Yale Business of Biotechnology - Yale University

jamaicanabsorbingΒιοτεχνολογία

5 Δεκ 2012 (πριν από 4 χρόνια και 8 μήνες)

350 εμφανίσεις

Business of Biotech 7


Yale Biotechnology & Pharmaceutical Society


30 March


2 April 2009

Constance McKee

Yale MBA 1986

President & CEO, Manzanita Pharmaceuticals, Inc.

March
-
April 2009

1

The Business of Biotech 7

A Non
-
Credit Seminar for Yale & the Biohaven Community

Week of 30 March


2 April 2009

Yale School of Management

135 Prospect Street, New Haven



Constance McKee

Yale School of Management, MBA 1986

Manzanita Pharmaceuticals, Inc.

www.manzanitapharmaceuticals.com


2995 Woodside Road

Suite 400, PMB 309

Woodside, CA 94062

constance.mckee@comcast.net


m 408.348.3191 v 408.872.1094



Constance McKee

Business of Biotech 7

March
-
April 2009

2

Introduction


Course approach


part quantitative concepts, part case studies


First hour
-

basic concepts in start
-
ups


Modular


hard copy fills in blanks if you miss a few evenings


Second hour


micro case studies from entrepreneurs, investors & industry


Speakers talk about making decisions


and how it *really* turned out



Key questions


What’s the opportunity?


What’s the opportunity worth?


How do we


founders & investors


make money?


In the current environment, where *is* the money?



Emphasis on biopharmaceuticals


Business concepts apply to devices, tools & diagnostics companies


But decision
-
making process similar for devices & tools

Constance McKee

Business of Biotech 7

March
-
April 2009

3

Course Goals


Explain challenges of raising capital for life sciences start
-
ups


No previous experience required


From perspective of scientist


Quantitative approach


Skip the MBA…..



Introduce basic concepts that drive the business of biotechnology


Most good business decisions are driven by quantitative concepts


Rules of the game


How to play the game to increase the probability of success



Develop network of Yale
-
centric entrepreneurs & investors


Sources of information


Sources of funding


Career opportunities outside the lab


Constance McKee

Business of Biotech 7

March
-
April 2009

4

Course Outline & Speakers

Case Studies in Decision Making


Monday, 30 March 2009


Sohini Chowdhury, Michael J. Fox Foundation (Parkinson’s disease) (New York)


Robi Blumenstein, HighQ Foundation (Huntington’s disease) (New York)



Tuesday, 31 March 2009


Jim Dolan, Executive VP, Purdue Pharma (Stamford)


Dr. Roger Hill, Head, Global Licensing


Cardiovascular, Boehringer
-
Ingelheim
(Ridgefield)



Wednesday, 1 April 2009


Ron Burch, MD, CSO, Pacira (San Diego) (former CEO, AlgoRx)


Jonathan Lewis MD, founder & CEO, ZioPharm Oncology (New York)



Thursday, 2 April 2009


Scott Barry, Essex Woodlands Health Ventures (New York)


Myles Greenberg, MD, CHL Medical Partners (Stamford)


Constance McKee

Business of Biotech 7

March
-
April 2009

5

Acknowledgments & Sources
-

1


Matt Plunkett & Rob Weir, Oppenheimer & Co (Menlo Park)
-

M&A statistics


Howard Palefsky, Montreux Equity Partners (Menlo Park)



MAKO case study



Mark Edwards, Recombinant Capital
www.recap.com

& online publication
“Signals”
www.signalsmag.com



Statistics on deals & deal trends


Article on venture philanthropies



Cynthia Robbins
-
Roth


books & columns


From Alchemy to IPO


Alternative Careers in Science


BioWorld Today
www.bioworld.com




www.clinicaltrials.gov



NIH database for clinical trials, current and closed


Reference for trial design, numbers of patients



www.nasdaq.com



Pricing & valuations for many biotechnology, tools & diagnostics companies


Constance McKee

Business of Biotech 7

March
-
April 2009

6

Acknowledgments & Sources
-

2


Online reading


Fierce Biotech


GEN (Genetic Engineering News)


BioBrief, RPM Report



In Vivo

publications


Roger Longman is one of industry’s longest
-
serving & most insightful analysts



Patient advocacy organizations


Statistics on patient populations


Current news on experimental therapies, clinical trials



NIH
-

information on diseases & disorders; SBIR & other grants programs



Merck Online
www.merck.com/mmpe/index.html



Current information on diseases & disorders


Standard
-
of
-
care drug therapy, mechanism of action of drugs



SEC filings
www.sec.gov



Company websites for annual reports (10
-
Q), quarterly reports (10
-
K)


Information on failed trials is usually buried in quarterly or interim (8
-
K) reports


Constance McKee

Business of Biotech 7

March
-
April 2009

7

Monday

Basic Concepts in Start
-
up Business Infrastructure


Patents



How ownership arises (why Yale owns your ideas)



How rights to patents get transferred to your start
-
up



What is “unmet clinical need”? What is a “market”?



What is a business model?



What is a business plan?

Constance McKee

Business of Biotech 7

March
-
April 2009

8

Growing the Start
-
Up

“First, you need a lawyer…..”

1. Incorporate.

Set up a legal entity that (1)
shields individuals from liability & (2) allows
individuals and corporate entities to share
ownership


but not always equally. Legal
documents set up officers & Board members.

2. Patents.

License in discoveries from a
university, another company, or reduce your own
ideas to practice. Employees assign rights of
ownership of new patents to new company.

3. People.

Legal agreements for employees,
advisors & consultants, Board members, service
providers


accounting, legal, patents.

4. Collaborators.

Sponsored research
agreements, Contract Research Organizations.

5. Financing.

Cap chart, comparables, valuation.

Constance McKee

Business of Biotech 7

March
-
April 2009

9

Patents


What is a ‘patentable invention’?


Patents are issued by US Patent & Trademark Office, European Patent Office
and patent offices of respective countries


Must show your idea is “novel
and

not obvious” & that it works (data)


When issued, confers the right to sue if an infringer sells a product in the
marketplace based on your idea



What is intangible intellectual property that can be protected?


Copyright


software, drawings


Know
-
how


protocols for synthesis of a small molecule drugs


Also known as trade secrets (“secret sauce”)


Almost always key to real value in the product, never disclosed in a patent
application


Constance McKee

Business of Biotech 7

March
-
April 2009

10

How Ownership Arises

Why Yale Owns Your Ideas


Under US law, the employer owns the ideas of employees


Terms of Yale employment includes faculty, graduate students


Yale Office of Cooperative Research
http://www.yale.edu/ocr/



You can “consult” to your own start
-
up


Most universities permit this, but your consulting agreement either

(1)

continues to allow Yale to own your ideas while consulting, but licenses any
discoveries to your start
-
up, or

(2)

grants ownership of ideas generated during consulting period to the start
-
up



Document who & where invention occurs


Complicated with multiple academic collaborators


Complicated by multiple granting sources


Expect multiple co
-
inventors on patent application



Constance McKee

Business of Biotech 7

March
-
April 2009

11

Why Are Patents Important?


