Campbell Alliance 2010 Deal Makers Intentions Survey

The2010DealmakersIntentionsStudyResults
PresentationtoBIOSuper PresentationtoBIOSuperSession
May2010 May 2010
Copyright2010CampbellAllianceGroup,Inc.AllRightsReserved. Copyright2010CampbellAllianceGroup,Inc.AllRightsReserved.
DealmakersIntentionsSurveyfor2010 Introduction Manydealdatabaseresourcesareavailable. Theyareindispensable,butcanonlytelluswhathasalready happened. TheDealmakersIntentionsSurveyisdesignedtobemore forwardlooking. Aseachyearcloses,weaskwhatDealmakersexpectinthenew year. Companiesofallsizesareincludedbutwesegmentthe Companiesofallsizesareincluded responses.
2
DealmakersIntentionsSurveyfor2010 WhyIsDealmakingSoImportantRightNow?
In2008and2009,withlimitedVCfundingandaneardisappearanceofIPOs,the primarymeansofrealizingvalueforbiotechcompanieshasbeenthroughdealmaking.
FundingThroughIPOs
$4,000 Total Funding (M) F $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 Total Funding (M) F $3,500 $3 500 $4,000 $3,500 $3,000 $2,500 $2,000 , $1,500 $1,000 $500 $0
VCFunding
2008
1
Source:BioCentury.January4,2010
2009
2
Source:InVivo.February2010
2008 1
2009 2
DealmakersIntentionsSurveyfor2010 WhyShouldWeFocusontheLargestCompanies?
Companieswithrevenuegreaterthan$1billioncontributeapproximately70%of meaningfullicensingandacquisitiondeals. BigPharmaShareofLicensingDeals1
80% 70% Sh hareofDeals 50% 40% 30% 20% 10% 0% ShareofDeals
1 2
BigPharmaShareofAcquisitions2
80% 70% 60% 50% 40% 30% 20% 10% 0%
60%
2008
2009
2008
2009
Sources:WindhoverStrategicTransactionsDatabasefor identificationofdeals;CampbellAllianceanalysis
Sources:WindhoverStrategicTransactionsDatabasefor identificationofdeals;CampbellAllianceanalysis
1Shareofthepharmaceuticalandbiotechlicensingdealswithanupfrontpaymentgreaterthan$15Mwheretheinlicensorwasa
companywithrevenuegreaterthan$1B(62dealsin2008and59dealsin2009) p y g $ ( )
2Shareofthepharmaceuticalandbiotechacquisitionswithvaluegreaterthan$100Mwheretheinlicensorwasacompanywith
revenuegreaterthan$1B(28dealsin2008and31dealsin2009)
DealmakersIntentionsSurveyfor2010 CharacteristicsofRespondents
Wereceivedresponsesfromseniordecisionmakersrepresentingavarietyofcompany types. Respondent Titl R d t Titles (n=156) n=156)
Other1%
Company T C Types (n=156 n=156)

Other1%
Director/ Sr.Director 31%
SVPandAbove SVP and Above 42%
Commercial Development withRev>$1B Focused F d % 26% 45% Commercial withRev<$1B i hR $1B 28%
VP 26%
Source:CampbellAllianceDealmakersIntentionsSurvey2010
DealmakersIntentionsSurveyfor2010 RespondentRoleinDeals
Wereceivedresponsesfrombothin andoutlicensorswhohadbeenactivedeal Wereceivedresponsesfrombothin andout makersin2009. makersin2009. RespondentRoleinLicensing R d t R l i Li i (n=156)
Exclusively OutOut-License 10% Exclusively InIn-License 8%
NumberofDealsCompletedin2009 N b fD l C l t d i 2009 UpFront>$5M(AllRespondents*)

CompletedOneDeal CompletedTwoDeals 21 10 4 3 7
Mostly M tl Out-License 28%
Mostly In-License 28%
CompletedThreeDeals CompletedFourDeals CompletedFiveorMoreDeals
Equally In- and OutLicense 26%

