The new role of R&D and process for new products in pharmaceutical industry has been established Productivity increase of Orion R&D within 6 years by : -Classification of partners -Partnering and outsourcing models in use Need of reliable key metrics to value R&D investment and boost the future growth of the company

1. Increase of the
Productivity of the
Discovery Process
by Partnering and
Outsourcing
Antti Haapalinna,
Ph.D., Adjunct Professor, eMBA
Vice President, Research, R&D,
Orion Corporation ORION PHARMA
12th Annual Congress of International Drug Discovery Science &
Technology, 16-20 November 2014, Suzhou, China
Stream 16: Symposium of Drug Discovery R & D Outsourcing Services

2. Structure
• Orion in brief as background information
• The new role of R&D and process for new products in
pharmaceutical industry
• Productivity increase of Orion R&D within 6 years
What has been made?
• Classification of partners
• Partnering and oursoursing models in use
• Need of reliable key metrics to value R&D investment and
boost the future growth of the company
• Conclusions
Orion's R&D: The voice of science and the patient

3. Building Well-being Is Orion’s Mission
Orion’s own sales organisation’s areas
Sales areas of partners
Orion is a globally operating Finnish company
developing pharmaceuticals and diagnostic
tests – a builder of well-being.
Orion in brief 2013
Net sales EUR 1 007 million
Operating profit EUR 268 million
R&D expenses EUR 101.9 million
Nro of personnel (at end of) 3,519
in Finland 2,816
in other countries 703
Market cap on 11 June 2014 EUR 3,78 billion
Orion Corporation

4. 4

5. Innovative treatments worldwide
5
Orion’s own sales organisation’s areas
Sales areas of partners

6. R&D, new model
and
effect on
productivity
6 R&D, the Voice of Science and the Patient

7. The new role of internal R&D
7
Search,
combination
and processing
of
knowledge by
internal R&D
Knowledge and IPR
from internal sources
Knowledge and IPR
from external sources
Commercialisation
through internal paths
Commercialisation
through external paths
(from J. Kettunen, S-K Ilomäki, P. Kalliokoski;
Making sense of innovation management, 2008)
Orion partnerships cover the entire R&D value chain of operations
- Increasing focus on research collaboration partnerships
- Rights for further development and marketing of candidate
compounds to Orion (especially in Europe)
- Development partnerships are usually sought for clinical phase III at
the latest, especially in marketing authorization cases in countries
outside Europe
- Rewards and risks are shared with partners
Orion's R&D: The voice of science and the patient

8. 30
Active-To-Hit Hit-To-Lead Lead Optimization
CNS B
CNS C
Cardiovascular
Urology
CNS A
CandidatePrecandidate
Oncology A
Research projects 2006 = Before candidate
selected for development to IND/CTA
CTA
"R&D: The Voice of Science and the Patient"

9. 9
Pharmaceutical Development pipeline year 2009
Own proprietary animal drug research
Own proprietary drug research
Developed by a partner
Project Indication Preclinical
Clinical phases
Registration
I II III
Histrelin implant (Vantas®) advanced prostate cancer Endo Pharmaceuticals Solutions
Stalevo®, expansion of the indication in the US early stage Parkinson’s disease
Dexmedetomidine (intravenous) for European markets sedative for patients in intensive care
Stalevo®, development for the Japanese market Parkinson’s disease
Easyhaler® combined formulation asthma, COPD
Pharmacology of steroid receptors SARM, prostate cancer
Alfa 2 C receptor pharmacology schizophrenia, Alzheimer

10. Active-To-Hit Hit-To-Lead Lead Optimization
CandidatePrecandidate
Research projects 2014
10
CNS D
CNS A
Oncology E
CNS B
Oncology C
CNS C
Oncology B
Oncology D
CNS G
CNS F
CNS E
CNS H Super generic
Collaaboration (Biologic) for new indication
HIT Finding
CTA
CNS H
CNS I
CNS J
"R&D: The Voice of Science and the Patient"
Oncology A

