Business Models in BiotechBusiness Models in BiotechBusiness Models in BiotechColumbia UniversityBusiness Models in BiotechColumbia University

February 25, 2009February 25, 2009February 25, 2009February 25, 2009y ,y ,y ,y ,

Current Status MedicineCurrent Status Medicine

• Symptomatic approach to healthcare

• All therapeutics directed at 500 protein targets

• Symptomatic approach to healthcare

• All therapeutics directed at 500 protein targets p p g

• Significant adverse reactions• Serious 2 million (6.7%)

p p g

• Significant adverse reactions• Serious 2 million (6.7%)• Fatal 100,000 (0.3%)

• Limited efficacy / response• Beta blockers 10 35%

• Fatal 100,000 (0.3%)

• Limited efficacy / response• Beta blockers 10 35%• Beta- blockers 10 - 35%• ACE-1 10 - 30%• Beta- blockers 10 - 35%• ACE-1 10 - 30%

Transformation of MedicineTransformation of Medicine

• Understand disease mechanismsmechanisms

• Improved diagnostics (surveillance)

• Improved therapies• Efficacious• Safe

• Personalized / Individual Medicine

Molecular Medicine ParadigmMolecular Medicine Paradigm

Modified RNA Proteins ProteinsDNA Biological

Function

Transcription Translation Post-TranslationModification

Information: Critical to Understanding Disease Mechanisms

<50,000 Genes > 500,000 Proteins

Information: Critical to Understanding Disease Mechanisms

Drug Discovery and Development ProcessDrug Discovery and Development Process

PhaseTarget selection

Assay develop-

HTS screens

Hit-to-Lead

Lead

Optimiz-Pre-clinical

Phase IPhase Phase

IIIselectionp

mentscreens Lead Optimiz

ationclinical IIA IIB

Genesis of CeleraGenesis of Celera

T b th d fi iti t l f g i • To become the definitive portal for genomic and related medical information

• To understand and commercialize • To understand and commercialize the logic of biology

Accelerating the “GenomicAccelerating the “Genomic RevolutionRevolution

Why Now?Why Now?

• Opportunity to revolutionize process• New high throughput technology capabilities

• Opportunity to revolutionize process• New high throughput technology capabilities• Advances in sequencing strategies• Advances in computing and informatics• Ability to invest outside of product business

• Advances in sequencing strategies• Advances in computing and informatics• Ability to invest outside of product business• Ability to invest outside of product business• Ability to invest outside of product business

Celera Sequencing CenterCelera Sequencing Center

Celera Bioinformatics InfrastructureCelera Bioinformatics Infrastructure

••Massive computing power required toMassive computing power required tointerpret biological informationinterpret biological information

One teraflop of processing powerOne teraflop of processing power100 terabytes of storage100 terabytes of storage

••Industry's largest bioinformatics staffIndustry's largest bioinformatics staff••Algorithm group led by Dr. Gene Myers Algorithm group led by Dr. Gene Myers

AssemblyAssemblyNew algorithms New algorithms -- Comparative genomicsComparative genomics

Information Business ModelInformation Business Model

C t t N C t t N I t g t d I t g t d D t Vi li ti D t Vi li ti P d t P d t Constant New Constant New PublicPublic

and Proprietary and Proprietary InformationInformation

Integrated Integrated Information Information

DeliveryDelivery

Data Visualization Data Visualization and Analysis Toolsand Analysis Tools

Product Product Segmentation Segmentation

to Usersto Users

Celera Discovery SystemCelera Discovery System

The Celera Discovery System

A powerful research tool that offerssequence analysis and visualization

application to help you targetapplication to help you target,manage and decipher genomic data.

Pricing ConsiderationsPricing Considerations

• Early Adopters• Early Adoptersy

• Market Segmentation• IP ownership

y

• Market Segmentation• IP ownership• Cash versus royalties• Ability to pay• Number of users

• Cash versus royalties• Ability to pay• Number of users

• Level of content and functionality

• Versus “free” sources

• Level of content and functionality

• Versus “free” sources

CELERA DISCOVERY SYSTEM – BEYOND A DATABASE: A ROBUST DISCOVERY SYSTEMCELERA DISCOVERY SYSTEM – BEYOND A DATABASE: A ROBUST DISCOVERY SYSTEM

Human chromosome maps

Sequence data

Protein classification

Mouse dataText search

SNP maps

Accomplishments (Road Show Slide)Accomplishments (Road Show Slide)

Built the world’s largest sequencing / SNP discovery center• Built the world’s largest sequencing / SNP discovery center

