BioStrategy Seminar:

1
BioStrategy Seminar Biotechnology Business
Models
Jason S. Fisherman, M.D. Partner, Advent
International
MIT November 14, 2001
2
AGENDA

• Overview
• Deal Evaluation
• Business Models
• Case Studies

3
ADVENT INTERNATIONAL
100 investment professionals, 27 nationalities
16 offices in 15 countries, 5 billion in capital
North America Boston Palo Alto
Latin America Mexico City Sao Paulo Buenos Aires
Western Europe London Frankfurt Paris Milan
Central Europe Warsaw Budapest Bucharest
Asia Singapore Hong Kong Kuala Lumpur Melbourne To
kyo
3
4
VENTURE DEAL DYNAMICS
At the end of the day, investors seek superior
returns, identifiable exits, and the ability to
manage risk.

• Influence
• Ability to impact key decisions of company,
  usually through board representation
• Returns
• Equity returns of typically 30 or more (or
  roughly 5x initial investment)
• Liquidity
• Viable exit strategy within 3-7 years
• Public markets or strategic sale

• Determining Valuations
• Qualitative
• Management
• Technology
• Products
• Quantitative
• Comps
• Multiples
• Future dilution

• Business model risk

5
BIOTECH BUSINESS MODEL EVOLUTION
Tools Companies Emerge
Hybrids
Product Companies
Amgen Founded
Genentech Founded
IDEC
Incyte
Affymetrix
Celera
MLNM
HGS
EPO
HGH Insulin
Rituxan
Gene Database
DNA Chips
Sequencing
Platforms to Products
6
DRUG DISCOVERY PROCESS
Target Identification
Compound Screening
DISCOVERY PLATFORMS
Target Validation
Computational Chemistry
In Silico Modeling
Lead Optimization
Toxicology
Pre-Clinical Development
PRODUCT DEVELOPMENT
Human Trials
Animal Studies
7
CASE STUDY
ILEX is an oncology-focused drug development
company.
Founded 1993
Present 2001
Future 2005

• Contract research services
• Product development subsidiary

• Sales marketing of approved oncology products
  with deep pipeline

• Active product portfolio
• Eight clinical, several
• pre-clinical candidates
• Partnerships

ILEX Oncology has shifted from a primarily
service-based business model to an emerging
product development and commercialization
company.
8
CASE STUDY
Exelixis is a genomics-based drug discovery and
development company.
Founded 1995
Present 2001
Future 2005

• Model-systems genetics expertise
• Secreted protein trap technology

• Deep product pipeline
• Cancer
• Metabolism
• CNS
• Inflammation
• Agriculture

• Established integrated drug discovery platform
  through organic growth, acquisition, and
  alliances
• Drug development
• Pre-clinical leads
• In-license

Exelixis is transitioning from a leader in model
systems genomics to a drug development company
with an evolving pipeline.
9
CASE STUDY
Anadys is a fully integrated drug discovery and
development company focused on the
anti-infective and anti-viral markets.
Near-Term
Medium-Term
Long-Term

• Screening tools
• Riboproteomics
• Chemo-informatics

• Partnered
• Internal

• In-licensed compounds
• Pre-clinical leads

Hybrid Model Attractive business model offers
long-term drug development upside with near-term
technology commercialization potential.