1. Biomedical Technologies at Skolkovo Skolkovo Prof Igor Goryanin, Head of Biomedical Cluster, Skolkovo February 1, 2011 With help Skolkovo colleagues and McKinsey & Company

2. First steps, first achievements http://www.i-gorod.com/ From Presentation in Davos, January 25th, 2011

3. Town-planning concepts for Skolkovo Innovation Centre development (ОМА, AREP) OMA AREP Social Culture University Industry Commercial Residential Park & Ride

4. The MISSION of Skolkovo Skolkovo is to become an innovation hub that will stimulate innovative entrepreneurship and disseminate entrepreneurial culture across the country to integrate Russia into the global economy: Fostering advancement of human capital in Russia by attracting foreign specialists and creating conditions for local innovative talent development Creating globally competitive products and services based on cutting-edge research Establishing global innovative companies in Russia

5. Governance structure The government provides initial funding and signals credible commitment to support the project in the future The project is managed by a non-government foundation with an independent Board, regulated by a special law The Foundation is a doorkeeper, while all Skolkovo units (such as the Clusters) and residents are independent organizations Much of the real estate in Skolkovo will be built by private developers

6. Map of key partners (2010 – January 2011)

7. Skolkovo Foundation track record (March 2010 – January 2011)

8. Global network for knowledge management

9. Creating in SKOLKOVO

10. Joint risk management in innovative cycle

11. Initial ideas Biomedicine: to focus in development , implementation and commercialization, long-term technology transfer in “P-4 Medicine” (Personalized, Participatory, Predictive and Preventive). Biopharmaceuticals: to establish Russian independence in the pharmaceutical sector from drug discovery to manufacturing (by 2015 many drug patents will expire, further weakening the financial foundation of the industry) Biomedical Informatics: to establish Russian independence in health informatics sector by establishing infrastructure, developing novel computational technologies, knowledge management, rational planning of biological and clinical experiments. Industrial Biotechnology and Bioenergetics: to develop alternative approaches in the bioenergy, and bioremediation sectors, to develop waste, and industrial by-products utilization technologies combined with energy production in multiple forms 10

13. Relatively low infrastructure and equipment costs (e.g., versus drug production) and high interest from international partners to collaborate with local scientists also supports higher feasibility and opportunity

14. Can be an enabler of other areas as an early “proof of concept” for Skolkovo biotech cluster

15. DNA sequencing

16. Pathway modeling

18. Highly attractive driven by large existing domestic market of ~$1.5B, nearly 100% financed by Russian government healthcare budget spend and nearly all on imported drugs

19. Some areas (e.g. bio-similars) may have lower entry barriers and at the same time span across topics, ensuring broader impact

20. Monoclonal antibodies

21. Novel treatment modalities

22. Products for stroke prevention/treatment

23. Bio-similars

24. Companion diagnostics

26. Biopesticides (i.e. biological defence of plants)

28. No government subsidies versus international markets

29. May become both feasible and highly attractive if government was to prioritise the area

30. Genetic modification of biomass, e.g. development of species relevant for a particular climate1 May be partially outside the current mandate SOURCE: Expert interviews; Team analysis

31. 12 e 20 9 14 39 6 25 14 8 Biomedicine cluster – Russian and global market summary ROUGH ESTIMATES Bio-healthcare/ Bio-pharma Bio-informatics Bio-industrials Bio-energy Russian market size Global market size CAGR Percent CAGR Percent USD billions USD billions 720 12-16 0-2 160 8% p.a. 14% p.a. 510 4-6 105 270 6-8 320 0.5-1.5 0-1 200 65 35 2-4 11 150 0.1-0.3 2-4 5-7 <1 260 3 194 3-5 0 120 1-2 2020 15 2009 15 2020 2009 SOURCE: Evaluate; Markets and Research; government reports; press search; team analysis

