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Deutsche Bank Markets Research Rating Buy North America United States Health Care Biotechnology Company Retrophin lieuter, Wveramrty Lxc•.mge Ticker RTRX.00 RTRX US NMS RTRX Agrees to sell PRV for $245M, new TP of $52 Retrophin agrees to sell its PRV to SNY for $245M• new TP of $52 This morning RTRX announced that it plans to sell the rare pediatric priority review voucher acquired with the approval of Cholbam to Sanofi for $245M. The company will receive $150M when the deal closes (no timing was provided by the company; we assume at some point during 3Q15), and two additional payments of $47.5M in 2016 and 2017. The company has previously disclosed that it plans to use the proceeds for its late-stage pipeline and/or for business development. We are raising our TP to $52 to account for the transaction. Reiterate BUY. Prior vouchers sold for $67.5M and 5125M. This is the highest price paid for a voucher to our knowledge and demonstrates their scarcity. We note that UTHR is the only other company to have one of these vouchers in its possession. The company sold the voucher for $145M over our projected sale price of $100M. A sale of $100M was worth approx $1.4/sh to our DCF. The additional $145M is approx $2/sh to our DCF. Reiterate BUY, new TP of $52. Valuation and risks: We value RTRX using a probability-adjusted DCF analysis with a 10% discount rate. We extend our estimates to 2029 and use a 2% terminal growth rate. Risks: 1) Base business sales risk, 2) Sparsentan / other pipeline products fail, 3) Regulatory risk, and 4) Reimbursement risk. Date 27 May 2015 Breaking News r4 Price at 26 May 2015 (USD/ 26.87 Price target 52.00 52-week range 26.98 - 8.09 Robyn Karnauskas Research Anal t Even Seigerman Research Associate Mohit Banal Research Associate I Key changes Price target EPS (USD} &KAM &MOM. BIM 50.00 to 52.00 0.96 to 1.65 1 4.0% 71.5% I Price/price relative — - 54P 60) Mt% IRebeeedl Performance (GM 1m 3m 12m Absolute 8.6 80.3 95.7 S&P 500 INDEX -0.6 -0.3 10.7 &vett Dived...O&M Deutsche Bank Securities Inc. Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 124/04/2015. EFTA01192826 27 May 2015 Biotechnology Retrophin Model updated:27 May 2015 Running the numbers North America United States Biotechnology I Retrophin Reuters: RTFOCOO Bloomberg: RTRX US IBuv Price 126 May 15) Target Price 52 Week range Market Cap fm) USD 26.87 USD 52.00 USD 8.09 - 26.98 USOm 949 EURm 871 Company Profile Retrophin is a biophammasutical company focused on discoverMg, develocMg and marketing innovative therapies for debilitating and often Me-threatening diseases. I Price Performance 20 24 20 16 12 8 4 0 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Reeerem SW 600 111a€X late n. I Margin Trends 14 16E 166 17E ~ FERO. Mina ~EXIT Marais Growth & Profitability 200 160 100 60 0 sass ammar Had, ~ ROE Ota0 so 40 30 20 10 0 Solvency 0 -zo -40 -CO .90 -100 -120 -140 111 14 156 166 176 clabibissty 0-XSI ~Ns entreat cow" iRXS" Robyn Kamauskas •1 212 260-7591 Fiscal year end 31-Dec [Financial Summary 08 EPS (1.150) Repatod EPSIUSD) CPS IUSDI BVPS (USDI [Valuation Metrics Price/Sales (x) PPE IDB)Ixl PPE (Reported) 00 WEN lx1 FCF yield I%) Dividend yield t%} EV/Sales EWEBITDA EWEBIT [Income Statement (USDm) Sales EMMA €BIT Pottax profit Net inane [Cash Flow (USDm) Cash flow from operations Not Capes Free cash flow Equity raisedflbougM backl Dividends paid Not incr(doc) in tomawMgs Other investimilinancing cash flows Not cash flow Change in worldly cooks! [Balance Sheet (USDm) Cash and cash equivalents Property, plan 8 equipment Goodwill Other assets Toted assets Debt Other liabilities Total liabilities Total shareholders equity Nee debt [Key Company Metrics Sales growth 0%) 08 EPS growth PM Payout ratio OS/ EBITDA Margin 041 €BIT Marge, I%4 ROE I%) Not debt/equity PM Not interest cover Ix) [DuPont Analysis €BIT margin 6%) x Asset tutova 120 x Fmanciel cost ratio ix) x Tax and other effects 00 ▪ ROA (post tax") x Fmanciel leverage (xl ▪ ROE 1%) annual growth 1%) x NTAfthare lavg) Ix) ▪ Reported EPS annual growth f%) Source: Company two Deutsche Bonk estimates 2014 -2.51 0.84 0.00 -L49 11.2 rim 16.0 rim 29.3 0.0 10.2 11.0 11.0 28 [repeated 3 times] 29 31 29S20M2i,* 18 1 0 117 136 0 173 173 -37 -18 ren 0.0 92,8 92.8 rim ten ten 92.8 0.2 1.0 1.2 22.9 .3.6 -83.2 no -1.0 0.84 no 2016E 2018E 2017E 1.65 1.00 1.08 0.63 2.13 2.19 0.00 [repeated 3 times] Q07 7.88 9.86 11.6 8.0 5.9 16.3 26.9 24.8 42.6 12.6 12.3 4.4 3.4 2.7 4.9 13.7 13.2 0.0 [repeated 3 