Feeding the Pipeline VII: Clearing the Innovation Bar
Ed Saltzman Defined Health
LES 2006 Annual Meeting New York
© Defined Health, 2006 The information in this presentation has been obtained from what are believed to be reliable sources and has been verified whenever possible. Nevertheless, we cannot guarantee the information contained herein as to accuracy or completeness.
All expressions of opinion are the responsibility of Defined Health, and though current as of the date of this report, are subject to change.
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 2 The Presenter’s Challenge
“The ear tends to be lazy, craves the familiar, and is shocked by the unexpected: the eye, on the other hand, tends to be impatient, craves the novel and is bored by repetition.”
-- W.H. Auden
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 3 Feeding the Pipeline VII: Topic Outline
I. Still stuck in the No-Fun Zone II. Are the fun times coming back? III. Licensing to the rescue (again!) IV. But an ever-increasing list of challenges for those in L&BD: – The Typical: The Perennial Late Stage Opportunity Shortage – The New: Spiraling Cost of Early Stage Deals V. Implications and Predictions – Lessons from the M&A Space: When Pipelines are Worth More than Products – Reverberations from a brutal Biotech IPO market VI. OK, but I still Need to Find a Product! Take-Homes from the “No- Spin Zone” – The New Regulatory Bar: Safety, Efficacy and Medical Necessity – Unmet Needs: Let’s Get Serious! – Broader isn’t Better: The Coming of the Less Impersonal Blockbuster
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 4 The No Fun Zone
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 5 Pharma Continues to Dwell in a No Fun Zone
18% 17% 17% 16% 16% 16% 16% 16%
14% 14% 13% 12% 12% 12% 12% 11% 11% 11% 11% 10% 10% 10% 10% 9% 9% 9% 8% 8% 8%
% Growth % 7% 7% 7% 6% 6% 5% 4% 4% % Sales Growth 4% 3% 2% % EPS Growth 2%
0%
A A A A A A A A A A A A A A
-1985A 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006E A A-1991A
1975 1986 EvaluatePharma, Cowen & Company, June 2006; Defined Health analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 6 Pharma Continues to Dwell in a No Fun Zone
Pharma Industry – Trend in Return on Equity Pharma Industry ROE
22%
20%
18%
16%
14%
12%
10% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
EvaluatePharma
EvaluatePharma; Defined Health Analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 7 Pharma Continues to Dwell in a No Fun Zone
10% 7% 5% 0% 0% 2002A 2003A 2004A 2005A 2006E* -5% -1%
-10% -9% -15%
-20%
-25% -26% -30% *Through June 20, 2006 Cowen & Company, June 2006; Defined Health analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 8 Spiraling R&D Expense and Decreasing Output
140 $45.0
120 NME Non NME R&D Spend $40.0 120 $38.8
$34.5 $35.0 100 $31.0 $30.0 $29.8 87 82 82 78 78 80 $26.0 $25.0 70 71 $22.7 64 65 $21.1 61 60 $20.0 60 54 $19.0 53 51 $ Billions 48 $16.9 48 47 45 Number of Products Number $15.2 $15.0 41 40 42 $13.4 39 40 $12.7 33 35 30 30 $11.5 30 30 28 27 $10.0 $9.726 25 24 22 20 21 23 23 $8.4 22 21 $4.1 20 $7.3 20 $6.5 17 $5.5 12 $3.6 $5.0 $3.2 $4.7
0 $0.0 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 Parexel's Pharmaceutical R&D Statistical Sourcebook 2005/2006; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 9 The Innovation Deficit Is Making Things Worse
Innovativeness of FDA Approved Drugs (1989-2000)
Old Active Ingredients = 65%
Increasing Level of Innovation NIHCM Foundation, FDA
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 10 FDA OKs pearly pigments to color pills By ANDREW BRIDGES, Associated Press WriterThu Jul 20, 11:03 PM ET AP Photo: In this photograph provided by EMD Chemicals, Inc., Candurin Pearl Effect Color coated tablets are... If you think beauty can't go more than skin deep, swallow this: Health officials on Thursday said drug companies could start gussying up their pills with pigments like those that give cosmetics a pearly sheen. The pearlescent pigments can be used in any drugs that are swallowed, including pills, tablets and liquids, the Food and Drug Administration said. As a result, drugs may never look the same again. The pigments can produce sparkly metallic, satiny and shimmery finishes, as well as different hues If youof red thinkand gold, beautydepending partly can't on the go color more of the underlying than skin drug. deep, swallow The FDA's publicationthis: of a final Health rule approving officials their use came on eightThursday years after EMD said Chemicals drug Inc. compan of Gibbstown,ies N.J., first petitioned the agency. The chemical and pigment maker is part of the German drug company Merck KGaA. That company is entirely separate fromcould U.S.-based start Merck gussying& Co. Inc. up their pills with pigments like those EMD Chemicals hopesthat the pharmaceutical give cosmetics companies it asupplies pearly will seize sheen. on the technology to give their drugs a look that is unique and hard to copy, said Dan Giambattisto, sales and marketing director for Candurin Pigments at EMD Chemicals. The pigments are madeThe by coating pearlescent the mineral mica pigments with either titanium can dioxide be orused iron oxide in — any or both. drugs The FDA t approvedhat are using the two separate combinations to color contact lenses in 2002. swallowed, including pills, tablets and liquids, the Food and Similar pigments also are used in makeup, including lipstick, eye shadow and nail polish, as well as in inks and automotive paint. Drug Administration said. As a result, drugs may never look Gatewood Organization LLC, a regulatory consulting group in Hazlet, N.J., had questioned whether the pigments would put some drugs off limits to patientsthe who same must watch again. their intake of iron and whether they would affect the shelf life of drugs. EMD Chemicals also is seeking FDA approval to use the pearly pigments in cereals, candies, chewing gum and other foods. In June, the FDA approved the use of titanium dioxide and mica pigments in some foods; the agency continues to review pigments made with synthetic ironThe oxide. pigments can produce sparkly metallic, satiny and shimmery finishes, as well as different hues of red and gold, Associated Press; Yahoo dependingNews partly on the color of the underlying drug. Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 11 Though Better than Pharma, Biotech Has Its Own Innovation Gap Innovativeness of FDA Approved Drugs (2001-2004)
*Distribution of NDAs, Pharma vs. Biotech* Old Active Ingredients = 73% (Total=619 New Drugs)
Pharma 11% 16% 6% 60% 7%
Priority NME Standard NME Priority IMD Standard IMD Other Increasing Level of Innovation
Biotech 29% 16% 6% 43% 6%
Old Active Ingredients = 55%
•NDA sponsors were designated either Biotech or Pharma; includes BLAs USFDA; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 12 New Biotech Products are Smaller than Current Ones WW Peak Sales by Originator Top 10 Products per Group $70B
$60B
$50B 2nd Generation Biotech: $40B Alexion, Myogen, Threshold, Antigenics, $30B Telik, Basilea, Dendreon, Keryx and Xenoport WW Peak Peak Sales WW $20B
$10B
$0B Pharma Biotech 2nd Generation Biotech
EvaluatePharma; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 13 Is Biotech Facing its Own Innovation Gap?
Biotechnology Companies BiotechnologyAverage Peak Year Companies Sales Forecast for– First Average Marketed PeakProduct Year Sales Forecast for First Marketed Product $1,600 $1,493
$1,400
$1,200 $1,079 $971 $1,000
$800 $ Millions $600
$397 $400 $299
$200
$0 1975-1979 1980-1984 1985-1989 1990-1994 1995-1999 Year of Company Formation Company reports; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 14 The Strong Biotechs Are Getting Stronger
MarketMarket Cap for Top Cap 10 Biotech for Top as a 10Fraction Biotechs of All Biotechs as a Fraction of All Biotechs 100% 95% 90% 90%
85% 82% 80% 78% 76% 75% 73% 73% 73% 71% 71% 70%
65% 63% 62% 60% 55% 50% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
EvaluatePharma; Yahoo! Finance
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 15 But Very Few New Big Biotechs
Biotech Companies That Have for the First Time Surpassed $3 Billion in Market Cap 7 6 6 5 Cephalon & 4 Amylin 4 3 OSI 3 2 2 2 1 1 1 1 0 0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
EvaluatePharma; Yahoo! Finance
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 16 Ligand to Sell Oncology Line to Eisai © 2006 The Associated Press SAN DIEGO — Ligand Pharmaceuticals Inc. said Friday it agreed to sell its oncology product line and related assets to Eisai Inc. and Eisai Co. for $205 million in cash. Teaneck, N.J.-based Eisai and its Tokyo-based unit develop drugs to treat Alzheimer's, acid reflux and convulsions. The sale includes Ligand'sThe four marketedsale includes oncology drugs Ligand's _ Ontak, Targretin four capsules, marketed Targretin gel and Panretin gel. Ontak is FDA-approved to treat persistent or recurrent cutaneous T-cell lymphoma, while Targretin has proven effective as a treatment oncologyof cutaneous T-cell drugs lymphoma. -- Ontak, Targretin capsules, In February 1999, the FDATargretin granted marketing gel clearan andce Panretin for Panretin gel gel. for the topical treatment of cutaneous lesions of patients with AIDS-related Kaposi's sarcoma. Ligand said Eisai will assume all future royalty payment obligations for the products. Eisai will receive all rights to the products worldwide, including related intellectual … On Thursday, Ligand agreed to sell U.S. and Canadian rights to its Avinza pain drug to King Pharmaceuticals Inc. "We have now sold our two commercial operations for total cash consideration of $518 million. With the sale of our commercial operations, Ligand will become a dynamic and highly-specialized R&D and royalty company, said Henry F. Blissenbach, Ligand chairman and CEO. "By the end of 2006, Ligand expects to have new corporate leadership, to have restructured and narrowly focused its research and development endeavors in order to focus on our most promising compounds, and to minimize its expense structure with a goal to be both earnings and cash-flow positive," added Blissenbach. Shares closed Thursday at $9.95 on the Nasdaq.
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 17 Ligand to Sell Oncology Line to Eisai © 2006 The Associated Press SAN DIEGO — Ligand Pharmaceuticals Inc. said Friday it agreed to sell its oncology product line and related assets to Eisai Inc. and Eisai Co. for $205 million in cash. Teaneck, N.J.-based Eisai and its Tokyo-based unit develop drugs to treat Alzheimer's, acid reflux and convulsions. The sale includes Ligand's four marketed oncology drugs _ Ontak, Targretin capsules, Targretin gel and Panretin gel. Ontak is FDA-approved to treat persistent or recurrent cutaneous T-cell lymphoma, while Targretin has proven effective as a treatment of cutaneous T-cell lymphoma. In February 1999, the FDA granted marketing clearance for Panretin gel for the topical treatment of cutaneous lesions of patients with AIDS-related Kaposi's sarcoma. Ligand said Eisai will assume all future royalty payment obligations for the products. Eisai will receive all rights to the products worldwide, including related intellectual … On Thursday,On Ligand Thursday, agreed to sell U.S. Ligand and Canadia agreedn rights to itsto Avinza sell pain U.S. drug toand King PharmaceutCanadiaicalsn Inc. "We have nowrights sold our twoto commercialits Avinza operations pain for total drug cash considerationto King ofPharmaceutic $518 million. With the saleals of Inc.our commercial operations, Ligand will become a dynamic and highly-specialized R&D and royalty company, said Henry F. Blissenbach,"We Ligand chairmanhave andnow CEO. sold our two commercial operations for total "By the end of 2006, Ligand expects to have new corporate leadership, to have restructured and narrowly focused its research andcash development consideration endeavors in order to of focu $518s on our million.most promising With compounds, the andsale to minimize of our its expense structurecommercial with a goal to be operations, both earnings and cash-flow Ligand positive," will added become Blissenbach. a dynamic and Shares closedhighly-specialized Thursday at $9.95 on the Nasdaq. R&D and royalty company, said Henry F. Blissenbach, Ligand chairman and CEO.
