Advance Market Commitments Financial Implications & Risk Model Overview & Analysis Results

1. November 9, 2006 London, England Advance Market CommitmentsFinancial Implications & Risk ModelOverview & Analysis Results

2. AMC-FIRMContents • Analysis Methodology & Model Framework • Pneumococcal Vaccine Analysis Results 1 AMC-FIRM_Overview & Analysis_London_09Nov06

3. Advance Market CommitmentsSupplier Perspective • The goal of vaccine suppliers is to recoup their substantial investment in vaccine development within a reasonable timeframe • To make credible investment decisions, suppliers utilize industry best practices that: • Clearly define the investment opportunities • Identify the timing and risks of development • Explicitly assess the costs (e.g., development, manufacturing) • Analyze numerous competitive market scenarios • Consider all investments in the context of their overall portfolio • Suppliers will employ this methodology when considering an AMC 2 AMC-FIRM_Overview & Analysis_London_09Nov06

4. High NPV (Exp. Revenues -Exp. Costs) Success Low Success Fail Go Fail Success Go No Go Cumulative Dev. Cost, at Time of Failure Fail Success Go No Go Fail No Go $0 Development Strategy Market Value Supplier PerspectiveDevelopment Strategy and Market Value Relationship • Suppliers have a well established decision-making process for development investment • Suppliers make a Go/No Go decision at each development step • Each Go/No Go decision is made with forward looking value analysis • Each supplier will evaluatean AMC based on the information availableat the time ofthe currentdecision 3 AMC-FIRM_Overview & Analysis_London_09Nov06

5. Potential Market Scenarios ‘A’ Value Given ‘B’ and ‘C’ also succeed Competitor C Success Competitor B Success PC PB ‘A’ Value Given ‘B’ also succeeds Competitor C Failure Competitor C Success ‘A’ Value Given ‘C’ also succeeds PC Competitor B Failure ‘A’ Value Given ‘B’ and ‘C’ failed Competitor C Failure ‘A’ Cost of Failure $0 Supplier PerspectiveMarket Value and Competition Relationship • In addition to their own success or failure, each supplier must account for the possibility of other new suppliers successfully reaching the market, e.g., Supplier A Success PA Go SupplierA Supplier A Failure No Go 4 AMC-FIRM_Overview & Analysis_London_09Nov06

6. Supplier A Supplier B Supplier C Probability Outcome Success 5% A, B, C 20% Success Fail 20% A, B 50% Success Success 5% A, C 50% 50% 20% Fail Fail 20% A Illustrative Success 5% B, C 20% Success Fail 50% 20% B 50% Fail Success 5% C 50% 20% Fail Fail 20% - AMC ModelAnalysis Frame • The AMC model is designed to explore the level of AMC funding required to provide a neutral or better return on investment given multiple outcomes The AMC needs to be sized to support multiple supplier outcomes 5 AMC-FIRM_Overview & Analysis_London_09Nov06

7. AMC ModelGeneral Structure Analysis Inputs Financial Analysis Parameters Supplier & Product Profile Data Country (“Market”) Data AMC Contract Terms AMC Financial Implications & Risk Model Vaccine Need & Potential Market Forecasts Vaccine Product Availability Capacity & Supply Forecasts Financial Reports (Suppliers, Funders & Countries) Health Impact Reports Analysis Outputs 6 AMC-FIRM_Overview & Analysis_London_09Nov06

8. AMC ModelAnalysis Components Determine Vaccine Need f {population cohort, doses/fully compliant person} f {# of suppliers, vaccine availability, supplier capacity plan} Determine Potential Vaccine Capacity Determine Potential Vaccine Market f {vaccine need, vaccine coverage rate} AMC Investment AMC Price Post-AMC Price Define AMC Terms Determine Potential Vaccine Demand f {vaccine availability, country adoption timing, time to peak coverage} Determine Supply/Demand f {vaccine price, country co-pay, country willingness to pay, country financial sustainability, AMC investment} Determine Supplier, Funder & Country Financials f {supplier costs, capacity utilized, supplier discount rate, funder/country discount rate} iterate 7 AMC-FIRM_Overview & Analysis_London_09Nov06

9. AMC ModelData Input Quality • Each Vaccine Program Team was responsible for ensuring the credibility of their analysis inputs • Credibility was achieved through transparent data gathering processes and multiple external expert reviews • The AMC model was responsible for: • Applying the data in accordance with industry best practice • Providing sensitivity analysis on key input data 8 AMC-FIRM_Overview & Analysis_London_09Nov06

