230-8, 2010.

9

The primary endpoint will evaluate response to therapy at 72 hours, per recommendations by the FDA’s Anti-

Infective Drugs Advisory Committee, in 4Q11. Response is defined as improvement in at least two of the four

following symptoms: cough, sputum production, chest pain, and shortness of breath, with no worsening in any

category. We anticipate a non-inferiority margin of 10% for solithromycin responders vs. moxifloxacin. Top-line

data are expected in 1H14. The following table outlines the planned phase III trial for oral solithromycin.

Cempra, Inc. – Overview of Phase III CABP Trial of Oral Solithromycin

Source: Cempra, Inc. and SunTrust Robinson Humphrey

Cempra also intends to conduct a phase III trial of intravenous solithromycin in CABP, which would incorporate an

IV-to-oral step-down regimen. The company plans to finalize the protocol following a planned End of Phase II

Meeting with the FDA in 2Q13. We expect the trial to begin shortly thereafter, potentially in 2H13. Based on a

recently completed phase I study, the company would initiate IV dosing at 400mg, then transition to oral. In our

view, the clinical implication would be to treat admitted CABP patients having more-severe PORT scores (III-IV) with

IV, then discharge with an oral solithromycin prescription at day two or three. Pending initiation timelines, top-line

results could be available by the end of 2014. We believe the convenience of continuity of therapy would be

attractive to physicians, as it would represent an option to further reduce uncertainty about continued treatment

benefit.

A third phase III trial of solithromycin will target gonococcal infections, and we currently expect this to be a 2013

initiation, although the timing is less certain. The company recently completed a successful phase II study in

gonorrhea, demonstrating a 100% efficacy rate, although the trial’s size was relatively modest (n=22). We view this

indication as a potentially attractive opportunity given the lack of recently approved therapies and the recent

removal of oral cephalosporin therapy from the CDC’s recommended treatment guidelines. Gonococcal infections

are increasingly resistant to legacy antibiotics such as cefixime and ceftriaxone.

Solithromycin: Prior Data Suggest Promise in CABP, Gonorrhea

Phase II CABP data for basis for phase III program

Cempra has successfully completed phase II trials of solithromycin in both CABP and gonococcal infections. The

phase II CABP trial was a randomized, double-blind, multicenter study intended to compare solithromycin and the

fluoroquinolone levofloxacin. A total of 132 patients received either oral solithromycin at a loading dose of 800mg,

followed by once daily doses at 400mg for four days, or levofloxacin at 700mg daily for five days. The primary

endpoint assessed clinical success at the test-of-cure visit, 5 to 10 days following the last dose of therapy, in the

intent-to-treat and clinically evaluable populations. An important secondary endpoint was early response rates at

day three, defined as improvement in two of the four symptoms of cough, sputum production, chest pain, and

dyspnea, with no worsening in any of these.

Trial Arms Patients Population Design Endpoint

Phase III study

in CABP

comparing

solithromycin to

moxifloxacin

2 800 Patients with CABP

characterized by

PORT scores

ranging from II to IV,

with 50% PORT III

or worse

Global, multi-center, double-blind,

randomized non-inferiority study to

evaluate oral solithromycin for 5

days (800mg QD/day 1, 400mg QD

days 2-5) versus oral moxifloxacin

for 7 days (400mg QD on days 1-7)

Primary endpoint: Early

response at 72 hrs, defined as

improvement in two of the

following: cough, sputum

production, chest pain, and

difficulty breathing. Non-

inferiority margin 10%

10

Cempra, Inc. – Overview of Phase II CABP Trial Design, Oral Solithromycin

Source: Cempra, Inc. and SunTrust Robinson Humphrey

We believe the early response data were critically important, as they are the same endpoints being evaluated in

the ongoing phase III trial and are likely to become part of upcoming FDA Guidance on requirements for new drugs

in the CABP setting. This trial was completed in 3Q11, and data were presented at the European Congress of Clinical

Microbiology and Infectious Diseases (ECCMID) in 1Q12.

The trial successfully demonstrated solithromycin’s activity in CABP and showed promising comparability to

levofloxacin on the primary endpoint of clinical cure as well as in the key secondary measures, including early

response. As levofloxacin is widely used as a standard of care in CABP, we believe the data support Cempra’s belief

that solithromycin represents an attractive alternative on efficacy alone. We believe the drug’s activity in resistant

strains as well as its improved tolerability profile are areas of differentiation. A summary of important data are

shown in the following table.

Cempra, Inc. – Overview of Phase II CABP Data, Oral Solithromycin

The company believes the differences shown in cure rate in the clinically evaluable population reflect imbalances

in exclusion criteria, whereby certain clinical success in the solithromycin arm was excluded, along with certain

failures in the levofloxacin arm. This resulted in data that suggested numerically higher success rates in the

levofloxacin arm. We believe the totality of data shows close comparability between the two arms, supporting

Cempra’s analysis.

