Anacor Investor Presentation June 2013 [Compatibility Mode]

Investor PresentationInvestor PresentationJune 2013June 2013

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Safe Harbor StatementSafe Harbor StatementSafe Harbor StatementSafe Harbor Statement

C t i it i thi t ti d th tt di d t d th t Certain items in this presentation and other matters discussed today or answers that may be given to questions asked could constitute forward-looking statements, including statements regarding the progress and timing of clinical trials, the safety and efficacy of our product candidates, our collaborators, and estimates of the potential markets for our product candidates. Additional risks and uncertainties are described more fully in Anacor’s Annual Report on Form 10-K for the year ended December 31, 2012 and subsequent quarterly reports filed on Form 10-Q filed with the Securities and Exchange Commission. These statements are subject to risks and uncertainties relating to Anacor’s future financial or business performance. Anacor’s actual results or achievements could differ materially from those anticipated in these forward-looking statements. Please note that Anacor is under no obligation to update any of the forward-looking statements discussed today. y

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A Biopharmaceutical CompanyDeveloping Multiple Drug Candidates

Using Novel and ProprietaryBoron ChemistryBoron Chemistry

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Anacor Pharmaceuticals Overview Anacor Pharmaceuticals Overview Anacor Pharmaceuticals Overview Anacor Pharmaceuticals Overview

Two Proprietary Compounds in Late Stage Clinical Development

Tavaborole - Topical Treatment for OnychomycosisM t i d d d i t ith t ti ti l i ifi d b tt ffi th • Met primary and secondary endpoints with statistical significance and better efficacy than currently approved topical in two Phase 3 studies

• NDA filing expected mid-2013• Potential $1B market opportunity

AN2728 - Topical Treatment for Atopic Dermatitis and Psoriasis• Demonstrated safety and efficacy in 16 Phase 1 and Phase 2 clinical trials • Expect to initiate Phase 3 studies in 4Q13 or 1Q14• Potential $600M market opportunity

Key Strategic Corporate Partnerships• 2 candidates selected for development in animal health indications• High single digit – low double digit royalties on future sales ($350M - $500M High single digit low double digit royalties on future sales ($350M $500M

potential market opportunity per candidate)

• Anti-infective R&D collaboration• Over $75M paid to Anacor to date

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Prolific Boron Chemistry Platform• 8 novel small-molecule compounds have begun development in the last 7 years

Deep Pipeline of Proprietary Drug CandidatesDeep Pipeline of Proprietary Drug CandidatesDeep Pipeline of Proprietary Drug CandidatesDeep Pipeline of Proprietary Drug CandidatesU P C O M I N G M I L E S T O N E S

Phase 1 Phase 2 Phase 3 1H13 2H13 2014

Tavaborole (topical anti-fungal) • Pre-NDA communications with FDA • Potential FDA

Anacor Owned

(topical anti-fungal)

Onychomycosis

completed successfully• File NDA mid 2013

Potential FDA Approval

AN2728(topical anti-

Backup compound (AN2718)

(topical antiinflammatory)

Atopic Dermatitis

Psoriasis

• Initiate Ph 2 safety/PK/efficacy study in children and TQT study

• Initiate Ph 3 trial in atopic dermatitis in 4Q13 or 1Q14

Ph 3 ready

3 Ph 2 studies completed

AN3365(gram-negative antibiotic)

Backup compound (AN2898)

Future development plans under review

Animal Health 1Animal Health 2

• Protocol concurrencePartnered

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AN5568 (HAT/Sleeping Sickness)

Our Lead Program Our Lead Program -- TavaboroleTavaboroleOur Lead Program Our Lead Program -- TavaboroleTavaborole

b lTavaboroleTarget Product Profile:

Safe and effectivetopical treatment for

onychomycosis

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Onychomycosis Onychomycosis –– a Highly Prevalent Fungal a Highly Prevalent Fungal Infection Affecting 35M People in the USInfection Affecting 35M People in the USOnychomycosis Onychomycosis –– a Highly Prevalent Fungal a Highly Prevalent Fungal Infection Affecting 35M People in the USInfection Affecting 35M People in the US

Fungal infection of the nail and nail bed– Without treatment, it can damage the nail unit and spread to other toes and skin

Affects 1 in 10 peopleAffects 1 in 10 people– Affects 1 in 3 diabetics, increasing risk of secondary infections, foot disorders and

limb amputations

Local, non life threatening infection - fundamentally ought to be t t d t i ll

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treated topically

Currently Approved Products Have LimitationsCurrently Approved Products Have LimitationsCurrently Approved Products Have LimitationsCurrently Approved Products Have Limitations

Oral treatments (Mostly Lamisil and Sporanox) –Safety concerns limit their use despite effectiveness

–Liver toxicity, drug-drug interactions and unwanted side effects–Sporanox received 2 black box warnings (CHF and drug interactions)–Sporanox received 2 black box warnings (CHF and drug interactions)

Topical treatment–Penlac is the only approved topical and was approved with concomitant debridement

–Safe but low efficacy due to inability to penetrate nail–Inconvenient to apply

To cure onychomycosis the optimal topical drug must be small water

Fungus resides in nail and nail bed

To cure onychomycosis, the optimal topical drug must be small, water soluble and not bind to keratin to penetrate the nail and reach the

nail bed

Nail’s thickness and construction of compact keratin matrix and water create barrier for

t t i ll li d

Topical drug must penetrate nail plate to treat fungus in nail bed

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most topically applied agents

g

Due to Limitations of Approved Products, Most Due to Limitations of Approved Products, Most Patients are Treated with DebridementPatients are Treated with DebridementDue to Limitations of Approved Products, Most Due to Limitations of Approved Products, Most Patients are Treated with DebridementPatients are Treated with Debridement

