Morgan Stanley

Morgan Stanley February 29, 2016 Editas Medicine Starting A Gene Editing Revolution Industry View Stock Rating In-Line Equal-weight Price Target $28.00 We initiate at EW with a $28 PT; Despite our LT optimism for the promise of gene editing, two near-term headwinds are likely to keep EDIT range bound - IP uncertainty and a lack of clinical catalysts until 2017. Over the long term, however, we see Editas as the premier gene editing company. We initiate at EW with a $28 PT: Editas is using a new technology called CRISPR/Cas9 to edit (replace/remove) bad genes with good genes and achieve a therapeutic benefit in patients with genetic diseases. This approach differs from the more commonly known gene therapy in that it can accurately remove and replace genes instead of inserting a new gene sequence without specificity as happens in gene therapy. Thus, the potential of CRISPR is broad with -6,000 genetic diseases of which less than 5% have treatments. At odds with our positive long-term view of Editas and CRISPR technology are two headwinds which we see as keeping EDIT in check: (1) Over the course of the next 1-2 years Editas and its academic parters are going to engage in a substantive IP battle over CRISPR technology versus other companies, namely, Intellia and Crispr Therapeutics, which is likely to limit stock appreciation; and (2) initial clinical data is unlikely to be available until late 2017 at the earliest, limiting any significant derisking events for the platform. CRISPR is a compelling technology and we see Editas as best positioned to realize its potential: We have high hopes that the potential for CRISPR can be translated into clinical benefit across a wide variety of diseases. Key to our optimism is that CRISPR has been used in many labs across many academic institutions with strickingly similar outcomes, suggesting that many of the key technical hurdles in small systems are understood. We believe Editas has a strong analytic process dedicated to addressing each of the main components of development. Thus, we ultimately see Editas as being successful in delivering therapeutic candidates. Importantly, for the lead clinical program in Leber's disease, we see it as the right first target given that it is relatively easier to deliver therapy to the photoreceptors, and the closed system of the eye limits potential safety risks. IP a key area of debate over the next 1-2 years: Editas, along with its academic partners from whom it licensed its foundational IP, is currently engaged in a interference proceeding to determine which claims, if any, from its IP can stand versus the competing party (University of California and its licensees). This proceeding is likely to play out over the course of the next 1-2 years. While we expect the outcome is likely to be one which requires both sides to share IP, there are tail scenarios which could lead Editas to have no freedom to operate. Editas Medicine] February 29. 2016 MORGAN STANLEY RESEARCH MORGAN STANLEY & CO. LLC Matthew Harrison '1212 761-8055 David N Lebowitz, MPH. CFA '1212 761-0324 Cyrus Amoozegar, M.D., Ph.D. .1212 761-6009 Editas Medicine ( EDIT.O, EDIT US ) Biotechnology / United States of America Stock Rating Industry View Equal-weight In-Line Price target $28.00 Shr price, close (Feb 26, 2016) 527.49 Mkt cap, curr (mm) 5133 52-Week Range $2940.12,57 Fiscal Year Ending 12/14 12/15e 12/16e 12/17e ModeiWare EPS (S) (4.79) (233) (1.16) (L81) Prior ModelWare EPS (1) P/E NM NM NM NM Consensus EPS ($)1 Div yld (%) Unkst oihemiie noted, all metrics am based on Mogan sanity mocloWaie frarnenork - ContanT.os data ,s pronle:l by Thomson Rauuns E clm ems a - Montan Staab, R{,{.I0.4 mimamt QUARTERLY MODELWARE EPS (S) Quarter 2015e 2014 Prior 2015e 2016e Current Prior 2016e Current Q1 (1.00) (0.70)a (0.21) Q2 (1.00) (0.68)a (0.24) Q3 (1.36) (0.69)a (0.29) Q4 (1.89) (0.26) (0.41) • Macron Sun by Research estmaiet a • ActualCompany /opened data Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision. For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report. EFTA01100261 Morgan Stanley Editas Medicine] February 29. 2016 MORGAN STANLEY RESEARCH Lack of near-term clinical data and IP dispute likely to keep EDIT range bound: Despite our positive view of CRISPR, we see the lack of near-term derisking clinical data as limiting potential upside to EDIT in the near-term. Further, while we expect the outcome of the IP dispute to be some sort of cross licensing agreement similar to what we have seen with antibodies, the tail scenarios present sizable risk and thus are likely to also limit upside. 2 EFTA01100262 Morgan Stanley Editas Medicine I February 29. 2016 MORGAN STANLEY RESEARCH Risk Reward Demonstration of safe administration in humans, IP resolution, and LCA10 success drive risk/reward BO 70 00 $7200(.210%1 50 40 30 $n t3 20 10 0500(. 0 Feb-14 144.14 F4045 Aug.15 Feb-115 /04.03 FS-17 Ter Psi') Source: Thomson Reuters. Morgan Stanley Research Price Target $28 Bull DCF Base DCF • Oen Ste Pis Our PT is derived from a DCF that uses a 15% discount rate and a 0% terminal growth rate beyond 2032E. $72 Editas is able to develop and commercialize therapies that receive widespread uptake. The LCA10 therapy launches in the US and EU in 2024E, treats and cures —80-90% of the addressable LCA10 population, commands premium pricing and generates peak sales of -4130M in both the US (2026E) and EU (2027E). Editas is also able to realize -568, in sales by 2032E from additional therapies in CAR-T applications, non-malignant hematology, DMD, and CF. $28 The LCA10 therapy proves successful, but additional therapies obtain modest success. The LCA10 therapy launches in 2024E in the US and EU. and treats and cures —70-80% of the addressable LCA10 population to generate -585M in peak sales in both the US and EU (2028E). While Editas is able to develop successful therapies for CAR-T, hematology, DMD, and CF, it achieves lower market share for total additional annual re✓enues of -438 by 2032E. Bear $5 DCF (Cash/share) Pipeline programs fail. Editas is not able to commercialize any therapies. and the resulting valuation is cash / share. Investment Thesis ■ We are Equal-weight Editas Medicine. The CRISPR gene editing platform has been derisked from an operational standpoint, and can be geared towards numerous disease targets. Howe✓er, the delivery and long-term safety of administering dinically relevant doses in humans needs to be proven. ■ Editas has a systemic, modular approach that may allow for differentiation over competitors ■ The first disease being targeted (LCA10, an inherited retinal dystrophy) lowers the initial risk of proving that gene editing can work in humans, as the eye is immune privileged and provides a small, contained area in which sufficient quantities of vector can be delivered safely ■ Overall, we see significant long-term potential for Editas, but remain equal-weight while initial therapies are derisked in the dinic and the IP battle plays out over the next 1-2 years. Key Value Drivers ■ Resolution to IP interference proceedings ■ Progressing the LCA10 program into the dinic ■ Advancing current discovery stage programs into the clinic such as for hematologic diseases and genetic diseases of the lung & liver Potential Catalysts ■ Initiation of Phi LCA10 trial in 2017 ■ Interference proceedings in 2016/2017 ■ Entering additional therapies into the clink in 2017/2018 Risks to Achieving Price Target ■ IP outcome that limits Editas' freedom to operate ■ Development risk associated with early nature of pipeline, and the timeline is long to initial data (first data in humans is expected from the LCA10 Phi study in 2017) ■ Competitors that could influence investor perception of the stock 3 EFTA01100263 Morgan Stanley Editas Medicine I February 29. 2016 MORGAN STANLEY RESEARCH Investment Case Summary & Conclusions We are initiating coverage of Editas with a 528 PT and an Equal-weight rating. Our rating is based on two near-term factors at odds with our longer term view of CRISPR as a platform: (1) Over the course of the next 1-2 years Editas and its academic parters are going to engage in a substantive IP battle over CRISPR technology versus other companies, namely, Intellia and Crispr Therapeutics which is likely to limit stock appreciation; and (2) initial clinical data is unlikely to be available until late 2017 at the earliest, limiting any significant derisking events for the platform. Thus, while we continue to view CRISPR as one of the more compelling next-generation technologies to address a wide variety of disease targets, we think the stock is likely to remain range bound ahead of clarity on both IP and clinical activity. Note: The authors of this material are not acting in the capacity of attorneys, nor do they hold themselves out as such. This material is not intended as either a legal opinion or legal advice. The information provided herein does not provide all possible outcomes or the probabilities of any outcomes. The result of any legal dispute or controversy is dependent on a variety of factors, including but not limited to, the parties' historical relationship, lows pertaining to the case, relative litigation talent trial location, jury composition, and judge composition. Investors should contact their legal advisor about any issue of law relating to the subject matter of this material. Key Investment Points 1. CRISPR is a compelling technology and we believe Editas is best suited to translate the technology into therapeutic benefit - We are positive about the potential for CRISPR to be translated into clinical benefit across a wide variety of diseases. Key to our optimism is that CRISPR has been used in many labs across many academic institutions with similar outcomes, suggesting that many of the key technical hurdles in small systems are understood. That said, there are still many key risks and challenges that need to be overcome including identifying efficient edits for each target, appropriate delivery to the tissue, expanding the platform's applicability across a range of different types and kinds of gene edits and various other engineering challenges. However, we believe Editas has a strong analytic process dedicated to addressing each of the main components of development. Thus, we ultimately see Editas as being successful in delivering therapeutic candidates. 2. IP battle will remain an overhang, but we continue to see cross licensing as the most probable outcome - The P in the CRISPR space is complicated, varied and nuanced. Thus, it is not surprising that various academic institutions believe they each have foundational P. Early in January 2016, foundational patents which Editas has licensed from Harvard, the Broad Institute and MIT were named in a patent interference proceeding with the University of California, University of Vienna, and Emanuel Charpentier. These patents are held by Caribou Biosciences and licensed to Intellia. Crispr Therapeutics also has rights to the same IP as Intellia though the second scientific founder, Dr. Doudna. The debate between the parties, which we discuss further in this report, is whether the initial discovery of CRISPR in prokaryotic cells is easily translated into mammalian cells (Broad was first to discover in the latter category while UoC in the former). Given the complexity of the P — 11 patents are named in the interference —we believe a plausible outcome is one where certain claims in Editas IP are narrowed (right now Editas is the only company with granted IP) and certain claims in the Caribou P are granted, but overall both parties would need rights to the other party, similar to the situation which developed from the foundational antibody IP. We assume modest royalties which generally cancel each other out. Nonetheless, the uncertainty created by this situation — including the fact that one outcome could be that Editas would have no freedom to operate if all its IP was overturned — is likely to keep EDIT range bound as the interference proceeds. 4 EFTA01100264 Morgan Stanley Editas Medicine] February 29. 