PLATINUM – LEARNING REVIEW

1. PlatinumCollaboration & In-License AZ / POZENSigned 1 August 2006“Deal Learning Review” Prepared for the SPBD Alderley Meeting29 September 2006Denise Goode, Transaction Director“largely a personal view”

2. PLATINUM – LEARNING REVIEW Objectives of Session • To ensure a broad understanding of Agreement between AZ and POZEN • Share learning & Best Practice across SPBD peer group • Technical challenges • ”Team & Process” challenges

3. PLATINUM – LEARNING REVIEW The challenges of a formulation technology deal aimed at the development & commercialisation of a FIXED DOSE COMBINATION including an AZ patented brand, Nexium

4. Platinum – What is it ? The “POZEN Product” : A Fixed Dose Combination tablet providing coordinated & sequential release of immediate release PPI & enteric-coated NSAID . POZEN owned the IP/technology required to develop this product

5. PLATINUM – WHAT IT IS : A NS PRODUCT DERIVED FROM NEXIUM & THE (CV)GI TA A new Pain product for patient benefit Note that in this dummy “aid”, shared with POZEN, the marketing team are using our project name LEARNING: Take care when we choose these

6. PLATINUM – WHAT IT IS : PROPOSED PRODUCT MESSAGES RELIEF AND REASSURANCE “A practical balance of proven pain relief and GI protection” • Meets the need for long-term, low GI risk therapy in patients with chronic pain • Platinum is a unique, single formulation that combines • sustained pain relief with naproxen and • GI protection with esomeprazole • The powerful pain relief of naproxen in the treatment of chronic pain • Demonstrated significantly fewer endoscopic ulcers than celecoxib when used in combination with low-dose aspirin • Resulted in significantly fewer endoscopic ulcers than enteric coated naproxen • New combination pill that ensures delivery of the proven GI protection of esomeprazole with every naproxen dose

7. PLATINUM – LEARNING REVIEW – TRULY GLOBAL CROSS-TA TEAM The cross-TA dimension made it challenging appointing the deal team and the GPD – more on this later! DEAL SPONSORS • Martin Nicklasson EVP • Gunnar Olsson, Head of CVGI TA • Mark Jones, Primary Care SPBD involvement • Transaction Leadership – Denise Goode (TD - CVGI) • Evaluation Leadership – Ulf Jonsson (ED - GI) • Due Diligence Leadership – Steve Emery TA / Functional Support – Core Team • Legal considerations - Olof Ljungstrand • Development Collaboration - Rich Leff (Neuroscience Dev’t) • Regulatory – Birgitta Hedin • Operations/PAR&D - Rob Alves • Intellectual Property - Birgitta Larsson • Commercial - Mike Gibbs (Global) / Jim Helm (US) • Finance – Andy Staples Business Recipient • GPD- Lori Kreamer (Neuroscience, Wilmington) … and GI friends

8. Platinum – Why look to develop a new Pain product ?The Strategic Context……. • Market for Pain products is significant • high degree of unmet need • ‘Platinum’ represented an opportunity to provide • patient benefit by • launching a new Pain product • with good efficacy and • with a low GI side effect profile • Potential launch of new product in 2009 • Potential to compete with/potentially replace, existing non-selective NSAIDs/COX-2s as a “GI safe” pain therapy • “Formulation” patent coverage to 2023 • scope to extend sales past Nexium patent expiry in 2016

9. PLATINUM – Background to the FDC / Deal • The concept of PPI +NSAID combos were not new to AZ • POZEN itself had been on the radar for several years, but never judged to be of any significant interest • It was not until second half of April 2006 that the POZEN case started causing some positive vibrations … positioning it as a Pain-based product

10. Platinum – Commercial Value was validated by Market Research “How was it determined whether to progress?” • Market has changed post-Vioxx withdrawal • New AZ approach: Position as Pain product, not ‘PPI line extension’ • Projected share assumptions validated by Market Research • Platinum ‘Value Proposition’… • Better safety profile • Improved compliance • Increased convenience • Potential cost savings • Enhanced medico-legal “peace-of-mind” for the physician

