Quarterly Biopharma Deals Update First Quarter...

Quarterly Biopharma Deals UpdateFirst Quarter 2013

April 2013Deloitte Recap LLCwww.recap.com

www.recap.com

1Copyright © 2013 Deloitte Development LLC. All rights reserved.Member of Deloitte Touche Tohmatsu Limited

1Q2013 Deal Trends Update

• Aggregate disclosed deal values are down compared to 1Q2012, despite increase in number of license deals and M&A transactions

• Early stage (Discovery-Phase I) and Reformulation deals are up compared to 1Q2012

• Cancer continues to dominate the licensing landscape, accounting for 33% of deals for the quarter

• MacroGenics and Gilead’s cancer-focused mAb discovery deal was the largest deal of 1Q2013 at $1.1 billion

• Cardinal Health’s acquisition of service company AssuraMed was the largest M&A transaction of 1Q2013 at $2.07 billion


Quarterly Report ContentSlide 3 – 1Q2013 Deal Making Landscape Slide 4 – Number of Licenses/JVs and M&A Deals Signed by Quarter: 1Q2011 – 1Q2013Slide 5 – License Deals by Stage at Signing: 1Q2012 vs. 1Q2013Slide 6 – Distribution of Licenses by Therapeutic Area: 1Q2012 vs. 1Q2013Slide 7 – Top Five License Deals of 1Q2013 by Total Disclosed SizeSlide 8 – Snapshots: Top Five License Deals of 1Q2013

Slide 9 – MacroGenics / GileadSlide 10 – Lundbeck/Otsuka (expansion of existing deal) Slide 11 – Chiasma / RocheSlide 12 – Edison Pharmaceuticals / Dainippon Sumitomo PharmaSlide 13 – Moderna Therapeutics / AstraZenecaSlide 14 – Lycera / Merck

Slide 15 – Quarterly Life Science M&A Deals: 1Q2011 – 1Q2013Slide 16 – Top Five M&A Transactions of 1Q2013 by Total Disclosed Deal SizeSlide 17 – Snapshots: Top Five M&A Transactions of 1Q2013

Slide 18 – AssuraMed / Cardinal HealthSlide 19 – Agila Specialties / MylanSlide 20 – MAP Pharmaceuticals / AllerganSlide 21 – Trauson Holdings / StrykerSlide 22 – Nypro / Jabil Circuit


1Q2013 Deal Making Landscape

50%M&A

($10.1B)

19%Licenses &

JVs($3.9B)

24%Asset

Purchase($4.9B) $20.1 Billion

Total deal value*

Deal Dollars**

12%M&A

(n=75)

31%Licenses &

Joint Ventures(n=195)

7%Asset

Purchase(n=43)

13%Grant, Equity,

Royalty Buyouts,

Other Funding(n=79)

16%Supply,

Distribution, Co-Promotion

(n=99)

8%Contract Services(n=48)

Acq. Option 2

9%Research

(n=58)

4%Other(n=26)

625Total number of deals in 1Q2013

Deal Volume

Source: Deloitte Recap LLC

*Total deal value among 126 deals with publicly disclosed deal value (excludes expansions of existing deals)

** Grant, Equity, Royalty Buyout, Other Funding=$629M; Supply, Distribution, Co-Promotion=$509M; Contract Service=No Disclosed Values; Acq. Option=$26M; Research=$3.8M; Other=No Disclosed Values


Quarterly Deal Trends:1Q2013 Aggregate Disclosed Values Down Despite Increase In Number of Deals

205 192

158178

158

141126

189195

7878

42

54

4746

45

6975

$0

$10

$20

$30

$40

$50

$60

$70

0

50

100

150

200

250

300

1Q2011 2Q2011 3Q2011 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013

Aggr

egat

e Di

sclo

sed

Deal

Val

ue ($

B)

Num

ber o

f Dea

ls

Number of Licenses/Joint Ventures and M&A Transactions Signed by Quarter: 1Q2011-1Q2013

# M&A # Licenses/JVs Aggregrate Disclosed Value ($B)

2011 2012 2013


NOTE: Aggregate disclosed deal size value excludes expansions of existing deals.


