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HEALTH CARE EQUITY CAPITAL MARKETS REVIEW2008 Q3 Review

Piper Jaffray Equity Capital Markets

October 2008

Minneapolis

New York

Boston

Chicago

San Francisco

Palo Alto

Charlotte

London

Shanghai

Hong Kong

Since 1895. Member SIPC and FINRA

1

BUILDING THE LEADING MIDDLE MARKET INVESTMENT BANK

*Securities and products are offered through Piper Jaffray Ltd. which is authorized and regulated by the Financial Services Authority

• Client-focused, independent, publicly held securities firm founded in 1895

• Leading growth-oriented, middle market investment bank

• Full-service capabilities and unparalleled transaction execution

• Growing presence in global growth markets

• Built on a 100+ year track record of quality service and customer success

• Client-focused, independent, publicly held securities firm founded in 1895

• Leading growth-oriented, middle market investment bank

• Full-service capabilities and unparalleled transaction execution

• Growing presence in global growth markets

• Built on a 100+ year track record of quality service and customer success

Minneapolis— Headquarters(Banking, Research, Sales &

Trading)

Menlo Park(Banking &

Research)

Chicago(Banking)

New York(Banking, Research & Trading)

LondonPiper Jaffray Ltd.**(Banking, Sales & Trading)San Francisco

(Banking, Sales & Trading) Shanghai

China Growth Advisory Ltd.*(Banking)

Boston(Sale &Trading)

Public Finance & Institutional ClientsPublic Finance & Institutional Clients

Corporate & Institutional ClientsCorporate & Institutional Clients

• Public Finance

• Municipal Sales

• Municipal Underwriting & Trading

• Derivative Products

• Loan Syndications

• Public Finance

• Municipal Sales

• Municipal Underwriting & Trading

• Derivative Products

• Loan Syndications

• Investment Banking

• Institutional Equity Sales & Trading

• Equity Capital Markets

• Convertible Capital Markets

• PIPEs & RDs

• Debt Capital Markets

• Equity Research

• Asset Management

• Bridge & Structured Financing

• Investment Banking

• Institutional Equity Sales & Trading

• Equity Capital Markets

• Convertible Capital Markets

• PIPEs & RDs

• Debt Capital Markets

• Equity Research

• Asset Management

• Bridge & Structured Financing

•

• ••

•

•••

•

United KingdomLondon*

ChinaHong KongShanghai

United StatesMinneapolis, MN (Headquarters)Boston, MACharlotte, NCNew York, NYPalo Alto, CASan Francisco, CA

Services for:

•

2

THE PIPER JAFFRAY TEAM

Chad AbrahamManaging Director

Head of Equity Capital Markets(612) 303-6274

Equity Capital Markets

Neil RileyPrincipal

Head of Health Care Capital Markets(612) 303-1601

Jonathan JewettAssociate

(612) 303-6365

Michael BassettAnalyst

(612) 303-6865

Chad HuberAssociate

(212) 284-9573

Dave StadinskiManaging Director

Head of PIPEs / RDs(212) 284-9572

Chris ChristinaManaging Director

(612) 303-8521

Kevin LanderAnalyst

(612) 303-8432

Greg KlancherAssociate

(612) 303-8309

Forrest KoenigVice President(415) 984-5142

Martin AlvarezManaging Director

Head of Convertibles(415) 984-5131

Iain FranksPrincipal

(415) 984-5129

PIPEs / RDs

Daniel GrosslightAnalyst

(415) 984-5116

Convertibles

Mark SpiegelPrincipal

(212) 284-9502

Tom WrightManaging Director

Head of CVS(612) 303-6039

Jay HersheyManaging Director

(612) 303-5724

Corporate & Venture Services

3

TABLE OF CONTENTS

Section I Broader Markets: A Historical Perspective

Section II Key Themes in Q3 2008

Section III IPO Market Update

Section IV Follow-on Market Update

Section V Convertible Market Update

Section VI PIPE and Registered Direct Market Update

Section VII Institutional Health Care Fund Movement

SECTION IBroader Markets: A Historical Perspective

5

8000

9000

10000

11000

12000

13000

14000

15000

Sep

'07

Oct

'07

Nov

'07

Dec

'07

Jan

'08

Feb

'08

Mar

'08

Apr

'08

May

'08

Jun

'08

Jul '

08

Aug

'08

Sep

'08

Oct

'08

The current period of

market weakness is

already similar in

depth to previous

periods; however, it

has occurred faster

than any previous

downturns since the

great depression

Source: Yahoo! FinanceData through 10/15/08All market declines calculated using intraday highs and lows

Dow Jones Industrial Average (2007 - 2008)

BROADER MARKETS: A HISTORICAL PERSPECTIVE


0

80

160

240

320

400

Aug

'29

Nov

'29

Feb

'30

May

'30

Aug

'30

Nov

'30

Feb

'31

May

'31

Aug

'31

Nov

'31

Feb

'32

May

'32

Aug

'32


500

600

700

800

900

1000

1100

Nov

'72

Jan

'73

Mar

'73

May

'73

Jul '

73

Sep

'73

Nov

'73

Jan

'74

Mar

'74

May

'74

Jul '

74

Sep

'74

Nov

'74

Jan

'75


7000

8000

9000

10000

11000

12000

Nov

'99

Feb

'00

May

'00

Aug

'00

Nov

'00

Feb

'01

May

'01

Aug

'01

Nov

'01

Feb

'02

May

'02

Aug

'02

Nov

'02


Dow Jones Industrial Average (1973 - 1974)Dow Jones Industrial Average (1929 - 1932)

Market Decline: 23 Months -47%Market Decline: 34 Months -89%

Market Decline: 33 Months -40% Market Decline through Oct. 10 Lows: 12 Months -46%

Crash of 1929: 71 Days -49%

Sep. 15 – Oct. 10: 18 Days -32%

6


7000

8000

9000

10000

11000

12000

13000

14000

15000

2007

2008

2009

2010

2011

2012

2013

Dow

Jone

s In

dust

rial

Ave

rage

2%

3%

4%

5%

6%

7%

8%

9%

10%

Une

mpl

oym

ent R

ate

Unemployment Rate Dow Jones Industrial Average

0

80

160

240

320

400

480

1928

1930

1932

1934

1936

1938

1940

1942

1944

1946

1948

1950

1952

1954

Dow

Jone

s In

dust

rial

Ave

rage

0%

5%

10%

15%

20%

25%

30%

Une

mpl

oym

ent R

ate


500

600

700

800

900

1000

1100

1200

1300

1400

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

Dow

Jone

s In

dust

rial

Ave

rage

3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

Une

mpl

oym

ent R

ate


7000

8000

9000

10000

11000

12000

13000

14000

15000

2000

2001

2002

2003

2004

2005

2006

2007

Dow

Jone

s In

dust

rial

Ave

rage

2%

3%

4%

5%

6%

7%

8%

9%

10%

Une

mpl

oym

ent R

ate


Markets have

recovered more

quickly following

recent periods of

market weakness

Unemployment has

reached double digits

in two of three

previous downturns

and appears to pave

the road to recovery

Source: Yahoo! Finance and the U.S. Bureau of Labor StatisticsData through 10/15/08All market declines calculated using intraday highs and lows

Recovery from Current Bear MarketRecovery from 1999 - 2002 Bear Market

Recovery from 1973 - 1974 Bear MarketRecovery from 1929 - 1932 Bear Market

Time to Full Recovery: 25 yearsTime to Full Recovery: 10 years

Time to Full Recovery: 6.5 years

?

7

70

191

77

442

172 179

378

271

204

293

433

313

379

563

419

257

484

429

8877 76

233

196 199214

29

97

105 104

0

100

200

300

400

500

600

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

# o

f IP

Os

0

100

200

300

400

500

600

700

800

900

Ru

sse

ll 2

00

0

# of IPOs Russell 2000

IPO Pricings since 1980

Source: Baseline, Dealogic, Yale School of ManagementData excludes BCC/SPACs, closed-end funds and deals <$20mm

The IPO market is on

pace to finish the

year with fewer than

40 offerings, which

would make it the

slowest year in recent

history


8

0

10

20

30

40

50

60

70

80

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

The VIX, a measure

of expectations for

volatility over the

next 30 days and a

proxy for investor

fear, has spiked to

unprecedented levels

since mid-September

KEY THEMES IN Q3 2008

CBOE Market Volatility Index (VIX) since 1990

Source: Yahoo! Finance

First Gulf War

Iraq War

Arthur Andersen/ WorldCom

Accounting Scandals9/11

Terrorist Attack

Asian Financial

Crisis

Russian Financial

Crisis

Current Financial Crisis

SECTION IIKey Themes in Q3 2008

10

Annual Percentage Rate Real US GDP Growth

1.2%

-0.7%

-1.5%

-0.2%

2.8%

0.9%

-0.2%

4.7%4.7%

0.0%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08F Q4 '08F Q1 '09F Q2 '09F

-10.0% -9.0%-7.0%

10.0%

21.0%

-1.0%

0.0%3.0%

0.0%

-20%

-10%

0%

10%

20%

30%

Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08E Q4 '08E CY '09E


0%

1%

2%

3%

4%

5%

6%

7%

12/31/06 3/31/07 6/30/07 9/30/07 12/31/07 3/31/08 6/30/08 9/30/08

Fed-Funds Auction Rate LIBOR

65%

44%

-18%

-28% -28%

17%

-44%

-1%

-50%

-25%

0%

25%

50%

75%

Crude Oil Commodity Index

Home Price Index*

ConsumerConfidence

% Chg since 1/1/2007 % Chg in Q3

Uncertainty persists

as to the length and

depth of the

economic slowdown

– GDP growth has

stalled and crude

oil/commodities have

fallen sharply from

historical highs

Investors seeking

security drove the

Fed-Funds auction

rate to near zero in

Q3 while LIBOR

moved higher (the

normal spread is

<0.5%)

S&P 600 Quarterly Earnings GrowthFed Funds Auction Rate vs. LIBOR

Source: Bureau of Economic Analysis, Baseline, BloombergU.S. GDP estimates per the Bureau of Economic AnalysisS&P 600 estimates per First Call Consensus*Home Price Index reflects Case-Shiller Index through the end of July

US GDP Growth by Quarter Macro-Economic Drivers

Current Fed-Funds Target Rate = 2.0%

9/16: Fed-Funds auction rate hits 0.06% following the bankruptcy of Lehman Bros.

11

-10.6%

1.2%

3.6%

8.1%

8.5%

8.6%

10.7%

10.9%

14.0%

33.4%

-30% -20% -10% 0% 10% 20% 30% 40%

Financials

Cons. Discret.

Telecom Svcs.