11. Platinum – Why not develop something similar ourselves? The Rationale for the deal with POZEN = “fastest route to market” for AZ • AZ have IP which would enable us to develop an ‘enteric coated PPI’ version of this product BUT • No comparable internal AZ opportunities could • deliver in this time frame, or • with enough time to generate positive value versus a Nexium patent expiry in 2016

12. PLATINUM – THE BACKDROP : POZEN’S PROGRESS TO DATE….

13. PLATINUM – THE BACKDROP : POZEN’S PROGRESS ….. Implication & message from POZEN was “do not hold us up AstraZeneca if you want this product”

14. Platinum – Timeline became clear in late May … and then the real work started ! • Despite interactions meetings of the GI team with POZEN it had not been identified how tight timelines were • a talented temporary GPT formed early • with strong VP leadership • focused & fleet of foot • in quickly building a picture of opportunity size, value, risks and challenges • Commercial Positioning, Forecasting & TPP development, completing months of normal work of a GPT in 2 - 3 weeks • From that the investment proposition was built, agreed with PST & term sheet submitted 6 June & secured DD access “DEAL ON” Learning… • An earlier understanding / communication of the likely partnering timelines required by POZEN would have resulted in the team being under less pressure timewise

15. Platinum – AZ required a particular Target Product Profile • The primary AZ objective of entering the licence deal with POZEN is to develop and file an NDA by end Q4 2008, under Pozen’s IP • For a formulation that combines, in a fixed dose solid oral form, non-enteric coated esomeprazole with enteric coated naproxen (“FDC”) • Has similar pain efficacy and superior endoscopic protection efficacy to Celebrex • The Target Product Profile (& associated development plan) of the FDC is designed by AZ to deliver TPP claims vs Celebrex

16. TPP: Endoscopic ulcer incidence with Platinum FDC b.i.d. significantly less than EC naproxen bid Endoscopic ulcer incidence with Platinum FDC b.i.d. and low dose ASA q.d. significantly less than with celecoxib 100mg b.i.d. and low dose ASA q.d. Significantly fewer upper GI symptoms than EC naproxen Efficacy in chronic pain similar to celecoxib 100mg bid Cost effective compared to naproxen or celecoxib in terms of cost per ulcer avoided Platinum – Target Product Profile (“TPP”) designed by AZ Achieving the TPP is fundamental to AZ - Underpinned our willingness to proceed with a deal. - Written into the draft deal contract such that AZ holds the NDA filing decision (& control over future milestones payments, etc) in the event TPP claims are not achieved Learning: If this had not been thought through early by AZ, argued strongly by AZ, & in contract we would have been in a very weak position & could not have ensured critical contractual get-outs in event product does not meet required profile to deliver Commercial Case & required value

17. 2022 2019 2020 2021 2017 2018 2009 2010 2011 2012 2013 2014 2015 2016 2023 Platinum : Marketing Opportunity Patent expiry of celecoxib and esomeprazole are key events in Platinum’s life cycle – Product will be designed where possible to capitalise on the (anticipated) competitive landscape Platinum launch Platinum patent expiry Area of opportunity How to protect AZ post eso. patent expiry? Celebrex patent expiry esomeprazole patent expiry Post esomeprazole patent expiry Platinum product will be potentially exposed to risk of formulation “work arounds” Value story vs celecoxib significantly diminishes Generics bring price referencing risk & formulary challenges

18. Platinum – Interesting Aspects of the Deal • Objective : Develop & commercialise product formulation(s) under Pozen’s IP, focusing initially on the FDC previously described: • AZ licence Pozen’s formulation patent to combine EC-naproxen with our on-patent molecule, esomeprazole • AZ has the freedom to develop & commercialise other fixed dose combination products (gastroprotective agents with EC-NSAIDs) under this agreement. Learning: • Royalties will be payable on any sales so generated. • This was offered by AZ in order to avoid a non-compete • Aspirin/PPI is explicitly excluded from contract by both parties • AZ & Pozen combine respective expertise & assets to develop & commercialise the product – POZEN will develop & file in US • AZ can terminate the contract “at will” at any time provided a termination fee of between $25m - $100m depending on timing Learning: This was designed in the absence of being able to offer product reversion rights

