ico Therapeutics Inc. ico-tsxv $0.59

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1 EQUITY RESEARCH BIOTECHNOLOGY REPORT September 30, 2009 ico Therapeutics Inc. ico-tsxv $0.59 Connie S. Chen, PhD Research Analyst Biotechnology & Health Sciences , Neal Belovay Research Associate Speculative BUY 12-Month Target $1.50 More than Eye Candy Initiating Coverage Providing solutions to underserved diseases: ico 007 opportunity an approved drug to treat diabetes related blindness does not exist. ico 009 opportunity an oral and safe version of a gold standard anti fungal therapy, amphotericin B, is not available. Strong management supported by impressive clinical and scientific advisors: With 14% ownership, management is aligned with shareholder interests. The presence of Dr. David Boyer, Dr. Philip Rosenfeld, and Dr. Donald Buell, top experts in their field, as active Advisors endorses the quality of the Company s programs and management. Streamlined drug development quick and less costly path to shareholder value: ico operates on a no research, development only (NRDO) model. Seeking to create value while reducing the risks and costs in drug development, the Company has opportunistically acquired novel assets with different therapeutic modalities for inexpensive economics. Share Data ICO V 12 Month Target $1.50 Previous Close $0.59 Potential Return 154% 52 week High $ week Low $0.09 Avg. Daily Vol. (100 day) 59,053 Shares Outstanding (basic, mm)* 32.7 Shares Outstanding (FD, mm) 34.4 Market Cap (mm) $19.3 Enterprise Value (mm) $17.1 Cash & Equivalents (mm)* $2.2 Estimated Monthly Burn Rate (mm/mo.) $0.17 Months of Cash 13 Fiscal Year End Dec 31 *As at Jun 30/09, includes gross proceeds of $0.5m raised in Jul/09 as well as ~$0.9m from 3.1m "in the money" warrants Lead Candidates (Value Drivers) ico 007 diabetic macular edema, Phase I ico 009 oral reformulation of amphotericin B, preclinical We are initiating coverage of ico Therapeutics with a Speculative BUY recommendation and a 12 month target price of $1.50 per share. Company Profile Price Chart ico Therapeutics Inc. (ICO TSXV) is an early stage biotechnology company with an efficient approach to drug development and therapies targeting underserved medical indications. Employing a no research, development only (NRDO) approach to reduce drug discovery risks and requirements, ico acquires promising candidates with identified targets and demonstrations of systemic safety, including novel reformulations of off patent drugs. This also provides a repurposing aspect to ico s approach, and candidates are developed for use in other or expanded indications with significant market potential. Lead candidates ico 007 and ico 009 are being developed in diabetes related blindness and as a novel oral reformulation of the gold standard antifungal amphotericin B, respectively. Management strength is supported by an impressive group of Directors, Advisors and strategic investor ISIS Pharmaceuticals. (Website: See important disclaimers on page 2 of this report. Source:

2 Table of Contents Investment Thesis 1 Potential Catalysts for the Stock 2 Company Overview 2 Targeted Markets 3 Company Product Pipeline 7 Competition 14 Valuation and Recommendation 15 Intellectual Property 17 Risks 18 Appendix A Competitive Landscape Tables: I) DME and II) Anti Fungal Therapies 19 Appendix B Historical and Projected Financial Statements 21 Appendix C Revenue Model and Comparable Analysis 22 Appendix D Management, Board of Directors & Advisors 23 TORONTO Head Office 55 Avenue Road Suite 2250 East Tower Toronto, ON M5R 3L2 Tel: Fax: NA: (Toll Free) EU: (Toll Free) MONTRÉAL 1200 McGill College Ave. Suite 1900 Montréal, QC H3B 4G7 Tel: Fax: MEMBERS TSX Venture Exchange Investment Industry Regulatory Organization of Canada Investment Industry Association of Canada Canadian Investor Protection Fund CNSX Pure Trading Participating Organization: Toronto Stock Exchange Approved Participant: Montreal Exchange IMPORTANT DISCLAIMERS LOM BioQuest Life Sciences Corporation ( LOM BioQuest ) Research Analyst has visited the material operations of the subject company to the extent of viewing the major production facilities and meeting certain key management Within the last 12 months, LOM BioQuest has not acted in underwriting and/or financial advisory capacity for the subject company. One or more directors, officers or employees of LOM BioQuest or its affiliated companies may hold more than 1% of the subject company s equity securities. The Analyst responsible for the preparation of this report is employed by Loewen, Ondaatje, McCutcheon Limited, a Canadian Institutional Dealer and an indirect affiliate of LOM BioQuest. While the information contained in this Report is obtained from sources believed to be reliable, LOM BioQuest does not guarantee its accuracy or completeness nor does it assume liability for any inaccuracy or incompleteness. This Report is not to be construed as an offer to sell or a solicitation to purchase any securities. The inventories of LOM BioQuest, its affiliated companies and the holdings of their respective officers, directors and associates may from time to time include securities of the subject company. LOM BioQuest Rating Systems can be found at the end of this report. To obtain access to LOM BioQuest research reports or request copies of selected research materials by mail or , please contact us at research@lombioquest.com. LOM BioQuest Life Sciences Corporation. To US Residents LOM BioQuest Life Sciences Corporation ( LOM BioQuest ) is a Canadian corporation registered in Canada as a Limited Market Dealer. LOM US is a Canadian corporation registered in the United States as an Institutional Dealer. LOM US is indirectly affiliated with LOM BioQuest through the ownership of more than 1% of LOM BioQuest shares by LOM US parent company, LOM Bancorp. LOM BioQuest is not registered in the US. The Research Analysts named in this Report are the only persons contributing to the Report and are not associated with LOM US. They are not registered /qualified research analysts with FINRA and therefore may not be subject to FINRA Rule 2711 restrictions on communications with the subject company of this Report, public appearances, and personal trading of shares of the subject company. This Research Report may only be distributed in the US to institutional investors. Interested institutional investors may only deal with LOM US.

3 ico Therapeutics Inc. (ICO-TSXV) September 30, Investment Thesis ico Therapeutics Inc. (ICO TSXV) is an early stage biotechnology company with an efficient approach to drug development and lead candidates that target underserved medical indications. The Company s lead candidates are ico 007 for the treatment of diabetes related blindness and ico 009, a novel oral reformulation of the well known antifungal amphotericin B for which an orally available formulation does not commercially exist. Management strength and calibre is supported by the consistent participation of strategic partner ISIS Pharmaceuticals (ISIS Nasdaq; not covered). Developing therapies in underserved indications: ico 007 is an antisense therapy for the treatment of diabetic macular edema (DME), a form of visual impairment associated with diabetes for which there is no FDA approved therapy. Of the 17.9 million diagnosed diabetics in the US, approximately 40 45% have vision problems (retinopathy) and 10% suffer from DME (National Eye Institute; Defined Health). We note that the market for ophthalmic therapies is a growing and exciting space, representing US$13.5 billion globally in 2008 (Business Insights). ico 009, is an oral formulation of amphotericin B (AmpB). Although AmpB represents a drug of choice for systemic fungal infections, the associated toxicities imposes limitations, and an oral version is not commercially available. With an improved safety and ease of use profile, ico 009 could be positioned to expand the market to out patient use, given rising health costs. An abbreviated development path for ico 009 could be pursued. The population susceptible to fungal infections continues to rise with the growing numbers of immune compromised individuals due to HIV, cancer, diabetes, and organ transplantations. The global market for systemic anti fungal therapies is projected at US$5.4 billion in 2011 (Kalorama). Other reformulation opportunities could be provided through this delivery technology. Employing NRDO approach to streamline operations, improve shareholder value: ico employs a no research, development only (NRDO) approach to reduce the risks, capital and intensive time requirements inherently associated with drug discovery and development. The Company has acquired rights to promising yet perhaps previously ignored candidates with identified mechanisms and early demonstrations of systemic safety, including novel reformulations of off patent, approved drugs. This enables ico to also employ a repurposing approach wherein candidates are developed for use in other or expanded indications with significant market potential. The goal maximize returns on therapeutic programs by minimizing the economics of drug development. Strong management, high calibre advisors and strategic investor reflects Company strength, aligns them with shareholder interests: ico management is comprised of biotech veterans that are also shareholders with a record of consistently investing in the Company on the open markets, while drawing amongst the lowest compensation relative to their peers in the Canadian biotechnology industry. ico s war chest of impressive, high calibre advisors comprised of the top experts in the ocular and anti infective space is indicative of the quality of management and opportunities in its therapeutic programs. This is further supported by the presence of strategic investor ISIS Pharmaceuticals, a leader in the antisense industry. Recommendation: We believe the Company is well positioned to continue to drive shareholder value and presents a compelling opportunity for investors. In our opinion, ico is undervalued at its current levels and our conservative valuation generates a price target of C$1.50 per share.

4 2 September 30, Potential Catalysts for the Stock Program Timing Milestone ico 007 Q report on safety committe meeting, with review of 2 month data post last patient treated in final dosing cohort of Phase I study Q last patient visit from final dosing cohort of Phase I study Q report final data from Phase I study ico 009 H complete GLP toxicology studies, preparation of IND (financing contingent) H submit IND to initiate clinical studies (financing contingent) ico continue out licensing discussions Company Overview ico Therapeutics Inc. (ICO TSXV) is an early stage biotechnology company with an efficient approach to drug development and lead candidates that target underserved medical indications. The Company employs a no research, development only (NRDO) model to reduce the risks, capital and intensive time requirements inherently associated with drug discovery and development. ico acquires rights to promising yet perhaps previously ignored candidates with identified targets and early demonstrations of systemic safety, including novel technologies for the reformulation of off patent drugs. This enables ico to also employ a repurposing approach wherein candidates are developed for use in other or expanded indications with significant market potential. The Company s lead candidates are ico 007 for the treatment of diabetesrelated blindness and ico 009, a novel oral reformulation of the well known antifungal amphotericin B for which an orally available formulation does not commercially exist. Management strength and calibre is supported by an impressive group of Directors and Advisors, and the consistent participation of strategic investor ISIS Pharmaceuticals. Strength in Leadership As illustrated in Appendix D, ico management is comprised of biotechnology veterans with considerable senior executive, business development and drug development experience. Prior to founding ico in 2005, President and CEO Mr. Andrew Rae garnered more than 10 years in the industry including as CFO of Ability Biomedical Corporation prior to its acquisition by Medarex Inc. (later acquired by Bristol Myers Squibb in 2009; BMY NYSE, not covered). Chief Business Officer Dr. John Clement is also a co founder of ico and with more than 20 years of drug development experience, was also previously Director of Business Development at QLT Inc. (QLT TSX; not covered). Moreover, the Company has meticulously cultivated an impressive array of well respected Board directors and advisors. This includes Noel Hall (co founder of Aspreva Pharmaceuticals) and Richard Barker (Director General of the Association of the British Pharmaceutical Industry). Included in the Company s impressive chest of actively involved advisors are Dr. David Boyer and Dr. Philip Rosenfeld, world renowned experts in ophthalmic disorders. The Company also recently announced the appointment of Dr. Donald Buell, a globally recognized expert in infectious diseases, as Chair of ico s Scientific Advisory Board (SAB) of ico 009. We believe the quality of the cast supporting ico management is very compelling and illustrative of management s resourcefulness in soliciting strategic relationships as well as the strength and opportunities in the Company s development programs. Management s interests are also aligned with shareholders, reflected by their 14% ownership (13% assuming exercise of in the money warrants) and consistent purchase of equity through

