1. Biotech 2008: A Global Transformation
G. Steven Burrill
Chief Executive Officer
Burrill & Company
Wisconsin Life Sciences Transformation: World Perspectives & Wisconsin’s Advantage
Madison, WI, February 21, 2008
Last Updated: April 16, 2017

2. Exclusive focus on Life Sciences
Burrill & Company
Exclusive focus on Life Sciences
Human Healthcare (Rx and Dx)
Nutraceuticals/Wellness
Agbio
Industrial
Biofuels/ Bioenergy
Enabling Technologies

3. Burrill & Company – exclusively focused on life sciences
Private Equity / Venture Capital Group
Investing across the entire spectrum of the life sciences/biotechnology ≈ $950 million under management
Merchant Banking (Burrill LLC)
Strategic Partnering including licensing, research and other collaborations
Strategic Advisory Services including new company formation
Merger & Acquisitions across life sciences
Spin-outs ranging from products, to research divisions to disease area franchises
Media
Publications (biotech book, newsletters, special purpose publications [stem cells, personalized medicine, aging etc.], The Journal of Life Sciences, web- based intelligence reports)
Conferences
Headcount: 60+ professionals and staff

4. Burrill & Company U.S. & International Locations
San Francisco (HQ)
New York
Indianapolis
Portland
United States
London
United Kingdom
Shanghai
China
Dubai
UAE
Tokyo
Japan
Mumbai
India
Kuala Lumpur
Malaysia

5. Burrill Funds Under Management -($ millions)
Burrill Life Sciences Capital Fund III (2006) $283
Burrill Life Sciences Capital Fund II (2003)(1) $211
Burrill Life Sciences Capital Fund I(1)
Burrill Biotechnology Capital Fund (1999)(1) $140
Burrill Agbio I + Annex & Agbio II Capital Funds (1998(1)/2001)(1) $ 82
Burrill Nutraceuticals Capital Fund (2000)(1) $ 61 $283
Malaysian Life Sciences Capital Fund (a JV Fund) $150
Burrill AgBio II Annex* (a side-car fund to the MLSCF) $ 20
Total Funds Under Management at 12/31/07 $947
Fully invested, including reserves/commitments for subsequent financings in existing portfolio companies

6. Strategic Investors in Burrill & Company Funds

7. Burrill Merchant Banking Services (Burrill LLC)
Transactions Across Life Sciences for Public and Private Clients
Sell-side
Buy-Side
Divestitures
Reverse mergers
M&A Transactions
Representing Biotech and Big Pharma
Out-licensing, profit shares, options, and regional deals, etc.
Preclinical through marketed products
Strategic Partnering
Create a New Company or Merge into an Established Entity
Newco financings for pharma and biotech
Spin-Outs
Potential Scope of
Burrill LLC
Client Relationship
Private Placements
PIPE financing
Late-stage venture financing
M&A financing
Financing

8. Burrill Created/Hosted Industry Events
For inquires, contact Britt Fenton-Olsen at (415) or

9. G. Steven Burrill’s Annual Book
Our 22nd annual book will be out February 2008
To order most recent book or complete sets, visit:

10. Burrill Biointelligence Group Reports
The Burrill & Company’s Special Reports:
The Burrill Personalized Medicine Biointelligence Report
The Burrill Stem Cell Biointelligence Report
The Burrill Aging Biointelligence Report
The Burrill China Biointelligence Report
The Burrill India Biointelligence Report
The Burrill Media’s quarterly/monthly bio-intelligence report:
The Burrill Canadian biotech News Monthly
M&A/Partnering
Stem Cells
Personalized Medicine

11. The Journal of Life Sciences
Mr. William Patrick
Editor in Chief
A six-times per year publication. For information, see our website
and

12. To request the free weekly e-mail editions:
The Journal of Life Sciences on the web Weekly Brief and Weekly Brief, California Edition
To request the free weekly editions:

13. Themes in ’88 book
…Into The Marketplace
Science being converted to business
Products coming to market place
Are product liability, regulatory reform, patent court behavior insurmountable barriers?
Partner or vertically integrate?
Acquisitions by pharma desirable?
How will the industry evolve?