19. Clear decision (AZ get out) points at both Proof of Concept & NDA filing Learning: Additional POC study designed & paid by AZ to allow this Governance: POZEN have “control” of Development Learning: HOWEVER AZ retains control over all key development decisions via tie-breaking in GPT (with scope to veto) over decisions pertaining to NDA filing Choice of Dose Labeling … AZ therefore has de facto control Platinum responsible for initial formulation through a CMO (Patheon), thereafter AZ responsible for manufacturing Termination rights (…next slide) Platinum – Development : Deal Learning AZ’s Risk Mitigation includes ….

20. Platinum – Termination Provisions – my favourite area ! AZ Risk Mitigation in relation to Termination is robust AZ have “no cost” termination right / “walk away” in the following circumstances: Learning: • Formulation not delivered by Pozen within 9 months • AZ designed Proof of Concept studies do not successfully deliver defined endpoints (a clear “TG3” decision) • FDA and / or EMEA requiring additional studies / longer duration of studies • Failure of Platinum core registration Phase III program for safety or efficacy • Failure of AZ designed TPP studies • A $25m termination fee is payable if TPP endpoints not achieved, but a fileable product exists & AZ choose not to file an NDA • Otherwise AZ have the “no cost” termination right • FDA and / or EU non approval • Approvable letter • If delays in development (at any point) lead us to conclude that regulatory approval will be 18 months later than that scheduled in contract (BACK STOP) …. A TOUGH AREA TO CREATIVELY ADDRESS & NEGOTIATE

21. Platinum – Commercial Risk Mitigation: Learning • Formulation IP – Uncertain exclusivity position post Nexium patent expiry (end 2016) Learning • POZEN is obliged not to develop any competing product or presentation • In the event of the introduction of any other party’s FDC containing esomeprazole / EC-naproxen reaching the market a royalty reduction applies under the contract • Commitment to commercialise / commercial diligence • AZ will utilise diligent efforts to commercialize US + 5 Major EU Learning: Flexibility built into agreement to allow for launch country flexibility ex-US • US 3 year to peak uptake may not be achieved with planned investment Learning: Full TPP necessary for success - have negotiated inclusion of all TPP claims as an AZ prerequisite for NDA filing

22. PLATINUM – LEARNING REVIEW “Why AstraZeneca?” Feedback sent 25 September 2006 from K. Adomonis, SVP Business Development, POZEN on AZ partnering & business strengths. Quote: • … “strong strategic partner • highly collaborative approach to deal negotiation and implementation • high level of mutual respect and trust (from prior experience and from this negotiation) • availability / commitment of resources to optimize licensed asset”

23. PLATINUM - LEARNING REVIEW So, what did we learn from Project Platinum about AZ’s dealmaking process?

24. PLATINUM – Team Learning : Our Process “AZ can move very fast in delivering a deal” First Scientific meeting with POZEN on 30 March…. • Evaluation Team first contact with POZEN Jan. & subsequent meetings in March & May. • Transaction Team engaged in May • Delivery to meet POZEN's needs then came into sharp focus • This commitment reflected POZEN being ready to enrol Ph III • Martin Nicklasson committed to POZEN's CEO that AZ would deliver a deal by end July (gulp!) • Deal Team built deal concepts & drove transaction with excellent CVGI TAPT member support Learning… • There maybe scope for SPBD to gain time here, eg ED to engage TD earlier • With a deal hungry Biotech ‘scientific meetings’ are never just scientific meetings – they are looking for a deal & TD should be engaged in those meetings

