From: Vahe Stepanian

From: Vahe Stepanian To: [email protected] Cc: , Paul Morris < >, Subject: Re: Biotech Sell-Off.... [C] Date: Wed, 26 Mar 2014 17:44:42 +0000 Inline-Images: unnamed; unnamed(1); unnamed(2); unnamed(3); unnamed(4); unnamed(5); unnamed(6); unnamed(7); unnamed(8); unnamed(9); unnamed(1 0); unnamed(I I); unnamed(12); unnamed(13) Classification: Confidential Jeffrey - following up about your biotech holdings with an updated chart - current price ato -1:40pm EST today. Description Trade Date Quantity Current Price Unit Cost Market Value Unrealized G/L SANGAt40 BIOSCIENCES 5/28/2013 50,000.00 $ 17.86 $ 8.44 $ 893,000.00 $ 470,786.00 MOGEN 2/14/2012 2,095.00 $ 307.34 $ 119.55 $ 643,877.30 $ 393,422.35 FOUNDATION MEDICINE 1/13/2014 25,000.00 $ 34.45 $ 27.51 $ 861,250.00 $ 173,586.50 GILEAD SCIENCES INC Multiple 8,100.00 $ 73.42 $ 79.41 $ 594,702.00 $ (48,502.00) ARIAD PHARMACEUTICALS Multiple 16,535.00 $ 7.66 $ 17.60 $ 126,658.10 $ (164,339.30) Total Biotech $3,119,487.40 $ 824,953.55 Please let us know how to proceed. Depending on your view, will look into unwinding, hedging. or adding to your exposure. Thank you, Vahe From. Jeffrey Epstein <jeevacaliontggmail.ccm, To. Tule Smill l Date: 03/25/2014 09.42 MI Subject Re: Biotech Sell-Off.... (II remind me tomorow remind On The, Mar 25, 2014 at 7:30 AM, Tazia Smith < > wrote: Classification: For internal use only Jeffrey - Biotech posted sharp declines. You are up $970,2.82 across your basket of names as of yesterday's (3124) close (detail below along with chart of Nasdaq Biotech Index and your holdings). Consider unwinding or hedging now and watching for entry point via total return swap or zero cost risk reversal as this negative momentum bottoms out. Note: Ariad an outlier (incrementally positive news on drug, Iclusig). The Financial Times features an article this morning suggesting that the sell-off in Biotech is a signal of a broader market peak. A letter from congressional representatives to Gilead questioning its plans to sell a hepatitis C drug (named Sovaldi) for $84,000 per dose has put the spotlight on Congress' concerns that the expense might saddle state Medicaid programs with steep costs. US is the only major health-care market remaining without any meaningful drug price controls — increased risk for the sector once the Congress gets involved, especially if focused primarily on pricing. EFTA01193595 NBI Index Description Trade Date Quantity Last Prices Unit Cost Market Value Unrealized G/L SANGAMO BIOSCIENCES 05/28/2013 50,000.00 $ 19.80 $ 8.44 $ 990,000.00 $ 567,786.00 BIOGEN 02/14/2012 2,095.00 $ 312.60 $ 119.55 $ 654,897.00 $ 404,442.05 FOUNDATION MEDICINE 01/13/2014 25,000.00 $ 36.40 $ 27.51 910,000.00 $ 222,336.50 GILEAD SCIENCES INC 2/5/14, 3/7/14 8,100.00 $ 72.13 $ 79.41 $ 584,253.00 $ (58,951.00) ARIAD PHARMACEUTICALS 2/14/12, 1/24/13 16,535.00 $ 7.60 S 17.60 $ 125,666.00 $ (165,331.40) Total Blotec $3,264,816.00 $ 970 282.15 Nasdaq Biotech Index - lyr Price History NBI ( 2499.44 -77.77 Or 24 Mar 0 2587.92 F 2587.92 L 2434.16 2499.44 Actions • -FA Edit - Table " -4.-"ara DriSfID13 03/2S/2.314 ID Last Pnce I? 5. Max :a t! • 4 Z: 5.e:1:1"5. Track / Annotate News , Zoom I • Last Price 2499.44 • T High on 02/25/14 2854.26 A.-Average 2155.07 .1 Low en 03/25/13 1619.16 • Volume 83.00M L■ SMAVG (15) 62.3 M Line Chart "EDI" 0 Volume 2800 p- moo 2499.44 P. 2400 2200 •• 2000 I-1800 • 1600 Jun Sep 2013 Dec 2014 Mar Ariad - lyr Price History ARIA US S Market K7.86 /7.88K 15x10 Prey 7.60 Vol 171 991 EllirM a '• •••Pr e'lfiirrntain Last Pria =Mr , :"”"c MINE ID 3D IM •*- 1Y zd . 1 , • • C S•curity/Sta Track • Annotate 4 News CL Zoom . ip• Volume 0.172M L • SMAVG (15) 11.128M Line Chart C 20 15 10 Biogen - lyr Price History EFTA01193596 FMI US ui OS/24/2011 18118 US f c — Q314.75 /315.500 1>:1 312.60 715 99 Save As WROBArei—vrtalreimiralr 03/25/201' ID 3D IP! OM rt. Lan Price Line Chart A QUA 1. oinvive mcy AvIt MOMM ".< M USD m 1Y Max Eaqy • to Stagily/5"a d Evert 0 4- Track .0: Annotate t.4' News Q. Zoom l. Last Price 312.60 T High on 03/18/14 351.94 m- Average 250.467 1 Low on 03/25/13 176.22 • LT:• Voluz (154 e 115Omm I Jun Sep 2013 Dec Mar 2014 350 iffila 250 200 SM 1.80611 Foundation Medical - 1 r Price Histor FMI US $ Market 1-1-- P35.25 /38.78K 1-:1 Prey 36.40 Vol 543,200 99 Save As 90 Achonfl Echt - 99 Table 03/25/2014 las: Once Line Chart OZEIPm === VoUnne 1Y • • if Et<vrt“St...Cy E.ev. 0 Track .