14. Biotech is Transforming the Globe
…and being transformed by it

15. Transformation
Webster: trans·for·ma·tion     Pronunciation: "tran(t)s-f&r-'mA-sh&n”, -Function: noun
The act or process of transforming somebody or something
Webster: trans.form
1a: To change in composition or structure

16. A Global Transformation…
…From
To…
Chemistry
Biochemistry
On Size fits all drugs
Personalized medicine
Aging (just happens)
Aging is optional / controllable
Therapeutics/diagnostics/devices
“Theranostics”
Treating sickness
Preventing Sickness
Food for survival
Food for health

17. A Global Transformation…
…From
To…
Fossil fuels
Alternative fuels (biomass conversion)
Unavailable local capital
Global arbitrage
Fully integrated business model (FIPCO)
Virtually Integrated business model (VIPCO)
Local companies
Global companies
US centric biotech industry
Global industry
Changing the healthcare environment
Transforming the world

18. Life Sciences – Biotech: A Short History …
Circa 1953 – Watson and Crick
Circa 1973 – Inception of biotech
ALZA (`68) Cetus (`71) Amgen (`80),
Genentech (`76 ) Biogen (`78),
Centocor (`79) Hybritech (`78)
Circa Meaningful biotech revenue
Circa 2008 – Transforming the world

19. Era of Unprecedented Advances in Medical Research
Understand the pieces
Hardware of Life (20th Century) genes/proteins
Software of Life (21st Century) – systems/network
“Biomarkers ‘r us” (Note: “genes ‘r us” biz model failed)
Cost per bit of biological info rapidly decreasing (Moore’s law)
The consequences are staggering …

20. Moore’s law – Cost Per Base

21. Challenges/Opportunities in Improvement of Care
And we see its implications:
Evidence based medicine
Advances in health information (Web MD)
Personalized, predictive, preventative medicine - (3 P’s)
Electronic Health Records (EHR)
BUT …
Delivery system so flawed can’t bring healthcare “advances” to market place
Government increasingly the payor (Medicare/other government healthcare systems)

22. Also Era of Macro Issues
Climate change
Energy needs/alternative fuels
Poverty
Security/terrorism
Philosophical - ideological conflict (religious conflict)

23. ……yet we are the envy of the world
FDA
NIH
CDC
DOD/DARPA/SARPA
USDA
DOE – Energy Alternatives

24. Total US Spend for Biotech/Pharma Research
NIH $29B
Pharma $43B
Biotech $30+B
TOTAL $100+B

25. Current Healthcare System in “Silos”
Insurers
Employers (Providing $)
Providers/ Managed Care
Doctors/Nurses/Hospitals
Suppliers
Pharma Companies
Diagnostic Companies
Medical Device Companies
Medical Innovators

26. Integration Is Essential BUT Where Is It Happening?
Kaiser Permanente (California)
Intermountain Health (Utah)
Analogy (Clayton Christiansen/ Harvard)
Color TVs invented by RCA but no sales since nobody would broadcast in color
RCA then bought NBC, then integration happened
…Therefore integration within the healthcare system is essential
if benefits of new technologies are to be realized

27. HHS Secretary Michael Leavitt
“Combining gene based medical care with health information technology could transform healthcare…”
“Personalized healthcare will combine basic scientific breakthrough of the human genome with computer-age ability to exchange and memorize data”

28. Regulatory harmonization
Not only integration, but a greater need for international collaboration
Pandemic diseases
Regulatory harmonization
Approvals
Patents
Drug/ Food Safety
Diseases know no borders
It’s a global economy

29. Entering a Period of Co-opetition (Cooperation/ Competition)
Strategic Partnering
Co-development
Co-branding
Co-promotion
Co-marketing
Country to country
Public/private
Big/small
Within industry/outside industry (IT/biotech)

30. Life Science Investment Thesis “To create and capture value across the spectrum of the life-sciences industries”
HEAL THE WORLD
FEED THE WORLD K
Human Health Care
Agriculture
Therapeutics
Diagnostics
Traits
Tools
Services
“Sustain & Nourish the world”
Wellness Enhancers
Food ingredients
Seeds
Medical devices
Bio Processing
Bio Fuels
Biomaterials
Building sustainable businesses
Addressing major market needs
Biopharmaceuticals
FUEL THE WORLD