25. PLATINUM LEARNING REVIEW – OUR PROCESS “AZ can move very fast in delivering a deal” 8 weeks from AZ 1st indicative term sheet to deal signing (including a World Cup) July Sept. May August June 1 27-28 5-14 20-21 7 12 20 25 19 2 6 1 MeetingMNY PST-review 1st draft contract by P 2nd draft2ndcontract By AZb By AZ by AZ Effective date POZEN TermSheet Signing AZ SET-meetingmeeting DueDiligence AZ Non-binding proposal MeetingNY AZ Boardmeeting • Term Sheet from Pozen 19 May, EVP meeting with Pozen 26 May • AZ PST review 2 June, AZ proposal out 6 June, 1st draft contract from Pozen 12 June • Ist meeting of deal teams & “deal” negotiation with Pozen 20/21June in NY • Due diligence 27/28 June • AZ 2nd draft 1 July • 2nd “deal” negotiations with Pozen 5 – 14 July NY • SET meeting 20 July, Board 25 July, Signed 1 August (Effective 7 Sept.) However, this pace & level of activity has a price for the core deal team

26. PLATINUM LEARNING REVIEW – OUR PROCESS “AZ can move very fast in delivering a deal” It is possible to complete a deal in a compressed time…. • However to do so requires full commitment from the management of both companies • Early strategic alignment is key – no rush to Term Sheet, no rush to contract • An expressed intention from the most senior management of both companies really ‘oiled the wheels’ within AZ • All members of the Core Deal Team must be focused, dedicated & courageous otherwise it will not happen – this is not a part-time job or for the fainthearted • Critical that there is a senior person (EVP-level) available at all times to directly support & guide the TD • Martin & Gunnar were fantastically accessible to the deal team • A ‘hard stop’ deadline, which both teams recognise, is highly valuable in focusing delivery, action & sanity in (eventually) reaching compromise

27. PLATINUM – Team Learning : Our Process “AZ can move very fast in delivering a deal” BUT…. Rapid planning, performance and “read” from quality Due Diligence was critical • DD planned, executed & reported under extremely tight time conditions • Implications: • Some deal team members were on both Deal & DD teams and both activities ran in parallel • This was a major challenge but having enough people involved in DD allowed some delegation within functional teams (particularly development) • No criticism of DD team, but DD before an in-depth evaluation is far from ideal for ED • No criticism of DD team, but DD reading during (rather than before) negotiations was equally challenging for TD Learning… • For AZ to operate in this way requires increased DD resource available & ready to take on activity at short notice • IF DD is “parallel processed”, both ED & TD need to be talented & flexible enough in their approach and thinking skills in order to able to manage even more ambiguity through their tasks

28. PLATINUM LEARNING REVIEW – TEAMWORK & LEADERSHIP • Building a trusting relationship between the two companies is critical • A small empowered dedicated “core” deal team gets things done most efficiently • We cannot achieve everything AZ’s way - be have to be prepared to compromise

29. PLATINUM – Team Learning: Our Process “Crossing the (cross-)TA swamp without falling in – challenges encountered on the journey” • TAPT vs. Primary Care / Existing Product Team sensitivities • The early communication that this was a Pain and not a GI opportunity was maybe not terribly helpful to the process • In this case a poorly planned “pre-DD” visit to POZEN had no real benefit …or the moral of the story is: never send new people alone on a site visit without proper trained assistance!

30. PLATINUM – Team Learning Last thoughts … • Never underestimate the time it takes to agree a CDA when two companies are active in the same Field • It may not be straightforward evaluating an opportunity where no data in principle exists on the specific product you are endeavouring to develop from the combination of an existing brand and someone else’s technology • “ Fun & Camaraderie ! ” • In all of this there must also be time for ensuring positive AZ team spirit • Of course we must take the mission to complete the best possible • deal for AZ seriously, but not always ourselves