Quarterly Deal Trends:Early Stage and Reformulation Deals are Up in 1Q2013 vs. 1Q2012

24

13

46

2 3 3 3

30

23

10

53 0

4

8

0

5

10

15

20

25

30

35

Discovery Lead/Preclinical Phase I Phase II Phase III Registration Approved ReformulatedProduct

License Deals by Stage at Signing: 1Q2012 vs. 1Q2013

1Q2012 1Q2013

*Excludes 94 license deals in 1Q2012 and 86 license deals in 1Q2013 for which a stage at signing was not applicable and 5 deals in each quarter for which a stage at signing was unknown/undisclosed



Distribution of Licenses by Therapeutic Area: 1Q2012 vs. 1Q2013

* “Other” includes dermatology, chromosomal abnormalities, warfare defense, gastrointestinal disease, genitourinary/sexual function, nutritional supplements, cosmetics, and orthopedics; Chart excludes 28 and 36 licensing deals for 1Q2012 and 1Q2013, respectively, for which a therapeutic area was not applicable or not disclosed

Autoimmune/ Inflammatory

6%

Cancer31%

Infectious Disease

15%

Neurology16%

Endocrine/ Metabolic

10%

Diversified3%

Cardiovascular3%

Pulmonary2%

Ophthalmic2%

Hematologic2%

Other*10%

1Q2012n=122

Autoimmune/ Inflammatory

12%

Cancer33%

Infectious Disease

7%

Neurology16%

Endocrine/ Metabolic

6%

Diversified5%

Cardiovascular2%

Pulmonary3%

Ophthalmic2%

Hematologic4% Other*

10%

1Q2013n=145

Quarterly Deal Trends:Cancer Continues to Dominate the Landscape in 1Q2013



Quarterly Deal Trends:Top Five Licenses of 1Q2013 by Total Disclosed Deal Size

Licensor/ Seller

Licensee/ Buyer Total Size Upfront Asset Description Stage Therapeutic

Area

MacroGenics Gilead $1,115M $30MDART bispecific mAb programs against up to four undisclosed targets

Discovery Cancer

Lundbeck* Otsuka $825M $150M

Expansion of 2011 CNS pipeline collaboration to include Lu AE58054, a selective 5HT6 receptor antagonistfor Alzheimer’s disease

Phase II Neurology

Chiasma Roche $595M $65MOctreotide oral formulation for acromegaly and neuroendocrine tumors

Reformulation Endocrine/Metabolic

Edison Pharma Dainippon $545M $35MEPI-743 and EPI-589 redox factors and mitochondrial augmentors for CNS disorders in Japan

Phase III Neurology

Moderna AstraZeneca >$420M $240M

Option to 40 messenger RNA (mRNA) therapeutics for cardiometabolic diseases, renal diseases, and cancer

Discovery Diversified

Lycera Merck >$300M UndisclosedDiscovery of small molecules against undisclosed targets for autoimmune diseases

Discovery Autoimmune/ Inflammatory


*NOTE: This deal is an expansion of an existing multi-product CNS pipeline collaboration originally signed in November 2011, and does not represent an arm’s length transaction.


Snapshots for Top Five Licenses of 1Q2013 (as measured by total disclosed deal size, includes one deal expansion

for a total of six snapshots)


Date Announced: 1/2013

Dual-Affinity Re-Targeting (DART) bispecific mAb products directed to four targets in cancer and other diseases

GileadMacroGenics

Technology:Antibodies - Monoclonals

License Exclusivity:Exclusive

Stage At Signing:Preclinical

Therapeutic Area:Cancer

License to develop and commercialize preclinical Dual-Affinity Re-Targeting (DART) products directed at up to four undisclosed targets

# Products/Options:4

Territory:Worldwide

• Retains rights to one program ex-North America, Europe, Australia and New Zealand

• This is the fourth partnership signed around the DART platform in the past two years; MacroGenics is also collaborating with Servier, Boehringer Ingelheim, and Pfizer

Total Announced Size (USD):

Notes: $85M preclinical and $1B in clinical, regulatory and sales milestones; tiered low double-digit royalties

Sales-based: CONPre-Commercial: CON

Back-End Payment: Royalty

Upfront:$30M

Total Milestones:$1,085 M

Committed Payments: Contingent Payments:

Equity:−

$1,115M

LicenseeLicensor

• Will fully fund MacroGenics’ research activities for all four programs

• Has exclusive worldwide rights for three programs

• Has rights in North America, Europe, Australia and New Zealand for the remaining program

R&D Funding:−

Source: Deloitte Recap LLCCON = confidential



Expansion of 2011 CNS pipeline collaboration to include Lundbeck’s Lu AE58054, a selective 5HT6 receptor antagonist for Alzheimer’s disease

OtsukaLundbeck

Technology:Small Molecules


Stage At Signing:Phase II

Therapeutic Area:Neurology

Rights to co-develop and co-commercialize Lundbeck's Phase II compound, Lu AE58054, a selective 5HT6 receptor antagonist for AD


Territory:U.S., Canada, EU, East Asia (incl. Japan), & Nordic countries

• Shared costs of development and promotion

• The deal is part of a broader global neurology pipeline alliance to develop up to five psychiatric and neuroscience products -original deal signed between the two companies in late 2011