5 ico Therapeutics Inc. (ICO-TSXV) September 30, repeated participation in financings and the open capital markets. Also refreshing, is the willingness of management to incur salary reductions as neededd to ensure continued and smooth operations. Management appears to be amongst the lowest remunerated in Canadian biotechnology companies. Moreover, the staff structure of the Company is lean, with a mere 7 full time employees on payroll. Strategic Investor Supporting the quality of management and its ability to pursue and engage strategic relationships, antisense industry leader ISIS Pharmaceuticals continues to be a strong investor in ico. Beyond licensing one of its antisense candidates to the Company, ISIS has invested approximately US$2. 3 million through the conversion of milestones and participation in a round of financing, translating into a 14% share ownership (16% assuming exercisee of in the money warrants). ISIS also continues to offer product and developmental insight to the Company. We view this level of participation as an endorsement of the Company and its therapeutic program. Targeted Markets Diabetic Retinopathy and Diabetic Macular Edema The disease: Diabetic retinopathy (DR) refers to a collective group of diabetes related, progressive ocular complications resulting from damage to the small blood vessels of the retina in the eye (the light sensitive tissue at the back of the eye; Exhibit 1a), usually affecting both eyes. An estimated 40 45% of those with diagnosed diabetes have some form of DR and vision loss (American Diabetes Association/ADA; National Eye Institute/NEI), with DR representing the leading cause of blindness in adults age years in industrialized countries (NEI; Decision Resources; Frost & Sullivan). Damage can be in the form of swollen blood vessels that leak fluid and blur vision, or growth of new but often abnormal and fragile blood vessels on the retinal surface from which blood leaks and aggregates in the center of the eye (Exhibit 1b). Exhibit 1a: Cross Section of the Eye Source: NIH National Eye Institute

6 4 September 30, Exhibit 1b: Diabetic Retinopathy Source: D Ambrosio Eye Care, Olmsted Center Diabetic macular edema (DME) often represents the most severe subset of DR, but can also manifest at any stage. DME refers to the swelling of the macula (i.e. macular edema), defined clinically by the thickening of the layers of the retina, caused by leakage and abnormal accumulation of fluid in the center of the macula. The macula is the small, central area of the retina that provides daytime and high resolution (i.e. sharp) vision, and which detects colours. Macular edema leads to blurred vision in the middle or just to the side of the central visual field, and this visual loss can progress in a period as little as a few months. DME is further classified as being focal or diffuse in distribution, which although differing in clinical presentation, can share similar features in the underlying pathologies and a single therapeutic could be effective for both types. Focal DME is typically caused by micro aneurysms (tiny malformations in blood vessels) and other vascular abnormalities that result in localized leakage of fluid in the area of hemorrhage, which is often also associated with the presence of hard lipoprotein based deposits. Conversely, diffuse DME tends to be caused by dilated ( widened) and thickening retinal capillaries in the back of the eye, resulting in more extensivee degradation of the blood retinal barrierr and widely distributed (i.e.. diffuse) leakage. Symptoms include blurred and/or doubled vision, and floaters or small black dots or lines made up of cellular debris that temporarily interfere with vision. The current standard of care for DME is medical control of diabetes and laser therapy. However, laser therapy is typically limited by little or no improvement in visual acuity despite a general effectiveness in reducing the risk for progressive loss of vision. Repeat treatment is also often required, but poor patient compliance in diligent follow up is not uncommon, additionally hindering the benefits of this therapy. No FDA approved drugs exist to treat DR and DME, providing a clear need for therapies that can effectively reduce macular thickening and significantly improve visual acuity. The epidemiology and market: The 2008 global ophthalmic pharmaceutical market was an estimated US$13.5 billion (Business Insights), comprised mainly of therapies targeting glaucoma, wet age related macular degeneration (AMD), ocular allergies, dry eyes and cataracts. Dominating this market and development in the area are therapies that target specific protein factors associated with the growth and proliferation of ocular vasculature. Since a drug therapy to treat DR or DME, the focal ophthalmic indication of this report, has yet to be approved by the

7 ico Therapeutics Inc. (ICO-TSXV) September 30, FDA, a significant opportunity exists. The estimated prevalence of diagnosed diabetes in the US is 17.9 million (ADA). Complications like DR and DME typically arise in poorly managed diabetes and corresponding to reports that suggest 57 64% of diagnosed diabetics fail to meet targeted control of their blood glucose (ADA; Nature Reviews Drug Discovery Oct 2007), an estimated 40 45% ( million) of diabetics are thought to have some form of DR. The prevalence of DME in the US is an estimated 9 10% of diabetics ( million) will suffer from DME (Am J Ophthalmol Mar 2006; Defined Health), of which between 20 30% will present with clinically significant symptoms that require treatment (Defined Health). Contributing to the growth of the ophthalmic market is the increasing prevalence of retinal diseases from the escalating aging and diabetic population. Oral Anti Fungal Therapy Systemic Fungal Infections The disease: Under normal circumstances in healthy individuals, fungi rarely cause debilitating consequences beyond superficial or mild to moderate flu like symptoms. Fungal infections however, can trigger the body s immune system and inflammation, which can cause tissue damage in deep or systemic cases. This can be particularly serious in individuals with weakened immune systems, wherein invasive fungal infections can affect the entire body (i.e. systemic) with potentially fatal results. Typical symptoms include persistent fever and shock, neutropenia (abnormally low white blood cell count), low blood pressure, and respiratory or multi organ distress. The epidemiology and market: The incidence of opportunistic, invasive systemic fungal infections is thought to be on the rise given the growing populations of individuals with compromised immune systems due to aging and complications of disease or disease treatment, including HIV infection, cancer, organ transplantations and serious diabetes. The widespread use of immunosuppressive agents for autoimmune disease (e.g. HIV) and organ transplantation, and immunosuppression as a result of chemotherapies, are significant risk factors in developing systemic fungal infections. Increased use of broad spectrum antibiotics and rising resistance to several currently employed anti fungal therapies also contribute to the expansion of systemic fungal infections. Broad spectrum antibiotics can eliminate or reduce friendly bacteria that normally compete with and maintain healthy levels of fungi populations. Fungal infections are estimated to represent the third most common nosocomial (i.e. originating or acquired in a hospital setting) infection. Systemic fungal infections are thought to account for as many as 30% of deaths in immune compromised individuals (Expert Opin Drug Deliv Mar 2009). The global market for anti fungals is projected to reach US$7.0 billion in 2011 (Kalorama), with systemic therapies estimated to comprise approximately 77% of the market at US$5.4 billion in sales. Intravenously administered amphotericin B (AmpB) is still considered one of the gold standards in the treatment of systemic fungal infections, despite the renal and infusion related toxicities associated with this compound and the advent of other anti fungal therapies. However, an oral formulation does not commercially exist due to poor solubility of this amphipathic molecule, its instability in the gastrointestinal tract and a limited understanding of how the drug is absorbed from the upper small intestine. This has restricted the administration of AmpB to injection by infusion. Consequently, the use of AmpB is reserved for treatment of serious and life threatening cases, and requires facilities where patients can be monitored over a length of time in case intervention is required. Newer generation lipid based formulations have shown much improved

8 6 September 30, toxicity profiles and shorter courses of treatment (e.g. 3 5 days vs days), but are often considerably more expensive than conventional AmpB formulations (e.g. 3 to 5 fold higher). As well, the intense monitoring and hospital requirements are not alleviated, further adding to the expense. Newer anti fungal therapies with improved toxicity profiles include the azoles (e.g. fluconazole) and echinocandins (e.g. caspofungin), but which may be less efficacious, possess similar poor oral bioavailability due to drug metabolism, have higher potential for drug interactions, or provide limited broad applicability profiles compared to AmpB. Several fungal strains are also developing resistance to current therapies (e.g. fluconazole). Consequently, a considerable and expanded market likely exists for an orally available, systemic anti fungal therapy with equivalent efficacy to injected AmpB but with improved safety and ease of use to improve patient compliance while reducing the cost and time associated with hospital stays. Visceral Leishmaniasis The disease: Leishmaniasis is a parasitic disease spread by the sandfly, characterized initially by skin sores at the site of the bite but which can escalate to multi organ damage with progressing disease. Visceral leishmaniasis (VL) is the most severe form of leishmaniasis wherein the parasites have migrated to the vital organs, and is associated with fever, weight loss, spleen and liver enlargement, anemia, and death if left untreated. Mortality is typically not a direct result of the parasitic infection but rather, other opportunistic infections that arise as a result of damage to and resulting weakening of the host s immune system. Several global groups, including the World Health Organization (WHO), have mobilized to develop and disseminate oral therapies for VL, of which Impavido from Paladin Labs (PLB TSX; not covered) is the only commercially available oral product and at considerable expense. The epidemiology: Leishmanisis is found mainly in tropical and sub tropical countries and other developing nations. The global incidence of leishmaniasis is an estimated 1.5 million new cases each year (US CDC). While the global incidence of VL is an estimated 500,000 each year, the market for VL therapies is modest, given the disease is localized predominantly to developing nations whose citizens cannot afford expensive treatments. More than 90% of the world s cases of VL are located in India, Bangladesh, Nepal, Sudan and Brazil (Institute for One World Health). Realistically, this is not a commercial market of focus for ico. However, non profit or government assistance is available for the investigation of new or improved therapies in neglected diseases like VL, data from which could be used to support and validate the safety and efficacy of a drug candidate like ico 009. Despite strong leishmaniacidal efficacy, conventional forms of AmpB are not popular in VL due to the inconvenient use and cost associated with the infusion based route of administration, as well as the accompanying toxicities. Allergic Conjunctivitis The disease: The conjunctiva, a thin membrane covering the sclera (white part of the eye) and lining the inside of the eyelid, normally produces mucus and tears to facilitate ocular lubrication, prevents microbes from getting into the eye, and participates in immune surveillance. Allergic conjunctivitis (AC) refers to allergen induced irritation and inflammation of the conjunctiva (Exhibit 2). Symptoms include red and swollen eyes (from dilation of peripheral small blood vessels) that can be itchy, painful and/or teary the condition is often referred to as pink eye. Seasonal and perennial allergic conjunctivitis (SAC and PAC) represent the majority of ocular allergy diagnoses. Although vernal and atopic keratoconjunctivitis (VKC and AKC), and giant papillary conjunctivitis are more rare, these disorders pose serious risks. Severe forms are usually

