The Business of Biotech Industry in 2006

The Business of Biotech
October 16, 2006

Lynne Zydowsky
Zydowsky Consultants

Agenda
• Overview of the Biotechnology Market
– Industry overview and critical issues
– Current and future markets/disease indications
– Economics and risks of drug development
– Future drivers of the Industry
• Viable Business Models and Strategies
– Business models and value creation
– Developing a commercial plan and effective strategy
– Financing the entity: venture capital, partnerships, M&A
• New Opportunities
• Case Study
– Academic scientist to successful entrepreneur - Ramon Felciano,
Founder and CTO of Ingenuity Systems
• Discussion

Overview of the Biotechnology Market

-Industry overview and critical issues

-Current and future markets/disease indications

-Economics and risks of drug development

-Future drivers of the Industry

Biotechnology Industry: Year 2006
• The Biotech Industry started in San Francisco (Genentech
‘76) and Boston (Biogen ‘78). Today these areas still have
the largest biotech clusters.
• To be perceived as credible today companies must have
products in the clinic and corporate partnerships.
• Investors are far more risk adverse and would rather pay
more for a later stage of development.
• Continued high hurdles in raising capital with a greater
emphasis on speed to POC and market.
• Emergence of new financing paradigms (M&A, hedge
funds, private equity, reverse mergers…).
• Continued issues with regulatory approval for new drugs.

Biotechnology: Science-based Business
• One of the biggest challenges still remains the melding of
scientific entrepreneurship with “commercial reality” and
making science a profitable business.

• The Genentech Model for Monetizing IP:
– Transfer of university technology to the private sector for
company creation.
– Venture capital and public equity markets funding
critical stages while rewarding those who take risks.
– Creation of a market for know-how (scientists provide IP
and intellectual capital) to established enterprises in
exchange for funding.

30 Years of Genentech
• 1976 founded based on recombinant DNA technology
developed by Herb Boyer with VC Bob Swanson.
• 1978 established partnership with Eli Lilly:
– In exchange for marketing/manufacturing rights, Lilly
funded R&D for recombinant insulin and paid royalties
to Genentech.
– Marked Pharma’s first outsource of a proprietary
program to a for-profit entity.
• 1980 IPO raised $35M and allowed for vertical integration.
• 1982 Insulin, 1st rDNA drug on the market.
• 1985 Protropin,1st rDNA drug marketed by a biotech.
• 1990 $2.1B merger with Roche (56% ownership).

Biotech’s Booms and Busts

Burrill & Company, Life Sciences: A Changing Prescription

Generations of Drug Discovery


Genomic Revolution
• 1988 Congress funds Human Genome Project
• 2000 first human genome sequence published
• Movement towards development of Dx for identification
and molecular pathologies of disease

• Greatest future impact of genomics may be cases
where this knowledge will enable us to:
– more selectively choose therapies
– understand disease at a molecular level
– select patients for clinical trials increasing the efficiency
of drug development

Personalized Medicine

Systems Biology Revolution
• Computational methods and capabilities allow for a better
understanding/prediction of complex biological systems
• Development of molecular, cellular, tissue, organ, and
whole-body systems-level model will allow for a better
understanding of disease mechanisms and create the
ability to test putative therapeutic targets

Integration of “omics” information systems biology, the
basis for the body to be viewed as a whole working system

Disease Indications
• Current market focus on:
– Cancer, CV, anti-inflammation, CNS

• Future markets indications with emphasis on:
– Memory and Alzheimer's
– Anti-aging
– Obesity and obesity related diseases (diabetes, heart disease,
hypertension, stroke…)
– Anti-infectives and pandemic disease
– Wellness or preventive medicine

• Niche markets
– Genetic disorders and life threatening diseases (priority review)
– Targeted therapies

Top 20 Biotech Drugs

•=


Blockbuster Model: Multi-billion $$$ Drugs
• Focus on R&D to discover the next blockbuster drug
• Dominate therapeutic category and necessitate large
sales/marketing force
• Majority are “me too” drugs and will soon be off patent

