TRANZYME PHARMA (OUTPERFORM)(TZYM-NASDAQ)

BMO CAPITAL MARKETS: FLASH: 2Q12 RECAP HIGHLIGHTS PROGRESS IN DIABETIC GASTROPARESIS

Monday, August 13, 2012

Tranzyme (TZYM) hosted a conference call on Friday to discuss 2Q12 results and to provide an update on key initiatives. Net loss per share was narrower than expected at ($0.23) vs. ($0.33) BMO Capital estimate on higher-than-expected revenues and lower OPEX, and TZYM ended 2Q12 with $36.4M in cash. Key highlights from the quarter included completion of enrollment in the phase 2b 12-week trial of GI pro-motility candidate TZP-102in patients with diabetic gastroparesis and termination of the license agreement with Norgine for ghrelin agonist ulimorelin following failure of phase 3 trials in post-operative ileus. With primary focus on progress with TZP-102, guidance was maintained for top-line phase 2b data by YE2012 and TZYM also announced the initiation of the DIGEST phase 2b study evaluating dosing of the drug before meals and with data expected by 1H13.

Our View:
• We are encouraged by increased financial discipline and narrowing loss at TZYM, which should help e
   extend the companies cash runway as phase 2b programs come to completion in 1H13.
• Progress with TZP-102 in diabetic gastroparesis is in line with our expectations and we believe that
   the initiation of a second dosing study should further optimize design of a pivotal phase 3 study.
• We continue to believe that the risk-reward proposition is attractive for TZP-102 in diabetic
   gastroparesis with downside risk further mitigated by initiation of a second study.
• We believe that phase 2 data has already established efficacy of TZP-102 in addressing upper GI
   symptoms associated with diabetic gastroparesis and believe that further proof-of-concept could
   support expansion into even larger indications like gastroesophageal reflux disease (GERD).

Company:   Tranzyme Pharma (TZYM)
Price/Rating/Target:   $4.24/Outperform/$6.00
Analyst:   Jim Birchenough, M.D.
Disclosures:   http://researchglobal.bmocapitalmarkets.com/DailyCharts/comply/TZYM7.pdf


CONTACT:    Jim Birchenough, M.D.
                    415-591-2129

For Important Disclosures, go to http://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx