Trinity Delta

BerGenBio A rosy outlook for Axl

The potential of Axl as an oncology target is now widely accepted and

BerGenBio’s BGB324 is a first-in-class selective oral Axl inhibitor in clinical

development. Data shows that BGB324 can reduce resistance to targeted and

chemotherapies. However, it is now recognised that BGB324’s greatest

prospects could be as an immuno-oncology agent that acts both on tumour and

immune cells. There are currently six Phase II studies ongoing, with three in

immuno-oncology settings, and regular data read-outs are due over the coming

year. We value BerGenBio at NOK1,564m ($184m), or NOK31.34/share.

Year-end: December 2015 2016 2017E 2018E

Sales (NOKm) 0.0 0.0 0.0 0.0

Adj. PBT (NOKm) (72.1) (129.8) (194.1) (238.8)

Net Income (NOKm) (72.1) (129.8) (194.1) (238.8)

Adj. EPS (NOK) (296.3) (419.7) (4.3) (4.8)

Cash (NOKm) 74.0 161.8 348.6 114.3

EBITDA (NOKm) (72.7) (131.4) (194.2) (237.9)

Source: Trinity Delta Note: Adjusted numbers exclude exceptionals.

▪ BerGenBio is leading the Axl field BerGenBio leads the understanding of Axl biology and its lead programme, BGB324 is the most advanced selective oral Axl inhibitor in development. A key role of Axl in cancer is to promote epithelial-mesenchymal transition (EMT), which is linked to metastasis and drug resistance. Recently the broad ranging immune suppressive effects of Axl signalling in cancer have gained prominence. BerGenBio is developing a portfolio of therapies and targeting Axl.

▪ Axl inhibition promises to transform immuno-oncology Through a combination of direct and indirect effects, the inhibition of Axl has the potential to significantly enhance the activity of immuno-oncology therapies. Within a tumour, Axl signalling has been shown to enable tumour cells to both resist immune cell mediated killing and to support an immune-suppressive tumour microenvironment. Axl inhibition not only reverses these effects but also increases the anti-tumour activity of many immune cells, including cytotoxic T-cells.

▪ Six Phase II clinical studies underway To understand better BGB324’s potential, BerGenBio has a broad Phase II programme, with an emphasis on immuno-oncology. Three of the six trials are in combination with Merck’s pembrolizumab (Keytruda) in melanoma, lung and breast cancer. Data from all of the trials is expected throughout 2018.

▪ rNPV model suggests a valuation of NOK31.34/share We prudently value BerGenBio using a rNPV model based only on the indications/settings in which BGB324 is currently being assessed. This gives a value of NOK1,564m ($184m), or NOK31.34/share, with significant upside from positive clinical data. BerGenBio had NOK399m in cash at Q317, which should allow it to operate into H119 and deliver data from the current clinical trials.

Initiation of coverage

4 January 2018

Price (NOK) 21.30

Market Cap (NOKm) 1,063

Enterprise Value (NOKm) 664

Shares in issue 49.9m

12 month range (NOK) 19.00-26.50

Free float 57%

Primary exchange Oslo

Other exchanges N/A

Sector Healthcare

Company Code BGBIO

Corporate client Yes

Company description:

BerGenBio is a clinical-stage, drug

development company based in

Bergen, Norway and Oxford, UK. It is

developing innovative anti-cancer

therapies that act on the promising

Axl signalling pathway. The lead

oncology compound, BGB324, is in a

number of Phase II trials.

Analysts

Mick Cooper PhD

mcooper@trinitydelta.org

+44 (0) 20 3637 5042

Franc Gregori

fgregori@trinitydelta.org

+44 (0) 20 3637 5041

Jan

-18

No

v-1

7

Sep

-17

Jul-

17

May

-17

15

20

25

30

2

Trinity Delta

4 January 2018

BerGenBio

Investment case

BerGenBio is a clinical stage biotechnology company that is focussed on

exploiting its knowledge of the Axl signalling pathway as a drug target. It was

founded in 2007 by Prof James Lorens of the University of Bergen, Norway. His

pioneering work in understanding the role and biology of Axl is being explored in

oncology indications, with early clinical results showing encouraging activity. The

lead compound, BGB324, is undergoing "proof of concept" Phase II trials as both

a single agent and in combination therapy. Following an IPO in April 2017,

raising NOK400m ($47m) gross, BerGenBio is listed on the Oslo Exchange. The

company consists of 35 people, with research facilities in Bergen and the clinical

development functions in Oxford, UK.

Valuation

BerGenBio is a classic biotechnology company and is well suited to valuing using

an rNPV model. Using conservative assumptions throughout, we have ascribed a

risk-adjusted value to BGB324 in each indication, summed them and netted

against projected costs. Although BGB324 has clear commercial potential in

many other indications, we have attributed no value to those indications or to

the pre-clinical programmes. These latter assets are expected to progress into

the clinical stages in the near term and represent additional upside.

Despite our prudent approach, we value BerGenBio at NOK1,564m ($184m) or

NOK31.34 per share, which is 47% above the current share price. There are

multiple catalysts to drive further upside over the next 15 months, as data from

the six open-label Phase II trials are expected to report regular data.

Financials

BerGenBio had NOK399m at Q317, sufficient cash to operate into H119, after

raising NOK400m (gross) at NOK25/share during the IPO. Before then, the

company should report final ORR data from four clinical trials (acute myeloid

leukaemia [AML], non-small cell lung cancer [NSCLC] with erlotinib and with

pembrolizumab, and triple-negative breast cancer [TNBC] with pembrolizumab),

and interim data from the two other trials.

Sensitivities

The typical industry risks associated with clinical trials, regulatory hurdles,

financing, possible partnering discussions, and eventually pricing and

commercialisation apply. Currently, the main sensitivity relates to the novelty of

the Axl protein as a therapeutic target. Successful clinical outcomes would

clearly position BerGenBio at the forefront of an exciting, and lucrative, area;

however, inevitably such innovation carries a higher risk profile. The key near-

term inflection points are the results of various oncology trials currently

underway with BGB324. If successful, the next sensitivity would be whether

management opts to license the programme out or look to assume a degree of

self-commercialisation; at this stage, we expect they will seek a partner.

Pioneering novel drug classes

carries additional risk but

provides greater upside potential

Our model employs conservative

assumptions and suggests the

company is worth NOK1,564m

Current cash position suggests a

runway through to H119

The experts in Axl signalling with

a first-in-class selective

compound in the clinic

3

Trinity Delta

4 January 2018

BerGenBio

BerGenBio: A plethora of opportunities

BerGenBio was founded to commercialise the research of Prof James Lorens

(University of Bergen, Norway) to develop drugs that disrupt endothelial-

mesenchymal transition (EMT), and in particular inhibit the Axl receptor. Since

then, knowledge of Axl’s biology has grown (especially in the field of

immunology), and its link with aggressive tumours strengthened.

Axl is a tyrosine kinase receptor, which can activate EMT, cell migration,

proliferation, survival, and immune suppression pathways. The actual effect of

activating the Axl receptor is dependent on the cell type and physiological

context. Axl is broadly associated with advanced malignancy, inflammation and

EMT, which allows tumour cells to adapt and change their characteristics. This

engenders resistance to chemotherapy and targeted therapies, and promotes

metastasis. Of particular importance is that Axl enables tumour cells to escape

immune destruction and modulates the activity of immune cells. This is raising

considerable interest in the field of immuno-oncology.

The potential of Axl as a drug target led BerGenBio to in-license BGB324 from

Rigel Pharmaceuticals in 2011. Clinical development started in 2013 and this

compound is still the only selective oral Axl inhibitor in clinical development. The

Phase I study, in healthy volunteers, confirmed that BGB324 was well tolerated.

BerGenBio is now conducting an extensive Phase I/II trial programme in AML as

monotherapy, NSCLC with erlotinib, TNBC with pembrolizumab, NSCLC with

pembrolizumab. There are also two investigator-led trials underway, in NSCLC

with docetaxel and in metastatic melanoma with targeted and immuno-

oncology therapies. There is already promising initial data from the AML,

NSCLC/erlotinib and NSCLC/docetaxel trials. Final ORR data is expected in H218

from the AML, NSCLC/erlotinib, NSCLC/pembrolizumab and

TNBC/pembrolizumab trials (the company has a cash runway into H119).