Blockbuster Model: Issues
• In the last decade the Pharma industry has been predicated on the
blockbuster making it one of the most profitable industries and
enabling large R&D spends.
• Approx 80% of growth of the Pharma industry came from ~ 8 drugs
in the last 10 years.
• However the impact of the recall of Vioxx is an example of how
something like this can dramatically decrease revenues coupled
with the impact of lawsuits.
• Growing concern that going forward healthcare will only pay for 1-2
drugs in each class.
• Future drugs will be based on smaller markets and more targeted
therapies in hopes to protect themselves from damaging effects of
recalls.
• There is a shift away from blockbusters. Only 33 of the top 200
drugs are of blockbuster status.
• This will call for more stream lined approach to R&D with a focus on
fewer disease areas and more strategic partnerships.

Industrialized R&D

Harvard Business Review Oct 2006

Risks and Uncertainty of R&D

2001 Nature Publishing Group biotech.nature.com

Drug Development Costs


R&D Costs

Harvard Business Review Oct 2006

Innovation Gap


Escalating Costs for R&D

• Increasing R&D costs are due to:
– Increase clinical trial size, inefficiency of the process and misguided
strategies (blockbuster vs. science driven development)
– Enormous development costs ~ $800M - $1B
– Long development times ~ 8-12 yrs from discovery to NDA
– High attrition rate ~ 9 of 100 preclinical drugs get approved
– Failure rate in Phase II has increased from 35 to 50%
– Partial efficacy in patients ~40 – 60% and potential for adverse
effects
– Shortened life due to followers and generics

Increased expenditures do not necessarily yield
better drugs nor better returns

Summary: Future of Drug Discovery

• Rising costs of R&D, coupled with a decline in productivity,
resulted in a decrease in return on investment.

• Genomics will impact the model of selling one drug to
millions (blockbuster) vs. selling limited more specialized
drugs to selected populations (predictive medicine and
targeted medicine).

Future of Drug Discovery: Biological Centric

Regulatory Approval: FDA
• 2005 was a politically charged year at the FDA and the fear overall
is that the FDA is becoming a highly politicized organization.
• Struggling (since 2000) with lack of leadership and long term vision
– McClellan, Crawford, and Von Eschenbach.
• The McClellan era fostered an environment conducive to innovation
and collaboration between the Industry and FDA. Now we have
returned to the “regulator vs. industry” mentality with concerns about
collaborations due to conflict.
• Issues re drug safety were center stage with the removal of Vioxx
and have forced the FDA and companies to become more proactive
and now include submission of risk management plans.
• Currently there is a 50% (vs. 30%) failure rate in phase III. Is this the
result of conservatism of the reviewers or the Industry submitting
poorly documented applications.
• Focus on life-threatening disease allows for “Priority Review”
However there is the need to understand the risk/benefit balance of
therapy (removed and returned, Tysabri).

Nature Biotechnology February 2006

Personalized, Predictive & Preventative Medicine

FDA Pharmacogenomic Submission and Critical Path
Initiative (established in 2004 by McClellan) are geared
towards more effective and targeted medicines.
Selected Targeted Treatments
- Personalized cancer vaccines
- Gleevec (Novartis)
- Iressa (AstraZeneca)
- Tarceva (Genentech/OSI)
- Erbiutx (Imclone/BMS)
- Avastin (Genentech)
- Herceptin (Genentech)

Regulatory Approval: FDA
• Establishment of Interdisciplinary Pharmacogenomics Review
Group (IPRG) to review genomics data outside of the clinical review
process under the Voluntary Genomics Data Submission (VGDS).
Data ranges from preclinical signatures to phase 4 data. This
agency may be the “bridge” between the regulators and the Industry.
• IPRG drafted the 2005 Drug Test Co-development Concept Paper
for parallel development of drugs and diagnostics. IPRG’s position is
biomarkers are critical at earlier stages of development. Feedback
shows a gap between the agency’s view and industry reality.
• Prescription Drug User Fee Act (PDUFA, designed to foster new
initiatives) is up for renewal and will probably include drug safety
and monitoring.
Bottom line, drug safety goes beyond regulatory approval.