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 18 http://www.office-humour.co.uk/g/i/1992/
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 19 Are the Fun Times Coming Back?
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 20 “The science has exploded and all sorts of things are happening… I’m going to stay for a while because I’ve been around for all the crummy stuff, and this is going to be good.”
-- John L. LaMattina, President, Pfizer Global Research and Development July 18, 2006
Company website; Wall Street Journal
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 21 The richness of the early-stage pipeline illustrates the replacement power of the Novartis pipeline and demonstrates the continuing high performance of the research organization.
Company press release, January 2005
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 22 Early-Stage Pipeline Update The Company announced that it continues to make progress advancing its early-stage pipeline . Since the start of 2006, five new molecules, two in oncology solid tumors, two for diabetes and one for idiopathic pulmonary fibrosis have been advanced into clinical development. Additionally, two new molecules, one for diabetes and one for pain, have entered the clinic for introduction into humans. During this period, three early-stage programs have been terminated.
Company website
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 23 …clear improvements in the company's product flow capability and early stage pipeline have been achieved in the past two years.
Company press release, November, 2005
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 24 Takeda Pharmaceuticals North America, Inc. (TPNA) is a new kind of pharmaceutical company. We are dedicated to serving patients by providing innovative products that improve their lives with better healthcare. With a foundation built on the tremendous success of ACTOS ® (pioglitazone HCl) as well as a robust, early-stage pipeline, TPNA is poised to realize its vision of becoming a world class pharmaceutical company.
Company website
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 25 More Shots on Goal Have Not Scored More Goals
1.5 Number of Compounds in Each Phase of 1539 Development By Year 1.4
1.3 Phase I 1371 Phase II 1.2 1694 Phase III 1218 1647
1.1 1139 1486 1485 781 1 754 705 Index Based on 2001 Status 2001 on Based Index 701 0.9
0.8 2001 2002 2003 2004 2005
Parexel, http://www.graywolveshockey.com/2002/shot-on-goal.jpg; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 26 Phase II Attrition is Skyrocketing
Phase II Failure Rate
80%
70%
60%
50% 1991-2000 2005
Parexel; Robert Ruffolo in Wall Street Journal, Sept. 30, 2005
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 27 Licensing to the Rescue (Again)!
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 28 In-Licensed Products Will Soon Dominate in Both Number of Top Selling Products & Revenue Contribution 50% 60
45% 50 40%
40 Top100 35%
%in-licenced revenues 30% 30 # in-licensed # products in 2000 2001 2002 2003 2004 2005 2006 2007 2008
In licensed products in top 100 % in licensed revenues from Top 100
EvaluatePharma, Sept 2006
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 29 In-Licensed Revenue to Double Between 2000 & 2009
160bn 140bn 120bn 100bn 80bn 60bn 40bn 20bn 0bn 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
EvaluatePharma
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 30 From 2000 – 2009, Revenues From In-Licensed Drugs will Grow 1.6X Faster Than for Internal Compounds 240%
220% Self-Originated In-Licensed 200%
180%
160%
140%
120%
100% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
EvaluatePharma; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 31 In-Licensed Drugs are More Likely to be Approved the First Time Around
Approval Rate by Drug Origin N=60 N=17 100% 90% 80% 42% 65% 70% 60% 50% 40% 30% 55% Approval Ratio % 20% 35% 10% 0% Self-Originated In-Licensed
Multi-Cycle Single-Cycle
Independent Evaluation of FDA’s First Cycle Review Performance – Retrospective Analysis Final Report, Booz Allen Hamilton, January 2006
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 32 Big Biotech Would Be Less “Big” Without Externally-Sourced Products
Amgen
$16.0
$14.0
$12.0 Organic Revenues
$10.0 Inorganic Revenues
$10.5 $8.0 $9.3 $6.0 $8.0 $6.5 $4.0 $4.5 $2.0 $3.0 $3.2 $3.5 $3.2 $2.2 $2.5 $2.8 $2.1 $1.4 $2.0 $0.0 $0.5 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Amgen WW Revenues ($ Billions) Self marketed products for which sales are booked only, excludes royalties from out- licensed products not booked as sales. EvaluatePharma; Defined Health analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 33 Big Biotech Would Be Less “Big” Without Externally-Sourced Products
Genentech
$8.0
$7.0
$6.0 Organic Revenues
$5.0 Inorganic Revenues $4.1
$4.0 $2.7
$3.0 $1.8
$2.0 $1.1 $0.9 $3.0 $0.9 $2.4 $1.0 $0.8 $1.8 $0.7 $1.4 $0.5 $1.1 $0.6 $0.6 $0.4 $0.8 $0.0 $0.2 $0.3 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Genentech WW Revenues ($ Billions)
Self marketed products for which sales are booked only, excludes royalties from out- licensed products not booked as revenues. EvaluatePharma; Defined Health analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 34 Big Biotech Would Be Less “Big” Without Externally-Sourced Products
Genzyme
$3.0
$2.5 Organic Revenues $2.0 Inorganic Revenues $1.5
$1.5 $1.3
$1.1 $1.0 $0.9
$0.6 $0.7 $1.1 $0.5 $0.9 $0.5 $0.6 $0.6 $0.3 $0.4 $0.4 $0.3 $0.2 $0.2 $0.0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Genzyme WW Revenues ($ Billions)
Self marketed products for which sales are booked only, excludes royalties from out- licensed products not booked as revenues. EvaluatePharma; Defined Health analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 35 Big Biotech Would Be Less “Big” Without Externally-Sourced Products
Medimmune
$1.2
$1.0 Organic Revenues $0.8 Inorganic Revenues
$0.6 $0.9 $0.9 $0.9 $0.8 $0.4 $0.7
$0.5 $0.2 $0.4 $0.3 $0.2 $0.1 $0.1 $0.01 $0.02 $0.1 $0.1 $0.1 $0.1 $0.0 $0.0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Medimmune WW Revenues ($ Billions)
Self marketed products for which sales are booked only, excludes royalties from out- licensed products not booked as revenues. EvaluatePharma; Defined Health analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 36 But an Ever-Increasing List of Challenges…
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 37 An Ever-Increasing List of Challenges
The Usual: The Perennial Late-Stage Opportunity Shortage
The New: The Spiraling Cost of Early-Stage Deals
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 38 An Ever-Increasing List of Challenges
The Usual: The Perennial Late-Stage Opportunity Shortage
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 39 “Hey, I said this in 2000!”
“Of course, we’d all like low-priced, low- risk Phase III products with wonderful programs, but there are very few of them, and when they do exist, you end up spending top-dollar.” -- John Patterson, Executive Director, Development, AstraZeneca Quoted in Chemical & Engineering News March 6, 2006
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 40 “There are Very Few of Them…”
Trend in Number of Phase III Deals 14 13 12 11 11 10 10 8 6 6 4 Number of Number Deals 2 0 2002 2003 2004 2005 Q1-3/06
Phase III Company reports; ReCap; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 41 “…and you end up paying top dollar”
Index of Deal Upfronts for Index of Deal Upfronts For Phase II & Greater Deals Phase II & Greater Deals 19941994-2002 - 2006 600% 500% 400% CPI 300% DPI Ph III 200% 100% 0% 1994 1998 2002 2006*
CPI: Consumer Price Index DPI: Deal Price Index Note: Includes deals signed in Phase II, III , and after filing; only those with ascertainable upfront payments DH analysis based on data presented by Oxford Bioscience Partners (*): Projection applying historic trend
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 42 An Ever-Increasing List of Challenges
The Usual: The Perennial Late-Stage Opportunity Shortage
The New: The Spiraling Cost of Early-Stage Deals
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 43 Early Stage Deals Have Only Recently Become Expensive: The Early Stage DPI vs. The CPI
Index of Deal Upfronts For Phase I Deals 1994-2006 250%
200%
150% CPI DPI Ph I 100%
50%
0% 1994 1998 2002 2006*
CPI: Consumer Price Index DPI: Deal Price Index Note: Includes deals signed in Phase I ; only those with disclosed/ascertainable upfront payments DH analysis based on Recap Data (*): as of September 06
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 44 Skyrocketing Ph I Prices but Pharma’s Still Buying!
$35 60 Avg. Upfront Payment Avg. Upfront Payment (Excluding Outliers) $29.5 $30 No. of Phase I Deals 48 46 50 $25.4 $25 41 40
$20 36 37 $17.2 $15.7 $15.5 30 $15 $13.9
$10.0 $10.1 20 I Deals of Phase Number $10 $8.8
Average Upfront Payments ($ Millions) Payments Upfront Average $4.4 10 $5
$0 0 2002A 2003A 2004A 2005A Q1 - 3 / 06
* Includes 2006 deals completed to-date (September 11, 2006) EvaluatePharma, Recombinant Capital; Defined Health analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 45 “In spite of the cost of living, it's still popular.” -- Kathleen Norris
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 46 Pay Now or Pay Later? The Biggest Pharmas are Not the Biggest Buyers of Phase I Products
Phase I Deals by Selected Pharmacos 2002-2006 16 14 12 10 8 6
Deal Number Deal 4 2 0
Roche Novartis Pfizer GlaxoSmithKline AstraZeneca sanofi-aventis Company reports; Recap; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 47 Big Phase I Deals: The New Sticker Shock
Roche/Actelion Infinity/Medimmune • July 2006: $630 MM • August 2006: $500 MM • $75 MM upfront, $550 MM • $70 MM upfront, $430 milestones, royalties, profit milestones share • Cancer (multiple types) • Autoimmunity, multiple • WW single compound license indications (hedgehog inhibitor), and • WW single compound license agreement to jointly develop (S1P1 receptor agonist), plus compounds against hh and platform Hsp 90 • Actelion to fund into Phase II • Shared development costs for 2 indications
Company reports; Recap; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 48 Big Phase I Deals: The New Sticker Shock
Sankyo/Ajinomoto • August 2006: Yen 4.6 B • $39 MM upfront, undisclosed milestones, royalties • Diabetes • WW Single product license (new pathway activates the insulin signaling pathway), plus platform • Joint development for certain programs
Company reports; Recap; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 49 Deal Nostalgia Quiz # 1
Date: 1996 Financials: Upfront $20 MM for US, $5 MM for ROW, $170 MM milestones; Total Deal $200 MM Territory: WW Phase: III Therapeutic Area: Cardiovascular Product: ?/?/?
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 50 Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 51 Lipitor
Peak Year (2008) Consensus Forecast = $12.6 B
Analyst Consensus Forecasts, Evaluate Pharma
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 52 Deal Nostalgia Quiz # 2
Date: 1997 Financials: Upfront $15 MM , $85 MM Milestones Territory: North America Phase: III Therapeutic Area: Rheumatoid Arthritis Product: ?/?/?
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 53 Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 54 Enbrel
2010 Consensus Forecast = $6.8 B
Analyst Consensus Forecasts, Evaluate Pharma
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 55 Deal Nostalgia Quiz # 3
Date: 1998 Financials: Upfront $85 MM for US, $155 MM Milestones Territory: North America Phase: III Therapeutic Area: Pain Product: ?/?/?
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 56 Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 57 Celebrex
2010 Consensus Forecast = $3.3 B
Analyst Consensus Forecasts, Evaluate Pharma
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 58 Deal Nostalgia Quiz # 4
Date: 2001 Financials: Upfront $11 MM , $27 MM Milestones Territory: North America Phase: III Therapeutic Area: Supportive Oncology Product: ?/?/?
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 59 Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 60 Aloxi
2010 Forecast = $383 M
Analyst Consensus Forecasts, Evaluate Pharma
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 61 Deal Nostalgia Quiz # 5
Date: 2001 Financials: Upfront $200 MM , $800 MM Milestones Territory: WW Phase: III Therapeutic Area: Oncology Product: ?/?/?
