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Bio Pharm Collaborations 9 09


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CBI Conference on Collaborations

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Bio Pharm Collaborations 9 09

  1. 1. CBI’s 3 rd Annual Bio/Pharmaceutical Collaboration and Transaction Accounting Conference September 22, 2009 Joint Finance Committee Perspectives on How to Best Work with Collaborators and Manage Expectations
  2. 2. Our Panelists: <ul><li>Christian Blin, Vice President, sanofi-aventis </li></ul><ul><li>Christopher Fenimore, Director of Finance, Regeneron Pharmaceuticals </li></ul><ul><li>Dominic Piscatelli, Sr. Director Finance, OSI Pharmaceuticals </li></ul><ul><li>Thomas Hess, Chief Financial Officer, Yaupon Therapeutics </li></ul><ul><li>Christopher Lindblom, Controller, Infinity Pharmaceuticals </li></ul><ul><li>Susan Melle, Finance Director, GlaxoSmithKline </li></ul><ul><li>Alan Esenstad, Controller, Human Genome Sciences </li></ul>
  3. 3. Lessons Learned – JFC Perspective Keys to a Successful Collaboration <ul><li>Understand and be transparent with your partners </li></ul><ul><ul><li>Take into account the differences in your partner’s culture, size and objectives </li></ul></ul><ul><ul><li>Results in a stronger relationship </li></ul></ul><ul><ul><li>Develops a level of trust and confidence </li></ul></ul><ul><li>Know your collaboration agreement (the “contract”) and determine how the contract would address particular issues </li></ul><ul><ul><li>Provide “real-world” instances where a deviation from the contract may be warranted </li></ul></ul><ul><ul><li>Use the “spirit” of the agreement to determine how issues should be handled that are not specifically defined </li></ul></ul>
  4. 4. Lessons Learned – JFC Perspective Keys to a Successful Collaboration <ul><li>Attempt to resolve disputes internally and at the finance level without having to refer to higher governing body </li></ul><ul><ul><li>Be aware of your partner’s alternative views; negotiate collaboratively, be flexible where prudent </li></ul></ul><ul><li>Clear and frequent communication </li></ul><ul><ul><li>Develop formal meeting schedules and establish the principles for how the partners will work together </li></ul></ul><ul><ul><li>Develop absolute clarity on plans, accountability and status </li></ul></ul><ul><ul><li>Don’t let key items wait until the next meeting (set the stage via email or phone) </li></ul></ul><ul><ul><li>Set meeting agendas and take great minutes </li></ul></ul>
  5. 5. 3rd Annual Bio/Pharmaceutical Collaboration and Transaction Accounting Conference September 22, 2009 Christian Blin, Vice President, sanofi-aventis Christopher Fenimore, Director of Finance, Regeneron
  6. 6. Overview of sanofi-aventis <ul><li>Sanofi-aventis is a global healthcare company engaged in the research, development, manufacture and marketing of healthcare products </li></ul><ul><ul><li>Business is diversified and includes pharmaceuticals comprising Rx (prescription) drugs, OTC/OTX (over-the-counter / combined OTC and Rx drugs) and generics; vaccines and animal health </li></ul></ul><ul><li>2008 net sales: €27.8 B; H1 2009 net sales: €14.5B </li></ul><ul><li>Pharmaceuticals business focuses on six therapeutic areas: thrombosis, cardiovascular diseases, diabetes, oncology, central nervous system (CNS) and internal medicine </li></ul><ul><li>Sanofi-aventis has a commercial presence in approximately 100 countries, and our products are available in more than 170 countries. </li></ul>