*Thesumofdealscompletedbyallrespondentswas106;when onlyin licensorswereincluded,thesumwas84. only inlicensors were included, the sum was 84. Source:CampbellAllianceDealmakersIntentionsSurvey2010
DealmakersIntentionsSurveyfor2010 GeneralExpectationsforDealActivity
Overall,therespondentswithcommercialoperationsexpectlevelsofPhaseIII dealmakingtoremainsteady. ExpectationsforPhaseIIIDeals
60% ShareofR Respondents 50% 40% 30% 20% 10% 0% Decreaseover Remainthe Increaseover lastyear same lastyear
n=54InLicensors,52OutLicensors Source:CampbellAllianceDealmakersIntentionsSurvey2010
In InLicensors Out OutLicensors
DealmakersIntentionsSurveyfor2010 GeneralExpectationsforDealActivity
TheserespondentswereevenmoreoptimisticaboutPhaseIIdealmakingactivity. E ExpectationsforPhaseIIDeals t ti f Ph II D l
60% ShareofR Respondents 50% 40% 30% 20% 10% 0% Decreaseover Remainthe Increaseover lastyear same lastyear
n=54InLicensors,52OutLicensors Source:CampbellAllianceDealmakersIntentionsSurvey2010
ExpectationsforPhaseIIIDeals
60% ShareofR Respondents 50% 40% 30% 20% 10% 0% In InLicensors Out OutLicensors
In InLicensors Out OutLicensors
Decreaseover Remainthe Increaseover lastyear same lastyear

n=54InLicensors,52OutLicensors
ExpectationsandIntentions IntentionsbyTherapeuticArea
Dealmakingintentionsareconcentratedinafewtherapeuticareas. DealmakersIntentions
(ShareofrespondentsratingtheirlikelihoodtocompleteaPhaseIIorIII (ShareofrespondentsratingtheirlikelihoodtocompleteaPhaseIIorIII (Share of respondents rating their likelihood to complete a Phase II or III dealinthetherapeuticareaasa5orgreateronascaleof7) WomensHealth(3%) Dermatology(3%) Metabolics(4%) ( ) Oncology(24%) Antibiotics(4%) Antivirals(4%) Cardiovascular(4%) Cardiovascular (4%) Vaccines(6%) CNS(excludingpain)(15%) Respiratory(6%) Gastrointestinal(6%) Immunology(12%) Immunology (12%) Pain(9%)
Source:CampbellAllianceDealmakersIntentionsSurvey2010.N=66(onlyincludingrespondentswhoworkforcompanieswithcommercialoperations[i.e., revenueabove$0]andwhodescribedtheirroleasexclusivelyinlicensing,mostlyinlicensing,orequallyin andout licensing)

ExpectationsandIntentions ExpectationsforDealValues
Dealmakersexpectdealvaluestogoupintheareasofexpressedinterest. DealmakersIntentions
(Shareofrespondentsanticipatingatleasta10%increaseinupfrontpayments (Share of respondents anticipating at least a 10% increase in up front payments forPhaseIIdealsintheselectedtherapeuticareas)
Oncology CNS(excludingPain) ( g ) Pain Antivirals Vaccines Metabolics Women'sHealth Respiratory Dermatology Immunology Antibiotics Cardiovascular Gastrointestinal
Valuerepresentstheshareofrespondentswho identifiedthemselvesashavingaroleof identified themselves as having a role of mostlyorexclusivelyinlicensingand choosingeitherincreaseby10%20%or increasebymorethan20%whenaskedfor expectationsonupfrontpaymentsforPhaseII assetsintheidentifiedtherapeuticarea.
0%
5%
10%
15%
20%
25%
30%
35%
40%
n=~35(variedbytherapeuticarea)individualswhodescribedtheirroleasmostlyorexclusivelyinlicensing Source:CampbellAllianceDealmakersIntentionsSurvey2010
10 10
ExpectationsandIntentions ProductAvailability
Supplyisalsohighintheareasofexpressedinterest...
ComparisonofAreasWhere10TopCompaniesExpressLicensingInterestandEst.#ofProductsAvailable TherapeuticArea
Oncology CNS(Excluding CNS (Excluding Pain) Immunology Pain Vaccines Respiratory Gastrointestinal Metabolics Antibiotics Antivirals Cardiovascular Dermatology WomensHealth W H lh
NumberofCompaniesExpressing LicensingInterest
10 9 9 7 3 7 2 10 3 7 9 1 1
EstimatedNumberofPhaseIIand III ProductsAvailableforLicensing