31. So let’s look at where we are and what happened during the last year...

32. Key Industry Stats – Biotech 2008
USA
Europe
Asia/ Pacific
Canada
Total
Sales / Rev.
$89B
$12B
$3.5B
$1.5B
$106B
Annual R&D
$23B
$4B
$0.4B
$0.8B
$28B
Number of Companies
1,450
1,600
740
450
4300
Number of Employees
131,000
10,000
13,000
7000
151,000
Number of Public Co.’s
370
160
140 75
745
Market Cap
$455B
$30B
$50B
$547B

33. Pharma vs. Biotech Industry Market Cap ($B)
Company
12/31/07
12/31/06
12/31/05
12/31/04
12/31/03
12/31/02
12/31/01
12/31/00
Pfizer
155
187
172
199
280
192
251
290
Johnson & Johnson
191
180
186
184
154
112
181
146
Merck
127 82 69 69
103
165
133
216
Eli Lilly 60 62 65 65 77 50 88
105
Bristol-Myers Squibb 53 50 46 47 58 65
112
145
Pfizer/Merck
282
269
241
268
383
357
384
506
Total US Biotech
455
496
491
399
342
213
366
425
Industry
1.6x
1.8x
2.0x
1.5x
0.9x
0.6x
1.0x
0.8x

34. Top ten Biotech Companies by Market Cap
Position
Biotech 1986
Biotech 1991
Biotech 1996
Biotech 2001
Biotech 2006
Biotech 2007 1
Genentech
Amgen 2
Cetus 3
ALZA
Chiron
Elan
Gilead Sciences 4
Applied Biosystems
Centocor
Shire
Celgene
Genzyme 5
Biogen
Biogen Idec 6
BiogenIdec 7
Nova
Genetics Institute
Serono (ADR)
Shire ADR 8
Synergen
Immunex
Shire (ADR) 9
IDEXX
MedImmune
Quest Diagnostices
Amylin 10
Diagnostic Products
Millennium
Millennium Pharmaceuticals

35. Historical Biotech Market Cap 1997–2006

36. Top Five US Pharma* vs. Total Biotech Market Cap
….And these small Life Science companies are becoming increasingly important as a source of value creation and innovation in the healthcare sector
Top Five US Pharma* vs. Total Biotech Market Cap
Market Value of selected Big Pharma acquisitions of public Biotechs ( )
Source: Capital IQ, Windhover, Burrill Analysis

37. So, what really happened during the last year ?
Stem cells politically hot and the science is delivering
Technology/platform companies rebounded
BioFuels are BOOMING…
Industrial biotech is finally happening
Ag/animal health show progress
acreage is up
but “organics” and “natural’ are hot

38. So, what really happened during the last year ?
Increased interest in “wellness” not just sickness
Personalized medicine makes real progress
Regulatory concerns:
IVD/MIA “approvals”
FDA Critical Path
Theranostics
Biogenerics/biosimiliars/follow-on biologics
Big pharma buys into the biotech pipeline

39. So, what really happened during the last year ?
Reimbursement dynamics continue to dominate, especially in the US
India/China make real progress (Malaysia, Korea, others do too)
Industry raises $45b in capital in US alone
The last year has been a good year, not a great one
… My projections for 2008 will follow at the end

40. Transformation:
Sickness to Wellness

41. Healthcare Industry Dilemma…
Rising Healthcare Costs
Loss of Patent Protection for Blockbuster Drugs
Need for Innovation; build vs. buy
Reimbursement/Payment system changes – Medicare Part D
Compulsory Licensing

42. Healthcare Costs Have Been Rising - For a Long Time

43. Prescription Drug Costs as Percentage of Healthcare

44. Estimate of Overall US Healthcare Spending on Prescription Drugs (by general public)

45. Worldwide Global Pharmaceutical Sales –

46. …by the way, the Global Nutraceuticals Industry is $228 Billion in 2006
Supplements
Natural Foods
Functional Foods
Personal Care
(millions)
Source: Nutrition Business Journal May/June 2007

