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December 4, 2018

Stemline Therapeutics, Inc. (STML) Overweight

Tagraxofusp Poised To Become Standard Of Care In BPDCN

PRICE: US$11.01
STML presented updates from the Phase I/II trials of tagraxofusp in BPDCN, r/r CMML
and r/r MF and hosted an investor event at ASH. Commercial launch preparations TARGET: US$20.00
continue ahead of a potential front-line BPDCN approval in February 2019 and we came DCF analysis through 2035 including
away incrementally more comfortable with our modeling assumptions with regards to Elzonris US and EU sales in BPDCN.
BPDCN incidence, cost of therapy and penetration. We continue to have confidence that
tagraxofusp will become the new standard of care in this orphan oncology indication and Joseph M. Catanzaro, PhD
remain at Overweight. Sr. Research Analyst, Piper Jaffray & Co.
212 284-9344,
• ASH event gives us more confidence in our BPDCN assumptions. STML hosted
an investor event to highlight tagraxofusp's multiple data sets presented at ASH, but R I S K S TO A C H I E V E M E N T O F
P T & R E C O M M E N D AT I O N
also to highlight commercial preparations ahead of a potential BPDCN approval and
Tagraxofusp may fail in clinical trials, face
the opportunity for label expansions. There's three points we'd like to note. First is the
regulatory delays or commercial hurdles.
discussion around the incidence of BPDCN, which the company indicated at minimum
represents 500 new cases in the US/year. This is in-line with our recent survey of Price Performance - 1 Year
hematopathologists that suggested a near identical ~500 newly diagnosed patients/ USD
year. Our model currently estimates 625 patients, which incorporates some literature
estimates. The company pointed to its significant efforts to raise awareness around
CD123 testing and eliminating the rate of misdiagnoses that has historically plagued
BPDCN. One KOL at the event mentioned that numerous patients had been referred
to his center with CTCL or PTCL, but were subsequently re-classified as BPDCN.
STML pointed to MDS as a case study where the true incidence was initially vastly
underappreciated. It noted that in 1995 literature suggested an annual MDS incidence 10

of 1.5K, but this number had grown to >40K by 2010. One KOL who previously noted at 8
Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct -18 Dec-18
STML's ASH investor event two years ago that he was seeing 2-3 patients/month, noted
Source: Bloomberg
today that there are some months where he's receiving 6-10 inbound calls from all over
the world regarding BPDCN patients. We think this is a great example how over only
the last couple of years tagraxofusp's robust clinical data and STML's effort to increase
CD123 testing has raised significant awareness. The second point worth noting were
STML's comments around a pricing strategy. Management again pointed to Lenvima (~
$200K/year) and Luxturna (~$850K/year) as potential goalposts. Notably, they indicated
that they expect to fall closer to CAR-T ($400K/year) and Luxturna. Our model assumes a
net annualized price of $225K/patient, which assumes a six month duration of treatment.
The final point was around commercial launch preparations. STML noted that the sales
force has been hired and trained with a payer team in place. The sales force is already
out in the field raising disease awareness and management noted that their initial launch
will focus on sites that participated in the clinical trial, as well as the ~65 NCCN centers.
One other point worth noting, the KOLs could not point to any potential BPDCN subset
where they wouldn't consider tagraxofusp in the commercial setting. They made clear
that the clinical program encompassed the full spectrum of the disease and included both
young and old patients (22-84 years of age), as well as patients with disease burden
in all three compartments (cutaneous, bone marrow, extramedullary). Some physicians
we've spoken to suggested they may stick with intensive chemotherapy for the small
minority of young patients who would be fit for transplant, but KOLs at the event felt that
tagraxofusp was a less intensive option that could clearly get a patient to transplant.
Overall, we came away incrementally more comfortable with the BPDCN opportunity we
are modeling (peak US sales of $267M). ASH data are detailed on subsequent pages.
Stemline is developing a novel CD123-targeting therapy for heme malignancies.

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Stemline Therapeutics, Inc. Page 1 of 5
December 4, 2018

• Modest update for BPDCN, but mOS still not reached. STML reported updated data from
the pivotal Phase I/II study of tagraxofusp in BPDCN, which supported the BLA filing currently
under Priority Review. Recall, 42 patients treated at the move-forward 12 mcg/kg dose were
enrolled over 3 stages and included 29 newly diagnosed patients and 13 patients treated in the
r/r setting. Response rates remain consistent with the most recent update at EHA and included
a 90% ORR, 72% CR/CRc/CRi and 45% transplant rate for newly diagnosed patients. At a
median follow-up of 23 months (vs. ~14 months at EHA), the median overall survival had still
not been reached for newly diagnosed patients. This compares to retrospective analyses in
the literature that suggests a median OS of 8-14 months for this patient population. One patient
who achieved a complete response remains on treatment for ~3 years. The safety profile of
tagraxofusp remains in-line with prior updates with thrombocytopenia the most common grade
3/4 AE (22%) across all trials at the 12 mcg/kg dose (n=148). The rate of grade 5 CLS at the
12 mcg/kg dipped slightly to 0.6% (1/166) from 0.7% (1/144) reported at EHA. Across the full
166 patient cohort, we note that there does appear to be one additional incidence of grade
4 CLS in a patient that subsequently died from myocardial infarction. We continue to have
confidence that tagraxofusp's clinical data package is fully supportive of an approval in newly
diagnosed BPDCN.

