About NASDAQ Biotechnology

The NASDAQ Biotechnology Index (^NBI) is calculated under a modified capitalization-weighted methodology and consists of public companies traded on the NASDAQ Stock Exchange which are classified according to the Industry Classification Benchmark as either Biotechnology or Pharmaceuticals. In order for the company to be included into the NASDAQ Biotechnology index it must meet other eligibility criteria.

Biotechnology Index Security Index Inclusion Eligibility Criteria

• the security must be exclusively listed on the NASDAQ Stock Market. The exception could be done to the securities that were dually listed on another U.S. market prior to January 1, 2004 and has continuously maintained such listing;
• the issuer (public company) of the security must be a part of the Biotechnology or Pharmaceuticals industry according to the Industry Classification Benchmark;
• the issuer (public company) of the security may not be currently in bankruptcy proceedings;
• market capitalization of at least $200 million is required to be allocated in the security;
•  the security must be liquid with an average trading volume of at least 100,000 shares per day;
•  the security issuer may not have entered into a definitive agreement or other arrangement which would likely result in the security no longer being Index;
•  the security issuer may not have annual financial statements with a currently withdrawn audit opinion;
•  6 months minimum is required for the security issuer to be "seasoned" on NASDAQ or another recognized market; in the case of spin-offs, the operating history of the spin-off will be considered.

The NASDAQ Biotechnology Index Securities are evaluated on semi-annual basis. The Securities from the index basket must have at least $100 million in market capitalization and average daily trading volume of at least 50,000 shares. The Index securities that do not meet the maintenance criteria are still retained in the Index if such security met these criteria in the previous semi-annual ranking. The Securities are removed from the NASDAQ Biotechnology Index in situation when Securities do not meet the index inclusion criteria for two consecutive semi-annual rankings periods. Index-eligible securities not currently in the Index are added.

As a rule the index components changes are implemented after the market close on the third Friday in May and November. The data used in the March ranking includes end of March. The data used in September ranking are based on total shares outstanding submitted in a publicly filed SEC document via EDGAR through the end of April and October.

At the same time as an addition to the semi-annual Ranking Review, the NASDAQ Biotechnology Index securities are monitored every day for changes in total shares outstanding arising from secondary offerings, stock repurchases, conversions, or other corporate actions. NASDAQ has adopted the following weight adjustment procedures with respect to such changes. Changes in total shares outstanding could be derived from stock splits, stock dividends, or spin-offs. In general, if the change in total shares outstanding are less than 5%, then all such changes are accumulated and made effective at one time on a quarterly basis after the close of trading on the third Friday of March, June, September, and December. If the change in total shares outstanding arising from other corporate actions is greater than or equal to 5.0%, the change will be made as soon as practicable, normally within ten (10) days of such action. In either case, the Index share weights for such Index Securities are adjusted by the same percentage amount by which the total shares outstanding have changed in such Index Securities.

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