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 62 Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 63 Erbitux
2010 Consensus Forecast = $2.9 B
Analyst Consensus Forecasts, Evaluate Pharma
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 64 Deal Nostalgia Quiz # 6
Date: 2002 Financials: Upfront $110 MM , $335 MM Milestones Territory: WW Phase: III Therapeutic Area: Diabetes Product: ?/?/?
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 65 Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 66 Byetta
2010 Consensus Forecast = $1.3 B
Analyst Consensus Forecasts, Evaluate Pharma
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 67 Implications and Predictions
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 68 "Those who have knowledge, don't predict. Those who predict, don't have knowledge.”
-- Lao Tzu, 6th Century BC Chinese Poet
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 69 Ed: Circa 1985 Ed: Circa 1995 Ed: Present Day
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 70 Very Comfortable Less Comfortable Very Uncomfortable 80’s Early-Mid 90’s Late 90’s-Present
Comfort Factor
Ph III Inventory Plentiful Scarce Extinct!
Late Stage Deal Inexpensive Getting pricy Priceless Cost Commercial Risk for Nil Increasing Forget about Follow-Ons it!
Biotechs Willing to Most Few None Cede Complete Control
Early Inventory Who cared? Who cared? Generous
Early Stage Deal Dirt cheap Cheap Getting very Cost pricey Revenue Bar $500mm $1b Lipitor
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 71 Very Comfortable Less Comfortable Very Uncomfortable 80’s Early-Mid 90’s Late 90’s-Present
Comfort Factor
Number of Potential Big Numerous Shrinking Shrinking more Pharma Partners
Big Pharma’s Bring ‘em on First or second Hopefully, it’s Willingness to Take on in class or else such an Commercially innovation that Challenging Products it doesn’t require a sales force Need to In-License as I’m a genius. How much will How soon can Well as Out-License Why would I that sales force you guys find us want somebody cost??? products? else’s stuff?
Competition for Prime I’m not a buyer, Still not buying How do I In-Licensing Assets I’m a seller compete with Pfizer for oncology assets?
To Keep or Not to Keep Say what? Still mostly a Must keep even no-brainer if you don’t want Defined Health to!
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 72 Very Comfortable Less Comfortable Very Uncomfortable 80’s Early-Mid 90’s Late 90’s-Present
Comfort Factor
IPO Bar Any sexy Anything high At least 2 Phase sounding throughput, III and 4 Phase II science combinatorial or products genomic
VCs Willingness to As long as it As long as it Let’s just say the Finance Early Stage sounds cool targets a big terms are very Development market unpleasant and leave it at that
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 73 Implications and Predictions
Lessons From the M&A Space: When pipelines are worth more than products
Reverberations from a brutal Biotech IPO market
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 74 Implications and Predictions
Lessons From the M&A Space: When pipelines are worth more than products
Reverberations from a brutal Biotech IPO market
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 75 ????
????
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 76 Nov 8, 2005 press release
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 77 Nov 8, 2005 press release
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 78 …..15 Billion CASH!
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 79 April 10, 2006 press release
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 80 April 10, 2006 press release
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 81 Market Cap: $12.58 B (9/7/06)
Yahoo! Finance
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 82 Current Portfolio Will Demonstrate Decent Growth through 2010
3,500 HuMax-CD4 Raptiva 3,000 Saizen Gonal-F/Gonalef Rebif 2,500
2,000
1,500 WW Sales: US $ (mln) $ US Sales: WW 1,000
500
0 2005 2006 2007 2008 2009 2010 EvaluatePharma
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 83 Future Pipeline Contribution is Debatable Phase 1 Phase 2 Phase 3 Hyperglycosylated Oxytocin receptor Anastrozole in Oral cladribine in FSH in infertility antagonist in pre- ovulation induction multiple sclerosis term labor & improvement of MMP-12 inhibitor in follicular Phenoptin in multiple sclerosis JNK inhibitor in development phenylketonuria Atacicept (TACI-Ig) multiple sclerosis in rheumatoid Adecatumumab in Zanolimumab arthritis Atacicept (TACI-Ig) prostate cancer (HuMax-CD4) in in relapsed / cutaneous T-cell Atacicept (TACI-Ig) refractory B-cell Adecatumumab in lymphoma in systemic lupus malignancies metastatic breast erythematosus cancer NI-0401 anti-CD3 Atacicept (TACI-Ig) monoclonal antibody in multiple myeloma Zanolimumab in Crohn's disease (HuMax-CD4) in Adecatumumab + non-cutaneous docetaxel in T-cell lymphoma metastatic breast cancer
Company website
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 84 The Challenges of Selling a “One-Trick Pony”
Imclone Systems Engages Lazard to Review Strategic Alternatives for the Company; IMCLONE SYSTEMS ANNOUNCES JOSEPH L. FISCHER, DIRECTOR, NAMED INTERIM CHIEF EXECUTIVE OFFICER
NEW YORK--(BUSINESS WIRE)-- Jan. 24, 2006--ImClone Systems Incorporated (NASDAQ:IMCL) announced today that the Board of Directors has engaged Lazard to conduct, in conjunction with management, a full review of the Company's strategic alternatives to maximize shareholder value. These alternatives could include a merger, sale or strategic alliance. The Company is proceeding in consultation with its existing partners as the process moves forward.The Company also announced today that Joseph L. Fischer, a member of ImClone Systems' Board of Directors since 2003 as well as a member of its Audit and Compensation Committees, has been named Interim Chief Executive Officer, replacing Philip Frost, M.D., Ph.D. Mr. Fischer brings over 20 years of global managerial and operational experience to the Company. As a result of being named Interim Chief Executive Officer, Mr. Fischer will no longer serve on the Audit and Compensation Committees of the Board of Directors. Dr. Frost will remain as Executive Vice President and Chief Scientific Officer.
Company website, Jan 24, 2006 press release
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 85 Growth Forecasts for Erbitux are Respectable
700
Erbitux 600
500
400
300 WW Revenues: US $ (mln) $ US Revenues: WW 200
100
0 2005 2006 2007 2008 2009 2010
EvaluatePharma
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 86 But No Potential Pipeline Payoff for 10 Years
Company website
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 87 Imclone Systems Completes Review of Strategic Alternatives and Decides to Remain Independent; Transaction Alternatives Did Not Provide Sufficient Premium to Shareholders
Joseph L. Fischer to Continue to Lead Company While Board Searches for Permanent CEO Company Announces Annual Meeting Date and Invites Carl Icahn to Join Company's Board of Directors
NEW YORK--(BUSINESS WIRE)--Aug. 10, 2006--ImClone Systems Incorporated (NASDAQ: IMCL): ImClone Systems Incorporated (NASDAQ: IMCL) announced today that its Board of Directors has completed a review of the Company's strategic alternatives and has made the decision to remain independent. The strategic review, conducted by the Board in conjunction with the Company's financial advisors and management, was initiated in January and included the evaluation of a number of alternatives, including a merger, sale or strategic alliance.In reaching its decision, the Board noted that the Company possessed a number of significant near- and long-term value drivers, including improving revenue and earnings performance; increasing sales of ERBITUX(R) in its approved indications, a successful launch in head and neck cancer and increased market penetration in colorectal cancer; the prospects for important clinical trial results toward the end of this year and beginning of 2007; and significant potential for the Company's pipeline product candidates.Commenting on the Board's decision, Joseph L. Fischer, Interim Chief Executive Officer of ImClone Systems, stated: "The Board concluded that the alternatives available, including bids received for the acquisition of the Company, did not match the value potential of ImClone Systems as an independent company. This decision was made in light of significant improvements in the top- and bottom-line performance of the Company over the review period and from the Company's numerous opportunities for growth. The Board, management team and I look forward to continuing to grow and improve ImClone Systems as a business, so that we can continue to be industry leaders in developing novel products for the benefit of the oncology community." Company website; August 10, 2006 press release
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 88 Market Cap: $2.36 B (9/7/06)
Yahoo! Finance
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 89 Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 90 Imclone Systems Announces Slate of Directors for Annual Meeting of Shareholders NEW YORK--(BUSINESS WIRE)--Aug. 23, 2006--ImClone Systems Incorporated (NASDAQ: IMCL) announced today the slate of nominees recommended by the Board of Directors for election at the 2006 Annual Meeting of shareholders scheduled for September 20, 2006 at 10:00 AM at the Company's offices in Branchburg, New Jersey. This slate of twelve individuals comprises the nine current members of the Board together with Richard Mulligan, Ph.D., Charles Woler, Ph.D. and Carl Icahn . The Company's Board of Directors believes that Drs. Mulligan and Woler, who were both suggested by Mr. Icahn, are highly qualified to serve as independent directors and it is confident that they will make valuable contributions to theThe Board Company's as it focuses on continu Boarding to ofgrow Directors the Company. believesThe agreement that with Mr. Drs. Icahn regarding the compositionMulligan of the andBoard slateWoler, also a voidedwho a wereproxy contest both that suggested would have been bydistrac Mr.ting for the Company. Icahn, are highly qualified to serve as independent David Kies, Chairman of ImClone Systems' Board of Directors, stated: "We are fortunate to have Joe Fischer serve as interim Chiefdirectors Executive Officer.and itHe is has confident managed the Companythat they effectively will during make a challenging valuable time and has agreed to continue to serve ImClone Systems while we search for a permanent Chief Executive Officer. We welcome the inputcontributions of all of our directors to intothe the Board process ofas naming it focuses a permanent on Chief continu Executive Offingicer. to We look forward to Mr.grow Icahn's the further Company. input with regard toThe the Company's agreement governance, with and Mr.hope thatIcahn it will be productive and given in a manner that maximizes the value of the Company for all shareholders.“ regarding the composition of the Board slate also Dr. Charles Woler is CEO of Neuro3D, a biopharmaceutical company focused on discovery and development of treatments for psychiatricavoided disorders a proxy such as schizocontestphrenia, that depression would and anxiety, have and been is Operating Partner Healthcare at Duke Street Capital. He has also served as CEO of Cadus Corporation, as CEO of Roche, France, an affiliate of F. Hoffmann-LaRochedistracting for Ltd., theand as Company. Chairman, Europe Pharmaceuticals, SmithKline Beecham. Mr. Icahn is the principal equity holder and a director
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 91 Imclone Systems Announces Slate of Directors for Annual Meeting of Shareholders NEW YORK--(BUSINESSWe WIRE)--Aug. look forward 23, 2006--ImClone to Mr. Systems Icahn's Incorporated further (NASDAQ: IMCL) announced today the slate of nominees recommended by the Board of Directors for election at the 2006 Annual Meeting of shareholders scheduled inputfor September with 20, regard 2006 at 10 to:00 theAM at Company's the Company's offices in Branchburg, New Jersey. This slate of twelvegovernance, individuals comprises and the hopenine current that members it will of thebe Board together with Richard Mulligan, Ph.D., Charles Woler, Ph.D. and Carl Icahn . productive and given in a manner that The Company's Board of Directors believes that Drs. Mulligan and Woler, who were both suggested by Mr. Icahn, are highly qualifiedmaximizes to serve as independent the value directors of and the it is confident Company that they forwill make valuable contributions to the Board as it focuses on continuing to grow the Company. The agreement with Mr. Icahn regarding the compositionall of theshareholders.“ Board slate also avoided a proxy contest that would have been distracting for the Company. David Kies, Chairman of ImClone Systems' Board of Directors, stated: "We are fortunate to have Joe Fischer serve as interim Chief Executive Officer. He has managed the Company effectively during a challenging time and has agreed to continue to serve ImClone Systems while we search for a permanent Chief Executive Officer. We welcome the input of all of our directors into the process of naming a permanent Chief Executive Officer. We look forward to Mr. Icahn's further input with regard to the Company's governance, and hope that it will be productive and given in a manner that maximizes the value of the Company for all shareholders.“ Dr. Charles Woler is CEO of Neuro3D, a biopharmaceutical company focused on discovery and development of treatments for psychiatric disorders such as schizophrenia, depression and anxiety, and is Operating Partner Healthcare at Duke Street Capital. He has also served as CEO of Cadus Corporation, as CEO of Roche, France, an affiliate of F. Hoffmann-LaRoche Ltd., and as Chairman, Europe Pharmaceuticals, SmithKline Beecham. Mr. Icahn is the principal equity holder and a director
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 92 Altana Considers Sale of Pharmaceuticals Division Amid Delays
Oct. 30 (Bloomberg) -- Altana AG, the German drugs and chemicals maker controlled by the billionaire Quandt family, is considering a sale of its pharmaceuticals business amid delays in the introduction of new drugs, its chief executive said.
