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Oral Therapies Are The Next Step for Global Rheumatoid Arthritis Therapeutics

Research PREVIEW for

Product and Pipeline Analysis of the Global Rheumatoid Arthritis Therapeutics Market

November 2014

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Research Team

Research Director Steering Committee

Jennifer LazarGlobal Program DirectorLife Sciences

(650) 475-4514

Jennifer.Lazar@frost.com

Greg CaressiSr. Vice PresidentHealthcare

(650) 475-4555

Greg.Caressi@frost.com

Research Lead

Lucila RoccaIndustry AnalystHealthcare

(5411) 4778-3540

Lucila.rocca@frost.com

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Contents

Section Slide Numbers

Executive Summary 5

Market Overview 11

External Challenges: Drivers and Restraints 22

Competitive Analysis—Global Rheumatoid Arthritis Pharmacotherapeutics Market 24

Profiles of Late-stage Investigational Products Close to be Launched 36

The Last Word 40

Appendix 44

The Frost & Sullivan Story 58

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Scope and Methodology

• This research service evaluates the market for prescription drugs and biologics for the long-term treatment of rheumatoid arthritis (RA) prescribed in addition to standard of care. It does not evaluate the market for corticosteroids, non-steroidal anti-inflammatory agents (NSAIDs), and other analgesics or background disease-modifying antirheumatic drug (DMARD) therapy.

• The study takes into account products in the market as well as those in development and discusses market challenges, drivers, and restraints. Segmentation by drug class is also provided along with additional supporting information such as clinical trial timelines and results, projected launch timelines, and epidemiology.

• The information provided in the research service has been derived from primary research with key opinion leaders and secondary research from published sources including disease control organization websites, public health organization websites, company publications including annual reports, SEC filings, and press releases, government sources, and published articles in scientific journals.

Source: Frost & Sullivan

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Executive Summary

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Key Findings

• The number of people with RA globally is 73 million in 2014. The chronic disease is more prevalent in elderly patients.

• The overall disease prevalence is not expected to change significantly in the near term; with the expected rise in number of patients being 3.7 million in the next four years.

• The tumor necrosis factor (TNF) inhibitors Enbrel, Humira, and Remicade dominate the market as first-line standards of care.

• The TNF inhibitors are well entrenched and are expected to continue to dominate the market during 2015 and 2016, until the launch of new drug classes for the treatment of RA.

• New biologics arriving in the market will impact TNF inhibitors’ share. However, novel orals and biologics are generally reserved for anti-TNF refractory patients.

• High costs make biologics inaccessible to many patients, resulting in a need for less costly options without sacrificing safety or efficacy. Biosimilars, such as infliximab, which were launched in emerging markets, are expected to be the choice of many patients who are not able to purchase biologics.

Source: Frost & Sullivan

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Key Findings (continued)

• There are 11 marketed products globally, and 14 are being evaluated in Phase 3 clinical trials. The research and development (R&D) trend is to develop TNF, interleukin and Janus kinase (JAK) inhibitors, as well as anti-Cluster of Differentiation (CD) products. The R&D is focused on increasing efficacy and safety as well as increasing lifestyle quality by changing the administration forms from subcutaneous to oral drugs.

• Three products are expected to be launched in the United States in 2016.o Bariticinib, developed by Eli Lilly, is an oral medication which causes fewer side

effects than Pfizer’s tofacitinib, Xeljanz.o BCD-020, developed by Biocad, is expected to make a major impact in the market

for being the first anti-CD20 biosimilar approved for RA.o SAR153191/REGN88, developed by Sanofi and Regeneron, is the first fully human

monoclonal antibody anti-IL-6.

Source: Frost & Sullivan

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Companies to Watch

Source: Frost & Sullivan.

Samsung Bioepis Co.,

Ltd.

• The company was created in 2013 by the joint venture between Samsung and Biogen Idec. The company is focused on developing biosimilars.

• Samsung Bioepis Co., Ltd. has a TNF inhibitor drug under Phase III clinical trials for the treatment of RA.

Celltrion

• The company has developed Remisina, the first biosimilar approved for the treatment of rheumatoid arthritis.

• Celltrion is currently developing an anti-cd20 drug which is in Phase III clinical trials and is expected to reach the market in 2018.

Biocad• Biocad has developed the first rituximab, an anti-CD20 inhibitor biosimilar. The

product is expected to penetrate the RA therapeutics market in 2016, impacting Rituxan’s sales negatively.

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Defining Healthcare Trends in the Future

Topic Present (2014) Future Outlook (2024)

Clinical TrialsSeveral global trials are being conducted for the treatment of RA as R&D pertaining to biologics is on the rise.

The market is expected to be flooded with many me-too drugs, consisting of biologics and biosimilars as well as novel oral therapies.

Treatment Costs

Biologic drugs are expensive. Introducing a biologic drug in the market requires significant investment by the pharmaceutical companies. The largest multinational pharmaceutical companies are usually the ones able to make such investments.

Patent expiration will allow biosimilars to enter into the RA therapeutics market and offer low-cost treatments. Globally, several tier 2 and 3 companies will compete in this market with biosimilars.

Target Patient Population

Elderly people are the targeted group for RA treatments.

Population aging will increase the prevalence of RA. As RA treatments are expensive, governments may invest on the development of preventive RA drugs.

Drug Targets

Pharmaceutical companies are looking to increase the efficacy of RA drugs. Several drugs with different actions are in the trial stage. The main class groups are anti-TNF, CD, interleukin, and Jak.

