Satellos Bioscience Inc (MSCLF)

[Jumpinjackas]

We expect iCo to complete the iCo-007 phase II trials by 2013. We expect phase III trials to continue
for three years, thereafter, and are hopeful that iCo-007 could be approved by the FDA in 2018. With
an annual treatment cost of C$10,000 and a significant market (currently 1.6mn suffer from DME),
iCo-007 is likely to generate C$114.9mn in 2019. During the patented period (2019–28), we anticipate
iCo-007 to penetrate the market (as its closest competitor Lucentis has an annual treatment cost of
$24,000) and expect revenues to grow at a CAGR of 16.4% to C$450.2mn in 2028 from C$114.9mn
in 2019. On expiry of the patent, the annual treatment cost is likely to fall by 61% in the next two
years. As a result, we expect revenues to decline to C$204.9mn in 2030 despite an increase in
market share. Longer term, we see potential for broader opportunities for possible label expansion
for iCo-007 in treating Diabetic Retinopathy (DR). c-Raf kinase is involved in cellular processes
regulating proliferation, differentiation, and apoptosis, and iCo-007 may therefore have anti-apoptotic
properties, which stabilize the blood-retina barrier. We have not, however, reflected the potential for
expanded scope of iCo-007 in our forecast.
iCo-008, another drug candidate, has a good safety record and phase I and phase II clinical history
with 126 patients. The drug will be used for treatment of Vernal and Atopic Keratoconjunctivitis
(“VKC”) and potentially wet age macular degeneration (WAMD). We expect commercialization to
begin by 2020. Considering a 1mn population base suffering from these diseases, we forecast



potential revenues of C$17.2mn in 2020 assuming eventual regulatory approval. Like iCo-007, we
expect high growth (CAGR: 22.1%) for iCo-008 during the patented period (2020–29), after which we
expect the revenues to fall by 28% to C$75mn in 2030 from C$104.1mn in 2029.
iCo could also reap profits from iCo-008 through its licensing deal with IMMUNE Pharmaceuticals.
The company licensed the systematic applications of iCo-008 to IMMUNE Pharmaceuticals in 2011
for an upfront payment of $500,000, a 6% equity stake in the company, and future royalty payments
which could reach as much as $32mn. IMMUNE is preparing to enter a Phase II trial in 2012 with
iCo-008 to treat inflammatory bowel disease. We anticipate milestone receipts up to C$32mn on
account of out-licensing iCo-008 to IMMUNE Pharmaceuticals (IMPH). Additionally, we have modeled
future royalty receipts for IMPH’s revenues from 2020 onwards. Importantly, on November 8, 2012,
IMMUNE announced a merger agreement with EpiCept Corporation (NASDAQ OMX Stockholm:
OTCQX: EPCT), which is expected to close during the first quarter of 1Q13. IMMUNE shareholders
will control 77.5% of shares after the merger, and we believe IMMUNE’s public market valuation
could be a positive catalyst for iCo’s shares by providing value for iCo’s equity investment.
http://www.pivotpointnewswire.com/wp-content/uploads/2012/11/ICOnov2012final.pdf