1

London is The Ideal Fit for Life Sciences

• London is one of the largest global financial centres, with assets managed here totalling $2.9 trillion • Strong investors support meant UK IPOs significantly outperformed US IPOs in 2015 • International shareholders represent a majority in UK stocks; North American shareholders alone own c.30% and in recent UK IPOs, US institutional demand has totalled 40%+

• US investors represent a large proportion of the free float of UK healthcare companies

More International and Stable

Shareholder Base

• Circassia largest biotech IPO globally by proceeds raised (£211m) in 2014 • 2014 and 2015 best years for UK healthcare and domestic life science IPO capital raising in a decade • 2015 characterised by follow on offerings for small cap life science companies – many of which whom floated in the last 18 months

• Best performing Main Market IPO in 2014 was US IP commercialisation company Allied Minds; Best performing London IPO in 2014 was 4DPharma, MotifBio top 3 in 2015

• £800m / $1.2bn jumbo IPO of Woodford Patient Capital Trust also focused on Life Science IP Commercialisation and Investment

Resurgence in Healthcare Interest

• UK process allows for extensive pre-IPO investor engagement as well as deal research – investor education of complex stories can be more effective and pricing outcomes are more predictable

• Confidential filing is standard in the UK and possible to IPO without a prior public disclosure • Adjustment to the High Growth Segment of the Main Market will allow life science Main Market floats with as little as 10% free float – key consideration when cornerstone investors involved

• UK investors much more accepting of secondary selldown at IPO

More Flexibility over Size, Structure &

Process

• London is much more cost effective in terms of IPO underwriting and transaction costs • Directors and officers insurance typically 3x more expensive in US due to legal environment • Cost of annual Sarbanes Oxley compliance estimated at US$1.5m • Quarterly reporting not mandated in the UK

Vastly Reduced Regulatory Burden

and Cost

2

80

90

100

110

120

130

140

Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 FTSE 100 FTSE All Share Healthcare FTSE All Share

NASDAQ Comp FTSE AIM All Share Healthcare NASDAQ Biotech

US Biotech Investors Nursing Large Losses Since Summer

Global Healthcare Indices

Source: Bloomberg, Index performance as of 8th February 2016

NASDAQ Biotech down 45% since peak

9.9%

-7.7%

-9.8%

-12.4%

-18.3%

-14.5%

3 Source: Dealogic, LSE stats, January 2016 *Number of IPOs by listing venue ** Weighted by market cap at offer

2015 – LSE Strength In a Global Context

Top 5 Exchanges by # IPOs 2015

Top 5 Exchanges by Money Raised at IPO 2015

•  Global IPO proceeds in 2015 reached $201.5bn. London Stock Exchange Group ranked top globally, with $26.3bn raised in 120 IPOs.

•  London IPOs enjoyed healthy aftermarket, with weighted performance** of 26.2% and 71% of deals trading above the issue price.

•  In 2015, the Computers & Electronics sector was the most active across LSEG’s equity markets with 14 IPOs raising $7.6bn.

31-149 11-30 1-10 no IPO

Number of IPOs* (2015)

150+

0

20

40

60

80

100

120

140

Shenzhen NASDAQ LSEG Shanghai ASX

Num

ber o

f IPO

s

Borsa Italiana

0

5

10

15

20

25

30

LSEG HKSE NYSE NASDAQ Shanghai

Mon

ey R

aise

d in

USD

bn

Borsa Italiana

4

Consumer Goods

3% Consumer Services

47%

Financials 26%

Health Care 6% Industrials

8%

Oil & Gas 4%

Technology 2%

Telecommunications

2%

Utilities 2%

2014

Source: Dealogic, Bloomberg, LSE computations, January 2016

An Overview of London IPO Issuance in 2015

Consumer Goods

7%

Consumer Services

21%

Financials 34% Health Care

3%

Industrials 30%

Technology 5%

2015

Issuance by Market Cap at IPO Issuance by Deal Size

Sector Breakdown of IPOs (by volume) Financial Sponsor IPOs as % of Issuance(by volume)