~500 ~200 200 ~235 ~75 ~85 ~110 ~90 ~30 ~70 ~110 ~50 ~30 ~85 85
CompaniesIncluded: Johnson&Johnson,Pfizer,Bayer,GSK,Novartis,sanofiaventis,Roche,AstraZeneca,Merck,Abbott,BMS,andEliLilly Note: Therapeuticareaincludedifcompanyexpressedlicensinginterestinanydiseasestatewithinthetherapeuticarea Sources: Companywebsitesandpartneringbrochures

11 11
ExpectationsandIntentions LicensingInventory
...makingtheinventoryofavailableassetsgreatestinsomeoftheareasofhighest demand. HypotheticalLicensingInventory* Hypothetical Licensing Inventory* Inventory
25 20 15
Years
10 5 0
Sources:CampbellAllianceDealmakersIntentionsSurvey2010;Adis; Pharmaprojects; WindhoverTransactionTracker;CampbellAnalysis
*TheinventorymeasurerepresentstheratioofpotentiallyavailablePhaseIIandPhaseIIIassets *Th i h i f i ll il bl Ph II d Ph III dividedbythenumberofdealscompletedin2009thathadanupfrontvalueofmorethan$10M.

12 12
ExpectationsandIntentions DealTiming
SowelookedatwhenourDealmakersthoughtadealshouldbedone. WhenInLicensorsSayOutLicensorsShouldDotheDeal WhenInLicensorsSayOut
80% 70% 60% 50% 30% 20% 10% 0%
Shareof 40% Respondents
BeforeEndofPhaseII
ImmediatelyFollowingPhaseII 13 13
FollowingPhaseIII
n=42to69dependingontherapeuticarea;onlyincludedrespondentswhoindicatedtheirroleisexclusivelyormostlyinlicensingorequallyin andoutlicensing.
ExpectationsandIntentions DealTiming
Inthreeareas,wefoundacomparativelyhighshareofinlicensorswhoseean Inthreeareas,wefoundacomparativelyhighshareofin opportunitytolicensepriortothecompletionofPhaseII. WhenInLicensorsSayOutLicensorsShouldDotheDeal WhenInLicensorsSayOut
80% 70% 60% 50% 30% 20% 10% 0%
Shareof 40% Respondents
BeforeEndofPhaseII
ImmediatelyFollowingPhaseII 14 14
FollowingPhaseIII
n=42to69dependingontherapeuticarea;onlyincludedrespondentswhoindicatedtheirroleisexclusivelyormostlyinlicensingorequallyin andoutlicensing.
ExpectationsandIntentions HotAreas
Thesebiasesseparatewhatistrulyhotfromwhatissimplyintheneighborhood.
PhaseIII Phase III Completed ThroughFiled 1
TherapeuticArea Oncology Infectious Disease
Phase IThrough PhaseIIInitiated 8 4
PhaseII Completed 6 1
Marketed 1
ShareCompleted onPhase IIData 37% 20%
CNS (excludingpain) Gastrointestinal Cardiovascular Respiratory
1 1 2 1
3 2 2
56% 66%
1 1
50% 50%
AllOthers
22%
Total
24
18
10
30%
Sources:WindhoverStrategicTransactionsDatabaseforidentificationofdeals;CampbellAllianceanalysis
15 15
ExpectationsandIntentions HotAreas
Theup Theupfrontpaymentsforoncologytherapiesinnewbutincreasinglywellcharacterized mechanismsrevealthevalueofproductsinhotareas.
OutLicensor Merrimack Trubion Plexxikon Ambit SeattleGenetics Exelixis Ardea
InLicensor Sanofiaventis Facet Roche Astellas Millennium Sanofiaventis Bayer
UpFrontPayment $60M $30M $60M $40M $60M $140M* $35M
*Coveredtwoproducts Source:WindhoverStrategicTransactionsDatabaseforidentificationofdeals
16 16
ExpectationsandIntentions WhatDoesProofofConceptMeanNow?
In InLicensorshavedifferentproofneedsfordifferenttypesofproducts.
TodaysProofDemands
Category 1
SpecialistProduct New (well New(well characterized) mechanism
Description
ProofDemand
TraditionalPhase II ClinicalPOC AC220(Ambit Biosciences) MM121 MM121 (Merrimack)

