1. Views from Venture Capitalists Nancy Harrison & Jennifer Hamilton

2. Venture Capital Investments in Biotech Canadian VCs Support Industry

3. Where is the Bottom?!

4. The Bad News Blair/Clinton comments September 11th Enron Elan Dov Pharma downturn Series of poor data, FDA rejections ImClone

5. Are There Public Market Safe Havens? 7 Stocks Lose $62B in 6 Months 12/31/016/12/02Mkt Cap ChangeMkt Cap % Amgen $59.2B$42.2B-$16.8B-28% Genentech $28.6B$17.4B-$11.2B-39% Immunex $15.8B$12.4B-$3.3B-21% Elan $15.4B$2.6B-$12.8B-83% Serono $14.3B$10.2B-$4.0B-28% Genzyme $12.7B$4.0B-$8.7B-68% Idec $10.5B$5.0B-$5.5B-52% Total $156.4B$94.1B-$62.4B-40% Source: BioCentury June 24,2002

6. What Constitutes a Tier I Company? March 2000: 41 of 81 companies have products Today: 33 of 36 companies have products Source: BioCentury June 17, 2002

7. US Money Raised by Biotech Companies in 2002 YTD $ YTD$ 2001 IPOs$239.6M$400M Follow-ons$592.4M$4B Venture capital$1881.9M$4.2B Other$5247.5M$7.4B Total$7961.5M$16B Source: BioCentury June 24, 2002 Where are the institutional investors?!

8. Canadian Public Market Financings are Dead Source: Yorkton Securities Money Raised in Public Canadian Biotechnology Companies

9. Private Deals Done in BC – not many - Last half 2001 –Protiva - $14.5m First half 2002 –Oncogenex - $3.6m Other deals –follow-ons –Grants - Genome Canada

10. BC Companies are Still Not on the Radar Screen of Foreign Investors

11. The New Reality Internal rounds (Series B-2) closing a year after Series B Lack of lead investors Debt financing Lay-offs and downsizing/prioritizing Mergers VC’s supporting their own companies VC’s having a hard time getting excited about the “old” model - Disillusioned Numbers don’t work anymore

12. Angiotech Model Go public on TSE (stepping stone/capital) Then go to NASDAQ (liquidity) Luck element - public markets closed

13. Big Corporate Partnership Model Sign a big deal and get credit (Inex) Doesn’t always work that way anymore (StressGen)

14. Top Quartile VC IRR’s above 30 %

15. What are VC’s doing to Get Returns? Focussing on companies with on products, revenues and profits Avoiding concept deals Doing fewer deals – more money per deal Watchful waiting Investing in NRDO’s e.g. Salmedix

16. What are VC’s doing to Get Returns? Investing in Superhero CEO’s –Affinity raised $70m Series B – June 24 Investing at lower valuations (40%) –Especially for Class of 2000 companies Letting companies go under – not throwing good money after bad Investing in relatively cheap publics versus private companies

17. Creative Financing Alternatives Cut Burn –e.g. Geron Let go 1/3 of work force to refocus on later stage programs – June 2002 “In the current financing climate companies that are well managed make tough calls…early.” Alex Barkas, Chairman Slice and Dice Market –e.g. Angiotech - masters of this Lean and Mean –Angiotech never more than 50 people

18. Creative Financing Alternatives Strategic M&A –e.g. ImmGenics –Don’t wait until out of money Deals to cut burn, increase chances of success –e.g. Active Pass/Neogenesis Buy versus Build –e.g. Active Pass Spinouts –e.g. Inex/Protiva

19. Summary The world has changed – forget the past Lots of money out there –For Right story - at Right Valuation Time is the enemy: Financing and M&A take a long time – don’t get pushed up against the wall Remember what drives investors – returns! – build into pitch Be flexible on model and exit Founders make money when shares are sold, not on company financings.