Topanin Pharma Market Analysis Report

Market Analysis Report for U.S.
XXX- Prepared for Topanin Pharma Topanin Pharma
Market Analysis Report- Topanin Pharma

Table of Contents
I. Report Highlights II. Introduction a. Harrison Hayes Objective and Process III. U.S. Market Overview a. Market Size b. Product Matrix c. Current pricing structure IV. Key Yyy Sales Channels a. Xxx/Yyy b. Xxx LAR V. Indications Segmentation a. Acromegaly b. Carcinoid Syndrome and VIPomas c. Chemotherapy Induced Diarrhea (CID) VI. Yyy/Xxx conversions to Xxx LAR a. Primary point of conversion based on prescriber group b. Primary point of conversion based on channel c. Implications for Topanin Pharma VII. Competitive Landscape a. Competitive Products b. Commonly Used Dosage Forms VIII. Prescriber Groups a. High Volume Prescribers IX. Key Recommendations X. Glossary of Terms

I. Report Highlights
The Yyy market in the U.S. in 2006 was $471 million and grew at a compounded annual growth rate (CAGR) of 16.7%. Xxx/Yyy IR generated $107.7 million in sales in 2006. The key channels or market segment of Xxx/Yyy IR in 2006 were non federal hospitals, mail service and drug stores. The key channels or market segment for Xxx LAR in 2006 were clinics, non federal hospitals, mail service and drug stores. Acromegaly was treated primarily by endocrinologists in 2006 reflecting a market size of $115.26 million with Xxx LAR representing 95 % of the market. Carcinoid syndrome and VIPomas were primarily treated by oncologists in 2006 with a combined market size of $118.5 million of which Xxx LAR represented approximately $70 million. Chemotherapy Induced Diarrhea (CID) was treated by oncologists, GIs and Internists in 2006 providing a market size of $50.1 million. All revenue was generated through the sale of Xxx/Yyy IR, with generic Yyy representing $34.1 million. Of the analyzed prescriber groups, endocrinologists and oncologists reflected the highest conversion rates from IR to LAR. Of the analyzed channels or market segments, clinics represent the highest conversion rate from IR to LAR. A moderate degree of competition exists as the market was dominated by Novartis AG in 2006. Generic manufacturers captured 57% of the IR market in 2006 led by Bedford labs with 45% market share. Harrison Hayes identified 13 development stage products that could directly or indirectly compete with Topanin Yyy. The most commonly used dosage form for Xxx/Yyy IR in 2006 was .05 and .1 mg/ml wet ampules. High Volume Prescriber (HVP) groups for Xxx/Yyy IR included: Oncologists, endocrinologists, internal medicine, GIs, and family practice physicians. These five prescriber groups represented also represented 77% of all prescriptions. Four High Volume Prescriber (HVP) groups were identified for Xxx LAR: Oncologists, endocrinologists, internal medicine, and GIs. The four groups represented 77% of all prescriptions for LAR.

II. Introduction: a.) Harrison Hayes Objective and Process
Harrison Hayes conducted a market analysis on Xxx/Yyy IR and Xxx LAR markets in the U.S. for Topanin Pharma.
The analysis focused only on the prescription market as it pertained to the use of Yyy. The broad objectives of this report were to provide Topanin Pharma with a clear understanding of the IR Yyy market, including trends, opportunities, and potential threats. Analysis allowed Harrison Hayes to answer key questions pertaining to the market such as: market size, key market segments or channels, segmentation of key patient groups, conversion points from IR to LAR Yyy, the competitive landscape, dosing, product pricing, and key high volume prescriber groups. Three general sources were utilized to form the basis for meeting the market analysis objectives: Harrison Hayes conducted an extensive literature search focused on the use of Yyy. Harrison Hayes acquired quantitative information such as sales and prescription data for Yyy drugs from IMS, serving as the basis for much of the analysis. Harrison Hayes utilized internal resources that had been collected through our past experience when analyzing similar or related markets. These resources allowed Harrison Hayes to meet the market analysis objectives and efficiently answer the key questions and prepare the Market Analysis Report.

III. Yyy Market Overview:
Yyy is a somatostatin analogue that is delivered via injection; subcutaneous, intramuscular, or continuous infusion (IV). The product is an octopeptide that mimics the pharmacology of natural somatostatin. Yyy has distinct advantages over somatostatin such as: increased inhibition of a variety of hormones including insulin, growth hormone, and glucagon. Yyy exhibits increased potency by reducing the secretion of fluids in the intestine and reducing GI motility. Yyy was first approved by the U.S. FDA in October of 1988; Novartis AG submitted additional label revisions and expansions to continue to maximize the value of its product. In 1998 Xxx LAR was approved as an extended release formulation of Yyy for patients that required maintenance therapy. Yyy was approved for the treatment of Acromegaly, the treatment of diarrhea, and flushing episodes associated with Carcinoid Tumors, and the treatment of diarrhea in patients with Vasoactive Intestinal Tumors (VIPomas). Yyy has been used to stop bleeding in patients with esophageal varices, treat pancreatic pseudo cysts, and control GI fistulae. In the U.S. three general Yyy product categories exist: Xxx LAR, commercialized by Novartis AG, is approved and has no generic competition; The product is an extended release formulation of Yyy that is administered once a month via intramuscular injection as a maintenance therapy for patients. Branded Generics Pure Generics of Yyy IR

III. Yyy Market Overview: a.) Market Size
SALES U.S. OCTREOTIDE (Figure 1) $400,000,000 $350,000,000 $300,000,000 $263,717,649 $228,767,492 $150,237,427 $98,207,701 $45,321,052 $61,063,000 $46,617,000 2003 2004 2005 2006 $316,677,101 $363,576,000 SANDOSTATIN LAR SANDOSTATIN NVR OCTREOTIDE ACE
UNITS
$250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0
$133,467,038

III. Yyy Market Overview: a.) Market Size
Harrison Hayes determined the market size of Yyy in the U.S. to include Xxx LAR, Xxx IR, and Yyy IR. In 2006, the total combined sales of the three product categories were $471.3 million. It is clear from Figure 1 that a significant portion of the market size was attributable to sales of Xxx LAR. Sales of Xxx LAR continued to increase steadily exhibiting a compounded annual growth rate (CAGR) of 16.7% from 2003 through 2006. Xxx IR lost substantial market share primarily driven by two key factors: Xxx IR lost its patent protection in 2005, resulting in a significant increase in the degree of competition from other manufacturers. Due to the increased generic competition, significant downward pricing pressure has forced Novartis AG to lower the price of Xxx IR in order to compete. The market size for Yyy IR including Xxx IR in 2006 was approximately $107.7 million, down from $133.5 million in 2003. Of the $107 million in revenue generated from Yyy Immediate Release, approximately 57% was attributable to generic Yyy IR and the remaining 43% generated from the sale of branded Yyy IR in Xxx.

III. Yyy Market Overview: a.) Market Size- Market Share
2003 Market Share (Figure 2) OCTREO IR 0% SANDO IR 37% SANDO LAR 63%
SANDO IR 10%
2006 Market Share (Figure 3)

OCTREO IR 13%
SANDO LAR 77%

III. Yyy Market Overview: a.) Market Size- Market Share
The Yyy market size grew steadily from 2003 to 2006, with a single patented product that accounted for majority of the market. A significant opportunity exists for a company that can compete with both the LAR and IR product categories and a product that is differentiated with patent protection. It is evident from both Figure 2 and Figure 3 that Xxx LAR was and remains the dominant product within the Yyy market. In 2006, the total combined sales of the three product categories were $471.3 million. It is clear from Figure 1 that a significant portion of the market size was attributable to sales of Xxx LAR. Since 2003, Xxx LAR has increased its market share to 77% up from 63% in 2003. Xxx IR has steadily lost market share to generic competition and conversion to Xxx LAR with just 10% in 2006, down from 37% in 2003. Xxx LAR and IR are both Novartis AG products, and as such, Novartis AG had a monopoly on the Yyy market with a combined market share of 90% in 2006 down from 100% market share in 2003.