2016 MORGAN STANLEY RESEARCH Exhibit 1: Indicative Timeline for IP Interference Proceedings 12 months -C 14 days 4-6 weeks 6 weeks 3 weeks 6 weeks 6 weeks 3 months 3 months Declaration of Interference Initial Papers Motions Lists I Call with APJ TP1 Motions TP2 Responsive Motions TP3 Oppositions TP4 Replies Oral Argument Decisions on Motions Cross-Examination Cross-Examination Period for Observations Motion to Exclude, Records Source. Company Dili Morgan Stank] ROttilth 3. Clinical data is the key upside driver, but is not due until late 2017 at the earliest- Editas and its CRISPR platform has the ability to target a wide variety of diseases with over 6,000 diseases caused by a genetic mutation and 95% having no approved therapy. Key targets include muscular dystrophy, cystic fibrosis, various malignant and non-malignant hematologic diseases and other liver direct targets. Thus, the universe of available diseases is large; however, all of these programs are currently in preclinical development and unlikely to move into the clinic in the near-term. The most advanced program is for a eye disease called Leber congenital amaurosis (LCA), which impacts a patient's retina and leads to blindness. This program is likely to enter clinical testing in 2017. Importantly, we view this as an appropriate target for an initial clinical program. Based on the literature -10-20% of the photoreceptors in the eye need to be edited to produce a therapeutic response (i.e., maintenance of some vision) and since the eye is a closed body, both delivery is likely achievable and off target toxicity is likely to be limited. Thus, we see the overall risk to be more modest with the LCA10 program. Despite our positive view of this program, the timeline is likely to limit stock appreciation given clinical data is unlikely until late 2017. 4.Business development has the potential to be a near-term upside driver - Editas has already completed one licensing deal with Juno in the CAR-T space. While we think that partnership can drive value for both companies, the timelines are not near-term. Further, we have seen other companies like Crispr Therapeutics strike partnership deals with Vertex and Bayer. Thus, there is clearly interest in CRISPR therapies by larger companies. Unlike Crispr Therapeutics, we believe Editas' management strategy is better suited to preserving shareholder value and would expect management to target deals where the assets are well defined (i.e., no open-ended target deals) and either the time to market or the basic knowledge in the therapeutic category (i.e., neurology) could be accelerated by the larger party. Thus, we do expect business development and expect it to be positive for EDIT, but the timing is hard to predict 5 EFTA01100265 Morgan Stanley Editas Medicine I February 29,2016 MORGAN STANLEY RESEARCH Exhibit 2: Correction of mRNA Expression in Cells from LCA10 Patients 0 • Normal MMutant Conti'01 Source:Company DaIs Guide Pair 1 Guide PaIr2 Exhibit 4: Recent Gene Editing Deals bed say- Valet Arno Introor Exhibit 3: Editas Pipeline Program Target Gene Star Lebo Congenial Amurtosis tO CEP290 Dotorery. SC over". Nude, a 2015. nil „ I . 2017 Olitett ilt4 Meagre CuMiteinter M Eye Discern Geoe Edo% lareelleto Weal OMNI Maple Deccreary NoorMairant Hereleloge 04•••••n M.Itple DriCevery Gent% etteeeesolMescle MJIple Decoverf Gera& Damsel De Lung Maple Discovery aeons innesousnmesoi Ole MS Maple Drecourf Source: Company Data. Morgan Stanley Research f tertine Pseinn C°Mbar awn Occur Annourue,ntnt per 1),,bon of CellAberstot upfront rot .is mfortomr Royally murbortrer Allot therontaA‘ IV to address Wood *tureen. lAndens. and rceutoolal neon deem 1///1/201S foremmestt 13001Ar ton/ ern lie yea. OM MA NA DI SA, mums SlOOPA• At eeruhr creceON owned SO/SO by Saw and CeRlet thempean us ant, Ateurret 5394 neer o (Mee Moseys Cute. thoyertuuct error focus on cystic homy, and wire tell Away c...blorytann additional (hunts torpsnon lour wars 510501 54204A Vt. 111 SIOSM uelrotmometts el Sore Ea* end SAW merry ID Venn venture KO% et claelownom rout to trestmorts olormied bIrVer" tertat CAR 1 art tat cancer Morrom S/17/1015 (never. SRCOSA rn heed runnel on 522M in reiteer trIPPOn Crter Are yrA coill•boraion teethe tale1 murk. tncireenng CAAts ore nemAtoporesrt %tern ten 1/7/7015 Orreymrs Not Onflosed Nei dechsted Yes III MD hordes II)tiovarm atones onprol cowry slake in Welke Source Company Data. Morgan Stanley ROttalCh S.Given the early stage of development Editas is tough to value, but we think a unique approach is warranted - We value Editas using a two pronged approach. As is typical, we value the defined clinical programs - in this case LCA10 - and assign a value. However, separately, we also try to value the potential upside associated with the platform. Here our approach is unique as we take our revenue models for DMD, Cystic Fibrosis, CAR-T and non-malignant hematology and assume Editas could penetrate that market starting in 2025 and reach peak share of 30% of that market by 2030. We than assume a 10% probability of success as a way to gauge the potential of the platform across a wide variety of targets and diseases. 6 EFTA01100266 Morgan Stanley Editas Medicine I February 29. 2016 MORGAN STANLEY RESEARCH Exhibit 5: Bear to Bull Case Bridge for Editas Valuation Oral Sou r<* Ngorgan Stanley Reseagch Key Upcoming Catalysts 2$ Hale arse A.:39 LCAIG 72 Ilu The key upcoming catalysts for Editas include updates to the interference proceeding, updated preclinical data at the ASGCT conference in May and an IND filing on its first clinical candidate for LCA10. Obviously, general developments in the CRISPR space are likely to occur as well and could have an impact on Editas. Exhibit 6: Editas Catalyst Calendar Milestones Timing Updated preclinical data at ASGCT 2016 May 4-7, 2016 Potential new business development 2016 Potential interference proceedings and updates 2016/2017 Initiation of Phase I LCA10 study 2017 Additional therapies enter the clinic 2017/2018 End of Juno collaboration 2020 ou roe: Company Data. Morgan mangey lirnatth 7 EFTA01100267 Morgan Stanley Editas Medicine I February 29, 2016 MORGAN STANLEY RESEARCH Valuation Exhibit 7: DCF drives valuation ac Oct NO, 0.0 ae 001, On0 a.m 'on on nu ion inn ion isn a an out aon aro ant an (% on ma on n. M, to pn Sill II" Source: Company Data, Morgan Stanley Research Sum of Discounted CF ($3.4) $1,009 Net Cash $203 Equity Value $1,213 Equity Value Per Share $28 Discount Rate 15% Terminal Growth Rate 0% Time of Valuation 2016 Shares Outstanding (millions) 43 Our S28 price target includes -43.38 in peak (2032E) global revenue. We derive our price target from a discounted cash flows (DCF) analysis that uses a WACC of 15.0% and a terminal growth rate of 0%. Valuation Methodology: We prefer the use of a DCF analysis to value biotechnology companies. Given the defined patent life for each product, we believe a DCF fully captures both the upfront investment period as well as the long-term earnings power. While investors do look at biotechnology on a multiples basis (PIE), we prefer a DCF as it is more rigorous and requires more explicit assumptions about the long-term prospects of a company. Discount Rate: We use a 10% discount rate for all commercial companies, a 12.5% rate for companies with randomized Phil data and a 15% rate for all development stage companies. Given the stage of development we use a 15.0% discount rate for EDIT. Terminal Growth Rate: We model explicit revenues through 2032E with a 0% terminal growth rate Revenue: We model 5-25% penetration of the LCA10 market in the US and 3-17% in the EU starting in 2024. We assume $1M pricing in the US, increasing 1.5% annually. We assume a $900k price in the EU, increasing 1% annually. For other products we assume a blend of revenues from CAR-T, non-malignant hematology, DMD, and CF with the company capturing a small fraction of sales and having a 10% probability of success. Total estimated peak sales (2032) are -$3.38. Economics: Editas maintains worldwide commercial rights to many of its product candidates, except for their CAR-T program. We expect the company to retain global rights and launch their products themselves. COGS: We model COGS as a continuous 17%. Operating Expenses: We assume R&D of $25M in 2016E growing to -$80M in 2021E and -5250M in 2032E. R&D growth is expected to be aggressive in the next few years to account for the simultaneous development of several products. We assume SG&A of -$25M in 2016E, growing to -556M in 2021E and -$210M by 2032E, assuming product launches starting in 2024E. Key Risks To Our Price Target Include: (1) Lack of freedom to operate driven by losses int he interference proceeding around CRIS PR IP; (2) Inability to deliver CRSIPR candidates to the correct tissue or inability to achieve high editing efficiency; (3) Lack of efficacy with initial clinical data or unknown safety. 8 EFTA01100268 Morgan Stanley Editas Medicine] February 29. 2016 MORGAN STANLEY RESEARCH Debate 1- What is CRISPR/Cas9? Overview: CRISPR is a new technology that may not be familiar to many investors. While the new wave of genetherapy companies - where a gene sequence is inserted into a viral carrier (typically lenti or AAV) and then incorporated into the body's genes - has educated investors on that technique, many have heard about CRISPR, but do not know all of the details. CRISPR is a protein-RNA complex where guide RNAs locate a specific gene sequence and then allow cas9 nucleases to "edit" that sequence. It is a precise way to edit a specific gene sequence, potentially curing the patient of the disease caused by the genetic defect. Significant academic success has been made with the CRISPR/Cas9 system, though all the work has been completed in animal models. The first in-human testing is to be completed by Editas and its competing commercial entities. Street's take: Overall, we believe consensus recognizes that CRISPR is a significant new technology that could have a large impact on the treatment of genetic diseases. We believe most investors understand the significant potential of CRISPR and the debate centers around how effectively it can be implemented, if the technology is ready to be used in humans and if it is derisked enough yet for an equity investment As is to be expected, some investors see near-term potential while others would prefer to wait for greater clinical experience. Our take: We believe CRISPR is likely to play a major role in gene repair and modification long-term. While we are not entirely sure how long and what the path to clear therapeutic effect will involve, we do believe CRISPR as a technology is proven from a technical perspective and now needs to be translated into humans. Thus, we see great promise in the platform and believe CRISPR has the best chance to create durable, functional cures of many genetic diseases. Gene therapy vs Gene editing? Gene therapy differs from gene editing in both the approach and the possible results seen. Gene therapy generally involves the addition of a new gene to a genome. These new genes can be to replace a defective gene or to add a new gene. The original genes remain intact. Gene editing involves changing the genome, which can involve the addition, deletion, or substitution of components of the genome. CRISPR/Cas9 is not a genetherapy and is a gene editing platform. What is CRISPR/Cas9? CRISPR/Cas9 is a novel method of genetic engineering that uses guide RNA to edit DNA by allowing the enzyme Cas9 to cut and insert the desired genome sequences. The CRISPR/Cas system is formed from CRISPR arrays and CAS genes. CRISPR arrays are clustered, regularly interspaced short palindromic repeats found in certain prokaryotic genomes. CRISPR arrays involve sections of repeated base pair sequence separated by non-repeating spacer sequences. Both the repeated sequences and the spaces come in a large number of variations. Many CRISPR-genes also contain domains associated with DNA manipulation and many of the spacer sequences contained plasm id or phage-derived DNA. CAS, or CRISPR-associated genes, are almost always found adjacent to the repeat arrays. CAS genes come in a variety of subtypes. The CAS9 subtype gene encodes the RNA-guided endonuclease Cas9 which can cleave double stranded DNA. CRISPR RNA (crRNAs) guides with Cas9 proteins and can lead to cleavage of specific sites on DNA and the introduction of templates for gene insertion, as demonstrated in the illustration below. 9 EFTA01100269 Morgan Stanley Editas Medicine] February 29. 2016 MORGAN STANLEY RESEARCH Exhibit 8: Illustration of Gene Editing Using CRISPR/Cas9 DNA target Cas9 CRISPR/Cas9 has the advantage of being cheaper, faster, and easier to use than other techniques. The system is easy to configure between species and allows for an increased precision of insertion. Overall the CRISPR/Cas9 system allows for greater control than usual gene augmentation from gene therapy. The CRISPR/Cas9 technology has seen rapid uptake in a number of academic laboratory groups due to the relative low cost and ease of use. The technology was initially designed for prokaryotic cells but was later adapted to eukaryotic cells, and has since been demonstrated to work in Mammalian cells. A useful review of the history of CRISPR by gado RNA Lander can be found in Celt 164. January 14, 2016. Source: Company Data What other approaches are available for gene editing? Zinc finger nucleases — These are restriction enzymes designed to cleave specific target sequences on DNA. They involve a zinc finger DNA binding domain with site specificity and a DNA-cleavage domain for cutting the phosphodiester bone between nucleic acids in DNA strands. By taking advantage of a cell's intrinsic DNA repair mechanisms, zinc finger nucleases can be used for gene editing. Zinc finger nucleases are being commercialized by Sangamo Biosciences (not covered). Exhibit 9: Illustration of Gene Editing Using Zinc Finger Nucleases (Codon Identification) 5' -ACAAGGAGAGATTICAA TTGAAGAAGTGAAAGA11-3' 3' -1VTICCTCTCTAAAGIT AAA -5' Source: [tont. Physool.. 