Worthless unless a product made from it, sold & making $$


Does not keep others from stealing your ideas


Just gives you the right to sue them if they do steal


Formidable barrier to entry if you succeed


In pharmaceuticals, can charge a premium price



Confers exclusivity


Means you’re the only one legally authorized to sell product


Can be US only, EU only, ROW only or combination


When patent expires for pharmaceuticals, generic drug makers take over &
premium
-
priced drug revenues decline ~ 60% in one year post
-
expiry


Strong patents are enormously valuable to pharma

Constance McKee

Business of Biotech 7

March
-
April 2009

12

Yale Licenses Rights To Start
-
Up

How Legal Rights Are Transferred


License is a legal agreement


Yale’s ownership gives it right to confer some or all of its rights, over time


In exchange for grant of rights, Yale may get rights to % of future product value


Future product value


milestones or % of sales (“royalties”)



Important concept


transfers rights, not ownership


If things go wrong, Yale still owns patents


Start
-
up licensee usually pays for patent prosecution


Start
-
up licensee usually obligated to use “best efforts” to develop


Years before Yale (and you, the discoverer) makes any money



Flexible concept


May have low or no upfront fee


May include milestones for key development steps


May include royalties (% sales) when product launched

Constance McKee

Business of Biotech 7

March
-
April 2009

13

Royalties

Percentage of Cash from Products Sold


Wait years until product developed & finally sold


Industry standard


2% of net revenues of Rx


Royalties increase as drug price increases, number of patients increases

Income/Expense
% Revenue
Notes
Revenue
100
$

Units x price
Cost-of-Goods
(10)
$

Raw materials
Gross revenue
90
$

Gross margin
90%
Percent of Revenue
Salaries
(10)
$

10%
Science - cost of R&D
(2)
$

2%
Management
Offices, plant & equip
(3)
$

3%
Cost to operate, not build
Sales, General & Admin
(40)
$

40%
How concentrated?
NET REVENUES
35
$

35%
(earnings before income taxes)
NET EARNINGS
35
$

35%
(who pays income taxes?)
EARNINGS PER SHARE = EPS = Net earnings / number of all shares outstanding
Constance McKee

Business of Biotech 7

March
-
April 2009

14

Unmet Clinical Need

Number of Patients X Cost of Undertreatment


Example: 25 million Americans with chronic pain


No drug of choice


many classes of Rx prescribed, but only 30% effective


Direct cost
-

$1,000 per patient per year


Rx relatively inexpensive, but patients keep going back to the doctor


US Army
-

$340 BN total cost of treating pain in returning veterans from
Operation Enduring Freedom, Operating Iraqi Freedom

Chronic pain
Number
Unit or Description
Number of patients
25


million
% drugs effective
30%
NSAIDs, tricyclics, gabapentin
Number untreated
18


million
Cost of treatment
1,000
$

Per year, Rx plus cost of office visits
Cost of unmet need
500
$

Per year, indirect costs (loss of work)
UNMET CLINICAL NEED
18,000
$

In US$ billions - direct costs (one year)
ECONOMIC BURDEN
9,000
$

In US$ billions - indirect costs (one year)
Constance McKee

Business of Biotech 7

March
-
April 2009

15

What is a Market?

Can Describe Both Place & Total Value Sold


Place =

pharmacy, stock exchange, flea market, souk, eBay


Total value =

number of units sold X price per unit


Drug market =

number of scrip written X price paid by patient


Example: Exubera (inhaled insulin developed by Nektar, marketed by Pfizer)


Exubera sold $14 million after it was launched


Merck sells Januvia for $4.86 per tablet (100 mg 1X 7 days) x (22,475+48,685) = $2
million per week, $125 million per year just weeks after launch


Pfizer pulled Exubera from the market in October 2007


Depends on who can afford Rx, who actually takes their meds


Doesn’t quantify potential Rx with better effectiveness that addresses unmet need

Exubera

Exubera

Januvia

Januvia

NRxs

TRxs

NRxs

TRxs

5/11/2007

1,179

1,659

22,475

48,685

5/18/2007

1,307

1,816

28,416

56,243

Constance McKee

Business of Biotech 7

http://seekingalpha.com/article/50788
-
pfizer
-
four
-
lessons
-
from
-
the
-
exubera
-
failure


March
-
April 2009

16

What is a Business Model?

Lemonade Stand Revenue Model, Price & Customers


Are you selling the end product? Or intermediates?


What is the cost of the materials in your product?


What is the price per unit, less the cost of materials per unit?


How much $$ does it take to develop your product & launch it?


How much $$ does it take to keep your business going?

Income
Income-
Expense
PerCent
Revenue
Revenue
100
$

Lemons, sugar, H20
(10)
$

Gross revenue
90
$

Gross margin
90%
Salaries - Research
(10)
$

-10%
Salaries - Management
(2)
$

-2%
Offices, plant & equip
(3)
$

-3%
Sales, General & Admin
(40)
$

-40%
100
$

(65)
$

35%
NET REVENUES
35
$

NET EARNINGS
22.8
$

35%
Constance McKee

Business of Biotech 7

March
-
April 2009

17

What is a Business Model?

Life Sciences Sector Overview


Key risk is time & money until you get to product revenue


Trade
-
offs between make
-
it
-
yourself and license
-
it
-
out models


Best scenario


shortest time & money, biggest payoff


Venture capital now only rarely funding drug development

Constance McKee

Business of Biotech 7

Type of Business Model
Years to
Develop
Cost to
Develop
Number of
Customers
Cash or
Royalties?
Years to
$$
Market Potential
Drug Disovery - Genomics
2-3
20
$

50


Royalties
10


3 yrs to HITS; +7 yrs to drug
Tools cf HuMAb mouse
2-3
20
$

50


Royalties
7


3 yrs to IND; + 5 yrs to drug
Drug delivery technology
2-3
15
$

50


Royalties
7


3 yrs to IND; +5 yrs to drug
Reformulate generics
2-3
15
$

1 - 100M
Cash
5


3 yrs to IND; + 2 yrs to drug
Develop NMEs
* Blockbuster
3-5
500
$

1 - 500M
Cash
7


$ 1 BN+ revenue potential
* Average new drug
3-5
500
$

1- 500M
Cash
7


$50M - $500M revenue potential
* Orphan Drug
2-3
20
$

1- 200,000
Cash
3


Acceleate IND - FDA approval
License in
20
$

* New indication, old drug
0
20
$

1 - 100M
Cash
3


Years for new clinical trials
* Complete clinical trials
2-3
40
$

1 - 100M
Cash
3


Years for new clinical trials
* Already approved drug
0
-
$

1 - 100M
Cash
1


March
-
April 2009

18

What is a Business Plan?


