Strategic Synergy Consulting Group

Apostolos Antoniou | Ashleigh Womble | Dylana Suarez | Mike Kavanagh | Ni Zhan | Taylor Polchinski | Roberto Westerband

Executive-in-Residence ProgramSpring 2014

LEERINK PARTNERS LLCMGT REPORT RE-DESIGN

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Agenda

• SWOT Analysis of Leerink Partners LLC

• SWOT Analysis of Leerink’s Current MGT Report

• Key Stakeholders

• Design Methodology

• Deliverable of Leerink Quarterly Review

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SWOT AnalysisLeerink Partners LLCStrengths Weaknesses

Opportunities Threats

• Reputation/knowledge in

healthcare

• MEDACorp/research capability

• Client service

• Investment banking capability

• MEDACorp use limitations

• Lack of diversity within product

offerings

• Brand image

• International presence

• MEDACorp expansion to other

expert networks

• Brand development

• Growth through acquisitions

• International expansion

• Increased regulation in within

industry

• Competition from Mature asset

management companies with

larger market share

• Other investment banks

acquiring research companies

similar to MEDACorp

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SWOT AnalysisCurrent MGT ReportStrengths Weaknesses

Opportunities Threats

• Detailed Financial Information

• Includes all necessary ratios and

metrics

• Quantitative information to

highlight current work stream

performance

• Easy to miss important

information

• Design aesthetic is visually

unpleasing

• Difficultly in finding financial

results due to clustered bullets

• Allow transparency for key

stakeholders

• Better managerial decision

making due to ease of use

• More streamlined reporting

would allow for less redundancy

• Important metrics are missed

• If management is misinformed, it

will have negative effects on

internal processes

• Misinterpretation of Leerink

performance

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Key StakeholdersWho Are They? What are their Needs?

Stakeholder Takeaways

• Board of Directors

• Upper-level Management

• Current and Future Investors

• Interested External Parties

• Understanding of Company

Performance

• Quick Comprehension

• Easy Comparability

• Key Financial Highlights and

Metrics

• Geographic Profitability

• Historical Trends per Business Segment

• A Comparative Review of Revenues, Expenses and Pre-Tax Income

• Recent Banking Transactions

• Top and Bottom 10 Client Accts.

• Employee Metrics

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Design Methodology

• Built a storyline to highlight work stream performance.

• Chose a graphical approach to financial statements.

• Condensed graph design that combines current year, prior year, and planned figures.

• Color coding for ease of identification

• Includes key highlights and metrics to provide better transparency.

• Use of Current Technology to auto-populate management report

Current Year

Budget

Overall Design Legend

PY/Plan

Prior Year

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Deliverable of Leerink Quarterly Review

• Cover Page

• Q 3 2013 Income Statement Overview

• Q3 2013 Balance Sheet Overview

• Financial Highlights

• Location Highlights

• Business Segment Trends

• Revenues | Expenses | Pre-Tax Income

• Q3 2013

• YTD

• Performance Highlights

• Deal Activity

• Client Metrics

• Headcount Statistics

• Employee Metrics

LEERINKBusiness

Performance

Storyline

The Healthcare Investment Bank

2013 Third Quarter Review

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Q3 2013 Income Statement Overview

Financial Highlights

$36.1MOperating Revenue for Q3 13, ahead of Plan by $11.4M and Q3 12 by $17.2 M (+91.0%). It was the firms highest ever quarterly revenue.

$23.1M

Compensation Costs for Q3 13, unfavorable to Plan of $7.3M (+46.3%), which was mostly the effect of the favorable revenue on the incentive compensation accrual.

$7.7M Operating NPE for Q3 13, unfavorable to Plan of $6.4M (+19.3%) and Q3 12 of $5.5M (+40.1%).

$5.3M Pre-tax Net Operating Income, far surpassed the $2.4M planned for the quarter (+117.4%) and $2.7M earned in Q3 12 (+96.4%).

14.7%

Pre-tax Operating Margin % for The Firm’s Q3 13.