The focus will be on oral drugs with fewer side effects. Their administration and doses will be the key factors for differentiating them in the market as the efficacy is likely to be similar to the existing drugs.

Is your company prepared for the challenges that lie ahead?Rheumatoid Arthritis Therapeutics Market: Market Outlook, Global, 2014 and 2024

Source: Frost & Sullivan

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Executive Summary—CEO’s Perspective

2The market is dominated by three entrenched biologic products—Embrel, Humira, and Remicade.

3The high cost of biologics limits patient access and leaves a large portion of the market untapped.

4

Changes in clinical practice trends, such as earlier diagnosis and early initiation of treatment, could expand the market.

5

In the light of availability of several safe and effective therapies, the bar for the approval of new therapies has been raised significantly.

1Rheumatoid arthritis is a highly complex disease, pharmacological management of which is challenging.

Source: Frost & Sullivan

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Market Overview

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Market Overview—Definitions

• Rheumatoid arthritis is a chronic autoimmune inflammatory disorder that causes inflammation and permanent damage in joints and surrounding tissues. While rheumatoid arthritis can also affect organs, the disease typically affects the small joints in the hands or feet.

• The onset of RA is most common between the ages of 40 and 50, but people of any age can be affected by the disease. Risk factors for RA include female gender (RA is approximately five times more likely to develop in women compared to men), smoking (RA is four times more common in smokers than non-smokers), and family history. There is no cure for RA.

• In 2014, the number of people across the globe affected by RA is 73 million.

Source: Frost & Sullivan

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Market Overview—Definitions (continued)

• Definitive diagnosis of RA is complex and involves the following medical tests: o Physical examination: The process by which a doctor investigates the body of a

patient for signs of diseaseo Rheumatoid factor (RF): A blood test to detect the presence and level of RF, an

autoantibody present in approximately 80% of RA patientso C-reactive protein (CRP): A blood test used to measure CRP, an indicator of

inflammationo Anti-cyclic citrullinated protein/peptide antibodies (ACPA): A blood test used to

measure the presence of anti-citrullinated protein (anti-CCP) antibodies, an indicator of early RA that can be measured prior to the development of symptoms

o Erythrocyte sedimentation rate (ESR): A blood test that measures how fast red blood cells (erythrocytes) drop to the bottom of a collection tube (an indicator of inflammation)

o Antinuclear antibody test (ANA): A test that measures the amount and pattern of auto-antibodies in the blood

o Joint X-rays: X-ray examination of a joint

Source: Frost & Sullivan

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Market Overview—Definitions (continued)

• Clinical diagnosis of RA involves meeting classification criteria outlined below. A total score of at least 6 on the below table classifies a patient as having RA.

Source: 2010 American College of Rheumatology (ACR)/European League Against Rheumatism (EULAR) RA Classification Criteria, Frost & Sullivan

Joint Distribution Score

1 large joint 0

2-10 large joints 1

1-3 small joints 2

4-10 small joints 3

> 10 joints 5

Serology

Negative RF AND negative ACPA 0

Low positive RF OR low positive ACPA 2

High positive RF OR high positive ACPA 3

Symptom Duration

< 6 weeks 0

≥ 6 weeks 1

Acute Phase Reactants

Normal CRP AND normal ESR 0

Abnormal CRP OR abnormal ESR 1

Clinical Diagnosis Classification Criteria

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Market Overview—Definitions (continued)

The assessment of disease activity and severity for RA is typically made using one or more of the following instruments. The American College of Rheumatology response criteria which has shown a 20% improvement in identifying RA symptoms (ACR20) compared to other test methods is the most common measurement used as a primary endpoint in clinical trials. However, ACR50 is increasingly being used as a primary or secondary endpoint, as it demonstrates a higher standard of efficacy.

Instrument Description

ACR20• A 20% improvement in identifying certain RA symptoms

(includes tender or swollen joint counts plus additional criteria)

ACR50• A 50% improvement in identifying certain RA symptoms

(includes tender or swollen joint counts plus additional criteria)

Disease Activity Score (DAS)• Combines several measurements into a single index• Scores are typically expressed as low (DAS ≤ 2.4),

moderate (DAS between 2.4 and 3.7), or high (DAS > 3.7).

Disease Activity Score-28 (DAS28)

• An analogous version of the DAS using a 28 tender joint count, a 28 swollen joint count, ESR, and general health assessment

• Scores are typically expressed as low (DAS 28≤ 3.2), moderate (DAS between 3.2 and 5.1), or high (DAS > 5.1)

Rheumatoid Arthritis Therapeutics Market: Common Disease Assessment Instruments, United States, 2011

Source: American College of Rheumatology and Frost & Sullivan

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Market Overview—Definitions (continued)

Early RA

Features of Poor

Prognosis

Features of Poor

Prognosis

High Disease Activity

Moderate Disease Activity

DMARD* MonotherapyCombination DMARD*

Therapy

No Yes

Low Disease Activity

No Yes

DMARD* Monotherapy OR HCQ*** and MTX**

Anti-TNF or Non-TNF Biologic or Novel Oral

DMARDs± MTX** OR

Combination DMARD* Therapy

Source: ACR 2012 Practice Guidelines and Frost & Sullivan

Rheumatoid Arthritis Therapeutics Market: Early RA Treatment Paradigm, Global, 2014

Key: *DMARD = Disease-modifying anti-rheumatic drug**MTX = Methotrexate***HCQ = Hydroxychloroquine

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Market Overview—Definitions (continued)

Established RA

Low Disease Activity With Poor Prognosis OR Moderate/High Disease ActivityLow Disease Activity Without Poor Prognosis

