IPO RESEARCH MOLMED SpA by jizhen1947

VIEWS: 24 PAGES: 32

									                                                                                                  IPO RESEARCH
                                                                                                       MOLMED SpA




                                                                                                                 25 January 2008



    Info
                                                         Cutting Edge Research on Cancer
    Sector                                 Biotech       •   Established in 1996, MolMed is a biotechnology company focused on the
                                                             research, pre-clinical and clinical development of innovative biotech-based
                                                             cancer therapies, including cellular/gene therapies, vascular targeting
                                                             agents and therapeutic vaccination. The main shareholders are Science
                                  25 January 2008
                                                             Park Raf (90% controlled by the San Raffaele Foundation), Airain Lda,
                                                             Fininvest Spa (Silvio Berlusconi), Delfin Sàrl (Leonardo Del Vecchio) and
                                   Equity Analyst:           H-Equity Sàrl (Ennio Doris).
                                     Bruno Permutti      •   MolMed is currently developing three main product candidates: 1) TK for
                      bruno.permutti@bancaimi.com            the treatment of Acute Myelogenous Leukaemia (AML), which is
                                  +39 02 8021 5772           commencing a Phase III clinical trial in Europe in 2008, after the successful
                                                             completion of a multi-centre Phase I/II trial. TK is a cell therapy enabling
                                                             safe haematopoietic stem cell transplantation (HSCT) from partially
                                                             compatible donors; 2) ARENEGYR, a vascular targeting agent, which is in
                                                             Phase II clinical trial as single agent for the treatment of colorectal
                                                             carcinoma, small cell lung cancer (SCLC), hepatocarcinoma and
                                                             mesothelioma (asbestos cancer); and 3) M3TK, a therapeutic vaccine for
                                                             patients with stage III/IV melanoma, which is in Phase I/II clinical trial.
                                                         •   Management’s strategy mainly focuses the group’s resources on the
                                                             development of drug candidates: TK, ARENEGYR and M3TK.
                                                             Management is also considering a licensing agreement with a
                                                             pharmaceutical/biotech      company   for    the    development       and
                                                             commercialisation of ARENEGYR outside Europe and of M3TK worldwide,
                                                             except for Asia where an out-licensing agreement with Takara Bio is
                                                             already in place (for both TK and M3TK). IPO proceeds should be mainly
                                                             used to finance R&D programmes and the in-licensing of new technologies.
                                                             An investment in a new Good Manufacturing Practice facility could also be
                                                             taken in consideration.

                                                         •   We believe that MolMed has a sound balance sheet: at end-September
  NOT FOR DISTRIBUTION IN OR INTO THE                        2007, it posted EUR 8.4M net cash and EUR 13.5M shareholders’ equity.
  UNITED STATES, CANADA, AUSTRALIA OR                        In the 2004-9M07 period, MolMed mainly financed its operating activity
  JAPAN.                                                     through capital increases for a total amount of EUR 45.5M; the average
                                                             annual cash burn amounted to approx. EUR 10M (EUR 10M in 2004, EUR
                                                             8.8M in 2005 and EUR 11.4M in 2006).




Banca IMI S.p.A. Piazzetta Giordano Dell’Amore 3 20121 Milano Tel +39 02 7261.1 www.bancaimi.it
Share capital Euro 662,464,000.00 ABI Code 3249.0 Company Register number, Tax Code, and VAT Code 04377700150 Bank Register enrollment
number 5570 Company under the management and coordination of Intesa Sanpaolo S.p.A. and part of the Intesa Sanpaolo Group, enrolled in the
Banking Group Register, member of the Interbank Deposit Protection Fund and the National Guarantee Fund.
Molmed SpA                                                                                   25 January 2008




                                [This page has been left intentionally blank.]




2                                                                           Intesa Sanpaolo Equity Research
             NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
25 January 2008                                                                                   Molmed SpA




                                    Disclaimer
                                    THIS DOCUMENT HAS BEEN PREPARED BY THE RESEARCH DEPARTMENT
                                    OF INTESA SANPAOLO S.p.A. (“INTESA SANPAOLO”) INDEPENDENTLY OF
                                    MOLMED S.P.A. (THE “COMPANY”), ANY OTHER SYNDICATE MEMBER OR
                                    ANY OF THEIR RESPECTIVE AFFILIATES.

                                    THE INFORMATION AND OPINIONS IN THIS DOCUMENT ARE ENTIRELY
                                    THOSE OF INTESA SANPAOLO AS PART OF ITS INTERNAL RESEARCH
                                    ACTIVITY AND NOT AS A MANAGER OR UNDERWRITER OF THE OFFERING
                                    OR AS AN AGENT OF OR FINANCIAL ADVISER TO THE COMPANY OR ANY
                                    OTHER SYNDICATE MEMBER OR ANY OF THEIR RESPECTIVE AFFILIATES.
                                    INTESA SANPAOLO HAS NO AUTHORITY WHATSOEVER TO MAKE ANY
                                    REPRESENTATION OR WARRANTY ON BEHALF OF THE COMPANY OR ANY
                                    OTHER SYNDICATE MEMBER OR ANY OF THEIR RESPECTIVE AFFILIATES
                                    IN CONNECTION WITH THE PROPOSED OFFERING OR OTHERWISE.

                                    THIS DOCUMENT IS CONFIDENTIAL AND IS BEING FURNISHED TO YOU
                                    SOLELY FOR YOUR INFORMATION AND MAY NOT BE REPRODUCED OR
                                    REDISTRIBUTED TO ANY OTHER PERSON OR PUBLISHED, IN WHOLE OR
                                    IN PART, FOR ANY PURPOSE.

                                    NEITHER THIS DOCUMENT NOR ANY COPY OF IT MAY BE TAKEN,
                                    TRANSMITTED INTO OR DISTRIBUTED IN THE UNITED STATES, CANADA
                                    AUSTRALIA OR JAPAN. THE DISTRIBUTION OF THIS DOCUMENT IN OTHER
                                    JURISDICTIONS MAY ALSO BE RESTRICTED BY LAW AND PERSONS INTO
                                    WHOSE POSSESSION THIS DOCUMENT COMES SHOULD INFORM
                                    THEMSELVES ABOUT AND OBSERVE ANY SUCH RESTRICTIONS. BY
                                    ACCEPTING THIS REPORT YOU AGREE TO BE BOUND BY THE
                                    FOREGOING INSTRUCTIONS.

                                    THIS DOCUMENT DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER
                                    FOR SALE OR SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES
                                    NOR SHALL IT OR ANY PART OF IT FORM THE BASIS OF OR BE RELIED ON
                                    IN CONNECTION WITH ANY CONTRACT OR COMMITMENT WHATSOEVER.
                                    ANY DECISION TO PURCHASE SHARES IN THE OFFERING SHOULD BE
                                    MADE SOLELY ON THE BASIS OF THE INFORMATION TO BE CONTAINED IN
                                    THE OFFERING CIRCULAR TO BE PUBLISHED IN DUE COURSE IN
                                    RELATION TO THE OFFERING.

                                    THE INFORMATION CONTAINED IN THIS DOCUMENT IS SUBJECT TO
                                    CHANGE WITHOUT NOTICE, ITS ACCURACY IS NOT GUARANTEED AND IT
                                    MAY NOT CONTAIN ALL MATERIAL INFORMATION CONCERNING THE
                                    COMPANY. ACCORDINGLY, NO REPRESENTATION OR WARRANTY,
                                    EXPRESS OR IMPLIED, IS MADE AS TO, AND NO RELIANCE SHOULD BE
                                    PLACED ON, THE FAIRNESS, ACCURACY, COMPLETENESS OR
                                    CORRECTNESS OF THE INFORMATION AND OPINIONS CONTAINED IN
                                    THIS DOCUMENT. NONE OF THE COMPANY, ANY SYNDICATE MEMBER OR
                                    ANY OF THEIR RESPECTIVE AFFILIATES OR DIRECTORS, MEMBERS,
                                    OFFICERS OR EMPLOYEES SHALL HAVE ANY LIABILITY WHATSOEVER (IN
                                    NEGLIGENCE OR OTHERWISE) FOR ANY LOSS HOWSOEVER ARISING
                                    FROM ANY USE OF THIS DOCUMENT OR ITS CONTENTS OR OTHERWISE
                                    ARISING IN CONNECTION WITH THIS DOCUMENT.

                                    THIS DOCUMENT IS FOR DISTRIBUTION ONLY TO PERSONS WHO (I) HAVE
                                    PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS
                                    FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND
                                    MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (AS AMENDED,
                                    THE “FINANCIAL PROMOTION ORDER”), (II) ARE PERSONS FALLING WITHIN
                                    ARTICLE   49(2)(A) TO   (D)  (“HIGH     NET  WORTH    COMPANIES,




Intesa Sanpaolo Equity Research                                                                           3
                  NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
Molmed SpA                                                                                   25 January 2008


                                UNINCORPORATED ASSOCIATIONS ETC”) OF THE FINANCIAL PROMOTION
                                ORDER, (III) ARE OUTSIDE THE UNITED KINGDOM, OR (IV) ARE PERSONS
                                TO WHOM AN INVITATION OR INDUCEMENT TO ENGAGE IN INVESTMENT
                                ACTIVITY (WITHIN THE MEANING OF SECTION 21 OF THE FINANCIAL
                                SERVICES AND MARKETS ACT 2000) IN CONNECTION WITH THE ISSUE OR
                                SALE OF THE SHARES MAY OTHERWISE LAWFULLY BE COMMUNICATED
                                OR CAUSED TO BE COMMUNICATED (ALL SUCH PERSONS TOGETHER
                                BEING REFERRED TO AS “RELEVANT PERSONS”). THIS DOCUMENT IS
                                DIRECTED ONLY AT RELEVANT PERSONS AND MUST NOT BE ACTED ON
                                OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY
                                INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS DOCUMENT
                                RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE
                                ENGAGED IN ONLY WITH RELEVANT PERSONS.

                                THIS DOCUMENT IS FOR DISTRIBUTION IN ITALY ONLY TO QUALIFIED
                                INVESTORS UNDER (I), (II) AND (III) OF ARTICLE 2, PARAGRAPH 1 LETTER
                                E) OF THE EU DIRECTIVE 2003/71, WITH THE EXCEPTION OF (I)
                                MANAGEMENT COMPANIES AUTHORISED TO MANAGE INDIVIDUAL
                                PORTFOLIOS ON BEHALF OF THIRD PARTIES (SOCIETÀ DI GESTIONE DEL
                                RISPARMIO); AND (II) FIDUCIARY COMPANIES MANAGING PORTFOLIO
                                INVESTMENTS REGULATED BY ARTICLE 60, PARAGRAPH 4, OF DECREE
                                NO. 415 OF 23 JULY 1996 (SOCIETÀ FIDUCIARIE), AND (III) LEGAL PERSONS
                                INDICATED IN ARTICLE 2, PARAGRAPH A, LETTER E, (iii) OF EU DIRECTIVE
                                2003/71 WHICH DO NOT MEET AT LEAST TWO OF THE FOLLOWING
                                REQUIREMENTS: (i) A BALANCE SHEET TOTAL EQUAL TO AT LEAST EURO
                                20,000,000 (ii) A NET TURNOVER EQUAL TO AT LEAST EURO 40,000,000 OR
                                (iii) OWN FUNDS EQUAL TO AT LEAST EURO 2,000,000.
                                THIS DOCUMENT HAS BEEN PREPARED BY AN ENTITY WHICH MAY HAVE,
                                DIRECTLY OR THROUGH OTHER ENTITIES OF THE SAME GROUP, A
                                SPECIFIC INTEREST IN RESPECT OF MOLMED S.P.A. AND/OR THE
                                PROPOSED OFFERING. IN PARTICULAR, BANCA IMI ACTS AS JOINT
                                GLOBAL CO-ORDINATOR, JOINT BOOKRUNNER AND JOINT LEAD
                                MANAGER IN THE INSTITUTIONAL OFFERING AND IS LEAD MANAGER,
                                SPONSOR AND SPECIALIST IN THE ITALIAN PUBLIC OFFERING.
                                THIS DOCUMENT HAS BEEN PREPARED BY BRUNO PERMUTTI, RESEARCH
                                ANALYST OF INTESA SANPAOLO AUTHORISED BY THE BANK OF ITALY.
                                THE REMUNERATION OF THE NATURAL OR LEGAL PERSONS THAT WERE
                                INVOLVED IN THE PREPARATION OF THE RESEARCH REPORT IS NOT TIED
                                TO INVESTMENT BANKING TRANSACTIONS PERFORMED BY BANCA IMI
                                S.p.A.
                                THE MANAGER BANCA IMI IS PARTY TO AN AGREEMENT WITH THE
                                COMPANY RELATING TO THE PROVISION OF INVESTMENT BANKING
                                SERVICES.