PY/Plan

PY/Plan

PY/Plan

PY/Plan

PY Plan

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Q3 2013 Balance Sheet Overview

Financial Highlights

$68.5MCash and Cash Equivalents increased $22.1M from year-end primarily due to the proceeds from the sale of Humica and positive net cash flows from business operations.

$25.5M

Receivables include customer ($18.6M) and employee and other receivables ($6.9M). The increase of $9.5M from PY is mostly related to accrued banking revenue.

$8.6M Other Assets increased largely due to a $1.7M letter of credit that was signed related to the NY lease as well as purchases of fixed assets.

$43.9M

Members’ Equity decreased by $7.8M from Dec. 2012 due to the Lovell Minnick equity repurchase ($40.0M) mostly offset by net income ($32.4M).

$4.02 Tangible Book Value per share was $4.02, up from $3.52 in Dec.

PY/Plan

PY/Plan

PY/Plan

PY/Plan

PY/Plan

Financial Highlights

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Location Highlights

Comparative Expenses by Location

• +30% Q3 Revenue from San Francisco Year-Over-Year• Attributed to increased sales force

• 10 More Clients Out of New York Year-Over-Year• Attributed to higher referral rate

• -15% Expenses in Boston Year-Over-Year• Attributed to decreased rent expense

Location Metrics

Key Highlights Comparative Revenue by Location

New York San Francisco Boston

$15,000,000

$6,500,000

$1,250,000

$10,000,000

$5,000,000

$1,000,000

Q3 2013 Q3 2012

New York San Francisco Boston

$750,000

$300,000

$125,000

$500,000

$250,000

$100,000

Q3 2013 Q3 2012

Boston, MA• $$ Revenue• 94 Employees• $$ Rev/HC

New York, NY• $$ Revenue• 82 Employees• $$ Rev/HC

San Francisco, CA• $$ Revenue• 10 Employees• $$ Rev/HC

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Business Segment Trends

Institutional Equities

• Executed 19 Deals in Q3 13, up from 15 deals in Q2 13.

• Average Fee per Transaction was up in Q3 13 at $1.18M vs. $992k in Q2 13.

• 20% M&A Deals of total Q3 13 revenue.

• 263m Shares Trade Volume was up compared to prior quarter of 245m shares. Asset Management

Key Highlights Investment Banking

Q3'10 Q1'11 Q2'11 Q3'11 Q1'12 Q2'12 Q3'12 Q1'13 Q2'13 Q3'13

$17,250

$18,650 $18,200

$19,850 $20,275

$20,850

$22,600

$21,002

$22,041 $22,347

Q3'10 Q1'11 Q2'11 Q3'11 Q1'12 Q2'12 Q3'12 Q1'13 Q2'13 Q3'13

$7,200

$7,900 $7,850

$9,000 $8,750

$9,000

$9,450

$10,000

$11,250

$10,144

Q3'10 Q1'11 Q2'11 Q3'11 Q1'12 Q2'12 Q3'12 Q1'13 Q2'13 Q3'13

$1,450 $1,500

$1,586 $1,620 $1,700

$1,750 $1,800

$1,900 $1,950

$2,048

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Q3 2013 Revenue

Key Highlights

Revenue Comparison

• Q3 Investment Banking revenue was 22.3M favorable to plan by 9.8 Million. The highest quarterly revenue result in the Firm’s history.

• Q3 Institutional Equities revenue was 10.1M favorable to plan by .8M.

• Trade volumes for the quarter were up 7% from the previous year to 263M shares.

• Asset Management continues to grow steadily with a 15% increase from the previous quarter.