The Bad Homburg-based company hired Goldman Sachs Group Inc. to explore strategic options for the business, spokesman Thomas Gauly said, confirming a report in the Financial Times Deutschland that cited a letter by Chief Executive Officer Nikolaus Schweickart to employees. All options regarding the future of the business are still open, Gauly said today. ``The letter refers to strategic gaps in our portfolio that will require action,'' Gauly said in an interview. ``If all options are open, then that also includes a sale.''
A sale of the business would depart from Schweickart's strategy, announced in August, to strengthen the drugs business through strategic partnerships and collaborations after he budgeted 1 billion euros ($1.2 billion) for investments in the unit. Altana is struggling to move new products onto the market as sales of its asthma drug Alvesco are trailing earlier projections.
Company website; Oct 30, 2005 press release
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 93 Company website
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 94 2,500
2,000
1,500
1,000 Ebrantil
WW Sales: US $ (mln) $ US Sales: WW Daxas OMNAIR Alvesco Protonix 500
0 EvaluatePharma 2005 2006 2007 2008 2009 2010
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 95 Some Costs Could Surely Be Taken Out of Altana
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 96 AA placeplace inin societysociety Altana believes in building bridges between industry and culture.
To that end, the company established the Herbert Quandt Foundation and the Altana Cultural Forum. Twice a year, at the foundation’s invitation, leading figures from politics, industry, science, and religion meet at the Sinclair House in Bad Homburg to discuss key social issues. The Cultural Forum, also headquartered in the Sinclair House, collects and exhibits international works of art of the 20th and 21st centuries. Altana’s annual report displays some of that art and a quote from Nikolaus Schweickart, chairman of Altana AG: “Culture is intellectual nourishment. It reflects society’s degree of civilization. That is why the arts must not flounder but flourish.” In celebration of the holding company’s 25th anniversary, the Munich Symphony Orchestra and a well known choir from Munich traveled with Altana’s management around the world to host management meetings and celebrations in Frankfurt, Sao Paulo, New York, Mexico City, and Shanghai. The company invited customers and employees at every level of the company to attend.
Company website
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 97 AA placeplace inin societysociety Altana believes in building bridges between industry and culture.
To that end, the company established the Herbert Quandt Foundation and the Altana Cultural Forum. Twice a year, at the foundation’s invitation, leading figures from politics, industry, science, and religion meet at the Sinclair House in Bad Homburg to discuss key social issues. The Cultural Forum, also headquartered in the Sinclair House, collects and exhibits international works of art of the 20th and 21st centuries. Altana’s annual report displays some ofIn that celebration art and a quote of from the Nikolaus holdingSchweickart, company’s chairman 25th of Altana AG: “Cultureanniversary, is intellectual nourishment.the Munich It reflects Symphony society’s degreeOrchestra of civilization. Thatand is why a the well arts known must not floundechoir rfrom but flourish.” Munich traveled with In celebration ofAltana’s the holding managementcompany’s 25th annive aroundrsary, the the Munich world Symphony to host Orchestra and a well known choir from Munich traveled with Altana’s management around the worldmanagement to host management meetings meetings and and ce lebrationscelebrations in Frankfurt, in Sao Paulo, New York,Frankfurt, Mexico City, Sao and Shanghai. Paulo, TheNew com York,pany invited Mexico customers City, and and employees at everyShanghai. level of the The company company to attend. invited customers and employees at every level of the company to attend. Company website
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 98 But with a Weak Pipeline, No Rush of Interested Buyers
No update on strategy and spending on Daxas/early stage pipeline continues
We obviously did not expect any “breaking news” on the search for a strategic partner in the pharmaceutical division to conveniently coincide with the results. Any definitive progress in this area would clearly have to be communicated to the market immediately. However, it is now a year since Altana first informed investors that it planned to separate its chemicals and pharmaceuticals businesses and 9 months since the announcement that it was looking for a strategic partner for pharmaceuticals (although the phrase “opening of the pharmaceutical business to a change in the shareholder structure” was the one used yesterday). Although the writtenHowever, guidance on it thisis nowprocess a remains year sinceunchanged Altana with Altana first purelyinforme statingd that it expects to makeinvestors a decision onthat both it processes planned during to separatethe course of its this chemicals year, previous andcomments by the CEOpharmaceuticals Dr Schweickart that the businesses chemicals separation and wou9 monthsld happen sincein autumn the are looking a little ambitious. announcement that it was looking for a strategic partner for pharmaceuticals (although the phrase “opening of the pharmaceutical business to a change in the shareholder structure” was the one used yesterday).
Citigroup analyst report Aug 3, 2006
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 99 But with a Weak Pipeline, No Rush of Interested Buyers Mechanism Drug Development Phase Drug Of Action (Indication : Phase : Country) Originator Licensee Roflumilast PDE IV COPD : Preregistration : EU ALTANA Tanabe inhibitors Asthma : Phase III : EU, USA Pharma Seiyaku COPD : Phase III : Australia, Brazil, India, South Africa, USA Asthma : Phase II : Japan COPD: Phase II : Japan Psoriasis : Preclinical : EU Lusupultide Membrane ARDS : Phase III : EU, NA, South Scios ALTANA integrity Africa antagonists Membrane permeability enhancers Soraprazan Potassium- GERD : Phase II : Germany ALTANA competitive acid GERD : Phase I : USA blockers GERD therapy Potassium- GERD : Phase I : EU ALTANA competitive acid blockers
Adis R&D Insight
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 100 Market Cap: $7.8 B (9/11/06)
Yahoo! Finance
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 101 On the Other Hand, Schering AG Gets Fought Over! Jul 26-06: Bayer Bayer offers E89 per Apr 13//06: Bayer acquires share for all offers E86 per share, Schering remaining shares for Schering, a and buys out premium of 61% over Merck, 12 months, and 39% successfully pre takeover, as a acquiring “White Knight” Schering Schering Board recommends Bayer
Mar-Jun/06: Merck declares it Mar 13/06: Merck will not increase offers E77 per share its offer, but Merck sells Schering stake, for Schering, a acquires a large pocketing premium of 24%. stake, 21%, in E400 gain Schering.
Company reports; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 102 • KPMG value for Schering was E88 per share • Bayer final offer E89 per share, valuing Schering at E17 B ($21 B) 3 x 2006E Sales 13 x 2006E EBITDA 16 x 2006E Earnings
Company reports; Recap; Deutsche Bank; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 103 Schering Pipeline has Lots of Near Term Shots on Goal
2.5 Phase III II I
2 Imclone 0 0 0 1.5
1 Serono 5 4 10 0.5 Sales GrowthSales %) (Cum 0 Altana 1 3 0 2005 2006 2007 2008
Altana Imclone Schering 16 9 1 Schering AG Serono
Company reports; EvaluatePharma; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 104 At $15 Billion Was Serono Overpriced?
Serono takes itself Schering Serono off the block 3 X Sales $22 B $8 B MarketWatch Apr 10, 2006 After six months on the block, Switzerland's Serono SA on Monday gave up on the idea of selling itself 13 X $22 B $9 B and instead said it was considering EBITDA making acquisitions to expand. Serono said its controlling 16 X $22 B $12 B shareholder, the Bertarelli family, Earnings decided the offers it received didn't adequately reflect its true value. Published reports had indicated Market $22 B $10 B that bids for Europe's largest Cap biotech from suitors including GlaxoSmithKline and Novartis were closer to $12 billion than the $15 billion that Serono had sought.
Company reports; Deutsche Bank; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 105 MSN Money
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 106 Growth Forecasts for Marketed Portfolio are Very Nice 2,500
Arformoterol Xopenex Lunesta 2,000
1,500
1,000 WW Sales US $ (mln) $ US Sales WW
500
0 2005 2006 2007 2008 2009 2010 EvaluatePharma; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 107 But Any Pipeline Payoff Looks Like a Longshot
Company website
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 108 Will Pfizer Buy Sepracor?
$52 Pfizer 5% $51.1 Pfizer-Sepracor* $51 4.1% 4.0% % Annual Growth (Pfizer) 4% 3.6% $50 % Annual Growth (Pfizer-Sepracor) 3.4%
$49.1 $49 3.1% $48.8 3%
$48 $47.5 2% $47.2 $47.1 $47 $46.5 $46.1 1% $ $ Billions $46 $45.5 % Annual Growth% Annual
$45 0% Largest contribution to $44 -0.8% growth occurs with -0.6% immediate accretion in -1% -1.3% $43 year of acquisition
$42 -2% 2006E 2007E 2008E 2009E 2010E
Pharma Revenues ($ Billions) *Note : Impact of any FTC mandated divestitures is not included in this analysis EvaluatePharma; Defined Health analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 109 Will Pfizer Buy Forest?
What Happened. FRX today announced Forest Laboratories Inc.that (FRX) Lawrence Olanoff will succeed New President for FRX Kenneth Goodman as President and COO
What Happened. FRX today announcedas that Goodman Lawrence Olanoff retires will succeed after Kenneth 26 Goodman years as with President the and COO as Goodman retires after 26 yearscompany. with the company. Olanoff, an M.D., Ph.D, previously served as Executive Vice President and Chief Scientific Officer for ten years at Forest. He left in July of 2005 to become President and CEO of Celsion Corporation.
Our Takeaway. Ken Goodman has been a very strong leader for the company and this is a material loss for Forest. Larry Olanoff did a great job in R&D for Forest for years and is interestingly returning to take over but at this point he has little experience running the full operations. It is our understanding that Ken Goodman has been considering this move for some time, but we think he has waited for the company to move through the Lexapro patent situation and for a time when the company is on strong footing. We also believe that Dr. Olanoff is very well respected within the company and many of the division leaders who will report to him are very experienced and stable at the company. Hence we don’t expect any missteps.
We have always gotten questions about whether Forest was a take out candidate. While CEO Howard Solomon remains, he is close to eighty years old. It was always assumed that when he retired Ken Goodman would take over the company. With this move today, we would have to say that a potential sale of Forest is a higher likelihood than we had previously thought.
CSFB
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 110 Forest Laboratories Inc. (FRX) New President for FRX
What Happened. FRX today announced that Lawrence Olanoff will succeed Kenneth Goodman as President and COO as Goodman retires after 26 years with the company. Olanoff, an M.D., Ph.D, previously served as Executive Vice President and Chief Scientific Officer for ten years at Forest. He left in July of 2005 to become President and CEO of Celsion Corporation. Our Takeaway. Ken Goodman has been a very strong leader for the company and this is a material loss for Forest. Larry Olanoff did a great job in R&D for Forest for years and is interestingly returning to take over but at this point he has little experience running the full operations. It is our understanding that Ken Goodman has been considering this move for some time, but we think he has waited for the company to move through the Lexapro patent situation andOur for aTakeaway. time when the company is on strong footing. We also believe that Dr. Olanoff is veryKen well Goodman respected within has thebeen company a and many of the division leaders who will report to himvery are verystrong experienced leader andfor stablethe at the company. Hence we don’t expect any missteps. company and this is a We have always gotten questions about whether Forest was a take out candidate. While CEO Howardmaterial Solomon loss remains, for heForest. is close to eighty years old. It was always assumed that when he retired Ken Goodman would take over the company. With this move today, we would have to say that a potential sale of Forest is a higher likelihood than we had CSFBpreviously thought.