11 April 1010, 'Emerging gene editing strategies for Duchenne muscular dystrophy targeting stern cells: Carmen leflant. Department of Neurology. David Geffen School of Medicine. Unriersity of California Los Angeles Engineered meganucleases — Meganucleases are naturally occurring proteins that can recognize and cleave specific DNA sequences. They have a DNA recognition sequence that can be modified, thus allowing for engineered meganucleases that can target specific DNA sequences of genetic disorders. Exhibit 10: Illustration of Gene Editing Using Meganucleases Source: [tont. Physeal . 11 April 1014, "Emerging gene editing strategies for Duchenne muscular dystrophy targeting stern cells; Carmen Defiant. Department of Neurology. David Geffen School of Medicine. Un iwesity of California Los Angeles Transcription-activator like effector nucleases (TALENs) — Transcription activator-like effectors (TALEs) are proteins that bind promoter genes and can enhance gene expression. TALEs have a central repeat domain that confers the ability of TALEs to recognize specific DNA sequences along genomes. TALENs are engineered proteins that involve fusing a TALE and a DNA cleavage domain. 10 EFTA01100270 Morgan Stanley Editas Medicine I February 29, 2016 MORGAN STANLEY RESEARCH Exhibit 11: Illustration of Gene Editing Using TALENs (Nucleotide Identification) III I 0 111111111111 5' -ACAAGGAGAGATTTCAA YEGAAGAAGTGAAAGAA- ' Source: Front. Physiol.. 21 April 2014, 'Emerging gene editing strategies for Duchenne muscular dystrophy targeting stem cells,' Carmen Berton*: Department of Neurology. David Geffen School of Medicine. Un ',many of California Los Angeles What is Editas's approach to gene editing? Editas's approach to gene editing has four components:1) nuclease engineering; 2) delivery; 3) control and specificity; and 4) directed editing. Each of these components can be independently optimized in order to develop the best therapeutic candidate. We see Editas as using a comprehensive analytical approach to systematically build a library of CRISPR/Cas9 for a variety of editing approaches. We outline the key features of Editas* approach below. 1. Nuclease Engineering - The CRISPR/Cas9 system involves both a Cas9 protein and an RNA guide molecule. Both of these components can be tailored to allow Editas' gene editing platform to comprehensively target a wide variety of diseases. Editas is developing Cas9 variants tailored to specific genetic defects, and is also making targeted gRNA chemical and structural modifications to build a library of guide RNAs that will allow for enhanced targeting. Additionally, Editas is also using iterative in silico design and high-throughput screening to identify optimal Cas9 / guide RNA combinations. This approach could allow Editas to perform gene editing through various methodologies to address most disease-causing mutations. Exhibit 12: Approaches Available to Gene Editing for Editas CUT & REVISE CUT & REMOVE TGCACCTGAArH t TGCACCTGAAXXXGGCA "I ir zi. -4 TGAATGGrA ,— _ 4 IS° TGGCA CUT & REPLACE CCTGAATGCCA 4 -V TAGTCGCATCCCGCA Source: Company Data 2. Delivery - Different disease indications will involve different cell types and tissue structures and thus delivery mechanisms will need to be specifically designed for each disease type. Editas's CRISRP/Cas9 system is adaptable to different delivery modalities, and the company intends to use existing delivery technologies for in vivo and ex vivo delivery through modalities including viral vectors, nanoparticles, and electroporation. Preclinical data for both ex vivo and in vivo genome editing has provided encouraging early results, as demonstrated below. Next-generation delivery methods will be studied based on product needs going forward. 3. Control & Specificity — One of the largest advantages of gene editing techniques over conventional gene therapy techniques is the high level of specificity available when altering, deleting, or inserting new genetic material. The specific DNA cut sites must be optimized in order to deliver optimal therapy. Cellular exposure to the Cas9-guide/RNA complex can also affect the outcome and can be optimized to provide maximal benefit. Editas is exploring codon optimization for Cas9, to be able to identify the ideal codon set for each tissue. The company is also working to identify tissue-specific promoters for both guide RNAs and Cas9 proteins. Specific methodologies the company is exploring to control the editing process include self-targeting gRNAs to turn expression off, developing small molecule modulators of Cas9, and incorporating functional motifs and 11 EFTA01100271 Morgan Stanley Editas Medicine I February 29. 2016 MORGAN STANLEY RESEARCH Exhibit 14: Ex vivo: mRNA & RNP Delivery of PD- Exhibit 13: In viva Factor VII Gene Knockdown in 1 Targeted Cas9 in T-Cells the Liver with AAV so 40 00 c 30 -o 20 10 0 Source: Company Data d Day 2 Day 3 Untreated harkat developing variants to control cellular Cas9 degradation. 4. Directed editing — There are several mechanisms by which the CRISPR/Cas9 system and the cell's intrinsic repair systems can work together to cut and repair the target cell's DNA. Non-homologous end joining (NHEJ) Source Company Data is a method of DNA repair that occurs in the absence of a DNA template for each cell to copy that leads to small insertions and deletions. This is the best option when treatment requires the deletion of gene segments. The difficulty of using this mechanism increases as the length of DNA requiring deletion increases. Homologous directed repair (HDR) is a method of DNA repair that occurs in the presence of a DNA template. This method leads to the replacement of defective sequences with functional ones. This technique is the best option for inserting new genes. Editas is studying the impact that Cas9 variants and different cutting approaches have on the NHEJ and HDR repair pathways, and is working to enhance the efficiency of HDR by using donor DNA modifications. Important Papers in CRISPR/Cas9's development The development of CRISPR/Cas9 for Human Cells "Multiplex Genome Engineering Using CRISPR/Cas Systems" - L Cong, et al. In Science 2013 This paper demonstrates that RNA-guided Cas9 nucleases can be engineered that precisely target genomic loci in mammalian cells and cause double stranded breaks in mammalian chromosomes. "RNA-Guided Human Genome Engineering via Cas9" - P Mali, et al. In Science 2013 This paper focuses on the development and testing of engineered CRISPR/Cas9 with a custom guide RNA in human cells. This paper established that this technology was capable of human genome engineering. These tests were done in vitro. Improving Delivery "Cationic lipid-mediated delivery of proteins enables efficient protein-based genome editing in vitro and in vivo" Zuris, et al. In Nature Biotechnology 2014 This paper discusses a delivery system that can be applied to the CRISPR/Cas9 system proteins. Experiments were performed both in vitro and in vivo that demonstrated that the Cas9 system could be delivered and would 12 EFTA01100272 Morgan Stanley modify the target genome. Editas Medicine] February 29. 2016 MORGAN STANLEY RESEARCH "In vivo genome editing using Staphylococcus aureus Cas9" - F Ran et al. In Nature 2015 Earlier studies of Cas9 mainly relied on Streptococcus pyogenes derived Cas9s (SpCas9). These are larger proteins and limit the useful applications. This paper demonstrated that the significantly smaller Cas9 from Staphylococcus aureus can achieve similar efficacies to SpCas9, while maintaining specificity and efficacy. Improving Characterization "GUIDE-seq enables genome-wide profiling of off-target cleavage by CRISPR-Cas nucleases" - S Tsai et al. In Nature Biotechnology 2014 This paper highlights a detection system for identifying off-target DNA double strand breaks caused by CRISPR/Cas9 nucleases. Experiments with 13 CRISPR systems in 2 human cell lines demonstrated a high level of variability in off-target activities that were not detected by other computational and experimental detection methods. It was also shown that truncated RNA guides led to a reduction in off target double strand breaks. in vivo interrogation of gene function in the mammalian brain using CRISPR-Cas9" - L Swiech et al. In Nature Biotechnology 2014 In this study an AAV vector was used to deliver CRISPR/Cas9 derived from Streptococcus pyogenes to adult mouse brain cells targeting specific genes. The genome editing resulted in biochemical, genetic, electrophysical, and behavioral changes. Improving Specificity "Double Nicking by RNA-Guided CRISPR Cas9 for Enhanced Genome Editing Specificity" - F Ran et al. In Cell 2013 This paper discusses the use of paired RNA guides to introduce double strand breaks into target DNA. By using two guides with known spacing the specificity of the DNA cuts drastically increases. These experiments were performed in mouse zygotes. "Improving CRISPR-Cas nuclease specificity using truncated guide RNASs" - Y Fu et al. In Nature Biotechnology 2014 In this paper, researchers compare guide RNAs with truncated guide RNAs in terms of off-target effects. They demonstrate that the truncated guide RNAs have as much as a 5000-fold decrease in undesired mutagenesis without affecting on-target editing. "Fusion of catalytically inactive Cas9 to Fokl nuclease improves the specificity of genome modification" -.I Guilinger et al. In Nature Biotechnology 2014 The fusion of inactive Cas9 and Fokl nuclease improves DNA cleavage specificity. These fused Cas9 complexes had a significantly higher specificity than WT Cas9 proteins. "Dimeric CRISPR RNA-guided Fokl nucleases for highly specific genome editing" - S Tsai et al. In Nature Biotechnology 2014 This paper describes dimeric RNA-guided Fokl nucleases that have high efficacy and specificity in their DNA targets by recognizing extended genetic sequences. This system uses two guide RNAs with fixed and known spacing to ensure specificity. "Engineered CRISPR-Cas9 nucleases with altered PAM specificities" - B Kleinstiver et al. In Nature 2015 13 EFTA01100273 Morgan Stanley Editas Medicine I February 29. 2016 MORGAN STANLEY RESEARCH The range of sequences that can be identified with a Cas9 protein is determined by the specific protospacer adjacent motifs (PAM) on the targeted DNA. This paper demonstrates that the specificity of the CRISPR/Cas9 system for PAMs can be altered so that a wider range of targets is available to therapy. "High Fidelity CRISPR-Cas9 nucleases with no detectable genome-wide off target effects" - B Kleinstiver et al. In Nature 2015 This paper describes a variant of SpCas9 that minimized non-specific DNA contacts that results in the retention of on-target activity while rendering nearly all off target effects undetectable. "Rationally engineered Cas9 nucleases with improved specificity - I Slaymaker et al in Science 2015 In this paper, structure-guided protein engineering is used to alter and improve the specificity of SpCas9. These altered Cas9 proteins reduced off-target effects while still maintaining on-target editing. Key Academic Institutions with CRISPR/Cas9 Progams The development of CRISPR/Cas9 technology provides a model for what can be done through incremental progress in science. In the late 1980s/early 1990s, Dr. Francisco Mojica, a post doctoral student at the University of Alicante in Spain, noticed a unique/repeating genetic sequence in Haloferax mediterranei. It altered between a repeat sequence of 30 base pairs followed by -36 spacer base nucleotides. Dr. Mojica initially called the finding short regularly spaced repeats (SRSRs), eventually renaming it to clustered regularly interspaced palindromic repeats or CRISPR. This finding from a microbe usually found in salty environments, and noted for its ability to tolerate excessively high salinity, marks the beginning of an incremental set of advances that eventually led to the gene editing technologies being pursued by Editas and its competitors. Post the early discovery in Spain, there was a great deal of work that needed to be done to determine the purpose (if any) of these repeat sequences. After years of work, Dr. Mojica noted that these spacers were noted in E. coli strains with bacterial resistance leading to the hypothesis that CRISPR's purpose was part of the adaptive immune system offering a way for cells to adapt to their environment. While Dr. Mojica made some early findings, many others contributed new discoveries at a rapid pace. From Horvavth, Barrangou and Moineau who discovered that Cas nucleases contributed to this adaptive response to Marrafani and Sontheimer, who discovered that CRISPR specifically targeted DNA. As more incremental advances occurred it became increasingly apparent that not only is CRISPR, and in particular the Cas9 nucleotide, an important component of the adaptive immune system but also that it could be utilized as a gene editing tool. Such a tool would have immense potential for treating a massive array of diseases and disorders. Below we outline the key academic institutions who claim to have IP for CRISPR/Cas9 and their corporate affiliation. Broad Institute, Massachusetts Institute of Technology, Harvard University • Contribution: Dr. Feng Zhang, one of the founders of Editas and a principal scientist in the intellectual property dispute, conducted his research at the Broad Institute/MIT. Zhang's team examined CRISPR-Cas9 and in partnership with Dr. George Church from Harvard University learned that the nuclease Cas9 could be used to cut DNA in a highly specific location. This work was published in January 2013 in the journal Science. Dr. Zhang's team demonstrated that the cut DNA was replaceable with another piece of DNA, changing the overall sequence of the gene. Zhang and team also discovered Cpfl, which could also have similar application with the advantage of being a smaller protein than Cas9. Dr. George Church of Harvard University, and also a Broad Institute researcher, conducted work concurrently with Dr. Zhang and reported similar findings. Dr. Church's work was also published in the January 2013 issue of Science. It is important to note that both Church and Zhang also were able to translate the use of CRISPR/Cas9 into mammalian cells. ■ Intellectual Property Status: The Broad Institute filed for patents through the Prioritized Patent Examination Program, a fast-track review program. In December 2015, only six months after application, the US Patent and Trademark Office (USPTO) issued 23 patents 14 EFTA01100274 Morgan Stanley Editas Medicine] February 29. 