BC Biotech Association
Vancouver, March 2006
It Ain’t Easy
Deborah BrownGeneral Manager & Regional Vice President
Serono Canada Inc.
Vancouver, March 2006
2 Vancouver, March 2006BC Biotech Association
Biotech in CanadaA quick overview
• Almost 500 companies (over 1/3rd from spin offs)• Revenues of $3.8 billion• R&D expenditure nearly $1.5 billion• Directly employs 12,000 skilled workers• Biotech Human Resources Council estimates biotech
activities support 2500 organizations and over 200,000 jobs
• Market cap of Canada’s biotech companies estimated to be over $15 billion (70% represented by ~10 companies)
Source: Statistics Canada, Uses and Development Survey 2003
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A typical biotech is . . .
• Private• Works in human therapeutics with an R&D focus • Three-quarters of all companies have fewer than 50
employees• Does not have a commercialized product • Has less than 12 to 18 months of funding
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Pillars of Biotech Success …
Intellectual Property & Protection
Access to marketFinancing
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“Biotechnology is an industry driven by science”
“Biotechnology today is all about money."
Dr. Tony Brooks, Formerly of PricewaterhouseCoopers LLP
Paradox
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Serono
• Global biotech leader, 3rd largest in terms of revenues
• Largest European based biotech
• Based in Geneva, Switzerland
• 100 years old as of March 10, 2006
• Almost 5,000 employees, revenues of $2.5B in 2005
• 4 therapeutic areas and an emerging TA in oncology
• Blockbuster drug, Rebif, for Multiple Sclerosis
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The Major Biotechnology Leaders
Lead Productas % of
Sales
AmgenAmgen
GenentechGenentech
ChironChiron
GenzymeGenzyme
MedImmuneMedImmune
GileadGilead
2004 Revenues US$m2004 Revenues US$m
4,621
2,201
1,726
1,325
1,141
2,210
10,550
2,458
26%
46%
50%
68%
38%
17%
63%
84%
26%
46%
50%
68%
38%
17%
63%
84%
Market cap (US$) as of
Dec 31, 2004
81,479
57,141
10,158
22,218
14,397
6,228
15,148
6,743
81,479
57,141
10,158
22,218
14,397
6,228
15,148
6,743
SeronoSerono
Biogen-IDECBiogen-IDEC
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Biotech Ranking Update – H1 2005
CompanyH1 2005 Revenues
($m)
Revenues y.o.y.
Growth
Sales as % of Revenues
Lead Product as %
Sales
Lead Product H1 2005 Sales
($m)
Lead Product
Amgen 21.9% 96.7% 21.2% 1230.0 Epogen
Genentech 42.1% 82.3% 38.9% 956.0 Rituxan
Genzyme 24.7% 100.0% 35.6% 462.0 Cerezyme
Serono 11.7% 91.0% 53.2% 618.8 Rebif
Biogen Idec 10.5% 95.7% 66.2% 755.4 Avonex
Gilead 47.2% 91.7% 47.9% 406.9 Viread
Chiron 8.8% 70.3% 18.9% 109.5 TOBI
MedImmune 2.7% 99.2% 88.1% 523.0 Synagis
Cephalon 24.5% 95.3% 42.7% 230.0 Provigil
Celgene 51.3% 78.7% 90.0% 182.8 Thalomid258
566
598
826
926
1,193
1,278
1,298
2,988
6,005
Data Source: Company SEC filings / Bloomberg / Analyst reports
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Strong Financial Performance
• Over the last 5 years, total revenues doubled with a compounded annual growth rate (CAGR) of 16%
• Net income CAGR over the last 5 years of 22%
1,1331,240
1,3771,538
2,019
1999 2000 2001 2002 2003 2004
183
301 317 321
390
1999 2000 2001 2002 2003 2004
Total Revenues ($M) Net Income ($M)Guidance
2’370 - 2’420 Guidance492 - 497
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4 Therapeutic Areas, 13 products
• #1 MS product outside the USA and fastest growing MS drug in the USA
• World’s #1 brand in the field of fertility
• Unique portfolio of state-of-the-art fertility products
• Fastest-growing product in the GH business
• The only GH therapy registered for AIDS wasting
• First biological therapy for psoriasis to receive EC marketing autorisation
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Fostering a partnership culture
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Commercial Market Environment
•Slow (!) regulatory approvals
•Limited and deteriorating market access
•Biosimilars on the horizon
•Declining physician numbers
Negative Forces
Positive Forces
• Favourable economic environment
• Improved patient advocacy
• Biotech addressing unmet needs
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1. Low odds of clinical success2. Regulatory inefficiency3. High expectations of new biotech entrants4. Market access barriers5. Heavy expenses to service niche specialty areas6. Too few or too many therapeutic areas7. Competing against large pharma with more resources
Barriers to Success
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Probability of Clinical Success
• No guarantees, even at Phase III • Auto-immune diseases are multi-factorial• Few blood pressure cuffs • Placebo-controlled trials – the paradox• Lengthy ethics approvals • Phase IV gets bigger and bigger, and GCP
standard
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• Accept the unique nature of bioscience inventions and resource accordingly and/or adopt international standards and reviews in regulatory practices
• This includes:– eliminating the backlog of new technologies – launching the creation of an Orphan Product policy that
encourages and supports the development of treatments for unmet medical needs
– establishing a directive to ensure government processes and policies do not delay or discourage introduction and adoption of new biotechnologies like vaccines.