Industrials

Utilities

Health Care

Cons. Staples

Technology

Materials

Energy

Over the last four

quarters, the Health

Care sector has seen

consistent revenue

growth despite a

softening economy

Russell 2000 Revenue Growth by Sector – Q2 ‘08 Russell 2000 Revenue Growth by Sector – Q1 ‘08

Source: Bloomberg

-0.5%

2.3%

7.7%

9.7%

10.6%

11.1%

13.4%

15.1%

42.9%

-6.1%

-20% -10% 0% 10% 20% 30% 40% 50%

Financials

Cons. Discret.

Telecom Svcs.

Cons. Staples

Utilities

Health Care

Technology

Industrials

Materials

Energy

3.1%

4.2%

6.8%

8.5%

8.8%

10.1%

11.2%

13.0%

25.0%

-0.2%

-5% 0% 5% 10% 15% 20% 25% 30%

Financials

Utilities

Cons. Discret.

Materials

Industrials

Energy

Health Care

Cons. Staples

Technology

Telecom Svcs.

Russell 2000 Revenue Growth by Sector – Q4 ‘07 Russell 2000 Revenue Growth by Sector – Q3 ‘07

1.1%

9.1%

9.3%

10.4%

10.7%

11.8%

13.1%

26.9%

32.1%

-17.6%

-30% -20% -10% 0% 10% 20% 30% 40%

Financials

Cons. Discret.

Cons. Staples

Industrials

Utilities

Health Care

Materials

Technology

Telecom Svcs.

Energy


12

$26.7

$47.9

$32.6

-$40.2

$3.1

-$2.4

$83.0

$29.6

$15.2

$30.0

$75.6

($60)

($40)

($20)

$0

$20

$40

$60

$80

$100

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1'07

Q2'07

Q3'07

Q4'07

Q1'08

Q2'08

Q3'08

80

90

100

110

120

130

9/30/06 12/30/06 3/30/07 6/30/07 9/30/07 12/30/07 3/30/08 6/30/08 9/30/08

Pri

ce In

dexe

d to

100

Dow Jones S&P 500 NASDAQ Russell 2000

Major Market Index Performance Quarterly Mutual Fund Flows ($ Billions)

60

70

80

90

100

110

120

130

140

150

9/30/06 12/30/06 3/30/07 6/30/07 9/30/07 12/30/07 3/30/08 6/30/08 9/30/08

Pri

ce In

dexe

d to

100

Health Care Drugs & Pharma Biotech Medical Devices HC Services

-$516

$156

$449

-$901

$1,710

-$12-$162

-$696

$342

-$926

$683

($1,000)

($500)

$0

$500

$1,000

$1,500

$2,000

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1'07

Q2'07

Q3'07

Q4 '07

Q1'08

Q2'08

Q3'08

Russell 2000 Health Care Index Performance Health Care Quarterly Mutual Fund Flows ($MM)

CY2006

CY2007

Q32008

YTD2008

Dow Jones 16.3% 6.4% (4.4%) (18.2%)S&P 500 13.6% 3.5% (8.9%) (20.6%)NASDAQ 9.5% 9.8% (9.2%) (21.5%)Russell 2000 17.0% (2.7%) (1.5%) (11.3%)

The major market

indices have all

posted negative

double-digit returns

YTD

Health Care funds

saw their third

greatest inflows on

record, only outpaced

by Q1 2000 and Q2

2005; likewise, the

Health Care indices

dramatically

outperformed the

broader markets

Source: Thomson Baseline, Bloomberg, AMG Data


CY2006

CY2007

Q32008

YTD2008

Health Care 9.6% 13.3% 8.2% (9.5%)Drugs & Pharma 8.4% 20.1% 13.7% (5.4%)Biotech 2.0% (0.9%) 8.2% (10.3%)Medical Devices 15.4% 22.7% 8.0% (6.7%)HC Services 7.7% 6.8% 2.0% (17.7%)

13

76

28

82

65

7681

6051

24

67

45 44

67

3948

3440

282730

37 5055 57

54

65

28

0

20

40

60

80

100

120

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Num

ber

of F

ollo

w-o

n O

fferi

ngs

Full Year Activity YTD

240

402349

231

433

373

82 75 76

233

2929

210198196

139119147153

275355

329303

210221

286

130

0

100

200

300

400

500

600

700

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Num

ber

of IP

Os


391

491

555

406 399426

391 371

459

542

464 477436

215215

272

367 368 361296

345

259304 294

412

316 339 323

0

100

200

300

400

500

600

700

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Num

ber

of F

ollo

w-o

n O

fferi

ngs


35

79

48

91

168

49

32 3644

3315

28 26

16

69

34

1519

75

13 131

38

24 2430

0

20

40

60

80

100

120

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Num

ber

of IP

Os


2008 offering volume

is on pace for its

lowest levels in more

than 30 years

Similar to the broader

markets, Health Care

IPO issuance is at

historically low levels

while follow-on

issuance is on pace

for the slowest year

since 1998

Annual Median = 231

Annual Median = 35

Annual IPO Offering Activity Annual Follow-on Offering Activity

Annual Health Care IPO Offering Activity Annual Health Care Follow-on Offering Activity

Annual Median = 436

Annual Median = 65

Source: Dealogic and Piper Jaffray ECMExcludes BCC/SPACs, closed-end funds, and transaction less than $20mm


14

$9,685

$16,374$11,844

$14,727$20,805

$4,952

$26,021

$37,758

$15,816

$28,466$13,504

$50,886 $57,039

$935

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08

IPO Proceeds Follow-on Proceeds

2008 New Issue

Market Highlights

Equity New Issue Volume by Product ($ in Millions)

• The mortgage meltdown, credit crunch, inflationary fears, and high energy costs created extremely challenging pricing conditions in Q3. IPO activity all but dried up in the quarter while follow-on activity came primarily on behalf of distressed financials, real estate, and energy companies.

• The Visa IPO accounts for $19.7 billion of the $26.7 billion in total IPO capital, or 74% of IPO proceeds thus far in 2008. Capital raised from follow-on offerings on behalf of financials, real estate, and energy companies has accounted for 87% of the total follow-on proceeds thus far in 2008.

• Uncertainty driven by recessionary fears has resulted in major swings in volatility in 2008; the CBOE Volatility Index has risen to its highest levels ever and contributed to a slowdown in growth sector equity offering activity.

• Energy and commodity prices, stability in the financial/mortgage markets, the upcoming presidential election, and the extent of an imminent recession remain significant themes for the equity market in Q4.

2008 YTD 2007 YTD % Change

No

CapitalRaised($MM) No

CapitalRaised($MM) No

CapitalRaised($MM)

IPO 29 $26,692 139 $37,903 -79.1% -29.6%Follow-on 215 $121,429 323 $79,595 -33.4% 52.6%

Total 244 $148,121 462 $117,498 -47.2% 26.1%


Source: Dealogic and Piper Jaffray ECMExcludes BCC/SPACs, closed-end funds, and transaction less than $20mm

SECTION IIIIPO Market Update

16

IPO MARKET UPDATE

Very difficult

conditions have

prevailed in the IPO

markets in 2008

Historically Slow Offering Activity

• 6 IPOs priced in Q3 ‘08 raising $1bn; 29 IPOs have priced in ’08 raising $27bn

• 29 IPOs priced in the first nine months, the fewest since 2003, when 27 IPOs were priced – 76 IPOs priced in CY2003 as strong economic performance drove a bull rally in Q4

• In the 2004-2007 time period, there were 52 IPOs per quarter on average with no fewer than 32

Investor Appetite for Growth Stories Limited by Risk Tolerance

• Investors have shown a lack of appetite for growth stories as volatility and uncertainty have led to risk aversion; 28 of the 29 companies to go public in 2008 have been profitable or are expected to be profitable before year end

• Only 1 non-profitable, long-term growth story has successfully gone public thus far in 2008: MAKO Surgical, which priced at a -33% discount to the mid-point of its filing range and has traded down an additional -28% since going public.

• Of note, no pre-revenue companies have successfully completed an IPO in 2008

• 72 IPOs have been withdrawn thus far in 2008 – the highest total since 145 IPOs were withdrawn in the first nine months of 2001

Historical Counter-Cyclicality of Health Care Sector Fails to Boost Activity

• Besides MAKO Surgical, the other two Health Care IPOs were for profitable companies and have traded strongly in the aftermarket: IPC The Hospitalist (+61%) and Cardionet (+39%); only 8 of the 29 IPOs to price in 2008 were trading above offer price at the end of the quarter

• 24 Health Care IPOs were withdrawn during the first 3 quarters of 2008; 3 of the 24 were acquired and the remaining 21 were withdrawn in order to pursue alternative strategies/financing and cited market conditions as the primary reason for withdrawal

Source: Dealogic and Piper Jaffray ECM as of 9/30/08Excludes BCC/SPACs, closed-end funds, and transaction less than $20mm

IPO Market Update – Key Takeaways

17

Clean Tech6%

Consumer4%Industrials

3%

Financial14%

REIT2%

Technology34%

Health Care21%

Energy/Mining10%Media

2%

Transports4%

Industrials17%

Media7%

Clean Tech10%

Energy/Mining18%

Financial17%

Health Care10%

Transports7%

Technology14%

Market Cap @ Time of Offering

-14%

-8%

-2%

11%

-9%

(20%)

(10%)

0%

10%

20%

< $500MM $500MM-$1B

$1B-$5B >$5B Overall

Market Cap @ Time of Offering

-15% -13%

40%

-25%

-11%

(40%)

(20%)

0%

20%

40%

60%

< $500MM $500MM-$1B

$1B-$5B >$5B Overall

23

5

5

5

4

3

2

1

29 16

70

6

12

22

# of IPOs by Sector 2008YTD

2008 IPO Price Performance: File-to-Offer 2008 IPO Price Performance: Return to Current

# of IPOs by Sector CY2007

6

6

16

6 6

1

29

8

44

5

5

9

29

IPO issuance has

decreased across all

sectors thus far in

2008 vs. 2007

For issuers who have

come to market,

larger cap IPOs

(>$1B) have received

more favorable

pricing than the

overall IPO market

Source: Dealogic and Piper Jaffray ECM as of 9/30/08Excludes BCC/SPACs, closed-end funds, and transaction less than $20mm

IPO MARKET UPDATE

18

IPO MARKET UPDATE

15%

0%

9%

-3%

0%

-11%-15%

-10%

-5%

0%

5%

10%

15%

20%

Profitable Not Profitable Russell 2000

5

3

5

6

3 3

2

01

1

0

1

2

3

4

5

6

7

Jan Feb Mar Apr May Jun Jul Aug Sep

Profitable Not Profitable

40%

60% 97%

3%

Profitable Not Profitable

2007 2008 2007 2008

2008 IPO Breakdown by Profitability

2007 vs. 2008 IPO Breakdown by Profitability 2007 vs. 2008 Offer/30-Day Performance