BerGenBio is undecided on whether to advance BGB324 into Phase III by itself.

However, if the data from the current Phase II studies confirm the broad

potential of BGB324 to prevent resistance to chemotherapy and targeted

therapies, and enhance the activity of immuno-oncology, we would expect the

company to partner the asset on attractive terms.

At the forefront of understanding

the scope of Axl signalling

BerGenBio’s lead compound, BGB324, is being tested in six Phase II trials in

various cancers and a broad range of settings, including in combination with

immuno-oncology therapy. This programme highlights the considerable

potential of BGB324 as an oncology therapy. The compound is also the first-in-

class selective oral Axl inhibitor in clinical development, just as the

understanding around Axl’s biology confirms it is a highly promising oncology

drug target. Final ORR data from four of the ongoing trials are due to be

reported by the end of 2018, as well as interim data from all of the studies in

H118. Our rNPV model gives a valuation of NOK1,564m (NOK31.34 per share),

which could rise materially with positive results from the trials.

Axl is an integral element in

many cancer pathways

An extensive clinical trial

programme is underway in

multiple difficult tumour types,

with significant data points in

2018

Results from these key proof of

concept studies will determine

the future strategy

4

Trinity Delta

4 January 2018

BerGenBio

Axl inhibition is a novel and promising approach

The Axl receptor was first identified from a screen of genes associated with

chronic myeloid leukaemia in 1988, but it is only recently that its potential as a

drug target is being realised. Activation of Axl signalling has far reaching effects

on the immune system, the tumour microenvironment, and tumour cells

themselves. With the deeper understanding of Axl biology, it is becoming clear

that Axl inhibitors have considerable therapeutic potential in combination with

immuno-oncology therapies, as well as in overcoming resistance to

chemotherapy and targeted treatments.

Part of the reason for the delayed recognition in Axl as a drug target in cancer,

even though it is a tyrosine kinase receptor (RTK), is that it has a limited impact

on proliferation. At the same time, the important role of the immune system in

combatting tumours is now better understood, as is the process of epithelial to

mesenchymal transition (EMT) in enabling tumours develop drug resistance,

evade the immune system and metastasise.

Axl is a member of the TAM family of tyrosine kinase receptors together with

Mer and Tyro-3. The sole ligand for Axl is GAS6, which causes receptor

dimerisation, thereby triggering downstream signal transduction. TAM receptors

are important regulators of the innate immune system and macrophage

phagocytosis. Axl expression is in part distinguished from other TAMs by its close

association with inflammation and prevalence in malignancy.

Exhibit 1: Proportion of cancers expressing high levels of Axl

Source: BerGenBio

Axl has been known for some

time but its importance is only

now being appreciated

A member of the TAM family

5

Trinity Delta

4 January 2018

BerGenBio

Axl is present at low levels in adult tissues and it appears to have limited

function; indeed, Axl knockout mice are normal. In contrast, it is commonly

expressed at high levels in many cancers and associated with a worse prognosis

for those patients (Exhibits 1 and 2). Interestingly, few activating mutations

(typical of RTKs) have been identified, suggesting that epigenetic regulation of

Axl is important.

Exhibit 2: Prognosis of breast, lung and AML patients with high and low levels of Axl expression

Source: BerGenBio

The biology of Axl is complex, with the protein being able to activate many

different signalling pathways (Exhibit 3), depending on the tissue context in

which the protein is activated, including promoting proliferation via MEK/ERK

and survival via PI3K-AKT signalling. It is however important to highlight two of

the other pathways:

▪ STAT1 signalling in dendritic cells plays an important role in immune

homeostasis and prevents excessive immune reactions;

▪ The pathway that activates Snail and Twist, which leads to EMT.

During an immune response, the STAT1 pathway is activated in macrophages

and dendritic cells by the cytokine IFN-γ binding to the IFN receptor. This is

crucial in stimulating an innate response to an infection, but to prevent an

excessive immune response, there is also a ‘safety switch’ triggered by the

increased expression of Axl. This results in the activation of SOCS3 genes that

down regulate pro-inflammatory cytokines and dampen the immune response.

Consistent with Axl and the other TAM proteins having a key role in immune

regulation, mice which lack all three of the TAM genes develop normally until 4-

6 weeks after birth when their spleens and lymph nodes become enlarged

before they develop inflammation and autoimmune syndromes. This finding

demonstrates that the key role of TAM genes is in modulating activity of the

immune system. Axl serves important roles in dampening the immune response

to infections and disease, while Mer is the main receptor for apoptotic (dead

6

Trinity Delta

4 January 2018

BerGenBio

and dying) cell removal by efferocytosis (a form of phagocytosis1); Tyro3 is a

negative regulator of Type 2 immune responses2

Exhibit 3: Signalling pathways that can be activated by Axl signalling

Source: BerGenBio

Within a solid tumour, Axl regulates the EMT of cells. The transition of tumour

cells from an epithelial to mesenchymal-like cell type supports strong invasive

characteristics. EMT also causes tumour cell secretion of anti-inflammatory

cytokines that suppress anti-tumour immunity. This is characteristic of “cold”

tumours with limited invasion of cytotoxic T cells.

During EMT, the expression of hundreds of genes change enabling the

acquisition of new cellular behaviours. This allows tumour cells to break away,

invade the surrounding tissue and vasculature, and access sites in other organs.

This plasticity further allows distant colonisation and the formation of secondary

tumours (metastasis). These phenotypic changes are closely associated with

reduced sensitivity to chemotherapy or targeted oncology drugs. In fact, one of

the reasons that cancers stop responding to treatment is that therapy-induced

stress triggers EMT. This insight has raised interest in targeting this mechanism.

11 Phagocytosis is the process through which cellular debris from apoptotic cells and microorganisms are ingested by phagocytes, such as macrophages and neutrophils. 2 Type 2 immune responses are generated following infection from helminths (parasitic worms) and exposure to allergens.

Epithelial to mesenchymal

transition (EMT) is a major factor

in aggressive tumours

Axl is linked to tumour resistance

in a number of ways…

7

Trinity Delta

4 January 2018

BerGenBio

Exhibit 4: Axl-driven epithelial-mesenchymal transition of tumour cells

Source: BerGenBio

Associated with the EMT of tumour cells, there are also changes that can enable

tumour cells to escape immune surveillance. Firstly, there is reduced expression

of MHCI proteins (Major Histocompatibility Class I protein) the proteins that

present protein fragments to cytotoxic T-cells. Secondly, the EMT cells express

higher levels of PD-L1, which inhibits the activity of cytotoxic T-cells. In

preclinical studies with radiation sensitive and resistant tumour cell lines, Axl

inhibition was shown to have a greater effect on restoring radiation sensitivity

than the use of checkpoint inhibitors and was found to increase infiltration by

cytotoxic T-cells.

Axl can also promote tumour progression through angiogenesis. The receptor is

needed for VEGF-A-induced migration of endothelial cells and the formation of

new blood vessels in tumours. Axl has also been linked to dormancy of

metastatic prostate cancer cells in the bone marrow, and cancer stem cell

activity in recurrent breast cancer.

Axl inhibitors in development

Interest in Axl as a therapeutic target for cancer and other therapeutic areas (eg

auto-immune diseases) has only recently grown, fuelled by its potential in

immuno-oncology. BerGenBio’s BGB324 is the first-in-class selective small-

molecule Axl inhibitor in clinical development that can address this opportunity.

The company’s leading position is thanks to the prescient in-licensing of the

compound (R428) from the San Francisco-based biotech, Rigel Pharmaceuticals

(discussed below). Exhibit 5 details other compounds in development that

inhibit Axl; the only other compound in clinical development with reasonable

specificity is Daiichi Sankyo’s DS-1205, but it appears that it is being developed

for use in combination with osimertinib (Tagrisso) in mEGFR NSCLC. The other

8

Trinity Delta

4 January 2018

BerGenBio

molecules with some degree of specificity for Axl are Ono Pharmaceutical’s

ONO-7475 (which binds to the other TAM protein, Mer) and Betta

Pharmaceuticals’ BPI-9016M, all of which are in Phase I development.

