wbb securities, llc © wbb securities, llc 2007 a forward looking strategy for biotech businesses

WBB Securities, LLC

© WBB Securities, LLC 2007

A Forward Looking Strategy

For

Biotech Businesses

WBB Securities, LLC


The Landscape

Big Pharma (BP) –

Many low margin, few high margin products;

Significant R&D investment;

Size makes formidable, also slow moving;

Deep pockets make companies big targets of opportunity.

Big Bio (BBio) –

A number of products, usually high margin;

Must maintain R&D/science collaborations to continue growth;

Marketing differs from Pharma in its more focused approach.

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The Landscape

Small Bio (SBio) –

Early projects, potentially high yields;

Significant R&D;

Many out there, few will succeed.

Generic Pharma (GP)–

Low margin, Low cost, High quantity;

Lots of competition for market share.

New Pharma/Bio (NPB) –

Development stage companies with little or no revenue;

Regularly in need of cash to fund R&D;

More nimble in collaboration and more willing to take risks.

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BP/BBio – A few big earners; Some moderate earners Several losers, Lots in development

SP/SBio – One or two cash cows; A few in development

GP/GBio –Mature Products; Low margin, High Quantity

NP/NBio – Leading Edge Discoveries Early Stage Development

Characteristics of Revenue Drivers

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Evolution of Pharma/Biotech IndustriesEarly Consolidation Era

EarlyPharma/Bio New

BP/BBio

Early Stage companies bring one or more products to market.

SP/SBio NewBP/BBio

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Evolution of Pharma/Biotech IndustriesDiversification Era

BP/BBio

SP/SBio GP/Bio NP/Bio

Characterized by market segmentation

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Evolution of Pharma/Biotech IndustryPersonalized Medicine/Reconsolidation Era

SP/Bio GP/Bio NP/Bio

New BP/BBio

Surviving BP/BBio

Consolidation into new and existing Big Pharma players

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Evolution of Pharma/Biotech IndustryConsolidated Landscape Era

SP/Bio GP/GBio NP/Bio

Consolidated Landscape

Surviving BP/BBio

New BP/BBio

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Evolution of Pharma/Biotech IndustryTomorrow’s Landscape Era

SP/BBio GP/Bio NP/Bio

New landscape anticipates another round of consolidation

New BP/BBio

Surviving BP/BBio

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Other Industries Recently Subject to Cycle

• Telecommunications• Automobiles• Entertainment (Movies, Radio, Television and Publishing)

• Agriculture and Food• Computers• Retail• Airlines

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Factors Accelerating Pharma/Bio Changes

• Slow New Drug Approvals - 18 in 2006• Acceleration of Takeovers - up 32% in 2006• Deteriorating Margins - driving inefficiency out of marketplace• Freedom to Operate - more complex to secure• Maturing Science and Technology - How many new antibiotics?• Forced Product Life Cycles - Long development times & fixed patent lives• Consumer Protection - activism• Less Efficient Organizations - over time• New Technologies stem cells - neural stimulation, etc. showing promise• Dispersion of IQ - causing competition from many regions and centers of

excellence• Investor Activism - desire for quick rewards• Government Activism – FDA, HHS, CDC

• Market Downturn – Minus 514 points on the DJIA in 5 days

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Big Pharma/BBio Warning Signs 1

More R&D Spending, Fewer New Molecular Entities

CBO Study, R&D in Pharma Industry, October, 2006

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2006

$28+ B

Total 2006Pharma Industry R&D

$51.3 billion

$39.4 B

Inflation Adjusted Dollars


Federal Government Funding Lower Percentage of R&D


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Fewer Patents Per R&D Dollar


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Diminishing Return on Assets


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Differentiating the Winners in Biotech

• IP (freedom to operate)• IQ (scientists/engineers)• Cash• Good Scientific Base• Excellent Management and Marketing• Good Business Case• Ability to Work the Government Review Process

• Ability to Leverage Technology Externally

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Challenges & Opportunities in the Stem Cell Arena

• Lack of Federal funding for embryonic research

• Early stage development increases risk and need for $

• Misperceptions and lack of information among general population

• Freedom to operate difficult to acquire because of patent dispersion.

• High cost and long time required to bring new drug to market.

• Relatively new field with many unknowns

• Discovery of multiple sources for adult stem cells

• Great promise for curing a wide range of diseases

• Glitzy and glamorous to science fiction writers and lifeline for really sick people

• Patent arena creates a barrier to entry for competitors

• Lagging R&D productivity by existing players

• Relatively new field has great opportunities for innovation .

Challenges Opportunities

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What Is Your End-Game Business Strategy?

• Running a biotech business and other sad stories.• Develop milestones that lend themselves to easy

quantification and institutional investor explanation.

• Strategies for continuing independent operation.

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Unique Aspects of Biotech Companies Covered by WBB Securities

•IP-IP-IP-IP

•Lead product identified

•Large partner validation and negotiating acumenTechnology and business acumen.

•Understanding of capital markets

wbb securities, llc © wbb securities, llc 2007 a forward looking strategy for biotech businesses

Documents

llc wbb securities

spsbio new bpbbio slide

pharma industry rd

days slide

market segmentation

new field

new antibiotics

landscape big pharma