17 17
Examples from 2009Dealmaking 2009 Dealmaking
TodaysProofDemands
Category 1
2
SpecialistProduct Established Established Mechanism NewActive Product
Description
ProofDemand
PotentialtoEnter MarketEarlyin Sequence Amplixa (Targacept) Linaclotide Linaclotide (Ironwood)

18 18
TodaysProofDemands
Category 1
2
3
SpecialistProduct Established Established Mechanism LateEntrantor EstablishedActive Product Clinical Differentiationand Potentialfor Reimbursement Iloperidone (Vanda) DM1796 DM1796 (Depomed)
Description
ProofDemand
PotentialtoEnter MarketEarlyin Sequence S Amplixa (Targacept) Linaclotide Linaclotide (Ironwood)

19 19
TodaysProofDemands
Category 1
2
3
SpecialistProduct Established Established Mechanism LateEntrantor EstablishedActive Product Clinical Differentiationand Potentialfor Reimbursement Iloperidone (Vanda) DM1796 DM1796 (Depomed)
4
AnyProductin PrimaryCare y
Description
ProofDemand
PotentialtoEnter MarketEarlyin Sequence S Amplixa (Targacept) Linaclotide Linaclotide (Ironwood)

20 20
Differentiationand Potentialfor Reimbursement R i b t Intermezzo (Transcept) Voltaren Gel Gel (Novartis)
BusinessModelImplications TheBiotechBusinessModelMap
Theseproofdemandsareforcingnewbehaviorsbybiotechleaders. FirstProductTechnologyModels gy
Concept Refiner FirstApplication Developer PostPOCDeveloper (IndependentModel) PostPOCDeveloper (PatronModel) (Patron Developer PostPOCDeveloper Post POC Model) (PolypartnerModel)
FirstTACommercialModels
FirstRegion Commercializer FirstRegion (FIPCOModel) Commercializer FirstRegion (OutsourceModel) (Outsource Model) Commercializer (Co (CoProModel) FirstRegion Commercializer (MultiTA,FIPCO Model) Multi MultiRegion Commercializer Multi MultiRegion (FIPCOModel) Commercializer Multi MultiRegion ( Commercializer) (OutsourceModel) (Co (CoProModel) MultiRegion Commercializer (MultiTA,FIPCO Model)
LicensetoProveand Improve
PipelineBuilder p (ExpansionModel) PipelineBuilder (AcquisitionModel)
MultiTACommercialModels
PostPOC OC Commercializer (FocusedTA,Single PostPOC RegionModel) Commercializer (MultiTA,SingleRegion (MultiTA,Single Model) PostPOC P t POC Commercializer (FocusedTA,Multi (FocusedTA,Multi PostPOC RegionModel) Commercializer (MultiTA,MultiRegion (MultiTA,Multi Model)
Technology and Pipeline xpansion Models TechnologyandPipelineExpansionModels
*FIPCOFullyintegratedpharmaceuticalcompany *FIPCO Fully integrated pharmaceutical company
CommercialOnlyModels
21 21
BusinessModelImplications ExpectationsofTriedandTrueBusinessModelPathways
Somecompanieshadaplantopursuethetriedandtruepathwayofdevelopinga firstproductthroughPhaseIIproofofconcept... BiotechnologyBusinessModelPathways
Concept Refiner
FirstApplication Developer
22 22
...findingapartner...
BiotechnologyBusinessModelPathways
Concept Refiner
PostPOCDeveloper (PatronModel)
23 23
...andreturningtotheircorecapabilitytobuildoutadditionalproductsinapipeline.
Concept Refiner
PipelineBuilder p (ExpansionModel)
24 24
BusinessModelImplications NewBusinessModelPathwaysforSomeCategories
Instead,somefirmsparticularlythoseinCategory3arefindingthattheymust Instead,somefirmsparticularlythoseinCategory3 adoptanindependentpostPOCdevelopmentmodel. adoptanindependentpost BiotechnologyBusinessModelPathways
Concept Refiner
PostPOCDeveloper (IndependentModel)
25 25
BusinessModelImplications NewBusinessModelPathwaysforSomeCategories
Afewareevenfindingthattheyneedtoprepareforindependentcommercialization.
Concept Refiner
PostPOCDeveloper (IndependentModel)
FirstRegion Commercializer (FIPCOModel)
26 26
LicensingOperations ThePipelineChallengeforInLicensors ThePipelineChallengeforIn