Sponsored 57%

Non-Sponsored

43% 2015

41

24 11

4

5

11

11 28

3

# of IPOs 2014 Main Market AIM

14

26 26

13

1

4

5 9

21

19

# of IPOs 2014 Main Market AIM

Sponsored 55%

Non-Sponsored

45% 2014

21

8 2

10

9 20 20

3

# of IPOs 2015

Main Market AIM

8 14

7 2

14 5 11 23

9

# of IPOs 2015 Main Market AIM

Does not include

Woodford and PureTech

UK Providing Superior Support for IPOs

Source: Dealogic Jan 2016 Price performance is weighted by market cap at the start of the year. Weights for separate categories calculated separately for each year

Financial Sponsor Backed (Raised $bn) NumberExchange Sponsor-Backed Non-Sponsor Sponsor-

Backed Non-Sponsor

London 12.0 8.4 23 70New York 11.6 9.0 26 30Nasdaq 3.7 14.0 25 103

Exchange Money Raised ($bn) NumberLondon 20.3 93 New York 20.7 56 Nasdaq 17.7 128

5

26.2%

(4.4%) (4.8%) -10%

-5%

0%

5%

10%

15%

20%

25%

30%

London New York Nasdaq

2015 IPO Performance

33.4%

(3.4%)

0.3%

13.4%

(5.7%) (6.1%) -10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

London New York Nasdaq

2015 Financial Sponsor Backed IPOs

Sponsor Backed Non-Sponsor

London – The Most Globally Diverse Investor Base

Source: Factset and LSE calculation, January 2016

Domicile of Top 50 investors in listed securities by country

UK HK US

•  London is the key global equity financial centre, with more international assets under management than any other global financial centre. •  Companies listing in London are able to access overseas investors through widely used and well understood capital raising routes. •  Apart from the large investor community in London, companies raising capital can also access a global investor base, including sovereign

wealth funds, global institutional funds, tracker funds, specialist sectoral and geographic funds.

UK 39%

EMEA (ex-UK) 17%

North America 29%

Asia Pacific 13% Others

2%

UK 12%

EMEA (ex-UK) 2%

North America 7%

Asia Pacific 78%

Others 1%

UK 4%

EMEA (ex-UK) 6%

North America 83%

Asia Pacific 6% Others

1%

6

7

Free float 63.9%

Institutional Ownership 34.1%

FF Market Cap ($m) 760

Free float 85.1%

Institutional Ownership 70.6%

FF Market Cap ($m) 1,476

Free float 89.2%

Institutional Ownership 65.9%

FF Market Cap ($m) 1,848

Distribution of Institutional Investors Distribution of Institutional Investors Distribution of Institutional Investors

Source: Dealogic Factset, LSE calculations, November 2015

US Investors Strong Supporters of UK Life Sciences Companies

7

United Kingdom

75%

United States 25%

United Kingdom

51%

United States 46%

Row 3%

United Kingdom

32%

United States 58%

Row 10%

Top 5 US Holders Value $m

Janus Capital Management 208

Northern Cross 143

Scopia Capital Management 119

Fidelity Management & Research 107

Massachusetts Financial Services 77

Top 5 US Holders Value $m

OppenheimerFunds 87

Capital Research & Mgt (World) 22

Deutsche Investment Management 9

Capital Research & Mgt (Global) 6

Morgan Stanley Investment Mgt 2

Top 5 US Holders Value $m

T.Rowe Price Associates 156

Select Equity Group 101

Wasatch Advisors 90

Columbia Wanger Asset Mgt 41

OppenheimerFunds 35

8

Historic Year for Life Science London Capital Raising

Life Sciences Money Raised on the LSE

Source: Dealogic, LSE stats, January 2016

8

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Mon

ey R

aise

d ($

m)

FO AIM FO Main Market IPO AIM IPO Main Market

9

Life Science Follow-Ons Key Feature of 2015

90

95

100

105

110

115

120

125

130

Jan-2015 Feb-2015 Mar-2015 Apr-2015 May-2015 Jun-2015 Jul-2015 Aug-2015 Sep-2015 Oct-2015 Nov-2015 Dec-2015