III. Yyy Market Overview: a.) Market Size- Total Prescriptions
SANDOSTATIN LAR SANDOSTATIN IR OCTREOTIDE IR OCTREOTIDE IR Total
TRX U.S. OCTREOTIDE (Chart 31)
70,000 60,000 50,000 40,000 30,000 20,000 10,000 0
54,626 35,096 19,530
57,867
56,894 60,142 30,038 23,201 3,638
UNITS
35,743 22,124
25614 23,013 11515 2006
2003
2004
2005
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III. Yyy Market Overview: a.) Market Size- Total Prescriptions
The total number of prescriptions of Yyy based products grew from 54,626 in 2003 to 60,142 in 2006.
The growth in total prescriptions was driven by the increased use of Xxx LAR and the generic competition of Xxx IR.
The continued and increased use of Xxx LAR may be supported due to the products convenient monthly dosing regimen, as compared to immediate release Yyy, and a chronic pool of patients.
The number of total prescriptions is also driven by the marginal increase in IR prescriptions. Generic Yyy experienced significant growth while Xxx IR prescriptions fell sharply to 23,013 total prescriptions from 35,096 total prescriptions in 2003.
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III. Yyy Market Overview: a.) Market Size- New Prescriptions
NRX U.S. OCTREOTIDE (Chart 32)
SANDOSTATIN LAR SANDOSTATIN IR OCTREOTIDE IR OCTREOTIDE IR Total
30,000 25,000 20,000 15,000 10,000 5,000 0 2003 2004 2,194 2005 21,100 15,115 5,985 22,992 15,542 7,450 21,988 12,610 7,172 25,686 10,877 8561 6248 2006
UNITS
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III. Yyy Market Overview: a.) Market Size- New Prescriptions
The number of new prescriptions (NRXs) is defined as prescriptions written during the calendar year by the treating physician and is not prescription refills. As anticipated, Yyy IR would have a greater number of new prescriptions as part of the total prescriptions.
On average, the percent of new prescriptions as part of the total prescriptions for Xxx IR and Yyy IR in 2006 was 47% and 54% respectively.
For Xxx LAR, the number of new prescriptions as part of total prescriptions in 2006 represented only 33%.
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III. Yyy Market Overview: a.) Market Size- Discussion Point I.
It can be speculated that the growth of LAR is far more aggressive than IR for a number of
reasons. First, a high rate of conversions from IR to LAR in key chronic indications such as VIPomas, Carcinoid Syndrome, and Acromegaly may be responsible for driving the growth of LAR prescriptions. The chronic pool of patients continues to grow, increasing the demand and use of Xxx LAR. Second, many of the chronic patients may be converted from IR to LAR at an earlier stage as part of their Yyy therapy. For example, an acromegaly patient receiving subcutaneous (Sub.Q) Yyy IR for six months and converted to Xxx LAR, may now only be
receiving Sub Q Yyy IR for three months and then convert to LAR. Third and finally, the
reimbursement for self-administered medication such as pump-based/Sub Q Yyy therapy may not be available, resulting in economics dictating the Yyy modality of choice.
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III. Yyy Market Overview: a.) Market Size- Discussion Point II.
The new prescription (NRX) trends observed from 2003 to 2006 were logical and dictated by the role and
stage of specific therapy based on patient type. It is important for Topanin Pharma to understand the segmentation of treatment used based on indication. There is a clear relationship between acute and transient conditions and the use of IR Yyy therapy. In addition, there is a clear relationship between IR Yyy use and
initiation therapy. Typically, patients with acute transient conditions such as Chemotherapy Induced Diarrhea
(CID) receive IR Yyy therapy. Due to the acute nature of the disease, a high percent of patients treated are first time or treatment nave patients. This would clearly support the high percent of new prescriptions to total prescriptions. In addition, patients that are diagnosed with chronic conditions such as acromegaly, VIPomas,
and Carcinoid syndrome are initiated with IR Yyy therapy and then converted to LAR Yyy therapy. The role
the products play based on type of indication dictate the higher number of refills VS new presciptions. The number of new prescriptions of LAR is significantly lower than those of IR octreatide therapy, again because patients receiving LAR therapy are chronic patients. These chronic patients receive LAR multiple times during the year and help maintain the condition of patients.
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III. Yyy Market Overview: b.) Product Matrix
Characteristic
Package
Xxx/ Yyy IR
Ampule Single Dose Vials Multi Dose Vials Variable based on patient type Sub Q, I.V.(Bolus and/or Continuous Infusion) Pump Self Injected (Sub. Q) Health Care Professional (I.V.)
Xxx LAR
Kit Syringe Kit Vials Limited variability based on patient type
Topanin Yyy
Single Solid Dosage Cartridge
Dosing
Fixed Solid Dose
Administration
I.M. Only
Intradermal Only
Product Administrator
Health Care Professional Required 1 Hour Room Temp prior to Mix Mix with Diluent Uptake in Injection Repeated rocking required prior to injection Refrigeration Required Protection from light
Self Injected, needle-less
Preparation
Direct Uptake for Sub Q Or I.V. preparation
Insert Cartridge into Needleless Actuator
Storage
Refrigeration Required Protection from Light
None known
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III. Yyy Market Overview: b.) Product Matrix- Discussion Point I.
Harrison Hayes created a product matrix highlighting key characteristics of Topanin Yyy when compared to currently used Xxx /Yyy IR and Xxx LAR. The goal of the comparison was two fold. First, clearly provide Topanin Pharma with an understanding of currently available products. Second, highlight the strengths and weaknesses of the Topanin Pharma actuator when compared to currently available products. The packaging of Topanin Yyy is available in the form of a single fixed dosed product, while IR is available in ampoules, single dose, and multi-dose packages. LAR is available in the form of both Kits and vials only. The implications of the packaging availability are strongly evidenced in the dosing of products. IR exhibits the greatest flexibility of dosing for patients and is far more conducive for patients in the hospital. Hospitalized patients such as active variceal bleeding patients, small bowel fistulas, severe GI GVHD, and severe pancreatitis are patients that would comprise the core hospitalized patient population, with a smaller number of VIPomas, Carcinoid Syndrome, and severe CID comprising hospital patients. As a consequence the single package and dosing form may be a limitation for patients in the hospital due to the lack of required flexibility necessary for patient based on disease type. The delivery mode of intradermal, needle-less injection for Topanin will increase the ease of use and potentially capture conversions from patients receiving Sub Q IR to LAR, or patient required to begin Yyy therapy. However, the added advantage of self administration may limit the reimbursement of product. A medical necessity letter may be required for certain third party payers. The preparation and storage for Topanin Yyy is a clear differentiator when compared to IR and LAR products. Existing Yyy based products require some form of preparation even if self administered and further have specific storage requirements such as refrigeration and protection from light. Based on the information available to Harrison Hayes, no specific storage requirements exist with Topanin Yyy. These differentiating characteristics increase the ease of use and could potential drive product uptake. The convenience of administration and storage may also drive patients for new starts and conversions. Topanin should strive to capture revenue generated through Yyy sales in three specific segments. First, Topanin should capture non-hospitalized de novo patients such as acromegaly patients and CID patients. Second, Topanin should strive to inhibit the conversion of IR to LAR by highlighting the differentiating characteristics of Topanin Yyy. Finally, Topanin should attempt to capture existing LAR patients and convert them to Topanin Yyy based on key differentiators such as the benefits of self administration with intradermal, needle-less injections.
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III. Yyy Market Overview: c.) Current Pricing Structure
The pricing structure for Yyy therapy products was determined at the wholesale acquisition cost (WAC) level and average wholesale price (AWP) level. Harrison Hayes evaluated and determined the pricing structure for various dosage forms with multiple units for Xxx IR and generic Yyy and Xxx LAR.
MANUFACTURER WHOLESALER SALES CHANNEL
Topanin PHARMA
MCKESSON
VARIOUS
WAC PRICE
AWP PRICE
The chart above provides a clear representation of part of the supply chain for pharmaceutical companies within the U.S. market. In the example above, Topanin Pharma manufactures the product and sets a transfer price to the wholesaler. This set transfer price is referred to as the wholesale acquisition cost (WAC). A wholesaler such as McKesson is then responsible for distributing the product through various sales channels. The wholesaler sets a transfer price to hospitals, pharmacies, mail order service providers, and others at the average wholesale price (AWP). Since WAC prices were not directly available, Harrison Hayes made the assumption that WAC prices were 80% of AWP prices or a 20% discount on AWP prices.
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III. Yyy Market Overview: c.) Current Pricing Structure- WAC and AWP (Table 5)
Product- In US Dollars
Yyy IR-Generic Sol, IJ, 50 mcg/ml 1 ml 10s 100 mcg/ml 1 ml 10s 200 mcg/ml 5 ml 500 mcg/ml 1 ml 10s 1000 mcg/ml 5 ml Sol, IJ (1MLx25 VIALS) 50 mcg/ml 1 ml 25s 100 mcg/ml 1 ml 25s 200 mcg/ml 5 ml 500 mcg/ml 1 ml 25s 1000 mcg/ml 5ml SOL, IJ (MDV Private Label) Sol, IJ, 50 mcg/ml 1 ml 10s 100 mcg/ml 1 ml 10s 200 mcg/ml 5 ml 500 mcg/ml 1 ml 10s 1000 mcg/ml 5 ml Sol, IJ (MDV) 200 mcg/ml, 5 ml 1000 mcg/ml, 5 ml Xxx IR Sol, IJ, 50 mcg/ml 1 ml 10s 100 mcg/ml 1 ml 10s 200 mcg/ml 5 ml 500 mcg/ml 1 ml 10s 1000 mcg/ml 5 ml Xxx LAR KIT, MR (1&1/2X19G,PFS) 10 mg, ea 20 mg, ea 30 mg, ea * Source: Redbook 2005,2006,2007
Manufacturer
Bedford
2005-wac
2006-wac
95.888 184.896
891.84
2007-wac
95.888 184.896 190.624 891.84 937.968
223.504 433.248 178.712 2090.248 879.344 89.368 173.352 178.712 836.088 879.344 178.712 879.344
2005-awp
2006-awp
119.86 231.12
1114.8
2007-awp
119.86 231.12 238.28 1114.8 1172.46
279.38 541.56 223.39 2612.81 1099.18 111.71 216.69 223.39 1045.11 1099.18 223.39 1099.18
Sicor 223.504 433.248 178.712 2090.248 879.344 Sandoz 89.368 173.352 178.712 836.088 879.344 Abraxis 111.71 216.69 223.39 1045.11 1099.18 279.38 541.56 223.39 2612.81 1099.18
Novartis
95.336 184.904 190.624 891.832 937.968
95.336 184.904 190.624 891.832 937.968
95.336 184.904 190.624 891.832 937.968
119.17 231.13 238.28 1114.79 1172.46
119.17 231.13 238.28 1114.79 1172.46
119.17 231.13 238.28 1114.79 1172.46
Novartis 1509.616 1668.704 2466.88 1493.032 1694.096 2504.44 1493.032 1804.912 2668.264 1887.02 2085.88 3083.60 1866.29 2117.62 3130.55 1866.29 2256.14 3335.33
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III. Yyy Market Overview: c.) Current Pricing Structure- Unit Pricing(Table 6)
Product- In US Dollars
Yyy IR-Generic Sol, IJ, 50 mcg/ml 1 ml 10s 100 mcg/ml 1 ml 10s 200 mcg/ml 5 ml 500 mcg/ml 1 ml 10s 1000 mcg/ml 5 ml Sol, IJ (1MLx25 VIALS) 50 mcg/ml 1 ml 25s 100 mcg/ml 1 ml 25s 200 mcg/ml 5 ml 500 mcg/ml 1 ml 25s 1000 mcg/ml 5ml SOL, IJ (MDV Private Label) Sol, IJ, 50 mcg/ml 1 ml 10s 100 mcg/ml 1 ml 10s 200 mcg/ml 5 ml 500 mcg/ml 1 ml 10s 1000 mcg/ml 5 ml Sol, IJ (MDV) 200 mcg/ml, 5 ml 1000 mcg/ml, 5 ml Xxx IR Sol, IJ, 50 mcg/ml 1 ml 10s 100 mcg/ml 1 ml 10s 200 mcg/ml 5 ml 500 mcg/ml 1 ml 10s 1000 mcg/ml 5 ml Xxx LAR KIT, MR (1&1/2X19G,PFS) 10 mg, ea 20 mg, ea 30 mg, ea * Source: Redbook 2005,2006,2007
Manufacturer
Bedford
Unit 2005wac
Unit 2006wac
10 18 89
Unit 2007wac
10 18 38 89 188 9 17 36 84 176 9 17 36 84 176 36 176
Unit 2005awp
Unit 2006awp
12 23 111
Unit 2007awp
12 23 48 111 234 11 22 45 105 220 11 22 45 105 220 45 220
Sicor 9 17 36 84 176 Sandoz 9 17 36 84 176 Abraxis 11 22 45 105 220 11 22 45 105 220
Novartis
10 18 38 89 188
10 18 38 89 188
10 18 38 89 188
12 23 48 111 234
12 23 48 111 234
12 23 48 111 234
Novartis 1510 1669 2467 1493 1694 2504 1493 1805 2668 1887 2086 3084 1866 2118 3131 1866 2256 3335
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III. Yyy Market Overview: c.) Pricing Structure- Table 5 and 6 Notes
Table 6 is a direct function of prices laid out in Table 5, yet shows unit pricing. It is evident from the table that unit prices vary significantly based on dosing strength and delivery form. It is of particular value for Topanin to determine the dosing strength they will use in the Topanin actuator. The greater the dosing strength the higher the unit price per ml, and all unit prices for immediate release Yyy are expressed in price per ml.
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III. Yyy Market Overview: c.) Pricing Structure- Discussion Point I.
Introduction of Generics In 2006, generic versions of Xxx IR were launched in a variety of key dosage forms including both sub-q and I.V. formulations. Competitive Pricing Upon introduction of generic Yyy, the generic competition approached pricing with different strategies. For example, Sandoz launched both sub-q and I.V. formulations of Yyy and priced their products at a 6.45% discount to Xxx IR. Bedford Labs and Sicor (Teva) on the other hand priced their generic Yyy products competitively with Xxx IR. One possible explanation may be that since Sandoz is the generic subsidiary of Novartis, it was a strategy employed to maintain the maximum transfer from Branded to Generic product within Novartis AG. Pricing Trends It would be assumed that in order for Xxx IR to maintain market share, the price would drop in order to compete. However, the average wholesale price from 2005 to 2007 remained constant with no changes in price. Xxx LAR Xxx LAR is priced at a significant premium when compared to immediate release formulations of Yyy. This price premium may be due to the convenience of once monthly dosing, thus novel formulation of the product. It is also worth noting that the price of the 20 and 30 mg doses increased from 2005 to 2007 at a rate of 1.5%, while the price of the 10 mg dose remained constant.
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IV. Key Yyy Sales Channels: a.) Xxx/Yyy IR
Xxx IR and Yyy are commercialized by a number of manufacturers and through a number of channels or market segments. As Xxx/Yyyis the induction therapy or de novo therapy for patients on Yyy therapy, the distribution of revenue generated based on channel is markedly different from Xxx LAR. The table below reflects the different channels or market segments that Xxx/Yyy was commercialized through. CHANNEL
CLINICS Total NON FEDERAL HOSPITALS
SANDOSTATIN IR OCTRETOTIDE IR
2004
$3,837,000 $79,870,000 $79,870,000 0 $16,250,000 $16,250,000 0 $25,886,000 $25,886,000 0 $4,193,000 $10,531,000 $4,110,000 $4,236,000 $194,000 $74,000
2005
$3,697,000 $75,529,000 $42,464,000 $33,065,000 $17,414,000 $16,473,000 $936,000 $25,714,000 $23,650,000 $2,064,000 $3,688,000 $10,159,000 $4,556,000 $5,116,000 $127,000 $136,000
2006
$3,007,000 $46,365,000 $6,502,000 $39,863,000 $17,499,000 $12,113,000 $5,386,000 $22,636,000 $15,395,000 $7,241,000 $3,788,000 $6,020,000 $4,327,000 $3,873,000 $76,000 $89,000
Total MAIL SERVICE

