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Company Analysis: MLNM

Company Analysis: MLNM. Andrea Hooper Imke Ehlers Rana Sawaya Carlos Dedesma. Carlos. What Were Our Data Sources?. Carlos. What are they Worth?. Introduction Assets Some Product; Lots of Pipeline Agreements. Carlos. What are they Worth?. Introduction Assets

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Company Analysis: MLNM

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  1. Company Analysis: MLNM • Andrea Hooper • Imke Ehlers • Rana Sawaya • Carlos Dedesma Carlos

  2. What Were Our Data Sources? Carlos

  3. What are they Worth? • Introduction • Assets • Some Product; Lots of Pipeline • Agreements Carlos

  4. What are they Worth? • Introduction • Assets • Some Product; Lots of Pipeline • Agreements Andrea

  5. Introduction • Founded 1993 • Traded on Nasdaq since 1996 • Currently 2,079 full-time employees • Major facilities: Cambridge, MA (HQ) • Cambridge, England • South San Francisco, CA • Website: www.mlnm.com Andrea

  6. Introduction: Ample Lab Space • Cambridge, MA: 1,040,211 sq ft building of offices and lab space. Under lease. • San Fran:136,000 sq ft of office and lab. Under lease. • England: 40,000 sq ft of office and lab. Under lease. • Constructions: Took occupancy of a 202,000 square feet new office lab space in MA with a lease until 2019. Another building next to it under construction with 214,000 square feet of office and lab space with lease til 2020. Move in Q3Q4 2K3. Also 90,000 square foot building in England with move in Q2 2K3 Andrea

  7. Introduction: Management’s Control over Expenses Carlos

  8. Introduction: Cheap Stock? MLNM RGN PFE Mkt Cap (Billions) $2.4 $0.9 $183 Price/Book  0.83  6.15 9.66 Carlos

  9. Introduction: Volatile Stock? MLNM RGN PFE Mkt Cap (Billions) $2.4 $0.9 $183 Price/Book  0.83  6.15 9.66 Beta 1.65 1.02 0.60 Carlos

  10. Introduction: Volatile Stock? Carlos

  11. Introduction: Volatile Stock? Carlos

  12. What are they Worth? • Staff, Trade Name, Experience Set • Assets • Some Product; Lots of Pipeline • Agreements Carlos

  13. Assets • $1.8 Billion in cash • This is enough cash to meet this year’s operational & financing expenses Carlos

  14. Assets • $1.8 Billion in cash • This is enough cash to meet this year’s operational & financing expenses • What about next year? Carlos

  15. What are they Worth? • Staff, Trade Name, Experience Set • Assets • Some Product; Lots of Pipeline • Agreements Rana

  16. Some Product; Lots of Pipeline • Cardiovascular Disease • Product- INTEGRILIN (available) • Pipeline- Phase I (3) / Phase II, III for Integrilin • Cancer • Product- VELCADE • Pipeline- Phase I (5) / Phase II, III for Velcade • Inflammation • Pipeline- Phase II (1) / Phase I (1) • Metabolic disorders Rana

  17. Lots of Pipeline • Cardiovascular Disease • MLN519- proteosome inhibitor/ PAION Gmbh (P-II) • MLN01- monoclonal antibody (b2 integrin)/ XOMA Ltd. (P-II) • MLN1021- Factor Xa inhibitor (P-I) • CAB-2- complement inhibitor / XOMA Ltd. (P-I and P-II) • Cancer • MLN591RL- monoclonal antibody (prostate-PSMA) • MLN2704- monoclonal antibody (prostate-PSMA) • MLN576- topoisomerase inhibitor/ XENOVA (P-I and II) • MLN518- receptor tyrosine kinase inhibitor (P-I) • MLN944- samll molecule (solid tumor) / XENOVA (P-I and II) • Inflammation • MLN02- monoclonal antibody (a4b7) (inflammatory bowel disease) (P-II) / Genentech (completion) • MLN1202- monoclonal antibody (rheumatoid arthritis) • Metabolic disorders • Obesity and diabetes Rana

  18. Some Product • Cardiovascular Disease • Product- INTEGRILIN (available) • Cancer • Product- VELCADE Rana

  19. Some Product: INTEGRILIN • Anti-platelet agent • Platelet Glycoprotein (GP) IIb/IIa inhibitor • Compound- Eptifibatide • Cyclic heptapeptide/binds the KGD sequence on receptor • Highly selective for inhibiting ligand binding • Administered as an injection, in conjunction with plasminogen activators, oral regimens (aspirin) • One of three anti-(GP) IIb/IIa inhibitor available on market (concept in 70’s and 80’s) Rana