Revenue Breakdown by Segment

62%

28%

6%4% Investment Banking

Institutional Equities

Asset Management

Other Revenue

Investment Banking Institutional Equities Asset Management Other Revenue Total Revenue

22,347

10,144

2,048 1,514

36,053

7,693 8,742

2,809

(372)

18,872

Q3 2013 Q3 2012 Budget

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YTD 2013 Revenue

Key Highlights

YTD Revenue Comparison

YTD Revenue Breakdown by Segment

61%

29%

6% 4% Investment Banking

Institutional Equities

Asset Management

Other Revenue

Investment Banking Institutional Equities Asset Management Other Revenue Total Revenue

58,994

31,113

6,038 4,359

100,504

26,975 29,344

8,565 1,173

66,057

YTD 2013 YTD 2012 Budget

• YTD Operating Revenue was $100.5M, up 52% (+$34.4M) vs. 2012, and up 34% (+25.2M) when compared to plan.

• YTD Institutional Equities revenue ($31.1M) increased 6% (+$1.8M) vs. 2012, and up $5.3% (+$1.6M) when compared to plan.

• YTD Asset Management revenue ($6M) declined 30% (-$2.5M) from 2012, and down 15% (-$1.1M) vs. plan.

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Q3 2013 Expenses

Q3 2013 Key Metrics

Expenses Comparison

Key Highlights

Comp Expenses NPE Expenses Total Expenses

23,073

7,666

30,739

10,672

5,470

16,142

Q3 2013 Q3 2012 Budget

43%

32%

25%Variable Comp.

Fixed Comp.

NPE

• Compensation vs. Revenue Ratio was 64%, flat compared to prior year.

• NPE Expenses was $7.7M up 40% (+$2.2M) when compared to prior year, up 12% ($792k) from Q2 2013, and up 19% (+1.2M) compared to plan.

• NPE vs. Revenue Ratio was 21.3%, down when compared to the last 8-quarter average of 25.9%, and down vs. plan levels of 26.1%.

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YTD 2013 Expenses

YTD Key Metrics

Expenses Current Year to Prior Year

64%Variable Compensation Ratio

to Revenue

39%

35%

26% Variable Comp.

Fixed Comp.

NPE

Comp Expenses NPE Expenses Total Expenses

64,322

22,414

86,736

40,871

19,224

60,095

YTD 2013 YTD 2012 Budget

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Q3 2013 Pre-tax IncomePre-tax Income Current Year to Prior Year

Pre-tax Income Actual to Budget

Q3 Revenue Q3 Expenses Q3 Pre-Tax Income

36,053 30,739

5,314

24,644 22,201

2,443

Actual Budget

Pre-Tax Income

5,314

2,730

Q3 2012 Q3 2013

Key Highlights

• Operating Pre-tax Income was $5.3M, which was the 2nd highest ever (next to $7.6M in Q2 2007).

• Pre-Tax Margin was +14.7%, higher than a year ago levels of +14.5%, and up vs Q2 2013 levels of 13.1%, and up compared to plan levels of +9.9%.

• Operating Leverage was a +0.6%, vs. plan of -6.9%, a full year 2012 of +11.8%.

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YTD 2013 Pre-tax IncomePre-tax Income Current Year to Prior Year

Pre-tax Income Actual to Budget

Pre Tax Income

13,768

5,962

YTD 2012 YTD 2013

Q3 Revenue Q3 Expenses Q3 Pre-Tax Income

100,504 86,736

13,768

75,296 68,530

6,766

Actual Budget

• Operating Pre-tax Income was $13.8M, up 131% (+$7.8M) vs. 2012, and up 103% (+$7M) when compared to plan. This already have exceeded full year target levels of $10M. 

• Pre-Tax Margin was +13.7%, up from last year’s levels of +9%, and up vs. plan of +9%.

 • Operating Leverage was a +7.8%, up vs.

plan of 0%.

Key Highlights

Performance Highlights

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Deal ActivityQ3 2013 Banking Transactions

Future Transactions

• October revenue includes $7.7M from the Restat M&A, the largest banking transaction fee received in the history of the firm.

• Three biopharma public equity transactions expected to price in October ($2.7M of fees).

• $75M IPO for Veracyte, Jt. BR, expected to launch in October.

• Two private placement offerings expected to close by early November, ($1.7M).

