Eric S. Langer President and Managing Partner, BioPlan Associates, Inc. 2275 Research Blvd, Suite 500 Rockville, MD 20850 301-921-5979 www.bioplanassociates.com

5 September 2016

Current Trends in Single Use Technologies:

Future Developments Affecting Production

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Cell Therapies Single-use Continuous Bioprocessing Microbial Simulated Moving Bed Modular/Ballroom Production Flexible Bioprocessing …More

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TRENDS AND BIOPROCESSING-CONTRADICTION IN TERMS!

Not all trends are good ideas Some good ideas don’t survive the test of time, regulatory pressures, or effectiveness

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TODAY’S UP AND DOWNSTREAM BIOPROCESSING TRENDS

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2016 13th Annual Report •222 Biopharmas, CMOs •190 Industry Suppliers •28 Countries

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ONGOING BIOPHARMACEUTICAL TRENDS…

More global biopharma facilities

More biological products; often w/smaller markets

More continuous processing, including downstream

More multi-product facilities

Modular facilities-new enabling technologies, re-purpose spaces

More efficient bioprocessing – titers and yields continue to increase

More high-tech expression systems and engineering advances

More automation, monitoring and process control

More bioprocess modeling

More process automation

More complex regulation

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SINGLE MOST IMPORTANT BIOMANUFACTURING TREND, 2014-2016

It’s STILL about Productivity

Does CBP ‘Trend’ have staying-power?

…been here for 30 years!

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BIG-PICTURE BIOPROCESSING SITUATION, RELATED TO SINGLE-USE

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Economic resilience: • $200B biopharmaceutical industry; $150B recombinant

proteins/mAbs • ~$23B~ bioprocessing supplies and services industry • Consistent 12%-15% annual growth • Both biotherapeutic revenue & bioprocessing supply/service

did well in recession

Pharmaceuticals shifting to biopharmaceuticals • Nearly 50% of pharma R&D in biopharmaceuticals, and

increasing • Biopharmaceuticals more profitable (and expensive)

BIG-PICTURE BIOPROCESSING SITUATION

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BIG-PICTURE BIOPROCESSING SITUATION

Single-use Equipment: Adoption continues. SUS, upstream (e.g., bioreactors), dominates (85%) pre-commercial, R&D, trials supply

Stainless Steel: Dominates commercial-scale.

China, India, ROW as Biomanufacturers: Domestic, less regulated markets-rapid growth

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BIG-PICTURE BIOPROCESSING SITUATION

Bioprocessing Continues to Improve: Steady increases in titers; DSP yields hold steady

Improvements: Cell lines, media, expr. systems

Downstream Less of a Problem: Remains most challenging (vs titers). But industry increasing DSP productivity • A primary bottleneck in bioprocessing • New technologies being introduced

Continuous bioprocessing • Upstream (perfusion) – Slow comm’l slow-growth (<$25M/yr) • Downstream (chromatography) – little yet available

Increased Titer can result in

smaller operations; impacts on

SUS

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BIG-PICTURE BIOPROCESSING SITUATION

Mammalian Crowding-out Other Platforms: More, larger companies standardizing in-house bioprocessing to be ~~solely mammalian-based

Microbial Single-use Systems Here: Introduced next-gen SUS microbial bioreactors.

Modular Bioprocessing Facilities: • Vendors’ modular comm’l construction, completed in weeks • Modular facil, not just cleanrooms, becoming a trend (e.g., GE KuBio in China)

Biosimilars Finally Entering U.S. markets: FDA approved 3 biosimilars. Healthy pipeline (www.biosimilarspipeline.com). ~800 biosimilars

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BIG-PICTURE BIOPROCESSING SITUATION

Cost-containment/Controls: Protests high pharma prices. Clinton warns of action vs. pricing practices…EpiPen, hep C, HIV (not biopharma)

Biosimilars will change pricing models: Force physicians, pharmacists and to use these

Developing Countries Increasing GMP: Top 1000 Global Facilities Index (www.top1000bio.com)

Worldwide Standardization: More biomanufacturing performed worldwide, standardize manufacturing globally.

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BIOPROCESSING MARKET OVERVIEW

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IMPROVING BIOMANUFACTURING PERFORMANCE

FACTORS CREATING "SIGNIFICANT" OR "SOME" IMPROVEMENTS U.S. VS WESTERN EUROPE VS REST OF WORLD

73.4% in US Feel SUS is Improving their Biomanufacturing!