Importantly, the phase II data suggest a safety and tolerability advantage for solithromycin over levofloxacin. As

the table below shows, solithromycin patients experienced fewer treatment emergent adverse events, and none

withdrew from the trial due to an adverse event. By comparison, six levofloxacin patients withdrew due to an

adverse event. As we expect many investors to focus solely on pricing and top-line efficacy, these safety and

tolerability data serve as important reminders of other aspects that both physicians and patients consider when

Trial Arms Patients Population Design Endpoint

Phase II study

in CABP

comparing

solithromycin to

levofloxacin

2 132 Adult patients with

moderate to

moderately-severe

CABP

Multi-center, double-blind,

randomized study to evaluate oral

solithromycin (800mg q.d./day 1,

400mg q.d. on days 2-5) versus

oral levofloxacin (750mg q.d. on

days 1-5)

Primary endpoint: test-of-cure (TOC)

5 to 10 days after the last dose of

study drug) in intent-to-treat (ITT) and

clinically-evaluable (CE) populations.

Key secondary assessments

included early response at 72 hrs.

Visit, patient group Solithromycin Levofloxacin

Test of Cure Visit (1)

Intent to treat ITT (co-primary endpoint) 55/65 (84.6) 58/67 (86.6)

Clinically evaluable (co-primary endpoint) 46/55 (83.6) 54/58 (93.1)

Streptococcus pneumonia patients 12/15 (80.0) 10/13 (76.9)

Early Response, Day 3 ITT (2) 47/65 (72.3) 48/67 (71.6)

Notes: (1) Four to 11 days following last drug dose. (2) Expected to be new

FDA Guidance. Source: European Congress of Clinical Microbiology and Infectious

Diseases (ECCMID), Abstract P719, March 31, 2012

Cure rates by dose group (n/N, %)

11

selecting CABP therapy. In particular, patients who are more-severely ill or fragile are similarly more sensitive to

tolerability issues. We believe that if similar tolerability differences are observed in phase III data, solithromycin

would be preferred in the more-severe populations. Safety and tolerability data from the phase II trial are outlined

below.

Cempra, Inc. – Overview of Phase II CABP Data, Oral Solithromycin

Phase II gonorrhea results highlight broader potential utility

In 4Q12, Cempra announced positive top-line results from a phase II trial of solithromycin in uncomplicated

urogenital gonorrhea. This study was a single site, single arm trial in 25 patients with clinically proven gonococcal

infection. Patients received a single dose of solithromycin at 1200mg and were evaluated for bacterial eradication

at seven days after treatment. A total of 22 patients were evaluable, based on positive baseline cultures.

The data showed a 100% cure rate among evaluable patients. In addition to clearing urethral and cervical

infections, all pharyngeal and rectal infections were also cleared. Further details regarding safety and tolerability

were not disclosed; we expect possible details at a future conference. Based on these results, Cempra plans to

initiate a phase III trial in gonorrhea, potentially in 2H13. The company may seek funding assistance from a

government source prior to initiating such a trial. While we view CABP to be the primary market for solithromycin,

we believe the revenue opportunity for gonorrhea represents an important incremental driver. As a reminder, the

CDC recently removed cephalosporins from recommended treatment guidelines, suggesting a possible widening of

the opportunity for new agents in this area.

Phase I IV trial complete; sets stage for key IV-to-oral step-transition study

Cempra also recently completed a phase I study evaluating the safety and tolerability of the intravenous

formulation of solithromycin in healthy volunteers. This study evaluated doses ranging from 25mg to 800mg and

evaluated important safety parameters such as the QT interval and adverse events. The company expects to utilize

the 400mg dose in a planned phase III IV-to-oral step-down trial, which is to begin following a planned end of the

phase II meeting with the FDA. The importance of this dose selection and ability to transition is that they allow

patients to transition to oral doses at the same dosage, helping to remove an additional element of uncertainty

when transitioning patients from intravenous dosing on hospital discharge. We believe this will serve to further

differentiate solithromycin from alternative therapies. Notably, the last macrolide antibiotic to reach the market in

both oral and intravenous formulations was azithromycin, nearly 20 years ago. We expect dosing convenience and

the ability to lower uncertainty on discharge to resonate with physicians seeking ways to most-effectively transition

patients out of the hospital.

Patients with various treatment

emergent adverse events (TEAEs) Solithromycin Levofloxacin

Experiencing at least one TEAE 19 (29.7) 31 (45.6)

Gastrointestinal 9 (14.1) 16 (23.6)

CNS, musculoskeletal 11 (17) 11 (16)

Withdrew from study due to TEAE 0 6 (9)

Source: European Congress of Clinical Microbiology and Infectious

Diseases (ECCMID), Abstract P719, March 31, 2012

Adverse events by dose group (n, %)

12

Taksta: Current Status

Cempra is developing Taksta, a novel formulation of fusidic acid, for prosthetic bone infections. Fusidic acid is a

steroidal antibiotic that has been used for decades in markets outside the U.S. for skin infections. Cempra’s

proprietary dosing regimen is expected to result in improved efficacy and a reduced potential for resistance. While

Taksta has never been approved in the U.S., the drug’s extensive long-term safety profile may lead to increased

interest from infectious disease physicians. We currently view Taksta as a long-term opportunity with relatively little

downside potential based on the Street’s conservative revenue expectations.

