Chip Linnemann Goldman, Sachs

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• Chip LinnemannGoldman, Sachs Co.April 16,
  2002

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Choosing a Liquidity Strategy
Shareholder Consideration
Liquidity Upside Execution Timing Potential Risk
Long-Term High High Short-Term Low/None Low/None

• Public market ingredients
• Capital markets and new issue environment

IPO
MA

• Attractiveness to strategic buyers
• Number of potential strategic buyers

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MA Transaction
BUYER
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Global MA Trends
3,419
3,277
2,488
1,691
1,630
31
240
26
31
19
22
35

• Source Thomson Financial Securities Data
• Year-to-date as of March 31.

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Global MA Trends
Number in Sample 356 365 515 453 244 36

1. Premium is relative to target share price four
   weeks prior to announcement for deals with U.S.
   targets valued over 100 million.

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Healthcare MA Trends
Numberof Deals 1,603 1,506 1,372 1,314 1,202 267
Source Securities Data Corp.
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Biotechnology MA Transactions(a)
32.2
12.037
2.427
2.321
10.7
20.263
9.1
8.479
1.4
6.773
1.7
1.3
0.1
Source Securities Data Corp., where information
is available. (a) Includes transactions over 100
million.
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Successful Liquidity Strategies

• A successful public markets liquidity strategy is
  measured over time and not by the success of
  the IPO
• Significant addressable market opportunity
• Credible business plan
• Competitive advantage
• Quality management team
• Technology validation and strategic partners
• Strong patent and intellectual property position
• Achievable forecasts and milestones
• Adequate cash (post IPO) to execute business plan

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U.S. IPO Market Environment
New Issue Activity is Relatively Fragile
154
164
126
128
108
100
97
76
81
71
30
9
64
57
45
52
21
37
(a)
New Issuance by Sector is Shifting to Meet
Changing Investor Appetite
6
7
7
7
12
11
12
18
13
23
17
27
21
35
26
34
27
19
8
49
29
11
56
25
13
28
26
8
14
12
1997 1998 1999 2000 2001 YTD 2002(a)
(a) Year-to-date as of March 31.
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U.S. IPO Market Environment
Healthcare IPO Market by Sector
6,848
1
4
5
23
4,453
3,988
1
22
46
2,995
6
2,752
7
9
6
68
9
28
96
22
4
1,059
17
5
64
7
4
29
24
5
16
15
26
16
16
(a)
(a) Year-to-date as of March 31.
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U.S. Biotech New Issue Market
20,858104 Deals
in Millions
6,208 24 Deals
2,633 22 Deals
1,6914 Deals
Backlog (a) 936 8 Deals
36811 Deals
(a) Backlog as of March 31.
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Recent Biotech IPO Performance Summary
Median Valuations of Biotechnology Companies
(Grouped by Date of IPO)
486
453
443
339
321
291
231
219
196
191
187
152
Source Equidesk. Post-money valuation data
based on shares outstanding at first quarterly
filing. Current equity market capitalization as
of January 25, 2002.
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Biggest Mistakes

• Focus on IPO Value
• Execute prematurely

• Explore in series vs. in parallel
• Wait too long before engaging an advisor
• Not fully prepared before initiating discussion