DMARD Monotherapy

Reassess

Add MTX, HCQ or LEF*

Add or Switch to Anti-TNF

Reassess

MTX Monotherapy OR Combination DMARD Therapy

Add or Switch to Another DMARD

Add or Switch to Abatacept or Rituxumab

Reassess

Reassess

ReassessReassessIf SAE**

Switch to Non-TNF Biologic Switch to Anti-TNF or Non-TNF Biologic or Novel Oral DMARDs

Source: ACR 2012 Practice Guidelines and Frost & Sullivan

Rheumatoid Arthritis Therapeutics Market: Established RA Treatment Paradigm, Global, 2014

Key: *LEF = leflunomide; **SAE = Serious Adverse Event

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Total Rheumatoid Arthritis Therapeutics Market

Total Rheumatoid Arthritis Therapeutics Market: Market Segmentation, Global, 2014

Market Overview—Segmentation

Key: *Not covered in this research service¹CD = cluster of differentiation

Analgesics & NSAIDs

Corticosteroids DMARDs

Celocoxib Prednisone

Cortisone

Methylprednisolone

Methotrexate (MTX)

Hydroxychloroquine (HCQ)

Sulfasalazine

Leflunomide (LEF)

Anti-Interleukin

Novel Oral DMARDS

Acetaminophen

Ibuprofen

Janus kinase (JAK) inhibitors

Spleen tyrosine kinase (Syk)

inhibitors

Standard of Care Therapies* Add-on Therapies

Acetylsalicylic acid

Naproxen

Biologic DMARDS

Anti-CD¹

T cell modulator

Anti-TNFsNon-TNF Biologics

Source: Frost & Sullivan

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Market Overview—Segmentation (continued)

Market Segmentation

Standard of care for rheumatoid arthritis comprises prescription of one or more drugs intended to

alleviate pain, such as NSAIDs and other analgesics or anti-inflammatory drugs such as corticosteroids.

For milder forms of the disease, this may be the only treatment needed. As these drug classes are also

widely used for the treatment of pain and inflammation across indications, they are not covered in this

analysis.

The standard therapy for moderate to severe forms of rheumatoid arthritis typically includes the addition

of a DMARD to the treatment regimen, most commonly MTX. This class of drugs works to slow the

progression of joint damage, as opposed to the simple alleviation of symptoms. Methotrexate is effective

for approximately 40% of the patients.

For patients who do not respond adequately to methotrexate therapy alone, add-on therapy may be

required. The add-on therapies for RA currently are biologics and novel oral DMARDs. However, the

introduction of one or more novel oral therapies in this segment is anticipated beginning in early 2016.

Biologic DMARDs as well as novel oral DMARDs are typically prescribed in addition to MTX, or in some

cases, as an alternative to MTX.

Source: Frost & Sullivan

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Market Overview—Segmentation (continued)

Market Segmentation (continued)

The first agents introduced in the biologic DMARD segment were the TNF inhibitors upon identification of

cytokine as a major pro-inflammatory factor for RA. Currently, six TNF inhibitors are available: Enbrel

(etanercept), marketed by Amgen; Remicade (infliximab), marketed by Johnson & Johnson; Humira

(adalimumab), marketed by Abbott; Cimzia (certolizumab), marketed by UCB; Simponi (golimumab),

marketed by Johnson & Johnson; and Remisina (infliximab), marketed by Celltrion. TNF inhibitors are all

biologics, either in the form of monoclonal antibodies or other protein-based biologics (i.e. fusion protein)

and work by binding to TNF and blocking its actions. A TNF inhibitor is generally recommended as the

first add-on therapy for MTX non-responders.

The rest of the agents comprising the add-on therapy segment offer alternatives to TNF inhibitors for

patients who do not respond to, or are intolerant of TNF inhibitors. Members of this segment include

Orencia (abatacept), a T cell costimulation modulator marketed by Bristol-Myers Squibb (BMS);

(Ro)Actemra (tocilizumab), an interleukin-6 (IL-6) inhibitor marketed by Roche; Rituxan (rituxumab), an

anti-CD20 antibody marketed by Roche; Kineret

(anakinra), an interleukin-1 (IL-1) inhibitor marketed by Amgen; and Xeljanz (tofacitinib) a janus kinase

(JAK) inhibitor marketed by Pfizer.

Other biologic agents in late stage development are targeting interleukin, CD, TNF, and others.

Source: Frost & Sullivan

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Note: All figures are rounded; The base year is 2014. Source: Frost & Sullivan

Rheumatoid Arthritis Global Incidence

Key Takeaway: The number of patients is expected to increase moderately.

2010 2011 2012 2013 2014 2015 2016 2017 2018640,000

660,000

680,000

700,000

720,000

740,000

760,000

780,000

Rheumatoid Arthritis Incidence, Global, 2010-2018

Year

Nu

mb

er

of

Ne

w P

ati

en

ts

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External Challenges: Drivers and Restraints—Total Rheumatoid Arthritis Therapeutics

Market

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Drivers and Restraints

1-2 Years 3-4 Years 5-6 Years

Aging of the Population Along with Increased Longevity with Newer Therapies could Expand the Potential Market Size

Trend Toward Earlier Initiation of Therapy Expected to Expand Market

Increasing Trend of Personalized Medicine to Drive Innovation

Withdrawal of Therapy is Considered Risky, Driving the Need for Lifelong Therapy

Health Insurance Coverage for Rheumatoid Arthritis is Expected to Continue to be Adequately Addressed

Mar

ket

Dri

vers

Impact: High Medium Low

Total Rheumatoid Arthritis Therapeutics Market: Key Market Drivers and Restraints, Global, 2015–2020

Source: Frost & Sullivan

Inherent Risks of Biologic Therapy Restricting Widespread Use

High Risk of Failure Late in Development Process

High Cost of Biologics Limiting Patient Access

Mar

ket

Res

trai

nts

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Competitive Analysis—Total Rheumatoid Arthritis Therapeutics

Market

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Competitive Factors and Assessment

Source: Frost & Sullivan

• The rheumatoid arthritis therapeutics market is dominated by three established products: Enbrel, Humira, and Remicade.

