To Partner, or Not to Partner, that is Not the Question. Gregor Fachinger, BAYER.

Gregor Fachinger Ph.D.; Bayer Lifescience Center; Upgraded Life Festival Helsinki, May 31, 2016

Bayer´s Strategy to Access External Innovation To Partner, or Not to Partner, that is Not the Question

Partnering at Bayer • G. Fachinger • Upgraded Life Festival • May 31, 2016

Forward-Looking Statements: This presentation may contain forward-looking statements based on current assumptions and forecasts made by Bayer management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in Bayer’s public reports which are available on the Bayer website at www.bayer.com. The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.

Legal Notice:The product names designated with ™ are brands of the Bayer Group or our distribution partners and are registered trademarks in many countries.

Disclaimer

http://www.bayer.com/


The steadily growing and aging global population has a need for new and better

medicines and for an adequate supply of safe food. Our innovations offer answers to these challenges. We invent new molecules which can positively influence the biochemical

processes in living organisms with the goal of improving the quality of life. That is what our mission

“Bayer: Science For A Better Life” stands for.

Our MissionBayer: Science For A Better Life


Pharmaceuticals Consumer Health Crop Science• Prescription drugs • Over-the-counter medicines,

dietary supplements,dermatology products,foot care and sunscreen

• Innovative crop protectionand seeds

What do we do?Bayer Business Areas Focus on Human Health, Animal Health and Plant Health


Pharmaceuticals DivisionOne of the leading innovative companies in the healthcare industry

* pro forma by new segments** as of December 31, 2015 by new segments in full-time equivalents

• Largest division of Bayer in terms of sales• One of the fastest growing pharma companies

worldwide• Sales of 13.7 billion Euro• Pro forma sales of 15.3 billion Euro in 2015 *• Global headquarter in Berlin, Germany• 40,500 employees worldwide in 2015 **• Largest German pharma company

• Focus on prescription products, especially for cardiology, oncology, hematology, women’s healthcare, and ophthalmology

• Also markets contrast-enhanced diagnostic imagingequipment together with contrast agents


2015

Pharmaceuticals DivisionInnovative and established prescription products

Xarelto™

1,679Eylea™

759Kogenate™

1,109Mirena™ product family

819Nexavar™

773Betaferon™ / Betaseron™

823YAZ™ / Yasmin™ / Yasminelle™

768Adalat™

588Aspirin™ Cardio

486Glucobay™

443Ultravist™

302Gadovist™ / Gadavist™

233

Product [ sales in € million ]

2,252

1,228

1,155

968

892

824

706

633

524

523

318

290

2014


Pharmaceuticals DivisionPipeline by Indication

Cancer / Pasotuxizumab (PSMA BiTE Antibody)

Cancer / Pan-FGFR Inhibitor

Cancer / FGFR2-ADC

Cancer / Allost. AKT1/2 Inhibitor

Cancer / PTEFb Inhibitor 1

Cancer / PTEFb Inhibitor 2

Cancer / MPS1 Inhibitor 1

Cancer / MPS1 Inhibitor 2

Cancer / C4.4a-ADC

Cancer / MKNK1 Inhibitor

Cancer / mIDH1-Inhibitor

Cancer / anti-CD22-Thorium Conjugate

Heart Failure / Vasopressin-Rec Ant

Thrombosis / FXIa Inhibitor

Thrombosis / FXIa Antibody

Hypertension / sGC Stimulator

Diabet. Foot Ulcers / ARα 2c Rec Ant

Hemophilia / anti-TFPI Antibody

Endometriosis / AKR1C3 Inhibitor

Endometriosis / PRLR Antagonist

Selection of major Pharma pipeline projects in clinical Phase I to III (Status April 2016)

Prostate Cancer / ODM-201

HCC 2nd Line / Regorafenib*

Comb. Study CRPC / Radium-223 Dichloride

NHL / Copanlisib (PI3K Inhibitor)