11. Project Indication
Clinical phases
Registration
I II III
Easyhaler®
budesonide-formoterol Asthma, COPD
Stalevo®
for Japanese markets 1)
Parkinson’s disease
Easyhaler®
salmeterol-fluticasone Asthma, COPD
ORM-12741 (alpha-2c adrenoceptor
antagonist) 2) Alzheimer’s disease
ODM-201 (androgen receptor inhibitor) 3)
Prostate cancer
ODM-103 (more effective COMT inhibitor) Parkinson’s disease
ODM-203 (dual FGFR & VEGFR inhibitor) Cancer
Key pharmaceutical development projects year 2014
11
1) Conducted by partner Novartis
2) In collaboration with Janssen Pharmaceuticals
3) In collaboration with Bayer
IIa
Completed Ongoing
....and 3 projects in nonclinical development for IND/CTA

12. What has been
made to increase
the number of
projects and
research output?
12
Orion's R&D: The voice of science and the patient

13. 13
Collaborative networks across the R&D value chain
Generics Development and
Product Lifecycle Management
Partnering …and moving further
Late stage
development
Early developmentResearch
Partnering and outsourcing
… and moving earlier Partnering
Target
identification
and validation
8–24 mth
Hit to Lead
generation
12–24 mth
Lead
optimisation
18–36 mth
Candidate
selection,
preclinical
dev.
12–24 mth
Phase I
12–14 mth
Phase III
18–48 mth
Phase II
12–36 mth
"R&D: The Voice of Science and the Patient"

14. 14
Classification of collaborators
Strategic
significance/
Technology
low
low
high
highCompetence required for product/activity
Competitive bidding,
cost efficiency
Collaboration
Availability/
quality
Development of
product solutions/
Cost efficiency
Strategic
collaboration
Development of competence,
technologies, processes, products
>100
partners
20-30 partners
a few partners
Usually; Ample availability / Restricted availability
Public &Private
Partnerships
Orion's R&D: The voice of science and the patient

15. Orion view on collaboration and networking
opportunities
Scientific
competence
- Universities
- Research centres
Drug discovery &
development
competence
- Small biotech, Pharma
companies or CROs
Orion
Networking
Collaboration
opportunity
Collaboration
opportunity
Collaboration
opportunity
15
Orion's R&D: The voice of science and the patient

16. “R&D -The Voice of Science and the Patient"
FTE agreement; hybrid and
integrated model. On line support
allocated for several research
projects in Orion. In addition also
multiple small tasks outsources on
demand.
Risk sharing hit & lead
finding project
Risk Sharing Project on
pre-candidate/dev.
candidate finding
Univ.
network
Several partners and CROs
Partner
&CROs
&CROs
&CROsPartner
Univ.
network
Various kinds of collaboration models in use

17. Partners (working for several parallel projects)
Internal database
Chemistry
Laboratories
Orion CL
contact
Project groups
Biology
Laboratories
Orion BL
ADME Contact
Info and
compounds
Coded samples (without
structures)
Results
Results
ADME
needs /
compound
Structure- activity
groups
Responsible Chemists
Orion CL
eRoom
Orion BL
eRoom
Info
Structure activity
DB
DATA transfer
by Orion personnel
DATA transfer
by Orion personnel
Info
(FTE)
Info,
Structures
compounds
Example of test and information management
in hybrid and integrated model for novel
compounds
Orion's R&D: The voice of science and the patient

18. POI
Hit to
Lead
Lead
Optimization
Development
for phase 1
TMP Lead
selection
Development
candidate
selection
I-ID I-XX-YY D-XX-YY
Timelines between phases to be recorded:
1) Hit to lead phase (from official start of the project to identification 1st lead structure)
2) identification of Lead molecule: (start of lead optimization process),
3) identification of Pre candidate (broader in vivo efficacy and safety testing) and
4) identification of Drug development candidate (start of the nonclinical developmental work for the CTA)
5) CTA ready
WBS-code logic:
all POIs Specific research project Specific development project
Pre-
candidate
selection
CTA
documentation
ready
(Target Molecule Profile)
Guidance and logic in early R&D
18
Orion's R&D: The voice of science and the patient