Nature Biotechnology February 2006

Drug Approvals: Trends 2005 - 2006
• Key trend in 2005 approvals. 2005 provided no sign of recovery in
productivity and was marred by regulatory uncertainty. The year was
punctuated by setbacks to development time lines brought on by the need
for further clinical safety data; approvals conditional on the production of
post-marketing safety data; approval failures; and restrictions placed on the
marketing of certain products. The significant volume of black-box
warnings issued was also a stark reminder that marketing approval
does not guarantee success.
Key trend in 2006 approvals. 2006 depends on how regulators manage
the tension between addressing product safety concerns and the need
to support innovation and reduce the time drugs take to reach the
market. The industry is waiting to see what balance regulators strike
between risk and benefit, particularly for 'first in class' candidates.
Stakeholders will also watch how the FDA will provide its critics with
assurance of its ability to function without conflict of interest while
working alongside the industry to progress projects such as the
Critical Path Initiative. Ultimately 2006 must provide greater certainty over
the future state of the regulatory environment, or confidence will be further
undermined.
•
Leland Gershell, SG Cowen & Co

FDA: The Critical Path Initiative
• In 2004, the FDA launched the Critical Path Initiative, intended to
promote research into ways to help drugs clear the hurdles of
demonstrating efficacy and safety more quickly and cheaply. The
initiative's latest report, released in March, includes projects to
speed drug development, such as developing better disease
models and developing surrogate markers to measure drug
efficacy more quickly. But the most far-reaching and revolutionary
aspect of the report is the FDA's embrace of the idea that the way to
get more drugs approved is by “tailoring therapy” to each patient.

• Although tailored medicine might increase the number of drugs that
make it to market, how it will affect the drug-making business seems
unclear. Drug approval might be made faster and cheaper, but
the number of patients that can be treated by any particular
drug will be smaller. Will this threaten the development of
billion-dollar blockbuster drugs, and can Pharma survive
without them? Will tailored medicine open up new
opportunities, such as in biomarker tests, which can
compensate? Nature Medicine 12, 481 (2006)

Value of Healthcare: Bench to Bedside

BioCentury Sept 2006

Pricing: Cost of Goods


Pricing Models for Drugs: What is Fair?


Biogenerics


The Reimbursement Issue
• 125 million Americans have at least 1 chronic disease
• Chronic disease accounts for ~ 75% of all healthcare costs
with current costs for chronic disease approaching $1trillion
• By 2015 annual healthcare costs will be ~ $4 trillion with $1
in every $5 dollars spent on healthcare
• Generics will become more part of the solution to lower
prescription drug-benefit costs
• Healthcare issues are on everyone’s agenda

Companies need to start factoring in the likelihood
of reimbursement prior to approval by the FDA

Summary: Economic Risks of R&D
• Rising costs of R&D coupled with declining productivity
• Regulatory issues associated with drug approval
– 14 NCE’s were approved in 2005 ave time 13 – 16 mo’s
– 37 black box warnings given to drugs in 2005
– Vioxx, Bextra and Tysabri withdrawn in 2004/2005
– 9 blockbuster drug patents expiring in 2005 and 2006
– Continued change in FDA due to organizational (need
for leadership and vision) and operational issues.
• Social and political pressures on pricing
• Price pressures of managed care
• Competition from generics

Future Drivers of the Industry
Regulatory Change
Dx, Theranostics, Biomarkers
FDA Critical Path Initiative

Market Change
Technology Change
R&D Generics
Enabling and
Pricing and Reimbursement
Disrupting
New Markets (Aging, Obesity
Technologies &
Regenerative Medicine, Anti-
Systems Biology
Manufacturing infectives)
Change Personalized/Predictive Medicine
Biologics Molecular Diagnostics
Biomarkers

