State of Licensing 2011 Update

Moderators/Speakers Hemmie Chang, Chair, Licensing & Strategic Alliance Practice Group, Foley Hoag LLP Ranya Dajani, Executive Director, Strategic Transactions Group, Bristol- Myers Squibb Mahmood Ladha, Executive Director Regional & Corporate Business Development, Global SPBD, AstraZeneca Veronique Riethuisen, Transactions Lead, Primary Care BD, Pfizer, Inc. R. Christopher Seaton, Senior V.P./Global Transactions, Bayer HealthCare 2

Overview Current Challenges for Partnering Developments & Innovations in Life Sciences Transactions Hot Areas Personalized Medicine/Diagnostics Emerging Markets Rare Diseases Pharma/University Partnerships 3

Life Sciences VC Funding Declining 5 Source: PricewaterhouseCoopers, Taking A Tumble, February 2011

Life Sciences VC Funding Declining Faster Than Overall VC Funding 6 Source: PricewaterhouseCoopers, Taking A Tumble, February 2011

Biotech IPOs Struggling in Q1 2011 Company Name IPO Date Proceeds (M) Price Talk IPO Price 4/4/11 Price Pacira Pharmaceuticals 02/03/11 $42.00 $14-$16 $7 7.10 BG Medicine 02/04/11 $35.00 $13-$15 $7 7.70 Endocyte 02/04/11 $75.00 $13-$15 $6 8.48 AcelRx Pharmaceuticals 02/11/11 $40.00 $12-$14 $5 3.17 Tranzyme 04/01/11 $67.50 $11-$13 $4 4.03 7 Source: Wall Street Journal Venture Capital Dispatch blog, Biotch IPOs Continue Bleeding Money, April 4, 2011

Biotech Post-IPO Performance: 2009-2011 Percent Gain Or Loss 80 60 40 20 0-20 -40-60 -80 8 Source: Google Finance IPOs through Feb. 18, 2011

Decline in M&A for Private Biotechs Number of Private Biotechs Acquired 50 45 40 35 30 25 20 15 10 5 0 2005 2006 2007 2008 2009 2010 9 Source: Elsevier s Strategic Transactions database

10 BigPharma Facing Patent Cliff

Percentage of Deals Including An Option The Rise of Option-Based Licensing 2007 2008 2009 2010 12 Source: Elsevier s Strategic Transactions. Includes all licensing deals by big pharma, big biotech in which the option is the main component from 1/01/2007 to 8/31/2010.

Up-Front Payments Declining Millions ($) 13 Source: Elsevier s Strategic Transactions. Data set includes 299 alliances by big pharma, mid-sized European companies, top Japanese, and big biotech for which up-fronts were disclosed. 2010 Phase II average skewed by mammoth Abbott/Reata deal; if excluded average drops to $38.3mm.

Up-Front Payments Declining 14 Source: HBM Partners Pharma/Biotech M&A Report VC-backed companies only. Former buyouts excluded. Only for transactions where respective information was available.

What s Pharma Buying? Proportion of Total Worldwide Acquisition Value by Development Stage (includes generics) 15 Source: Elsevier s Strategic Transactions

The Rise of Contingent Value Rights Avg. Multiple Avg. Multiple with Earn-outs 16 Source: Elsevier s Strategic Transactions

Who is Buying? BigPharma s Share of Private Biotech Acquisitions Decreasing 17 Source: HBM Partners Pharma/Biotech M&A Report

Personalized Medicine/Diagnostics Deals in 2011 January launches $470M tender offer for February and and buys form partnership announce collaboration for $805M upfront March and form partnership April 19 raises $40M in Series A round from Third Rock Ventures

Pfizer buys 40% stake in Teuto Oct. 2010 Amgen buys Bergamo April 2011 Emerging Markets Recent Deals Brazil Russia AstraZeneca invests in new production manufacturing plant, commits to support new science and technology center April 2011 21 India Bayer/Cadila Joint Venture January 2011 Partnership between Merck and Sun Industries, Ltd. April 2011 China Novartis acquires majority stake in Zhejian Tianyuan Bio-Pharmaceutical March 2011 Bristol-Myers Squibb and Simcere announce partnership Nov. 2010 Merck/BGI sign Statement of Intent to Collaborate Sept. 2010

Alliances By Therapeutic Category Total Number of Alliances 23 Source: Elsevier s Strategic Transactions. Deal set includes all licensing transactions between 1/01/2007 and 12/31/2010 by big pharma, big biotechs, specialty, and top Japanese companies.

2010 s Top Dealmakers: Cancer, Neurology & Immune Disorders 24 Source: Elsevier s Strategic Transactions. Alliances that covered multiple theracats were counted more than once.

Rare Diseases Recent Deals Sanofi/Genzyme ($20B; numerous rare diseases) Pfizer/Zacharon Pharmaceuticals ($210M; lysosomal storage diseases) Pfizer/FoldRx Pharmaceuticals (protein misfolding diseases) 25

Rare Diseases FDA Designation & Approval Rates 26 Source: FDA Law Blog

Overview Current Challenges for Partnering Developments & Innovations in Life Sciences Transactions Hot Areas Personalized Medicine/Diagnostics Rare Diseases Emerging Markets Pharma/University Partnerships 27

Accessing Academic Innovation Total Number of Alliances 28 Source: Elsevier s Strategic Transactions. All licensing transactions by big pharma, big biotech, mid-sized European, and Top4 Japan from 1/01/2006 to 12/31/2010.

Pharma/University Partnerships Recent Deals Sanofi-aventis Enters Into Research Collaboration With Columbia University to Develop New Diabetes Treatments Yale and Gilead Sciences Sign Pact in Search for Cancer Drugs (up to $100 million) UCSF Partners With Pfizer to Improve Drug Discovery, Development (up to $85 million) AstraZeneca and UCL Join Forces in Sight-Related Stem Cell Medicine 29 Veridex (J&J), MGH (Harvard) to Work on Test for Circulating Tumor Cells

Q & A Hemmie Chang, Chair, Licensing & Strategic Alliance Practice Group, Foley Hoag LLP Ranya Dajani, Executive Director, Strategic Transactions Group, Bristol- Myers Squibb Mahmood Ladha, Executive Director Regional & Corporate Business Development, Global SPBD, AstraZeneca Veronique Riethuisen, Transactions Lead, Primary Care BD, Pfizer, Inc. R. Christopher Seaton, Senior V.P./Global Transactions, Bayer HealthCare 30