9 ico Therapeutics Inc. (ICO-TSXV) September 30, degenerative conditions that present with damaged corneas and chronic inflammation, resulting in impaired vision if left untreated. Typically, anti histamines are sufficient to treat mild or moderate allergic conjunctivitis. However, the use of anti histamines and steroid based therapies in chronic (e.g. in VKC or AKC) or severe forms of allergic conjunctivitis are typically less effective and the long term use thereof is associated with desensitizationn and deleterious side effects. Exhibit 2: Allergic Conjunctivitis Source: ico Therapeutics The epidemiology and market: An estimated 15% 20% of the population will experience ocular allergies (Ophthalmol Clin North Am Dec 2005). Among those suffering from ocular allergies, AKC and VKC represent up to an estimated 8% of the cases (Graefes Arch Clin Exp Ophthalmol Feb 2008), although the prevalence appears to be higher in warmer and dry climates. Several newer therapies and those in development attempt to modulate non steroidal targets and pathways, including various proteins associated with the immunological and inflammatory cascade. This is the approach followed by the Company s ico 008, which targets a well known pathway broadly applicable to allergic responses ncluding allergic conjunctivitis and rhinitis, food allergies and severe asthma. However, given the financial constraints currently experienced by early to mid stage biotechnology companies, the Company has placed further development of this program on hold until an appropriate partner or acquirer can be found. Company Product Pipeline The Company s candidates have been in licensed from well established, respected institutions or companies, and for which sufficient work had been completed to provide comfort of reasonable benefit and safety. These candidates generally were in the stages of early development, were relegated to a holding status by the licensor after lacklustre efficacy results in separate indications, or were determined to be of low priority in an acquirer s therapeutic pipeline. This enabled ico to license its candidates at favourable economics while identifying a considerable opportunity to repurpose some of these candidates in new indications. Given limited resources in the current constrained market environment, the Company has selected two of its three available candidates that being ico 007 and ico 009 to focus on developing through key valuation points (i.e. partnership). Management believes that ico 008 is supported by sufficient data that it could be ready to be partnered out with minimal effort.

10 8 September 30, ico 007 Overview: ico 007 is a second generation version of an antisense (ISIS 5132) originally investigated by industry leader ISIS Pharmaceuticals as a therapy for recurrent or metastatic colorectal cancer. Due likely to first generation antisense technology (discussed below), ISIS 5132 demonstrated ambiguous results in eliciting objective tumour responses in a Phase II study and the program was subsequently shelved. Recognizing the opportunity to apply the targeted mechanism of ISIS 5132 to the similar pathologies shared by ocular diseases, ico subsequently acquired the rights to ico 007, with improved second generation chemistries, in ico 007 is being developed for the treatment of retinal diseases, initially in diabetic macular edema (DME). A common consequence of chronically high glucose levels is increased inflammatory responses and oxidative damage to tissues, such as blood vessels. Vascular damage can result in leakage, blockage (occlusion), restricted blood supply (ischemia) and ultimately, reduced oxygen to tissues (hypoxia). In response, vascular tissues tend to increase the production of various protein factors to stimulate the growth and development of new blood vessels (i.e. angiogenesis). The over expression of growth factors like vascular endothelial growth factor (VEGF) is implicated in the pathology of several diseases including cancer, and modulating pathways associated with angiogenesis has therapeutic implications. This approach is validated by the global approval of anti angiogenic therapies (e.g. Avastin), several of which have achieved blockbuster sales. In the eye, blood vessel breakage and blockage usually lead to fluid leakage into the retina, resulting in vision blurring and loss. Increased growth of new immature blood vessels may result in bleeding and accumulation of fibrous, vascular tissue associated with vision impairment. ico 007 is an antisense that inhibits the production of c Raf kinase, a well described intracellular protein implicated in angiogenesis and the growth of blood vessels. The c Raf protein is both influenced by and subsequently exerts influence on several signal transduction molecules shown to be key regulators of cell growth, proliferation, migration and vascular permeability. Blocking the production of c Raf and inhibiting its activities is expected to reduce the growth of abnormal blood vessels and vascular leakage, to diminish retinal swelling and ultimately, visual impairment. Targeting c Raf provides inhibition of blood vessel development and vascular leakage through multiple signal cascades a more potent and safer approach?: Many of the therapies recently approved or in development in ocular indications employ VEGF inhibition as the therapeutic approach. However, several other growth factors in addition to VEGF are also implicated in the stimulation of growth and proliferation pathways associated with angiogenesis. These growth factors exert their effects through the activation of receptors on the cell surface that subsequently signal through critical intracellular protein targets like the c Raf kinase (Exhibit 3). In turn, c Raf modulates other signal cascades, primarily the MAPK (mitogen activated protein kinase) pathway, that have been shown to be key regulators of cell growth, proliferation, and migration. While blocking individual proteins like VEGF has been shown to be anti angiogenic, the existence of the other growth factors and receptors provide multiple surrogate pathways by which cells could attempt to bypass this inhibition.

11 ico Therapeutics Inc. (ICO-TSXV) September 30, Exhibit 3: Illustration of c Raf in Growth and Differentiation Signalling Source: Cell Signalling Technology Instead, directly inhibiting c Raf not only enables the inhibition of multiple pathways critical to angiogenesis, but since this activity is downstream of the various cell surface growth factors, this approach could be more effective by circumventing surrogate pathways from attempting to bypass the inhibition. This could also suggest that less drug may be needed to exert a benefit, implying the potential for improved potency. Moreover, recent studies suggest that VEGF may independently possess neuroprotective properties, and that prolonged inhibition of VEGF may have detrimental effects on neural retinal cells. This could imply that employment of ico 007 could provide a safer alternative in avoiding the direct ablation of VEGF that would otherwise be detrimental. Antisense technology to facilitate specific and selective targeting of c Raf, second generation chemistry improves potency, stability and side effect profile: Antisense agents are part of a group of RNA based therapies that collectively, because of their specificity in regulating gene and protein expression, are widely regarded to represent a potential blockbuster class of drugs. RNAbased technologies are thought to enable previously inaccessible or difficult to access drug targets to be addressed and potentially provide improved selectivity over small molecules and antibodies. Antisense oligonucleotides (ASOs) are single strands of short nucleotide sequences that bind specifically to single stranded messenger RNA (mrna) of a particular gene in a sequence specific manner, forming a double stranded molecule. The formation of this duplex prevents the RNA from being translated (into protein) and the mrna gets cleaved and degraded. As ico 007 is delivered directly to the eye, the risk of systemic exposure is limited. Concerns on the effectiveness and safety of ASOs have been raised, but these are directed primarily to systemic applications. When delivered systemically, early generations of ASOs showed

12 10 September 30, inconsistent results and off target effects, had limited uptake by and into cells at the desired disease area, and were vulnerable to rapid enzymatic degradation. Second generation ASO candidates employing improved chemistries, including ico 007 and several other advanced candidates, demonstrate improved specificity, potency and stability with significantly reduced inflammatory responses. As well, an antisense drug directly administered to the eye by intravitreal injection has been approved by the FDA ISIS Vitravene for the treatment of AIDSrelated cytomegalovirus (CMV) retinitis. The drug is no longer marketed due to poor sales, which resulted from a significant decline in CMV incidence with improved HIV management, and not as a result of efficacy or safety concerns. Nonetheless, the approval of Vitravene as an antisense delivered directly to the eye supports the application of ico 007 in ophthalmic indications. Development to date: The half life of ico 007 was an estimated 6 8 weeks after intravitreal injection in rabbits and monkeys, and preliminary human evidence suggests that a single intravitreal injection of as little as µg could provide clinical benefit beyond 3 months, potentially even up to 6 months. This suggests a significantly less frequent injection schedule compared to several other therapies available for ocular diseases like wet aged macular degeneration (AMD). It appears that distribution of the ico 007 is and will be localized to ocular tissues with intravitreal injection, and systemic exposure is negligible as concentrations in the plasma or other tissues are typically below the limits of detection. Preclinical data have consistently shown the ability of ico 007 antisense, delivered by injection into the eye, to suppress c Raf expression in the eye and inhibit pathological hallmarks associated with new growth of retinal blood vessels. Moreover, 14 days after a single intravitreal injection of ico 007 (180 µg), c Raf was still inhibited by more than 40% compared to saline controls in a porcine (pig) eye model. In rabbit studies, administration of ico 007 did not show any ocular inflammation, a side effect found with first generation antisense candidates. Current status and future plans: An open label, single dose escalation Phase I trial is currently ongoing to evaluate the safety and tolerability of a single intravitreal injection of ico 007 in approximately 15 patients with diffuse DME or moderate to severe non proliferative DR. Four doses (110, 350, 700, 1000 µg) are being evaluated and patients followed for 8 weeks after dosing, for a total follow up of 6 months. Early signals of efficacy, as measured by changes in visual acuity (i.e. the gain in the number of letters visible in an eye chart test) and retinal thickness compared to baseline, will also be evaluated. However, given the small number of subjects per cohort, any benefits are not expected to be statistically significant. Nonetheless, signs of preliminary efficacy would be encouraging given the lack of available therapy. Moreover, despite the availability of agents employed in an off label manner in DME, many of these are typically associated with dosing regimens (e.g. once a month) that could be perceived to be impractical for a chronic disease like DME. Dosing of final patient (cohort) has been completed, and final data is expected to be reported in Q2/10. ico 009 Overview: ico 009 is a proprietary lipid based, oral reformulation of the well known antifungal amphotericin B (AmpB; brand names include AmBisome, Fungizone, etc.), developed by and licensed (2008) from Dr. Kishor Wasan and the University of British Columbia (UBC). Dr. Wasan has amassed more than 20 years of knowledge and expertise on AmpB and in the development of its improved delivery. AmpB is considered a mainstay in systemic anti fungal therapy and its fungicidal activity is based on its ability to create pores in the fungal membrane that leads to loss of intracellular potassium and lysis (i.e. death) of the fungus cell. This mechanism is based on

