Panorama 2013 of the French Life Sciences Industry®

Panorama 2013of the French LifeSciences Industry®

Biotech | Medtech | Biocleantech |

12th

Edition

Innovate: a synonym for undertakeMajor element, obvious driving force, nonetheless we should remember : innovation is achieved by men and

women who dare, who take risks, and who often break codes.Innovative breakthrough is a demonstration of an ambition, a vision, being achieved in our SMEs more than in large organizations. Our SMEs provide far more fertile ground, greater and more flexible scope, capable of adapting to changes following effective radical decision making.France must better promote creation, risk taking and recognition of the entrepreneur : only every second creation comes from the academic sector, only 15% from large corporate groups…Let’s open the doors of science universities to listen to the entrepreneurs, let’s optimize scientific valorization, let’s help transfers, spin-offs, incubation.

Innovate: a question of speedBeing the first! First to discover as only the first can patent.First to publish in order to be in the best medical and

scientific journals.First to be authorized to provide treatment in order to work with renowned hospitals, first to obtain MA.It’s not a sprint; it’s a marathon!Contract times with multi-reference academics, research request for proposals times, regulatory affairs response times…France must remove the obstacles that slow us down needlessly and come ahead of us like other countries: we are your partners.

Innovate: a variety of fundingThose who are successful today and make the headlines are people who vary their sources of funding.

They have been subject to refusals from investors for different reasons, to criticism of their business plan, to diverging views on the strategy to be adopted.They have met investors with long-term visions, other investors who wanted to commit even before investing. They have been able to establish boards of directors composed of people coming from all walks of life, with non-related investors, and fostering open discussion.

None of our companies has the same technology or the same strategy; let’s be careful that public investment policies enrich the ecosystem and give way to the diversity of investors so as not to sterilize what works best.France must do more to attract private investment to our businesses.

Innovate: an international success storyAt the laying of the foundation stone, our « start-ups » are international; a Japanese publication can ruin a patent,

a Korean start-up can emerge at any point, a US nugget company can suddenly create a planetary buzz leaving you no room even though you are more advanced… Those who are successful travel, shape international alliances in research and development, think out of the box, seek out excellence and, above all, know their competitive environment by heart. They set up competitive intelligence tools, renew their knowledge, prepare for meetings with their partners, anticipate. They also know they must protect their information.France lags behind in its competitive intelligence policies; it is urgent to raise the awareness of all the players in the financing and information management chains and to do more abroad.

Innovate: a French storyIn all sectors of the industrial marketplace and especially in life sciences, France is a major player in innovation.

This can be attributed not only to people but also to public support whose relevance and effectiveness can be increasingly measured long-term.Research tax credit, YIC status, OSEO-BPI are unique tools that are the envy of our international partners.Beyond the financial support they provide, these tools structure our research activities. For example research tax credit and OSEO-BPI, ultra-incentive mechanisms, build bridges with our friends in academic research, fostering fruitful exchanges. Our long development cycles depend, on the maintenance and reinforcement of these tools; do not spoil what works !

Pierre-Olivier GOINEAU

Pierre-Olivier GOINEAUPresident of France BiotechCo-Founder and Vice-President,Chief Operating Officer of ERYTECH Pharma

Innovate; some key success factors.Feedback on a sector reaching maturity

EDIT

OR

IAL

MET

HO

DO

LOG

YSince 2002, France Biotech has conducted the «Panorama of the Life Sciences Industry in France®», a study that provides an annual update on the growth and dynamism of this innovative sector in France.

The results reported in this 12th Edition are based on the information gathered by France Biotech from the 214 French Life Sciences companies that took part in this survey. All the participating companies meet the following eligibility criteria:

• Be active in the Life Sciences industry in France,• Allocate at least 15% of total expenses to Research and Development,• Employ up to 250 people.

As defined by the OECD, «Biotechnology» refers to «the application of science and technology to living organisms as well as parts, products and models thereof, to alter living or non-living materials for the production of knowledge, goods and services». This conventional definition has been considered during the survey.

While the «Small and Medium Enterprises» dominate the area of life sciences in France for many years, two companies have obtained the status of «Medium Size Companies». The scope of this survey is the same as for previous years. The threshold of R&D investments remains at 15% of total expenses, the same level required to obtain the «Young Innovative Company» status. Medtech and Biocleantech companies have been included in the study as were Biotech companies in order to provide good representativeness of the sector.

This year, 255 companies declaring Life Sciences as a core business participated in the electronic survey provided by «Le Sphinx Développement», a company specialized in quantitative and qualitative surveys. Online from 12 March 2014 until 14 May 2014, the survey allowed us to collect 255 answers among which 214 were taken on for the study (the other 41 answers lacked sufficient depth to serve the analysis).

The results of the survey have been published in aggregate form in order to respect the confidentiality of respondents. A change in methodology was made for Figures 5, 9 and 15 in order to faithfully transpose the best reality in our sample.

Financial data and information regarding public policy programs were compiled by France Biotech staff members using public resources and third-party databases.

Company size and employee education 12 Company age, origin and domain of activity 13Company Creations and Liquidations 15Mergers and Acquisitions 15Partnerships and Clients 16 Patents 17 Therapeutic products 18Medical devices 21Diagnostic 22Biocleantech 24

THE LIFE SCIENCES INDUSTRY IN FRANCE

FRANCE: FINANCING INNOVATION

GLOBAL OUTLOOK

A constantly changing business model 28Financing the Life Sciences Industry 29Expert testimony: Franck Lescure 30 Venture Capital Funding 31Public Market Funding 31Licensing and Partnership Agreements 32Other forms of financing 33Government Support 34Expert testimony: Franck Sebag 36

Worldwide partnerships and subsidiaries of French Life Sciences companies 40European Life Sciences public market 42Top 10 largest biopharma M&A transactions worldwide during 2013 43NYSE NEXT Biotech index 43NEXT Biotech vs. BTK index 2013-2014 44Expert testimony: Sacha Pouget 45Comparison of VC financing in European Life Sciences: 2008-2013 46

TABL

E O

F C

ON

TEN

TS

2

3

1

26

38

10

French Life Sciences Industry Timeline 06France: 2013/2014 Highlights 08Geographical Distribution 09

INTRODUCTION

Commercialized Products 48Public listed companies 49List of the companies that participated in the study 50Index 51Glossary 52 France Biotech and the Panorama Study 55

ANNEX

6

FRENCH LIFE SCIENCES INDUSTRY TIMELINE

Founding of Cayla

Founding of Transgene

Founding of Genset

Founding of LFB

Genset (FR) purchased by Serono (CH)

Founding of France Biotech

AMM issued to BioAlliance Pharma for Loramyc®

IPO: Flamel Technologies (NASDAQ, June)Genset (NASDAQ, June)

IPOs: Cerep (February); Transgene (March);Stallergenes (July)

IPO: Nicox (November)

IPOs: Exonhit (November); BioAlliance Pharma (December)

IPOs: Innate Pharma (November); Genfit (December)

IPOs: Cellectis (February); Metabolic Explorer (April); Genoway (May); Vivalis (June); Hybrigenics (December)

IPO: Quantum Genomics (July)

IPOs: AB Science (April); Deinove (April); Neovacs (October);Integragen (June); Carmat (July); Novagali (July);Stentys (October)

1977

1979

1989

1994

1996

1997

1998

1999

2002

2005

2006

20072008

2009

2011

IPOs: Adocia (February); EOS imaging (February); Intrasense (February); DBV Technologies (March); Vexim (April);Nanobiotix (October); Novacyt (October); Theradiag (December)

IPOs: Tekka (January); Biosynex (March); Median Technologies (May); GlobalBioenergies (June); Visiomed Group (July); Mauna Kea Technologies (July)

2010IPO: Ipsogen (June); Creation of NEXT Biotech Index on NYSE Euronext

7

1983

1996

1999

2004

2005

2007

2008

2009

2011

2013

GOVERNMENTAL SUPPORT

2014 Creation of the PEA-PME

Creation of Bpifrance, the French public bank of investmentCreation of the CICE

Reform of the JEI designation (January 2011)

Creation of InnoBio, the specialty investment fund for Biotech managed by CDC Entreprises

Creation of the NYSE Euronext NEXT Biotech Index*;Creation of the Strategic Investment Fund (FSI);Creation of the Strategic Industrial Innovation (ISI) fund at OSEO*

Passing of the TEPA Law* (August 2007)

Creation of the «Agence Nationale de la Recherche» (ANR)*; Creation of OSEO; Creation of the Competitivity Bioclusters

Creation of the Young Innovative Company (JEI) designation*

Passing of the Innovation Law (July 1999), leading to the creation of the «Concours National d’Aide à la Création d’Entreprises de Technologies Innovantes»

Creation of the «Nouveau Marché» stock exchange for start-up companies

Creation of the Research Tax Credit (CIR)

*recommended by France Biotech

AMM issued to BioAlliance Pharma for Loramyc®

Sanofi (FR) purchases Fovea Pharmaceuticals (FR);AstraZeneca (UK) purchases Novexel (FR)

Cellectis (FR) purchases CytoPulse Sciences (US)

Sanofi (FR) purchases Genzyme (US); Ipsogen is purchased by Qiagen (NL) and becomes Qiagen Marseille; Cellectis (FR) purchases Cellartis (SE)

Theradiag: CE marking for diagnostic kit in vitro anti-CCP®

Mauna Kea Technologies: CE marking endo-urologie for CystoflexTM, Cystoflex UHDTM and UroflexTM

BioAlliance Pharma: marketing authorization granted for Sitavig®

IPOs: Spineway (February); Spineguard (April); Erytech Pharma (May); LDR (NASDAQ, October); Implanet (November); Medtech Surgical (November); Carbios (December)

Exonhit (FR) purchases InGen Biosciences (FR) and becomes Diaxonhit; Vivalis (FR) purchases Intercell (AU) and becomes Valneva; Novagali Pharma (FR) is purchased by Santen Pharmaceuticals (JP)

2012

2013

EOS imaging: CE marking for hipEOS®

Mauna Kea Technologies: FDA approval for Cellvizio™ in urology for Uroflex™ B et CystoFlex™, market authorization in Brazil for AQ-Flex 19™ for UroFlex™ and for EVA™ softwareMedtech: CE marking of ROSA™ SpineQuantel: CE marking for Optimis Fusion™Stallergenes: FDA approval ORALAIR®

Valneva: marketing authorization granted for cell line EB66®

Vexim: Indication extension for SpineJack®

Merger between BioAlliance Pharma and Topotarget, to become OnxeoNicox acquires Eupharmed (Italy) and Aciex Therapeutics (USA)Transgene sells its interest in Jennerex to Stillagen

IPOs: Crossject (February); Oncodesign (March); Genticel (April); Genomic Vision (April); Fermentalg (April); SuperSonic Imagine (April); TxCell (April); Theraclion (April); Pixium Vision (June);Quantum Genomics (transfers its shares to Alternext Paris; April)

2014

8

FRANCE: 2013/2014 HIGHLIGHTS

companies studied

214

of companies over10 years old

33%55

companies created in 2013

4,620total employees

(average per company: 20)

12commercialized

therapeutic products

therapeuticproducts in

development

303 diagnosticproducts in

development

104

medicaldevices in

development

57

invested in Research andDevelopment

€349m

estimatednet loss

€358m€278min total

revenueslisted companiesat June 30th, 2014

54

9

One of the French characteristics generally criticized by observers is its centralization. The life sciences industry is no exception, with an overrepresentation of the Ile-de-France region. Indeed, this region alone accounts for 32% of the companies surveyed (17 public listed companies). However, the creation of in the following regions: Rhône-Alpes, PACA, Languedoc Roussillon, Midi-Pyrénées, Pays de la Loire, Alsace and Nord-Pas-de-Calais has boosted the sector and encouraged entrepreneurship through the establishment of incubators.

