Presented at the 3rd New Product Planning Summit. The presentation was designed to help professionals in New Product Planning to present a case for why commercial strategy input is needed early in the process of developing new therapeutics. The presentation also includes suggested approaches and tools to help with effective engagement with Research teams.

1. Working Effectively with Research Teams
in New Product Planning
TONY RUSSELL , PHD, MBA
SENIOR DIRECTOR, PRODUCT STRATEGY AND COMMERCIAL PLANNING
THERAVANCE BIOPHARMA US, INC.
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2. Disclaimer
The views and opinions expressed are solely those of the speaker and do not represent those of
my current or previous employers
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3. Tony Russell, PhD MBA
Background and Experience
Year Company Position
2015 – Present Theravance Biopharma US, Inc. Product Strategy and Commercial Planning
2010 – 2015 Alder BioPharmaceuticals Commercial Strategy
2007 – 2010 ZymoGenetics (acq. BMS) Medical Affairs
2006 – 2007 ICOS (acq. Eli Lilly) Strategic Marketing
2004 – 2006 Corus Pharma (acq. Gilead Sciences) Product Management
2000 – 2004 Amgen Medical Affairs
1999 – 2000 Baxter Global Marketing
1998 University of Washington PhD (Physiology and Biophysics)
1998 Seattle University MBA
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https://www.linkedin.com/in/arussellbiotech/

4. Key Topics to be Covered
 Challenges in New Product Planning
 Working Effectively with Research Teams
 Tools and Approaches to Use
 Mini Case Study
 Summary / Areas for Improvement
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5. Challenges in New
Product Planning
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6. 0
10
20
30
40
50
60
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Count
BLA Approvals NDA Approvals Filings
Increasingly Crowded Markets in the US
with More Drugs Approved Over Time
Source: http://fortune.com/2016/12/15/fda-new-drug-approvals-plunge/

7. Increasingly Crowded Markets in the US
with More Drugs Approved Over Time
7
0
100
200
300
400
500
600
700
800
900
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Count
Cumulative BLA Approvals Cumulative NDA Approvals Cumulative Filings
Adapted from: http://fortune.com/2016/12/15/fda-new-drug-approvals-plunge/
Note: 1993 is set as a “reference”
year for subsequent years to
assess the cumulative effect of
additional approvals and filings

8. Crowded Markets Can Impact Ability to
Differentiate and Achieve Market Share
 More challenging to demonstrate higher quality:
 Efficacy thresholds can increase as technology improves (e.g. better MOA’s, better target engagement,
etc.)
 Safety issues can be minimized with newer generation therapies (e.g. decreased off-target toxicity)
 More challenging to achieve substantial market share as a late entrant:
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Source: Cha and Yu. “Pharma’s first-to-market advantage.” McKinsey & Co. (https://www.mckinsey.com/industries/pharmaceuticals-and-medical-products/our-insights/pharmas-first-to-market-advantage)
Key Aspects:
• Best to be 1st to Market
• Odds for better market share improve if:
• 2nd to market
• Fast follower (launch within same year or 1
year after 1st entrant
• Marketed by a large pharma company
• Establish meaningful differentiation

9. Drug Development and Evolving Goals –
Obtaining FDA Approval is Not Enough
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“Biopharmaceutical Research and Development: The Process Behind New Medicines” PhRMA (http://phrma-docs.phrma.org/sites/default/files/pdf/rd_brochure_022307.pdf)
Past Goal
Current Goal

10. Frequent Drug Price Increases Were the
Historical Norm in Pharma
10
Average Annual Cost of Brand Name Drugs
Source: “Drug Costs for Older Adults Still Soaring”
https://www.aarp.org/health/drugs-supplements/info-
2016/drug-costs-for-older-adults-still-soaring-cs.html
EpiPen Price History
Source: “How EpiPen came to symbolize corporate greed”
https://money.cnn.com/2016/08/29/investing/epipen-price-rise-
history/index.html
List Price of Humalog Insulin
Source: “Why treating diabetes keeps getting more expensive”
https://www.washingtonpost.com/news/wonk/wp/2016/10/31/
why-insulin-prices-have-kept-rising-for-95-
years/?noredirect=on&utm_term=.eecdb9ce844e