ESUS / Rivaroxaban

PAD / Rivaroxaban

Major Adv. Card. Events Prevent. / Rivaroxaban

CHF and CAD / Rivaroxaban

Long-term VTE Prevention / Rivaroxaban

Medically Ill / Rivaroxaban

Insufficient PDE5 Inhibitor Response / Riociguat

Diabetic Kidney Disease / Finerenone

Hemophilia / Damoctocog alfa pegol

Non-CF Bronchiectasis / Cipro DPI

Lung Infections / Tedizolid

Gram-neg. Pneumonia / Amikacin inhale

Phase III (16)Phase I (20)

*Regorafenib is a Bayer compound developed solely by Bayer. In 2011, Bayer entered into an agreement with Onyx Pharmaceuticals, Inc. under which Onyx will receive royalty on future global net sales of regorafenib in oncology

Oncology Cardiovascular Diseases

GynecologyHematologyOthers

Phase II (18)Cancer / Regorafenib*

Bone Mets Breast Cancer / Radium-223 Dichloride

Cancer, various studies / Radium-223 Dichloride

Cancer / Anetumab Ravtansine (Mesoth.-ADC)

NHL / DLBCL / Copanlisib (PI3K Inhibitor)

ACS sec Prevention / Rivaroxaban

Thrombosis / FXI ASO (Antisense-Oligonuc.)

PH IIP / Riociguat (sGC Stimulator)

Chronic HF / Vericiguat (sGC Stimulator)

Renal Anemia / Molidustat

Heart Failure / Neladenoson Bialanate (p.Ad-A1 Ag)

Heart Failure / Chymase Inhibitor

Sympt. Uterine Fibroids / Vilaprisan (S-PR M)

Endometriosis / Vilaprisan (S-PR M)

Wet AMD / PDGFR Antibody + Aflibercept

Wet AMD / DME / Ang-2 Antibody + Aflibercept

Cystic Fibrosis / Riociguat (sGC Stimulator)

Diff. syst. Sclerosis / Riociguat (sGC Stimulator)


Collaboration with Orion Pharma on ODM-201A highly innovative Androgen Receptor Inhibitor added to Bayer´s Prostate Cancer Pipeline

From: Ganesh V et al., Cancer Forum Prostate Cancer, November 2015 Vol 39

Collaboration Agreement with Orion on ODM-201 ODM-201 is an investigational novel oral Androgen

Receptor (AR) inhibitor in clinical development ODM-201 may provide a potential new treatment for

patients with high risk non-metastatic castration-resistant prostate cancer

Excellent fit to Bayer´s portfolio in Prostate Ca, which includes Xofigo for the treatment of patients with symptomatic bone metastases

Partners to jointly develop ODM-201 with Bayer obtaining global commercial rights; Orion has option to co-promote in Europe

Orion will be responsible for manufacturing Upfront €50M, milestones, double-digit royalties

Dr. Joerg Moeller, Member of the Bayer Pharmaceuticals Executive Committee and Head of Global Development: “From a clinical perspective, ODM-201 has the potential to complement Bayer´s portfolio in Prostate Cancer and enables us to deliver new treatment options for patients who desperately need them”


Pharmaceuticals DivisionFrom Molecules To Medicine:The long process of drug development

Source: based on PhRMA Profile Pharmaceutical Industry 2010

More than 1 billion Euro

Drug research Vorklinik

Data reviewby regulatory authorities(up to 2 years)

(more than2 years)

Lab and animalexperiments

Preclinical Clinical trials Evaluation/Approval

Phase IV studies

10,000Test compounds

<250Test compounds <5 Test compounds

1 Drug Approved By Health

Authorities

Years0 2 4 6 8 10 12

Phase I: 20-100 healthy volunteers tolerability, pharmaco-

kinetics / pharmacodynamics Phase II: 100-500 patients

safety, efficacy (dose finding) Phase III: 1,000-10,000 patients

efficacy, safety


Pharmaceuticals DivisionOur research activities focus on diseases with a high medical need

