Executive Chairman Message

2011 has been a very exciting year for Intarcia!

Our company has capitalized on our technology platforms, and we are successfully advancing our promising drug candidate – ITCA 650 – toward a global Phase 3 clinical program through a collaboration that could represent a new model in our industry, and in one of the biggest therapeutic categories in the world – diabetes.

We aim to redefine health outcomes in serious diseases by building differentiated products with our breakthrough technology platform to:

• Enhance and optimize the benefit/risk profile of compounds
• Assure long-term adherence with dosing up to just once per year
• Deliver superior patient outcomes

We have partnered with the world's leading global CRO – Quintiles – to help us do that on a global scale as quickly as possible. Our alliance will help accelerate both our Phase 3 program – initiating 5 pivotal phase 3 studies and a cardiovascular outcomes study early in 2012 – and Intarcia's corporate development as we move into 2012. This deal with Quintiles is innovative and the largest of it's type between a CRO and an emerging biotech company. It is the first step of a two-prong global alliance strategy: first selecting a global CRO to partner with us on the clinical development of ITCA 650, and second to strike a worldwide collaboration with a top-tier pharma company that maximizes the opportunity of our late-stage investigational drug in type 2 diabetes, ITCA 650.

That's exciting progress!

But as much as these business milestones invigorate us, what excites us most is the opportunity to deliver well differentiated treatments that transform serious, poorly controlled diseases. At Intarcia, delivering superior patient outcomes is our ultimate mission.

Realizing superior outcomes is best illustrated by the promise of our current investigational therapy, ITCA 650. This Phase 3 development product could fundamentally change how diabetes is treated and the course of the disease for many people.

Key clinical goals we hope to test in the Phase 3 trial design are to demonstrate superiority vs. DPP-4 inhibitors and sulphonylureas when used in combination with metformin. Once we have achieved this in our Phase 3 program, we believe we will have established why ITCA 650 is a clear breakthrough in adherence and a new standard of care for Type 2 diabetes that has the potential to lead to better health outcomes over time.

Type 2 diabetes is dramatically on the rise. Complicating the sobering statistics are the significant obstacles patients facemaintaining glycemic control and adhering to treatment. This continues to be a major challenge around the world. Additionally, there are problems of weight gain, hypoglycemia and side effects associated with several major treatments that are currently widely used.

Collectively, these problems create a clear, unmet need for better patient outcomes. We believe ITCA 650 will prove itself able to help address some or all of these challenges in T2D. That's why we have planned such a comprehensive and global Phase 3 program: to determine just that.

We also believe our innovative technology platform and our late-stage drug candidate in Type 2 diabetes is just the first of many innovations to help us achieve the larger goal of improving patient outcomes for millions of people. The opportunity to make significant improvements in other major disease categories is not only attractive, but frankly inspiring.

As this year has evolved, we have shaped our company into a force capable of delivering the full promise of our technology and our pipeline. This will require: 1) The partnership of investors – both private and potentially public, 2) The global clinical strength and reach of Quintiles as our global CRO and development partner, and 3) Our selection of a global pharma partner.

We've made excellent progress toward achieving these goals through 2011 and look ahead to even greater success in 2012. Why? Because with our current assets and business plan in place, I believe Intarcia stands tall among competitive investment and partnering opportunities.

I want to thank the Board of Directors for the opportunity to lead Intarcia, and I deeply appreciate the help of the talented and dedicated people of our company who are ready and able to turn our aggressive business plan into well earned results by year's end, and the ongoing support and confidence of our investors.

Kurt Graves
Executive Chairman, Intarcia Therapeutics