11. Recent Examples Show Emerging Drag
Forces on Pricing
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Struggle of the PCSK9 mAb Class to Reach Blockbuster Status
Compounded: $10-20 / injection; K-V Product: $1,500 / injection
Zaltrap 2X the cost of Avastin; similar
median survival
Oct 25, 2018: “Amgen Slashes Cholesterol Drug Price 60% to Match
Rival Regeneron”
Apr 2, 2011: “KV Pharmaceutical… announced that it was
reducing the price of the drug, sold as Makena, to $690 an
injection”

12. Emerging Political Pressures on Pricing
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Money (Jul 25, 2018)
New York Times (Jul 23, 2018)
Forbes (Aug 7, 2018) Bloomberg (Jul 16, 2018)

13. Pressures of Small-to-Mid Sized
Pharmaceutical Companies
 Limited Resources and Institutional Knowledge
 Pressures of Being Publicly Traded
 Pressure of Asymmetrical Valuation
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14. Limited Resources
 Constant start-up budgets
 Founder-based limitations
 Fewer FTEs available (wearing “multiple hats”)
 Lack of institutional knowledge / experience memory
 Constant need for fundraising
 Irrational exuberance (“only need to get 1% of the market to be successful”)
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15. Pressure of Stock Outperforming the
General Market
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NASDAQ Biotechnology ETF
DJIA / S&P 500
If decisions are made in the short-term
to bolster stock performance, then long-
term returns may suffer.
Reference: “Short-term profit can be dwarfed by longer-term losses” The Guardian (Jul 7, 2011)
https://www.theguardian.com/sustainable-business/short-term-profit-long-term-losses

16. Challenge of Asymmetrical Valuation – One
Program Can Dictate Total Value in a Company
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Development
Candidate
Stage
Phase 1 Phase 2a
Asset #1
Asset #2
Asset #3
Asset #4
Based on article by LifeSciVC “Solving Biotech’s “Asymmetry of Maturity” Challenge” (https://lifescivc.com/2011/12/solving-biotechs-asymmetry-of-maturity-challenge/; accessed Aug 10, 2018)
• If the lead program (Asset #1) does well and drives an exit (e.g. buyout, M&A), it
typically drives about 95% of deal
• If the lead program (Asset #1) fails, it can wipe out about 95% of the value of the
company (“lead program brings down the house”)

17. Proposal for New Product Planning
 Challenges in New Product Development Come From Multiple Sources
 Crowded markets
 Ability to demonstrate differentiation is increasingly challenging
 Pricing pressures
 Expect further public scrutiny and changes in the future
 Small company pressures can limit multiple “shots on goal”
 Important as New Product Planners to Treat the Challenges as Opportunities
 Establish meaningful differentiation
 Select and curate assets carefully
 Build the value story for programs early in development
 Sounds good, but how?
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18. Working Effectively with
Research Teams
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19. Challenges of Working Early with
Research – Overcoming Historical Norms
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Where We Were
Where We
Need to Be
Image from http://nmtpharma.com/en/drug-development-stages/

20. Approaches and Tools for Working with
Research Teams Early in Development
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• How should we work together?
Integration and
Norms
• What target / indication should we pursue?
Decision
Framework
• What do we need the final product to look like?
• What properties does the compound need to have?TPPs / TCPs
• How do we deal with potential uncertainty in
development (i.e. “what if” discussions)?
Scenario
Planning
• How can we define our potential competitive
strengths?
Competitive
Mapping
TPP: Target Product Profile; TCP: Target Compound Profile

21. Integration and Setting Norms
 Setting Norms Up-Front
 Goals – define shared goals early in engagement
 Expectations – “Fail fast; Fail early” leading to iteration and critical learning
 Discussions – need for open and honest interactions
 Include Research as Part of the Commercial Evaluation Journey
 Include in KOL discussions
 Include in design and execution of market research
 Review the competitive landscape together
 Importance of Research “Buy-In”
 Critical for the plan to be a collaboration

