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Pharmaceutical Case Competition 2007 Biogen Idec: A Good Buy? November 30, 2007

Pharmaceutical Case Competition 2007 Biogen Idec: A Good Buy? November 30, 2007. Team 7 : Rachel Dexter, PhD Chemistry Han Lee, MBA/PhD Genetics James Park, MD/PhD Neuroscience Johanna Rodriguez, PhD Chemistry Pauline Wyrembak, PhD Chemistry . Pfizer as a Company .

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Pharmaceutical Case Competition 2007 Biogen Idec: A Good Buy? November 30, 2007

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  1. Pharmaceutical Case Competition 2007Biogen Idec: A Good Buy? November 30, 2007 Team 7: Rachel Dexter, PhD Chemistry Han Lee, MBA/PhD Genetics James Park, MD/PhD Neuroscience Johanna Rodriguez, PhD Chemistry Pauline Wyrembak, PhD Chemistry

  2. Pfizer as a Company Distribution of Pfizer’s Interests Possible Initiatives Cardiovascular Disease Biologics Vaccines Alzheimer’s Disease Multiple Sclerosis

  3. Multiple Sclerosis (MS) Overview Unmet Needs in MS: Mechanics - Compliance - Efficacy Disease Profile U.S Market Sales for RRMS Drugs • 493,600 patients in the U.S • 85% of all patients - relapsing-remitting or secondary progressive MS Total U.S. Sales $2.5 Billion Rodman and Renshaw Report, Sep 2006

  4. 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 FDA Approved MS Drugs • Biogen: • Avonex: Immunomodulator, Interferon • Tysabri (Elan): Immunosuppressant, Monoclonal antibody • Competition: • Betaseron: Bayer Schering Pharma AG • Copaxone: Teva • Rebif: Merck Serono Sanofi-Aventis • Novantrone: EMD Serono, Inc. and OSI Pharmaceuticals, Inc. AVONEX TYSABRI Patent Expiration LIPITOR VIAGRA CELEBREX Pfizer Drugs:

  5. Pipeline MS Drugs Biogen: Rituxan (Genentech): Phase II/III, Immunosuppressant, Monoclonal antibody BG-12 (Oral): Phase III, Immunomodulator, Fumarate Competition: IV: MBP8298 (BioMS), ABT-874 (Abbott), CAMPATH (Genzyme)… Orals: FTY720 (Novartis), Mylinax (Serono/Merck), Teriflunomide (Sanofi-Aventis), Laquinimod (Teva)… 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 ORALS? Enter Market BG-12 AVONEX TYSABRI & RITUXAN Patent Expiration LIPITOR VIAGRA CELEBREX Pfizer Drugs:

  6. Should Pfizer acquire Biogen?

  7. Projected Profits for Biogen’s MS Drugs In US Market Patent Expires: 80% drop in Revenue Orals Compete for Market Share Added Competition from Generics Assumptions: Cost of Capital (COC) = 13 % Inflation = 3 % g = 4 % (Long-term GDP growth rate) Bottom Line: $2 Billion

  8. Scenario 3: License from Biogen • Scenario 4: Alternative acquisition Pfizer’s Options • Scenario 1: Acquire Biogen • Scenario 2: Pass on Biogen • Scenario 3: License from Biogen • Scenario 4: Alternative acquisition

  9. Recommendations • Scenario 3: License BG-12 from Biogen - $25 Million for BG-12 (50% profit share) • Scenario 4: Alternative Acquisition - Acquire BioMS Medical Corp. for MBP8298 - Market cap $238 Million (Toronto Stock Ex.) - MBP8298 predicted to have sales of $10 Billion between 2012 and 2018 - Slows progression, better dosing schedule (better compliance) - Returns: 16% (conservative estimate)

  10. Acknowledgements • Yale Biotechnology & Pharmaceutical Society • Yale School of Management • Boehringer Ingelheim, Pfizer, Roche, Vion • Compass Strategic Consulting • BioMS: Amanda Stadler • Professor Charles Ahn, Yale University, Dept. of Applied Physics

  11. Pfizer: Potential Growth Areas

  12. PR SP PP RR Clinical Patterns of MS

  13. s.c – sub cutaneously i.v – intra venously PML – progressive multifocal leukencephalopathy Kleinschnitz, et. al. J. Neurol. (2007), 254, 1473-1490

  14. 147.74 $80.4 $59.5 42.67 29.89 29.24 $19.8 $20.6 19.79 Financial Fundamentals

  15. Facts and Assumptions in DCF • Current global MS market = $5 Billion • United States (US) accounts for 50% of the global MS market • 25,000 new cases per year in US (growth 0.5% per year) • Biogen’s US MS drug sales represents ~40% total revenues • Margins = 25% • Minimal synergy

  16. Value of Biogen Industry Average P/E Current NPV (DCF, COC = 13%) 20 70 14 48 6 2

  17. Value of Biogen Industry Average P/E Current NPV (DCF, COC = 13%) NPV (DCF, COC = 8%) 20 70 14 48 8% 8% 13% 13% 15 4 6 2

  18. Industry Average P/E Current NPV (DCF, COC = 13%) NPV (DCF, COC = 8%) NPV (DCF, COC = 8%, Optimistic AVONEX Sales) Value of Biogen 8% 8% 20 70 18 61 14 8% 48 8% 13% 13% 15 4 6 2

  19. Projections

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