Exhibit 5: Oral Axl inhibitors in development

Compound (Company) Binding specificity Axl inhibition IC50 (nM)

Development stage

Indications

Cabozantinib

(Exelixis)

VEGF, Met, FLT3, c-KIT, Axl

7 Approved Approved in medullary thyroid cancer and renal cell carcinoma,

Ph II & III in other solid tumours

Gilteritinib/ASP2215 (Astellas)

FLT3, LTK, Axl, TRKA, RET ROS Mer,

0.7 Phase III AML (Phase III for FLT-mutation positive AML; Phase I for 1st line AML)

BGB324/R324 (BerGenBio/Rigel Pharmaceuticals)

Axl 14 Phase II AML, NSCLC, TNBC, malignant melanoma

MGCD265

(Mirati Therapeutics)

Axl, Met, RON, TIE, VEGFR2

<10 Phase II NSCLC and other solid tumours

Merestinib/LY2801653

(Eli Lilly)

Met, MSTR1, DDR1, TIE1, Mer Tyro3, Axl

11 Phase II AML, NHL and solid tumours

ONO-7475

(Ono Pharmaceuticals)

Axl, Mer N/A Phase I Acute leukaemia

BPI-9016M

(Betta Pharmaceuticals)

Axl, Met N/A Phase I Solid tumours

ASLAN002/BMS-777607 (Aslan Pharmaceuticals/BMS)

Axl, Ron, Met, Tyro3, Mer, FLT3

1.1 Phase I Solid tumours

S49076

(Servier)

Met, Axl, Mer, FGFRs

7 Phase I Solid tumours

TP-0903

(Tolero Pharmaceuticals)

Aurora A&B, JAK2, ALK, ABL, Axl, Mer

27 Phase I Solid tumours

DS-1205

(Daiichi Sankyo)

Axl 1.3 Phase I NSCLC (in combination with osimertinib)

LDC1267/Q107 (LDC/Qurient Therapeutics)

Met, Axl, Tyro3 19 Preclinical Immuno-oncology

Source: Trinity Delta

The specificity of BGB324 is important, as it means that it should be easier to

combine this compound with other drugs, compared to those with more

promiscuous inhibition profiles. The biology of Axl also indicates that

combination of the compound with other agents could result in successful

therapies for many tumours. Initial data on BGB324 supports the view that it can

be used in combination with various drug classes; BerGenBio has shown that

BGB324 can be combined with erlotinib (see below). In contrast, a trial with

Astellas’s gilteritinib with erlotinib in NSCLC had to be terminated after the

treatment of only 10 patients because of adverse events.

The Axl receptor is also being targeted using monoclonal antibodies and

antibody-drug-conjugates (ADC). Indeed, BerGenBio has two such preclinical

assets in its portfolio with BGB149, an antibody, and BGB601, an ADC. Other

companies have reported preclinical antibodies (eg Genentech’s YW327.6S2),

A promising profile allows use in

combination with other agents

BerGenBio has other Axl assets in

pre-clinical development

9

Trinity Delta

4 January 2018

BerGenBio

while the most advanced antibody-based product in clinical development is

Genmab’s ADC, Humax-AXL-ADC.

It is unclear at this stage which Axl targeting approach is the most effective, and

it is possible that this will depend on the indication. However, the favourable

manufacturing and convenience of an oral small molecule inhibitor for patients

are important strengths of BGB324.

Clinical development of BGB324

Exhibit 6 provides details of BerGenBio’s entire pipeline. As well as BGB324, the

company has two monoclonal antibodies against Axl in development; BGB149,

due to enter the clinic in H218, and BGB601, which is an ADC partnered with

ADC Therapeutics. These are also being developed in cancer indications, but no

details have been disclosed; they might have potential in other therapeutic

areas given the activity of Axl in other diseases.

The rest of this report is focused on BGB324 as it is currently BerGenBio’s only

clinical asset.

Exhibit 6: BerGenBio’s portfolio of products

Source: BerGenBio

The clinical development of BGB324 began with a Phase I study in healthy

volunteers in 2013/14, unusually for an oncology compound. This was possible

because of the clean safety profile shown during preclinical development. The

data from the Phase I study confirmed this favourable safety profile, with it

being safe and well-tolerated up to a dose of 1.5g per day and only grade 1

reversible adverse events were observed up to 1.0g per day.

BGB324 is the star of BerGenBio’s

development pipeline

Phase I study showed a very

clean safety profile

10

Trinity Delta

4 January 2018

BerGenBio

Exhibit 7: Clinical development programme for BGB324

Clinical trial name /

NCT number

Phase (trial status)

Indication (setting/number enrolled)

Next data

(Expected completion date)

Notes

BGBC001

(N/A)

Phase I

(completed)

Healthy volunteers

(-/n=32)

(Q114) Single ascending dose study. Results: Only Grade 1 AEs observed up to 1g per day, and well tolerated up to 1.5g per day. Predictable PK data with long plasma half-life of almost 4 days.

BGBC003

(NCT02488408)

Phase Ib/II

(recruiting)

Relapsed or refractory AML, High risk MDS (monotherapy or with cytarabine or decitabine/ n=75)

Jun 2018 (H218)

Open-label, Stage 1:dose escalation study to identify MTD as monotherapy (completed). BGB324 was well-tolerated, loading dose of 600mg on days 1 & 2, followed by 200mg daily dose selected for next stage. Stage 2: At recommended dose, tolerability study as monotherapy and in combination with cytarabine and decitabine.

BGBC004

(NCT02424617)

Phase Ib/II

(recruiting)

NSCLC

(monotherapy in heavily pre-treated patients and in combination with erlotinib in patients with an activating EGFR mutation / n=66)

Jun 2018 (H218)

Open-label, Stage 1:dose escalation study to identify MTD as monotherapy and in combination with erlotinib (completed). BGB324 was well-tolerated; selected a loading dose of 600mg on days 1 & 2, followed by 200mg daily dose for next stage. As monotherapy, ~1 year PFS in 2 of 8 patients; and with erlotinib, 4 of 8 patients had clinical benefit. Stage 2: At recommended dose of BGB324 and in combination with erlotinib, ORR, PFS, circulating Axl levels and safety will be assessed in c 40 patients.

BGBC007

(NCT03184558)

Phase II

(recruiting)

TNBC

(in combination with pembrolizumab / n=56)

Jun 2018

(H218)

Open-label study, in collaboration with Merck. Endpoints are ORR, DoR, PFS, OS, 12 month survival, response by biomarker expression (PD-L1) and safety.

BGBC008

(NCT03184571)

Phase II

(recruiting)

NSCLC

(previously treated adenocarcinoma of the lung in combination with pembrolizumab / n=48)

Jun 2018

(H218)

Open-label study, in collaboration with Merck. Endpoints are ORR, DoR, PFS, OS, 12 month survival, response by biomarker expression (PD-L1) and safety.

BGBIL005

(NCT02922777)

Phase Ib

(recruiting)

NSCLC

(previously treated, in combination with docetaxel / n=30)

June 2018

(H119)

Investigator-led, open-label study led by University of Texas Southwestern Medical Center. Dose escalation study (3+3 model) with docetaxel at 75mg/m2. Endpoints include identifying MTD for BGB324 in combination with docetaxel, and PD/PK assessments.

BGBIL006

(NCT02872259)

Phase Ib

(recruiting)

Metastatic melanoma

(previously treated stage IIIc/IV, with pembrolizumab or dabrafenib & trametinib / n=92)

H218

(H220)

Investigator-led, open-label study led by Haukeland University Hospital. Four-arm study with BGB324 in combination with pembrolizumab or dabrafenib & trametinib compared to pembrolizumab or dabrafenib & trametinib alone. Endpoints are ORR, PFS, DoR, OS and safety

Source: Trinity Delta

Since then BerGenBio has embarked on a broad clinical trial programme in a

range of cancer indications and different drug combinations (Exhibit 7). The

focus of the studies is moving towards exploring BGB324’s potential as an

immuno-oncology agent, as the ability of Axl inhibition to enhance anti-tumour

T-cell activity is better understood. While it is unusual for a small biotech

A wide-ranging clinical

programme is now underway…

11

Trinity Delta

4 January 2018

BerGenBio

company to embark on such wide-ranging clinical trials, it is rational and means

that it will be in the best position to maximise the value of the compound. The

company has also selected indications in which a high expression of Axl is

associated with a poor prognosis (Exhibit 3).