  20. Some Product: INTEGRILIN • Developed/marketed by COR and Schering-Plough • Marketed in the US, EU, and 11 more countries • Cleared for • management of patients with percutaneous coronary intervention (PCI) (angioplasty/ stenting) • acute coronary syndromes (ACS) (unstable angina/ heart attack) • Marketed in the US, EU, and 11 more countries • Clinical trials in progress for added indications • Phase III- specific type of heart attack/pre-PCI • Phase II- coronary artery bypass graft Rana

  21. Medically, INTEGRILIN is 2nd Best of ThreeReoPro > Integrilin > Aggrastat ReoPro Integrilin Aggrastat (Abciximab) (Epifibatide) (Tirofiban) Molecule Ab Fab Peptide Non-peptide Binding site Unknown KGD RGD Binding affinity HighModerate Moderate Receptor specificity No (sickle cell)YesYes FDA Approval PCI (#1) PCI,ACS ACS Clinical studies renal,diabetic Sale price HighLower Rana

  22. INTEGRILIN Now Faces Targeted Competition from Eli Lilly Imke

  23. Conclusion:INTEGRILIN’s Sales for the next ~18 Months have Peaked Rana

  24. Some Product: VELCADE • Novel drug candidate with broad applications in treatment of cancer • In 2002 Velcade was granted “fast-track” status • In Jan 2003, the NDA filing was completed for relapsed and multiple myeloma • In Feb 2002 a MAA was submitted to the EMEA for marketing in the European Union Rana

  25. VELCADE’s Possible Additional Indications • Phase III- APEX trial • Patients with multiple myeloma- refractory after one or more prior therapies • 600 patients • Phase II- SUMMIT trial / CREST trial • Patients with multiple myeloma- refractory after two or more prior therapies • Velcade (single agent) or in combination with dexamethasone • (NDA based primarily on phase II trials) • Phase I and II- Velcade along with other drugs • refractory colorectal cancer • advanced non-small lung cancer • blood malignancies other than multiple myeloma • solid tumors- pancreatic, lung, breast, prostate, ovarian Rana

  26. VELCADE’s Mode of Action • Compound- Bortezomib for Injection • Proteasome inhibitor • Dipeptide boronic acid analogues that inhibit the chymotryptic activity of the proteasome • Acts through multiple mechanisms to arrest tumor growth, tumor spread and angiogenesis Rana

  27. Proteasome Inhibitor • Inducing apoptosis • Inhibiting metastasis • and angiogenesis VELCADE’s Mode of Action Proteasome IkB NF-kB Inhibitors of apoptosis adhesion molecules (metastasis) (angiogenesis) Tumor growth Rana

  28. VELCADE’s Competition • No other proteasome inhibitor on the market • BUT, the competition for the indication includes: • Chemotherapy • Traditional therapies • Thalomid (thalidomide) (Celgene Corporation) • Competitive therapies in late-stage clinical development Rana

  29. What are they Worth? • Staff, Trade Name, Experience Set • Assets • Some Product; Lots of Pipeline • Agreements Imke

  30. Agreements that generate revenue • Agreements as Sources of Revenue • Bayer • Aventis • Schering-Plough • ILEX • Genentech • Monsanto Imke

  31. Agreements that generate revenue 1. Bayer  “multi-disease alliance” in finding targets for small molecule therapies and Bayer’s development and commercialization of resulting therapies  research part of alliance for 5yr term- completed in Oct.2003-extendable for 1yr at Bayer’s option  MLNM eligible to receive up to $465MM of which $387.4MM have been received up to Dec 2002; in 2002, this generated 22% of revenues 2. Aventis  “inflammatory disease broad agreement” from June 2000, for a 5 yr research phase $250MM equity investment received, MLNM will receive royalty payments and enjoy access to Aventis’ promotional infrastructure in case of commercialization  “technology transfer agreement” from July 2000 over 3-5yrs. May be ended July 2003 Aventis is provided rights to MLNM drug discovery technologies in exchange for payments between $160-200MM over 3-5yrs . $97.8MM were received to date; in 2002, this generated 12% of revenues Imke

  32. Agreements that generate revenue 3. Schering-Plough:  collaboration on Integrilin marketing; US profits: 50% ; international: SGP will pay royalties 4. ILEX  ILEX owns CAMPATH (humanized monoclonal Ab) for refractory CML. To date, MLNM has received $60MM from ILEX related to CAMPATH. entitled to another $40MM in 2003 and 2004 if sales in the US meet thresholds. After 2004 entitled to further payments if sales meet thresholds in the US. 5. Genentech collaboration for MLN 02 to target Crohn s disease from Dec.1997 to take it through Phase II after which Genentech will take over option to share costs/profits or receive royalties and entitled to milestone payments 6. Monsanto  research alliance and technology transfer agreement with Monsanto, expired at end of its original 5yr term. -MLNM may receive royalty payments in the future if lead target are developed into commercial products by Monsanto Imke