38. 14 Bio-Informatics Bio-Healthcare/ Bio-Pharma Biotech Prioritization Matrix Bio-Industrials Bio-Energy Attractiveness “Higher priority areas”: Expected to have highest proportion of high potential project proposals I III “Long term potential” Highly attractive but requires more capability and infrastructure building Vaccines and anti-infectives Oncology Companion diagnostics Blood Bulk/polymers Endocrine Regenerative medicine Drug development Cardiovascular Nuclear medicine National incubators CNS Food/feed Biosimilars Molecular medicine Musculo-skeletal Ethanol Gene therapy Bioremediation Agriculture “Lower priority areas” Select opportunities possible but expect less overall deal flow in these areas “No regret areas”: Relatively higher probability of success, can be leveraged to support other areas Preventive medicine Marine biotech Plant extracts Oleochemicals Biomass Biodiesel Sensory organs Genito-urinary Feasibility Strategic directions prioritization – Biomedical II IV SOURCE: Team analysis, Expert Interviews

40. Monoclonal antibodies (e.g., in breast cancer and leukemia)

42. Vaccines (e.g., TB, flu, new pediatric, conjugated)

45. Alzheimer’s disease

46. Schizophrenia

55. Companion diagnostics (e.g., in oncology)I 1 Cross-cutting areas SOURCE: Expert interviews; Evaluate; IMS; Scientia Advisors; PWC; press search; team analysis

57. Molecular medicine

59. Virtual screening

63. Plant extracts

65. Oil spills treatment

67. Exploration of promising compounds derived from marine organisms (e.g red or green alga as anti-cancer compound)

69. Fast growing genetically modified products for livestock

71. Genetic modification of biomass, e.g. development of species relevant for a particular climate

73. Cellulosic ethanol (e.g. bioethanol from waste)

75. Use of microorganisms to convert raw materials (e..g CO2, wood, sugar) into biodiesel

77. Lysine production

79. Sorbitol technology

80. Bioplastics (including biodegradable products) based on carbohydrates as starch, celluloseIII SOURCE: Expert interviews; Evaluate; IMS; Scientia Advisors; PWC; press search; team analysis

82. Antineoplastic and immunomodulating agents

83. Novel treatment moda-lities (e.g., personalized treatments)

84. Area of high disruptive potential as evidenced by large R&D in the area, with high disruptive potential (e.g., USD 275 mn spent p.a. to catalogue gen. changes just in 20 types of cancer treat.)

85. Large potential market (USD 250bn in US, growing at 10% p.a.), with high unmet need

86. Early commercial successes (e.g., Dendreon, initially for prostate cancer)

87. Indications of Russian state interest and support (e.g., Oncophage registration);also PoC

88. Monoclonal antibodies (e.g., in breast cancer and leukemia)

89. Large current market (USD 27bn globally, USD 530mn in Russia), expected to grow rapidly (10% CAGR)

90. Clear support from the Russian government (e.g., declared interest and state purchases)

91. "Hot" area in global R&D, with strong "pockets" of capabilities in Russia (e.g., Gabibov’s lab)SOURCE: Expert interviews; Evaluate; IMS; Scientia Advisors; PWC; press search; team analysis

93. Clearly a priority area for the government

94. High level under-penetration, e.g., Russian National Calendar only includes ~10 diseases vs. 15-20 in the West

95. HC2020 Strategy explicitly identifies local Vx production as key state priority

96. Government consistently increased funding to Vx (e.g., additional USD 10mn given on R&D in 2010)

97. Historically strong infrastructure/capabilities to build upon (e.g., Vector, Inst. of Sera)

98. Mid-sized market (USD 22bn globally, but only ~5% market is biotech-based); Russian market is USD 300mn

99. Anti-virals seen as a priority by the state

100. E.g., Over 500K HIV cases (another 1mn likely not diagnosed) and growing at 10% p.a.; only ~25% get adeq. treatment

102. Drugs capable of fighting infectors, both prophylactic and treatment focused

103. Vaccines (e.g., TB, flu, new pediatric, conjug.)

104. Anti-virals (e.g., anti-HIV)SOURCE: Expert interviews; Evaluate; IMS; press search; team analysis

106. Significant unmet need due to low effective-ness of products on the market (estimated market could be 10x larger)

107. High (and declared) priority for the state due to high case number (400K cases p.a.)

108. Large market size (USD 35bn globally), with above average growth expected (5% overall, 25% in GLP-1 component) expected

109. Disease seen as a high priority for Russia

110. 2.8mn diagnosed diabetics in Russia (~5mn undiagnized and ~6mn pre-diab.)