4                                                                        Intesa Sanpaolo Equity Research
             NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
25 January 2008                                                                                                                          Molmed SpA




                                    Contents
                                    INVESTMENT SUMMARY ..................................................................................... 7
                                      POSITIVES ............................................................................................................ 7
                                      NEGATIVES ........................................................................................................... 7
                                    STRUCTURE OF THE IPO .................................................................................... 9
                                    VALUATION ......................................................................................................... 10
                                      SOP-DCF.......................................................................................................... 10
                                      DISCOUNTED P/E ................................................................................................ 11
                                    GROUP PROFILE ................................................................................................ 12
                                      THE HISTORY ...................................................................................................... 12
                                      THE MANAGEMENT TEAM ...................................................................................... 13
                                      THE PRODUCT PIPELINE ....................................................................................... 14
                                        TK ................................................................................................................. 16
                                        ARENEGYR ................................................................................................. 17
                                        M3TK ............................................................................................................ 20
                                      STRATEGIC AGREEMENTS .................................................................................... 22
                                    STRATEGY .......................................................................................................... 23
                                      SWOT ANALYSIS ................................................................................................ 24
                                      COMPETITIVE FORCES ......................................................................................... 24
                                    FINANCIALS ........................................................................................................ 25
                                      2004/9M07 RESULTS .......................................................................................... 25
                                    EARNINGS OUTLOOK ........................................................................................ 26
                                        TK ................................................................................................................. 26
                                        ARENEGYR ................................................................................................. 26
                                        M3TK ............................................................................................................ 27




Intesa Sanpaolo Equity Research                                                                                                                            5
                  NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
Molmed SpA                                                                                   25 January 2008




                                [This page has been left intentionally blank.]




6                                                                           Intesa Sanpaolo Equity Research
             NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
25 January 2008                                                                                          Molmed SpA




                                    Investment Summary

                                    Positives
 Highly experienced and             The key members of MolMed’s management all have pharmaceutical/medical
 committed management               and/or financial backgrounds. The President and CEO, Claudio Bordignon,
                                    professor of haematology at the Milan San Raffaele Vita Salute University, has
                                    extensive knowledge and experience in the gene and cellular therapy fields.
                                    Marina Del Bue, General Director since 2000, has been working in the
                                    pharmaceutical industry for more than 20 years. CFO Enrico Cappelli has a strong
                                    accountancy and finance background, while Holger Neecke, Director of Business
                                    Development, holds a PhD in Genetics at the Milan University.
Focused on cutting-edge             MolMed’s research and development capabilities are mainly focused on biological
anti-cancer therapies               cancer therapies currently representing the cutting-edge of anti-cancer drug
                                    research. The company is also focused on the development of potential
                                    treatments for advanced tumours, with limited therapeutic options currently
                                    available. We believe that MolMed’s focus on clear unmet clinical needs should
                                    allow it to enter the cancer drugs market without facing the significant marketing
                                    costs that would be required to directly attack well-established competitors.

Rich news-flow expected in          The start of the Phase III registration trial (TK008) in Europe of TK for the
the next 18-24 months               treatment of high-risk acute myeloid leukaemia is planned in 1Q08. We expect
                                    interim results of several ongoing Phase I and II clinical trials of ARENEGYR to be
                                    released between 1H08 and 1H09, while we expect interim results of Phase I/II
                                    trial for M3TK to be published by the end of this year. The company is considering
                                    entering into an out-licensing agreement for ARENEGYR in the US and in the rest
                                    of the world, and for M3TK worldwide (with the exception of Asia) within the next
                                    two years.
                                    MolMed should benefit from preferential access to the San Raffaele Foundation
Direct access to the SRF
                                    (SRF) research projects portfolio, thanks to an option agreement concerning the
research projects portfolio
                                    right to in-license any current and future intellectual property developed by SRF in
therapies                           the fields of gene and molecular treatments for cancer and AIDS. We believe the
                                    agreement should allow the company to limit research and pre-clinical
                                    development costs.

TK and M3TK already out-            MolMed already signed an important partnership with Takara Bio, a company
licensed in Asia                    active in gene and DNA-related businesses, listed on the Tokyo Stock Exchange.
                                    In 2003 MolMed out-licensed to Takara Bio the development, manufacturing and
                                    commercialisation in the Asian countries of both TK and M3TK. In addition, in
                                    2005 MolMed further enhanced its relationship with Takara Bio by signing another
                                    agreement concerning the joint development and marketing of the anti-AIDS gene
                                    therapy MM-F12.
ARENEGYR, a potential               ARENEGYR, the vascular targeting agent the company is developing for the
blockbuster drug                    treatment of several solid tumours, could have the potential to become a
                                    blockbuster drug: according to our estimates and 2002 Globocan data, the first
                                    three drug candidates’ possible indications (colorectal cancer, hepatocarcinoma
                                    and small cell lung cancer) could generate peak sales of approximately EUR 2Bn
                                    in Europe and the US together.




                                    Negatives
A tough market                      The company operates in a highly competitive environment with more than 1,000
environment                         pharmaceutical and biotech companies focused on the development of innovative
                                    cancer therapies.




Intesa Sanpaolo Equity Research                                                                                      7
                  NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
Molmed SpA                                                                                              25 January 2008


    Risks common to every             MolMed is an early-stage biotech company, characterised by very low visibility on
    early-stage biotech               future trends. In our opinion, the main risks are: 1) the fact that no self-developed
    company                           products have ever reached the market, 2) significant additional investments in
                                      R&D, regulatory, sales and marketing activity will be required to bring existing
                                      product candidates on the market; and 3) even if successfully developed and
                                      marketed, the drug candidates could fail to generate the expected revenues and
                                      profitability.

    ARENEGYR and                      The Phase II studies on ARENEGYR, in our view, the most promising drug
    partnerships, a lot to do         candidate in terms of potential revenues, are still at early stages, with a limited
                                      number of patients being enrolled and treated. In addition, important partnerships
                                      in the US and/or Europe for the out-licensing of ARENEGYR and M3TK are still to
                                      be finalised.
    Company valuation                 According to our valuation, the company’s value is strongly related to
    strongly dependent on a           ARENEGYR. We believe its successful development is, therefore, critical for
    single product                    investors.




8                                                                                   Intesa Sanpaolo Equity Research
                   NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
25 January 2008                                                                                                                                                          Molmed SpA




                                              Structure of the IPO
 The entire offer represented                 MolMed’s major shareholders are Science Park Raf (28.18%), 90% controlled by
 by newly issued shares                       the San Raffaele Foundation, Airain Lda (28.16%) and Fininvest Spa (21.84%)
                                              controlled by Silvio Berlusconi. The remaining 21.82% of MolMed share capital is
                                              equally divided between H-Equity Sàrl SICAR (10.91%) controlled by Ennio Doris
                                              and Delfin Sàrl (10.91%) held by Leonardo Del Vecchio.
                                              MolMed is to be listed on the Italian Stock Exchange (MTA) through a public
                                              offering of ordinary shares to retail investors in Italy and an international offering
                                              reserved to institutional investors outside the US. The structure of the operation
                                              should be as follows:
                                              •         Global offering through the issue of 26,116,952 new shares;
                                              •         Greenshoe up to 15% of the global offering.
 Proceeds from IPO to                         The entire offer will be represented by newly issued shares, while post-IPO market
 finance R&D programmes                       float should be 27.7% of the total share capital should the greenshoe be fully
                                              exercised. According to the group, proceeds from the IPO should mainly be used
                                              to finance the current and future R&D programmes and the in-licensing of new
                                              technologies and patents.


                                              Table 1: MolMed - IPO Structure
                                                                                                                No. of shares                                             % of total issue
                                               New shares issued                                                  26,116,952                                                       100.0%
                                               Existing shares sold                                                         0                                                         0.0%
                                               Free float after IPO                                               26,116,952                                                       100.0%
                                               Greenshoe (up to 15% of Initial Off.)                                3,917,543                                                       13.0%
                                               Free float after IPO and greenshoe                                 30,034,495                                                       100.0%
                                               New shares issued                                                  30,034,495                                                       100.0%
                                               Existing shares sold                                                         0                                                         0.0%
                                              Source: Intesa Sanpaolo Equity Research elaboration



Table 2: MolMed – Pre and Post IPO Share Capital
Shareholder                Pre IPO           Public           New shares          Post IPO                       Greenshoe                      Post IPO and greenshoe
                           No.         %       sale               issued              No.      %                        No.                              No.           %
Science Park Raf    22,080,684    28.18%          0                            22,080,684  21.1%                          0                       22,080,684       20.4%
Airain              22,063,374    28.16%          0                            22,063,374  21.1%                          0                       22,063,374       20.4%
Fininvest Spa       17,103,408    21.84%          0                            17,103,408  16.4%                          0                       17,103,408       15.8%
SICAR                8,551,695    10.91%          0                             8,551,695   8.2%                          0                        8,551,695        7.9%
Delfin Sàrl          8,551,695    10.91%          0                             8,551,695   8.2%                          0                        8,551,695        7.9%
Market                              0.0%                         26,116,952    26,116,952  25.0%                  3,917,543                       30,034,495       27.7%
Total               78,350,856    100.0%            0            26,116,952   104,467,808 100.0%                  3,917,543                      108,385,351      100.0%
Source: Company data and Intesa Sanpaolo Research elaboration


                                              Chart 1 - Chart 2: MolMed – Pre and Post-IPO Shareholders Structure

                                                  Delf in Sàr l; 10.91%                                                                                            Science Park Raf ,

                                                                                           Science Park Raf ;                                                            20.4%
                                                                                                                            Mar ket , 27.7%
                                                                                                 28.18%
                                                     SICAR; 10.91%




                                                                                                                    Delf in Sàrl, 7.9%


                                                                                                                                                                            Air ain, 20.4%
                                                            Fininvest Spa;
                                                                21.84%
                                                                                                                                                       Fininvest Spa,
                                                                                                                                         SICAR, 7.9%
                                                                               Air ain; 28.16%                                                             15.8%




                                              Source: Intesa Sanpaolo Equity Research elaboration




Intesa Sanpaolo Equity Research                                                                                                                                                              9
                       NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
Molmed SpA                                                                                                        25 January 2008




                                   Valuation
 Two valuation methods:            In our opinion, several factors should be evaluated when investing in a biotech
 SOP based on drug                 company, such as the management team’s quality and credibility, the expected
 candidates’ risk adjusted         news-flow, the number of products and possible indications, the patent positioning,
                                   the stock liquidity and the shareholders’ structure. All these factors should be
 DCF and discounted P/E
                                   considered when deciding to invest in a biotech company, but contribute little to
                                   the calculation of its fair valuation.
                                   We believe that two main methods could be used to determine a biotech company
                                   valuation: sum-of-the-parts based on drug candidates’ risk adjusted discounted
                                   cash flow (SOP-DCF) and discounted P/E.



                                   SOP-DCF
                                   Through this approach, we build a cash flow model for the company’s main
                                   product candidates and based on the estimated drug’s approval probability and on
                                   the weighted average cost of capital, we calculate the risk adjusted NPV of the
                                   single product. Based on the studies conducted by DiMasi JA at Tufts University
                                   (2001 and 2007), we believe the following product candidates’ success
                                   probabilities could be considered a reference point for investors: 4% for pre-
                                   clinical products, 18% for Phase I, 24% for Phase IIa, 42% for Phase IIb, 60% for
                                   Phase III and 80% for drugs for which a New Drug Application (NDA) approval has
                                   been filed.
                                   Cash flows included in our calculations extend until the drug’s patent protection
                                   expiration; taxes are charged based on the company’s tax rate.
                                   The valuation is obtained by summing the risk adjusted NPV of individual product
                                   candidates, the risk adjusted NPV of costs not attributable to any single product
                                   and the net financial position. Indirect costs are estimated based on the weighted
                                   average approval probability attributed to the drug candidates’ portfolio.
                                   The matrix table below shows the MolMed SOP-DCF valuation sensitivity to
                                   different success probabilities of TK and ARENEGYR with that related to M3TK
                                   maintained fixed at 20%. We did not consider the valuation sensitivity to M3TK
                                   because, based on our model that assume to out-license M3TK at the end of the
                                   ongoing Phase I/II clinical trial, we found its impact on the SOP-DCF valuation to
                                   be modest. Both cash flows generated by the drug candidates or costs not
                                   attributable to any single product are discounted at a 13.6% WACC resulting from
                                   a 4.6% risk free rate (a five-year average of 10Y BTP), a 4.5% risk premium and a
                                   2x beta which is in the upper end of the beta values (Source: JCF) observed
                                   among the Nasdaq Biotech index constituents’ list.

                                   Table 3: MolMed - Valuation Sensitivity Analysis to Drugs’ Approval Probability
                                                                            ARENEGYR approval probability
                                                              EUR M   18%20.0%              22.0%      24.0%       26.0%     28.0%
                                        42.5%                 272           302               332           362      391      421
                                    TK approval probability




                                        45.0%                 273           303               332           362      392      422
                                        47.5%                 273           303               333           363      392      422
                                        50.0%                 274           304               333           363      393      423
                                        52.5%                 274           304               334           364      393      423
                                        55.0%                 275           305               334           364      394      424
                                        57.5%                 275           305               335           364      394      424
                                        60.0%                 276           305               335           365      395      424
                                        62.5%                 276           306               336           365      395      425
                                        65.0%                 277           306               336           366      396      425
                                        67.5%                 277           307               337           366      396      426
                                   Source: Intesa Sanpaolo Equity Research estimates




10                                                                                           Intesa Sanpaolo Equity Research
                NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
25 January 2008                                                                                                  Molmed SpA


                                    Discounted P/E
                                    A rougher yet widely used valuation method for early-stage companies is the
                                    discounted P/E. The table below shows the sensitivity of MolMed’s valuation to the
                                    Biotech industry P/E and to the discount rate applied to the future expected net
                                    profits. The table is built with reference to the company’s net profit we estimate
                                    when we forecast it to reach its peak EBIT result. We also highlight that the
                                    current 2008 Nasdaq Biotech Index P/E is 37.3x (Source: JCF), while the discount
                                    rate generally applied by the market to the future earnings of early-stage biotech
                                    companies is approx. 50%.

