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Risk Sharing in Drug Development September 15, 2011 at BIOCOM

Risk Sharing in Drug Development September 15, 2011 at BIOCOM. Agenda. Opening Comments: Taylor J. Crouch, CEO eStudySite Risk Sharing in Patient Recruitment Richard “Rick” Malcolm, Ph.D., CEO Acurian Program and Company Level Risk Sharing with a CRO

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Risk Sharing in Drug Development September 15, 2011 at BIOCOM

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  1. Risk Sharing inDrug DevelopmentSeptember 15, 2011at BIOCOM

  2. Agenda • Opening Comments: • Taylor J. Crouch, CEO eStudySite • Risk Sharing in Patient Recruitment • Richard “Rick” Malcolm, Ph.D., CEO Acurian • Program and Company Level Risk Sharing with a CRO • Thanos Maroglou, Ph.D., Chief Business Officer, Cato Bioventures

  3. Richard “Rick” Malcolm, Ph.D., CEO Acurian • 22 years in healthcare management • CEO Acurian Inc. • VP Business Development, ICON Clinical Research • GlaxoSmithKline: • Numerous roles in marketing, multiple disease areas • Head of SBCL Clinical Trials (now Quest Central Labs) • Management and consulting for The Medicines Company and Neutris Pharmaceuticals • B.S. in Microbiology from University of Michigan • Ph.D. in Pharmacology from USC

  4. Thanos Maroglou, Ph.D., Chief Business Officer, Cato Bioventures • 26 years experience in large and small life science companies • Specializes in building high-performance companies from start-up ventures • Chief Business Officer, Cato Bioventures • Symphonia Partners, Dr. Maroglou’s business consulting practice • Managed or co-founded 8 start-ups with multiple profitable exits • Multiple roles at DuPont • Over $1 billion in deals throughout career • B.Sc. and Ph.D. in Chemical Engineering from the University of Birmingham, UK

  5. TJC Career Map Research/Discovery Development Commercialization Pfizer (Mgmt) Tylyx (CEO) Ictus (CEO) Drugs Schering-Plough (Mgmt) Ligand (President Int’l) Variagenics (CEO) Technologies Bruker BioSciences (Board) Discovery Partners (President/COO) eStudySite (CEO) Services National Research Inst. (Board) Parexel (SVP)

  6. ESS Business Model Dedicated research clinics adjacent to large partner hospitals Collaboration agreement provides access to: Emergency department patients In-patients Support services (pharmacy, labs, radiology, etc.) Leading enroller in infection studies (skin, pneumonia, influenza, hepatitis C, vaccines, other infection) Outstanding track record in acute and chronic disease studies including infection, cardiovascular, vaccine, diabetes, pain, respiratory Major sites throughout San Diego and Las Vegas 6

  7. Sunrise Medical Las Vegas ED Census 110,000/year ESS Sites: San Diego Tri-City Medical Center ED Census 65,000/year Palomar/Pomerado ED Census 100,000/year Sharp Grossmont ED Census 110,000/year Sharp Coronado P1B Unit Sharp Chula Vista ED Census 50,000/year

  8. Risk-Sharing Sharing only risk is not a good proposition And… you cover our pension and healthcare liabilities…

  9. Risks Performance (patients, data) Quality (evaluability) Time Results (efficacy, safety) Rewards Funding Milestones and Incentives Equity Royalty Mutually Aligned Objectives Risk and Reward Sharing

  10. Risk-Reward Continuum Fees Incentives Milestones Equity Royalty “CRO Classic” Fee For Service “CRO Turbo” Metric Incentives CRO/Biotech Hybrid Program Incentives Biotech/CRO Hybrid Molecule Incentives Biotech/Pharma Commercial Incentives

  11. CROs Already Take Significant Risk • Fixed/Variable Staffing: Just in time, trained staff • All projects are “highest” priority • Bidding process encourages “best case” pricing and plans • Service companies need to pay their bills on time regardless of project risk • CRO profit margins only 5-15% when WELL RUN  There’s very little room for operational or financial risk

  12. Pharma/Biotech risk: 50% of sites never enroll a patient 20-30% of sites enroll 80% of patients Non-performing sites still cost start-up and monitoring expenses Pharma-Investigator relationship is important asset Site Cash Flow Risk: Typical contract proposal is payment upon completion of monitoring Patient completed day 30 Monitor reviews data day 60 Client approves payment day 90 Finance makes payment day 120 Site paid staff day 15 and 30 Sites provide biotech/pharma a cash flow loan of 90-180 days for approx. 35% of the cost of drug development! Drug Development Cash Flow Investigator Sites

  13. CROs and Venture Risk: Examples • Cato Bioventures • Quintiles: Triangle; Medicines Company • PPD: Furiex • Discovery: Pharmacopeia, Millennium, Ligand, etc.

  14. Mutually Shared Objectives • New market entry • Parexel/Searle Japan • eStudySite: Early access research sites • Transfer of fixed capacity to variable capacity through “sale lease-back” • Quintiles: MMD, Syntex • Covance: Lilly, Sanofi-Aventis • Shared resources • Most Biotech/Pharma alliances (also Academia-Pharma) • Access to new technologies • Electronic data capture • Imaging technologies • eStudySite: Finding blood from a stone

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