GEOGRAPHICAL DISTRIBUTION

18

7010

BretagneIle-de-France

Midi-Pyrénées

13

1

2

3 3

3

Languedoc-Roussillon

18

Pays de la Loire

Centre

Poitou-Charentes

LimousinAuvergne

BourgogneFranche-Comté

2 7

30

4

32

3

19

ChampagneArdenne

Nord-Pas- de-Calais

Alsa

ce

Basse Normandie

HauteNormandie Picardie

Provence-AlpesCôte d’Azur

Aquitaine

Lorraine

Rhône-Alpes

1 - 9

> 40

10 - 20

21 - 40

1

Corse

La Réunion

1

Source: France Biotech July 2014; 214 companies

1

Number of companies

1 THE LIFE SCIENCES INDUSTRY IN FRANCE

THE LIFE SCIENCES INDUSTRY IN FRANCE

Nearly five years after the global financial crisis, biotechnology

companies must increase their efforts to survive in an industry where the guiding principle is innovation. The previous edition of the Panorama of the French Life Sciences industry® showed a dynamism, reflecting the ability of French biotech companies to innovate despite lower investments in R&D than in the pharmaceutical industry. The maturity level reached in 2011 was confirmed in 2012 with continuity in mergers and acquisitions in the French life sciences industry.

12


Nearly 62% of companies have a workforce between 1 and 10 employees, indicative of the start-up business model. The 11-30 employees group represents 17% of companies. Among our sample, 37 companies have a staff of 31 people, which reveals a certain degree of maturity in their development. Finally, 4% of companies (9) exceed 100 employees. As for the education level of the employees, it exceeds the Master’s degree for over 63% of the employees. All the companies surveyed employ 4,620 people with an average of 20 employees per firm.

COMPANY SIZE AND EMPLOYEE EDUCATION

With economic recovery in France taking its time, the life sciences sector, with innovation at its core, seems to be the ideal candidate to drive growth. Over the last three years, the biotechnology industry has maintained its technological and financial development with no less than 16 IPOs in the last 18 months.

The popularity of the biotechnology industry among both domestic and foreign investors is of course related to the wealth and the quality of the pipeline but also to the market sizes they cover. The French life sciences industry can be divided into three major sectors: health biotechnology, medical devices, and biotechnology associated to sustainable development, Biocleantech.

Number of employees 1

Source: France Biotech, June 2014, 214 companies

n 1 to 10n 11 to 30n 31 to 99n 100+

Level of education achieved by employees 2


27%

36%

13%

24%

17%

62%

4%

17%

n High-Schooln Bachelor’s Degreen Mastersn PhD

13

1

Research and Development (R&D) are the two key drivers of innovation. The academic research appears then to be a decisive source of value creation. In fact, more than half (54%) of business creation comes from academic research getting ahead of the «ex-nihilo» business creation (30%) after total or partial transfer of assets. By contrast, spin-offs from large pharmaceutical companies represent only 8% of company creations. Another important fact confirming the maturation of the industry, nearly a third of companies are more than 10 years old, this last third accounts for almost 65% of the employment panel.

COMPANY AGE, ORIGIN AND DOMAIN OF ACTIVITY

CEO Profile

The CEO profile is symptomatic of the business model of the biotechnology industry since 76% of the managers are the founders, among which 72% have scientific training. Another interesting characteristic concerns the former activity of the CEOs since more than 35% of executives surveyed had previously run a business.

In the light of these remarks, we are led to understand that either these leaders are «serial entrepreneurs» in the life sciences or they call in business leaders whose speciality is the development of the business and the structuring of the company.

However, for 17% of the cases, there is a combination of these three characteristics.

Origin of the company 3


8%

54%

30%

8%

n Academic Researchn Others (ex-nihilo creation, asset purchase)n Spin-off from Big companyn Spin-off from Small Business Start-up

Companies by age 4


36%

31%

33%

n 0 to 5 yearsn 6 to 10 yearsn 10+ years

14


Domain of activity 5

As in previous editions, human health remains the first (86%) area of business activity, followed by animal health (36%) and medical devices (32%). Compared to previous years, the largest increase relates to medical devices with more than a two-fold increase in representativeness. This is in part due to a better response rate of Medtech companies for this edition.

Another sector under the spotlight is Biocleantech. Many entrepreneurs choose sustainable development through life sciences. The recent government guidelines adopted in the field of energy, a desire to disengage France from nuclear energy sources, will not curb their ambitions. Bio-fuels from biomass processing and recovery of waste, previously non-recyclable, are also central to Biocleantech business.

Biocleantech and energy transition

Carbios is fully engaged in energy transition and is pleased that the government will advocate a reduction target of 30% of fossil fuels by 2030. Jean-Claude Lumaret, CEO of Carbios says: «From our part, we continue our work of transforming waste of petrochemical origin, now considered trash, into infinitely reusable raw materials. This is a huge environmental and economic challenge! In Europe, 25 million tons of plastic waste are produced each year, of which only 20% are recycled, according to the European Commission. Globally, this recyclable waste, which represents a considerable reservoir of untapped renewable resources and an estimated $100bn windfall, is estimated at about 100 million tons. We look forward to seeing what measures will be put in place by the summer». (Source: Press Release Carbios, April 11th, 2014)

Source: France Biotech, June 2014, 214 companies (réponses à choix multiples)

n Human Healthn Bioinformatics Equipment & Reagentsn Animal Healthn Medical Devices

n Cosmeticsn Agrifood Human & Animaln Biocleantech

2012 2013

88%

41%

13%

24%

27%

25%

39%

86%

39%

36%

32%

28%

27%

23%

15

1

2013 witnessed many movements showing the ambition of life sciences companies to consolidate their position as technological leaders and to focus on core business activities. Transgene sold its shares held in Jennerex (8.5%) to the South Korean, Sillajen.

The acquisition of immuno-monitoring Indicia Biotechnolgy by Platine Pharma Services helped the company to dilute the participation of Transgene in its capital but also the future development of Platine Pharma. Eurofins, for its part, increased its presence in quality control, bio-analysis with the acquisition of IDmyk laboratory and the Merck Millipore subsidiary, DDS (Discovery and Development Solutions).

At the same time, Indicia Production (CMO) strengthened its activities in contract manufacturing through the acquisition of Biotechnologie Appliqué. Hybrigenics consolidated its technology through the acquisition of Imaxio and Dualsystems Biotech, respectively genomic and screening activities. EOS Imaging acquired OneFit Medical (€4m), offering surgeons a complete solution for imaging diagnosis to surgery prosthesis.

Biomérieux, specialist of in vitro diagnostics, acquired the U.S. company Biofire Diagnostics for an amount of €350m. Nicox developed its sales force in Italy by acquiring Eupharmed. Nicox acquired Aciex Therapeutics, a US Biotech company, for an amount of $120m. Ose Pharma acquired all assets of OPI, now becoming its subsidiary in Switzerland.

Finally, BioAlliance Pharma and TopoTarget entered into merger agreement and created Onxeo, a future leader in orphan drugs in oncology.

COMPANY CREATIONS AND LIQUIDATIONS

Source: France Biotech, June 2014

2008 2009 2010 2011 2012

46

-20

41

-9

43

-5

3824

-25

2013

49

-14

55

-40

0

60

-60

3226

-1

35

15

Number of companies

Year

MERGERS AND ACQUISITIONS

In 2013, the Life Sciences sector showed its dynamism by generating a creation of 55 companies (+ 12% vs. 2012). This dynamism is stained by an increase in the number of liquidations, with 40 liquidated companies (+ 285% vs. 2012) during the same period showing the difficulty to persist in the sector. French Life Sciences companies must pursue their efforts in terms of investments and innovation, despite the backdrop of economic crisis that has revealed a fracture in the economic fabric of France. For a large number of small and medium-sized enterprises, there is no room for complacency since the prospects for growth remain fragile. Some of them were even forced into premature cessation of activity.

Creations and liquidations 6

n Creationsn Liquidationsn Net

16


The creation of structuring partnerships (R&D, distribution) is a major challenge for the development of biotech companies. In fact, 124 companies have announced at least one partnership and more than 290 partnerships have been reported in our sample, among which 45% built with the academic sector, aiming to develop collaborative research programs. The major players are the public research institutes such as AP-HP, CEA, CNRS, INSERM, Institut Curie and Institut Pasteur. On the other hand, 26% of partnerships are made with pharmaceutical companies. This type of partnership provides payment of milestones, according to the stage of product development. Many Big Pharma such as Bayer, BMS, GSK, Ipsen, Merck, Novartis, Novo Nordisk, Pfizer, Sanofi, Servier, Teva have developed partnerships with the life sciences industry, giving proof of the synergy that exists between life sciences and pharmaceutical companies. Finally, 17% of the partnerships were built between biotech companies, showing the degree of connection in the sector. As for the geographical distribution of the partnerships, two thirds of them are French-French, leaving the last third to foreign partnerships (33%). 6 partnerships reveal a more internationally oriented vision.

Pharma, Biotech and Public Research remain the top three in the clients’ distribution by industry sector. As expected, the pharmaceutical industry (72%) leads the order as the biggest source of cash, either through ‘milestones’ unlocked when crossing stages during the development of products or through royalties after a license transfer to a marketing operator. Biotechnology companies follow in pharma’s footsteps representing 61% of the clients. In fact, the commercialization of technological platforms explains in part this high rate as 56% of these companies market their platforms. Research laboratories (48%) follow closely in third place, a position due to the application of tests to researchers for their experiments in R&D.

PARTNERSHIPS AND CLIENTS

Geographical distribution of partners 8

Distribution of partners types 7

26%

45%

12%

17%

Source: France Biotech, June 2014, 124 companies, 295 partners

n Academic Researchn Industryn Biotechn Others

n Francen Europen North American Rest of the World

11%

16%

67%

6%


Distribution of clients by industry sector 9

0

10

20

30

40

50

60

70

80

n 2012n 2013

79%

72%69%

61%

51%48%

31%30%30%31%

20%19%

14%17%

18%17%

13%14%

9%11%

14%10%

Phar

maceu

tical

Indus

try

Biotec

hnolo

gy

Publi

c Res

earch

Health

care

Facil

ities

Cosmeti

c

Indus

try

Medica

l

Device

s

Envir

onem

ental

Health

care

Agri-fo

od

Indus

try

Chemica

l

Indus

try

Farm

ing/

Bree

ding

Source: France Biotech, June 2014, 124 companies, 295 partners

17

1PATENTS

Patents filed 10

Patents granted 11

Patents exploited 12

Intellectual property protection is one of the key elements of the valuation of innovative companies, especially in a highly technological and scientific sector. The coverage of intellectual property appears then high on the agenda. As shown in the chart above, more than half of the patents (52%) are granted in the European zone.

Companies with patent filing activity seem to be mature and structured companies with a lifetime of 9.5 years and an average size of 25 employees. The recent issuance of a new patent granted to BioAlliance Pharma shows the importance of having an international coverage.

Aude Michel, Director of Corporate Development of BioAlliance Pharma declared on 18 February 2014, «We are very pleased with the issuance of this new patent for Livatag®, which is the fruit of a close collaboration between development teams and Property Industrial Department. These on-going interactions allow us to ensure the establishment of an optimal patent protection, thereby maximizing on-going enhancement of our programs». (Source: Press Relaese BioAlliance Pharma, February 18th, 2014)

36%

17%

47%

54%

34%

12%

59%

21%

20%

n France/Europen USAn Rest of the World






18


THERAPEUTIC PRODUCTS

Oncology (32%), 97 products in development, including 7 in phase 1, 10 in phase 2 and 7 phase 3, Infectious Diseases (17%), 51 products in development including 5 in phase 1, 5 in phase 2 and the Immune System (10%), 30 products in development including 3 in phase 1, 4 in phase 2 and 1 in phase 3 are the top 3 therapeutic areas in the R&D pipeline. In early 2014, the French Government launched the second «Cancer Plan» for the period 2014-2019. With an incidence of 355,000 cases per year (all cancers combined), the plan highlights the importance of this disease in our society over the next decade. Several points can be linked to the biotechnology sector. In fact, the plan promotes access to therapeutic innovations through the ambition to increase the number of clinical trials with the goal of 50,000 patients in 2019 (37,500 in 2012). The imminent arrival of a single convention, prior to the implementation of clinical trials, allows the simplification of administrative procedures. The new approach should limit to 60 days the signature time for laboratories wishing to start clinical trials. The plan develops five strategic axes:

1. Identifying populations at risk of cancer in order to adapt and customize strategies for prevention and early detection;2. Coming up with a new definition of cancer;3. Modelling tumour processes to better understand cancer and better manage patients;4. Understanding tumour escape and host-tumour relations;5. Fighting against health inequalities facing cancer.