                                    Table 4: MolMed - Valuation Sensitivity to Sector P/E and Discount Rate
                                                                                         P/E ratio (x)
                                                         EUR M   29.00   31.00   33.00        35.00      37.00   39.00   41.00
                                                         40.0%     521     557     593           629       665     701     737
                                                         42.5%     429     459     488           518       547     577     607
                                                                   354     379     403           428       452     476     501
                                     Discount rate (%)



                                                         45.0%
                                                         47.5%     294     314     334           354       375     395     415
                                                         50.0%     244     261     278           295       311     328     345
                                                         52.5%     203     217     232           246       260     274     288
                                                         55.0%     170     182     194           205       217     229     241
                                                         56.0%     159     169     180           191       202     213     224
                                                         57.0%     148     158     168           178       189     199     209
                                                         58.0%     138     147     157           166       176     185     195
                                                         59.0%     129     137     146           155       164     173     182
                                                         60.0%     120     128     137           145       153     161     170
                                    Source: Intesa Sanpaolo Equity Research estimates




Intesa Sanpaolo Equity Research                                                                                          11
                  NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
Molmed SpA                                                                                                                         25 January 2008




                                     Group Profile

                                     The history
 Born to provide cell therapy        Established in 1996 as a joint venture between Science Park Raf (a company
 services and evolved to a           controlled by the San Raffaele Foundation) and Boehringer Mannheim GmbH to
 drug development                    provide cell therapy services to the San Raffaele Hospital, MolMed is today a
 company                             biotechnology company focused on the research, pre-clinical and clinical
                                     development of innovative biotech-based cancer therapies including cellular/gene
                                     therapies, vascular targeting agents and therapeutic vaccination. Its finance,
                                     clinical development, quality assurance and regulatory activities are managed by
                                     around 77 people; all based in Milan (Italy), close to the San Raffaele Hospital
                                     headquarters. Note that the San Raffaele Scientific Institute is among the most
                                     important European biomedical research institutes with over 500 scientists and in
                                     2006, the 1,400-bed San Raffaele Hospital conducted 250 clinical studies.
                                     MolMed also runs an in-house Good Manufacturing Practice (GMP) certified
                                     facility formally authorised for manufacturing clinical-grade medicinal products
                                     used in both MolMed’s own ongoing clinical trials or trials conducted by external
                                     clients. The company does not currently have any sales and marketing capability
                                     as no product candidates are close to market launch.

                                     Chart 3: MolMed - Business Model


                                                                 Quality Assurance                                       Activities currently not
                                                                                                                         conducted by M olM ed.
                                                                                                                         Anticipated to be
                                                                                                                         shared with licensees,
                                                                 Quality Control                                         or partially outsourced



                                                                 Regulatory Affairs



                                                                      Cl. trial manufact.        Industrial manufact.


                                                            Preclinical dev.

                                                                     Process          Clinical       Marketing
                                                Research           development                                          Hospital             Patient
                                                                                   Development        & Sales
                                                                   Toxicology
                                                                    & Safety




                                                                                                                              Activities currently not
                                                                                                                              conducted by M olM ed.
                                                                                                                              Anticipated to be shared with
                                                                                                                              licensees


                                     Source: Company data


Three main drug                      MolMed is currently developing three main following product candidates: 1) TK for
candidates in clinical trials        the treatment of Acute Myelogenous Leukaemia (AML), commencing a Phase III
                                     clinical trial in Europe in 2008 after the successful completion of a multi-centre
                                     Phase I/II trial. TK is a cell therapy enabling safe haematopoietic stem cells
                                     transplantation (HSCT) from partially compatible donors. HSCT is the only
                                     potentially curative therapy for this kind of leukaemia; yet its use is currently
                                     limited since the company estimates that not more than 40% of the eligible
                                     patients have fully matched donors; 2) ARENEGYR, a vascular targeting agent, in
                                     Phase II clinical trial as single agent for the treatment of colorectal carcinoma,
                                     small cell lung cancer (SCLC), hepatocarcinoma and mesothelioma (asbestos
                                     cancer). Some studies are also evaluating ARENEGYR in combination with
                                     chemotherapies, such as doxorubicin, cisplatin and oxaliplatin; and 3) M3TK, a
                                     cancer vaccine for patients with stage III/IV melanoma in Phase I/II clinical trial.
                                     In addition to the three drug candidates, MolMed is currently conducting a
                                     pre-clinical study on NGR-IFNγ, a vascular targeting agent selectively acting on
                                     tumour blood vessels, and research on a gene therapy for AIDS (MM-F12) and
                                     another vascular targeting agent (NGR-IL12).



12                                                                                                   Intesa Sanpaolo Equity Research
                  NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
 25 January 2008                                                                                                      Molmed SpA


                                     In the following table, we summarise the key events in MolMed’s history.

                                     Table 5: MolMed – Industrial History (1996-2007)
                                     1996 Established as a joint venture between Boehringer Mannheim and Science Park Raf to
                                          provide cell therapy services to the San Raffaele Hospital
                                     1999 Roche (Boehringer Mannheim) sells its stake to Airain
                                     2000 MolMed changes its business model: from service to product company
                                     2001 In-licensing from San Raffaele Foundation of IP (Intellectual property) related to TK,
                                          ARENEGYR and M3TK and acquisition of Genera, a company active in gene therapy and
                                          molecular medicine for cancer and AIDS treatment; option right agreement on IP
                                          developed by the San Raffaele Foundation
                                     2002 Start of TK Phase I/II clinical trial (TK007); incorporation of Genera Spa
                                     2003 Start of M3TK Phase I/II clinical trial (IPR02); Authorisation as GMP facility; Out-licensing
                                          of TK and M3TK to Takara Bio for Asia
                                     2004 Start of ARENEGYR Phase I dose-escalating study; New shareholders (Fininvest, H-
                                          Equity SICAR and Delfin) entering the company
                                     2005 Start of ARENEGYR Phase I low dose study; Signature of AIDS Gene Therapy research
                                          agreement with Takara Bio; Completion of TK007 trial (fresh cohort)
                                     2006 Start of ARENEGYR/doxorubicin Phase I combination study
                                     2007 Phase II of ARENEGYR in colorectal, lung and liver cancer and in mesothelioma; Filed
                                          IMPD (Investigational Medicinal Product Dossier) and clinical protocol for Phase III trial of
                                          TK in AML (Acute Mieloid Leukaemia) treatment
                                     Source: Company data



New shareholders in 2004             In the 2004-September 2007 period, MolMed financed its drug development
to finance R&D                       activity through capital increases for a total amount of EUR 45.5M. In 2004 the two
programmes                           main shareholders, Science Park Raf and Airain, were diluted by the entrance of
                                     the new shareholders Fininvest (Silvio Berlusconi), H-Equity SICAR (Ennio Doris)
                                     and La Leonardo Finanziaria (Leonardo Del Vecchio). According to our
                                     calculations, in the last three years, the net cash annually used in operating
                                     activities amounted to EUR 10M, EUR 8.8M and EUR 11.4M in 2004, 2005 and
                                     2006, respectively, while in the nine months of 2007 cash burn totalled EUR 9.5M.
                                     At 30 September 2007, MolMed posted a shareholders’ equity of EUR 12.8M and
                                     a net cash position of EUR 8.5M, entirely represented by available bank deposits.

                                     Table 6: MolMed – Equity Financing History (2004-9M07)
                                                                                                                     Gross Proceeds
                                      Year    Equity Financing                                                              (EUR M)
                                      2004    First tranche private placement (to Fininvest, H-Equity and Delfin)               10.1
                                      2005    Second tranche private placement (EUR 9.9M from Fininvest, H-                     17.9
                                              Equity and Delfin) and internal capital increase
                                      2006    Capital increase (internal round)                                                    8.0
                                      9M07    Capital increase (internal round)                                                    9.5
                                              Total Financing 2004-9M07                                                           45.5
                                     Source: Intesa Sanpaolo calculations on company data




                                     The management team
                                     Members of MolMed’s management have all pharmaceutical/medical and/or
                                     finance backgrounds. Below, we outline the executive management’s main
                                     professional features.
A high profile management
                                     Claudio Bordignon: President and CEO, was a principal founder of the company in
team                                 1996. He is professor of haematology at the Milan San Raffaele Vita Salute
                                     University; he holds great knowledge in the gene and cellular therapy fields and
                                     was a pioneer in the clinical validation of several successful gene-based therapies
                                     for both genetic and acquired diseases. Bordignon is among the 22 eminent
                                     founding members of the Scientific Council of the European Research Council and
                                     was also Scientific Director of the San Raffaele Scientific Institute.
                                     Marina Del Bue: General Director since 2000, she has been working in the
                                     pharmaceutical industry for more than 20 years with focus on the economic
                                     aspects of the drug development process. Former R&D controller in the Menarini




 Intesa Sanpaolo Equity Research                                                                                                  13
                   NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
Molmed SpA                                                                                          25 January 2008


                                  group and researcher at the biotechnology division of Eni Ricerche, she is also
                                  member of the boards of EuropaBio and Assobiotec.
                                  Enrico Cappelli: CFO since June 2001, he has a strong accountancy and finance
                                  background. Former corporate controller and investor relations manager of an
                                  Italian group operating in the manufacturing of electronic devices, he is also a
                                  Chartered Accountant and member of the Official Register of Public Auditors.
                                  Holger Neecke (PhD): Director of Business Development, he has been working for
                                  MolMed since 2001. PhD in Genetics at the Milan University, he was in charge of
                                  the company’s intellectual property portfolio management until December 2007
                                  and focuses on structuring strategic alliances, licensing agreements and
                                  collaboration with other pharmaceutical and biotech companies worldwide.
                                  Daniele Pieraccioli (PhD): Director of Intellectual Property, he has 30 years of
                                  experience in the pharmaceutical and biotech industry, is member of the board of
                                  the European Patent Institute and is board director of the European Association of
                                  Patent Attorneys.
                                  Gian Paolo Rizzardi (MD): Research Director, he joined the company in 2001.
                                  Rizzardi has 15 years of experience on immunotherapeutic strategies for
                                  HIV/AIDS and for infectious diseases and is member of the American Society of
                                  Gene Therapy and of the International AIDS Society.
                                  Marco Dieci: Director Quality and Regulatory Compliance, he joined the company
                                  in 2001. Dieci has a chemical studies background and has 10 years of experience
                                  in quality control and assurance in GMP manufacturing processes. He previously
                                  worked for Chiesi Farmaceutici and Lameplast Spa.
                                  Antonio Lambiase (MD): Director of Clinical Department, he joined the company in
                                  March 2007. He was formerly responsible for the clinical development of novel
                                  biotech compounds in the oncology and haematology division at Roche.
                                  Cynthia Giuliani: Director of Human Resources, she joined the company in 2008.
                                  She worked in the human resources department at Roche for nine years and most
                                  recently served as Director of Human Resources for Bioxell.



                                  The product pipeline
 Anti-cancer drugs: big           According to the GLOBOCAN 2002 database, each year 10.9M people worldwide
 opportunities, but tough         are diagnosed with cancer and 6.7M die from the disease. The cancer drug
 market environment               market presents big opportunities and high risks: in 2005 the worldwide drug
                                  market for cancer treatment was worth around USD 40Bn and is expected to grow
                                  to USD 65Bn by 2011 (Source: Datamonitor, 2005). However, the competitive
                                  environment is very tough with more than 1,000 pharma and biotech companies
                                  focused on the development of innovative therapies. The present cancer
                                  treatments include surgery, chemotherapy (use of drugs to destroy cancer cells),
                                  radiation therapy (use of high energy radiation from x-rays, gamma rays, neutrons,
                                  and protons to kill cancer cells and shrink tumours) and the biological therapies
                                  including targeted therapies and immunotherapy (treatment to boost or restore the
                                  ability of the immune system to fight cancer). The choice of therapy depends on
                                  the location and grade of the tumour, the stage of the disease and the state of the
                                  patient (performance status).
                                  Upon early diagnosis, surgery remains the most likely treatment option to lead to
                                  long-term survival; however, the propensity of cancers to invade adjacent tissue or
                                  to spread to other parts of the body by microscopic metastasis often limits its
                                  effectiveness and requires other kinds of therapeutic approaches. Most of the
                                  diagnosed cancer patients presenting metastasis receive chemotherapeutic and
                                  radiation treatments whose benefits are anyway limited due to only brief and
                                  unpredictable response in patients with more advanced stages of the disease and
                                  to the inability of these therapies to distinguish between cancer and normal cells.
                                  Killing non-cancerous cells can cause severe toxic side effects that threaten the
                                  patient’s quality of life and limits the possibility to repeat treatment if needed. In
                                  addition, most of the patients develop resistance to one or more chemotherapeutic
                                  agents.