2016 MORGAN STANLEY RESEARCH with respect to CRISPR/Cas9, 13 of which were issued to the Broad Institute, MIT and Dr. Feng Zhang. Harvard University was issued 4 patents relating to CRISPR. ■ Affiliation: Editas Therapeutics University of California, Berkeley, University of Vienna • Contribution: Dr. Jennifer Doudna of the University of California at Berkeley partnered with Dr. Emmanuelle Charpentier from the University of Vienna. Much of their work together was focused on Cas9. They made similar discoveries as Dr. Zhang and Dr. Church's team, demonstrating that the enzyme could be used to cut DNA. Dr. Doudna was one of the original founders of Editas; although, she left the company to start Caribou Biosciences, a company that eventually cofounded Intellia Therapeutics. ■ Intellectual Property Status: Doudna and Charpentier submitted a patent application for the UC Berkeley and the University of Vienna to the USPTO seven months ahead of Zhang. However, the application was submitted via the normal track as opposed to the fast tracked Zhang application. As such, the Broad Institute teams were granted broad Cas9 patents. UC Berkeley & University of Vienna initiated multiple Suggestions of Interference proceedings to challenge the Broad Institute patents. • Affiliation: Intellia Therapeutics and CRISPR Therapeutics are affiliated with Dr. Doudna and Dr. Charpentier, respectively. University of Vilnius ■ Contribution: Dr. Virginijus Siksnys of the University of Vilnius also concurrently conducted and published work evaluating Cas9 activity. In this work, it was demonstrated that Cas9 could be targeted to cut double stranded DNA exactly three nucleotides from the protospacer adjacent motif (PAM) sequence. Dr. Siksnys submitted his work for publication, a month before the Doudna/Charpentier paper had been published (after it was fast-tracked through Science's review process) • Intellectual Property Status: Dr. Siksnys filed patent application in March of 2012 based on this work. • Affiliation: Dupont for agricultural purposes. The Rockefeller University • Contribution: Dr. Luciano Marraffini is affiliated with the Rockefeller University. In his work he determined that CRISPR specifically targets DNA. In his work, he concluded that CRISPR was a programmable restriction enzyme that could potentially be employed as a gene editing technology. ■ Intellectual Propery Status: The Rockefeller University is a joint patent applicant on certain patent applications along with the Broad Institute. • Affiliation: Intellia Therapeutics ToolGen, Inc. • Contribution: Affiliated with Seoul National University in South Korea, ToolGen has developed genetic tools based on zinc finger engineering technology, with technology ultimately evolving toward the use of Cas9 nucleases. The company has also refined a process called double-nicking approach with zinc finger nucleases to clip the DNA. The belief 15 EFTA01100275 Morgan Stanley Editas Medicine I February 29. 2016 MORGAN STANLEY RESEARCH is that this will reduce off-target modification. • Intellectual Propery Status: ToolGen has filed Suggestions of Interference claims that two of their patents interfere with five Broad Institute patents. UC Berkeley has filed a similar claim on these five Broad Institute patents. • Affiliation: Thermo Fisher Scientific Exhibit 15: Various Academic Institutions and Players With CRISPR/Cas9 Programs Academic institution Contribution iP Status /41/6.0.1 Massachuswts Institute of Technology (MIT) - Broad Institute Harvard University- Broad Institute Dr. Zhang lad one effort to develop Cas9 for the purpose of gene editing. Granted initial Patents in large Part due TO decision to apt* through USPTO Prioritized Patent F commotion Program, leading to 6-month review process. Dr. Church of Harvard and Broad Institute conducted work on Cas9 concurrently with Dr. 2hang. First to be granted Patents i /X CRISP'', Cas9 gene editing technology m December 2015 Granted multiple initial patents in tandem WW1 MIT - Broad Institute. (Odes (dila, UC Berkeley ntellia University of Vienna Dr. Doudna conducted similar work on Cass for gene editing in unrelated effort. An original founder of f ditas, left to form Caribou Biosciences which co-founded Intellia. Dr. Charpentret worked in partnership with Dr. Doudna in Cas9 research. She is a founder of CRISPR Therapeutics Applied for Cas9 patents 7 months ahead of thong's team However, fell behind because Zhang's fast-tracked process. Filed multiple Suggestions of rnterference claims. Univensty of Vienna was named as part of VC Berkety's patent application and is included in Suggestion of Interference claims. Intelba University of Vilnius Dr. Siltsnys of the Unwersity of Vilnius showed that Cas9 could be targeted to cut double stranded DNA exactly three nucleotides from the protospacer adjacent motif (PAM) sequence. His work was submitted for publication l'month before Doudnagharpentier's efforts were published. Filed for patents in 2012. Dupont The Rockefeller University Dr. Marrahni conducted much work on CRISPR, being one of the first to determine it actually targeted DNA and suggesting it could be a gene editing technology Rockefeller is named on five Broad Institute Patents. Though they received nO rights as part of Broad's license agreement with Editas. 'MOM ToolGen, Inc. A Korean company affiliated with Seoul National University that used zinc finger technology in CRISPR research, moving eventually toward Cas9. Employs double-nicking to potentially reduce off target effects rnitiated Suggestion of Interference Proceeding regarding five Broad Institute patents Thermo Fisher Scientific Source: Cell 164, January 14, 2016 and Morgan Stanley 16 EFTA01100276 Morgan Stanley Editas Medicine] February 29. 2016 MORGAN STANLEY RESEARCH Debate 2 - What Is Going On With IP And What Potentially Can be a Plausible Outcome? Overview: In early January, an interference proceeding was declared between the Broad Institute/Harvard/MIT (from whom Editas has licensed its IP) and University of California, University of Vienna and Emmanuelle Charpentier (from whom Intellia and Crispr Therapeutics have licensed IP). At the core of the debate is who was first to invent the use of CRISPR/Cas9 in eukaryotic cells (particularly mammalian cells). The Broad has 12 issued patents named in the interference proceeding versus a yet to be issued University of California patent. Because California claims to have invented first it has been named the senior party while the Broad the junior party, though those designations could change. The total interference proceeding is expected to play out over the next two years. Potential outcomes could be that the Patent Trial and Appeal Board (PTAB) invalidates the Broad's IP, leaving Editas without freedom to operate, that the PTAB does not award a patent to the University of California, meaning Editas has the only granted IP for CRISPR/Cas9, or a limiting of claims for both parties with issued IP for both sides. An appeal is also possible after the initial ruling. Street's take: Investors have seen a few interference proceedings before, namely, Gilead versus Idenix for sofosbuvir and Biogen versus Forward Pharma related to Tecfidera IP. However, neither case has been potentially so central to the investment debate on the stock. Thus, for many investors this is an area they find hard to completely derisk. Despite that, we believe the prevailing opinion is either to invest broadly across the CRISPR/Cas9 space, thereby having investments in both parties or assuming, as do we, that given the breadth of the Editas IP, while some IP may be narrowed, the likelihood that all IP will fall is low. Our take: We believe a plausible outcome of the interference could be that both parties would end up with issued IP for CRISPR/Cas9, requiring both parties to engage in cross licensing deals. Our base case assumption is that these deals would end up being single digit royalties (one side may be slightly higher than the other), such that the net impact to the losing" party would be a low single digit royalty to the other side. Thus, our long-term view is that IP is unlikely to have a major impact on Editas. However, in the near-term, the IP case is likely to create volatility and a certain amount of uncertainty that we believe is likely to keep the stock in check. Overview of Editas' IP Portfolio Editas' IP portfolio consists of wholly owned IP as well as licensed patents and patent applications. Within the wholly owned portion of its IP portfolio, Editas has two pending US non-provisional patent applications and 14 pending US provisional patent applications. The company has 13 pending PCT patent applications, including claims for the direct editing component of the genome editing platform, composition of matter, and method of use claims for the therapeutic programs. These patents all expire between 2034 and 2036, excluding any term adjustments and extensions. For LCA10, Editas' first indication, there is one pending US patent and one pending PCT patent application. These are composition of matter and methods of use patents that are expected to expire in 2035. In addition to wholly owned IP, Editas has a number of in-licensed patents related to foundational CRISPR/Cas9 IP. Editas has in-licensed 16 US patents, 54 pending US patent applications, four EU patents and related validations, 19 pending EU applications, and 21 pending PCT patent applications. These patents come from a variety of sources, including the Broad Institute, Harvard, MIT, Massachusetts General Hospital, and Duke University. A summary of Editas' licensing deals is provided in Exhibit 16. 17 EFTA01100277 Morgan Stanley Editas Medicine] February 29. 