The approach, firstly, helps to mitigate the risks associated with developing a

compound against a novel target with such complex biology, which is only

starting to be better understood. Secondly, the data from the trials in different

settings (monotherapy, with an immuno-oncology drug, to alleviate drug

resistance) will help to indicate where BGB324 has most potential.

BerGenBio is also looking to reduce the risk profile of BGB324 development, by

including biomarker analysis in its clinical development plan. The aim is to

develop a companion diagnostic to identify patients most likely to benefit from

BGB324 treatment. Among the potential biomarkers being analysed are: tumour

Axl expression, soluble Axl in the blood, and known immune and EMT

biomarkers (protein and genomic).

We estimate that BGB324 could advance into Phase III in 2019, assuming

promising levels of efficacy are observed during the current studies. The pivotal

studies could in turn lead to a NDA in the US and MAA in Europe being filed in

2021/22 and BGB324 being approved in 2022/23.

Monotherapy in AML and MDS

BerGenBio’s first Phase II study is in relapsed/refractory acute myeloid

leukaemia (AML) and high-risk MDS patients (c 30% of MDS patients will end up

developing AML), indications that mainly affect people over the age of 45

(average age for AML: 67). Until recently there has been limited innovation in

therapy, which has essentially only seen modest variations on the 7+3

chemotherapy regimen of cytarabine and daunorubicin. The treatment

landscape is starting to evolve with the approval of Novartis’ midostaurin

(Rydapt), Agios/Celgene’s enasidenib (Idhifa) and Pfizer’s gemtuzumab

ozogamicin (Mylotarg) in 2017, but there is still much demand for a treatment

suitable to treat elderly patients with AML or MDS in these highly

heterogeneous indications.

High Axl expression is associated with a poor prognosis for AML patients and Axl

signalling drives proliferation, survival and chemo-resistance of AML cells,

making Axl an attractive target in AML and closely-related MDS. The potential of

BGB324 to treat AML and MDS was subsequently confirmed in preclinical

studies, in which BGB324 was shown to inhibit the Akt and MAPK pathways,

have a similar or greater affect than cytarabine, and have an additive anti-

tumour effect with cytarabine in two different AML cell lines.

BGB324 is now in a Phase Ib/II study in AML, started in 2014. The first part of the

study was the dose escalation stage with the following three dosing regimens: a

loading dose of 400mg for two days followed by a daily dose of 100mg; 600mg

A novel target with such complex

biology requires a comprehensive

clinical trial evaluation…

Axl biomarkers are also being

developed

Smooth progress could mean

pivotal trials by 2019 and

regulatory filings in 2021/22

AML and MDS are the first

indications being explored

Axl is associated with a poor

prognosis in AML and is an

important driver of the disease

Phase Ib element of the trial

showed encouraging side-effect

profile…

…that will inform future direction

of the development plans

12

Trinity Delta

4 January 2018

BerGenBio

then 200mg; and 900mg followed by 300mg. The most common side effects

were reversible mild and moderate gastrointestinal disorders (there was in the

lowest dosing cohort one dose-limiting toxicity [DLT], QTc prolongation, but this

was associated with a pre-existing condition). Based on these findings, combined

with the PK/PD data, the 600/200mg dosing regimen was taken forward into the

second stage of the trial.

There were also promising signals of anti-tumour activity (Exhibit 8) in the pre-

treated group of patients (average number of treatments =2). Encouragingly,

two (40%) of the five MDS patients achieved partial responses (PR); and four

(13%) of the 20 AML patients attained objective responses, including one

immunophenotypic complete response (iCR). The company also observed that

there were rapid changes in the signalling pathways downstream of Axl, and

interesting pro-differentiation effects on the leukaemic cells.

Assuming the data from this trial continues to impress (final data expected in

H218), we would expect the product to advance into Phase III development.

There is a clear need for well tolerated drugs in AML and high-risk MDS. It will,

however, be important for BerGenBio to identify which subgroup of AML

patients are likely to benefit most from BGB324 therapy. After limited

innovation over the last 15 years, in 2017 the FDA approved Novartis’s

midostaurin (Rydapt) for FLT3-mutation-positive AML, Agios/Celgene’s

enasidenib (Idhifa) for IDH2-mutation-positive AML, and Pfizer’s gemtuzumab

ozogamicin (Mylotarg) for CD33-positive AML.

Exhibit 8: Treatment outcomes during dose escalation stage of Phase I/II study in AML/MDS

Source: BerGenBio

A clear need for new drugs as

greater understanding drives

treatment differentiation

13

Trinity Delta

4 January 2018

BerGenBio

Fortunately, BerGenBio had the foresight to include a detailed biomarker

programme within the current Phase I/II study to identify those patients most

likely to respond to BGB324. AML is a heterogenous disease, and gradually

treatment options are improving as the underlying molecular drivers of the

disease are better understood. A specific companion diagnostic would also

potentially protect BGB324 from competition from Astellas’s gilteritinib, which is

in Phase III development for FLT3-mutation-positive AML and Phase I in first-line

AML, is very well tolerated by patients, and is a potent inhibitor of FLT3 and Axl.

We estimate that BGB324 could generate peak sales of $126m in AML and high-

risk MDS, which is based on 5% penetration of the US and European markets. In

the US, the American Cancer Society (ACS) estimates that there are 21,380 new

cases of AML per annum and 13,000 new cases of MDS. We note that there is

considerable divergence of opinion on the true incidence rate of MDS, the ACS

estimate that it is 4.8 per 100,000, but other groups believe is could be as high

as 13.1. We have used the ACS’s estimate. In the case of AML, we have also

adjusted for the cases which are FLT3-mutation positive (c 30%). We estimate

that the average cost of a course of treatment in all indications will be $80,000

in the US, with a 33% discount in Europe. It is particularly challenging to

estimate the potential pricing of BGB324, should it get to market, because of the

broad number of indications and settings in which it could be used.

NSCLC with mEGFR in combination with erlotinib

Patients with EGFR mutation (mEGFR) positive NSCLC (c 30% of cases) are often

treated with Roche’s erlotinib (Tarceva), but their cancers in most cases

normally will recur after 12 months. There are various reasons for the

progression. In half of the cases it is due to additional mutations, either in the

EGFR protein (eg T790M for which AstraZeneca developed osimertinib, Tagrisso)

or in other genes (eg c-Met). Another escape mechanism is EMT via increased

Axl signalling, and it is also known that EGFR and Axl interact in a positive

feedback loop.

BerGenBio has confirmed the potential of BGB324 to treat patients that have

developed erlotinib-resistant NSCLC in preclinical studies (Exhibit 9). The

company is now conducting a Phase I/II to explore further the ability to treat

patients with mEGFR NSCLC that are erlotinib-resistant.

The first part of the Phase Ib/II study that was started in 2015 has been

completed, and, as in the case of the AML study, the trial has already delivered

promising results. The Phase Ib involved dose escalation of BGB324 in heavily-

pre-treated, metastatic, second-line mEGFR patients as monotherapy (n=8) and

in combination with the standard dose of erlotinib (n=8). BGB324 was found to

be well tolerated in both settings up to 600mg loading dose on days one and

two, followed by a daily dose of 200mg per day.