Debridement Untreated

30%

Debridement ~8-10 million people

Visit podiatrists ~3 times per year for debridement (cutting, clipping, scraping or removing the nail) to

Untreated~20 million people

Unmotivated to treatDon’t like treatment optionsUninformed

55%Untreated

30%Debridement

or removing the nail) to improve appearance and comfort

Does not cure the infectionOral Medication (primarily Lamisil)

10%Topical

5%

Topical Treatments(Penlac and OTC remedies) 3 illi l

(primarily Lamisil)~1-2 million people

Most effective treatment option

Safety concerns and t d id ff t 5%

Oral~ 3 million people

Demonstrated little to no efficacy

unwanted side effects have limited the use of oral medication

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Source: Estimated based on Podiatry Today, IMS, AC Nielsen, Medicare and Alpha Detail data

In Spite of Limitations, Currently Approved In Spite of Limitations, Currently Approved Products Had Combined Peak Sales Over $2BProducts Had Combined Peak Sales Over $2BIn Spite of Limitations, Currently Approved In Spite of Limitations, Currently Approved Products Had Combined Peak Sales Over $2BProducts Had Combined Peak Sales Over $2B

Lamisil (terbinafine) –Oral

Sporanox (itraconazole) – Oral

Penlac (ciclopirox) –Topical

~$1.2B peak WW sales

Most effective but safety

~$600M peak WW sales

Low efficacy and safety

~$300M peak WW salesLow efficacy and Most effective but safety

concernsLow efficacy and safety

concernsLow efficacy and

inconvenient

2010 NRx (a) 1.4M 23K 375K

Complete Cure (Mycological Cure + 38% 14% 5.5% - 8.5%

(with debridement)( y g100% clear nail) (with debridement)

Mycological Cure (Negative Culture

and Negative KOH)70% 66% 29% - 36%

Price Price per course of

treatment (prior to generic entry)

$1,172 (3 months of treatment)

$2,050(3 months of treatment)

$660 (b)(1 year of treatment)

Potential Side Effects

• Liver toxicity• Drug-drug interactions

• 2 Black Box Warnings• Liver toxicity

• <5% skin irritation

Effects• Diarrhea• Rash• Smell and taste disturbance

• Drug-drug interactions • Cardiac complications• Rash• GI disorders

Inconvenience/ Other Issues

• Liver enzyme test at onset and 6 weeks• Older / diabetic patients may be on multiple other oral

• Lacquer must be applied daily, allowed to dry and

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Other Issues p y pmedications and don’t want to or can’t add an oral treatment for onychomycosis

y yremoved weekly

• Approved as adjunctive therapy to debridement

(a) Source: IMS. Includes generics. (b) AWP of branded Penlac increased to $3,616 per course of therapy as of 3/1/13

Our Solution for OnychomycosisOur Solution for OnychomycosisOur Solution for OnychomycosisOur Solution for Onychomycosis

BaselineBaselineLocal, targeted therapy Little or no detectable systemic

SafeSafeSafeSafe

Potent against broad spectrum of fungi and yeast

EffectiveEffectiveEffectiveEffective

exposureAll preclinical toxicology completed

Unique MOA - targets LeuRS to kill fungusDemonstrated efficacy superior to Penlac in first Phase 3 studyPhase 3 study

TavaboroleTavaboroleA safe and effective topical

treatment for

Easy to UseEasy to UseEasy to UseEasy to UsePenetrates NailPenetrates NailPenetrates NailPenetrates Nail

onychomycosis that is more effective than current topical

options and safer than current oral therapeutics

Apply with dropper once dailyDries in about one minuteNo special cleansing or preparation prior to application

Small molecular weight – 152 Da compared to > 300

Da for most antifungals Balanced preference for oil and water (logP = 1 24)

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water (logP = 1.24) Water soluble (0.8 mg/mL)Activity in presence of keratin

Tavaborole Met All Endpoints With Statistical Tavaborole Met All Endpoints With Statistical Significance In Two Phase 3 TrialsSignificance In Two Phase 3 TrialsTavaborole Met All Endpoints With Statistical Tavaborole Met All Endpoints With Statistical Significance In Two Phase 3 TrialsSignificance In Two Phase 3 Trials

Studies included patients of all ages with no upper age limit and onychomycosis involving 20% - 60% of target great toenail

Study 301(N = 594)

(active / vehicle)

Study 302(N = 601)

(active / vehicle)

Primary Endpoint at

• Completely clear nail and mycological cure (defined as negative culture and negative

6.5% / 0.5% (p=0.001)

9.1% / 1.5% (p<0.001)p

52 Weeks ( g gKOH) of target great toenail

(p ) (p )

Secondary Endpoints at

52 Weeks

• Completely clear or almost clear (≤10% clinical involvement) target great toenail

26.1% / 9.3% (p<0.001)

27.5% / 14.6% (p<0.001)

M l i l f t t t t il 31 1% /7 2% 35 9% / 12 2% • Mycological cure of target great toenail 31.1% /7.2% (p<0.001)

35.9% / 12.2% (p<0.001)

• Completely clear or almost clear nail + mycological cure

15.3% / 1.5% (p<0.001)

17.9% / 3.9% (p<0.001)

Other • Negative culture 87.0% / 47 9% 85.4% / 51 2% Other • Negative culture 87.0% / 47.9% (p<0.001)

85.4% / 51.2% (p<0.001)

• Completely clear or almost clear nail and negative culture

24.6% / 5.7% (p<0.001)

25.3% / 9.3% (p<0.001)

Safety • Rate of discontinuations as a result of 2.8% / 1.6% 0.8% / 0.5%

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adverse events

• Overall safe and well-tolerated across study subjects• No serious adverse events related to study drug

