Burrill

1
Dr. Ganesh Kishore, Managing Director Burrill
Company CEO, Malaysia Life Science Capital
Fund November 2, 2007
2
Themes and Take Home Messages

• The Global Biotech Enterprise is Transforming the
  World and is being Transformed by it
• Business Models of the Biotech Industry are
  evolving rapidly from FIPCO to VIPCO
• Biotech Businesses are increasingly global .. For
  sourcing , technology and people
• Entrenched players Big Pharma, Ag, Food,
  Chemical are adapting Open Innovation
  Partnering strategies to accelerate and augment
  pipeline, access top talent
• Biotech investors increasingly provide smart
  capital, navigating the investee companies to
  build best of breed businesses and generate
  superior financial returns
• Seed early stage financing for biotech is a
  major issue

3
The Life Science Commercialization Path

• Source of Funds
• Federal grants for basic research
• Private venture capital for early stage companies

University Research
Public Equity Markets
Partnerships
Large Corporations
4
A Global Transformation
To
From
Chemistry
Biochemistry
On Size fits all drugs
Personalized medicine
Aging (just happens)
Aging is optional / controllable
Therapeutics/diagnostics/devices
Theranostics
Treating sickness
Preventing Sickness
Single Disease
Multi-factorial, complex
5
A Global Transformation
To
From
Fossil fuels
Alternative fuels (biomass conversion)
Unavailable local capital
Global arbitrage
Fully integrated business model (FIPCO)
Virtually Integrated business model (VIPCO)
Local companies
Global companies
US centric biotech industry
Global industry
Food for survival
Food for health
6
Total Annual US Spend for Biotech/Pharma Research
- Flattening federal support

• NIH 29B
• Pharma 43B
• Biotech 30B
• TOTAL 100B or Rs. 3900 B

7
India The opportunity

• Research Programs in Universities focused on
  Translation Research
• Global Technology Acquisitions
• - Innovative Applications
• Leverage global partners where appropriate
• - financing, technology, markets

8
Key Industry Stats Biotech 2007
9
US Biotech Financing 3Q 06 2Q 07
10
Capital Raised 1980-2007 Partnering is back
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MA / Partnering

• Big Pharma continues to add products/key
  technologies.
• European pharmas continue to consolidate.
• Large biotech also increasingly active in the MA
  space (2006 biotechs first hostile takeover).
• There has been a decrease in sub-50
  million-valued deals, with steady increase in
  100 million to 500 million deals.
• Indian generics companies are expanding into
  Europe.
• Acquisitions in the diagnostics space muted.
• MA premiums over IPO values.

12
Mergers/ Acquisitions Partnering
BIG PHARMA/PHARMA
BIG PHARMA/BIOTECH
BIOTECH/BIOTECH
Bayer AG/Schering AG 19.9 billion
Abbot/Kos 3.7 billion
Gilead/Myogen 2.5 billion
Genentech/Tanox 900 million
Merck KGaA/Serono 12.9 billion
Eli Lilly/Icos 2.1 billion
Genzyme/AnorMED 560 million
UCB/Schwartz Pharma 5.4 billion
Merck/Sirna 1.1 billion
Illumina/Solexa 500 million
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Finance and Capital Markets
The global financial markets have created
additional opportunities for companies to look
outside their borders for financing

• Europeans on NASDAQ/NYSE
• Chinese on NYSE
• Americans on AIM/Euronext/SWX
• Other markets are available
• Mothers (Tokyo)
• DFX (Dubai)
• Hong Kong

14
Industry MA Activity Total Number of Deals by
Total Deal Value
15
Big Pharma Alliances in 2006
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Alliance Involving Regional Companies China,
India, Middle East
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IPOs Not What They Used to Be!
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IPOs Not What They Used to Be! (Continued)
19
India A key partner as companies migrate from
FIPCO to VIPCO business model
FIPCO (Fully Integrated Pharma Co.)
VIPCO (Virtually Integrated Pharma Co.)
20
New Product Launches 97 - 06
21
Innovation Gap Getting Wider
22
Biotechnology Drugs in Clinical Development
23
Manufacturer Reported Serious Adverse Events Per
Fiscal Year
24
Pulled from the Market
Blockbuster drugs pulled from the market gave
investors concern
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Our due diligence process
Final Review by BC
LOG IN
Company Meetings Presentations
Business Plans
Inquiries and Contacts
Preliminary Review by Corporate Partners with
Relevant Domain Expertise
Investment Committee Decision
Due Diligence Process
Preliminary Review by Select Advisory Board
Members

• Evaluate
• Market Size
• Competition
• IP
• License Agreements
• Management
• Budget
• Clinical/Technical Risk
• Financial Strategy
• Exit Strategy

Thank You Sent
Final Term Sheet
Preliminary Review by Associate
Final Due Diligence
Investment Committee Decision
Executive Summary with Synopsis Distributed
Executive Summary with Synopsis Distributed
NO
YES
Execution of Deal
Rejected
Prepare Preliminary Investment Memorandum
Associate to draft letter
Weekly Meeting
Weekly Meeting
Investment Professionals, Secondees
Burrill Investment

Inquiry, contacts, follow up, strategy
-

-

Review executive summaries

Review executive summaries
Things We Do To Add Value
Final Due Diligence
Final Due Diligence by Advisory Board

• Commission Formal IP/License Review
• Engage Outside Consultants, as necessary
• Complete Preliminary Process

YES
YES
NO
NO

• Strategy development
• Recruit Board Members Senior Executives
• Financing creativity access
• Clinical development strategy execution
• Tactical review assistance
• Partnering-Strategy/access/execution

Distribute Business Plan For Review
Rejected
NO
YES
NO
YES
Issue Term Sheet
Subsequent Weekly Meeting
Review business plans
Exit
YES
YES
Negotiate Deal and Funding Strategy
Business Plan of Interest
Solicit Interest from Potential Co-Investors
Designate team for project follow through
IPO
Trade Sale

• Introduce bankers
• Pricing committee help
• Access to investors
• Financing strategy

• Network/access
• Deal strategy
• Deal execution

Prepare Final Investment Memo
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The US 438 Billion Global Health and Wellness
Market
27
Burrill Nutraceutical Index, 2002 to 2006
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The opportunity space for Ag biotech
Industrial/Wellness
Production Ag
Grain processing
150 Billion
250 Billion
1000 Billion
Seeds
Chemicals
29
Major players Production Ag
30
Stock Market Performance of White Biotech
companies
31
Themes and Take Home Messages

• Small companies are a critical component of any
  open innovation strategy
• Role of diverse sources of financing for a
  capital intensive industry
• Its a global business from day one
• Perfect storm for bio businesses
• Technology
• Constrained natural resources
• Market readiness
• Importance of partners
• Consumer driven personalization