Total DRUG STORES FEDERAL FACILITIES HOME HEALTHCARE FOOD STORES LONG TERM CARE HMO MISCELLANEOUS
Based on Table 2, it is evident that majority of the revenue generated for Xxx/Yyywas through the channel or market segment of non federal hospitals. It is also clear that other channels or market segments generated moderate revenue such as drug stores, mail service and home health care.
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IV. Key Yyy Sales Channels: a.) Xxx/Yyy IR cont.
2006 Sales Based on Channel (Figure 6)
LONG TERM CARE FOOD STORES 4% CLINICS 4% 3% HOME HEALTHCARE 6% FEDERAL FACILITIES 4%
DRUG STORES 21% NON FEDERAL HOSPITALS 42% MAIL SERVICE 16%
Based on Figure 6, it is evident that the sale of Xxx/Yyywas dominated by three channels or market segments. In 2006, non federal hospitals represented approximately 42% of all revenue generated for Xxx/Yyy IR. Mail service and drug stores were the two other channels or market segments that also generated moderate revenue and accounted for 16% and 21% respectively of Xxx/Yyysales in the U.S. in 2006. These three channels or market segments accounted for approximately 79% of all revenue generated in 2006.
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IV. Key Yyy Sales Channels: : a.) Xxx/Yyy IR - Discussion Point I.
While three channels represent majority of the revenue generated, each segment treats a specific patient
population with specific formulations and dosage forms that may be particularly insightful for Topanin Pharma. Patients treated in the non federal hospital setting, are patients that require acute critical care. These patients receive I.V. bolus or continuous infusion immediate release yyy. The primary patient population that encapsulates acute critical care patients may include active variceal bleeding patients, small bowel fistulae, severe GI GVHD, and severe pancreatitis. Harrison Hayes believes that Topanin Pharma will face two severe hurdles in trying to penetrate this channel. First, patients that are hospitalized require a broad range of I.V. infused yyy. The dosing regimen varies significantly based on indication and the patient themselves. For example, esophageal variceal bleeding require I.V. bolus of 25-50 mcgs followed by continuous I.V. infusion of 25-50 mcg/hour.2 Second, patients require the activity of yyy to be immediate, and unless Topanin Pharma can show comparable pharmacokinetic activity to yyy I.V. infusion therapy, its usage will be further minimized.
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IV. Key Yyy Sales Channels: : a.) Xxx/Yyy IR - Discussion Point I. cont.
Mail Service is the second key channel used to generate sales of immediate release yyy. Majority of these
patients receive Sub-Q injections for self administration. These patients comprise both de novo (newly diagnosed) and chronic patients that are not considered to be critical care. These patients include acromegaly, carcinoid, VIPomas, and some CID patients. It may also include patients with HIV induced diarrhea. Mail Service provides patients with the convenience of direct shipments, easy access to refills, ease of processing insurance claims/reimbursement, and increased patient education and compliance.
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IV. Key Yyy Sales Channels: : a.) Xxx/Yyy IR - Discussion Point I. cont.
Harrison Hayes believes that an opportunity exists for Topanin Pharma, as the Topanin actuator may be
more competitive with Sub-Q yyy.
Drug Stores are the final key channel responsible for sales of immediate release yyy and account for 21% of sales. Patients receiving immediate release yyy through the Drug Store channel are de novo patients leaving the hospital on Xxx/Yyytherapy being converted to Sub-Q administration, and patients that are initially started on Sub Q. Xxx/Yyytherapy. Patients that receive products from Drug Stores are those considered non acute critical care patients such as newly diagnosed carcinoid, VIPomas, and some CID patients. Sales in this channel are driven by convenience of a local pharmacists, as well as third party payer requirements for reimbursement. For example, a medical insurance company may require that a patient receive their Sub-Q immediate release yyy through a specific drug store chain in order to receive reimbursement on the product.
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IV. Key Yyy Sales Channels: : a.) Xxx/Yyy IR - Discussion Point I cont.
2004-2006 $ Change (Figure 7)
C N D H S U O E N LA EL C IS M E R O CA M M H R TE G S N RE LO E O R ST A D HC O LT FO S EA IE IT IL A M D FE
$5,000,000 $0 -$5,000,000 -$10,000,000 -$15,000,000 -$20,000,000 -$25,000,000 -$30,000,000 -$35,000,000 -$40,000,000

N LI IC S O N
R U G
E M
IL R SE V D ER AL H O
ER
Harrison Hayes evaluated the growth of each channel or market segment from 2004 to 2006, to determine which segments represented the highest growth areas. Based on Figure 7, it is evident that a serious decline in revenue occurred from 2004 to 2006. Only two channels or market segments experienced any positive growth. Both mail service and food stores experienced growth, yet grew conservatively below 5% annually. Of the three major channels, only mail service experienced an increase in revenue generation from 2004-2006. Interestingly, Non Federal Hospitals have lost the greatest market share and revenue of all channels used to commercialize immediate release yyy. From 2004-2006 sales of immediate release yyy through the Non Federal Hospital channel have declined by approximately $35 Million.
FE
S R TO IC E LS
A L
C FA
ES
A IT SP
channel
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IV. Key Yyy Sales Channels: : a.) Xxx/Yyy IR - Discussion Point II
CHANNEL
CLINICS Total NON FEDERAL HOSPITALS
2004
$3,837,000 $79,870,000 $79,870,000 0 $16,250,000 $16,250,000 0 $25,886,000 $25,886,000 0 $4,193,000 $10,531,000 $4,110,000 $4,236,000 $194,000 $74,000
2005
$3,697,000 $75,529,000 $42,464,000 $33,065,000 $17,414,000 $16,473,000 $936,000 $25,714,000 $23,650,000 $2,064,000 $3,688,000 $10,159,000 $4,556,000 $5,116,000 $127,000 $136,000
2006
$3,007,000 $46,365,000 $6,502,000 $39,863,000 $17,499,000 $12,113,000 $5,386,000 $22,636,000 $15,395,000 $7,241,000 $3,788,000 $6,020,000 $4,327,000 $3,873,000 $76,000 $89,000
Total MAIL SERVICE

Total DRUG STORES FEDERAL FACILITIES HOME HEALTHCARE FOOD STORES LONG TERM CARE HMO MISCELLANEOUS
It is likely that the decline in revenue for the key commercial channels for immediate release yyy is attributable to a number of factors. First, the steep decline in immediate release yyy in the Non Federal Hospital setting may be due to generic competition and Novartis switch in focus to more rapid conversion to Xxx LAR. In 2006, according to the table above, 85% of revenue generated through the Non Federal Hospital channel was due to generic Yyy and not Xxx IR. Sales in Drug Stores declined marginally and may also be attributable to Novartis conversion push to Xxx LAR. Finally, Mail Service sales increased marginally yet, no sufficient evidence was identified to support the slight increase in revenue generation.
29

IV. Key Yyy Sales Channels: : b.) Xxx LAR
Xxx LAR is commercialized through a number of channels or market segments. In all, 10 channels or segments are used to sell the product. Please review the table below for a list of the relevant channels or market segments, and their corresponding sales from 2004 through 2006. CHANNEL
CLINICS NON FEDERAL HOSPITALS MAIL SERVICE DRUG STORES FEDERAL FACILITIES HOME HEALTHCARE FOOD STORES LONG TERM CARE HMO MISCELLANEOUS
2004
$127,792,000 $55,682,000 $31,899,000 $26,381,000 $6,088,000 $6,167,000 $4,291,000 $2,138,000 $437,000 $224,000
2005
$170,608,000 $60,023,000 $36,846,000 $27,018,000 $7,514,000 $4,823,000 $4,271,000 $2,755,000 $370,000 $167,000
2006
$200,527,000 $65,385,000 $48,915,000 $27,965,000 $8,682,000 $4,443,000 $4,487,000 $2,647,000 $400,000 $126,000
Based on the data reflected in the table above, it is evident that Xxx LAR product sales were greatest in the clinic setting. Non federal hospitals, mail service, and drug stores also accounted for a significant portion of product sales. Clinics are often defined as outpatient channels tied to hospitals.
30

