CBI’s 3CBI’s 3rdrd Annual Annual Bio/Pharmaceutical Collaboration Bio/Pharmaceutical Collaboration and Transaction Accounting and Transaction Accounting ConferenceConferenceSeptember 22, 2009September 22, 2009
Joint Finance Committee Joint Finance Committee Perspectives on How to Best Perspectives on How to Best Work with Collaborators and Work with Collaborators and
Manage ExpectationsManage Expectations
Our Panelists:Our Panelists:
• Christian Blin, Vice President, sanofi-aventisChristian Blin, Vice President, sanofi-aventis• Christopher Fenimore, Director of Finance, Christopher Fenimore, Director of Finance,
Regeneron PharmaceuticalsRegeneron Pharmaceuticals• Dominic Piscatelli, Sr. Director Finance, OSI Dominic Piscatelli, Sr. Director Finance, OSI
PharmaceuticalsPharmaceuticals• Thomas Hess, Chief Financial Officer, Thomas Hess, Chief Financial Officer,
Yaupon TherapeuticsYaupon Therapeutics• Christopher Lindblom, Controller, Infinity Christopher Lindblom, Controller, Infinity
PharmaceuticalsPharmaceuticals• Susan Melle, Finance Director, Susan Melle, Finance Director,
GlaxoSmithKlineGlaxoSmithKline• Alan Esenstad, Controller, Human Genome Alan Esenstad, Controller, Human Genome
SciencesSciences
Lessons Learned – JFC Lessons Learned – JFC PerspectivePerspectiveKeys to a Successful Keys to a Successful CollaborationCollaboration Understand and be transparent with your partnersUnderstand and be transparent with your partners– Take into account the differences in your partner’s Take into account the differences in your partner’s
culture, size and objectivesculture, size and objectives– Results in a stronger relationshipResults in a stronger relationship– Develops a level of trust and confidenceDevelops a level of trust and confidence
Know your collaboration agreement (the Know your collaboration agreement (the “contract”) and determine how the contract would “contract”) and determine how the contract would address particular issuesaddress particular issues– Provide “real-world” instances where a deviation from Provide “real-world” instances where a deviation from
the contract may be warrantedthe contract may be warranted– Use the “spirit” of the agreement to determine how Use the “spirit” of the agreement to determine how
issues should be handled that are not specifically issues should be handled that are not specifically defineddefined
Lessons Learned – JFC PerspectiveLessons Learned – JFC PerspectiveKeys to a Successful CollaborationKeys to a Successful Collaboration
Attempt to resolve disputes internally and at the Attempt to resolve disputes internally and at the finance level without having to refer to higher finance level without having to refer to higher governing bodygoverning body– Be aware of your partner’s alternative views; negotiate Be aware of your partner’s alternative views; negotiate
collaboratively, be flexible where prudentcollaboratively, be flexible where prudent Clear and frequent communicationClear and frequent communication
– Develop formal meeting schedules and establish the Develop formal meeting schedules and establish the principles for how the partners will work togetherprinciples for how the partners will work together
– Develop absolute clarity on plans, accountability and statusDevelop absolute clarity on plans, accountability and status– Don’t let key items wait until the next meeting (set the stage Don’t let key items wait until the next meeting (set the stage
via email or phone)via email or phone)– Set meeting agendas and take great minutesSet meeting agendas and take great minutes
3rd Annual Bio/Pharmaceutical Collaboration and Transaction Accounting Conference
September 22, 2009
Christian Blin, Vice President, sanofi-aventis
Christopher Fenimore, Director of Finance, Regeneron
Overview of sanofi-aventis
Sanofi-aventis is a global healthcare company engaged in the research, development, manufacture and marketing of healthcare products
Business is diversified and includes pharmaceuticals comprising Rx (prescription) drugs, OTC/OTX (over-the-counter / combined OTC and Rx drugs) and generics; vaccines and animal health
2008 net sales: €27.8 B; H1 2009 net sales: €14.5B
Pharmaceuticals business focuses on six therapeutic areas: thrombosis, cardiovascular diseases, diabetes, oncology, central nervous system (CNS) and internal medicine
Sanofi-aventis has a commercial presence in approximately 100 countries, and our products are available in more than 170 countries.