111. 2009 drug spend at USD 400mn (incl. USD 100mn biologics); total direct costs estimated at over USD 10bn

113. Biotech products targeted at CV/circ. system diseases

114. Products for stroke prevention/treatment (e.g., hemorrhage/ thrombosis)

115. Endo-crinology

116. Products enhancing functio-ning of the endocrine system

117. Diabetes (e.g., GLP-I agonists1)1 Glucagon-like-peptide-1 – increases insulin secretion, lowers glucagon secretion, increases insulin sensitivity SOURCE: Expert interviews; Evaluate; IMS; MoH; NovoNordisk; press search; team analysis

119. Some historical capabilities in CNS exist (e.g., Inst. of Mol Biology, Chernogolovka Inst.)

120. "Hot" R&D area globally (USD 0.5bn spend p.a. in the US alone and growing), with an opportunity to "create" a large market

121. Large patient population, both globally and in Russia, affecting 1.5% population

122. High unmet need due to lack of effective treatments, with USD 0.4bn R&D spend p.a.

123. Historically present R&D capabilities in Russia (e.g., Inst of Pharmacology)

124. Mixed perception of disease importance –not a priority for the Russian government

125. Large and growing patient population, est. at ~15mn in Russia; low diagn./treatment rates

126. Anti-dep. market at USD 40mn and growing

127. Current global market of USD 12bn, in 5 yr. expected to decline to 8bn due to LOEs

129. Products related to curing nervous system diseases

130. Alzheimer’s disease

131. Schizophrenia

132. Depression1 Primarily non-biologics SOURCE: Expert interviews; Evaluate; IMS; NIH; press search; team analysis

134. Highly competitive market dominated by 3 major established players (e.g., GE, Phillips, Siemens)

135. High fixed/investment costs

136. Russian government supportive of medical devices (imaging focus), investing USD 1bn into R&D centers in 2009-10

137. E.g., Medradiopreparat received RUB 1bn from the state, with add. RUB 10bn likely

139. Specialty medicine/medical imaging branch using radio-active decay for disease diagnosis and treatment

140. Nuclear imaging (e.g., PET)1 Primarily non-biologics SOURCE: Expert interviews; Evaluate; IMS; NIH; press search; team analysis

142. Listed as high priority for local production by both Ministry of Health and the Ministry of Industry and Trade

143. Pharmstandard, a top local Russian pharmaco with substantial investment backing, investing heavily to produce

144. Regarded as complex to produce, esp. recombinant form, due to complicated biologics production process

145. Expected competition from other Russian pharmacos investing in the space

146. Mid-sized market in Russia (USD ~60mn), growing at ~10%

147. Relatively competitive space, with multiple effective drugs available (e.g., Remicade, Humira, Enbrel)

148. Research may be leveraged in other auto-immune areas, e.g., psoriasis or lupus

150. Products for treatment of blood related disease

151. R&D partnerships into Blood Factor Co-agulating agents (e.g. long-lasting Factor VIII)

152. Drugs for musculoskeletal disease treatment

153. Musculo-skeletal

154. Rheumatoid arthritis1 Primarily non-biologics SOURCE: Expert interviews; Evaluate; IMS; NIH; press search; team analysis

156. Products off-patient but relatively more complex to develop

157. Biologics market in Russia is very large, at USD 1.6bn, and expected to grow at 14%

158. Russia has sufficient development/production capabilities to produce bio-similars

159. Large investments into infrastructure committed/ongoing

160. Multiple projects close to completion (e.g., Pharmstandard/Generium, Biocad)

161. Russian government extremely focused on locally produced bio-similars

162. Integral part of HC2020 and Pharma2020 (partly due to cost savings)

163. Significant funding (e.g., USD 100mn) already committed by various state entities

164. Bio-similars development and production

165. Regenerative medicine

166. Creating living, functional tissues to repair or replace tissue or organ function

167. Large potential market ($1.5bn currently, forecasted to grow to $15-20bn by 2025)

168. Existing capabilities/infrastructure (e.g., stem cells in SPb), enhanced by beneficial regulatory environment regulations

169. Research direction relevant for other TAs (e.g., alimentary)

170. Relatively open space with no dominant leader

171. Regenerative medicine (e.g., stem cells)SOURCE: Expert interviews; Evaluate; IMS; Scientia Advisors; PWC; press search; team analysis