IV. Key Yyy Sales Channels: : b.) Xxx LAR cont
2006 Sales Based on Channel (Figure 4)
FEDERAL FACILITIES 2% DRUG STORES 8% MAIL SERVICE 13%
HOME FOOD STORES HEALTHCARE 1% 1% LONG TERM CARE 1%
NON FEDERAL HOSPITALS 18%
CLINICS 56%
Figure 4 clearly reflects the distribution of sales based on channel or market segment. As previously stated, clinics account for the majority of revenue generated for Xxx LAR and accounted for 56% of sales. Non federal hospitals accounted for 18% of sales, while mail service and drug stores represented 13% and 8% respectively of sales. It is worth noting that these four channels or market segments accounted for 95% of the total Xxx LAR sales in 2006. In the event Topanin Pharma decides to compete directly with Xxx LAR, marketing efforts should focus exclusively on clinics, non federal hospitals, mail service, and drug stores. 31

IV. Key Yyy Sales Channels: : b.) Xxx LAR cont
CAGR SANDO LAR CHANNELS (Figure 5)
30% 20%
Growth Rate
10% 0% -10% -20% -30%

CL FE HO N MA DR FO LT FE D IN C OD ME UG IL F IC D SE AC H S S HO S T T C R I L AR SP V E HM O MI SC
Channel
Harrison Hayes determined that not only did the clinic market segment or channel represent the greatest portion of Xxx LAR sales, but it also represented the channel growing at the most rapid pace. According to Figure 5, revenue generated through clinics grew at a compounded annual growth rate (CAGR) of 25%. It is worth noting that mail service and federal facilities were two other market segments or channels that grew aggressively at 24% and 19% respectively from 2004 to 2006. Federal facilities represented only 2% of revenue generated for Xxx LAR, yet experienced rapid growth since 2004. Assuming federal facilities sustain the rate of growth experienced over the last couple of years; Topanin Pharma should closely monitor this channel and consider integrating this segment as part of their marketing and commercialization strategy for Topanin Yyy.
32

IV. Key Yyy Sales Channels: b.) Xxx LAR- Discussion Point I
Harrison Hayes recommends that Topanin Pharma focus on key channels responsible for generating majority of the revenue for Xxx/Yyyand Xxx LAR. As such, Topanin Pharma will be able to most effectively integrate the Topanin actuator at various stages of yyy therapy treatment.
33

V. Indications Segmentation
Harrison Hayes analyzed the various indications currently treated through Yyy therapy. Four basic disease states exist that utilize yyy as a form of therapy: Acromegaly, Carcinoid Syndrome, VIPomas, and Chemotherapy Induced Diarrhea (CID). Each indication has its own set of circumstances that allow the differentiation of treatment from one patient sub population to the other. Yyy is approved for the control of symptoms in patients with metastatic carcinoid, vasoactive intestinal peptide-secreting tumors (VIPomas), and acromegaly. It should be clearly stated that yyy is a broadly used somatostatin analogue, and as a result a significant portion of product used is considered off label or investigational. Some of the indications that benefit from the use of yyy are:
AIDS-associated secretory diarrhea (including Cryptosporidiosis), control of bleeding of

esophageal varices, breast cancer, cryptosporidiosis, Cushings syndrome (ectopic), insulinomas, small bowel fistulas, pancreatic tumors, gastrinoma, postgastrectomy dumping syndrome, chemotherapy induced diarrhea (CID), graft-versus-host disease
(GVHD) induced diarrhea, Zollinger-Ellison syndrome, congenital hyperinsulinism, and

hypothalamic obesity.
34

V. Indications Segmentation: a. ) Acromegaly: Change order to have IR before LAR
ACROMEGALY MARKET 2006 Figure 14
SANDO IR 2% OCTREO IR 3%
SANDO LAR 95%
Harrison Hayes determined the market size of yyy therapy for Acromegaly patients in the U.S. Our process for determining the market size began with determining the number of units of each product category as a result of prescriptions written by all prescriber groups. Once the total number of units was computed, we were able to derive unit cost. Three unit costs were computed beginning with Xxx LAR, followed by Xxx IR, and finally Yyy IR. In 2006, the size of the Acromegaly market was $115.26 million with Xxx LAR accounting for 95% of the market.
35

V. Indications Segmentation: a. ) Acromegaly: Retail Market
ENDO RETAIL CHANNEL IR RX

2,500 2,000
# OF RX
NRX Retail TRX Retail
ENDO RETAIL CHANNEL LAR RX

3,500
NRX Retail TRX Retail
739 747 1591 1071 1062 702

# OF RX
3,000 2,500 2,000 1,500 1,000 500 0
845
998
723
1,500 1,000 500 0

2004
2271
2116
2136
2005
2006
2004
2005
2006
YEAR
YEAR
36

V. Indications Segmentation: a. ) Acromegaly: Mail Service Market
ENDO MAIL SERVICE CHANNEL IR RX

1,000 800
# OF RX
NRX Mail Service TRX Mail Service
ENDO MAIL SERVICE CHANNEL LAR RX

5,000 4,000
# OF RX
NRX Mail Service TRX Mail Service
1490 1016 3321 2564
600 400 200 0

2004 0
314
397
3,000 2,000 1,000 0

0 2004
447
450
2005
2006
2005
2006
YEAR
YEAR
37

V. Indications Segmentation: a. ) Acromegaly: Long-Term Care Market
ENDO LTC CHANNEL IR RX 60 50
NRX LTC TRX LTC
ENDO LTC CHANNEL LAR RX 100

0
NRX LTC TRX LTC
80
# OF RX
# OF RX
40 30 20 10 0
2004 0 2005 2006 54
60 40 20 0
2004 0 2005 2006 85
34
59
YEAR
YEAR
38

V. Indications Segmentation: a. ) Acromegaly: Market Observations
After analyzing the Acromegaly Xxx/Yyymarket, it was evident that endocrinologists primarily prescribe immediate release yyy through Retail (Drug Stores, etc) and mail order channels. While the volume of new (NRX) and total (TRX) prescriptions was greatest through Retail, the volume had clearly declined from 2004. On the other hand, Mail Service grew rapidly from 2004 to 2005, and experienced modest growth from 2005 to 2006. Much of this strategy may be governed by the contract pricing strategy of Novartis and other generic competitors. The three figures clearly show the three channels or market segments through which endocrinologists prescribe Xxx LAR. The three channels or market segments are: Retail, mail service and Long Term Care. Clearly, retail and mail service dominate the market segments not only through the number of total prescriptions (TRX), but also through the number of new prescriptions (NRX). Interestingly, the total number of prescriptions by endocrinologists for Xxx LAR grew the fastest through the mail service channel or market segment. In 2004, no prescriptions for Xxx LAR were filled through the mail service channel or market segment. However, in 2006 just over 4800 prescriptions were filled through the mail service channel for Xxx LAR.
39

V. Indications Segmentation: a. ) Acromegaly: Discussion Point I.
Harrison Hayes believes that Topanin Pharma can play a pivotal role in the treatment of acromegaly patients. Topanin can penetrate the market in two primary ways. First, since acromegaly patients start yyy therapy via immediate release Sub-Q yyy, the Topanin actuator can be substituted and begin treating the De Novo (New Patients) pool of acromegaly patients. Second, endocrinologists start yyy therapy via IR Sub Q. for two weeks and are required to stabilize hormone levels prior to converting patients to Xxx LAR. This provides an ideal penetration point for Topanin Yyy for patients who are about to be converted to Xxx LAR. Harrison Hayes believes that this penetration approach can be further validated via Key Opinion Leader interviews. Without conducting Key Opinion Leader interviews, it is possible that other prescriber groups such as family practice and internal medicine specialists are treating acromegaly patients, however through the currently available information, Harrison Hayes has no way of verifying this assumption.
40

V. Indications Segmentation: b. ) Carcinoid Syndrome and VIPomas
In determining the market size of carcinoid syndrome and VIPomas, Harrison Hayes conducted the analysis for both indications together. The primary reason for conducting the analysis in this manner was because both diseases share the same prescriber groups. Harrison Hayes determined that both indications were treated by oncologists as the primary prescribing group of Xxx/Yyyand Xxx LAR. We further determined that oncologists prescribing Xxx/Yyywere also targeting patients suffering from carcinoid syndrome, VIPomas, and Chemotherapy Induced Diarrhea (CID). In order to ascertain the size of the market for carcinoid syndrome and VIPomas, Harrison Hayes identified the incidence (newly diagnosed patients) for both indications and CID. The appropriate ratio was computed for the given indications and was applied specifically to the market size of yyy therapy in oncology.
41

V. Indications Segmentation: b. ) Carcinoid Syndrome and VIPomas cont.
Harrison Hayes determined through internal sources, other secondary prescriber groups some practitioners that may have a more passive role in patient management and merely follow patients. Internists for example, may be Oncologists, GIs, or Endocrinologist, but are not boards certified and as such are not classified by specialty. Surgeons may also play a role in the early use of yyy therapy such as use for pre operative tumor shrinkage prior to resection. Other more passive prescribers included in the analysis were Family Practice physicians and Gastroenterologists. Additional sub segments include surgeons, GIs, and Internists. It should be noted that these secondary prescribers are a minor subgroup of the main prescribing group in oncologists. Harrison Hayes cannot validate the specific number of prescriptions written by the secondary prescriber groups for Carcinoid Syndrome or VIPomas. However, we have attempted to allocate some revenue generated by the additional secondary prescribers based on a flat percent. Harrison Hayes has assumed that 20% of immediate release prescriptions was attributable to VIPomas and Carcinoid Syndrome, and 30% of LAR prescriptions was attributable to VIPomas and
Carcinoid Syndrome. The allocation to VIPomas or Carcinoid syndrome is based on the proportional
annual incidence of 30 people for VIPomas and 250 people for Carcinoid Syndrome.
42

V. Indications Segmentation: b. ) Carcinoid Syndrome and VIPomas- Market Size
Octreotide Oncology Market 2006 Figure 15
$109,867,688
$120,000,000 $100,000,000
Revenue
$80,000,000 $60,000,000 $40,000,000 $20,000,000 $SANDO LAR
$8,284,626
$11,053,041
SANDO IR
OCTREO IR
Figure 15 reflects the market size distribution in 2006 based on product category. Xxx LAR generated approximately $110 million in revenue in 2006 through oncologists, and represented 87% of the market. Harrison Hayes calculated the market size for Carcinoid syndrome and VIPomas for the Xxx/ Yyycategory and Xxx LAR category. The market sizes for Xxx/Yyyfor Carcinoid Syndrome and VIPomas were $961,036 and $11,532 respectively. The remaining market size was attributed to Chemotherapy Induced Diarrhea (CID). The market sizes for Carcinoid syndrome and VIPomas for the Xxx LAR product category was $69.747 million and $1.39 million respectively.
43