Client Deal Type II Deal Type III Capital Raised Total RevenueInsmed Follow-On Sole Bookerunner - $ 2,310,438

Medicines Co. Follow-On Jt Bookrunner $ 46,000,000 2,097,236 OncoMed IPO Jt Bookrunner - 2,078,975 Ophthotech IPO Co-Manager 90,000,000 1,680,897 Acceleron IPO Jt Bookrunner 103,500,000 1,640,260 Onconova Therapeutics IPO Jt Bookrunner - 1,578,994 Foundation Medicine IPO Co-Manager 40,000,000 1,225,953 Sophiris IPO Jt Bookrunner 197,000,000 1,010,751 Verastem Follow-On Jt Bookrunner - 1,006,655 Agios IPO Co-Manager - 894,178 Kalobios Follow-On Sole Bookerunner - 800,832 Cellular Dynamics IPO Co-Manager 275,000,000 558,421

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Client MetricsTop 10 Accounts

YTD Top 10 Largest Producers YTD Net Eligible YTD Net Budget $ Diff % DiffFidelity Management & Research, LLC $ 1,099,963 $ 678,973 $ 420,990 62%Hennion & Walsh 854,192 941,006 -86,814 -9%Visium Asset Management 791,450 749,282 42,168 6%Balyasny Asset Management 747,819 405,426 342,393 84%Pyramis Global Advisors, LLC 704,547 695,419 9,128 1%Mason Capital 575,309 403,897 171,412 42%Sabby Capital 549,898 485,279 64,619 13%Partner Funds 514,789 265,104 249,685 94%Orbimed Advisors 452,168 250,185 201,983 81%Ridgeback Capital Management 449,379 295,881 153,498 52%

Accounts as % of Revenue Key Financial Highlights

• YTD Net Eligible: $123,456,789

• Average Loss Ratio: 23%

• Top 5 Capital Users• Fidelity Management & Research, LLC

• Visium Asset Management

• Partner Funds

• Mason Capital

• Capital World Investors

32%

20%26%

22%Top 10 Accounts

Accounts #11 to #25

Accounts #26 to #50

Accounts #51 to #100

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Client MetricsBottom 10 Accounts

YTD Top 10 Laggard vs BudgetYTD Net Eligible

YTD Net Budget

$ Diff % Diff

Tradewinds Global Investors $ 32,551 $ 352,846 -320,295 -91%Columbia Mgmt 197,237 352,436 -155,199 -44%Capital Research Global 397,218 544,611 -147,393 -27%Ayer Capital 93,039 222,075 -129,036 -58%Tang Capital 0 127,876 -127,876 -100%PointState Capital 21,054 147,725 -126,671 -86%Marshall Wace 214,516 340,766 -126,250 -37%Turner Investment Partners 133,358 230,312 -96,954 -42%JP Morgan 133,015 229,372 -96,357 -42%UBS O'Connor 141,215 235,825 -94,610 -40%

32,551 197,237 397,218 93,039 0 21,054 214,516 133,358 133,015 141,215

YTD Net Eligible YTD Net Budget

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Headcount Statistics

2013 2012

Q3 A Q3 P Delta Q3 A

Headcount - End 187 196 -4.6% 180

Headcount - Avg 183 194 -5.8% 182

Rev / HC $197.0 $126.8 55.3% $103.5

Q3 2013 Headcount Roll Forward

43

128

25%

75%

Managing DirectorsAll Others

9873

57%

43%

Revenue GeneratorNon-Revenue Generator

19

152

11%

89%

Administrative Professionals

Managing Director Summary

Revenue Generator Summary

Administrative Staff Summary

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Previous Year$789

Plan$456

$845Comp. Cost

per FTE

Employee MetricsQ3 2013 Highlights

Key Metric Comparisons

96.3%

Employee Satisfaction

4.2%

Turnover Rate

Previous Year9%

Plan3%

$1,072

Profit per FTE

Previous Year$543

Plan$876

$2,492

Revenue per FTE

Previous Year$3,456

Plan$1,234

Success Against Hiring Initiatives

Department Plan To Date

Sales 10 13

HR 2 1

Admin 3 0

Thank You!

Strategic Synergy Consulting Group