173. Diagnostics applied across TAs

174. Relatively small market (USD 400mn globally), which grows very rapidly (expected 25% CAGR)

175. Despite relatively low potential of each test (USD 100-150mn globally), frequent identification of new biomarkers expected to drive the size

176. Growing evidence of clinical utility likely to drive adoption, and market participants likely to capture greater share of value

177. Market still nascent, with significant degree of fragmentation allowing for relatively easy entry of new players

178. Some R&D capabilities exist in Russia

179. Companion diagnostics (e.g., in oncology)

180. Talent development

181. Search and development of talented scientists

182. National incubators can be an effective tool to encourage innovation

183. E.g., USD 25-50K grants to graduate students, with larger follow-on funding based on performance

184. National incubators concept allows to diversify funding targets, channel money to most effective uses, and create synergies

185. Large of large numbers stipulates that some funding would be successful

186. Follow-on funding approach ensures performance-based funding

187. Common infrastructure (incl. management support) would create significant economies-of-scale for funding recipients

188. National incubatorsBio-Healthcare Priority areas: Talent development and diagnostics HIGH LEVEL ASSESSMENT Level 1 Direction Description/level 2 Rationale SOURCE: Expert interviews; press search; team analysis

190. Fast market growth (>25% a year)

191. Large disruptive potential, e.g., making a breakthrough for personalized medicine

192. Low barriers to entry: relatively low infrastructure/ start-up costs and high potential talent pool

193. Relatively low capital costs with big potential benefit, e.g., FDA estimates that 10% improvement in drug efficacy prediction rate can save USD 100mn devel. cost per drug

194. Synergies with other Skolkovo bio-HC R&D

195. A large component of drug development BI (total drug development market is expected to be USD 8bn globally in 2020)

196. Fast market growth (>20% a year)

198. Development of molecular interventions to correct genetic/mol. errors of disease

199. DNA sequencing1

200. Drug development

201. Use of data, analysis and modelling techniques to develop/test new molecules

202. Pathway modeling

203. Virtual screening1 Not confined to molecular medicine but cross-cutting SOURCE: Expert interviews; team analysis

205. High computational skills requirements maps, well to Russian academic and current research strengths

206. High potential for partnerships

207. High market potential (estimated at USD 2bn by 2015), expected to grow at 20% rate

208. High computational skills requirements leverage traditional Russian R&D strengths

210. Insertion, alteration, or removal of genes within an individual's cells to treat disease.

211. Genomics1

212. Preventive medicine

213. Work on preventing diseases, as opposed to curing them, using bio-informatics advances

214. Molecular diagnostics21 Not confined to molecular medicine but cross-cutting 2 Illustrative portion of preventative medicine SOURCE: Expert interviews; press search; team analysis

216. Organic acids (citric, gluconic, lactic), amino acids (lysine, threonine) vitamins.

217. Lysine (aminoacids)

218. Medium size market (~$40-60 m) and quickly growth market (15% a year) in Russia

219. Significant potential for import substitution (currently 80% is imported)

220. Good accumulated research as Soviet Union was one of the world leaders in lysine production

221. Very competitive industry internationally

222. Citric acid

223. Average market (~$20-30 m)

224. Existing production in Russia (JSC Citrobel)

225. Plant extracts

226. Hydrocolloids (gums and starch), flavor and fragrance ingredients (essential oils, botanicals),

227. Industrial starch

228. Large market ($150-200 m) in Russia

229. Slow growth (2,5-3% globally)

230. Russia has accumulated substantial research base of starch technology driven by significant local producing industry: main market players in Russia are Efremovsky, Gulkevichsky, Chaplygin, Zvyagin, Krahmaloproduct

231. Exists potential for development of niche products (e.g. for oil drilling)SOURCE: Expert interviews; team analysis

233. Natural rubber, bioplastics, polyols (sorbitol, mannitol, xylitol, glycerin)

234. Sorbitol technology

235. Big market size ($50-150 m) in Russia and average growth (13%)

236. Relatively lower feasibility given no local production

237. High availability of raw material in Russia (starch)

238. Bioplastics (including biodegradable products) based on carbohydrates as starch, cellulose

239. Small market size (5% of bulk/polymers market ~$20-30 m) and medium growth in Russia

240. Unlike many Western countries, no regulatory obligation to use biodegradable materials

241. High availability of raw material for production (e.g. wood waste from timber industry)

242. Bio-remediation

243. Biotreatment of waste, oil spills for clean-up/removal

244. Oil spills treatment

245. Currently negligible market size (no statistics) but with medium growth (construction of pipelines, new field exploration)