V. Indications Segmentation: b. ) Carcinoid Syndrome and VIPomas- Market Size cont.
Carcinoid and VIPomas Market Size 2006 Figure 16
$100,000,000 $90,000,000 $80,000,000 $98,096,150
Revenue
$70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $Carcinoid Syndrom e
09 07,4 $7,8 9 6 ,88 $93 VIPom as
$11,771,538
IR
LAR
Indication
Figure 16 reflects the market size for both indications based on product category. It is evident that the market size is driven by Xxx LAR used for the treatment of carcinoid syndrome. The total market for carcinoid syndrome in 2006 was $105.8 million with Xxx LAR accounting for $98 million. The market size for VIPomas was considerably smaller and was a direct function of incidence rates. As such, the total market for VIPomas in the U.S in 2006 was $12.7 million with Xxx LAR accounting for close to $11.7 million.
44

V. Indications Segmentation: b. ) Carcinoid Syndrome and VIPomas- Distribution of Revenue
IMMEDIATE RELEASE OCTREOTIDE SALES 2006 (Figure 34)
Octreo IR Sand IR
IMMEDIATE RELEASE OCTREOTIDE UNITS 2006 (Figure 35)
Octreo IR Sand IR
$8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $VIP INDICATION Car
18000 16000 14000 12000 10000 8000 6000 4000 2000 0 VIP INDICATION Car
Figures 34 and 35 above clearly show the specific distribution of revenue and units of Xxx IR and Yyy IR. While revenue is fairly evenly split between branded and generic immediate release yyy, the number of units vary greatly. The number of Xxx IR units is considerably greater than the number of units of generic yyy and may be attributable to Novartis AGs commitment to ensuring conversion to Xxx LAR.
45

V. Indications Segmentation: b. ) Carcinoid Syndrome and VIPomas- Discussion Point I
The treatment of Carcinoid Syndrome and VIPomas is primarily initiated by oncologists. While surgeons may
operate on patients early in the treatment process, it is unlikely that they will be responsible for managing the patients yyy therapy. Harrison Hayes believes that Topanin Yyy may play an important role in treating VIPoma and Carcinoid patients. Oncologists initiate yyy therapy with De Novo patients by prescribing immediate release, subcutaneous formulation to patients. It is unlikely that patients will be initiated on Yyy therapy by LAR due to the potential toxicity issues as evidenced in the product label including severe metabolic changes.4 However, in order to verify this prescribing trend, Primary market research must be conducted in the future. Patients are converted to LAR therapy after initiation and stabilization with IR yyy therapy. As in the case with Acromegaly, Topanin Yyy can be positioned to displace immediate release Sub. Q yyy and limit the conversion to LAR due to the convenience
characteristics of the Topanin actuator. Sales of immediate release yyy for VIPoma and Carcinoid Syndrome
patients will be primarily through the channels of Mail Service and Drug Stores. Some patients that are considered acute critical care VIPoma and Carcinoid Syndrome patients will receive immediate release yyy through hospitals; however the formulation will be either I.V. bolus or continuous infusion.
46

V. Indications Segmentation: c. ) Chemotherapy Induced Diarrhea (CID)
Harrison Hayes evaluated the Chemotherapy Induced Diarrhea (CID) market and determined the
size, presciber distribution, and product category distribution.
Based on our research, we believe that CID is primarily treated by Oncologists, Gastroenterologists
(GIs), and Internal Medicine specialists. Xxx/Yyyis the primary form of treatment for patients
that suffer from CID. Thus, the market size for CID is the cumulative function of Xxx IR and Yyyprescribed by GIs, the majority of oncologists, and 30% of prescriptions written by internists. This distribution of prescriptions to CID patients is based on Harrison Hayes internal sources. CID is primarily treated using IR yyy therapy and administered by oncologists and GIs.
47

V. Indications Segmentation: c. ) Chemotherapy Induced Diarrhea (CID)- Market Size (revenue)
CID MARKET SIZE 2006 (Figure 17)
$25,000,000 $20,000,000
REVENUE
$15,000,000 $10,000,000
Octreo IR
Octreo IR
Octreo IR
$5,000,000 $-
Sando IR Sando IR Sando IR
INTERNIST
ONCOLOGIST
GI
INDICATION
According to Figure 17, the total amount of revenue generated for the treatment of CID in 2006 was $50.1 million, with generic yyy representing aproximately $34 million and immediate release Xxx representing the remaining $16.1 million. Of the highest prescriber groups, GIs generate the most revenue for the treatment of CID and primarily use generic yyy for patients. Generic yyy may be used more through GIs as Novartis AG may focus more on prescriber groups where a high conversion rate exists to LAR. Since CID patients suffer from an acute condition, a limited opportunity exists for the use of LAR. With oncologists and internists there is a more even balance between the revenue generated for CID patient treatment.
48

V. Indications Segmentation: c. ) Chemotherapy Induced Diarrhea (CID)- Market Size (units)
CID MARKET SIZE 2006 (Figure 36)
40,000 35,000 30,000

Octreo IR
units
25,000 20,000 15,000 10,000 5,000 0

INTERNIST ONCOLOGIST Sando IR Octreo IR Sando IR
Octreo IR
Sando IR
GI
INDICATION
When reviewing the number of units used to treat CID patients, the use of units varied when compared to revenue generated. For GIs, a greater number of generic yyy units were used, however the disparity between generic and branded units was not as great when compared to revenue generated. The number of units used by oncologists and internists was significantly greater for branded immediate release yyy when compared to generic immediate release yyy. In total 89,000 units were used to treat CID patients by the respective prescriber groups.
49

V. Indications Segmentation: c. ) Chemotherapy Induced Diarrhea (CID)- Discussion Point I
Harrison Hayes believes that an opportunity exists for non-hospitalized CID patients currently receiving immediate release Sub-Q yyy. Harrison Hayes believes that more I.V. doses of immediate release yyy are used to treat patients. Furthermore, there is limited conversion from immediate release to LAR for CID patients due to the nature of the indication being primarily acute care. Many of the patients that suffer from CID are hospitalized cancer patients. This is a high priority area for Topanin Pharma due to the volume of IR prescriptions for patients, there will be limited
utility of the Topanin Actuator because of the fixed dose characteristic. It would be ideal initiating
non-hospitalized CID patients on the Topanin Actuator.
50

V. Indications Segmentation: Overall Market Discussion Point
The four primary indications analyzed in this report focusing on yyy therapy generated combined revenue of $283 million in 2006. Xxx/Yyy accounted for $63.5 million and Xxx LAR represented $219.5 million. Of the immediate release yyy used to treat the four primary indications evaluated, generic immediate release yyy represented $ 41.8 million or 42.436 thousand units. Xxx IR generated $21.8 million in revenue for the four primary indications or 73,898 thousand units. With a proposed total yyy therapy market of $471 million, it can be concluded that the four primary indications represent 60% of the market. A logical follow up question can be proposed inquiring of the remaining 40% of the market. Harrison Hayes believes that the remaining 40% of the market can be distributed into two categories. First, a portion of the market can be allocated to other indications that were not considered the primary four. For example, yyy therapy is also used to treat gastroenteropancreatic tumors including insulinomas, gastrinomas, and other tumors. Second, Harrison Hayes feels that other prescribers may be involved in ensuring receipt of yyy therapy for patients, but are not specialists. Two methodologies exist for further determining the market size for the covered indication. One could either acquire International Classification of Disease (ICD) data or conduct primary research targeting various prescriber groups. ICD 9 data may be purchased at a significant cost to Topanin Pharma, but will provide the specific disease code associated with each prescription of yyy therapy. The approximate cost of this data is in the range of ten thousand dollars (US 10,000).
51

Harrison Hayes believes there are number of key considerations that should be taken into account when Topanin Pharma reviews this data. First, prescriber groups may vary significantly in prescribing yyy therapy for patients. However, a clear distinction exists between prescribers who maintain patients and prescribers who follow patients. Some generalist prescribers may write a number of prescriptions; however they do not manage patients and have little influence on the type of yyy therapy for patients. Second, there is a tremendous amount of off -label use of yyy. Again, Yyy is used to treat the following conditions: AIDS-associated secretory diarrhea (including Cryptosporidiosis), control of bleeding of esophageal varices, breast cancer, cryptosporidiosis, Cushings syndrome (ectopic), insulinomas, small bowel fistulas, pancreatic tumors, gastrinoma, postgastrectomy dumping syndrome, chemotherapy induced diarrhea, graft-versus-host disease (GVHD) induced diarrhea, Zollinger-Ellison syndrome, congenital hyperinsulinism, and hypothalamic obesity.2 Third, Harrison Hayes normalized the units and revenue by determining the total number of generic immediate release, Xxx IR and Xxx LAR units, and the total revenue generated by the three product categories. This allowed Harrison Hayes to readily convert units into revenue. The conversions are significantly higher than their respective unit costs based on WAC or AWP, as they capture a segment of prescriber market in hospitals that are not captured by syndicated data sources. Harrison Hayes recommends that Topanin Pharma target those indications where the prescriber groups involved in patient management have a high degree of influence of patient treatment, where Sub-Q immediate release yyy formulations are actively used, where the Topanin Actuator may have a strong impact in altering conversion trends from immediate release to LAR to immediate release to the Topanin Actuator, and finally where a large market size exists. 52

V. Indications Segmentation: Overall Market Discussion Point cont
INDICATION OPPORTUNITY ASSEESSMENT
HIGH
CIDs
MARKET SIZE
Carcinoid Acromegaly
LOW
VIPomas
LOW
HIGH
SUB-Q USE
53

The figure in the previous slide depicts two key measures of the indication opportunity for Topanin Pharma. Harrison Hayes evaluated market size and use of Sub-Q immediate release yyy. Acromegaly and CID appear to be the two indications that could offer a significant opportunity for Topanin Pharma as an initial penetration strategy. Acromegaly patients are rarely acute care patients in the hospital and typically receive Sub-Q immediate release yyy. Initial yyy therapy for acromegaly patients begins with Sub-Q 50 mcg 3 times a day. While the current market size for immediate release yyy is only $5.6 million to treat acromegaly patients, the conversion to Xxx LAR is substantial. According to our analysis, the revenue generated by Xxx LAR is approximately $109.5 million. Topanin Pharma will have an opportunity to disrupt conversion to LAR due to the differentiating characteristics of the Topanin Actuator. CID is a second indication that may be worth exploring for Topanin Pharma. CID patients are treated primarily by Oncologists and GIs. Patients will receive various formulations and dosages based on response. Harrison Hayes believes that a majority of CID patients are initiated on I.V. yyy, but have the potential to be converted to the Topanin Actuator after initial treatment. In addition, the Topanin Actuator could compete directly with those patients that receive Sub-Q yyy as their initial yyy therapy. It is important to realize that the treatment of CID using yyy therapy is an off label use for the product. Finally, both VIPomas and Carcinoid Syndrome indications may offer an opportunity for Topanin Pharma, but due to the small market size (primarily driven by the low incidence) use of I.V. immediate release yyy, the ability to penetrate and disrupt conversion from LAR to Topanin will be more difficult.
54

