Pro : The Autologous Cartilage Tissue Implant

1. Pro: The Autologous Cartilage Tissue Implant Thomas M. DeBerardino, MD Professor of Orthopaedic Surgery, Baylor College of Medicine Co-Director, Baylor-San Antonio, Texas Sports Medicine Fellowship The San Antonio Orthopaedic Group Medical Director, BRIO

2. Disclosure • The following relationships with commercial interests related to this presentation existed during the past 12 months: • Research support: MTF and Arthrex • Consultant: Arthrex, MTF • Dr. DeBerardino does not intend to discuss the use of any off-label use/unapproved use of drugs or devices

3. Cartilage Restoration • Unified Goal: • Find a method that demonstrates significant advantage over the others for improving joint function • Problem: • Outcomes have failed to produce histologically comparable cartilage that mimics the complex zonal architecture of native hyaline cartilage with optimal long-term implications

4. Holy Grail • Cartilage regeneration techniques must be: • Cost effective • Single stage (hopefully some day) • Patient friendly

5. U.S. Cartilage Market

6. Autologous Cartilage Restoration Options • OATS • OCA • Cell-cased therapies • MACI • NeoCart • Novocart 3D

7. Scaffold/Cell Based Cartilage Restoration • Long basic science and clinical history • Autologous cells seem best • Trend is cells in matrix

8. Cell/Scaffold Restoration • Open surgery • Best with little/no bone loss • Limited weight bearing • Motion recommended

9. Cell/Scaffold Advantages • Can support multiple lesions and sizes without need for multiple grafts (OCAs) • Planned two stage operation makes logistically less challenging

10. Cell/Scaffold Disadvantages • Two-staged operation- (one-staged options being studied) • Nonstructural at time zero • Expensive

12. Background • Despite introduction of autologous chondrocyte therapy for repair of hyaline articular cartilage injury in 1994, microfracture remains a primary standard of care • NeoCart, an autologous cartilage tissue implant, was compared with microfracture in a multisite prospective, randomized trial of a tissue-engineered bioimplant for treating articular cartilage injuries in the knee Crawford DC, DeBerardino TM, Williams RJ 3rd. NeoCart, an autologous cartilage tissue implant, compared with microfracture for treatment of distal femoral cartilage lesions: an FDA phase-II prospective, randomized clinical trial after two years. J Bone Joint Surg Am, 2012. 94(11):979-89

13. Methods • 32 patients randomized at a ratio of two to one (two were treated with an autologous cartilage tissue implant [NeoCart] for each patient treated with microfracture) at the time of arthroscopic confirmation of an ICRS grade-III lesion(s) • Microfracture or cartilage biopsy was performed • NeoCart, produced by seeding a type-I collagen matrix scaffold with autogenous chondrocytes and bioreactor treatment, was implanted six weeks following arthroscopic cartilage biopsy • Standard evaluations were performed with validated clinical outcomes measures Crawford DC, DeBerardino TM, Williams RJ 3rd. NeoCart, an autologous cartilage tissue implant, compared with microfracture for treatment of distal femoral cartilage lesions: an FDA phase-II prospective, randomized clinical trial after two years. J Bone Joint Surg Am, 2012. 94(11):979-89

14. Results • Significantly more NeoCart-treated patients (p = 0.0125) had responded to therapy (were therapeutic responders) at six months (43% versus 25% in the microfracture group) and twelve months (76% versus 22% in the microfracture group) • This trend continued, as the proportion of NeoCart-treated patients (15 of 19) who were therapeutic responders at 24 months was greater than the proportion of microfracture-treated participants (4 of 9) who were therapeutic responders at that time • Conclusions: NeoCart technique is associated with greater clinical efficacy at two years after treatment Crawford DC, DeBerardino TM, Williams RJ 3rd. NeoCart, an autologous cartilage tissue implant, compared with microfracture for treatment of distal femoral cartilage lesions: an FDA phase-II prospective, randomized clinical trial after two years. J Bone Joint Surg Am, 2012. 94(11):979-89

16. NeoCart • Currently finishing up FDA Phase III Muli-Center Trial

17. Current Phase III Trial • The current phase III study is a multisite protocol with 33 study locations. This confirmatory study is a prospective randomized trial comparing the efficacy and safety of NeoCart to microfracture in the treatment of cartilage defects in the knee. The primary outcome measures are the change of physical functioning and pain as assessed by patient reported outcome measures of the KOOS (Knee injury and Osteoarthritis Outcome Score) and IKDC (International Knee Documentation Committee) scores.