246. Lack of regulatory support (no pressure from the state to be environmentally more responsible)

247. Can be used immediately by existing industrySOURCE: Expert interviews; team analysis

249. Application of molecular biological methods to marine and freshwater organisms, to produce foodstuffs, energy, drug compounds

250. Compounds derived from marine organisms used in healthcare (e.g red or green alga as anti-cancer compound)

251. Some disruptive potential but only 45 marine-derived natural products tested to be used as medical drugs in preclinical and clinical trials so far, only two have been developed into registered drugs

252. Fungi as a source for the compounds may be derived in extreme marine environments (cold water in Russia)

253. Research capability exists (Dalnevostochniy and Kaliningradskiy centres) but limited to only two institutes

254. Total spend on fish preservation and reproduction in Russia $50-70m

255. Limited natural resources for classical fish farming

256. Existing but small fish farming industry

257. High potential for disruptiveness, in case of extension into genetically modified fish cultures

258. Fish farming (e.g. fish feed)SOURCE: Expert interviews; team analysis

260. Yield enhancement, transgenic foods, biopesticides

261. Fast growing genetically modified products for livestock

262. Big total stock raising market in Russia ($42 bn)

263. Restrictive regulation in the home market: growing genetically modified food for human consumption is banned in Russia

264. Unclear regulation on genetically modified plants for use in feedstock

265. Significant agricultural industry in Russia ($41 bn)

266. Total global biopesticids market ($ 1,6 bn)

267. No regulatory restraints, however no supportive laws

268. Competition with cheaper comparables as pesticides

269. Biopesticides (i.e. biological defence of plants)SOURCE: Expert interviews; team analysis

271. Biological material from organisms used as a source of renewable energy

272. Large market (USD 15b globally and USD 50-150m in Russia)

273. Opportunity to develop species relevant for cold Russian climate, which can also be leveraged in other Nordic countries

274. Large amounts of available resources in the home market

275. Genetic modification of biomass, e.g. development of species relevant for a particular climate

276. Biodiesel

277. Vegetable oil or animal fat-based diesel fuel

278. Use of microorganisms to convert raw materials (e..g CO2, wood, sugar) into biodiesel

279. Significant disruptive potential, e.g. both environmental and energy production technologies

280. Low potential in the home market

281. Longer term horizon for development of the technology – 10+ years

282. Jet biofuel from camelina

283. High disruptive potential, however market is not defined yet as the technology is not ready

284. Unlikely government support in the next 10 years

285. Availability of the plant (camelina) on the Russia marketSOURCE: Expert interviews; team analysis

288. Large market potential (USD 40b globally in 2009, up to USD 2b in Russia by 2020)

289. Large amounts of raw materials

290. Potential exports markets already existing (e.g. current increase from 5% to 10% share of ethanol in petrol in EU starting 2011)

291. Microbial synthesis of ethanol

292. Large market potential (USD 40b globally in 2009, up to USD 2b in Russia by 2020)

293. Longer term horizon for development of the technology – 10+ years

294. Uncertain potential in the home marketSOURCE: Expert interviews; team analysis

295. The expected impact 2015-2020 IP protected production of essential medicines, healthy food and animal feed, drug and food public safety Improved state health system through new technologies for diagnostics,prevention and treatment of diseases Increased renewables in the total energy balance. Improvement of ecological situation in Russian Federation by reduction ofemissions and conservation of biodiversity. New jobs created for urban and rural population with diverse Innovative economic development from scientific research originated from Skolkovo, Russia and by transfer of foreign technologies Establishment of the internationally recognized scientific and industrial biotech center The development of related industries (medicine and agriculture) through the creationof the additional demands from the biotechnology industry 33

296. 34 There is a unique opportunity for Russia Roger Kornberg, Nobel Laureate