10. AMC ModelAnalysis Objectives • Consistently evaluate all AMC vaccine candidates • Ensure common methodology and data gathering processes • Explore the financial implications of an AMC by providing insight on: • Size of AMC required to create a competitive market capable of supporting multiple suppliers, both multinational and emerging • AMC terms that provide the most robust market support • Given AMC size and vaccine price assumptions, determine: • AMC duration • Donor cost • Health impact 9 AMC-FIRM_Overview & Analysis_London_09Nov06

11. AMC-FIRMContents • Analysis Methodology & Model Framework • Pneumococcal Vaccine Analysis Results 10 AMC-FIRM_Overview & Analysis_London_09Nov06

12. Pneumo Vaccine Analysis Minimum Vaccine Product Profile Requirements • Efficacy vs. vaccine-type invasive disease >80% • Provides coverage against at least 50% of pneumococcal serotypes causing local invasive disease • Administered concurrently with DTP • Local and systemic reactions as or less common than following DTwP vaccine • Shelf life 24 months • Liquid formulation preferred over lyophilized; separate injection acceptable 11 AMC-FIRM_Overview & Analysis_London_09Nov06

13. Pneumococcal Vaccine Analysis Potential Vaccine Demand • Assumes initial vaccine is available to GAVI-eligible countries in 2010 • Assumes no vaccine supply or price constraints • Countries assigned to one of three adoption categories based on multiple criteria 12 AMC-FIRM_Overview & Analysis_London_09Nov06

14. Pneumococcal Vaccine Analysis Supplier Product Profile Assumptions 13 AMC-FIRM_Overview & Analysis_London_09Nov06

15. Pneumococcal Vaccine Analysis Supplier Timeline & Return Assumptions • Assume Global Supplier #1 and #2 are developing for industrialized markets, therefore, do not require an AMC return on investment • Assume post-licensure R&D is in developing countries on behalf of AMC, therefore, requires 100% return through AMC mechanism • Assume Emerging Supplier enters development because of AMC, but intends to market to both private and public markets • Assume supplier requires a 80% return on investment through the AMCcc 14 AMC-FIRM_Overview & Analysis_London_09Nov06

16. Pneumococcal Vaccine Analysis Probability of Licensure Global #1 Licensure Global #2 Licensure Emerging Licensure Outcome Probabilities Licensee Outcome S 1, 2, E 1, 2 1, E 1 2, E 2 E none 0.0575 0.1555 0.1342 0.3628 0.0235 0.0635 0.0548 0.1482 p = 0.27 S p = 0.30 F p = 0.73 S p = 0.71 S p = 0.27 F p = 0.70 F p = 073 S p = 0.27 S There is an 85% chance of 1 or more products achieving licensure p = 0.30 F p = 0.73 F p = 0.29 S p = 0.27 F p = 0.70 F p = 0.73 15 AMC-FIRM_Overview & Analysis_London_09Nov06

17. Given: Country Co-pay: $1.00/dose Post-AMC Price: $2.00/dose Pneumococcal Vaccine Analysis AMC Terms Analysis Donor Discount Rate: 5.8% Supplier Discount Rate: 10% 16 AMC-FIRM_Overview & Analysis_London_09Nov06

18. Pneumococcal Vaccine Analysis Scenario Analyses • Based on these scenario analyses, an AMC investment of $1.5B is expected to achieve the AMC objectives. 17 AMC-FIRM_Overview & Analysis_London_09Nov06

19. Given: Country Co-pay: $1.00/dose Post-AMC Price: $2.00/dose Pneumococcal Vaccine Analysis AMC Terms Recommendation Donor Discount Rate: 5.8% Supplier Discount Rate: 10% 18 AMC-FIRM_Overview & Analysis_London_09Nov06

20. Pneumococcal Vaccine AnalysisAnticipated AMC Benefits • Provides motivation for multiple suppliers to invest in the capacity required to meet demand in low-income countries • Mitigates delay in developing world vaccination – a delay that historically has been 15 years or more • Encourages emerging manufacturers to invest in vaccine development and supply, creating a more competitive market and additional downward price pressure • Enables countries to make more informed adoption decisions given greater predictability of country cost implications, both during and after the AMC funding period • Increases confidence in affordability and sustainability assumptions • Creates market for more efficient vaccine technologies to capture share in an established and profitable market 19 AMC-FIRM_Overview & Analysis_London_09Nov06

21. Pneumococcal Vaccine Analysis Potential Deaths Averted • Given an AMC investment of $1.5B, pneumococcal vaccination could result in approximately 5.4 million deaths averted by 2030 20 AMC-FIRM_Overview & Analysis_London_09Nov06