Recent IPOs by Profitability

Source: Dealogic and Piper Jaffray ECM as of 9/30/08Profitable defined as companies with positive operating income in year of IPO.Excludes BCC/SPACs, closed-end funds, and transaction less than $20mm

Pr ic ing Date Issuer Sector

Deal Val ($MM )

Mkt Val ($MM)

Offer Pr ice Rang e

% C hgAmt FTO

% C hg / FTO

Sel l i ng Shrs %

% C hg / 1- Day

% Chg /C ur rent Revs Di vidend

Operati ngProfi ts

8/7/08 Rackspace Hosting Inc Technology $188 $1,443 $12.50 In Range -11% -11% 15% (20%) (22%) √ √

8/4/08 China Mass Media Media $49 $162 $6.80 Below -45% -45% (4%) (32%) √ √

7/29/08 China Distance Education Technology $61 $248 $7.00 Below -30% -30% (6%) (43%) √ √

7/23/08 GT Solar International Clean Tech $500 $2,349 $16.50 In Range 0% 0% 100% (12%) (34%) √ √

7/1/08 Energy Recovery Inc Clean Tech $137 $407 $8.50 In Range 6% 6% 42% 16% 13% √ √

6/17/08 RHI Entertainment Inc Media $189 $328 $14.00 Below -11% -18% (4%) 6% √ √

6/17/08 Britannia Bulk Holdings Transports $125 $405 $15.00 Below -17% -17% (8%) (64%) √ √ √

6/11/08 Fifth Street Finance Corp Financial $141 $317 $14.12 In Range -6% -6% (14%) (29%) √ √ √

5/28/08 Safe Bulkers Inc Transports $190 $1,036 $19.00 Below -10% -10% 100% (1%) (43%) √ √ √

5/14/08 American Capital Agency Financial $200 $300 $20.00 In Range -20% 0% (3%) (13%) √ √ √

5/14/08 Verso Paper Corp Industrials $168 $625 $12.00 Below -47% -29% (17%) (78%) √ √ √

5/8/08 Real Goods Solar Inc Clean Tech $55 $155 $10.00 In Range 0% -9% (12%) (59%) √ √

5/8/08 Western Gas Partners Energy/Mining $343 $747 $16.50 Below -21% -21% 0% (20%) √ √ √

5/7/08 Colfax Corp Industrials $388 $742 $18.00 Above 13% 13% 52% 17% (7%) √ √

4/30/08 Pioneer Southwest Energy Energy/Mining $180 $547 $19.00 In Range -37% -5% 3% (13%) √ √ √

4/24/08 Hatteras Financial Corp Financial $276 $559 $24.00 In Range 20% -4% 3% (3%) √ √ √

4/24/08 Whiting USA Trust I Energy/Mining $234 $263 $20.00 In Range 5% 0% 100% 4% (18%) √ √ √

4/22/08 American Water Works Industrials $1,358 $3,440 $21.50 Below -22% -14% 100% (4%) 0% √ √ √

4/21/08 Intrepid Potash Inc Energy/Mining $1,104 $2,395 $32.00 Above 60% 28% 58% (6%) √ √

3/18/08 Visa Inc Financial $19,650 $42,533 $44.00 Above 11% 11% 28% 40% √ √

3/18/08 CardioNet Inc Health Care $83 $415 $18.00 Below -47% -22% 33% (2%) 39% √ √

3/11/08 Heritage-Crystal Clean Industrials $25 $120 $11.50 In Range 10% 0% 23% 19% √ √

2/14/08 MAKO Surgical Corp Health Care $51 $184 $10.00 Below -33% -33% (8%) (28%) √

2/13/08 ArcSight Inc Technology $62 $278 $9.00 In Range -10% -10% 13% (2%) (15%) √ √

1/28/08 ATA Inc (China) Technology $48 $228 $9.50 In Range -10% -10% (8%) (4%) √ √

1/28/08 Cascal NV Industrials $152 $367 $12.00 Below -52% -33% 31% 0% (13%) √ √

1/24/08 RiskMetrics Group Inc Financial $282 $1,012 $17.50 In Range -3% -3% 29% 36% 12% √ √

1/24/08 IPC The Hospitalist Co Health Care $94 $237 $16.00 In Range 11% 0% 37% 28% 61% √ √

1/17/08 Williams Pipeline Partners Energy/Mining $358 $685 $20.00 In Range 25% 0% 0% (30%) √ √ √

Mean $920 $2,156 -9% -9% 54% 3% (13%)

Median $180 $407 -10% -9% 39% (2%) (13%)

19

5

2

6

3

6

5

2

7 7

11

2

6

0 0 0

1

2

1

2 2

1

0

1 1 1 1

4

1

0 0

1

3 3 3

1

5

2

4 4

2

1

4

2

0 00

2

4

6

8

10

12

Q1 '05 Q2 '05 Q3 '05 Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08

# of

IP

Os

$0

$400

$800

$1,200

$1,600

$2,000

$2,400

IPO

Pro

ceed

s ($

MM

)

Biopharmaceuticals Health Care Services Medical Technology Capital Raised

Q2 and Q3 were the

first quarters since

2003 in which no

Health Care IPOs

were completed

Health Care IPO Activity by Quarter and Subsector

Source: company filings, Dealogic, and Piper Jaffray ECMData through 9/30/08Excludes transactions less than $20 million

Health Care IPOs Completed in 2008

PricingDate Issuer Subsector

FilingRange

OfferPrice

% ChgPriceFTO

DealValue($MM)

MarketValue($MM)

% FromSelling

Shareholders

% ChgPrice1-Day

% ChgPrice

30-Day

% ChgPrice

Current3/18/08 CardioNet Inc Med Tech 22.00 - 24.00 $18.00 -22% $83 $415 33% -2% 11% 39%2/14/08 MAKO Surgical Corp Med Tech 14.00 - 16.00 $10.00 -33% $51 $184 0% -8% 0% -28%1/24/08 IPC The Hospitalist Co Inc HC Services 15.00 - 17.00 $16.00 0% $94 $237 37% 28% 30% 61%

Mean -18% $76 $279 23% 6% 14% 24%Median -22% $83 $237 33% -2% 11% 39%

IPO MARKET UPDATE

20

2008 is on pace to

see more Health Care

IPOs postponed or

withdrawn than any

year over the last 1017

20

26

16

108

17

13

19

24

0

5

10

15

20

25

30

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

FilingDate

WithdrawnDate Issuer Subsector

AmountFiled ($MM) Marketed Acquired

LTMRevs ($MM) Profitable Withdrawn/Postponed Comment

4/14/08 9/25/08 Fluidigm Corp Biopharma $80 √ $10 Market conditions12/31/07 9/9/08 Alma Lasers Ltd Med Tech $86 $82 √ Market conditions10/23/07 9/8/08 XDx Inc Biopharma $86 $9 Market conditions8/17/07 9/8/08 Insys Therapeutics Inc Biopharma $86 Pre-Rev Market conditions3/13/08 8/26/08 Salient Surgical Technologies Med Tech $86 $34 Market conditions3/20/08 8/1/08 Zogenix Inc Biopharma $86 Pre-Rev Market conditions1/9/08 6/27/08 Bayhill Therapeutics Inc Biopharma $86 Pre-Rev Market conditions

11/20/07 6/20/08 Broncus Technologies Inc Med Tech $86 Pre-Rev Market conditions7/27/07 6/18/08 eyeonics Inc Med Tech $70 √ $22 Due to acquisition by Bausch & Lomb Inc5/11/07 6/9/08 CCS Medical Holdings Inc HC Services $150 √ $507 √ Market Conditions. Initially postponed on 8/15/072/13/07 6/4/08 Noninvasive Medical Technologies Med Tech $52 $3 Market conditions1/23/08 6/3/08 Accuro Healthcare Solutions Inc HC Services $144 √ $68 √ Due to acquisition by MedAssets9/21/07 5/12/08 Emphasys Medical Inc Med Tech $86 $1 Market conditions9/21/07 5/9/08 Elixir Pharmaceuticals Inc Biopharma $41 √ Pre-Rev Market conditions. Initially postponed 1/17/085/14/07 3/27/08 MonoSol Rx Inc Biopharma $68 √ $3 Market conditions. Initially postponed on 10/17/07

12/31/06 3/21/08 LifeWatch Corp HC Services $68 $51 √ Market conditions10/13/06 3/19/08 Vision-Ease Lens Corp Med Tech $86 $105 √ Market conditions10/12/07 2/21/08 Transoma Medical Inc Med Tech $86 √ $37 Market Conditions. Initially postponed on 2/6/088/17/07 2/15/08 Concentric Medical Inc Med Tech $63 $14 Market conditions

10/10/07 2/15/08 Critical Homecare Solutions HC Services $69 √ $157 √ Due to acquisition by MBF Healthcare Acq Corp 4/21/06 2/8/08 Light Sciences Oncology Inc Biopharma $125 √ Pre-Rev Market conditions. Initially postponed on 10/12/067/25/07 2/6/08 Archemix Corp Biopharma $79 $14 Market conditions8/14/07 2/1/08 Biolex Therapeutics Inc Biopharma $59 Pre-Rev Market conditions8/3/07 1/23/08 BG Medicine Inc Med Tech $86 √ $9 Market conditions

Source: company filings, Dealogic, and Piper Jaffray ECM

IPO MARKET UPDATE

# of Withdrawn & Postponed IPOs by Year

21

The overall IPO

backlog has

stagnated as a result

of significant

volatility in the

markets and

compressed

valuations among

existing public

companies

New issuance activity

will likely be led by

strong revenue

growth stories

Total IPO Backlog vs. Health Care IPO Backlog

102111

10290 94

111

138

99105 107

158

115106

94 98

2321

1917 17

24

33

21

27 26

2326 2530

41

0

20

40

60

80

100

120

140

160

180

Q1 '05

Q2 '05

Q3 '05

Q4 '05

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 '07

Q3 '07

Q4'07

Q1'08

Q2'08

Q3'08

Ove

rall

IPO

Bac

klog

10

15

20

25

30

35

40

45

Hea

lth C

are

IPO

Bac

klog

Overall IPO Backlog Health Care IPO Backlog

<$25MM LTM Revs

24%

Pre-Revenue

32%

>$25MM LTM Revs

44%

116

8

IPO Backlog Aging by Sector

Health Care IPO Backlog by LTM Revenue (# Deals)

