1. Pharma/BIOTECH industry overview
Iain Jeromson 18/11/13

2. Introduction
Pharmaceutical companies develop drugs to treat diseases through their R&D department (also acquire compounds from biotechnology companies), sector is very active in acquisitions
It can take 12 years from compound discovery to first sale

3. Main players Top 10 pharma companies by revenue (2012)
GSK and AZ are FTSE 100 constituants
Popular with pension funds

4. Biotech vs Pharma Biotech companies are often smaller And younger
Research driven- rarely sell anything
Have used the advancements in genetics to spur on innovation- biotech didn’t exist before the 80s- pharma is over 100 years old
Biotech use genetic manipulation of microorgansims to make highly complex biologic compounds such as antibodies and proteins

5. Drug development Drug development is a risky business
And a costly one, >$1bn to bring a drug to market

6. Patents New chemical entities are patented by pharmaceutical companies
A granted patent allows exclusive rights to manufacture and sell the drug for 20 years
After 20 years generic forms of the drug may be manufactured by third parties, this leaves a window of less than 8 years for a pharma company to capitalise with sales and “repay the debt of R&D”
After this 20 year window a so called patent cliff is reached where sales of the branded original dramatically, usually by 90%

7. Industry trends
A move towards biologic drugs, and away from traditional small molecules
Major restructuring of large multinational pharma companies due to weak drug pipelines, see GSK and Pfizer
Many biotech IPOs recently-

8. Industry performance

9. Opportunities for the industry
Strengthening scientific base
Increasing demand for medication
Removal of barriers for free trade

10. Challenges for the industry
Tighter regulation
Annual approval of new drugs has flatlined
Rising healthcare costs due to aging population

11. Biotech funds 2 of the heavyweights in the biotecch sector are…
RA Capital- 44% annual returns since 2004
Baker Bros Advisors LLC-

12. Both have a position in my company of choice…

13. Acadia Pharmaceuticals
NASDAQ:ACAD
“Acadia Pharmaceuticals is a biopharmaceutical company focused on innovative treatments that address unmet medical needs in neurological and related central nervous system disorders. Acadia Pharmaceuticals has been one of the best performing stocks across all industries, having generated a return of more than 300% year-to-date.  The company is a perfect example of why following the smart money is typically a smart move for investors. The Baker Brothers, one of the best performing biotech hedge funds in the world, took an early position in Acadia Pharmaceuticals and have seen its holdings in the company soar to a value of approximately $550 million.”
Tom Meyer

14. Info Current price per share $23.29
Primavastin will potentially be a blockbuster drug (>$1bn in sales per year)
Developing drugs to treat conditions such as Alzeimers

15. Recent news
Very positive phase III data for their lead candidate- due for phase 4 middle of next year
20/05/2013- added to NASDAQ biotech index
07/01/2013- added to the Russel 2000 index

16. Analyst opinions

17. Pipeline

18. Future Approval for Primavastin estimated for mid 2014
Very likely buyout target

19. Risks vs Strengths Risks Strengths Clinical trials for primavanserin
Need for capital
Late stage, good data, also presented for multiple indications
Just received funding (from listing on NASDAQ)

20. Conclusion
Arcadia Pharmaceuticals presents a great opportunity to invest in a biotech company
Strong buyout potential
Analysts are bullish
Recent investment
Strong clinical data

21. Acadia Pharmaceuticals