Importantly, if successful, Cempra could be entitled to up to 10 years of market exclusivity with Taksta, based on

five years of new chemical entity (NCE) protection and additional protection afforded by recent antibiotics

legislation. Should Taksta meet the criteria to be characterized as a Qualified Infectious Disease Product (QIDP)

under the recent FDA GAIN (Generating Antibiotic Incentives Now) legislation, an additional five years of market

exclusivity could be granted on top of the NCE exclusivity. Thus, it is conceivable that Taksta could achieve an

attractive commercial lifespan in the U.S.

Phase II Trial in Prosthetic Joint Infections to Complete by Year-End

In 4Q12, Cempra initiated an open-label phase II trial of Taksta in up to 50 patients with prosthetic joint infection.

This trial is enrolling patients undergoing hip or knee replacement surgery and involves the addition of Taksta to a

standard regimen of rifampin, compared to an active comparator of IV vancomycin, nafcillin, oxacillin, cefazolin, or

ceftriaxone. Patients will receive an initial Taksta loading dose of 1,500mg BID on day one, followed by 600mg BID

doses for up to 12 weeks. The primary endpoint will be clinical success as defined by the absence of persistent

infection at 12 weeks. We anticipate that data could be available in 4Q13. If successful, a phase III trial could follow

in 2014.

Market Opportunity

Solithromycin: Community Acquired Bacterial Pneumonia

We believe the U.S. market opportunity for solithromycin in CABP could exceed $350M annually within five years

of launch. Our model assumes a late-2015/early-2016 U.S. product launch. We base this number on a potential 5%

penetration rate into the overall 4.5 million annual CAPB cases reported in the U.S. annually. While anywhere from

40% to 60% of these are believed to result from Streptococcus pneumonia, we believe use will initially ramp in cases

of suspected fluroquinolone or macrolide resistance, a substantial opportunity. In our view, if the attributes

outlined previously are borne out in the phase III program – namely the drug’s impressive efficacy, activity against

resistant strains, improved safety and tolerability, and the flexibility imparted by the availability of both oral and

intravenous dosing forms – then our forecast of a 5% penetration rate in 2020 could be conservative. Despite the

presence of generic therapies such as cephalosporins and macrolides, we expect solithromycin to realize an

attractive ramp due to the drug’s differentiated profile. The following table highlights our solithromycin revenue

model in both the U.S. and ex-U.S. markets.

13

Cempra, Inc. – Solithromycin Revenue Model, CABP

Source: SunTrust Robinson Humphrey

Solithromycin: Gonococcal Infections

We currently estimate the U.S. market opportunity for solithromycin in gonorrhea to be approximately $29M.

While not as large as the CABP market, we believe the recent removal of the last single-agent cephalosporin from

the CDC’s recommended treatment guidelines suggests an opportunity for solithromycin. We would expect

incremental off-label use to follow from a potential successful phase III trial in gonococcal infections. Cempra plans

to initiate a phase III trial in 2H13. A number of different therapeutics are currently used in this setting, with the

CDC recommending combination approaches such as ceftriaxone/azithromycin and cefixime/doxycycline. However,

we believe the opportunity to replace these combinations with a single dose of a single drug may resonate with

certain physicians, particularly in cases where cultures suggest problematic resistance. Our model assumes modest

penetration into the approximately 740K annual reported cases of gonorrhea following a 2016 launch. We currently

assume 2020 sales of $29M in the U.S. and $13M in Europe. Our model and estimates are shown below.

Cempra, Inc. – Solithromycin Revenue Model, Gonococcal Infections

U.S. Solithromycin Sales 2015E 2016E 2017E 2018E 2019E 2020E

CABP incidence 4,613,631 4,636,699 4,659,882 4,683,182 4,706,598 4,730,131

Solithromycin penetration 0.00% 0.50% 2.00% 3.50% 4.50% 5.00%

No. of patients treated - 23,183 93,198 163,911 211,797 236,507

Days on treatment 5 5 5 5 5 5

Total patient days - 115,917 465,988 819,557 1,058,984 1,182,533

Total doses 5 5 5 5 5 5

Cost per day $232 $246 $261 $277 $293 $311

Total U.S. sales: CABP - $28,536,911 $121,601,486 $226,698,611 $310,502,611 $367,531,590