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VENDORS' OPTIMISM FINANCIAL PERFORMANCE 2011-2016: % VENDORS, (N=158)

30.4% - DOUBLE the percent last year,

expect to do ‘Much Better’

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AREAS WHERE VENDORS CREATE QUALITY PROBLEMS (2008-2016)

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NEW TECHNOLOGY TRENDS

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NEW PRODUCT DEVELOPMENT AREAS OF INTEREST: 2010 - 2016

TREND: What will CBP look like in

5 Years?

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New Product Development Areas of Interest "U.S. vs Western Europe vs ROW

ASIA is likely to lead the demand for SUS in 5 years…Pricing is

today’s concern

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WHAT ARE SUT COMPETITORS WORKING ON 2012-2016

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SINGLE-USE USAGE TRENDS

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ESTIMATED % OF UNIT OPERATIONS THAT ARE "SINGLE-USE" (2014 VS. 2016)

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REASONS FOR INCREASING SINGLE USE, 2015 (% INDICATING ATTRIBUTE IS "VERY IMPORTANT" OR "IMPORTANT")

>83% State Reasons for Increasing SUS:

Strategic Manufacturing

>88% note OPERATIONAL

Reasons

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VALUE OF USEABLE L&E DATA HOW MUCH MORE FACILITIES MAY PAY IF SINGLE-USE DEVICE SUPPLIER PROVIDED "USEABLE" LEACHABLES AND EXTRACTABLES (L&E) DATA

L&E TREND Est. Avg Acceptable Upcharge for "Useable L&E Data" : 12.2% in 2016 vs 13.4% in 2015

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FACTORS RESTRICTING DISPOSABLES PERCENT INDICATING "STRONGLY AGREE" OR "AGREE“ (2015)

>75% Waiting for Better Bags…

>57% Don’t want to get stuck with just 1

supplier

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FACTORY OF THE FUTURE

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SINGLE USE/DISPOSABLE ADOPTION ISSUES % "AGREE "OR "STRONGLY AGREE"

57.3% expect to see a fully SUS facility in

5 Years

51.8% expect THEIR facility will be 50%

GMP SUS 5 Years 21.3% expect

‘Significant’ Upstream

Continuous Bioprocessing in

2 Years!

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EVALUATING CONTINUOUS BIOPROCESSING TECHNOLOGIES (OVER NEXT 12 MONTHS)

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GEOGRAPHIC OPPORTUNITIES

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9%

37%

26%

5%

6%

Other: 17%

CONCENTRATION OF BIOPROCESSING

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GEOGRAPHIC ANALYSIS--CHINA

Biologics’ quality issues on the rise

DSP is 70% of Bioprocessing; a key to public safety

2010 GMP documents set higher standards

New investment entering China biologics

Expect >15% growth in facilities, revenue

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CHINA MARKET OF BIOPROCESSING POSES DOUBLE-DIGIT GROWTH

Note: DSP estimated at 70% of total cost of bioprocessing in China

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DOMESTIC CHINESE VENDORS TRYING TO CATCH-UP

Domestic devices generally viewed not as good as multinationals

Domestics cannot provide integrated solutions

Domestics trying to catch up • Suzhou Sepax • Senhui Microsphere • Huiyan Bio – Chromatography Material • Lisure Science (chromatography automation) • Hua Chuang

– Hi Tech Filtration – ATFF -AutoPrep：ATFF automatic ultrafiltration systems adopts imported

head, valves, sensors, advanced control concept

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BIOSIMILARS & EFFECT ON SUS

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NUMBER OF BIOSIMILARS IN THE U.S. PIPELINE BY LAUNCHABLE DATES

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COGS

Cost of a biologic in 2005 was $500/gram

Decreasing: <$100/gram in some production

Stainless in US, at 10k – 20k L scale may run $100 - $30/g.

GMP Single-use, even in developing regions over $200/gram

1/3 API, 1/3 Fill-Finish, and 1/3 Quality.

F/F costs: • CMOs indicate Fill-finish@ 10-20% (up to a third) of API cost. • Some consider F/F costs may exceed biosimilars production costs

Biosimilars in SUS at 2000L: COGs may approach Stainless

(Cost-accounting variability…Depreciation? Overhead?)

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API VOLUMES < MANY PRESUME

5-10 competitors for each biosimilar

5 years out, will reference product retain 50% total market share?

If 10 competitors share 50% market (5% each) competitors needs 5%, of ref. product’s KGs

If a ref. product needs 120,000 L annual capacity, each biosimilar needs 6,000 L annually

Cost-effectively manufactured using SUS

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BIOSIMILARS CAPACITY

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HOW MUCH CAPACITY IS NEEDED?

Sus vs Stainless Scale

2016 Biosimilars Facility Capacity Demand 2026 Biosimilars Facility Capacity Demand

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WHAT HAPPENS IF TITERS DOUBLE?

Sus vs Stainless Scale

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IN-HOUSE, DEDICATED BIOSIMILARS MFG CAPACITY

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SUMMARY

Single-use a mainstream technology

SUS Opportunities continue to increase,

Derived from larger industry trends: • Asia • Biosimilars • Multi-facility • Continuous • DSP

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BioPlan Associates, Inc.

2275 Research Blvd, Suite 500

Rockville, MD 20850

www.bioplanassociates.com

301-921-5979

ABOUT BIOPLAN ASSOCIATES, INC.