SPT — Investor Presentation 2013

Aug 7, 2013

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ScinoPharm Management Presentation

TWSE 1789

August 7, 2013

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Disclaimer

This material has been prepared by ScinoPharm Taiwan, Ltd. (“ScinoPharm”).

Any opinions expressed in this material are subject to change without notice as a result of using different assumptions. ScinoPharm is under no obligation to update or keep current the information contained herein. The information contained in this presentation is ScinoPharm’s confidential information.

Any disclosure, copying, distribution or any action taken or omitted to be taken in reliance on it is prohibited and may be unlawful.

No representation or warranty , express or implied, is or will be made in or in relation to, and no responsibility or liability is or will be accepted by the Company as to , the accuracy or completeness of this material and any liability therefore is hereby expressly disclaimed.

Statements made in this material include forward-looking statements, which include, without limitation, statements about the issues, plans and expectations of ScinoPharm. Without limiting the foregoing, statements including the words “believes”, “anticipates”, “plans”, “expects” and similar expressions are also forward-looking statements. Forward-looking statements reflect, among other things, management’s plans and objectives for future operations, current views with respect to future events and future economic performances and projections of various financial items. These forwardlooking statements involve known and unknown risks , uncertainties and other factors which cause actual results to differ from those such may materially implied by forward-looking statements.

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Table of Content

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Overview of ScinoPharm Financial & Operating Results Oncology Market Trend Progress Made in Japanese Market

Business Outlook

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Overview of ScinoPharm - An API + ANDA Company

Active Pharmaceutical Ingredients Abbreviated N ew Drug Application

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Background

• Established in 1997 in Taiwan by founders from Syntex, listed on TWSE, current market cap ~ US$1.8 billion

• Major shareholders include Uni-President Group, Government’s Development Fund, Taiwan Sugar, etc.

• Facility & organization designed & built in Taiwan by experienced Syntex team, received multiple regulatory inspections from US FDA, Australia, EU, Japan, etc.

• � Specializes in high potency (steroid, cytotoxic) & injectable APIs

• Expanding in China with a new plant in Changshu & sales & marketing base in Shanghai

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Business Overview

• Maintain dominant position in Specialty APIs for generic market. Strong customer base (320+) in US/EU/Japan, some through Indian generics. Aggressively developing Japan and China markets

• Developed ~60 generic APIs with 22 launched. Filed 44 DMFs in US (647 DMFs WW), leader in supplying oncology injectable APIs with 20 US DMFs

• 70+ NCE CRAMs projects, with 5 in phase III with NDA filing in 2-3 years & 4 already launched. The only company in Asia supplying APIs for multiple commercial NCEs

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World Class Facilities

Taiwan (SPT)

China (SPC)

• 6.6 hectares of land, 330K sq. ft. facilities with >200M[3] reactor volume

• 8 of 18 production lines equipped with high potency capabilities for cytotoxics or steroids

• US FDA approved & 200+ GMP audits by customers

• Provides full CRAMs for brand drugs

• Building an oncological injectable plant

• Global market

• 6.6 hectares of land with ~250M[3] reactor volume

• 1[st] phase completed in Q1, 2012 2[nd] phase to be completed in Q4, 2013

• CGMP designed facility for intermediates & high potency API

• Full scope capabilities in developing and manufacturing APIs from small to large scale for generic & CRAM markets

• Global market including China

• Common Stren th Differentiators g

• � Same sizable land area � Different reactor chamber volumes

• Taiwan � Complied with int’l GMP & EHS (200M[3 ] in SPT vs. 250M[3 ] in SPC) vs � standards for global market SPC mainly for large volume

• China � Strong R&D capabilities � SPT focusing on global export; Plant � Multi-functional plants, able to SPC on China domestic market produce high potency APIs � SPT with an injectable plant

• � Small, mid, to large lines

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Financial & Operating Results

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Quarterly P&L - Consolidated

	In NT$ million, except for EPS	2Q,’13 (Reviewed)	1Q,’13 (Reviewed)	2Q,’12 (Reviewed)	QoQ	YoY
	Net Sales	1,339	1,186	913	13%	47%
	Gross Profit	724	655	437	11%	66%
	Gross margin	54%	55%	48%
	Operating Expenses	(267)	(267)	(238)	0%	12%
	Operating Income	457	388	199	18%	130%
	Operating margin	34%	33%	22%
	Other Rev.(Exp.)	11	19	1	-42%	1000%
	Net Income before Tax	468	407	200	15%	134%
	Net Income after Tax	406	350	176	16%	131%
	Net margin after tax	30%	30%	19%
	EPS (after tax)	0.62	0.54	0.27	15%	130%