13 ico Therapeutics Inc. (ICO-TSXV) September 30, preferential binding of AmpB to ergosterol, a critical component found only in fungal and certain parasitic membranes. The affinity of AmpB for ergosterol is much higher than for the cholesterol found in mammalian host cells, although in high concentrations has been shown to bind nonspecifically to mammalian cells. Organ toxicities tend to manifest in the tissues where AmpB preferentially accumulates, that being the liver, kidney and lungs. An estimated 75% of patients administered older generations of AmpB will experience infusion related reactions (e.g. fever, chills, nausea, headaches), and 30% sustain kidney toxicities. Due to the poor solubility of AmpB, its use is limited to intravenous administration, and hospitalization with constant monitoring for toxicities is required. Other serious side effects include death of red blood cells (hemolysis), pulmonary reactions, high fever and infusion related toxicities. As a result, AmpB is usually reserved for progressive, potentially life threatening cases of systemic infection. The opportunity an oral AmpB, which does not yet exist commercially: Although improved liposomal based formulations of AmpB exist (e.g. AmBisome) that have significantly reduced toxicities and shortened the course of treatment, they do not eliminate known toxicities and are still restricted to administration by infusion. Consequently, hospital stays are still required, increasing costs and posing some risks of complications and infections. Despite these shortcomings, employ of AmpB appears to still be preferred given its excellent fungicidal and not just fungistatic capacities, very broad spectrum applicability in the number of fungal and parasitic species against which it is effective, and lower risk of deleterious interactions with other drugs. Notably, AmpB does not appear to activate liver enzymes commonly involved in drug metabolism, while many other antifungal drug classes do. Historical attempts to re formulate AmpB for oral administration have shown poor bioavailability and efficacy. However, an oral AmpB formulation that provides similar efficacy and broad spectrum activity as lipid based AmpB, but with dramatically improved safety profile and ease of use to encourage out patient use, could represent a significant and lucrative opportunity given soaring health care costs that have attracted significant political and corporate attention. The novelty of ico 009: The composition of ico 009 involves a proprietary formulation comprised of various lipid components intricately processed and composed in specific ratios. A greater understanding of how lipids are processed by the body has allowed for novel advances in lipid packaging and carrier systems of large amphipathic molecules like AmpB. The formulation of ico 009 protects the compound from being destroyed by stomach acids and increases its solubility. In addition, the formulation enhances the absorption of ico 009 through the gut into the bloodstream where it appears to be recognized and carried by certain circulating white blood cells (i.e. phagocytic cells like macrophages) to specific tissues exhibiting the pathogenic infection. With ico 009, AmpB solubility is enhanced by 30 fold compared to conventional formulations, enabling plasma concentrations similar to those elicited by intravenous therapy (e.g. Fungizone) to be sustained. If ico 009 is approved, this technology could form a platform around which the improved delivery of other approved therapies could be pursued. Moreover, the formulation appears to restrict AmpB interaction to fungal membranes, avoiding mammalian host cells, preventing the typical toxicities seen with injected AmpB. It is thought that the specific lipid formulation of ico 009 renders AmpB unavailable for binding with either ergosterol or cholesterol until specific phospholipase enzymes secreted by fungal and parasitic organisms degrade the lipid carrier to release AmpB at site of infection. Human host cells at the organs where lipid based AmpB accumulates do not exhibit these fungal phospholipases, which are also thought to be different than those found in the human blood stream. This is expected to reduce the risk of AmpB interaction with host cells and the associated toxicities.

14 12 September 30, Development to date: Early studies in two fungi models predictive of activity in humans suggest that ico s oral AmpB formulation is significantly fungicidal while not eliciting the typical infusionrelated kidney toxicities associated with AmpB. Extensive pharmacological and tissue distribution studies in two animal models have been conducted, showing the preferential localization of ico 009 to the lung, kidney, liver and spleen. This is in line with historical data from infusion based lipid formulations of AmpB. Conversely, red blood cell lysis, renal toxicities and other infusionbased side effects have not been observed, providing encouraging signs that ico 009 in humans could demonstrate a similar improved tolerability profile over conventional parenteral formulations of AmpB. An animal study conducted by a leading independent US research laboratory also demonstrated that ico 009 was capable of eradicating greater than 99% of the parasites responsible for VL infection. The results from these studies suggest that as an oral AmpB formulation, ico 009 possesses the potential to be as efficacious as injectable AmpB but with improved safety, access and ease of use. This would be expected to expand patient access to the agent while significantly reducing the need for hospitalization, time and labour resources. Current status and future plans: ico is currently conducting additional preclinical studies with ico 009 to further establish oral bioavailability, safety and efficacy profiles of this oral AmpB formulation. The intent is to submit an Investigational New Drug (IND) application to initiate a Phase I safety study in 2010 and as well, potentially pursue a 505(b)(2) regulatory strategy for approval in the US to expedite the commercialization process. We anticipate that the initial indications in which ico 009 will be investigated will be selected from those which AmBisome and other AmpB drugs are already approved for. Although, until Phase I studies are completed we do not expect these specific indications to be identified. On a related note, several global organizations are providing financial grants to assist in the development and distribution of oral therapies for neglected fungal or parasitic diseases such as visceral leishmaniasis. Although such indications are not expected to be profitable commercial markets, they provide a source of nondilutive funding to establish additional data to support the development and regulatory submissions of ico 009. The management of ico is strategically pursuing this avenue, and recently announced a research collaboration with The Consortium for Parasitic Drug Development (CPDD) to optimize and employ the proprietary lipid based delivery platform, upon which ico 009 is based, in the treatment of neglected diseases. The CPDD is funded largely by the Bill and Melinda Gates Foundation, which has also awarded CPDD Director Dr. Richard Tidwell, a contributor and investigator in the ico 009 program, $58.5 million to date. ico 008 Overview: ico 008 (formerly bertilimumab or CAT 213) was licensed in 2007 from a subsidiary of AstraZeneca. ico 008 is a human monoclonal antibody specifically targeting eotaxin 1, a chemokine protein implicated in the pathology of allergic disorders such as those presenting in the nasal passages and eye, as well as asthma. After lacklustre results from a Phase II study in seasonal nasal and ocular allergies conducted by its subsidiary, as well as a decision to refocus its internal therapeutic programs, AstraZeneca subsequently decided not to pursue the development of this candidate. However, recognizing the opportunity for this antibody to be repurposed in more appropriate indications (e.g. with an improved clinical protocol design), ico in licensed ico 008 as a strategic fit with the Company s model and therapeutic focus. Allergic responses involve multiple immune cell types and signalling pathways. Eotaxin 1 is a key signal messenger associated with numerous allergic responses included in the eye, and is secreted by various cell types of the immune system including eosinophils (a type of white blood

15 ico Therapeutics Inc. (ICO-TSXV) September 30, cell) and fibroblasts. Secretion of eotaxin 1 is thought to attract and accumulate cells like eosinophils to sites of inflammation. Eotaxin 1 exerts its effects primarily through binding and activation of CCR3 receptors on eosinophils and other immune effector cell types (e.g. mast cells, basophils etc.). This is thought to activate various immune stimulatory and inflammatory cascades but which in excess and with prolonged exposure can cause tissue damage. Elevation of eotaxin 1 and its associated activities has been implicated in disorders such as allergic conjunctivitis, asthma, allergic rhinitis, atopic dermatitis and other inflammatory disorders. Eotaxin 1 is also implicated in the heightened allergic response seen in anaphylaxis. Targeting eotaxin 1 is thereby one approach in addressing CCR3 mediated disorders and other eosinophil mediated diseases. Reports suggest that small molecule inhibition of chemokine receptors may be less effective or possess more potential for side effects due to non specific interaction with other non targeted receptors. By directly targeting eotaxin 1 as the ligand of the CCR3 receptor, the ico 008 antibody could be positioned as an attractive candidate to modulate CCR3 activities. Of interest is a recent study showing that targeting CCR3 could have significant implications in preventing neovascularisation associated with wet AMD. This approach appears to be more effective than targeting VEGF alone, the current standard of therapy in wet AMD but which has raised concerns that complete inhibition of this constitutively expressed growth factor (VEGF) could be unsafe. This adds to the numerous indications in which targeting eotaxin 1 could have therapeutic applications beyond modulating allergic disorders, including some skin conditions (e.g. psoriasis, eczema), inflammatory bowel diseases, malignant diseases and parasitic infections. Data to date: Preclinical studies have demonstrated the ability of ico 008 to inhibit eotaxin 1 mediated recruitment and chemotaxis of eosinophils in various immune responsive tissues and animal models. No target organ or non specific toxicology was observed in non human primates. Similarly, it appears the candidate is well tolerated as no serious adverse events were observed in a Phase I study evaluating single escalating doses of intravenous ico 008 (0.01, 0.1, 1, 5, 10 mg/kg or placebo) in 25 healthy male volunteers. Intranasal and topical administration of ico 008 in a randomized, double blind, placebo controlled Phase II study provided early evidence of clinical benefit in 101 subjects with off season severe allergies induced by grass pollen, including a reduction of post allergic nasal obstruction. Although trends were seen in reduced eosinophil number and activation, these were not statistically significant. However, administration of ico 008 was able to significantly reduce infiltration of submucosal mast cells and eosinophils, suggesting the antibody could still provide clinical benefit in a better designed clinical trial and as well perhaps in a manner different from that originally intended. Antibodies against ico 008 were not detected. Current status and future plans: ico 008 is near ready to enter Phase II clinical trials in patients with vernal keratoconjunctivitis (VKC), a severe form of ocular allergy. API manufacturing of ico 008 has been completed by Lonza, providing high antibody yield and enabling the program to be ready for the final stages of manufacturing. However, given the constrained capital resources in the current economic condition and since this program is considerably more clinical advanced and ready to be out licensed, the Company has elected to focus its resources on its other two programs.