14                                                                              Intesa Sanpaolo Equity Research
               NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
25 January 2008                                                                                                         Molmed SpA


                                    Biological therapies are a relatively new addition to the family of cancer treatments:
MolMed’s focus is on
                                    they use the body’s immune system to fight cancer or to lessen the side effects
biological cancer therapies         caused by other treatments, as they are designed to repair, stimulate or enhance the
                                    immune system’s responses against infections and diseases. They include interferons,
                                    interleukins, colony stimulating factors, monoclonal antibodies, vaccines, gene/cellular
                                    therapies and non-specific immuno-modulating agents and are being used alone or in
                                    combination with other treatments, such as radiation and chemotherapy.

Three drug candidates in            MolMed’s research and development capabilities are mainly focused on biological
clinical trial                      cancer therapies with three drug candidates currently in clinical trial: 1) TK for
                                    high-risk acute myeloid leukaemia (AML), a cell therapy enabling safe
                                    haematopoietic (blood forming) stem cells transplantation from partially compatible
                                    bone marrow donors; 2) ARENEGYR, a vascular targeting agent consisting of a
                                    peptide (NGR) binding to newly formed tumour blood vessels fused with human
                                    Tumour Necrosis Factor α indicated for the treatment of several solid tumours; and
                                    3) M3TK, a cancer therapeutic vaccine for the treatment of melanoma, based on
                                    the infusion of patient’s own T-cells expressing tumour antigen MAGE-3, in order
                                    to stimulate dendritic cell driven immune response against the tumour. Ongoing
                                    research, in earlier development stages, also concerns two additional vascular
                                    targeting agents and a gene therapy for AIDS (MM-F12). Below, we summarise
                                    MolMed’s three most advanced drug candidates, their potential indications and
                                    their current clinical development stages.

                                    Table 7: MolMed – Drug Candidates
                                     Drug Candidate        Indication                                                           Stage
                                     TK                    Potential treatment of high-risk Acute Myeloid               Start Phase III
                                                           Leukaemia through haematopoietic stem cells
                                                           transplantation from partially compatible bone marrow
                                                           donors
                                     ARENEGYR              Potential treatment of solid tumours (colorectal, ovarian,         Phase II
                                                           small cell lung, liver, hormone refractory (HR) prostate,
                                                           mesothelioma and sarcoma both as a single agent and
                                                           in combination with chemotherapy)
                                     M3TK                  Potential treatment for advanced/metastasis (stage               Phase I/II
                                                           III/IV) melanoma
                                    Source: Company data


                                    Chart 4: MolMed – Product Pipeline




                                    Source: Company data




Intesa Sanpaolo Equity Research                                                                                                    15
                  NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
Molmed SpA                                                                                             25 January 2008



                                    TK
TK, a cell therapy for high-        TK, MolMed’s most advanced clinical stage drug candidate, is a cell therapy
risk Acute Myeloid                  enabling safe haematopoietic stem cells transplantation (HSCT) from partially
Leukaemia                           compatible bone marrow donors. HSCT is currently the only potentially curative
                                    treatment for high-risk Acute Myeloid Leukaemia (AML) which in Europe, North
                                    America and Japan is estimated to account for approximately 33% of the 100,000
                                    new leukaemia cases diagnosed each year (Source: Globocan 2002). According
                                    to the National Cancer Institute (NCI), approximately 60% to 70% of adults with
                                    AML can be expected to attain complete remission status following appropriate
                                    chemotherapeutic therapy; yet only 15% of adult AML patients are expected to
                                    survive more than three years. A wider use of HSCT practice is currently limited by
                                    the lack of a fully matched donor, which according to MolMed’s management can
                                    be found for only approximately 40% of the AML patients eligible for stem cells
                                    transplant.
                                    Haplo-identical HSCT (from a partially compatible donor) presents important
                                    complications among which the most life threatening one is GvHD (Graft versus
                                    Host Disease), namely the immunologic attack of the transplanted cells against
TK mechanism of action              the recipient. GvHD is generally addressed through both the depletion of T-cells
and target market                   (lymphocytes capable of stimulating the immune response) from the transplanted
                                    haematopoietic cells and the pre and post transplant use of immune suppression
                                    therapies: GvHD is thus controlled at the expense of higher infections risks, lower
                                    T-cells anti-leukaemia activity (graft versus Leukaemia-GvL) and a delay in the
                                    patient’s immune reconstitution. MolMed’s TK therapy should allow haplo-HSCT to
                                    take place without preliminary T-cell depletion: the donor’s T-cells are genetically
                                    modified to make them selectively sensible to the anti-viral drug Ganciclovir, as
                                    they can be eliminated should GvHD happen. TK should allow all eligible patients
                                    to undergo HSCT independently of the availability of a fully matched donor without
                                    the need of preliminary and successive immune suppression therapies, thus
                                    hastening the patient’s immune reconstitution (IR) and enhancing the immune
                                    system ability to fight the tumour (GvL). According to management, each year,
                                    60% (approx. 20,000 people) of the newly diagnosed AML patients in Europe, US,
                                    Canada and Japan, lack a fully compatible haematopoietic stem cells donor and
                                    should, therefore, represent the primary TK target market. At any rate, note that,
                                    even if less frequent, GvHD is a possible complication in allogenic (from a fully
                                    matched donor) HSCT, and thus we believe the extension of the use of TK to
                                    every HSCT could be an option.
                                    TK obtained orphan drug status from both EMEA (in 2003) and the FDA (in 2005),
                                    thus gaining an exclusive marketing right for 10 years in Europe and 7 years in the
                                    US from the date of its authorisation.
TK competitive                      To MolMed’s knowledge, there are currently no other drugs on the market or in
environment                         clinical trial aimed at allowing the haplo-HSCT to avoid T-cells depletion. There
                                    are, however, possible alternative approaches to reduce the risks related to HSCT
                                    that are being studied: 1) the use of haematopoietic stem cells obtained from
                                    umbilical cord blood which have less matching requirement than bone marrow or
                                    peripheral blood transplant. The shortfall of this approach is in the limited number
                                    of stem cells in cord blood enabling a quantity sufficient generally only for pediatric
                                    treatment; 2) StemEx, a drug candidate developed by a joint venture between
                                    Teva Pharmaceutical and Gamida Cell, which is entering a Phase III clinical trial
                                    and is based on a technology that expands the number of cord blood stem cells,
                                    thus increasing their therapeutic capacity for transplantation in adolescents and
                                    adults; 3) ATIR, a cell based medicinal product developed by Kiadis Pharma,
                                    currently under Phase I/II clinical trial in Europe and Canada to prevent acute
                                    GvHD allowing the use of a mismatched donor for bone marrow transplantations;
                                    4) Rhitol, developed by Kiadis Pharma, currently under Phase I/II clinical trial to
                                    prevent chronic GvHD allowing the use of a mismatched donor for bone marrow
                                    transplantations; and 5) Prochymal, developed by Osiris Therapeutic and
                                    Genzyme, currently under Phase III clinical trial for the treatment of acute GvHD.
TK clinical development             In 2002 MolMed started a European multi-centre Phase I/II clinical trial (TK007) of
                                    TK for the treatment of high-risk acute myeloid leukaemia patients undergoing
                                    haplo-HSCT. The primary study endpoint was the achievement of early sustained
                                    immune reconstitution in patients receiving infusion of TK-transduced donor T-cells



16                                                                                 Intesa Sanpaolo Equity Research
                 NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
25 January 2008                                                                                                                    Molmed SpA


                                                  following haplo-identical HSCT; secondary endpoints concerned leukaemia free
                                                  survival and the overall survival rates and the assessment of acute and long-term
                                                  TK toxicity. The trial involved 53 patients, enrolled between 2002 and 2007 into two
                                                  cohorts: 29 patients planned for infusion of fresh TK cells and 24 patients planned
                                                  for infusion of frozen TK cells (to be sent to external study centres). At mid-
                                                  November 2007, the results showed that TK promoted an early, wide and effective
                                                  immune reconstitution (22 out of 28 valuable patients reached IR), allowed a
                                                  complete control of GvHD (10 out of 22 IR patients experienced acute GvHD which
                                                  in all cases was successfully treated with Ganciclovir) and induced a GvL effect
                                                  reducing the relapse incidence of patients in complete remission. Consequently, TK
                                                  treated patients experienced a reduction in the non-relapse mortality incidence and
                                                  an improvement in overall survival. MolMed’s management has planned to continue
                                                  the TK development through three additional trials:
                                                  • a Phase III registration trial (TK008) in Europe of TK for the treatment of high-
                                                  risk acute myeloid leukaemia patients undergoing haplo-HSCT, involving 200
                                                  patients. The IMPD submitted to AIFA just recently received formal approval and
                                                  the study is planned to start in 1Q08. The clinical trial has two primary endpoints:
                                                  1) prevention of chronic GvHD; and 2) increase of overall survival. Should the first
                                                  primary endpoint be reached (to be verified upon analysis of the first 50 enrolled
                                                  patients) a conditional approval under exceptional circumstances might be
                                                  allowed. The TK008 study is expected to be completed within four years;
                                                  • a Phase I/II trial in the US (TK009) of TK for the treatment of high risk acute
                                                  myeloid leukaemia patients undergoing haplo-HSCT is planned to start in 1H08.
                                                  The study aims at obtaining the permission to extend the European TK Phase III
                                                  clinical trial to North America and will be managed by the MD Anderson Cancer
                                                  Centre in Houston (Texas);
                                                  • a Phase I/II clinical trial in Europe (TK010) of TK for the treatment of leukaemia
                                                  patients in second complete remission (more aggressive leukaemia) through a
                                                  new enhanced cell activation technology. The study is planned to start in 2008.

 Table 8: TK Historical and Planned Clinical Development
 Study       Indication                   Clinical trial features         Primary endpoint                  Stage/Results
 TK007       High risk acute myeloid      Ph.I/II in Europe, multi-       Early and sustained IR            Study completed. Therapy safe and
             leukaemia                    centre, 52 patients enrolled                                      feasible, early and sustained IR, potent
                                                                                                            GvL effect, complete control of GvHD
 TK008       High risk acute myeloid      Ph.III in Europe, multi-        Prevention of chronic GvHD (*),   Study start planned in 1Q08. IMPD
             leukaemia                    centre, 200 patients            increase of overall survival      filing approved from AIFA
 TK009       High risk acute myeloid      Phase II in the US              Permission to extend TK008 to     Study start planned in 1H08
             leukaemia                                                    North America
 TK010       Acute myeloid leukaemia,     Phase I/II in Europe            Using a new enhanced cell         Study start planned in 2008
             patients in second                                           activation technology
             complete remission
 (*) Possible conditional approval upon analysis of first 50 enrolled patients; Source: Company data



                                                  ARENEGYR
ARENEGYR, a vascular                              ARENEGYR is a vascular targeting agent (VTA) based on the combination of the
targeting agent to fight                          NGR peptide with the human Tumour Necrosis Factor α (hTNF-α). The drug
solid tumours                                     candidate, currently in Phase I and Phase II clinical trials, showed high avidity in
                                                  binding to both CD13 aminopeptidase N receptor, expressed on the surface of
                                                  newly formed tumour blood vessels and TNF receptors (TNF-R1 and TNF-R2).
                                                  The new molecule should, therefore, allow a selective delivery to cancer cells of
                                                  the human TNF-α and is also believed to exercise a specific anti-cancer activity
                                                  through the destruction of tumour blood vessels. MolMed is currently developing
                                                  ARENEGYR as a single agent or in combination with chemotherapeutic agents,
                                                  for the treatment of several types of solid tumours: colorectal cancer, small cell
                                                  lung carcinoma (SCLC), hepatocarcinoma, mesothelioma, hormone refractory
                                                  (HR) prostate cancer, ovarian cancer, sarcoma and non-small cell lung cancer
                                                  (NSCLC). According to some statistics (Source: Globocan 2002), in 2002, the total
                                                  incidence of these types of cancers in the US, Europe, Japan, Australia and New
                                                  Zealand amounted to approximately 1.5M with a 5-year prevalence of 3.8M
                                                  patients and an annual mortality/incidence ratio ranging from a minimum around
                                                  0.25 for prostate cancer to much higher values for liver and lung cancers.



Intesa Sanpaolo Equity Research                                                                                                                 17
                       NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
Molmed SpA                                                                                                                       25 January 2008


ARENEGYR advantages                           According to management, the main ARENEGYR advantages should be its
and mechanism of action                       multiple mechanism of action (vascular permeabilisation and direct anti-tumour
                                              activity), its ability to improve the efficacy of chemotherapeutic drugs with no
                                              incremental toxicity, its wide range of application and the lack of drug resistance
                                              responses. However, the ARENEGYR competitive arena is quite crowded in all
                                              the drug’s potential indications. We believe that main competitors could be
                                              represented by already launched or innovative cancer therapies that are currently
                                              under development rather than by chemotherapeutic agents, which could be
                                              considered an opportunity for combination therapies. We outline in the table below
                                              the main ARENEGYR competitors by indication.