VI. Yyy/Xxx IR Conversions to Xxx LAR
Harrison Hayes analyzed the conversions of Xxx/Yyyto Xxx LAR. The conversion analysis conducted was performed at two key points within the patient treatment and management process. First, we evaluated the conversion points based on prescriber groups, with a focus on oncologists, gastroenterologists (GIs), internists and endocrinologists. Second, we evaluated the conversion points based on channel or market segment, with a focus on key channels or market segments as outlined in section III. Each conversion point was analyzed with the goal of determining a conversion coefficient. The conversion coefficient would indicate the rate at which Xxx/Yyywas converted to Xxx LAR. A conversion coefficient of 1 would indicate that approximately 100% of IR was converted to LAR, while a coefficient of 0.2 would indicate that only 20% of IR was converted to LAR.
55

a.) Primary Point of Conversion Based on Prescriber Group
ONCOLOGY CONVERSION Figure 18
6000 NRX LAR NRX IR TRX LAR TRX IR
5000
PRESCRIPTIONS
4000
3000
2000
1000
0 2004
2005
2006
Conversion within the oncology market reflects a dynamic yet high conversion coefficient between the years 2004 to 2006. Based on Figure 18, when comparing the total prescriptions of IR to LAR, the coefficient increased form 0.75 in 2004 to > 1 in 2006. As such, Harrison Hayes can state that the rate of conversion within the oncology market was extremely high and was evidenced by a greater than 100% conversion rate in 2006. This trend may be attributable to carcinoid syndrome and VIPomas patients that require both IR and LAR yyy therapy. It is possible that significantly more prescriptions of LAR were written in comparison to IR for these two indications, which would suggest an even higher conversion coefficient. However, a reason that could possibly support the trend reflected in Figure 18 was the third indication treated by oncologists, chemotherapy induced diarrhea (CID), was primarily treated with IR and not LAR since CID is an acute condition with a finite course of treatment. CID prescriptions of IR may be responsible for the current conversion coefficient of 1.16 or greater than 100%. 56

a.) Primary Point of Conversion Based on Prescriber Group cont
ENDO CONVERSION Figure 19
9000 8000 7000
PRESCRIPTIONS
NRX LAR NRX IR TRX LAR TRX IR
6000 5000 4000 3000 2000 1000 0 2004
2005
2006
The conversion coefficient and rate within the endocrinology market or prescriber group was very different from that of oncology. The primary indication treated by endocrinologists is Acromegaly with patients receiving both IR and LAR as part of their yyy therapy. Like all yyy therapies, the patient is started with IR and then either stops treatment, remains on IR, or is converted to LAR. Based on Figure 19, the conversion coefficient is > 1 from 2004 to 2006. Therefore, all patients that begin on IR yyy therapy are converted to LAR. A clearly observed trend was a growing conversion coefficient that peaked at 2.9 in 2006. One explanation for this trend may be that endocrinologists were converting their acromegaly patients from IR to LAR more rapidly. The course of IR therapy was truncated and patients were switched to LAR. A second explanation for the trend may be attributable to the chronic nature of acromegaly, where patients may be on LAR therapy for years. With newly diagnosed patients being switched more rapidly to LAR therapy, combined with the existing population of acromegaly patients on LAR therapy, the observed trend may be logical.
57

GASTRO CONVERSION Figure 20
6000 NRX LAR NRX IR TRX LAR TRX IR
5000
PRESCRIPTIONS
4000
3000
2000
1000
0 2004
2005
2006
Gastroenterologists (GIs) are primarily responsible for treating patients with CID. The conversion coefficient within the GI prescriber group was significantly different from oncologists and endocrinologists primarily due to the nature of the indication. Figure 20 clearly depicts a conversion coefficient well below 1, however, a coefficient that increased year on year. The conversion coefficient grew from .35 in 2004 to .59 in 2006, or a 59% conversion rate in 2006. Again, one of the reasons the low conversion rate was observed may be due to the treatment regimen for CID patients. The conversion rate may be growing due to other indications GIs are treating with LAR, yet it is unlikely CID patients are receiving LAR therapy.
58

INTERNIST CONVERSION Figure 21
10000 9000 8000 NRX LAR NRX IR TRX LAR TRX IR
PRESCRIPTIONS
7000 6000 5000 4000 3000 2000 1000 0 2004 2005 2006
Internists are a combination of physician types including specialists such as GIs, oncologists, etc. The observed trend within the internist prescriber group most closely mimics that of GIs. According to figure 21, the conversion coefficient decreased from 2004 to 2006. In 2004 and 2006 the conversion coefficient was .63 and .41 respectively. Approximately 40% of IR patients were converted to LAR in 2006. This trend and low conversion rate may be attributable to the patient types being treated by internists. It is likely that internists treat a significant number of CID patients and treat other indications that require both IR and LAR therapy. It is possible that internists also treat acromegaly, VIPomas, carcinoid syndrome and other indications. This would help support the 3700 LAR prescriptions written in 2006.
59

b.) Primary Point of Conversion Based on Channel cont
CLINIC CONVERSIONS Figure 22
16000 14000 LAR IR
PRESCRIPTIONS
12000 10000 8000 6000 4000 2000 0 2004 2005 2006
Clinics represent 56% of sales of Xxx LAR, however, only contribute 3% of sales for the Xxx/Yyy market. Based on Figure 22, the coefficient of conversion for clinics is well above the 1 mark. The observed trend suggests that a decrease in IR prescriptions occurred from 2004 to 2006, while the opposite occurred for LAR, with observed increases in prescriptions from 2004 to 2006. In 2006 the conversion coefficient was 12.71, up from 4.75 in 2004. The primary explanation for this occurrence may be the nature of LAR and the patient populations the product treats. LAR is a once monthly IM injection that is best suited as a maintenance therapy for chronic patients. As such, clinics represent an outpatient venue to receive product. It can be concluded that the rate of conversion in the clinic setting well exceeds 100%.
60

NON FED HOSP CONVERSIONS Figure 23
45000 40000 35000 30000 25000 20000 15000 10000 5000 0 2004 LAR IR
PRESCRIPTIONS
2005
2006
The second channel or market segment evaluated by Harrison Hayes was non federal hospitals. Non federal hospitals represented 18% of Xxx LAR sales and 42% of Xxx/Yyy sales. Based on Figure 23 it is clear the IR represented the majority of prescriptions in the non federal hospital setting. This may be due to the acute nature of IR therapy that is used as the induction or the initial formulation of yyy therapy. The conversion coefficient increased significantly as the number of prescriptions of IR rapidly declined coupled with the modest growth of LAR prescriptions. The conversion coefficient in 2004 and 2006 was 0.1 and 0.43 respectively. This rapid decrease in IR prescriptions may again be attributable to patients more rapidly being converted to LAR therapy.
61

US MAIL SERV CONVERSIONS Figure 24

9000 8000 7000 6000 5000 4000 3000 2000 1000 0 2004
LAR IR
PRESCRIPTIONS
2005
2006
The US mail service represented approximately 13% of LAR sales and 16% of IR sales. Based on Figure 24, it can be observed that significantly more IR was prescribed as opposed to LAR. As a result, the coefficient of conversion is well below 1, yet grew due to a narrowing gap between the number IR and LAR prescriptions. The coefficient of conversion in 2006 was 0.49 up from 0.28 in 2004. In conclusion, approximately 49% of conversions occurred in 2006 from IR to LAR.
62

PRESCRIBER IR-LAR CONVERSION RATES Figure 25

350% 300% 250%
RATE
100%
CHANNEL IR-LAR CONVERSION RATES Figure 26
RATE
Oncology Gastro Endos Internists
DRUG STORES 80% MAIL SERVICE NON FED HOSP 60% CLINICS
200% 150% 100% 50% 0% 2004 2005 2006
40%
20%
0% 2004
2005
2006
The Harrison Hayes analysis of conversion points and rates have yielded a clearer understanding of which prescriber groups and which channels or market segments host the maximum conversion from IR to LAR. Figure 25 reflects the four primary prescriber groups and their respective annual conversion rates. Harrison Hayes can conclude that endocrinologists and oncologists exhibit the highest conversion rate of IR to LAR. Targeting endocrinologists and oncologists would give a company the greatest opportunity to disrupt the existing conversion of IR to LAR. Our analysis of the conversion points and rates for the key channels also yielded vital information if preparing a target product launch. Clinics by far display the highest conversion rates, which annually exceed 100%. Drug stores, mail service and non federal hospitals display much lower IR to LAR conversion rates but appear to be growing at a rapid pace.
63

VII. Competitive Landscape
A competitive analysis was completed to determine a variety of key market opportunities or threats. As part of the competitive analysis, Harrison Hayes analyzed competitors with marketed product (generic yyy) and products at various stages of development. In addition, we prepared a summary of the most commonly used dosage forms for both Xxx LAR and Xxx/Yyy IR.
64

a.) Competitive Products in Market and in Development
2006 IR MARKET SHARE Figure 27

SICOR PHARM 5% SANDOZ 6% ABRAXIS PHARM 1%
NOVARTIS 43%
BEDFORD LABS 45%
Prior to 2005, yyy therapy was dominated by Novartis AG. Upon patent expiration of Xxx IR, a flurry of generic competitors entered the market. Figure 27 provides an accurate representation of the competitive landscape specifically for Xxx/Yyy in the U.S. In 2006 the market was dominated by Novartis AG and Bedford Labs, both pharmaceuticals companies holding a combined 88% market share. Three other generic manufacturers sell Yyy but represent only 12% of the market.
65

IR MARKET SHARE TRENDS Figure 28
ABRAXIS PHARM BEDFORD LABS NOVARTIS SANDOZ SICOR PHARM
$160,000 $140,000 $120,000

SALES (000)
$100,000 $80,000 $60,000 $40,000 $20,000 $0 2004
2005
2006
The Xxx/Yyy market was once dominated by Novartis AGs Xxx IR, which held 100 % of the market. In 2005, a variety of generic manufacturers entered the market with mixed results. Bedford Labs experienced significant growth from 2005 to 2006 and held 45% of the market and was the leading product based on sales of $46.7 million in 2006. Xxx IR lost considerable market share, and held only 43% of the market. Other generic manufacturers experienced growth, yet represented only minor holdings of market share.
66