Viable Business Models and Strategies

-Business models and value creation

-Developing a commercial plan and effective strategy

-Financing the entity

Common Issues of Emerging Companies
• Positioning the company in the context of today’s
market (consideration to current and future drivers)
• Financial challenges ($$ and valuation)
• Lack of Infrastructure and minimal staffing (many with
little to no start-up nor business experience)
• Parallel tracks with multiple goals
• Need to focus on value-add milestones
• Potential for founder issues, ensuring continued
creativity and opportunities for contribution

Building Value in Emerging Companies
• Strength of intellectual property
– Originates from universities and companies or generated in-house
– Strength of IP -> patentability + freedom to operate
– Developing an IP strategy integrated with overall business strategy
• Strength of technology and science
– Products (sm molecules, proteins, biologics, genes), platform, drug
delivery, devices……Everything rests on the data
• People
– Management, founders, investors, board of directors, scientific advisors
• Commercial strategic plan
– Defining the opportunity and need and other issues (e.g. regulatory)
– Assessing the competitive landscape (e.g. niche market, time to market)
• Operating plan and budget
– Defining the value-add milestones (milestones to $$), revenue generation
(near/long term), and looking “over the horizon”
• Financing strategy
– Defining a strategy and identifying investors for this stage and type of
company.

Definition of Success
• Develop new medicines Molecules in man
and a better way to discovery Improved drugs
and develop drugs

• Build a lasting Sustainable pipeline
company and balanced
portfolio

• Create significant 3-10X returns in
shareholder value 5+yrs

Valuation

• Valuations must be consistent with engaging
entrepreneurial instincts as well as be realistic.
• Timelines and key value-add milestones must be
consistent with the “hockey stick” valuation curve.
• Investment size must be commensurate with true needs
– Balance financial risk with leadership risk
– Balance financial risk with starvation risk

-> Are we heading towards a new model for private
equity financing? Old model to invest $100M with 5-
7yr return vs. new to invest $250M+ with 10yr return.

Creating Value and ROI


Business Models: Defined By Product
• Drug development or therapeutic area driven
– Drug discovery and development focused on therapeutic
areas (e.g. Anacor, Millennium)
– In-licensing late stage drug development plays (e.g.
Cerimon, Jazz)
• Technology platform
– breadth and depth (e.g. Alnylam, Millennium)
• Instruments and reagents
– (e.g. Affymetrix)
• Diagnostics
– (e.g. Celera)

Therapeutic Area: Anacor Founded 2002

Anacor: Commercial Strategy
• 1997 DARPA grant funded the initial research.
• Shapiro’s (Stanford) discovery of an essential gene in
Gram-negative bacteria, a novel target for antibiotic drug
development, coupled with Benkovic’s (Penn State)
inhibitors of the target, novel boron-containing
compounds, formed the basis of Anacor's proprietary
technology.
• Founded in 2002 based on capital from a “non-dilutive”
source - $21M DARPA and USAMRIID contract
• Additional capital raised in a VC-based financing totaling
$7M in 2002 and $25M in 2005.
• Sole focus in area of infectious disease.
• 2006 value creation in 4 yrs from inception with Phase II
demonstration of efficacy in lead compounds

Drug Development: Cerimon Founded 2004

Raised $70M in Series A
With a focus on:
- Expanding markets
- Expand indications
- Expand pipeline

MLNM: Early Business Strategies
• Millennium’s strategy in moving from platform-based
to product-focused was “by design”.
• The transition to drug developer was done with 3 major
strategies:
– Generation of revenue (near term) from strategic
alliances based on target discovery and licensing of
platform technology in >20 collaborations and >$2B of
“committed funding” in revenue.
– Royalty-based revenues (long term) on drugs created
by partners with Millennium’s targets and technology
and candidates discovered and sold to partners.
– Generation of a drug pipeline (building a sustainable
business) by internal discovery and development and
M&A

MLNM: Commercial Strategy
• Founded in 1993 with IPO in 1996
• Generated $2B in early partnership revenue
• Raised $400M in convertible debt and $768M in a
secondary offering in 2002
• Acquired by M&A: Leukocyte (Velcade), Cambridge
Discovery Chemistry, COR (Integrilin)
• Established franchises in oncology, inflammation and CV
• Velcade was launched in 2003 and generating $143M in
revenue by 2004
• Executed co-promotion agreements for: Velcade with J&J
and Integrilin with Schering-Plough

MLNM: Platform to Fully Integrated

>$700M in cash -> more M&A in 2006?