Proxy for future value


Estimates for market size & market opportunity


Estimates risk (amount of $ to product vs amount of potential revenue)


Patents


How much can you expect to sell vs competitors’ products?



Proxy for reality


Has team done *it* before? (developed this kind of product)


Have other companies tried to address this problem before? Did they fail?


Have other investors made money in this sector? With this business model?


What are the “comparables” (value of deals done in this sector)?


What are the “comparable exits” (value of deals in this sector that were acquired
by other companies, or went public)

Constance McKee

Business of Biotech 7

March
-
April 2009

19

Biotech IPOs


Canaries in Capital Markets?

the venture capital industry is not investing….

Constance McKee

Business of Biotech 7

March
-
April 2009

20

Early
-
Stage Funding Gap

Source: Signals Mag; Alzheimer’s Drug Discovery Foundation www.alzdiscovery.org

Constance McKee

Business of Biotech 7

March
-
April 2009

21

Opportunity for Philanthropic Capital

Hint: go where the money is…..

Constance McKee

Business of Biotech 7

March
-
April 2009

22

Tuesday

Managing Risk in Clinical Development: Focus on Pharma


What is the FDA
-
driven development path?



What is a decision tree?



What is the decision tree for clinical development?



What are key strategies to manage development risk?

Constance McKee

Business of Biotech 7

March
-
April 2009

23

Gene

“HIT”

Library

Medicinal Chemistry

Rationale Drug Design

Compound identification


Lead Candidate

Cell
-
based assays

In vitro

-

primary culture

In vivo

-

non
-
mammalian

In vivo

-

knockout

In vivo

-

clinically predictive

In vivo

-

not clinically predictive



Clinical Development

7.5 Years
-

$750 Million

Constance McKee

Business of Biotech 7

Research

$500M

Clinical Trials

$250M

March
-
April 2009

24

Lead Candidate

Cell
-
based assays

In vitro

-

primary culture

In vivo

-

non
-
mammalian

In vivo

-

knockout

In vivo

-

clinically predictive?

IND application



What risks, over what period of time?

What kind of risks do your investors understand?

Constance McKee

Business of Biotech 7

Science risk

Clinical risk

Regulatory risk

Market risk

Financial risk

March
-
April 2009

25

Decision Tree for Clinical Development


PhRMA;
(Brealey & Myers)

Develop 20
compounds
(invest
-
$500M)

Do not develop

.01%

Failure (50%)

Complete
preclinicals
(invest
-

$20M)

Restructure R&D
(invest
-

$200M)

Divest division (sell + $50M)

Complete
Phase I
(invest
-

$25M)

Failure (50%)

50%

Failure (60%)

Failure (50%)

Complete
Phase II
(invest
-

$25M)

Complete
Phase III/IV
(invest
-

$50M)

40%

50%

50%

FDA
approval
(launch
-

$50M for
ramp
-
up)

Don’t market
(competition)

Constance McKee

Business of Biotech 7

March
-
April 2009

26

Spread Portfolio Risk

Venture Investors & Pharma Measure Success as “IRR”


IRR = internal rate of return (complex calculation for both cash invested and
time until investment pays off)


ROI = return on investment (used interchangeably to express increase in
value of original investment, adjusted by time)


For pharma & VCs alike, “shots on goal”
-

home runs make up for strike
-
outs


For pharma


known mechanism of action; clinically relevant models
shortens development time & lowers risk

Constance McKee

Business of Biotech 7

IRR
YR1
YR2
YR3
YR4
YR5
YR6
YR7
YR8
YR9
Product 1
(8)
$

(8)
$

(20)
$

(25)
$

-
$

Product 2
(2)
$

(8)
$

(20)
$

-
$

Product 3
-12%
(0)
$

(20)
$

(20)
$

(25)
$

(25)
$

25
$

25
$

-
$

10
$

Product 4
83%
(0)
$

(8)
$

(8)
$

(10)
$

25
$

50
$

75
$

75
$

75
$

Product 5
68%
(0)
$

(8)
$

(8)
$

(10)
$

25
$

50
$

50
$

25
$

-
$

Totals
23%
(10)
$

(52)
$

(76)
$

(70)
$

25
$

125
$

150
$

100
$

85
$

March
-
April 2009

27

Potential Market Value Drives Decisions

$120M Market Is Minimum To Justify Beginning Development

(In US$ millions)
Investment
Prob
Success
Value
Cashflows
Research
(500)
$

0.01%
(0.1)
$

(0.1)


Preclinicals
(10)
$

50%
(5.0)
$

(5.0)


Phase 1
(25)
$

50%
(12.5)
$

(12.5)


Phase 2
(50)
$

50%
(25.0)
$

(25.0)


Phase 3/4
(100)
$

40%
(40.0)
$

(40.0)


File IND - FDA Approval
(10)
$

100%
(10.0)
$

(10.0)


Market Launch
(55)
$

50%
(27.5)
$

(27.5)


CASHFLOWS
(750)
$

100%
(120)
$

120
$


If 10% of drug candidates reach the market, you need 10 drugs to
complete preclinical studies to ‘guarantee’ a successful drug


But costs $500 million per drug candidate through to Phase 1


Big pharma needs $1.2 BN market opportunity to justify development
($120M x 10, assumes stop development at milestone failures)

Constance McKee

Business of Biotech 7

March
-
April 2009

28

What is a Business Model?

Lemonade Stand Revenue Model, Price & Customers


Are you selling the end product? Or intermediates?


What is the cost of the materials in your product?


What is the price per unit, less the cost of materials per unit?


How much $$ does it take to develop your product & launch it?


How much $$ does it take to keep your business going?

Income
Income-
Expense
PerCent
Revenue
Revenue
100
$

Lemons, sugar, H20
(10)
$

Gross revenue
90
$

Gross margin
90%
Salaries - Research
(10)
$

-10%
Salaries - Management
(2)
$

-2%
Offices, plant & equip
(3)
$

-3%
Sales, General & Admin
(40)
$

-40%
100
$

(65)
$

35%
NET REVENUES
35
$

NET EARNINGS
22.8
$

35%
Constance McKee

Business of Biotech 7

March
-
April 2009

29

What is ‘Venture Fundable’?