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 111 We have always gotten questions about whether Forest was a take out candidate. While CEO Howard Solomon remains, he is close to eighty years old. Forest Laboratories Inc. (FRX) It was always assumed that when he retired New President for FRX Ken Goodman would take over the What Happened. FRX today announced that Lawrence Olanoff will succeed Kenneth Goodman as President and COO ascompany. Goodman retires With after 26 this years withmove the comp today,any. Olanoff, we wouldan M.D., Ph.D, previously served as Executive Vice Presidenthave andto Chiefsay Scientific that aOfficer potential for ten years sale at Forest. of Forest He left in Julyis aof 2005 to become President and CEO ofhigher Celsion Corporation. likelihood than we had previously Our Takeaway. Ken Goodman has been a very strong leader for the company and this is a material loss for Forest. thought.Larry Olanoff did a great job in R&D for Forest for years and is interestingly returning to take over but at this point he has little experience running the full operations. It is our understanding that Ken Goodman has been considering this move for some time, but we think he has waited for the company to move through the Lexapro patent situation and for a time when the company is on strong footing. We also believe that Dr. Olanoff is very well respected within the company and many of the division leaders who will report to him are very experienced and stable at the company. Hence we don’t expect any missteps.
We have always gotten questions about whether Forest was a take out candidate. While CEO Howard Solomon remains, he is close to eighty years old. It was always assumed that when he retired Ken Goodman would take over the company. With this move today, we would have to say that a potential sale of Forest is a higher likelihood than we had previously thought.
CSFB
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 112 Will Pfizer Buy Forest?
$54 10% Pfizer Pfizer-Forest* $53.4 % Annual Growth (Pfizer) % Annual Growth (Pfizer-Forest) $52 $51.5 8% 7.9%
$50 $49.7 $49.5 6% $48.8
$48 3.9% $47.1 $46.5 3.7% 4% $46.1 $46 $45.5 3.6% $ $ Billions 3.4% % Annual Growth% Annual 2% $44
Again, largest 0% $42 contribution to growth -0.8% -0.5% occurs in year of -1.3% acquisition $40 -2% 2006E 2007E 2008E 2009E 2010E
Pharma Revenues ($ Billions) *Note : Impact of any FTC mandated divestitures is not included in this analysis EvaluatePharma; Defined Health analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 113 That Decision Would Appear to Depend on One’s View of the Pipeline
The Forest Pipeline Preclinical Phase I Phase II Phase III NDA / sNDA faropenem medoxomil for GRC-3886 acute bacterial sinusitis, (oglemilast) for mGLUR1/5 community-acquired chronic for various memantine for desmoteplase for pneumonia, acute obstructive CNS neuropathic pain acute stroke (IIb/III) pulmonary exacerbation of chronic conditions disorder bronchitis, uncomplicated (COPD) and skin and skin structure asthma infections RGH-188 for schizophrenia neramexane for milnacipran for and bipolar chronic pain fibromyalgia nebivolol for hypertension mania RGH-896 for nebivolol for chronic pain and Namenda (memantine HCl) congestive other CNS heart failure for mild Alzheimer’s disease conditions neramexane for Company website moderate to severe Alzheimer’s disease
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 114 Implications and Predictions
Lessons From the M&A Space: When pipelines are worth more than products
Reverberations from a Brutal Biotech IPO Market
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 115 Biotech is Under Water
2006 IPO Performance (US Market, Through Q2)
50
40
30
20 NOVC 10 OMRI ALTU 0
-10 RDYN SGXP VNDA BMTI TRGT VLRX ACOR -20 ALXA IOMI -30
-40
% Change in Market Cap Post IPO Post Cap Market inChange % -50
Adapted from BioCentury, The Bernstein Report, July 3, 2006
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 116 Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 117 Some Biotech Haircuts Are Just A Light Trim…
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 118 A Little Off the Top, Please
Xenoport Somaxon Proposed $14-16 Proposed $13-15 IPO January 2005 at $10.50 IPO October 2005 at $11.00 Raised $53 MM Raised $55 MM Day 1 Close: $10.39 Day 1 Close: $11.00 Current Share Price: Current Share Price: $21.03 $14.11 Haircut ≈ 35% Haircut ≈ 37%
Burrill & Company newsletter, April 2006; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 119 Today’s Biotech Haircuts are a Bit More Severe
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 120 Sweeney Todd Jobs!
Accentia Biopharma Advanced Life Sciences Proposed $11-13 Proposed $11-13 IPO February 2005 at $8.00 IPO April 2005 at $5.00 Raised $19 MM Raised $35 MM Day 1 Close: $7.25 Day 1 Close: $6.00 Current Share Price: $3.06 Current Share Price: $2.99 Haircut ≈ 40% Haircut ≈ 60%
Burrill & Company newsletter, April 2006; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 121 Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 122 Biotech Pulled IPOs (2005) Company Ticker File Date Proposed Offering Voyageur Pharma VYGR 9/9/2005 $89-112M Reliant Pharma RRX 5/20/2005 TBA Predix Pharmaceuticals PRDX 8/3/2005 $50-60M SkinMedica SKMD 4/27/2005 TBA Intarcia ITCA 2/7/2005 $86M Celldex Therapeutics CDEX 4/8/2004 $50M Synta Pharma SNTA 1/18/2005 $115M EpiCept EPCT 1/10/2005 $75M Salmedix SMDX 4/24/2004 $86M Targacept TRGT 5/14/2004 $86M Cyclacel CYCC 7/2/2004 $44-52M TolerX TLRX 8/26/2003 $75M Xcel Pharma XCEL 1/7/2002, 8/22/2003 $75M Peninsula Pharma PPRX 12/16/2003 $69-81M Aderis ADPX 8/27/2003 $75M Burrill & Company presentation: Biotech 2006 – Celebrating 20 Years
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 123 Biotech Start-Ups Increasingly Opt For a Sale to Drug Firms Over an IPO By DAVID P. HAMILTON July 13, 2006 Biotechnology start-ups long have followed a simple playbook: Go public at an early stage, keep raising money for a decade or more and … "It is a sea change "Itin our is industry a sea that's change really radically in important,"our industry says Brian that's Atwood, really a co-founde r of venture-capital firm Versant Venturesradically in Menlo Park, important," Calif. "We've always says thought Brian about Atwood, IPOs, about makinga co- the next Genentech. This has caught a lot of us by surprise." Since 2003, acquisitionsfounder of biotech of start-ups venture-capital have significantly outpacedfirm Versant the initial public Ventures offerings that were … What's more, largerin biotech Menlo and pharmaceutical Park, Calif. comp "We'veanies are starting always to pony thought up significant sums in these deals. The median value ofabout biotech acquisitionsIPOs, about last year makingnearly tripled theto $170 next million Genentech. compared with the previous year , Bain calculates. Among the major deals: Pfizer Inc.'s acquisition of closely held Idun Pharmaceuticals for $280 million; the purchase of SanThis Diego-based has Syrrxcaught Inc. by a Japan' lot sof Takeda us Pharmaceuticalby surprise." Co. for $270 million; Johnson & Johnson's … The surge in biotech acquisitions largely reflects a newfound hunger on the part of major pharmaceutical companies for drug candidates to fill their depleted pipelines. As blockbuster drugs like Merck's cholesterol-lowering Zocor lose patent protection and face generic competition, drug makers have largely turned to the biotech industry for fresh ideas. To a lesser extent, … The big question haunting many in the biotech industry is whether the move toward an acquisition model -- one in which biotechs could end up resembling medical-device start-ups, which rarely grow into independent companies and instead are frequently acquired by major device makers such as Boston Scientific Corp. or Medtronic Inc. -- is a aberration or a permanent feature of the landscape. "Without a sustainable IPO market, it becomes much more difficult to build the next Amgens," says Ivor Royston, co- founder of San Diego-based Forward Ventures, a venture-capital firm, …
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 124 What's more, larger biotech and Biotech Start-Ups Increasinglypharmaceutical Opt For companiesa Sale to Drug are Firms starting Over anto IPO By DAVID P. HAMILTON Julypony 13, 2006 up significant sums in these deals. Biotechnology start-ups long haveThe followed median a simple value playbook: of Go biotech public at an acquisitions early stage, keep raisin g money for a decade or more and … last year nearly tripled to $170 million "It is a sea change in our industry that's really radically important," says Brian Atwood, a co-founder of venture-capital firm Versant Ventures in Menlocompared Park, Calif. "We've with always the thought previous about IPOs, year. about making the next Genentech. This has caught a lot of us by surprise." Since 2003, acquisitions of biotech start-ups have significantly outpaced the initial public offerings that were … What's more, larger biotech and pharmaceutical companies are starting to pony up significant sums in these deals. The median value of biotech acquisitions last year nearly tripled to $170 million compared with the previous year , Bain calculates. Among the major deals: Pfizer Inc.'s acquisition of closely held Idun Pharmaceuticals for $280 million; the purchase of San Diego-based Syrrx Inc. by Japan's Takeda Pharmaceutical Co. for $270 million; Johnson & Johnson's … The surge in biotech acquisitions largely reflects a newfound hunger on the part of major pharmaceutical companies for drug candidates to fill their depleted pipelines. As blockbuster drugs like Merck's cholesterol-lowering Zocor lose patent protection and face generic competition, drug makers have largely turned to the biotech industry for fresh ideas. To a lesser extent, … The big question haunting many in the biotech industry is whether the move toward an acquisition model -- one in which biotechs could end up resembling medical-device start-ups, which rarely grow into independent companies and instead are frequently acquired by major device makers such as Boston Scientific Corp. or Medtronic Inc. -- is a aberration or a permanent feature of the landscape. "Without a sustainable IPO market, it becomes much more difficult to build the next Amgens," says Ivor Royston, co- founder of San Diego-based Forward Ventures, a venture-capital firm, …
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 125 BiotechThe Start-Ups surge in Increasingly biotech acquisitions Opt For a Sale to Drug Firms Over an IPO By DAVIDlargely P. HAMILTON reflects July 13,a newfound2006 hunger on Biotechnology start-ups long have followed a simple playbook: Go public at an early stage, keep raising money for a decadethe or more part and of… major pharmaceutical "It is a companiessea change in our industryfor drug that's reallycandidates radically important," to fill says Brian Atwood, a co-founder of venture-capital firm Versant Ventures in Menlo Park, Calif. "We've always thought about IPOs, about making the next Genentech. This hastheir caught depleted a lot of us by surprise."pipelines. Since 2003, acquisitions of biotech start-ups have significantly outpaced the initial public offerings that were … What's more, larger biotech and pharmaceutical companies are starting to pony up significant sums in these deals. The median value of biotech acquisitions last year nearly tripled to $170 million compared with the previous year , Bain calculates. Among the major deals: Pfizer Inc.'s acquisition of closely held Idun Pharmaceuticals for $280 million; the purchase of San Diego-based Syrrx Inc. by Japan's Takeda Pharmaceutical Co. for $270 million; Johnson & Johnson's … The surge in biotech acquisitions largely reflects a newfound hunger on the part of major pharmaceutical companies for drug candidates to fill their depleted pipelines. As blockbuster drugs like Merck's cholesterol-lowering Zocor lose patent protection and face generic competition, drug makers have largely turned to the biotech industry for fresh ideas. To a lesser extent, … The big question haunting many in the biotech industry is whether the move toward an acquisition model -- one in which biotechs could end up resembling medical-device start-ups, which rarely grow into independent companies and instead are frequently acquired by major device makers such as Boston Scientific Corp. or Medtronic Inc. -- is a aberration or a permanent feature of the landscape. "Without a sustainable IPO market, it becomes much more difficult to build the next Amgens," says Ivor Royston, co- founder of San Diego-based Forward Ventures, a venture-capital firm, …
