SPT — Investor Presentation 2017

Feb 15, 2017

Ticker: TWSE 1789

ScinoPharm Management Presentation

Fourth Quarter 2016 Investor Conference

February 15, 2017

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 presentation 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 forward‐looking statements involve known and unknown risks , uncertainties and other factors which may cause actual results to differ materially from those implied by such forward‐looking statements.

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Table of Contents

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 Overview of ScinoPharm

 Financial & Operating Results in Q4, 2016 & FY2016

 Business Updates

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Overview of ScinoPharm

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Confidential

Business Overview

• Company specializes in high potency (steroid/cytotoxic) APIs and is expanding into sterile/aseptic injectable formulations

• Facility & organization established in Taiwan and expanding in China with a new GMP plant in Changshu & marketing base in Shanghai

• 72 generic APIs in current portfolio with 25 APIs launched; 53 US DMFs filed (753 DMFs WW), 32 US DMFs in oncology APIs. 100+ NCE CRAM projects, with 5 APIs launched and 5 in phase III for NDA filing in 1‐3 years

• Fully compliant with world‐class cGMPs and international regulatory requirements; Certified by US FDA, EMA, EDQM, Australian TGA, Japanese PMDA

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World Class API Facilities

Taiwan

China

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

• 5 of 16 production lines equipped with high potency capabilities for cytotoxic/steroids

• Passed US FDA, EMA, EDQM, Australian TGA, Japanese PMDA inspections, & 300+ cGMP customer audits

• Provides comprehensive contract research & manufacturing services for brand drug companies

• 6.7 hectares of land with > 250M[3] reactor volume

• 3 of 7 production lines equipped with high potency capabilities for cytotoxics

• US FDA approved cGMP facility for intermediates & high potency API

• Full scope capabilities in the development and production of APIs on small to large scales for generic & CRAM markets

• Global market including China

• Global Market

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Strong Generics Product Portfolio

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40 36
unlaunched
35 launched
30
25 23
20
13
15
7
10 7 6
4
13
2 2 2 2
5 6
6
3
4
2 2 2
1 1
0
Note: Other (Women's Health, Gastrointestinal, Immunology and Metabolic)
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ScinoPharm ‐ Oncology API Leader

Stand‐Alone API Companies

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ScinoPharm 31 21
Shilpa 12 11 3
Polymed 10 2 3
MacChem Products 6 5 2 # Oncology DMF Overlap with SPT
# Non-overlapping Oncology DMF
Laurus Labs 7 7 14
# Other DMFs
Sichuan Xieli 6 8 13
Chemwerth 3 5 33
Apicore 5 6 24
0 10 20 30 40 50 60
Large Generic Pharmaceutical Companies
ScinoPharm 31 21
Teva 17 26 249
Dr. Reddy's 14 14 187
Cipla 11 17 125
Sun 17 11 174
Hisun 11 19 48 # Oncology DMF Overlap with SPT
Qilu 8 3 8 # Non-overlapping Oncology DMF
# Other DMFs
Hengrui 3 3 10
0 50 100 150 200 250 300
Source: US FDA DMF Q3 2016 database
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We are Transforming our Company

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API business, to maximize ROI
Positioning as a Transforming into a Tightening cost control
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Tapping into formulation space
related to our core competencies
in high‐entry‐barrier APIs
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Keys to Generic Formulation Business

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Opportunity Strategy Tactics
 Already the leader in  Developing dossiers per  Expanding
providing oncology APIs our difficult‐to‐make APIs formulation portfolio
to regulated markets to increase value  Establishing on‐site
worldwide proposition in the supply oncology injectable
 Injectable CMOs are in chain facility and providing
short supply.  Targeted delivery & an integrated supply
 Can be customer’s extended release of chain
injectables provider by proven APIs via 505(b)(2)  Promoting our
developing fast track formulations via
formulations using our  Collaborating with start‐ strategic alliances,
own oncology APIs or ups & research institutes, especially in China
others’ APIs, up to and focusing on un‐met and US/EU
including ANDA filing oncology medical needs
with FDA of high prevalence in Asia
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Financial & Operating Results in Q4, 2016 & FY2016

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Quarterly P&L ‐ Consolidated