Venture Investors Seek Least Risk, Highest Upside


Start
-
ups usually begin after discovery completed in universities


So VCs focus on the $250M cost of development


Big pharma addresses large, chronic conditions


VCs focus on smaller markets, clear clinical endpoints

Constance McKee

Business of Biotech 7

Number of
Patients
YR1
YR2
YR3
YR4
YR5
Preclinicals
(8.0)
$

Prepare & file IND
(2.0)
$

Phase 1
100


(25.0)
$

Phase 2
500


(50.0)
$

Phase 3/4
2,000


(100.0)
$

File IND - FDA Approval
(10.0)
$

Market Launch
(55.0)
$

Totals
(10.0)
$

(25.0)
$

(50.0)
$

(100.0)
$

(65.0)
$

Cumulative
(35.0)
$

(85.0)
$

(185.0)
$

(250.0)
$

March
-
April 2009

30

Affymetrix (AFFX)

Business Model Example: Research Tools

Constance McKee

Business of Biotech 7

Period Ending:
12/31/2008
2008%
12/31/2007
12/31/2006
12/31/2005
Total Revenue
$410,249
$371,320
$355,317
$367,602
Cost of Revenue
$152,140
37%
$138,716
$128,943
$101,412
Gross Profit
$258,109
63%
$232,604
$226,374
$266,190
Operating Expenses
Research and Development
$84,482
21%
$72,740
$86,296
$77,404
Sales, General and Admin.
$127,161
31%
$138,488
$145,126
$123,058
Non-Recurring Items
$289,005
70%
$15,296
$13,497
$8,315
Operating Income
($242,539)
-59%
$6,080
($18,545)
$57,413
Add'l income/expense items
$14,629
$15,420
$14,078
$6,740
Earnings Before Interest and Tax
($227,910)
$21,500
($4,467)
$64,153
Interest Expense
$14,091
$3,218
$1,600
$1,545
Earnings Before Tax
($242,001)
$18,282
($6,067)
$62,608
Income Tax
$65,918
$5,689
$7,637
($3,179)
Net Income-Cont. Operations
($307,919)
$12,593
($13,704)
$65,787
Net Income
($307,919)
-75%
$12,593
($13,704)
$65,787
Affymetrix
March
-
April 2009

31

Affymax (AFFY)

Business Model Example: Emerging Biotech

Constance McKee

Business of Biotech 7






Affymax
12/31/2007
2007%
12/31/2006
12/31/2005
12/31/2004
Total Revenue
$44,336
$11,726
$74
$151
Gross Profit
$44,336
100%
$11,726
$74
$151
Operating Expenses
Research and Development
$69,398
157%
$54,347
$24,051
$17,338
Sales, General and Admin.
$24,075
54%
$11,089
$10,032
$4,931
Operating Income
($49,137)
-111%
($53,710)
($34,009)
($22,118)
Add'l income/expense items
$11,439
$5,506
$1,462
$720
Earnings Before Interest and Tax
($37,698)
($48,204)
($32,547)
($21,398)
Interest Expense
$14
$84
$29
$0
Earnings Before Tax
($37,712)
($48,288)
($32,576)
($21,398)
Income Tax
$5,357
$0
$0
$0
Net Income-Cont. Operations
($43,069)
($48,288)
($32,576)
($21,398)
Net Income
($43,069)
-97%
($48,288)
($32,576)
($21,398)
Adjustments to Net Income
$0
($815)
($597)
($105)
Net Income Applicable to Common
Shareholders
($43,069)
-97%
($49,103)
($33,173)
($21,503)
March
-
April 2009

32

Pain Therapeutics (PTIE)

Business Model Example: Small cap biopharma

Period Ending:
12/31/2008
2008 %
12/31/2007
12/31/2006
12/31/2005
Total Revenue
$63,725
$65,984
$53,918
$5,080
Gross Profit
$63,725
100%
$65,984
$53,918
$5,080
Operating Expenses
Research and Development
$45,817
72%
$47,730
$46,803
$32,938
Sales, General and Admin.
$9,196
14%
$8,085
$7,668
$4,859
Operating Income
$8,712
14%
$10,169
($553)
($32,717)
Add'l income/expense items
$6,018
9%
$10,136
$9,668
$2,047
Earnings Before Interest and Tax
$14,730
23%
$20,305
$9,115
($30,670)
Earnings Before Tax
$14,730
23%
$20,305
$9,115
($30,670)
Income Tax
($617)
-1%
$0
$2,927
$0
Net Income-Cont. Operations
$15,347
24%
$20,305
$6,188
($30,670)
Net Income
$15,347
24%
$20,305
$6,188
($30,670)
Net Income Applicable to
Common Shareholders
24%
$15,347
$6,188
$20,305
($30,670)















Constance McKee

Business of Biotech 7

March
-
April 2009

33

Medtronic (MDT)

Business Model: Medical Devices

Period Ending:
4/28/2008
2008 %
4/27/2007
2007 %
4/28/2006
4/29/2005
Total Revenue
$11,292,000
$12,299,000
$11,292,000
$10,054,600
Cost of Revenue
$3,446,000
31%
$3,168,000
26%
$2,815,300
$2,446,400
Gross Profit
$10,069,000
89%
$9,131,000
74%
$8,476,700
$7,608,200
Operating Expenses
Research and Development
$1,275,000
11%
$1,239,000
10%
$1,112,900
$951,300
Sales, General and Admin.
$5,143,000
46%
$4,153,000
34%
$3,659,400
$3,504,100
Non-Recurring Items
$875,000
8%
$166,000
1%
$463,800
$654,400
Operating Income
$2,776,000
25%
$3,573,000
29%
$3,240,600
$2,498,400
Add'l income/expense items
$109,000
1%
$170,000
1%
$36,700
$100,200
Earnings Before Interest & Tax
$2,885,000
26%
$3,743,000
30%
$3,277,300
$2,598,600
Interest Expense
$228,000
2%
$116,000
$55,100
Earnings Before Tax
$2,885,000
26%
$3,515,000
29%
$3,161,300
$2,543,500
Income Tax
$654,000
6%
$713,000
6%
$614,600
$739,600
Net Income-Cont. Operations
$2,231,000
20%
$2,802,000
23%
$2,546,700
$1,803,900
Net Income
$2,231,000
20%
$2,802,000
23%
$2,546,700
$1,803,900
Net Income Applicable to
Common Shareholders
2,231,000
$

20%
23%
$2,802,000
$2,546,700
$1,803,900
Constance McKee

Business of Biotech 7

March
-
April 2009

34

Amgen (AMGN)