47. Today’s Medicine Challenge: One Size Doesn’t Fit All

48. Pharmacogenomics Shapes the Healthcare Business in 2000+

49. 140 Years of Drug Discovery Technology
penicillins
sulphonamides
aspirin
psychotropics
NSAIDS
H2-antagonists
beta
blockers
lipid
lowerers
ACE-inhibitors
Biotech drugs
chronic
degenerative
disease associated
with ageing,
inflammation,
cancer
drugs against
targets identified
from disease genes
1900
2030
1950
1960
1970
1980
1990
2000
2010
2020
2040
New Therapeutic Cycles
1st generation
2nd generation
3rd generation
natural products
and derivatives
serendipity
receptors
enzyme
genetic engineering
cell pharmacology/
molecular biology
genomics /
proteomics
Source: CMS, Lehman Brothers research

50. Confluence of Technology, Tools, and Knowledge

51. A Systems Biology Approach – Follow the Pathways

52. Analyzing the Molecular Profiles (Biosignatures) of Body Functions in Health and Disease
The Molecular Basis
of Biological Processes
The Molecular
Heterogeneity of Disease
Individual Genetic
Variation
Alterations in Disease
Disease Subtypes
Pharmaco-
genetics
Disease
Predisposition
New Targets for
Dx, Rx, Vx
Right Rx for
Disease
New Targets
for Dx,
Rx, Vx
PDx
PRx

53. Selected Targeted Treatments
Personalized cancer vaccines
Favrille – FavId for non-Hodgkin's lymphoma
Genitope – MyVax for non-Hodgkin's lymphoma
Gleevec (Novartis) - pH+ CML kinase inhibitor
Iressa (AstraZeneca) – EGFR tyrosine kinase inhibitor
Tarceva (Genentech/OSI) – HER1/EGFR inhibitor
Erbitux (ImClone/BMS) – HER1/EGFR inhibitor
Avastin (Genentech) – VEGF/VEGFR inhibitor
Herceptin (Genentech) – HER2 inhibitor
BilDil (NitroMed) - heart failure in African American patients
Other “Semi Targeted” Treatments (approved or late stage trials)
Nexavar (Bayer/Onyx) – multikinase inhibitor
Tykerb (GSK) - ErbB-2/EGFR inhibitor
Enzastaurin (Lilly) - PKC-Beta, AKT/P13 inhibitor

54. Innovation Gap Getting Wider

55. Safer, More Effective Drugs
Target
Identification
Validation
Lead Development
Preclinical
Clinical
Market
Faster path to
disease targets
using genetic data
Speed trials by testing on
patients selected for likely
high response and safety
Knowledge of biological pathways
and gene variants help eliminate
poor candidates
Target optimal population
by combining drug with molecular diagnostic testing

56. Big “New” Markets
Obesity/diabetes/metabolic disease
Alzheimer's/memory
Anti-aging
Anti infectives (antibiotic resistance)
Wellness (preventative/predictive cure)

57. Projected Alzheimer’s Disease Prevalence, 2000 to 2100

58. Aging Is it a Disease?
About 1.4 million Americans are in their 90s, and another 64,000 are 100 years old or older
Baby boomers represent 30% of the total US population
Per person, seniors consume about five times the drugs of their working-age counterparts
By 2030, 20% of US population will be over 65 years of age…

59. Medicines in Development for Older Americans*
* Some medicines are listed in more than one category

60. Chronic Disease
125 million Americans have one or more chronic conditions (e.g. congestive heart failure, diabetes)
Chronic diseases account for 75% of all health care expenditures
Current costs for chronic diseases is approaching $1 trillion
These expenditures are not delivering what is possible

61. Stratifying Into Risk Categories Diabetes Type 2: What’s Becoming Possible?

62. Products in WW Development 2007 III and Registration
571 Total
388 Risk-Adjusted to Approval
248 Total
208 Risk-Adjusted to Approval
Source: BioCentury Publications