Patient profiling should maximise

BGB324 potential benefit

Adopting conservative assumptions

throughout our forecasting

In combination with Roche’s

Tarceva (erlotinib) in NSCLC

Exploratory Phase I/II study in

erlotinib-resistant patients in place

Phase Ib element of the trial has

produced encouraging results

14

Trinity Delta

4 January 2018

BerGenBio

Exhibit 9: Preclinical data with BGB324 in combination with erlotinib in erlotinib-resistant HCC827 model

Source: BerGenBio; Note: In the HCC827 model, tumours develop erlotinib resistance at day 67 after becoming mesenchymal

There were also initial signs of anti-tumour activity as monotherapy and in

combination with erlotinib (Exhibit 10). In the monotherapy setting, in patients

with or without EGFR mutations, two of the eight people had a PFS of over 40

weeks. In the combination arm with BGB324 and erlotinib in patients resistant

to erlotinib, four of the eight patients had a PFS of over four months, with one of

them still with a stable disease after 88 weeks.

During the second part of the trial, 50 additional patients, with known activating

EGFR mutations and erlotinib-resistant tumours, will be treated with BGB324 in

combination with erlotinib. Interim data from that stage are expected to be

reported at ASCO in June 2018, with the trial being completed at the end of

H218.

There are an estimated 184,000 new cases of NSCLC per year in the US and

255,000 patients in Europe, of these 70% are classed as having Stage III or IV

cancer and c 30% of these cases are mEGFR positive. We estimate that BGB324

could be used to treat 15% of mEGFR patients in the US and 10% in Europe. This

suggests that BGB324 could achieve peak sales of $749m in this setting, with

peak sales being achieved over six years.

NSCLC is a sizeable opportunity

Top line data from Phase II

element expected in H118

15

Trinity Delta

4 January 2018

BerGenBio

Exhibit 10: Treatment outcomes during dose escalation stage of Phase I/II study in NSCLC as (a) monotherapy in metastatic NSCLC and (b) in combination with erlotinib in second-line mEGFR NSCLC

(a)

(b)

Source: BerGenBio

NSCLC and TNBC in combination with pembrolizumab

Immuno-oncology and, in particular, checkpoint inhibitors are transforming the

treatment of many cancer patients, converting the disease into a chronic

indication in some cases. However, it has proved challenging to increase the

proportion of patients that might benefit from the therapy above 30% in most

immunogenic cancers. Given the potential of Axl inhibition to make “cold”

tumours “hot” and increase T-cell activity, Merck and BerGenBio have formed a

collaboration to investigate the potential of combining pembrolizumab

(Keytruda) and BGB324 in adenocarcinoma NSCLC tumours and triple negative

breast cancer (TNBC)3. The belief is that BGB324 will overcome a tumour’s

resistance to a PD1 checkpoint inhibitor.

3 Triple negative breast cancer (TNBC) does not express oestrogen receptor, progesterone receptor or HER2 receptor, which means that there are limited treatment options for TNBC patients other than chemotherapy.

BGB324 being explored in

immuno-oncology regimens

16

Trinity Delta

4 January 2018

BerGenBio

Pembrolizumab has so far been approved for use in melanoma, NSCLC, head and

neck squamous cell carcinoma (HNSCC), classical Hodgkin lymphoma (cHL),

urothelial carcinoma, and microsatellite instability-high cancer (MSI-H). Despite

the broad label, there is still a strong belief that the drug could be used more

broadly if it was combined with the correct agents. For example, pembrolizumab

is only approved in NSCLC as a monotherapy in patients that have tumours with

high levels of PD-L1 expression in over 50% of the cancer (otherwise it must be

used in combination with chemotherapy). Similarly, initial data from the

KEYNOTE-086 study in TNBC shows that some patients did develop durable

responses from monotherapy; however, the overall response rate was only 5%

regardless of PD-L1 expression.

Preclinical studies by different groups have confirmed that BGB324 can act

synergistically with PD1/PD-L1 antibodies in targeting established tumours

(Exhibit 11). The beneficial effect of the two therapies in combination was

associated with higher levels of tumour infiltration by cytotoxic T lymphocytes,

natural killer cells and natural killer T cells, and lower levels of monocytic

myeloid derived suppressor cells (mMDSC, associated with immune suppression

and EMT). Recent studies document that BGB324 treatment inhibits key

immune suppressive arginase-expressing tumour associated macrophages and

increases dendritic cell populations that promote long term anti-tumour

immunity. These changes are all consistent with increased immune activity

against the tumours.

Exhibit 11: Preclinical activity of BGB324 in combination with PD1 and CTLA-4 antibodies

Source: BerGenBio

The Phase II trials in TNBC and NSCLC have already begun. In both studies,

patients will be receiving 200mg of BGB324 (after the loading dose of 600mg

during the first two days) with the standard dose of 200mg of pembrolizumab

every three weeks. During the studies, the level of PD-L1 expression in the

tumours will be measured by Merck; it will not be used as a selection criterion,

but there will be an analysis of the relationship between expression levels and

A clear need to improve more

patient outcomes

Pre-clinical studies suggest

BGB324 acts synergistically

Both TNBC and NSCLC trials due

to report results during 2018

17

Trinity Delta

4 January 2018

BerGenBio

clinical response. Both the NSCLC and TNBC trials are due to be completed in

H218 with interim data published at ASCO in June 2018

We estimate that BGB324 could generate peak sales of $1,210m and $751m

from use in combination with pembrolizumab in adenocarcinoma NSCLC and

TNBC, respectively, based on 15% market penetration in the US and 10% in

Europe. With approximately 40% of lung cancer cases being adenocarcinoma

NSCLC and 70% of those stage III/IV, there are c 62,300 and c 87,700 new cases

of unresectable, adenocarcinoma NSCLC per year in US and Europe, respectively.

In breast cancer, about 15% of cases are classed as TNBC suggesting there are

about 38,000 and 55,000 diagnosed with TNBC each year in the US and Europe,

respectively.

Clearly, if the data from the two studies are positive, we would expect the

development programme in immuno-oncology to expand to other indications

and checkpoint inhibitors. It is important to note that Merck has no rights to

BGB324 from the collaboration, and that during the trials it is only supplying

pembrolizumab and conducting the PD-L1 biomarker assays.

Adenocarcinoma NSCLC with docetaxel

BerGenBio is also exploring the potential of BGB324 to re-sensitise tumour cells

to chemotherapy, through an investigator-led Phase II trial. As previously

discussed, tumour cells change their characteristics during EMT and this can

render them resistant to chemotherapy. The study in second-line NSCLC with

docetaxel is being conducted by Dr David Gerber at the University of Texas

Southwestern Medical Center and there are again promising initial results.

In preclinical studies, BGB324 was shown to act synergistically with docetaxel in

two different models (Exhibit 12). In both cases, it appears that BGB324

prevents the tumour cells from becoming resistant to docetaxel, as they tend to

become after 10-15 days.

The clinical study with BGB324 in combination with docetaxel is a Phase Ib dose-

escalation study. The standard dose of docetaxel (75mg/m2 every three weeks)

is being used initially with a loading dose of 200mg of BGB324 followed by a

daily dose of 100mg, and then with the dose of BGB324 doubled, assuming the

combination is sufficiently well tolerated. This will be followed by up to 30 more

patients being treated with the best dosing regimen from the first stage of the

trial.

Initial data has only been published for the first ten patients from the trial, with

BGB324 being used at the lower dose, and there is already evidence of BGB324

reducing tumour resistance to docetaxel (Exhibit 13). One patient has so far

been treated for 34 weeks without progression, this compares to the median

PFS of about 12 weeks in this indication with docetaxel monotherapy. Further

data from this trial is expected at ASCO in June 2018.

Re-sensitisation of tumours to

traditional oncology treatments

being explored in NSCLC

NSCLC and TNBC are also sizeable

commercial opportunities

Success would open the door to

other potential indications

18

Trinity Delta

4 January 2018

BerGenBio

Exhibit 12: Preclinical data of BGB324 in combination with docetaxel

Source: BerGenBio

Exhibit 13: Initial Phase Ib data of BGB324 in combination with docetaxel in 2nd-line NSCLC

Source: BerGenBio

We forecast that BGB324 could achieve peak sales of $218m in second-line

NSCLC in combination with docetaxel. Of the 184,000 new NSCLC cases per year

in the US and 255,000 patients in Europe, around 30% receive chemotherapy

and c 60% of those advance to second-line therapy. We estimate that 30% of

those are treated with docetaxel so that there are about 33,000 patients treated

with docetaxel in the US and 46,000 in Europe. At this stage, we estimate that

BGB324’s market penetration will be 15% in the US and 10% in Europe.