Business Model: Biotherapeutics

Constance McKee

Business of Biotech 7

Period Ending:
12/31/2008
2008 %
12/31/2007
12/31/2006
12/31/2005
Total Revenue
$15,003,000
$14,771,000
$14,268,000
$12,430,000
Cost of Revenue
$2,296,000
15%
$2,548,000
$2,095,000
$2,082,000
Gross Profit
$12,707,000
85%
$12,223,000
$12,173,000
$10,348,000
Operating Expenses
Research and Development
$3,030,000
20%
$3,266,000
$3,366,000
$2,314,000
Sales, General and Admin.
$4,169,000
28%
$3,361,000
$3,366,000
$2,839,000
Non-Recurring Items
$1,318,000
$1,231,000
Other Operating Items
$294,000
2%
$298,000
$370,000
$347,000
Operating Income
$5,214,000
35%
$3,980,000
$3,840,000
$4,848,000
Add'l income/expense items
$352,000
2%
$309,000
$309,000
$119,000
Earnings Before Interest and Tax
$5,566,000
37%
$4,289,000
$4,149,000
$4,967,000
Interest Expense
$316,000
2%
$328,000
$129,000
$99,000
Earnings Before Tax
$5,250,000
35%
$3,961,000
$4,020,000
$4,868,000
Income Tax
$1,054,000
7%
$795,000
$1,070,000
$1,194,000
Net Income-Cont. Operations
$4,196,000
28%
$3,166,000
$2,950,000
$3,674,000
Net Income
$4,196,000
28%
$3,166,000
$2,950,000
$3,674,000
Net Income Applicable to
Common Shareholders
28%
$3,674,000
$4,196,000
$3,166,000
$2,950,000
March
-
April 2009

35

Wednesday

Valuations


What is a valuation?



Why is this important to founders?



How are valuations determined in the private (venture) market and in
the public markets?



To what quantitative factors are valuation models sensitive?



Founders make money when….



Founders lose money when….


Constance McKee

Business of Biotech 7

March
-
April 2009

36

Valuation Determined by (1) Value of Latest
Round of Financing & (2) Market Conditions

Current
New Financing
Constance McKee

Business of Biotech 7


If 25% is worth $1 million, then 100% is worth $4 million


($1
divided by

25% = 4)

25% valued at $1 million

March
-
April 2009

37

Pricing Rounds

Venture Valuations Affect Founders’ Ownership (“Dilution”)


Begins with pre
-
money valuation


Pre
-
money valuation driven by


(1) absolute amount of cash needed and


(2) target post
-
money valuation


New price
-
per
-
share calculated as (valuation/new $$ required = price/sh)


New price/sh calculate as (# new shs issued = % owned) = “dilution”

Constance McKee

Business of Biotech 7

Shares Outstanding
3,000,000


Pre-Money Price Per
Share
0.33
$

Pre-Money Valuation
(No. Shs X Price)
1,000,000
$

New $$ Required
1,000,000
$

New Price Per Share
0.75
$

No. New Shares Issued
1,333,333


4,333,333


New Shs % Total
31%
New Valuation $
3,250,000
$

March
-
April 2009

38

Valuations

Market Drives Pre
-
Money Valuations


Model sensitive to time to exit (acquisition, IPO, product launch)


Model sensitive to cash required for each milestone


Pre
-
money valuation is whatever investors believe & insist on


Pre
-
money valuation + funds in = post
-
money valuation


Next round of investors want a “step up” (assumes you meet your
milestones & your technology is now worth more)

Constance McKee

Business of Biotech 7

Low Valuation Scenario
Total $
In
A Pre
0.3
$

A New $
0.5
$

0.5
$

A Post
0.8
$

Step-up X
2
B Pre
1.7
$

B New $
5.0
$

5.0
$

B Post
6.7
$

Step-up X
3
C Pre
20.0
$

C New $
20.0
$

20.0
$

C Post
40.0
$

Step-up X
2
EXIT
80.0
$

25.5
$

March
-
April 2009

39

How Expected Exits Drive Valuations


Solve for “x”


exit value must be at least $50M


Constant


capital
needed to bring Rx
to market


Constant


time
needed to bring Rx
to market


Constant


return
VCs seek at each
capital raise


Variable


IPOs &
comparables


“Solve for x”


what
your company is
worth now ~ current
round VC pricing

Constance McKee

Business of Biotech 7

Time: 6
-

8 yrs for novel Rx

Your idea
-

$70M for novel Rx

Milestone


in vivo POC $5M

Milestone


preclinicals/IND $5M

Milestone


“clinical proof” $10M

Milestone


FDA approval $40M

Milestone


IPO or trade sale


(x+5) + (3x+5) + (2x+10) + (2x+30) = 100

March
-
April 2009

40

Notion of ‘Expected Future Earnings’


Public Company Valuations Fluctuate with Price


For public companies, investors buy on future expected value of earnings


Torcetrapib failed in Phase 3


Pfizer spent $850M to develop the drug to that point


Conducted trials in 20,000 patients


On 4 December 2006, stock price dropped from $27.88 per share to $23.00
per share (x 7.2 billion shares, from $201 BN to $166 BN total company value)


Means investors removed value of future earnings from stock price

Constance McKee

Business of Biotech 7

March
-
April 2009

41

What’s a Valuation ‘Comparable’?

Similar business model, similar products


Constance McKee

Business of Biotech 7


Valuations of venture
-
backed companies


Subscription
-
services


(1) Venture One


(2) The Venture Capital Analyst


(3) your lawyers (without naming companies….”we’re seeing deals like
this right now at valuations of etc”)


(4) your friends


Small cap public companies


Valuations may be affected by major investors’ portfolio concerns, may be
unrelated to company’s future


or inside information? (PTIE)


Valuations may be affected by global market conditions (MAKO)


Similar class of drugs progressing through clinical trials


Pfizer torcetrapib failure

March
-
April 2009

42

What Happened to 2007 IPO Debuts?

Public valuations ~ VC valuations



T
i
m
e

F
r
a
m
e
:

Market cap as of 16 Mar 2009


MIPI = Molecular Insight ($64M)

SNTA = Synta ($62M)

OPTR = Optimer ($328M)

ROSG = Rosetta Genomics ($30M)

VRUS = Pharmasset ($241M)

Constance McKee

Business of Biotech 7

March
-
April 2009

43

What happened on October 7?

Venture investors Montreux & Skyline do $60M PIPE on
October 29, 2008 at $6.25 per share*

Constance McKee

Business of Biotech 7

Montreux bid $6 per share in
2006 in a venture round before
MAKO went public, but were
outbid by hedge funds. MAKO
later went public at $10 per
share, has received FDA
approval and started marketing
its products. Montreux invests
later in the company’s
development with minimum
science, clinical and market risk
in a PIPE (Private Investment in
Public Entity)…but what is VC
doing investing in public
companies….?

March
-
April 2009

44

What happened to PTIE on March 2?

