Industry Company Products Pipeline Risks/Catalysts Valuation Q&A. Agenda

Transcription

1 Industry Company Products Pipeline Risks/Catalysts Valuation Q&A Agenda 1

2 Pharmaceutical/Biotech Pharmaceutical companies Simple molecules made by chemical process taken orally Biotech companies Complicated large proteins usually injected In general biotech drugs are more expensive to produce and sell for higher prices Companies can work together The Biotechnology Industry Rapid growth Biotechnology industry grew from 54 billion in 1994 to 500 billion in 2005 More than 200 products have been approved for commercialization in the US up from 33 in 1994 High R&D costs 2

3 FDA Approval Phase I drug safety Phase II drug dosing Phase III drug effectiveness, broad safety Phase IV marketing Fast track! FDA Approval Drug Testing Phase s I IV and FDA Approval 50-60% success rate in Phase III 60-70% positive FDA actions Phase IV Intrinsic value of pipeline 3

4 Why Ming Hates DNA Market Cap: $85 billion Forward P/E Ratio: 33 Enterprise Value / EBITDA: 24 ROE (ttm): 22% Number of analysts covering stock: 24 Valuation # 1 Overvalued! Trades at a high premium compared to other pharmaceuticals Are other pharmaceuticals comparable? 4

5 In business for life In the industry at its inception First biotech company to go public Owned primarily by Roche Awards Brain Power aka Science Team 5

6 Proven Management -Barron's top 30 "World's Best CEOs -Worth Magazine's Top 50 CEOs -Irvington Institute's Corporate Leadership Award FORTUNE Magazine's List of 50 Most Powerful Women Success is not a coincidence! History 1997 Rituxan 1982 Human Insulin 1987 Activase 1985 Protropin (HGH) 1993 Nutropin 1990 Actimmune 1994 Pulmozyme 6

7 History 2000 TNKase 2003 Raptiva 2004 Tarceva 2004 Avastin 2006 Lucentis 2003 Xolair 1998 Herceptin Rituxan Herceptin Avastin Lucentis Drugs for Ming 7

8 Revenue Breakdown Herceptin 14% Rituxan 25% Contracts Avastin 20% Royalties 15% Protropin/Nutropin Lucentis 3% Tarceva Xolair Raptiva Activase/TNKase Pulmozyme Rituxan For relapsed or refractory, low-grade or follicular, CD20-positive, B-cell non- Hodgkin's lymphoma (NHL) $2.19 billion in revenue this year Stable - low single digit growth expected 8

9 Herceptin For metastatic breast cancer in HER2- overexpressed tumors $1.29 billion in revenue this year Stable - low single digit growth expected Avastin For use in combination with intravenous 5- fluorouracil-based chemotherapy for firstor second-line treatment of patients with metastatic carcinoma of the colon or rectum; in combination with carboplatin and paclitaxel for the first-line treatment of patients with unresectable, locally advanced, recurrent or metastatic nonsquamous non-small cell lung cancer (NSCLC) 9

10 Avastin (now in English) Ming s Investment TUMOR! Strategy AVASTIN Crappy Blood DCF Vessels Models Avastin Better strategy/success than chemotherapy Approved for colon and lung cancers $1.80 billion in revenue this year Prescribed off-label for age-related macular degeneration 10

11 Lucentis Basically Avastin repackaged for the treatment of neovascular (wet) age-related macular degeneration (AMD) Injected directly into the eye every month at a cost of approximately $2000 per injection (100 times the equivalent dose of Avastin) Humans, on average, have two eyes R&D 20% of revenues into R&D Over 40 drugs in pipeline Oncology Immunology Disorders of tissue growth and repair 11

12 Phase I Seven drugs in Phase I Apo2L/TRAIL BR3-Fc New Molecular Entity x 2 PARP Inhibitor Systemic Hedgehog Antagonist Trastuzumab-DM1 Drugs range from tumors to arthritis to cancer Phase II Eight drugs in Phase II 2nd Generation Anti-CD20 Avastin BR3-Fc LUCENTIS Omnitarg Rituxan Immunology Topical VEGF Xolair Ranging from foot ulcers to peanut allergies to ovarian cancer 12

13 Phase III Ten drugs in Phase III! 2nd Generation Anti-CD20 Avastin Avastin +/- Tarceva Herceptin +/- Avastin Rituxan Hematology/Oncology Rituxan Immunology Tarceva Tarceva +/- Avastin TNKase Xolair Ranging from asthma to breast cancer to arthritis to leukemia Risk/Catalysts Avastin for first line breast cancer Herceptin for adjuvant HER2+ breast cancer Health conference on November 17th Democrats in power 13

14 Recap! Great scientists Proven record of drugs Amazing blockbusters Avastin! Huge pipeline going forward The Mega Cap Universe But what s going to keep these other companies We know growing what s for going the next to keep 20 years? these companies in business for the next 20 years 14

15 Valuation #2 Correct comparables are other growth companies Large pipelines Google, Microsoft, Apple, Internet based companies Confused?? 15