• Due to their extensive clinical history and positive risk versus benefit profiles, these agents are likely to retain their market share.

• Due to the high cost of add-on DMARD therapy, patient access is largely governed by health insurance formulary coverage. Health insurance coverage is highly influenced by the presence or absence of net clinical benefit.

• Physicians are also typically slow to change prescribing practices and will generally stick with products with known long-term safety and good efficacy.

• The inherent high cost of biologics, such as TNF inhibitors, makes these agents inaccessible to many patients, leaving a sizeable portion of the add-on market untapped.

• The response rate of patients to DMARD therapy varies widely, creating a need for several alternative choices in order to find a suitable treatment for each patient.

• The demand for oral therapies with equal or better efficacy and safety compared to biologics also drives innovation.

Market is dominated by established TNF inhibitors

Unmet needs drive innovation

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Competitive Landscape—Count of Marketed and Pipeline Products

Class of Drug Phase 1 Phase 2 Phase 3 Marketed Total

Anti-CD 2 2 3 1 8

Anti-TNFs - 1 4 6 11

Anti-Interleukin 2 2 3 2 9

JAK Inhibitors - 3 1 1 5

Others 8 6 3 1 18

Rheumatoid Arthritis Therapeutics Market: Count of Marketed and Pipeline Products, Global, 2014

Key Takeaway: A large number of new drugs is expected to be launched in the coming 5 years for the treatment of rheumatoid arthritis.

Note: See following graphic and tabular slides for more details. Includes latest stage reached per molecule only. This table depicts a count of all of the marketed and novel products known or believed to be in active development for the treatment if rheumatoid arthritis. Source: Frost & Sullivan

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TNF Inhibitors

Rheumatoid Arthritis Therapeutics Market: Marketed and Pipeline Products, Global, 2014

Competitive Landscape—Marketed and Pipeline Products

Phase 1 Phase 3 MarketedPhase 2

Source: Frost & Sullivan

Anti-Interleukin

Note: This figure depicts all of the marketed and novel products known or believed to be in active development for the treatment of rheumatoid arthritis.

Other

Anti-CD

JAK Inhibitors

BCD-020(Biocad)

BI 695500(Boehringer Ingelheim)

SB5(Samsung Bioepis)

ABT-122(Abbvie)

BI 655064(Boehringer Ingelheim)

BT061(Biotest/Abvvie)

CHS-0214(Coherus Biosciences)

GP2013(Sandoz)

CT-P10(Celltrion)

BI 695501(BoehringerIngelheim)

Denosumab(Amgen)

Mavrilimumab(MedImmune)

Clazakizumab(BMS)

GS-5745(Gilead Sciences)

SAR153191/REGN88(Sanofi/Regerion)

ALX-0061(Ablynx)

CNTO 136(Janssen/GSK)

AIN457(Novartis)

FPA008(Five Prime)

INCB047986(Incyte)

GLPG0634(Galapagos NV)

Baricitinib(Elli Lilly)

SAN-300(Salix)

HM71224 (Hanmi)

CC-292(Colgene)

Abatanercept(BMS)

ABP 501(Amgen)

TAB08(Theramab)

IPI-145(Infinity)

AMG 162(Daiichi Sankyo)

HMPL-523(Hutchison Medipharma)

Masitinib(AB Science)

ABT-494(Abbvie)

BMS-986104(BMS)

LY3090106(Eli Lilly)

CFZ533(Novartis)

F8IL10(Philogen)

ENIA11(TSH Biopharm)

CNTO 6785(Janssen)

E6011(Eisai)

Enbrel(Amgen/Pfizer)

Humira(Abbvie)

Simponi(J&J/Merck)

Remicade(J&J/Merck)

Cimzia(UCB)

Orencia(BMS)(Ro)Actemra

(Roche)

Rituxan(Biogen/Roche)

Kineret(Sobi/Amgen)

Remisina(Celltrion/Hospira)

Xeljanz(Pfizer)

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Marketed Product Analysis

Product Manufacture License MOA/ClassLine of Therapy for

RA Dose/Administration

Enbrel (etanercept)

Immunex (Amgen) Pfizer

TNF inhibitor(recombinant

product)First line ± MTX Subcutaneous (SC); 50 mg

once weekly

Humira (adalimumab) Knoll Abbvie

TNF inhibitor(monoclonal antibody

(mAb)First line ± MTX

SC, 40 mg every 2 weeks; 40mg every week in MTX non-responders

Remicade (infliximab)

Johnson & Johnson

(Centocor)N/A TNF inhibitor

(mAb) First line + MTX

SC, 3 mg/kg every 2 weeks after first dose, once every 6 weeks and once every 8Weeks

Cimzia (certolizumabPegol)

UCB (Celltech) N/A TNF inhibitor(mAb) First line ± MTX

SC, 400 mg at 1, 2, and 4 weeks, then 200 mg every other week or 400 mg every 4 weeks

Simponi (golimumab)

