It Ain’t Easy

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It Aint Easy
Deborah Brown General Manager Regional Vice
President Serono Canada Inc.
Vancouver, March 2006
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Biotech in CanadaA quick overview

• Almost 500 companies (over 1/3rd from spin offs)
• Revenues of 3.8 billion
• RD expenditure nearly 1.5 billion
• Directly employs 12,000 skilled workers
• Biotech Human Resources Council estimates biotech
  activities support 2500 organizations and over
  200,000 jobs
• Market cap of Canadas biotech companies
  estimated to be over 15 billion (70 represented
  by 10 companies)

Source Statistics Canada, Uses and Development
Survey 2003
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A typical biotech is . . .

• Private
• Works in human therapeutics with an RD focus
• Three-quarters of all companies have fewer than
  50 employees
• Does not have a commercialized product
• Has less than 12 to 18 months of funding

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Pillars of Biotech Success
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Paradox

• Biotechnology is an industry driven by science
• Biotechnology today is all about money."

Dr. Tony Brooks, Formerly of PricewaterhouseCoope
rs LLP
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Serono

• Global biotech leader, 3rd largest in terms of
  revenues
• Largest European based biotech
• Based in Geneva, Switzerland
• 100 years old as of March 10, 2006
• Almost 5,000 employees, revenues of 2.5B in 2005
• 4 therapeutic areas and an emerging TA in
  oncology
• Blockbuster drug, Rebif, for Multiple Sclerosis

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The Major Biotechnology Leaders
Market cap (US) as of Dec 31, 2004
Lead Productas of Sales
2004 Revenues USm
26 46 50 68 38 17 63 84
81,479 57,141 10,158 22,218 14,397
6,228 15,148 6,743
Amgen
Genentech
Serono
Biogen-IDEC
Genzyme
Chiron
Gilead
MedImmune
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Biotech Ranking Update H1 2005
Data Source Company SEC filings / Bloomberg /
Analyst reports
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Strong Financial Performance
Net Income (M)
Total Revenues (M)
Guidance2370 - 2420
Guidance492 - 497

• Over the last 5 years, total revenues doubled
  with a compounded annual growth rate (CAGR) of
  16
• Net income CAGR over the last 5 years of 22

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4 Therapeutic Areas, 13 products

• 1 MS product outside the USA and fastest growing
  MS drug in the USA
• Worlds 1 brand in the field of fertility
• Unique portfolio of state-of-the-art fertility
  products
• Fastest-growing product in the GH business
• The only GH therapy registered for AIDS wasting
• First biological therapy for psoriasis to receive
  EC marketing autorisation

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Fostering a partnership culture
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Commercial Market Environment

• Favourable economic environment
• Improved patient advocacy
• Biotech addressing unmet needs

Positive Forces

• Slow (!) regulatory approvals
• Limited and deteriorating market access
• Biosimilars on the horizon
• Declining physician numbers

Negative Forces
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Barriers to Success

• Low odds of clinical success
• Regulatory inefficiency
• High expectations of new biotech entrants
• Market access barriers
• Heavy expenses to service niche specialty areas
• Too few or too many therapeutic areas
• Competing against large pharma with more resources

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Probability of Clinical Success

• No guarantees, even at Phase III
• Auto-immune diseases are multi-factorial
• Few blood pressure cuffs
• Placebo-controlled trials the paradox
• Lengthy ethics approvals
• Phase IV gets bigger and bigger, and GCP standard

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Inefficient Regulatory System

• Accept the unique nature of bioscience inventions
  and resource accordingly and/or adopt
  international standards and reviews in regulatory
  practices
• This includes
• eliminating the backlog of new technologies
• launching the creation of an Orphan Product
  policy that encourages and supports the
  development of treatments for unmet medical needs
  
• establishing a directive to ensure government
  processes and policies do not delay or discourage
  introduction and adoption of new biotechnologies
  like vaccines.

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Health Canada Performance is Poor
1,033 day avge
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Improved Biologics Performance Anticipated???
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High Expectations

• Breakthrough disease areas they want cures
• Many are injectables which increase expectations
  on
• Training
• Supply provision
• Ongoing support Call Centers
• Improved administration, tolerability, efficiency
  lifecycle management!

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Standard Expectations for Biotech Drugse.g. The
Clear Support Program

• CSP Get Back to Living Kit
• Overall Objectives
• Assist patient in self-injection
• Ensure proper technique is applied consistently
  for every injection
• Provide helpful tools

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Who Pays and Will They?
Reimbursement
Private 60
Public 40
Conseil du Médicament

• Managed
• 20
• Special authorization
• Annual cap
• Lifetime cap
• Mimic provincial plan

Open 80
New Common Drug Review
Québec Decision
CDR Recommendation 6 months post submission
Provincial Drug Plan Decisions 4-12 months post
CDR recommendation
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Cheaper by the dozen?

• The expenses of servicing niche specialty areas
  are heavy
• Too few therapeutic areas
• Too many therapeutic areas

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Biotechnology Lifecycle
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Too Few

• PROS
• Efficient opex
• Intimacy with market
• Superior offerings vs. pharma

• CONS
• Too vulnerable to a new competitor
• Very difficult to build infrastructure for sales
  ops, CHE, market access, medical services, QA/QC,
  business development etc.

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Too Many

• PROS
• Have resources to build shared services
  infrastructure
• Can leverage best practice across therapeutic
  areas
• Less vulnerable to one TA

• CONS
• Difficult to feed each therapeutic area
• Compete against big pharma and their opex

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Patient and Physician Expectations
Dermatologist Derm RN
PsO sufferer or Caregiver seeking Tx
Raptiva Rx (patient)

• CLEAR SUPPORT Program
• (Raptiva DTP Pt Support Program)

PEP Program Psoriasis education
awareness (DTC Program)
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Education/ Value Added an Expectation
Sponsors of Whitaker-McFarlin MS Colloquium

• Sponsors ofMS Fellows Program
• Each award is a two year fellowship
  (50,000/year)
• Two will be awarded to applicants from across the
  US, one will be awarded to a Harvard applicant

• Accredited by the University of Minnesota /
  Endorsed by CMSC and IOMSN
• Content overview
• Epidemiology, Diagnosis, and Natural History
  (clinical and MRI)
• Disease Modifying Therapies
• Symptom Management
• Whole Patient Management Practical Case Studies

• Sponsors ofJohn Hopkins CME Programs
• Maximizing Long-Term Outcomes in Multiple
  Sclerosis
• Steering Committee Peter Calabrese, MD and Doug
  Kerr, MD (Co-Chairs), Pat Coyle, MD, Doug Goodin,
  MD, Norm Kachuk, MD

• Sponsors of MS Teleconnections
• 200 CME teleconferences
• Accredited by Medical Education Collaborative

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Competing with the Big Boys

• Outsized on
• Salesforce size
• Promotional spend
• Lobbying power
• Legal, sales operations, market research,
  business analysis, competitive intelligence,
  manufacturing capability, GXP expertise, medical
  services, broad CRA teams.
• Bundling power

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It Aint Easy, but Its Worth It

• Advances in genetic engineering will not only
  have
• dramatic implications for people and society,
  they will
• reshape vast sectors of the world economy. The
  boundaries
• between many once-distinct businesses, from
  agribusiness
• and chemicals to health care and pharmaceuticals
  to
• energy and computing will blur, and out of their
• convergence will emerge what promises to be the
  largest
• industry in the world the life sciences
  industry.
• Enriquez Goldberg, HBR March-April 2000

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TM
Thank You Good Luck!
www.biotech.ca