  33. Agreements requiring payments • Agreements as Liabilities: • BZL Biologics LLC • Xenova • XOMA Imke

  34. Agreements requiring payments 1. BZL Biologics collaboration for joint dev. and commercialization of antibody-based therapeutics targeting PSMA from April 2001: MLNM holds exclusive dev. and WW marketing rights to these products. (MLN2704/591R) MLNM pays development and milestone and royalty payments to BZL based on product sales. 2. Xenova agreement from 2001: for the dev. and exclusive North American commercialization rights to Xenova s DNA targeting program. Initial payment from MLNM to Xenova $11.5MM. MLNM promised further milestone payments and royalties 3. XOMA  cardiovascular alliance since Nov. 2001  provides for the development of 2MLNM biotherapeutics by XOMA  MLNM pays milestone and royalty payments, and commercializes products after successful Phase II Imke

  35. Summary & Conclusions • Scary Things • Cash position • Potential patent infringement • Bayer may terminate relationship this year • Monsanto may terminate relationship this year • INTEGRILIN’s market share has probably peaked • Positives • VELCADE looks promising and is solely owned by the company • Diverse product pipeline Carlos

  36. Summary & Conclusions: We Recommend a HOLD Position • Although we like MLNM, we are concerned with the large number of challenges that must be met in the next year in order to remain an on-going concern. • We would like to monitor the company’s operations and report back later this year. Carlos

  37. Conclusion • HOLD as we watch for certain goals to be met, • File FDA application for VELCADE in multiple myeloma • Complete enrollment for Phase III APEX Study of VELCADE in multiple myeloma • Initiate CABERNET trial of Integrilin in CABG surgery • Initiate Phase II trials of VELCADE in solid tumors and NHL

  38. Conclusion • HOLD as we watch for certain goals to be met (continued), • Initiate trials of Integrilin in combination with drug eluting stents • Initiate trials of INTEGRILIN in combination with direct thrombin inhibitor • Phase II results of MLNM 02 in ulcerative colities • Initiate Phase II trial of MLNM-591 in prostate cancer • Enter 2-3 new molecules into clinical development

  39. Millennium Executive Officers Mark J. Levin, 52 Chief Executive Officer since 1994 President since 1993 Founding CEO of Cell Genesys, Stem Cells, Tularik, Focal and Millennium Vaughn M. Kailian, 58 Vice Chairperson since 2002 Was President, CEO of COR Therapeutics 1990-2002 Kenneth M. Bate, 52 Senior VP & Chief Financial Officer since 2002 John "Jack" B. Douglas III, 49 Senior VP and General Counsel since 1999-2000 Linda K. Pine, 51 Senior Vice President, Human Resources since 1994 Robert I. Tepper, MD, 47 President, R & D since 2002 At Millennium since 1994 Andrea

  40. Other Members of Management Julian Adams, PhD Senior Vice President of Drug Development and Discovery since 1999 Used to work for LeukoSite before the merger Responsible for discovery of VelcadeTM while at Proscript/LeukoSite Clare Midgley Vice President of Global Corporate Affairs since 1997 Peter Smith, PhD Senior VP, Clinical Drug Development since 2000 Andrea

  41. Millenium BOD Eugene Cordes, Ph.D., Chairman of the Board, Concurrent Pharmaceuticals, Inc. Shaun R. Coughlin, M.D., Ph.D, Director of the Cardiovascular Research Institute, University of California, San Francisco Ginger L. Graham, Advisor to the President and Chief Executive Officer, Guidant Corporation A. Grant Heidrich, III, Partner, Mayfield Fund Charles J. Homcy, M.D., Senior Research & Development Advisor Vaughn M. Kailian, Vice Chairperson, Millennium Pharmaceuticals, Inc. Raju Kucherlapati, P.h.D, Scientific Director, Harvard-Partners Center for Genetics and Genomics, Professor of Genetics, Harvard Medical School Eric Lander, Ph.D., Director, Whitehead/MIT Center for Genome Research Mark J. Levin, Chief Executive Officer, Millennium Pharmaceuticals, Inc. Edward D. Miller, M.D., Dean, Johns Hopkins University School of Medicine and Chief Executive Officer, Johns Hopkins Medicine Norman C. Selby, Chief Executive Officer, TransForm Pharmaceuticals, Inc. Kenneth E. Weg,Chairman, Clearview Projects, Inc. Principal, Clearview Global Venture Partners Andrea

  42. Fin Carlos

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