A variety of compounds were identified in clinical development directly targeting key indications treated by yyy. Some of the compounds identified were targeted therapies designed specifically to attack tumors, while others function in an indirect manner such as yyy. The table to the left lists the identified products in development that could in the future compete with yyy either directly as part of the yyy market or indirectly as part of the indication market. In total, 13 products were identified with 10 in clinical development and 9 products in phase II development and beyond.
67

b.) Most Commonly Used Dosage Forms
Sandostatin/Octreotide IR
AMP .05MG 1MLX10 AMP .5MG 1MLX10 AMP WET .05MG/ML 1MLX20 AMP WET .1MG/ML 1MLX50 AMP WET .5MG/ML 1MLX20 VIAL WET Multi Dose .2MG/ML 5ML VIAL WET MultiDose 1000MCG/ML 5ML VIAL WET MultiDose 1MG/ML 5ML VIAL WET MultiDose 200MCG/ML 5ML VIAL WET Multi Dose 5MG/5ML 5MLX1 VIAL WET Sing Dose .05MG/ML 1MLX10UD VIAL WET Sing Dose .1MG 1MLX10 VIAL WET Sing Dose .1MG/ML 1MLX10UD VIAL WET Sing Dose .5MG 1MLX10 VIAL WET Sing Dose .5MG/ML 1MLX10UD VIAL WET Sing Dose 100MCG/ML 1MLX25 VIAL WET Single Dose 500MCG/ML 1MLX25 VIAL WET Sing Dose 50MCG/ML 1MLX25
2004
0 0 52260 75990 12540 0 0 8319 0 5418 0 0 0 0 0 0 0 0
2005
33 140 66810 116900 18880 50 0 9783 1137 4532 5420 9510 0 1080 0 0 0 0
2006
79 850 47240 86420 14980 154 395 7906 4865 2692 12770 22890 780 4100 200 7200 250 5425
Harrison Hayes evaluated the most commonly used dosage forms based on units prescribed from 2004 to 2006. The product dosage forms evaluated were segmented into Xxx/Yyy and Xxx LAR. Table 4 lists the various product dosage forms for both product types from 2004 to 2006 expressed in units. Based on the table at left, it is clear that high unit volumes exist for specific dosage forms for both IR and LAR products. The top IR products that sold the highest unit volumes in 2006 were Vial 0.1 mg/ml x 10, Ampule Wet .05 mg/ml x 20, and Ampule Wet 0.1 mg/ml x 50. With regard to Xxx LAR dosage forms, far fewer are available to prescribers and patients. The kit syringes accounted for majority of the units sold in 2006 for LAR. The Kit Syringe 20 mg and 30 mg sold a combined 22,700 units out of a total 25,600 units sold for all LAR products in 2006.
Sandostatin LAR
KIT SYRINGE 10MG 1 KIT SYRINGE 20MG 1 KIT SYRINGE 30MG 1 KIT VIAL 10MG 1 KIT VIAL 20MG 1 KIT VIAL 30MG 1
2004
255 1531 1931 1395 9183 5739
2005
1619 11467 9253 213 1427 627
2006
1956 12103 10689 76 624 166
68

b.) Most Commonly Used Dosage Forms- Discussion Point I
After reviewing the dosage forms for immediate release yyy, it is evident that the 50 and 100
mcg doses are the most commonly used. Since immediate release yyy products are not packaged in pre-filled dosage forms, Harrison Hayes is unable to determine which products are used for Sub-Q injections and which are used as part of I.V. immediate release yyy therapy. It is clear
that a fixed dose in the Topanin Actuator of either 50 mcg or 100 mcg would be most convenient
for patients based on the current use of those dosage forms. In addition, it is worth noting that due to the significant dose ranges for patients based on indication and individual patient response, Harrison Hayes is unable to accurately determine the cost per dose per patient type
due to the significant variability of dose per individual patient. It is likely however, that the
lower dosage forms are used as Sub-Q injections and the higher dosage forms > 100 mcg are used as part of I.V. yyy therapy.
69

VIII. Prescriber Groups
A key component of the market analysis performed by Harrison Hayes focused on the various prescriber groups. The analysis of the prescriber groups served a number of important purposes. For example, in designing a commercial strategy or licensing strategy for a product, understanding the target market of prescribers allows one to build a more specialized sales force or target licensees with already established infrastructure focused on the key prescribers. The analysis of the prescriber groups also served as the basis for determining the market size of the four key indications treated by yyy therapy.
70

a.) High Volume Prescribers
2006 IR PRESCRIBER GROUPS Figure 30
INTERNAL MEDICINE 27% OTHER 13% GERIATRICS 4% SPECIALTY UNSPECIFIED 5% OSTEOPATHIC MEDICINE 6%
GASTROENTERO LOGY 14%
ONCOLOGY 13%
FAMILY PRACTICE 10%
ENDOCRINOLOG Y 8%
An evaluation of the Xxx/Yyy prescriber groups yielded a more interesting dynamic than the evaluation of LAR prescribers. While it is clearly understood that internal medicine, GIs, oncologists, and endocrinologists play a pivotal role in treating and man aging patients on yyy therapy, there appears to be one other key group not previously captured. Based on Figure 30, the four primary prescriber groups are responsible for 60% of prescriptions of Xxx/Yyy IR. Family practice physicians were responsible for 10% of all prescriptions in 2006. This physician group is a combination of physicians much like internists and appear to play a more pivotal role in the administration of yyy therapy to patients. Without conducting primary market research and speaking with key family practice physicians, Harrison Hayes is unable to determine the role and indications treated by this physician group. It is also worth noting that other prescriber groups such as geriatrics and osteopathic medicine specialists also play a role in the treatment of patients on yyy therapy.
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a.) High Volume Prescribers- Discussion Point I
HVP ROLE IN PATIENT MANAGEMENT ONC CID GIS CID ONC VIP&CAR
HIGH
VOLUME OF RXS
FAMILY MULT INTERN MULT
ENDOS ACRO
LOW
LOW
HIGH
PRESCRIBER INFLUENCE
Understanding the role and function that each key prescriber group plays in the treatment protocols for patients receiving yyy therapy is extremely important. The chart above clearly shows the type of role and function each one of the key prescriber groups plays in treating certain indications.
72

a.) High Volume Prescribers- Discussion Point I
Gastroenterologists GIs play an important role in use of immediate release yyy to treat a variety of indications. GIs may use immediate release yyy to treat the following indications: CID, AIDS Associated Diarrhea, Pancreatitis, Post Gasterectomy (Dumping Syndrome), and other bowl mobility disorders. GIs have a strong influence over the type of treatment these patients receive as it pertains to the stated indications. Interestingly, all the indications stated above utilize yyy therapy in an off label manner. Oncologists Oncologists play an extremely important role in the use of immediate release yyy. Oncologists may prescribe immediate release yyy for the following indications: CID, VIPomas, Carcinoid Syndrome, Pancreatic Tumors, Acute and Chronic GVHD. Oncologists are one of the key prescriber groups that have a high level of influence on the immediate release regimen patients receive. Endocrinologists Endocrinologists also play a key role in the use of immediate release yyy for various indications. Endocrinologists may use immediate release yyy for the following indications: Acromegaly, Hypothalamic Obesity, Congenital Hyperinsulinism. Endocrinologists have a high influence on the treatment regimen given to the above stated patients. Internal Medicine These high volume prescribers (HVPs) play differing roles in the treatment of patients based on the indication. Harrison Hayes believes that internal medicine HVPs treat the following indications: Variety of Secretory Diarrhea, including CID, HIV Induced Diarrhea, AND Other General Follow Ups from Referring Oncologists to include VIPomas and Carcinoid Syndrome. Internal Medicine prescribers have a moderate amount of influence in treating patients. We believe their influence may be higher in treating CID patients, and lower with treating VIPoma and Carcinoid Syndrome patients. Family Practice physicians are high volume prescribers that have little to no influence on the immediate release yyy treatment regimen. These prescribers merely follow patients from referrals from Oncologists and Gastroenterologists.
73

a.) High Volume Prescribers- Discussion Point I.
Our review of the prescriber groups providing yyy therapy to patients yielded interesting results. The treatment of patients with Xxx LAR revealed four primary groups that accounted for 77% of the market. More specifically, endocrinologists represented 31% of total prescriptions, oncologists represented 20% of total prescriptions, internal medicine represented 15% of total prescriptions and GIs represented 11% of total prescriptions. The remaining market was highly fragmented with numerous prescriber groups involved in either managing the patient or following the patient as recommended from the primary patient manager.
2006 LAR PRESCRIBER GROUPS Figure 29
O ST EO PA T HI C M ED I C I N E 3% G EN ER A L HEM A T O LO G Y SU R G ER Y 3% 3% F A M I LY PR A C T I C E 4% SPEC I A LT Y U N SPEC I F I ED 5%
EN D O C R I N O LO G Y 3 1%
N U R SE PR A C T I T I O N ER 2% PED I A T R I C S 1% O T HER 2%
O N C O LO G Y 20%
I N T ER N A L M ED I C I N E 15%
G A ST R O EN T ER O LO G Y 11%
74

a.) High Volume Prescribers- Discussion Point II.
HVP ROLE IN PATIENT MANAGEMENT
HIGH
ENDOS ACRO ONC VIP&CAR INTERN MULT GIS VIP and CAR
VOLUME OF RXS
LOW
LOW
HIGH
PRESCRIBER INFLUENCE
The chart above clearly reflects the role the prescriber plays in prescribing Xxx LAR for various indications.
75

a.) High Volume Prescribers- Discussion Point II.
Gastroenterologists Prescriptions written for Xxx LAR by GIs are primarily used to treat the following indications: VIPomas, Carcinoid Syndrome, and Pancreatic Tumors. GIs however are far less influential with the treatment regimen for the above indications and are referred from the primary prescriber group, oncologists. While GIs have a high influence in treating CID patients with immediate release yyy, their influence is low with respect to Xxx LAR prescriptions. Oncologists This group of prescribers has a high influence on the use of Xxx LAR for the following indications: VIPomas, Carcinoid Syndrome, and Pancreatic Tumors, and Other Off Label Use. Oncologists are a group of prescribers that have a high level of influence in the treatment regimen received by patients for immediate release yyy and Xxx LAR. As such, Oncologists are a key prescriber group involved in the conversion of patients from IR to LAR. Endocrinologists Patients that receive Xxx LAR from endocrinologists are primarily acromegaly patients. Endocrinologists have a high level of influence in the treatment regimen received by acromegaly patients for Xxx LAR. Endocrinologists are a prescriber group that reflects a high level of influence on the treatment of acromegaly patients for both immediate release and LAR yyy therapy, and subsequently is a prescriber group that reflects the highest conversion rate from immediate release to Xxx LAR. Internal Medicine This group of prescibers functions to support follow up from other referred physicians. In particular, internal medicine prescribers may treat VIPomas, Carcinoid Syndrome, Acromegaly, and Other Off Label Indications. Internal medicine prescribers had a moderate level of influence when treating patients with immediate release yyy, but it is believed they have a very low level of influence with treatment regimens using Xxx LAR.
76

