Francis Kern

Senior Director, External Scientific Affairs

Daiichi Sankyo Pharmaceutical Development.

2nd Annual Immune Checkpoint Inhibitor Meeting

March 17, 2016

Remaining Competitive in a Rapidly Evolving Field:

Strategies to Establish and Reinforce Market Share

Passion for Innovation.

Compassion for Patients.TM

2

Forward-Looking Statements

Financial forecasts, future projections and R&D information that Daiichi Sankyo discloses may include information that might be classified as “Forward-Looking Statement”. These forward-looking statements represent our current assumptions based on information currently available. Please note that such are subject to a number of known and unknown risks and uncertainties and our future performance may differ from the expectations as expressed in such statements.

3

3

0

5000

10000

15000

20000

25000

2012 2013 2014 2015 2016 2017 2018 2019 2020

Wo

rld

wid

e S

ale

s (

$0

00

’s)

Blincyto (Amgen) Provenge (Dendreon) Prostvac (Bavarian Nordic) Rintega (Celldex Thera.)

Yervoy (BMS) Opdivo (BMS) Keytruda (MRK) Durvalumab (Celgene)

Atezolizumab (Roche) Avelumab (Pfizer) Durvalumab (AZ)

Projection for the I-O Market Vary Widely; Most Analysts Predict

the Category to Reach ≥$20B Annually in Less than 10 Years

• 45k pts treated with Immunotherapy (2015) could grow to 60% of 2.7MM pts treated each year for cancer

• Analyst predictions for worldwide immuno-oncology market sales vary widely:

Citigroup: Market could reach up to sales of up to $35 billion/year within the next 10 yrs

Leerink Swan: $29 billion by 2025

Sanford C. Bernstein: $16 billion by 2020

Decision Resources: $13.3 billion by 2023

Sources: The Future of Immuno-Oncology: Perspectives from Academia and Industry (Sep. 2014), (Defined Health, Sep. 2014),Priceless Pills (The Economist, Sept. 2014),

EvaluatePharma

PD1/PD-L1

inhibitors

CTLA-4

inhibitors

Therapeutic

vaccines

Worldwide Immunotherapy Sales for Key Products

Majority of the growth in sales anticipated to come from checkpoint inhibitors, particularly PD1/PD-L1 inhibitors

4

Daiichi Sankyo has been an innovative pharmaceutical company since its foundation

Daiichi Sankyo

Mr. Joji Nakayama

Edoxaban

Olmesartan Pravastatin

Levofloxacin

Sankyo Daiichi

Pharmaceutical

Dr. Jokichi Takamine Dr. Katsuzaemon Keimatsu

2007

1899 1915

5

Japan Pharmaceutical Market 2014

0 1000 2000 3000 4000 5000 6000 7000

Eisai

GSK

Otsuka

Novartis

MSD

Mitsubishi Tanabe

Pfizer

Chugai

Daiichi Sankyo

Astellas

Takeda

(US$ Millions)

$1 = JPY 115 © 2015 IMS Japan KK. All rights reserved. Source: IMS JPM / Reprinted with Permission

2,588

2,608

2,654

3,115

3,187

3,350

3,698

3,823

5,174

5,585

6,040

6 as of March 2015

>16,000 Worldwide Employees

- Germany

- UK

- Ireland

- France

- Spain

- Portugal

- Italy

- Netherlands

- Belgium

- Austria

- Switzerland

- Turkey

- China

- South Korea

- Taiwan

- Hong Kong

- Thailand

- India - Brazil

- Venezuela

EU 2100

Asia 2000

Latin America

500

US 3300

Japan 8600

Our Global Prominence

7

Clinical Development Pipeline (Ph2-Ph3) -Oncology

Generic Name / Project code number

Class Target indication Stage Remarks

Denosumab Anti-RANKL antibody Breast cancer adjuvant JP P3 additional indication

Rheumatoid arthritis JP P3 additional indication

Tivantinib MET inhibitor Hepatocellular cancer US/EU P3

Nimotuzumab Anti-EGFR antibody Gastric cancer JP P3

Vemurafenib BRAF inhibitor Melanoma adjuvant US/EU P3

additional indication

Licensee Roche is conducting

the study. Submission in 2016 is

planned.