In InLicensorshavetheirownchallenges.Primaryamongtheseiskeepingafullpipeline ofopportunities. AttritionintheLicensingPipeline Attrition in the Licensing Pipeline
NumberofOpportunitiesReviewed (variesbycompanysize) ( i b i ) NumberofProgramsMovingtoCDA (variesbycompanysize) ShareofProgramsMovingfromCDA toBindingTerms ShareofBindingTermsGoingto ClosedTransactions Cl d T ti ClosedTransaction
OpportunitiesReviewed pp TenProgramsMovetoCDA 21%
49% One Closed Deal
Source:CampbellAllianceDealmakersIntentionsSurvey2010.Onlyincludesresponsesfromindividualswithinlicensingresponsibilitieswithincompanies withcommercialoperations.
27 27

AlargeshareoftheburdenforfillingthetopofthefunnelfallsonBusiness Developmentleaders. InLicensorsFirstContactforOpportunities (N=36) Board 1% Other Marketing 4% 4% R&D 10% Business Development 62%
Executive E ti Leadership
19%
28 28

Opportunitiesmustbeidentifiedfromavarietyofsourcesbutindustrypartnering Opportunitiesmustbeidentifiedfromavarietyofsources meetingshavetakenaleadingrole. InLicensorsSourceforOpportunities (N=31) Other ScientificLiterature 8% ScientificMeetings 11% 19% 26% UnsolicitedReceipt ofNon Confidential Materials of NonConfidentialMaterials ofNon
11% 26%
PartneringMeeting (proactive)
PartneringMeeting ( (reactive) )
29 29

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The2010DealmakersIntentionsStudyResults

Company T C Types (n=156 n=156)

Director/ Sr.Director 31%

SVPandAbove SVP and Above 42%

NumberofDealsCompletedin2009 N b fD l C l t d i 2009 UpFront>$5M(AllRespondents*)

Mostly M tl Out-License 28%

Mostly In-License 28%

CompletedThreeDeals CompletedFourDeals CompletedFiveorMoreDeals

Equally In- and OutLicense 26%

In InLicensors Out OutLicensors

In InLicensors Out OutLicensors

Decreaseover Remainthe Increaseover lastyear same lastyear

Source:CampbellAllianceDealmakersIntentionsSurvey2010.N=66(onlyincludingrespondentswhoworkforcompanieswithcommercialoperations[i.e., revenueabove$0]andwhodescribedtheirroleasexclusivelyinlicensing,mostlyinlicensing,orequallyin andout licensing)