Table 9: ARENEGYR Main Competitors
Indication           Product        Treatment                 Approved                     Under development                                Company
Colorectal cancer    Avastin        First and second line          Yes                                            -   Genetech in the US, Hoffman LA
                                    treatments                                                                       Roche in Europe, Chugai in Japan
                     Erbitux        Third line treatment               Yes   MAA submitted for first line treatment     Bristol-Myers Sqibb in the US,
                                                                                in EU and approval requested in                       Merck in Europe
                                                                                                              Japan
                     Vectibix       Third line treatment               Yes                                         -                 Amgen in the US
                     Sutent                       -                      -                                 Phase III                              Pfizer
                     Recentin                     -                      -                                 Phase III                     Astra Zeneca
                     Nexavar                      -                      -                                  Phase II                             Bayer
Hepatocarcinoma      Nexavar                      -                      -    NDA/MAA submitted to FDA/EMEA                                      Bayer
                     Thado                        -                      -                                 Phase III                    TTY Biopharm
Mesothelioma         Zolinza                      -                      -                                 Phase III                             Merck
                     Onconase                     -                      -                                 Phase III                     Alfacell Corp.
HR-prostate          Satraplatin    Second line treatment,               -             MAA submitted to EMEA              GPC Biotech and Spectrum
carcinoma                           in combination                                                                                     Pharmaceutical
                     Avastin                                             -                                 Phase III     Genetech/Hoffman LA Roche
                     ASA404                                              -                                  Phase II                          Novartis
Small cell lung      Picoplatin     Second line treatment                -                                 Phase III                  Poniard Pharma
cancer
                     Alimta                                              -                               Phase III                          Eli Lilly
Ovarian cancer       Avastin        First line treatment                 -                               Phase III             Genetech/LA Roche
                     Telcyta        Second line treatment                -                               Phase III                             Telik
                     Tarceva        First line treatment                 -                               Phase III             Genetech/LA Roche
                     Yondelis       Second line treatment,               -                               Phase III      PharmaMar and Ortho Biotech
                                    in combination
                     OvaRex         Second line treatment                -                               Phase III             Unither Pharmaceutical
                     Phenoxodiol                                         -                               Phase III                  Marshall Edwards
                     Zybrestat      Second line treatment,               -                               Phase II                            Oxigene
                                    in combination
Sarcoma              Yondelis       Second line treatment,             Yes                                        -     PharmaMar and Ortho Biotech
                                    in combination
Non-small cell lung Avastin                     -                      Yes                                        -                             Roche
cancer
                    Iressa                      -                   Yes                                        -                         Astra Zeneca
                    Tarceva                     -              Yes, as a           Phase III in combination with                             Genetech
                                                                  single                       Avastin or Sutent
                                                                  agent
                     Sutent                     -                      -             Phase III as a single agent                              Pfizer
                     AMG706                     -                      -                               Phase III                             Amgen
                     Erbitux                    -                      -                               Phase III                              Merck
                     Xyotax                     -                      -                               Phase III      Cell Therapeutics and Novartis
                     Nexavar                    -                      -                               Phase III                    Bayer and Onyx
                     Zactima                    -                      -                               Phase III                       Astra Zeneca
                     Recentin                   -                      -                             Phase II/III                      Astra Zeneca
Source: Intesa Sanpaolo Equity Research elaboration and Company data


ARENEGYR clinical                             MolMed is developing ARENEGYR through a multiple clinical trials programme
development                                   aimed at evaluating the drug as a “Single agent” or “In combination” for different
                                              indications. As of November 2007, MolMed has successfully completed two Phase I
                                              clinical trials: 1) NGR002 which assessed the drug safety as a single agent at low-
                                              dose range in 16 pre-treated patients where also an anti-cancer activity was
                                              observed (disease stabilisation in 5 out of 16 patients); and 2) NGR003 which
                                              evaluated the drug safety in combination with doxorubicin at low dose range in 15
                                              already treated patients and showed no overlapping toxicities and an overall disease
                                              control (partial response + disease stabilisation) in 87% of the patients treated.




18                                                                                                       Intesa Sanpaolo Equity Research
                      NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
25 January 2008                                                                                                Molmed SpA


                                    Another Phase I trial (EORTC 16041) evaluating ARENEGYR maximum tolerated
                                    dose (MTD) as a single agent, which is managed by the European Organisation
                                    for Research and Treatment of Cancer (EORTC), completed enrolment (70
                                    patients) and we expect interim results to be released by 1H08. Lastly, the last
                                    ongoing Phase I trial (NGR004), aimed at assessing the drug candidate safety in
                                    combination with cisplatin, started enrolment in June 2007 and has thus far
                                    recruited 8 patients. The successful completion of the Phase I NGR002 and NGR003
                                    studies as to the drug safety and the encouraging data about the drug’s anti-tumour
                                    activity with no related significant toxicity, paved the way for the start-up of four Phase
                                    II studies evaluating ARENEGYR as a single agent in patients with no other
                                    therapeutic options:
                                    • NGR 006: an ongoing trial evaluating ARENEGYR for the treatment of
                                    refractory colorectal cancer, involving 33 patients, with ongoing recruitment.
                                    Internal preliminary data showed no grade III/IV treatment related toxicities, a
                                    disease stabilisation (SD) in 54% of the patients and a median progression free
                                    survival (PFS) of approximately 3 months. Upon amendment of the clinical
                                    protocol, recruitment will be re-opened to include 12 further patients, who are
                                    planned to be treated with infusions once a week instead of every three weeks;
                                    • NGR 007: an ongoing trial evaluating ARENEGYR for the treatment of small cell
                                    lung carcinoma involving 27 patients. The study has enrolled 9 patients, with ongoing
                                    recruitment;
                                    • NGR008: an ongoing trial evaluating ARENEGYR for the treatment of
                                    hepatocarcinoma. The study enrolled 18 patients, with ongoing recruitment and
                                    preliminary data showed a disease stabilisation (SD) in 30% of the patients treated;
                                    • NGR010: an ongoing trial evaluating ARENEGYR for the treatment of
                                    mesothelioma. The study thus far enrolled 40 patients and internal preliminary
                                    data showed a disease stabilisation (SD) in around 50% of the patients treated
                                    (23) with a significant increase in the progression free survival (PFS) in second-
                                    line treatment patients compared to historical data.
                                    In addition, MolMed planned to start during 2008 a Phase II trial (NGR009) of
                                    ARENEGYR as a single agent for the treatment of HR-prostate carcinoma and two
                                    Phase II trials (NGR 011 and NGR012) of ARENEGYR in combination with
                                    doxorubicin for the treatment of soft tissue sarcoma and ovarian cancer; lastly, the
                                    protocol approval for a Phase II study of ARENEGYR in combination with
                                    oxaliplatin and gemcitabine for the treatment of colorectal cancer was granted in
                                    December 2007.




Intesa Sanpaolo Equity Research                                                                                           19
                  NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
  Molmed SpA                                                                                                                     25 January 2008


  Table 10: ARENEGYR Historical and Planned Clinical Development
   Study           Indication            Clinical trial features                        Primary           Stage/Results
                                                                                        endpoint
   NGR002          Solid tumours         Ph.I in Europe, mono-centre, 16 patients       Drug safety       Study completed. Therapy safe, anti-cancer
                   (advanced stage)      enrolled and treated with ARENEGYR as a                          activity observed.
                                         single agent at low dose
   NGR003          Solid tumours         Ph.I in Europe, multi-centre, 15 patients      Drug safety       Study completed. Therapy safe, no
                   (advanced stage)      enrolled and treated with ARENEGYR in                            overlapping toxicity with doxorubicin, overall
                                         combination with doxorubicin                                     disease control (SD+PR) in 87% of pts.
   EORTC16041      Solid tumours         Ph.I in Europe, 2 centres, 70 patients         MTD               Preliminary results to be released by 1H08
                   (advanced stage)      enrolled and treated with ARENEGYR as a
                                         single agent
   NGR004          Solid tumours         Ph.I in Europe, 12 patients to be treated      Drug safety       Study ongoing (started June 07), 8 pts.
                   (advanced stage)      with ARENEGYR in combination with                                enrolled
                                         cisplatin
   NGR006          Refractory colorectal Ph.II in Europe, multi-centre, patients with   Drug              Enrolment and study ongoing. Preliminary
                   cancer                no other therapeutic options to be treated     safety/efficacy   internal results showed SD in 54% of
                                         with ARENEGYR as a single agent                                  valuable pts and PFS of approx. 3M
   NGR007          Small cell lung       Ph.II in Europe, multi-centre, 27 patients     Drug              Study ongoing, 9 patients enrolled at mid-
                   cancer                with no other therapeutic options to be        safety/efficacy   November 2007
                                         treated with ARENEGYR as a single agent
   NGR008          Hepatocarcinoma       Ph.II in Europe, multi-centre, 27 patients     Drug              Study ongoing, 18 patients enrolled at mid-
                                         with no other therapeutic options to be        safety/efficacy   November 2007. Preliminary internal results
                                         treated with ARENEGYR as a single agent                          showed SD in 30% of valuable pts.
   NGR010          Mesothelioma          Ph.II in Europe, multi-centre, 40 patients     Drug              Study ongoing, 40 patients enrolled at mid-
                                         with no other therapeutic options to be        safety/efficacy   November 2007. Preliminary internal results
                                         treated with ARENEGYR as a single agent                          showed SD in 50% of valuable pts. and a
                                                                                                          significant increase in PFS in second line
                                                                                                          treatment pts
   NGR009          HR-prostate          Ph.II in Europe, patients with no other         Drug              Study start planned in 2008
                   carcinoma            therapeutic options to be treated with          safety/efficacy
                                        ARENEGYR as a single agent
   NGR011          Soft tissues sarcoma Ph.II in Europe, patients with no other         Drug              Study start planned 1H08
                                        therapeutic options to be treated with          safety/efficacy
                                        ARENEGYR in combination with
                                        doxorubicin
   NGR012          Ovarian cancer       Ph.II in Europe, patients with no other         Drug              Study start planned 1H08
                                        therapeutic options to be treated with          safety/efficacy
                                        ARENEGYR in combination with
                                        doxorubicin
   NGR005          Colorectal cancer    Ph.II in Europe, patients with no other         Drug              Protocol approved December 2007, study
                                        therapeutic options to be treated with          safety/efficacy   start planned 1H08
                                        ARENEGYR in combination with oxaliplatin
   Source: company data




                                                 M3TK
                                                 M3TK is an anti-tumour therapeutic vaccine whose mechanism of action is based
  M3TK, a therapeutic
                                                 on the patient infusion with autologous T-cells, genetically modified through the
  vaccine for the treatment of                   tumour antigen MAGE3 and HSV-TK, in order to stimulate dendritic cells (antigen
  melanoma                                       presenting cells) driven immune response. Thanks to their natural ability to enter
                                                 lymphoid organs, genetically modified lymphocytes (GML) mimic the physiological
                                                 antigen presentation process and stimulate a cell mediated immune response
                                                 which involves the activation of all immune system components (macrophages,
                                                 natural killer (NK) cells, antigen-specific cytotoxic T-lymphocytes, various
                                                 cytokines). MolMed is currently developing M3TK, through a Phase I/II clinical trial
                                                 for the treatment of advanced/metastatic (stage III/IV) melanoma. M3TK clinical
                                                 applications under investigation include the use of the drug candidate as long-term
                                                 treatment in relapsing disease, as post-surgery adjuvant and as first line treatment
                                                 in cases of lesions of limited extension.
                                                 According to the Globocan database, in 2002, the total incidence of melanoma in
M3TK, target market and                          the US, Canada and Europe amounted to approximately 120,000 patients; out of
competitive environment                          them, approximately 18-19% presented a metastatic melanoma expressing the
                                                 MAGE-3 tumour antigen and are, therefore, potentially treatable with M3TK. It
                                                 should be noted that in addition to melanoma, M3TK represents a potential active
                                                 immune-therapy against any solid tumours expressing the antigen MAGE-3 such
                                                 as lung, head and neck and esophageal cancers.




  20                                                                                                      Intesa Sanpaolo Equity Research
                          NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
  25 January 2008                                                                                                                        Molmed SpA


                                                    The competitive environment for anti-melanoma therapeutic vaccines is quite
                                                    tough with two approved drugs (M-Vax and Hybricell) and several product
                                                    candidates. We summarise below the main M3TK potential competitors and their
                                                    development stages.

                                                    Table 11: M3TK Main Competitors
                                                     Product                   Approved                Development stage                         Company
                                                     M-Vax                          Yes                                -              Avax Technologies
                                                     Hybricell                      Yes                                                      Genoa Group
                                                     Oncophage                        -                          Phase III                       Antigenics
                                                     MDX1379                          -                          Phase III           Bristol Myers Squibb
                                                     Allovectin-7                     -                          Phase III                            Vical
                                                     MAGE-A3                          -                           Phase II                            GSK
                                                     Uvidem/IDD-3                     -                           Phase II    Sanofi-Aventis/IDM Pharma
                                                     Hi-8 MEL Vaccine                 -                           Phase II              Oxford BioMedica
                                                     ODC-0501                         -                           Phase II                   ODC Therapy
                                                     OncoVAX                          -                          Phase I/II                  Intracel Corp.
                                                    Source: Intesa Sanpaolo Research elaboration and Company data



M3TK, clinical development                          MolMed is developing M3TK for the treatment of stage III/IV metastatic melanoma
                                                    in a multi-centre Phase I/II clinical trial (MAGE-3/IPR-02) in two kinds of patients:
                                                    as mono-therapy in patients with advanced disease and as adjuvant therapy to
                                                    prevent disease relapse in patients with no evidence of the disease after surgical
                                                    removal of stage III/IV tumour lesions. Based on internal preliminary data
                                                    concerning 17 tumour bearing patients and 4 patients with no evidence of disease
                                                    (NED) following surgery, we believe that the study suggested that: 1) M3TK
                                                    therapy is safe and feasible; no adverse side effects were detected; 2) 15 out of
                                                    17 tumour bearing patients responded to the vaccine and 5 out of 15 developed
                                                    MAGE-3 specific immune response (CD8+ and CD4+ Tcells); 3) all the NED
                                                    patients responded to the vaccine; and 4) a tumour response was observed in 4
                                                    out of 5 patients who had developed MAGE-3 specific immune response. Overall,
                                                    these preliminary data appear to support the potential efficacy of the M3TK;
                                                    MolMed intends to continue the ongoing Phase I/II study in Melanoma aiming at
                                                    out-licensing the product candidate in all territories except for Asia, upon trial
                                                    completion.