The market opportunity with docetaxel in second-line NSCLC is relatively

modest. However, if there is impressive data from this Phase Ib trial, the

potential of BGB324 in combination with other chemotherapy regimens could

be explored in other indications. This would significantly increase the peak sales

potential of BGB324 in combination with chemotherapy.

Use of BGB324 with docetaxel

could lead to much broader use

with other chemotherapy

regimens

19

Trinity Delta

4 January 2018

BerGenBio

Malignant melanoma with various therapies

The final study with BGB324 is a Phase Ib, investigator-led study in metastatic

melanoma in combination with pembrolizumab, or dabrafenib (Raf inhibitor)

and trametinib (Mek inhibitor). This is a real-world study in 92 patients and as

such could provide the most valuable data.

The study is being conducted by Haukeland University Hospital, with patients

being treated across Norway in Bergen, Oslo, Tromso and Trondheim (an

additional site at Lorenskog is due to open). During the trial, patients are

allocated to different arms according to their BRAF status, and it also has a cross

over design as illustrated in Exhibit 14.

Exhibit 14: Clinical trial design for Phase II study in metastatic melanoma

Source: Haukeland University Hospital

Initial data from thirteen patients have so far been reported (Exhibit 15) and no

significant additive toxicity has been observed from the use of BGB324 in

combination with dabrafenib/trametinib or pembrolizumab. Further interim

data is expected to be published at ASCO in June 2018.

The treatment of metastatic melanoma has been transformed in recent years

with the approval of Raf and Mek inhibitors and immunotherapies. But, there

are limitations of both therapies; median PFS for dabrafenib/trametinib in the

Phase III COMBI-d trial was only 9.3 months and the overall response rate to

pembrolizumab was 33% and 34% (two dosing arms) in the Phase III KEYNOTE-

006 trial. Axl signalling has been implicated with both resistance to Raf and Mek

inhibitors, as well as enhancing immunotherapies (as discussed above), hence

the belief that BGB324 will improve the clinical outcomes in combination with

both therapeutic regimens for melanoma.

Investigator-led trials are also

underway in melanoma

20

Trinity Delta

4 January 2018

BerGenBio

Exhibit 15: Initial data from the Phase II study in metastatic melanoma

Source: Haukeland University Hospital

We estimate that BGB324 could achieve peak sales of $200m in metastatic

melanoma, by penetrating 15% of the US market and 10% of the European.

There are about 9,700 deaths in the US and 15,700 in Europe from melanoma.

In-licensing deal with Rigel for BGB324

BerGenBio was initially focused on developing a monoclonal antibody against

Axl, but opportunistically decided to in-license various selective Axl inhibitors

from Rigel in June 2011 in a backend weighted deal, once it became aware of

them. Since then, BerGenBio has prioritised the development of the small

molecule BGB324, which was R324.

Under the terms of the deal, BerGenBio obtained the worldwide exclusive rights

to BGB324 and eight back-up compounds with the right to sub-license the assets

(and subsequently, it exercised its option to in-license nine other Axl inhibitors

from Rigel for $2m in June 2016). In exchange, BerGenBio agreed to make

various payments to Rigel; it has so far paid: time-based payments of $0.5m in

2011 and 2012, a similar payment of $1.7m in 2016, and $3.3m in February 2017

relating to the initiation of first Phase II study for the first product. In the future,

payments will depend on whether the product is developed/commercialised in

house or by a partner.

If BerGenBio continues to develop and commercialises BGB324 itself, the

company will have to make the following payments:

▪ $8m milestone on initiation of first Phase III study for the first product;

▪ $12m milestone on submission of an NDA (or equivalent) for the first product; and

The in-licensing of BGB324 was

an inspired deal

Payment terms are back-end

loaded and depend on terms of

eventual commercialisation

21

Trinity Delta

4 January 2018

BerGenBio

▪ $15m milestone for approval of first drug.

▪ Tiered royalties of 5%, 7% or 9% of net sales, if sales are under $500m, between $500m and $1bn, or over $1bn

If BerGenBio out-licenses BGB324, payments based on a revenue sharing model

will need to be made to Rigel according to the schedule below.

▪ 60% of revenues, if partnered prior to completion of Phase Ia;

▪ 50% after completion of the first Phase Ia;

▪ 45% after completion of the first Phase Ib study;

▪ 40% after completion of first Phase II trial;

▪ 35% after completion of first Phase II trial with 60 or more patients; or

▪ 30% after completion of a Phase III study.

BerGenBio is considering whether to partner BGB324. The final decision will

depend on the clinical data; however, we believe that it is most likely that

BerGenBio will look to partner BGB324 with a large player on completion of the

current programme of Phase II studies. Assuming data from the trials confirm

BGB324’s potential to treat a broad range of tumours and in combination with

various other regimens (targeted therapy, immuno-oncology, and

chemotherapy), considerable resources would be required to conduct a broad

Phase III oncology programme. This would be necessary to maximise the value

of BGB324.

Both the Phase Ib/II trials in AML and with erlotinib are expected to recruit over

60 patients. We therefore believe that in the event that BerGenBio enters into a

sub-licensing agreement, it will pay 35% of revenue receipts to Rigel.

Sensitivities

The main risk with BerGenBio at the moment relates to the outcome of the

clinical trials. The initial results are promising, but the true potential of BGB324

will only become apparent at the end of the current Phase II studies. The broad

programme, combined with the biomarker analysis, partially de-risks the

company, but it should be recognised that BerGenBio is developing a first-in-

class product, and the biology of Axl is particularly complex and only partly

understood. It should also be noted that BGB324 might also have a greater

effect on overall survival (OS) than progression free survival (PFS), because of

BGB324’s effect on the immune system and tumour metastasis.

The company is yet to decide whether to take BGB324 to market by itself or with

a partial/full out-licensing of BGB324. The novelty of the compound, while

making the development process more challenging, means that it is likely to be

commercially attractive to prospective partners, especially as it has such broad

potential as an oncology therapy (assuming the current trials are successful).

Should BerGenBio look to partner BGB324, it is important to realise that the best

Clinical trials results are the key

near-term determinants

We believe a licensing deal is

likely in order to maximise the

overall value of BGB324

Axl’s novelty means extensive

trials are required but it also

makes BGB324 very attractive

22

Trinity Delta

4 January 2018

BerGenBio

deal might not be the one with the greatest bio-dollars, but the one with the

most committed partner that will devote sufficient resources to optimise the

product’s development.

BGB324 is currently being developed for AML/MDS, NSCLC, TNBC and metastatic

melanoma in various settings (monotherapy, with targeted therapies, with

chemotherapy and with the checkpoint inhibitor pembrolizumab). The results of

the Phase II studies will determine if the programme is expanded or contracted.

This decision will be based on both scientific and commercial considerations.

The potential of BGB324 as an immuno-oncology therapy agent is particularly

exciting, however, this field is highly competitive.

Although BGB324 is currently the only selective Axl inhibitor in development,

there will probably be more entering the clinic now that the important role that

Axl plays in EMT, chemotherapy resistance and immuno-oncology is better

understood. Clearly, the rate at which BerGenBio can advance BGB324 will

determine the first-mover advantage for the compound, should it reach the

market.

On top of these specific risks, there are also the other usual ones associated with

drug development, including patent litigation, financing and regulatory

uncertainties. Regarding its patent position, the composition of matter patent

(PCT/US07/089177) is due to lapse in 2027 without an extension, and there is a

patent pending covering the use of BGB324 (PCT/GB2014/053548), which

should protect the compound from competition through to 2034. There are also

various other patents (awarded and pending), which could provide a degree of

protection through to 2036.

Valuation

With BerGenBio being a classic drug development company, it is well-suited to

being valued using a rNPV methodology. Typically, the rNPV of the individual

clinical projects (adjusted for the success probabilities) are summed and netted

against the costs of running the operation. In the case of BerGenBio, we

estimate the value of BGB324 in each indication in which it is currently being

developed. The success probabilities in each indication are based on standard

industry criteria for each stage of the clinical development process but are

flexed to reflect the data from the different indications.