Clinical Photographs from Tavaborole Phase 3 Studies Clinical Photographs from Tavaborole Phase 3 Studies ––26.1% and 27.5% of Patients Reached “Completely Clear” 26.1% and 27.5% of Patients Reached “Completely Clear” or “Almost Clear” Nails in Studies 301 and 302or “Almost Clear” Nails in Studies 301 and 302

Clinical Photographs from Tavaborole Phase 3 Studies Clinical Photographs from Tavaborole Phase 3 Studies ––26.1% and 27.5% of Patients Reached “Completely Clear” 26.1% and 27.5% of Patients Reached “Completely Clear” or “Almost Clear” Nails in Studies 301 and 302or “Almost Clear” Nails in Studies 301 and 302

BaselineWeek 52

“Completely Clear” Nail With Mycological Cure

“Almost Clear” NailWith Mycological Cure Baseline

Week 52

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Tavaborole Has Demonstrated Greater Efficacy Tavaborole Has Demonstrated Greater Efficacy and is More Convenient to Use than Penlacand is More Convenient to Use than PenlacTavaborole Has Demonstrated Greater Efficacy Tavaborole Has Demonstrated Greater Efficacy and is More Convenient to Use than Penlacand is More Convenient to Use than Penlac

Tavaborole Tavaborole Penlac (1)

Study 301 Study 302 (ciclopirox lacquer)

Adjunctive Treatment Required

None Nail debridement, as often as monthly

Dosing / Application Solution applied once daily • Lacquer painted on nail dailyDosing / Application Solution applied once daily • Lacquer painted on nail daily• Weekly removal of Penlac

with alcohol

Phase 3 Efficacy Results (Active / Vehicle) (Active / Vehicle) (Active / Vehicle)

Completely clear or almost 15 3% / 1 5% 17 9% / 3 9% 6 5% / 0 9% (Study 312)Completely clear or almost clear nail + mycological cure

15.3% / 1.5% 17.9% / 3.9% 6.5% / 0.9% (Study 312)12.0% / 0.9% (Study 313)

Mycological cure 31.1% / 7.2% 35.9% / 12.2% 29.0% / 11.0% (Study 312)36.0% / 9.0% (Study 313)

Completely clear nail and 6.5% / 0.5% 9.1% / 1.5% 5.5% / 1.0% (Study 312)mycological cure 8.5% / 0.0% (Study 313)

Completely clear or almost clear nail

26.1% / 9.3 27.5% / 14.6% N/A

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(1) Penlac label

Tavaborole Could Represent an Important New Tavaborole Could Represent an Important New Treatment Option for Onychomycosis PatientsTreatment Option for Onychomycosis PatientsTavaborole Could Represent an Important New Tavaborole Could Represent an Important New Treatment Option for Onychomycosis PatientsTreatment Option for Onychomycosis Patients

Demonstrated efficacy and safety in two Phase 3 trials conducted under an SPA– No upper age limit on patientsNo upper age limit on patients

– Onychomycosis involving 20% - 60% of target great toenail

– No debridement was allowed

Anacor’s conversations with potential prescribers indicate the following:p p g– Strong interest in a safe, novel, easy-to-use treatment with tavaborole’s profile

– Although tavaborole Phase 3 trials did not include debridement, podiatrists expressed interest in using it with debridement

Most impo tant t eatment goal fo p esc ibe s and patients is ‘clea o almost clea nail’– Most important treatment goal for prescribers and patients is ‘clear or almost clear nail’

Potential competition from Valeant’s IDP-108– Difficult to compare Phase 3 results between IDP-108 and Anacor

• Known differences in inclusion criteria • Known differences in inclusion criteria

– IDP-108 Phase 3 trials excluded patients over 70 and patients with more than 50% nail involvement

• Potential differences in trial methodology

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– Recent CRL related to container closure apparatus will delay launch

– Anacor’s ongoing arbitration with Valeant could delay launch further

TavaboroleTavaborole Packaging Designed for Packaging Designed for Convenience and StabilityConvenience and StabilityTavaboroleTavaborole Packaging Designed for Packaging Designed for Convenience and StabilityConvenience and Stability

Key Packaging Attributes Tavaborole Bottle and Dropper

Bottle packaged with screw top for optimal long-term drug stability

Separate dropper allows for convenient application for patients and screws on tightly to preserve drug during use

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Upcoming Upcoming TavaboroleTavaborole EventsEventsUpcoming Upcoming TavaboroleTavaborole EventsEvents

Tavaborole NDA on schedule to be filed with the FDA in mid-2013

–In pre-NDA communications with FDA, Anacor achieved concurrence from the FDA on all major areas of focus for the NDA:from the FDA on all major areas of focus for the NDA:

• Safety

• Efficacy

• Manufacturing• Manufacturing

• Packaging

Phase 3 data to be presented in an oral presentation at the American Podiatric Medical Association Annual Meeting on July 22 2013Podiatric Medical Association Annual Meeting on July 22, 2013

–Poster authors

• Lee Zane, MD

Ri h d P ll k DPM• Richard Pollak, DPM

• Max Weisfeld, DPM

Final arbitration hearing with Valeant scheduled for September 2013

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Arbitration with Valeant PharmaceuticalsArbitration with Valeant PharmaceuticalsArbitration with Valeant PharmaceuticalsArbitration with Valeant Pharmaceuticals

