Getting The Most Of Your International Alliance July 18 19,2011

GETTING THE MOST OF YOUR ALLIANCE INTERNATIONALLY BY MAXIMIZING YOUR PARTNER’S

RESOURCES

Daisy Rivera-Muzzio, R Ph, MS, MBA Managing Partner,

DRM BioPharmSource

Pharmaceutical Licensing Partnerships and Alliance Management Conference July 18-19, 2011 Philadelphia, PA

Introduction

Alliances between small players (biotech, academia, small companies) and big pharma have been driving the innovation in the biopharma industry for years. Small companies / inventors aspire to be acquired by big pharma to leverage its financial, regulatory and commercial capabilities to market the inventions and maximize their value.

The current partnering landscape has become increasingly competitive. Both sell and buy side experience an intense pressure to be selected as the partner of choice. An effective partnership requires the understanding of each other’s perspective. The value of the initiative goes above and beyond the financial transaction and could bring learning and growing opportunities.

International alliances brings additional dimensions if both partners are willing to be creative in the deal structure leveraging each other core competencies.

July 18-19, 2011|DRM BioPharmSource

Overview

¨  Sell and Buy Side expectations/ perspectives

¨  How to address the gaps, leveraging partner’s resources

¨  Considerations to maximize the partnership


Rational for Partnership: Mutual Benefit : Incremental Value Drivers for collaboration :

¨  Buy Side : Big Pharma ¤  High Value, fast speed, low cost innovation to fill the gaps of their pipeline

n  Buy side is continuing to increasing its emphasis on late stage deals, shorter term revenues and lowered risk

n  Partners selection based on institutionalized due diligence process for risk assessment. A seamless product introduction and reliable quality and supply as if the product is developed/manufactured internally

¨  Sell Side : Small Bio-tech/Start ups/Academia ¤  Commercial ( Sales, Marketing, P &R) Regulatory Capabilities, to market its invention and

maximize its value n  Partners who can clearly demonstrate a credible value maximization, solid capabilities, risk

sharing and creativity in deal structures. ¤  Financial Resources

n  Sell Side, struggling with the balancing act of raising capital and the challenges to get regulatory approval may choose as a best alternative partnering/ selling out to cash rich big pharma

¤  Development of additional capabilities July 18-19, 2011|DRM BioPharmSource

What each partner brings to the table

Small Companies Big Pharma

Restless / Results oriented Reliable Business Process

Unconventional/ Entrepreneurs Global Regulatory and Commercial Strengths

Risk affined Calculated risks

Innovation minded Global Manufacturing Network Capabilities

Flexible, adaptable

Pursue differentiation as a competitive advantage

External Funding Dependent High Financial resources

Broad Network of Collaborators Established Business Process, Logistics, Supply Chain


What a partner continues to look for - value creation (Sell Side Companies Perspective)

Synergies and Gaps

¨  There is synergy between the expectations of the sell side and the strategies of the buy side on : ¤  Sell Side looks to complement the Regulatory and Commercial

capabilities they are lacking ¤  Big Pharma continues to strengthen their commercial and regulatory

capabilities. ¤ Deal structure considers expanded roles for licensors

¨  GAPS: Both Sell side and Buy side Outsource R&D and Mfg. which may increase the risk of the initiative ¤  Big Pharma has increased the outsourcing of R&D and

Manufacturing, placing more emphasis in selection of CMO’s and supportive entities for product development. n  Sell side could enable Buy Side resources to address this potential risk


How to address the gaps leveraging the partner’s resources?

¨  Seek for synergistic/complimentary/ reliable partnerships in earlier stages ¤  Value Chain of Key players: CMOs/ Academia/CROs/others small to mid-size companies

¨  Considerations ¤  CMO’s - Highly reputable, reliable quality and supply (Patheon, Catalent, DSM, Lonza,

etc.) n  Using the partner’s network of strategic suppliers and global external supply resources n  Incentives

n  Small company: De-risk due diligence process n  CMO: Commitment to M&S

¤  Academia- Low Cost, great reservoir of expertise n  Leverage on Pharma and Academia and Regulatory Agencies joint initiatives ( ex. Rutgers

University -NSF Engineering Research Center on Structured Organic Particulate Systems n  Overcome the IP disputes that delays opportunities for collaboration

¤  CRO’s : Cost and Risk management of clinical studies n  Low Cost locations- Highly reputable CRO’s used by big Pharma n  Use of technology to predict rate of success of clinical studies

§  BioVista §  Absorption Systems

Contract Manufacturing Organizations


Reputation: DSM and DSM Pharma are recognized for Innovation and Sustainability

DSM recognized June 2011 by Patent Board in the top ten (of 167) most innovative chemical firms due to ‘research intensity and industry impact’

DSM Pharma received:

¨  Profiles in Sustainability Award 2011 for Green Innovation

¨  European Outsourcing Award 2010 for carbon footprint reduction

¨  Profiles in Sustainability Award 2010 for Green Chemistry Toolbox

¨  Safe Bridge Certification for handling of potent compounds

2010 Dow Jones Sustainability World Index

DSM #1 in the Global Chemical Industry 5 of 7 years

Good Corporate Citizenship Endorse obligations in the chemical industry’s International Responsible Care® Program


Vertical integration: DSM is a Leading Global Provider of Custom Manufacturing and Development Services for the Nutritional, Consumer and Biopharma businesses

