How to improve our chances of success In the Biotechnology Industry

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How to improve our chances of success ?In the
Biotechnology Industry

• Presented by YC Lee, Ph.D.
• PharmEng Innovations
• April 22, 2008
• The Biotechnology Initiatives C-level Forum

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Outlines

• Canadian biotech industry
• Current challenges for investors
• Current challenges for biotech companies
• Improve our chance of success
• Conclusions

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YC Lee personal profile

• Personal profile
• Senior Director, PharmEng Innovations, Canada
• Chief Operating Officer, PharmLink, Canada
• Director, Pharmaceutical Development Services,
  Patheon, Canada
• Manager, Analytical Development, Eli Lilly Co.
• Experience
• Pharmaceutical Development for Active
  Pharmaceutical Ingredients and Finished
  Pharmaceutical Products
• Worked on more than 100 New Chemical Entities
• FDA, Health Canada, European Union, Global
  Submissions

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Major Canadian Biotechnology Discoveries
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Biotechnology Industry

• Canada has a substantial pool of biotechnology
  companies-there are about 500
• Second largest in the world after the United
  States
• Poor commercialization low revenue
• Need strategic direction
• (Ref Biotechnology in Canada, The conference
  board of Canada, December 2005)
• Costs more than 802 million (US) to bring a new
  drug to market - New Chemical Entity
• (Ref Patented Medicine Prices Review Board.
  PMPRB annual report 2004. Ottawa, Ont Government
  of Canada 2004)
• Promotion cost 30,000 in promotion costs per
  physician in Canada.
• (Ref Are drugs too expensive in Canada? , Joel
  Lexchin, The College of Family Physicians of
  Canada, 2006)

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Biotechnology Industry

• Clinical Research Timeline
• Preclinical 2 to 5 years
• Phase 1 1 to 2 years
• Phase 2 2 to 3 years
• Phase 3 2 to 5 years
• Regulatory Approval more than 1 year
• (Ref Bain drug economics model, Bain Co. Inc.,
  2003)

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Current Challenges
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Current challenges for biotech investors

• High risk and diminished return on investment
  (ROI)
• Limited selection and due diligence process
  (i.e., review of dossiers) by internal expert
  team at investment companies
• Limited portfolio of candidate drugs in most
  biotech companies must invest in multiple
  companies to ensure success
• Disconnected investment
• Lack of continuity between investment and
  pharmaceutical development
• Escalating drug development expense
• Failure to recognize failed investments early
  (i.e., failed drugs) with result of loss of other
  investment opportunities
• Biotech companies are reluctant to give up on
  their candidate molecules

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Current challenges for Biotech companies

• Distracted by numerous pressing needs
• Constant need for raising capital
• Limited drug development expertise
• Skyrocketing cost of drug development program
• Drug development team has no significant vested
  interest in early success (or failure) of product
• Lack of promising New Chemical Entities (NCE) to
  establish a solid RD portfolio.

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Improve our chance of success
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Focus, focus, focus

• Therapeutic area
• Eli Lilly - fluoxetine, olanzapine, duloxetine
• Technology platform
• Genentech biologics
• RD programs
• Decision making
• Early termination of failing projects
• Expertise

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We cant do it all by ourselves!
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Pharmaceutical Product Development
Toxicology
Analytical
Chemistry
Formulation
Regulatory Affairs
ADME/PK
Intellectual Property
Manufacturing
Efficacy Model (in-vivo, in-vitro)
Clinical
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Pharmaceutical Product Development
Toxicology
Analytical
Formulation
Chemistry
ADME/PK
Regulatory Affairs
Intellectual Property
Manufacturing
Efficacy Model (in-vivo, in-vitro)
Clinical
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Pharmaceutical Product Development
Toxicology
Analytical
Formulation
Chemistry
ADME/PK
Regulatory Affairs
Intellectual Property
Manufacturing
Efficacy Model (in-vivo, in-vitro)
Clinical
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Pharmaceutical Product Development
Toxicology
Analytical
Formulation
Chemistry
ADME/PK
Regulatory Affairs
Intellectual Property
Manufacturing
Efficacy Model (in-vivo, in-vitro)
Clinical
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Pharmaceutical Product Development
Toxicology
Analytical
Formulation
Chemistry
ADME/PK
Regulatory Affairs
Intellectual Property
Manufacturing
Efficacy Model (in-vivo, in-vitro)
Clinical
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Pharmaceutical Product Development
Analytical
Toxicology
Formulation
Chemistry
ADME/PK
Regulatory Affairs
Intellectual Property
Manufacturing
Efficacy Model (in-vivo, in-vitro)
Clinical
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Pharmaceutical Product Development
Toxicology
Analytical
Formulation
Chemistry
ADME/PK
Regulatory Affairs
Intellectual Property
Manufacturing
Efficacy Model (in-vivo, in-vitro)
Clinical
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Pharmaceutical Product Development
Toxicology
Analytical
Formulation
Chemistry
ADME/PK
Regulatory Affairs
Intellectual Property
Manufacturing
Efficacy Model (in-vivo, in-vitro)
Clinical
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Pharmaceutical Product Development
Toxicology
Analytical
Formulation
Chemistry
ADME/PK
Regulatory Affairs
Intellectual Property
Manufacturing
Efficacy Model (in-vivo, in-vitro)
Clinical
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(No Transcript)
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Approval
Reference Unlocking the value of pharmaceutical
products, Richard Skyes, Capgemini, 2004
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Partnership