Med Tech24%

Services20%

Biopharma56%

14

6

5

Health Care IPO Backlog by Subsector (# Deals)

Days Since Filing

0-44 45-89 90-119 120-180 181-360 TotalClean Tech 1 4 1 6Consumer 1 1 1 1 4Energy/Mining 2 2 3 7Financial 1 3 2 3 4 13He alth Care 2 5 2 3 13 25Industrials 1 2 1 6 1 11Media 1 1 2Real Estate 2 1 3Technology 3 1 6 16 26Transportation 1 1Total 12 19 7 19 41 98

Source: company filings, Dealogic and Piper Jaffray ECM as of 9/30/08Excludes BCC/SPACs, BDCs, REITs, and closed-end funds

IPO MARKET UPDATE

22

FilingDate Issue r

MostRe ce nt Ame nd

# of Ame nd Issue r Busine ss De scription

Curre nt Amt File d

($MM)Gross

Margin

LTM Re ve nue

($MM)07/25/08 Select Medical Corp 08/29/08 1 Operator of specialty acute care hospitals $100 13% $2,10507/27/07 Talecris Biotherapeutics 07/23/08 5 Biopharmaceutical company specializing in the production of plasma-derived protein therapies. $1,000 33% $1,22109/12/08 Emdeon Corp - - Provides business & tech solutions to financial and healthcare delivery $460 36% $82912/19/07 Prometheus Laboratories 08/14/08 5 Pharma products, pharmacogenetic testing, therapeutic drug monitoring $100 60% $24206/20/08 AGA Medical Holdings Inc 09/10/08 2 Holding co. for manufacturer of transcatheter occlusion devices. $200 85% $15703/07/08 Bostwick Laboratories Inc - - Laboratory focused on the diagnosis of cancer $100 62% $10311/09/07 Xanodyne Pharmaceuticals 06/10/08 4 Therapeutic drugs for oncology, hematology and management $86 84% $7204/17/08 Epocrates Inc - - Provider of clinical information, IT, and decision support tools $75 65% $6606/06/08 Acclarent Inc 08/07/08 1 Develops technologies in the ear, nose, and throat. $86 78% $3605/01/07 Cumberland Pharma 08/12/08 13 Specialty pharmaceutical company focused on acquiring & developing branded prescriptions $94 90% $3107/02/08 Zonare Medical Systems Inc 09/05/08 2 Develops compact ultrasound systems $86 42% $31

FilingDate Issue r

MostRe ce nt Ame nd


Curre nt Amt File d

($MM)Gross

Margin

LTM Re ve nue

($MM)01/22/08 Cardiovascular Systems 09/08/08 6 Produces devices for the treatment of cardiovascular disease $86 60% $2211/09/07 ChemoCentryx Inc 01/14/08 2 Developes orally-administered chemotherapy drugs $58 N/A $1903/12/08 CyDex Pharmaceuticals 06/18/08 2 Portfolio company focused on the commercialization of drugs $50 85% $1204/01/08 Biotrove Inc 08/22/08 4 Developing instruments for genomic analysis $75 23% $707/25/08 AutoGenomics Inc. 09/18/08 2 Provides automated molecular testing solutions. $86 N/A $308/05/08 Dr. Tattoff Inc - - Laser tattoo removal company $8 N/A $1

FilingDate Issue r

MostRe ce nt Ame nd


Curre nt Amt File d

($MM)Gross

Margin

LTM Re ve nue

($MM)09/04/08 TherOx Inc - - Developer of devices for cardiac ischemia patients. $100 - -07/01/08 Alimera Sciences Inc 08/19/08 1 Clinical stage developer of prescription ophthalmic pharmaceuticals. $75 - -05/09/08 Aldagen Inc 06/18/08 1 Biopharmaceutical company. $81 - -01/25/08 Phenomix Corp 05/16/08 2 Developing treatments for immune, central nervous system, and metabolic diseases. $86 - -01/09/08 Omeros Corp 05/08/08 2 Developing orthopedic, rheumatology, urology, and cardiovascular pharmaceuticals $115 - -11/20/07 Aegerion Pharmaceuticals 01/18/08 2 Specialty pharma company developing products to treat cardiovascular and metabolic disease. $86 - -09/14/07 TransMedics Inc 12/14/07 2 Medical device company enable transplantation of beating hearts and other functioning organs. $86 - -08/31/07 Anacor Pharmaceuticals Inc 04/03/08 4 Biopharmaceutical company developing small molecule therapeutics. $58 - -

IPO Market OverviewCurrent Health Care IPO Backlog (LTM Revenue > $25 Million)

The Health Care IPO

backlog stands at 25,

down from a 6-year

high of 41 set in Q3

of 2007

Current Health Care IPO Backlog (LTM Revenue < $25 Million)

Current Health Care IPO Backlog (Pre-Revenue)

IPO MARKET UPDATE

Source: company filings, Dealogic and Piper Jaffray ECMData through 9/30/08, Shading denotes Piper Jaffray as a managerA registration statement relating to these securities has been filed with the Securities and ExchangeCommission but has not yet become effective. These securities may not be sold nor may offers to buybe accepted prior to the time the registration statement becomes effective.

SECTION IVFollow-on Market Update

24

The first 9 months of

2008 have been

dominated by

struggling financials

raising capital in

order to shore up

their balance sheets

Offering Activity Increased in Q2 Driven by Large-Cap Financials

• Q3 follow-ons accounted for $57bn in capital raised, second only to Q1 2000 in total follow-on proceeds in a quarter

• The 67 priced transactions was well below the quarterly average of 120 for the ‘04 – ’07 period

• $105bn of the $121bn (87%) in follow-on capital raised thus far in 2008 has been on behalf of Financial, Real Estate and Energy companies

Difficult Pricing Conditions and Volatility Have Lead to Selective Offering Activity

• Many growth companies without immediate capital needs or significant catalysts to drive stock price appreciation have elected to delay financing; only 53 of the 215 (25%) follow-ons priced so far in ’08 have been on behalf of companies in the growth sectors vs. the average of 40% for the ’04 – ’07 period

• Pricing conditions continue to be challenging; the average change from file-to-offer in Q3 was -9.3% vs. the average of -4.4% for the ’04 – ’07 period; on average, sub $2bn market cap growth companies traded down -11.5% in Q3

• Selling shareholder activity has been limited; only 30 transactions have been completed on behalf of selling shareholders in 2008(shareholders selling >50% of the offering), or 14% of the completed offerings – well below the 33% average seen from ’04 – ‘07

Health Care Offering Activity is Limited – However Performance Has Been Strong

• Companies with significant announcements/catalysts for stock price appreciation have accounted for the limited deal activity in the Health Care sector; the Health Care sector is one of only two sectors where offerings are trading above offer on average, trading up 11% year-to-date

• Pricing performance has been more favorable for Health Care issuers; average price declination file-to-offer was -7.4% in Q3 vs. -9.3% for the broader markets

Follow-on Market Update – Key Takeaways

FOLLOW-ON MARKET UPDATE

Source: company filings, Dealogic and Piper Jaffray ECMData through 9/30/08Excludes transaction less than $20mm and closed end funds

25


10193

122

148

127 129

83

138

111

140

72

113

51

100

64

40

60

80

100

120

140

160


# o

f Fol

low

-ons

$0

$10

$20

$30

$40

$50

$60

Pro

ceed

s ($

B)

Follow-ons Completed Follow-on Proceeds ($B)

Follow-on Activity by Quarter

File / Offer Performance by Quarter Last Trade / Offer Discount by Quarter

-8.4%

-5.6%

-9.3%

-3.1%-3.4%

-4.4%

-2.5%

-6.0%

-4.1%

-5.5%

-9.2%(10%)

(8%)

(6%)

(4%)

(2%)

0%

Q1'06

Q2'06

Q3'06

Q4'06

Q1'07

Q2'07

Q3'07

Q4'07

Q1'08

Q2'08

Q3'08

-2.6%-2.4%

-2.2%

-2.8%-2.7% -2.6%

-3.4%

-4.3%

-3.2%-2.9%

-4.5%-5%

-4%

-3%

-2%

-1%

0%

Q1'06

Q2'06

Q3'06

Q4'06

Q1'07

Q2'07

Q3'07

Q4'07

Q1'08

Q2'08

Q3'08

Distressed financial

companies looking to

shore up balance

sheets led to the

most active quarter of

follow-on issuance, in

terms of capital

raised, since Q1 of

2000

Pricing conditions

deteriorated

considerably in Q3

after showing some

signs of improvement

in Q2


26


Follow-on offering

activity has

disproportionately been

on behalf of Financial &

Energy companies in

2008

Issuers have looked to

mitigate market risk by

quickly accessing the

capital markets via

bought/accelerated

transactions in 2008

Follow-on Offering Activity Breakdown

Source: company filings, Dealogic and Piper Jaffray ECM through 9/30/08*Defined as selling shareholder selling 50% or more of the offeringExcludes transaction less than $20mm and closed end funds

Health Care

11%

Industrials

7%

Clean Tech

5%

Consumer

3%

Energy &

Mining

20%

Financial

25%

REIT

17%

Real Estate

2%

Technology

5%

Transports

5%

Transports

7%

Technology

18%

Real Estate

1%

REIT

7%

Financial

17%

Energy &

Mining

18%

Consumer6%

Clean Tech

3%

Industrials9%

Health Care

14%

148

170

170

104

30

140

0

50

100

150

200

2003 2004 2005 2006 2007 2008 YTD0%

10%

20%

30%

40%

# of Follow-ons w/ Selling Shareholders % of Total FOs

30%

59%

18%22%

19%

52%

0%

15%

30%

45%

60%

75%

2007 2008

% o

f O

ffer

ings

Fully Marketed Bought Accelerated

2007 CY Follow-on Deal Volume by Sector2008 YTD Follow-on Deal Volume by Sector

Follow-on Marketing Style Follow-ons Driven by Selling Shareholders*

27


-4.3% -4.4%

-2.3%-2.7%

-3.9%

-2.7% -2.9%

-10.7%

-2.1% -1.9%

-4.4%

-12%

-10%

-8%

-6%

-4%

-2%

0%

Q1'06

Q2'06

Q3'06

Q4'06

Q1'07

Q2'07

Q3'07

Q4'07

Q1'08

Q2'08

Q3'08

-14.4%

-5.2%

-7.5%

-5.2%-6.8%

-3.4%-4.5%

-10.8%

-7.2%

-4.8%

-18.7%(20%)

(16%)

(12%)

(8%)

(4%)

