1. Donald P. Francis, MD, DSc Entrepreneurial Thought Leaders Seminar

2. Presentation Outline I.Myself – a brief description II.Vaccines – Social need, business challenge III. The company/mechanisms to develop vaccines IV. Lessons, reality, future directions

3. An Entrepreneur by Necessity California physicians: Grandfather, mother, father Trained in pediatrics and infectious diseases 21 years with CDC as infectious disease epidemiologist Cholera Nigeria Smallpox Sudan, India, Bangladesh Ebola Sudan AIDS everywhere Since 1992, an AIDS vaccine “Entrepreneur” Co-founded what became Int’l AIDS Vaccine Initiative Genentech Co-founded VaxGen (1995) Now developing a not-for-profit for developing country vaccines.

4. How Do Vaccines Work? Vaccines “fake out” the immune system Without causing disease, they induce a “post-infection” immune status Protection from subsequent infection or disease

7. AIDS Orphans inSub-saharan Africa "By the year 2010, one in seven children under 15 years will have lost a parent to AIDS."

8. Annual Direct Medical Costs ofHIV for the World $18 billion in 1997* *Modified from AIDS in the WorldII, ed. Mann &Tarantola

9. An HIV/AIDS Vaccine The only way to stop the AID epidemic is with a vaccine Challenges Business Scientific Social value

13. Opportunity Costs Huge social need Questionable return ? Market (esp developing countries) ? Social value (demand?)

14. Why Vaccines Fail to Compete Vaccine/Therapeutic Market Comparison Note: Vaccine market data 2000, pharma sales 2001

15. Development of Vaccines vs Anti-viral Agents for HIV Anti-viral VaccinesDrugs HistoricalManyFew Dev TimeLongerShorter Social DemandLowHigh Num AvailableNoneMany

16. HIV Prevalence vs GNP

17. VaxGen’s Vaccine Almost 20 years $280MM invested A long way to go

18. AIDSVAX Development History

19. AIDSVAX –Cost of Development Investment: Genentech$ 50M VaxGen $130M Celltrion$100M ______ Total$280M Capital Sources: Private capital: $269M US Government: $11M 1 NGO$0 _____ Total $280M 1 Includes CDC and NIH

21. Efficacy Trial Results Thai trial – no efficacy US/Europe Trial – Low efficacy

22. AIDSVAX B/B - Efficacy by Subgroups 50% 100% 0% 5.8% 65.7% 77.6% 86.5% Volunteers (vacc + plcbo) Overall BlackWomen Efficacy Observed infections (vacc) 5009498314268 19433178 1911241 *Expected infections, VE=0 Weighted cohort Black Asian Other *Adjusted for 2:1 vaccine:placebo NS<0.01<0.02NS p-value (unadjusted)

23. VaxGen – Built a Company with Value > 120 highly-skilled vaccine developers Excellent team spirit Flexible

24. VaxGen - Looking Ahead Company following “social value” - Priority shift to anthrax and smallpox Future AIDSVAX development will require outside funding/partnerships NIH/CDC collaboration to complete analysis NIH - Subtype C vaccine – early stage NIH - Thailand prime-boost Phase III trial

25. The Next Venture Three VaxGen senior executives stepping out of company Will establish a not-for-profit foundation Pursue vaccine development for the less- developed parts of the world Dependent on outside (Gates) funding