times] 8.3 5.0 3.3 9.4 5.8 3.8 9.4 5.8 3.8 el 119 160 72 103 136 72 103 136 72 103 136 30 103 108 6 139 137 -4 4 13 133 15 0 [repeated 3 times] 19 13 133 2 262 342 420 s 8 1I 0 [repeated 3 times] 109 [repeated 3 times] 376 469 601 0 [repeated 3 times] 161 171 173 161 171 173 214 288 368 -262 -342 -420 189.0 463 318 na -39.4 8.2 0.0 [repeated 3 times] 88.0 86.7 85.5 88.0 86.7 85.5 33.8 412 32.9 -122.2 -118.8 -114.3 am nm nm 88.0 86.7 85.5 0.3 [repeated 3 times] 1.0 [repeated 3 times] 0.4 1.0 0.8 11.7 24.8 21.6 2.9 1.7 1.6 33.8 412 32.9 no 22.9 -201 Is 52 6.7 0.63 2.13 2.19 -24.6 237. I 27 Page 2 Deutsche Bank Securities Inc. EFTA01192827 27 May 2015 Biotechnology Retrophin RTRX DCF I Figure 1: RTRX DCF 8 BIOTECH: RETROPHIN DCF 12.250.7591. DCF = $52 DB BIOTECH: RTRX- DISCOUNTED CASH FLOW ins In nowt 3031= Int Net veoth to caul less Capital 004006063 00..7.$6 FR Coin RI. Gnwth 1Nscount•eno4 Damon tint.. hewn yaw 04 (0111003 Terminal growth rata a 2 0' Discount Rate Nry4.l, NW NISUI Nry Tow Nei CasNlOtliti Nei cnaissore SI Shin Jwmll.Y who TV as% of UPI who NPVC3sh Flows • TV $52 Show outrthendow 47 51.612 5751 52364 $2 SanerDaman Rine WISE 70161 70173 70181 70191 70101 70711 20771 70711 20711 707..1 10/0 70771 70771 70791 a.c.? )4/ 51/ 54I 1574 575* Sias $453 531.1 $750 5.1.3 Ss4b Ai 5•510 553 1544/ 50 1520) (5151 15611 (571) 151071 15144) 151851 (52111 151011 151111 1$191) 152041 15123) 350% 00% HOW 350N 350% 350% 1501$ 350% 3501. 350% [repeated 4 times] BO% 350?) SO SO $1 $1 51 52 [repeated 4 times] 12 53 [repeated 5 times] RI/ $10 $2 511 se 51 $12 sil 512 511 OM 15671 $0 50 ISII) (531 1541 (541 1541 (RI 154/ (541 (54 1541 IR/ 1541 (541 1531 1541 MP $76 555 SR 536 $119 5141 $214 5279 $$4 UM 5550 5207 5366 5373 5216 RAS ISM nit% II% 51% 31% V% St% MC 44% 24% 3% OM 0 975 395 2.75 3.75 4.75 575 6.75 775 975 975 1075 11.75 1275 1375 33.75 100 093 025 tl 7? 010 064 0.59 053 042 045 OR 0.36 033 COO 017 027 $76 SO $W RS $OO $90 $133 $147 $169 WO $237 $103 1119 5117 1 Deutsche Bank Securities Inc. Page 3 EFTA01192828 27 May 2015 Biotechnology Retrophin RTRX P&L 'Figure 2: P&L Stint AMMON Bate We Aelayei me We Owe /Me Wee we 01 • li• PP. e 0. . 540 0.0 II fiS V , 00 PE N V e /0. la 00 n P.. Oa 00 n P• WV I% 00 Pm Jar In 00 Wm Pim SI% M. PI le a M. IIN tin in. 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II 41 • IOPI • [repeated 6 times] C 4.z tiO no p" m V • 0 in m V a • .• a II • [repeated 3 times] a II • 0 • a V • la . a le • [repeated 3 times] a a y. • 0 • a M I/ • 6m • • 44 • • 54 . a a • [repeated 3 times] a ii • [repeated 3 times] an r • • og fm r • • og pant...Ion IM . 4. 4. Na M lig 1 MI M. MM MI .1 la a la int ., II ,,,... . . .. .. . . .. .. i, .., r 2.. .. 2.. .. .. ,... ., .. ., ., ../ 'J. .. .. . .. [repeated 8 times] sc. ..—. . . , . C • . 0 • • . [repeated 3 times] 0 [repeated 4 times] • [repeated 4 times] Page 4 Deutsche Bank Securities Inc. EFTA01192829 27 May 2015 Biotechnology Retrophin Appendix 1 Important Disclosures Additional information available upon request Disclosure checklist Company Ticker Recent price' Disclosure Retrophin RTRX.OQ 26.87 (USD) 26 May 15 1,6,7,8,9 •prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from local exchanges via Reuters. Bloomberg and other vendors . Other reformation is sourced from Deutsche Dank, subject companies, and other sources. For disclosures pertaineg to recommendations or estimates made on scarifies other than the primary subject of this research, please see the most recently published company report or visit our global disclosure lookup page on our website at httpfigrn.db.comigeddisclosuro/DisclosureDirectomodsr. Important Disclosures Required by U.S. Regulators Disclosures marked with an asterisk may also be required by at least one jurisdiction in addition to the United States. See Important Disclosures Required by Non-US Regulators and Explanatory Notes. 1. Within the past year, Deutsche Bank and/or its affiliate(s) has managed or co-managed a public or private offering for this company, for which it received fees. 6. Deutsche Bank and/or its affiliate(s) owns one percent or more of any class of common equity securities of this company calculated under computational methods required by US law. 7. Deutsche Bank and/or its affiliate(s) has received compensation from this company for the provision of investment banking or financial advisory services within the past year. 8. Deutsche Bank and/or its affiliate(s) expects to receive, or intends to seek, compensation for investment banking services from this company in the next three months. Important Disclosures Required by Non-U.S. Regulators Please also refer to disclosures in the Important Disclosures Required by US Regulators and the Explanatory Notes. 