63. Products in Phase III by Disease / Target Area
Source: BioCentury

64. Number of Products Approved — 1982–200645
New Indications 40 35
Biotech Drugs 30 25 20 15 10 5
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007

65. Biotechnology Drugs in Clinical Development

66. MDx is at the Center of the New Dx World

67. Diagnostic Innovation Makes Impact on Cancer Therapy

68. In Vitro Diagnostics, By Application

69. Looking Forward, Patent Exposure is Set to Increase Significantly

70. Biogeneric Status of Biotech Drugs

71. Adverse Event Reports 1990-2006
(thousands)
Source: CDER OSE report 10/5/07 AERS database (includes all US marketed drug and biologic products)

72. Blockbuster drugs pulled from the market gave investors concern
Date
Approved
Drug Name
Use
Risks
Withdrawn
2002
2001
Zelnorm
Bextra
IBS - C
Pain reliever
Heart attack
Heart attack/stroke; fatal skin reactions
2007
2005
1999
Vioxx
Heart attack/stroke
2004
1997
Baycol
Cholesterol
Severe damage to muscle, that is sometimes fatal
Raplon
Anesthesia
An inability to breathe normally
1993
Propulsid
Heartburn
Fatal heart rhythm abnormalities
2000
Rezulin
Type 2 diabetes
Severe liver toxicity
1988
Hismanal
Antihistamine
Raxar
Antibiotic
Posicor
High blood pressure
Dangerous interactions with other drugs
1998
Duract
Severe liver damage
1985
Seldane
1973
Pondimin
Obesity
Heart valve abnormalities
1996
Redux
Blockbuster drugs pulled from the market gave investors concern

73. On the Regulatory/Patent/Policy Front…
Patent reform (PTO proposals to restrict claims examined in a single application and limit continuation applications)
FDA resources – PDUFA IV authorization
follow-on biologics (biogenerics)
drug safety
theranostics
food safety (pet food)
Biofuels – renewable and alternative energy sources through use of biotechnology
Medicare Prescription Drug Price Negotiation Act – Non-interference (proposal to require Medicare interference)
Sarbanes Oxley compliance – reducing the burden on small companies
SBIR eligibility
Agbio/ GMO’s
Stem cell research – federal funding

74. The Cost of Developing a New Drug has Greatly Increased

75. CMS Becomes Dominant Customer (40% of Market in 2008)
2002 Rx Payment Sources ($B)
2008 Projected ($B)
Total = $162.4
Total = $260
Source:
2002 data: Health Affairs Volume 23, Number 1; January 2004.
2008 data: Tag & Associates estimate

76. Medicare Heads Towards Bankruptcy

77. Major Government Initiatives in Biotechnology
EU/Eastern Europe/Scandinavia
China
India
Japan
Malaysia
Singapore
UAE/Dubai and Kuwait
Israel
Various Latin American Countries (esp. Chile/Brazil)
Australia/New Zealand

78. Healthcare costs per car are $1700
Healthcare Costs are Growing Much Faster Than Productivity (Revenue Per Employee)
CAGR=3%
GM Cannot Compete
Healthcare costs per car are $1700
more then Toyota
CAGR=10%
I’ll begin by demonstrating the challenge all of us in healthcare are facing today. You can’t open a newspaper without reading another headline about the skyrocketing costs. Consider the following:
- Health care costs are growing much faster than employee productivity (10% CAGR since 1998 versus 3% CAGR revenue growth)
Source: Hewitt Health Value Initiative; United States Census; Bureau of Labor Statistics (2002 Productivity estimated based on first 3 Quarters)

79. …so, healthcare cost increases are on everyone’s agenda
Politicians/Congress/White House
Payors/Reimbursors/Insurers
Physicians/Providers
Patients/Consumers
…and patients are empowered, have economic costs, and really want to stay well!