0%

Q1'06

Q2'06

Q3'06

Q4'06

Q1'07

Q2'07

Q3'07

Q4'07

Q1'08

Q2'08

Q3'08

Health Care follow-on

issuance levels are at

their lowest levels

since 2003

Pricing conditions

deteriorated in Q3 –

however they are still

improved from the

very poor levels seen

in Q4 ’07 and Q1 ‘08

Health Care Follow-on Activity by Quarter and Sector

Health Care File / Offer Performance By Quarter Health Care Last Trade / Offer Discount by Quarter


18

4

1816

19

9

5

1311

20

67

8

34

2

8

2

56

1

4

9

5

2 221

64

2 2

4

1 1

5

32

0

5

10

15

20

25


# of

Fol

low

-ons

$0

$1,000

$2,000

$3,000

$4,000

$5,000

Follo

w-o

n P

roce

eds

($M

M)

Biopharmaceuticals Health Care Services Medical Technology Capital Raised

28


Pricing Date Issuer

Deal Value ($MM)

Market Value ($MM)

DealValue /

Mkt Value

% Chg Price / FTO

% Chg Amount /

FTO

% Chg Price / Current

9/23/08 Hanger Orthopedic $45 $455 10% -8% -8% -3%8/18/08 ABIOMED Inc $42 $683 6% -8% -8% 2%8/15/08 VisionChina Media $101 $443 23% -29% -51% -8%8/6/08 Acorda Therapeutics $131 $1,109 12% -5% -5% -16%

7/31/08 Incyte Corp $109 $870 12% -2% 14% -15%7/31/08 CardioNet Inc $133 $635 21% -11% -5% -6%7/24/08 EnergySolutions Inc $765 $1,753 44% -15% -15% -47%7/21/08 Shuffle Master Inc $86 $233 37% -33% -33% 20%7/17/08 Canadian Solar Inc $119 $1,270 9% -11% -11% -43%7/15/08 IPC The Hospitalist $74 $300 25% -16% -41% 39%6/26/08 Sequenom Inc $98 $889 11% 9% 9% 72%6/24/08 HealthSouth Corp $151 $1,581 10% -4% -4% 7%6/24/08 Luminex Corp $80 $803 10% -11% -11% 26%6/23/08 SuccessFactors Inc $104 $648 16% 5% 23% -8%6/19/08 Synthesis Energy Sys. $106 $347 31% 6% 6% -48%6/17/08 ReneSola Ltd $212 $1,409 15% 0% 0% -49%6/12/08 Monotype Imaging $68 $340 20% -22% -35% -7%6/4/08 Solera Holdings Inc $133 $1,816 7% -5% -5% 8%

5/22/08 Natus Medical Inc $90 $519 17% -9% 4% 16%5/22/08 Allos Therapeutics $70 $435 16% -4% 16% 31%5/22/08 Polypore International $193 $996 19% 12% 12% -10%

Mean $139 $835 18% -8% -7% -2%Median $104 $683 16% -8% -5% -6%

Pricing Date Issuer

Deal Value ($MM)

Market Value ($MM)

DealValue /

Mkt Value

% Chg Price / FTO

% Chg Amount /

FTO

% Chg Price / Current

9/26/08 Washington Real Estate $60 $1,905 3% -4% -4% 5%9/26/08 JP Morgan Chase $11,500 $169,694 7% -7% -7% 15%9/26/08 National Retail Properties $80 $1,850 4% -3% 66% 4%9/25/08 First Niagara Financial $115 $1,740 7% -14% -14% 17%9/24/08 Realty Income Corp $78 $2,790 3% -1% -1% -5%9/24/08 Stifel Financial Corp $87 $1,224 7% -3% 37% 11%9/24/08 James River Coal Co $45 $911 5% -10% -10% -27%9/24/08 Corporate Office Prop. $146 $2,039 7% -3% 58% 3%9/24/08 First Potomac Realty $46 $437 11% -11% -11% 7%9/24/08 Equity One Inc $47 $1,662 3% -2% -2% -5%9/24/08 Goldman Sachs $5,750 $54,329 11% -2% -2% 4%9/24/08 Capital One Financial $761 $20,457 4% -9% -9% 4%9/24/08 Waste Connections Inc $411 $2,604 16% -12% -4% 6%9/23/08 Healthcare Realty Trust $205 $1,496 14% -19% -19% 14%9/23/08 Hanger Orthopedic Group $45 $455 10% -8% -8% -3%9/19/08 LDK Solar Co Ltd $200 $4,867 4% -5% 21% -28%9/18/08 Vertex Pharmaceuticals $220 $3,936 6% -4% 3% 30%9/18/08 Otter Tail Corp $155 $1,143 14% -25% -32% 2%9/15/08 Omega Healthcare Investors $98 $1,408 7% -5% -5% 20%9/11/08 Regency Energy Partners $149 $1,151 13% -11% -11% -13%9/10/08 Cogdell Spencer Inc $40 $334 12% -3% 14% -13%

Mean $964 $13,163 8% -8% 3% 2%Median $115 $1,740 7% -5% -4% 4%

Recent Growth Sector Small Cap (<$2B) SECs

Recent Follow-on Pricing PerformanceRecent Follow-ons (all sectors & market caps)

Recent Small Cap (<$2B) Follow-on Pricing Performance Recent small-cap

follow-ons have seen

difficult pricing

conditions while in

registration –

declining 8% on

average

In the broader

markets, follow-ons

have primarily been

coming on behalf of

distressed financials

and REITs

Data as of 9/30/08Source: Dealogic, BaselineGrowth Sectors defined as Clean Tech, Consumer, Health Care, & Technology

-2%

-11%

-3%

-10%

-3%

-1%

-14%

-3%

-7%

-4%

-2%

-11%

58%

-10%

37%

-1%

-14%

66%

-7%

-4%

-20% 0% 20% 40% 60% 80%

(9/24) Equity One Inc

(9/24) First Potomac Realty

(9/24) Corporate Office Prop.

(9/24) James River Coal Co

(9/24) Stifel Financial Corp

(9/24) Realty Income Corp

(9/25) First Niagara Financial

(9/26) National Retail Properties

(9/26) JP Morgan Chase

(9/26) Washington Real Estate

% Chg Price FTO % Chg Amt FTO

-16%

-11%

-33%

-15%

-11%

-2%

-5%

-29%

-8%

-8%

-41%

-11%

-33%

-15%

-5%

14%

-5%

-51%

-8%

-60% -40% -20% 0% 20%

(7/15) IPC The Hospitalist

(7/17) Canadian Solar Inc

(7/21) Shuffle Master Inc

(7/24) EnergySolutions Inc

(7/31) CardioNet Inc

(7/31) Incyte Corp

(8/6) Acorda Therapeutics

(8/15) VisionChina Media

(8/18) ABIOMED Inc

(9/23) Hanger Orthopedic

% Chg Price FTO % Chg Amt FTO

29

PricingDate Issuer

DealType

OfferPrice

Deal Value($MM)

Mkt Value($MM)

SellingShrs %

% ChgAmt FTO

% ChgPrice FTO

% Chg LastTrade/Offer

% Chg /1-Day

% Chg /30-Day

% Chg /Current

9/18/08 Vertex Pharma Accelerated $25.50 $220 $3,936 3% -4% -4% 9% 2% 30%8/6/08 Illumina Inc Accelerated $87.50 $352 $6,074 -6% -6% -2% 1% -4% -54%8/6/08 Acorda Therapeutics Bought $28.50 $131 $1,109 -5% -5% -5% -6% 4% -16%

7/31/08 Incyte Corp Accelerated $9.00 $109 $870 14% -2% -3% 7% 14% -15%6/25/08 Sequenom Inc Accelerated $15.50 $98 $889 9% 9% -3% -2% 42% 72%6/24/08 Luminex Corp Marketed $19.91 $80 $803 -11% -11% 0% 4% 8% 26%5/22/08 Allos Therapeutics Marketed $5.64 $70 $435 16% -4% 0% 7% 16% 31%5/7/08 La Jolla Pharma Accelerated $1.92 $30 $75 2% 2% 2% -14% 8% -42%

2/28/08 Genoptix Inc Marketed $25.50 $61 $411 100% -58% -16% 0% 1% -1% 28%2/12/08 Vertex Pharma Accelerated $17.14 $118 $2,380 -6% -6% 0% 12% -10% 94%2/12/08 Acorda Therapeutics Marketed $21.50 $82 $686 3% -2% -18% 0% 15% -13% 11%2/6/08 Biodel Inc Marketed $15.50 $59 $376 14% -35% -35% -3% -3% -19% -78%

1/31/08 Rigel Pharma Marketed $27.00 $135 $992 30% 4% -2% -3% -27% -14%1/23/08 OREXIGEN Therapeutics Marketed $11.00 $81 $388 -21% -21% -4% -1% 3% -2%1/17/08 Targacept Inc Accelerated $7.07 $31 $173 0% 0% 0% 0% 13% -18%1/17/08 Seattle Genetics Marketed $9.00 $104 $752 -23% -23% -7% 1% 6% 19%

Mean $110 $1,272 39% -6% -9% -2% 2% 3% 5%Median $90 $777 14% -3% -5% -2% 1% 3% 5%

PricingDate Issuer

DealType

OfferPrice

Deal Value($MM)

Mkt Value($MM)

SellingShrs %

% ChgAmt FTO

% ChgPrice FTO


% Chg /1-Day

% Chg /30-Day

% Chg /Current

9/23/08 Hanger Orthopedic Bought $18.00 $45 $455 100% -8% -8% -8% -5% -18% -3%7/15/08 IPC The Hospitalist Marketed $18.50 $74 $300 69% -41% -16% -1% 9% 32% 39%6/24/08 HealthSouth Corp Bought $17.20 $151 $1,581 -4% -4% -4% -1% 1% 7%4/11/08 Almost Family Marketed $17.75 $45 $141 -15% -15% -1% 0% 22% 123%

Mean $79 $619 84% -17% -11% -4% 1% 9% 41%Median $60 $378 84% -12% -12% -3% 0% 11% 23%

PricingDate Issuer

DealType

OfferPrice

Deal Value($MM)

Mkt Value($MM)

SellingShrs %

% ChgAmt FTO

% ChgPrice FTO


% Chg /1-Day

% Chg /30-Day

% Chg /Current

8/18/08 ABIOMED Inc Bought $17.38 $42 $683 -8% -8% -8% 4% 3% 2%7/31/08 CardioNet Inc Marketed $26.50 $133 $635 100% -5% -11% -4% 8% 15% -6%5/22/08 Natus Medical Marketed $19.50 $90 $519 4% -9% -1% 8% 5% 16%4/1/08 Hansen Medical Bought $13.34 $40 $320 10% -9% -9% 9% 32% 1%