31. PLATINUM – MOTHERHOOD & APPLE PIE POINTS (Sorry!)…Learning to take forward as a TD into Brilliant: • Projects of complexity require project management skills from initiation to completion – this can be by the TD, but can be augmented by a project manager (not used here, but would have added value by releasing time to rest of team) • Breaking down complex situations into key elements & tasks enables sub-teams to be quickly established & to work in parallel towards the common goal • Providing a clear team structure with robust leadership & disciplined but empowered delegation is a key success factor in a project of intense workload & tight deadlines • Promoting close interactions & two-way dialogue with EVPs & key senior management stakeholders secures optimal empowerment for the TD & her deal team • Early identification of internal gaps in expertise & resource allows the appropriate ‘contracting in’ & integration of external support – this deal would not have delivered in this time frame without additional, in this case external, legal support to turn drafts • Even in event of a short timeline, planning, ‘thinking’ & preparation is vital at each stage of the project – This is whilst retaining flexibility of response to rapidly changing positioning &, ultimately, delivering a deal through appropriate balanced compromise

32. PLATINUM – LEARNING REVIEW That’s all Thanks for listening Any questions? Denise Goode September 2006

33. PLATINUM – BACK UPS Denise Goode September 2006

34. Platinum - AstraZeneca’s Financial Exposure from Deal Terms TG3 • AZ’s maximum cash exposure to Proof of Concept (TG3 decision point) during 2007 is up ot $62m • Draft contract terms include walk away right with no financial penalty in event of not achieving POC

35. Platinum – Spirit of Collaboration is that time is of the essence to ensure filing not delayed (All work carried to be carried out by Platinum)

36. PLATINUM - Net Sales Forecasts: Interesting Aspects PYS Base $0.8bn Upside $1.3bn Downside $0.3bn • In both the base case and upside scenarios the US contributes more than 85% of the NPV. • Platinum had not considered in detail the ROW development plan. This will be fully under the control of AZ although Platinum will perform part of the work on our behalf. • The contract recognises separate options and break points for ROW from the core deal predicated on the US development and launch Patent assumptions are estimates for conservative planning purposes only

37. Platinum - Financial Terms – Very competitive royalty rates agreed • Upfront: $40m on signing Development Milestones • $20m on Proof of concept • NDA/MAA filing • $30m US • $20m ROW • Approval • $60m US • $15m ROW on approval • $15m ROW on pricing approval (de-minimis limit) Commercialisation: • Sales related Payments: • Sales >$1.0bn $40m • Sales >$1.5bn $65m • Sales >$2.0bn $70m • Royalties • Launch to 2015 inclusive – tiered • <$350m pa - 6% • >$350m<$1000m pa - 10% • >$1500m pa – 15% • 2016 to term – tiered • <$1000m pa - 10% • >$1000m pa – 17.5% • Term – In each country later of Platinum patent expiry (2023) or 10 years • Development – Platinum manage all development work • Platinum pay for core program ($30m) • AZ fund POC and additional TPP studies ($53m) • Supply: Platinum develop formulation at CMO (Patheon), AZ pay $2m. AZ take over for clinical supply and transfer internally for commercial supply. • Capex: $10m for tablet formulation equipment Additional Notes • Platinum will carry out all development work under AZ controlled GPT structure. Platinum fund core program, AZ fund additional studies to confirm POC and deliver TPP (vs Celebrex). • AZ control content of NDA filing and label negotiation • AZ are also contracted to commercialise the product with “Diligent efforts” in the US and the EU5 markets once the product is taken to market. • Platinum will receive royalties on any other fixed dose combinations of a gastro protective agent and NSAID should AZ launch one during the term (excludes PPI/Aspirin). Platinum are precluded from developing a competing product.

38. Platinum - Potential Value from Deal : Key financial metrics • All launch scenarios offer value, achievement of the base case or better is forecast to offer strong additional returns to AZ for modest risk • The deal terms have been built to offer AZ stronger proof of concept early on and a number of staged pre approval failure options for walk away to mitigate risk • Commercial diligence is required in the US and 5 major Ex- US markets only, no specific FTE or marketing expenditure commitments are required by AZ. • The US commercial team perceive the key success factor as delivery of a competitive TPP versus Celebrex. Patent assumptions are estimates for conservative planning purposes only