Platform Technology
• Enabling platforms have both the “breadth and depth”
• Perform feasibility studies to assess potential and allow for
the generation of data to fully leverage the platform
• License access to all data and/or technology
• License or partner off plums to fund further development of
the platform and drug discovery programs
• Retain option to keep some programs for conversion to
drug discovery and development model (e.g. early
Millennium, Exelixis, HGS, and Aurora)

Platform Technology
• Broad platform creates multiple product opportunities and can be
highly leveraged to raise money (MLNM, ALNY)
• Platform must produce enough products to sell/partner + keep to
develop as internal programs

Platform: Alnylam Founded 2002

Enabling Technology: Novartis-Alynlam

ALNY: Summary of Commercial Strategy
• Founded in 2002 to discover/develop therapeutics based
on RNAi
• Raised $17M in Series A/B + add’l $24M upon acquisition
in 2002
• Completed IPO in 2004 for $34M
• 2005 landmark Nature paper showing systemic delivery
and efficacy in primates
• Executed partnerships with: Merck (2003), Medtronic
(2005), Novartis (2005), Biogenidec (2006), NIAID (2006)
$23M contract for biodefense + licensed technology
• Established programs in oncology, RSV, pandemic flu,
CF, neuropathic pain, Parkinsons, CNS disease……..

AFFY: Business Model
• Initial strategy was a “value-based” pricing model that was
royalty driven. Issues were both internal due to deferred
cash flow and external due to resistance from customers re
the “reach-through”.
• Revised model was “fee based” using a NPV calculation
based on projected revenue from royalties
– Initial model consisted of large upfront ($2-4M) +
reasonable fee for easy access to other products.
Resulted in early cash flow, but also created “cap” on
the value of reagents.
– Moved to model with variable fees based on cost +
“value of information”, i.e. information content of chip.

Diagnostics: Celera Founded 1998

CRA: Founded 1998
• Founded in1998 by C Venter
• 1999 begin sequencing the human genome and pioneers
“shotgun” sequencing
• 2000 subscription-based model for its genetic database
and announces completion of human genome
• 2001 Celera founds “Celera Diagnostics” and acquires
Axys Pharmaceuticals (sm molecule drug discovery)
• 2002 FDA approval for HIV genotyping test
• 2004 strategic partnerships: Abbott, Seattle Genetics, GE
• 2005 Celera discontinues genetic database subscriptions
• 2006 Celera Genomics merges with Celera Diagnostics

Diagnostic Market
• IVD industry will play a prominent role in healthcare
decisions due to molecular diagnostics and molecular
imaging.
• 2005 WW market is ~ $36B with US accounting for ~
43% of the revenue and Europe (26%), Japan (10%) and
rest of world (22%).
• US demand is expected to grow ~6% annually to $17.9B
by 2009
• Clinical diagnostics are divided by:
– Dedicated Companies (BD, Beckman Coulter),
– Pharma (Roche, Bayer, Abbott, J&J),
– Biotech (Affymetrix, Third Wave, Gen-Probe)

Access To Capital Markets
• Venture capital
– Seed stage -> full rounds
• Hedge funds ($1 trillion under management) or other
public (mutual) funds and private equity players
• Quasi-public or “big brother” (e.g. Genentech + Roche)
• M&A including acquisition of early stage technology (e.g.
Amgen + Avidia)
• IPO, market barrier to entry remains high.
– 1st US company to do IPO in Japan Medici Nova raised $107M
• Reverse mergers (e.g. Infinity + Discover Partners)