Mean $76 $539 100% 0% -9% -5% 7% 14% 3%Median $66 $577 100% -1% -9% -6% 8% 10% 1%

Health Care Follow-

ons Completed in

2008

Medical Technology

Biopharmaceuticals/Diagnostics

Health Care Services



SECTION VConvertible Market Update

31

The convertible

market priced $1.6

billion of capital

during September,

bringing the total

through Q3 2008 to

$63.5 billion

Deal activity for Q3

2008 was down 42%

versus Q3 2007 as

measured by capital

raised, and down

33% measured by the

number of completed

transactions

Convertible Capital Raised

Convertible Issuance Activity

46% 34%

7%13%

Less than $300mm $300mm - $2B

$2B - $10B Greater than $10B

33% 48%

14%5%

Less than $300mm $300mm - $2B

$2B - $10B Greater than $10B

Q3 Convertible Issuers by Market Capitalization

CONVERTIBLE MARKET UPDATE

$89.4

$48.8$40.5

$69.3

$99.2

$63.5

$21.5

$1.8 $1.6$0

$20

$40

$60

$80

$100

$120

2003 2004 2005 2006 2007 2008 Sep-07 Sep-08

Cap

ital

Rai

sed

($ b

ln)

Completed Deals Annualized Deals

# of Convertible Transactions

LTM Convertible Issuers by Market Capitalization

116

203147

115

186

278

58

39

0

50

100

150

200

250

300

2003 2004 2005 2006 2007 2008 Sep-07 Sep-08

Nu

mbd

er o

f D

eals

Source: Company Press Releases, Dealogic and BloombergPercentages calculated relative to # of Deals

32

Every major industry

group issued

convertibles in Q3

with a strong

showing from the

alternative energy

and Health Care

sectors

79% of convertible

transactions were not

rated by the credit

agencies versus 74%

during the last 12

months

LTM Convertible Transactions by Industry


Q3 Convertible Issuers by Credit Rating


5%

17%

14%

5%

18%22%

14%

5%

Consumer & Retail Energy & PowerFinancial Institutions HealthcareIndustrial Growth Media & CommunicationsReal Estate Technology

13%

74%

13%

Investment Grade Non-Rated Speculative

Q3 Convertible Transactions by Industry

LTM Convertible Issuers by Credit Rating

18%

24%

10% 8%

15%

14%

7%

4%

Consumer & Retail Energy & PowerFinancial Institutions HealthcareIndustrial Growth Media & CommunicationsReal Estate Technology

79%

21%

Investment Grade Non-Rated Speculative


33

Convertible structuring

diverged a little from

the longer term trend –

Financials pulled back

from issuing

convertibles in Q3, as

the SEC’s short ban

limited investors’ ability

to hedge their equity

exposure

Companies continue to

use net share

settlement (NSS) (cash

settlement upon

conversion) - the FASB

ruled in favor of

changing accounting

guidance on such

convertible structures

that will be more

dilutive to earnings

LTM Convertible Security Type


Q3 Convertible Enhancement Structures


16%

10%

74%

Preferred Mandatory Bond

86%

5%9%

Preferred Mandatory Bond

9%

22%

11%

53%

0%

20%

40%

60%

CoPay NSS Call Spread Turbo

% o

f To

tal

Q3 Convertible Security Type

LTM Convertible Enhancement Structures

5.3%

31.8%

52.4%

5.3%

0%

20%

40%

60%

CoPay NSS Call Spread Turbo

% o

f Tot

al


34

Convertible bond

structure was largely

unchanged during Q3

Debt refinancing and

general corporate

purposes were stated as

the most prevalent use of

proceeds during Q3 – in

line with the longer-term

trend

The majority of Q3’s

convertible transactions

were completed via Rule

144a or as registered

offerings

The 144A offering process

remains the most flexible

and efficient process to

market for many issuers

and appeals to the

majority of the buyer base

Weighted Average Coupon / Premium


Q3 Convertible Security Registration at Issue


52%

42%

6%

Registered Reg D 144a

23%

63%14%

Registered Reg D 144a

51%

72%

10%

40%

18%

68%

14%11%

0%

20%

40%

60%

80%

100%

DebtRefinance

Share Repo General M&A

% o

f Tot

al

LTM Q3

Convertible Use of Proceeds

LTM Convertible Security Registration at Issue

0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%

Oct-07 Dec-07 Jan-08 Mar-08 Apr-08 Jun-08 Jul-08 Sep-08

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Coupon Premium


35

60% of the convertible

offerings during Q3 were

completed with just one

day of marketing - the

convertible market

continues to minimize

market risk and

management distraction

via the most utilized on

day telephonic road show

schedule

Most convertible

transactions completed

with a marketing schedule

longer than one day are

completed with other

capital product offerings

such as follow-on equity

offerings or debt

LTM Convertible Security Marketing Period



31%

16%

53%

>1 Day Overnight 1 Day

35%

60%

5%

>1 Day Overnight 1 Day

Q3 Convertible Security Marketing Period

Q3 Convertible Health Care Transactions

CompanyTradeDate

MarketCap

TotalSize

Yield Premium EffectiveMaturity

Non CallPeriod

Security Call

Spread Call SpreadUpper Strike

Net ShareSettlement

StockRepurchase

Stock Repurchase% of Deal

DebtRefinance

Mylan Labs 9/10/2008 $3,380MM $500MM 3.750% 20% 7 Life NC Sr Note 80.0% NA

Salix Pharmaceuticals 8/19/2008 $346MM $60MM 5.500% 20% 5 5 NC Sr Note NA NA

China Medical Technologies 8/13/2008 $1,270MM $240MM 4.040% 23% 5 Life NC Sr Note NA NA

PSS World Medical 7/30/2008 $1,040MM $230MM 3.125% 28% 6 Life NC Sr Note 70.0% 17.5%

American Oriental Bioengineering 7/9/2008 $702MM $115MM 5.000% 15% 5 Life NC Sr Note NA NA

Number of Deals = 5 $1,347MM $229MM 4.28% 21.00% 6 75.0% 17.5%$1,040MM $230MM 4.04% 20.00% 5 75.0% 17.5%


SECTION VIPIPE and Registered Direct Market Update

37

PIPE AND REGISTERED DIRECT MARKET UPDATE

$4.2 $6.1 $4.7 $5.7 $3.4 $7.9 $3.6 $5.3 $4.0 $5.1$3.4$8.1 $5.9$6.0$4.6

7183

119

96

115131

174

156

173185

102

209

158

192

88

0

25

50

75

100

125

150

175

200

225


# of

PIP

Es/R

Ds

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

Cap

ital

Rai

sed

($B

)

Capital Raised ($B) PIPEs/RDs Completed

All PIPE/RD Activity by Quarter (a)

2005 – 2008 YTD PIPE/RD Activity

(a) Source: PlacementTracker.com as of September 30, 2008. Includes all common stock, convertible preferred and convertible debt PIPE/RD transactions greater than $10 million.

(b) Percentage indicated is based on number of offerings.

Common StockSector No.

Total AmtOff (MM)

Clean Tech 17 $483Consumer 8 $135Energy 16 $1,076Financial 25 $2,439Health Care 44 $1,074Industrial Growth 29 $794Technology 18 $830Total 157 $6,831

ConvertibleSector No.

Total AmtOff (MM)

Clean Tech 7 $214Consumer 4 $550Energy 13 $1,232Financial 18 $2,266Health Care 17 $407Industrial Growth 12 $379Technology 14 $663Total 85 $5,711

PIPE/RD Activity Since 1/1/2008

Although so far in

2008 PIPE and

Registered Direct

issuance is down

from the previous

year, $12.54 billion

has still been raised

in 242 transactions

38

$3.8 $3.9 $5.5 $4.2 $5.1 $5.3 $3.1 $5.5 $7.1 $2.9 $4.5 $3.2 $3.5 $4.6$6.8

76

57

7077

101

167

146

174

94

168

151

134

155

108 104

0

25

50

75

100

125

150

175

200


# of

PIP

Es

$0

$1

$2

$3

$4

$5

$6

$7

$8

Cap

ital

Rai

sed

($B

)

Capital Raised ($B) PIPEs Completed

All PIPE Activity by Quarter (a)


Total AmtOff (MM)

Clean Tech 12 $359Consumer 6 $80Energy 12 $694Financial 21 $2,267Health Care 25 $599Industrial Growth 26 $737Technology 17 $804Total 119 $5,540


2005 – 2008 YTD PIPE Activity

(a) Source: PlacementTracker.com as of September 30, 2008. Includes all common stock, convertible preferred and convertible debt PIPE transactions greater than $10 million.



Total AmtOff (MM)

Clean Tech 7 $214Consumer 4 $555Energy 13 $1,232Financial 18 $2,266Health Care 16 $356Industrial Growth 12 $379Technology 14 $663Total 84 $5,665

2008 PIPE Activity Since 1/1/2008

Although so far in

2008 PIPE issuance is

down from the

previous year, $11.21

billion has still been

raised in 203

transactions

39


$250 $595 $570 $869 $418 $350 $342 $724 $752 $241 $579 $523$806$834 $1,303

1418

21

18

7

26

13

36

8

17

222219

24

11

0

5

10

15

20

25

30

35

40


# of

RD

s

$0

$250

$500

$750

$1,000

$1,250

$1,500

$1,750

$2,000

Cap

ital

Rai

sed

($M

M)

Capital Raised ($MM) RDs Completed


Total AmtOff (MM)

Clean Tech 5 $125Consumer 2 $54Energy 4 $382Financial 4 $172Health Care 19 $475Industrial Growth 3 $57Technology 1 $26Total 38 $1,291

Although so far in

2008 RD issuance is

down from the



raised in 39

transactions

All RD Activity by Quarter (a)

2008 RD Activity Since 1/1/2008

2005 – 2008 YTD RD Activity

(a) Source: PlacementTracker.com as of September 30, 2008. Includes all common stock, convertible preferred and convertible debt RD transactions greater than $10 million.



Total AmtOff (MM)

Clean Tech 0 —Consumer 0 —Energy 0 —Financial 0 —Health Care 1 $52Industrial Growth 0 —Technology 0 —Total 1 $52

40

Although so far in

2008 common stock

PIPE and Registered

Direct issuance is

down from the



raised in 157

transactions

2008 YTD Common Stock PIPE/RD Activity (a, b)

18%

21%

8%

17%

36%

0% to 5% 5% to 10% 10% to 15%

15% to 20% Greater than 20%

Traditional PIPE/RD Transaction Size as % of Market Cap

22%

9%

30%

18%

21%

Less than $50MM $50MM to $100MM$100MM to $200MM $200MM to $400MMGreater than $400MM

PIPE/RD Issuer Market Cap


(a) Source: PlacementTracker.com as of September 30, 2008. Includes all agented common stock PIPE/RD transactions greater than $10 million.