Approved product with $15-20MM in projected annual sales
9 Ph 3 trials underway … Many shots on goal
Ph 3 data coming in 2010
3 human mAbs in clinic today; target 2-3 new mAbs to enter clinic each year, 2009-2012; balance of novel and validated targets
Cash of $466MM (at 6/30/09) and no debt; resources expected to support operations through 2012
Manufacturing expertise; expanding to 50k liters capacity
Current market cap of approximately $1.7B – among the 20 largest biotechs
Regeneron Today
Aflibercept (VEGF Trap)
cancer
VEGF Trap-Eye
wet AMD
ARCALYST® (rilonacept)
gout
Collaboration Agreements
sanofi-aventis
Bayer HealthCare
sanofi-aventis –
Upfront/milestone payments $130MM $115MM $85MM –
Development costs paid by partner * 100% ~50% ~100%** –
Profit split — Regeneron share
US 50% 100% 50% 100%
Japan ~35% royalty 50% 35-45% 100%
ROW 50% 50% 35-45% 100%
Milestones remaining
Regulatory $400MM $70MM – –
Sales – $135MM $250MM –
* 50% repayment from profits ** plus $475MM of research funding over 5 years
Oncology Eye Disease Antibodies Inflammation
Aflibercept (VEGF Trap)
Aflibercept (VEGF Trap)Phase 3 Oncology Program
Total # of Patients
VELOUR study: 2nd line metastatic colorectal cancer(+ leucovorin, fluorouracil & irinotecan) 1200
VANILLA study: 1st line metastatic pancreatic cancer (+ gemcitabine) 630
VITAL study: 2nd line non-small cell lung cancer (+ docetaxel) 900
VENICE study: 1st line metastatic hormone resistant prostate cancer (+ docetaxel and prednisone)
1240
Patients randomized to standard of care chemotherapy +/- aflibercept
Each study more than 60% enrolled; total of 2,500 patients to date
Studies monitored by Independent Data Monitoring Committees (IDMC)
Results expected starting in 2010
Human Antibodies
Sanofi-Aventis Antibody Collaboration
Global collaboration to discover, develop, and commercialize therapeutic human antibodies
Sanofi-aventis funds $475 million of discovery research over five years through 2012
Sanofi-aventis funds 100% of development costs for collaboration antibodies
Goal is to bring average of 2 to 3 new antibodies into clinical development each year
Three antibodies in Ph 1
Two more INDs planned for 2009
Shaping Medicine, Changing LivesDominic Piscitelli
Sr. Director Finance
September 2009
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An Historical UpdateEvolution From a Technology Platform to a Cancer Company
Tarceva Jointly Discovered in Oncology Partnership With Pfizer
2000: Tarceva Rights Returned to OSI as an FTC Requirement for Pfizer’s Acquisition of Warner-Lambert
2000-2004: Established Oncology Franchise to Ensure Tarceva Success– Acquired Oncology Development & Regulatory Capabilities and Built
Commercial Organization
– Established Alliance With Genentech/Roche to Ensure Global Competitiveness
– Successfully Managed Phase III Trials and FDA Approval of Tarceva in NSCLC & Pancreatic Cancer
2005-2008: Began to Build Framework for a Premier Biotech– Increased Investment in Diabetes/Obesity pipeline
– Continued Investment in Oncology Pipeline
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Tarceva Collaboration Agreements Highlights
Co-Developer of Tarceva
Exclusive Marketing Rights for Tarceva in the US
– OSI has Co-Promotion Rights
Operating Losses and Profits are Shared Equally
OSI is Responsible for Manufacturing of the Product
OSI is Entitled to Certain Milestone Payments
Co-Developer of Tarceva
Exclusive Marketing Rights for Tarceva in the World Excluding the US
OSI receives a 21% Royalty on Net Sales
Roche has Exclusive Manufacturing Capabilities for the World ex-US
OSI is Entitled to Certain Milestone Payments
Three Parties have a Comprehensive Ongoing Clinical Development Program to Support the Long-Term Growth of Tarceva
- Tri-Partite R&D Expenses Shared Three Ways
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Tarceva Sales in the US and Related Revenue Recognition
Sales of Tarceva recorded by Genentech
50/50 net profit split recorded as Revenue by OSI on a quarterly basis
OSI also records Revenue relating to reimbursement for Manufacturing and Commercial costs
Total US Revenue recorded by OSI as a percentage of Tarceva Sales is referred to by OSI as the Conversion Factor
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Key Committees
Global Development Committee (GDC)
– Responsible for directing the clinical development of the product– Review and approve development proposals and budgets
Joint Steering Committee (JSC)
– Approve overall strategy of collaboration– Oversee and manage the product development and commercialization – Manufacturing related activities – Review and approve annual marketing and sales budgets
Joint Finance Team
– Work under direction of JSC– Financial, budgetary and accounting issues
Joint Project Teams – Clinical, Marketing, Sales, etc
Adolor/Pfizer Delta CollaborationAdolor/Pfizer Delta CollaborationThomas Hess
Former Chief Financial Officer of Adolor Corporation Former Chief Financial Officer of Adolor Corporation (currently CFO of Yaupon Therapeutics)(currently CFO of Yaupon Therapeutics)
© 2008 Adolor Corporation. All rights reserved.