• Thrombosis / Heart Failure / Acute Coronary Syndrome

• Kidney Diseases • Lung Diseases

Cardiovascular Diseases

Oncology

• Cell Cycle / Survival Signaling • Tumor Metabolism / Chromatin

Biology• Immunotherapies / Antibody-

Drug Conjugates / Thorium Conjugates

• Hemophilia • Rare Bleeding Disorders• Hemoglobinopathies• Hematopoiesis

Hematology

Gynecological Therapies

• Endometriosis• Uterine Fibroids

• Macular degeneration• Other Exudative / Non-

Exudative Eye Diseases

Ophthalmology


OsloBerlin

Pharmaceuticals DivisionResearch centers around the globe

Wuppertal / Cologne

Berkeley / San Francisco Turku

Employees in R&D 2015: 7,741Investment in R&D 2015: € 2.3 billion

Investment in R&D of 2015 total net sales: 16.6%

• Oncology• Gynecological

Therapies• Cross-

Indication Platform

• Cardiovascular Diseases

• Ophthalmology• Biologics

Research & Development

• Cross-Indication Platform

• Hematology

• Biologics Research & Development

• Chemical and Pharmaceutical Development: Polymer-based Drug Delivery Systems

• Oncology:Thorium Conjugates Platform


Pharmaceuticals DivisionResearch partnerships are coordinated at our international Science and Innovation Centers

* Facility of collaboration partner

Beijing • DD Innovation Center China• * Bayer Tsinghua Center for

Innovative Drug Discovery• * Bayer / Peking University

Center of Translational Research for Drug Discovery

Osaka• Open Innovation Center

Japan

Singapore• Science Hub Singapore

Region • Integrated Translational

Oncology Network

San Francisco • Science Hub US• CoLaborator

Boston• East Coast Innovation Center

Berlin• CoLaborator


Increasing challenges in the Healthcare MarketNeed for Partnerships

Increasing ValueRequirements

Aging Population

From “Emerging Markets”to “Growth Markets”

Patients / Consumersgain more

Influence

Highly efficient

healthcare industry

Rising costsand pressureon healthcareindustrymanufacturers

These challenges cannot be addressed by the majorpharmaceutical companies alone: partnerships are a key component

Need to come up with „breakthrough“ innovation

Understand needs and specifics of diseases prevalent in emerging markets

Find options to “de-risk” research and increase flexibility

Improve molecular understanding of disease mechanisms, better models, patient stratification


Pharma / Biotech Companies

Arm‘s length

Close interaction

on individual or multiple

projects

Co-location

Academic Institutions

Joint labs

License and research agreements

Consortia

Asset acquisition /divestment

Contract research

Grants

AcceleratorIncubator CoLaborator

GermanCancer ResearchCenter (DKFZ)

Amgen, Compugen,

OncoMed, Broad

Institute, Lead Discovery

Center, Innovative

Medicines Initiative,

Inception 4,

Syndax,

Grants4-Initiativen

From traditional licensing agreements or strategic research alliances to public-private partnerships or open innovation models – Bayer welcomes many different forms of cooperation along the value chain.

There's No 'One Size Fits All'!A Portfolio of Collaboration Models is Employed to Address Different Partnering Needs and Interests


Strategic Alliances Long-term-oriented, risk-sharing agreements, complementary expertise

and joint collaboration goals to develop new therapy options Significant contributions from both partners in terms of content, resources

and financials

There's No 'One Size Fits All'!Strategic Alliances Enable Work on Highly Complex and Innovative Project Portfolios

Examples German Cancer Research Center (DKFZ): Cancer therapy OncoMed: Cancer stem cell therapeutics Evotec: Innovative endometriosis therapeutics Tsinghua University: Bayer-Tsinghua Joint Research

Center for Innovative Drug Discovery (multiple drug discovery projects)

PROGNOSTICTreat or don’t

treat?

PHARMACO-DYNAMIC

Which dose?

PREDICTIVEWhich drug?