These five themes will be invested by recurring project calls and multidisciplinary projects aimed at improving prevention, diagnosis and treatment. The Cancer Plan funds this research by dedicating 50% of these credits.

Therapeutic areas 13


0

5

10

15

20

25

30

35

Onc

ology

Infec

tious

dese

ases

Immun

e sys

tem

Centra

l ner

vous

syste

m

Metabo

lism

Cardio-

vasc

ular s

ystem

Oph

talmolo

gyO

ther

Dermato

logy

Geneti

c des

ease

s

Tran

splan

t

32%

17%

10%8%

6% 5% 5%

2%2%4%

2%

With 303 products ranking from proof of concept to commercialization, the R&D pipeline is rich. Over 72% of products are concentrated in the early stages of development (Proof of concept and Pre-clinical), making the future look promising.

Furthermore, there is a real increase of products at Phase 3 (12) and registration stage (7); mature companies can see their work paying off with the imminent commercialization of their future blockbusters.

Stage of development 14

Source: France Biotech, May 2014, 100 companies, normalized data to 103 companies per year

n 2009n 2010n 2011n 2012n 2013

Proo

f of c

once

pt

Pre-c

linica

l

Phase

1

Phase

2

Phase

3

Regist

ratio

n

Commer

cializ

ation

0

100

108

50

2621

6 37

NC

63

40

27

84

12

126

59

2935

6 3

12

138

57

34 34

84

11

152

66

2631

127

1220

40

60

80

120

140

160

19

1

Birth of a future European giant in rare diseases, Onxeo

Judith Greciet, BioAlliance Pharma CEO, said: «The merger with TopoTarget will allow us to strengthen and diversify our position in the field of rare cancers. The TopoTarget team, who accompanied Beleodaq until registration in the USA is very experienced. Pooling our expertise applied to a promising and innovative product portfolio will be a driver to accelerate our programs and to grow our business. This is a unique opportunity that comes at a key time for the company and will allow us to secure our position on this highly profitable market».(Source: Press Release BioAlliance Pharma, 16th, April 2014)

Orphan diseases: a developing market

Companies engaged in the development of treatments against orphan diseases have benefited from the high-growth potential of this market. The National Institute of Health (NIH) has identified up to 7,000 rare diseases, the majority of which has few or no treatment options. During 2013, the European Medicine Agency (EMA) issued 117 «Orphan Drug» designations. The orphan drug designation provides an accelerated regulatory review process through a gradually clinical data deposit, and a lower cost of development. Over the past 10 years, 36% of Food and Drug Administration (FDA) approved products were orphan drugs. Cancer is, once more, the therapeutic area that receives the most attention from the industry. Indeed, 41% of approvals include oncology over the past decade. In addition, competition is less fierce than in other markets.This market will represent nearly 16% of sales of prescription drugs by 2018 (equivalent of $127bn).

0

2

4

6

8

10

12

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

n Geneticn Cancern Othern % of orphan drugs approved by FDA

Source: HBM Partners, Trends in US New Drug Approvals, February 2014

45%

30%

15%

01

1

1 5

3

0

4

2

1

0

3

2 2 2

12

2

3

3

2

75

2

1

6

3 3 4 32

4

2

0

Orphan drugs approval by FDA 2003-2013 15

15%

29%

39%

24%

35% 35% 35%

27%

39%

38%

31%

*Source: Evaluate Pharma, Orphan Drug Report 2013

20


COMPARISON WITH FRENCH PHARMACEUTICAL COMPANIES

R&Dinvestment

# of Research # of Phase 1 # of Phase 2 # of Phase 3

Top 10 Biotech listed Panorama

€146m 18 2 11 5

IPSEN €349m 4 1 12 6

Sanofi €6,338m 15 48 43 20

As we compare the Top 10 Biotech companies by market capitalization in the present panorama with the two French «Big Pharma», it appears that the biotech companies are more efficient in terms of R&D productivity. In fact, with lower R&D investment they bring more products to clinical trial. This trend is transcribed through the number of FDA approvals of biotech drugs. During the first six months of 2014, the FDA approved 17 new molecular entities (NME), among which 6 are biologics products (35%). The trend expressed above on the development of products for orphan diseases is confirmed, as 4 of the 6 biologics approved are Orphan drugs. Over the past ten years, we have seen a steady increase in biological products. This pattern is also repeated in global sales over the period 2007-2017. Indeed, according to the IMS (Institute for Healthcare Informatics) report, the share of biological products in global sales stood at 15% of the global market in 2007. In 2012, biological market share rose to 18% or $169bn. Finally in the latest projections for 2017, biological products are expected to represent 20% of the global market or $221bn. Another example of the penetration of biological products is the Top 20 global sales. In 2013, the top-selling drug is a biologic, Humira® (adalimumab). 9 biological products are present in the Top 20 and 5 are present in the Top 10. Growth of biological products is mainly driven by monoclonal antibodies with no less than 4 products on the Top 5 global sales of biological products in 2012.

FDA approval 1998-2013 16

Source: Nature Reviews Drug Discovery, vol 13, February 2014

0

10

5

15

20

25

30

35n New biologics approvedn New NME’s approved

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

30

35

27

24

17

21

31

18 18

16

21

19

15

2423

24

7

32

57

65

24

23

6 6

11

14

6

Source: France Biotech, May 2014, Biocentury

21

1

Stage of development 18


23 products are already marketed by these companies, which shows the actual maturity of the sector. Once considered cheaper and faster than drugs, the development of medical devices has become much more complex at the regulatory and clinical level. Yet even more, it is public market access that is the big issue today, business development being mainly driven by exports. Access to the domestic market for these innovative technologies is not easy and the wealth of the pipeline, with no less than 31 products in R&D and 3 in registration phase, paves the way to a brighter future.

Innovative medical devices, public market access issues

Bertin Nahum, ranked fourth in the world’s most revolutionary high-tech entrepreneurs according to a publication of the Canadian Journal Discovery Series, stated in the opinion on May 14th, 2014: «Regarding innovative medical devices, such as the surgical robots that we design, the urgency is now to have a regulatory framework offering the possibility to be disseminated within the hospital network. There still is a gap between the growing interest of health professionals and patients for innovative technologies such as ours, and their late apprehension by regulators. We also pay special attention to measures that promote innovative public procurement and for the access of SMEs to public procurement. I believe there is a real awareness and the first steps are in the right direction. But we must go faster. Public procurement accounts for more than €87.8bn in France. In terms of their weight in the real economy, it is essential that SMEs, and the most innovative ones, have easy access to these markets». (Source: L’opinion, on May 14th, 2014).

Therapeutic areas 17

Estimated at over €200bn in 2010 (CEPS, 2011 report), with growth of 6%, the global market for medical devices is rapidly expanding. In France, according to the Ministry of Industry’s report, PIPAM (2011), the market amounted to almost €19bn for all medical devices, including in vivo and in vitro diagnostics.25 companies reported an activity in the field of medical devices. In first place, we find the area «Rheumatology». It accounts for all orthopaedic devices (33%) which represented almost €28bn in 2010, according to the AIEFC study. This is followed by Oncology (11%), Cardiovascular System (11%) and Ophthalmology (11%).


MEDICAL DEVICES

0

5

10

15

20

25

30

35

Rheum

atolog

y

Onc

ology

Cardiov

ascula

r sys

tem

Oph

talmolo

gy

Centra

l ner

vous

syste

m

Dermato

logy

Uroge

nital

syste

m

Dental

Immun

e sys

tem

33%

11% 11% 11%9%

7% 7%4%4%

0

5

10

15

20

25

9

22

3

23

Resea

rch

Develo

pmen

t

Regist

ratio

n

Commer

cializ

ation

22


Therapeutic areas In vitro 19

Stage of development In vitro 20

18

44

13


Source: France Biotech, May 2014, 37 companies

The in vitro diagnostic product is used by the examination of samples from the human body, in order to provide information on the physiological or pathological condition of a person or on a congenital defect. The area of Oncology (24%) is the most represented in vitro diagnostics, followed by Infectious diseases (15%) and Central nervous system (13%). Thanks to the breakthrough of pharmacogenomics, developing companion tests has accelerated during the last decade. The purpose of a companion test is to identify responders, monitor response and adjust treatment if necessary. The most striking example is probably Herceptin® and its HER2 test making it possible to screen patients and, at the same time, follow the evolution of their disease. Biomarker discovery is the next major challenge for the industry.

There appear to be several advantages in launching a co-development of companion test/drug-candidates. For industry, companion tests facilitate decision making in the R&D stage. It enables manufactures to better screen drug candidates upstream and avoids project funding without any future. For the patient, it reduces the number of treatment failures due to better screening of patients. Due to its role in industrial development and its central position in the therapeutic armamentarium, the companion test fits perfectly into health organizations’ perspectives, namely; cost reduction and personalized medicine.

Moreover, the pharmaceutical industry, «les entreprises du medicament» (Leem), published a study (2011) on the subject estimating the market at around $47bn by 2017.

13 products are already on the market and 62 products are still in the R&D phase. In our sample, no companies are in the registration phase.

DIAGNOSTIC

In vitro

n Researchn Developmentn Registrationn Commercialization

Onc

ology

Infec

tious

dese

ases

0

5

10

15

20

25

Centra

l ner

vous

syste

mO

ther

Digesti

ve

Blood

syste

m

Oph

talmolo

gy

Immun

e sys

tem

Metabo

lism

Hospit

al so

lution

s

Respir

atory

syste

m

Geneti

c des

ease

s

24%

15%13%

8%

5% 5%3%

4%4%4%5%5%

23

1Central nervous system and Immune system are the two areas most represented in our sample. Indeed, with the steady increase in allergic and neurodegenerative diseases, it is not surprising to see these areas, having become strategic, at the top of the list. Rheumatology, Oncology and Genitourinary system the follow. Valued at more than €20bn in 2010 (PIPAM 2013), the global market for medical imaging is rapidly expanding due to the aging population and greater exposure to disease. These needs target a better prevention, better and earlier diagnosis and personalized therapeutic monitoring. The advent of new technologies and the development of computing power provide new perspectives. Medical imaging allows exploration of living organisms and improved knowledge of molecular and cellular biology.

In vivo

Therapeutic areas In vivo 21

Major breakthroughs in medical imaging

Medical imaging is one of the areas affected by these technological breakthroughs, like EOS imaging, whose products have been created from research conducted by Nobel laureate George Charpak. Marie Meynadier, CEO of EOS imaging declared after the installation of two EOS® systems in Paris: «These two additional installations in Paris further highlight the medical value of our technology. The EOS® system is immediately usable in patient care and treatment processes, contributing to the safety and efficiency of orthopaedic diagnosis and treatment thanks to its high-quality, low-dose imaging and to the unique 3D reconstruction of the skeleton in a functional position. We are also very pleased to observe and contribute to the development of public-private partnerships enabling the installation of innovative equipment such as EOS®». (Source: Press Release EOS imaging, 6th, February 2014).

Stage of development In vivo 22


Regarding the stages of development, 11 products are already on the market and 15 are in the research and development stage demonstrating the robustness of the pipeline. 3 products are in the registration phase.

4

11

11

3

n Researchn Developmentn Registrationn Commercialization


0

5

10

15

20

25

Immun

e sys

tem

Centra

l ner

vous

syste

mO

ther

Onc

ology

Uroge

nital

syste

m

Metabo

lism

Rheum

atolog

y

Digesti

ve

24% 24%

10% 10%

7% 7%

3% 3%

DIAGNOSTIC

24


BIOCLEANTECH

Domain of activity Biocleantech 23


The biotech industry related to the environment is a fast-growing sector. On the chart many companies use life sciences in the area of agri-food, waste treatment. Offering a serious alternative to petrochemicals, new fermentation processes offer solutions to declining natural resources. Similarly, new techniques will produce clean energy from previously non-recyclable waste energy. With more than 360 employees, these companies are relatively young (median 2007), yet have the appearance of mature companies. As proof, they have an average of 4 products or bio-processes under development and have developed 3 partnerships on average. Investment in R&D (€41m) and ensuing results (about 800 patents submitted) demonstrate the maturity of companies.