2016 MORGAN STANLEY RESEARCH The ongoing debate around gene editing IP that may affect Editas relates to Broad Institute patents licensed by Editas. We summarize and provide our view on this issue in our next section. Exhibit 16: IP Licensing Deals Institute Number cii Patents Patent Content Mowed Uses Fees Milestones1Royakies Source: Company Data Interference What is the issue? Broad Institute General Hospital Corp./MGM .20 LIS Wenn 46 pending US numb -4 EU peteMs end related raliclations 111 prong EU potent litigeossone .11 pending PCT epplimbere .Other missed potent epplaliens mettle On USEU Rants to main CRISPATAS and TALE. Weise composition el melt pee ler geneue *Sung, sea ws certain CRISP%CesS end TALE. misled dense/ tecnrologiee Prevenlien ear treatment ot Mar Omen. exclmeng certsin MW -deers meanness or *Simla or maim& nib keTe CrOSSen and fNP 01 aW4 MINS. to. sissonostilenStion Vag human end the emelestment and convnedallzatIon ol producteservICel NT eased eliphaitiOnS Opines heonte M. Lew 6 epas end • single dell percentage of EONS ma Anenal License Maintenance lee: Low to and fire Sprees to lee us hoses bossing in 2016. aseitable pains royalties lalleekees: Up to Wekindleelial to lager ions:suns and $4 1MInchomen ler nisei indialbani Royalties. Mid lingleregib pireentsue lei PesenieliTe laettplat and • and* ems Ng single-Popl to high single-Mud Pe Ow produce end maim 10 wash's S ten imp amens 4 mums E pde pp aeons 2 pears PCT eppliceeons 03•Ikt Next, DOM, eoplrotere OSSA lilt L/SEU Aetna to CA WAG* end TALEselette men eaten of mMtie pester end Mee w in genre editing Ptivantea a butenaill *Maw, et animal dbaele end apaCutture. Including It. rumen MnlimPtien Does not include Medina a pietalent read kr clinical atedarrea Wart Wawa Banta Soo Law 6 Nisei end Mu Man ll. of common stock Meal LiCarde Mamlenance tee- Lon to mei rim nod dells unman. beginning us 2017 ilitesiesmir Up to 1141 in aspegele for Ent liOefaibd COOduCISOOON• Idattenit LOW II 26a In egregast tor 2ntrells inclicetion to eater the clime end seas Set 2•411-44h lantana' Val mak* it to metal There bre Si SPA in stiles milessoneo daystaas, Lea seals tar permatego el nei Mw la gel prennesel and treeiment of humeri Pewee* tee ergle-ihge to lot double digit en net soles Seiner AWLS...sneer& Duke University .2 pending US aslant tapliciacre 1 pending EU part applicaton 1 Pending PCT •OISICSion iK greme editing sprosTes. inducing CReaff•Cad sad TALES appeosimi for Mainers] MAD Exclaim lire la ere in sevenlien end Imetment of Ann disease. Ma beliefs research awe Nonexcherve ern part radiating remarthisagento ke Internet use. O*010 lipase M. High Ism mom Annual License Mairdenano• Rana* Fern meta den w law Iwo Ott *Om senorret beginning in 2015 MIletterief: Clinical. regulatory. end arnmertml mautones up to $625it In eggrogan par teenied (Padua Royailles: Low single CYO Demonists beast on arnmel net mice The IP surrounding CRISPR/Cas9 has recently become a topic of substantial discussion. The interference centers around the question of who has broad rights to use CRISPR/Cas9 technology in eukaryotic cells, and the legal case is between the Broad Institute (where a large portion of Editas' IP is licensed from) and the University of California Berkeley in conjunction with the University of Vienna and microbiologist Emmanuelle Charpentier. The first CRISPR/Cas9 related patent application was filed in March 2013 and named Jennifer A. Doudna and Martin Jinek (University of California Berkeley), Emmanuelle Charpentier, and Krzysztof Chylinski (University of Vienna) as inventors. The Broad Institutes first patent credited to Feng Zhang, was filed in October 2013. Eleven additional CRISPR/Cas9 patents related to the work of Dr. Zhang were awarded by the USPTO to the Broad Institute in 2013-2014. The University of Berkeley, Dr. Charpentier, and the University of Vienna believe their patent filed March 2013 invalidates the subsequent patents issued to the Broad Institute. The underpinning of the ongoing legal case between the two parties is the framework under which patent validity is being evaluated. In March 2013 the US adopted a system in which patent disputes were resolved based on a "first-to-file" system. Under this system, this case would be straightforward and Berkeley would likely win patent rights given its first CRISPR/Cas9 patent was filed roughly seven months prior to the Broad Institutes first CRISPR/Cas9 patent. However, as discovery work related to both patents was conducted before March 2013, the case is being evaluated under the "first-to-invent" system implemented prior to March 2013. Under the "first-to-invent" system, when competing patents claim overlapping inventions, patent rights are awarded to the party who can demonstrate that its patent was the first to reduce a concept to a practice. 18 EFTA01100278 Morgan Stanley Editas Medicine] February 29. 2016 MORGAN STANLEY RESEARCH Berkeley, Dr. Charpentier, and the University of Vienna contend that their patent filed March 2013 covers the use of CRISPR/Cas9 in eurkaryotic cells. As a result, they believe the twelve CRISPR/Cas9 patents awarded to the Broad Institute by the USPTO are invalid and have asked the USPTO to reconsider Broad's patents through a patent interference proceeding. Following Berkeley's request, the USPTO has declared an interference. The Broad Institute concurs that its patents were not the first CRISPR related patent applications, but contends that Broad was first in describing mammalian genome editing using experimental data. Broad believes the work underlying the Berkeley patent describes the ability of purified Cas9 protein and purified RNA to cleave DNA, but does not demonstrate mammalian genome editing and therefore does not qualify for priority given it does not prove that Berkeley was "first-to-invent" Eukaiyotic Cells Key To Interference Dispute The so-called reduction of practice issued related to the CRISPR/Cas9 patent interference debate relates mainly to the Broad's contention that it is not obvious to translate non-mammalian uses of the CRISPR system to mammalian systems (of which its IP describes) versus California's contention that a person skilled in the art would understand how to translate the use across eukaryotic cells. We found this quote from Jennifer Doudna in a publication which says, "it was not known whether such a bacterial system would function in eukaryotic cells" as particularly instructive in potentially supporting the Broad's claims. (see Jinek et al. elife 2013;2:e00471). The patents under debate are summarized in the exhibit below. Each patent from each party maps to multiple claims that each party believes speaks to the count that is the centerpiece of this interference. This count is the use of a Cas9 protein and a DNA-targeting RNA comprising a targeter-RNA or guide sequence and an activator- RNA or tracer sequence wherein the Cas9/DNA-targeting RNA complex is used to cleave or edit target DNA or modulate the transcription of at least one gene encoded by the target DNA in eukaryotic cells (emphasis added). 19 EFTA01100279 Morgan Stanley Editas Medicine I February 29. 2016 MORGAN STANLEY RESEARCH Exhibit 17: Summary of Berkeley and Broad Institute Patents Patent Filing Date Named Inventors Title femme, A. Doudna (Berkeie Methods and Compositions for RNA-Oar-OM University of California Application 3/15/2013 Martin liner (Berkeley) Target DNA Modification and for RNA- University of Vienna 13/842,859 KrzysztOf Chylonski (Vienna) Directed Modulation of Transcription Emmanueee Charpentier 8.69/359 10/15/2013 lent: /hang CRISPR-Cas Systems and Methods for Altering 8,171,945 2/18/2014 Feng Man Expression of Gene Products 8,945239 4/18/2014 Fong 2hang 8395,965 8.871,445 2/18/2014 4/23/2014 Feng Diane Le Cong. Feng/hang, CRISPR.Cas Component Systems, Methods. and Compositions for Sequence Manipulation 8,865,406 3/24/2014 Feng Zhang, Co Ran Engineering and Optimization of Improved Systems, Methods and Enzyme Compositions the Broad Institute 8,895,308 6/2/2014 Feng Ihang, Fei Ran for Sequence Manipulation Harvard College 8,889,356 2/18/2014 icing Thang CRISPFCCas Nickase Systems, Methods, and Mlt Compositions for Sequence Manipulation in 8,932,814 4/22/2014 Le Long, Fong Ihang EukaryOteS Engineering of Systems, Methods and Feng /hang. le Cong 8,906,616 5/29/2014 Optimized Gude Compositions for Sequence Patrick Hsu, fel Ran Manipulation Feng Mang, le Cong, Randall Jeffrey Platt 8,993,233 12/13/2013 Neville Espi Saniana. fei Ran Engineering and Optimization of Systems, Methods and Compositions for Sequence 8.999,641 3/26/2014 Feng Thant Le Cong Manipulation with Functional Domains Randall Jell rey Platt, Neville bp' Sarliana 'Harvard Cade iS nor on assignee /or Ine foltornng parents 8,697,359, 8,7/1,945. 8,295,965, 8.889,356, 8.945,819 Source: USPIO gov. Morgan Stanley Research What is an interference? Interference proceedings occur when two groups file potentially conflicting patents. These proceedings are declared by the USPTO after reviewing a party's suggestion of interference, and are contested in the USPTO between two applications or patents to determine which party has priority with their patent. In this case, the University of California, the University of Vienna, and Emmanuelle Charpentier filed suggestions of interference throughout 2015, and the USPTO declared the interference proceeding in January 2016. In an interference proceeding, the -senior party" initially refers to the group with the earlier patent filing date while the "junior party" is the one with the later filing date. The burden of proof in an interference case falls on the junior party. The Broad Institute is the junior party in this case. However, it is worth noting that "senior- and :junior" designations in this case may change based on a judges review of which party had the earliest patent filing to demonstrate use of CRISPR for genome editing in a eukaryotic cell. A timeline for the proceeding will be established in early March 2016. Based on our diligence, we have learned that interference proceedings typically take -1.5 years to resolve.A timeline of key recent and upcoming events for the proceeding are provided below. All of the filings for this interference are available online at https://acts.uspto.gov/ifiling/PublicView.jsp. The interference is 106,048. Interference timeline April 13, 2015 - University of California on behalf of itself and the University of Vienna and Emmanuelle Charpentier filed a suggestion of interference in the USPTO against the 10 U.S. patents in-licensed from Broad April 13, 2015 - ToolGen filed a suggestion of Interference in the USPTO against 5 U.S. patents licensed from Broad November 5, 2015 - University of California and Emmanuelle Charpentier filed a supplemental suggestion of interference against 2 U.S. patents and 5 pending U.S. patents applications from Broad 20 EFTA01100280 Morgan Stanley January 11, 2016 - The USPTO declared an interference proceeding for claims related to CRISPR Editas Medicine I February 29. 2016 MORGAN STANLEY RESEARCH March 3, 2016 — Each party will file and serve a list of motions March 10, 2016 - Appeal board will hold a conference call to discuss the interference, and a time line will be set on this call Late 2017 - Interference proceedings take -1.5 years on average. Expected resolution in late 2017 Overview of European Patents and Current Opposition Proceedings Patents at issue and nature of the opposition There are two key patents at issue in Europe currently. Both have been in-licensed from Harvard/MIT/Broad and describe various CRISPR applications, as summarized below. Exhibit 18: Summary of Broad/Harvard/MIT Patents at Dispute in the EU 1.111.468 The Broad Institute Engineering of Systems. Methods Ranged Colter 11/12/2013 Fens ZII011. Le Conte and Optimized Goole Compositions Mir Patrick HSu. tti Kin for Sequence Man Dula:ion 2,734,162 III Methods foe design and use of vectors that encode components of a CM SPR complex 111 methods of deectng CRiSeR complex unmans in eultaryonc coat III Mel hods for selenms specific cells by introducing pr ecru, mutations utplung the CRISell Cas system Source: EPO org. Morgan Stanley Research Nine oppositions have been filed against Patent 2,771,468. Parties opposing the patent include CRISPR Therapeutics, Novozymes, and several IP attorneys and legal firms (likely representing industry). The notices of opposition against this patent were filed in late 2015, and Broad/Harvard/MIT were notified in late December 2015 that they have four months from 12/22/15 to file their observations in response to all nine oppositions. All oppositions request the complete revocation of Broad's patent and oral proceedings in case the European Patent Office does not decide to revoke the patent based on the oppositions and supporting documents filed. Eight oppositions have been filed against Patent 2,784,162. The group opposing this patent comprises the same parties that filed oppositions to Patent 2,771,468, barring industrial biotechnology firm Novozymes. These oppositions were filed in early January 2016, and Broad/Harvard/MIT were notified in mid-February 2016 that they must file their observations in response to all oppositions within four months from 2/18/16. What is an opposition proceeding? An opposition proceeding is the EU equivalent to an interference. The opposition process is initiated through the formal filing of a notice of opposition by a party (or parties) that believe a certain patent is invalid on the grounds that (1) the subject matter of the patent is not patentable, (2) the patent does not describe the discovery clearly and completely enough for a skilled person to execute it, and/or (3) the patents subject matter reaches beyond the content of the patent filing. Oppositions must be filed within nine months after the publication of a mention of the patent in question being granted. Oppositions filed to both Broad/Harvard/MIT patents cut across all three criteria as grounds for revocation. Following the filing of an opposition the defending party is allowed a set amount of time (usually four to six months) to file their observations in response to the opposition(s). Following a review of documents filed by both sets of parties, the EPO Opposition Division may seek additional information and may also provide a preliminary opinion. If the division is not able to reach a final verdict based on documentation filed, or if either party requests an oral proceeding, an oral hearing is held to determine whether the patent in question will be (1) in effect as originally granted, (2) maintained but with amendments, or (3) revoked. Requests for an appeal must be filed within two months of the notification of the final decision. While variability exists on how long specific cases take to resolve, our diligence suggests that proceedings typically take —1.5-3 years to resolve (not 21 EFTA01100281 Morgan Stanley Editas Medicine I February 29. 