	In NT$ million, except for EPS 4Q,’16 (Unaudited) 3Q,’16 (Reviewed) 4Q,’15 (Audited) QoQ YoY	In NT$ million, except for EPS 4Q,’16 (Unaudited) 3Q,’16 (Reviewed) 4Q,’15 (Audited) QoQ YoY	In NT$ million, except for EPS 4Q,’16 (Unaudited) 3Q,’16 (Reviewed) 4Q,’15 (Audited) QoQ YoY	In NT$ million, except for EPS 4Q,’16 (Unaudited) 3Q,’16 (Reviewed) 4Q,’15 (Audited) QoQ YoY	In NT$ million, except for EPS 4Q,’16 (Unaudited) 3Q,’16 (Reviewed) 4Q,’15 (Audited) QoQ YoY	In NT$ million, except for EPS 4Q,’16 (Unaudited) 3Q,’16 (Reviewed) 4Q,’15 (Audited) QoQ YoY	In NT$ million, except for EPS 4Q,’16 (Unaudited) 3Q,’16 (Reviewed) 4Q,’15 (Audited) QoQ YoY
	In NT$ million, except for EPS	4Q,’16 (Unaudited)	3Q,’16 (Reviewed)	4Q,’15 (Audited)	QoQ	YoY
	Operating Revenue	1,002	992	1,030 ＊	1%	-3%
	Gross Profit	444	466	514	-5%	-14%
	Gross margin	44%	47%	50%
	Operating Expenses	(234)	(233)	(250)	0%	-7%
	Operating Income	210	233	264	-10%	-20%
	Operating margin	21%	24%	26%
	Other Rev. (Exp.)	3	(26)	(32)	-110%	-108%
	Net Income before Tax	213	207	232	3%	-8%
	Net Income after Tax	147	166	195	-11%	-25%
	Net margin after tax	15%	17%	19%
	EPS (after tax)	0.19	0.22	0.26

＊ Around 25% of operating revenues come from Vilazodone, used in the treatment of major depressive disorder

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Profit & Loss ‐ Consolidated

	In NT$ million, except for EPS	FY 2016 (Unaudited)	FY 2015 (Audited)	YoY
	Operating Revenue	4,031	3,955	2%
	Gross Profit	1,806	1,677	8%
	Gross margin	45%	42%
	Operating Expenses	(938)	(927)	1%
	Operating Income	868	750	16%
	Operating margin	22%	19%
	Other Rev. (Exp.)	(57)	53 ＊	-208%
	Net Income before Tax	811	803	1%
	Net Income after Tax	659	635	4%
	Net margin after tax	16%	16%
	EPS (after tax)	0.87	0.84	4%

＊ One‐time capital gains in 2015 of NT$95 MM is a result of the equity swap with Foresee. Without this item, the Net Income after Tax YOY % would be 19%.

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Balance Sheet‐ Consolidated

	In NT$ million 2016/12/31 (Unaudited) 2015/12/31 (Audited)	In NT$ million 2016/12/31 (Unaudited) 2015/12/31 (Audited)	In NT$ million 2016/12/31 (Unaudited) 2015/12/31 (Audited)	In NT$ million 2016/12/31 (Unaudited) 2015/12/31 (Audited)	In NT$ million 2016/12/31 (Unaudited) 2015/12/31 (Audited)	In NT$ million 2016/12/31 (Unaudited) 2015/12/31 (Audited)
	In NT$ million	2016/12/31 (Unaudited)		2015/12/31 (Audited)
	Cash and Cash Equivalents	3,707	29%	2,336	19%
	Accounts Receivable	638	5%	867	7%
	Inventories	1,830	18%	2,169	18%
	Long-Term Investments	364	3%	339	3%
	Property, Plant & Equipment	5,209	42%	5,171	42%
	Other Current/Non-Current Assets	1,035	11%	1,340	11%
	Total Assets	12,783	100%	12,222	100%
	Current Liabilities	1,692	13%	2,275	18%
	Long-Term & Other Liabilities	863	7%	90	1%
	Stockholders’ Equities	10,228	80%	9,857	81%

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Cash Flows‐ Consolidated

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FY 2016 FY 2015
In NT$ million
(Unaudited) (Audited)
Cash and cash equivalents at
2,336 1,928
beginning of period
Cash flows from operating activities 1,659 764
CAPEX (437) (582)
Short‐term borrowings (720) 402
-
Long‐term borrowings 803
Cash Dividends (219) (141)
Others 285 (525)
Cash and cash equivalents at
3,707 1,846
end of period
Free Cash flow 1,222 388
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Sales by Business

FY2016

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BD &
CRO
CMO
Others
12%
2%
FY2015 <1%
BD
CMO
CRO
2%
8%
5%
Generic
API
86%
Generic
API
85%
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Sales by Indication