16 14 September 30, Competition ico 007 Primary prevention and glucose control in diabetics is typically the first line of treatment to address DR and DME. In several trials, including the Diabetes Control and Complications Trial (DCCT), baseline HbA1c and duration of diabetes have been shown to be the strongest predictors of the development and/or progression of DR and DME. However, estimates suggest that between 57% 64% fail their target HbA1c (ADA; Nat Rev Drug Disc Oct 2007). Conventionally, laser photocoagulation to burn retinal capillaries in order to slow leakage, is recognized as the standard of care in the treatment of DME, providing significant improvement of oxygen supply to the retina and reducing neovascularisation. However, while laser use prevents further vision loss, it typically does not restore vision already lost, can worsen DME in some cases (i.e. in proliferative DR), and since it produces deep burns in the retina, repeated use causes vision loss of a different nature. Other increased risks include scotomas, scarring in the fovea, fibrosis and neovascularisation at the sites of laser scars. Consequently, laser photocoagulation is considered to be effective in less than 50% of DME cases (Diabetic Retinopathy 2008). Vitrectomy, wherein a tiny incision is made to remove vitreus gel clouded with blood, is a secondary option to laser photocoagulation to treat opacities and progression that preclude laser treatment. However, the procedure can be fairly invasive and performed under local or general anesthesia, cataract formation and retinal detachments are common complications, as are increased intraocular pressure, and vitreus hemorrhage. An approved drug therapy to treat DR and DME currently does not exist. Therapies approved in other ophthalmic indications exist that could be employed in an off label manner to treat DME and DR (see Appendix A). However, these are either steroid based and are accompanied by deleterious risks when used long term or may be associated with impractical dosing regimens in a chronic indication like DME. Moreover, the premise exists that by addressing multiple signalling pathways in a selective manner, ico 007 may provide broader and yet more specific therapeutic effect. ico 009 The real opportunity for ico 009 is likely not necessarily as a direct competitor of intravenously administered anti fungal agents (see Appendix A), but rather in the expansion of the use and applicability of an orally available and safer anti fungal that is well recognized to be an extremely effective therapy. Of the various therapies available, for serious systemic fungal infections AmpB is still often considered a gold standard, but its use is limited by serious renal toxicities and the requirement for administration by infusion, which requires hospital stays and exposes the patient to certain risks for infections and complications. Agents in the other classes of antifungals, while possessing similar efficacy with certain species of fungi, often possess a narrower spectrum of activity and higher risks for relapse, drug interactions and embryo or fetal toxicities. As a result, a significant opportunity could exist for a formulation of AmpB that demonstrates oral bioavailability to facilitate ease of use, similar efficacy and specificity for the same broad spectrum of fungal and parasitic species, and negation of both renal and infusion related toxicities. Moreover, as the population of immunocompromised individuals appears to be on the rise, the availability of an oral AmpB therapy could be quite timely.

17 ico Therapeutics Inc. (ICO-TSXV) September 30, The closest competitor to ico 009 is likely BioDelivery Sciences (BDSI Nasdaq; not covered) oral cochleate formulation of AmpB, Bioral Amphotericin B. Cochleates are co precipitates formed from chemical reactions between lipid polymer solutions and certain ionic molecules. They possess defined multi layered structures, into which molecules like AmpB can be inserted for delivery to and consequently interaction with, biological membranes. However, although preliminary Phase I results have shown encouraging tolerability and efficacy results, animal data also suggests that fungal elimination with Bioral (10 15 days) could be considerably slower compared to ico 009 (4 days). To date, efficacy data in a mouse model of VL does not appear to have been published. Interestingly, more recently BioDelivery disbanded their formulation group and has announced its intent to out license the cochleate technology to the inventor of the technology. Valuation and Recommendation We have employed discounted earnings and comparable analyses to value ico Therapeutics, as the Company s therapies are predominantly in early stage development, which in our opinion, renders a discounted cash flow approach impractical. We have conservatively projected only revenues generated from sales of ico 007, based on an expected approval by the FDA and subsequent market launch in 2016 in the US, and 2017 in Europe. Our revenue model and the associated assumptions are provided in Appendix C. Although we assume the signing of a well established biotechnology or pharmaceutical partner to advance this program past Phase III and FDA approval, to be conservative we have not recognized revenues provided by upfront or milestone payments, the timing and level of which are unpredictable. However, an announcement of a partnership and recognition of upfront payments at minimum represent significant and additional upside to the value of the Company. We have not yet incorporated revenue projections from the ico 009 program as it is in the preclinical stage of development and the immediate indications in which a defined regulatory pathway will be pursued have not been disclosed by the Company. We note however, that upon entering the clinic, which is expected by the end of 2010 or early 2011, an abbreviated pathway to approval in the US could potentially be pursued (i.e. under the 505(b)(2) process) given that ico 009 provides a new route of administration (oral) for a previously approved and well known drug (AmpB). This aspect, coupled with the potential for ico 009 to be used in combination with other antifungal drugs, could position this program attractively for partnerships with pharmaceutical firms with antimicrobial franchises or pipelines, providing an upside to the Company s valuation. Although ico 008 is the furthest clinically advanced candidate, as management has restricted development of this program until financial resources are more readily available, our model does not include revenues from this program. However, management is actively pursuing discussions to out license ico 008, in part or in entirety, which we believe is reasonable given the clinical, safety and manufacturing data supporting the program. This would provide additional upside to the stock. Discounted Price to Earnings Approach Applying a 15x earnings multiple to our 2017 fully diluted EPS of $0.81 and discounting back to the end of FY2010 using a conservative discount rate of 35%, this approach generates an equity

18 16 September 30, value of $1.50 per ico share. A multiple of 15x represents what large, profitable biotechnology companies are currently trading at on average (BioCentury). A sensitivity analysis employing various P/E multiples and discount rates is presented in Exhibit 4. Although management has been active in pursuing non dilutive funding from government and not for profit agencies, this has not been incorporated into our model. We have however, conservatively included dilution from two financings of C$12.0 million and C$12.5 million in FY2010 and FY2012, respectively. As well, we conservatively assume C$/US$ at parity. Exhibit 4: Discounted Earnings Sensitivity Analysis Discount Rate FD EPS P/E Multiple $ x 15.0x 20x 30% $1.30 $1.95 $ % $1.00 $1.50 $ % $0.77 $1.16 $1.55 Source: LOM Estimates. Comparable Company Analysis Our comparable analysis includes primarily US and Canadian publicly traded companies that employ a NRDO and/or drug repurposing approach to drug development, are developing therapies in the ophthalmic or anti microbial space, or are employing RNA based therapeutic technologies (Appendix C). Recent advancements in RNA technologies, have garnered significant attention and valuations for companies developing small interfering RNA (sirna) and antisense therapies, including the 2008 partnership between antisense leader ISIS and Genzyme (GENZ NASDAQ; not covered) that could reach up to US$1.9 billion. We believe our comparable group, although not perfect due to differences with respect to commercialization stage, potential products in the pipeline, stage of development, financial resources and market capitalization, provides a reasonable proxy for valuing ico. The average market capitalization of this peer group is $65.2 million, or $62.4 million when subtracting the outliers (i.e. high and low). The median market capitalization of this group is $53.4 million. Averaging these two values and dividing by ico s basic share count generated an estimated market capitalization of $57.9 million or $1.77 per share (assuming conversion of in the money warrants). Alternatively, using enterprise value (EV) generates a value of $1.41 per share (including ico cash of $0.07 per share). The average of our comparable analysis implies a value of $1.59 per ico share. Notable opportunity: The level of ophthalmic partnership and/or acquisition transactions in the past 18 months could be viewed as being indicative of the attractiveness and value of assets in this space (Exhibit 5). Moreover, even early stage compounds or technologies have demonstrated the ability to command significant valuation. One example that is illustrative of what a potential partnership agreement for ico 007 could garner is the license of Japanese rights to MacuSight s candidate in DME to Santen Pharmaceuticals in mid Although complete terms of the deal were not disclosed, an upfront payment of US$50 million was provided for the agreement that was signed just after the completion of a Phase I study. More recently, German ESBATech, whose therapeutics assets are primarily in early stage development in ophthalmic indications, was acquired by ophthalmic conglomerate Alcon for up to a reported US$589 million. These examples support that positive results from the ico 007 Phase I study in DME, expected in Q2/10 could place ico in a very interesting position to create significant value for shareholders.

19 ico Therapeutics Inc. (ICO-TSXV) September 30, Exhibit 5. Select Ophthalmic Transactions Companies Involved Development stage Pieris AG Allergan discovery/ Value (upfront; milestones/royalties) Transaction type $10m; not disclosed global partnership Sep 09 preclinical Asterand Allergan preclinical $6.3m; up to $56m global partnership Aug 08 Methylgene Otsuka preclinical $6.9m; up to $50.5m global partnership Mar 08 Forsight QLT preclinical $42m cash; >$40m acquisition Oct 07 Alcon AstraZeneca discovery not disclosed 5 year collaborative Aug 09 research agreement ESBATech Alcon Phase I/II $150m, initial cash; acquisition Sep 09 up to $439m milestones MacuSight Santen Phase I/II $50m; not disclosed Japan, Asia partnership Jun 08 SurModics Merck Phase I $20m; up to $288m global partnership Jun 07 Acucela Otsuka Phase I Acucela $5m, up to $258m North America, Asia Sep 08 Phase III Otsuka partnership Date Regeneron Bayer Phase II $75m; up to $245m global (ex US) Oct 08 partnership Santen Merck approved not disclosed global partnership Apr 08 Advanced Abbott marketed $2.8b cash acquisition Jan 09 Medical Optics opthalmic Alcon Novartis marketed & $11b, initial 25% stake; acquisition Jul 08 developmental $28b option (add'l 52%) Eyetech OSI marketed & $935m cash & stock acquisition Aug 05 developmental Source: Various, LOM. Recommendation Averaging the values generated from our discounted earnings and comparable company analyses implies a value for ico of $1.54 per share, which we have rounded down to $1.50 per share. We are initiating coverage of ico Therapeutics Inc. with a Speculative BUY rating and a 12 month target price of C$1.50 per share. Intellectual Property ico Therapeutics possesses numerous issued patents and pending patent applications in various jurisdictions, with expiration dates spanning between 2014 to Related to ico 007, ico obtained exclusive worldwide rights to ISIS and c Raf oligonucleotides patents granted to ISIS in numerous regions including the US, Canada, Australia, Germany, United Kingdom, Japan and South Korea. This patent family includes ten issued US patents and 15 patents issued in other jurisdictions, as well as two pending US patent applications. These issued patents expire between ; however, ico also possess rights to granted patents relating to second generation antisense chemistry and associated technologies required for the manufacture of ico 007, which run to at least Related to ico 008, ico holds exclusive worldwide rights to patents related to the composition and method of use of ico 008, which expire in This patent family includes two issued US patent and eight patents issued in other jurisdictions, including Australia, France, Germany, Ireland, United Kingdom, Switzerland, New Zealand and Singapore, as well as pending applications in the US, Brazil, Canada, Israel, and Japan. ico also

20 18 September 30, holds exclusive worldwide rights to an international PCT patent application related to ico 009, from which any patents to issue would have an expiration date in Risks Development and regulatory risks: ico is a drug development firm and success of clinical trials cannot be determined with certainty. The Company s candidates may suffer delays and the perspectives of regulatory agencies cannot be predicted. This could lead to failure to obtain marketing approval. Antisense based drug development is a fairly nascent class and a systemically delivered candidate has not yet been approved in the US, and therapies employing this technology could be viewed as carrying additional risk. However, we note that an ophthalmic antisense therapeutic delivered directly to the eye (similar to ico 007) has been approved by the FDA. Furthermore, the presence of antisense industry leader ISIS Pharmaceuticals as a strategic investor of the Company has provided ico with considerable support. We view these considerations as factors that help to mitigate the risks associated with ico 007. Market risks: ico may not be successful in developing meaningful partners and subsequently may not deploy its products in the market in a timely manner or penetrate the market as anticipated. Even if successfully developed, there is no guarantee ico s products will gain or increase market acceptance among, and utilization by physicians, patients, and healthcare payors. Although no direct approved therapy exists for DR and DME, products like Lucentis and Macugen that are approved for other vascularly based ophthalmic indications are being used in an off label manner for DR and DME. These drugs benefit from considerable popularity and name recognition, and may impede penetration of ico s lead candidate. Financial risks: ico is an early stage biotechnology drug developer and although management is extremely prudent with its resources, requires significant and intense capital resources to fund the development of its lead programs. We anticipate the Company will need to raise money in the next 12 months and there is no guarantee that it will be able to successfully do so. Clinical trials are inherently expensive and specialty indications could require significant amount of time for patient recruitment. There is no guarantee that market conditions will be favourable for the Company to raise capital should it be required to do so.