18. Current Phase III Trial- 1st Step • The initial surgery involves confirmation of appropriate inclusion and exclusion criteria • A cartilage biopsy is obtained arthroscopically and sent to Histogenics for the treatment group and microfracture is performed for the control group

19. Phase III Trial- 2nd Step • 2nd step for the treatment group occurs at about 6 weeks after biopsy • Neocart implant is produced via a collagenase extraction of chondrocytes • Cells are seeded onto a bovine type-I collagen matrix incubated in a bioreactor • A mini-arthrotomy allows direct access to the known lesion and the surgeon shaped Neocart implant is secured to the prepared based of the lesion using a proprietary collagen-based polymer (CT-3, Histogenics) • Both groups are treated with rehabilitation standardized to the same protocol recommended after microfracture • TTWB for six weeks with 6-8 hours of continuous active or passive motion • Sports restrictions are recommended for 6 months

21. Cartilage Restoration: Current Status • Cartilage lesion treatment options have become more numerous each year • Advances with autologous cartilage cell seeded scaffold-based products are showing early promising results • Current ongoing studies analyzing implants such as Neocart represent an important evolution in chondral lesion management

22. Cartilage Restoration: Current Status • Responder analysis will hopefully help identify patients and subgroups that are optimal candidates for similar cartilage restoration in the future • There have yet to be any clinical trials comparing one cell-based technology directly to another • Once clinical efficacy of the myriad of cartilage restorative procedures is documented, such comparative trials will certainly follow

23. Summary of NeoCart Phase 3 Clinical Trial Results • NeoCart demonstrated clinically meaningful improvement at 1 year vs. microfracture on highest hurdle, dual-threshold endpoint. The trial narrowly missed statistical significance and did not meet the primary endpoint by 2 microfracture responders in the mITT population (one sided test: *p=0.025). • 62% of NeoCart patients were responders at 6 months vs 46% of microfracture (*p=0.0188). • 74% of NeoCart patients were responders at 1 year vs 62% of microfracture (p=0.0714). • Based on current MCID on IKDC for example, NeoCart demonstrated statistically significantly superiority. • NeoCart demonstrated statistically significant results compared to microfracture at 1 year on KOOS and IKDC endpoints, as established in FDA Guidance & used in ongoing clinical trials conducted by third parties. It also demonstrated superiority at 2 years based on only ~120 patients (visits pending for rest). • NeoCart performed better than expected, demonstrating early and sustained clinically meaningful improvements at 1 year and 2 years. • However, microfracture did better than expected in what we believe is the most robust study conducted to date under current FDA guidance in a population intended to maximize its performance (low BMI, most appropriate lesion size and strict rehabilitation program). • Risk / benefit believed to be established, safety between arms was comparable. • Based on totality of data and published FDA guidelines, we believe NeoCart should be acceptable for review and potential approval. We intend to confirm this with the FDA via a Type A Meeting.

24. NeoCart Phase 3 Clinical Trial Design & Demographics Arm 1: NeoCart (n = 170) Arm 2: Microfracture (n = 79)

25. Dual Threshold : Reasons for Its Use, Design & Impact • Dual Threshold Responders typically used in Oncology or Cardiology to further demonstrate magnitudes of clinically relevant effects. • When our trial was designed in 2009 (prior to FDA guidance released in 2011), it had been rarely used in Orthopedics, particularly with patient reported outcome endpoints. • Initial thesis: true leveler design to modulate the tendency for patients to accommodate pain or loss of function. Goal is to show that each patient gets better on both scores vs. mean differences on individual scores. • Minimum clinically important/meaningful differences or cut-off’s have greater impact than in other designs – balance of specificity and sensitivity.

26. NeoCart Phase 3 Clinical Trial Preliminary Data (mITT Population) Responder Analysis: Responses required on both Pain & Function (~15% delta needed) Responder Analysis Results: 6 month data significant (early improvement) with 1 year data narrowly missing significance NeoCart (n=163) Microfracture (n=79) Responders Non- Responders p < 0.0714 IKDC Subjective • 1-year endpoint would have been statistically significant if two microfracture patients had not been responders • Microfracture patients performed significantly better than expected, and better than in most previous published studies (62% response vs. 50% projected in statistical plan) and real world experience • Clinicians in this trial requested current MCID analysis, which demonstrated superiority at 1 year +20 points Baseline *p < 0.025 KOOS Pain Non- Responders Non-Responders +12 points

27. Superiority on dual threshold in certain patient populations (p <0.025) Lesion Size > 2.2 cm Body Mass Index (BMI) Clopper-Pearson exact confidence interval for a binomial proportion. Confidence interval calculated based on the normal approximation. One-sided normal approximation test of superiority of NeoCart over Microfracture

28. Current FDA Endpoints: KOOS Pain • KOOS Pain is one of several measures used to demonstrate superiority vs baseline, and control arm in ongoing clinical trials for cartilage knee repair • NeoCart would have demonstrated clinically meaningful improvements in KOOS pain as early as 3 months and sustained through two years with statistical significance Note: The discussion in this presentation of how NeoCart hypothetically would have performed against endpoints other than those included in its Phase 3 clinical trial are for illustrative purposes only and do not impact or change the outcome of the Phase 3 clinical trial and NeoCart’s performance against its endpoints

29. Current FDA Endpoints: IKDC Function/Pain • IKDC Pain / Function is used to demonstrate superiority vs baseline, and control arm in ongoing clinical trials for cartilage knee repair • NeoCart would have demonstrated clinically meaningful improvement in IKDC Subjective Pain / Function as early as 6 months and sustained through two years (statistically significant at one and two years) Note: The discussion in this presentation of how NeoCart hypothetically would have performed against endpoints other than those included in its Phase 3 clinical trial are for illustrative purposes only and do not impact or change the outcome of the Phase 3 clinical trial and NeoCart’s performance against its endpoints

30. Thank You! Questions?