Company Analysis: MLNM

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Company Analysis MLNM

• Andrea Hooper
• Imke Ehlers
• Rana Sawaya
• Carlos Dedesma

Carlos
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What Were Our Data Sources?
Carlos
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What are they Worth?

• Introduction
• Assets
• Some Product Lots of Pipeline
• Agreements

Carlos
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What are they Worth?

• Introduction
• Assets
• Some Product Lots of Pipeline
• Agreements

Andrea
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Introduction

• Founded 1993
• Traded on Nasdaq since 1996
• Currently 2,079 full-time employees
• Major facilities Cambridge, MA (HQ)
• Cambridge, England
• South San Francisco, CA
• Website www.mlnm.com

Andrea
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Introduction Ample Lab Space

• Cambridge, MA 1,040,211 sq ft building of
  offices and lab space. Under lease.
• San Fran136,000 sq ft of office and lab. Under
  lease.
• England 40,000 sq ft of office and lab. Under
  lease.
• Constructions Took occupancy of a 202,000 square
  feet new office lab space in MA with a lease
  until 2019. Another building next to it under
  construction with 214,000 square feet of office
  and lab space with lease til 2020. Move in Q3Q4
  2K3. Also 90,000 square foot building in England
  with move in Q2 2K3

Andrea
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Introduction Managements Control over Expenses
Carlos
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Introduction Cheap Stock?
MLNM RGN PFE Mkt Cap (Billions) 2.4 0.9
183 Price/Book  0.83  6.15 9.66
Carlos
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Introduction Volatile Stock?
MLNM RGN PFE Mkt Cap (Billions) 2.4 0.9
183 Price/Book  0.83  6.15 9.66 Beta
1.65 1.02 0.60
Carlos
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Introduction Volatile Stock?
Carlos
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Introduction Volatile Stock?
Carlos
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What are they Worth?

• Staff, Trade Name, Experience Set
• Assets
• Some Product Lots of Pipeline
• Agreements

Carlos
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Assets

• 1.8 Billion in cash
• This is enough cash to meet this years
  operational financing expenses

Carlos
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Assets

• 1.8 Billion in cash
• This is enough cash to meet this years
  operational financing expenses
• What about next year?

Carlos
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What are they Worth?

• Staff, Trade Name, Experience Set
• Assets
• Some Product Lots of Pipeline
• Agreements

Rana
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Some Product Lots of Pipeline

• Cardiovascular Disease
• Product- INTEGRILIN (available)
• Pipeline- Phase I (3) / Phase II, III for
  Integrilin
• Cancer
• Product- VELCADE
• Pipeline- Phase I (5) / Phase II, III for
  Velcade
• Inflammation
• Pipeline- Phase II (1) / Phase I (1)
• Metabolic disorders

Rana
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Lots of Pipeline

• Cardiovascular Disease
• MLN519- proteosome inhibitor/ PAION Gmbh (P-II)
• MLN01- monoclonal antibody (b2 integrin)/ XOMA
  Ltd. (P-II)
• MLN1021- Factor Xa inhibitor (P-I)
• CAB-2- complement inhibitor / XOMA Ltd. (P-I and
  P-II)
• Cancer
• MLN591RL- monoclonal antibody (prostate-PSMA)
• MLN2704- monoclonal antibody (prostate-PSMA)
• MLN576- topoisomerase inhibitor/ XENOVA (P-I and
  II)
• MLN518- receptor tyrosine kinase inhibitor (P-I)
• MLN944- samll molecule (solid tumor) / XENOVA
  (P-I and II)
• Inflammation
• MLN02- monoclonal antibody (a4b7) (inflammatory
  bowel disease) (P-II) / Genentech (completion)
• MLN1202- monoclonal antibody (rheumatoid
  arthritis)
• Metabolic disorders

Rana
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Some Product

• Cardiovascular Disease
• Product- INTEGRILIN (available)
• Cancer
• Product- VELCADE

Rana
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Some Product INTEGRILIN

• Anti-platelet agent
• Platelet Glycoprotein (GP) IIb/IIa inhibitor
• Compound- Eptifibatide
• Cyclic heptapeptide/binds the KGD sequence on
  receptor
• Highly selective for inhibiting ligand binding
• Administered as an injection, in conjunction with
  plasminogen activators, oral regimens (aspirin)
• One of three anti-(GP) IIb/IIa inhibitor
  available on market (concept in 70s and 80s)

Rana
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Some Product INTEGRILIN

• Developed/marketed by COR and Schering-Plough
• Marketed in the US, EU, and 11 more countries
• Cleared for
• management of patients with percutaneous
  coronary intervention (PCI) (angioplasty/
  stenting)
• acute coronary syndromes (ACS) (unstable angina/
  heart attack)
• Marketed in the US, EU, and 11 more countries
• Clinical trials in progress for added indications
• Phase III- specific type of heart attack/pre-PCI
• Phase II- coronary artery bypass graft