80. Significant Mergers & Acquisitions 2007
PHARMA/PHARMA
PHARMA/BIOTECH
BIOTECH/BIOTECH
Schering-Plough/Organon
$ 14.4 billion
AstraZeneca/MedImmune
$ 15.6 billion
Celgene/Pharmion
$ 2.7 billion
Siemens/Dade Behring
$ 7.1 billion
Eisai/MGI Pharma
$ 3.5 billion
Qiagen NV/Digene
$ 1.5 billion
Mylan/Merck Generics
$ 6.6 billion
GSK/Reliant
$ 2.7 billion
Amgen/Illypsa
$ 420 million
Hologic/Cytyc
$ 5.9 billion
Shire/New River
$ 2.5 billion
Genzyme/Bioenvision
$ 308 million

81. M&A Total

82. M&A

83. Partnering – Big Pharma

84. Partnering - Upfronts

85. Wellness: Its Time Has Come
Rising healthcare costs are impacting individuals
Rising incidence of chronic disease
Recognition of the importance of genetic variation
Scientific knowledge base for:
Personalization
Cost effective technologies
Financial markets beginning to recognize opportunity

86. The Demands for Agriculture Stay the Same
More food on less land with half the water.
Source: 1999-United Nations

87. Market Overview – Agriculture

88. Global Area of Biotech Crops 1996 to 2005 By Crop

89. 2005 Was The Tipping Point For Industrial Biotechnology
Perfect Storm
Energy security
Global Warming
Economics
Political Will
Market pull
Ready technology
Biofuels
Sustainability
2008 89

90. VC investments increased dramatically
Exciting Time Since
VC investments increased dramatically
Oil companies invested in technology and infrastructure
Supportive legislation
Frenzy to access technology
Frothy Pre-money Valuations
No success stories

91. What Has Happened Since?
Ethanol plant construction exploded (All corn based)
Now have 113 in operation, 77 under construction
Production at 6 billion gallons, potential for 12B
Price of feed grains
$2 historically, topped $5.00
20% of corn crop today, 50% in two years !
13% of soybeans going to biodiesel
The focus has been on biofuels - Ethanol 91

92. Unprecedented energizing of rural America Price of corn
Implications
Unprecedented energizing of rural America
Price of corn
Feed costs: poultry, beef, and swine
Sales of pickup trucks, farm equipment and new kitchens
Land values
Food costs: Meat, HFCS

93. Key Future Drivers! Energy Bill & Farm Bill
The Energy Independence and Security Act of 2007
By 2022
Renewable Fuel (20% reduction in GHG) B gallons
Advanced biofuels (other than corn starch with 50% life cycle reduction in GHG B gallons
Cellulosic Biofuel (>60% reduction in GHG) 16 B gallons
2008 Farm Bill – Energy Title (In Conference)
Tax incentives
Funding for development and demonstration

94. 2007 Great Year But with Storm Clouds Forming
Perfect Storm
Energy security
Global Warming
Economics
Political Will
Market pull
Ready technology
Second Perfect Storm
Social
Economic
Environmental

95. Storm Clouds
Commodity prices drive up food prices
Acreage Swap between Corn and Soybeans
The linkage: Corn – Soybeans – Palm Oil
Exaggerated by imminent US lead recession
Economic discontinuities caused by speed of adoption

96. Social, Economic and Environmental Issues will Dominate 2008
US recession
How long how deep?
Fewer IPOs, Fewer Acquisitions
What will big oil do ?
Access to project financing
Funding of small technology companies
$5M, $20M, $100 M
Will we get the project financing needed given the economic and political uncertainty
IPOs early in year critical – several good ones ready to file, some even have revenues!
Uncertainty a big risk

97. From an investor stand point – “Ethanol is dead”
Opportunities
From an investor stand point – “Ethanol is dead”
Cellulosic sourcing of sugars will be hot
Increasing interest in alternative fuels
Butanols
Alkanes
Lots of opportunities outside biofuels
Bioplastics / Biomaterials
APIs
Specialty chemicals

98. Some Learnings From Agbio
Be proactive, get ahead of the issues
Engage all parties, respect their issues (they may be right)
Do not be defensive
Find common ground
Energy security, sustainability, reduced environmental foot print
It is not about the science it is about the political, social, economic and environmental issues