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Half Year P&L - Consolidated

	In NT$ million, except for EPS	1H,’13 (Reviewed)	1H,’12 (Reviewed)	YoY
	Net Sales	2,524	1,884	34%
	Gross Profit	1,379	961	43%
	Gross margin	55%	51%
	Operating Expenses	(534)	(478)	12%
	Operating Income	845	483	75%
	Operating margin	33%	26%
	Other Rev.(Exp.)	30	7	329%
	Net Income before Tax	875	490	79%
	Net Income after Tax	756	423	79%
	Net margin after tax	30%	22%
	EPS (after tax)	1.16	0.65	78%

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Balance Sheet- Consolidated

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2013/6/30 2012/6/30
In NT$ million
(Reviewed) (Reviewed)
Cash and Cash Equivalents 3,379 29% 2,972 30%
Accounts Receivable 870 7% 732 7%
Inventories 2,288 20% 2,022 21%
Long-Term Investments 273 2% 168 2%
Fixed Assets 3,897 33% 3,080 31%
Total Assets 11,702 100% 9,849 100%
Current Liabilities 2,527 22% 1,444 15%
L-T Liabilities and Others 66 -% 64 -%
Stockholders’ Equities 9,109 78% 8,341 85%
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Cash Flows- Consolidated

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1H 2013 1H 2012
In NT$ million
(Reviewed) (Reviewed)
Cash and cash equivalents at
3,035 3,294
be innin of eriod
g g p
Cash flows from operating activities 456 61
CAPEX (506) (378)
-
Long-term Investment (107)
-
Short-term borrowings 491
Others 10 (5)
Cash and cash equivalents at
3,379 2,972
end of eriod
p
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Sales by Business

1H 2012

1H 2013

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CMO
CRO
5%
2%
CMO
30%
Generic
Generic
70%
93%
CRO
<1%
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Sales by Indications

1H 2012

1H 2013

Others 5%

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11%
CNS
CNS
36% Oncology
25% Oncology
59%
64%
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Sales by Region

1H 2012 1H 2013

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Rest of AU & NZ ROW Rest of AU & NZ ROW
Asia 4% <1% Asia 4% <1%
10%
14%
India
India
12%
US & CAN
13% US & CAN
39%
50%
EU
EU
20%
34%
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Oncology Market Trend

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Key Facts about Oncology Market

• Cancer is the leading cause of death, accounting for 7.6 million deaths worldwide (around 13% of all deaths) in 2008

• Deaths from cancer worldwide are projected to keep rising to over 13.1 million in 2030

• The global oncology market reached US$62.2 billion in 2011

• (CAGR: 5.5%), driven by the growing pharmerging markets

• The oncology market will continue to grow to $75-80 billion by 2015, due to targeted therapeutics, earlier detection, longer treatment duration, and extended indications

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Market Value by Therapeutics

� Oncology drug market value to reach $75-80bn in 2015 Leading Therapy Classes in 2015

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Source: The Global Use of Medicines: Outlook Through 2016, IMS, Jul 2012

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Major Classes of Oncology Drugs

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Chemotherapies Targeted therapies
Kill cancer cells by affecting Destruct cells by blocking
cell division growth signaling pathways
developed Alkylating agents Monoclonal antibodies
by SPT
planning Antitumor antibiotics Angiogenesis inhibitors
( including mAbs, SMEs)
developing Antimetabolites
by invest. Protein kinase inhibitors
Plant alkaloids
future
Antibody Drug
direction
Conjugate (ADC)
Hormonal agents
Targeted Nanomedicines
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ScinoPharm development pipeline is focused on targeted therapy drugs

Source: Cancer Market Outlook to 2016, Business Insights

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Progress Made in Japanese Market

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Continued API Growth in Asia

� Asia is the global third largest regional market for APIs only next to North America and Europe

2005-2011 ： CAGR ~ 9.1%

2011-2017 ： CAGR ~ 8.5% (vs. 7.4% WW)

• API Market Share in Asia by Country in 2011

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Others
14%
Korea
8%
India Japan
6% 51%
China
21%
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Source: Active Pharmaceutical Ingredients (API) Market in Asia-Pacific to 2017, GBI Research, Nov 2012