Johnson & Johnson

(Centocor)N/A TNF inhibitor

(mAb) First line + MTX SC, 50 mg every 4 weeks

Remisina(infliximab) Celltrion/Hospira N/A TNF inhibitor

(mAb biosimilar) First line + MTX

SC, 3 mg/kg every 2 weeks after first dose, once every 6 weeks and once every 8weeks

Source: Frost & Sullivan

Rheumatoid Arthritis Therapeutics Market: Marketed Product Analysis, Global, 2014

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Marketed Product Analysis (continued)

Product Originator License MOA/ClassLine of Therapy for

RA Dose/Administration

Orencia (abatacept) BMS N/A

T cellcostimulation

Modulator(recombinant

product)

First line ± MTX SC, after IV loading dose, 125 SC once weekly

(Ro)Actemra (tocilizumab) Chugai Roche

(Genentech)IL-6 inhibitor

(mAb)

Second line + MTX after MTX and 1 or

more TNFs

SC, 4-8 mg/kg every 4 weeks

Kineret(anakinra) Amgen Sobi IL-1 inhibitor

(mAb)

Second line + MTX after MTX and 1 or

other DMARDsSC, 100 mg daily

Rituxan (rituxumab)

IDEC Pharma-ceuticals (Biogen

Idec) Roche Anti-CD20

(mAb)

Second line + MTX after MTX and 1 or

more TNFs

SC; two-1,000 mg IV infusions separated by 2 weeks (one course) every 24 weeks

Xeljanz(tofacitinib) Pfizer Pfizer JAK Inhibitors Second line Oral, 5 or 10 mg

twice daily

Source: Frost & Sullivan

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2005 2010 2015 2020 20252000 2030

Rheumatoid Arthritis Therapeutics Market: Patent Expiration Timeline, US, 2000–2030

Year

Pro

du

ct

Source: Frost & Sullivan

Patent Expiration Timeline

Humira2016

Remicade2015

Enbrel2028

Xeljanz2020

Note: This exhibit depicts patent expiry of marketed products according to available information.

Simponi2024

Cimzia2024

Orencia2019

Ro(Actemra)2015

Rituxan2016

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Pipeline Analysis—Products in Clinical Development

Product Company MOA/Class Administration Phase

AIN457 Novartis  Anti-il-17a SC, 75 mg or 150 mg every 4 weeks

Phase 3

ABP 501 Amgen Igg1κ SC, 40 mg every 2 weeks

BCD-020 Biocad

Anti-cd20

SC, 1000 mg every 2 weeks

BI 695500 Boehringer Ingelheim SC, 2 doses every 2 weeks

CT-P10 Celltrion SC, 2 doses every 2 weeks

CNTO 136 Janssen Research & Development LLC | GlaxoSmithKline

Anti-il-6

SC, 100mg every 2 weeks; 50mg every 4 weeks

SAR153191/REGN88 Sanofi | Regeneron Pharmaceuticals SC, 1 or 2 doses every 2 weeks

BI 695501 Boehringer Ingelheim

Anti-TNF

SC, 1 dose every 2 weeks

CHS-0214 Coherus Biosciences, Inc. | Daiichi Sankyo Co., Ltd. SC, 50 mg weekly

SB5 Samsung Bioepis Co., Ltd. SC, 40 mg weekly

ENIA11 TSH Biopharm Corporation Limited SC, 25 mg twice weekly

Masitinib AB Science Tyrosine-kinase inhibitor Oral, 3 mg/kg/day or 4.5mg/kg/day

Baricitinib Eli Lilly and Company JAK inhibitor Oral, 4 or 2 mg daily

AMG 162 Daiichi Sankyo Inc. RANKL inhibitor SC, every 3 to 6 months

Source: Frost & Sullivan.

Rheumatoid Arthritis Therapeutics Market: Competitive Landscape—Investigational Products, Global, 2014

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Pipeline Analysis—Products in Clinical Development (continued)

Product Company MOA/Class Administration Phase

GP2013 Sandoz | Novartis Pharmaceuticals Anti-cd20 SC

Phase 2

BT061 Biotest | AbbVie Anti-CD4 SC, 25/100/200 mg weekly

Mavrilimumab MedImmune LLC Anti-gmcsf SC

Clazakizumab Bristol-Myers Squibb Anti-il6  SC, 5/100/200 mg every 4 weeks

ABT-122 AbbVie Anti-tnf/IL-17 dvd-ig SC, 1 dose every 2 weeks

SAN-300 Salix Pharmaceuticals Anti-vla-1 SC, 0.5/1/2 mg/kg weekly or 2/4 mg/kg every 2 weeks

CC-292 Celgene Corporation BTK inhibitor Oral, 375 mg daily

TAB08 Theramab LLC Igg4 SC

GLPG0634 Galapagos NV

JAK inhibitor

Oral, 2 capsules of 25/50/100mg daily

INCB047986 Incyte Corporation Oral, 4/8/12 mg daily

ABT-494 AbbVie  Oral, twice daily

IPI-145 Infinity Pharmaceuticals, Inc. Pi3k-delta gamma inhibitor

Oral, 2 blinded capsules twice a day 

E6011 Eisai Inc.|Eisai Co., Ltd. Anti fractalkine SC, 100/200mg every 2 weeks

CNTO 6785 Janssen Research & Development, LLC Anti-IL17A SC, 200/100/50/15 mg every 4

weeks

Source: Frost & Sullivan.