• Annotate m'• Mews r-. Zoom 45 / el Last Price 36.40 High an 03/13/14 43.62 -9- Average 30.1647 / Low on 09/24/13 18.00 yE Volume 0.543M 1 . SMAVG (15) 0.265M Sep Oct • Nov 2013 Dec Jan • Feb Mar 2014 40 30 25 20 5M Gilead - 1yr Price History EFTA01193597 GILD US Market P72.64/72.82K 1.1 72.13 Vol 29.340 GILD US ui 03'25'2013 .1D 3D 1M 99 Save As 961 Actions • WI Ern • 91 Table Line Chart PI 13/ZINI" par= min MEMO OM YTD lY St' Max Daly • • S/c.riD/ Drop, Yc1 Evert 0 + Track / Annotate News ... Zoom 0-85 03/25, 2014 last Once . Last Price 72.13 • T High on 02/25/14 83.95 ... Average 64.4132 i Low on 03/25/13 44.98 0-80 0'65 0-60 -55 -50 0-45 4' •■ Volume 29340 k Dec • Mar 2014 Jun 2013 Sangamo - 1 yr Price History ISGMO US Market 1(19.85/21.400 • Prey 19.80 Vol 2,907, 036 li 99 Save As 90 Actions 97) Edit • Last Price ID 3D LI 611 YTD ' ■ Last Price 19.80 . T High on 03/19/14 23.86 -0- Average 12.1209 Low on 06/26/13 7.31 i. • Track Annotate 2 2 92) Table Line Chart VoLme ^Er' Security/Study v4 1ts-t t". News . ZOOM T• Volume 2.907M P-24.00 -22.00 19 SO 0. 18.00 16.00 -14.00 a-12.00 -10.00 -8.00 istmlias Jun 2013 Sep 2014 Mar 10M CLI 2.90711 Healthcare sector has outperformed S&P500 last 4 years and has been the best-performing sector YTD • Improving R&D returns • Ongoing efficiency gains due to various 'self-help' measures More supportive regulatory and payor environment Increasing number of financings and IPOs in Q1 Frequent upward revisions lately to sales estimates at the largest biotechnology companies Nasdaq Biotech Index (NBI) dropped 4.4% Friday Sharpest decline since Oct-11 • Triggered by a letter from congressional representatives to a biotech company Gilead Sciences, questioning its plans to sell a hepatitis C drug (named Sovaldi) for $84,000 per dose EFTA01193598 Gilead required to give briefing by 03-Apr Sovaldi expected to generate >$4bn in sales this year The drug's expense might saddle state Medicaid programs with steep costs The whole sector is as risk • US is the only major health-care market remaining without any meaningful drug price controls • Risk for the whole sector once the Congress gets involved, especially if focused primarily on pricing The biggest NBI firms sold-off significantly 1d chg (%) Index Wt (Ye) BIOGEN DEC INC -8.2 7.9 AMGEN INC .3.2 7.8 GILEAD SCIENCES INC -4.6 7.0 REGENERON PHARMACEUTICALS -5.4 6.9 CELGENE CORP -3.7 6.5 ALEMON PHARMACEUTICALS INC -8.0 4.6 ILLUMINA INC -5.4 4.6 MYLAN INC -0.9 4.3 VERTEX PHARMACEUTICALS INC -5.1 3.8 BIOMARIN PHARMACEUTICAL INC -5.9 2.5 Ways to hedge exposure to the US biotech sector • ProShares UltraShort Nasdaq Biotech Fund (BIS US Equity): designed to be 2x short the NBI • Options on iSharesNasdaq Biotech ETF (IBB US Equity) NBI — last 5 ears A' CC( 2577.2 2000 1500 10O0 500 2009 2010 2011 2012 2013 1201• NBI It (Nasdaq Blotedinology Index) Cciayrchte 2014 Montan Finance L.P. 23-IUr-2014 14:35:20 NBI vs S&P500 — last 1 year Normalized As Of 03/23/2013 Hi: 57.370 a■ NKI Index - SPX Index 38.8807 • -r 5 Jun • Sep Dec Mar 2013 2014 60 38.8807 20 • 0 NBI — last 1 year EFTA01193599 Sep Dec Jan Mar Oct Nov 2013 mel Index Nasdaq aloteChnoicgry Wm) Daily LIStiM13-LIFIAR2014 2577.2: 2500 2400 2300 2200 2100 2000 Feb 2014 copyrhps 2014 atocaberg Finarce 23-ear-201• 14:35:52 KCP Capital Markets This e-rnall may conlain confidential and/or privileged information. If you are not the intended recipient (or have recetved the e-mail in error) please notify the sender immediately and destroy the email. My unauthorized copying. declosure or deiribulion of the material in this e-rnall is strictly forbidden. Tazia Smith Director I Key Client Partners - LIS Deutsche Bank Securities Inc Deutsche Asset & wealth Mamgement 345 Park Avenue. 26th Floor New York. NY 10t54 Tel. Fax MO Email Pancio-1,:hy Peefbrm. This communication may contain confidential and/or privileged information. If you are not the intended recipient (or have received this communication in error) please notify the sender immediately and destroy this communication. Any unauthorized copying, disclosure or distribution of the material in this communication is strictly forbidden. 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