  7. 7. <ul><li>Approved product with $15-20MM in projected annual sales </li></ul><ul><li>9 Ph 3 trials underway … Many shots on goal </li></ul><ul><li>Ph 3 data coming in 2010 </li></ul><ul><li>3 human mAbs in clinic today; target 2-3 new mAbs to enter clinic each year, 2009-2012; balance of novel and validated targets </li></ul><ul><li>Cash of $466MM (at 6/30/09) and no debt; resources expected to support operations through 2012 </li></ul><ul><li>Manufacturing expertise; expanding to 50k liters capacity </li></ul><ul><li>Current market cap of approximately $1.7B – among the 20 largest biotechs </li></ul>Regeneron Today Aflibercept (VEGF Trap) cancer VEGF Trap-Eye wet AMD ARCALYST ® (rilonacept) gout
  8. 8. Collaboration Agreements * 50% repayment from profits ** plus $475MM of research funding over 5 years Oncology Eye Disease Antibodies Inflammation sanofi-aventis Bayer HealthCare sanofi-aventis – Upfront/milestone payments $130MM $115MM $85MM – Development costs paid by partner * 100% ~ 50% ~ 100%** – Profit split — Regeneron share US 50% 100% 50% 100% Japan ~ 35% royalty 50% 35-45% 100% ROW 50% 50% 35-45% 100% Milestones remaining Regulatory $400MM $70MM – – Sales – $135MM $250MM –
  9. 9. Aflibercept (VEGF Trap)
  10. 10. Aflibercept (VEGF Trap) Phase 3 Oncology Program <ul><li>Patients randomized to standard of care chemotherapy +/- aflibercept </li></ul><ul><li>Each study more than 60% enrolled; total of  2,500 patients to date </li></ul><ul><li>Studies monitored by Independent Data Monitoring Committees (IDMC) </li></ul><ul><li>Results expected starting in 2010 </li></ul>Total # of Patients VELOUR study: 2 nd line metastatic colorectal cancer (+ leucovorin, fluorouracil & irinotecan) 1200 VANILLA study: 1 st line metastatic pancreatic cancer (+ gemcitabine) 630 VITAL study: 2 nd line non-small cell lung cancer (+ docetaxel ) 900 VENICE study: 1 st line metastatic hormone resistant prostate cancer (+ docetaxel and prednisone ) 1240
  11. 11. Human Antibodies
  12. 12. Sanofi-Aventis Antibody Collaboration <ul><li>Global collaboration to discover, develop, and commercialize therapeutic human antibodies </li></ul><ul><li>Sanofi-aventis funds $475 million of discovery research over five years through 2012 </li></ul><ul><li>Sanofi-aventis funds 100% of development costs for collaboration antibodies </li></ul><ul><li>Goal is to bring average of 2 to 3 new antibodies into clinical development each year </li></ul><ul><li>Three antibodies in Ph 1 </li></ul><ul><li>Two more INDs planned for 2009 </li></ul>
  13. 13. Shaping Medicine, Changing Lives Dominic Piscitelli Sr. Director Finance September 2009
  14. 14. An Historical Update Evolution From a Technology Platform to a Cancer Company <ul><li>Tarceva Jointly Discovered in Oncology Partnership With Pfizer </li></ul><ul><li>2000: Tarceva Rights Returned to OSI as an FTC Requirement for Pfizer’s Acquisition of Warner-Lambert </li></ul><ul><li>2000-2004: Established Oncology Franchise to Ensure Tarceva Success </li></ul><ul><ul><li>Acquired Oncology Development & Regulatory Capabilities and Built Commercial Organization </li></ul></ul><ul><ul><li>Established Alliance With Genentech/Roche to Ensure Global Competitiveness </li></ul></ul><ul><ul><li>Successfully Managed Phase III Trials and FDA Approval of Tarceva in NSCLC & Pancreatic Cancer </li></ul></ul><ul><li>2005-2008: Began to Build Framework for a Premier Biotech </li></ul><ul><ul><li>Increased Investment in Diabetes/Obesity pipeline </li></ul></ul><ul><ul><li>Continued Investment in Oncology Pipeline </li></ul></ul>
  15. 15. Tarceva Collaboration Agreements Highlights <ul><li>Co-Developer of Tarceva </li></ul><ul><li>Exclusive Marketing Rights for Tarceva in the US </li></ul><ul><ul><li>OSI has Co-Promotion Rights </li></ul></ul><ul><li>Operating Losses and Profits are Shared Equally </li></ul><ul><li>OSI is Responsible for Manufacturing of the Product </li></ul><ul><li>OSI is Entitled to Certain Milestone Payments </li></ul><ul><li>Co-Developer of Tarceva </li></ul><ul><li>Exclusive Marketing Rights for Tarceva in the World Excluding the US </li></ul><ul><li>OSI receives a 21% Royalty on Net Sales </li></ul><ul><li>Roche has Exclusive Manufacturing Capabilities for the World ex-US </li></ul><ul><li>OSI is Entitled to Certain Milestone Payments </li></ul><ul><li>Three Parties have a Comprehensive Ongoing Clinical Development </li></ul><ul><li>Program to Support the Long-Term Growth of Tarceva </li></ul><ul><ul><li>- Tri-Partite R&D Expenses Shared Three Ways </li></ul></ul>