n Date: December 2007
n Focus: Delta opioid agonists for pain
n Lead Compound: ADL5859
n Upfront Payment: $30M + $1.9M reimbursement for Phase 2a studies
n Milestones: $232.5MM
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Adolor/Pfizer Collaboration – Highlights
n Back End
United States
Profits/Losses shared 60% to Pfizer and 40% to Adolor
- US development expenses (external) to be shared in same proportion
Rest of World
Adolor to receive royalties on Pfizer net sales
- ROW development expenses – 100% Pfizer
n Provisions for adding compounds and indications
n Development Collaboration
Adolor: IND filings and clinical program through Phase 2a
Pfizer: Subsequent worldwide development and regulatory approvals
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Adolor/Pfizer Collaboration – Highlights
Adolor had the “option” to attend all JSC meetings!
Adolor is not obligated to attend collaboration meetings.
Two compounds in the clinic as of the collaboration date.
Adolor responsible for the development of each compound through
Phase 2a and then Pfizer assumes all responsibility.
Adolor’s project management projected that compound I & II would
be completed in February 2010 (26 months from collaboration
inception). Therefore, amortize upfront payment over 26 months.
Adjust if Phase II takes more/less time.
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Revenue Recognition Considerations
Innovative. Independent. Inspired.
Purdue Alliance: $500M potential over 5 years
Hedgehog inhibitor program and discovery pipeline
Economics
Independence
• $75 million equity purchase at avg. price of $12.50• $50 million line of credit, 10 year balloon note at prime• ~$400 million R&D funding over 5 years• Up to $200 million in warrant purchases at $15 - $40/share• Up to 20% royalties on all ex-U.S. sales
• Infinity leadership of worldwide discovery and development• Infinity to commercialize oncology products in the U.S.
Innovative. Independent. Inspired.
• Worldwide collaboration: R&D and commercial
• Compelling economics: Control INFI cash burn, significant downstream participation
– $70M upfront; $215M potential milestones
– R&D cost share and 50/50 WW profit split
– Co-promotion rights in US
• Provided global oncology infrastructure and reach
MedImmune/AstraZeneca alliance on Hsp90
HGS / GSK Collaboration
GSK / HGS Historical Collaborations GSK is a global pharmaceutical company, with annual sales in
excess of US$38B (£24B), arising from pharmaceutical and consumer products over 8 major therapeutic areas. These sales and much of our R&D efforts arise in part from a diverse range of collaborations.
HGS is a late-stage biotech company, with three products in Phase 3 development, one of which is being co-developed with GSK.
Ground breaking HGS/SB Genomic collaborative agreement signed in 1993
– Shared access to HGS’ sequence dB for target discovery
GSK exercised option to co-develop and co-promote BENLYSTATM in 2005.
– Agreement signed in 2006.
GSK / HGS BENLYSTA Collaboration
HGS wrapping up Phase 3 development
50 \ 50 cost sharing of development costs since 2006 (Clinical expenses, FTEs, drug supply, certain outside services)
Global commercialization
– HGS \ GSK share U.S. and ex-U.S. commercialization
Roles & Responsibilities
HGS\GSK Governance Structure
Joint Steering
Committee
Joint Manufacturing
Committee
Joint Development Committee
Global Joint Marketing Committee
Joint FinanceCommittee &
Sub-teams
Joint Finance Committee
Lead representative from each partner, with additional financial personnel on team
Participation from project management, operations and other areas (either ongoing or ad-hoc)
Joint Finance Committee RoleRole:
Prepare and monitor budgets and forecasts and changes to plan
Participate in operational team meetingsSupport collaboration governance committeesSupport analysis and evaluation of program changes
Establish and maintain effective financial oversightMonthly or ad-hoc meetings, facilitated by standard financial
reviews and templatesReview and approval process through governance structure
for life cycle plans or annual budgets, actual expenses, changes or other key items
Panelist Q&APanelist Q&A
JFC Panel Contact InformationJFC Panel Contact Information
• Doug McCorkle (Regeneron):Doug McCorkle (Regeneron): [email protected]
• Christian Blin (sanofi aventis):Christian Blin (sanofi aventis): [email protected]
• Christopher Fenimore (Regeneron):Christopher Fenimore (Regeneron): [email protected]
• Dominic Piscatelli (OSI):Dominic Piscatelli (OSI): [email protected]• Thomas Hess (Yaupon):Thomas Hess (Yaupon): [email protected]• Christopher Lindblom (Infinity):Christopher Lindblom (Infinity):
[email protected]• Susan Melle (GlaxoSmithKline):Susan Melle (GlaxoSmithKline): [email protected]• Alan Esenstad (Humane Genome Sciences):Alan Esenstad (Humane Genome Sciences):
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