Background– In November 2012, Valeant published Phase 3 data for efinaconazole, a triazole

antifungal developed for the topical treatment of onychomycosis

In October 2012, Anacor provided notice to Valeant Pharmaceuticals International, Inc. (successor in interest to Dow Pharmaceutical Sciences, Inc. (Dow)) seeking to commence arbitration of a breach of contract dispute under a master services agreement dated March 26 2004 between Anacor under a master services agreement dated March 26, 2004 between Anacor and Dow related to certain development services provided by Dow in connection with our efforts to develop our onychomycosis nail-penetrating anti-fungal product

We are seeking injunctive relief and damages of at least $215.0 million

We have carefully reviewed our position and we believe that we have meritorious claims

We currently estimate that the arbitration will conclude in the second half of 2013 – Valeant agreed to postpone launch of efinaconazole until after final arbitration

hearing in September 2013

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Our Lead Topical AntiOur Lead Topical Anti--inflammatory inflammatory –– AN2728AN2728Our Lead Topical AntiOur Lead Topical Anti--inflammatory inflammatory –– AN2728AN2728

AN2728AN2728Target Product Profile:

Safe and effectivel ftopical treatment for

atopic dermatitis and psoriasis

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Atopic Dermatitis is a Prevalent and Intensely Atopic Dermatitis is a Prevalent and Intensely Itchy Chronic Skin ConditionItchy Chronic Skin ConditionAtopic Dermatitis is a Prevalent and Intensely Atopic Dermatitis is a Prevalent and Intensely Itchy Chronic Skin ConditionItchy Chronic Skin Condition

Large patient population– ~40M in the developing world – ~10% - 20% of infants and young children

• 70% of cases start before the age of 5 years• Up to 50% may have recurrences as adults

–Majority of cases are mild-to-moderateMajority of cases are mild to moderate

Chronic type of eczema characterized by flareups of itchy, inflamed skin

P d i tl i f ki fl d f– Predominantly in areas of skin flexures and face– Itch and discomfort can lead to restlessness and lack of

sleep, impacting quality of life for patient and family– Skin can be broken from scratching which can allow Skin can be broken from scratching which can allow

bacterial or viral access and lead to secondary infections

Due to prevalence among children, safety is an

2020

important feature of a treatment

Existing Therapies Lack Safety Needed for Existing Therapies Lack Safety Needed for Treating a Disease that Primarily Affects ChildrenTreating a Disease that Primarily Affects ChildrenExisting Therapies Lack Safety Needed for Existing Therapies Lack Safety Needed for Treating a Disease that Primarily Affects ChildrenTreating a Disease that Primarily Affects Children

Topical CorticosteroidsTopical Calcineurin Inhibitors

(Protopic and Elidel)

Recommended Use • Low potency steroids safe for • 2nd line therapy when Recommended Use (by American Academy of

Dermatology)

• Low potency steroids safe for children in short intervals

• High potency steroids should be avoided in high risk areas such as face or skin folds

• 2nd line therapy when continued use of topical steroids is ineffective or use of steroids is inadvisable

Advantages • Anti-inflammatory • Fair to good efficacy

Di d L l id ff ki R i d Bl k B i Disadvantages • Local side effects - skin thinning, acne, stretch marks

• Systemic side effects – HPA Axis suppression

• ~72.5% of parents worry about

•Received Black Box warning from FDA in 2005

•Prior to Black Box warning, considered “breakthrough” products due to perceived 72.5% of parents worry about

using them on children (1)

• ~24% of parents admitted to not using them on children due to safety concerns (1)

products due to perceived safety relative to corticosteroids

2121

(1) Charman CR, Morris AD, Williams HC. Br J Dermatol. 2000;142(5):931-6

Sales Ramp of Protopic and Elidel Demonstrates Sales Ramp of Protopic and Elidel Demonstrates Demand for Safe Treatment OptionDemand for Safe Treatment OptionSales Ramp of Protopic and Elidel Demonstrates Sales Ramp of Protopic and Elidel Demonstrates Demand for Safe Treatment OptionDemand for Safe Treatment Option

Protopic and Elidel WW Sales

Protopic and Elidel Generated Over $500M in Sales Prior to FDA Black Box Warning in 2005

$600 Elidel Protopic

Protopic and Elidel WW Sales ($ in millions)

$400

$500 Black Box Warning

$200

$300

$0

$100

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Source: SEC filings and company reports

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Our Solution for MildOur Solution for Mild--toto--Moderate Atopic Moderate Atopic DermatitisDermatitisOur Solution for MildOur Solution for Mild--toto--Moderate Atopic Moderate Atopic DermatitisDermatitis

BaselineBaselineTopical application limits systemic exposure

SafeSafeSafeSafe EffectiveEffectiveEffectiveEffectiveTarget product profile -efficacy equal to topical calcineurin inhibitorsy p

16 clinical studies to date demonstrate a promising safety profile

calcineurin inhibitorsThree Phase 2 studies have demonstrated efficacy treating adults and adolescents with atopic ddermatitis

AN2728AN2728Topical Anti-inflammatory

for Atopic Dermatitisfor Atopic Dermatitis

Unique Mechanism of ActionUnique Mechanism of ActionUnique Mechanism of ActionUnique Mechanism of Action

Boron-based compoundInhibits PDE4– Reduces production of pro-

Unique Mechanism of ActionUnique Mechanism of ActionUnique Mechanism of ActionUnique Mechanism of Action

2323

inflammatory cytokines thought to be associated with atopic dermatitis

Overview of AN2728 Phase 2 Studies in Atopic Overview of AN2728 Phase 2 Studies in Atopic Dermatitis Completed to DateDermatitis Completed to DateOverview of AN2728 Phase 2 Studies in Atopic Overview of AN2728 Phase 2 Studies in Atopic Dermatitis Completed to DateDermatitis Completed to Date

AD-202(completed Dec. 2011)

AD-203(completed Dec. 2012)