Notes: Costs incurred for the development and promotion of Lu AE58054 will be shared in the same ratio as profits


Back-End Payment: Profit Split

Upfront:$150M

Total Milestones:$675 M


Equity:−

$825M

LicenseeLicensor

• Shared costs of development and promotion

• Plans to begin a Phase III program in 2013 in more than 2,500 patients with mild-to-moderate Alzheimer's disease as an adjunct to donepezil

R&D Funding:−




Octreolin (octreotide) oral formulation for acromegaly and neuroendocrine tumors worldwide

RocheChiasma

Technology:Drug Delivery - Oral


Stage At Signing:Reformulation

Therapeutic Area:Endocrine/Metabolic

Rights to develop and commercialize octreotide, a somatostatin mimetic, formulated with Chiasma's TPE oral formulation technology, for acromegaly and neuroendocrine tumors


Territory:Worldwide

• Responsible for completing development through Phase III testing for acromegaly

• Developed the oral formulation using its Transient Permeability Enhancer technology

• Data from the Phase III trial for acromegaly are expected in 3Q2013 and MAA and NDA submissions are planned for 1Q2014


Notes: Up to $530M in development and commercial milestones, plus tiered, double-digit royalties.



Upfront:$65M

Total Milestones:$530M


Equity:−

$595M

LicenseeLicensor

• Roche and its Genentech unit will be responsible for marketing the product following its approval

R&D Funding:

−




EPI-743 and EPI-589 redox factors and mitochondrial augmentors for CNS disorders in Japan

Dainippon Sumitomo Pharma

Edison Pharmaceuticals



Stage At Signing:Phase III

Therapeutic Area:Neurology

Rights to develop and commercialize EPI-743, a compound that targets NQO1 and augments endogenous glutathione biosynthesis, and EPI-589, a reversible redox cofactor, for CNS disorders


Territory:Japan

• Will jointly develop EPI-589 (preclinical redox co-factor) for adult CNS diseases in Japan

• Retains all rights to EPI-743 and EPI-589 outside of Japan. Total Announced Size (USD):

Notes: $10-35M in development milestones per indication; undisclosed royalties on sales

Sales-based: $460MPre-Commercial: $35M


Upfront:$35M

Total Milestones:$495M


Equity:−

$545M

LicenseeLicensor

• Will develop EPI-743 (Phase IIb/III) stage for orphan pediatric mitochondrial diseases in Japan

• Will collaborate with Edison on EPI-589 (preclinical reversible redox cofactor) for adult CNS diseases in Japan

R&D Funding:$15M




Option to 40 messenger RNA (mRNA) therapeutics for cardiometabolic diseases, renal diseases, and cancer

AstraZenecaModerna

Technology:Oligonucleotide Ligands and siRNAs


Stage At Signing:Discovery

Therapeutic Area:Diversified

Option to develop and commercialize mRNA therapeutics for cardiometabolic, renal, and cancer targets discovered in a 5-year collaboration


Territory:Worldwide

• Responsible for designing and manufacturing the messenger RNA against selected targets


Notes: Up to $180M for 3 technical milestones, plus additional development and commercial milestones and royalties from high-single to low-double-digits per product



Upfront:$240M

Total Milestones:CON


Equity:−

>$420M

LicenseeLicensor

• Has the right to select from any target in cardiometabolic diseases, and from selected targets in cancer, for up to 5 years

• Has an option to select up to 40 drug products for clinical development

• Responsible for leading preclinical, clinical development and commercializationR&D Funding:

−




Discovery of small molecules against undisclosed targets for immune-mediated disorders

MerckLycera



Stage At Signing:Discovery

Therapeutic Area:Autoimmune/Inflammatory

Rights to discover, develop and commercialize small molecules against undisclosed targets for autoimmune diseases

# Products/Options:Multiple

Territory:Worldwide

• The agreement builds on a previous 3/2011 deal to discover, develop and commercialize small molecules that target T-helper 17 (Th17) cells by targeting the retinoic acid related orphan receptor (RORyt) for autoimmune disorders


Notes: Undisclosed upfront payment and research funding plus >$300 million in R&D, regulatory and commercial milestones, and royalties on sales.