• Continued positive signal of activity in CMML, await clarity on development strategy.

STML also reported data from the Phase I/II of tagraxofusp in 20 r/r CMML patients with
the overall data set improving incrementally since the last update at EHA. This cohort had
a median age of 69.5, 60% had CMML-1 (40% CMML-2), median blast count was 6.8 and
50% of patients had received prior HMA (10% prior transplant). In the 14 evaluable patients,
three achieved a bone marrow CR including one new patient who was bridged to SCT
and is currently in remission (2 CRs out 13 evaluable patients at EHA). For patients with
baseline splenomegaly (n=10), the spleen response rate remains 100%. Spleen reductions
of at least 50% were noted in 80% of patients vs. 75% reported at EHA. For patients with
baseline splenomegaly of at least 5 cm (n=6), 50% reductions were reported in 67% of
patients vs. 60% at EHA. Six patients received tagraxofusp for 6+ months and three remain on
therapy (excluding patient bridged to transplant). The most common grade 3/4 AEs remained
thrombocytopenia (35%) and nausea (5%). Low-grade CLS was noted in 3 patients and only
1 patient discontinued treatment due to an AE, both consistent with EHA. Altogether these
data continue to indicate that tagraxofusp is clinically active in this setting and while it is
noteworthy that one patient was bridged to transplant, BM response rates are admittedly not
overwhelming. However, as noted in our recent initiation, we think in the r/r setting with an
elderly population, symptomatic relief, hematologic improvement and a survival benefit will be
the ultimate measures of efficacy. STML noted that it is currently generating a briefing book
with plans to meet with the FDA in early-2019 around a future registrational trial. STML pointed
to spleen reduction as a potential primary endpoint and reductions in symptom burden as a key
secondary endpoint. For context, ruxolitinib was approved in r/r MF with a primary endpoint of
spleen volume reduction as compared to placebo/best available therapy.

• STML points to MF patients with monocytosis as a potential path forward. Lastly, STML
presented data from 23 r/r MF patients. Median age was 69, 57% had primary MF, all had
intermediate- or high-risk disease, 65% had received a prior JAK inhibitor and 17% had
undergone prior stem cell transplant. In 16 evaluable patients, 56% demonstrated reduction
in splenomegaly vs. 50% reported at EHA. Reductions of at least 45% were noted in 25% of
patients and 44% of patients exhibited a reduction of at least 29%. The presentation noted
a subgroup of patients with monocytosis (>1x10 /L), with all 5 patients exhibiting a spleen
response. This subgroup of MF patients has been shown to have a worse prognosis with
shorter leukemia-free and overall survival. Consistent with the EHA update, 69% of patients
experienced an improvement in quality of life with 4 out of 13 patients (31%) reporting 100%
improvements. The most common grade 3/4 AE was thrombocytopenia (8%). There was
one case of grade 3 CLS, which was previously reported and 2 patients discontinued study
treatment due to an AE. For context, fedratinib reported a 55% spleen response rate (≥35%

Stemline Therapeutics, Inc. Page 2 of 5

December 4, 2018

reduction in spleen volume) in 86 MF patients with intermediate or high-risk disease that were
resistant or intolerant of ruxolitinib. STML notes that it is planning to initiate registration-directed
trials either as a monotherapy or in combinations with potentially a focus on MF patients with
baseline monocytosis.

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December 4, 2018


Rating and Price Target History for: Stemline Therapeutics, Inc. (STML) as of 12-03-2018

Q3 2016 Q1 Q2 Q3 2017 Q1 Q2 Q3 2018 Q1 Q2 Q3 2019

Created by: BlueMatrix

Notes: The boxes on the Rating and Price Target History chart above indicate the date of the fundamental Equity Research Note, the rating and the price
target. Each box represents a date on which an analyst made a change to a rating or price target, except for the first box, which may only represent the
first Note written during the past three years.
I: Initiating Coverage
R: Resuming Coverage
T: Transferring Coverage
D: Discontinuing Coverage
S: Suspending Coverage
OW: Overweight
N: Neutral
UW: Underweight
NA: Not Available
UR: Under Review

Distribution of Ratings/IB Services

Piper Jaffray

IB Serv./Past 12 Mos.
Rating Count Percent Count Percent
BUY [OW] 408 63.26 122 29.90
HOLD [N] 225 34.88 18 8.00
SELL [UW] 12 1.86 0 0.00

Note: Distribution of Ratings/IB Services shows the number of companies currently covered by fundamental equity research in each rating category from
which Piper Jaffray and its affiliates received compensation for investment banking services within the past 12 months. FINRA rules require disclosure
of which ratings most closely correspond with "buy," "hold," and "sell" recommendations. Piper Jaffray ratings are not the equivalent of buy, hold or sell,
but instead represent recommended relative weightings. Nevertheless, Overweight corresponds most closely with buy, Neutral with hold and Underweight
with sell. See Stock Rating definitions below.

Analyst Certification — Joseph M. Catanzaro, PhD, Sr. Research Analyst

The views expressed in this report accurately reflect my personal views about the subject company and the subject security. In addition, no part of my
compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report.

Piper Jaffray research analysts receive compensation that is based, in part, on overall firm revenues, which include investment banking revenues.

Time of dissemination: 4 December 2018 07:04EST.

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December 4, 2018

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