Using this approach, we value BerGenBio at NOK1,564m ($184m), which is

equivalent to NOK31.34/share; the details of our valuation are shown in Exhibit

14. The valuation is based on cash flows through to 2034, when we estimate

that BGB324 will lose patent protection. Throughout the valuation we have used

conservative assumptions, in line with our policy. For example, we do not

assume meaningful revenues from BGB324 before 2023, and exclude any value

from BGB324 in any indications beyond those currently being investigated, or

from the rest of its portfolio.

Valuation using a rNPV approach

suggests a value of NOK1,564m

($184m), or NOK31.34 a share

Everything hinges on the current

proof of concept trials

Axl’s role will inevitably attract

other, and possibly larger and

better funded, players

All the other usual drug

development risks also apply

23

Trinity Delta

4 January 2018

BerGenBio

Being prudent, we have assumed the average cost of treatment across all

indications will be $80,000 in the US and two thirds the price in Europe. This

compares to an estimated average cost of treating a patient with AstraZeneca’s

osimertinib (Tagrisso) of $200,000 and Merck’s pembrolizumab (Keytruda) of

$150,000. We believe this is sensible given the limited clinical data. Also,

BGB324 has the potential to be used to treat most solid tumours, either in

combination with chemotherapy or immuno-oncotherapies, and has very low

cost of goods, so a relatively low price might be settled upon to ensure that

reimbursement issues do not hinder adoption of BGB324.

The shares are currently trading at 47% below our valuation of BerGenBio, we

expect this difference to be reduced over the coming year as data is regularly

reported from the six Phase II trials. Four of the clinical trials are also expected

to report final ORR and PFS data by the end of 2018, as well as interim results

from the other studies, which could result in significant increases to our

valuation.

Exhibit 14: rNPV-based valuation of BerGenBio

Indication Total NPV ($m)

Total NPV (NOKm)

Likelihood of success

rNPV ($m)

rNPV

(NOKm)

rNPV/share (NOK)

Notes

AML/MDS 32.9 280.0 30% 7.0 59.3 1.19 Peak sales: $126m

Launch year: 2023

NSCLC with erlotinib

212.2 1,803.3 30% 57.7 490.0 9.82 Peak sales: $749m

Launch year: 2023

NSCLC with pembrolizumab

347.4 2,952.7 20% 62.0 527.0 10.56 Peak sales: $1,210m

Launch year: 2023

TNBC with pembrolizumab

210.5 1,789.0 20% 33.4 283.7 5.68 Peak sales: $751m

Launch year: 2023

NSCLC with docetaxel

62.1 527.5 20% 10.7 90.9 1.82 Peak sales: $218m

Launch year: 2023

Metastatic melanoma

37.7 320.4 20% 5.9 50.0 1.00 Peak sales: $200m

Launch year: 2025

Milestones 242.8 2,063.6 See notes 84.8 720.6 14.44 Milestones totalling $400m,

Likelihood of receipt: 50% to 20%

Rigel payments (497.3) (4,226.9) (124.3) (1,056.2) (21.16) 35% of revenues payable to Rigel

Net cash 47.0 399.2 47.0 399.2 8.00 At Q317

Total 695.1 5,908.7 184.0 1,564.4 31.34

Royalty rate 18%

Discount rate 12.5%

Exchange rate (NOK/$)) 8.5

Tax rate 27% Starting in 2025

Source: Trinity Delta. Note: Valuation assumes BGB324 is out-licensed in 2019. The value of each indication includes the current R&D expenses associated with the current clinical trials.

The low costs of production

mean even prudent price

assumptions are attractive

The expected raft of news flow

provides multiple possible value

inflection points

24

Trinity Delta

4 January 2018

BerGenBio

Financials

BerGenBio had a cash position of NOK399m (c $47m) in cash and no debt at

Q317, reflecting the successful IPO. The company raised NOK375m net

(NOK400m gross), after issuing 16m shares at NOK25 per share on 6 April, ahead

of the shares starting to trade the following day on the Oslo Stock Exchange. We

estimate that this will allow the company to operate into H119, by which time it

should have reported ORR data from the trials in AML (monotherapy), NSCLC

with erlotinib, NSCLC with pembrolizumab and TNBC with pembrolizumab, as

well as interim data from the other studies.

The operating costs have increased rapidly in recent years due to BGB324

starting clinical development and the subsequent expansion in the number and

size of clinical studies. They were NOK58.8m in FY14, NOK72.9 in FY15 and

NOK131.6m (including payments of NOK31.1m to Rigel) in FY16. We expect this

trend to continue with operating costs of NOK194.4m (including a milestone

payment of NOK27.9m to Rigel) in FY17 and NOK238.1m in FY18. We currently

expect the operating expenses to fall slightly in FY19 to NOK233.7m, though this

could vary significantly depending on the outcome of the current clinical trials

and whether BerGenBio decides to take BGB324 into Phase III development.

Cash runway into H119, sufficient

to deliver multiple data points

from all trials.

Operating costs forecast to rise

rapidly as number and size of

clinical trials increase

25

Trinity Delta

4 January 2018

BerGenBio

Exhibit 15: Summary of financials

Source: BerGenBio, Trinity Delta Note: Adjusted numbers exclude exceptionals. The short-term debt in FY19 is indicative of the company’s funding requirement

Year-end: Dec 31 NOKm 2015 2016 2017E 2018E 2019E

INCOME STATEMENT

Revenues 0.0 0.0 0.0 0.0 0.0

Cost of goods sold 0.0 0.0 0.0 0.0 0.0

Gross Profit 0.0 0.0 0.0 0.0 0.0

Personnel costs (25.2) (20.6) (24.3) (26.1) (27.4)

Other expenses (47.6) (110.8) (169.9) (211.8) (206.2)

Amortisation & depreciation (0.2) (0.2) (0.2) (0.2) (0.1)

Underlying operating profit (72.9) (131.6) (194.4) (238.1) (233.7)

Other revenue/expenses 0.0 0.0 0.0 0.0 0.0

EBITDA (72.7) (131.4) (194.2) (237.9) (233.6)

Operating Profit (72.9) (131.6) (194.4) (238.1) (233.7)

Interest income 2.5 3.0 2.1 0.5 0.2

Interest expense (1.7) (1.3) (1.8) (1.3) (8.8)

Other financing costs/income 0.0 0.0 0.0 0.0 0.0

Profit Before Taxes (72.1) (129.8) (194.1) (238.8) (242.3)

Adj. PBT (72.1) (129.8) (194.1) (238.8) (242.3)

Current tax income 0.0 0.0 0.0 0.0 0.0

Net Income (72.1) (129.8) (194.1) (238.8) (242.3)

EPS (NOK) (296.3) (419.7) (4.3) (4.8) (4.9)

Adj. EPS (NOK) (296.3) (419.7) (4.3) (4.8) (4.9)

DPS (NOK) 0.0 0.0 0.0 0.0 0.0

Average no. of shares (m) 0.2 0.3 45.0 49.9 49.9

Gross margin N/A N/A N/A N/A N/A

EBITDA margin N/A N/A N/A N/A N/A

BALANCE SHEET

Current assets 82.0 174.1 365.1 130.9 39.2

Cash and cash equivalents 74.0 161.8 348.6 114.3 22.7

Short-term investments 0.0 0.0 0.0 0.0 0.0

Accounts receivable 0.0 0.0 0.0 0.0 0.0

Other current assets 8.0 12.3 16.6 16.6 16.6

Non-current assets 0.4 0.4 0.4 0.2 0.0

Property, plant & equipment 0.4 0.4 0.4 0.2 0.0

Investments in portfolio companies 0.0 0.0 0.0 0.0 0.0

Other non-current assets 0.0 0.0 0.0 0.0 0.0

Current liabilities (12.1) (21.3) (30.2) (33.7) (183.2)

Short-term debt 0.0 0.0 0.0 0.0 (150.0)

Accounts payable (5.3) (10.7) (14.0) (17.4) (16.9)