FY2016

Others

FY2015 Others CNS 7% 17%

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12%
CNS
12%
Oncology
76%
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FY2016
Sales by Region
AU+NZ
Others
2%
CN
7%
4%
JP
8%
FY2015
AU+NZ
India10%
CN US+CAN
5% Others
EU
1% 49%
JP
5%
20%
6%
India
18% US+CAN
42%
EU
23%
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Business Updates

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Confidential

Business Growth Drivers

• CRAM has promising development potential in the next three years

• Focus on small‐molecule targeted therapies and CNS agents based on new mode of action

• Provide integrated service from API to formulation for niche injectables

• Active development of Chinese and Japanese market

• Target projects to utilize capacity and accelerate growth for Changshu site

• Develop partnership with major Japanese pharmaceutical companies and international pharmaceutical groups with Japan‐based operation site

• Deploying the network of development, production and distribution of injectable products

• Build partnerships to speed up the momentum of vertical integration

• Achieve critical mass workforce for in‐house injectable plant facility

• Continue optimizing existing generic APIs

• Maintain the market share and profit of the top 5 marketed products

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Confidential

Trend of New Oncology Agents

The development of genomics and molecular biology sheds light on new concepts of cancer therapy

• Cancer was regarded as a single disease and was primarily managed by killing cancer cells with high dose of cytotoxic substances (chemotherapy or radiotherapy).

• With the understanding individual genomic variance, immunity integrity, and tumor development, more mechanisms have been developed to provide high specificity agents with less toxicity. The control of tumor growth and progression can be tailored to individual conditions.

• Oral small‐molecule targeted chemotherapy is currently one of the primary areas of novel anti‐cancer agents.

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Confidential

CRO Phase III Product Portfolio * Already Filed

	Code	Est. NDA Filing Year	Indication	**Region **	Regional* Sales**	Remarks
	A	2016*	Infectious Disease	US / EU / Asia	$1.4 bn	Completed process validation. Anticipated launch in 2017 with demand in tons. Expected revenue of several million USD per year
	B	2017	Ovarian/ endometrial	US / EU	$6.0 bn	Anticipated launch in 2018 and revenue of
			Cancer			several million USD within 3 years
	C	2018	Type I,II Diabetes	US/ EU	$2.4 bn	Intermediate project made in Changshu site. Expected revenue of several million USD per year after launch
			Advanced			API project made in Changshu site. CFDA
	D	2018	Hepatocellular Carcinoma	CN	N/A	granted accelerated review under its category 1.1 innovative drug. Anticipated launch in 2019 with demand in tons

*** Source: BioMedTracker, GlobalData and DataMonitor**

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Confidential

CRO Phase III Product Portfolio (cont’d)

					*Regional
	Code	Est. NDA Filing Year	Indication	Region	Sales	Remarks
	E	2018	Prostate Cancer	US / EU	$2.4 bn	Started process validation. Anticipated launch in 2019 and revenue of several million USD per year
	F	2018	Parkinson’s Disease	US	$1.0 bn	Novel mechanism with promising demand. Anticipated launch in 2019 with demand in tons. Expected revenue of several million USD per year

CRAM business is expected to enjoy significant growth in 2017

*** Source: BioMedTracker, GlobalData and DataMonitor**

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Confidential

China and Japan Market Development

China

• Accelerate progress to create positive cash flow

• Focus on mid‐ to late‐phase CRO projects. Current portfolio includes agents for oncology, anti‐hypertension, and diabetes

• Seek generic APIs/intermediates with large demand to increase production utilization

• Develop partnerships with downstream formulation for collaborative development and registration, realizing shared profit creation

Japan

• Among 20 customers, 6 are top 10 drug firms. Less established players have exited the more concentrated market

• Encourage local generic customers to engage more in direct business

• Support Japanese companies and foreign pharmaceutical companies to enable and extend business outreach

• With the resources in Taiwan and Changshu, API supply is more flexible and can be incorporated to injectable drug product via integrated services

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Selected List of CRAM Projects at Changshu

	Customer	Project Type	Product Indication/stage	Product Type	Remarks/ Market
	To 10 lobal harma	CMO	Aroved antideressant dru in US	GMP	Passed Mexican authorit (APIF) GMP
	p g p		pp p g	Intermediate	y inspection
	Top 5 global pharma	CMO	Approved African sleeping disease drug	API	Site transfer from Taiwan
	Lee’s Pharma	CRO / CMO	>15 projects for brain tumors, antibiotic, hypertension, ophthalmology, etc.	API	China
	Chinapharm company	CRO	Phase II/ III clinical trial for cancer	API	China
	China pharm company	CRO	Phase IIb for age‐related macular di	API	US/China
			egeneraton
	Taigen Biotech	CRO	Phase II clinical trial for myocardial infarction	API	China/Taiwan
	US‐based new drug company	CRO	Phase II clinical trial for prevention of HIV infection	API	US
	Aslan Pharmaceuticals	CRO	Phase II clinical trial for cancer	API	China/Global
	Top 5globalpharma	CRO	Phase III clinical trial for diabetes	Intermediate	US
	Top 5globalpharma	CRO	Phase I clinical trial	API	NA
	US NASDAQ listed pharma	CRO	Phase III clinical trial for opioid‐induced constipation	Crude API	US
	US‐based new drug company	CRO	Phase I clinical trial for sickle cell disease	API	US

