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  • Remind that need to make up $19B
  • Mention orals****
  • In order to put a fair value we have taken 4 MS drugs in their portfolio that are either on the market or at least in phase III clinical trials and have projected their profits over the next ten years.
    Talk about each drug trend
    - avonex – patent, fda approval generics
    - tysabri – side effects, stringent guidelines, accident, orals (50% MS)
    - rituxan – early phase III, silver bullet?, competing generics, saturated market, competitor pipelines
    - BG12 – first mover advantage, efficacy, phase III drop out
    -generics
    Bottom line -$2B justify
  • #1- dilution of shares, 8% - valuation model shows minimal synergies
    Pipeline – not replenished in ms market
    If pfizer still wants to diversify – 2 options
  • #3: oral –satisfies unmet need, biogen not adverse to partnership, pfizer advantage w/better sales/distribution
    #4: treats SPMS (only 2 drugs approved), though not oral only 2 times a year.
  • Slide 1

    1. 1. Pharmaceutical Case Competition 2007Pharmaceutical Case Competition 2007 Biogen Idec: A Good Buy?Biogen Idec: A Good Buy? November 30, 2007November 30, 2007 Team 7: Rachel Dexter, PhD Chemistry Han Lee, MBA/PhD Genetics James Park, MD/PhD Neuroscience Johanna Rodriguez, PhD Chemistry Pauline Wyrembak, PhD Chemistry
    2. 2. Infectious and Respiratory Diseases Urology Oncology Endocrine Disorders Opthamology All Other Alliance Revenue 20% 22% 15% 12% 7% 11% 13% Distribution of Pfizer’s Interests Possible Initiatives Cardiovascular Disease Biologics Vaccines Alzheimer’s Disease Multiple Sclerosis Pfizer as a CompanyPfizer as a Company
    3. 3. Multiple Sclerosis (MS) OverviewMultiple Sclerosis (MS) Overview Disease Profile U.S Market Sales for RRMS Drugs Total U.S. Sales $2.5 Billion Rodman and Renshaw Report, Sep 2006 • 493,600 patients in the U.S • 85% of all patients - relapsing- remitting or secondary progressive MS Avonex Copaxone Rebif Betaseron Tysabri Unmet Needs in MS: Mechanics - Compliance - Efficacy
    4. 4. FDA Approved MS DrugsFDA Approved MS Drugs  Biogen: – Avonex: Immunomodulator, Interferon – Tysabri (Elan): Immunosuppressant, Monoclonal antibody  Competition: – Betaseron: Bayer Schering Pharma AG – Copaxone: Teva – Rebif: Merck Serono Sanofi-Aventis – Novantrone: EMD Serono, Inc. and OSI Pharmaceuticals, Inc. 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Patent Expiration AVONEX LIPITOR VIAGRAPfizer Drugs: TYSABRI CELEBREX
    5. 5. Pipeline MS DrugsPipeline MS Drugs  Biogen: – Rituxan (Genentech): Phase II/III, Immunosuppressant, Monoclonal antibody – BG-12 (Oral): Phase III, Immunomodulator, Fumarate  Competition: – IV: MBP8298 (BioMS), ABT-874 (Abbott), CAMPATH (Genzyme)… – Orals: FTY720 (Novartis), Mylinax (Serono/Merck), Teriflunomide (Sanofi- Aventis), Laquinimod (Teva)… 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Enter Market Patent Expiration BG-12 AVONEX TYSABRI & RITUXAN ORALS? LIPITOR VIAGRAPfizer Drugs: CELEBREX
    6. 6. Positives Negatives - Diversification into MS market - $5 Billion global market - Access to Biogen’s pipeline - Patent expiration of Avonex - Biogen’s existing partnerships - Tysabri side effects (Litigation) - Market saturation - Exacerbation of pipeline issues Should Pfizer acquire Biogen?Should Pfizer acquire Biogen?