Largest investor Eastbourne sells 1M (of 11M) shares

Constance McKee

Business of Biotech 7

$4,349
(7.93%)
(88,530)
1,028,069
12/31/2008
DIMENSIONAL FUND ADV...
$5,130
126.03%
676,190
1,212,731
12/31/2008
VANGUARD GROUP INC
$6,382
11.14%
151,200
1,508,787
12/31/2008
RENAISSANCE TECHNOLO...
$9,146
(0.90%)
(19,604)
2,162,241
12/31/2008
BARCLAYS GLOBAL INVE...
$46,851
0.00%
0
11,075,874
12/31/2008
EASTBOURNE CAPITAL M...
Value
($1000)
% Change
(Shares)
Change
(Shares)
Shares Held
Date
Owner Name
Select a name below for more information.
$4,349
(7.93%)
(88,530)
1,028,069
12/31/2008
DIMENSIONAL FUND ADV...
$5,130
126.03%
676,190
1,212,731
12/31/2008
VANGUARD GROUP INC
$6,382
11.14%
151,200
1,508,787
12/31/2008
RENAISSANCE TECHNOLO...
$9,146
(0.90%)
(19,604)
2,162,241
12/31/2008
BARCLAYS GLOBAL INVE...
$46,851
0.00%
0
11,075,874
12/31/2008
EASTBOURNE CAPITAL M...
Value
($1000)
% Change
(Shares)
Change
(Shares)
Shares Held
Date
Owner Name
Select a name below for more information.
March
-
April 2009

45

Founders Make Money When…

Valuations Are High & Keep Ratcheting Up to Exit

Constance McKee

Business of Biotech 7

Investor Class
A
A%
A
Value
B
B%
B
Value
C
C%
C
Value
Sale
or IPO
IPO%
Exit
Value
Pre-Money
2
$

8
$

36
$

104
$

New Funds
2
$

4
$

16
$

15
$

12.6%
15
$

Post-Money
4
$

2.0


12
$

3.0


52
$

2.0


119
$

Total $ in Deal
4
$

8
$

24
$

39
$

VC 1
1
$

25%
1.0
$

12.5%
1.5
$

4.2%
2.2
$

2.6%
3.1
$

VC 2
1
$

25%
1.0
$

12.5%
1.5
$

4.2%
2.2
$

2.6%
3.1
$

VC 3
2
$

25%
3.0
$

8.3%
4.3
$

5.1%
6.1
$

VC 4
2
$

25%
3.0
$

8.3%
4.3
$

5.1%
6.1
$

VC 5
8
$

33%
17.3
$

20.5%
24.4
$

VC 6
8
$

33%
17.3
$

20.5%
24.4
$

Public investors
15
$

38.5%
45.8
$

Founders
2
$

50%
2
$

25%
8.3%
47.7
$

5.1%
6.1
$

Total Funds In
2.0
$

6.0
$

22.0
$

37.0
$

Total Ownership
100%
100%
100%
100.0%
March
-
April 2009

46

Founders Lose Money When…

Valuations Remain Low & Exit Is Low

Constance McKee

Business of Biotech 7

Investor Class
A
A%
A
Value
B
B%
B
Value
C
C%
C
Value
Sale
or IPO
Sale %
Exit
Value
Pre-Money
2
$

8
$

54
$

-
$

New Funds
2
$

10
$

40
$

10
$

100.0%
10
$

Post-Money
4
$

2.0


18
$

3.0


94
$

2.0


10
$

Total $ in Deal
4
$

14
$

54
$

69
$

VC 1
1
$

25%
1.0
$

7.1%
1.3
$

1.9%
1.7
$

1.4%
0.1
$

VC 2
1
$

25%
1.0
$

7.1%
1.3
$

1.9%
1.7
$

1.4%
0.1
$

VC 3
5
$

36%
6.4
$

9.3%
8.7
$

7.2%
0.7
$

VC 4
5
$

36%
6.4
$

9.3%
8.7
$

7.2%
0.7
$

VC 5
20
$

37%
34.8
$

29.0%
2.9
$

VC 6
20
$

37%
34.8
$

29.0%
2.9
$

Public investors
15
$

21.7%
2.2
$

Founders
2
$

50%
2
$

14%
3.7%
90.5
$

2.9%
0.3
$

Total Funds In
2.0
$

12.0
$

52.0
$

62.0
$

Total Ownership
100%
100%
100%
100.0%
March
-
April 2009

47

Change the Math for Early
-
Stage Investment


Shorten Time to Market & Minimize VC Equity

Constance McKee

Business of Biotech 7

ROI
YR1
YR2
YR3
YR4
YR5
YR6
-6%
-5
-10
-15
-20
-20
60
9%
-5
-10
-15
-20
60
24%
-5
-10
20
Capital

Time in Years

$60 Million

ROI = 24%

$20 Million

1
2
3
4
5
6
ROI = 9%

ROI = (6%)

ROI = 24%

March
-
April 2009

48

Change the Math for Early
-
Stage Investment


Strategies to Accelerate Exit & Minimize Dilution

Constance McKee

Business of Biotech 7

Shorten Time to Market

Minimize VC Equity



License in later
-
stage compound



Acquire later
-
stage product



Re
-
engineer generic compound



Reformulate marketed compound



NIH & NCI



Venture philanthropies



DARPA



Partner with large pharma or medtech



Pursue product with shorter test period



Pursue disease with smaller patient


size for smaller clinical trial size



State funds: CT Innovations, Pennsylvania



Country funds: Scotland’s Co
-
Investment


Fund; France’s Premier Jour @ Genopole



Partner with large pharma or medtech

University funds



Stanford’s Birdseed Fund



Elm Street Ventures, Yale

March
-
April 2009

49

Thursday

Sources of Equity & Non
-
Equity Capital


Founders make money when…



Angel investors & venture capital



Pharmaceutical industry alliances



Federal grants


NIH
-

SBIR, STTR


(TIP)


Department of Defense
-

US Army, DARPA



Venture philanthropies & foundations



Ex
-
US

Constance McKee

Business of Biotech 7

March
-
April 2009

50

Biotech IPOs


Canaries in Capital Markets?

the venture capital industry is not investing….

Constance McKee

Business of Biotech 7

March
-
April 2009

51

Biotech Industry


on the Ropes

“Darwinism” isn’t selecting out the best ideas….