Quizartinib FLT3-ITD inhibitor Acute myeloid leukemia

US/EU/

Asia P3

JP P1

Pexidartinib

(PLX3397)

CSF-1R/KIT/Flt3-ITD

inhibitor

Tenosynovial Giant Cell

Tumor (TGCT) US/EU P3

including pigmented

villonodular synovitis

Glioblastoma US P2

Melanoma US P2

Melanoma, solid tumor US P1/2

combination with

pembrolizumab in collaboration

with Merck

Patritumab Anti-HER3 antibody

NSCLC US/EU P2

NSCLC JP P1

Breast cancer US P2

Breast cancer JP P1

Head & Neck cancer EU P1

as of January 2016

8

Clinical Development Pipeline (Ph1) -Oncology

Generic Name / Project code number

Class Target indication Stage Remarks

DS-3032 MDM2 inhibitor Solid cancer, lymphoma US/JP P1

Leukemia US P1

PLX7486 Fms/Trk inhibitor Solid cancer US P1

DS-8895 Anti-EPHA2 antibody Solid cancer JP P1

DS-8273 Anti-DR5 antibody Solid cancer US P1

PLX8394 BRAF inhibitor Solid cancer, leukemia US P1

DS-6051 NTRK/ROS1 inhibitor Solid cancer US P1

DS-5573 Anti-B7-H3 antibody Solid cancer JP P1

PLX9486 KIT inhibitor Solid cancer US P1

DS-8201 Anti-HER2 antibody drug

conjugate Solid cancer JP P1

U3-1784 Anti-FGFR4 antibody Solid cancer EU P1

DS-1123 Anti-FGFR2 antibody Solid cancer JP P1

as of January 2016

9

Causes of Rapid Evolution in Oncology Therapeutic Area Strategy Development

1) Realization that Resistance to Targeted Therapies Is a Fait Accompli

Dissecting Therapeutic Resistance to RAF Inhibition in Melanoma by Tumor Genomic Profiling Nikhil Wagle, Caroline Emery, Michael F. Berger, Matthew J. Davis, Allison Sawyer, Panisa Pochanard, Sarah M. Kehoe, Cory M. Johannessen, Laura E. MacConaill, William C. Hahn, Matthew Meyerson, and Levi A. Garraway

JCO August 1, 2011 vol. 29 no. 22 3085-3096

After 15 weeks of vemurafinib Before initiation After 23 weeks of therapy

10

Causes of Rapid Evolution in Oncology Therapeutic Area Strategy Development:

2) Tumor Heterogeneity, “Genomic Chaos” and Frequent Mutation of Currently

Undruggable Targets

Gerlinger et al., Intratumor Heterogeneity and

Branched Evolution Revealed by Multiregion

Sequencing, NEJM 366:883, 2012

11

Causes of Rapid Evolution in Oncology Therapeutic Area Strategy Development:

Prolonged and Deep Responses to the Combination of Ipilimumab and

Nivolumab in Melanoma

Objective responses occurred in 9 of 17 patients (53%; 95% CI, 28 to 77), including 3 with a complete response.

All 9 patients who had a response had tumor reduction of 80% or more at their first scheduled assessment

J.S. Wolchuk et al., NEJM 369:122 (2013)

12

The Emerging Picture

13

Are Targeted Therapies Obsolete?