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 126 Biotech Start-Ups Increasingly Opt For a Sale to Drug Firms Over an IPO By DAVID P. HAMILTON July 13, 2006 Biotechnology start-ups long have followed a simple playbook: Go public at an early stage, keep raising money for a decade or more and … "It is a sea change in our industry that's really radically important," says Brian Atwood, a co-founder of venture-capital firm Versant Ventures in Menlo Park, Calif. "We've always thought about IPOs, about making the next Genentech. This has caught a lot of us by surprise." Since 2003, acquisitions of biotechThe start-ups big question have significantly haunting outpaced the many initial public in offeringsthe biotech that were … What's more, larger biotech and pharmaceutical companies are starting to pony up significant sums in these deals. The median value of biotech acquisitionsindustry last is year whether nearly tripled the to $170 move million comparedtoward with an the acquisition previous year , Bain calculates. Among the major deals: Pfizer Inc.'s acquisition of closely held Idun Pharmaceuticals for $280 million; the purchase of San Diego-basedmodel Syrrx Inc. -- by one Japan' ins Takedawhich Pharmaceutical biotechs Co. could for $270 end million; up Johns on & Johnson's … resembling medical-device start-ups, which rarely The surge in biotech acquisitionsgrow largely into reflects independent a newfound hunger companieson the part of major and pharmaceutic insteadal companies are for drug candidates to fill their depleted pipelines. As blockbuster drugs like Merck's cholesterol-lowering Zocor lose patent protection and face genericfrequently competition, druacquiredg makers have by largely major turned device to the biotech makers industry forsuch fresh ideas. To a lesser extent, … as Boston Scientific Corp. or Medtronic Inc. -- is a The big question haunting many in the biotech industry is whether the move toward an acquisition model -- one in which biotechs could end up resemblingaberration medical-devic or ae permanentstart-ups, which rarely feature grow into of independent the companies and instead are frequently acquired by major device makers such as Boston Scientific Corp. or Medtronic Inc. -- is a aberration or a permanent featurelandscape. of the landscape. "Without a sustainable IPO market, it becomes much more difficult to build the next Amgens," says Ivor Royston, co- founder of San Diego-based Forward Ventures, a venture-capital firm, …
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 127 Historically about 5-7 Drug-Biotech Deals per Year has Jumped to 23 in 2005
Trend in Big Pharma-Biotech Mergers & Acquisitions 25 23
20 Average Annual M&As Actual Number of M&As
15
10
65-7 5 Number of Big Pharma-Biotech M&As of Pharma-Biotech Number Big
0 <2005 2005 Signals Magazine; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 128 Big Pharma Now Acquires Pre-IPO Private Biotech with Relatively Unencumbered Pipelines
Analysis of Selected Pharma-Biotech Mergers & Acquisitions (2004 – 2006)
Biotech Company Date of Financial Summary of Biotech Pipeline / Technology Platform on Date of Pipeline Product Licensing Big Pharma Acquirer Acquired Transaction Terms Transaction Status • The DNA repair platform includes several different approaches • Largely towards inhibition of enzymes involved in the responses to various types of DNA damage. DNA repair inhibitors have the potential to unpartnered $210 kill cancer cells either as stand-alone therapy or by enhancing the KuDOS Dec efficacy of chemo- and radio-therapies – 11 Dec 2003: AstraZeneca M Pharma 2005 • The acquisition of KuDOS Pharmaceuticals augments Banoxantrone Cash AstraZeneca's portfolio with clinical and pre-clinical compounds licensed to and programmes. An innovative, targeted compound, KU 59436, Novacea in North an oral poly-ADP-ribose polymerase (PARP) enzyme inhibitor, is America currently in phase I clinical development
$527 • All Jan • Angiosyn (now Pfizer), is developing a proprietary angiostatic Pfizer Angiosyn M agent for the potential treatment of ophthalmic diseases, such as unpartnered 2005 age-related macular degeneration (AMD) Cash • Largely • Idun's technology is focused on the control of caspase activity. Caspases are a group of cellular proteases involved in the unpartnered pathway of apoptosis and inflammation. Idun has developed therapeutic applications focused on inhibiting caspase activity as – Abbott holds potential treatments for liver disease and inflammation. Idun also exclusive Idun Feb $298 has programs targeting the activation of caspases as potential worldwide rights Pfizer treatments for cancer Pharma 2005 M for clinical • Idun's lead compound, IDN-6556, a first-in-class pan caspase compounds from inhibitor, is in Phase II clinical trials in liver transplantation and in patients infected with Hepatitis C virus. research • In addition to IDN-6556, Idun has a robust preclinical pipeline programs for Bcl-2 including a number of programs in inflammation and oncology antagonists & Akt inhibitors
ADIS R&D Insight; Company reports; Company websites; IDdb; Recombinant Capital; Signals Magazine; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 129 Big Pharma Now Acquires Pre-IPO Private Biotech with Relatively Unencumbered Pipelines
Analysis of Selected Pharma-Biotech Mergers & Acquisitions (2004 – 2006)
Biotech Pipeline / Biotech Big Pharma Date of Summary of Biotech Pipeline / Technology Platform on Date of Technology Encumbered Company Financial Terms Acquirer Transaction Transaction due to Out-Licensing Acquired Agreement? • Vicuron has two products currently under New Drug • All Application (NDA) review at the FDA: anidulafungin for Jun $1.9 B unpartnered Pfizer Vicuron fungal infections and dalbavancin for Gram-positive 2005 Cash infections. Recently, Vicuron announced positive Phase III results on anidulafungin, demonstrating superiority versus fluconazole in invasive candidiasis/candidemia • Rinat's most advanced compound is RN624, a potential • Lead new treatment for acute and chronic pain entering Phase II clinical trials. compound • Developing RN1219, a humanized monoclonal antibody partnered, Apr Not Pfizer Rinat for the treatment of Alzheimer's disease. RN1219 has others 2006 disclosed been shown to reduce amyloid plaque in pre-clinical studies unpartnered • Compounds in late pre-clinical development for migraine prophylaxis and cachexia as well as discovery programs in obesity, pain, neuropathy and Parkinson's disease • Aton's lead product candidate, suberoylanilide • All hydroxamic acid (SAHA), has been studied in Phase I unpartnered Acq. for clinical trials in cancer patients and is currently in Phase Feb II clinical trials for the treatment of cutaneous T-cell Merck Aton Cash lymphoma (CTCL). 2004 Upfront and • SAHA is also in Phase 1 for treatment of patients with Contingent other types of cancer, including leukemia, multiple myeloma and solid tumors, such as breast and colorectal cancer
ADIS R&D Insight; Company reports; Company websites; IDdb; Recombinant Capital; Signals Magazine; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 130 Biotech/Biotech Deals are Producing Fewer but Bulkier Pipelines More Ripe for M&A
Phase I Deals by Company Type 60
50
40
30
20 Deal Number Deal 10
0 2002 2003 2004 2005 Q1-3/06
Drug / Biotech Biotech / Biotech Drug / Drug
Company reports; Recap; DH analysis
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 131 Biotech Gets Hostile!
Genzyme to pursue rare hostile biotech bid AnorMED Product Pipeline August 31, 2006 Cambridge, MA-based Genzyme says it will pursue its hostile takeover of AnorMed with a tender offer of $8.55 per share, a 70 percent premium on the Canadian biotech's trading price. The New York Times' Andrew Pollack polled a group of industry execs, none of whom could recall any recent example of a hostile takeover in the biotech industry. Analysts say that a successful hostile takeover could trigger a walkout by key people in a biotech outfit, significantly reducing its value. AnorMed, though, may be a special case. Baker Brothers Advisers engineered a board coup at the company last April. The new board, meanwhile, has brought in Goldman Sachs to evaluate "strategic alternatives," a sign for some that they just want a higher offer before agreeing AnorMED company website; FierceBiotech to sell.
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 132 OK, But I Still Need a Product! Take-Homes from the “No-Spin Zone”
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 133 OK, But I Still Need a Product! Take-Homes from the “No-Spin Zone”
The New Regulatory Bar: Safety, Efficacy and Medical Necessity
Unmet Needs: Let’s get serious!
Broader isn’t better: The Coming of the Less Impersonal Blockbuster
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 134 OK, But I Still Need a Product! Take-Homes from the “No-Spin Zone”
The New Regulatory Bar: Safety, Efficacy and Medical Necessity
Unmet Needs: Let’s get serious!
Broader isn’t better: The Coming of the Less Impersonal Blockbuster
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 135 March 2006 Cephalon drug a victim of ADHD debate: experts Cephalon Inc.'s experimental drug to treat attention deficit hyperactivity disorder may have fallen victim more to"The the timing FDA of its auditionhas come than the quality under of its performance,fire and some experts say. Last week, a panel of advisers to the U.S. Food and Drug Administration voted 12 to 1 against approving the drug, Sparlon, amid concerngotten it might more cause conservative,"a potentially fatal skin allergy said called Dr. Stevens Johnson Syndrome. In a 950-person trial, oneDoris patient Day, developed assistant a blistering rash, professor from which he recovered,of but the panelists felt the risk was too great to recommend approval of Sparlon without further safety studies. That will likely delay the drug's journey to the marketdermatology by as much as twoat years, New which York some expertsUniversity say is less a reflection of the drug's relative risk as of heightenedSchool concern of Medicine. among regulators "There about drug aresafety soin general many and ADHD drugs in particular. Several panels have convened recently to examine the cardiovascular and psychiatric risks associated with drugs such outas Novartis there AG's thatRitalin, Shirecan Plc's cause Adderall, Stevens Johnson & Johnson's Concerta, and Eli Lilly & Co.'s Strattera.Johnson "If the SparlonSyndrome, hearing had happenedand at thre a ehigher months ago, the panel wouldn't have gone this way," said Dr. F. Xavier Castellanos, professor of child and adolescent psychiatry at New York University School of Medicinelevel thanand author this of "Stimulant one." Drugs and ADHD: Basic and Clinical Neuroscience." The panel that vetted Sparlon was made up mainly of psychiatrists. The lone dermatologist on the panel was Dr. Michael Bigby, associate professor of dermatology at Harvard Medical School. He voted in favor of the drug, and other dermatologists say they would have voted the same way. "The FDA has come under fire and gotten more conservative," said Dr. Doris Day, assistant professor of dermatology at New York University School of Medicine. "There are so many drugs out there that can cause Stevens Johnson Syndrome, and at a higher level than this one."
CYCNET
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 136 Cephalon ADHD drug effective but not safe: pane Cephalon Inc.'s Provigil drug is not safe enough to win approval for treating attention deficit hyperactivity disorder (ADHD) in children and teenagers, even though data showed it worked, a U.S. advisory panel said on Thursday. The Food and Drug Administration group of outside experts said it was most concerned about the risk of skin rashes that can lead to hospitalization and called on the drug maker to conduct more clinical trials. "I think we're dealing with some fuzzy information," said panel chairman Wayne Goodman, a psychiatrist at the University of Florida, adding that more patients needed to be studied before approval. "I don't want to do that experiment in the post-marketing arena," Goodman said. Provigil is already approved to treat sleep disorders, but Cephalon is seeking to sell it under the name Sparlon for children and teenagers with ADHD. The ADHD version of the drug, known generically as modafinil, would be smaller and come in a wider range of doses. The FDA granted conditional approval for ADHD in October 2005, but sought expert advice over lingering concerns about rashes as well as mania, aggression and other possible psychiatric effects.Safety "They'd haveconcerns to do a lot more also work kept to show somea reason for it to be marketed" if the skin risk showed up in futurepanelists studies, FDA's from Direct orsupporting of Psychiatry Products Sparlon Thomas Laughren told reporters after the meeting. when other therapies are already Cephalon officials said the concern was unexpected. "We were surprised by the degree to which this relatively benign case led to such available.apparent turmoil in the minds of the committee today," said Dr. Paul Blake, executive vice president of Cephalon's medical and regulatory operations. …. Cowen and Co. analyst Eric Schmidt said the panel's 12-1 vote against the drug's safety was "definitely disappointing." Thursday's vote follows the action of another FDA panel that called on Wednesday for all ADHD drugs to include new information about psychiatric and heart risks although data are still unclear. Safety concerns also kept some panelists from supporting Sparlon when other therapies are already available. "This is a medication that looks likely to be slightly less effective than the other options available," panelist Dr. Marsha Rappley of Michigan State University added.