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Confidential

Formulation Business Progress

In‐house injectable plant

• On schedule to complete equipment assembly and verification, sterility verification, organization, personnel deployment and training, and cGMP system deployment for both vial and cartridge production lines

• Planned kick‐off registration batch production by 2017. Expected submission of 1st in‐house ANDA in 2018 and subsequent US FDA inspection approval in 2019.

• Formulation and collaboration development

• 2 US ANDAs: Oncology product partnership with SAGENT, and ScinoPharm‐ developed Fondaparinux

• 11 co‐developed and cost/profit sharing products with various partners

• Niche drugs planned with the indications of cancer, diabetes, osteoporosis, multiple sclerosis, and anti‐emetics. Continue to develop strategic alliances, including ongoing discussions with international major companies for exclusive rights of distribution.

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Strate ic Alliance Hi hli hts g g g

*** Already launched**

	Partner		Product	Indications	Region	Launch Year(E)	Remarks
	Genovate		Entecavir	Hepatitis B Virus	Taiwan	2013*	1st co‐developed formulation product launch
	Sagent		Oncology Injectable	Myeloid Leukemia	US	2017	1st US ANDA filing, triggering US FDA inspection in Changshu, China site
	Foresee		Leuprolide	Prostate cancer	US	2019	505(b)(2) NDA CRAM + Equity
	Coland		Bortezomib	Multiple Myeloma	China	2020	1st co‐developed drug in China to trigger CFDA inspection in Changshu site
			Azacitidine	MDS	China	2021	Co‐developed formulation in China
	Lee’s Pharma		Fondaparinux	Anti‐ thrombotic	China	2021	Co‐development collaboration
			Travoprost Bimatoprost	Glaucoma	China	2021
	Nanjing King Friend		Regadenoson	Stress agent for heart scan	China	2020	Co‐developed formulation in China
	US partner		Project A	Non‐small cell lung cancer	US	2018	US NDA 505(b)(2) with Paragraph IV filing / The estimated launch year is subject to litigation results
	US & China partners		Project B	Imaging agent	US	2021	ANDA with Paragraph IV filing / The estimated launch year is subject to litigation results.

Confidential

Maintain Market Share of Existing APIs 2016 Major Products account for 65% of total sales

	API	Indication	2016 MKT share*	# of US DMF/EDMF & other filings
	Irinotecan HCI	Antineoplastic	42%	63
	Paclitaxel	Antineoplastic	34%	57
	Gemcitabine	Antineoplastic	24%	76
	Exemestane	Antineoplastic	22%	44
	Galantamine HBr	Antipsychotic	17%	38
	Docetaxel Anhydrous	Antineoplastic	15%	69
	*Source: IMS data from Newport

2017 Product Launch Plan

	Type	Product	Region	Indication	Brand	Regional	WW
					Marketer	Sales	Sales
	Generic API	Desmopressin Acetate	USA	Polyuria	Ferring	US$166M	US$405M
	Generic	Tamsulosin HCl	USA	Benign Prostatic	Boehringer	US$333M	US$1706M
	API			Hyperplasia (BPH)	Ingelheim
	CMO API	Oral Product	USA EU	Antibiotics	N/A	N/A	N/A
	Generic Drug	Oncology Injectable	US	Myeloid Leukemia	MDS	US$183M	US$278M

Source: IMS Data (2015Q3‐2016Q2)

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Pipeline Outlook

• 5‐6 new launches

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 2 generic API launches
 1 drug products launched in US
 1 [st] co‐developed US ANDA
 Chinese (CFDA) inspection at Changshu site
launched
 US FDA inspection at Injectable plant
2017 2018 2019 2020
 3‐5 generic API launches
 4‐5 new launches
 1 [st ] in‐house drug US ANDA filing
 2 co‐developed China ANDAs
 1 [st] self‐developed US ANDA launched
launched
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• 1 co‐developed US ANDA launched

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uestions Q

& Answers

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Brand Quality with Asian Advantages www.scinopharm.com

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