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20 February 2008

Venture Capital and the Biotechnology Industry. Paul Rodgers. 20 February 2008. Amgen: a capital venture. World’s largest biotech company Founded 1980 $19 million venture capital investment 2007 Financial Year $14.8 billion revenues $4.8 billion profit (before tax)

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20 February 2008

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  1. Venture Capital and the Biotechnology Industry Paul Rodgers 20 February 2008

  2. Amgen: a capital venture • World’s largest biotech company • Founded 1980 • $19 million venture capital investment • 2007 Financial Year • $14.8 billion revenues • $4.8 billion profit (before tax) • Market capitalisation: $51 billion

  3. Venture Capital • Invest in: • Private companies with high growth potential • Launch, early development, or expansion • Management buy-outs and buy-ins • Raise funds for investment from: • Private and public pension funds • Endowment funds • Foundations, corporations, wealthy individuals • Looking for >5-fold return on investment within 5 years

  4. Venture Capital • Profit and risk sharing(high risk – high return) • 10 to 15% of portfolio will give very high returns • Detailed due diligence • High level of hand holding • Ownership and control of business shared • Patient, flexible financing (5-7 years to exit) • Highly selective financing – importance of deal flow

  5. Exit Strategy • Exit through the stock exchanges (“IPO”) • Sell to another VC company/strategic investor • Strategic mergers and acquisitions • Issues in Exit :- • Minimum return expected by VC fund. • Minimum equity size for public issue

  6. Venture Capital: Relevant Numbers

  7. Funding of Biotech Start-ups Initial finance Seed finance 1st VC round Formation Founders, family & friends Business angels; University Challenge Funds; specialist VC’s; grants

  8. Features of Biotech Start Ups • Innovative technology/products • High R&D component • High intangible component - intellectual property • Failure rates can be high • Long product development time • Long gestation period, initial cash flow low • Patient financing • Evaluation of management team critical

  9. What Merlin Looks For • World-class management, proven track record • Products that address major needs • Access to range of technologies: product stream • Proprietary position on technology or product • Corporate alliances with market leaders • Realistic valuations • Clear and credible business strategy with exit plan • Strong near-term milestones

  10. PSYNOVA NEUROTECH LTD A CNS DIAGNOSTICS COMPANY CONFIDENTIAL

  11. Psynova’s Unique Selling Points • Bahn lab (Psynova’s “basic research division”) • World leading expertise in a wide range of “state of the art” profiling technologies • Focus on large scale, label free LC/MS proteomic approaches to identify protein and peptide biomarkers detectable in blood • Clinical insight/Valuable world wide clinical network to enable sample access • SMRI and other academic funds >$8-10m over next 5 years • Unique Biobank - 1000s of relevant samples e.g. Drug naive first onset schizophrenic CSF & serum, discordant monozygotic twins, drug treated, first onset patients, etc • Lowe lab • Proteome fractionation – unique affinity reagents • Diagnostics expertise • PsyDataTM • unique asset • database of all biomarker data mined from Biobank • “Framework” IP agreement with U. Cambridge to all output from Bahn lab CONFIDENTIAL

  12. The Opportunity • 7% of world population affected by schizophrenia, bipolar disorder or major depressive disorder • >15% of burden of disease in established economies • Schizophrenia alone costs US$40-60B pa (USA) and $10-52B (Europe • “Schizophrenia affects 1% of the population, accounts for 1/4 of all mental health costs and takes up 1/3 psychiatric hospital beds” - Dr Richard Wyatt, NIMH (US) • Early intervention greatly improves clinical outcomes • Early diagnosis is a clear unmet clinical need • Schizophrenia first priority but potential to develop a range of specific diagnostic tests for bipolar, depression, etc CONFIDENTIAL

  13. Early Intervention Current DSM-IV diagnostic methods Psynova’s Diagnostic • Psynova Dx • Objective diagnosis • Duration of untreated psychosis (DUP) greatly reduced • Early therapeutic intervention possible • Less severe symptoms • Faster recovery ‘plateau’ First positive symptoms Severity of symptoms DUP 1-3yrs Prodrome Critical period Time Time from prodrome to diagnosis > 3-8 years CONFIDENTIAL

  14. DISORDERS SCHIZOPHRENIABIPOLAR DISORDER MAJOR DEPRESSION AUTISM OCD ADHD ALZHEIMER’S DOWN’S SYNDROME HUNTINGTON’S DISEASE PARKINSON’S DISEASE SLEEP DEPRIVATION BIOMARKER DISCOVERY: Our Strategy CNS Post-mortem brain tissues Cerebrospinal fluid CSF CSF PLASMA SERUM WHOLE BLOOD URINE T-CELLS FIBROBLASTS ERYTHROCYTES LIVERSPLEENDURA MATER PERIPHERAL TISSUES In order to address questions of disease specificity of a given biomarker it is important to investigate several CNS disorders simultaneously

  15. EXAMPLE BIOMARKERS from SERUM 2 proteins identified in CSF are also biomarkers in serum serum • ELISA confirmation of • Schizophrenia expression changes for 2 serum biomarkers discovered on MS platform • 2 markers predict membership of first-onset, drug naïve Schiz group • sensitivity = 89% • specificity = 73%

  16. PCA 3 2 1 t[2] 0 - 1 - 2 - 4 - 3 - 2 - 1 0 1 2 3 4 5 6 t[1] EXAMPLE BIOMARKERS from SERUM 1700 proteins identified in serum following depletion of 20 most abundant proteins (comparable with labelled approaches; but one dimensional chromatography) • PCA Plot • Schizophrenia expression changes for 2 serum biomarkers discovered on LC-MS platform • 2 markers predict membership of first-onset, drug naïve Schiz group • sensitivity = 80% • specificity = 72%

  17. Commercial Strategy I $M

  18. Commercial Strategy II:Likely Products • “Home Brew” screening product to aid in diagnosis of schizophrenia • Market directly to psychiatrists • Use to obtain clinical data for regulatory approval • Co-development, revenue sharing agreement with a US based, CLIA-certified biomarker company • In Vitro Diagnostic to aid in the diagnosis of schizophrenia • Licensing deal with large Dx company • Won’t come to market until after clinical trials, regulatory approval • Potential “home brew” patient monitoring screening product in schizophrenia • To monitor disease progression and/or drug response • Repeat cycle for bipolar, depression etc • Biomarker panels for R&D collaborations with pharma companies

  19. MILESTONES & TIMELINES

  20. SUMMARY • Illnesses such as schizophrenia are a major burden to healthcare systems and society • Diagnostic tests for severe mental illness are major unmet needs • Psynova has a competitive advantage in developing biomarker diagnostics for neuropsychiatry • Schizophrenia projects furthest advanced but activities in BD, MDD, ADHD, autism ongoing/planned • Potential collaboration opportunities in drug discovery and/or development applications of biomarker approaches • Psynova open to new collaborations in CNS biomarker discovery

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