AD-204(completed Mar. 2013)

Objective Human proof of concept in adults

Safety, PK, and efficacy in adolescents

Dose-ranging study in adolescentsin adults adolescents adolescents

Patients •25 adults with atopicdermatitis and 2 target lesions of similar severity

•23 adolescents (12-17 years) with atopic dermatitis affecting 10% -

• 86 adolescents (12-17 years) with atopicdermatitis and 2 target lesions of similar severity dermatitis affecting 10%

35% BSAdermatitis and 2 target lesions of similar severity

Design • Bilateral• Double-blind

• Whole body• Open-label

• Bilateral• Double-blind

• Randomized 1:1, active: vehicle

• Patients treated one lesion with AN2728, 2% and a comparable lesion

p• Patients applied AN2728 ointment, 2% to all treatable areas of atopic dermatitis BID for 4 weeks

• Randomized 1:1 to treat lesions BID or QD

• Patients treated one lesion with AN2728, 2% and a comparable lesion and a comparable lesion

with vehicle BID for 6 weeks

weeks and a comparable lesion with AN2728, 0.5% for 4 weeks

Outcomes ADSI assessed at 2 4 ISGA assessed weekly ADSI assessed at 8 15

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Outcomes ADSI assessed at 2,4and 6 wks with primary endpoint at 4 wks

ISGA assessed weekly ADSI assessed at 8,15, 22, and 29 days

2 Scales Used to Measure 2 Scales Used to Measure Severity Severity of of Atopic Atopic DermatitisDermatitis2 Scales Used to Measure 2 Scales Used to Measure Severity Severity of of Atopic Atopic DermatitisDermatitis

ADSI

(Atopic Dermatitis Severity Index)

Used to assess severity of individual signs d t f t i d titi l i

ISGA

(Investigator Static Global Assessment)

Used to assess severity of all of the atopic d titi ti t’ b dand symptoms of atopic dermatitis lesions

15 point scale (0-15)

Sum of the severity scores of five clinical features rated from 0 (none) to 3 (severe) for

h f t f t t l f 0 t 15

dermatitis on a patient’s body

5 point scale (0-4)

Score Grade Definition

Minor residual discoloration; no each feature, for a total score of 0 to 15

5 clinical features assessed:

Erythema (redness)Pruritus (itch)

0 ClearMinor residual discoloration; no

erythema or induration/ papulation; no oozing/ crusting

1 Almost Clear

Trace faint pink erythema, with barely perceptible induration/

papulation and no oozing/ Pruritus (itch)Exudation (oozing/crusting)Excoriation (evidence of scratching)Lichenification (skin thickening)

papulation and no oozing/ crusting

2 MildFaint pink erythema with mild induration/papulation and no

oozing/crusting

Score Grade

0 None

1 Mild

2 Moderate

3 ModeratePink-red erythema with

moderate induration/ papulation with or without oozing/ crusting

Deep or bright red erythema ith i d ti /

2525

2 Moderate

3 Severe4 Severe with severe induration/

papulation and with oozing/ crusting

Study ADStudy AD--204: AN2728 Ointment, 2% Applied BID 204: AN2728 Ointment, 2% Applied BID Demonstrates Greatest Improvement from Baseline ADSI Demonstrates Greatest Improvement from Baseline ADSI Score; Treatments Show Excellent Dose ResponseScore; Treatments Show Excellent Dose Response

Study ADStudy AD--204: AN2728 Ointment, 2% Applied BID 204: AN2728 Ointment, 2% Applied BID Demonstrates Greatest Improvement from Baseline ADSI Demonstrates Greatest Improvement from Baseline ADSI Score; Treatments Show Excellent Dose ResponseScore; Treatments Show Excellent Dose Response

262626

Study ADStudy AD--204: AN2728 Ointment, 2% Applied BID 204: AN2728 Ointment, 2% Applied BID Demonstrates Greatest Improvement in the Individual Demonstrates Greatest Improvement in the Individual Components of Atopic Dermatitis After 4 WeeksComponents of Atopic Dermatitis After 4 Weeks

Study ADStudy AD--204: AN2728 Ointment, 2% Applied BID 204: AN2728 Ointment, 2% Applied BID Demonstrates Greatest Improvement in the Individual Demonstrates Greatest Improvement in the Individual Components of Atopic Dermatitis After 4 WeeksComponents of Atopic Dermatitis After 4 Weeks

272727

Study ADStudy AD--204: 62% of Lesions Treated with AN2728 204: 62% of Lesions Treated with AN2728 Ointment, 2% BID Were Clear or Almost Clear After 4 Ointment, 2% BID Were Clear or Almost Clear After 4 WeeksWeeks

Study ADStudy AD--204: 62% of Lesions Treated with AN2728 204: 62% of Lesions Treated with AN2728 Ointment, 2% BID Were Clear or Almost Clear After 4 Ointment, 2% BID Were Clear or Almost Clear After 4 WeeksWeeks

282828

AN2728AN2728--ADAD--204 Results in Adolescents Compare 204 Results in Adolescents Compare Favorably to ADFavorably to AD--202 Results in Adults at 4 Weeks202 Results in Adults at 4 WeeksAN2728AN2728--ADAD--204 Results in Adolescents Compare 204 Results in Adolescents Compare Favorably to ADFavorably to AD--202 Results in Adults at 4 Weeks202 Results in Adults at 4 Weeks

AN2728 Ointment, 2% Dosed Twice Daily for 4 Weeks

292929

Study ADStudy AD--203: AN2728 Demonstrated Efficacy in 203: AN2728 Demonstrated Efficacy in Adolescents Using Anticipated Phase 3 Efficacy MeasureAdolescents Using Anticipated Phase 3 Efficacy Measure