Jazz Raises $250M Financing

- Financing: a mix of VC,
private equity, healthcare
funds, private investors……

Infinity Completes Reverse Merger

- Financing: a mix of VC,
private equity, healthcare
funds, private investors……

Corporate Partnerships: What’s Needed

Partnering: Pharma and Biotech

Strategic Alliances: Jun 2004 – Jul 2005

Summary: Building Companies
• Emerging companies need:
– Strong IP, solid technology, and good data
– World-class team
– Well thought-out commercial strategy and
operating plan
– Near-term and long-term financing strategy
with realistically aggressive value-add
milestones
– Maintain flexibility and awareness of the
external environment

Building Companies in Canada: Issues
• People
– Entrepreneurs and management with little to
no biotech experience
• Money
– Access to capital markets and VC funds
outside of Canada
– Lack of NIH or SBIR like funding and other
early stage money to support research longer
in academic environment

New Opportunities for Biotech

- Personalized medicine, molecular diagnostics and
biomarkers and theranostics (DxRx)
- High through-put technologies to sequence genomes
- RNAi as a new modality
- Infectious disease and the emerging field of biodefense
- Regenerative medicine and stem cell research
- Next generation of protein therapeutics
- Synthetic biology, Green Biotech and Nanomedicine
- And more…………

Genomics, Genetics and Modern Medicine

Molecular Diagnostics


Diagnostics Value to Therapeutics: DxRx
• Product Differentiation
– Better clinical information
– Greater efficacy
– Less adverse effects
– Improved dose benefit
– Improved risk benefit and health economics
• Market Expansion
– Improved diagnosis
– Increased compliance
– Rapid growth in: cancer, CV, genetics, diabetes,
infectious disease

Rapid Sequencing: The $1000 Genome

-Sequencing of individual genomes, a
key resource for personalized medicine
-Solexa, 454, Pacific Biosciences,
Helicos – all novel sequencing
technologies

RNAi: A New Therapeutic Modality

Antibacterials: The Unmet Need
• The emergence of resistance has brought the Industry to
the point of requiring a paradigm shift in how
antibacterials are developed and brought to market.
• There needs to be a better vision of the importance of
antibiotic resistance, this is becoming a public health
concern.
• Prioritization of resources away from R&D efforts
focused on the development of antibiotics, due to a shift
in business strategies, have been driven by the lack of
commercial value in lieu of treating chronic diseases (the
blockbusters).
• There is a critical need for re-engagement of Pharma
directly or in partnership with biotech to address this
problem.

Antibacterials: The Need for Better Drugs
• 2003 Project Bioshield developed a 10 year, $5.6B initiative for the
research and development of biocounter measures.
• Recently, the ISDA (Infectious Disease Society of America) called
on Congress to launch Bioshield II to address the need for new anti-
bacterials.
• Tax breaks, patent extensions are other incentives (money from the
DOD) are being established in an effort to get the Industry back into
this field.
• Pharma wants broad spectrum drugs which have highest probability
of resistance (and commercial success). Inadequate diagnosis also
necessitates the use of broad spectrum reagents.
• Biotech companies are approaching this area with new creative
strategies, targets and other tools yielding many novel new
antibacterials in clinical development. Strategies to leverage
government funding can be an effective means to financing R&D.

The Evolving Field of Biodefense

Stem Cell Research Breakthroughs

Nov 2001
1972 1993 Aug 2001
Scientist at US biotech clone
Transplantation of frog US split embryos to create Bush allows limited funding
Hu embryos by replacing egg
Embryos into unfertilized Genetically identical twins of stem cell research using
nuclei with mature nuclei from
Frog eggs – British clone frogs And grow to 32 cell stage stem cell lines already
adult cells
derived

1996 1998
Dolly, the sheep is US clone 3 generations of
cloned from adult mice from adult cells
cells


Aug 2005
2004
Dec 2001 Hwang announced 1st cloned
Hwang from South Korea Oct 2005
US scientists clone first dog and 11 stem cell lines
announced cloning of Senate pushes back debate
cloned pet - cat from skin of individual patients
30 human embryos On Stem Cell Res
Enhancement Act of 05 to 06

StemCells receives clearance
Feb 2005 May 2005
from FDA to begin phase I trials
Intro of Stem Cell Res San Francisco chosen as
To Tx Batten disease. Uses Hu
Enhancement Act of Headquarters for CA $3B
Neural stem cells as potential
2005. Bill would stem cell initiative
Therapeutic agent
require NIH to fund
stem cell research.
Lawsuits filed.