  16. 16. Tarceva Sales in the US and Related Revenue Recognition <ul><li>Sales of Tarceva recorded by Genentech </li></ul><ul><li>50/50 net profit split recorded as Revenue by OSI on a quarterly basis </li></ul><ul><li>OSI also records Revenue relating to reimbursement for Manufacturing and Commercial costs </li></ul><ul><li>Total US Revenue recorded by OSI as a percentage of Tarceva Sales is referred to by OSI as the Conversion Factor </li></ul>
  17. 17. Key Committees <ul><li>Global Development Committee (GDC) </li></ul><ul><ul><li>Responsible for directing the clinical development of the product </li></ul></ul><ul><ul><li>Review and approve development proposals and budgets </li></ul></ul><ul><li>Joint Steering Committee (JSC) </li></ul><ul><ul><li>Approve overall strategy of collaboration </li></ul></ul><ul><ul><li>Oversee and manage the product development and commercialization </li></ul></ul><ul><ul><li>Manufacturing related activities </li></ul></ul><ul><ul><li>Review and approve annual marketing and sales budgets </li></ul></ul><ul><li>Joint Finance Team </li></ul><ul><ul><li>Work under direction of JSC </li></ul></ul><ul><ul><li>Financial, budgetary and accounting issues </li></ul></ul><ul><li>Joint Project Teams </li></ul><ul><ul><li>Clinical, Marketing, Sales, etc </li></ul></ul>
  18. 18. Adolor/Pfizer Delta Collaboration Thomas Hess Former Chief Financial Officer of Adolor Corporation (currently CFO of Yaupon Therapeutics) © 2008 Adolor Corporation. All rights reserved.
  19. 19. <ul><li>Date: December 2007 </li></ul><ul><li>Focus: Delta opioid agonists for pain </li></ul><ul><li>Lead Compound: ADL5859 </li></ul><ul><li>Upfront Payment: $30M + $1.9M reimbursement for Phase 2a studies </li></ul><ul><li>Milestones: $232.5MM </li></ul>Adolor/Pfizer Collaboration – Highlights
  20. 20. <ul><li>Back End </li></ul><ul><li>United States </li></ul><ul><li>Profits/Losses shared 60% to Pfizer and 40% to Adolor </li></ul><ul><li>- US development expenses (external) to be shared in same proportion </li></ul><ul><li>Rest of World </li></ul><ul><li>Adolor to receive royalties on Pfizer net sales </li></ul><ul><li> - ROW development expenses – 100% Pfizer </li></ul><ul><li>Provisions for adding compounds and indications </li></ul><ul><li>Development Collaboration </li></ul><ul><ul><li>Adolor: IND filings and clinical program through Phase 2a </li></ul></ul><ul><ul><li>Pfizer: Subsequent worldwide development and regulatory approvals </li></ul></ul>Adolor/Pfizer Collaboration – Highlights
  21. 21. <ul><li>Adolor had the “option” to attend all JSC meetings! </li></ul><ul><li>Adolor is not obligated to attend collaboration meetings. </li></ul><ul><li>Two compounds in the clinic as of the collaboration date. </li></ul><ul><li>Adolor responsible for the development of each compound through Phase 2a and then Pfizer assumes all responsibility. </li></ul><ul><li>Adolor’s project management projected that compound I & II would be completed in February 2010 (26 months from collaboration inception). Therefore, amortize upfront payment over 26 months. Adjust if Phase II takes more/less time. </li></ul>Revenue Recognition Considerations