EstimatedNumberofPhaseIIand III ProductsAvailableforLicensing

CompaniesIncluded: Johnson&Johnson,Pfizer,Bayer,GSK,Novartis,sanofiaventis,Roche,AstraZeneca,Merck,Abbott,BMS,andEliLilly Note: Therapeuticareaincludedifcompanyexpressedlicensinginterestinanydiseasestatewithinthetherapeuticarea Sources: Companywebsitesandpartneringbrochures

Sources:CampbellAllianceDealmakersIntentionsSurvey2010;Adis; Pharmaprojects; WindhoverTransactionTracker;CampbellAnalysis

*TheinventorymeasurerepresentstheratioofpotentiallyavailablePhaseIIandPhaseIIIassets *Th i h i f i ll il bl Ph II d Ph III dividedbythenumberofdealscompletedin2009thathadanupfrontvalueofmorethan$10M.

Shareof 40% Respondents

Shareof 40% Respondents

TherapeuticArea Oncology Infectious Disease

Phase IThrough PhaseIIInitiated 8 4

ShareCompleted onPhase IIData 37% 20%

CNS (excludingpain) Gastrointestinal Cardiovascular Respiratory

OutLicensor Merrimack Trubion Plexxikon Ambit SeattleGenetics Exelixis Ardea

InLicensor Sanofiaventis Facet Roche Astellas Millennium Sanofiaventis Bayer

UpFrontPayment $60M $30M $60M $40M $60M $140M* $35M

TraditionalPhase II ClinicalPOC AC220(Ambit Biosciences) MM121 MM121 (Merrimack)

Examples from 2009Dealmaking 2009 Dealmaking

TraditionalPhase II ClinicalPOC AC220(Ambit Biosciences) MM121 MM121 (Merrimack)

PotentialtoEnter MarketEarlyin Sequence Amplixa (Targacept) Linaclotide Linaclotide (Ironwood)

Examples from 2009Dealmaking 2009 Dealmaking

TraditionalPhase II ClinicalPOC AC220(Ambit Biosciences) MM121 MM121 (Merrimack)

PotentialtoEnter MarketEarlyin Sequence S Amplixa (Targacept) Linaclotide Linaclotide (Ironwood)

Examples from 2009Dealmaking 2009 Dealmaking

TraditionalPhase II ClinicalPOC AC220(Ambit Biosciences) MM121 MM121 (Merrimack)

PotentialtoEnter MarketEarlyin Sequence S Amplixa (Targacept) Linaclotide Linaclotide (Ironwood)

Differentiationand Potentialfor Reimbursement R i b t Intermezzo (Transcept) Voltaren Gel Gel (Novartis)

Examples from 2009Dealmaking 2009 Dealmaking

PipelineBuilder p (ExpansionModel) PipelineBuilder (AcquisitionModel)

Technology and Pipeline xpansion Models TechnologyandPipelineExpansionModels

*FIPCOFullyintegratedpharmaceuticalcompany *FIPCO Fully integrated pharmaceutical company

FirstRegion Commercializer (FIPCOModel)

LicensingOperations ThePipelineChallengeforInLicensors ThePipelineChallengeforIn

OpportunitiesReviewed pp TenProgramsMovetoCDA 21%

49% One Closed Deal

LicensingOperations ThePipelineChallengeforInLicensors ThePipelineChallengeforIn

LicensingOperations ThePipelineChallengeforInLicensors ThePipelineChallengeforIn

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TheinventorymeasurerepresentstheratioofpotentiallyavailablePhaseIIandPhaseIIIassets Th i h i f i ll il bl Ph II d Ph III dividedbythenumberofdealscompletedin2009thathadanupfrontvalueofmorethan$10M.

FIPCOFullyintegratedpharmaceuticalcompany FIPCO Fully integrated pharmaceutical company