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Japanese Generics Landscape

� The second largest market next to the US, presenting a significant growth potential in generics

• Japanese government aims to lift the generic volume penetration rate from current 25% to 60% by 2018

� Most domestic demand of generic APIs depends on imports, especially for oncology injectable drug

• Japanese government requires high quality APIs manufactured under stringent GMP norms. Japanese customers prefer one-stop-shop service (from API manufacturing to dosage form) from Taiwan

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Target Top Tier Japanese Firms

Top Generic Companies	2012 Sales (Million Yen)	2012 Sales (Million Yen)
Nichiiko Teva Sawai Towa Nipro Nippon Kayaku Daito		77,740 70,000 67,600 48,720 42,550 28,510 27,100
Shiono Chemical Fuji Pharma		25,300 21,620
Top 5 Brand name Companies Takeda Astellas Daiichi Sanko		2012 Sales (Million Yen)
		1,508,900 969,400 938700
y Otsuka (Taiho) Eisai		, 782,200 648,000

� ScinoPharm’s main target customers include tier 1 generic and new drug co.’s. 12 out of the top 14 drug companies have partnered with us.

� Our customers’ market shares are high and stable.

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Growing Customer Base in Japan

• Our Japanese customers will be over 10 by 2013

� Target to be a vital API supplier to the generic and brand name drug companies in Japan within 3-5 years

	Year	2006	2007	2008	2009	2010	2011	2012	2013 (E)	2014 (E)
	# of accumulated customer for R&D	4	7	9	14	19	21	24	26	28+
	# of accumulated customer for	0	0	2	3	3	6	7	10	11+
	Commercial Sales

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Booming Market Presence in Japan

� As the first Taiwanese API company qualified by PMDA, ScinoPharm aims to capitalize on its qualified APIs and formulation business

• With Anastrozole 、 Docetaxel 、 、 、

• Exemestane Gemcitabine HCl 、 、

• Irinotecan HCl Isoconazole Levonorgestrel and Paclitaxel marketed in Japan, one of which has gained more than 90% market share, we are expecting a wider presence with 2 additional items in our portfolio next 1~2 year

ScinoPharm’s Sales Growth in Japan

Unit: USD M

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10
10
9
8
7
6
5 5.64 5.43
5.03
4
3
2
2.29
1
0
2009 2010 2011 2012 2013
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ScinoPharm Japan Office

Str ic Goals ateg

• JDMF registration and management

• API regulatory support for customers importing dosages to Japan

• Contacts for Japanese agents and customers

• � Market research and intelligence collection

• Business support for future formulation products

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Business Outlook

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2013 Product Launch Plan

	API	Region	Indications	Brand Marketer	Regional Sales	WW Sales
	Azacitidine	US	MDS, Anti-neoplastic	Pharmion	US$331.3MM*	US$729.7MM*
	Decitabine	US	MDS, Anti-neoplastic	MGI Pharma	US$238.0MM*	US$249.1MM*
	Docetaxel	JP	Anti-neoplastic	Sanofi Aventis	US$236.9NM**	US$2,051MM*
	Anhydrous
	Modafinil	US	Antinarcolepsy	Cephalon	US$1,219MM*	US$1,319M*
	Paclitaxel	JP	Anti-neoplastic	Bristol Myers	US$307.1MM**	US$1,654M*
	Riluzole	US	ALS	Sanofi Aventis	US$55.0MM*	US$237.1MM*
	Topiramate	US	Seizures	Customer	NDA ( FDA tentative approval)

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CRAM Business Updates

• One CMO new drug has obtained another FDA approval to treat HAP (Hospital Acquired Pneumonia), in addition to its original skin infection indication

• ScinoPharm Changshu has formed a strategic alliance with Sundia MediTech Co. (a Shanghaibased CRO) to combine their NCE R&D capabilities and our CGMP manufacturing facilities to strive for Chinese local and int’l CRAMS business opportunities

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Outlook

� Sustain Leadershi in Oncol ical APIs p og Continue to launch and develop oncological injectable APIs & others with high technological barriers including Peptides � Establish Presences in China Develop APIs and formulations to timely capture the generic business with strategic alliance and CRAMs from MNCs

� a anese Market Penetration J p Expand strategic partnerships with major pharma � Vertical Int ration – API+ANDA eg Select difficult-to-make APIs to formulate dossiers and build an oncology injectable plant to provide value-added total solution to customers

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Confidential

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Brand Quality with Asian Advantages

www.scinopharm.com

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