Technology Update: Biotechnology

1
Technology Update Biotechnology

• Brian Farmer
• Bill Burns
• Stephen Chen

2
Agenda

• Introduction and Industry Overview
• Technology Trends
• Business Trends
• Scenario Analysis
• Question and Answer Period

3
Biotechnology Defined
Intro a Tech Trends a Bus. Trends a Scenario

• Use of the cellular and molecular processes to
  solve problems or make products (Biotechnology
  Industry Organization)

4
Market Structure
Intro a Tech Trends a Bus. Trends a Scenario
Bio-Technology
Pharmaceutical
Agricultural
Industrial
Other Biotech
Medical Devices
Chemistry Biochemistry
Genomics
Proteomics

• Therapeutic drugs
• Diagnostic applications
• Gene therapy

• Transgenic crops
• Hormonal or disease treatment
• Bioprocessing

• Bioleaching
• Detection monitoring tools
• Bioremediation

• Service, data equipment providers to biotech
  companies

• Biometric devices
• Pace-makers
• Artificial organs

• Typical companies
• Amgen
• Genentech
• Immunex
• Biogen

• Typical companies
• Mycogen
• Monsanto (now Pharmacia)

• Typical companies
• Medtronic
• Siemens
• GE Medical

• Typical companies
• Celera
• Bausch Lomb

• Typical companies
• DuPont

5
Biotechnology Timeline
Intro a Tech Trends a Bus. Trends a Scenario
1980s genetic engineering- transfer of genetic
information from one organism to another
1997 Dolly the sheep cloned
1953 Watson Crick discover double helix
structure of DNA
Bacteria is used to make foods (yeast and
fermentation)
1994 1st genetically engineered fruit approved by
FDA
1982 1st commercial application- human insulin
for diabetes treatment
2000 Human genetic code essentially deciphered
1856 Mendel begins study of plant genetics
1990 Human Genome Project launched
1973 Researchers develop ability to isolate genes
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Basic Sciences Drive Biotech
Intro a Tech Trends a Bus. Trends a Scenario
Proteomics
Genetics
Complexity
Biochemistry
Physiology
Evolution
Stone Age Based on enhanced visual analysis
Pharm Age Using chemical biological pathways
Gene Age Genomic research treatments
New Age Precise treatments specific proteins

• X-ray machines
• Microscopes

• Spectrometer
• NMR

• Gene splicers
• Gene sequencers

• Biochips
• Protein specific devices/equip

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Technology Trends Convergence
Intro a Tech Trends a Bus. Trends a Scenario

• Convergence with Chemicals Industry
• Convergence with Information Technology
• Convergence with Health Care
• Convergence with Agriculture

8
Chemical Industry Convergence
Intro a Tech Trends a Bus. Trends a Scenario

• Industrial Processing
• Protein and enzyme reactions substitute for
  chemical applications
• Maxygen
• Genencor
• Diversa
• New Material Development
• Using biotech to improve the discovery of new
  materials
• Symyx
• Sunesis

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IT Convergence
Intro a Tech Trends a Bus. Trends a Scenario

• Molecular Modeling
• Supercomputing applications to aid biotech
  research
• IBMs Blue Gene
• Genomics
• Understanding the basis of disease at the
  molecular level
• Incyte Genomics
• Rosetta Inpharmatics
• Gene Logic
• Silicon Genetics
• DoubleTwist
• Affymetrix

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IT Convergence (contd)
Intro a Tech Trends a Bus. Trends a Scenario

• Proteomics
• Understanding the functions of proteins and their
  interrelationships
• Oxford GlycoSciences
• Celera
• Physiomics
• Study of physiology and metabolism at the
  molecular level
• Physiome Sciences
• Entelos

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Health Care Convergence
Intro a Tech Trends a Bus. Trends a Scenario

• Post-Genomic Medicine
• Genetic Basis for Disease
• DNA Sciences
• deCode Genetics
• Framingham Genomics
• DNA Sciences
• Improving the Design of Clinical Trials
• Surromed
• Quintiles
• Mass Customization of Drug Therapies
• Virologic

12
Agriculture Convergence
Intro a Tech Trends a Bus. Trends a Scenario

• Altering the Traits of Plants
• Agraquest
• Exelixis
• Changing Plant Structures
• Mycogen
• Phytera Inc.
• Cyanotech
• Cereon Genomics

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Industry Drivers
Intro a Tech Trends a Bus. Trends a Scenario
Low
Substitutes

• Alternate research sciences available (chemistry)
• However, none promises the speed, effectiveness,
  specificity of genomics

High
Med
Competitive Rivalry
Buyer Power
Supplier Power

• High industry growth rate
• Companies are in niches
• Large number of competitors
• Global competition

• High promise compounds are rare and highly prized
  
• Low price sensitivity
• Buyers dominate distribution and marketing

• Small number of suppliers of niche products
• RD is 75 of revenues
• Few specialists with transferable skills

Med
Med
Barriers to Entry

• High capital requirements
• Industry based solely on proprietary IP
• Long development cycle
• Human Genome is public

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Government Social Factors
Intro a Tech Trends a Bus. Trends a Scenario

• Healthcare policies
• Medicare drug benefit changes (price controls?)
• HMO cost management strategies
• Federal biotechnology regulations
• Mandatory labeling
• Human clinical trials
• Restrictions on genomic RD
• Federal biotechnology incentives
• Research funding (i.e. NIH, universities, etc.)
• Patent reform
• RD tax credits
• Environmental watchdog groups
• Propensity for disease based on genetic profile
• Unintentional DNA jumping across species
• Long-term environmental impact

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Business Trends
Intro a Tech Trends a Bus. Trends a Scenario
Issue
Impact

• Lengthy FDA approval process
• Complex clinical trials

• Faster and more accurate testing equipment
• Complex data processing
• Integrated market approach

Speed to Market

• Fewer homerun products on the market 0.5(1)
• Increasing RD expenses

• Multiple developmental efforts (i.e. full
  pipeline)
• Cost effective technology
• Industry consolidation

Leveraged RD

• Increased overall knowledge of genetic data
• Lower technology costs
• Demand for early detection
• Consumer sensitivity to genetic information

• Downstream analytical capabilities
• Home-monitoring devices

Distributed Analytic Power

• Self-diagnostics
• Drug-to-patient matching
• Genotyping

New Genomic Services
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Scenario Analysis
Intro a Tech Trends a Bus. Trends a Scenario

• Key Industry Drivers
• Speed to Discovery of Proteins
• Level of Government Regulation
• Social Acceptance
• Evolution of Key Technologies

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Scenario Analysis
Intro a Tech Trends a Bus. Trends a Scenario

• Social Acceptance Will Influence Level of
  Government Regulation

Degree of Social Acceptance
High
Low
High
Degree of Government Regulation
Low
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Scenario Analysis
Intro a Tech Trends a Bus. Trends a Scenario

• Level of Government Regulation High/Low
• Degree of Social Acceptance High/Low
• Pace of Technical Evolution High/Low

H L H
H L L
L H H
L H L
L L H
L L L
1
4
7
Early
Timing of Protein Discovery
Late
2
3
5
6
8
9
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Scenario Analysis
Intro a Tech Trends a Bus. Trends a Scenario

• Scenarios Impact
• 1 3 Industry Dies Through Heavy
  Regulation
• 4 Big Win ()
• 5 6 Big Win Delayed
• 7 9 Industry Dies Through Consumer
  Apathy

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Questions?