Pric

e R

ebas

ed to

100

2015 Selected Key Deals

$53m FO

$30m FO

$190m FO

$22m IPO

$203m FO $1197m IPO $100m IPO

$62m FO

$432m FO

$171m IPO

$35m FO $105m FO

$34m FO

$11m IPO

$15m IPO

$30m FO

Source: Bloomberg, Dealogic, LSE stats, January 2016

$38m IPO

UK US Adaptimmune

Summit

US UK PureTech Verseon Motifbio

Private Financing Immunocore

Oxford Nanopore Kymab

NightstaRx Mission Inivata

10

US Life Science IPO Issuance 2014 vs 2015

10

23

17

21 15

7

19 12

10

3

2

5 6

4

5

2

-

34.6%

68.4%

57.7%

38.1%

45.5%

33.3%

21.4%

70.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1 2 3 4 1 2 3 4

2014 2015

% o

f Dea

ls th

at P

riced

Bel

ow R

ange

Mon

ey R

aise

d ($

m)

Biotech Medtech Priced Below Range

Source: Dealogic, LSE stats, 7th December 2015

53% 63%

-14% -29%

42% 37%

5%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

Pricing vs Range 2014 Pricing vs Range 2015 Offer to current (median) 2014 Offer to current (median) 2015

Below In Range Above

US Biotech Small Caps: a Story of The Have-Nots

Source: Dealogic, LSE stats, December 2015 100 US Biopharma IPOs in 2014, 64 <$250m market cap at offer, median aftermarket performance: -14%, 36 >$250m market cap at offer, median= +53% aftermarket performance 2015: 58 US Biopharma IPOs, 30< $250 market cap at offer, median = -29%, 28> $250m, median = 3%

US Small Biopharma IPOs – Pricing and Price Performance* - Deals under <$250m market cap considered

Small Cap (-14%) vs Large

Cap (53%) Median

aftermarket performance

11

Small Cap (-29%) vs Large

Cap (3%) Median

aftermarket performance

12

More Pricing And Valuation Certainty in London

12 Source: Factset & Dealogic 2016. Deals considered are 2015 IPOs that disclosed a price range in their official published documents

•  Incorporation in the UK of investor meetings prior to IPO and deal research allows for more granular feedback on valuation and price range setting

•  Issuers in the UK are not obliged to disclose a price range or issue an intention to float announcement giving them more flexibility and in turn greater valuation certainty – filing with the UK regulator is also confidential

IPO Price Relative To Price Range 2015

10% Below

90% In Range

London

20% Above

29% Below 51% In Range

New York

13

Cost of listing in London is further reduced by:

•  Regulation which is widely tested and balanced

•  Highly competitive legal services which have experience of listing process

•  Timing of the admission process is clearly communicated

•  Direct communication with the regulator and the Exchange

•  All disclosures in English

Lowest IPO Fees

Comparison of Underwriting Costs (%)*

*Based on gross underwriting fees % (excluding AIM). Source: Dealogic, LSE data –December 2015

0

1

2

3

4

5

6

7

8

2008 2009 2010 2011 2012 2013 2014 2015YTD

LSE NYSE Nasdaq HKSE TMX ASX

13

14

•  D&O insurance costs are typically 3x more expensive for a company listed in the US (1)

•  US is a significantly more litigious environment than the UK and non-US companies are potentially exposed to greater uncertainty and a non-domestic bias

•  Managing this risk is costly and can be an unnecessary distraction for management and difficult to manage from a distance. This is another factor in many non-US companies choosing to relocate their HQ and/or move significant operating assets out of the US

£0

£5,000

£10,000

£15,000

£20,000

£25,000

£30,000

£35,000

Pric

e pe

r Mill

ion

(GB

P)

Market Cap (GBP bn)

D&O costs for 35 Largest FTSE 100 companies

Largest Smallest

Lower Legal Risk Environment

Higher personal & litigation risk for directors and companies listed in the US than in the UK

Average: GBP 14,476

Average: GBP 4,752

1) Analysis performed on primary D&O Price per Million (GBP) of FINPRO UK's Non-FI FTSE 100 Companies listed from left to right in descending market cap order 14

15

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