Inefficient Regulatory System
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Health Canada Performance is Poor
0 200 400 600 800 1000 1200
Submission Approval Time (days)
20002001200220032004
CanadaAUS
EU Swiss
USA 2
00
4
B
iolo
gic
s
Performance (HC Biologics vs World)
1,033 day avge
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Improved Biologics Performance Anticipated???
0 200 400 600 800 1000 1200
Submission Approval Time (days)
20002001200220032004
20002001200220032004
Dru
gs
B
iolo
gic
s
Performance Times (Biologics vs Drugs)
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High Expectations
• Breakthrough disease areas – they want cures• Many are injectables which increase
expectations on:• Training• Supply provision• Ongoing support = Call Centers
• Improved administration, tolerability, efficiency = lifecycle management!
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Standard Expectations for Biotech Drugse.g. The Clear Support Program
CSP “Get Back to Living Kit”
Overall Objectives:1. Assist patient in self-injection2. Ensure proper technique is
applied consistently for every injection
3. Provide helpful tools
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Who Pays and Will They?
Reimbursement
Private60%
Public40%
NewCommon
Drug Review
CDR Recommendation6 months post submission
Provincial Drug PlanDecisions
4-12 months post CDR recommendation
Open80%
Conseildu
Médicament
Québec Decision
Managed20%
• Special authorization • Annual cap• Lifetime cap• Mimic provincial plan
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1.The expenses of servicing niche specialty areas are heavy
2.Too few therapeutic areas3.Too many therapeutic areas
Cheaper by the dozen?
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Biotechnology Lifecycle
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Too Few
PROS• Efficient opex• Intimacy with market• Superior offerings vs.
pharma
CONS• Too vulnerable to a new
competitor• Very difficult to build
infrastructure for sales ops, CHE, market access, medical services, QA/QC, business development etc.
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Too Many
PROS• Have resources to build
shared services infrastructure
• Can leverage best practice across therapeutic areas
• Less vulnerable to one TA
CONS• Difficult to feed each
therapeutic area• Compete against big
pharma and their opex
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Patient and Physician Expectations
PsO sufferer or Caregiverseeking Tx
CLEAR SUPPORT Program(Raptiva DTP Pt Support Program)
Dermatologist&
Derm RN
Raptiva Rx(“patient”)
PEP ProgramPsoriasis education & awareness
(DTC Program)
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Education/ Value Added an Expectation
Sponsors of Whitaker-McFarlin MS Colloquium:
•Accredited by the University of Minnesota / Endorsed by CMSC and IOMSN
•Content overview:
•Epidemiology, Diagnosis, and Natural History (clinical and MRI)
•Disease Modifying Therapies
•Symptom Management
•Whole Patient Management: Practical Case Studies
Sponsors ofMS Fellows Program:•Each award is a two year fellowship ($50,000/year)
•Two will be awarded to applicants from across the US, one will be awarded to a Harvard applicant
Sponsors ofJohn Hopkins CME Programs:
•“Maximizing Long-Term Outcomes in Multiple Sclerosis”•Steering Committee: Peter Calabrese, MD and Doug Kerr, MD (Co-Chairs), Pat Coyle, MD, Doug Goodin, MD, Norm Kachuk, MD
Sponsors of MS Teleconnections:•200 CME teleconferences
•Accredited by Medical Education Collaborative
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Outsized on: Salesforce size Promotional spend Lobbying power Legal, sales operations, market research, business
analysis, competitive intelligence, manufacturing capability, GXP expertise, medical services, broad CRA teams.
Bundling power
Competing with the Big Boys
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It Ain’t Easy, but It’s Worth It
“Advances in genetic engineering will not only have dramatic implications for people and society, they will reshape vast sectors of the world economy. The
boundaries between many once-distinct businesses, from
agribusiness and chemicals to health care and pharmaceuticals to energy and computing will blur, and out of their convergence will emerge what promises to be the largest industry in the world: the life sciences industry.” Enriquez & Goldberg, HBR March-April 2000
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Thank You &Good Luck!
TM
www.biotech.ca
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