French biocleantech recognized at European level

As exemplified by Fermentalg which was awarded the «Standout Fundraising Achievement of the Year» Award by Cleantech Group in May. This Award, which recognizes a clean technology company whose fundraising is illustrated by its innovation and outstanding performance, once again confirms the vitality of Fermentalg and its strong development capability. Pierre Calleja, Founder and CEO of Fermentalg, said: «It is an honour to receive this award from an institution such as the Cleantech Group, a benchmark in the world of clean technology and sustainable development. Like AFIC Cleantech in 2011 or UIC Pierre Potier in 2012, this award confirms the excellent work of our teams in all areas and the exceptional evolution of our company since its inception in 2009». (Source: Press Release Fermentalg, May 21st, 2014).

n Bio-productionn Agri-foodn Waste recoveryn Water treatment

n Bio-fueln Cosmeticn Bio-materialn Others

38%

35%

9%

6%

3%3%

3% 3%

25

1

MEDIAN Technologies develops medical imaging software and services dedicated to oncology clinical trials, cancer screening, and clinical practice. MEDIAN Technologies standardizes and automates the interpretation of medical images in oncology to optimize the diagnosis of cancer patients and the assessment of their response to therapy. MEDIAN has received the label «Innovative company» by the BPI and is listed on Euronext Paris’ Alternext market (ISIN: FR0011049824, ticker : ALMDT). The company is eligible for the PEA PME SME equity savings plan setup.

DEFYMED is a company that develops implantable bio-artificial medical devices for cell therapy. Its initial focus is on Type1 Diabetes. Defymed exclusive technical know how allows to customize its bioartificial medical devices to meet several therapeutic applications. Defymed‘s initial product is a bioartificial pancreas, named MAILPAN® (MAcro-encapsulation of PANcreatic Islets) designed to treat Type-1 diabetic patients.

Based in Balma, near Toulouse (France), VEXIM is a medical device company created in 2006 that specializes in creating and marketing minimally invasive solutions for treating traumatic spinal pathologies. Benefitting from the financial support of longstanding shareholders, Truffle Capital and Banexi Venture, and OSEO public subsidies, VEXIM has designed and developed the SpineJack®, a unique implant capable of repairing a fractured vertebra and restoring the balance of the spinal column. VEXIM has been listed on Alternext Paris since May 2012.

CYTOO develops physiological cellular models compatible with High Content Screening. Illustrated, MyoScreenF™, a fully mature human muscle micro-tissue model, is used to discover drugs to treat sarcopenia, cachexia, musculoskeletal diseases, neuromuscular disorders, as well as to evaluate the impact of compounds on muscle toxicity or metabolism.

2 FRANCE: FINANCING INNOVATION

FRANCE: FINANCING INNOVATION

Since the beginning of the 21st century, the biotechnology industry business model has come under close scrutiny from management

and investors alike.

Both investors and public stock market are a capital source of financing: while the former can create value by identifying potential milestones and setting a course towards achieving them, the latter brings some fresh air when private financing happens to be lacking.

In 2013, French Life Sciences companies continued their efforts in terms of investments and innovation despite the economic crisis. In the face of challenging financing conditions due to high development costs and the uncertainty of results, they mobilize considerable resources by diversifying their sources of financing and by counting on government support, a real financial safety valve.


28

A CONSTANTLY CHANGING BUSINESS MODEL

Business model Life ScienceTech 24

Symptomatic of the financing round of young innovative companies, the biotechnology industry business model includes various approaches at different levels of funding. Every new business needs some start-up capital, for research, product development and production and other overhead costs. Young innovative companies use Business Angels or seed capital enabling them to launch their business; some life sciences companies might also look for other solutions such as crowdfunding as a complementary funding source.

As a valuable resource, Venture Capital will look for more mature companies. Venture Capitalists rally round to invest in very promising companies and identify potential milestones and set a course towards achieving them. At a more advanced level, going public is the option for more established companies, helping them to get additional funding to go to market and to accelerate their international development.

* Created in October 2013, Auriga IV Bioseeds is a seed fund, focussing on financing the development of innovative projects initiated from scientific knowledge and expertise in areas in which French know-how is recognised globally. Auriga IV Bioseeds intends to invest in more than ten young innovative French companies with a deal value between €0.5m and €3m. (Source : Bpifrance)

Crowdfunding in the Life Sciences Industry

Crowdfunding has come into the mainstream in a meaningful way. As young innovative companies find it hard to attract investors, this source of financing could be a game-changer for many of them. More appropriate for companies willing to go to the market quickly with a seductive product, crowdfunding is viable only if the investor has a clear vision of the economic potential of the innovation. Thus, crowdfunding could be disruptive for life sciences companies as the investors need to be knowledgeable about the scientific issues. Despite the enthusiasm shown by 59 French life sciences companies - among the 116 which participated in the study – who think that crowdfunding platforms and their offerings could greatly augment the capital flows into the earlier stage biotech arena, the biotechnology industry still needs serious investors such as VCs and Angel Investors, willing to invest substantial amounts of money.

Revenus

Time

Public stock market (IPO)

Mergers and Acquisitions

Venture Capital (2 - 20 m)

Business Angels (150 - 600 K)

Seed Funds (300 K - 2 m)

Grants and loans

Young Innovative Company DevelopmentGrowth

Source: Montaigne Institut Report, «Santé, le pari de l’innovation. Une ambition au service de nos finances publiques et de notre compétitivité»; France Biotech

2

29

FUNDING COMPARISON (€m)

Year H1 2013 H1 2014 Change

IPO 31 237 665%

Venture Capital 161 112 -30%

SPO 24 274 1,042%

Total 216 623 188%

The success of small biotech companies is dependent upon outside sources of capital to fund the long and costly process of bringing a new drug to market. Over the last decade, factors both internal and external to the industry have had a large impact on the availability of capital. In fact, the 2008 global crisis has kept investors away from the biotechnology industry considered too risky. As they were recovering from the consequences of the economic and financial global slowdown, venture capitalists started showing interest in 2012 when venture capital funding rose by 14% (vs. 2011) reaching an amount of €252m in 2013 (+82% vs. 2012). Taking advantage of a more realistic and sustainable source of financing image, the public market attracted 7 new French life sciences compa-nies in 2013, raising a total amount of €153m. Note that the best IPO on the Paris Stock Exchange in 2013 returns to Medtech, robotic surgery, with €20m raised on NYSE Euronext.

FINANCING THE LIFE SCIENCES INDUSTRY

The booming Biotech IPO market is symptomatic of the selectivity that Venture Capital has been showing, in view of the large capital requirements, lengthy timelines and high risk associated with drug development. As a consequence, a growing number of French life sciences companies chose to go public, making France the first IPO place in Europe. The trend seems to continue so far as 9 new French life sciences companies went public in the first half of 2014, raising a total amount of €237m (+665% vs. YTD 2013) and predicting a lofty year. During the first half year 2014, the prize for the most successful introduction goes to SuperSonic Imagine, medical imaging, with €50m raised by its IPO on NYSE Euronext.


Evolution of Life Sciences Industry Funding 25 (€m)


n IPOn Secondary Public Offeringsn Venture Capital

252

153

146

138

146

80

169

101183

183

106 237

274

112

74

92

121

2009 2010 2011 2012 2013 H1 2014

600

0

€m

Year

300


30

Expert Testimony

Franck Lescure Partner Life SciencesAuriga Partners

Lamarck, no Darwin

D espite a favorable context in France for the emergence of start-ups, symbolized by the

Research Tax Credit (RTC) or the status of Young Innovative Company (YIC), several improvements must be considered to further strengthen the development of technological innovation in Life Sciences. Observation of our ecosystem indeed suggests a number of weaknesses that need to be addressed. The lack of private engagement and the consecutive over-representation of public structures and finance in technology investment funds is a first obvious fact. Several responses could be made to this recent development in which the State still has a role to play: to foster by strong incentives the commitment of private institutional investors, industrial firms and our citizens; to reconsider the performance of venture capital by encouraging the emergence of large funds covering the funding chain in its entirety; to attract foreign investors to direct and indirect investment to remain coherent with the structural

internationalization of biotech business models… The technological funding ecosystem, venture capital or growth capital, must be specifically monitored and supported. There is need to defend internationally-recognized French management companies, to encourage the emergence of new teams, to make the profession of biotech investor attractive again, to develop major expert technological funds supporting, downstream of the funding chain, the commercial growth of emerging industrial leaders,… Finally, the foundations having been laid for public tenders, the development of a French Small Business Act must be pursued taking into account our specificities, by promoting the biotech firms that are on the point of marketing their leading-edge products. The aim is to continually explore ways of improving our environment, because to innovate is to know how to challenge ourselves and to renew our way of doing things.

Franck Lescure

2

31

VENTURE CAPITAL FUNDING

Distribution of VC Funding 26 (€m) After having shown little interest in the biotechnology industry in favour of NICTs, considered less risky, Venture Capital signed its return in 2013. Healthcare companies were responsible for half of the most important fund raisings, with in first place, Gensight Biologics which raised €32m from Venture Capital. As a catalyst of this dynamism, medical devices represented 51% (vs. 38% in 2012) of Venture Capital investments. Riding on the positive trend, Venture Capital funding in 2013 rose to €252m (+82% vs. 2012). The average investment led the expansion showing a growth of 40% to €4.9m invested in 2013.

Allocation of investments by funding rounds showed a significant growth by 55% of Series A financings up to €40m in 2013. So far, Venture Capitalists have been skeptical about medtech companies, only later-stage companies with products at or close to market, offering thereby less risk, have been drawing in the VC money. Times are changing since Venture Capital seems to be less reluctant to invest in medtech companies, considering the cycle of commercialization shorter then biotech companies.

Biotech is back with a vengeance in the IPO window. In 2013, we witnessed over 7 new biotech capital openings and more than €153m raised, growing by 5% compared to 2012 (€146m raised). There are a number of reasons behind this booming IPO market, but a big part of it has been generalist interest in biotech’s wide outperformance coupled with the positive euphoria that gained medtech companies willing to be part of the party (5 companies among the 7 new listed in 2013 are medtech). Taking advantage of the window of opportunity at the Paris stock exchange, going public seems to be in the limelight this year. 9 new listed companies were already reported during the first semester (among which 2 medtech companies) making the Paris stock exchange, known as Euronext Paris, the top European stock exchange in the sector (especially in medtech) and the second financial market place after the Nasdaq.

Evolution of French Life Sciences IPOs on NYSE Euronext 27

49

140106 92

1461533

5

0

7

6

8

7

2005 2006 2007 2008 2009 2010

250

0

Amount Raised (€m)

Year2011 2012 2013 H1 2014

Number of IPOs

37

2

12

1

237

9

125


PUBLIC MARKET FUNDING

n Amount Raised n Number of IPOs

109

130

13

80

52

6

113

50 6

67

48

2010 2011 2012 2013 H1 2014

320

0

AmountRaised (€m)

Year

Number ofOperations

7

95

10

70

0

38

25

4147

34


n Biocleantechn Medtechn Biotechn Deals


32

LICENCING AND PARTNERSHIP AGREEMENTS

Recent operations in the pharmaceutical industry have been driven to deal with the challenges facing the Big Pharma companies, including spiralling R&D costs, gaps in drug development pipelines, patent expirations and generic erosion of compounds. Pharmaceutical companies must also deal with competition from foreign entities, regulatory scrutiny and costly lawsuits. As a consequence of all these issues, Big Pharma companies have concentrated their efforts on balancing their product pipelines through acquisitions of smaller biopharmaceutical players, focusing on high-growth potential markets such as Oncology, Rare diseases and Diabetology. As a leading niche, Oncology dominated in 2013. French life sciences companies such as Diaxonhit, Valneva, Effimune and Transgene signed licensing agreements with, respectively, Boehringer Ingelheim, the German biopharmaceutical company Delta-Vir, Janssen Biotech and Sanofi. Focusing on partnering and licensing deals, Big Pharma companies continued an acquisition spree in the first half of 2014, spending the cash available from their cost-cutting and restructuring programs. The French pharmaceutical company Servier signed a strategic collaboration agreement with its life sciences fellow company Cellectis for an amount of €7.55m in order to «develop and commercialize novel product candidates stemming from cell therapy»; Servier may exercise an exclusive worldwide option for a license on each product candidate developed under the agreement. BioAlliance Pharma showed its dynamism as well, since the biotechnology company signed various agreements among which a commercialization agreement in Japan with FUJIFILM Pharma for Loramyc®. The registration of the product will trigger an important amount of steps «milestones» by the Sosei Group, the development partner of the French company in Japan. All these movements show the operational synergies between pharmaceutical and biotechnology industries. The revenues from partnership deals help life sciences companies to find short and medium-term funding thanks to royalties and steps «milestones» and therefore to advance the development of their products.