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Pipeline Analysis—Products in Clinical Development (continued)

Product Company MOA/Class Administration Phase

BI 655064 Boehringer Ingelheim

Anti-cd40

SC

Phase 1

CFZ533 Novartis

FPA008 Five Prime Therapeutics, Inc. Anti-csf1r

ALX-0061 Ablynx Anti-il-6

GS-5745 Gilead Sciences Anti-mmp-9

Denosumab Amgen Anti-rankl

HM71224 Hanmi Pharmaceutical Company Limited BTK inhibitor Oral

HMPL-523 Hutchison Medipharma Limited Syk inhibitorSC

F8IL10 Philogen S.p.A. Anti IL 10

BMS-986104 Bristol-Myers SquibbOther

Oral

LY3090106 Eli Lilly and Company SC

Source: Frost & Sullivan.

NED2-52 34

Source: Frost & Sullivan.

Rheumatoid Arthritis Therapeutics Market: Product Launch Timeline, US, 2015-2019

2018201720162015 2019

SAR153191/REGN88(Sanofi/Regeneron)

Potential U.S. launch

Product Launch Timeline

Baricitinib(Eli Lilly)

Potential U.S. launch

BCD-020(Biocad)

Potential U.S. launch

BI 695500(Boehringer Ingelheim)Potential U.S. launch

BI 695501(Boehringer Ingelheim)Potential U.S. launch

CNTO 136(Janssen)

Potential U.S. launch

ENIA11(TSH Biopharm)

Potential U.S. launch

CHS-0214(Coherus Biosc./Daiichi

Sankyo)Potential U.S. launch

Masitinib(AB Science)

Potential U.S. launch

ABP 501(Amgen)

Potential U.S. launch

CT-P10(Celltrion)

Potential U.S. launch

AIN457(Novartis)

Potential U.S. launch AMG 162(Daiichi Sankyo)

Potential U.S. launch

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2014 2016

Rheumatoid Arthritis Therapeutics Market: Phase 3 Program, Global, 2013–2019

Year

Phase 3 Clinical Program—Next Product Launches

RA-BEYOND (N = 2671) Global Study. Safety and side effects of baricitinib

Source: Clinicaltrials.gov and Frost & Sullivan

20182013 2015 2017

RA-BEAM (N = 1280) Global Study. Efficacy vs. placebo

2019

Baricitinib (Eli Lilly)

2014 2016

Year

SARIL-RA-TARGET (N = 622) Global study. Effect of SAR153191 (REGN88) added to other RA drugs

20182013 2015 2017

SARIL-RA-EASY (N = 200) Locations in America, Europe and African. Evaluate sarilumab - SAR153191  (REGN88) - auto-injector device 

2019

SAR153191/REGN88(Sanofi/Regeneron) SARIL-RA-ONE (N = 120) Locations in United States and Europe. Evaluate the immunogenicity and safety

RA-COMPARE (N = 700) Global study. Evaluate the effect of sarilumab vs. etanercept when both combined with methotrexate (MTX)

2014 2016

Year20182013 2015 2017

BIORA (N = 308) Locations in Europe, Asia and Latin America. Safety and Efficacy of BCD-020

2019

BCD-020(Biocad)

NED2-52 36

Profiles of Late-stage Investigational Products Close to be Launched

NED2-52 37

Product Dashboard—Eli Lilly’s Baricitinib

Baricitinib has the potential to be the first systemic antisense drug in the market for the treatment of RA.

Phase 1

Development Status

Advantages Challenges

Ease of use - Oral formulation once-daily Not first-in-class

Efficacy with high doses: With 8 mg doses patients get 73% response on 20% of the American College of Rheumatology (ACR20) efficacy criteria.

Not the first oral treatment for rheumatoid arthritis

Lower side effects rate: 36% low; 23% moderate; 5% severe side effects Need to position itself against tofacitinib

Events Timeline

2014

Phase 2 Phase 3 Preregistration MarketedMOA/Class:JAK inhibitor

Company :Eli Lilly and Company

Dosing:Oral, 4 or 2 mg daily

Unique Selling Point:Effective antisense therapy with low potential for drug interaction

Potential Safety Signals:Infection

Indication:Moderate to severe rheumatoid arthritis patients with inadequate response to methotrexate

2016

Finalization of RA-BEAM clinical trial

Product launch in the United States

and Europe

Source: Frost & Sullivan

Ongoing Clinical Trials

• Phase 3: RA-BEAM (N = 1280) Efficacy vs. placebo

• Phase 3: RA-BEYOND (N = 2671) Safety and side effects of baricitinib

NED2-52 38

Product Dashboard—Sanofi/Regeneron’s SAR153191/REGN88

SAR First and only oral therapy indicated for hoFH

Phase 1

Development Status

Advantages Challenges

Reduced severe side effects; adverse events were similar to those in placebo patients Subcutaneous administration

High effectiveness, over 50% patients achieved ARC20 responses in a long term treatment. Late to market

Phase 2 Phase 3 Preregistration MarketedMOA/Class:Anti-IL-6

Company :Sanofi | Regeneron Pharmaceuticals

Dosing:SC, 1 or 2 doses every 2 weeks

Unique Selling Point:First fully human monoclonal antibody anti-IL-6

Potential Safety Signals:Liver toxicity, infections, and neutropenia

Indication: Rheumatoid arthritis patients who failed on treatment with anti-TNF

Source: Frost & Sullivan

Ongoing Clinical Trials• Phase 1: Pharmacodynamics and safety of SAR153191 (REGN88)

• Phase 3: SARIL-RA-TARGET (N = 622) Effect of SAR153191 (REGN88) added to other RA drugs

• Phase 3: SARIL-RA-ONE (N = 120) Evaluate the immunogenicity and safety  

• Phase 3: RA-COMPARE (N = 700) the effect of sarilumab vs. etanercept when both combined with methotrexate (MTX)

• Phase 3: SARIL-RA-EASY (N = 200) Evaluate sarilumab - SAR153191 (REGN88) - auto-injector device 

Events Timeline

2014 2016

Finalization of SARIL-RA-TARGET clinical trial

Product launch in the United States

and Europe

NED2-52 39

Product Dashboard—Biocad’s BCD-020

The only prescription fish oil comprised exclusively of EPA

Phase 1

Development Status

Advantages Challenges

First anti-CD20 biosimilar Potential imminent biosimilar competition

Low-cost treatment

Rituximab is well established as an effective therapy for RA patients. Biocad’s new drug will need to position itself against rituximab to gain market share.

