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• Management meetings enhance conviction that SPA is within grasp;reiterate Market Outperform rating and $10 price targeton Ziopharm.Werecently hosted meetings with Ziopharm management and investors,based on which we have gained incremental insights into
the final steps to securing an SPA for the palifosfamide pivotal program. With these new insights, we remain confident that the company is very close tosuccessfully completing SPA discussions with the FDA and continues to be on track to initiatethe pivotal trial in mid-2010. Additionally, with the balance sheet now strengthened, management provided insights into possible development paths for palifosfamide beyond sarcoma as well asefforts toenhancethe visibilityof other pipeline assets. We have also updated our model to include the recent financing, increasing both our share count and cash balance. Our $10 price target is derived from a sum-of-the-parts analysis of the
palifosfamide revenue opportunity in sarcoma, including both US sales and ex-US royalties.

• Key takeaways include rigor in Pali protocol design, possible timelines, IP and additional indications, with capital efficiency remaining “Job #1.” Some of the key discussion points on
which we gleaned incremental insights for the upcoming palifosfamide pivotal program in sarcoma include endpoints (clearly PFS but powered for OS), various ways to deal with discordant data
(primary or site read vs.independent reader), and possible DSMB futility/safety reviews, as well as timelines for enrollment (start in 3Q10) and early data (PFS from roughly 2/3 events in 1H12). All
said, this incremental info and our discussions on rigorous trial design, endpoints, and statistical plan provide us confidence in the Pali sarcoma program. Beyond the important start of this lead
program, foradditional value creation prior to Pali pivotal data we now look to increasing visibility of possible Pali utility from soon-to-start trials in small cell lung/breast cancer, and early (Phase I and
preclinical) data for Daraniparsin in PTCL (1H11) and an undisclosed large market indication (oral version, 2H10). Finally, we are pleased with the IP on Pali and Dara, with composition-of-matter claims (on Pali) extending beyond 2025. Although we believe the clinical data from other indications for Pali and perhaps those for Daraniparsin and Indibulin (breast cancer) will result in many monetizable assets while also diversifying risk, we hesitate to value these until data is in
hand. Therefore, our valuation for ZIOP shares continues to be driven by the sarcoma potential of Pali.

• Updating model to include financing. Last week, Ziopharm completed an equity financing, raising net proceeds of approximately $33MM, excluding overallotment allocations, through the sale of 7 million shares of common stock at $5 pershare. This cash adds to the cash balance of
$45MM at the end of 1Q10, giving a pro forma cash position of $78MM. We view this cash balance as more than sufficient to complete the clinical development of palifosfamide in advanced sarcoma, as well as limited clinical development for other candidates. Following the completion of this transaction, Ziopharm has basic shares outstanding of 48.8 million. We have updated our model to increase the weighted average share count in 2Q10 and beyond. In addition, the fully diluted share count includes stock options outstanding of 3.5 million, stock options available for issue of 3.1 million, and warrants of 15.9 million (exercisable at $4.11 per share). The net impact of the changes to our model does not have any impacton our valuation or price target on ZIOP shares.

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