Ex-U.S. Solithromycin Sales 2015E 2016E 2017E 2018E 2019E 2020E

CABP incidence 4,152,268 4,173,029 4,193,894 4,214,864 4,235,938 4,257,118

Solithromycin penetration 0.00% 0.00% 0.25% 2.00% 3.50% 4.50%

No. of patients treated - - 10,485 84,297 148,258 191,570

Days on treatment 5 5 5 5 5 5

Total patient days - - 52,424 421,486 741,289 957,851

Total doses 5 5 5 5 5 5

Cost per day $139 $148 $157 $166 $176 $186

Total ex-U.S. sales: CABP - - $8,208,100 $69,952,714 $130,411,096 $178,620,353

U.S. Solithromycin Sales 2015E 2016E 2017E 2018E 2019E 2020E

Gonorrhea incidence 735,707 743,064 750,495 758,000 765,580 780,891

Solithromycin penetration 0.00% 1.00% 3.00% 5.00% 7.00% 8.00%

No. of patients treated - 7,431 22,515 37,900 53,591 62,471

Days on treatment 1 1 1 1 1 1

Total patient days - 7,431 22,515 37,900 53,591 62,471

Doses per day 1 1 1 1 1 1

Cost per day $348 $369 $391 $415 $440 $466

Total U.S. sales: Gonorrhea - $2,743,946 $8,813,007 $15,725,342 $23,569,771 $29,124,156

14

Source: SunTrust Robinson Humphrey

Taksta: Prosthetic Joint Infections (PJI)

We model a potential Taksta U.S. market introduction in the 2H17 and assume initial use in prosthetic joint

infections and osteomyelitis. We estimate approximately 75K cases of osteomyelitis and 18K cases of prosthetic

joint infection will require treatment with antibiotic therapy (company-contracted market research). Our model

assumes Taksta use for up to six weeks at a standard dose of 600mg twice daily and a daily cost of approximately

$110. With modest initial penetration, we believe U.S. sales could reach $31M in 2020. The following tables

highlight our U.S. Taksta revenue models for PJI and osteomyelitis.

Cempra, Inc. – Taksta Revenue Model, Prosthetic Joint Infection

Source: SunTrust Robinson Humphrey

Cempra, Inc. – Taksta Revenue Model, Osteomyelitis

Source: SunTrust Robinson Humphrey

Ex-U.S. Solithromycin Sales 2015E 2016E 2017E 2018E 2019E 2020E

Gonorrhea incidence 662,136 668,758 675,445 682,200 689,022 702,802

Solithromycin penetration 0.00% 0.00% 2.50% 4.00% 5.00% 6.00%

No. of patients treated - - 16,886 27,288 34,451 42,168

Days on treatment 1 1 1 1 1 1

Total patient days - - 16,886 27,288 34,451 42,168

Doses per day 1 1 1 1 1 1

Cost per day $226 $240 $254 $270 $286 $303

Total ex-U.S. sales: Gonorrhea - - $4,296,341 $7,359,460 $9,848,797 $12,778,224

U.S. Taksta Sales 2017E 2018E 2019E 2020E

Cases of PJI 17,690 17,867 18,046 18,226

Taksta penetration 0.50% 1.50% 3.00% 5.00%

No of patients treated 88 268 541 911

Days on treatment 42 42 42 42

Total patient days 3,715 11,256 22,738 38,275

Cost per day $110 $117 $124 $131

Total U.S. sales: PJI $408,645 $1,312,487 $2,810,296 $5,014,506

U.S. Taksta Sales 2017E 2018E 2019E 2020E

Cases of osteomyelitis 77,050 77,821 78,599 79,385

Taksta penetration 0.50% 2.00% 4.00% 6.00%

No of patients treated 385 1,556 3,144 4,763

Days on treatment 42 42 42 42

Total patient days 16,181 65,369 132,046 200,049

Cost per day $110 $117 $124 $131

Total U.S. sales: Osteomyelitis $1,779,855 $7,622,051 $16,320,336 $26,208,827

15

Intellectual Property

Cempra, Inc. - Patent owned by Cempra

Source: USPTO, Cempra, Inc., and SunTrust Robinson Humphrey

Cempra Inc. - CEM-101 related Patents Licensed by Cempra from Optimer

Source: USPTO, Cempra, Inc., and SunTrust Robinson Humphrey

Company Management

Cempra, Inc. - Key Management

Source: Cempra, Inc.

U.S. Patent # Assignee Issued Expiry Notes

8,247,394 Cempra 8/21/2012 2031 Method of using fusidic acid to treat and prevent urethritis, an ocular

infection, or a pharyngeal infection caused by Neisseria gonorrhoeae or

Chlamydia trachomatis.

U.S. Patent # Assignee Issued Expiry Notes

8,343,936 Optimer 1/1/2013 2024 U.S. Appln (13/136,172) granted allowance on 9/4/2012; Continuation of

U.S. Patent 8,012,943 (which is a continuation of U.S. Patent 7,601,695) -

Composition of matter patent describing novel functionalized macrolide

compounds.

8,012,943 Optimer 9/6/2011 2024 Continuation of U.S. Patent (7,601,695) - Composition of matter patent

describing novel functionalized macrolide compounds.

7,601,695 Optimer 10/13/2009 2025 Composition of matter patent describing novel functionalized macrolide

compounds, methods of preparing said macrolides, and including but not

limited to use of such macrolides as antibacterial agents.

Name Position Experience

Prabhavathi Fernandes, Ph.D. Founder,

President, CEO

President, CEO, DarPharma, Ricerca

Biosciences and Small Molecule Therapeutics;

Advisory Board Member, Optimer

Pharmaceuticals, Inc.