Rana
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Medically, INTEGRILIN is 2nd Best of
Three ReoPro gt Integrilin gt Aggrastat

• ReoPro Integrilin Aggrastat
• (Abciximab) (Epifibatide) (Tirofiban)
• Molecule Ab Fab Peptide Non-peptide
• Binding site Unknown KGD RGD
• Binding affinity High Moderate Moderate
• Receptor specificity No (sickle cell) Yes Yes
• FDA Approval PCI (1) PCI,ACS ACS
• Clinical studies renal,diabetic
• Sale price High Lower

Rana
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INTEGRILIN Now Faces Targeted Competition from
Eli Lilly
Imke
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ConclusionINTEGRILINs Sales for the next 18
Months have Peaked
Rana
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Some Product VELCADE

• Novel drug candidate with broad applications in
  treatment of cancer
• In 2002 Velcade was granted fast-track status
• In Jan 2003, the NDA filing was completed for
  relapsed and multiple myeloma
• In Feb 2002 a MAA was submitted to the EMEA for
  marketing in the European Union

Rana
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VELCADEs Possible Additional Indications

• Phase III- APEX trial
• Patients with multiple myeloma- refractory after
  one or more prior therapies
• 600 patients
• Phase II- SUMMIT trial / CREST trial
• Patients with multiple myeloma- refractory after
  two or more prior therapies
• Velcade (single agent) or in combination with
  dexamethasone
• (NDA based primarily on phase II trials)
• Phase I and II- Velcade along with other drugs
• refractory colorectal cancer
• advanced non-small lung cancer
• blood malignancies other than multiple myeloma
• solid tumors- pancreatic, lung, breast, prostate,
  ovarian

Rana
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VELCADEs Mode of Action

• Compound- Bortezomib for Injection
• Proteasome inhibitor
• Dipeptide boronic acid analogues that inhibit the
  chymotryptic activity of the proteasome
• Acts through multiple mechanisms to arrest tumor
  growth, tumor spread and angiogenesis

Rana
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VELCADEs Mode of Action
Proteasome
IkB
NF-kB
Inhibitors of apoptosis
adhesion molecules (metastasis)
(angiogenesis)
Tumor growth
Rana
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VELCADEs Competition

• No other proteasome inhibitor on the market
• BUT, the competition for the indication includes
• Chemotherapy
• Traditional therapies
• Thalomid (thalidomide) (Celgene Corporation)
• Competitive therapies in late-stage clinical
  development

Rana
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What are they Worth?

• Staff, Trade Name, Experience Set
• Assets
• Some Product Lots of Pipeline
• Agreements

Imke
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Agreements that generate revenue

• Agreements as Sources of Revenue
• Bayer
• Aventis
• Schering-Plough
• ILEX
• Genentech
• Monsanto

Imke
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Agreements that generate revenue

• 1. Bayer
• ? multi-disease alliance in finding targets
  for small molecule therapies and Bayers
  development and commercialization of resulting
  therapies
• ? research part of alliance for 5yr term-
  completed in Oct.2003-extendable for 1yr at
  Bayers option
• ? MLNM eligible to receive up to 465MM of which
  387.4MM have been received up to Dec 2002 in
  2002, this generated 22 of revenues
• 2. Aventis
• ? inflammatory disease broad agreement from
  June 2000, for a 5 yr research phase
• 250MM equity investment received, MLNM will
  receive royalty payments and enjoy access to
  Aventis promotional infrastructure in case of
  commercialization
• ? technology transfer agreement from July
  2000 over 3-5yrs. May be ended July 2003
• Aventis is provided rights to MLNM drug discovery
  technologies in exchange for payments between
  160-200MM over 3-5yrs . 97.8MM were received to
  date in 2002, this generated 12 of revenues

Imke
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Agreements that generate revenue

• 3. Schering-Plough
• ? collaboration on Integrilin marketing US
  profits 50 international SGP will pay
  royalties
• 4. ILEX
• ? ILEX owns CAMPATH (humanized monoclonal Ab)
  for refractory CML. To date, MLNM has received
  60MM from ILEX related to CAMPATH.
• ?entitled to another 40MM in 2003 and 2004 if
  sales in the US meet thresholds. After 2004
  entitled to further payments if sales meet
  thresholds in the US.
• 5. Genentech
• ?collaboration for MLN 02 to target Crohn s
  disease from Dec.1997 to take it through Phase II
  after which Genentech will take over
• ?option to share costs/profits or receive
  royalties and entitled to milestone payments
• 6. Monsanto
• ? research alliance and technology transfer
  agreement with Monsanto, expired at end of its
  original 5yr term.
• -MLNM may receive royalty payments in the future
  if lead target are developed into commercial
  products by Monsanto