Open-label study in adolescents with atopic dermatitis 10%-35% BSA

23 patients treated all atopic dermatitis lesions with AN2728 ointment, 2% BID for 4 weeksBID for 4 weeks

Investigator Static Global Assessment (ISGA) assessed weekly

2.42 5

3.0

Mean ISGA Scores at Weekly VisitsN=23

1.8

1.51.3 1.4

1.5

2.0

2.5

ISGA Scale:0 Clear1 Almost Clear2 Mild

Mean ISGA Scores

0.0

0.5

1.0

Baseline Day 8 Day 15 Day 22 Day 29

3 Moderate4 Severe

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Baseline Day 8 Day 15 Day 22 Day 29

Study ADStudy AD--203: Efficacy Compares Favorably to 203: Efficacy Compares Favorably to Elidel, an Established Atopic Dermatitis TherapyElidel, an Established Atopic Dermatitis TherapyStudy ADStudy AD--203: Efficacy Compares Favorably to 203: Efficacy Compares Favorably to Elidel, an Established Atopic Dermatitis TherapyElidel, an Established Atopic Dermatitis Therapy

Caution is needed when comparing AN2728’s open-label Phase 2 data with randomized, controlled Phase 3 data for ElidelPi t l Ph 3 d t f Elid l t i d t f ISGA Pivotal Phase 3 data for Elidel categorized outcomes for ISGA after 6 weeks of treatment versus the 4-week course of therapy in the AN2728-AD-203 study

OutcomeAN2728

(4 wk BID n=23)

Elidel / vehicle (1)

(6 wk BID, n=267 / (4 wk BID, n=23) n=136)

Clear/Almost Clear 74% 35% / 18%

Clear/Almost Clear ( ith 2 d 35% N/A(with 2-grade improvement)

35% N/A

Clear 13% 10% / 4%

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(1) Source: Elidel label

Study ADStudy AD--202: AN2728 Demonstrated Safety and Efficacy 202: AN2728 Demonstrated Safety and Efficacy in Human Proof of Concept Study in Adults with Atopic in Human Proof of Concept Study in Adults with Atopic DermatitisDermatitis

Bilateral study in adults with atopic dermatitis ≤35% BSA

25 patients treated target lesions with AN2728 ointment, 2% vs. vehicle, BID for 6 weeks

% of Lesions with Greater % of Lesions Achieving

Atopic Dermatitis Severity Index (ADSI) assessed at 2, 4, 6 weeks (Primary endpoint at 4 wks)

68% 66%70%

Improvement in ADSI than Vehicle at Day 28

(p=0.02)

% Improvement in ADSI at Day 28

(p=0.01)

gTotal or Partial Clearance

(ADSI ≤2) by Day 28(p=0.0027)

39%

52%

40%

50%

60%

70%

20%16%

10%

20%

30%

40%

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0%

10%

AN2728 Vehicle

AN2728 Has Demonstrated Safety in the Treatment of AN2728 Has Demonstrated Safety in the Treatment of Adults and Adolescents with Atopic DermatitisAdults and Adolescents with Atopic DermatitisAN2728 Has Demonstrated Safety in the Treatment of AN2728 Has Demonstrated Safety in the Treatment of Adults and Adolescents with Atopic DermatitisAdults and Adolescents with Atopic Dermatitis

Atopic dermatitis is commonly associated with allergies and sensitivity. Many atopic dermatitis patients are sensitive to contact with soaps, fragrances, etc. Therefore, a non-irritating drug is critical, but almost all clinical trials will show some application site reactions.

AD-202 – No severe adverse events reported that were considered related to study drug

AD-203 G ll f d ll l d i h AE’ b i li i i i– Generally safe and well-tolerated with most common AE’s being application site reactions

• No serious adverse events (SAEs); one discontinuation due to AE

– Pharmacokinetic data:• Blood levels are generally low and proportional to body surface area treated

ll h k l h d l f d f b d f• Overall pharmacokinetics are similar to those seen in adults after adjusting for percent body surface area treated

AD–204– No serious adverse events and no discontinuations due to drug-related adverse events

(AEs)– 22 AEs in 86 subjects

– Severity: 91% mild, 9% moderate, none severe– Relatedness: 82% not related to study drug

3333

– 4 subjects reported application site symptoms:• Transient mild itching or burning/stinging on first application, none reported thereafter

Conclusions and Next StepsConclusions and Next StepsConclusions and Next StepsConclusions and Next Steps

In three Phase 2 studies in atopic dermatitis, data for AN2728 Ointment, 2% dosed BID continue to support its target product profile for the treatment of atopic dermatitis in the age groups tested p o o a o a op d a ag g oup dto date

Next steps in development:

2 additional safety studies prior to initiating Phase 3:– 2 additional safety studies prior to initiating Phase 3:

• MUSE (maximal use systemic exposure) study in ~30 children with atopic dermatitis to measure blood levels when AN2728 is applied under maximal use conditions

• TQT study - to assess the effects of AN2728 following multiple-dose administration on electrocardiograms (ECGs) in ~180 healthy volunteers

– Initiate Phase 3 program of AN2728 development in 4Q13 or 1Q14

• Timing dependent upon completion of MUSE study

• Anticipate approximately 500 patients 2-17 years of age in each

3434

Phase 3 trial

34

Corporate Corporate PartnershipsPartnerships

35

Partnerships Explore Boron Chemistry inPartnerships Explore Boron Chemistry inAnimal Health and AntibioticsAnimal Health and AntibioticsPartnerships Explore Boron Chemistry inPartnerships Explore Boron Chemistry inAnimal Health and AntibioticsAnimal Health and Antibiotics