Constance McKee

Business of Biotech 7

2007
2008
% Change
Industry market cap
$454B
$404B
-11.00%
Total capital raised
$22B
$10B
-54.00%
Total partnering capital
$23B
$20B
-14.00%
Total raised from IPOs
$2B
$6M
-99.00%
Total raised from follow-ons
$6.3B
$1.7B
-73.00%
Total raised from PIPEs
$1.8B
$1B
-40.00%
Total raised from debt
$6.6B
$2.8B
-57.00%
Total raised from venture capital
$4.4B
$4.1B
-6.00%
Companies that are public
365
356
-4.50%
Companies having a market cap greater than $1 billion
60
49
-18.30%
Companies with a market cap between $500M-$999M
45
26
-42.20%
Companies with a market cap between $250M-$499M
66
38
-42.40%
Companies with a market cap between $100M-$249M
103
59
42.70%
Companies having a market cap below $100 million
91
184
102.20%
Companies trading with less than six months of cash on hand
12
120
90%
Companies with less than one year of cash remaining
26
180
65%
Companies filing for bankruptcies in 2008
2
6
200%
Companies delisted from NASDAQ
7
22
214%
THE BIOTECHNOLOGY INDUSTRY AS OF 12/31/08
Source: Burrill & Company, Biotech 2009
March
-
April 2009

52

Opportunities for Exit

IPO Market Slammed Shut in 2008


But Not M&A

Constance McKee

Business of Biotech 7

0
5
10
15
20
25
30
2007
IPOs
2008
IPOs
2008
M&A -
Mx
2008
M&A -
Dx
2008
M&A -
Rx
Total Raised
Average Deals
Billion$ Deals
March
-
April 2009

53

Mergers & Acquisitions 2008


Investors’ Only Exit Opportunity in 2008

Transaction
Premium
Ann. Date
Target
Acquiror
Industry
Value ($mm)
1 Day Prior
1 Week Prior
1 Month Prior
4/7/08
Alcon Inc.
Novartis AG
Medical Devices
38,579.8
(3.5%)
0.7%
6.1%
7/17/08
Barr Pharmaceuticals Inc.
Teva Pharmaceutical Industries
Pharmaceuticals
8,920.4
42.0%
50.9%
60.9%
2/1/08
Millennium Pharmaceuticals Inc.
Takeda Pharmaceutical Co. Ltd.
Biotechnology
7,798.0
64.8%
70.7%
54.4%
9/10/08
Imclone Systems Inc.
Eli Lilly & Co.
Biotechnology
6,198.0
10.0%
8.6%
9.2%
6/11/08
Applied Biosystems Inc.
Invitrogen
Diagnostics and Tools
6,158.1
12.9%
7.6%
9.3%
7/6/08
APP Pharmaceuticals, Inc.
Fresenius Kabi AG
Pharmaceuticals
5,644.1
29.1%
43.2%
64.6%
6/11/08
Ranbaxy Laboratories
Daiichi Sankyo Company, Limited
Pharmaceuticals
2,243.9
31.4%
42.0%
49.1%
4/7/08
LifeCell Corp.
Kinetic Concepts Inc.
Medical Devices
1,716.1
18.2%
21.3%
25.8%
6/14/08
Ranbaxy Laboratories Ltd.
Daiichi Sankyo Company, Limited
Pharmaceuticals
1,588.3
30.0%
45.4%
49.0%
7/31/08
Alpharma, Inc.
King Pharmaceuticals Inc.
Pharmaceuticals
1,273.5
60.8%
50.0%
61.0%
2/13/08
Toyama Chemical Co. Ltd.
FUJIFILM Holdings Corporation
Pharmaceuticals
1,273.0
39.5%
31.2%
14.6%
9/1/08
Sciele Pharma Inc.
Shionogi & Co. Ltd.
Pharmaceuticals
1,262.7
60.9%
64.3%
63.3%
5/22/08
Chugai Pharmaceutical Co. Ltd.
Roche Holding AG
Pharmaceuticals
913.8
11.6%
13.0%
39.1%
7/23/08
Vital Signs Inc.
General Electric Co.
Medical Devices
882.9
28.6%
26.3%
32.1%
5/30/08
Leiner Health Products Inc.
NBTY, Inc.
Pharmaceuticals
794.0
-
-
-
4/11/08
Sirtris Pharmaceuticals, Inc.
SmithKline Beecham Corporation
Biotechnology
619.8
68.0%
73.2%
116.4%
7/15/08
Lev Pharmaceuticals, Inc.
ViroPharma Inc.
Biotechnology
576.1
50.2%
45.5%
51.8%
7/21/08
Symbion Pharmacy & Consumer Businesses
Sanofi-Aventis Australia Pty Ltd.
Pharmaceuticals
545.8
-
-
-
6/8/08
Third Wave Technologies Inc.
Hologic Inc.
Diagnostics and Tools
538.4
7.1%
6.0%
32.7%
6/1/08
Laboratório Americano de Farmacoterapia S.A.
Hypermarcas SA
Pharmaceuticals
536.6
-
-
-
3/4/08
Enturia, Inc.
Cardinal Health, Inc.
Pharmaceuticals
490.0
-
-
-
7/9/08
Speedel Holding AG
Novartis AG
Biotechnology
476.3
95.1%
107.5%
64.6%
7/25/08
Acambis plc
Sanofi Pasteur SA
Biotechnology
466.3
65.2%
71.2%
61.0%
6/4/08
Protez Pharmaceuticals, Inc.
Novartis AG
Pharmaceuticals
400.0
-
-
-
1/22/08
Cogenesys, Inc.
Teva Pharmaceutical Industries Ltd.
Pharmaceuticals
400.0
-
-
-
2/6/08
Alpharma AS
3i Group plc
Pharmaceuticals
395.0
-
-
-
6/4/08
Tercica Inc.
Ipsen S.A.
Biotechnology
385.4
111.3%
114.8%
82.9%
7/10/08
Speedel Holding AG
Novartis AG
Biotechnology
381.8
93.7%
107.0%
67.9%
3/28/08
Del Pharmaceuticals, Inc.
Church & Dwight Co. Inc.
Pharmaceuticals
380.0
-
-
-
11/23/08
Omrix Biopharmaceuticals, Inc.
Johnson & Johnson
Biotechnology
352.2
18.2%
37.5%
69.5%
2/20/08
Encysive Pharmaceuticals Inc.
Pfizer Inc.
Biotechnology
346.8
117.6%
200.5%
245.6%
3/31/08
Bentley Pharmaceuticals Inc.
Teva Pharmaceutical Industries Ltd.
Pharmaceuticals
339.2
7.9%
7.2%
(0.1%)
4/25/08
Innogenetics NV
Solvay Pharmaceuticals S.A.
Biotechnology
326.1
73.8%
62.5%
63.3%
9/18/08
Protherics plc
BTG plc
Biotechnology
321.1
41.8%
25.1%
0.8%
2/25/08
CollaGenex Pharmaceuticals Inc.
Galderma Laboratories, L.P.
Pharmaceuticals
320.8
31.4%
31.4%
41.3%
8/25/08
Optimum Nutrition, Inc.
Glanbia plc
Pharmaceuticals
315.0
-
-
-
8/4/08
Valeant (Europe)
Meda AB
Pharmaceuticals
300.1
-
-
-
6/16/08
LipoSonix, Inc.
Medicis Pharmaceutical Corp.
Medical Devices
300.0
-
-
-
Average
45.1%
50.5%
53.2%
March
-
April 2009

54

Angel Investors Aren’t Always (Angelic)

The Good, The Bad & The Ugly


Good angel investors


Typically invest $50K
-

$100K


Anticipate that VCs will follow on


meaning, their terms anticipate VC terms


Understand they will be diluted


Have “deep pockets”


meaning, they can keep putting cash in



Bad angel investors


Demand terms that VCs will choke on later


Don’t understand your technology, your financing targets & waste HOURS of
time asking for explanations


Leave you hanging when you need more capital



Ugly angel investors


Sure you want to know……?