Mark W. Hahn EVP, Chief

Financial Officer

CFO, Athenix Corp.; CFO, BuildLinks, Inc.; CFO,

Charles & Colvard, Ltd.

Carl T. Foster EVP, Business

Development

CEO, Jurilab; Managing Director, Ferghana

Partners, Inc.

David Pereira, Ph.D. Senior VP,

Chemistry

Director, Synthesis Group, Cardinal Healthcare

David Oldach, M.D., FIDSA Senior VP,

Clinical

Research

Clinical research director, Gilead Sciences,

Inc.

16

Summary Financials

As of December 31, 2012, Cempra had approximately $70M in cash and equivalents. We currently estimate a 2013

cash burn of approximately $61M. A summarized balance sheet is shown below.

Source: Cempra, Inc.

Assets 12/31/12

Cash and equivalents $70,109

Prepaid expenses $265

PP&E, net $43

Deposits $321

Total Assets $70,738

Liabilities and Shareholders' Equity

Current liabilities $5,345

Long-term Debt $7,623

Shareholders' Equity $57,770

Total Liabilities and Shareholders' Equity $70,738

(Amounts in thousands)

17

Cempra, Inc. – Statement of Operations, Quarterly

Ce

mp

ra, In

c. --

Sta

tem

en

t o

f O

pe

rati

on

sA

mounts

in t

housands,

exc

ept

per-

share

fig

ure

s

Bri

an

Lia

n,

Ph

.D.

212-3

19-3

728

1Q

11A

2Q

11A

3Q

11A

4Q

11A

2011A

1Q

12A

2Q

12A

3Q

12A

4Q

12A

2012A

1Q

13E

2Q

13E

3Q

13E

4Q

13E

2013E

1Q

14E

2Q

14E

3Q

14E

4Q

14E

2014E

Glo

ba

l S

oli

thro

mycin

Sa

les

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Re

ve

nu

e

Solit

hro

mycin

reve

nues

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Taksta

reve

nue

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Royalty r

eve

nue

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

To

tal

op

era

tin

g r

eve

nu

e-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Op

era

tin

g e

xp

en

ses:

Cost

of goods s

old

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Researc

h &

deve

lopm

ent

4,3

92

4,3

61

6,6

61

1,4

58

16,8

72

1,8

76

7,4

24

3,1

56

4,4

13

16,8

69

8,5

79

10,6

15

16,1

28

17,8

51

53,1

73

17,2

41

12,6

15

11,4

28

5,9

50

47,2

34

SG

&A

880

806

965

1,0

57

3,7

08

972

1,7

77

1,4

95

1,8

25

6,0

68

1,9

87

2,0

70

2,2

13

2,1

98

8,4

68

2,2

87

2,3

25

2,2

90

2,4

39

9,3

41

Colla

bora

tive

pro

fit s

hare

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

To

tal

op

era

tin

g e

xp

en

ses

5,2

72

5,1

67

7,6

26

2,5

15

20,5

80

2,8

48

9,2

01

4,6

51

6,2

38

22,9

37

10,5

66

12,6

85

18,3

41

20,0

49

61,6

41

19,5

28

14,9

40

13,7

18

8,3

89

56,5

75

Inco

me

(L

oss

) fr

om

op

era

tio

ns

(5,2

72)

(5,1

67)

(7,6

26)

(2,5

15)

(2

0,5

80)

(2

,848)

(9,2

01)

(4,6

51)

(6

,238)

(22,9

37)

(1

0,5

66)

(1

2,6

85)

(1

8,3

41)

(2

0,0

49)

(6

1,6

41)

(19,5

28)

(1

4,9

40)

(1

3,7

18)

(8

,389)

(56,5

75)

Oth

er

incom

e (

expense)

(641)

-

-

-

(6

41)

(3

02)

(327)

(330)

(330)

(1,2

89)

(312)

(312)

(312)

(312)

(1,2

48)

(3

12)

(312)

(312)

(312)

(1,2

48)

Pre

tax

in

co

me

(lo

ss)

(5,9

13)

(5,1

67)

(7,6

26)

(2,5

15)

(21,2

21)

(3,1

50)

(9,5

28)

(4,9

81)

(6,5

68)

(24,2

26)

(10,8

78)

(12,9

97)

(18,6

53)

(20,3

61)

(62,8

89)

(19,8

40)

(15,2

52)

(14,0

30)

(8,7

01)

(57,8

23)

Accre

tion o

f re

deem

able

conv

pre

ferr

ed

(941)

(9

40)

(9

41)

(9

41)

(3

,763)

(314)

-

-

-

(314)

-

-

-

-

-

-

-

-

-

-

Incom

e t

ax e

xpense (

benefit

)-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Ne

t in

co

me

(lo

ss)

(6,8

54)

(6,1

07)

(8,5

67)

(3,4

56)

(2

4,9

84)

(3

,464)

(9,5

28)

(4,9

81)

(6

,568)

(24,5

40)

(1

0,8

78)

(1

2,9

97)

(1

8,6

53)

(2

0,3

61)

(6

2,8

89)

(19,8

40)

(1

5,2

52)

