© Flatiron Health 2019 1

Business of Oncology:Q1 2019

Tesh KhullarSVP, Provider Solutions

Flatiron Health

© Flatiron Health 2019

Legal Disclaimer

All statements made during this presentation are my own and do not reflect any opinions, views or statements of Flatiron Health, Inc.

© Flatiron Health 2018 3

Goals

● Regulatory update (340B, Site Neutrality)

● Market consolidation

● Biosimilars update

© Flatiron Health 2019 4

Tesh KhullarSVP, Provider SolutionsFlatiron Health

● 20+ years in the business side of community oncology○ Oncology Therapeutics Network

■ NOA GPO○ McKesson Specialty Health

■ Onmark GPO ○ McKesson / USON

● Flatiron Health

© Flatiron Health 2018

Regulatory Update

5

© Flatiron Health 2018 6

340B

Site Neutrality

Part B Experiments

PBMs

© Flatiron Health 2018 7

© Flatiron Health 2018

Market Consolidation

8

© Flatiron Health 2018 9

© Flatiron Health 2018 10

© Flatiron Health 2018 11

© Flatiron Health 2017 12

CVS to Buy Aetna for $69B

Updated thoughts: • Trump administration has shown it's not receptive to

vertical integration deals • This created mega PBM with horizontal (patient) &

vertical (drugs) leverage • CVS’s largest customer is Aetna • Estimating $750M in initial “synergies” (vast majority will

come from drug negotiation power)• CVS wants to defend itself from vertically integrated

potential competitors (like Amazon)

CVS / Aetna Deal

(approved 11/2018)

© Flatiron Health 2017 13

Cigna to Buy ExpressScripts for $67B

Initial thoughts: • Fell into similar review as CVS/Aetna• Created largest PBM with horizontal (patient) & vertical

(drugs) leverage • ExpressScripts is one of ABC’s largest customers• Cigna procures orals from Cardinal’s via OptumHealth

relationship (formerly Catamaran) • ExpressScripts has a specialty distribution arm

(Curascript) -> further mergers to be expected

Cigna / ExpressScripts Deal

(approved 12/2018)

© Flatiron Health 2017 14

Walmart in talks to acquire Humana

Initial thoughts: • Will fall into similar review as CVS/Aetna & Cigna/Express

if agreed upon• Humana already teamed up with Walmart for low priced,

in network, generic orals • Walmart is McKesson’s largest customer• Humana procures orals from ABC • With Humana, Walmart has a horizontal patient network

& vertical drug distribution with the convenience of retail stores to undercut price to employers

Walmart / Humana Speculation

© Flatiron Health 2018 15

© Flatiron Health 2019 16

© Flatiron Health 2018

Biosimilars

17

© Flatiron Health 2018 18

© Flatiron Health 2017 19

Biosimilars: Why is there so much buzz now?

● We are entering time where biologics will go biosimilar in US (not just supportive care)

● In 2019, Avastin, Rituxan, Herceptin will have biosim competition ○ Herceptin biosim approved Jan 2019 (Samsung) &

Mylan and Amgen expected to follow● Announced that biosims will have their own j-code

Biosimilar use and regulation exists in Europe and is being defined in the U.S.

● Naming & interchangeability to be determined● Cost & Payer formulary will determine use

Biosimilars

© Flatiron Health 2018 20

LOE and Biosimilar Entry as of January

2018

Source: http://www.trinitypartners.com/files/5815/1638/4057/The_State_of_US_Biosimilars_Market_Access.pdf

© Flatiron Health 2017 21

Remicade:

● Went biosimilar in the EU in 2015, US in 2016 ● In Europe, market share dropped 50% in the last two years, when measured

by units sold (primarily to Celltrion) 1

● In US, Remicade has barely lost any market share due to J&J volume based contracting (main competitor is Pfizer - anticompetitive lawsuit pending) 1 2

Enbrel:

● Went biosimilar in the EU in April 2017, US delayed (min later 2018)● In Europe, markets hare dropped 25% in the last year, when measured by

units sold (primarily to Samsung) 1

Rituxan:

● Went biosimilar in the EU in April 2017, US anticipated 2019● In Europe, Rituxan market share dropped 13% in Q3 2017 (to Celltrion &

Novartis / Sandoz) 1●

1 https://www.fiercepharma.com/corporate/j-j-s-success-stunting-remicade-biosimilar-competition-us-cushions-blow-europe-report

2 https://www.fiercepharma.com/legal/tired-its-biosim-being-stiff-armed-pfizer-files-suit-over-j-j-s-remicade-contracting

Existing Biosimilars:

A Tale of 2 Markets

© Flatiron Health 2017 22

1. Biosimilars are not new - just new in the U.S.

● Adoption has become standard of care in Europe

2. Still unclear how they will be priced (Brand vs. Generic)

● Biosim manufacturers will include historically branded companies ● Amgen received FDA approval for biosimilar Avastin in Sept 2017 &

Mylan for Herceptin in December 2017, Samsung for Herceptin in Jan 2019

3. US Market opportunity is huge - adoption is key

● Worldwide annual Roche Sales of Avastin, Herceptin & Rituxan exceeded $21B, more than half coming from the US 1

● Fear that Insurers / PBMs may stick with branded biologics due to rebates

Key Takeaways

23

Q&A

Thank you

24