21 ico Therapeutics Inc. (ICO-TSXV) September 30, Appendix A Competitive Landscape Tables: I) DME and II) Anti Fungal Therapies I: Comparison of select therapies for DME Drug Name Company Description, Indications Dosing Regimen Notes or Device Mechanism of Action primary status in DME route dose Retisert, Iluvien Kenalog/ Trivaris (triamcinolone) psivida/ Alimera Sciences BMS/Allergan (genericized) corticosteroid (fluocinolone) to suppress inflammation, reduce leakage corticosteroid to suppress inflammation, reduce leakage approved for uveitis off label/ Phase III (Iluvien) approved for inflammation by allergic reactions, eczema, psoriasis intravitreal implant or injection for daily dosing off label, intravitreal extensive use injection or implant 36 months with low dose (~0.23ug/day) or 24 months with high dose (~0.45ug/day) 3 mo. dosing 1 4 mg drawbacks: steroid, less preferred by clinicians; 12% of high dose patients experienced intraocular pressure increases of 30mmHg or greater; long term laser is preferred over steroids; risk for cataract development drawbacks: steroid, less preferred by clinicians; significant adverse events including elevated intraocular pressure, cataract formation, injection related complications like endophthalmitis, retinal detachment Ozurdex (formerly Posurdex) Allergan corticosteroid (dexamethasone) to suppress inflammation, reduce leakage Avastin Genentech anti VEGF mab (full, humanized), targets multiple VEGF isoforms Lucentis Genentech anti VEGF Ab fragment (1/3 of Avastin), more efficient retina penetration approved for macular edema following branch or central retinal vein occlusion Phase III for uveitis, DME approved for colorectal cancer, off label AMD approved for new wet AMD Phase III off label off label intravitreal implant intravitreal injection intravitreal injection 1 3 mo. dosing 350 or 700 ug 4 6 week dosing 1250 ug 4 week dosing 300 or 500 ug drawbacks: steroid, less preferred by clinicians; cataracts, increased ocular pressure; no clear advantage over laser, requires injection in operating room; drawbacks: systemic use associated with thrombotic risks, one factorial targeting, frequent dosing requirement could be considered impractical for a gradual visionloss disease like DME drawbacks: very expensive, systemic use associated with thrombotic risks, one factorial targeting, frequent dosing requirement could be considered impractical for a gradual vision loss disease like DME; VEGF Trap Eye Macugen (pegaptanib) Sirolimus (rapamycin) Bayer/ Regeneron Pfizer, Eyetech Macusight VEGF receptor fusion protein, bind all VEGF A isoforms (as well as placental growth factor) anti VEGF aptamer (pegylated), targets one VEGF isoform mtor inhibitor (antiangiogenic), immunosuppressive (inhibits T lymphocyte activation/proliferation, antibody production) ico 007 ico Therapeutics anti c Raf kinase antisense, may modulate multiple signaling paths (e.g. MAP kinase) downstream of VEGF and other extracellular growth factors Phase III for wet AMD (Phase III for cancer) approved for new wet AMD clinically significant DME Phase II off label Phase IIa intravitreal injection intravitreal injection subconjunctival injection diffuse DME Phase I intravitreal injection 4 8 week dosing ug 6 week dosing 300 ug (DME) 2 month dosing ug 3 6 month dosing potential (less frequent) ug drawbacks: dosing frequency may or may not be improved vs. Lucentis (preliminary results suggest monthly injections more effective, which could be considered impractical for DME) drawbacks: targets just one form of VEGF, frequent dosing requirement could be considered impractical; market share loss to Avastin/Lucentis drawbacks: frequent dosing requirement could be considered impractical no drug related SAEs to date; minor side effects are transient in nature and are injection but not product related * less frequent dosing regimen and ability to target multiple signaling paths could be significantly favourable Source: Various, ico Therapeutics, LOM

22 20 September 30, II: Dominant classes of systemic anti fungal therapies Class Mechanism of action Activity Drawbacks Examples polyene macrolides azoles high affinity binding to ergosterol, basic component of fungal membrane (vs. cholesterol in mammalian cells) physical disruption of membrane creates pores that result in leakage of potassium ions, cell lysis, fungal death interferes with transport functions and permeability wider/broader spectrum of activity vs. other classes of antifungals fungistatic & fungicidal inhibits an enzyme involved in ergosterol primarily biosynthesis (14α lanoestreol demthylase) fungistatic, disrupts pathway, deplete ergosterol organismdependent alters membrane fluidity, interferes with membrane enzyme activities fungicidal prevents conversion of fungi into activity invasive and pathogenic forms, rather than killing parental fungus organism can still bind non specifically to cholesterol renal toxicities infusion related toxicities oral forms not available (poor solubility, previous attempts unsuccessful and required excessive doses) gastrointestinal toxicities (nausea, anorexia, vomiting) liver, CNS toxicities drug drug interactions relapse common embryo/feto toxic amphotericin B (i.e. AmBisome, Gilead/Astellas; Fungizone, Bristol Myers Squibb; Ablecet, Enzon; etc.) fluconazole (i.e. Diflucan, Pfizer) itraconazole (Sporanox, Janssen) posaconazole (Noxafil, Schering Plough) ketoconazole (i.e. Nizoral, Janssen) allylamines echinocandins inhibits an enzyme involved in ergosterol biosynthesis (squalene epoxidase, upstream of azoles) disrupts pathway, deplete ergosterol increases membrane permeability and cell fragility inhibits glucan biosynthesis, an essential component of fungal cell wall not found in mammalian host cells alters membrane composition and fidelity, results in fungal death Source: Pharmacogenomics 9: , 2008; ico Therapeutics, LOM fungistatic & fungicidal fungistatic & fungicidal (depending on infective species) gastrointestinal toxicities liver toxicities drug drug interactions oral formulations not typically available use limited to dermatophytes embryo/feto toxic drug interactions potential for drug resistance infusion related toxicities not orally available terbinafine (Lamisil, Novartis) caspofungin (Cancidas, Merck) anidulafungin (Eraxis, Pfizer) micafungin (Mycamine, Astellas/Roche)

23 ico Therapeutics Inc. (ICO-TSXV) September 30, Appendix B Historical and Projected Financial Statements INCOME STATEMENT (US$) 2008A 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E Royalty revenue ico ,816,395 97,218,017 Total revenue 24,816,395 97,218,017 Expenses R&D 1,421,258 1,221,651 4,500,000 4,500,000 3,600,000 3,420,000 3,591,000 3,770,550 3,959,078 4,157,031 G&A 995, , , , , ,037 1,015,389 1,066,159 1,119,467 1,175,440 Amortization 115, , ,147 88,635 76,234 65,648 56,618 48,922 42,365 36,782 Stock based compensation 179, , , , , , , , , ,266 Subtotal 2,711,953 2,269,541 5,609,263 5,645,057 4,785,477 4,650,353 4,870,559 5,103,559 5,349,735 5,609,520 EBIT/Operating income (loss) (2,711,953) (2,269,541) (5,609,263) (5,645,057) (4,785,477) (4,650,353) (4,870,559) (5,103,559) 19,466,660 91,608,497 Other items (30,421) (24,823) Income Tax (23,434,958) Net earnings (loss) (2,742,374) (2,294,364) (5,609,263) (5,645,057) (4,785,477) (4,650,353) (4,870,559) (5,103,559) 19,466,660 68,173,539 Basic loss per share (0.14) (0.07) (0.10) (0.10) (0.06) (0.06) (0.06) (0.06) Diluted loss per share (0.14) (0.07) (0.08) (0.08) (0.06) (0.06) (0.06) (0.06) Weighted Avg. Shares Outstanding 20,077,165 Shares Outstanding (Basic) 21,754,950 32,655,843 56,655,843 56,655,843 76,989,176 76,989,176 81,155,843 81,155,843 81,155,843 81,155,843 Shares Outstanding (Diluted) 23,521,022 34,377,272 70,463,343 70,553,718 83,148,612 83,248,251 83,352,871 83,462,722 83,578,066 83,699,178 CASHFLOW STATEMENT (US$) 2008A 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E Operating activities Net loss for the year (2,742,374) (2,294,364) (5,609,263) (5,645,057) (4,785,477) (4,650,353) (4,870,559) (5,103,559) 19,466,660 68,173,539 Add items not affecting cash: Depreciation and amortization 115, , ,147 88,635 76,234 65,648 56,618 48,922 42,365 36,782 Stock based compensation 179, , , , , , , , , ,266 Change in non cash working capital items 63,594 (68,982) 976,215 (258,415) (171,229) (26,790) 43,870 46,064 48,367 50,785 Subtotal (2,383,382) (2,111,040) (4,359,148) (5,635,546) (4,692,217) (4,413,827) (4,562,519) (4,790,645) 19,786,218 68,501,373 Investing activities Sale of short term investments 42,174 Purchase of PPE (18,071) 4,177 (5,000) (5,000) (5,000) (5,000) (5,000) (5,000) (5,000) (5,000) Subtotal 24,103 4,177 (5,000) (5,000) (5,000) (5,000) (5,000) (5,000) (5,000) (5,000) Financing activities Exercise of warrants, options 8, ,125 6,000,000 6,250,000 Issue of units 1,140,450 1,713,073 12,000,000 12,500,000 Unit issue costs (58,154) (23,750) (1,200,000) (1,250,000) Subtotal 1,090,322 2,632,448 10,800,000 17,250,000 6,250,000 Net increase in cash and cash equivalents (1,268,957) 525,585 6,435,852 (5,640,546) 12,552,783 (4,418,827) 1,682,481 (4,795,645) 19,781,218 68,496,373 Cash, beginning 1,889, ,276 1,145,863 7,581,715 1,941,169 14,493,952 10,075,125 11,757,606 6,961,961 26,743,179 Cash, end 620,276 1,145,863 7,581,715 1,941,169 14,493,952 10,075,125 11,757,606 6,961,961 26,743,179 95,239,552 BALANCE SHEET (US$) 2008A 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E Assets Current Cash and equivalents 620,276 1,145,863 7,581,715 1,941,169 14,493,952 10,075,125 11,757,606 6,961,961 26,743,179 95,239,552 Taxes and other receivable 42,950 15,528 15,528 15,528 15,528 15,528 15,528 15,528 15,528 15,528 Prepaid expenses 13,770 28,989 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 Subtotal 676,996 1,190,380 7,622,243 1,981,697 14,534,480 10,115,653 11,798,134 7,002,489 26,783,707 95,280,080 Equipment 23,830 11,823 13,099 13,974 14,573 14,983 15,264 15,457 15,589 15,679 Intangible assets 765, , , , , , , , , ,612 Total assets 1,465,831 1,865,023 8,198,739 2,474,558 14,956,107 10,476,632 12,107,495 7,267,928 27,011,781 95,476,371 Liabilities Current Accounts payable and accrued liabilities 442, ,615 1,333,841 1,075, , , , ,342 1,015,709 1,066,494 Total liabilities 442, ,615 1,333,841 1,075, , , , ,342 1,015,709 1,066,494 Shareholders's Equity Share capital 10,666,921 13,013,176 23,813,176 23,813,176 41,063,176 41,063,176 47,313,176 47,313,176 47,313,176 47,313,176 Contributed surplus 1,410,612 1,552,906 1,723,659 1,902,949 2,091,204 2,288,872 2,496,423 2,714,352 2,943,177 3,183,443 Warrants 286, , , , , , , , ,192 Deficit (11,054,502) (13,348,866) (18,958,129) (24,603,186) (29,388,663) (34,039,015) (38,909,574) (44,013,133) (24,546,473) 43,627,066 Total shareholders' equity 1,023,031 1,503,408 6,864,898 1,399,132 14,051,910 9,599,225 11,186,217 6,300,587 25,996,072 94,409,877 Total shareholders' equity and liabilities 1,465,831 1,865,023 8,198,739 2,474,558 14,956,107 10,476,632 12,107,495 7,267,928 27,011,781 95,476,371 Source: Company documents, LOM

