Increasing number of financings and IPOs in Q1 Frequent upward revisions lately to sales estimates at the largest biotechnology companies Nasdaq Biotech Index (NBI) dropped 4.4% Friday • Sharpest decline since Oct-11 • Triggered by a letter from congressional representatives to a biotech company Gilead Sciences, questioning its plans to sell a hepatitis C drug (named Sovaldi) for $84,000 per dose • Gilead required to give briefing by 03-Apr Sovaldi expected to generate >$4bn in sales this year The drug's expense might saddle state Medicaid programs with steep costs The whole sector is as risk US is the only major health-care market remaining without any meaningful drug price controls Risk for the whole sector once the Congress gets involved, especially if focused primarily on pricing The biggest NBI firms sold-off significantly chg (%) Index Wt eic.) BIOGEN DEC INC -8.2 7.9 AMGEN INC -3.2 7.8 C-ILEAD SCIENCES INC -4.6 7.0 PEGENER0N PHARMACEUTICALS -5.4 6.9 CELGENE CORP -3.7 6.5 ALE-ION PHARMACEUTICALS INC -8.0 4.6 ILL'.'MINA INC -5.4 4.6 MY LAN INC -0.9 4.3 ✓ERTEX PHARMACEUTICALS INC -5.1 3.8 BIOMARIN PHARMACEUTICAL INC -5.9 2.5 Ways to hedge exposure to the US biotech sector • ProShares UltraShort Nasdaq Biotech Fund (BIS US Equity): designed to be 2x short the NBI Options on iSharesNasdaq Biotech ETF (IBB US Equity) NBI — last 5 ears 3000 2577.21 2009 1500 1000 500 2009 I 2010 I 2011 I 2012 I 2013 201• NBI tnoex (Nasdaq Biotechnclogy Index) Copynghtli 2014 Bloomberg Finance L.P. ZS-Kw-2014 14:35:20 NBI vs S&P500 — last 1 year CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0 123564 CONFIDENTIAL SDNY_GM_00269748 EFTA01461487