MAYNE PHARMA GROUP LIMITED — Capital/Financing Update 2018

Oct 25, 2018

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Acquisition of FDA-approved halobetasol foam Mayne Pharma Group Limited 26 October 2018

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Transaction overview

• Mayne Pharma has acquired US and Australian rights to halobetasol foam and related assets for an investment of:

• Up to US$32.0m comprising:

  • An upfront cash payment of US$10.0m;

  • US$5.0m at commercial launch expected in 1Q CY19;

  • Up to US$17.0m of contingent payments based on reaching cumulative net sales targets, patent issuance and potential capital spend to support the project; plus

• An earn-out payable annually based on sales performance over the 10 years following commercial launch

• Halobetasol foam is a highly complementary dermatology product treating plaque psoriasis that will be marketed in the US through Mayne Pharma’s existing Specialty Brands Division (SBD) sales team

• Compelling strategic rationale underpins the acquisition which is in line with Mayne Pharma’s stated growth strategy that leverages existing commercial operations

• The acquisition will be funded from cash and undrawn debt

• The acquisition is expected to be accretive to earnings in its first full financial year (FY20) following commercial launch with further growth expected in subsequent years

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Halobetasol foam acquisition overview

Mayne Pharma has acquired US and Australian rights to halobetasol foam and related assets

Overview of product

• Halobetasol foam, 0.05% is a potent corticosteroid for the treatment of plaque psoriasis in patients aged 18+ years old

• Clinically differentiated product with intellectual property (IP) protection and technically challenging to develop and manufacture

  • Approved by US FDA in May 2018

  • Marketing exclusivity until May 2021

  • Four pending patents

  • Only halobetasol corticosteroid in a foam dosage form

  • Two phase 3 studies were conducted in 560 patients with moderate to severe plaque psoriasis

• Mayne Pharma expects to launch halobetasol foam in the US in early calendar 2019 following sales team training, finalisation of marketing materials and pre-launch market activities including product coverage and reimbursement

• Brand name under review with the FDA

• Highly complementary to Sorilux® (also treats plaque psoriasis) leveraging the existing SBD commercial

• Complementary to infrastructure Specialty Brands ● Significant overlap of Sorilux® and halobetasol prescriber base Division ● Further diversification of SBD portfolio

• Further strengthens Mayne Pharma’s presence in the US dermatology market

• Estimated US patient population of >7.5 million for plaque psoriasis

• Attractive market ● Psoriasis potent corticosteroid market valued at US$600m with 10m units per annum[1]

• fundamentals ● Halobetasol market valued at US$64m and growing 10% per annum in volume terms[1] ● A significant portion of the acquisition price is based on future sales performance ● Attractive revenue growth potential for the product through promotion by Mayne Pharma’s SBD alongside

• Financially Sorilux® attractive deal ● Expected to be accretive to earnings in its first full financial year post launch (FY20) - Approximately US$4m in operating expenses in FY19

• ● Peak sales potential >US$25m with strong margin profile due to limited additional operating expense

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1. IQVIA MAT Aug 2018

Psoriasis overview

• Psoriasis is a chronic, non-contagious, inflammatory skin condition that appears as red patches covered with silvery flakes often found on the elbows, scalp and knees but can also affect other parts of the body

• Psoriasis is the most prevalent autoimmune disease in the US which affects >7.5m Americans each year

• Plaque psoriasis is the most common type of psoriasis accounting for approximately 80% of cases

• Topical corticosteroids are the cornerstone of treatment for the majority of patients

• Dermatologists often prescribe more than one product to treat plaque psoriasis and many use a combination of a corticosteroid (eg. Halobetasol) and a Vitamin D analogue (eg. Sorilux)

• Potent corticosteroids are prescribed to an average of 80% of psoriasis patients

• The more potent the corticosteroid, the more effective it is in clearing psoriasis

Pharmaceutical psoriasis treatment

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Psoriasis
Mild - Moderate Moderate - Severe
Vitamin D Vitamin D + Corticosteroid
Corticosteroid
Vitamin D + Biologic
Combination
products Corticosteroid + Biologic
Retinoid Combination
products
Retinoid
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Source: Company sponsored primary research; American Academy of Dermatology Combination products combine corticosteroid with a Vitamin D analogue eg. Enstilar

US psoriasis market overview[1]

Topical psoriasis market by value[2]

Market opportunity

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Mild – Moderate Moderate – Severe
13%
Potent corticosteroid Psoriasis Psoriasis
0-10% of body affected >10% of body affected
Combination
US$900m
25%
5.6m people of which 1.9m people
Vitamin D
62% 3.7m diagnosed diagnosed
2.4m treated 1.4m treated
with a with a
prescription prescription
Potent corticosteroid market by value
Clobetasol 1.6m topical 1.3m topical
patients patients
Halobetasol (non
4% [4%][5%]
foam formulations)
6%
Betamethasone
11% US$600m
Fluocinonide
70%
Desoximetasone
Other
At least 2 million plaque psoriasis patients use a potent corticosteroid
(1) National Psoriasis Foundation; Company sponsored primary research; IQVIA MAT Aug 2018. 5
(2) Excludes other topical products such as retinoids, keratolytics and emollients which are also used to treat psoriasis as well as other dermatology indications such as acne, atopic dermatitis, etc
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