Session 5: Financing of Biotech Companies Title : Inception to Exit Financing for Biotech Dr. Waddington

4. US IPOs – Not What They Used To Be Source: Burrill & Company Biotech IPOs Completed 1996-2009

5. Coupled With Underperformance * Includes over-allotments ** As of 7/31/09 Source: Burrill & Company Number of IPOs Positive since IPO Negative since IPO Acquired or delisted Amount Raised* ($ Million) Average ∆ % change Since IPO** 2003 7 0 0 7 438 (100%) 2004 29 4 14 11 1,628 (11%) 2005 17 2 7 8 819 (43%) 2006 19 7 6 6 920 1% 2007 28 3 22 3 2,071 (36%) 2008 1 0 0 1 6 (100%) Total 101 16 49 36 5,852 (48%)

6. Growing Influence of Partnering Source: Burrill & Company US Biotech Financings ($m) 2004-2009 2004 2005 2006 2007 2008 1H 2009 Public IPO $1,701 $819 $920 $2,041 $6 $0 Follow-ons $3,388 $4,194 $5,766 $6,311 $1,726 $2,043 PIPEs $2,417 $2,376 $2,027 $1,818 $1,078 $733 Debt $8,418 $5,565 $13,978 $6,569 $2,824 $4,156 Private VC $3,733 $3,518 $4,236 $4,445 $4,175 $2,335 Other $269 $1,114 $425 $611 $294 $56 Public+Priv $19,927 $17,586 $27,352 $21,975 $10,103 $9,321 Partnering $10,933 $17,268 $19,796 $23,365 $20,023 $12,779 Total $30,860 $34,854 $47,148 $45,340 $30,126 $22,100

7. Significant Biopharma Partnering Deals 2009 Pharma/Biotech Roche/PTC Therapeutics $ 1.9 billion Sanofi/Exelixis $ 1.0 billion Merck/Cardiome Pharma $ 700 million BMS/ZymoGenetics $ 1.1 billion Forest Labs/Nycomed $ 600 million Novartis/Portola Pharmaceuticals $ 575 million Wyeth/Catalyst Biosciences $ 500 million Biotech/Biotech Amgen/Cytokinetics $ 650 million Onyx Pharma/S*BIO Pte $ 550 million Celgene/GlobeImmune $ 500 million Biogen/Acorda Therapeutics $ 510 million Cephalon/Immunopharma $ 500 million Glaxo/Concert Pharmaceuticals $ 1.0 billion Glaxo/Chroma Therapeutics $ 1.0 billion Wyeth/Santaris Pharmaceuticals $ 847 million GSK/Idenix Pharmaceuticals $ 450 million Biovail/Acadia Pharmaceuticals $ 395 million Bayer/Ardea Biosciences $ 407 million Source: Burrill & Company

8. Venture Capital – Lifeblood of the Biotech Industry THE SPECTRUM OF PRIVATE (RISK) EQUITY CAPITAL Expansion Financing stage Seed Start-up Early stage Buy-outs, buy-ins Pre-seed Price Risk Idea, concept Proof-of-Concept Market estab-lished Clinical Studies Trade sale, IPO Venture capital M&A Incubators Business angels “ Triple F” (Family, friends & fools) Private equity

9. Biotech Financing Models “ Reasonable” Scenario (“In The Old Days”) Round Pre-money $ In Post-value Source Seed $1M $1M $2M Angels A $4M $6M $10M VCs B $20M $20M $40M VCs Mezz $80M $50M $130M VCs/Mezz IPO $250M $80M $340M Market & 2-3 Corporate Deals ($10-50+M)

10. Which Required Multiple Financing Rounds & Multiple VCs Seed Series-A Series-B Series-C Angel/VC 1 VC 2 VC 3 VC 4 Exit (IPO/Trade sale) Years 1 2 3 4

11. Changing Face of Syndication Seed Series-A Series-B Series-C VC 1 VC 2 VC 3 VC 4 Exit (IPO/Trade sale) Years 1 2 3 4

12. Changing Business Models FIPCO (Fully Integrated Pharma Co.) Research Technology Manufacturing Clinical & Regulatory Sales & Distribution CSO CMO CROs Partnerships Academia, Scientific, Institutions R&D Preclinical Support Clinical Development Manufacturing Sales & Distribution Preclinical CRO VIPCO (Virtually Integrated Pharma Co.)

16. Global Biotech Financing: Economic Stimulus (Partial List) Country Biotech Economic Stimulus Malaysia $21.5 B for R&D US China $4.81 B in 2009, $4.4B in 2010 for “11 technology projects” $129 B in healthcare infrastructure Norway $2.87 B for biotech industry Taiwan $1.83 B to biotech VC fund UK $1.5 B “fund of funds” Canada $200 M for science and technology RM182m in Second Stimulus Package