24 22 September 30, Appendix C Revenue Model and Comparable Analysis Revenue Model 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E ico 007 diffuse diabetic macular edema (US) DME population (9% of diagnosed diabetics, 3% growth) 1,662,667 1,712,547 1,763,924 1,816,841 1,871,347 1,927,487 1,985,312 2,044,871 Addressable population (clinically significant DME 25%) 415, , , , , , , ,218 penetration rate (%) 0% 0% 0% 0% 0% 0% 5% 10% # pts on ico ,816 51,122 price/yr per pt (US$) $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 Sales (US$) $248,163,949 $511,217,734 royalty rate 10% 10% 10% 10% 10% 10% 10% 10% Royalty revenue to the Co. (US$) $24,816,395 $51,121,773 diffuse diabetic macular edema (EU) DME population 3,748,046 3,860,488 3,976,302 4,095,591 4,218,459 4,345,013 4,475,363 4,609,624 Addressable population CSDME, seek treatment 937, , ,076 1,023,898 1,054,615 1,086,253 1,118,841 1,152,406 penetration rate (%) 0% 0% 0% 0% 0% 0% 0% 5% # pts on ico ,620 price/yr per pt (US$) $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 Sales (US$) $460,962,431 royalty rate 10% 10% 10% 10% 10% 10% 10% 10% Royalty revenue to the Co. (US$) $46,096,243 Total royalty revenues to ico (US$) $24,816,395 $97,218,017 Source: LOM Comparable Company Analysis Company Name Ticker Close (C$) Basic S/O (mm) Mkt Cap (C$ mm) Cash & Eq. (C$ mm) EV (C$ mm) Description BIODELIVERY SCIENCES BDSI US $ $100.6 $31.7 $68.8 platform: drug delivery systems indications: pain, fungal infections lead candidate: approved drug; BEMA (P2 pain); Bioral (P1 oral AmbB) NOVABAY PHARMACEUTICAL NBY US $ $40.4 $13.1 $27.9 platform: Aganocide compounds, antimicrobials indications: hospital and community infections lead candidate: NVC 422 (P2 viral conjunctivitis ophthalmic) INSITE VISION INC INSV US $ $38.8 $28.4 $70.4 platform: ophthalmic delivery system indications: ocular infection, glaucoma, retinal disease lead candidate: approved drug, ISV 502 (P3 ocular infection) JAVELIN PHARMACEUTICALS JAV US $ $122.0 $7.2 $114.7 platform: drug delivery, repurposing model indications: neurological, pain lead candidate: injectible diclofenac (P3, pain) RXI PHARMA CORP RXII US $ $41.7 $12.1 $29.6 platform: sirna design, therapeutics indications: inflammatory, metabolic lead candidate: preclinical (candidate not identified) ISOTECHNIKA PHARMA ISA T $ $25.6 $7.3 $18.3 platform: immunosuppressive therapeutics indications: psoriasis, uveitis (ocular), dry eye, organ transplant rejection lead candidate: voclosporin (P3 uveitis, P2b psoriasis) TEKMIRA PHARMACEUTICALS TKM T $ $65.1 $28.4 $36.6 platform: sirna, lipid nanoparticle delivery systems indications: hypercholesterol, cancer lead candidate: ApoB SNALP (P1 hypercholesterol) YM BIOSCIENCES YM T $ $87.7 $42.1 $45.6 platform: NRDO approach indications: cancer, pain lead candidate: nimotuzumab (P3 cancer) ICO THERAPEUTICS ICO V $ $18.0 $2.2 $15.8 Mkt Cap EV EV + ico Cash Average ($ mm) $65.2 $51.5 $53.7 Avg. Ex Max&Min ($ mm) $62.4 $46.5 $48.7 Median ($ mm) $53.4 $41.1 $43.3 Average of Comparables ($ mm) $57.9 $46.0 Implied ico value ($ mm) $51.9 Implied ico value (per shr) $1.59 Notes (adjustments): Biodelivery Sciences cash includes $27m milestone payment from Meda AB in July/09 NovaBay Pharmaceuticals cash and shares outstanding include gross proceeds of $2.5m raised in Aug/09 RXI Pharma cash and shares outstanding include net proceeds of $7.7m raised in Aug/09 ico Therapeutics cash and shares outstanding include gross proceeds of $0.5m raised in Jul/09 and $0.9m from 3.1m "in the money" warrants C$/US$ exchange rate set at Priced as of close on Sep 28/09. Source: Company filing statements, Thomson, LOM.

25 ico Therapeutics Inc. (ICO-TSXV) September 30, Appendix D Management, Board of Directors & Advisors Andrew Rae President & Chief Executive Officer, Director John Meekison Chief Financial Officer John G. Clement, PhD Chief Business Officer, Director Peter Hnik, MD, MHSc Chief Medical Officer Santa Jeremy Ono, PhD Chief Scientific Officer Mr. Rae is a co founder of ico Therapeutics (2005) and has spent a decade in the biotechnology industry garnering experience in financings, developing successful business development deals, and executing M&A transactions. He was formerly CFO with Ability Biomedical Corporation (Irvine CA, Vancouver BC), which was acquired by Medarex Inc. in 2004, and has also served as Vice President, Finance & Corporate Affairs at Active Pass Pharmaceuticals (Vancouver BC). Prior to his operational experiences, Mr. Rae served as Biotechnology Equities Analyst at Goepel Shields & Partners (now Raymond James Canada). Mr. Rae currently sits on several academic and public advisory boards, including the University of British Columbia s Biotechnology, Honours program, the Dean s External Advisory Board for the Faculty of Business Administration at Simon Fraser University, Migenix (MGI TSX), and the Board of Directors of Covenant House Vancouver. Mr. Rae s degrees include a BSc from the University of Western Ontario and an MBA from Simon Fraser University. Mr. Meekison is a veteran investment banker specializing in life sciences at Loewen Ondaatje McCutcheon, Haywood Securities, Dlouhy Merchant and PI Securities, having raised equity capital for various Canadian biotechnology companies including ID Biomedical, Inex Pharmaceuticals, Xenon Pharmaceuticals, Nortran Pharmaceuticals (now Cardiome) and BioMS Medical Corp. Mr. Meekison received his BA from the University of British Columbia and is a Certified Investment Manager. Dr. Clement possesses over 20 years of experience in preclinical and clinical drug development, project management, and product acquisition. Prior to co founding ico Therapeutics, Dr. Clement served as Director, Business Development at QLT Inc., one of Canada s largest biotechnology companies and developer of Visudyne, the first product used to treat age related macular degeneration. He has also served as Director of Extramural Research and Associate Director of Pharmacology and Toxicology at Biochem Pharma Inc. During his tenure with the Department of National Defence, he held various scientific leadership / management positions and was responsible for the development of a new antidote for nerve agent poisoning (HI 6). He holds a PhD (Pharmacology) from the University of Western Ontario and has published over 60 scientific articles. Dr. Hnik received his medical degree from the Medical Faculty of Charles University of Prague in After practicing for years at the Eye Clinic of the Charles University Hospital where he performed surgery and consultation in glaucoma and neuro ophthalmology, Dr. Hnik later joined the Eye Clinic of the University of British Columbia as part of the glaucoma research group. He received his Master of Health Sciences degree from the University of British Columbia in Prior to joining ico Therapeutics, Dr. Hnik served as Associate Director of Clinical Research with QLT Inc., playing a critical role in designing and directing Visudyne clinical trials in AMD and diabetic retinopathy. He was also heavily involved in the publication, in licensing and pharmacovigilance activities for Visudyne. He has authored numerous ocular publications and presentations at international forums. Dr. Hnik is a member of the Association for Research in Vision and Ophthalmology (ARVO), the American Academy of Ophthalmology (AAO), the European Society of Retina Specialists (EURETINA), the Drug Information Association (DIA), and the New York Academy of Sciences (NYAS). Professor Ono is a leading authority in the fields of immunology and ophthalmology and joined ico Therapeutics in July 2005 as Chief Scientific Officer. Professor Ono has directed multiple research and development programs, many of which have been in partnership with biotechnology and pharmaceutical companies. Dr. Ono also holds a university appointment as Vice Provost for Academic Initiatives and Deputy to the Provost at Emory University. He most recently served as the Cumberlege Professor of Biomedical Science and later as the GlaxoSmithKline Professor of Ocular Immunology at the University College London from 2001 to 2006 where he was the Chair of Immunology, UCL Institute of Ophthalmology, Moorfields Eye Hospital (the world s first and largest eye research and treatment centre). Past appointments include Assistant Professor of Medicine, Pathology & Biology at Johns Hopkins University, and Associate Professor & Director of the Immunity, Inflammation and Transplantation Group at the Schepens Eye Research Institute, Harvard Medical School. Professor Ono received degrees from the University of Chicago (BA) and McGill University (PhD) and was a Helen Hay Whitney Fellow at Harvard University. He serves on many editorial boards, is involved with numerous professional societies and associations, and has more than eighty publications to his credit. Among his many honours, he was elected International Fellow of the American Academy of Asthma, Allergy and Immunology, Fellow of the Royal Society of Medicine, and received the Pharmacia International Award in Allergy Research.

