Project Avalanche Discussion Materials for Islanders’ Board of Directors August 30, 2020 Confidential Treatment Requested. Confidential portions of this document have been redacted and have been separately filed with the Securities and Exchange Commission. Exhibit (c)(ii)
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Source: Bloomberg, CapitalIQ, company filings, market data as of August 28, 2020. Note: Basic shares outstanding per company filings. Assumes 10.05mm options outstanding and 1.53mm RSUs outstanding per Avalanche Management. ($ and shares in millions, except for per share values) Overview of the Proposal
Avalanche’s Share Price Performance Over Last 12 Months Source: Bloomberg, company filings, Wall Street research; market data as of 28-Aug-2020 1/23/20 19.15 4/24/20 18.00 4/30/20 17.06 6/9/20 16.78 6/25/20 15.06 Date Event 24-Aug-2018 (25)% FDA issues CRL on Waylivra in FCS 23-Sept-2019 (20)% Announcement of CEO transition to interim CEO Damien McDevitt and departures of the Company’s CEO, President and COO 07-Oct-2019 +31% Avalanche and Pfizer announce licensing agreement for investigative antisense therapy ANGPTL3-L(Rx) 20-Nov-2019 +8% Announces closing of licensing agreement with Pfizer for ANGPTL3-L(Rx) (Mkt. close 19-Nov) 10-Jan-2020 +3% Announces initiation of the CARDIO-TTRansform Phase 3 cardiovascular outcomes study for TTR-LRx in patients with ATTR cardiomyopathy 22-Jan-2020 +11% Reports positive topline Phase 2 results of APOCII-L Rx with demonstrated favorable safety and tolerability 8-Jun-2020 +11% Announces appointment of Damien McDevitt to CEO 4-Aug-2020 (3)% Reports Q2 2020 earnings; revenue miss; did not provide guidance on timing of Waylivra US refiling Notable Stock Price Reactions Last Twelve Months Stock Price Performance 1 2 3 7 4 5 6 1 2 3 4 5 6 52-week high: $22.47 52-week low: $10.84 7 (44.3)%
Financial Analyses Illustrative Price per Share Comments Sum-of-the-Parts (SOTP): Standalone Avalanche1 Avalanche Management projections through 2029; extrapolation until 20402 per Islanders Management 8.0 % - 10.0% WACC Sum-of-the-Parts (SOTP): Avalanche under Islanders’ Control Avalanche Management projections per Islanders Management including value levers under Islanders’ control3 8.0 % - 10.0% WACC Precedent Squeeze-Out Transactions Premia to undisturbed price based on select squeeze-out transactions with deal value >$200mm Low: 15.2% based on min. premium at final bid High: 100.8% based on max. premium at final bid 52-Week Trading Range 52-week low of $10.84 as of 31-Jul-2020 52-week high of $22.47 as of 19-Sep-2019 Analyst Price Targets High: $41 Low: $16 Summary of Goldman Sachs’ Illustrative Avalanche Financial Analyses Source: Avalanche LRP projections used per instruction of Islanders Management, Bloomberg, company filings, market data as of August 28, 2020 Note: Confidential. Illustrative, for discussion purposes only. Valuation as of June 30, 2020. Assumes cash and cash equivalents of $390mm as of June 30, 2020. Assumes 101.6mm basic shares outstanding, 10.05mm options outstanding and 1.53mm RSUs outstanding. 1 Assumes $212mm follow-on in 2021 issued at a share price of $16.35 and $265mm follow-on in 2023 issued at a share price of $18.96. 2 Extrapolation until [*] for ANGPTL3-L given LOE in [*]. 3 Includes (i) expected cost synergies, (ii) absence of future financing need, (iii) [***] outlicensing, (iv) TTR-L go-it-alone scenario, (v) TTR-L launch at year-end [*], (vi) APOCIII revised partnership terms, (vii) APO(a) extension of exclusivity period, and (viii) removal of Islanders’ in-licensed asset. Current Share Price: $11.38 Public Market Perspectives Financial Valuation 1 2 4 5 Final Offer Price: $18.15 3
Stifel’s Avalanche Valuation Review Source: Avalanche Management projections (including adjustments from Islanders’ Management), company filings, Bloomberg, Wall Street research and FactSet as of August 28, 2020. Note: Confidential. Illustrative, for discussion purposes only. Valuation as of October 31, 2020, assumes mid-year discounting. Assumes cash and cash equivalents of $370 million, projected as of October 31, 2020. Assumes 101.599mm basic shares outstanding, 10.053mm options outstanding at a weighted average strike price of $18.53 per share and 1.526mm RSUs outstanding. Avalanche’s Management projections including adjustments from Islanders’ Management. Extrapolation until [*] for ANGPTL3-L given LOE in [*]. Discount rate of 9.0% - 12.0% based on a weighted average cost of capital analysis using Avalanche’s selected publicly traded comparable companies and Stifel judgement, refer to page 11. Includes potential value levers under Islanders’ control, including: (i) expected cost synergies, (ii) [***] outlicensing, (iii) TTR-L go-it-alone scenario, (iv) TTR-L launch at year-end [*], (v) APOCIII-L revised partnership terms, (vi) APO(a)-L extension of exclusivity period, and (vii) removal of Islanders’ in-licensed asset. Discount