2016 MORGAN STANLEY RESEARCH including an appeal process). Opposition timeline November 11, 2015 — Nine oppositions were filed in the EU against an EU patent in-licensed from Broad (EP 2,771,468 B1) January 8, 2016 - Eight oppositions were filed in the EU against a different EU patent in-licensed from Broad (EP 2,784,162 B1) April 2016 - Deadline for Broad/Harvard/MIT to submit their observations in response to oppositions filed against Patent 2,771,468 June 2016 - Deadline for Broad/Harvard/MIT to submit their observations in response to oppositions filed against Patent 2,784,162 Potential Outcomes to the IP case? Overall, we see three potential outcomes to the overall IP case that seem plausible. A total win or loss for Editas or a third scenario in which each party has some of their claims narrowed so as not to interfere with either parties IP, but where both parties still require each others' IP in order to have freedom to operate. Potential Outcome 1: A complete loss for Editas In this scenario, the reduction of practise argument would be won by California and all of the Broad's patents would be invalidated. While this would not be the end of Editas* commercial potential, it would severely limit their freedom to operate and likely mean they would have to acquire a license (which we assume would be at great cost) from California. We would expect the stock to trade near our bear case of cash only value in this scenario. Potential Outcome 2: A complete win for Editas In this scenario, the reduction of practise argument would be won by Editas and the University of California patents would be invalidated. This would clearly lift an overhang and likely lead to significant appreciation in EDIT. That said, given that our base case already assumes freedom to operate, it would not significantly impact our fundamental valuation which relies on CRISPR products demonstrating a therapeutic benefit Potential Outcome 3: A draw where both parties must cross license. In this scenario, neither party has a clear win. Both parties would have their patents modified and the claims in each patent and the statements attached to those claims could all be modified. We see this as making the most sense for the interference proceeding. While one party would likely have somewhat of an upper hand in the cross licensing negotiations, we think this scenario would at most lead to a net single digit royalty to the party with the upper hand. Thus, given the size of the potential market for CRISPR therapy, this would likely have a very modest impact on our valuation given we already assume some modest royalty in our COGS. Note that we ore not acting in the capacity of attorneys, nor do we hold ourselves out as such. This material is not intended as either a legal opinion or legal advice. The potential outcomes discussed above are hypothetical and for illustrative purposes only. 22 EFTA01100282 Morgan Stanley Editas Medicine I February 29. 2016 MORGAN STANLEY RESEARCH Debate 3 - How do you value the opportunity? Overview: Valuing early stage technology always presents a challenge. There is little, if any, clinical data on which to base one's valuation, yet the promise of the technology platform is huge. Thus, accounting for the value of -what if" is offset by the reality of the significant risks ahead to realize that -what if" leads to a wide variety of interpretations about intrinsic value. Street's take: Consensus has always been of two minds with early stage technology. Those with short term investing horizons typically only value what is nearest to market while those with longer-term time horizons value the -what if" much more heavily. In this case, given that we believe many investors see the strategic potential and significant market opportunity, an ability to value more than just the initial program in LCA10 is warranted. That said, given the current market investors also understand they must be measured in their approach. Our take: We value the LCA10 program in the eye directly given our view that this program presents the highest likelihood of an initial proof of concept for CRISPR/Cas9. There are a few items, particularly that the program only targets the eye which is a closed system and limits off-target concerns, that only 10- 20% of the photoreceptors need to be edited (and one allele at that) to maintain vision and that since the eye is small and physicians have direct access, delivery should not impede a clinical benefit. That said, LCA10 is a small market. Thus, we also believe that some value needs to be assigned broadly to CRISPR/Cas9. In this case we have chosen to use our annualized market sizes for cystic fibrosis, malignant and non-malignant hematology (leukemia, lymphoma, sickle cell disease and beta- thalassem ia) and duchenne muscular dystrophy as a proxy for the market potential of CRISPR. We have then assumed Editas could achieve 30% market share into that market at peak (2032E) and launch an Editas product in 2025E. We ramp that revenue from 2025E-2032E and then assign a 10% probability of success. The latter calculation represents the majority of our non-cash base valuation. Overview Editas's approach is based on the idea that DNA mutations are the root cause of a substantial number of diseases. There are approximately 10,000 genetic diseases and approximately 7,000 rare diseases. Of these rare diseases, approx. 80% (5,600) have a genetic basis and only -400 have approved therapies. There remains a substantial unmet medical need in many genetic diseases. Recent advances in the technology surrounding gene editing are beginning to allow direct editing of genetic material that may allow these previously unaddressable diseases to be addressed. Editas's CRISPR/Cas9 approach is highlighted in Debate 1 - What is CRISPR/Cas9? This is a versatile technology that can be applied over a wide range of genetic disorders. Editas is developing this technology for a number of indications. The Editas pipeline includes Leber Congenital Amaurosis 10 (LCA10), genetic and infectious diseases of the eye, gene editing in T-cells to treat cancer, non-malignant hematological disorders, genetic diseases of muscle, genetic diseases of the lung, and genetic and infectious diseases of the liver. 23 EFTA01100283 Morgan Stanley Editas Medicine I February 29, 2016 MORGAN STANLEY RESEARCH Exhibit 19: Editas Pipeline Program Inuit Gene Stage Delivery Editing Mechanism IP -:.tip Congenital Ainaumse 10 CEP290 Dscovery. MO enabling stones in 2016. Phl start in 2017 MV in wio NHEJ - Small Deboon Patents expire 2033.2036 Geneve and Inlecocos Diseases of Me Eye Motels Denotery MV on vrio NHEJ Patents expire 2033-2036 Gene Ecleing in T Coen lo Treat Cancer mtg..* Discovery Ex vivo NHEJ Patents expire 2033-2034 Non.Matignant Herrutobigc Diseases mow. Discovery Ex mio NHEJ & HDR Patents expire 2033-2036 Genetic Diseases of Muscle Meanie Discovery multi* NHEJ - Small & Large Deletion Patents expire 2033403E Genetic Diseases of Lung Multnle Discovery Hutto* NHEJ a NOR Pawns expire 2033-2030 Ora me Moms Made Dimovery Muth* NHEJ & HDR Patents expire 2033•2036 Source: Company Data The first program in development is for LCA10. This particular indication was selected because it requires both a simpler editing mechanism and because there is an established method of delivery. The size and complexity of the mutation being addressed will inform the editing mechanism necessary. Together with the complexity of delivery, these will determine the difficulty in developing therapies. Exhibit 20: Mutation Complexity vs. Delivery Delivery Comple)thy H8V a HSV DMD torn 51 EMI LCA10 ma• 0MD Eloin 4545 a Stargardt AD RP4 er a WOO slat oy srnaa Allele Large Nucleotide Small large !kitten Soecitx Deletion Repeat Regan Region NIIE1 NUT I NHEJ Deletion RCA UDR Editing Mechanism Source: Company Data The company has a number of key upcoming catalysts. In 2016 management is focused on moving programs through preclinical testing as well as new business development and the on-going interference proceedings discussed in Debate 2 - What Is Going On With IP And What Is The Most Likely Outcome? Management plans to enter the clinic in 2017 and treat the first patient with LCA10 using their CRISPR/Cas9 technology, with additional medicines to enter the clinic in 2017/2018. Editas currently has a collaboration with Juno for the development of CAR-T cells. If this collaboration is not renewed it will expire in 2020. Leber Congenital Amaurosis 10 Leber Congenital Amaurosis (LCA) consists of a heterogenous group of inherited retinal dystrophies. This family of diseases can be caused from at least 18 different mutations. The overall incidence of LCA is —2-3/10O000. 24 EFTA01100284 Morgan Stanley Editas Medicine] February 29. 2016 MORGAN STANLEY RESEARCH The disease usually manifests with significant vision loss, rapid involuntary eye movements, and there is an absence of measurable electroretinogram recordings. The most common form of LCA is LCA10, which makes up —20-30% of all LCA cases. LCA10 is caused by an autosomal recessive mutation int the CEP290 gene. There is no approved treatment and no potential therapies for LCA10 other than the one Editas has in development. Editas is currently applying their CRISPR/Cas9 system to LCA10 in preclinical testing. In preclinical models the Cas9 and guide RNA pairs can edit the mutation and lead to correctly spliced DNA. They are currently characterizing the frequency of these modifications seen with treatment of patient cells which will allow them to select the proper combinations of RNA and Cas9 proteins. These preclinical trials are being done to assess the efficacy of CEP290 editing in human photoreceptors. Gene therapy is a viable treatment for certain forms of LCA. LCA2 is caused by mutations in the RPE65 gene. This is a 65 k0a gene. Gene therapy has been shown to be a viable treatment for LCA2. However, CEP290 is significantly larger at 290 kDA and is too large for an AAV vector. Thus conventional gene therapy cannot be applied to treatment of LCA10, but gene editing therapies are still an option. Editas is also able to deliver the CRISPR/Cas9-based treatments through subretinal AAV injections, an established delivery method for other ophthalmic diseases. LCA10 provides a near-ideal indication for Editas to demonstrate proof-of-concept for their CRISPR/Cas9 system. The most common nucleotide mutation on the CEP290 gene is an A to G change that occurs on an intron, a non-coding portion of DNA that is removed during RNA splicing. No new genetic elements need to be added, thus NHEJ genome editing can be used with low risk of altering the protein coding structure. The NHEJ system is less complex than the HDR gene editing mechanism. A common concern between gene therapy and gene editing is the delivery of sufficient quantities of vector . The eye is of limited size and is an enclosed compartment, thus sufficient quantities of vector can be delivered safely. Furthermore, the eye is an immune- privileged region and thus there is less risk for a systemic toxic response. The subretinal injection will allow treatment to be delivered directly into the eye, minimizing overall systemic exposure. Further, because the second eye serves as an internal control, the trial itself can be completed more easily. Exhibit 21: CRISPR/Cas9 Treatment for LCA10 AAV with all components tr Sot reMY:pntwn 4 /Nu dale Mutant DNA e 46.0.. NHEJ 4 Edited DNA Normal inlitNA Normal Protein ca(.1(9 leJou/91,0n and mior wog $ Exon 27 Fxor 27 4 Corrected CEP290 Source: Company Data Over 140 different guides were tested in order to optimize the guide/RNA components. The optimal guides lead to significant increases in amount of correct protein over controls. 25 EFTA01100285 Morgan Stanley Editas Medicine I February 29. 