CYCNET
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 137 NPS Provides Update on Preos NDA Process and Timing SALT LAKE CITY, February 7, 2005 -- NPS Pharmaceuticals, Inc. announced today that the company will extend the time it will take to prepare the U.S. new drug application (NDA) for its osteoporosis drug candidate Preos in light of European deadlines and filing requirements of its partner Nycomed, and the complex process of incorporating data from multiple clinical studies into different regulatory submission documents. The company noted that Nycomed intends to submit a marketing authorization application in Europe next month for approval to sell Preotact (the European brand name for Preos or PTH), and that NPS and Nycomed are cooperating to meet the submission deadline designated byAlthough the European Medicineswe will Agency. extend Because our U.S. submission requirements are more extensive, NPS will submit its NDA following the Nycomed submission as soon as it has electronically formatted all of the additional documentation necesdatesary beyond for a successful the U.S. end marketing of February, application. we Hunter Jackson, Ph.D., Chairman, President, andexpect CEO of NPS,the said,delay "We arewill nearing be completionbrief and of the that NDA thefor Preos and believe we have a very strong data package to support the approval of this investigational therapy for postmenopausal osteoporosis. Although we willextra extend oureffort submission and date time beyond will the facilitate end of February, we expect the delay will be brief and that the extra effort aproductivend time will facilitate regulatory productive regulatory reviews reviews in in thethe U.S. U.S. and in Europe, which will allow us to achieve a timely and coordinated global Preos launch.“ About Preos and in Europe, which will allow us to Preos is recombinant full-length human parathyroidachieve hormone a (PTH timely 1-84). NPSand has coordinated studied Preos in a numberglobal of clinical settings to assess its safety and its effect on bone. The pivotal Phase 3 study, known as TOP (Treatment of Osteoporosis with PTH), was a multi-center, randomiPreoszed, launch.double-blind, placebo-controlled clinical trial designed to evaluate the potential of PTH (1-84) to reduce the risk of vertebral fractures in post-menopausal women. In the TOP study Preos demonstrated a statistically significant reduction in the risk of new or worsened vertebral fractures in women with and without osteoporosis-related fractures prior to entering the study. Results from the TOP study will be the foundation of the U.S. and European marketing applications.
Drugs.com
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 138 NPS Pharmaceuticals Reports Second Quarter and Six Month Operating Results 8/3/2006 4:53:00 PM PARSIPPANY, N.J., Aug. 3 /PRNewswire-FirstCall/ -- NPS Pharmaceuticals, Inc. (Nasdaq: NPSP) today provided a general business update andBased reported on its operating an analysis results for theof three the and existing six months clinicalended June data30, 2006. Business and Pipeline Updateand additional communications with the FDA, In the second quarter of 2006NPS NPS hasrecognized determined increased royalty that revenue the from likelihood sales of Sensipar(R)/Mimpa of ra(R) (cinacalcet HCl) by Amgen, celebrated the European launch of PREOTACT(R) (parathyroid hormone [rDNA origin] for injection) by its partner, Nycomed,success and continued in addressing to advance its proprietarythe agency's and partnered specific product cand idates through research and development.concerns regarding PREOS with an analysis of NPS reported that it expectsthe to completeexisting enrollment data of isits Phaselow. 3 Asstudy a with result, teduglutide NPS in patients does with short bowel syndrome (SBS) by year-end 2006. Currently over 80% of the patients required by the trial protocol have been randomized into the study.not The SBSexpect protocol to calls file for sixan months amendment of dosing. NPS basedexpects to fileon a new drug application (NDA) for SBS in 2008. The company also reported that it expects to complete a double blind dose escalating PK and tolerability study of teduglutideexisting to support clinical dose range data. selection for the next study in Crohn's disease. Based on an analysis of the existing clinical data and additional communications with the FDA, NPS has determined that the likelihood of success in addressing the agency's specific concerns regarding PREOS with an analysis of the existing data is low. As a result, NPS does not expect to file an amendment based on existing clinical data. The company will continue to evaluate alternative approval strategies, within the context of its financial resources and the likelihood of addressing the agency's concerns. N. Anthony Coles, M.D., president and CEO of NPS said, "We continue to believe that PREOS is an important and valuable global asset to NPS and are working to ensure that PREOS returns value to our shareholders and patients." Company website
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 139 Merck's Possible Vioxx Successor Draws Mixed Results in Study
By HEATHER WON TESORIERO August 24, 2006; Page D6 Merck & Co. releasedMerck's preliminary preliminary results of a large-scale findings study that suggested suggested that an that arthritis there medicine is it hopesno will replace Vioxx onsignificant pharmacy shelves difference may not carry anyin morethe heartcardiovascular risks than an older, widelyrisks prescr of ibed drug. But the company's statement, which didn't include some basic information about the study, also flagged some potential worries forArcoxia the drug, including and higherdiclofenac. rates of hypertension But Merck and other also conditions said that thatcaused some patients who were takinggreater it to drop numbers out of the tria ofl. And certain some scientists Arcoxia raised questions patients about had the s tudy'sto design. The painkiller, Arcoxia, is sold in Europe and Latin America but hasn't been approved for sale in the U.S. In October 2004, the Fooddiscontinue and Drug Administration treatment responded due to Merck'sto problems application study related that is the to firs hit togh primarily examine the cardiovascularblood effect pressure, of Arcoxia and edema Cox-2 inhibitor, and as congestive are Vioxx and Celebrex, heart made failure. by Pfizer Inc., and which are meant to be safer on the stomach than aspirin and other painkillers. If Merck gets the green light to sell Arcoxia in the U.S., the drug could replenish lost Vioxx sales -- though its overseas sales in the first half of this year were only $126 million. Merck's preliminary findings suggested that there is no significant difference in the cardiovascular risks of Arcoxia and diclofenac. But Merck also said that greater numbers of certain Arcoxia patients had to discontinue treatment due to problems related to high blood pressure, edema and congestive heart failure. The drug's European label carries a warning about these conditions. Merck said it plans to release the full results of the study once they are published in a peer-reviewed journal. Critics also questioned the study's design, especially the use of diclofenac as the comparison treatment. Diclofenac, Dr. Nissen said, acts in the body more like Cox-2 inhibitors than painkillers such as naproxen. The Cox- 2 drugs have harmful effects and this study documented that diclofenac is no safer." ---- Ron Winslow contributed to this article
Wall Street Journal
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 140 Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 141 Atypical Antipsychotic Approved by FDA in 2001 Geodon is contraindicated in patients with a known history of QT prolongation, recent acute myocardial infarction, or uncompensated heart failure, and should not be used with other QT-prolonging drugs. Geodon has a greater capacity to prolong the QTc interval than several antipsychotics. With some drugs, QT prolongation has been associated with torsade de pointes, a potentially fatal arrhythmia. Hyperglycemia related adverse events, sometimes serious, have been reported in patients treated with atypical antipsychotics. There have been few reports of hyperglycemia or diabetes in patients treated with Geodon, and it is not known if Geodon is associated with these events. Patients treated with an atypical antipsychotic should be monitored for symptoms of hyperglycemia.
Company reports
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 142 Cholesterol Drug Crestor Poses Risks, Journal Says Study Suggests Use Only as Last Resort By Marc Kaufman Washington Post Staff Writer Tuesday, May 24, 2005; Page A01 Crestor, which was approved by the FDA in 2003, is agreed to be the most potent statin on the market. Its higher strength, however, does not make a dramatic difference in studies. While statins such as Lipitor, Zocor and Pravachol lower LDL -- or harmful -- cholesterol by 50 to 55 percent, Crestor decreases it by 55 to 60 percent, said Grundy and Karas. In the new study, doctors of patients taking Crestor were significantly more likely to report complications of kidney disease and rhabdomylosis, a muscle deterioration that releases toxins into the blood that can cause renal failure. The overall number was small -- 145 muscle or kidney problems out of 5.2 million prescriptions during the drug's first year on the market -- but the number was substantially higher than for other statins. In 2001, the FDA took Baycol, a considerably more powerful statin than Crestor, off the market because of similar side effects. In a congressional hearing last December, FDA drug safety officer and whistle-blower David Graham identified Crestor as one of five drugs now on the market that he believed posed serious safety problems that were not balanced by their benefits. The FDA yesterday referred callers to its March conclusions that Crestor is no more hazardous than other statins.
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 143 OK, But I Still Need a Product! Take-Homes from the “No-Spin Zone”
The New Regulatory Bar: Safety, Efficacy and Medical Necessity
Unmet Needs: Let’s get serious!
Broader isn’t better: The Coming of the Less Impersonal Blockbuster
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 144 Strategy
Will focus on … Pipeline and products in selected disease areas of unmet medical need.
BMS Investment Bank Healthcare Conference Presentation, 2006
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 145 Considered the founder of the biotechnology industry, Genentech has been delivering on the promise of biotechnology for almost 30 years, using human genetic information to discover, develop, commercialize and manufacture biotherapeutics that address significant unmet medical needs.
Genentech website
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 146 In Discovery, our scientists work together across boundaries to exchange ideas, to promote best practice and to maximise the opportunities that are offered by our size and global reach. We focus on finding novel medicines for targeted unmet medical needs in our chosen areas of activities.
AstraZeneca 2005 Annual Report, AstraZeneca Business Review Day Presentation, 2006
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 147 Verus is dedicated to identifying, developing and delivering solutions to address the unmet medical needs of children and those who care for them.
Verus Pharmaceuticals website
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 148 Indiplon : Two formulations with a novel, more selective approach for treating the various types of insomnia Preparing for the Indiplon Launch: In December 2002, Neurocrine and Pfizer entered into a global agreement for the exclusive worldwide development and commercialization of indiplon . Neurocrine and Pfizer expect to submit New Drug Applications (NDA) with the U.S. Food and Drug Administration (FDA) in 2004. Pfizer will collaborate with Neurocrine on the development and marketing of indiplon in the U.S. and will have exclusive marketing and development rights to indiplon outside of the U.S. Insomnia is a Growing Medical Concern: Insomnia is a prevalent condition in the United States, with 58 percent of the adult population reporting Insomniatrouble sleeping remainsa few nights per a week, according to the National Sleep Foundation's (NSF) Sleep in America Poll 2002. Approximately 35 percent of the adult population reports that they have experienced disorderinsomnia everywith night high or almost unmet every night within the past year. Insomnia remains a disorder with high medicalunmet medical needs, needs, including including the inability to fall asleep, maintain sleep throughout the night and middle of the night awakenings with failure to return to sleep. theInsomnia inability is Prevalent to fall in asleep, the Elderly Patient Population: maintainInsomnia issleep also prevalent throughout in older adults, who comprise 20 percent of the total insomnia population. In addition, according to the National Sleep Foundation, frequent sleep problems in individuals that are 55 the tonight 84 years and old, ifmiddle ignored, can of complicate the the treatment of other medical conditions, including arthritis, nightdiabetes, awakenings heart and lung disease with and depression. failure to return to sleep.
Company website
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 149 Molecule Therapeutic Area Status
Flurizan™ (Global) Alzheimer's Disease Phase 3 (Global) Flurizan™ (US) Alzheimer's Disease Phase 3 (US) MPC-7869 Prostate Cancer Phase 2b Azixa™ (MPC-6827) Brain Metastases Phase 1 Azixa™ (MPC-6827) Solid Tumors Phase 1 MPC-2130 Metastatic & Blood Cancers Phase 1 MPC-0920 Thrombosis Phase 1 MPI-49839 AIDS Preclinical MPC-4505 Emesis Preclinical MPI-451768 Cancer Preclinical MPI-442690 Alzheimer's Disease Preclinical
Myriad is a leading biopharmaceutical company. Our strategy is to develop novel healthcare products in areas of critical need and to address some of the most pervasive diseases of our time. Myriad website
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 150 “Unmet Needs Met”
Q2 06 Sales by Therapeutic Area
Company website
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 151 OK, But I Still Need a Product! Take-Homes From the “No-Spin Zone”
The New Regulatory Bar: Safety, Efficacy and Medical Necessity
Unmet Needs: Let’s get serious!