22. Decision Framework – Indication
Assessment Example
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For illustrative purposes only; not intended to reflect an actual set of specific indications
Indication Assessment Worksheet (EXAMPLE)
[Product X]
Primary Corporate Goal: Indication that Can Be Served With a Small Dedicated Commercial Footprint
Notes Fit with Primary Goal Notes Fit with Primary Goal
Brief description of indication
Clinical Assessment
Size of target patient population (prevalence) Notes  Notes 
Precedence of clinical development pathway Notes  Notes 
Surrogate endpoint (disease BMx) Notes  Notes 
Time to endpoint (POC) Notes  Notes 
Recruitment rate (pts/site/mnth) Notes  Notes 
Preferred form/device Notes  Notes 
Form appropriate for POC study Notes  Notes 
Research / Nonclinical Assessment
Available proof-of-concept data (animal or human) Notes  Notes 
Literature data available on pharmacologic class (if available) Notes  Notes 
Regulatory Assessment
Precedence of regulatory pathway Notes  Notes 
Regulatory exclusivity options Notes  Notes 
Regulatory hurdles Notes  Notes 
Legal Assessment
Patentability Notes  Notes 
Patent infringement Notes Not Eval. Notes Not Eval.
Commercial Assessment
Current standard of care Notes  Notes 
Degree and nature of unmet need(s) Notes  Notes 
Key compounds in development (Phase 1 - Phase 3) Notes  Notes 
Value Proposition for Product X Notes  Notes 
INDICATION #1 INDICATION #2
Key Points:
 Clear objectives are critical
(keep the end in mind)
 Iterative process with multiple
rounds of evaluation
 Use market research and KOL
discussions to pressure test
assumptions
 Develop treatment flow
diagram to illustrate positioning
 Develop the value proposition
 Clearly outline the risks and
plans to manage the risks

23. Target Product Profile / Target
Compound Profile Template Examples
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Key Team Question:
Can the Target Compound Profile Deliver on the TPP?
For illustrative purposes only; does not reflect any actual compound or program

24. Mapping Assumptions and Scenario Planning
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Example Questions / Assumptions to Include:
• Is our compound sufficiently differentiated? Are there other ways to differentiate?
• Are there other indications to allow for faster time to market?
Assumption Relationship Mapping Scenario Planning and Logic Flow

25. Strategic Competitive Mapping
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Mapping by Subpopulations Mapping by Attributes
For illustrative purposes only; does not reflect any actual compound or program

26. Mini Case Study
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27. Case Study: Disease #1 or Disease #2?
Background Discussion*:
Science Team: We can make a good mAb to Target #1. Therefore, we believe Disease #1 is a
good indication for us to pursue. Can you tell us how big the opportunity is?
NPP: Let’s talk with some KOLs first to gauge interest.
KOLs: We don’t need new drugs for treating Disease #1 as our current therapies work well.
Science Team / NPP: [silent disappointment]
Science Team / NPP: What patients are you struggling to treat?
KOLs (unanimously, individually): Disease #2. We have no good therapies to treat patients.
Science Team: We can make a mAb for Target #2 for Disease #2
NPP: Let’s work together on the evaluation for Senior Management review
mAb: monoclonal antibody; NPP: new product planning; KOL: key opinion leader
* Case is presented in an overly-simplified fashion for illustrative purposes

28. Case Study: Building the Case for New Indication
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FINAL PLAN
& GUIDANCE
Draft TPP /
TCP
•Critical Thresholds
Needed
Value
Proposition
•Impact of an
Effective New
Therapy
Economics of
Unmet Need
•Cost of Substandard
Treatment
Competitor
Map
•Current & Pipeline
Competitors
Current SOC
•Treatment Flow and
Gaps
Market
Sizing
•Epidemiology
Analytics
Key Lessons
1. Challenge Assumptions Early
2. Find Opportunities to Pivot
3. Having Research Team as a “Partner” was Critical
4. Use a Defined Evaluation Process
5. Seek Continuous Feedback (Internal & External)
End Result: Support by Senior Leadership and Board of Directors to Pursue as a Development Candidate
SOC: standard of care; TPP: target product profile; TCP: target compound profile

29. Summary
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30. Areas for Improvement
 Challenges exist and will continue to be present
 Need to constantly look for ways to adapt to the evolving landscape
 Opportunities:
 Increase capabilities in defining subpopulations where treatment gaps exist
 Continue to explore improvements in translational models (de-risking of
programs early)
 Development of economically-efficient “sandboxes” to test ideas early with
minimal investment and select the winners for further development

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