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EFTA01088033 | EFTA01088036 Chart 7: S&P 500 Biotech industry: relative Price/Sales (1993-3/2016) Chart 8: S&P 500 Biotech industry: relative fwd. P/E (1993-3/2016) 12.00 i 3.00 10.00 2.50 8.00 2.00 6.00 A W 1.50 1.00 4.00 .1 0.50 2.00 93 95 97 99 01 03 —Relative P/S 05 07 93 09 11 13 15 95 97 99 01 03 05 —Relative Fwd PIE —Avg 07 09 11 13 15 -Avg SCUM FacrSet. Both.MemllLynchUS Equity & US Quant Strategy Sauce. Fac6et.BolA Mend Lynch US Equity & US Quant Strategy Table 2: S&P 500 Biotech - relative valuations vs. history (1992-3/2016) Implied upside (downside) Metric Current Avg. to get back to UT avg. Relative PG 2.6 2.0 -21% Relative NS 3.0 5.1 71% Relative Fed PI 0.7 1.3 78% Relative NOCE 1.1 1.9 74% Chart 9: Biotedt growth at a reasonable pike S&P 500 sectors and Health Care industries Fwd P;E vs. Consensus LTG (as of 3/31/16) 22x Life So Tools 21x Cons. Staplos• 8 Svcs 20x 19x HC Eqpt 8 • Coos. Disc. 18x Slehl. 17x Industrials • 18x Rharrna • 15x 14x Telecom Financials 13x C• Biotech) 12x 11x 0.0 2.0 4.0 8.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 Consensus Long-Tenn Growth Note based on aggregate %Suiten multiple miaow to S&P SOO milurie Source FacrSet. BOO .Memll Lynch US Equity & USQuaStrategy r. I Sauce. FaciSet.80% Mend Lynch US Equity & US Quant Strategy Valuations reflect mainly base businesses for most We reviewed the net present values (NPVs) for ALXN, AMGN, BIIB, BMRN, CELG. GILD, INCY, REGN, and VRTX — taking apart the base business (BB) vs pipeline contributions. Based on our analysis, the BBs for ALXN. AMGN, GILD. INCY, REGN, and VRTX reflect about 75%-100% of the current valuation with little premium from the pipeline. This should be viewed favorably in a nervous market and could protect against significant downside in a market downturn and offer upside if pipeline assets report favorable clinical data. Of these. AMGN, REGN. and VRTX will report later-stage clinical data in 2016 that could meaningfully drive shares higher, including Repatha outcomes data for AMGN, interim Praluent outcomes data for REGN. and VX661/Kalydeco and early triple combo data for VRTX. In addition to clinical read-outs on new indications for Saris, ALXN also has two product launches (Strensiq and Kanuma) that began late last year; we believe the long-term market opportunities for these are not reflected in the price. Not surprisingly. heavy weights BIIB, BMRN, and CELG screen lower with their BBs representing only 55%-65% of current valuations. We believe these are justified given the number of late-stage large trials each have underway that could significantly accelerate growth in the next few years. BIIB has Phase 3 aducanumab in Alzheimer's and Phase 3 anti-LINGO in multiple sclerosis data. BMRN has multiple catalysts over the next 12 months, including updates for BMN190 for Batten's disease. 30mcg data for BMN111 for achondroplasia, and preliminary data for BMN270 for Hemophilia A. CELG has the PDUFA date for Revlimid for patients with non-del-Sq myelodysplastic syndromes (MDS) on April 16 and Ozanimod data in 1H1 7. 4 Biotechnology 19 April 2016 ," Bankof America 40 Merrill Lynch EFTA01088036 Epstein Web iOS app on the App Store.
May 9, 2026 at 1:32 AM