1. Within the past year, Deutsche Bank and/or its affiliate(s) has managed or co-managed a public or private offering for this company, for which it received fees. 6. Deutsche Bank and/or its affiliate(s) owns one percent or more of any class of common equity securities of this company calculated under computational methods required by US law. 7. Deutsche Bank and/or its affiliate(s) has received compensation from this company for the provision of investment banking or financial advisory services within the past year. 9. Deutsche Bank and/or its affiliate(s) owns one percent or more of any class of common equity securities of this company calculated under computational methods required by India law. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at tiffp://qm.db.com/ger/disclosure/Disclosure.eqsr?ricCode=RTRX.OQ Analyst Certification The views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s) about the subject issuer and the securities of the issuer. In addition, the undersigned lead analyst(s) has not and will not receive any compensation for providing a specific recommendation or view in this report. Robyn Kamauskas Deutsche Bank Securities Inc. Page 5 EFTA01192830 27 May 2015 Biotechnology Retrophin I Historical recommendations and target price: Retrophin (RTRX.OO) /as of 5/26/20151 30.00 26.00 20.00 8 16.00 10.00 6.00 0.00 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 6%14 Jun 14 1. 0408/2015: Upgrade to Buy, Target Price Change USD50.00 Sep 14 Dec. 14 Ma; 16 Previous Recommendations Strong Buy Buy Market Perform Underperform Not Rated Suspended Rating Corrnnt Reenmmenrintinr6 Buy Hold Sell Not Rated Suspended Rating 'Now Recommendation Structure as of September 9,2002 Equity rating key Buy: Based on a current 12- month view of total share-holder return (TSR = percentage change in share price from current price to projected target price plus pro-jected dividend yield ) , we recommend that investors buy the stock. Sell: Based on a current 12-month view of total shareholder return, we recommend that investors sell the stock Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not recommend either a Buy or Sell. Notes: 1. Newly issued research recommendations and target prices always supersede previously published research. 2. Ratings definitions prior to 27 January, 2007 were: Buy: Expected total return (including dividends) of 10% or more over a 12-month period Hold: Expected total return (including dividends) between -10% and 10% over a 12month period Sell: Expected total return (including dividends) of -10% or worse over a 12-month period Equity rating dispersion and banking relationships 600 5420 4C0 3420 2C0 ICO 0 Buy Hold Sell •Companlee Covered •Cos. w/ Banking Relationship North American Universe Page 6 Deutsche Bank Securities Inc. EFTA01192831 27 May 2015 Biotechnology Retrophin Regulatory Disclosures 1.Important Additional Conflict Disclosures Aside from within this report, important conflict disclosures can also be found at under the "Disclosures Lookup" and "Legal tabs. Investors are strongly encouraged to review this information before investing. 2.Short-Term Trade Ideas Deutsche Bank equity research analysts sometimes have shorter-term trade ideas (known as SOLAR ideas) that are consistent or inconsistent with Deutsche Bank's existing longer term ratings. These trade ideas can be found at the SOLAR link at http://qm.db.com. Deutsche Bank Securities Inc. Page 7 EFTA01192832 27 May 2015 Biotechnology Retrophin Additional Information The information and opinions in this report were prepared by Deutsche Bank AG or one of its affiliates (collectively "Deutsche Bank"). 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EFTA01192835 David Folkerts-Landau Group Chief Economist Member of the Group Executive Committee Raj Hindocha Global Chief Operating Officer Research Marcel Cassard Global Head FICC Research & Global Macro Economics Richard Smith and Steve Pollard Co-Global Heads Equity Research Michael Spencer Regional Head Asia Pacific Research International locations Ralf Hoffmann Regional Head Deutsche Bank Research, Germany Andreas Neubauer Regional Head Equity Research, Germany Stave Pollard Regional Head Americas Research Deutsche Bank AG [repeated 3 times] Deutsche Securities Inc. 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