Immunotherapy: the Promised Land for biotech companies?

Today, one third of the drugs developed in the world stem from immunotherapy. Immunotherapy is a type of cancer treatment that uses body’s natural defenses to fight cancer cells, stopping them from spreading to other parts of the body. This therapy is a serious track in cancer research and could revolutionize cancer treatments. Thanks to monoclonal antibodies, the first generation of drugs able to recognize and neutralize cancer cells, the pharmaceutical industry has found a great market opportunity with an 8% annual growth and a global revenue up to $50bn**. Partly responsible for the success, biotechnology companies are behind this innovation, since companies such as Transgene, Neovacs, TxCell and Genticel chose immunotherapy as their core business. Their market capitalizations are booming and make Big Pharma companies show growing interest in licensing and partnership agreements – as an example, Innate Pharma signed a strategic agreement in 2011 with Bristol-Myers Squibb for an amount of $465m**, for the development and the commercialization of IPH2102, a new Phase I antibody in cancer treatment. More recently, Cellectis signed a deal with the American drugmaker Pfizer in order to develop immunotherapy drugs in cancer. Feeling the high-growth potential of immunotherapy treatment, Pfizer concretized its interest in the technology used by Cellectis who will receive an upfront payment of $80m coupled with development, regulatory and commercial milestone payments.

LICENCING & PARTNERSHIP

2007 2008 2009 2010 2011 2012 2013Amount of operations ($m) 2,000 0 1,300 1,200 400 600 3,300

Number of operations 25 2 4 16 7 10 40

BIOTECHS ACQUISITIONS

2007 2008 2009 2010 2011 2012 2013Acquisitions premiums average

76% 102% 68% 54% 63% 57% 34%

Number of operations 4 27 21 31 23 21 25Source: Sheffstation

Source: Sheffstation

2

33



OTHER FORMS OF FINANCING

The launch of the new PEA-PME at the beginning of the year sounds like an added source of financing for small and medium-sized enterprises.

Working as an investment vehicle, it stimulates the flow of more private savings toward small and medium-sized enterprises, which often get short shrift from investors.

The PEA-PME might bring some fresh air to small innovative companies, especially during the first development steps.

COMPANIES ELIGIBLE TO THE PEA-PME 28

Biotech (17) Medtech (19) Diagnostic (6) Cleantech (5)AB Science Crossject Biosynex CarbiosAdocia Diagnostic Medical Diaxonhit DeinoveBioAlliance Pharma EOS imaging Genomic Vision FermentalgCellectis Implanet Integragen Global BioenergiesDBV Technologies Intrasense Novacyt Metabolic ExplorerErytech Pharma Mauna Kea Technologies TheradiagGenfit Median TechnologiesGenoway Medicrea InternationalGenticel MedtechHybrigenics NanobioticsInnate Pharma Pixium VisionNeovacs QuantelNicox SpineguardOncodesign SpinewayQuantum Genomics StentysStallergènes SuperSonic ImagineTxCell Theraclion

VeximVisiomed Group



34

GOVERNMENT SUPPORT

Established in 2004 by the Strategic Council for Innovation and supported by France Biotech, the «Young Innovative Company» (JEI) status aims to support small and medium-sized enterprises (SMEs) in their first eight years of existence, providing a number of tax and social security exemptions. To qualify, companies must invest at least 15% of their total expenditure in R&D.

113 companies in this year’s study reported having opted for the JEI status, which represents 53%. After a decrease during the last two years, the number of new «young innovative companies» has got back to its previous level (12).

JEI

Number of new entrants JEI 29

Tax reductions allow companies to invest more money in hiring research workers, financing new projects and new R&D equipment. The chart below shows that more than 85% of the status beneficiaries have hired R&D staff. Almost 81% have started new R&D projects for a total amount up to €42,2m and two-third of companies bought R&D equipment for a total amount of €2,6m.

R&D staff 346 ETP*

New R&D projects Total project €42,2m

R&D equipment’s Total project €2,6m


0

5

10

15

20

2006

17

12 1211 11

9

2

12

2007 2008 2009 2010 2011 2012 2013

* full-time equivalent Source: France Biotech, June 2014

2

35

The «Research Tax Credit» (Crédit Impôt Recherche, CIR) is a tax reduction designed to encourage the R&D activities of French companies. As tax incentives have become an important instrument to stimulate business R&D, the CIR allows all companies incurring R&D expenses to be eligible to receive the tax credit, regardless of their size, business sector and nationality.

Among the 54 French public listed companies, €81m were granted in 2013, representing almost 28% of R&D total expense. The conditions of eligibility of the CIR were extended in early 2013.

From now on, companies spending money in the design of prototypes or new pilot products will be eligible for the CIR.

CIR

GRANTS AND RESEARCH SUBSIDIES

Among the 214 respondents to this year’s survey, 157 reported receiving a grant or subsidy to support their activity in 2013.

This financial assistance was distributed as follows:

• 60 companies received an investment subsidy,• 109 companies received operating subsidies, totalling €43,7m; (n=73),• 128 companies received a repayable loan, totalling €56,7m; (n=68),• 50 companies received support from bpifrance, totalling €19,3m,• 37 companies received support from the National Research Agency (NRA), totalling €9,5m,• 17 companies received support from a European Program, totalling €6,6m.


36

Expert testimonyExpert Testimony

Franck Sebag Partner, IPO & VC leader (France)Ernst & Young

World biotechnology industry: is acquisition power « firepower » changing hands?

W orld biotechnology industry: is acquisition power « firepower » changing hands?

On a global scale, the biotechnology industry last year confirmed its impressive dynamism and attractiveness for investors. According to the 28th annual report published by EY (Beyond Borders – Unlocking value), the sector bounced back strongly in 2013. Listed European, American, Canadian and Australian biotechnology companies experienced two-digit income growth (10%), with total turnover at 98,8 billion $US. Mergers and acquisitions (M&As) involving American or European biotechs picked up strongly in 2013, showing growth of 106% compared with the previous year.However, a shift can be seen in « firepower » - acquisition power - towards non-traditional acquirers.Big pharmaceutical companies remained in the background, with an acquisition value in stagnation between 2012 and 2013, in favour

of a strong growth in biotech-biotech agreements. The big biotechnology firms and specialized pharmaceutical companies are becoming far more serious competitors than in the past.This decrease in pharmaceutical companies on the ground of transactions is explained in part by the significant valorisation in terms of market capitalization, which has positioned certain targets beyond the reach of many potential buyers.The market capitalization reached record levels in 2013, increasing by 65% to reach 792 billion $US.Fifty biotechs were launched on the stock market, raising 3,5 billion $US.For the first time since 2007, IPO for biotechs is, besides merger-acquisition, a realistic exit strategy.These trends will require careful observation to see whether they are confirmed in 2014.One certainty: the level of IPOs was still very high at the beginning of the year.

Franck Sebag

2

37

TXCELL develops economically viable, personalized T-cell-based immunotherapies using antigen specific regulatory T-lymphocytes (Ag-Tregs) for severe chronic inflammatory and autoimmune diseases.

ERYTECH PHARMA (Euronext : ERYP) successfully completed Phase III of Acute Lymphoblastic Leukemia clinical trial with GRASPA® which consists in red blood cell-encapsulated L-asparaginase which allows to destroy asparagine, necessary to tumor growth, inside the red blood cell, preventing allergic reactions and reducing other adverse events.

DEINOVE is an industrial biotechnology company that develops processes for the production of biofuels and bio-based chemicals from non-food biomass, by improving the metabolic capabilities of Deinococcus bacteria.

3 GLOBALOUTLOOK

GLOBALOUTLOOK

The biotechnology industry is at the basis of the future

of medicine. Over 70% of innovative drugs in the world are developed by small life sciences companies. With more than 1.726 firms and an investment in R&D up to $17.6bn, the United States leads the sector with its strong entrepreneurial mindset that fosters creation of business. The country contributes to more than 77% of the world R&D effort estimated by Ernest & Young at $22.8bn. Europe has great potential as it counts 1.834 biotechnology firms and France has established itself as market leader since more than 250 firms develop therapeutic and diagnostic products, boosting the stock market and putting Paris at the forefront of Europe.

3 GLOBAL OUTLOOK

40

FINLAND

1

SWEDEN

DENMARK

GERMANY

77

ITALY

43

SWITZERLAND

19

SPAIN

12

PORTUGAL

1

BELGIUM

6

POLAND

3

1

ROMANIA

1

UNITED-KINGDOM

123 1NETHERLANDS

1

3


n Number of subsidiariesn Number of partnerships

WORLDWIDE PARTNERSHIPS AND SUBSIDIARIES OF FRENCH LIFE SCIENCES COMPANIES

3

41

6

1

5

3

1

1

2

1

2927

AUSTRALIA

BRAZIL

CANADA

CHINA

SOUTH KOREA

USA

ISRAEL

JAPAN

KUWAIT

NEW ZEALAND

SINGAPORE

TAIWAN

VIETNAM

In a globalized market, international openness seems a necessity to ensure its development. In Europe, the French biotech were preferentially oriented to larger markets (Germany, Italy, UK, Spain), representing 17.8% of the global market in 2013 (IMS), creating collaborative research partnerships or commercial agreements for the distribution of their future products.

However, this is still North America, where innovation is highly valued, which attracts the most. Indeed, the world’s largest market (40.6%) alone accounts for nearly 30 subsidiaries and 33 partners.

On the Asian continent, it attracts more and more French entrepreneurs. China (7,2% of global market) is the first destination with 5 subsidiaries and 4 partnerships. Followed behind Japan (2 subsidiaries and partners 4) and South Korea (3 partners).

The internationalization of French biotech is a must to capture the largest market growth.

1

1

4

4

1

3

1


WORLDWIDE PARTNERSHIPS AND SUBSIDIARIES OF FRENCH LIFE SCIENCES COMPANIES

3 GLOBAL OUTLOOK

42

EUROPEAN LIFE SCIENCES PUBLIC MARKET

Life Sciences IPO Fundraising by Country: NYSE Euronext and Alternext 30

98135

131

56

106 92

146

Biotech is back with a vengeance in the IPO window. European life sciences companies have benefited from the stateside fervour over drug developers which crossed the ocean and has spread to Europe, where companies are more emboldened by market conditions. In 2013, the market was receptive to good companies with a well thought out action plan. 7 of them went public raising a total amount of €153m (vs. €146m in 2012). In France, the public market is still opening up to the life sciences industry, leading the sector far ahead of the British life sciences industry which registered only one company on the London Stock Exchange in 2013 raising an amount of £45m (€57m). The mass of biotech initial public offerings is on pace for a record-setting year, especially in France where 9 successful IPOs have already been conducted in the first half of 2014 raising an amount of €237m way above the 2013 levels. The fervour is not likely to slowdown since other life sciences companies are said to be eyeing Euronext IPOs, such as Pixium Vision. The French medtech company which wants «to restore vision for the blind» thanks to its innovative Vision Restoration Systems (VRS) «that stimulate the retina to progressively obtain bionic vision and aim to significantly improve the independence, mobility and quality of life of patients who had lost their sight», has just successfully closed its IPO raising €34.5m. During the last twelve months, the French Stock Exchange has welcomed 40% of European IPOs while the French contribution to the European GDP is much lower.