2015 FDA New Oncology Drug Approvals

Drug (brand name) Sponsor Properties Indication

Palbociclib (Ibrance) Pfizer CDK4 and CDK6 inhibitor ER-positive, HER2-negative

advanced breast cancer

Lenvatinib (Lenvima) Eisai VEGFR inhibitor Thyroid cancer

Panobinostat (Farydak) Novartis Histone deacetylase inhibitor Multiple myeloma

Dinutuximab (Unituxin) United Therapeutics GD2-binding mAb Neuroblastoma

Sonidegib (Odomzo) Novartis Smoothened inhibitor Basal cell carcinoma

Tipiracil plus trifluridine (Lonsurf) Taiho

Thymidine phosphorylase

inhibitor plus a nucleoside

metabolic inhibitor

Colorectal cancer

Trabectedin (Yondelis) Johnson & Johnson Alkylating drug Liposarcoma or

leiomyosarcoma

Cobimetinib (Cotellic) Genentech MEK inhibitor Melanoma with

BRAFV600E/Kmutations

Osimertinib (Tagrisso) AstraZeneca EGFR inhibitor NSCLC with

EGFRT790Mmutations

Daratumumab (Darzalex) Johnson & Johnson CD38-directed mAb Multiple myeloma

Ixazomib (Ninlaro) Takeda Oral proteasome inhibitor Multiple myeloma

Necitumumab (Portrazza) Eli Lilly EGFR antagonist NSCLC

Elotuzumab (Empliciti) Bristol-Myers Squibb SLAMF7-directed mAb Multiple myeloma

Alectinib (Alecensa) Roche ALK inhibitor NSCLC

Adapted from Asher Mullard, Nature Reviews Drug Discovery 15, 73–76 (2016)

14

Nonsynonymous mutation burden associated with clinical

benefit of anti–PD-1 therapy.

Naiyer A. Rizvi et al. Science 2015;348:124-128

How Far Can We Extend the Benefit of Immunotherapy

Combinations: The Elephant in the Room

Le DT et al. N Engl J Med 2015;372:2509-2520.

.

Clinical Responses to Pembrolizumab Treatment

15

Ton N. Schumacher, and Robert D. Schreiber Science

2015;348:69-74

Estimate of the Neoantigen Repertoire in Human Cancer

LB Alexandrov et al. Nature 500, 415-21 (2013) doi:10.1038/nature12477

16

Distribution of HLA-A*0201 epitopes by sample.

Neil H. Segal et al. Cancer Res 2008;68:889-892

Do Neo-Antigens Exist in Tumors with Low Mutational

Burden?

17

But It’s Not Just Mutational Burden: Tumor Heterogeneity

Also Influences anti-PD1 Therapy Benefit

N. McGranahan et al., Science 10.1126/science.aaf490 (2016).

18

Larkin J et al. N Engl J Med 2015;373:23-

34.

The Prevailing Sentiment: Combinations Will Be Required but with What and in What Situations?

PDL1+

ITT

PDL1-

Phase 3 Study Results of Nivolumab plus

Ipilimumab combination in metastatic

melanoma

• Benefit of ipilumumab addition is

limited to patients with PDL1 negative

tumors

• Biomarkers will be needed to spare

patients unnecessary toxicity (55%

grade 3 or 4 AEs in combination group)

• ~50% of patients are refractory after

one year

19

Broad Spectrum of Combination Agents

20

Across a Broad Range of Indications

21

So Many Combination Choices, So Little Guidance

Co-stimulatory

Compugen – Bayer

FivePrime – BMS

Celldex (CD-27 mAb)

GITR Inc (GITR mAb)

Agenus (GITR, OX40 mAbs - Incyte)

Pelican (TNFRSF25 mAb, TL1A Fc

fusion)

Bionovion (CD-27, CD-70 – Aduro )

Apexigen (CD-70)

Pieris (OX40, GITR)

Treg inhibitors Pelican (TNFRSF25 mAb)

Boston Immune Technologies and Therapeutics

(TNFR2 mAb)

IDAC Theranostics (CD4 mAb)

Progenra (USP7 inhibitor)

Xoma (TGF-beta - Novartis)

Macrophage Directed immunotherapy Trillium (SIRPaFc CD47 blocking agent)

Novimmune (CD47/TAA bispecific)

MDSC Inhibitors/Macrophage

polarization Peregrine (Bavituximab)

Active Biotech (S100A9 SMI)

Inflammatorx (S100A9 mAb)

Deciphera (TIE2 inhibitor)

Calithera (Arginase)

Advancer Cancer Therapeutics (PFKFB3)

Cytokine fusion proteins

Philogen (Darleukin L19-IL2)

Cytune (IL-2/IL-15Rbg agonist - RLI-15)

ARMO (PEGylated IL-10)

Pivotal Biosciences (Liver Expressed

Cytokine)

Chemocentryx (CCR2)

Altor (IL-15 sushi Fc)

Vaccines

Immunevaccine (DPX Survivac)

PDS Biotechnology (Versamune)

Aduro (Listeria - Janssen)

Advaxis (Listeria monocytogenes)

Globeimmune (Tamogen yeast

deliveryplatform)

ImmuneDesign (recombinant

lentivirus for selective transduction of

dendritic cells with tumor associated

antigens)

