A workshop presentation for Medical Affairs Strategic Summit West held in San Diego on September 23, 2019. The workshop covered the following learning objectives: * Understand the factors involved in selecting and prioritizing indications * Understand the importance of strategic market segmentation * Understand how Medical Affairs can be involved in the process of new product planning

1. New Product Planning and Medical Affairs
TONY RUSSELL , PHD, MBA
EXECUTIVE DIREC TOR, PRODUC T 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 (Med Ed / Pub Planning)
2006 – 2007 ICOS (acq. Eli Lilly) Strategic Marketing
2004 – 2006 Corus Pharma (acq. Gilead Sciences) Product Management
2000 – 2004 Amgen Medical Affairs (Med Info / Med Comm)
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. Learning Objectives
1. Understand the factors involved in selecting and prioritizing indications
2. Understand the importance of strategic market segmentation
3. Understand how Medical Affairs can be involved in the process of new product planning
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5. Downward Trend in Productivity
Demands Transformative R&D Strategy
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Deloitte reports decreased R&D productivity as
measured by return on late-stage assets
Decreased productivity driven by:
◦ Increasing development costs
◦ Decreasing forecast peak sales per asset
Smaller specialized pharma companies outperform
large-cap pharma companies, but also have
decreasing R&D productivity
◦ Higher return due to higher projected forecast sales
offsetting higher development costs
Success in early research will feed the successes
needed in late-stage asset development
“Unlocking R&D Productivity: Measuring the Return from Pharmaceutical Innovation”. 2018. Deloitte
10.1%
7.6% 7.3%
4.8%
5.5%
4.2% 4.2%
3.7%
1.9%
17.4% 17.7%
16.1%
11.0%
12.5%
9.3%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
2010 2011 2012 2013 2014 2015 2016 2017 2018
AbsoluteIRR(%)
Return on Late-Stage (Ph2 Onwards) Asset Portfolio
Large-Cap Pharmas Small Spec Pharmas

6. 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

7. Value of Early Commercial Involvement
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$-
$10
$20
$30
$40
$50
$60
$70
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Sales($MM)
Sceanrio1 Scenario2
Drivers for Success (Examples)
• Clearly defined value
proposition
• Data above & beyond FDA
approval
• Strong competitive position
Drivers for Failure (Examples)
• Value proposition not
established
• Relatively late entrant
• Failed to consider
competitive or generic
entrants
For illustrative purposes only and does not represent any specific set of products
PotentialValue

8. 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)
 Develop treatment flow
diagram to illustrate positioning
 Develop the value proposition
early in planning
 Iterative process with multiple
rounds of evaluation
 Use market research and KOL
discussions to pressure test
assumptions
 Clearly outline the risks and
plans to manage the risks

9. Strategic Market Segmentation
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Segment 1
Segment 2
Segment 3
Segment 4
Company
Segment 1
Segment 2
Segment 3
Segment 4
Company
Concentrated ApproachUnfocused Approach
Benefits of Strategic Market Segmentation
• Defines a specific and addressable target patient population
• Establishes baseline for forecasts and scenario planning
• Provides a framework for efficient planning for clinical development and commercial planning
1 American Heart Association (https://professional.heart.org/idc/groups/ahamah-public/@wcm/@sop/@smd/documents/downloadable/ucm_503396.pdf)
2 National Kidney Foundation (https://www.kidney.org/news/newsroom/factsheets/KidneyDiseaseBasics)
For illustrative purposes only; not intended to reflect an actual set of specific indications
Between 2013 and 2016, 121.5 million American adults had
some form of cardiovascular disease.1
Kidney disease affects an estimated 37 million people in the
U.S.2
Adult patients with primary hyperlipidemia unable to
control LDL-C despite use of other lipid-lowering therapies
Stage 4 CKD patients (GFR = 15-29 mL/min) with iron deficiency
anemia
A
B
Examples
Examples
A
B

10. Approaches to Strategic Segmentation
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Mapping by Subpopulations Mapping by Attributes
For illustrative purposes only; does not reflect any actual compound or program

11. How Can Medical Affairs Help New
Product Development?
 Role of Medical Affairs within the Organization
 Medical Affairs as a function has roles and responsibilities separate from the commercial function
 Medical Affairs function ensures that patient and prescriber needs and requirements are met in a
compliant and regulated approach
 Medical Affairs Expertise That Can Assist New Product Development
 Subject matter expertise in specific therapeutic areas
 Knowledge of latest developments and emerging science
 Deep relationships with KOLs in specific therapeutic areas
 How Medical Affairs Can Get Involved in New Product Planning & Development
 Build relationships with new product planning / development teams
 Find opportunities for “special assignment” projects to participate on indication assessment teams
 Leverage unique insights from the field to help new product planning teams
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