The dynamism of French biotech companies on the public market is symptomatic of good performance in the European index NEXT Biotech. Well represented, the French Biotech attracts more and more investors, industrialists and financiers who prefer initially to invest through the public market against the overvaluation of certain companies. With lower valuations, European biotechnology companies (excluding French) remain more accessible to regular buyers, pharma and large biotech.

The increasing appetite for the sector has paved the way for a record pace of IPOs. The opened French public market increased the exposure of venture capital funds and individual investors to the biotechnology industry, driven by an increased appetite for risk and eagerness to chase high-return profiles. The rest of European life sciences companies (excluding French ones) remain dependant of the movements of acquirers; in other terms, whether they are willing to pursue M&A deals in the light of the recent Big Pharma restructuration operations. In fact, as traditional buyers, Big Pharma companies are no longer stocking the same levels of cash. Many of these companies now prefer to pursue a strategic partnership with high-growth potential targets, rather than committing to a takeout – biotech’s sky-high asset prices and market capitalizations are not helping to change Big Pharma’s mind. Luckily, large biotech firms have stepped in and taken up the role. With an average deal value of $708m in 2013, M&A transactions were mostly made by large biotech companies (see the chart above), which targeted American and European firms - excluding the French ones that turned to the opened French public market. Almost half of the top 10 largest biopharma M&A transactions targeted European firms, giving them an option regarding the feebleness of European public markets (France not included) and the lack of financing.

2010 2011 2012 2013 YTD 2014

350

0

AmountRaised (€m)

Year2007 2008 2009

153

35

237

NEXT Biotech index by Market Capitalization* (€m) 32


(1)

(2)

(1)

(2)

(5)

1222 (1)

(1)

(7) (6)

(8) (7)

(8)

n Belgiumn Francen Netherlands(n) = number of IPOs

3

43

NEXT Biotech index by Market Capitalization* (€m) 32

NYSE NEXT BIOTECH INDEX

Although a market capitalization of €5bn, the NEXT Biotech Index under-performed the NYSE Arca Biotechnology Index (BTK). In fact, the European index lost 21.1% in 2013 while the BTK increased by 50.6%. We can put this below-average performance down to the methodology of the NEXT Biotech Index that is weighted according to the market capitalizations of companies.

Therefore, if companies with a high contribution to the Index did not perform well it will affect all the more the performance of the latter. In 2013, companies like Thrombogenics (-60% in 2013; contribution to the Index of 17%), AB Science (-25% in 2013; contribution to the Index of 12%) and Valneva (-40% in 2013; contribution to the Index of 6%) did not perform well whereas their contributions to the Index are high.

3 620

638

1 229

TOP 10 LARGEST BIOPHARMA M&A TRANSACTIONS WORLDWIDE DURING 2013 31

Target Company Private/Public Buyer Upfront Deal Value ($m)

Onyx (US) Public Amgen (US) 10,4Bausch & Lomb (US) Private Valeant (Canada) 8,7Elan Corp (Ireland) Public Perrigo (US) 8,6Warner Chicott (Ireland) Public Actavis (US) 8,5Map Pharmaceuticals (US) Public Allergan (US) 958Pronova (Norway) Public BASF (G) 900Astex (US) Public Otsuka (J) 886Trius Therapeutics (US) Public Cubist Pharmaceuticals (US) 704Xellia Pharmaceuticals (Norway) Private Novo A/S (DK) 700Aragon Pharmaceuticals (US) Private Johnson & Johnson (US) 650

Source: HBM Partners Pharma/Biotech M&A Report 2013


* on 15th, July 2014 - Source: France Biotech, July 2014

n Belgiumn Francen Netherlands

3 GLOBAL OUTLOOK

44

NEXT Biotech vs. BTK index 2013-2014 33

Despite improving dynamism in Europe, there are still deep-seated differences between European and American markets. The wide pool of US biotech companies has spawned a large number of specialist funds and investors who deeply understand the business and are willing to take risks investing in young innovative companies, especially this year in medtech companies.

In fact, investors have a better comprehension of the medical device and their interest in such products is all the more important as these companies are less risky than biotechs. Europe, by contrast, is driven more by generalist investors that are becoming more specialized but still timid with regard to French life sciences companies. In this context, the IPO market continues in its own way, underlying the optimism in the public biotech market.

Recent IPO vintages have done very well in biotech, especially in France as the leading market in Europe. M&A deals have liberated cash for reinvestment into biotech companies through the public market that is still the safest long-term financial guarantee.

May 2013 July 2013 September 2013 January 2014

-50%

0%

50%

Source: Yahoo Finance

n BTKn NEXT Biotech

3

45

Expert Testimony

Sacha PougetCo-founderKalliste Biotech fund

The valuations of French biotech companies are attractive

T he landscape of publicly-traded French biotech companies has changed significantly over the last

decade. Mid-2014, about 20 biotech companies were listed on the Paris Stock Exchange against only two in 2004. Today, biotechnology has become a fully-fledged sector on the Paris Stock Exchange. As a consequence, an increasing number of specialized investment funds such as Kalliste Biotech are joining the venture to fuel this momentum. Considering only pharma development companies, total valuation reached 4.0 billion euros mid 2014 (versus 2.0 billion euros end 2012, and around 1 billion euros end 2011). Going beyond IPOs, this progression is also due to a remarkable market performance, the Nasdaq Biotechnology having progressed by 130% since the beginning of 2012 (340% since 2009), and an 85% gain for pan-European index Next Biotech (100% depuis 2009). Valuation levels have increased significantly. However, if we have « tight » levels on the other side of the Atlantic or

245 listed biotech companies with a total valuation of 530 billion euros, in France we have significant discounts. Therefore, market quotation per employee reached 9,9 million dollars in the USA, versus 3,75 million dollars in France. And, if 80% of American biotech companies have a valuation lower than 1 billion dollars, the fact remains that 82 of the 100 highest world valuations in biotechnology are still American. With however high concentration, since in New York the 10 largest American biotech companies represent 80% of the total stock-market value. In Paris, the five largest biotech companies represent 50% of the total stock-market value. The overall valuation of French biotech companies corresponds in the end to the valuation of the 17th American biotech company. While, at the same time, scientific quality in France is high, and even if the stage of maturity is not comparable, it is pretty difficult to be able to justify such variations.

Sacha Pouget

3 GLOBAL OUTLOOK

46

Austria6

8

5

46

2

5

61

5

32

48

Spain

23

1

2

4135

9

13

13

30

5

7

19

Sweden

72

4

38

45

25

54

6

18

10

29

14

11

Switz

erla

nd

9834

55 209

13034

15146

6454

9235Unit

ed K

ingdo

m149

115 85

165

333

63

281

142

145

52

218

30

COMPARISON OF VC FINANCING IN EUROPEAN LIFE SCIENCES: 2008-2013 34

Source: Dow Jones Venture Source

3

47

Belgium

2

558

29

5

1

21 2955

9

31

68

1008

22

81

Denm

ark

4

41

7

30

8

9

19

France

92 95

4360

137 102

53 21

76 21

109 130

Ger

man

y

265

57

46

82

207

44

84

73

191

21

124

162

Netherlands

100

2

21

36

51

9

77

1

96

12

3

Amount raised per country (€m)

2008 Biopharmaceuticals

Medical Devices and Equipment 2009 Biopharmaceuticals

Medical Devices and Equipment

Biopharmaceuticals

Medical Devices and Equipment2010

Biopharmaceuticals

Medical Devices and Equipment2011 Biopharmaceuticals

Medical Devices and Equipment2012 Biopharmaceuticals

Medical Devices and Equipment2013

48

n ARIANA PHARMACEUTICALS : Ariana KEM®

n AXESS VISION TECHNOLOGY : Broncoflex SU®

n BCI PHARMA : Bikin 1®

n BIOALLIANCE PHARMA : Loramyc®, Sitavig®

n BIOMEDICAL TISSUES : Cellweb®

n CELLECTIS : CanCell®, Kit cGPS®, DermaVax®, hES-CMC®, hiPS-HEP®, TALENS®

n COLCOM : Dendridiag®, Dendri-Graft Poly-Lysine® (DGL)

n DBV TECHNOLOGIES : Viaskin,® Diallertest®

n DIAXONHIT : Allomap®, TQS® (Tetanus Quick Test)

n DOSISOFT : EPIgray,® ISOgray®, MU2net®, PLANET ONCO®, PLANET Dose®

n EOS IMAGING : EOS®, Ster Eos®

n E(YE) BRAIN : Eye brain 1®, Eye brain 2®

n FLAMEL TECHNOLOGIES : Bloxiverx®, Coreg CR®

n FLUIGENT : MFCS®, ESS®

n FLUOPTICS : Flueobeam®, Angiostamp®, SentiDye®, Angiolone®, Fluostick®

n GENBIOTECH : Viticell®

n GENOMIC VISION : FSHDCombing test®

n GRAFTYS : Bioactys Granules®

n HEMARINA : Hemoxcell®

n IMAGENE : DNAshell®

n IMAXIO : Spirolept®, Trovolol®

n IMPLANET : Twist – Vis®, Twist – Bouton®, Paso Wire®, Madison®, Implanet Spine System®, Jazz®, Haka-PLIF®

n IN CELL ART : ICAFectin®, ICANtibodies®

n INNOPSYS : InnoScan®, InnoStamp®

n INTEGRAGEN : ARISK 1®, ARISK 2®

n KOELIS : Urostation®

n KORILOG : ngKlast®, KLASTRunner®, CLC KLAST®

n MAUNA KEA TECHNOLOGIES : Cellvisio®, GastroFlex®, CholangioFlex,® Cholanioscopy®, ColoFlex®, AlveoFlex®, AQ-Flex 19®

n MEDTECH : Rosa Brain®

n MEDIAN TECHNOLOGIES : LMS-Lesion Management Solutions®, LCSIS-Lung Cancer Screening Imaging Services®

n METAFORA BIOSYSTEMS : Glut1®

n NICOX : Adenoplus®, Xailin®, Sjö®, RetnaGene®

n NOVACYT : NovaPrep Processor System®

n NUTRIALYS MEDICAL NUTRITION : Castase®, Polydol®

n NUTRIVERCELL : DUAB®, NEOGIL®

n OTR3 : CACIPLIQ20®, CACICOL20®

n PIXIENCE : C-Cube®

n PHENOCELL : RD-iPSC®, Non pathological iPSC®, PhenoCopies®

n PRENYL B : NéoStem®

n PRIMADIAG : ACSIA®

n RBNANO : HYBE®, MINK®

n STEMCIS : Adip’sculpt®, Scivet®

n STENTYS : Stent AC®, Stent Bifurcation®

n SUPERSONIC IMAGINE : Aixplorer®

n SURGICAL PERSPECTIVE : TPEA Lifter®, Versa Lifter®, Versa Lifter Band®

n SYNEIKA : PowerMAG®, Syneika One®

n TBF GENIE TISSULAIRE : PHOENIX®, Allogreffes osseuses, TBFIX®

n TETRAHEDRON : Ergoneine®, NutraSelen®, Bioneine®

n THERACLION : Echopulse®

n THERADIAG : FIDIS®, LISA Tracker®

n TROPHOS : Plate RUNNER HD®

n VALNEVA : EB66 Cell Line®, VIVAIScreen®, IXIARO®/JESPECT®

n VEXIM : SpineJack®

COMMERCIALIZED PRODUCTS

AN

NEX

49

* only revenues from actual activity of the company (research tax credit, revenues from licensing agreements and other operating incomes not included)** among which R&D expenses; exceptionnal and financial expenses not included. *** period of 6 months (from January to June).**** period of 6 months (from July to December). 1: at constant exchange rates

PUBLIC LISTED COMPANIES

Market Market capitalization on 06.30.2014

(€m)

Number of

employees

Revenue 2013*

(€ thousands)

Revenue 2012*

(€ thousands)

R&Dexpenses

2013 (€

thousands)

R&Dexpenses

2012 (€

thousands)