IX. Key Recommendations
Harrison Hayes believes that Topanin Pharma should implement a targeted development and commercialization strategy in order to ensure product approval and penetration within the market. Since yyy is used extensively in an off label fashion, and used by numerous practitioners, it is extremely difficult to quantify the market size of specific indications based on dosage form, channel or market segment or prescriber group.
Harrison Hayes recommends that Topanin Pharma focus on market segments where a high requirement on dosing flexibility does not exist.
Prescriber groups that actively manage De Novo and Chronic patients should be targeted such that the Topanin Actuator may be adopted not only as the initiation therapy, but can also be used to divert conversion from immediate release yyy to Xxx LAR to the Topanin Actuator. Further, prescriber groups that exhibit a high degree of influence on patient ocrteotide therapy management should be targeted. We recommend that the key channels that Topanin Pharma should create commercial infrastructure to support focus on Mail Service and Drug Stores.
77

IX. Key Recommendations
Topanin Pharma should obtain Primary Market Research by conducting interviews with Key Opinion Leaders (KOLs) in oncology, endocrinology, gastroenterology and pharmacy. These KOLs could also be utilized by Topanin Pharma to form a Scientific Advisory Board (SAB). Topanin Pharma must complete well designed pharmacokinetics (PK) and pharmacodynamics (PD) studies to support efficacy and safety of Topanin Yyy versus current standards of care. This should solidify early product uptake and conversion efforts of Topanin Yyy from Xxx/Yyy IR. Also, these studies may support the delay to LAR starts, eliminate conversion to LAR, and perhaps support conversion from LAR to Topanin Yyy. Topanin Pharma should identify and collaborate with a select pharmacy mail service that can assist in Topanin Yyy uptake, billing, reimbursement, conversions, and provide patient education. Topanin Pharma should become actively involved in disease management and patient education. Topanins focus should include support groups such as the Carcinoid Cancer Foundation and the Pituitary Foundation. In addition, Topanin Pharma should investigate the impact of the case managers role in disease management.
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X. Glossary of Terms a.) Reimbursement/Managed Care
Managed Care Organization A Healthcare provider (or group of medical service providers) who contracts to provide a wide variety of healthcare services to enrolled members through participation providers. Health Maintenance Organization (HMO) A health plan, either for-profit or not-for-profit, that provides comprehensive managed care health services to its members for a fixed, prepaid premium. Members must use participating providers and are enrolled for a fixed period of time. Pharmacy Benefit Manager (PBM) An organization that provides administrative services in processing and analyzing prescription claims for pharmacy benefit and coverage programs. PBM services can include contracting with a network of pharmacies; establishing payment levels for provider pharmacies; negotiating rebate arrangements; developing and managing formularies, preferred drug lists, and prior authorization programs; maintaining patient compliance programs; performing drug utilization review; and operating disease management programs. Many PBMs also operate mail order pharmacies or have arrangements to include prescription availability through mail order pharmacies. Prior Authorization A formal process requiring a provider obtain approval to provide particular services or procedures before they are done. This is usually required for nonemergency services that are expensive or likely to be abused or overused. A managed care organization will identify those services and procedures that require prior authorization, without which the provider may not be compensated. Risk Contract A contract between a payer such as Medicare or Medicaid and a managed care organization or other managed care entity under which the entity agrees to provide, or arrange for the provision of, a specified set of services to enrolled beneficiaries in exchange for a fixed monthly capitation payment on behalf of each enrollee. By entering into such a contract the managed care organization is assuming the financial risk for costs of care to enrolled individuals. Capitation Payment A type of payment made under a risk contract, generally to a managed care organization (MCO). The payment is made on a monthly basis at a fixed amount on behalf of each individual enrolled in the MCO. In exchange for the capitation payment, the MCO agrees to provide or arrange services covered under the contract with the plan.
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X. Glossary of Terms a.) Reimbursement/Managed Care cont.
Carve Out A term used informally to describe the services excluded from a risk contract (generally a managed care organization) to which Medicaid beneficiaries would otherwise be entitled. A common carve out involves mental health services. A state Medicaid agency may nonetheless continue to pay for these services on a fee-for-service basis. Diagnosis-Related Group (DRG) Diagnosis-Related Group (DRG) is a system to classify hospital cases into one of approximately 500 groups, also referred to as DRGs, expected to have similar hospital resource use, developed for Medicare as part of the prospective payment system. DRGs are assigned by a "grouper" program based on ICD diagnoses, procedures, age, sex, and the presence of complications or comorbidities. DRGs have been used since 1983 to determine how much Medicare pays the hospital, since patients within each category are similar clinically and are expected to use the same level of hospital resources. DRGs may be further grouped into Major Diagnostic Categories (MDCs). Centers for Medicare and Medicaid Services (CMS) The agency in the U.S. Department of Health and Human Services responsible for administering the Medicaid, Medicare, and State Childrens Health Insurance programs at the federal level. CMS was formerly known as the Health Care Financing Administration (HCFA). Disproportionate Share Hospital (DSH) Payments DSH Payments are made by either Medicare or a states Medicaid program to hospitals that serve a disproportionate share of low-income or uninsured patients. These payments are in addition to the regular payments such hospitals receive for providing care to Medicare and Medicaid beneficiaries. Medicare DSH payments are based on a federal statutory qualifying formula and payment methodology. For Medicaid DSH, there are certain minimum federal criteria, but qualifying formulas and payment methodologies are largely determined by states. 340B Drug Discount Program Section 340B of the Public Health Service Act requires pharmaceutical manufacturers participating in the Medicaid program to provide discounts on covered outpatient drugs purchased by specified government-supported facilities (called "covered entities") that serve vulnerable patient populations. Covered entities include public hospitals and community health centers.
80

X. Glossary of Terms b.) Pricing/Cost
Wholesale Acquisition Cost (WAC) The price paid by a wholesaler for drugs purchased from the wholesalers supplier, typically the manufacturer of the drug. On financial statements, the total of these amounts equals the wholesalers cost of goods sold. Publicly disclosed or listed WAC amounts may not refle ct all available discounts. Average Wholesale Price (AWP) A national average of list prices charged by wholesalers to pharmacies. AWP is sometimes referred to as a sticker price bec ause it is not the actual price that larger purchasers normally pay. For example, in a study of prices paid by retail pharmacies in eleven states, the average acquisition price was 18.3 percent below AWP. Discounts for HMOs and other large purchasers can be even greater. AWP information is publicly available. Federal Supply Schedule (FSS) The collection of multiple award contracts used by federal agencies, U.S. territories, Indian tribes and other specified entities to purchase supplies and services from outside vendors. FSS prices for the pharmaceutical schedule are negotiated by the VA and are based on the prices that manufacturers charge their most-favored non-federal customers under comparable terms and conditions. Because terms and conditions can vary by drug and vendor, the most-favored customer price may not be the lowest price in the market. FSS prices are publicly available. Medicaid Best Price The lowest price paid to a manufacturer for a brand name drug, taking into account rebates, chargebacks, discounts or other pricing adjustments, excluding nominal prices. Best price is a variable used in the Medicaid rebate statute to calculate manufacturer rebates owed to state Medicaid agencies. Prices charged to certain governmental purchasers are statutorily excluded from best price including prices charged to the VA, DOD, Indian tribes, FSS, state pharmacy assistance programs, Medicaid, and 340B covered entities. Best price data is not publicly available. 340B Price The maximum price that manufacturers can charge covered entities participating in the Public Health Services 340B drug disco unt program. The 340B discount is calculated using the Medicaid rebate formula and is deducted from the manufacturers selling price rather th an paid as a rebate. Compared to a drugs AMP, covered entities receive a minimum discount of 15.1% for brand name drugs and 11% for generic and o ver-thecounter drugs and are entitled to an additional discount if the price of the drug has increased faster than the rate of inflation. Covered entities are free to negotiate discounts that are lower than the maximum allowable statutory price.
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Market Analysis Report for U.S.

XXX- Prepared for Topanin Pharma Topanin Pharma

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Market Analysis Report- Topanin Pharma

Market Analysis Report- Topanin Pharma

Market Analysis Report- Topanin Pharma

Market Analysis Report- Topanin Pharma

$250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0

Market Analysis Report- Topanin Pharma

Market Analysis Report- Topanin Pharma

2006 Market Share (Figure 3)

SANDO LAR 77%

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Market Analysis Report- Topanin Pharma

TRX U.S. OCTREOTIDE (Chart 31)

70,000 60,000 50,000 40,000 30,000 20,000 10,000 0

54,626 35,096 19,530

56,894 60,142 30,038 23,201 3,638

25614 23,013 11515 2006

Market Analysis Report- Topanin Pharma

Market Analysis Report- Topanin Pharma

NRX U.S. OCTREOTIDE (Chart 32)

SANDOSTATIN LAR SANDOSTATIN IR OCTREOTIDE IR OCTREOTIDE IR Total

Market Analysis Report- Topanin Pharma

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Market Analysis Report- Topanin Pharma

Market Analysis Report- Topanin Pharma

Fixed Solid Dose

Self Injected, needle-less

Direct Uptake for Sub Q Or I.V. preparation

Insert Cartridge into Needleless Actuator

Refrigeration Required Protection from Light

Market Analysis Report- Topanin Pharma

Market Analysis Report- Topanin Pharma

Market Analysis Report- Topanin Pharma

95.336 184.904 190.624 891.832 937.968

95.336 184.904 190.624 891.832 937.968

95.336 184.904 190.624 891.832 937.968

119.17 231.13 238.28 1114.79 1172.46

119.17 231.13 238.28 1114.79 1172.46

119.17 231.13 238.28 1114.79 1172.46

Market Analysis Report- Topanin Pharma

Sicor 9 17 36 84 176 Sandoz 9 17 36 84 176 Abraxis 11 22 45 105 220 11 22 45 105 220

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Market Analysis Report- Topanin Pharma

Market Analysis Report- Topanin Pharma

Total MAIL SERVICE

Market Analysis Report- Topanin Pharma

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Market Analysis Report- Topanin Pharma

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Market Analysis Report- Topanin Pharma

$5,000,000 $0 -$5,000,000 -$10,000,000 -$15,000,000 -$20,000,000 -$25,000,000 -$30,000,000 -$35,000,000 -$40,000,000

Market Analysis Report- Topanin Pharma

Total MAIL SERVICE

Market Analysis Report- Topanin Pharma

Market Analysis Report- Topanin Pharma

FEDERAL FACILITIES 2% DRUG STORES 8% MAIL SERVICE 13%

HOME FOOD STORES HEALTHCARE 1% 1% LONG TERM CARE 1%

NON FEDERAL HOSPITALS 18%

Market Analysis Report- Topanin Pharma

10% 0% -10% -20% -30%

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Market Analysis Report- Topanin Pharma