BIOMARKERS

Precision MedicineBiomarker concepts in Pharma Drug Development

adapted from Sawyers, Nature 2008

Clinical use of BM requires scientific evidence and an assay.


• Can add to a clear diagnosis

• Need for human samples• Not necessarily involved

with a novel therapeutic

• Need for animal samples, non/res-ponsive models

• Need for human samples

• Potential as CDx for patient selection

• Need for animal samples, response to drug

• Need for human samples

• Valuable for inter-nal decision mak-ing in early trials

In 2008, Bayer Pharma AG established the internal Research Biobank. Its mission is… …to provide Bayer Pharma scientists with speedy and compliant access to clinical specimens of standard of

care patients outside clinical trials in particular for biomarker research


Biomarker CollaborationsBayer´s Research Biobank Concept

Bayer Scientists

Sample processingSample analytics

Joint interpretation & publication

Academic MDs

Specimen generationClinical data

Joint interpretation & publication

CROs

Sample ProcurementClinical data

Sample processing & analytics

Patients: Hope for new

treatments

In 2015 Bayer entered into a collaboration with Turku University Hospital covering all indications legal environment highly annotated samples recontact for trial?Data measured will be reported to Auria

Biobanks in Finland Key part of Bayer Biobanking Strategy: Auria



Biobanks in Finland Key part of Bayer Biobanking Strategy: FIMM/FHRB

FHRB: Finnish national Biobank project for hematological disorders: bone marrow and blood samples skin biopsies clinical information

Bayer-FIMM/FHRB collaboration: screen AML samples ex vivo

against >200 compounds NGS analyticsSamples analyzed for Preclinical drug research Biomarker discovery Drug repurposing


Examples:Grants4Targets™ (www.grants4targets.bayer.com) Grants for developing target proposals, low effort

application, IP rights remain with applicant Promising targets might be pursued via collaboration

agreements Initiated 2009, 1300+ applications world-wide, 175+

grants were awarded

Bayer´s “Grants4…” initiativesCrowd Sourcing Utilizes the Expertise of a Larger Scientific Community

Grants4Indications™ (www.grants4indications.bayer.com) Grants to support non-clinical or clinical research projects

to evaluate a Bayer compound in a new indication Terms and conditions will be defined in a separate

contract


PartnerYourAntibodies™(www.partneryourantibodies.bayer.com) Easy-to-use web platform to promote the

exploration of antibodies as potential drugs A joint antibody exploration project might be

negotiated for interesting assets, involving substantial financial support from Bayer

Bayer´s “Grants4…” initiativesCrowd Sourcing Utilizes the Expertise of a Larger Scientific Community

Grants4Apps™ (www.grants4apps.bayer.com) Submission platform for innovative healthcare

projects instead of classical assets Examples include apps, services, wearables,

devices or processes contributing to improved health outcomes

Selected projects will gain financial support from Bayer


Key Partnering Principles Strategic Fit

Complementary capabilities, common strategic goals Relationship and Culture

Focus on personal relationship, trust and respect, cultural differences Operational Management

Well-defined processes and objectives, clear IP and publication agreements

Learning CapabilitiesOpenness to learn from each other

Value of CommunicationOpen communication, active conflict resolution

Enthusiasm and CommitmentCommitment to overcome issues, share credit

[Wissenschaftsmanagement 2010, 34-41.]

It's All About the Execution!Alliances are Managed According to Key Partnering Principles, and this is Regularly Checked


• generate added value for all involved parties

• complementary expertise

It's All About the Execution! Our partners value collaborations on eye-level with close interaction and exchange of expertise

¹ Insights based on a survey conducted with 52 partners from Biotech (23), CROs (3), and Academia (26) in May/June 2012.