% of Traditional PIPEs/RDswith Warrant Coverage

53%

47%

54%

46%

0%

15%

30%

45%

60%

75%

PIPEs RDs

% o

f Tot

al

No Warrants Warrants

41

Although so far in

2008 convertible PIPE

and Registered Direct

issuance is down

from the previous

year, $5.71 billion has

still been raised in 85

transactions

PIPE/RD Structure Breakdown

58%

42%

0%0%

20%

40%

60%

80%

100%

PIPEs RDs

% o

f Tot

al

Convertible Notes Convertible Preferred

2008 YTD Convertible PIPE/RD Activity (a, b)

5%5%

15%

8%67%

0% to 5% 5% to 10% 10% to 15%

15% to 20% Greater than 20%

31%

15% 23%

13%

18%

Less than $50MM $50MM to $100MM$100MM to $200MM $200MM to $400MMGreater than $400MM

PIPE/RD Issuer Market Cap


(a) Source: PlacementTracker.com as of September 30, 2008. Includes all agentedconvertible PIPE/RD transactions greater than $10 million.


% of Traditional PIPEs/RDsWith Warrant Coverage

45%

0%

55%

0%

20%

40%

60%

80%

100%

PIPEs RDs

% o

f Tot

al

No Warrants Warrants

PIPE/RD Transaction Size as % of Market Cap

100% 100%

SECTION VIIInstitutional Health Care Fund Movement

43

Health Care sector

equity asset

movement among

the top Health Care

funds – as measured

by equity assets

under management

% representative of change in assets between 3/31/08 and 6/30/08Source: Bigdough, excludes Indexed & Quantitative Investors“-” denotes accounts that have no holdings in the subsector

Equity Movements Among Funds with the Most Health Care Assets Under Management

INSTITUTIONAL HEALTH CARE FUND MOVEMENT

Q2 Change in Equity Assets

Institution Name City Style Bio

phar

ma

HC

Ser

vice

s

Med

Tec

h

Ove

rall

Chg

.in

HC

Ass

ets HC Assets

UnderMgmt($MM)

% FundsDevoted

to HC Ove

rall

Port

folio

Q2

Chg

. in

Ass

ets

FundsUnderMgmt($MM)

Fidelity Management & Research Boston Growth -3% -1% -2% -3% $63,461 12% -1% $535,342Wellington Management Co. Llp Boston Value -3% -2% -11% -5% $50,132 19% -1% $259,118Capital World Investors Los Angeles Value 2% 25% 6% 3% $40,778 10% 5% $428,547Alliancebernstein Lp New York Value -1% -2% 1% -1% $32,529 11% -1% $284,828T. Rowe Price Associates, Inc. Baltimore Growth 5% 10% 2% 5% $29,799 13% 3% $225,591Capital Research Global Investors Los Angeles Growth -3% 0% 2% -2% $24,639 7% 5% $330,851Dodge & Cox, Inc. San Francisco Contrarian 2% 0% -6% 0% $21,578 18% -1% $121,482Blackrock Advisors, Inc. New York Value 6% 6% -4% 3% $17,028 12% 3% $136,271TIAA-Cref Asset Management Llc New York Value 0% -3% 0% -1% $16,671 11% 1% $147,717Columbia Management Advisors, Inc. Boston Value -5% 3% -4% -4% $15,234 10% -5% $146,175Clearbridge Advisors New York Growth -2% 12% -1% -2% $13,880 20% -3% $69,480Primecap Management Co. Pasadena Growth 11% - 8% 10% $13,399 25% 4% $54,360Goldman Sachs Asset Management Tampa Growth 0% -20% 6% -1% $13,142 13% -2% $103,702Jennison Associates Llc New York Growth -19% 88% -13% -13% $10,392 21% 0% $50,563Norges Bank Investment Management Oslo Growth 42% 42% 52% 44% $10,207 8% 22% $131,520Enhanced Investment Technologies Palm Beach Growth -2% -2% 4% 0% $9,621 17% 2% $55,720UBS Global Asset Management Chicago Value 9% 8% 38% 16% $9,084 15% 16% $62,619Janus Capital Management Denver Agg. Growth 10% 12% 16% 12% $8,992 12% 5% $76,489Grantham, Mayo, Van Otterloo Boston Value -1% -24% -6% -3% $8,729 14% 0% $61,427JPMorgan Asset Management, Inc. New York Value 0% 40% 21% 8% $8,722 10% -1% $89,880Putnam Investment Management, Inc. Boston Value -2% -19% -2% -4% $8,538 13% -3% $64,543Brandes Investment Partners San Diego Contrarian 0% -9% -13% -2% $8,468 16% -7% $52,799MFS Investment Management Boston Value -5% 25% 5% -2% $8,418 9% 4% $91,375Templeton Global Advisors Nassau Value -1% 1% 6% 0% $8,290 16% -4% $52,796Capital Guardian Trust Co. Los Angeles Growth -8% 7% 0% -6% $8,245 14% -6% $58,212UBS Global Asset Management Zürich Growth -5% -14% -8% -6% $8,179 14% -4% $60,028Franklin Advisers, Inc. San Mateo Growth 3% 1% -1% 2% $7,908 14% 0% $58,410Oppenheimerfunds, Inc. New York Growth -4% 6% 2% -1% $7,634 8% 1% $95,860Neuberger Berman New York Growth 0% 4% 3% 2% $7,143 9% -1% $77,180Lord Abbett & Co. Jersey City Value -3% 7% 3% -1% $7,126 12% -3% $58,809American Century Investment Mgmt Kansas City Growth -7% -18% -8% -9% $6,802 12% -1% $54,747Morgan Stanley Investment Mgmt New York Growth -12% -3% 2% -9% $6,761 9% 0% $78,144Invesco AIM Management Group Houston Growth -5% -10% 10% -2% $6,681 14% -2% $48,595Van Kampen Asset Management Houston Growth -10% -12% 3% -8% $6,653 12% -1% $55,771Fil Investments International Ltd. London Growth -13% -3% 19% -3% $6,440 8% -3% $82,383

Median -2% 0% 2% -1% 12% -1%

44

% Change in CurrentPosition Position ($MM)

Norges Bank Investment Mgmt 44% $10,207

Fairholme Capital Management 313% $1,865

T. Rowe Price Associates, Inc. 5% $29,799

Primecap Management Co. 10% $13,399

UBS Global Asset Management 16% $9,084

Capital World Investors 3% $40,778

Fisher Investments, Inc. 91% $2,351

APG Investments 30% $4,484

Janus Capital Management 12% $8,992

CM-CIC Asset Management >1000% $787$787

$940

$1,036

$1,118

$1,226

$1,236

$1,273

$1,338

$1,414

$3,112

$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500

Top Health Care Buyers and Sellers ($MM)



American Century Investment Mgmt -9% $6,802

BNP Paribas Arbitrage Snc -34% $1,386

Relational Investors -55% $613

AXA Investment Managers Uk -21% $3,464

Credit Suisse Asset Management -29% $2,435

Marsico Capital Management -20% $4,384

Allianz Global Investors -40% $1,744

Jennison Associates -13% $10,392

Fidelity Management & Research -3% $63,461

Wellington Management Co. -5% $50,132($2,683)

($1,751)

($1,517)

($1,182)

($1,076)

($974)

($899)

($740)

($716)

($683)

($3,000) ($2,500) ($2,000) ($1,500) ($1,000) ($500) $0

% representative of change in assets between 3/31/08 and 6/30/08Source: BigdoughExcludes Indexed & Quantitative Investors

45





Fisher Investments, Inc. 105% $2,193


APG Investments 36% $3,681


CM-CIC Asset Management >1000% $630

JPMorgan Asset Management (UK) 19% $3,807


Blackrock Advisors, Inc. 6% $10,802$567

$591

$596

$630

$878

$970

$984

$1,125

$1,414

$2,293

$0 $500 $1,000 $1,500 $2,000 $2,500

Top Biopharmaceutical Buyers and Sellers ($MM)



Fil Investments International -13% $3,980

Van Kampen Asset Management -10% $5,264

Credit Suisse Asset Management -27% $1,669

Morgan Stanley Investment Mgmt -12% $4,989

AXA Investment Managers Uk -21% $3,304

Allianz Global Investors -40% $1,481

Wellington Management Co. -3% $36,389


Marsico Capital Management -24% $4,084

Jennison Associates -19% $6,469($1,480)

($1,308)

($1,274)

($1,238)

($999)

($897)

($679)

($624)

($584)

($570)

($1,600) ($1,400) ($1,200) ($1,000) ($800) ($600) ($400) ($200) $0

46


UBS Global Asset Management 38% $2,437


Capital World Investors 6% $10,077

Shumway Capital Partners 111% $733

Fil Investments International 19% $2,225

JPMorgan Asset Management, Inc. 21% $1,950


Paulson & Co., Inc. 31% $1,281


Glenview Capital Management 31% $1,092$260

$272

$307

$309

$342

$348

$386

$544

$670

$677

$0 $100 $200 $300 $400 $500 $600 $700 $800

Top Medical Technology Buyers and Sellers ($MM)




BNP Paribas Arbitrage Snc -69% $101

Hotchkis & Wiley Capital Management -80% $65

Friess Associates -26% $786

Dodge & Cox, Inc. -6% $4,506

Loomis, Sayles & Co. Lp -45% $422


Jennison Associates -13% $3,042

Delaware Investment Advisers -65% $281

Relational Investors -55% $613

Wellington Management Co. -11% $10,721($1,392)

($740)

($512)

($448)

($380)

($349)

($282)

($279)

($257)

($223)

($1,600) ($1,400) ($1,200) ($1,000) ($800) ($600) ($400) ($200) $0

47

Top Health Care Service Buyers and Sellers ($MM)



Loomis, Sayles & Co. Lp -58% $86

Credit Suisse Asset Management -40% $215

Millennium Partners -35% $275

Harris Associates Lp -25% $494

AXA Rosenberg Investment Mgmt -52% $166

Jana Partners -62% $114

Glenview Capital Management -35% $349

Putnam Investment Management, Inc. -19% $881

American Century Investment Mgmt -18% $946

Goldman Sachs Asset Management -20% $1,288($317)

($202)

($202)

($185)

($184)

($183)

($161)

($145)

($141)

($117)