99. Capital Raised

100. Biotech’s F=Five cycles Length of Rallies/Droughts in Months

101. Small, Mid-Cap vs. NASDAQ, DOW

102. Billion-Dollar Club

103. IPOs – Not What They Used To Be

104. IPOs – Not What They Used to Be
Number of IPOs
Positive since IPO
Negative since
IPO
Acquired
Amount Raised* ($ Million)
Average D % change
Since IPO**
2003 7 1 4 2
$438
(3.34%)
2004 29 6 17
1,628
(12.64%)
2005 5 10
819
4.55%
2006 19 13
920
8.26%
2007 28 11 18
2,041
2.00%
Total
100 62
5,846
(0.24%)
* Includes over-allotments
** As of 12/31/07
Source: Burrill & Company

105. 2007 Life Science Financing Overview
Initial Public Offerings:
27 offerings with proceeds of at least $20.0m
$2b total proceeds raised
$70m average deal size
$162.3m median pre-money valuation
The share price of issuing companies increased 2% on average 5 days post pricing
The share price since time of offering has increased 2% on average

106. Finance and Capital Markets
The global financial markets have created additional opportunities for companies to look outside their borders for financing
Europeans on NASDAQ/NYSE
Chinese on NYSE
Americans on AIM/Euronext/SWX
Other markets are available
Mothers (Tokyo)
DFX (Dubai)
Hong Kong

107. Transformation:
FIPCO’s to VIPCO’s

108. Changing Business Models
FIPCO (Fully Integrated Pharma Co.)
VIPCO (Virtually Integrated Pharma Co.)
Partnerships
Sales &
Distribution
Research
Technology
Manufacturing
Clinical &
Regulatory
Sales &
Distribution
CSO
Manufacturing
CMO
Clinical
Development
CROs
Preclinical
Support
Preclinical CRO
R&D
Academia, Scientific, Institutions

109. So What Does Big Pharma Do Better Than Anyone Else?
Discovery?
Development?
Manufacturing?
Distribution?
Disease Management?
What is the Answer?

110. Financing Biotech Companies the Old Way Doesn’t Work
Difficult financing at early stages
Successive venture rounds at increasing value is challenging…public equity values have compressed the whole equation
Time and cost of development has been increasing and risk/return has been decreasing
Therefore, a new model must emerge

111. How Does All This Impact Entrepreneurial Start-ups in 2008
VC & Angels are hesitant to invest
Business models are changing
More financing of projects
Selective platforms are coming back
Higher bar for regulatory approval
Reimbursement compression
Capital efficiency required
BUT…
Rate of start-ups are increasing (go figure…)

112. So the predictions for 2008…

113. The Predictions for Biotech in 2008
Sales of products will continue to increase, but reimbursement becomes more challenging
Despite stricter regulatory oversight, more products to the marketplace
Regulators
Raising the bar for innovation, theranostics
Pharmacovigilence is the name of the game
Drug safety will continue to be a major issue
Congress aiming to add power to Medicare to negotiate what it pays for drugs
Congress may reduce the capital gains differential (bad for the capital raising side of the industry)

114. The Predictions for Biotech in 2008 (continued)
Biofuels boom
Ag/Animal Health continue to progress
Biotech’s globality increases with US dominance continuing to decrease
US research engine faces challenging times
Non-health care aspects of biotech also becoming less dominant as industrial, biofuels, ag increase in importance
Clusters are redefined away from geography to virtual clusters (diseases, markets, unique industry segments)
Business models continue to evolve

115. The Predictions for Biotech in 2008 (continued)
Both big Pharma and big Biotech will be competing for companies with advanced product pipelines
We will see US biotechs accessing capital overseas…international companies accessing capital in non-local markets
“Capital Markets” worse than 2007, but
30 IPO’s in 2008 (mostly 2H ‘08)
2008 $50 billion will be raised by the US biotechs
MKT Cap will reach $500B
Of the 60 IPO’s completed by 2006, most all trading above offer price by end of 2008

116. It’s going to be a tough, competitive year with biotech companies transforming the world … and being transformed by it!

117. Biotech 2008: A Global Transformation
G. Steven Burrill
Chief Executive Officer
Burrill & Company
Wisconsin Life Sciences Transformation: World Perspectives & Wisconsin’s Advantage
Madison, WI, February 21, 2008
Last Updated: April 16, 2017