Broader isn’t better: The Coming of the Less Impersonal Blockbuster
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 152 Pop Quiz
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 153 How many of the 25 best-selling albums in American history can you name?
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 154 Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 155 29 million copies
27 million copies
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 156 Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 157 How many of the 25 best-selling albums in American history were recorded in this century?
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 158 Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 159 Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 160 “If the 20 th century entertainment industry was about hits, the 21 st will be equally about niches.”
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 161 OK, But I Still Need a Product! Take-Homes from the “No-Spin Zone”
The New Regulatory Bar: Safety, Efficacy and Medical Necessity
Unmet Needs: Let’s get serious!
Broader isn’t better: The Coming of the Less Impersonal Blockbuster
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 162 “Patients feel entitled to have personalized medicine.”
-- Susan Desmond-Hellman, President of Product Development, Genentech
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 163 The “Reinvented” Pfizer did not Encompass Personalized Medicine
CEO Henry McKinnell said Tuesday that although 2005 will be a transition year, he expects the drug giant to return to double-digit earnings growth starting in 2006. "We have reinvented ourselves many times, and it's clearly time to do it again," McKinnell said during a meeting with analysts and investors. The company offered guidance for 2005 that was lower than analysts had expected. Pfizer said it expects to earn $2.00 a share, excluding items, down from $2.12 a year ago. On a GAAP basis, the drug giant expects net income of about $8.6 billion and EPS of about $1.16. McKinnell said 2005 would be a "transition year" due to the expiration of patents on certain products and "a number of uncertainties," which include the company's arthritis drugs, "continued pricing pressures, and market acceptance of new products.“ CEO Henry McKinnell said Tuesday that The Cox-2 Dilemma although 2005 will be a transition year, he One uncertainty is how Bextraexpects and Celebrex the drugwill fare giantonce the toFood return and Drug to Administration double- acts on recommendations made by two advisory committees in mid-February to place restrictions on all arthritis drugs known as Cox-2 inhibitors.digit …., saidearnings the benefits growth outweighed starting the risks for Vioxxin 2006. and Bextra. "We The committees gave Celebrex overwhelming havesupport. reinvented ourselves many times, and McKinnell said Celebrex and Bextra are "very important options" to millions of patients, adding that he expects "renewed growth" from currentlyit's clearly depressed time sales tolev elsdo of theit again," Cox-2 drugs McKinnell if the FDA gives saidthe company a relatively broad label forduring these drugs. a meeting with analysts and Early in the second half of 2005, Shedlarz added, Pfizer will consider another buyback. Now trading in the mid-$20s range, Pfizer's stock is muchinvestors. closer to its 52-week low of $21.99, than its 52-week high of $37.90. TheStreet.com
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 164 The “Reinvented” Pfizer did not Encompass Personalized Medicine
McKinnell said Celebrex and Bextra CEO Henry McKinnell said Tuesday that although 2005 will be a transition year, he expects the drug giant to return to double-digit earnings growth starting in 2006. "Weare have "very reinvented important ourselves many options" times, and toit's clearlymillions time to do it again," McKinnell said during a meeting with aofnalysts patients, and investors. adding that he expects The company offered guidance for 2005 that was lower than analysts had expected. Pfizer said it expects to earn $2.00 a share, excluding items, down from $2.12 a"renewed year ago. On a growth" GAAP basis, thefrom drug currentlygiant expects net income of about $8.6 billion and EPS of about $1.16. depressed sales levels of the Cox-2 McKinnell said 2005 would be a "transition year" duedrugs to the expirationif the FDAof patents gives on certain the products company and "a number a of uncertainties," which include the company's arthritis drugs, "continued pricing pressures, and market acceptance of new products.“ relatively broad label for these drugs. The Cox-2 Dilemma One uncertainty is how Bextra and Celebrex will fare once the Food and Drug Administration acts on recommendations made by two advisory committees in mid-February to place restrictions on all arthritis drugs known as Cox-2 inhibitors. …., said the benefits outweighed the risks for Vioxx and Bextra. The committees gave Celebrex overwhelming support. McKinnell said Celebrex and Bextra are "very important options" to millions of patients, adding that he expects "renewed growth" from currently depressed sales levels of the Cox-2 drugs if the FDA gives the company a relatively broad label for these drugs. Early in the second half of 2005, Shedlarz added, Pfizer will consider another buyback. Now trading in the mid-$20s range, Pfizer's stock is much closer to its 52-week low of $21.99, than its 52-week high of $37.90. TheStreet.com
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 165 So, Pharma’s Future is in Personalized Medicine, Right?
Lipitor
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 166 Pharma’s Biggest Blockbusters are Impersonal
Lipitor
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 167 Assembly Line Medicine
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Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 168 Less “Impersonal Medicine” is About Reinventing the Drug Therapy Value Proposition Pharma and the Cult of the Individual science gate Josh Braun - December 14th, 2005 SCIENCE THAT MATTERS FROM THE EDITORS AT SPEED So, individualized medicines, tailored to you based on your genetics, are something people have been ranting about for a while now. The field is called pharmacogenomics. But, the sort of idea they're selling - that your physician will prick your finger, sample your DNA with some GATTACA-style palm-pilot and print out a list of prescriptions for designer drugs to take to the pharmacy - well, that's mostly bull. For now, anyway. We're a hell of a long way from being able to look at someone's genes, derive their physiology and use the information to formulate any specialized medication. We're even a long way from being able to locate genetic reasons for why a drug might be efficacious in one population and not in another. Here's how pharmacogenomics is actually starting out: trial and error, quite literally. After the heart medication, BiDil failed in trials, Nitromed - the company developing the drug - decided to cut their losses and try a new drug trial in African Americans only, based on some preliminary evidence that it worked better in this population. Today it was reported, the same is happening with Xyotax. Cell Therapeutics, a pharmaceutical company is going to start women-only trials of the lung cancer drug after initial trials failed. These companies know nothing about the underlying genetic or environmental conditions that might make the drug more or less effective in different people - they're merely cutting their losses after trials fail by re-trying the drug in a unique subpopulation. And this is going to be an increasing trend, as companies realize that FDA approval doesn't have to be an all-or-nothing game. Eventually, through trial and error, they'll divide up the population into promising FDA trial groups and we may get to something approaching individualized medicine. Linking genetic markers to drug efficacy is a really hard problem. I'm not saying pharmacogenomics won't eventually come around. But it's unlikely that we're going to see a bottom up approach of identifying genes, and designing drugs to match. It's much more likely we'll see a gradual subdivision of the drug market into increasingly specific groups, until separating patient groups by genetic markers becomes the next logical step.
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 169 Less Impersonal Medicine: Clinical Segmentation Instead of Pharmacogenetic Segmentation
Empiric therapy Non- responders Pt. subsets Age (e.g., aspirin- Sex induced asthma) Race
Profiling ProfilingClinical Clinical Chemistry/ DataChemistry Mining Drug-drug Data Mining Tolerability/ interactions Safety
Contra- Co-morbidities indications
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 170 Impersonal Medicine Personalized Medicine
Lipitor
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 171 Personalized Medicine
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 172 Less Impersonal Medicine
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 173 Less Impersonal Medicine
Impersonal Medicine Personalized Medicine Less Impersonal Medicine
Lipitor
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 174 “When one door closes another door opens; but we so often look so long and so regretfully upon the closed door, that we do not see the ones which open for us.”
-- Alexander Graham Bell
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 175 "...anything but another conference"
"Therapeutic Insight brings together a sophisticated, knowledgeable audience along with outstandingly qualified speakers addressing a variety of defining topics/issues challenging the pharmaceutical/biotechnology industry and is anything but another conference. It is a forum that one leaves with new thought and ideas that are useful and provocative for your own organization."
Frederick Frank Vice Chairman Lehman Brothers, Inc .
"In a world with so many licensing, M&A and strategy meetings, yet such limited discretionary budget and time, how do we choose? The answer - go with the meeting that offers unconventional insight into matters that sometimes cannot even be discussed candidly at internal company meetings. Hands down, the choice is Defined Health's famous annual Therapeutic Insight Conference."
Clive A. Meanwell, MD, PhD Chairman & CEO The Medicines Company
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 176 "...anything but another conference"
“I used to attend this conference for the networking and insights into therapeutics. While that is still a valuable benefit, Ed Saltzman has amplified this value through his thoughtful, highly insightful, frequently controversial approach to addressing the complex issues reshaping our industry. No other conference offers this combination of benefits.”
Michael J. DuBois Senior Vice President, Global Licensing Schering-Plough Corporation
"Therapeutic Insight is a unique forum that brings together an array of thoughtful and diverse biopharmaceutical stakeholders in an intimate setting. Panelists speak on state-of-the-art issues, deliver content that is objective and not commercial, and don’t refrain from engaging in controversial debates. Defined Health moderators provide informative overviews and lead balanced discussions. Even the most sophisticated biopharmaceutical professional would advance his or her thinking by attending this conference."
Robert H. Glassman, PhD Managing Director, Healthcare Investment Banking Merrill Lynch
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 177 "...anything but another conference"
“The annual Therapeutic Insight conference by Defined Health offers fresh insights into complex issues facing the pharmaceutical and biopharmaceutical industry. Carefully chosen topics are discussed by panels of experts who have very diverse views and broad experience. I always learn something new and profound and meet someone interesting and important, who I would have been unlikely to encounter anywhere else, in an atmosphere that is ideal for mind-bending.”
Mary C. Tanner General Partner Life Sciences Partner
"The Defined Health annual conference, Therapeutic Insight, brings together biotech and pharmaceutical thought leaders and business professionals in an intimate, interactive, highly informative setting. The candid open debate on key issues is, in itself, worth the price of admission."
Leonard P. Shaykin Chairman and CEO Tapestry Pharmaceuticals
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 178 "...anything but another conference"
“The conference is excellent. Extremely informative. A great networking opportunity with seasoned business professionals. Exceptional, knowledgeable speakers. I’ve attended Therapeutic Insight every year since it began. It is definitely a must-attend conference!”
Harry Loveys Principal Capital Royalty L.P.
“Over the years Defined Health has managed to attract many of the absolutely top flight pharmaceutical industry, academic, health economic, and health ethics experts to their Therapeutic Insight conference. It is a privilege to participate in these meetings not simply from a networking viewpoint but more especially, to learn from one’s respected peers.”
Brian Leyland-Jones, MD, PhD Minda de Gunzburg Professor of Oncology Founding Chairman, Department of Oncology McGill University
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 179 "...anything but another conference"
“The most compelling aspect of Therapeutic Insight is the therapeutic area panel discussions. 2006 was my first time to attend, and I was very impressed with the quality and diversity of the speakers and the different perspectives they brought to the issues. I especially appreciated the oncology panel. The discussion had tremendous clinical relevance regarding state-of-the art views with no “pie-in-the-sky” attitudes, just the reality of what is actually happening in this therapeutic area right now.”
Phyllis Whiteley, PhD Senior Vice President Business Development & Licensing Perlegen Sciences, Inc.
“The Defined Health Therapeutic Insight meeting always delivers on its promise: a large dose of insight. Ed and the Defined Health team put together the experts and the program that delivers the goods.”
John M. Siebert, PhD Chairman & Chief Executive Officer CyDex Inc .
Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 180 "...anything but another conference"
SAVE THE DATE! APRIL 25 & 26, 2007
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Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 181 Feeding the Pipeline VII © Defined Health 2006 September, 2006 - Pg. 182