    7. 7. 0 50 100 150 200 250 300 350 400 450 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Year $US(inmil) Avonex Tysabri Rituxan BG-12 Total Projected Profits for Biogen’sProjected Profits for Biogen’s MS Drugs In US MarketMS Drugs In US Market Assumptions: Cost of Capital (COC) = 13 % Inflation = 3 % g = 4 % (Long-term GDP growth rate) Patent Expires: 80% drop in Revenue Orals Compete for Market Share Added Competition from Generics Bottom Line: $2 Billion
    8. 8. Pfizer’s OptionsPfizer’s Options Scenario 1: Acquire Biogen Scenario 2: Pass on Biogen Scenario 3: License from Biogen Scenario 4: Alternative acquisition Scenario 3: License from Biogen Scenario 4: Alternative acquisition
    9. 9. RecommendationsRecommendations  Scenario 3: License BG-12 from Biogen - $25 Million for BG-12 (50% profit share)  Scenario 4: Alternative Acquisition - Acquire BioMS Medical Corp. for MBP8298 - Market cap $238 Million (Toronto Stock Ex.) - MBP8298 predicted to have sales of $10 Billion between 2012 and 2018 - Slows progression, better dosing schedule (better compliance) - Returns: 16% (conservative estimate)
    10. 10. AcknowledgementsAcknowledgements  Yale Biotechnology & Pharmaceutical Society  Yale School of Management  Boehringer Ingelheim, Pfizer, Roche, Vion  Compass Strategic Consulting  BioMS: Amanda Stadler  Professor Charles Ahn, Yale University, Dept. of Applied Physics
    11. 11. Therapeutic Area Recent Pfizer Initiatives Oncology Acquisition of Idun (4/2005) - Therapies to control apoptosis License agreement with Coley ( March 2005) -Toll-like receptor agonist for the potential treatment, control and prevention of cancer. Acquisition of Campto/Camptosar from Sanofi-Aventis (9/2004) -Treatment of colon cancer Potential acquisition of Biogen Cardiovascular Disease Acquisition of Esperion (2/2004) -Discovery and development of high- density lipoprotein (HDL)-targeted therapies Biologics Acquisition of Rinat (5/2006) -Company with several new central- nervous system product candidates. Acquisition of Bioren (8/2005) -Technology for optimizing antibodies Vaccines Acquisition of PowerMed (12/2006) -DNA-based vaccines for the treatment of influenza and chronic viral diseases Alzheimer’s Disease License/collaboration agreement with TransTech (9/2006) -Develop and commercialize small and large molecules Multiple Sclerosis Agreement with Serono (7/2002) -Co-promote Rebif Potential acquisition of Biogen Pfizer: Potential Growth AreasPfizer: Potential Growth Areas
    12. 12. Clinical Patterns of MSClinical Patterns of MS SP PP RR PR Relapsing- remitting Secondary Progressive Primary Progressive Benign 45% 197.8 40% 175.8 10% 44 5% 22
    13. 13. Injection Oral Drug Copaxone Tysabri MBP8298 FTY720 Laquinimod Stage In Use In Use Phase III Phase III Phase III Delivery s.c 40mg/day i.v 300mg/28days i.v. 500mg/6months oral 1.25mg/day oral 0.3mg/day MRI Lesion Decrease 38% 24% Univestigated Positive 44% (phase I) Relapse Rate Decrease 75% 66% 60% (phase II) 53% (phase II) None (phase I) 8% (phase IIb) Disease Course RR-MS RR-MS Chronic progressive RR-MS RR-MS Side Effects Local injection site reactions, naseau, anxiety, hypertonia Rash, arthralgia, headache, 2 instances of PML Local injection site reactions, occasional flush, mild hypotensions Sinusitus, mild headaches, gastrointestinal disorders, bradycardia Transient increases in liver enzymes s.c – sub cutaneously i.v – intra venously PML – progressive multifocal leukencephalopathy Kleinschnitz, et. al. J. Neurol. (2007), 254, 1473-1490
    14. 14. Financial FundamentalsFinancial Fundamentals 0 20 40 60 80 100 120 140 160 P/E Market Cap ($US Billions) Amgen Genentech Genzyme Biogen Industry Average 19.79 29.89 147.74 42.67 29.24 $59.5 $80.4 $19.8 $20.6
    15. 15. • Current global MS market = $5 Billion • United States (US) accounts for 50% of the global MS market • 25,000 new cases per year in US (growth 0.5% per year) • Biogen’s US MS drug sales represents ~40% total revenues • Margins = 25% • Minimal synergy Facts and Assumptions in DCFFacts and Assumptions in DCF
    16. 16. Industry Average P/E Current NPV (DCF, COC = 13%) 6 70 48 Value of BiogenValue of Biogen 2 20 14
    17. 17. 13% 8% 8% 13% Industry Average P/E Current NPV (DCF, COC = 13%) NPV (DCF, COC = 8%) Value of BiogenValue of Biogen 4 15 6 70 48 2 20 14
    18. 18. Value of BiogenValue of Biogen Industry Average P/E Current NPV (DCF, COC = 13%) NPV (DCF, COC = 8%) NPV (DCF, COC = 8%, Optimistic AVONEX Sales) 4 18 13% 8% 8% 61 15 8% 13% 8% 6 70 48 2 20 14
    19. 19. ProjectionsProjections

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