Animal Health Partnership signed in August 2010$3.5M upfront, minimum $6M and up to $12M in research funding$3.5M upfront, minimum $6M and up to $12M in research fundingResearch for a variety of animal health applications ($20 billion market)First development candidate, selected in August 2011 and second development candidate selected in December 2012 - $1M milestone payment received for each

Lilly responsible for worldwide development and commercialization– Lilly responsible for worldwide development and commercialization– Significant development milestones – $350M - $500M potential market opportunity per candidate with high single-digit to

low-double digit royalties on sales

Anti-Infective Partnership signed in October 2007Over $75M paid to Anacor to date including $12M upfront + $30M investment in Anacor

– Option to license compounds at PoC; 6-year research term– GSK Licensed AN3365 (also known as GSK ‘052) in July 2010 - $15M milestone

payment receivedModified in September 2011 - $5M upfront payment

– Expanded work around bacterial LeuRS, added program to fund Anacor’s TB

3636

p , p gresearch

GSK announced return of rights to AN3365 to Anacor on October 5, 2012

P li i lP li i l

Anacor’s Boron Chemistry Pipeline for Neglected Anacor’s Boron Chemistry Pipeline for Neglected DiseasesDiseasesAnacor’s Boron Chemistry Pipeline for Neglected Anacor’s Boron Chemistry Pipeline for Neglected DiseasesDiseases

ResearchResearch HitHit--toto--LeadLead Lead OpLead OpPreclinicalPreclinical

SafetySafety Phase 1Phase 1

Af i Sl i Si k (HAT)

Parasitic Diseases

SCYX7158 / AN5568African Sleeping Sickness (HAT)

Visceral Leishmaniasis

Chagas disease

Mala ia Lead Se ies

SCYX7158 / AN5568

Malaria – Lead Series

Malaria (New Scaffolds)

River Blindness (Macrofilariacide)

African Animal Trypanosomiasis

River Blindness (Wolbachia)

Cutaneous Leishmaniasis

Tuberculosis (TB) LeuRS

Bacterial Diseases

TB (non-LeuRS)

3737

TB new targets

Summary Financial InformationSummary Financial Information

38

Low COGS and Specialty Salesforce Costs Low COGS and Specialty Salesforce Costs Should Lead to Strong Operating MarginsShould Lead to Strong Operating MarginsLow COGS and Specialty Salesforce Costs Low COGS and Specialty Salesforce Costs Should Lead to Strong Operating MarginsShould Lead to Strong Operating Margins

Estimated Cost of Goods Sold (a)

Tavaborole ~$40 per course of therapy(12 bottles)

AN2728~$6 - $12 per course of

therapyAN2728 therapy(30g or 60g tube)

Estimated Salesforce Cost

# of Podiatrists ~10,000

# of Dermatologists ~15,000

Salesforce size to cover podiatrists and 60-120dermatologists 60 120

Annual cost per salesperson $200K to $250K

Total annual salesforce cost $12M to $30M

3939

(a) Estimates based on costs as of June 2012

Financial Summary Financial Summary ($ in 000’s)($ in 000’s)Financial Summary Financial Summary ($ in 000’s)($ in 000’s)

March 31 2013March 31, 2013

Cash, cash equivalents and short-term investments (1) $ 32,376

T t l t $ 37 378Total assets $ 37,378

Notes payable $ 23,516

Accumulated deficit $ (230 289)Accumulated deficit $ (230,289)

Total stockholders’ equity $ (7,795)

Total shares outstanding (2) 40,494,466

4040

(1) Excludes $5.0M proceeds from Gates equity investment and $21.4M net proceeds from follow-on public offering in April 2013. (2) As of May 3, 2013.

Thank youThank you

41

Appendix Appendix AN2728 in PsoriasisAN2728 in Psoriasis

42

Psoriasis Psoriasis —— A Prevalent Disease with Few A Prevalent Disease with Few Novel Treatment OptionsNovel Treatment OptionsPsoriasis Psoriasis —— A Prevalent Disease with Few A Prevalent Disease with Few Novel Treatment OptionsNovel Treatment Options

Psoriasis Psoriasis –– An Inflammatory Skin DiseaseAn Inflammatory Skin DiseasePsoriasis Psoriasis –– An Inflammatory Skin DiseaseAn Inflammatory Skin Disease

Large Population with Mild to Moderate Disease

Most Psoriasis Patients Treated Topically

80% 20% 87% 13%80%Mild to

ModerateDisease

20%Severe Disease

87%Topical

treatment

13%Non-topical treatment

only

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Source: Decision Resources

4 Million Topical Rx/year100M Affected Worldwide7.5M Affected in the U.S.

Phase 3 Efficacy of Most Recently Approved Phase 3 Efficacy of Most Recently Approved Topical Psoriasis DrugsTopical Psoriasis Drugs

Sorilux 

27%

25%

30%

Vectical 

23%21%25%

30%

Active ingredient: Calcipotriene (vitamin D analog) Active ingredient: Calcitriol (vitamin D)

t cle

ar”

ovem

ent

clea

r”

vem

ent

14%

7%

16%

5%

10%

15%

20%

25%

14%

21%

7%

5%

10%

15%

20%

“cle

ar”

or “

alm

ost

with

2+

grad

e im

pro

in P

GA

clea

r” o

r “al

mos

t cth

2+

grad

e im

prov

in P

GA

Taclonex 

0%

1

Active  Vehicle Active 

Vehicle

0%

1

Active  Vehicle Active Vehicle

8 weeks of therapy 8 weeks of therapy

w “ wit

Taclonex

48%

26%

40%

50%

y m

ild”

with

m

ent i

n IG

A

Active ingredients: Betamethasone Dipropionate (high-potency steroid) & Calcipotriene (vitamin D analog)

