Trends in life sciences licensing:

1

• Trends in life sciences licensing
• what the alliances of 2006 tell us about 2007

LES Vancouver chapterMarch 29, 2007James
Hatton
2
Experienced Advisorson Collaborations
Development and License Agreement
Collaboration and License Agreement
Joint Development Agreement
Collaboration and License Agreement
Strategic Alliance and Exclusive Master
Agreement
Development Agreement
3
Trends in life sciences licensing

• idiosyncratic look
• focus on important and innovative collaborations
• implications for deal points and structures for
  life sciences licensing in 2007

4
Sources of exceptional collaborations

• Recombinant Capital's 2006 Breakthrough
  Alliance nominees
• Scrip Awards 2006 Licensing Deal of the Year
  nominees andPartnership Alliance of the Year
• Burrill Co.'s quarterly publications to Q1 2006

5
Breakthrough Alliance nominees

• GSK Epix of 12/06 (not yet disclosed)
• Janssen Vertex of 6/06
• MedImmune Infinity of 8/06
• Novartis HGS of 6/06
• Takeda Affymax of 6/06

6
Scrip Awards nominees

• Alnylam Novartis of 12/05
• AtheroGenics IPR AstraZeneca of 12/05
• HGS Novartis Collaboration Agreement of 6/06
• Nastech PG of 1/ 06
• NicOx Merck of 3/06
• Protherics AstraZeneca of 12/05
• Trubion Wyeth of 12/05

7
Definitive list of alliances of 2006

• approximately 20 agreements
• full text disclosed athttp//del.icio.us/JamesHat
  ton/interesting

8
Exceptional collaborations of 2006
9
Exceptional collaborations of 2006 contd.
10
http//del.icio.us/JamesHatton/interesting
11
Source of the full text
12
http//www.jameshatton.com/public/
13
Alliance trends background information

• Total industry-wide alliances
• Average upfront payments
• Regional deals
• information courtesy of James Watson,Burrill
  Company Merchant Banking

14
Total industry-wide alliances
15
Average upfront payments
16
Average total payments
17
Regional deals world-wide rights on the wane
18
Regional deals Asia and America on the rise
19
Alliance trends

• empty pipelines increase biotech market power
• biotechs seek to grow into mini-pharmas (through
  licensing)
• biotechs seek higher returns by bearing more of
  the risk

20
Biotech market power

• lots of little wins
• e.g. equity at a premium
• 40 Acadia Sepracor
• 30 Protherics AstraZeneca
• 25 Pharmacopoeia GSK Pharmion MethylGene
• 20 Exelixis GlaxoSmithKline
• 15 Orthologic Quintiles

21
Growth through licensing

• retention of rights
• regional deals
• cost and profit sharing
• co-promotion rights
• right to lead development
• quids

22
Regional deals

• AVI Cook US EU
• Myogen GSK WW ex US
• Nuvelo Bayer WW ex US
• Pharmion GPC EU c.
• Pharmion MethylGene NA EU c.
• Vertex Janssen EU c.

23
Cost sharing and some profit sharing

• HGS Novartis 50 profit share in US
• Intermune Roche 33
• Infinity MedImmune 50 costs and profits
• Pharmion GPC shared costs royalties 26-34
• Pharmion MethylGene 40 royaltiesNA 13-21
  ROW 10-13
• Vertex Janssen 50 royalties tiered average mid
  20's

24
Co-promotion rights in the US

• BioCryst Roche
• EPIX GlaxoSmithKline
• Infinity MedImmune
• Intermune Roche
• NicOx Merck
• Plexxikon Roche
• Trubion Wyeth

25
Licensors right to lead development

• EPIX GlaxoSmithKline EPIX develops to proof of
  concept
• Infinity MedImmune Infinity develops to proof of
  concept
• Plexxikon Roche Plexxikon develops to Phase I
• Pozen AstraZeneca Pozen develops to NDA in US

26
Quids

• a licensee offsets the cost of an alliance by
  offering a non-cash asset, such as trading one
  drug for the rights to another one. Quids often
  involve co-promotion alliances
• AthroGenics AstraZeneca sales force
• Myogen GSK US drug distribution
• (Neurocrine Pfizer) detailing rights
• (Abbott Cephalon) RFN
• (Exilixis BMS) drug back

27
implications for life sciences licensing in 2007

• expect to win more of the small stuff
• profit sharing deals still the exception
• consider option rightsPharmion MethylGene
• how best to grow?retain regional rights
  co-promotion rights development rights quids

28

• For an electronic copy of todays presentation
  and the full text of all background licenses,
  please contact
• James Hatton Farris, Vaughan, Wills Murphy
  LLP jhatton_at_farris.com
• or visit
• www.jameshatton.com/public