For more reading on angel investors:
http://www.nature.com/bioent/2004/041201/full/bioent839.html

http://wistechnology.com/article.php?id=4340


http://wsbe2.unh.edu/center
-
venture
-
research

Constance McKee

Business of Biotech 7

March
-
April 2009

55

Venture Capital vs Private Equity

Capital market conditions are blurring boundaries


Venture capital buys stock


key bet is increased value of equity


Fundamental assumption


value of equity mirrors value of underlying asset


But value of equity can be affected by


(1) capital market conditions, including global economic crises


(2) exit to make private shares liquid is Initial Public Offering (IPO)


(3) performance of similar biotech companies at & after IPO


Venture train wreck scenario


increased value in asset, as milestones met &
risks decline, not reflected in stock price


Private equity buys assets


key bet is good management increases value


(1) value of deals *relatively independent* of capital market conditions


(2) exit most often sale to another company (“trade sale”)


(3) exit can be IPO

Constance McKee

Business of Biotech 7

March
-
April 2009

56

Why Pharma Does Venture Capital

Fills the Funding Gap & Strategic Focus

Constance McKee

Business of Biotech 7


Amgen, Genentech, Pfizer all have corporate investment funds located in, and active in investing in
California.


EMD Serono invests an early
-
stage fund alongside a strategic fund allied with the MS Society, “Fast
Forward”


blends corporate & philanthropic strategies


The Pfizer Incubator
www.thepfizerincubator.com

combines funding with access to laboratory facilities
in San Diego, with another facility mentioned for the Bay Area and one for Philadelphia. The funding
commitment is $50 million.


Since 2005, Takeda has operated a well
-
respected venture fund located in Palo Alto that invests from
the Takeda R&D budget.


Merck does not have a fund
per se
, but has a licensing group that is active in the Bay Area.


Baxter (Chicago) is rumored to be considering a corporate venturing fund.


Lilly Ventures operates out of Indianapolis.


Roche Venture Fund (Basel) has invested in 25 companies in ten countries.


Biogen Idec launched its venture fund in Boston in 2004 with a commitment of $100 million.


With a commitment of $2 billion, Novartis Venture Fund (Cambridge, MA and Basel)
http://www.venturefund.novartis.com/

is one of the largest corporate venture investors, with
investments in over 50 companies as of 2008.

March
-
April 2009

57

Why Biotech Does Alliances

Access to Capital & Validation


Discovery companies lack core competency in


Biological validation


Clinical development



Biotech lacks core competency in


Clinical development


CMC, GMP & manufacturing scale
-
up


Navigating FDA approval



Venture investors place enormous value on industry deals


Validate technology


Proxy for product value ~ proxy for financing valuation


Capital that VCs don’t put at risk themselves


Constance McKee

Business of Biotech 7

March
-
April 2009

58

Pharma As Source of Capital

Biotech
-
Pharma Deals: Credibility, Cash & Expertise

Constance McKee

Business of Biotech 7

March
-
April 2009

59

Pharma As Source of Capital

Biotech
-
Pharma Deals: Credibility, Cash & Expertise

0
50
100
150
200
250
Pfizer
GSK
Roche
Aventis
Wyeth
Novartis
Lilly
J&J
BMS
Merck
Abbott
AstraZeneca
Scher.-Plough
Bayer
Schering AG
Boeh. Ingl.
Baxter
Organon
Fujisawa
Taisho Ph.
Discovery
Lead
Preclinical
Phase I
Phase II
Phase III
PLA/NDA filed
Approved
Constance McKee

Business of Biotech 7

Biotechs took in $12 BN in Alliance
Revenues from the top 20 pharma
companies in the fifteen
-
year period 1987
-
2002 (n=1,848). Source: Recombinant
Capital 2003, with permission.


March
-
April 2009

60

750 Drugs in Development for Cancer

(2007 Data


Includes Overlapping Trials)

www.PhRMA_NM_Cancer0828Pg1.pdf


Constance McKee

Business of Biotech 7

March
-
April 2009

61

Yale’s Contributions to Medicine

Constance McKee

Business of Biotech 7

March
-
April 2009

62

Constance McKee

Constance McKee is currently founder, President & CEO of Manzanita Pharmaceuticals, Inc (2007
-
present). Manzanita is
the re
-
start of Asilomar Pharmaceuticals, Inc., an early
-
stage biotechnology company which filed for bankruptcy in June
2006. Manzanita is operating as a virtual company while seeking non
-
venture funding.


Constance is currently involved in the following other consulting and bioentrepreneurial activities:


Co
-
founder with Dr Jay Levy (UCSF) of California Antiviral Foundation, a start
-
up venture philanthropy to develop
new therapies based on the CAF innate immune response in HIV/AIDS patients.


Board member, co
-
founder and past President, BioE2E, Inc.,
www.bioe2e.org
, a 501(c)3 organization that has
presented over 60 programs on topics of interest to bioentrepreneurs in the San Francisco Bay Area.


From 1990
-
1994, Constance was Chief Executive of Cambridge Quantum Fund I, a seed venture fund investing in
technologies from Cambridge University (Cambridge, UK). From 1994
-
1995 she was co
-
founder and Chief Executive of
SynGenix Limited, a portfolio investment of Cambridge Quantum Fund. From 1996
-
2001 she worked in the corporate
venture capital group and in General Counsel’s office at Philips Semiconductors. From 2007
-
2008 she served as Co
-
Executive Director of Americans for Cures Foundation, a 501(c)3 organization dedicated to supporting advocates for stem
cell research.
www.americansforcures.org



In 1986
-
1987 she was a recipient of a Bosch Fellowship (Bosch III) which supported internships in corporate finance in
Germany. She holds an MBA from Yale University School of Management, an MM from San Francisco Conservatory of
Music (voice) and BA with distinction from Stanford University.

Constance McKee

Business of Biotech 7