Imke
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Agreements requiring payments

• Agreements as Liabilities
• BZL Biologics LLC
• Xenova
• XOMA

Imke
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Agreements requiring payments

• 1. BZL Biologics
• ? collaboration for joint dev. and
  commercialization of antibody-based therapeutics
  targeting PSMA from April 2001
• ? MLNM holds exclusive dev. and WW marketing
  rights to these products. (MLN2704/591R)
• ? MLNM pays development and milestone and
  royalty payments to BZL based on product sales.
• 2. Xenova
• ? agreement from 2001 for the dev. and
  exclusive North American commercialization rights
  to Xenova s DNA targeting program.
• ? Initial payment from MLNM to Xenova 11.5MM.
  MLNM promised further milestone payments and
  royalties
• 3. XOMA
• ? cardiovascular alliance since Nov. 2001
• ? provides for the development of 2MLNM
  biotherapeutics by XOMA
• ? MLNM pays milestone and royalty payments, and
  commercializes products after successful Phase II

Imke
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Summary Conclusions

• Scary Things
• Cash position
• Potential patent infringement
• Bayer may terminate relationship this year
• Monsanto may terminate relationship this year
• INTEGRILINs market share has probably peaked
• Positives
• VELCADE looks promising and is solely owned by
  the company
• Diverse product pipeline

Carlos
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Summary Conclusions We Recommend a HOLD
Position

• Although we like MLNM, we are concerned with the
  large number of challenges that must be met in
  the next year in order to remain an on-going
  concern.
• We would like to monitor the companys operations
  and report back later this year.

Carlos
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Conclusion

• HOLD as we watch for certain goals to be met,
• File FDA application for VELCADE in multiple
  myeloma
• Complete enrollment for Phase III APEX Study of
  VELCADE in multiple myeloma
• Initiate CABERNET trial of Integrilin in CABG
  surgery
• Initiate Phase II trials of VELCADE in solid
  tumors and NHL

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Conclusion

• HOLD as we watch for certain goals to be met
  (continued),
• Initiate trials of Integrilin in combination with
  drug eluting stents
• Initiate trials of INTEGRILIN in combination with
  direct thrombin inhibitor
• Phase II results of MLNM 02 in ulcerative
  colities
• Initiate Phase II trial of MLNM-591 in prostate
  cancer
• Enter 2-3 new molecules into clinical development

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Millennium Executive Officers
Mark J. Levin, 52 Chief Executive Officer since
1994 President since 1993 Founding CEO of Cell
Genesys, Stem Cells, Tularik, Focal and
Millennium Vaughn M. Kailian, 58 Vice
Chairperson since 2002 Was President, CEO of COR
Therapeutics 1990-2002 Kenneth M. Bate, 52
Senior VP Chief Financial Officer since
2002 John "Jack" B. Douglas III, 49 Senior VP
and General Counsel since 1999-2000 Linda K.
Pine, 51 Senior Vice President, Human Resources
since 1994 Robert I. Tepper, MD, 47 President,
R D since 2002 At Millennium since 1994
Andrea
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Other Members of Management
Julian Adams, PhD Senior Vice President of Drug
Development and Discovery since 1999 Used to work
for LeukoSite before the merger Responsible for
discovery of VelcadeTM while at
Proscript/LeukoSite Clare Midgley Vice President
of Global Corporate Affairs since 1997 Peter
Smith, PhD Senior VP, Clinical Drug Development
since 2000
Andrea
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Millenium BOD
Eugene Cordes, Ph.D., Chairman of the Board,
Concurrent Pharmaceuticals, Inc. Shaun R.
Coughlin, M.D., Ph.D, Director of the
Cardiovascular Research Institute, University of
California, San Francisco Ginger L. Graham,
Advisor to the President and Chief Executive
Officer, Guidant Corporation A. Grant Heidrich,
III, Partner, Mayfield Fund Charles J. Homcy,
M.D., Senior Research Development
Advisor Vaughn M. Kailian, Vice Chairperson,
Millennium Pharmaceuticals, Inc. Raju
Kucherlapati, P.h.D, Scientific Director,
Harvard-Partners Center for Genetics and
Genomics, Professor of Genetics, Harvard Medical
School Eric Lander, Ph.D., Director,
Whitehead/MIT Center for Genome Research Mark J.
Levin, Chief Executive Officer, Millennium
Pharmaceuticals, Inc. Edward D. Miller, M.D.,
Dean, Johns Hopkins University School of Medicine
and Chief Executive Officer, Johns Hopkins
Medicine Norman C. Selby, Chief Executive
Officer, TransForm Pharmaceuticals, Inc. Kenneth
E. Weg, Chairman, Clearview Projects, Inc.
Principal, Clearview Global Venture Partners
Andrea
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Fin
Carlos