Cause less infection -

Shorter dosage schedule -

Phase 2 Phase 3 Preregistration MarketedMOA/Class:Anti-CD20

Company :Biocad

Dosing:SC, 1000 mg every 2 weeks

Unique Selling Point:First rituximab biosimilar

Potential Safety Signals:Headache, fever, nausea, heartburn, weakness

Indication:Rheumatoid arthritis patients who failed on treatment with anti-TNF

Source: Frost & Sullivan

Ongoing Clinical Trials

• Phase 3: BIORA (N = 308) Safety and Efficacy of BCD-020

Events Timeline

2014 2016

• Finalization of SARIL-RA-TARGET clinical trial

• Marketing approval in Russia

Product launch in the United States

and Europe

NED2-52 40

The Last Word

NED2-52 41

The Last Word—Three Big Predictions

2The launch of biosimilars will impact the market broadly, as governments and private insurance companies will tend to purchase these types of products to limit expenditure.

3The launch of novel RA therapies and ensuing increased marketing efforts of competitors will generate renewed interest and awareness toward RA, prompting increased diagnosis and market expansion.

1The anti-TNF segment will continue to dominate the rheumatoid arthritis therapeutics market for the foreseeable future, due to the drug’s well established position as an effective and a safe disease modifying agent.

Source: Frost & Sullivan

NED2-52 42

The Last Word—Discussion

• TNF inhibitors are entrenched within the medical, regulatory, and managed care communities as the standard add-on to methotrexate background therapy. Due to their long clinical and market history and the resultant well known safety and efficacy profiles, there is a high level of confidence in and acceptance of this therapeutic class.

• The market for RA therapeutics is considerable and many patients do not respond well to TNF inhibitors which leaves a sizeable opportunity for other therapies.

• In the following 5 years, 15 products are expected to be launched globally, depending on Phase 3 clinical trial results. This would change the RA therapeutics market dramatically, due to patients being able to access a variety of drug classes. To compete in this market, companies will be focusing on product efficacy and safety.

• In 2016, three products are expected to be launched in the United States:o Bariticinib, developed by Eli Lilly, is an oral medication, which causes lower side effects

than Pfizer’s tofacitinib, Xeljanz.o BCD-020, developed by Biocad, will make a high impact in the market for being the first

anti-CD20 biosimilar approved for RA.o SAR153191/REGN88 developed by Sanofi and Regeneron

Source: Frost & Sullivan

NED2-52 43

Legal Disclaimer

Frost & Sullivan takes no responsibility for any incorrect information supplied to us by manufacturers or users. Quantitative market information is based primarily on interviews and therefore is subject to fluctuation. Frost & Sullivan research services are limited publications containing valuable market information provided to a select group of customers. Our customers acknowledge, when ordering or downloading, that Frost & Sullivan research services are for customers’ internal use and not for general publication or disclosure to third parties. No part of this research service may be given, lent, resold or disclosed to noncustomers without written permission. Furthermore, no part may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the permission of the publisher.

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© 2014 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.

NED2-52 44

Appendix

NED2-52 45

Market Engineering Methodology

One of Frost & Sullivan’s core deliverables is its Market Engineering studies. They are based on our proprietary Market Engineering Methodology. This approach, developed across the 50 years of experience assessing global markets, applies engineering rigor to the often nebulous art of market forecasting and interpretation.

A detailed description of the methodology can be found here.

Source: Frost & Sullivan research.

NED2-52 46

Table of Acronyms Used

Source: Frost & Sullivan

Acronym Definition

ACPA Anti-citrullinated protein antibodies

ACR American College of Rheumatology

ACR20 20 percent improvement in selected RA symptoms

ACR50 50 percent improvement in selected RA symptoms

ANA Antinuclear antibody test

Anti-BAFF Antibody against B cell activating factor

Anti-IL-6 Antibody against interleukin-6

Anti-IL-17 Antibody against interleukin-17

CCR5 C-C chemokine receptor type 5

CCR1 C-C chemokine receptor type 1

CD Cluster of differentiation (a cell surface marker)

CRP C-reactive protein

NED2-52 47

Table of Acronyms Used (continued)

Source: Frost & Sullivan

Acronym Definition

DAS Disease Activity Score

DMARD Disease-modifying anti-rheumatic drug

ESR Erythrocyte sedimentation rate

EULAR European League Against Rheumatism

GM-CSF Granulocyte-macrophage colony-stimulating factor

HCQ Hydroxychloroquine

IV Intravenous

JAK Janus kinase

KG Kilograms

LDA Low disease activity

LEF Leflunomide

mAb Monoclonal antibody

mg milligrams

MTX Methotrexate

NED2-52 48

Table of Acronyms Used (continued)

Source: Frost & Sullivan

Acronym Definition

NSAIDS Non-steroidal anti-inflammatory agents

QW Every week

RA Rheumatoid arthritis

RF Rheumatoid factor

SAE Serious adverse event

SC Subcutaneous

Syk Spleen tyrosine kinase

TNF Tumor necrosis factor

NED2-52 49

Drivers Explained

Aging of the Population Along with Increased Longevity with Newer Therapies could Expand the Potential Market Size

• The proportion of the elderly population is gradually increasing globally.