(1

4,0

30)

(8

,701)

(57,8

23)

Ba

sic e

arn

ing

s (l

oss

) p

er

sha

re($

13.4

1)

($11.6

5)

($16.0

4)

($6.4

7)

($47.5

3)

($0.2

6)

($0.4

5)

($0.2

4)

($0.2

7)

($1.2

3)

($0.4

4)

($0.4

3)

($0.6

1)

($0.6

6)

($2.1

6)

($0.6

4)

($0.4

2)

($0.3

8)

($0.2

4)

($1.6

4)

Dil

ute

d e

arn

ing

s (l

oss

) p

er

sha

re($

13.4

1)

($11.6

5)

($16.0

4)

($6.4

7)

($47.5

3)

($0.2

6)

($0.4

5)

($0.2

4)

($0.2

7)

($1.2

3)

($0.4

4)

($0.4

3)

($0.6

1)

($0.6

6)

($2.1

6)

($0.6

4)

($0.4

2)

($0.3

8)

($0.2

4)

($1.6

4)

Basic

com

mon s

hare

s o

uts

tandin

g511

524

534

534

526

13,2

51

21,3

05

21,0

38

24,1

47

19,8

83

24,9

04

30,3

05

30,5

55

30,8

05

29,1

42

30,9

30

36,4

55

36,5

80

36,7

05

35,1

68

Dilu

ted c

om

mon s

hare

s o

uts

tandin

g511

524

534

534

526

13,2

51

21,3

05

21,0

38

24,1

47

19,8

83

24,9

04

30,3

05

30,5

55

30,8

05

29,1

42

30,9

30

36,4

55

36,5

80

36,7

05

35,1

68

Ra

tio

s a

nd

Ma

rgin

s

Gro

ss M

arg

inN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

M

SG

&A

as p

erc

ent

of re

venue

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

R&

D a

s p

erc

ent

of re

venue

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

NM

Opera

ting m

arg

inN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

M

Pre

tax m

arg

inN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

M

Pro

fit m

arg

inN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

MN

M

Tax r

ate

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Sourc

e:

SunTru

st

Robin

son H

um

phre

y a

nd C

em

pra

, In

c.

18

Cempra, Inc. – Statement of Operations, Annual

Ce

mp

ra, In

c. --

Sta

tem

en

t o

f O

pe

rati

on

sA

mounts

in t

housands,

exc

ept

per-

share

fig

ure

s

Bri

an

Lia

n,

Ph

.D.

212-3

19-3

728

2011A

2012A

2013E

2014E

2015E

2016E

2017E

2018E

2019E

2020E

Glo

ba

l S

oli

thro

mycin

Sa

les

-

-

-

-

-

$31,2

81

$142,9

19

$319,7

36

$474,3

32

$588,0

54

Re

ve

nu

e

Solit

hro

mycin

reve

nues

-

-

-

-

-

$31,2

81

$130,4

14

$242,4

24

$334,0

72

$396,6

56

Taksta

reve

nue

-

-

-

-

-

-

2,1

89

8,9

35

19,1

31

31,2

23

Royalty r

eve

nue

-

-

-

-

-

-

2,5

01

15,4

62

28,0

52

38,2

80

To

tal

op

era

tin

g r

eve

nu

e-

-

-

-

-

31,2

81

135,1

04

266,8

21

381,2

55

466,1

59

Op

era

tin

g e

xp

en

ses:

Cost

of goods s

old

-

-

-

-

-

4,6

92

18,5

64

35,1

90

45,9

16

55,6

24

Researc

h &

deve

lopm

ent

16,8

72

16,8

69

53,1

73

47,2

34

31,7

15

33,3

01

34,9

66

36,0

15

37,0

96

38,5

80

SG

&A

3,7

08

6,0

68

8,4

68

9,3

41

18,5

40

57,1

44

80,0

02

88,0

02

92,4

02

97,0

22

Colla

bora

tive

pro

fit s

hare

-

-

-

-

-

10,9

48

45,6

45

84,8

48

116,9

25

138,8

30

To

tal

op

era

tin

g e

xp

en

ses

20,5

80

22,9

37

61,6

41

56,5

75

50,2

55

106,0

86

179,1

78

244,0

56

292,3

40

330,0

56

Inco

me

(L

oss

) fr

om

op

era

tio

ns

(20,5

80)

(2

2,9

37)

(6

1,6

41)

(56,5

75)

(50,2

55)

(74,8

05)

(44,0

74)

22,7

65

88,9

15

136,1

03

Oth

er

incom

e (

expense)

(641)

(1

,289)

(1,2

48)

(1

,248)

(1

,250)

(1

,250)

(1,2

50)

(1

,250)

(1

,250)

(1

,250)

Pre

tax

in

co

me

(lo

ss)

(21,2

21)

(24,2

26)

(62,8

89)

(57,8

23)

(51,5

05)

(76,0

55)

(45,3

24)

21,5

15

87,6

65

134,8

53

Accre

tion o

f re

deem

able

conv

pre

ferr

ed

(3,7

63)

(314)