($350) ($300) ($250) ($200) ($150) ($100) ($50) $0



Jennison Associates 88% $881

JPMorgan Asset Management, Inc. 40% $1,021

Crédit Agricole Asset Management 194% $436


Turner Investment Partners, Inc. 40% $594

Calamos Advisors 68% $419

Norges Bank Investment Mgmt 42% $509

Citadel Investment Group 162% $227

Capital World Investors 25% $645

Chieftain Capital Management, Inc. 30% $521$120

$128

$140

$150

$169

$170

$254

$288

$290

$412

$0 $50 $100 $150 $200 $250 $300 $350 $400 $450

48

Health Care sector

equity asset

movement among

the top sub-$10

billion funds – as

measured by equity

assets under

management


Equity Movements Among the Top Sub-$10B Health Care FundsQ2 Change in Equity Assets

Institution Name City Style Bio

phar

ma

HC

Ser

vice

s

Med

Tec

h

Ove

rall

Chg

.in

HC

Ass

ets HC Assets

UnderMgmt($MM)

% FundsDevoted

to HC Ove

rall

Port

folio

Q2

Chg

. in

Ass

ets

FundsUnderMgmt($MM)

Orbimed Advisors, Inc. New York Sector Specific 5% 0% 5% 5% $3,998 98% 4% $4,088Sectoral Asset Management Montreal Growth 0% - 1% 0% $3,078 100% 0% $3,078Westfield Capital Management Boston Agg. Growth 8% 6% -1% 6% $2,813 29% 4% $9,604Healthcor Management New York Sector Specific 0% -14% 18% 9% $2,364 88% 8% $2,682Sectoral Asset Management (Geneva) Geneva Growth 3% - -19% 3% $2,277 100% 3% $2,277Bellevue Asset Management Küsnacht Growth -9% 0% -8% -9% $2,150 90% -8% $2,386Maverick Capital Ltd. Dallas Long/Short 9% - 23% 20% $2,084 21% 16% $9,818Glenview Capital Management New York Opportunistic 774% -35% 31% 38% $1,966 24% 12% $8,295Timessquare Capital Management New York Agg. Growth 38% -8% -7% -3% $1,863 21% 2% $8,870Walter Scott & Partners Ltd. Edinburgh Growth 3% 6% -3% 1% $1,843 24% 5% $7,817Frontpoint Partners Llc Greenwich Long/Short -3% -32% 7% -2% $1,711 41% 4% $4,132Iridian Asset Management Llc Westport Growth 21% 2% -16% 0% $1,535 21% 3% $7,175Gardner Lewis Asset Management Chadds Ford Agg. Growth 3% 3018% -6% 5% $1,468 21% -2% $7,115State Of Wisconsin Investment Board Madison Growth -3% 7% 2% -1% $1,419 16% -1% $8,669Fortress Investment Group New York Opportunistic 71% 0% -52% 0% $1,341 46% 9% $2,900Edgewood Management New York Growth 19% 51% 3% 20% $1,306 28% 9% $4,694Comerica Asset Management Detroit Growth -3% -10% -3% -4% $1,235 13% 0% $9,821Franklin Templeton Investment Mgmt London Value 8% -2% 1% 6% $1,207 15% -3% $8,311Baker Bros. Advisors Llc New York Sector Specific 2% 0% -10% 1% $1,167 85% 2% $1,381Sound Shore Management, Inc. Greenwich Value 18% - 0% 8% $1,164 19% -3% $6,089Valueact Capital Management San Francisco Turnaround -8% -9% 0% -7% $1,149 27% 12% $4,295Shumway Capital Partners Greenwich Long/Short -8% - 111% 44% $1,148 18% 49% $6,336Munder Capital Management Birmingham Growth 8% 4% -12% 0% $1,131 12% 0% $9,614Deerfield Management Co. New York Sector Specific -10% 21% -6% -6% $1,116 93% -6% $1,197Analytic Investors Los Angeles Growth -49% 10% 12% -7% $1,101 12% 2% $8,929Trilogy Global Advisors New York Growth 11% 91% 40% 27% $1,095 18% -1% $6,049Select Equity Group, Inc. New York Growth -18% -12% 18% -1% $1,047 20% 1% $5,177Carnegie Fond Ab Stockholm Growth 0% -21% 16% 3% $1,026 47% 1% $2,163Schroder Investment Mgmt New York Growth 66% 19% -9% 28% $1,022 16% -9% $6,298Metropolitan West Capital Mgmt Newport Beach Contrarian 18% 10% 17% 15% $1,020 12% 10% $8,807Oppenheimer Capital New York Value -17% 77% 7% -5% $1,017 12% -8% $8,777Perkins, Wolf, Mcdonnell & Co. Chicago Value -15% 34% -2% 0% $1,009 11% 8% $9,461The Renaissance Group Cincinnati Growth 29% -8% -1% 11% $999 16% 4% $6,065Nordea Investment Management Stockholm Growth 16% -4% 12% 15% $998 12% -1% $8,498Frontier Capital Management Co. Boston Agg. Growth 5% -11% -9% -5% $992 20% -2% $4,850

Median 3% 0% 0% 1% 21% 2%

% representative of change in assets between 3/31/08 and 6/30/08Source: Bigdough, excludes Indexed & Quantitative Investors“-” denotes accounts that have no holdings in the subsector

49

Top Health Care Buyers and Sellers ($MM) - <$10B Under Management




Glenview Capital Management 38% $1,966

Elliott Management Corp. 679% $444

Shumway Capital Partners 44% $1,148

Maverick Capital 20% $2,084

Icahn Associates Corp. 20% $1,970

Hussman Econometrics Advisors, Inc. 67% $714

Visium Asset Management 47% $894


Hilliard Lyons Capital Management Initiation $234$234

$256

$284

$287

$322

$342

$349

$387

$541

$1,414

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600



H. A. Schupf & Co. -76% $65

Capital International Sa Switzerland -20% $811

Bellevue Asset Management Ag -9% $2,150

Vinik Asset Management Lp -55% $171

Duquesne Capital Management -42% $363

Mcmorgan & Co. -75% $103

The Robert Wood Johnson Foundation -15% $2,094

Cantillon Capital Management -40% $709

Chase Investment Counsel Corp. -36% $894

Relational Investors -55% $613($740)

($507)

($471)

($361)

($307)

($263)

($211)

($211)

($203)

($201)

($800) ($700) ($600) ($500) ($400) ($300) ($200) ($100) $0

50



Glenview Capital Management 774% $526

Elliott Management Corp. 869% $429

Icahn Associates Corp. 20% $1,905

Schroder Investment Management NA 66% $583

AGF International Advisors Co. 184% $343

Visium Asset Management 35% $769

Hussman Econometrics Advisors, Inc. 65% $486

Hilliard Lyons Capital Management Initiation $192

Skandia Liv >1000% $206$191

$192

$192

$201

$222

$231

$322

$384

$465

$1,414

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600

Top Biopharmaceutical Buyers and Sellers ($MM) - <$10B Under Management




Pictet Asset Management -32% $360

Bellevue Asset Management Ag -9% $1,726

Independence Investments -53% $155

Mazama Capital Management, Inc. -26% $516

Analytic Investors -49% $186

Capital International Sa Switzerland -21% $664

Mcmorgan & Co. -74% $78

The Robert Wood Johnson Foundation -15% $2,094

Cantillon Capital Management -99% $5

Chase Investment Counsel Corp. -60% $333($501)

($476)

($361)

($221)

($180)

($178)

($178)

($177)

($175)

($167)

($600) ($500) ($400) ($300) ($200) ($100) $0

51


Shumway Capital Partners 111% $733


Glenview Capital Management 31% $1,092

Maverick Capital 23% $1,283

Healthcor Management Lp 18% $1,408

RR Partners Lp 313% $215

Cadence Capital Management 32% $538

Eton Park Capital Management Lp 52% $314

Trilogy Global Advisors 40% $336

Congress Asset Management Co., Inc. 34% $385$97

$97

$107

$129

$163

$213

$237

$260

$307

$386

$0 $50 $100 $150 $200 $250 $300 $350 $400 $450

Top Medical Technology Buyers and Sellers ($MM) - <$10B Under Management





Greenlight Capital, Inc. -53% $91

Highfields Capital Management Lp -51% $101

SRM Global -100% $0

Iridian Asset Management -16% $611

H. A. Schupf & Co. -77% $36

Cr Intrinsic Investors -73% $67

Vinik Asset Management Lp -97% $5

Duquesne Capital Management -92% $18

Relational Investors -55% $613($740)

($198)

($190)

($181)

($119)

($113)

($108)

($104)

($103)

($102)

($800) ($700) ($600) ($500) ($400) ($300) ($200) ($100) $0

52

Top Health Care Service Buyers and Sellers ($MM) - <$10B Under Management



Oz Management -36% $104

Ivory Investment Management Lp -60% $46

Cadence Capital Management -95% $4

Private Capital Management, Inc. -29% $178

Omega Advisors, Inc. -100% $0

Roxbury Capital Management -54% $82

Brown Investment Advisory, Inc. -57% $82

Alex Brown Investment Management -87% $17


Glenview Capital Management -35% $349($185)

($184)

($112)

($108)

($97)

($90)

($74)

($70)

($68)

($59)

($200) ($180) ($160) ($140) ($120) ($100) ($80) ($60) ($40) ($20) $0



Chieftain Capital Management, Inc. 30% $521

Gardner Lewis Asset Management >1000% $105

Larrain Vial Sa Inv. Mgmt 891% $93

Oppenheimer Capital 77% $186

Trilogy Global Advisors 91% $165

Principled Capital Management 127% $137

Diamondback Capital Management 400% $92

Brookside Capital Investors Initiation $62

Midcap Spdr Trust Services 22% $327

Kingdon Capital Management 49% $168$55

$59

$62

$74

$77

$79

$81

$84

$102

$120

$0 $20 $40 $60 $80 $100 $120 $140

Minneapolis800 Nicollet Mall

Suite 800Minneapolis, MN 55402

(612) 303-6000

LondonOne South Place

London EC2M 2RB011 44 20 3142-8700

San Francisco345 California Street

Suite 2400San Francisco, CA 94104

(415) 277-1500

New YorkThe Chrysler Center

405 Lexington AvenueNew York, NY 10174

(212) 284-9300

Disclaimer:

Information contained in this material is based on data obtained from sources we deem to be reliable; however, it is not guaranteed as to accuracy and does not purport to be complete. Nothing contained in this material is intended to be a recommendation of a specific security or company nor is any of the information contained herein intended to constitute an analysis of any company or security reasonably sufficient to form the basis for any investment decision. Nothing contained in this material constitutes an offer to buy or sell or the solicitation of an offer to buy or sell any security. Officers or employees of affiliates of Piper Jaffray & Co., or members of their families, may have a beneficial interest in the securities of a specific company mentioned in this publication and may purchase or sell such securities in the open market or otherwise.

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