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Anatomy of a Deal: Avid Radiopharmaceuticals


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On October 12, 2012, Safeguard Scientifics' EVP and Managing Director, Jim Datin presented a case study at the RBC Biotech Conference, which focused on “Biotech Success Stories of the [Philadelphia] Region”. Jim Datin presented a case study on Avid Radiopharmaceuticals, a Safeguard partner company from 2007-2010, when it was acquired by Eli Lilly. The presentation, entitled "“The Success of Avid Pharmaceuticals from an Investor's Point of View" highlights the critical factors to building a great company, "The 5 Ms" -- Management, Market, Model, Momentum and Moat.

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Anatomy of a Deal: Avid Radiopharmaceuticals

  1. 1. CASE STUDY: Avid RadiopharmaceuticalsJim Datin, EVP and Managing Director, Safeguard Scientifics
  2. 2. Forward Looking StatementsStatements contained in this presentation that are not historical facts areforward looking statements which involve certain risks and uncertaintiesincluding, but not limited to, risks associated with the uncertainty ofmanaging rapidly changing technologies, limited access tocapital, competition, the ability to attract and retain qualified employees, ourability to execute our strategy, the uncertainty of the future performance ofour partner companies, acquisitions and dispositions of additional partnercompanies, the inability to manage growth, government regulation and legalliabilities and the effect of economic conditions in the business sectors inwhich our partner companies operate, negative media coverage and otheruncertainties as described in our filings with the Securities and ExchangeCommission, including our Annual Report on Form 10-K.Safeguard does not assume any obligation to update any forward lookingstatements or other information contained in this presentation. 2
  3. 3. About Safeguard Scientifics
  4. 4. Safeguard Today 4
  5. 5. Recent Success Stories Cash-on-Cash Acquired By Proceeds* Return $38M 4x $138M 13x $208M** 3x Market Cap Increased 5x $41M 3x Return Potential Could Approach 8x*** * Includes amounts held in escrow as of June 30, 2012 which are deemed likely to be realized during 2012, if any, but not unearned milestones / earnouts, where applicable. ** Proceeds include $61M from sale of CLRT shares during Q3’09. *** Based on achievement of difficult earnout provisions. 5
  6. 6. CASE STUDY “The Success of Avid Pharmaceuticals from an Investors Point of View“ 6
  7. 7. Avid’s Product Portfolio ALZHEIMER’S “Probable Alzheimer’s” Patient Cognitively Normal Elderly PARKINSON’S and DEMENTIA WITH LEWY BODIES 7
  8. 8. Significant Market Opportunity Alzheimer’s disease affects millions of older Americans.... U.S. Prevalence of Alzheimers 8 (Millions of Patients) 7 6 5 4 3 1990 1995 2000 2005 2010 2015 2020 2025 2030 … yet current diagnostic methods are inaccurate.Souces: American Academy of Neurology Practice Parameter for Diagnosis of Dementia;Morgan Stanley AD Market Report, 2003; U.S. Census Bureau 8
  9. 9. About the Founder Daniel M. Skovronsky, M.D. Ph.D. Founder and CEO Avid Radiopharmaceuticals, Inc.• 33 years old when he founded Avid Radiopharmaceuticals• 20+ peer-reviewed publications; 2 NIH-funded grants on Alzheimer’s disease research• E&Y Entrepreneur Of The Year® Award in 2009• Philadelphia Business Journal “40 under 40” in 2006• Scientific Director of High Throughput Screening and Drug Discovery at the Center for Neurodegenerative Disease Research at the University of Pennsylvania• Resident in Pathology; Fellowship in Neuropathology – Hospital of UPenn• M.D., Ph.D. – University of Pennsylvania• B.S., Molecular Biochemistry – Yale University 9
  10. 10. World Class Team BackgroundDaniel M. Skovronsky, M.D., Ph.D. – President & CEOHank F. Kung, Ph.D. – Chairman Scientific Advisory BoardFranz Hefti, Ph.D. – Chief Scientific OfficerRichard Baron – Chief Financial OfficerAlan P. Carpenter, Jr., Ph.D., J.D. – Business DevelopmentMichael Pontecorvo, Ph.D. – Clinical DevelopmentChris Clark, M.D. – Medical DirectorChris Bunting – Marketing & Sales 10
  11. 11. Board Members and/or Investors 11
  12. 12. History of Avid Radiopharmaceuticals 2005 Founded Spun out of UPenn Seed Funding Raised $500K 2006 Series A/B Raised $9M Alzheimer’s Licensing Agreement: Awards 2007 Series C Raised $26M Product Phase I Bayer Schering Pharma Frost & Sullivan ETC Enterprise Award Alzheimer’s Parkinson’s FDA Advisory 2008 Product Phase II Product Phase I Committee Meeting for Alzheimer’s Product Alzheimer’s Parkinson’s Diabetes 2009 Series D Raised $35 Product Phase III Product Phase II Product Phase I Alzheimer’s 2010 Product NDA Acquired by 12
  13. 13. The Results for Safeguard?• Safeguard deployed $12M in Avid• Eli Lilly acquired Avid for initial payment of $300M, plus an additional $500M contingent upon potential future regulatory and commercial milestones for Alzheimer’s product• Initial Proceeds were $36M, Constituted 3x CoC return for Safeguard• CoC return for Safeguard could approach 8x based on Avid’s achievement of some difficult regulatory and revenue milestones 13
  14. 14. Safeguard’s Capital Deployment Criteria: The ‘5Ms’• Management – How’s the management in this organization? Does it need to be augmented?• Market – Is the market large enough to build a real business, or is it just large enough to have a successful product line?• Model – Does the business model enable valuation growth?• Momentum – Are the momentum indicators showing that the company has its back to the wind as opposed to its back to the wall?• Moat – How defensible is a company’s competitive positioning? 14
  15. 15. CASE STUDY: Avid RadiopharmaceuticalsJim Datin, EVP and Managing Director, Safeguard Scientifics