2016 MORGAN STANLEY RESEARCH Exhibit 22: mRNA Guides Compared with Controls mRNA Correction Protein Correction 0.0005 0.0004 0.0003 0.0002 0.0001 ▪ 3 o. E 2 o c, u_ co 0 00 C O 1 03 O tA. 0 • • • Guide 1 I Guide 1 ••• PC 0.0001 • V.) a , pe • 7.1utant I Guide 2 GFP Control Guide 2 GFP Control Source:Company Data Editas management plans to enter the clinic and treat their first patient with LCA10 using the CRISPR/Cas9 system in 2017. We model LCA10 as beginning to generate US revenues in 2024 with LCA10 prevalence of -700 patients. We model Editas initially achieving 5% market share in 2024, growing to 25% by 2029 and an initial price of $1M, growing 1.5% yearly. We model the LCA10 treatment entering the EU in 2024 with LCA10 prevalence of -1,050 patients. We model an initial 3% market share increasing to 17% by 2029 and an initial price of $900,000 decreasing 1.5% yearly. We assume Editas' LCA10 treatment is curative, and as a result model the addressable LCA10 market size decreasing year-on-year in both the US and EU. Other Programs Editas has several other programs in preclinical development and a partnership with Juno for the development of CAR-T based therapies. Several other solely owned preclinical programs are also in development Juno Partnership Editas has entered into a partnership with Juno for the development of engineered CAR-T cells and engineering T-cell receptors. Editas is responsible for the generation of genome editing reagents that modify targets selected by Juno. Juno will evaluate these agents and will be responsible for global development, manufacturing, and commercialization of the CAR and TCR engineered products, excluding those for medullary cystic kidney disease. The targets will use both NHEJ and HDR approaches and will be both in vivo and ex vivo. Editas received a $25M upfront payment from Juno and will receive up to $22M more in research support over the 5 year collaboration (until May 26, 2020). Editas can also receive up to —$700M in aggregate from potential research, regulatory, and commercial milestones for each of the three research programs with Juno. Editas will also receive a net sales royalty in the low double-digit percentages. The Juno collaboration ends in 2020, but Juno retains the option to extend the collaboration through May 26, 2022 upon paying extension fees in the mid-single digit millions range per year. Early testing of the use of genome editing in T-cells has proven encouraging, as demonstrated below. Non-Malignant Hematological Diseases Mutations in the gene for human beta globin can result in diseases such as sickle cell disease and beta-thalassemia. Editas is studying how to best apply their CRISPR/Cas9 system 26 EFTA01100286 Morgan Stanley Editas Medicine] February 29. 2016 MORGAN STANLEY RESEARCH to address these mutations. The editing for these diseases could be done ex vivo on harvested hematopoietic stem cells. Once the cells are edited and it is verified that they produce the proper proteins, then the edited cells can be reintroduced into the body and used to repopulate the bone marrow. Throuah an ex vivo study, Editas Exhibit 23: Editing of T-Cell Target Genes in Human T-Cells IOD 60 .r2 I., 20 0 0 2 4 Da) Sou rce: Company Data observed -60% editing activity for the human beta globin gene in cells treated with Cas9-guide RNA complexes over control cells, as demonstrated in Exhibit 22. Treatment of the most common form of sickle cell disease would involve fixing the mutation of a single base pair, but treatment of beta-thalassemia would require the insertion of a new gene, thus likely requiring use of HDR editing. Exhibit 24: Cell Viability of Human T-Cells Following Delivery of Cas9-Guide RNA Complexes tee „ 20 0 —0— Ince A 4.4.0 Tarrt 8 2 Source Company Data Day Exhibit 25: Ex-vivo Editing of Hemoglobin Beta Gene in Human Stem Cells 100 80 2.4 60 a° 40 20 Control Cas9 Source. Company Data Control Cas9 Control Cas9 Donor I Donor 2 Donor 3 (Adult) (Cord Blood) (Cord Blood) Duchenne Muscular Dystrophy Duchenne Muscular Dystrophy (DMD) can be caused by a variety of mutations of the gene that encodes the protein Dystrophin. The Dystrophin protein helps provide structural stability to a complex found on the cell surface, particulary in muscle tissue cells. Mutations of the gene encoding this protein leads to progressive muscle weakness and atrophy, eventually leading to the failure of respiratory muscles. The dystrophin gene is one of the largest found in the human genome and mutations throughout that gene can occur which result in DMD. Some of these mutations lead to deformed proteins that still retain some functionality. Gene editing in DMD could serve to make a smaller, but functional protein. NHEJ editing of a small deletion on exon 51 would address -13% of DMD patients, while a NHEJ-mediated large deletion therapy applied to exons 45-55 would 27 EFTA01100287 Morgan Stanley Editas Medicine I February 29. 2016 MORGAN STANLEY RESEARCH address -60% of DMD patients. Delivery is complicated by the need to deliver the CRISPR/Cas9 therapy to striated muscle distributed throughout the body. Research at Duke is moving ahead on DMD and is a potential area of focus for Editas. Cystic Fibrosis Cystic fibrosis is a result of mutations in the cystic fibrosis conductance regulatory (CFTR) protein. The CFTR maintains water balance in the lung. Mutations of the gene encoding this protein lead to an imbalance of ions and water, resulting in a mucus excess. Similar to other genetic disorders, there are a variety of mutations that can lead to cystic fibrosis. An initial NHEJ based approach could be used to delete rare mutations, which would help address the disease in a smaller segment of the CF population. An HDR approach could be used to correct the Del F508 mutation, which accounts for the mutation in -70% of CF patients. Delivery in CF is complicated and will require efficient editing of the epithelial cells of the airways along the lungs. Novel delivery methods are in development such as liposomal encapsulation. Usher Syndrome 2A (USH2A) Usher Syndrome is a group of disorders that can be caused by a variety of mutations and leads to hearing loss and/or visual impairment. Usher Syndrome 2A occurs in patients that have mutations in the gene encoding the Usherin protein, which is found in the inner ear and in the retina. Over 200 mutations have been associated with the USH2A gene and loss of the Usherin protein leads to retinal degeneration and progressive vision loss. The most common location of the mutations of the USH2A gene are on exon 13. NHEJ editing could be used to delete a small section of the gene. Herpes Simplex Virus 1 (HSV-1) A Herpes Simplex Virus infection is a lifelong infection and activation of HSV-1 usually leads to oral and ocular disease. The virus will remain latent in neuron ganglia and will retain the ability to reactivate. However, in this latent phase the virus does not integrate into the host's genome. CRISPR/Cas9 could be used to cleave and inactivate the HSV-1 DNA, thus preventing reactivation. Inactivating DNA would likely require simple NHEJ editing. Alpha-1 Antitrypsin (A1AT) Deficiency Alpha-1 antitrypsin is a protease inhibitor. In alpha-1 antitrypsin deficiency, the protein is defective so that it accumulates in the liver and there is decreased activity in the blood and lungs. Due to this decreased activity, a number of proteases are under inhibited, including neutrophil elastase. This leads to elastin destruction in the lungs, ultimately causing emphysema. AlAT accumulation in the liver can lead to jaundice. The A1AT gene could be deleted using NHEJ, or HDR could be used to add the correct gene to the cells in the liver. Valuing these other programs We model other program revenues as coming from the CAR-T program, non-malignant hematology, DMD, and CF. These programs are still in preclinical development, and we therefore assign them a low overall probability of success. We define the revenue opportunity to be 30% market share of the four target markets mentioned above, and our base case assigns Editas a 10% probability of success in achieving this share. We further discount by assuming Editas is able to realize a certain portion (which increases every year) of the revenues implied by a 10% probability of success (POS) of obtaining 30% market share. We assume these blended revenues begin in 2025 at $240M and increase to $326 by 2032. Our Revenue Models Leber Congenital Amaurosis 10 (LCA10) Our key base case assumptions for our LCA10 revenue model are outlined below. ■ US and EU market launch in 2024E 28 EFTA01100288 Morgan Stanley Editas Medicine I February 29. 2016 MORGAN STANLEY RESEARCH • Addressable US and EU LCA10 populations in 2024E of -700 and -1,050, respectively, based on LCA prevalence of -1/100,000 and -20% of LCA cases caused by CEP290 mutations • Curative potential assumed for Editas' LCA10 therapy in both the US and EU • US market share grows from 5% of the addressable market to 25% by 2029E, with 25% share maintained through the end of the projection period in 2032E. Give our assumption that Editas' therapy is curative, our base case assumes —80% of the addressable LCA10 population in 2024E is treated by 2032E. • EU market share grows from 3% of the addressable population to 17% by 2029E, with 17% of the remaining addressable population treated each year through the end of the projection period. Our base case assumes —70% of the addressable population as of 2024E is treated by end of 2032E. • US gross pricing of $1M/patient at launch, growing at 1.5%/year with a 15% gross-to-net discount • EU gross pricing of $900K/patient at launch, decreasing 1.5%/year with a 20% gross-to-net discount Exhibit 26: US LCA10 Revenue Model US0000‘00. ;11 000 0(0 SS I. 40 SiO 944 191 161 346(00 519 349 0/6 112t lil.469 910 1S/ 910 199 196 407 /10 356'99)564 361 4 91 84) le Opp" NI 0" 0/6 015 On 0" 0" 0" 0" 0" ICA reedente 3.110 341$ 3.447 3.404 3.490 3315 3.33* 3364 5.599 3.614 %reale NA 0h 0h On 064 OM 02% 0.2% 0" 0.11 10.10 pm...me 642 666 618 HI 6% /03 10I 713 716 7/3 11~1. NA 0h 07% 0" 0h 07% 015 0^ 0h 0" Aokesoblel.CA104otv4be, 642 644 63 504 509 4/9 319 233 115 I SI 11 root. NA 0h 4 PI .915 54h /7.114 /1.3% /IA 11" 1. I " 00/14141/4/010YES ISO 0% 9% Mg 2.111 MS la 3716 JON NII 37% kr 0% 3% 1016 23% 1916 23/6 201 UN MN 2311 kw ON ON ON III ON ON ON a a PI 10914s 1CAIO thwe 064 134 SOS IS% 14% 13% FS% ZS% 1349 ItAt0141446111001/0 65 119 96 Y 81 63 48 IS • Getneti. NA (4, 111% 39 1% 11% 12" 1184 113 001101•00••••101 SO $1144040 $1,111.020 SWAM 51254914 $1,111.434 $1.11Z1J2 $1331.814 $1.1111.791 Ire• $O flAXYL000 $4.011020 SLOCIS 544164 11.061.144 54071.284 SUMO 11.109.04.4 stuswn SO 50 SO SO SO 50 SO SO SO $O 194400 RON" 04 SO S11%0009 S9015.000 Si 0.10.21S SI 04SAN4 SI Oel 14.4 f I Or? 201 SI 00.1 SI 501415 SI 116411 SO S450.001 1444.250 $411.691 $154.02, 5.3/.151 $915.151 9121.629 51061.114. $13.7.319 SO 51905//110 956(441.311 $09911.671 $04.116,252 963.0011111 $/6.6/09311 $59.11154 5/159440 S36.016. 7119 Source: Company Data. Morgan Stanley Research 29 EFTA01100289 Morgan Stanley Editas Medicine I February 29. 2016 MORGAN STANLEY RESEARCH Exhibit 27: EU LCA10 Revenue Model IV INPOVato9 119 79.915 SR 3n II% SI1,0902 515191440 %0.040 na On. t, 0. 03% 9 P% 03% 03% 050 01% 01% IM 0%%0Aeme S.Oq 5.119 %NS 5261 5.)76 5.11/ 5.10% 5.134 5.1%. 5.154 1 onott• NA 03% 03% 03% 03% 0311 03% 03% 01% 03% ICAtOrewhone LOIS 1.0•4 LOH IASI 1.051 LOSS IA) 'as 1.469 1/371 %run" HA 03% 031 0)% 03% 03% 03% 03% 0311 03% .01,flable KA 10 ono44149 LOIS 1.014 1.071 911 NO 77 • 141 151 449 35) • 49%0 NA On 3311 1" 93\ Il I% 116% 14 011 1598 158% Ustaseammen IS OS 4% St 1911 19% 11% MX IS% 25% 25% Is ON 1% 5% KOS 0% 15% OM in in V% Is OS 61, 0% 0% 0% 0% 0% 0% 0% 0% 104n VIA10 Owe 0% 1% 1% 10% I 15% 11%% :Au 53% LUPO %stools 'tonal le 11 N 1:1 1:0 109 9l 3J e1 • prom% NA NA 9)9% 929,4 5.11.9 9011 TO " 71.19 IS St Molgoaslos SO $1010.070 SUSI.° 51,417.443 51.0.12.123 51011.143 11001,1*8 $11/%373 59.71011 SM1.004 SO MUM Saba $411.20.1 $114104 5801,103 SWAN *Mtn $W%644 SM-40.1 SO SO SO SO 10 SO SO SO SO SO P.9e per 0414.'1. cop, SO 4WI,tW 51111,502 S.71.101 5100.104 54/.301 5811.415 S4/190/ SWIMS 5199501 IV9e per Pertvil SO Sno.oco Sicn./00 SoolkW 5Nµ0%. $413.361 Stek.996 S•51.541.1 $041./111 S439.0O3 Vat...03$ SO 119104 n: $16 NA 444 664.01091, $)5341454 $7464 ?a? S.U.n0.76? 560444104 S41, 81.9939 S41 341811 Satire* Company D33a. Morgan Stanley ReSealCh Additional Programs We value Editas* platform by valuing revenue streams from the application of the platform in CAR-T, non- malignant hematology, DMD, and cystic fibrosis. Given these are very early-stage programs, we heavily discount their expected revenue potential to Editas. For each program, our base case first assigns Editas a 10% probability of success in achieving 30% share of the market. We then further discount to account for blended product launches so that Editas earns an increasing portion of the revenue opportunity year-on-year. For 2025E, Editas earns 10% of the -$2.48 total revenue opportunity implied by a 10% POS of achieving -$248, which represents 30% share of the four target markets combined. The amount of the revenue opportunity earned increases 10% every year, such that Editas' additional programs generate -$3.28 in revenue by 2032E (80% of the -$48 opportunity implied by a 10% POS of achieving 30% market share of the four target markets combined). Exhibit 28: Additional Revenue Opportunities for Editas us% Vot13.1 56144 1644 Stn.? 14.444 WO* 410.4/0 111.1/1 111414 SI011 547.01 3MM? 5314% Po, 40499.4 .a.l “04 SILVA 34441 U./01. 1010 34159 Sing UP) SW) I4M3 14.106 NOM WWI owo 14711 14144 45+1 144u %Ms %Aft 11144 14.014 1.419. 