19. • Lead molecule
start of lead optimization process
• Active in relevant cell based assay
• Suitable physicochemical (measured) properties
related to the target profile
• Suitable pharmacokinetic properties in vitro and in
vivo related to the target profile efficacy in vivo
• Or appropriate secondary in vitro model to reflect the
potential mechanism of action
• Preliminary in vitro safety parameters evaluated
• Scaffold should not be genotoxic
• Clear patent strategy
• Initial FTO defined
• Preliminary SAR
• Stringent optimization strategy described
• Precandidate
• Active in relevant biochemical and/or cell-based
assays with an acceptable pharmacological profile
(specificity, selectivity, and potency)
• Suitable physicochemical (measured) properties
related to the Program Target(s)
• Suitable pharmacokinetic properties in vitro and in
vivo related to the Program Target
• Efficacious in vivo to reflect the proposed
mechanism of action, with demonstrated
pharmacodynamic effect
• Preliminary in vitro and in vivo cardiac safety
parameters shall be acceptable for further
development
• Not genotoxic
• No harmful metabolites have been identified
• Patentable and preliminary freedom to operate (FTO)
ok
• Initial scale up for broader efficacy and safety
evaluation
• Drug Development Candidate
• All the properties of the Precandidate but also:
• Patententable as a composition of matter with a clear patent strategy and freedom to operate (FTO) defined
• Initial synthesis scale up for broader efficacy and/or safety studies have been carried out; no major liabilities for
manufacturing or formulation have been identified
• The results from non-GLP in vivo safety pharmacology and toxicology (dosing for two weeks) studies in two species
(e.g., rat & dog) support further development
Definitions (the same for all projects)
19

20. 20
POI
Hit to
Lead
Lead
Optimization
Development
for phase 1
TMP Lead
selection
Development
candidate
selection
1) Hit to lead phase (from official start of the project to identification 1st lead structure)
2) identification of Lead molecule: (start of lead optimization process),
3) identification of Pre candidate (broader in vivo efficacy and safety testing) and
4) identification of Drug development candidate (start of the nonclinical developmental work for the CTA)
5) CTA ready
Timelines between phases recorded:
Timelines after 2007 (on average)
Pre-
candidate
selection
CTA
documentation
ready
17,5 8,8 13,019,2Months: 15,7
Orion's R&D: The voice of science and the patient

21. 21
Internal projects Collaboration projects
Time from the start of
the project to the
identification of
Precandidate
36.9 months 38.9 months
Internal FTEs used 39.3 6.1
Average extrenal costs 1 * X € 2.1 * X €
Average total costs 1 * X € 0.65 * X €
Comparison of internal and collaboration projects from
the start to the precandidate identification phase
Orion's R&D: The voice of science and the patient

22. • Combining resources creates more value
for both parties (win-win)
• Partnerships add new skills and knowledge
to joint projects.
• Possibility to start new projects fast with
flexible resource allocation (within both
companines).
• Partnering eables risk sharing.
22
Why partnering & outsoursing ?
Orion's R&D: The voice of science and the patient

23. ACT SMART - Agility challenge
23
Thus:
• Pure short term rationalization and cost cutting will
not be the right solution
• Capability of the organization to manage complexity
is important and needs to be continuously improved
• Prioritization and efficiency need to be continuously
improved
• Target setting and measurement as and essential
means to increase overall R&D performance
• Amount of information vs. quality of information !
• “Unused information is waste”
Orion's R&D: The voice of science and the patient

24. Thank you
for your interest
QA ?