26 24 September 30, Board of Directors William Jarosz, JD Chairman Andrew Rae CEO, Director John G. Clement Chief Business Officer, Director Richard Barker, DPhil, BA Director Noel Hall, BSc Director William Jarosz is currently a Partner at Cartesian Capital Group, LLC, a global investment management firm. From , Mr. Jarosz served as Managing Director and General Counsel of AIG Capital Partners, a subsidiary of American International Group, Inc., and as Managing Director of the AIG Brunswick Millennium Fund. While at AIG Capital Partners, Mr. Jarosz oversaw global private equity transactions for the firm s various private equity funds. Prior to joining AIG in 1997, Mr.Jarosz practiced law at Debevoise & Plimpton, specializing in international private equity investment and Russian corporate and securities laws. Mr. Jarosz received his MA in Law and Diplomacy from the Fletcher School at Tufts University and a JD from Harvard Law School. See above. See above. Dr. Barker is currently Director General of the Association of the British Pharmaceutical Industry (ABPI). Prior to joining APBI, Dr. Barker was the Founder and President of New Medicine Partners, CEO of iknowmed, Chief Executive of Chiron Diagnostics, General Manager of IBM s Worldwide Healthcare Solutions division, and leader of McKinsey s European healthcare practice. He is currently a board member of the European Federation of Pharmaceutical Manufacturers and Associations (EFPIA) and council member of the international equivalent body (IFPMA). He also serves on the board of Adlyfe, a company specializing in protein misfolding diseases. Dr. Barker s academic background includes research in biological magnetic resonance at Oxford, Leeds and Munich. He holds a D.Phil in biophysics and a B.A. in chemistry, both from Oxford University. Former Co founder, President & Director of Aspreva Pharmaceuticals, Noel Hall is currently a consultant to the life sciences industry and has approximately 25 years experience in the biotechnology industry, including as president of Aspreva Pharmaceuticals Corporation, which was acquired by the Galenica Group in Prior to co founding Aspreva, Mr. Hall co founded the life sciences practice of consulting firm Hill and Knowlton in 1995 and served as head of global strategic planning for the firm s worldwide pharmaceutical consulting practice. From 1992 to 1995, Mr. Hall was the director of corporate affairs for the UK and Northern Europe for The Wellcome Foundation Ltd., which is now part of GlaxoSmithKline PLC. From 1985 to 1990, Mr. Hall worked in market development with Abbott Laboratories Ltd. and from 1983 to 1985 Mr. Hall was a regional sales manager with Leo Laboratories Ltd. Mr. Hall holds a BSc in Medical Laboratory Science from London University. Strategic Advisory Boards George Lazezkay, PharmaD, JD Corporate Advisor Julia Levy, PhD Corporate Advisor Richard Glickman Corporate Advisor Dr. Lasezkay is the president of Turning Point Consultants, a consultancy practice that advises life sciences companies on strategy and business development. He is a former VP of Corporate Development at Allergan, a global pharmaceutical and medical aesthetics company. He also has extensive experience in hospital pharmacy practice, clinical pharmacokinetics consultation, clinical drug research and pharmacy education. Dr. Lasezkay earned BS Pharmacy and PharmaD degrees from the State University of New York and a JD degree from the University of Southern California. He has served as a director of several emerging pharmaceutical companies and including Urigen Pharmaceuticals, Inc., Collagenex Pharmaceuticals, and Novagali Pharma, SA. Dr. Julia Levy, co founder, former President & CEO and former Executive Chairman of the Scientific Advisory Board of QLT Inc. Under Dr. Levy s stewardship, QLT became a leading biotech company with the launch of Visudyne in 2000 to treat age related macular degeneration. A former microbiology professor at the University of British Columbia and a Fellow of the Royal Society of Canada, Dr. Levy was selected Female Entrepreneur of the Year for International Business in 1998 by Canadian Business magazine, and appointed to the Order of Canada in She received a BA (Hon.) from the University of British Columbia and PhD in experimental pathology from the University of London. Mr. Richard Glickman was a co founder, CEO and Chairman of Aspreva Pharmaceuticals Corporation and has a successful track record raising capital for biopharmaceutical companies. Mr. Glickman was the founder and director of Ontario Molecular Diagnostics, a former director of the Canadian Genetic Diseases Network and a cofounder of Probtec Corp. where he established and introduced Canada s first licensed DNA based forensic and paternity testing service. Mr. Glickman has received both Canada s and British Columbia s Top 40 under 40 Awards for entrepreneurs and was the Ernst & Young 2004 Entrepreneur of the Year recipient for Life Sciences.

27 ico Therapeutics Inc. (ICO-TSXV) September 30, Alan Bird, MD Clinical Advisor ico 007 David S. Boyer, MD Clinical Advisor ico 007 Donald Buell, MD Scientific Advisor ico 009 Philip Rosenfeld, MD, PhD Clinical Advisor ico 007 Jason Slakter, MD Clinical Advisor ico 007 Andrea Leonardi, MD Clinical Advisor ico 008 Dr. Bird s has made significant and well recognized contributions to the treatment of retinal vascular disease and genetic & degenerative retinal disorders were at the forefront of the field, spending the majority of his career at the Institute of Ophthalmology at University College London and Moorfield s Eye Hospital. Dr. Bird s expertise has been widely sought after and he has made strategic contributions to the US National Eye Institute, the UK Medical Research Council, the Wellcome Trust, INSERM and Deutsche Forchungsgemeinschaft. He has also played a key role in the design and evaluation of numerous clinical trials involving ground breaking treatments in retinal disease today. Dr. Bird was the Chairman of the Drug Safety Monitoring Committee for the development of Macugen by Pfizer/Eyetech. Dr. Bird is a Fellow of the UK National Academy of Medical Science and has received a number of prestigious awards in vision science and ophthalmology, including the Alcon Research Award, The Helen Keller Prize, the Kayser Award and the Jules Francois Medal. In 2006, he was honoured with the lifetime achievement award by the Macula Society. Dr. Boyer is a practising ophthalmologist who specializes in the treatment of diseases of the retina and vitreous. He is a Senior Partner at the Retina Vitreous Associates Medical Group and a Clinical Associate Professor at the University of Southern California, and has an extensive research background involving trials for age related macular degeneration, diabetic retinopathy, and cytomegalovirus retinitis. Dr. Boyer has been on the advisory boards for Alcon, Novartis, Eyetech/Pfizer, Genentech, Neurotech and the Macular Degeneration Partnership and is a reviewer for several highly regarded ophthalmology and diabetes medical publications. Throughout his career, Dr. Boyer has been honoured by prestigious organizations including the American Academy of Ophthalmology and Retinitis Pigmentosa International. Every year since 2000, he has been selected by his peers to be listed in Best Doctors in America. Dr. Boyer earned his MD at Chicago Medical School, completed his internship and residency at the USC/Los Angeles County Medical Center, and completed his fellowship in retinal surgery at the Wills Eye Hospital in Philadelphia. Dr. Buell was most recently the Senior Medical Director at Astellas Pharma Inc, and has held positions in the Antiinfective Drugs Group at Pfizer, the Division of Oncology and Radiopharmaceutical Drug Products in the Center for Drugs and Biologics at the US Food and Drug Administration (FDA). His wealth of experience in drug development includes senior involvement in the filing of 10 primary or supplemental New Drug Applications (NDA s), of which eight were approved, and has worked on some of the leading anti fungal agents such as Ambisome and Diflucan. Dr. Buell received his MD from Stanford University and has over 80 publications. Dr. Rosenfeld is Professor of Ophthalmology at the world renowned Bascom Palmer Eye Institute at the University of Miami, Miller School of Medicine. Dr. Rosenfeld s chief research interests are in the diagnosis, treatment and genetics of macular diseases, and he has spent the past decade seeking effective therapies for AMD, in which he is currently Principal Investigator of nine clinical trials. Dr. Rosenfeld was the first to perform an intravitreal injection of Avastin for the treatment of wet AMD and his findings have since been put into practice by physicians around the world. Dr. Rosenfeld received his MD and PhD from the Johns Hopkins University School of Medicine. He completed a residency at Harvard s Massachusetts Eye and Ear Infirmary and fellowships at both the Department of Ophthalmology at Harvard University and the Bascom Palmer Eye Institute at the University of Miami, Miller School of Medicine. Dr. Slakter s expertise in macular disease diagnostics is extensive. He has played a leading role and is widely published in the development of digital indocyanine green angiography (ICG) for the evaluation and management of macular degeneration and chorioretinal inflammatory disease. He created and is the director of the Digital Angiography Reading Center, which serves as a key resource for numerous industry sponsored studies. He has served as a Principal Investigator in the clinical trials for photodynamic therapy for the treatment of wet AMD and is currently conducting clinical studies for the treatment of central serous chorioretinopathy. Dr. Slakter is the Editor in Chief of Retinal Physician, is on the editorial board of Retina and serves as a scientific reviewer for major scientific ophthalmic journals. He is the recipient of a number of awards including the American Academy of Ophthalmology Honor Award, the Macula Society s Richard and Hinda Rosenthal Award, and the Helen Keller Manhattan League Award. Dr. Leonardi has cultivated considerable research and experience in allergic conjunctivitis, with particular focus and interest in vernal keratoconjunctivitis. In 2002, Dr. Leonardi became Assistant Professor of Ophthalmology in the Department of Neuroscience, University of Padua. He has over 80 publications in peer reviewed scientific journals and is an internationally sought opinion leader in ocular allergy and immunology. Dr. Leonardi received his MD from the University of Padua, where he also completed his residency in ophthalmology, specializing in anterior segment, allergy and immunology of the eye. Dr. Leonardi completed a research fellowship at Harvard University, at the Eye Research Institute, under the direction of Prof. Mathea Allansmith.

28 26 September 30, LOM BioQuest Life Sciences Corporation Rating System LOM BioQuest s share ratings are defined as follows: BUY The stock is attractively valued and expected to appreciate significantly from the current price over the next 12 months. HOLD The stock is fairly valued and is expected to trade within a narrow range of the current price over the next 12 months. SELL The stock is overpriced (relative to the company s fundamentals) or (the market ), and we expect it to decline from the current price over the next 12 months. UNDER REVIEW Pending additional review and/or information. No rating presently assigned. A rating may be preceded by Speculative which denotes that the investment has a higher degree of risk associated with it. To obtain access to LOM BioQuest s research or to request a copy of our selected research by mail or e mail, please contact us at research@lombioquest.com.

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