1. Business Value of SW in Drug Discovery Eric Neumann, W3C HCLSIG co-chair Teranode Corporation F2F Cambridge MA

2. New Regulatory Issues Confronting Pharmaceuticals from Innovation or Stagnation, FDA Report March 2004 Tox/Efficacy ADME Optim

3. Drug Discovery Costs ~$1.5 Billion / drug 80% failure rate during development –mainly Toxicity, Efficacy Clinical Trials 60-70% cost Regulatory Submissions Post-Launch Costs

5. Some Drug Development Facts One major reason for increased costs and lower ROI is a dramatic decline in productivity. Only one compound now reaches the market for every thirteen discovered and placed in preclinical trials, compared to one for every eight between 1995 and 2000. Attrition has been particularly severe in Phase III development. Average development costs per compound have increased from $131 million to $200 million, while the chances of each compound receiving approval has fallen from 73% to 59%. Post-Launch Costs - can be extreme

6. Areas benefiting from Information Discovery R&D (Targets and Leads) Preclinical/Safety Clinical Trials Pharmacovigilance Patent Portfolios In-licensing and Alliances Competitive Analysis

7. Drug Discovery & Development Knowledge Qualified Targets Lead Generation Toxicity & Safety Biomarkers Pharmacogenomics Clinical Trials Molecular Mechanisms Lead Optimization Launch

8. Pharmaceutical IT Costs Some opinions: –$43 billion worldwide market for informatics by 2004 (Sun Microsystems) –$2 billion by 2002 (Frost & Sullivan 1997 report) –$1.2 billion by 2005 (Front Line Consulting) –$110 million by 2004 for bioinformatics (Silico Research) Average Pharma IT ~$200 million/yr Compared to revenue ~$10-50B/yr

9. Information Challenges Data volume is exploding as more information is being generated about more targets and compounds. Data is being captured and stored by different systems in different formats which do not readily communicate with each other. Decisions must be made faster, based on creating, capturing, and reusing data from disparate sources. Information must be transmitted seamlessly and automatically among a company's labs, which may be located in different countries. In this era of Pharma mergers, information from two different corporate cultures must be consolidated and evaluated to set future directions.

10. Informatics ROI from SW Status Quo - no change in R&D –10% improve on $100M  $10M/yr savings Engaging Translation Research –Savings on DD (10% = $250M/yr) –Reduce Post-launch failures (>>$M)

12. Multiple Ontologies Used Together Drug target ontology FOAF Patent ontology OMIM Person Group Chemical entity Disease SNP BioPAX UniProt Extant ontologies Protein Under development Bridge concept UMLS Disease Polymorphisms PubChem

13. Potential Linked Clinical Ontologies Clinical Trials ontology RCRIM (HL7) Genomics CDISC IRB Applications Molecules Clinical Obs ICD10 Pathways (BioPAX) Disease Models Extant ontologies Mechanisms Under development Bridge concept SNOMED Disease Descriptions Tox