• Manage risk and return
• Outsource non-core technologies
• Manufacturing
• IT
• Joint development
• Complimentary skills and experience
• Leverage external expertise
• Cost effectiveness (e.g., conduct part of the RD
  in other countries)

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Emerging Economies

• Clinical development capabilities
• Trained and skilled personnel
• Improved standards for manufacturing
• Number of service providers
• Experience on global RD projects
• Domestic market

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Source FastTrack Systems Global Cost Databases,
2006

• Clinical trial cost in developing countries

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Provide medical solutions

• Not focus on the provision of specific drug
• Provide niche medical solution
• Combine medical treatment and diagnostic
• For example supplementary treatment for cancer
  patient
• ..Scientific discovery and innovation mean
  little unless the benefits are perceived by the
  wider public to address societys areas of
  greatest need..
• (Ref Biotech, The Globe and Mail, September
  29, 2006)

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Manage Investor Relationship

• Investments in RD are typically too high to be
  recouped domestically
• Specific target markets (e.g., health care
  patients with unique ailments) can be very small
• Canadas revenue growth in biotechnology is
  coming primarily from sales to the domestic
  market
• (Ref Biotechnology in Canada, The Conference
  Board of Canada, December 2005)

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Manage Investor Relationship

• From 2001 to 2004, the percentage of firms
  identifying access to capital as a key issue
• Investor confidence in the Canadian biotechnology
  sector is lower than ideal
• 38 per cent of publicly traded biotechnology
  companies in Canada have less than one year of
  cash available
• Investors are now content with a smaller return
  but insist on much shorter time frame five years
  is now the norm
• May harm the biotechnology industry by focusing
  on short-term, unrealistic, therapeutic
  goals-goals that are likely not going to be met,
  thus eroding investor confidence
• (Ref Organization for Economic Co-operation and
  Development (OECD), Science, Technology and
  Industry Outlook, 2004)

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Focus on what we do well
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Canadas Biotechnology Performance
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Canadas Biotechnology Performance

• Canada is performing relatively well in the
  creation of knowledge
• Canada is demonstrating weak performance as it
  relates to the creation of value from
  biotechnology
• Use implement new technologies
• Value social or economic value generated from
  transformed knowledge (e.g., revenue, profit,
  reduced health care cost)

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Canadas Biotechnology Performance
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Why cant we generate value from biotech?

• Small domestic market
• Lack of capital
• Shortage of skilled labor
• Inefficient technology transfer process
• develop biotech-specific commercialization policy
  in Canada
• easier and more common for professors to move in
  and out of the university setting
• No biotech focused strategy
• Government focuses on short-term impact, but it
  is long-term impact that is more important..
• (Ref CAHS Forum Summary The Return on
  Investments in Health Research Defining the Best
  Metrics, Canadian Academy of Health Sciences,
  September 18, 2007)
• UK clinical trial (strategic interest)
• US NIH funding for bio-weapon countermeasure
  (national importance)

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Critical Mass

• Pipeline portfolio management
• About 20 for those that successfully pass the
  phase I trials, 30 for those that pass phase II,
  and 67 for phase III
• The FDA approves just over 80 of all NDA of NCE
  that are submitted
• Need 13 new chemical entities (NCE) for
  pre-clinical development for ONE to reach the
  market (overall 8 success rate)
• (Ref Data are published periodically in summary
  form by the Tufts University Center for the Study
  of Drug Development (www.tufts.edu))
• Capital Investment

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Critical Mass - continue

• Expertise
• Discovery
• Preclinical
• Development
• Commercialization
• Leverage external expertise (e.g., virtual
  organization)

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Conclusions
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A Winning Formula
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Thank youemailyc.l_at_pharmeng.comyc.lee_at_sympati
co.caphone416-805-8573