Pharma Chemicals Dosage Forms Biologics • DPC: Custom manufacturing of

API and Intermediates • Broad technology toolbox for

process innovation and commercial manufacture

• DPI: Secondary manufacturing of of sterile injectables, non-sterile liquids, and oral dosage forms

• Experts in technology transfer projects

• DSMB: Custom manufacturing of biopharmaceutical ingredients

• Leaders in innovative process technology


Academia


Partnership with Academia

¨  Universities can be great partners: Great reservoirs of expertise at a lower cost -  Extensive instrumentation and modeling methodologies -  Inexpensive, highly trained labor (Graduate Students and postdocs)

-  Forum for collaboration between Pharma and Regulatory Agencies

¨  To maximize these positives:

-  Overcome struggles about IP: -  Restrict the scope of the university contract to roles that are not likely to generate IP: perform

measurements, obtain access to instrumentation, generate data, provide analytical services, etc. Such services can be accessed through "service agreements” that are much faster to negotiate and do not compromise IP

-  For scientific support, retain the academic as a consultant.

-  Students, once they graduate, are excellent recruits that already know the company – and the company has a chance to get to know them while they work on company-sponsored projects


Partnership with Academia

¨  Resources of Big Pharma are dedicated to sponsor industry driven research:

¤  Drug discovery

¤  Drug Delivery

¤  Quality by Design and Process Analytical Technologies

¤  Support for product/process development

¤  Participation in research consortia and centers

¨  Big Pharma often builds long-term alliances with academic institutions of interest

¤  Eli-Lilly foundation $20 million gift to Purdue University to establish a center of excellence in pharmaceutical sciences

¤  Novartis $65 million award to MIT to develop continuous manufacturing technology ¤  J&J long term “partnership for innovation” with Rutgers in drug discovery

¤  Most Big Pharma-Rutgers University -NSF Engineering Research Center on Structured Organic Particulate Systems

Contract Research Organizations Innovative technologies to enable

early decision making, reduce the cost and risk of clinical studies


Clinical DDI Discover Clarity in Transporters: CellPort Technologies®

FDA/EMA experience

Enabling waiver of clinical DDI studies

Human Bioequivalence Study • Clinical Drug-‐Drug InteracJon Studies • Significant savings in development Jme

Cost Comparison Human BE study In vitro study: ≈$50k In vivo human BE study: ≈$250k Clinical DDI study In vitro study: ≈$100k to assess mulJple interacJons ( transporters and CYPs) In vivo study: ≈$100k to 1M depending on number of interacJons

Absorption Systems: A Comprehensive Preclinical CRO offering Toxicology Services Innovative research tools and services to better predict human outcomes

Biowaiver of Human Studies

Lead OpJmizaJon

Candidate SelecJon

Toxicology & Safety

FTIH to Phase II

BA/BE Class I & Class III=61% of classified drugs Projected savings of biowaivers for all Class I & Class III ≈$128M to 150M

www. Absorption.com

Absorption Systems Exton, PA US; Asia Sapporo, Hokkaido, Japan ; Western US -San Diego, CA

BioVista

¨  COSS™ is a proprietary very large scale profiling technology specifically developed to address the need for pipeline value enhancement and improved patient cohort stratification.

¨  It uses very large scale mechanism of action (M o A) profiling to generate four solutions: ¤  Find novel indications for any drug, beyond the ones they were initially

developed for ¤  Identify novel, mature chemistries against targets and mechanisms ¤  Identify new biology and novel targets for diseases of interest ¤  Develop M o A- based patient cohort stratification and inclusion /exclusion

criteria that may be used in RMPs by profiling M o A of AE’s of any drug prior to or during clinical trials

¨  The technology helps prioritize and “kill” programs with elevated risks of MoA based attrition due to Safety or efficacy

BioVista- SA Charlottesville, VA USA ; EU Ellinikon, Athens, GREECE [email protected]

Partnership Value Creation


Maximization of Value Creation through Partnership ( Sell Side)

¨  Buy-Side Resources increase the value to the Sell Side Partner

•  Commercial and Regulatory Global outreach •  Established business process •  Access to a global network of external suppliers already

qualified •  Economies of scale through strategic CMO’s partnerships •  Reliable Supply Chain and Logistic Process •  Sponsored Academic research •  In house resources to International partners to monitor and

control Quality and EHS controls July 18-19, 2011|DRM BioPharmSource

Terms and Conditions to Provide Growth Opportunities to Sell Side

¤  Retain responsibilities for worldwide technical support

¤  Retain commercial rights for strategic markets •  Build its own sales force •  Seek local markets partnerships

¤  Co-marketing opportunities, synergies between both partners portfolio


Buy Side - Alliances with local players in International Markets offer ¨  The potential to leverage local market partner’s

resources: ¤ Untapped science resources in newer markets…

n  India – Cardiovascular work, clinical study data gathering and analysis

n  China – Chemistry, Chemical intermediates n  Eastern Europe - Clinical Research n  Latin America- Biotech, Clinical studies

¤ Treating diseases found primarily in newer markets

¨  Strong local network: political/ regulatory/commercial


In summary

¨  Resources of Big Pharma enhance the value of the strategic partnership: ¤ Providing complimentary capabilities ¤  Enabling the use of a network of qualified collaborators ¤ Providing Access to global markets

¨  Big Pharma could also benefit from alliances with local markets partners unique resources and competitive advantage in international markets

¨  Each partner’s definition of value and expectations lay the basis for creative deal structures to achieve mutual benefit


Getting The Most Of Your International Alliance July 18 19,2011

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