• Built one of the largest super computing centers

• Increased headcount to over 750 people

• Validated whole genome sequence shotgun strategy

• Developed proprietary assembly algorithms

• Sequenced and Assembled DrosophilaSequenced and Assembled Drosophila

• Largest genome to date - completed in record time

• Completed the human genome sequence

E t bli h d t b• Established customer base

NEXT-GENERATION BIOPHARMACEUTICAL COMPANYNEXT-GENERATION BIOPHARMACEUTICAL COMPANY

Joint venture withApplied Biosystems

Small moleculesA ib di Applied Biosystems

Molecular diagnosticsAntibodies

Cellular immunotherapies

Online informationOnline informationDiscovery services

Life Sciences InvestingLife Sciences Investing

O t itiO t itiOpportunitiesOpportunities

Societal NeedsSocietal Needs

Market Size and GrowthMarket Size and Growth

Pharmaceutical Industry Pharmaceutical Industry yyNeedsNeeds

Exclusivity PeriodsExclusivity Periods

Blockbuster Effect Blockbuster Effect

Continued InnovationContinued InnovationContinued InnovationContinued Innovation

Life Sciences InvestingLife Sciences Investing

O t itiO t iti ChallengesChallengesOpportunitiesOpportunities ChallengesChallenges

Societal NeedsSocietal Needs Attrition RatesAttrition Rates

Market Size and GrowthMarket Size and Growth Development TimelinesDevelopment Timelines

Pharmaceutical Industry Pharmaceutical Industry Regulatory HurdlesRegulatory HurdlesyyNeedsNeeds Regulatory HurdlesRegulatory Hurdles

Exclusivity PeriodsExclusivity Periods Intellectual Property DensityIntellectual Property Density

Blockbuster Effect Blockbuster Effect High Degree of CompetitionHigh Degree of Competition

Continued InnovationContinued Innovation Capital IntensityCapital IntensityContinued InnovationContinued Innovation Capital IntensityCapital Intensity

Drug Discovery and Development Profile Drug Discovery and Development Profile

T g t IDT g t ID

00 22 44 66 88 1010 121237 YearsYears

Assay developmentAssay development

DISCOV

DISCOV HTS screeningHTS screening

Target IDTarget ID 3737

2828

2525

Hit to leadHit to lead

Lead optimizationLead optimization

VERY

VERY

HTS screeningHTS screening

1919

99

2.7%

Preclinical Preclinical

IND/Phase IIND/Phase I

Phase IIAPhase IIA

DEVEL

DEVEL

55

33

22

Phase IIBPhase IIB

Phase IIIPhase III

OPMENT

OPMENT NDA/ R gi t tiNDA/ R gi t tiNDA/ R gi t tiNDA/ R gi t ti

1.51.5

1.11.1

TT NDA/ RegistrationNDA/ RegistrationNDA/ RegistrationNDA/ Registration 11

Determinants of ValueDeterminants of Value

Technology / ProductTechnology / ProductTechnology / Product

• Uniqueness of approach (first in class) disruptive vs incremental

Technology / Product

• Uniqueness of approach (first in class) disruptive vs incremental

• Stage of asset (phase of development) and time to next inflection point

• Stage of asset (phase of development) and time to next inflection point

•• Dimensions of clinical trial Dimensions of clinical trial –– complexity, endpoints, size, complexity, endpoints, size, duration (cost / predictability)duration (cost / predictability)

P t t bilt f t (IP)

•• Dimensions of clinical trial Dimensions of clinical trial –– complexity, endpoints, size, complexity, endpoints, size, duration (cost / predictability)duration (cost / predictability)

P t t bilt f t (IP)• Protectabilty of asset (IP)

• Breadth of assets

• Protectabilty of asset (IP)

• Breadth of assets

Determinants of ValueDeterminants of Value

• Market dimensions • Market dimensions

• Competitive landscape / Alternative approaches

Scientific and Management Team / Scientific founders

• Competitive landscape / Alternative approaches

Scientific and Management Team / Scientific founders • Scientific and Management Team / Scientific founders

• Business Model

• Scientific and Management Team / Scientific founders

• Business Model

•• Revenue base from partnerships or productsRevenue base from partnerships or products•• Programs that enhance internal knowledge / experiencePrograms that enhance internal knowledge / experience•• Retained rights upon which to build companyRetained rights upon which to build company

•• Revenue base from partnerships or productsRevenue base from partnerships or products•• Programs that enhance internal knowledge / experiencePrograms that enhance internal knowledge / experience•• Retained rights upon which to build companyRetained rights upon which to build company•• Participation in partnershipParticipation in partnership--created valuecreated value•• Participation in partnershipParticipation in partnership--created valuecreated value

Biotech Valuation Tiers Reflect Development StageBiotech Valuation Tiers Reflect Development Stage

• 20 Companies > $1Bn• 20 Companies > $1Bn • 40 Companies > $500M• 40 Companies > $500M

$798$800$900

Average Public Market Cap ($Ms) by Development StageAverage Public Market Cap ($Ms) by Development Stage

$$500$600$700

$75 $84$205

$324

$100$200$300$400

$75

$0$100

Ph I Ph II Ph III NDAPreclin/IND

Range:Range: $20-156M$20-156M $22-144M$22-144M $26-1,020M$26-1,020M $22-2,591M$22-2,591M $45-5,007M$45-5,007M