-

-

-

-

-

-

-

-

Incom

e t

ax e

xpense (

benefit

)-

-

-

-

-

-

-

430

7,0

13

18,8

79

Ne

t in

co

me

(lo

ss)

(24,9

84)

(2

4,5

40)

(6

2,8

89)

(57,8

23)

(51,5

05)

(76,0

55)

(45,3

24)

21,0

85

80,6

52

115,9

74

Ba

sic e

arn

ing

s (l

oss

) p

er

sha

re($

47.5

3)

($1.2

3)

($2.1

6)

($1.6

4)

($1.2

5)

($1.5

7)

($0.9

1)

$0.4

2$1.5

6$2.2

0

Dil

ute

d e

arn

ing

s (l

oss

) p

er

sha

re($

47.5

3)

($1.2

3)

($2.1

6)

($1.6

4)

($1.2

5)

($1.5

7)

($0.9

1)

$0.4

1$1.5

2$2.1

5

Basic

com

mon s

hare

s o

uts

tandin

g526

19,8

83

29,1

42

35,1

68

41,2

68

48,3

93

49,6

43

50,6

43

51,6

43

52,6

43

Dilu

ted c

om

mon s

hare

s o

uts

tandin

g526

19,8

83

29,1

42

35,1

68

41,2

68

48,3

93

49,6

43

51,9

43

52,9

43

53,9

43

Ra

tio

s a

nd

Ma

rgin

s

Gro

ss M

arg

inN

MN

MN

MN

MN

M85.0

%86.0

%86.0

%87.0

%87.0

%

SG

&A

as p

erc

ent

of re

venue

NM

NM

NM

NM

NM

NM

59.2

%33.0

%24.2

%20.8

%

R&

D a

s p

erc

ent

of re

venue

NM

NM

NM

NM

NM

106.5

%25.9

%13.5

%9.7

%8.3

%

Opera

ting m

arg

inN

MN

MN

MN

MN

MN

MN

M8.5

%23.3

%29.2

%

Pre

tax m

arg

inN

MN

MN

MN

MN

MN

MN

M8.1

%23.0

%28.9

%

Pro

fit m

arg

inN

MN

MN

MN

MN

MN

MN

M7.9

%21.2

%24.9

%

Tax r

ate

-

-

-

-

-

-

-

2%

8%

14%

Sourc

e:

SunTru

st

Robin

son H

um

phre

y a

nd C

em

pra

, In

c.

19

Investment Thesis We view Cempra as an emerging biopharmaceutical firm with clinical assets and significant upcoming catalysts. The company is developing two product candidates, solithromycin and Taksta, each of which we think provides attractive potential revenue opportunities. Our 12-month price target for Cempra is $12. We apply a 30x multiple to our probability-adjusted, fully diluted 2019 EPS estimate of $0.94 and discount six years at 15%. We believe the 30x multiple is appropriate for emerging biopharmaceuticals firms like Cempra. A 15% discount rate is appropriate given the probability adjustment applied to the company's 2019 earnings estimate. Risks to our price target include FDA delays or non-approval of solithromycin and Taksta, cardiovascular safety risks discovered with either drug that preclude them from receiving FDA approval, generic drug sales, and the possibility of new, more-effective antibiotics entering the market during the launch or sales periods for each drug.

Company Description Cempra, Inc. is a clinical-stage antibiotics company. The company's lead program is solithromycin, a novel macrolide

antibiotic in phase III development for community-acquired bacterial pneumonia (CABP). If approved, solithromycin

would represent the first oral and IV formulated macrolide to reach the market in 20 years. The company's second

drug candidate is Taksta, a novel antibiotic in phase II development for bone-related infections. Cempra's continued

focus is on both the hospital and community-acquired antimicrobial markets.

Analyst Certification I, Brian Lian, Ph.D., hereby certify that the views expressed in this research report accurately reflect my personal views about the subject company(ies) and its (their) securities. I also certify that I have not been, am not, and will not be receiving direct or indirect compensation in exchange for expressing the specific recommendation(s) in this report.

Important Disclosures SunTrust Robinson Humphrey, Inc. makes a market in the following companies at the time of this report: Cempra, Inc.

Analyst compensation is based upon quality of analysis, communication skills, stock price performance and the overall revenue and profitability of the firm, including investment banking revenue. As a matter of policy and practice, the firm prohibits the offering of favorable research or a specific research rating as consideration or inducement for the receipt of business or compensation. In addition, analysts and associated persons preparing research reports are prohibited from owning securities in the subject companies.

20

Rating And Price Target History (CEMP)

Date Rating Target Closing

No changes made in the prior three years.

Definition of Ratings SunTrust Robinson Humphrey assigns one of three ratings to stocks covered by our Research Department: Buy, Neutral, or Reduce. In addition, we assign a risk rank to each stock based on a combination of fundamental and stock volatility factors: Low = Low stock price volatility reflected by high predictability of financial results. Moderate = Moderate stock price volatility reflected by medium predictability of financial results. High = High stock price volatility reflected by inconsistent predictability of financial results. Speculative = Greatest stock price volatility reflected by low predictability of financial results. Venture = Recommended only for maximum risk oriented and well-diversified portfolios. Our ratings are a function of the risk ranking (higher return expectations for higher risk) and the absolute expected total return (price appreciation plus dividends) that result in our estimated 12-month price target. Please refer to the grid below for additional detail.