All revenues*

2013 (K€)

All revenues*

2012 (K€)

Operating expenses 2013**

(€ thousands)

Operating expenses 2012**

(€ thousands)

Part of R&D expenses

in operating expenses 2013

Part of R&D expenses

in operating expenses 2013

THERAPEUTICS

AB SCIENCE Euronext 354 106 - - 12,118 8,725 1,933 1,340 15,705 11,953 77% 73%

ADOCIA Euronext 90 73 5,588 3,995 11,475 11,784 8,821 7,236 13,124 13,306 87% 89%

CELLECTIS SA Alternext 341 60 11,683 13,573 24,941 18,981 15,078 15,291 74,908 40,797 33% 47%

DBV TECHNOLOGIES Euronext 297 50 182 174 17,366 11,579 3,826 2,777 23,780 16,280 73% 71%

ERYTECH PHARMA Euronext 77 40 - - 2,503 1,622 1,802 5,737 8,767 6,855 29% 24%

FLAMEL TECHNOLOGIES SA1 NASDAQ 538 251 7,288 7,860 21,720 21,256 17,809 20,711 33,400 27,289 65% 78%

GENFIT Alternext 552 80 1,899 1,672 12,229 11,314 2,416 2,902 16,348 13,728 75% 82%

GENOWAY Alternext 13 84 7,698 7,403 3,282 3,474 9,627 8,849 9,453 9,289 35% 37%

GENTICEL Euronext 87 31 - - 6,910 5,373 392 4,149 8,231 9,575 84% 56%

HYBRIGENICS Alternext 63 46 1,332 853 1,859 2,375 2,387 1,644 7,073 7,875 26% 30%

INNATE PHARMA Euronext 468 84 - - 15,131 13,417 16,652 14,282 19,444 17,668 78% 76%

NEOVACS Alternext 75 21 30 - 6,264 5,409 44 115 14,205 13,762 44% 39%

NICOX SA Euronext 166 101 824 284 3,685 6,471 7,312 8,305 22,883 17,112 16% 38%

ONCODESIGN Alternext 39 58 7,339 7,251 - - 7,756 9,033 9,716 - - -

ONXEO (ex-Bioalliance Pharma) Euronext 161 60 - - 9,979 9,300 3,324 4,563 19,813 17,576 50% 53%

QUANTUM GENOMICS Alternext 24 7 17 19 670 - 31 447 1,934 1,508 35% -

STALLERGÈNES Euronext 799 1,000 244,520 239,845 47,849 38,600 248,147 239,845 208,178 199,445 23% 19%

TRANSGÈNE Euronext 366 280 - - 50,063 48,679 15,735 13,061 56,933 55,196 88% 88%

TXCELL Euronext 91 38 17 - 5,673 3,804 1,774 1,121 7,224 5,364 79% 71%

VALNEVA (ex-Vivalis) Euronext 297 193 23,239 - 21,423 12,885 35,991 5,909 56,847 18,742 38% 69%

DIAGNOSTIC

BIOSYNEX SA Alternext 7 28 1,822 1,533 98 327 1,822 1,533 3,154 2,553 3% 13%

DIAXONHIT Alternext 47 85 - - 7,346 6,983 4,552 5,126 11,098 11,589 66% 60%

GENOMIC VISION Euronext 65 40 2,887 2,901 3,453 4,107 4,039 4,138 9,179 10,144 38% 40%

INTEGRAGEN SA Alternext 28 28 5,408 4,741 - 5,884 4,805 4,741 8,377 7,173 - -

NOVACYT Alternext 24 9 1,154 1,055 - 509 1,201 1,102 2,484 1,674 - 30%

QIAGEN MARSEILLE Alternext 74 75 12,615 10,407 3,642 3,623 15,471 13,866 10,483 12,405 35% 29%

THERADIAG Alternext 24 49 6,760 8,253 1,225 1,200 7,652 8,791 6,227 5,262 20% 23%

MEDTECH

CARMAT Alternext 325 43 - - 11,098 14,450 2,873 18 18,990 22,403 58% 65%

CROSSJECT*** Alternext 67 18 - 354 1,631 1,484 519 1,205 3,180 2,619 51% 57%

DIAGNOSTIC MEDICAL Euronext 23 85 22,265 27,964 951 846 24,662 29,659 25,631 30,152 4% 3%

EOS imaging Euronext 103 101 13,350 8,312 2,598 2,164 15,399 9,544 19,941 14,917 13% 15%

IMPLANET Euronext 43 35 7,139 6,647 1,205 700 7,786 8,507 14,352 13,382 8% 5%

INTRASENSE Alternext 15 57 4,153 4,102 1,572 1,200 5,671 5,163 8,266 6,415 19% 19%

LDR1 NASDAQ 294 323 88,527 72,125 7,437 8,524 88,527 72,125 75,951 61,272 10% 14%

MAUNA KEA TECHNOLOGIES Euronext 130 112 8,756 9,338 3,611 3,262 9,402 10,454 17,858 17,120 20% 19%

MEDIAN TECHNOLOGIES Alternext 48 45 1,203 886 2,876 2,891 1,450 1,029 6,039 5,737 48% 50%

MEDICREA INTERNATIONAL Alternext 84 109 22,900 20,700 - 1,326 22,900 20,700 - - - -

MEDTECH*** Euronext 76 21 740 483 - - 789 536 1,933 1,348 - -

NANOBIOTIX Euronext 242 40 185 74 6,026 4,312 1,595 971 9,775 6,123 62% 70%

PIXIUM VISION Euronext 100 26 - - 6,590 3,013 1,478 699 7,625 3,922 - 77%

QUANTEL Euronext 20 304 - - 4,979 5,700 32,595 28,539 34,642 33,316 14% 17%

SPINEGUARD Alternext 40 25 4,615 3,877 965 765 4,826 4,087 4,336 4,170 22% 18%

SPINEWAY Alternext 29 37 6,592 4,724 - - 6,643 5,523 6,927 5,391 - -

STENTYS Euronext 103 38 3,436 2,531 4,697 2,813 3,771 3,061 17,226 14,866 27% 19%

SUPERSONIC IMAGINE Euronext 179 126 16,961 14,097 3,311 3,293 16,961 14,097 28,249 25,380 12% 13%

THERACLION Alternext 44 19 14 - 2,200 2,100 76 0,003 4,623 3,646 48% 58%

VEXIM Alternext 63 30 5,791 2,756 674 1,141 6,701 2,289 12,076 8,360 6% 14%

VISIOMED GROUP Alternext 10 77 11,268 13,732 - - 11,268 13,732 13,180 16,094 - -

BIOCLEANTECH

CARBIOS Alternext 50 8 - - 3,314 1,695 900 554 4,016 2,675 83% 63%

DEINOVE Alternext 75 44 - - 3,945 3,345 51 666 5,574 4,518 71% 74%

FERMENTALG Euronext 99 56 181 138 2,617 1,485 1,422 592 3,654 2,834 72% 52%

GLOBAL BIOENERGIES Alternext 109 38 - - - 2,978 1,180 1,794 7,849 5,367 - -

METABOLIC EXPLORER Euronext 58 73 - - 7,711 9,207 8,340 10,939 12,618 14,965 61% 62%

OLMIX**** Marché libre 17 250 14,925 16,086 - - 16,572 16,224 15,632 16,154 - -

TOTAL 7,613 5,117 575,303 520,745 372,039 336,375 734,756 669,321 1,059,111 897,266 35% 37%

NASDAQ,

Source: reference documents and annual financial statements; France Biotech

50

ACTICOR BIOTECHADOCIAAFFICHEMAFFILOGICAGUETTANT BIOTECHAISA THERAPEUTICSALAXIAALKION BIOPHARMAALZPROTECT SASAMAROK BIOTECHNOLOGIESANAGENESIS BIOTECHNOLOGIESANTABIO SASAPOH-TECHNOLOGIESARCHIMMED SARLARIANA PHARMACEUTICALS SAATLANBIOATLANGRAMATLANTIC BONE SCREENATRAGENE RESEARCH INFORMATICSAXESS VISION TECHNOLOGYAXO SCIENCE

BCI PHARMABIOALLIANCE PHARMABIOALTERNATIVESBIOCYTEXBIOGALENYSBIOGEMMABIOMANDABIOMEDICAL TISSUESBIOPHYTISBIOVIRON

CAPSULAECARBIOSCARBOMIMETICSCARLINA TECHNOLOGIESCARMAT SACAVISKILLS SASCELENYS CELL CONSTRAINT & CANCERCELLECTISCELL PROTHERACERENIS THERAPEUTICSCHROMALYSCILOACIRMACISBIO BIOASSAYSCOLCOMCONIDIACROSSJECTCYBERNANOCYTOO CELL ARCHITECTSCYTOSIAL BIOMEDIC

DA VOLTERRADBV TECHNOLOGIESDEFYMEDDEINOBIOTICS SASDEINOVEDENDRISDENDRITICSDIAFIR

DIALPHADIAXHONITDNA THERAPEUTICSDOSISOFT

E(YE)BRAINECO-SOLUTIONEFFIMUNEELSALYS BIOTECHENTEROMEEOS IMAGINGERYTECH PHARMAEUKARYS

FERMENTALGFLAMEL TECHNOLOGIESFLUOFARMAFLUOPTICS

GAMAMABS PHARMAGENBIOTECHGENOMIC VISIONGENOSAFE SASGENOSCREENGENTICELGLOBAL BIOENERGIESGLYCODIAGGRAFTYSGTP TECHNOLOGY

HEMARINAHISTALIMHORAMAHORUS PHARMAHYBRIGENICS

I SONIC MEDICALICDD-SASIDBIOIMAGENE SAIMAXIOIMMUNO TARGETS SASIMMUTEPIMPLANET SAINDICIA BIOTECHNOLOGYINFLECTIS BIOSCIENCEINNATE PHARMAINNAVIRVAXINNOPSYSINTEGRAGEN SAINVECTYSINVIVOGEN

KAPTALIA MONITORINGKELIAKOELISKORILOGKOWOK THERADIAGNOSTIC

LABORATOIRE SYMBIOTECLABSKIN CREATIONSLCA-A DERMATECHLPS-BIOSCIENCESLTKFARMALUNGINNOVLYSECONCEPT

MABLIFEMANROS THERAPEUTICSMAUNA KEA TECHNOLOGIESMEDIAN TECHNOLOGIESMEDIT SAMEDSENICMEDTECH SAMEIOGENIXMETABOLIC EXPLORERMETABRAIN RESEARCHMETAFORA BIOSYSTEMSMETIS BIOTECHNOLOGIESMINMAXMEDICALMITOLOGICS

NANOBIOTIX S.A.NANOMEDSYNNATENCAPSNATURALPHANATURAMOLENEOVACSNEURONAXNICOXNORMANDY BIOTECHNOSOPHARMNOVACYTNOVADISCOVERYNOVALIXNOVOTECNUTRIALYS MEDICAL NUTRITIONNUTRIVERCELL SAS

ODESIA NEOSCIENCESONCODESIGNONCOMEDICSORIBASE PHARMAOTR3OXELTIS

PEPTINOVPHARNEXTPHENOCELLPHERECYDES PHARMAPHYLOGENEPHYSIOSTIMPILOSCIENCESPIXIENCEPLANT ADVANCEDTECHNOLOGIES PATPLUGMED HEART POLYPLUS TRANSFECTIONPOXELPRENYL BPRIMADIAGPROTNETEOMIX

QUANTUM GENOMICS

RBNANORD-BIOTECHREGULAXISRNTECH FRANCEROOT LINES TECHNOLOGY

S3DSCANELISSCREENCELLSELEXELSENSORIONSP3HSPLICOSSTEMCISSTENTYSSTILLA TECHNOLOGIESSTRATOZSUPERSONIC IMAGINESURGICAL PERSPECTIVESURGIMABSURGIVISIOSYNAPCELL SASSYNEIKA