Celldex (ADC directed NY-ESO

antibody fusion and associated

platform)

Immutep (LAG-3 Fc fusion protein)

Oncosec (IL-12 plasmid injection)

Checkpoints

Cytomx (PD-L1 probody – BMS)

Curtech (CT-011 PD1 - Medivation)

Sorrento (STI-A1010 PD-L1 -

NantWorks)

Merck KGa (PD-L1 - Pfizer)

TESARO (PD-1)

Bionovion (PD-1, PD-L1)

CoStim (Tim-3 –Novartis)

MabLife MAT-303 CD160 receptor

(BTLA)

Immunext (VISTA-Janssen)

Agenus (LAG-3, Tim-3)

TESARO (Tim-3, Lag-3)

Simulators of Inate Immunity

Mologen (TLR9 agonist)

ImmuneDesign (TLR agonist)

Aduro (STING agonist – Novartis)

Oncolytic Viruses

Genelux

Viralytics (Coxackie)

Virttu (HSV)

Tocagen (cytosine deaminase retrovirus)

Bispecific T cell engagers

Amgen/Micromet

Macrogenics

Affimed

Bionovion

Xencor

HLA-peptide directed antibodies

or TCRs

Eureka (WT1 and others)

Immunocore (ImTacs - GSK, Lilly,

AZ, Genentech)

BioNTech

Allogenic Cell based Therapy

Cellectis (CART - Pfizer)

Intrexon (UltraCART)

Bispecific or

multi-antibody

platforms

TESARO

F-Star

Bionovion

Symphogen

Macrogenics

22

Phase 1b Study Combining the IDO Inhibitor

Epacadostat and Pembrolizumab

Gangadhar et al.: Journal for ImmunoTherapy of Cancer 2015 3(Suppl 2):O7.

23

Pembrolizumab Combination Clinical Results Disclosed

Thus Far in Metastatic Melanoma

Source: Evaluate Pharma, Merck press release Nov. 21, 2015

24

Galluzi et al.,Oncotarget. 2014 Dec 30;5(24):12472-508.

IL-15

agonist

(Admune)

CART-T

(U Penn)

Tim-3 (Costim)

Lag-3

PD-L1

Anti-

TGFb1,2

(Xoma)

4 preclinical

programs

(Surface

Oncology)

STING

Agonist

(Aduro)

Areas Where other Late-Comers Are Accessing External

Opportunities: Novartis

25

Collaboration with Merck:

• Pexidartinib in combination with anti-PD-1

therapy for advanced melanoma and

multiple other solid tumors

Other potential indications:

• Glioblastoma

• Ovarian cancer

• Breast cancer

• Sarcomas

Investigational CSF-1R (FMS) Inhibitor • Tenosynovial Giant Cell Tumor (TGCT)

• Granted Orphan Drug Designation by the FDA and EMA

• Granted Breakthrough Therapy Designation by FDA

Pexidartinib: PLX3397

Further Investigations

29

T CELL

CANCER CELL

SIGNAL

PD-1

PD-L1

PD-1 mAb

Pembrolizumab

GENE

Myeloid

Suppressor

Cell

Pexidartinib

CSF1R

CSF1*

T-Cell- Mediated

Killing

* colony stimulating factor 1

26

Peering into the Crystal Ball

• Early combination data suggests that intervention at multiple

points in the Cancer Immunity Cycle will confer additional clinical

benefit to PD-1 or PD-L1 antibodies

• Early results suggest that patients deriving benefit from addition of

one agent to an anti-PD1 or PD-L1 regimen may not be the same

as those deriving benefit from a different combination partner

• Results of Randomized Combination Studies with predictive

biomarkers for which patients benefit from specific combinations

are still a ways off.

• For some time it will remain unclear whether different agents

targeting the same point in the Cancer Immunity Cycle will be

interchangeable as part of a combination regimen with PD-1 or

PD-L1 antibodies

• Portfolios of IO agents and IO biomarker discovery capabilities will

be required to be a significant player

• Combination partners that target multiple points in the Cancer

Immunity Cycle may circumvent the need for personalized

combination regimens

• PD-1 or PD-L1 antibodies may need to be included as part of the

portfolio to preserve return on investment in combination partners