Performance Definition Scale

Total return (capital gain/loss + dividends) expected over the next 12 months

Rating Low Risk Moderate Risk High Risk Speculative

Buy Over 10% Over 15% Over 20% Over 25% Neutral -5% to 10% -5% to 15% -10% to 20% -10% to 25% Reduce -5% or Worse -5% or Worse -10% or Worse -10% or Worse

SunTrust Robinson Humphrey assigns one of three ratings to industries/sectors covered by our Research Department: Overweight, Market Weight or Underweight. These terms are relative to the appropriate S&P 500 industries/sectors. Deviations from expected price targets due to price movement and/or volatility will be reviewed by the analyst and research management on a timely basis. Price targets are only required on Buy rated stocks; the analyst may choose to have price targets on Neutral or Reduce rated stocks, but it is not required. Action taken by an investor should be based upon their personal investment objectives and risk tolerance compared to a stock’s expected performance and risk ranking.

21

SunTrust Robinson Humphrey ratings distribution as of 03/20/2013:

Coverage Universe Investment Banking Clients Past 12 months Rating Count Percent Rating Count Percent* Buy 152 44 Buy 48 14 Hold/Neutral 187 54 Hold/Neutral 26 7 Sell/Reduce 10 3 Sell/Reduce 1 0

*Percentage of Investment Banking clients in Coverage Universe by rating

Financial Definitions Average Daily Volume = The cumulative number of shares traded over 200 days ÷ number of trading sessions in that period Book Value/Share = Shareholders’ equity ÷ shares outstanding Debt/Cap. = Debt ÷ shareholders’ equity + debt Debt/EBITDA = Long-term debt ÷ earnings before interest, tax, depreciation, and amortization Dividend/Yield = Annual dividend per share ÷ share price Est. 5-Year EPS Growth = Expected 5-year CAGR from latest actual Float = Number of shares outstanding available for public trading Free Cash Flow/Share = Trailing four quarters cash flow from operations - yearly CAPEX ÷ shares outstanding Long-Term Debt = Loans and financial obligations extending beyond one year Net Cash/Share = Cash + liquid securities - total debt (short and long term) ÷ shares outstanding ROE (last year actual) = Net income ÷ shareholders’ equity Shareholders’ Equity = Share capital + retained earnings - treasury shares

Key Indices: DJIA – Dow Jones RUI – Russell 1000 RUT – Russell 2000 MID – S&P MidCap 400 SPX – S&P 500 SML – S&P SmallCap 600

Other Disclosures Information contained herein has been derived from sources believed to be reliable but is not guaranteed as to accuracy and does not purport to be a complete analysis of the security, company or industry involved. This report is not to be construed as an offer to sell or a solicitation of an offer to buy any security. SunTrust Robinson Humphrey, Inc. and/or its officers or employees may have positions in any securities, options, rights or warrants. The firm and/or associated persons may sell to or buy from customers on a principal basis. Investors may be prohibited in certain states from purchasing some over-the-counter securities mentioned herein. Opinions expressed are subject to change without notice. The information herein is for persons residing in the United States only and is not intended for any person in any other jurisdiction. SunTrust Robinson Humphrey, Inc.'s research is provided to and intended for use by Institutional Accounts as defined in FINRA Rule 4512(c). The term "Institutional Account" shall mean the account of: (1) a bank, savings and loan association, insurance company or registered investment company; (2) an investment adviser registered either with the SEC under Section 203 of the Investment Advisers Act or with a state securities commission (or any agency or office performing like functions); or (3) any other person (whether a natural person, corporation, partnership, trust or otherwise) with total assets of at least $50 million. SunTrust Robinson Humphrey, Inc. is a registered broker-dealer and a member of FINRA and SIPC. It is a service mark of SunTrust Banks, Inc. SunTrust Robinson Humphrey, Inc. is owned by SunTrust Banks, Inc. ("SunTrust") and affiliated with SunTrust Investment Services, Inc. Despite this affiliation, securities recommended, offered, sold by, or held at SunTrust Robinson Humphrey, Inc. and at SunTrust Investment Services, Inc. (i) are not insured by the Federal Deposit Insurance Corporation; (ii) are not deposits or other obligations of any insured depository institution (including SunTrust Bank); and (iii) are subject to investment risks, including the possible loss of the principal amount invested. SunTrust Bank may have a lending relationship with companies mentioned herein.

22

© SunTrust Robinson Humphrey, Inc. 2013. All rights reserved. Reproduction or quotation in whole or part without permission is forbidden.

ADDITIONAL INFORMATION IS AVAILABLE at our website, www.suntrustrh.com, or by writing to: SunTrust Robinson Humphrey, Research Department, 3333 Peachtree Road N.E., Atlanta, GA 30326-1070