  Table 12: M3TK Historical and Planned Clinical Development
   Study       Indication     Clinical trial features                        Primary endpoint             Stage/Results
   MAGE-       Stage III/IV   Ph.I/II in Europe, multi-centre, 17 patients   Safety and feasibility.      Study ongoing. Internal preliminary data
   3/IPR-02    metastatic     enrolled, M3TK as mono-therapy in pts.         Immunological and            suggested M3TK therapy is safe and feasible;
               melanoma       with advanced disease and as adjuvant in       clinical response            immunological and clinical responses data
                              NED pts. after surgery                         evaluation                   supported the potential efficacy of the M3TK.
  Source: Company data


                                                    According to the company, the next 18 months’ news flow on product candidates’
                                                    development should be as shown in the following table.


   Table 13: MolMed – Expected News-flow
                      1H08
  TK                  Start TK008 Phase III trial in acute myeloid leukaemia
                      Paper with final results TK007
                      Start TK009 Phase I/II trial in acute myeloid leukaemia in the US
  ARENEGYR            Interim results on EORTC16041, NGR004, NGR006, NGR008, NGR010 presented at ASCO 2008
                      Start NGR005 Phase II combo with oxaliplatin and gemcitabine in colorectal cancer
                      Start Phase II combo with cisplatin in non-small cell lung cancer
                      Start NGR011 Phase II combo with doxorubicin in sarcoma
                      Start NGR012 Phase II combo with doxorubicin in ovarian cancer
                      Start NGR009 Phase II single agent in HR-prostate cancer
  M3TK                Paper with interim results ph. I/II ongoing trial
                      2H08
  ARENEGYR            Interim results on NGR004, NGR006, NGR007, NGR008, NGR010 presented at ESMO 2008
  M3TK                Interim results ph. I/II ongoing trial presented at ESMO 2008
                      1H09
  ARENEGYR            Interim results on NGR011, NGR012 presented at ASCO 2008
  Source: Company data, Intesa Sanpaolo Equity Research elaborations. All dates are approximate.




  Intesa Sanpaolo Equity Research                                                                                                                    21
                          NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
Molmed SpA                                                                                           25 January 2008


                                   Strategic agreements
                                   In the last few years, management signed two important strategic alliances with
Two important strategic            the listed Japanese Takara Bio and the Italian institution San Raffaele Foundation.
alliances: Takara Bio and
                                   In 2003 MolMed out-licensed to Takara Bio the development, manufacturing and
San Raffaele Foundation
                                   commercialisation in the Asian countries of both TK and M3TK. For each of the
                                   two drug candidates, Takara Bio committed to the payment of an up-front fee (at
                                   the contract signing), of some milestones payments and of a royalty on sales that
                                   we estimate in the high single-digit range, based on our understanding of typical
                                   licensing agreements in the pharmaceutical industry.
                                   In addition, in 2005 MolMed further enhanced its relationship with Takara Bio by
                                   signing another agreement concerning the joint development and marketing of the
                                   anti-AIDS gene therapy MM-F12. In particular, Takara Bio will have the right to
                                   commercialise the developed products in Asia, a joint distribution will be carried
                                   out in the US and Canada, while MolMed will retain the marketing rights in the rest
                                   of the world. Takara Bio assumed the obligations to pay an up-front fee at the
                                   contract signing, some milestone payments at various development stages, while
                                   each company will pay the other a royalty on sales.
                                   In 2001 MolMed signed an option agreement with Science Park Raf (SPR) and the
                                   San Raffaele Foundation (SRF), concerning the right to in-license any current and
                                   future intellectual property developed by SRF in the fields of gene and molecular
                                   treatments for cancer and AIDS. The agreement enforcement is conditioned to
                                   MolMed’s listing and will last eight years from the first listing of MolMed shares on
                                   a regulated stock exchange, with silent renewal every four years. The option right
                                   price is approximately EUR 4.1M to be paid by MolMed upon admission to trading.
                                   In case of exercise, MolMed assumed also the obligation to refund R&D costs
                                   sustained by SPR and SRF, to pay any amounts due from SRF/SPR to third
                                   parties (licence fees, milestones, royalties) and to pay SRF/SPR a royalty that,
                                   based on our knowledge typically for such agreements in the industry, we estimate
                                   to be in the low single-digit range, on the possible successful commercialisation of
                                   an acquired research project. We note that MolMed’s current product pipeline was
                                   largely generated by the SPR and SRF research. We, thus, believe that the option
                                   right agreement has a strong strategic value for MolMed and we expect it will be a
                                   means to feed the company’s pipeline.




22                                                                               Intesa Sanpaolo Equity Research
                NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
25 January 2008                                                                                            Molmed SpA




                                    Strategy
 Focus on therapies for             The company focuses its product pipeline on the development of potential
 advanced-stage tumours             treatments for advanced tumours, with limited therapeutic options currently
                                    available. MolMed’s concentrating on clear unmet clinical needs should allow it to
                                    enter the cancer drug market without facing the significant marketing costs that
                                    would be required to directly attack well-established competitors.
                                    In the next few years, management aims at concentrating most of the company’s
                                    human and financial resources on three drug candidates, TK, ARENEGYR and
                                    M3TK. We outline below the main clinical development and commercial strategic
                                    guidelines planned for each of them.
                                    TK: MolMed is developing TK for the treatment of high-risk acute myeloid
                                    leukaemia. The company completed a Phase I/II (TK007) clinical trial in Europe,
                                    which final results we expect to be the object of a paper to be published in the first
                                    half of 2008 and has just received approval from AIFA (Agenzia Italiana del
                                    Farmaco) of an IMPD (Investigational Medicinal Product Dossier) for a Phase III
                                    (TK008) trial planned to start in 1Q08. A Phase I/II study, managed by the MD
                                    Anderson Cancer Centre located in Houston (Texas), should be started-up in
                                    1H08 to support the TK introduction in the US. Management targets the
                                    completion of TK008 Phase III trial in four years for a potential TK market launch
                                    in Europe as early as 2012. The company out-licensed TK to Takara Bio for the
 Human and financial                Asian market, while plans to directly market the drug in Europe and the US.
 resources concentrated on          Considering the limited number of clinical centres specialised in HSCT, the TK
                                    marketing and sales activity is planned to require a sales force of around 40
 developing the existing
                                    people for Europe and the US. The company should directly manufacture TK in its
 product pipeline
                                    existing GMP facility for up to 400 patients/year; additional medicinal products
                                    would be manufactured by external GMP cell production centres with MolMed
                                    supplying the bulk drug substance (retroviral vector carrying the TK gene) and the
                                    necessary reagents and disposable for T-cells transduction. We note that TK
                                    obtained orphan drug designation in both Europe and the US. Looking at the
                                    patent protection of various key elements of the TK therapy, we believe the drug
                                    candidate patent protection could extend until 2025.
                                    ARENEGYR: is the company’s blockbuster drug candidate being addressed to the
                                    treatment of advanced solid tumours. MolMed completed two Phase I clinical trials
                                    and already started-up four Phase II trials for the treatment of refractory colorectal
                                    cancer, small cell lung cancer, hepatocarcinoma and mesothelioma. Additional
                                    Phase II studies of ARENEGYR for the treatment of HR prostate cancer, soft
                                    tissues sarcoma, ovarian cancer, non-small cell lung cancer and colorectal cancer
                                    are planned to start in 1H08, while we expect interim results of most of the
                                    ongoing and planned Phase II trials to be released between 2H08 and 1H09. The
                                    company plans to directly manage the drug development and marketing in Europe
                                    and to look for a partnership for the US and the other markets. European direct
                                    marketing is expected to concern the first 3 ARENEGYR indications reaching the
                                    market, with a company estimated sales force of 50 people visiting key oncology
                                    centres. The drug manufacturing is planned to be completely outsourced. Looking
                                    at the patent protection of various key elements of the ARENEGYR therapy, we
                                    believe that the drug candidate patent protection could extend until 2023.
                                    M3TK: is the anti-metastasis melanoma therapeutic vaccine currently in Phase I/II
                                    clinical trial. We expect the company to issue a paper with the ongoing trial interim
                                    results by the first half of 2008 and to present them at ESMO 2008 in the second
                                    half of the year. MolMed does not intend to fully develop M3TK and plans to out-
                                    license the drug in Europe and the US upon completion of the ongoing Phase I/II
                                    study. As for Asia, the company already out-licensed M3TK to Takara Bio. Based
                                    on our understanding of its patent protection, we believe that the M3TK patent
                                    protection could extend until at least 2017 in Europe and 2023 in the rest of the
                                    world.




Intesa Sanpaolo Equity Research                                                                                      23
                  NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
Molmed SpA                                                                                                          25 January 2008


                                               In addition, MolMed’s management aims at increasing its drug candidates’
                                               portfolio by exercising the option right agreed with Science Park Raf and the San
                                               Raffaele Foundation and by looking for new in-licensing agreements.
                                               Resources possibly raised through the planned capital increase should be mostly
                                               employed to finance R&D on the existing product pipeline, to exercise the option
                                               contract with SPR and SRF and to eventually in-license new products. A possible
                                               investment of approximately EUR 15M in a new GMP facility in the 2009-11 period
                                               will also be evaluated.



                                               SWOT analysis
Strengths                                                               Weaknesses
  •   High profile management team                                       •   Lack of commercial partnerships in Europe and in the
  •   Large and growing reference market                                     US
  •   Partnership with Takara Bio                                        •   No track-record (no company-developed products on
                                                                             the market)
  •   Sound balance sheet
                                                                         •   Only one drug candidate in the late development stage
  •   Preferential access to San Raffaele Foundation
      research projects

Opportunities                                                           Threats
  •   Potential label extension for TK to every HSCT                     •   Several competitors focused on cancer drugs
  •   ARENEGYR potentially becoming a blockbuster drug                   •   Potential price pressure in innovative therapies
  •   Leverage San Raffaele Foundation intellectual property             •   Clinical trials could turn out to be unsuccessful
      portfolio thanks to the right option agreement                     •   Risks present in the approval process
Source: Intesa Sanpaolo Equity Research




                                               Competitive forces
Suppliers power                                                                                 New entrants
We believe human capital and financial                                                          In our opinion, barriers to entry are
resources are together the key success                                                          high due to high capital requirements,
factors for biotech companies. The                                                              highly   technical    and     scientific
manufacturing of drugs used in clinical                                                         expertise and a tough competitive
trials does not represent an issue, as                                                          environment.
available from several suppliers and thanks
to the company’s owned GMP facility.
                                                        Rivalry
                                                        Large pharmaceutical companies
                                                        and several Biotechnologies are
                                                        active in the research of anti-cancer
                                                        drugs. Competition is, therefore,
                                                        very strong as well as the risk to
                                                        arrive too late on the market.
Substitute products                                                                             Customer power
Management’s strategy of addressing                                                             Physicians scarcely aware of the
unmet medical needs focusing on the                                                             product price; Selling price is not an
potential treatment of patients with no other                                                   issue for patients of such a fatal
therapeutic options should limit the impact                                                     disease should a drug demonstrate
of substitute products. Anti-cancer drug                                                        superior efficacy.
research is nevertheless among the most
crowded in the biotech industry.
Source: Intesa Sanpaolo Equity Research, Porter model




24                                                                                              Intesa Sanpaolo Equity Research
                      NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
25 January 2008                                                                                                              Molmed SpA



                                    Financials

                                    2004/9M07 results
                                    In the 2004-9M07 period, MolMed had no sales on products. The top line was
Average cash burn of                mainly represented by gene therapy services for Telethon and San Raffaele
EUR 10M in the 2004-06              Foundations, by milestones payments received from Takara Bio for the out-
period                              licensing of TK, M3TK and of the anti-AIDS gene therapy MM-F12 and by public
                                    grants. As for the company’s 2004-9M07 cost structure, we note that services and
                                    personnel were the most important expense items: the first mainly included R&D
                                    costs whose growth was mostly related to the TK and ARENEGYR clinical
                                    development, while the workforce increased by 17 people between the end of
                                    2004 and 30 September 2007 (from 58 to 77). In the last three years, the MolMed
                                    average cash burn amounted to EUR 10M (EUR 10M in 2004, EUR 8.8M in 2005,
                                    and EUR 11.4M in 2006) and reached EUR 9.5M in the first nine months of 2007.
                                    The company mainly financed the 2004-9M07 operating activity through capital
                                    increases for a total amount of EUR 45.5M; we believe that as a result MolMed
                                    had a sound balance sheet with a year-end net cash position and a stable
                                    shareholders’ equity during the period under review.