5014 15 110 11.1% 1.1%411 5.4.460 41µ 19.114 0 11.01 4451 1340 4593 31.144 4144 {JAM VIM 12)44 $3 411 1.141.5 $3,91/ Salle SLIM. $1.110 Itlia Ills) Ov1,ww„r,la AM.. Jan SHAM III I4 SINN) Si. WI SU PAS $11.1•1 $15.1.? 4714 12/41 S/1,•11 31111111 3110. 5.19.111 $114/1 SIdIC9/ DIM iPtA0 ewe 94. 499.40/ 4/ awes %I VA Apr, %t 71+1, S si •ron P1., fl 21.1 4154 5/ MI 1/ 741 )194/ 3119/ $1.11, Sou 35.41 5/4.• 5,0 Ail Si:?? 3:541 5)044 10 1% 3.'99 Source: Company Data, Morgan Stanley Re Sea IC% 30 EFTA01100290 Morgan Stanley Income Statement Exhibit 29: Editas Medicine Income Statement Editas Medicine I February 29. 2016 MORGAN STANLEY RESEARCH Editas Medicine Income Statement (SM) 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E Total Revenue 1.3 9.0 9.0 9.0 9.0 7.5 9.4 11.8 14.7 66.3 355.5 c:ollaborabon Revenue 13 90 90 90 90 75 94 118 141 184 730 I CA10 Product Revenue (WW) • 479 977 Addttional Prodact Revenue • 239 8 Consensus Revenue Costs and expenses Cosl of sates 81 565 Research and development 05 50 138 250 450 608 729 807 882 970 106 7 11/4 1791 General and administrative I 2 7.7 14.5 25.0 35.0 38.5 42 4 46.6 55.9 67.1 805 966 1063 Operating Income (Loss) (1.72) (12.7) (27.1) (41.0) (71.0) (902) (1062) (119.2) (134.7) (152.3) (172.5) (155.9) 63.6 Olner expense I Income (0 0) (0.9) (38.3) (1.0) (1.1) (1.1) (1 2) (1.2) (1.3) (1.3) (1 4) (1.5) 111) Interest income 0.1 1.5 2.0 1.3 04 IS 0.4 1.6 01 IS 0.3 Interest expense • (0m) (0.1) (0.1) (0.1) (0.1) (0 1) (0.1) (0.1) (0.1) (o 1) (0.1) (0.1) Pretax Income (Loss) (1.7) (13.6) (65.4) (40.6) (70.1) (90.1) (107.1) (118.9) (135.7) (152.2) (173.9) (155.7) 62.2 income Taxes (expense) beneld - (21 8) Jar Rale 00% 00% 00% 00% 00% 00% 00% 00% 00% 00% 00% 00% 350% Nei Income (Loss) before referred stock (1.7) (13.6) (654) (40.8) (70.1) (90.1) (107.1) (118.9) (135.71 (152.2) (173.9) (155.7) 40.4 ConverbOle preferred stock preferences and (0.0) (021 (0.3) . . - . . . . . Nel Income (Loss). non-GAAp (1.8) (13.9) (65.7) (40.6) (70.1) (90.1) (107.1) (118.9) (135.7) (152.2) (173.9) (155.7) 40.4 NoRGAAP EPS (excluding options) IS4.11) SS.19) ($1.10) ($1.19) $2.41 (52.50) $2.47 (52.541 $Z..)0 (57.69) (S2,20) SOAT Consensus EPS Options Expense 00 0.1 2.6 9.2 10.1 11.1 12.2 13.4 14.8 16.2 17 9 19.6 21.8 %Of operating expense 12% 04% 92% 183% 126% 112% 106% 106% 102% 99% 95% 88% 7 4% Tax impact • • Net Income (non-(GAP. incl option exp) (1 8) (14.0) 188 3) (49 8) (SO 2) (101 2) (119 3) (1324) (150 4) (1684) (191 8) (173 3) 188 EPS. Muted (non.CAAP, incl colon exp) (32 28) (S4 79) ($5 40) ($135) (32 (7) ($2.70) ($2791 (V 75) ($282) ($2 88) ($2.96) ($247) $0.22 Source: Company Dila, Morgan Stanley Research 31 EFTA01100291 Editas Medicine I February 29. 2016 MORGAN STANLEY RESEARCH Morgan Stanley Balance Sheet Exhibit 30: Editas Medicine Balance Sheet Editas Medicine Balance Sheet (5M) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Cash and ST Investments: 2.0 10.6 150.2 203.8 134.5 43.2 164.8 43.0 164.9 14.8 180.3 30.6 11.1 Cash and cash equivalents 2.0 10.6 150 2 203 8 134.5 43.2 164 8 43 0 164 9 10 8 180 3 30 6 11 1 Accounts receivables - - Prepaid expenses 0.0 0.1 06 36 27 1.8 18 1.5 19 24 2.9 6.6 356 Preferred stock tranche asset 0.1 - - - - Total current assets 2.1 10.7 150 8 207.4 137.2 450 166.7 44.5 166.8 17.2 183.2 37.2 467 Properly and equipment. net 0.1 1.1 2 2 5.6 8.8 11.8 14 7 16.8 19 5 22.9 27.2 32.0 64 6 Other non-curent assets 03 04 04 04 04 04 04 04 04 04 04 04 04 Restricted cash - - Total Assets 2.5 12.2 153.3 213.3 146.4 57.2 181.7 61.6 186.6 40.0 210.8 69.5 111.6 Current liabilities: Accounts payable 0.4 2.6 2.1 3.8 6.0 7.4 8.6 9.5 108 123 14.0 16.1 118 Accrued expenses 0.7 1.6 3.5 8.3 10.0 124 14.4 15.8 180 20.5 23.4 26.8 235 Defence rent, current portion 0.1 01 0.1 01 OA 01 01 01 01 0.1 01 01 Anhdrution protection Irahtilty 0.3 03 0.3 0.3 0.3 03 0.3 03 03 0.3 0.3 03 Preferred stock tranche Ira uty 1.0 1.5 • - - - • - • - Equipment loan. current patron, net of di n1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0 1 Total current liabilities 2.1 &2 62 10.5 16.5 20.3 23.5 25.8 293 333 37.9 43.3 35 8 Deferred rent nel of current cation 0.1 0.1 0 1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0 1 Equipment loan, net of current portion and discount 0.3 0 3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0 3 Deterred revenue 25 2 20.1 15.1 10.1 5.0 • - • Wanam Imokty 0.0 00 00 0.0 0.0 00 0.0 0.0 00 0.0 0A 00 Other long-term liabilities 0.0 0.1 02 14 1.4 1.4 14 1.1 14 1.8 22 9.9 178 Total liabilities 2.1 67 32.0 32.5 33.4 32.2 30.4 27.5 31.2 35.6 40.6 53.7 54.1 Stockholders' equity: Redeemable convertible preferred stock 2.1 20.8 199 8 - Share captai . • - - • • - • . Additonal pad-in captal - 0.2 5 3 314 4 326.7 339.8 585 5 600.7 872 4 890 2 1,207.3 1,268.3 1,291 2 Accumulated deice (1.8) (15.4) (83 8) (133.5) (213.7) (314.9) (434.2) (566.5) (717 0) 1885 4) (1.077.1) (1,252.4) (1.233.8) Total stockholders' equity 0.3 5.5 121.3 180.9 113.0 24.9 151.3 34.2 155.4 4.9 170.1 15.8 57.6 Total Liabilities and Stockholders' Equity 2.5 12.2 153.3 213.3 146.4 57.2 181.7 61.6 186.6 40.4 210.8 69.5 111.8 Source: Company Dale, Morgan Stanley ItOteerth 32 EFTA01100292 Editas Medicine I February 29. 2016 MORGAN STANLEY RESEARCH Morgan Stanley Cash Flow Statement Exhibit 31: Editas Medicine Cash Flow Statement Editas Medicine Cash Flow Statement (514) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Cash Flows From Operating Activities Net profit (loss) (1.6) (13.7) (68.3) (49.8) (80.2) (1012) (119.3) (132.4) (150.4) (168.4) (191.8) (175.3) 18.8 Adjustments to reconcile net loss to net Cash used in operating activities: Stock.based compensalien 0.D 0.1 2.6 92 10.1 11.1 122 134 I48 162 179 196 216 Oeprocabon 0.0 0.2 0.1 02 0.4 0.6 0.7 09 1 I 13 16 19 29 Non cash research and development expenses 0.7 - Non cash inkiest expense 00 Changes in far value ot waiters i ability (00) Change in lair verve of preferred stick karicne asset or la 0.0 0.9 Changes in lair value of ane.dilulive protecton lab lAy 0.0 Changes in deferred rent 02 Changes in operating assets and liabilities: Accounts iecewable • • • • Prepad expenses (0.0) 10.1) (0.5) (3.0) 0.9 0.9 0.3 (0.4) (0.5) (0.6) (31) (28.9) Other nos•cwrent assets (0.3) (0.0) • Accounts payable 0.4 2.2 (0.5) 1.6 2.3 1.4 1.2 09 1.3 1.5 1.7 2.0 (4.3) Accrued expenses 0.7 0.9 1.9 2.7 3.8 2.4 2.0 1.4 2.2 25 2.9 3.3 (32) Other I abilities (1.5) Upfront payments (corn collaborabons 25.2 Deterred revenue offset (50) (50) (50) (50) (50) Net cash used in operating activities (0.9) (8.7) (41.0) (44.1) (67.8) (89.8) (108.1) (120.4) (131.5) (147.3) (168.3) (152.1) 7.0 Cash Flows From investing Activities Purchase of properly. plant, and equipment (0 1) (1 2) (1 1) (36) (36) (38) (3 6) (30) (38) PI 7) (6 0) (88) (36 61 Increase in restricted cash Net cash used in investing activities (0.1) (1.2) (1.1) (3.6) (3.6) (3.6) (3.6) (3.0) (3.8) (4.2) (5.9) (6.6) 135.61 Cash Flows From Financing Activities Prnceeds from °mermen! !gag nil 44 ssuance costs 05 • Proceeds kern the issJance of redeemabre conyerbote fro 3 0 180 179.0 Payments of wywpment loan pintos, . • - Proceeds teem the sssance of common stock and restno 0.0 0.0 2.5 100.1 2.2 2.1 233.5 1.8 256.9 1.6 339 2 1 4 1.3 Other labites 0.1 12 (02) 03 04 04 77 78 Not cash provided by financing activities 3A 18.5 161.7 101.3 2.2 2.1 233.5 1.8 267.2 1.9 339.6 9.1 9.1 Erten of exchange tale changes on cash and cash mow Net (decrease) Increase in cash and cash equivalents 24 8.6 139.6 53.6 (69.3) (91.4) 121.7 (121.9) 122.0 (150.1) 165.4 (149.6) (19.5) Cash and cash equivalents at beginning of period 70 106 1507 7038 134 5 437 164 8 430 164 9 148 1803 306 Cash and cash equivalents at end of period 2.0 10.6 150.2 203.8 134.5 432 164.8 430 164.9 14.8 180.3 30.6 11.1 source: Company Data, Morgan Stanley Research 33 EFTA01100293 Morgan Stanley Editas Medicine I February 29, 2016 MORGAN STANLEY RESEARCH Analysis 34 EFTA01100294 Editas Medicine I February 29, 2016 MORGAN STANLEY RESEARCH Morgan Stanley 35 EFTA01100295 Morgan Stanley Editas Medicine I February 29, 2016 MORGAN STANLEY RESEARCH Disclosure Section The intonotion and opinions in Morgan Stanley Research were prepared by Mayan Staley & Co. 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ImmunoGen Inc., Trinity Pharmaceuticals Inc. Innovive Inc. Intercept Pharmaceuticals lit. Ironwood Pharmaceuticals, Inc.. Jiro Therapeutics Inc. Keryx Biopharmaceuticals Inc. MacroGenics Inc. Ocular Therapeutix Inc. Ophthotech Corp, Panda Pharmaceuticals Inc, Regeneron Pharmaceuticals Inc.. Regenxbio Inc, Relypsa, Utragenyx Pharmaceutical Inc Versartis, Inc., Vertex Pharmaceuticas. Within the last 12 months. Morgan Stanley has received ccapansation fix products and services other than irsestment banking services from Amgen Inc., Biogen Inc, Celgene Cap, Glad Sciences Inc., Vertex Pharmaceuticals. Willa the last 12 months. Morgan Stanley has provided a is void ng investment banking senices to, or has an imestment banking client relaticnstip with, the follohing creamy: Aocelercn Pharma Inc. Aketia Therapeutics Inc. Alexicn Pharmaceuticals. Amgen Inc., Biogen Inc. Bluebird Bio he, Celgene Corp, Camera Inc. Chimera lit. DBV Technologies SA Editas Medicine. Galapagos NV, Gilead Sciences Inc., Global Blood Therapeutics Inc. GW Pharmaceuticals PLC, ImmunoGen Inc., Irdrity Pharmaceuticals Inc. Innahe Inc, Intercept Pharmaceuticals Inc. Irermood Pharmaceuticals. Inc., Juno Therapeutics Inc, Keryx Bicpharmaceuticals Inc, MacroGenics Inc. Ocular Iterapeutbc hc. Optithotech Corp. Patda Pharmaceuticals Inc. Regeneron Pharmaceuticals Inc., Regenxbio Inc, Relypsa, Inc.. Utragenyx Pharmaceutical Inc. Vereartis. Inc., Vertex Pharmaceuticals. Within the last 12 months. Morgan Stanley has either provided or is providing rominvestment banking, secuities-related services to andla in the past has entered into an agreement to provide services or has a dient relationship with the taming company: Amgen Inc.. Biogen trc. Celgene Corp. Gilead Sciences Inc., Remnant Pharmaceuticals Inc., Vertex Pharmaceuticals. Magri Staley & Co. LLC makes a market in the securities ctAcceleron Pharma Inc. Akebia Therapeutics Inc. Alexion Pharmaceuticals, Amgen Inc., Bingen Inc, Bluebird Bio Inc, Celgene Corp. Cempra Inc, Chimerix Inc. DBV Technologies SA. Galapagos NV, Gilead Sciences hc.. Global Blood Therapeutics Inc, GW Pharmaceuticals PLC. ImmunoGen Inc., Irdrity Pharmaceuticals Inc, Innovive Inc. Intercept Pharmaceuticals hc. Ironwood Pharmaceuticals. Inc....kno Therapeutics Inc, Keryx Biopharmaceuticals Inc. MacroGenics Inc. Ocular Thempautix Inc, Ophthotech Corp, Patola Pharmaceuticals Inc. Regeneron Pharmaceuticals Inc.. Regan do Inc. Rdypse Inc., Rockwell Medical Inc. Utragenyx Pharmaceutical Inc, Versartis, Inc., Vertex Pharmaceuticals. 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Morgan Staley Research. a any portion thereof may not be reprinted sold a redstributed without the written consent of Morgan Stanley. 38 EFTA01100298 Morgan Stanley INDUSTRY COVERAGE: Biotechnology Editas Medicine ] February 29. 2016 MORGAN STANLEY RESEARCH CONPANY(TICKER) RATING(AS CF) PRICE (02/26/2016) Andrew S Berens Acceleron Pharma Inc (>LFIN.O) O(08/13/2015) $25.32 Arabia Therapeutics Inc (.6KBAO) O(09/09/2015) $7.47 Cempra Inc (CENP.O) O(11/16/2015) $17.66 GWPharmaceubcals PLC (GNPH.O) O(08/13/2015) $41.60 htercept Pharmaceuticals Inc (ICPT.O) E (01/29/2016) $113.90 KerborBiopharmaceubcals Inc (KERXO) E (12052015) $3.64 Ocular Therapeutix Inc (CCUL.O) O(02/17/2016) $8.07 Relbpsa. Inc. (FILYP.O) U((08/132015) $14.60 Rockwll Medical Inc (RMI1.O) U 08/13/2015 S9.98 Versarties. Inc. NSPRO) E(08/132015) $6.64 Matthew Harrison illation Pharmaceuticals (AL2N.O) O(10/01/2015) $140.16 Amgen Inc. (MGN.O) O(12/14/2015) $147.60 Bogen Inc (BIIB.O) O(03/262014) $264.49 Bluebird Bio Inc (BLUEO) E (12/072015) $49.73 Celgene Corp (CELLO) E (03/262014) $103.37 Chimerix Inc (CNRXO) U(02222016) $4.72 DM/ Technologes SA(DENT.O) O(09/152015) $25.70 Editas lubdicina (EDIT.O) E (0229/2016) $27.49 Galapagos NV (GLPG.O) O(06/082015) $42.18 Gilead Silences Inc. (GILD.O) E (1201/2015) $88.10 Gobal Blood Therapeutics Inc (GBT.O) O(09/08/2015) $14.87 ImmunoGan Inc (8.GN.O) U (091212015) $7.21 Infinity Pharmaceuticals Inc (NR.O) O(09121/2015) $6.21 Innothe Inc (INVAO) U (08/14/2014) $11.62 Ironwood Pharmaceuticals. Inc. (IRAO.O) E (08/14/2014 $9.58 Juno Therapeutics Inc (JUNO.O) E(01/132015) $36.67 kleatainics Inc (M31O.O) E(02252016) $15.82 Optibotec:h Corp (CPHT.O) O(08/14/2014) $46.71 Podolia Pharmaceuticals Inc (P1LAO) O(08/14/2014) $27.79 Regenercn Pharmaceuticals Inc. (REGN.O) E (1201/2015) $39423 Regerubio Inc (R(28B.O) O(1212/2015) $13.08 Ultragenw Pharmaceutical Inc (RARE.O) E (07/27/2015) $62.30 Vertex Pharmaceuticals (YRTXO) O(1201/2015) $87.00 Stock Ratings are subject to change. Reese see latest research fa each ccfrpany. • listaical picas are not split adjusted. C; 2016 Morgan Stanley 39 EFTA01100299