1. Establishing the Supply Chain A Small Company Perspective Biomedical Technology Club March 7, 2006

2. S. Pondell Mar 7, 2006 Topics Encysive Background Encysive Background Small Company Challenges Small Company Challenges Supplier Selection Supplier Selection Technical Transfer Technical Transfer Contracts and Quality Agreements Contracts and Quality Agreements Relationship Management Relationship Management

3. S. Pondell Mar 7, 2006 Encysive Setting Small company (200 people) Small company (200 people) In-house compound In-house compound Orphan drug, small volume, small molecule Orphan drug, small volume, small molecule Commercialization planned and underway Commercialization planned and underway

4. S. Pondell Mar 7, 2006 Perspective Company survival goes with product success Company survival goes with product success Risk-taking is minimized, if possible Risk-taking is minimized, if possible Agency requests Agency requests Information for filings Information for filings Small fish concept Small fish concept Effort needed to stay visible to suppliers Effort needed to stay visible to suppliers

5. S. Pondell Mar 7, 2006 The Team Process Experts Process Experts API API Formulation Formulation Analytical Expert Analytical Expert Quality Assurance Quality Assurance Project Management Project Management Regulatory Regulatory

6. S. Pondell Mar 7, 2006 Challenges for Small Companies Priorities Money Money Company success and survival! Company success and survival! Time to market Time to market Clinical results Clinical results Big tasks can paralyze multi-tasking Big tasks can paralyze multi-tasking

7. S. Pondell Mar 7, 2006 Challenges for Small Companies Financial Feast or famine Feast or famine Manufacturing costs probably not major piece Manufacturing costs probably not major piece Cash flow will direct timing of decisions Cash flow will direct timing of decisions

8. S. Pondell Mar 7, 2006 Challenges for Small Companies Technical Expertise Experts may be limited in breadth of experience Experts may be limited in breadth of experience Heavier use of consultants and reliance on them Heavier use of consultants and reliance on them No backup for key people No backup for key people

9. S. Pondell Mar 7, 2006 Challenges for Small Companies Decision Making Fewer decision makers – quicker turnaround Fewer decision makers – quicker turnaroundBUT Analyses of decision may not be as thorough Analyses of decision may not be as thorough Relationships vital Relationships vital First proposals may be only chance First proposals may be only chance First impressions critical First impressions critical May be short-term focused May be short-term focused

10. S. Pondell Mar 7, 2006 Supplier Selection Dependent on stage and size of drug Dependent on stage and size of drug More control necessary in earlier phases More control necessary in earlier phases Find suppliers who specialize in that stage Find suppliers who specialize in that stage Few people – time to travel and time out of office are important factors Few people – time to travel and time out of office are important factors

11. S. Pondell Mar 7, 2006 Supplier Selection Local representation for offshore supplier Local representation for offshore supplier Very dependent on background of sponsor’s technical expert Very dependent on background of sponsor’s technical expert Past relationships Past relationships Out-reach by suppliers Out-reach by suppliers Language can be an issue Language can be an issue

12. S. Pondell Mar 7, 2006 Tech Transfer Pre-clinical to clinical to commercial Pre-clinical to clinical to commercial Development expertise to commercial expertise Development expertise to commercial expertise Find suppliers with core competencies Find suppliers with core competencies Firms may be competitors Firms may be competitors Awareness Awareness Facilitate issues Facilitate issues

13. S. Pondell Mar 7, 2006 Tech Transfer Takes longer than you think Takes longer than you think More expensive than you think More expensive than you think Costs at both ends Costs at both ends

14. S. Pondell Mar 7, 2006 Tech Transfer Formal technical transfer protocols Formal technical transfer protocols Who initiates Who initiates Who signs Who signs Who has the expertise Who has the expertise

15. S. Pondell Mar 7, 2006 Contracts Points to Consider Points to Consider Set key points before work begun Set key points before work begun Finalize contracts while there were options Finalize contracts while there were options Leverage continued to diminish as time went on Leverage continued to diminish as time went on Make it a priority, or it won’t happen. Make it a priority, or it won’t happen. Supplier wins when negotiations drag. Supplier wins when negotiations drag.

16. S. Pondell Mar 7, 2006 Quality Agreements Very necessary Very necessary Tied into Contracts Tied into Contracts Up-front audit makes for less surprises Up-front audit makes for less surprises Reputable suppliers are a key Reputable suppliers are a key Checklist or contract format Checklist or contract format Typical issues Typical issues Regulatory audits Regulatory audits Degree of control Degree of control Product release Product release

17. S. Pondell Mar 7, 2006 Relationship Management Key point person – each way Key point person – each way Involved in every interaction Involved in every interaction YOU may be continuity YOU may be continuity

18. S. Pondell Mar 7, 2006 Relationship Management Project manager takes many roles Project manager takes many roles Keep emotions in check Keep emotions in check Facilitator Facilitator Schedule Schedule Scope Scope Enforcer Enforcer Contract negotiations Contract negotiations Schedule slippage Schedule slippage

19. S. Pondell Mar 7, 2006 Points to Consider Flexibility in expectations Flexibility in expectations Visibility to suppliers Visibility to suppliers Choose suppliers wisely Choose suppliers wisely Get the contracts in place Get the contracts in place

20. S. Pondell Mar 7, 2006 Points to Consider Know who the Project Managers will be Know who the Project Managers will be Use all the skills in your organization Use all the skills in your organization Get the commercial support organization in place as soon as possible Get the commercial support organization in place as soon as possible

21. S. Pondell Mar 7, 2006 Summary Know what you want and need Know what you want and need Reach for help - consultants Reach for help - consultants Select companies that “do this for a living” Select companies that “do this for a living” Assure that both you and your supplier can prosper Assure that both you and your supplier can prosper

22. S. Pondell Mar 7, 2006 Questions Contact Information: Steve Pondell spondell@encysive.com (713) 578-6549