  22. 22. Purdue Alliance: $500M potential over 5 years Hedgehog inhibitor program and discovery pipeline Economics Independence <ul><li>$75 million equity purchase at avg. price of $12.50 </li></ul><ul><li>$50 million line of credit, 10 year balloon note at prime </li></ul><ul><li>~$400 million R&D funding over 5 years </li></ul><ul><li>Up to $200 million in warrant purchases at $15 - $40/share </li></ul><ul><li>Up to 20% royalties on all ex-U.S. sales </li></ul><ul><li>Infinity leadership of worldwide discovery and development </li></ul><ul><li>Infinity to commercialize oncology products in the U.S. </li></ul>
  23. 23. <ul><li>Worldwide collaboration : R&D and commercial </li></ul><ul><li>Compelling economics : Control INFI cash burn, significant downstream participation </li></ul><ul><ul><li>$70M upfront ; $215M potential milestones </li></ul></ul><ul><ul><li>R&D cost share and 50/50 WW profit split </li></ul></ul><ul><ul><li>Co-promotion rights in US </li></ul></ul><ul><li>Provided global oncology infrastructure and reach </li></ul>MedImmune/AstraZeneca alliance on Hsp90
  24. 24. HGS / GSK Collaboration
  25. 25. GSK / HGS Historical Collaborations <ul><li>GSK is a global pharmaceutical company, with annual sales in excess of US$38B (£24B), arising from pharmaceutical and consumer products over 8 major therapeutic areas. These sales and much of our R&D efforts arise in part from a diverse range of collaborations. </li></ul><ul><li>HGS is a late-stage biotech company, with three products in Phase 3 development, one of which is being co-developed with GSK. </li></ul><ul><li>Ground breaking HGS/SB Genomic collaborative agreement signed in 1993 </li></ul><ul><ul><li>Shared access to HGS’ sequence dB for target discovery </li></ul></ul><ul><li>GSK exercised option to co-develop and co-promote BENLYSTA TM in 2005. </li></ul><ul><ul><li>Agreement signed in 2006. </li></ul></ul>
  26. 26. GSK / HGS BENLYSTA Collaboration <ul><li>HGS wrapping up Phase 3 development </li></ul><ul><li>50 50 cost sharing of development costs since 2006 (Clinical expenses, FTEs, drug supply, certain outside services) </li></ul><ul><li>Global commercialization </li></ul><ul><ul><li>HGS GSK share U.S. and ex-U.S. commercialization </li></ul></ul>
  27. 27. Roles & Responsibilities
  28. 28. HGSGSK Governance Structure Joint Steering Committee <ul><ul><li>Joint Manufacturing </li></ul></ul><ul><ul><li>Committee </li></ul></ul>Joint Development Committee Global Joint Marketing Committee Joint Finance Committee & Sub-teams
  29. 29. Joint Finance Committee <ul><ul><li>Lead representative from each partner, with additional financial personnel on team </li></ul></ul><ul><ul><li>Participation from project management, operations and other areas (either ongoing or ad-hoc) </li></ul></ul>
  30. 30. Joint Finance Committee Role <ul><li>Role: </li></ul><ul><ul><li>Prepare and monitor budgets and forecasts and changes to plan </li></ul></ul><ul><ul><li>Participate in operational team meetings </li></ul></ul><ul><ul><li>Support collaboration governance committees </li></ul></ul><ul><ul><li>Support analysis and evaluation of program changes </li></ul></ul><ul><li>Establish and maintain effective financial oversight </li></ul><ul><ul><li>Monthly or ad-hoc meetings, facilitated by standard financial reviews and templates </li></ul></ul><ul><ul><li>Review and approval process through governance structure for life cycle plans or annual budgets, actual expenses, changes or other key items </li></ul></ul>
  31. 31. Panelist Q&A
  32. 32. JFC Panel Contact Information <ul><li>Doug McCorkle (Regeneron): [email_address] </li></ul><ul><li>Christian Blin (sanofi aventis): [email_address] </li></ul><ul><li>Christopher Fenimore (Regeneron): [email_address] </li></ul><ul><li>Dominic Piscatelli (OSI): [email_address] </li></ul><ul><li>Thomas Hess (Yaupon): [email_address] </li></ul><ul><li>Christopher Lindblom (Infinity): [email_address] </li></ul><ul><li>Susan Melle (GlaxoSmithKline): [email_address] </li></ul><ul><li>Alan Esenstad (Humane Genome Sciences): [email_address] </li></ul>