                                    Table 14: MolMed – 2004-9M07 P&L Figures
                                    EUR M                                  2004A         2005A             2006A        9M06A     9M07A
                                    Services/products sales                   0.9           0.6               1.0          0.7       0.9
                                    Milestones                                0.3           0.7               0.9          0.7       0.7
                                    Other revenues                            0.4           0.6               0.8          0.5       0.4
                                    Total Revenues                            1.6           1.9               2.7          1.9       2.0
                                    Cost of sales/raw materials               1.3           1.3               1.6          1.1       1.3
                                    Services/SG&A                             5.3           6.3               6.7          4.4       7.0
                                    Personnel cost                            3.3           3.4               3.5          2.3       2.8
                                    Depreciation & amort.                     1.5           1.6               1.8          1.3       1.3
                                    EBIT                                     -9.8         -10.7             -10.8         -7.2     -10.4
                                    Net financial income                      0.1           0.1               0.1          0.1       0.2
                                    Pre tax Profit                           -9.7         -10.6             -10.7         -7.1     -10.2
                                    Taxes                                     0.0           0.0               0.0          0.0       0.0
                                    Minorities                                0.0           0.0               0.0          0.0       0.0
                                     Net Profit                              -9.7         -10.6             -10.7         -7.1     -10.2
                                    Source: Company data



                                    Table 15: MolMed – 2004-9M07 Key Cash Flow
                                    EUR M                                2004A               2005A                  2006A         9M07A
                                    Cash burn                             -10.0                -8.8                  -11.4          -9.5
                                    Capital Increase                       10.1                18.0                    8.0           9.5
                                    Net debt(-) / Cash(+)                   2.5                11.7                    8.4           8.5
                                    Shareholders' Equity                    8.6                16.1                   13.5          12.8
                                    Source: Intesa Sanpaolo Equity Research calculations on Company data




Intesa Sanpaolo Equity Research                                                                                                     25
                  NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
Molmed SpA                                                                                       25 January 2008




                                Earnings Outlook
                                We outline below the main assumptions of our MolMed earnings estimates model.
                                Our top-line figures include the three drug candidates currently under clinical
                                development, TK, ARENEGYR and M3TK, while research and pre-clinical projects
                                were not considered.

                                   TK
                                    1.   According to management’s strategy, we assume TK for acute myeloid
                                         leukaemia to be directly developed and commercialised by MolMed
                                         worldwide with the exception of Asia, where it already signed (2003) an
                                         out-licensing agreement with the Japanese company Takara Bio.
                                    2.   Based on industry practice, we assume the agreement with Takara Bio for
                                         TK to generate milestones payments for a total of approx. EUR 10M in
                                         the 2007E-12E period and a high single-digit royalty rate, after its market
                                         launch, which we assume to take place as early as 2012.
                                    3.   We assume that TK, currently entering the Phase III development stage,
                                         will be launched in Europe and Asia in the second half of 2012 and in
                                         North America a few months later in 2013. Peak sales are estimated to be
                                         reached at the sixth year of commercialisation with a peak penetration
                                         rate of 45% in its reference market represented by adults with acute
                                         myeloid leukaemia at high-risk of relapse undergoing haplo-HSCT
                                         (haematopoietic stem cells transplant). No potential label extension for
                                         the use of TK for all HSCT has been considered in our figures.
                                         We believe that a 45% market share is not an aggressive assumption
                                         considering that TK addresses an unmet medical need.
                                    4.   Based on our understanding of the company’s intellectual property
                                         protection, we assume TK patent protection to expire in 2025.
                                    5.   On the costs side, we assume TK marketing costs at 7.5% of the
                                         expected sales, an additional expense related to the TK dedicated sales
                                         force estimated at 40 people to address the more important transplant
                                         centres in Europe and North America and royalties of 5% assumed on
                                         direct sales to be paid to the San Raffaele Foundation. Manufacturing
                                         costs have been estimated assuming MolMed to provide transplant
                                         centres with the final medicinal product for up to 400patients/year,
                                         corresponding to the current capacity of the company’s GMP facility and
                                         the bulk drug substance for the additional product demand. We estimate
                                         costs to complete the TK clinical development to be EUR 15M.




                                   ARENEGYR
                                    1.   According to our understanding of management’s strategy, we assume
                                         ARENEGYR to be directly developed and commercialised by MolMed in
                                         Europe for the first three indications reaching the market and to be out-
                                         licensed to a major pharma or biotech partner for all other territories. In
                                         our forecasts, we assume colorectal cancer, hepato-carcinoma and small
                                         cell lung cancer (SCLC) to be the directly marketed ARENEGYR
                                         indications.
                                    2.   We assume an out-license agreement for the development and
                                         commercialisation of ARENEGYR in North American and other markets
                                         for the first three indications to be signed in the last part of 2008, when
                                         interim results on several ongoing Phase II clinical trials should be
                                         published. Based on the industry practice, we assume the agreement to
                                         generate milestones payments for a total amount of EUR 150M in the
                                         2008E-10E period and a double-digit royalty rate (we estimate at 25%)
                                         since its market launch we assume to be in 2011.



26                                                                           Intesa Sanpaolo Equity Research
             NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
25 January 2008                                                                                         Molmed SpA


                                        3.   We assume that ARENEGYR for the treatment of colorectal cancer,
                                             hepato-carcinoma and SCLC, currently in Phase II development stage, is
                                             to be launched on the market between 2011 and 2012. Peak sales are
                                             estimated to be reached at the sixth year of commercialisation with
                                             variable peak penetration rates, depending on the number of potential
                                             competitors. We highlight that our estimate of the ARENEGYR
                                             contribution to the group’s top line is based exclusively on the potential
                                             sales generated by the first three indications, which entered the Phase II
                                             development stages.
                                        4.   Based on our understanding of the company’s intellectual property
                                             protection, we assume ARENEGYR patent protection to expire in 2023.
                                        5.   On the costs side, we assume ARENEGYR marketing costs at 10% of the
                                             expected sales, an additional expense related to the estimated
                                             ARENEGYR dedicated sales force of 50 people to address the more
                                             important oncology centres in Europe, royalties of 5% on total sales to be
                                             paid to the San Raffaele Foundation and manufacturing costs at 10% of
                                             direct sales. We estimate costs to complete the ARENEGYR clinical
                                             development to be EUR 40M.



                                        M3TK
                                        1.   According to our understanding of management’s strategy, we assume
                                             M3TK to be out-licensed worldwide, following the completion of the
                                             ongoing Phase I/II clinical trial with the exception of Asia, where the
                                             company already signed (2003) an out-licensing agreement with the
                                             Japanese company Takara Bio. In addition, we assume an out-license
                                             agreement for the development and commercialisation of M3TK outside
                                             Asia to be signed in 2009.
                                        2.   Based on the industry practice, we assume the two agreements could
                                             generate milestones payments for a total amount of EUR 30M in the
                                             2009-13 period and a high single-digit royalty rate (we estimated at
                                             8-10%), since its market launch we assume to take place in 2014.
                                        3.   Based on our understanding of the company’s intellectual property
                                             protection, we assume M3TK patent protection to expire in 2017 in
                                             Europe and in 2023 in the rest of the world.


                                    In addition to the above outlined product specific assumptions, we highlight that
                                    our estimates also include other drug candidates related development costs,
                                    which we assume to be between 5% and 10% of the expected company’s
                                    revenue. Our assumptions of factors, such as milestone payments, royalties,
                                    intellectual property protection and other factors above, are based on our analysis
                                    of the company and our understanding of the industry in which it operates. All our
                                    estimates are based on pre-money figures.




Intesa Sanpaolo Equity Research                                                                                   27
                  NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
Molmed SpA                                                                                                                     25 January 2008


Table 16: MolMed – P&L 2004-14E
EUR M                                  2004A      2005A     2006A     2007E     2008E     2009E     2010E       2011E     2012E     2013E      2014E
Services and products direct sales        0.9        0.6       1.0       1.0       1.0       1.0       1.0        81.1     301.1     616.5      933.6
Royalties                                 0.0        0.0       0.0       0.0       0.0       0.0       0.0        20.0      74.5     156.1      226.1
Milestones                                0.3        0.7       0.9       0.9      31.2      51.0      71.0         3.1      13.9      19.0        0.0
Other revenues                            0.4        0.6       0.8       0.8       0.8       0.8       0.8         0.8       0.8       0.8        0.8
Total Revenues                            1.6        1.9       2.7       2.7      33.0      52.9      72.9       105.0     390.3     792.3    1,160.5
Cost of good sold/raw materials           1.3        1.3       1.6       1.6       1.6       1.7       1.7         9.8      58.2     100.3      162.7
Services/R&D/G&A                          5.3        6.3       6.7       9.5      21.7      27.9      21.6        25.0      45.6      53.3      145.1
Royalties paid                            0.0        0.0       0.0       0.0       1.5       2.5       3.5         5.0      18.7      38.5       57.8
Marketing expenses                        0.0        0.0       0.0       0.0       0.0       0.0       0.0         8.0      30.2      59.7       89.8
Personnel cost                            3.3        3.4       3.5       3.9       4.6       5.2       5.3        14.5      23.6      23.7       23.9
Depreciation & amort.                     1.5        1.6       1.8       1.8       1.8       1.8       1.7         1.7       1.7       1.7        1.7
EBIT                                     -9.8      -10.7     -10.8     -14.1       1.8      13.8      39.0        41.1     212.2     515.0      679.5
Net financial income                      0.1        0.1       0.1       0.0      -0.1      -0.1       0.2         0.4       1.0       3.5        8.9
Pre tax Profit                           -9.7      -10.6     -10.7     -14.0       1.7      13.7      39.2        41.5     213.2     518.5      688.4
Taxes                                     0.0        0.0       0.0       0.0       0.8       5.3      14.8        16.1      80.4     194.0      257.1
Minorities                                0.0        0.0       0.0       0.0       0.0       0.0       0.0         0.0       0.0       0.0        0.0
Net Profit                               -9.7      -10.6     -10.7     -14.0       0.9       8.4      24.4        25.5     132.8     324.5      431.3
A: actual, data taken from 2004-06 company financial report, and Intesa Sanpaolo Equity Research calculations     E: expected, Intesa Sanpaolo Equity
Research estimates


Table 17: MolMed – Balance Sheet 2004-14E
EUR M                                2004A      2005A      2006A     2007E     2008E     2009E     2010E        2011E     2012E     2013E      2014E
Cash/Marketable Securities              2.6       11.7        8.4      -5.5      -8.1      -0.9      19.8         23.3      74.4     277.1      608.6
Accounts Receivables                    1.1        0.5        1.1       1.1       4.2       6.6       9.1         32.0     119.1     243.5      362.7
Inventories                             0.1        0.1        0.1       0.1       0.3       0.3       0.3          1.6       9.6      16.5       26.7
Other Current Assets                    2.5        3.4        2.8       2.8       2.8       2.8       2.8          2.8       2.8       2.8        2.8
Total current assets                    6.2       15.7       12.4      -1.5      -0.8       8.8      32.0         59.7     205.8     539.9    1,000.8
Investments                             0.0        0.0        0.0       0.0       0.0       0.0       0.0          0.0       0.0       0.0        0.0
Tangibles                               1.9        2.0        2.3       2.3       2.2       2.1       2.1          2.1       2.0       2.0        2.0
Goodwill                                0.1        0.1        0.1       0.1       0.1       0.1       0.1          0.1       0.1       0.1        0.1
Intangibles                             5.7        5.0        4.2       4.2       4.2       4.2       4.2          4.2       4.2       4.2        4.2
Other assets                            4.1        4.1        4.1       4.1       4.1       4.1       4.1          4.1       4.1       4.1        4.1
Total Fixed Assets                     11.9       11.2       10.8      10.7      10.7      10.6      10.6         10.6      10.5      10.5       10.5
Total Assets                           18.1       26.9       23.2       9.2       9.9      19.5      42.6         70.3     216.3     550.4    1,011.3
Liabilities
ST Debt                                0.0         0.0        0.0       0.0       0.0       0.0       0.0         0.0        0.0       0.0        0.0
Accounts Payables                      4.6         5.2        4.7       4.7       4.5       5.7       4.5         6.7       19.9      29.5       59.0
Other current liabilities              4.7         5.3        4.8       4.8       4.8       4.8       4.8         4.8        4.8       4.8        4.8
Total current liabilities              9.2        10.5        9.4       9.4       9.3      10.4       9.2        11.4       24.7      34.2       63.8
LT Debt                                0.0         0.0        0.0       0.0       0.0       0.0       0.0         0.0        0.0       0.0        0.0
Other LT Liabilities                   0.3         0.3        0.3       0.3       0.3       0.3       0.3         0.3        0.3       0.3        0.3
Total LT liabilities                   0.3         0.3        0.3       0.3       0.3       0.3       0.3         0.3        0.3       0.3        0.3
Minorities                             0.0         0.0        0.0       0.0       0.0       0.0       0.0         0.0        0.0       0.0        0.0
Stockholders’ Equity                  14.4        17.2       22.5      22.5      22.5      22.5      22.5        22.5       22.5      22.5       22.5
Reserves                               4.0         9.5        1.7      -9.0     -23.1     -22.2     -13.8        10.5       36.0     168.8      493.3
Net Profit/loss                       -9.7       -10.6      -10.7     -14.0       0.9       8.4      24.4        25.5      132.8     324.5      431.3
Total Stockholders’ Equity             8.6        16.1       13.5      -0.6       0.3       8.7      33.0        58.5      191.3     515.8      947.1
Total Liabilities                     18.1        26.9       23.2       9.2       9.9      19.5      42.6        70.3      216.3     550.4    1,011.3
A: actual, data taken from 2004-06 company financial report, and Intesa Sanpaolo Equity Research calculations     E: expected, Intesa Sanpaolo Equity
Research estimates