TARGEONTBF, GENIE TISSULAIRETEKNIMEDTETRAHEDRONTHERACLIONTHERADIAGTHERAVECTYSTRANSGENETROPHOSTXCELL

VALNEVAVAXEAL RESEARCHVAXON BIOTECHVECT-HORUSVEXIM SAVIA VEGETALEVIROXISVITAMFEROVOXCAN

XEGEN

YSLAB

LIST OF THE COMPANIES THAT PARTICIPATED IN THE STUDY

A

B

C

E

G

H

K

M

N

O

S

V

F

I

R

T

D

P

Y

X

L Q

51

IND

EX Number of employees 12 Level of education achieved by employees 12 Origin of the company 13 Companies by age 13 Domain of activity 14 Creations and liquidations 15 Distribution of partners types 16 Geographical distribution of partners 16 Distribution of clients by industry sector 1610 Patents filed 1711 Patents granted 1712 Patents exploited 1713 Therapeutic areas - therapeutic products 1814 Stage of development - therapeutic products 1815 Orphan drugs approval by FDA 2003-2013 19 16 FDA approval 1998-2013 2017 Therapeutic areas - medical devices 2118 Stage of development - medical devices 2119 Therapeutic areas in vitro - diagnostic 2220 Stage of development in vitro - diagnostic 2221 Therapeutic areas in vivo - diagnostic 2322 Stage of development in vivo - diagnostic 2323 Domaine of activity - Biocleantech 2424 Biotech model Life ScienceTech 2825 Evolution of Life Sciences Industry Funding 2926 Distribution of VC Funding 3127 Evolution of French Life Sciences IPOs on NYSE Euronext 3128 Companies eligible to the PEA-PME 3329 Number of new entrants JEI 3430 Life Sciences IPO Fundraising by Country: NYSE Euronext and Alternext 4231 Top 10 Largest Biopharma M&A Transaction during 2013 4332 NEXT Biotech index by Market Capitalization 4333 NEXT Biotech vs. BTK index 2013-2014 4434 Comparison of VC Financing in European Life Sciences: 2008-2013 46

9 8 7

6 5 4 3 2 1

52

Angel investors: Angel investors are generally former managers or stockholders who invest their personal capital in young innovative companies (that are typically early-stage). They act as advisors, share their professional network and usually expect an equity stake in return.

Biocleantech: Biocleantech refers to the application of science and technology to living organisms, as well as to its components in order to produce highly sophisticated environmental friendly goods and services.

Biofuel: Biofuels are a type of energy derived from renewable plant and animal materials. They contain energy from geologically recent carbon fixation, such as plants. Biofuels are made by a biomass conversion and are most useful in liquid or gas form because they are easier to transport, deliver and burn cleanly. The designation “biofuel” was adopted by the European Parliament in 2003.

Bioinformatics: Bioinformatics is a field that gathers all informatics applications aiming at resolving a scientifical problem due to biology. These applications can consist in computer analysis of biological data, statistics or mathematics.

Biomass: Biomass refers to plants or plant-derived materials.

Biotechnology*: Biotechnology refers to the application of science and technology to living organisms as well as parts, products and models thereof, to alter living or non-living materials for the production of knowledge, goods and services.

BTK - NYSE Arca Biotechnology Index: As part of the NYSE Arca – a securities exchange on which stocks are traded – the NYSE Arca Biotechnology Index (BTK) is an index aiming at measuring the performance of companies in the biotechnology industry.

Business model: A Business model is the method or means by which a company tries to capture and create value from its business.

CE marking: The CE marking is a mandatory marking which indicates the conformity of a product. Thanks to this marking, the products sold within the European Economic Area (EEA) meet all the legal requirements.

Clinical trial: A clinical trial is a medical study conducted on humans in order to evaluate the effectiveness and safety of medications or medical devices by monitoring their effects.

Creation «ex-nihilo»: The term «creation ex nihilo» refers to the creation of a company from scratch. The founder must think about the concept, forecast all the steps and realize everything until the creation of the company.

Crowdfunding: Crowdfunding is a way of financing by asking a large number of people to invest in early stage projects. Young innovative companies can use this way of raising money using networks of friends, family and colleagues through social media websites.

Dilution: Dilution refers to the issuance of new stock causing the reduction in the ownership percentage of a share of stock.

EMA - European Medecines Agency: The EMA is the European agency for drug and medical devices in human and animal health. Related to the EU, the EMA grants the drug market application for all the countries of the European Union.

FDA - Food and Drug Administration: The FDA is the American agency for the control of food and drugs. The FDA grants the drug market application for all the states in the USA. Infectious diseases: Diseases caused by pathogenic microorganisms (such as bacteria, viruses, parasites, fungi). These diseases are transmissible directly from one person to another. Some preventive treatments exist to avoid the contagion.

Intellectual Property: The Intellectual Property aims at protecting inventions, innovations and creations. It legally recognized exclusive rights to the owners that are granted certain exclusive rights to a variety of assets. Intellectual property can consist of patents, trade secrets, copyrights and gives its owner a protection of use. In vitro diagnostic: An in vitro diagnostic is a method of performing a diagnostic test outside of a living body in an artificial environment, usually a laboratory. These tests can detect diseases, conditions or infections.

In vivo diagnostic: Medical procedure done on a living organism, such as a laboratory animal or human in order to test how the body responds to a substance.

IPO - Initial Public Offering: Initial public offering refers to the process by which a private company turns to a public one by selling for the first time a stock to the public. Usually, an IPO aims at expanding the capital of a company.

Angel investorsBiocleantech Biofuel Bioinformatics Biomass Biotechnology BTK Business model CE marking Clinical trial Creation «ex-nihilo»

Crowdfounding Dilution EMA FDA Infectious diseases Intellectual Property IPO In vitro diagnostic In vivo diagnostic Market capitalization Medtech

M&A Monoclonal antibodies NME NEXT Biotech Index Orphan diseases Patent Pharmacogenomics Pipeline Preclinical Proof of concept Quotation

Rare diseases R&DRoyaltiesSeed fundsSpinoffTumor escapeTherapeuticsVenture Capital

List of termsG

LOSS

ARY

*OECD definition

53

Market capitalization: Number of shares constituting a company multiplied by the price of the share. Total price that a buyer would have to reach if he wants to purchase the company.

Medtech - Medical device: Medtech refers to the use of novel technologies to develop highly sophisticated scientific products or medical devices for diagnostic, therapeutic, rehabilitative, preventive, or experimental purposes in medicine.

M&A - Mergers and Acquisitions: Mergers and acquisitions (M&A) are restructuring operations referring to the buying, selling, dividing and combining different companies helping them grow rapidly.

Monoclonal antibodies: Monoclonal antibodies are antibodies produced by identical immune cells that are clones. They are a cornerstone of immunology and are increasingly coming into use as therapeutic agents to treat some types of cancer.

NME - New Molecular Entities: A New Molecular Entity (NME) is a drug that contains an active substance which has never been approved or marketed. The NME designation indicates that the product in development is without precedent among regulated and approved drug products.

NEXT Biotech Index: Launched in April 2008, the NEXT Biotech Index concerns all biotechnology companies publicly listed on Euronext and Alternext. The index has been created in order to improve the cohesion of the sector in Europe and is composed by 25 biotechnology companies.

Orphan diseases: Orphan diseases are pathologies with no effective treatment. Their treatments consist in only reducing the symptoms.

Patent: A set of exclusive rights granted by a sovereign state to an inventor or assignee for a limited period of time in exchange for detailed public disclosure of an invention. Pharmacogenomics: Pharmacogenomics is the study of genetic mechanisms of individual variations of toxic or therapeutic effects of the drugs. The study is based on the analysis of genes and their functions.

Pipeline: A pipeline refers to the products in development of a company related to and their stage of development.

Preclinical: Preclinical studies refer to the stage of research that begins before clinical trials. These studies consist in evaluating the activity of a drug candidate based on the research phases.

Proof of concept: The proof of concept refers to the first administering of a substance to humans in order to test the efficacy of a drug candidate. Generally related to a phase II, the proof of concept determines the optimal dose and evaluates more precisely its safety.

Quotation: Price of the share on the stock exchange.

Rare diseases: Rare diseases are pathologies who affect a small number of people compared to the general population. In the European Union, a disease is considered as rare when it affects 1 person per 2,000.

R&D - Research & Development: The research and development (R&D) refers to the procedures aiming at designing, developing, testing and producing a new industrial or commercial product.

Royalties: Royalties are a monetary commission paid to an owner of a patent or a brand. The payment is made by those who wish to make use of its brand or technology.

Seed funds: Seed funds refer to the money invested (by family, angel investors…) to finance the first steps of a company creation.

Spinoff: The spinoff refers to the creation of a new independent commercial company born from the split from a bigger company. Spinoff is a way for encouraging employees to create their own company.

Tumor escape: Tumors escape refers to the capacity of a tumor to escape the immune system of the human body.

Therapeutics: Therapeutics refers to the branch of medicine that deals with the application of remedies to diseases among animals or humans.

Venture Capital: Investment funds specialized in financing start-ups. These funds can invest several millions and allow SMEs to continue growing.

54

MentionAlthough our best efforts were given to assuming the accuracy and completeness of the information provided in this report, it is possible that certain details have escaped our notice. Please signal any errors or omissions by emailing [email protected]

CreditsPhotos: Franck Dunouau, FotoliaArtistic Direction: Plus que les mots

France Biotech would like to thank the organizations that have contributed to producing the 2013 edition of the Panorama of Life Sciences®

n I2D Santé (Bretagne)

n Rouen Développement (Haute Normandie)

n Biocitech (Ile-de-France)

n Institut du Cerveau et de la Moelle épinière, ICM (Ile-de-France)

n Avrul (Limousin)

n Cancerbiosanté (Midi-Pyrénée)

n Eurasanté (Nord Pas de Calais)

n Canceropôle (PACA)

n Eurobiomed (PACA)

n Provence Promotion (PACA)

n Atlanpôle (Pays de la Loire)

n AEPI (Rhônes-Alpes)

n Lyonbiopôle (Rhônes-Alpes)

Haude COSTAGeneral SecretaryFrance Biotech

France Biotech

France Biotech is the association of French companies in the Life Sciences sector and their partners. Its mission is to contribute to domestic growth in this innovative industry and to support France’s leadership role within the European Life Sciences community. More specifically, France Biotech acts as an engine of change by interacting with the government, economic organizations, academic institutions, the media and the investor community to ensure the prioritization of the Life Sciences sector in France and the improvement of the economic, legal, regulatory and managerial environments for this important industry.

Created in 1997, France Biotech unites the leaders of innovative Life Sciences companies with their partners in the investment, legal and academic fields. Members come from all over France and represent each field of the Life Sciences (biotechnology, medical technology, clean/green technology). Under the banner of France Biotech, these industry leaders fight to create a new model of entrepreneurship in France and to support the creation of companies and jobs in this innovative sector. Led by Pierre Olivier Goineau since 2014, France Biotech continues to solicit public powers, economic decision makers and the media on behalf of actors in the French Life Sciences.

Panorama Study

Since 2002, France Biotech has conducted the Panorama of the Life Sciences Industry in France, a unique study that provides an annual update on the growth and dynamism of this innovative sector in France. The results of this study allow France Biotech to ground its proposals to the government in hard facts and to effectively represent the entire industry.

The Panorama analyses data from independent companies allocating at least 15% of total spending to Research and Development costs. France Biotech surveyed more than 450 companies via a secure online questionnaire and has analysed the data provided from 214 of the 255 total responses. The results of this survey will remain the property of France Biotech.

Pierre SORLIERProject ManagerDGCIS

Sacha POUGETCo-funderof Kalliste Biotech fund

Emmanuelle COUTENCEAUPartner life sciencesAuriga Partners

Mehdi CHATTOUProject ManagerFrance Biotech

Joffray LANÇONProject ManagerFrance Biotech

Pilot committee

Christine PLACETCEO Trophos

Pierrick VETIERProject ManagerDGCIS

Chahra LOUAFIInvestment DirectorBpifrance

FRANCE BIOTECH3/5 Impasse Reille 75014 ParisPhone: +33 (0)1 56 58 10 70

[email protected]

Panorama 2013 of the French Life Sciences Industry®

Documents

diversity of investors

nonrelated investors

competitive intelligence

competitive environment

shape international

international success

public investment policies

us nugget company