• The overall incidence of RA increases with age, reaching a peak in the 65 to 74 year age group. As this patient population comprises a large portion of the rheumatic diseases market, the effect of the aging of the population is expected to be a continual driver.

Source: United States Census and Frost & Sullivan

Po

pu

lati

on

Age Group

0-19 20-49 50-65 +650

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

3,500,000,000

Population by Age Range, Global, 2008 and 2014

2014

2008

NED2-52 50

Drivers Explained (continued)

Trend Toward Earlier Initiation of Therapy Expected to Expand Market

• Increasing evidence is emerging that supports the initiation of aggressive biologic therapy early in the disease, particularly in combination with methotrexate and before significant damage has occurred. The goal of this is achieving better long-term outcomes and, if possible, disease remission.

o The latest ACR practice guidelines published in 2012 recommend anti-TNF therapy with or without methotrexate for patients with early RA, signs of high disease activity, and poor prognosis.

• Improvements in diagnosis that enable detection of the disease in its early stages, coupled with the increasing practice of early aggressive treatment, should effectively expand the market size in terms of patient numbers as well as the duration of therapy. Thus, drug developers need to secure approval for therapies used in the early RA stage.

Source: Frost & Sullivan

NED2-52 51

Drivers Explained (continued)

Increasing Trend Toward Personalized Medicine will Drive Innovation

• Physicians, payers, and regulatory authorities will increasingly seek therapies with demonstrable clinical benefit in particular patient subsets as it will theoretically enable more effective disease modification with fewer side effects.

• Earlier diagnosis and identification of patients at risk may be enabled as new biomarkers are discovered and validated.

Withdrawal of Therapy is Considered Risky, Driving the Need for Lifelong Therapy

• Optimal clinical outcomes for rheumatic diseases is highly dependent on early initiation and continued adherence with therapy in order to minimize further joint damage and maximize quality of life for patients. There is increasing evidence that withdrawal of therapy is risky, particularly for patients with established RA, even if they have entered into remission.

Source: Frost & Sullivan

NED2-52 52

Drivers Explained (continued)

Health Insurance Coverage for Rheumatoid Arthritis is Expected to Continue to be Adequately Addressed

With increasing economic pressures and potential restrictions on health insurance coverage by private or corporate insurers, it is anticipated that chronic conditions that are disruptive to work productivity, such as RA, are likely to be covered better compared to chronic conditions not associated with disruptive symptoms, such as hypertension.

Source: Frost & Sullivan

NED2-52 53

Source: Package inserts (Enbrel, Humira, Remicade), Frost & Sullivan

High Cost of Biologics Limit Patient Access• The average annual cost of therapy for biologic DMARDs is approximately thirty times

that of non-biologic DMARDs such as generic methotrexate.• This high cost makes these therapies inaccessible to many patients, and many are

forced to skip treatments or discontinue therapy. • Nevertheless, the foray of biosimilars has created an opportunity for patients to receive

the treatment at a reduced cost. However, biosimilars are not expected to be widely used in the United States in the near future.

High Risk of Failure Late in Development Process• As with all chronic therapies, new agents developed for the treatment of RA must meet

the increasingly high standards of risk versus benefit in order to be competitive with the available products.

• The rheumatoid arthritis pipeline is mostly related with biologics, which often targets the immune system. These type of drugs usually have a poor safety profile, which comes to light late in the development stage after significant investment has been made. This may hinder some participants.

Restraints Explained

NED2-52 54

Restraints Explained (continued)

Inherent Risks of Biologic Therapy Restricts Widespread Use• Rheumatic diseases are essentially autoimmune disorders, the result of an immune

system generating auto-antibodies against the patient’s own tissues. The treatment is typically targeted at suppressing the immune system to minimize or halt disease progression.

• While highly effective in the management of rheumatoid arthritis, immunosuppressive therapy, such as anti-TNF, may generate risks as a result of a compromised immune system.

Source: Frost & Sullivan

NED2-52 55

Additional Sources of Information on Rheumatoid Arthritis

Source: Frost & Sullivan

• U.S. Rheumatoid Arthritis Market: Assessment of Biologics and New Treatments

• American College of Rheumatology (ACR) 2010 RA Highlights

• Rheumatoid Arthritis Therapeutics in Indonesia

• Rheumatoid Arthritis Therapeutics Market in Australia

• Rheumatoid Arthritis Therapeutics Market in Taiwan

• Rheumatoid Arthritis Therapeutics Market in Malaysia

• Rheumatoid Arthritis Therapeutics Market in South Korea

* Upcoming in Q3/Q4 2012

NED2-52 56

Additional Sources of Information on Rheumatoid Arthritis (continued)

Source: Frost & Sullivan

• Rheumatoid Arthritis Therapeutics Market in Thailand

• Rheumatoid Arthritis Therapeutics Market in India

• Rheumatoid Arthritis Therapeutics Market in Japan

• Rheumatoid Arthritis Therapeutics Market in Philippines

• Rheumatoid Arthritis Therapeutics Market in China

NED2-52 57

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NED2-52 58

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NED2-52 59

The Frost & Sullivan Story

NED2-52 60

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NED2-52 61

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NED2-52 62

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NED2-52 63

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NED2-52 64

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NED2-52 65

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