Other current liabilities (6.8) (10.6) (16.2) (16.2) (16.2)

Non-current liabilities (5.6) 0.0 0.0 0.0 0.0

Long-term debt 0.0 0.0 0.0 0.0 0.0

Other non-current liabilities (5.6) 0.0 0.0 0.0 0.0

Equity 64.7 153.3 335.3 97.4 (144.0)

Share capital 2.5 3.4 5.0 5.0 5.0

Other 62.3 149.9 330.3 92.4 (148.9)

CASH FLOW STATEMENTS

Operating cash flow (62.9) (124.3) (188.3) (234.3) (241.6)

Profit before tax (72.1) (129.8) (194.1) (238.8) (242.3)

Non-cash adjustments 6.5 3.8 (0.5) 0.6 0.9

Change in working capital 2.7 1.7 5.9 3.4 (0.5)

Interest paid 0.0 0.0 0.4 0.5 0.2

Taxes paid 0.0 0.0 0.0 0.0 0.0

Investing cash flow 0.0 (0.3) (0.2) 0.0 0.0

CAPEX on tangible assets 0.0 (0.3) (0.2) 0.0 0.0

Change in investments in portfolio companies 0.0 0.0 0.0 0.0 0.0

Other investing cash flows 0.0 0.0 0.0 0.0 0.0

Financing cash flow 10.5 212.4 375.2 0.0 150.0

Proceeds from equity 9.2 213.7 375.2 0.0 0.0

Increase in loans 1.3 (1.3) 0.0 0.0 150.0

Dividends 0.0 0.0 0.0 0.0 0.0

Other financing cash flow 0.0 0.0 0.0 0.0 0.0

Net increase in cash (52.4) 87.8 186.7 (234.3) (91.6)

Exchange rate effects 0.0 0.0 0.0 0.0 0.0

Cash at start of year 126.4 74.0 161.8 348.6 114.3

Cash at end of year 74.0 161.8 348.6 114.3 22.7

Net cash at end of year 74.0 161.8 348.6 114.3 (127.3)

26

Trinity Delta

4 January 2018

BerGenBio

Company information

Contact details

Jonas Lies vei 91,

5009 Bergen,

Norway

Tel: +47 559 61 159

www.bergenbio.com

Top institutional shareholdings % holding

Meteva AS 29.89

Investinor AS 13.24

Sarsia Seed AS 4.24

Verdipapirfondet Alfred Berg Gamba 3.71

MP Pensjon PK 3.67

KLP Aksjenorge 2.61

JP Morgan Chase Bank, London (Wellccome Trust) 2.55

Datum Invest AS 2.42

Sarsia Development AS 2.39

Bera AS 2.17

Top institutional investors 66.89

Other shareholders 33.11

Total shareholders 100.00

Source: BerGenBio

27

Trinity Delta

4 January 2018

BerGenBio

Key personnel

Person Position Biography

Stein Holst Annexstad Non-Executive

Chairman

Joined in February 2016 He has senior industry experience, both at executive and Board levels. He is former executive of Dyno Industrier AS (fine chemicals), and became the CEO of the pharmaceutical firm Nycomed AS (subsequently merged with Amersham Plc and thereafter merged with GE). He was head of AS Isco Group, an Executive Search and Corporate Advisory Group. He co-founded in 1996 NorgesInvestor AS, an Oslo-based Private Equity firm, and was in 2008 the first Chairman of Investinor AS (the VC of the Norwegian State). He was Chairman of Algeta ASA, the pharmaceutical startup that developed Xofigo and was acquired by Bayer in 2014. Other previous Chairman positions comprise commercial banking, business school, public R&D and various industrial enterprises.

Richard Godfrey CEO Joined as Chief Executive Officer in 2008. He has over 25 years’ industry experience in drug development and commercialisation. Previously, he served as CEO of Aenova Inc., a specialist biopharmaceutical company and prior to that was the Managing Director of DCC Healthcare Ltd. He also held positions at Catalant, Eli Lilly and Reckitt Benckiser in R&D and commercial roles. He qualified as a Pharmacist from Liverpool University and received his M.B.A. from Bath University.

Petter Nielsen CFO Joined in 2015 as CFO. He was previously CFO at GexCon, an R&D company that developed into an international group of companies focusing on commercial products and services. Prior to that he worked in the Transaction Advisory Services group at Ernst & Young. He has an MSc in Auditing and an MSc in Economics and Business Administration, both from the Norwegian School of Economics.

Prof James Lorens CSO Co-founder and CSO of BerGenBio, and also a Professor at the Department of Biomedicine at the University of Bergen. He leads a large internationally active academic research laboratory comprising 22 researchers, that is focused on cancer research. Prof. Lorens is an author of more than 85 peer-reviewed articles and numerous patents. He worked at Rigel after completing his postdoctoral studies at Stanford University and has managed many large collaborations with major pharmaceutical and biotechnology companies.

Dr Murray Yule Clinical

Development

Officer

Joined in 2011. Since 1998 has been involved with oncology clinical development, he has supervised multiple early phase clinical studies, and planned and executed global development strategies for several anticancer drugs for top-ten pharmaceutical companies. His work has led to licensing approvals for novel tubulin binders in solid tumours and epigenetic therapies in acute leukaemia. He completed his medical training in oncology at Addenbrookes Hospital, Cambridge and holds a PhD in experimental pharmacology.

Trinity Delta, 15 Eldon Street, London, EC2M 7LD. Contact: info@trinitydelta.org

Trinity Delta BerGenBio

Mick Cooper PhD CFA mcooper@trinitydelta.org +44 20 3637 5042 Lala Gregorek lgregorek@trinitydelta.org +44 20 3637 5043 Franc Gregori fgregori@trinitydelta.org +44 20 3637 5041

Disclaimer

Trinity Delta Research Limited ("TDRL"; firm reference number: 725161), which trades as Trinity Delta, is an appointed representative of Equity Development Limited ("ED"). The contents of this report, which has been prepared by and is the sole responsibility of TDRL, have been reviewed, but not independently verified, by ED which is authorised and regulated by the FCA, and whose reference number is 185325.

ED is acting for TDRL and not for any other person and will not be responsible for providing the protections provided to clients of TDRL nor for advising any other person in connection with the contents of this report and, except to the extent required by applicable law, including the rules of the FCA, owes no duty of care to any other such person. No reliance may be placed on ED for advice or recommendations with respect to the contents of this report and, to the extent it may do so under applicable law, ED makes no representation or warranty to the persons reading this report with regards to the information contained in it.

In the preparation of this report TDRL has used publically available sources and taken reasonable efforts to ensure that the facts stated herein are clear, fair and not misleading, but make no guarantee or warranty as to the accuracy or completeness of the information or opinions contained herein, nor to provide updates should fresh information become available or opinions change.

Any person who is not a relevant person under section of Section 21(2) of the Financial Services & Markets Act 2000 of the United Kingdom should not act or rely on this document or any of its contents. Research on its client companies produced by TDRL is normally commissioned and paid for by those companies themselves (‘issuer financed research’) and as such is not deemed to be independent, as defined by the FCA, but is ‘objective’ in that the authors are stating their own opinions. The report should be considered a marketing communication for purposes of the FCA rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. TDRL does not hold any positions in any of the companies mentioned in the report, although directors, employees or consultants of TDRL may hold positions in the companies mentioned. TDRL does impose restrictions on personal dealings. TDRL might also provide services to companies mentioned or solicit business from them.

This report is being provided to relevant persons to provide background information about the subject matter of the note. This document does not constitute, nor form part of, and should not be construed as, any offer for sale or purchase of (or solicitation of, or invitation to make any offer to buy or sell) any Securities (which may rise and fall in value). Nor shall it, or any part of it, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The information that we provide is not intended to be, and should not in any manner whatsoever be, construed as personalised advice. Self-certification by investors can be completed free of charge at www.fisma.org. TDRL, its affiliates, officers, directors and employees, nor ED will not be liable for any loss or damage arising from any use of this document, to the maximum extent that the law permits.

Copyright 2018 Trinity Delta Research Limited. All rights reserved.

More information is available on our website: www.trinitydelta.org