EFTA01453409.pdf

Biogen - lyr Price History (Embedded image moved to file: pic10884.gif) Foundation medical - lyr Price History (Embedded image moved to file: pic29202.gif) Gilead - lyr Price History (Embedded image moved to file: pic27528.gif) Sangamo - lyr Price History (Embedded image moved to file: pic23216.gif) Healthcare sector has outperformed S&P500 last 4 years and has been the best-performing sector YTD Improving R&D returns ongoing efficiency gains due to various 'self-help' measures More supportive regulatory and payor environment Increasing number of financings and IPOS in Q1 Frequent upward revisions lately to sales estimates at the largest biotechnology companies Nasdaq Biotech Index (NBI) dropped 4.4% Friday Sharpest decline since Oct-11 • Triggered by a letter from congressional representatives to a biotech company Gilead sciences, questioning its plans to sell a hepatitis c drug (named Sovaldi) for $84,000 per dose Gilead required to give briefing by 03-Apr Sovaldi expected to generate >$4bn in sales this year The drug's expense might saddle state Medicaid programs with steep Costs The whole sector is as risk uS is the only major health-care market remaining without any meaningful drug price controls Risk for the whole sector once the Congress gets involved, especially if focused primarily on pricing The biggest NBI firms sold-off significantly (Embedded image moved to file: pic22221.gif) ways to hedge exposure to the us biotech sector ProShares ultraShort Nasdaq Biotech Fund (BIS US Equity): designed to be 2x short the NBI options on isharesNasdaq Biotech ETF (188 US Equity) N8I - last 5 years (Embedded image moved to file: pic12586.gif) N8I vs S&PS00 — last 1 year (Embedded image moved to file: pic29608.gif) N8I - last 1 year (Embedded image moved to file: pic15967.gif) KCP Capital Markets This e-mail may contain confidential and/or privileged information. If you are not the intended recipient (or have received this e-mail in error) please notify the sender immediately and destroy this e-mail. Any unauthorized copying, disclosure or distribution of the material in this e-mail is strictly forbidden. (Embedded image moved to file: pic21206.gif) Tazia Smith CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0 110975 CONFIDENTIAL SDNY_GM_00257159 EFTA01453409