Table 18: MolMed – Cash Flow Statement 2004-14E
EUR M                                2004A      2005A      2006A     2007E     2008E     2009E     2010E     2011E       2012E      2013E     2014E
Net Profit                             -9.7      -10.6      -10.7     -14.0       0.9       8.4      24.4      25.5       132.8      324.5     431.3
Amort / Depreciation                    1.5        1.6        1.8       1.8       1.8       1.8       1.7       1.7         1.7        1.7       1.7
Other Operating                         0.0        0.0        0.0       0.0       0.0       0.0       0.0       0.0         0.0        0.0       0.0
Gross Operating Cash Flow              -8.2       -9.0       -8.9     -12.3       2.6      10.1      26.1      27.2       134.6      326.3     433.0
CAPEX                                  -0.9       -0.9       -1.4      -1.7      -1.7      -1.7      -1.7      -1.7        -1.7       -1.7      -1.7
Other Investments                       0.0        0.0        0.0       0.0       0.0       0.0       0.0       0.0         0.0        0.0       0.0
Change in NWC                          -1.1        1.0       -1.1       0.0      -3.4      -1.3      -3.7     -22.0       -81.8     -121.8     -99.9
Free Operating Cash Flow              -10.2       -9.0      -11.4     -14.0      -2.5       7.2      20.7       3.5        51.1      202.8     331.4
Share capital issues                   10.1       18.0        8.0       0.0       0.0       0.0       0.0       0.0         0.0        0.0       0.0
Dividends                               0.0        0.0        0.0       0.0       0.0       0.0       0.0       0.0         0.0        0.0       0.0
(Acquisitions)/Divestments              0.0        0.0        0.0       0.0       0.0       0.0       0.0       0.0         0.0        0.0       0.0
Others                                  0.2        0.1        0.0       0.0       0.0       0.0       0.0       0.0         0.0        0.0       0.0
Change in Net Debt/Cash                 0.1        9.2       -3.4     -14.0      -2.5       7.2      20.7       3.5        51.1      202.8     331.4
Net Debt (-)/Cash(+)                    2.5       11.7        8.4      -5.6      -8.1      -1.0      19.8      23.2        74.3      277.0     608.5
A: actual, data taken from 2004-06 company financial report, and Intesa Sanpaolo Equity Research calculations     E: expected, Intesa Sanpaolo Equity
Research estimates




28                                                                                                    Intesa Sanpaolo Equity Research
                       NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
25 January 2008                                                                                   Molmed SpA




                                    [This page has been left intentionally blank.]




Intesa Sanpaolo Equity Research                                                                          29
                  NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
                                                               DISCLAIMER

ANALYST CERTIFICATION
The financial analyst who prepared this report, and whose name and role appear on the first page, certifies that:
1.    The views expressed on companies mentioned herein accurately reflect independent, fair and balanced personal views;
2.    No direct or indirect compensation has been or will be received in exchange for any views expressed.

SPECIFIC DISCLOSURES:
1.    Neither the analyst nor any member of the analyst’s household has a financial interest in the securities of the Company.
2.    Neither the analyst nor any member of the analyst’s household serves as an officer, director or advisory board member
      of the Company.
3.    The analyst of this report does not receive bonuses, salaries, or any other form of compensation that is based upon
      specific investment banking transactions.
4.    The research department supervisors do not have a financial interest in the securities of the Company.
5.    A redacted form of this document without valuation information has been disclosed to the issuer and amended following
      this disclosure prior to its dissemination.


IMPORTANT DISCLOSURES
This research has been prepared by Intesa Sanpaolo S.p.A. and distributed by Banca IMI S.p.A. Milan, Banca IMI S.p.A-London Branch
(a member of the London Stock Exchange) and Banca IMI Securities Corp (a member of the NYSE and NASD). Intesa Sanpaolo S.p.A.
accepts full responsibility for the contents of this report and also reserves the right to issue this document to its own clients. Banca IMI
S.p.A. and Intesa Sanpaolo S.p.A., which are both part of the Intesa Sanpaolo Group, are both authorised by the Banca d'Italia and are
both regulated by the Financial Services Authority in the conduct of designated investment business in the UK and by the SEC for the
conduct of US business.
Opinions and estimates in this research are as at the date of this material and are subject to change without notice to the recipient.
Information and opinions have been obtained from sources believed to be reliable, but no representation or warranty is made as to their
accuracy or correctness.
Past performance is not a guarantee of future results.
The investments and strategies discussed in this research may not be suitable for all investors. If you are in any doubt you should
consult your investment advisor.
This report has been prepared solely for information purposes and is not intended as an offer or solicitation with respect to the purchase
or sale of any financial products. It should not be regarded as a substitute for the exercise of the recipient’s own judgement.
No Intesa Sanpaolo S.p.A. or Banca IMI S.p.A. entities accept any liability whatsoever for any direct, consequential or indirect loss
arising from any use of material contained in this report.
This document may only be reproduced or published together with the name of Intesa Sanpaolo S.p.A. and Banca IMI S.p.A.
Intesa Sanpaolo S.p.A. and Banca IMI S.p.A. have in place a Joint Conflicts Management Policy for managing effectively the conflicts of
interest which might affect the impartiality of all investment research which is held out, or where it is reasonable for the user to rely on
the research, as being an impartial assessment of the value or prospects of its subject matter. A copy of this Policy is available to the
recipient of this research upon making a written request to the Compliance Officer, Intesa Sanpaolo S.p.A., 90 Queen Street, London
EC4N 1SA.
Intesa Sanpaolo S.p.A. has formalised a set of principles and procedures for dealing with conflicts of interest (“Research Policy”). The
Research Policy is clearly explained in the relevant section of Banca IMI’s web site (www.bancaimi.it.).
Member companies of the Intesa Sanpaolo Group, or their directors and/or representatives and/or employees and/or members of their
households, may have a long or short position in any securities mentioned at any time, and may make a purchase and/or sale, or offer
to make a purchase and/or sale, of any of the securities from time to time in the open market or otherwise.
Residents in Italy: This document is intended for distribution only to qualified investors as defined in article (2) paragraph 1 letter (e) (i)
to (iii) of the prospectus directive, excluding (a) management companies (societa’ di gestione di risparmio) authorised to manage
individual portfolios on behalf of third parties, (b) fiduciary companies (societa’ fiduciarie) authorised to manage portfolio investments
pursuant to article 60, paragraph 4 of legislative decree 415 of July 23, 1996 and (c) legal persons that do not satisfy at least two of the
following requirements: (1) a balance sheet total equal to at least Euro 20,000,000.00 (ii) a net turnover equal to at least Euro
40,000,000.00 or (3) own funds equal to at least Euro 2,000,000.00, either as a printed document and/or in electronic form.
Person and residents in the UK: This document is not for distribution in the United Kingdom to persons who would be defined as
private customers under rules of the FSA.




30                                                                                              Intesa Sanpaolo Equity Research
                   NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
Valuation methodology
The Intesa Sanpaolo S.p.A. Equity Research Department values the companies for which it assigns recommendations as follows:
We obtain a fair value using a number of valuation methodologies including: discounted cash flow method (DCF), dividend discount
model (DDM), embedded value methodology, return on allocated capital, break-up value, asset-based valuation method, sum-of-the-
parts, and multiples-based models (for example PE, P/BV, PCF, EV/Sales, EV/EBITDA, EV/EBIT, etc.). The financial analysts use the
above valuation methods alternatively and/or jointly at their discretion.


Coverage policy and frequency of research reports
The list of companies covered by the Research Department is available upon request. Intesa Sanpaolo S.p.A. aims to provide
continuous coverage of the companies on the list in conjunction with the timing of periodical accounting reports and any exceptional
event that affects the issuer’s operations. The companies for which Banca IMI acts as sponsor or specialist are covered in compliance
with regulations issued by regulatory bodies with jurisdiction.
In the case of a short note, we advise investors to refer to the most recent company report published by Intesa Sanpaolo S.p.A’s
Research Department for a full analysis of valuation methodology, earnings assumptions, risks and the historical of recommendation
and target price. Research is available on IMI’s web site (www.bancaimi.it or www.caboto.it) or by contacting your sales representative.



SPECIFIC DISCLOSURES
Banca IMI discloses interests and conflicts of interest, as defined by: Articles 69-quater and 69-quinquies, of Consob
Resolution No.11971 of 14.05.1999, as subsequently amended and supplemented; the NYSE’s Rule 472 and the NASD’s Rule
2711; the FSA Policy Statement 04/06 “Conflicts of Interest in Investment Research” – March 2004 and the Policy Statement
05/03 “Implementation of Market Abuse Directive”, March 2005.
The Intesa Sanpaolo Group maintains procedures and organisational mechanisms (Information barriers) to professionally
manage conflicts of interest in relation to investment research.
We provide the following information on Intesa Sanpaolo Group’s conflicts of interest:


1.    The Intesa Sanpaolo Group has a conflict of interest inasmuch as it plans to solicit investment banking business or
      intends to seek compensation from the Company in the next three months.
2.    Banca IMI is Joint Global Coordinator, Joint Bookrunner, Lead Manager of the Retail Offering, Sponsor and Specialist
      for MolMed SpA in the IPO expected in February 2008.
3.    Banca IMI will guarantee, along with the other brokers, the placement of the shares being offered.




INTESA SANPAOLO RESEARCH RATING DISTRIBUTION (October 07)
 Number of companies covered: 83                 BUY                              ADD           HOLD         REDUCE              SELL

 Equity research Coverage relating to the last rating        20%     40%            34%           4%           2%
 Intesa Sanpaolo’s Clients (*)                               50%     31%            15%         33%          50%
(*) Companies on behalf of whom Intesa Sanpaolo and the other companies of the Intesa Sanpaolo Group have provided
corporate and Investment banking services in the last 12 months.




Intesa Sanpaolo Equity Research                                                                                                   31
                  NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
Equity&Credit Research                                        Institutional Sales
Giampaolo Trasi                            +39 02 8021 2297   Nicola Maccario              +39 02 8021 5517
                                                              Insaf Amri                   +39 02 8021 5897
Equity Research                                               Carlo Cavalieri              +39 02 8021 2722
Luca Bacoccoli                             +39 02 8021 5026   Francesca Guadagni           +39 02 8021 5817
Monica Bosio                               +39 02 8021 2725   Gregory Halvorsen            +39 02 8021 5857
Ester Brizzolara                           +39 02 8021 5984   Claudio Manes                +39 02 8021 5542
Marta Caprini                              +39 02 8796 2087   Nicola Mastrototaro          +39 02 8021 2976
Sergio Ciaramella                          +39 02 8021 5688   Laura Spinella               +39 02 8021 5782
Alberto Francese                           +39 02 8021 2707   Daniela Stucchi              +39 02 8021 5708
Manuela Meroni                             +39 02 8021 5937
Gian Luca Pacini                           +39 02 8021 2971
Bruno Permutti                             +39 02 8021 5772   US Institutional Sales   s
Fabio M. Picardi                           +39 02 8021 2972   Marco Letizia                 +1 212 326 1233
Roberto Ranieri                            +39 02 8021 5011   Jack Del Duca                 +1 212 326 1234
Lorenzo Re                                 +39 02 8021 2387   Barbara Leonardi              +1 212 326 1232

Technical Analysis
Emanuele Cecere                            +39 02 8021 5546   Sales Trading
Corrado Binda                              +39 02 8021 5763   Roberto Gussoni              +39 02 8021 5929
Sergio Mingolla                            +39 02 8021 5483   Adele Marchetti              +39 02 8021 5880
                                                              Lorenzo Pennati              +39 02 8021 5647
MAC&Corporate Broking Research                                Stefano Rivarola             +39 02 8021 5420
Paola Toschi                               +39 02 8021 2293   Mark Wilson                  +39 02 8021 2758
Sabrina Maggio                             +39 02 8021 2294
Serena Polini                              +39 02 8021 2292
                                                              Securities Lending
Research Production                                           Carlo Antonioli              +44 207 894 2444
Cinzia Bovina                              +39 02 8021 5437
Elena Giordano                             +39 02 8021 2742
Bruce Marshall                             +39 02 8021 2278   Corporate Brokerage
Luisella Reggiani                          +39 02 8021 2332   Danilo Brusa                 +39 02 8021 5917
Annita Ricci                               +39 02 8021 2279   Fabrizio Speroni             +39 02 8021 5894

Market Hub – Brokerage & Execution
Orazio Ruggeri                             +39 02 8021 5314
Italian Equities - Sergio Francolini       +39 02 8021 5859
Foreign Equities - Francesco Riccardi      +39 02 8021 2901

Market Hub – Exchange Traded Derivatives
Matteo Massardi                            +39 02 8021 2407
Biagio Merola - Milan                      +39 02 8021 2420
Duncan Barker - London                     +39 02 8021 2427

Market Hub – @ sales
Giovanni Spotti                            +39 02 8021 2339

								
To top