Nov 2005
Dec 2005 Oct 6, 2006
Establish CIRM in SF, CA
Investigation of Hwang’s CIRM in CA announces 10
work finds fabricated data yr strategic plan for $3B
Hwang admits using eggs
including how initial $150M
From paid donors and members of
will be allocated
his team, resigns position

Feb 2006
Sept 2005
International
Till & McCullough win the Lasker Prize
consortium on stem
for experiments that first identified a
cell ethics law
stem cell.
produces guidelines

Regenerative medicine and stem cell research

The Future of Biologics
• Pharma has historically focused on sm molecules. This will change
with ~60% of revenue growth forecast to come from biologic
products (therapeutic proteins and monoclonal antibodies)
• By 2010, annual sales of biologics will have increased by $26B
(compared to a $13B increase for sm molecules)
• Within the Pharma peer set, the revenue growth rate to 2010
forecast for biologics is a robust CAGR of 13.0%, outstripping the
near-static CAGR of 0.9% predicted for sm molecules - depressed
by exposure to intense generic competition
• Pharma has assumed a strong position within the antibody
market, a major attraction being the total absence of generic
risk. In contrast, bio-similars are an emerging threat for members of
the therapeutic protein class
• Roche is the leading Pharma player within the biologics
market; Its strong position in the antibody market is thanks to its
1990 merger with Genentech. Roche is forecast to record the
highest sales growth rate to 2010 within the peer set
Datamonitor 2006

Next Generation Protein Therapeutics

Codon Devices: Synthetic Biology

Codon Devices: Constructive Biology

Amyris: Synthetic Biology

Platform Technology
-$42.6M grant from Gates
Foundation in 12/04
-$20M in Series A 10/06

Synthetic Genomics: Green Biotech

Summary: More New Opportunities
• Improved drug delivery (oral delivery of biologics)
• Continuous monitoring feedback devices
• Functional imaging (molecular diagnostics + imaging)
• Neuro economics- convergence of brain imaging, behavioral sciences -
--the “ultimate mind reader”
• Exploration of periodic table for compound libraries resulting in
expanded chemical diversity and properties of molecules
• Improvements in complex synthetic chemistry to enable hitting protein-
protein interactions
• Gene therapy - use sm molecules to get indigenous cells to do
something different rather than trying to introduce cells into the
organism.
• Devices: species bar-coding, emerging pathogens and for biodefense
• Enzyme mining with all the metagenomics and
genotyping/resequencing across microbial, human and everything in
between. Application to biofuels (e.g., cellulose breakdown), industrial
enzymes, biotherapeutics.

Biotechnology Industry: Year 2026
• Move from US to global markets (China, India, Europe, Japan).
• Capital markets will continue to play a key role in reshaping the
industry with moving towards more M&A .
• Pharma will continue to access innovation through Biotech
• See move from blockbusters to niche markets.
• Move from genomics and systems biology to personalized and
predictive medicine.
• See more reform of the FDA especially with regards to safety.
• Healthcare costs and reimbursement issues will influence pricing
strategies and revenue for the Industry.
• Evolution of science will change the way we view life-threatening and
debilitating diseases (e.g. regenerative medicine).
• Research on antibiotics/anti-virals will expand with an increased
emphasis on pandemic disease.
• Move from small molecules -> proteins, Ab, gene therapy, stem cells.

The Business of Biotech Industry in 2006

The Business of Biotech Industry in 2006

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