rate of 7.5% - 9.5% based on a weighted average cost of capital analysis using Islanders’ selected publicly traded comparable companies and Stifel judgement, refer to page 12. Includes 2008–present selected majority-owned precedent transactions greater than $200 million in transaction value with a U.S. target. Market data per FactSet as of August 28, 2020. Based on analyst price target estimates as of August 28, 2020. Implied Price Per Share Avalanche Management projections through 2029; extrapolation until 2040(1) per Islanders Management SOTP based on each of Avalanche’s products No terminal value 9.0% - 12.0% WACC Commentary Methodology Sum-of-the-Parts (SOTP) Standalone Avalanche(1) 52-week high of $22.47 as of September 19, 2019 52-week low of $10.84 as of July 31, 2020 Based on selected majority-owned precedent transactions with deal value >$200mm Premia based on min and max premium to 1-day unaffected stock price of 15.2% and 100.8%, respectively Analyst Consensus(5) Based on analyst price target estimates Precedent-Squeeze Out Transactions(3) 52-Week Trading Range(4) $16.00 $26.00 $41.00 $25.00 Current Price: $11.38 Offer Price: $18.15 Sum-of-the-Parts (SOTP) Avalanche Under Islanders Control(2) Avalanche Management projections per Islanders Management including potential value levers under Islanders’ control(2) SOTP based on each of Avalanche’s products No terminal value 7.5% - 9.5% WACC
Source: Company filings, press releases and FactSet. Note: $ in millions. Based on the unaffected stock price prior to the transaction announcement. Pre-Deal ownership represents total voting power. Final bid to 1-Day premium includes a one-time $0.50/share dividend payment. Premiums Announce Pre-Deal Deal Initial Bid Final Bid Date Target Acquiror Ownership Value 1-Day(1) 1-Day(1) 20-Day(1) 11/27/19 AVX Kyocera 72.0% $1,046.1 29.7% 44.6% 41.2% 04/24/19 Speedway Motorsports Sonic Financial 71.3% 234.3 29.1% 41.7% 39.9% 11/16/18 EMC Insurance Employers Mutual Casualty 54.3% 372.2 25.1% 50.1% 53.1% 11/09/18 International Speedway NASCAR(2) 74.7% 1,128.4 7.5% 15.2% 25.0% 06/18/18 Foundation Medicine Roche 55.9% 2,260.9 24.9% 28.7% 61.6% 01/09/18 AmTrust Financial Services Evergreen Parent 54.9% 1,327.5 20.7% 45.3% 41.7% 03/07/16 National Interstate Great American Insurance(3) 50.8% 311.6 34.8% 46.0% 31.0% 02/29/16 Federal-Mogul Icahn Enterprises 82.0% 304.5 40.6% 100.8% 109.6% 12/13/12 Clearwire Sprint Nextel 50.4% 3,329.8 17.9% 40.1% 53.1% 11/28/12 Sauer-Danfoss Danfoss 75.6% 692.9 24.4% 48.6% 46.0% 10/31/10 CNA Surety CNA Financial 62.0% 477.6 14.2% 37.9% 51.6% 08/26/10 Wesco Financial Berkshire Hathaway 80.1% 545.4 18.6% 18.6% 14.2% 04/04/10 Terra Industries CF Industries 85.7% 659.4 26.3% 80.8% 68.6% 09/03/09 Odyssey Re Fairfax Financial 72.6% 1,050.0 15.8% 29.8% 39.7% 07/21/08 Genentech Roche 55.7% 46,763.5 8.8% 16.1% 27.1% 03/09/08 Nationwide Financial Services Nationwide Mutual Insurance 64.3% 2,449.9 15.9% 28.3% 28.7% Summary Statistics (n=16): Max 85.7% $46,763.5 40.6% 100.8% 109.6% Mean 66.4% $3,934.6 22.1% 42.0% 45.8% Median 64.3% $869.5 22.6% 40.9% 41.5% Min 50.4% $234.3 7.5% 15.2% 14.2% Precedent Squeeze-Out Transactions Analysis
Appendix: Additional Materials
Goldman Sachs’ Avalanche Illustrative Weighted Average Cost of Capital Analysis Source: Bloomberg, CapitalIQ, company filings, Axioma; market data as of 28-Aug-2020 Note: $ in millions. Target Capital Structure WACC Sensitivity Analysis Avalanche Beta as of 19-Feb-20 (pre-COVID) Historical 1.65 Predicted 1.40
Stifel’s Avalanche Weighted Average Cost of Capital Summary Bloomberg adjusted betas for 2 year weekly betas as of August 28, 2020. Public debt is valued at book value and assumes beta of debt is zero. Unlevered Beta = Levered Beta / [1 + (Debt/Equity Value)*(1-Tax Rate) ]. Based on Capital Asset Pricing Model. Risk-free rate of return utilizes the 20-year Treasury yield of 1.29% as per www.treasury.gov, as of August 28, 2020. Market risk premium is calculated by using the 2019 Duff & Phelps Cost of Capital Navigator as of December 31, 2019 for a market risk premium of 7.15% and a 1.47% size premium for market capitalizations between $994 million and $1,668 million. Assumes a 26% tax per Avalanche Management.
Stifel’s Islanders Weighted Average Cost of Capital Summary Bloomberg adjusted betas for 2 year weekly betas as of August 28, 2020. Public debt is valued at book value and assumes beta of debt is zero. Unlevered Beta = Levered Beta / [1 + (Debt/Equity Value)*(1-Tax Rate) ]. Based on Capital Asset Pricing Model. Risk-free rate of return utilizes the 20-year Treasury yield of 1.29% as per www.treasury.gov, as of August 28, 2020. Market risk premium is calculated by using the 2019 Duff & Phelps Cost of Capital Navigator as of December 31, 2019 for a market risk premium of 7.15% and a 0.73% size premium for market capitalizations between $6,619 million and $13,100 million. Assumes a 26% tax per Islanders Management.