Taclonex

26%

17%

8%

0%

10%

20%

30%

4 weeks of therapy“abs

ent”

or “

very

2-gr

ade

impr

ovem

4444

Taclonex Betamethasone Dipropionate(High‐potency steroid)

Calcipotriene(Vitamin D analog)

Vehicle

4 weeks of therapy

Our Solution for MildOur Solution for Mild--toto--Moderate Psoriasis: Moderate Psoriasis: AN2728 Topical TherapyAN2728 Topical TherapyOur Solution for MildOur Solution for Mild--toto--Moderate Psoriasis: Moderate Psoriasis: AN2728 Topical TherapyAN2728 Topical Therapy

EfficacyEfficacyEfficacyEfficacyBoron-based compound– Inhibits PDE4

BaselineBaseline

Inhibits PDE4– Reduces production of TNF-a, IL-12, IL-23

Target product profile efficacy is equal to mid-potency steroid

Four Phase 2 trials have demonstrated this level of

SafetySafetySafetySafety

Four Phase 2 trials have demonstrated this level of efficacy

Day 84Day 84SafetySafetySafetySafety

Topical application limits systemic exposure

Potential for long duration of treatment

Clinical trial results have shown a promising safety

Day 84Day 84

Clinical trial results have shown a promising safety profile

4545

Overview of AN2728 in PsoriasisOverview of AN2728 in PsoriasisOverview of AN2728 in PsoriasisOverview of AN2728 in Psoriasis

Target Product Profile–Safe and effective topical therapy for mild-to-moderate psoriasis

affecting all areas of the body including sensitive skinaffecting all areas of the body, including sensitive skin–Efficacy in the range of mid-potency steroids or Vitamin D analogs–Safer than topical steroids and without the irritation of Vitamin D

analogs analogs

AN2728 has demonstrated efficacy in the range of mid-potency steroids and vitamin D analogs

Results of Local Tolerability Study confirm potential to expand indication to patients with inverse psoriasis which involves the face, skin folds, recesses, and genitalia

AN2728 is Phase 3 ready for the treatment of mild-to-moderate psoriasis

4646

Phase 2b (DosePhase 2b (Dose--ranging Study in Psoriasis)ranging Study in Psoriasis)Clear Dose Response Over 12 Weeks of Clear Dose Response Over 12 Weeks of TreatmentTreatment

Phase 2b (DosePhase 2b (Dose--ranging Study in Psoriasis)ranging Study in Psoriasis)Clear Dose Response Over 12 Weeks of Clear Dose Response Over 12 Weeks of TreatmentTreatment

4747

Phase 2b (204 Study) Phase 2b (204 Study) –– Pilot Phase 3 in Pilot Phase 3 in PsoriasisPsoriasisPhase 2b (204 Study) Phase 2b (204 Study) –– Pilot Phase 3 in Pilot Phase 3 in PsoriasisPsoriasis

Key objectives– Provide data to inform plans for anticipated Phase 3 trial design and

End of Phase 2 meeting with FDAEnd of Phase 2 meeting with FDA• Safety and tolerability with larger body surface area treated than previous

Phase 2 trials• Level of efficacy with subject to subject comparison, rather than bilateral• Time to peak efficacy with whole body treatment

– Not intended to demonstrate statistical differentiation of treatment from vehicle, but to inform a fully-powered pair of pivotal Phase 3 trials

Design– 12 week, double-blind, subject-to-subject comparison– 68 patients randomized 2:168 patients randomized 2:1– AN2728 Ointment, 2%, vs. Vehicle BID

Clinical evaluations

4848

– Safety, efficacy and duration of treatment under anticipated Phase 3 conditions

Phase 2b (204 Study)Phase 2b (204 Study)AN2728 Demonstrated Improvement Over Vehicle in AN2728 Demonstrated Improvement Over Vehicle in Psoriasis at Each Recorded TimepointPsoriasis at Each Recorded Timepoint

Phase 2b (204 Study)Phase 2b (204 Study)AN2728 Demonstrated Improvement Over Vehicle in AN2728 Demonstrated Improvement Over Vehicle in Psoriasis at Each Recorded TimepointPsoriasis at Each Recorded Timepoint

Proportion of Subjects Achieving Clear or Almost Clear with ≥ 2-Grade Improvement from Baseline (PGA scale)

17%

14%14%

4949

Treatment with AN2728, 2% in MildTreatment with AN2728, 2% in Mild--toto--Moderate Moderate Psoriasis Psoriasis Phase 2b (204 Study)Phase 2b (204 Study)

Day 42Day 1 Day 84

5050

Local Tolerability Trial Demonstrates Potential Local Tolerability Trial Demonstrates Potential for Wider Use in Psoriasisfor Wider Use in PsoriasisLocal Tolerability Trial Demonstrates Potential Local Tolerability Trial Demonstrates Potential for Wider Use in Psoriasisfor Wider Use in Psoriasis

AN2728 Ointment, 2% was applied to sensitive areas BID for 21 days– Elbows and knees– Groin, axillae, gluteal cleft, retroauricular areas– Face / hairline

AN2728 Ointment, 2% appears to be safe and well-tolerated when applied to sensitive skin areas

Adverse events occurred at a low rate and were generally mild– Adverse events occurred at a low rate and were generally mild– None of the treated anatomic areas appeared to be particularly

sensitive to irritation by the study drug

R d i k f t ti f “i ” i i i Ph 3 Reduces risk of treating areas of “inverse” psoriasis in Phase 3, increasing potential for non-restrictive psoriasis indication

Increases probability of safe and well-tolerated treatment of

5151

areas typically affected by atopic dermatitis