What was valued and is important to our partners

Partners seek for• Collaborations on eye-level

with close interaction, exchange of expertise and mutual benefit

• Clear strategy and long-term perspective

Feedback from our partners:• Bayer has high scientific

expertise and good partnership management

Impact on organizing the partnership

Partner• Excellent collaboration partners • Sharing of knowledge

Bayer• Excellent internal Drug

Discovery expertise• Long-term, reliable partnership• Good partner interaction“High level of mutual trust which

allows for in-depth sharing of knowledge.”¹


Strategic Partnering complements internal excellence as a key to success for addressing the current and future healthcare challenges

There is no 'one size fits all' model, for each goal and partner the optimal partnering model has to be selected

Professional alliance- and project management is an important contributor to successful partnering

Consider Bayer as your partner of choice!

Strategic Partnering and Open Innovation for Life SciencesCollaboration is a key element in Bayer´s Innovation Strategy

Thank you for your attention!


Our products help improving people’s quality of lifePharmaceuticals Division

• Therapies with significant clinical benefit in liver cancer, colorectal cancer, prostate cancer, and gastrointestinal tumors

• Products to prevent and treat venous and arterial thromboembolism

• Helping people with cardiovascular risk management

• Treatment for different forms of pulmonary hypertension

• Treatment for Hemophilia A patients

• A therapy for five of the leading causes of vision loss in the workingage and elderly population

• A broad Women’s Healthcare franchise including contraceptives, menopause management, and gynecological therapies

• Anti-bacterial treatments to manage respiratory, urinary and surgical infections

• Well established therapy for Multiple Sclerosis

• Contrast media for computed tomography (CT) and magnetic resonance imaging (MRI)

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Strong and consistent performance in 2015Pharmaceuticals Division

2015

* Pharmaceuticals sales 2015 excluding sales from radiology business

[ in € million ]

Sales*EBITDASpecial itemsEBITDA before special itemsEBITDA margin before special itemsEBITSpecial itemsEBIT before special itemsGross cash flowNet cash flow

13,7453,987-208

4,19530,5%2,807-254

3,0612,7372,863

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ExampleThe Bayer-DKFZ Strategic Alliance Comprises Collaboration Along the Entire Oncology R&D Process

The German Cancer Research Center (DKFZ) is one of the largest bio-medical oncology research centers in Europe (3000+ employees)

First agreement signed in 2009, extended in 2014; Joint lab at the National Center for Tumor Diseases (NCT) established in 2013

Risk and reward sharing approach with joint financing and joint project selection (currently 30+ projects)

Ideal partnership due to high strategic fit and complementary expertise

BenchBedside


ExampleThe Bayer-Evotec Strategic Alliance Enables a New Approach to Endometriosis Research

Endometriosis research is currently facing a transition from hormonal to non-hormonal approaches

This required the identification of new targets and the development of novel, complex animal models

Contribution of complementary know-how (pain vs. endometriosis) Five-year, multi-target, risk- and reward-sharing alliance started 2012 Alliance built a balanced project portfolio in a short timeframe, currently

10+ projects, 3 preclinical development candidates so far


Pharmaceuticals DivisionOur open innovation initiatives complement our innovation strategy

Bayer allocates grants for the exploration of attractive, novel drug targets and biomarkers.

Bayer offers financial support to assess and to promote the exploration of small-molecule leads.

Bayer funds projects for novel software, hardware or technologies contributing to improve health outcomes or pharmaceutical processes. In addition, the “Grants4Apps Accelerator” in Berlin supports 5 digital health startups each year.

Bayer offers financial support to evaluate antibodies or derivates and to promote its exploration for a potential new drug development.

Bayer offers attractive laboratory and office spaces for young life-sciences companies at its premises in Berlin and San Francisco.

Bayer promotes the exploration of new indications and offers grants and further financial support for promising proposals.

Grants4Targets

Grants4Leads

Grants4Apps

Grants4Indications

CoLaborator

PartnerYourAntibodies

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To Partner, or Not to Partner, that is Not the Question. Gregor Fachinger, BAYER.

Healthcare

Transcript of To Partner, or Not to Partner, that is Not the Question. Gregor Fachinger, BAYER.