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![Page 1: Alan E Smith Senior Vice President Chief Scientific Officer Genzyme MIT R&D Conference November 3rd 2005.](https://reader036.fdocuments.net/reader036/viewer/2022082818/56649ecf5503460f94bdcc5e/html5/thumbnails/1.jpg)
Alan E SmithSenior Vice PresidentChief Scientific OfficerGenzyme
MIT R&D Conference November 3rd 2005
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Biotechnology - business appears to be great …
~ 150 marketing approvals for biotech drugs and vaccines in last 5 years – more than all previous years combined
Many big revenue products:- Enbrel - Aranesp/Epogen - Cerezyme - Rituxin- Remicade - Neulasta/Neupogen - Synagis - Rebif- ReoPro - Avonex - Herceptin - Viread
2004 R&D approx 32 new - 1st indication “biotech” products approved 350 products in clinical stage development
2004 Financing 37 Biotechs went public WW, 28 in US $21B financing raised; 2nd best year ever
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Our business is time-consuming, expensive, & riskyCenter for Study of Drug Development, Tufts University, 2003 - 2005
. . . but the Biopharmaceutical World is tough
10,00010,000
250250
1010
11
2 4 86 1210 14
15 Years
Lead Discovery
Safety & efficacy in animals
Safety & efficacy in humans
Regulatory Approval
~$1B
Post - Approval : 73% need additional studies 30% recoup development costs 0
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PhRma 2002, Nature Drug Discovery 2005
The Productivity Conundrum
NMEs approved
R&D Spending ($B)
20
25
30
35
40
45
50
55NMEs
15171921232527293133$35B
19960.3
19970.5
19980.7
1999 0.7
20001.0
20011.4
20031.6
20022.1
15 13
$B/NME
Increased R&D investment hasn’t translated into more products
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But in even this environment Genzyme is doing well
Revenues & R&D Spending
0
0.5
1.0
1.5
2.0
2.5
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
To
tal R
eve
nu
es
($B
)
0
50
100
150
200
250
300
350
400
450
R&
D S
pen
din
g (
$M
)1st $Billion – 19 Years2nd $Billion – 3 Years
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Where do opportunities that drive long term growth come from?
Current +1 +2 +3 +4 +5 +6 +7
Re
ven
ue
CommittedGrowth
Rate
Existing Product Revenue
RevenueGap
New Product Revenue
Success demands continuous development of new opportunities
Year
Always a revenue gap in the out years
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Internally Originated Discovery Programs
Preclinical Candidates
Drugs inClinic
Marketed Drugs
Clinical Candidates
Drugs inClinic
Marketed DrugsDiscover more:
Discover outside & partner or acquire:
Discover inside:
We have to do all three
MarketedProductsDiscovery
Preclinical Research
Preclinical Development Pivotals
ClinicalResearch
Our Model
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Why look outside?
Estimated global health R&D funding 2000
Public funding: advanced countries
Private funding: Pharma, Biotech
Private funding: not for profit
Public Funding: developing countries
TOTAL
$38.0B
$53.0B
$9.4B
$2.5B
$103B
* Global Health Forum 2001, PMPRB 2002, Genzyme Est.
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Of the top 10 selling drugs in 2002 . .
Monsanto3.0NSAIPfizer
Ferrosan3.0Anti-depressantsGlaxo SmithKline
Takeda3.1AntiulcerantsTAP Pharma
Pfizer/Sumitomo3.8Calcium antagonistsPfizer
Kirin-Amgen4.2AntianaemicsJohnson & Johnson
Warner-Lambert7.9AntihyperlipidaemicsPfizer
Originator‘02
$BTherapeutic
CategoryCompany
Celebrex9
Seroxat/Paxil8
Prevacid7
Norvasc5
Procrit/Eprex4
Lipitor1
Product#
Success demands it
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Risk of Failure
Cost of Deal
Preclinical Candidates
Drugs inClinic
Marketed Drugs
An investment balance required – early & late stage partnerships
Every company strives hard to strike the correct portfolio balance between the risk of early stage and the growing cost of late stage partnerships
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Genzyme has ongoing collaborations with all kinds of organizations
Public/Commercial•Pharmaceutical companies•Biotech companies•Startups•Venture Capital groups
•Private/Non-Profit •University Investigators•Clinical / Hospital Investigators•Government Institutes•Private Research Institutes
How do you do it?
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Genzyme’s Unsolicited Partnering Opportunities Q1-Q3 ’04 Snapshot Total - 538 submissions
89 (16.5%) Interesting
14 - Followed up by BD or Scientist
27 - Received more information; then no interest11 - Pending with additional information
37 (6.9%) - Initiated a Confidentiality Agreement
7- Pending review of information 1 (0.2%) - Received info = SRA
3 (0.5%) - Received info = MTA
1 (0.2%) - Received info = LIC25 - Received info: no interest
A 1% hit rate . . . about average
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Renagel example - partnership and acquisition
• Henri Termeer• Chairman, Genzyme Board of Directors • Member, Geltex Board of Directors
• Bob Carpenter • Chairman, Geltex Board of Directors • Member, Genzyme Board of Directors
• Joint venture with Geltex in 1997 before product approval • $27.5M for 50% of Renagel in US & Europe
• Geltex acquired in 2001 after Renagel launch, • $1 Billion in cash and stock
• 2005 revenues ~$400M (annualized Q2 2005)
Later stage acquisition lowers risk . . .but at a price!
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. . . but acquisitions have downsides too
Cost of acquiring quality late stage products candidates is high, and getting higher –
Buying someone else’s innovation . . .
to reduce internal risk . . .
with steadily increasing competition – many in same game, many with deep pockets - all looking for the same thing
Many, perhaps most, acquisitions fail to live up to expectations
Outside collaborations and acquisitions must be carefully chosen and managed. How? …
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Reproducible ‘proof of concept’ efficacy data in relevant disease model
Preliminary animal safety data
Stable prototype formulation
Production plan for manufacturing product
Commercial plan – including access to IP, competition, etc.
Regulatory strategy
Clinical development plan
What’s important: 1) a solid, compelling story
A development checklist:
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• Financial – Upfront and ongoing commitment• Financial – Expected return on investment • Timing – Pipeline needs• Technical – Therapeutic area experience and expertise• Technical – Therapeutic platform• Capacity – People and facilities• Market – Call point• Strategic – Desired area of growth
Needs & abilities on both sides of the table:
Initial partnering requirements: a compelling story AND a good fit:
What’s important: 2) a fit
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Personal
•Connection - awareness of opportunity wherever it might be•Champion(s) - person(s) who are connected & truly believe• Initiative – turning belief into action •Persistence – there are always non-believers & setbacks•Dedication – it’s always more work than you think
Organizational
•Flexibility – Partners have differing needs from relationship•Openness – Frequent face-to-face communication•Experience – Realistic expectations, well-founded decisions •Quality – Essential in all aspects of a collaborative
After the ink is dry, success requires people who will are committed andorganizations that – while recognizing and respect differences - are compatible
What’s important: 3) people & organization
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Summary
Biotech industry • Success is rare, time consuming, and very expensive• Committed to aggressive long-term growth• Seeks and commercializes innovation• An essential part of the equation is partnering & acquisition
Partnering• Must choose wisely • Need an extensive understanding of external landscape and a• Through understanding of internal needs that partnership will fill• Goal is to find a fit between the external opportunity and internal need• Dedicated people and receptive organizations make the relationship work