Upfront:CON

Total Milestones:>$300 M


Equity:−

>$300M

LicenseeLicensor

• Responsible for clinical development of the discovered compounds

• Will have worldwide marketing and commercialization rights to any products that may be developed as a result of the collaboration

R&D Funding:CON



Quarterly M&A Trends:1Q2013 Aggregate Value Down Despite an Increase in M&A Activity

78 78

42

54

47 46 45

69

75

$0

$10

$20

$30

$40

$50

$60

0

10

20

30

40

50

60

70

80

90

1Q2011 2Q2011 3Q2011 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013

Aggr

egat

e Di

sclo

sed

Valu

e ($

B)

Num

ber o

f Dea

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Number of M&A Deals and Aggregate Value by Quarter: 1Q2011 – 1Q2013

#Deals Aggregate Disclosed Value ($B)

2011 2012 2013



Target / Acquirer Date Announced Market Segment Total Disclosed Deal Size($M)

AssuraMed / Cardinal Health 2/14/2013 Service Company $2,070M

Agila Specialties / Mylan 2/27/2013 Therapeutic Products $1,850M

MAP Pharmaceuticals / Allergan 1/23/2013 Therapeutic Products $958M

Trauson Holdings / Stryker 1/17/2013 Devices $764M

Nypro / Jabil Circuit 2/4/2013 Service Company $665M

Quarterly M&A Trends: Top Five M&A Deals of 1Q2013 by Total Disclosed Deal Size



Snapshots for Top Five M&A Transactions of 1Q2013 (as measured by total disclosed deal size)

Copyright © 2013 Deloitte Development LLC. All rights reserved.Member of Deloitte Touche Tohmatsu Limited

Announced: 2/14/2013 Closed: 3/18/2013

Cardinal Health Acquires AssuraMedAcquirer

Cardinal Health

AssuraMed supplies in-home medical products to patients. It operates two separate businesses: Independence Medical, a distributor of wholesale medical supplies; and Edgepark Medical Supplies, which home-delivers medical supplies for chronic conditions.

Target Company

AssuraMed

Major Investors:

Clayton Dubilier & RiceGoldman Sachs Capital Partners

Deal Value (USD):

$2,070M

Upfront Cash (USD):

$2,070MContingent Payments (USD):

n/a

(Private)

Market Segment:

Service Company

Therapeutic Area:

Diversified

Leading Technology:

Devices



Announced: 2/27/2013

Mylan Acquires Agila SpecialtiesAcquirer

Mylan

Agila Specialties, a former subsidiary of Strides Arcolab, develops and markets generic injectable products.

Target Company

Agila Specialties

Major Investors:

Strides Arcolab

Deal Value (USD):

$1,850M

Upfront Cash (USD):

$1,600MContingent Payments (USD):

$250M

Contingent Payments:Undisclosed contingent payments subject to the satisfaction of certain conditions by Agila’sparent company, Strides Arcolab.

(Private)

Market Segment:

Therapeutic Products

Therapeutic Area:

Diversified

Leading Technology:

Generics

Most Advanced Product:

Marketed



Announced: 1/23/2013 Closed: 3/1/2013

Allergan Acquires MAP Pharmaceuticals

Leading Products:Levadex

Acquirer

Allergan

MAP Pharmaceuticals develops and commercializes therapies for neurological disorders utilizing inhalational drug delivery device technologies.

Target Company

MAP PharmaceuticalsDeal Value (USD):

$958M

Upfront Cash (USD):

$958MContingent Payments (USD):

n/a

(Public. NASDAQ: MAPP)

Market Segment:

Therapeutic Products

Therapeutic Area:

Neurology

Leading Technology:

Drug Delivery - Inhalational

Most Advanced Product:

Reformulation


Offer Price per Share:$25.00

Shares Outstanding:35.28M

Prior Close Sh. Price Premiums:

60% (1-Day)

57% (5-Day)

62% (30-Day)

Prior Year Total Revenues (USD):$23.1M

Cash On Hand at Acquisition (USD):$115M


Announced: 1/17/2013

Stryker Acquires Trauson HoldingsAcquirer

Stryker

Trauson Holdings develops and markets trauma and spine orthopedic implants and related surgical equipment. Its operates three business segments: Trauma Products, Spine Products, and Original Equipment Manufacturing.

Target Company

Trauson Holdings

Major Investors:

Luna Group

Deal Value (USD):

$764M

Upfront Cash (USD):


n/a

(Private)

Market Segment:

Devices

Therapeutic Area:

Orthopedics

Leading Technology:

Devices



Announced: 2/4/2013

Jabil Circuit Acquires NyproAcquirer

Jabil Circuit

Nypro provides plastics contract manufacturing services to the healthcare, packaging, and consumer electronics industries. Nypro operates 20 manufacturing facilities in 10 countries.

Target Company

NyproDeal Value (USD):

$665M

Upfront Cash (USD):


n/a

(Private)

Market Segment:

Service CompanyLeading Technology:

Manufacturing



Deloitte Recap Analyst TeamJacquelyn CafassoSenior Biopharma Deals Analyst

Chris DokomajilarManager, Senior Biopharma Deals Analyst

Jennifer DoyleManager, Senior Biopharma Deals Analyst

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