Making Sense Out of the Genomics Sector

1
Making Sense Out of the Genomics Sector

• Prepared by
• Texas Biotechnology for the
• Houston Technology Center Advisory Board
• April 13, 2000

2
Genomics A Marriage Between Biology and
Computers

• As way of context - Watson and Crick discovered
  the structure of DNA 47 years ago.
• Divining the order of these base chemicals
  requires significant software and hardware power.
• The Human Genome Project has identified the 3
  billion letters (base pairs of nucleolides) that
  make up the human genome.
• Yes, genomics will uncover many therapeutic
  opportunities however, this is a complex market
  in terms of the biology, the technology and the
  patent risk.

3
A Basic Primer Genes, Proteins and Drugs

• Genes reside on chromosomes of DNA.
• Each human chromosome is a single DNA molecule
  100 million bases in length.
• The code for chromosome (22) represents almost
  950 printed pages of various combinations of the
  four base chemicals
• adenosine
• cytosine
• guanine
• thymine

4
A Basic Primer Genes, Proteins and Drugs

• The gene is biologys version of an information
  network using the four-letter alphabet - ACTG.
• Any three DNA letters code for one of 20 amino
  acids that form proteins.
• Proteins interact with other molecules to form
  pathways that occupy cellscells then cluster to
  form organs.
• Simply put, a protein is the molecular equivalent
  of a messenger or worker.

5
Proteins Are the Primary Points of Potential
Therapeutic Intervention

• Long before a patient goes to a doctor, a gene
  misfired and messed up the code of instructions
  and a cell started making abnormal proteins or
  abnormal amounts of proteins.
• These messed up proteins then interact with
  other proteins and can cause disease.
• Examples of protein drugs
• erythropoetin (Epogen) rG-GSF
• Rituxan - IDEC Pharmaceuticals
• Herceptin - Genentech
• Enbrel - Immunex
• over 9 billion in sales

6
The Players

• The genomics industry can be divided into five
  groups
• the tool or equipment companies who focus on gene
  discovery (PE Biosystems, Hyseq, Affymetrix,
  Lark)
• those who use the tools to build data bases and
  sell library subscriptions to other companies
  (Celera, Incyte)
• those who use the tools to perform high
  throughput target screening (Cubist, Aurora
  Biosystems, Lexicon)
• those who use the tools to build data bases as
  well as develop new drugs or gene therapies
  (Human Genome Sciences, Millenium)
• those who are simply bioinformatics companies
  (SBI)

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A Sample Representation of the Genomics Industry
8
Biotech and Big Pharma Investment in Genomics
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The Risks

• Genomics therapy companies are years away from
  product sales and profitability.
• The tool and service companies will make money in
  the short-term - some will profit from royalties,
  also many years out.
• The patent risk is high for this group - as
  recently displayed by President Clinton and Tony
  Blair.
• The push to patent anything and everything
  associated with the discovery process may prove
  expensive.

10
Top Holders of Gene-Related Patents Issued by the
U.S. Patent Office, Year-End 1999
11
Technology Sector is Influencing Biotech
Valuations

• In early 1999, the entire genomic industry had a
  market cap of 5 billion.
• Today Millennium Pharmaceuticals, Celera, Incyte,
  Affymetrix, and Human Genome each have valuations
  close to 5 billion.
• These valuations are probably an overreaction by
  technology investors and may correct over time.
• At the same time, both biotech and big pharma
  companies are major investors in genomics
  companies as these companies will ultimately
  bring gene therapies to market.

12
TBC is Focusing on Computerized Drug Design for
Targets within the Vascular System
Vascular Proliferation
Apoptosis
Angiogenesis
Inflammation
Thrombosis
Vasoconstriction
13
Product Pipeline with Significant Commercial Value
14
Texas Biotechnology Investment Rationale

• NOVASTAN
• approval letter imminent
• strong commercial partner in SmithKline Beecham
• Two novel drug candidates in Phase II clinical
  trials
• Sitaxsentan
• TBC1269
• Deep RD pipeline of small molecule therapeutics
  focused on therapeutic areas with significant
  unmet medical needs

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Making Sense Out of the Genomics Sector

• Prepared by
• Texas Biotechnology for the
• Houston Technology Center Advisory Board
• April 13, 2000