November 3 rd , 2008 Experiences in Japanese Licensing Basic - - PowerPoint PPT Presentation

November 3rd, 2008

• Confidential -

Experiences in Japanese Licensing

• Basic Japanese licensing / collaboration strategies
• Importance of collaboration alignment
• Three-way partnerships in a highly competitive in-

licensing environment – leveraging lessons learned The landscape of “Inter-Geographic” licensing has changed dramatically and will continue to change – adaptation will be THE critical skill

Lessons from Eli Lilly and Company

A strong legacy of in-licensing from abroad

• Confidential -

Lessons from Lilly Business Development

• In-Licensing has represented a key element of Lilly’s portfolio

strategy for many years

• Key initial objectives for Lilly in all in-licensing transactions

– Establish Lilly’s leadership in the relevant disease area – Establishing guiding principles of a transaction – Develop a clear path to a transaction based on partner needs – Collaboration excellence with strong post deal “alliance management” Insulin Lorabid (Kyowa Hakko) Actos (Takeda) Prasugrel (Sankyo) Cialis sPLA2 (Shionogi)

• Confidential -

Lessons from Lilly Business Development

Two MOST critical lessons:

• Establish your expertise

– Ability to manage a Japanese relationship (trust, respect) – Development (local regulatory, clinical) – Team (Sr. Mgmt, SAB, CAB, BOD) – Funding (venture, other sources) – Value-add for partner (data exchange, $$$, learning)

• Establish guiding principles early in the process

– Value split based on risk/reward (financial and non-financial) – Responsibilities (development) – Set timing / process expectations

Lessons From Peninsula Pharmaceuticals

Alignment of Strategy and Operational Execution

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Alignment of STRATEGY and OPERATIONS

• Majority of key decisions in a NewCo are STRATEGIC

– Pharma may see decisions as low level PRODUCT issues

• Good alliances move “Appropriate” decisions UP the organization so all strategic

impact on the NewCo can be assessed and considered

Finance / Legal

Clinical Development

Marketing Manufacturing Regulatory

Product Product Product Product

TRx TRx TRx

Function Function

CEO

Preside nt

• Confidential -

Alignment of STRATEGY and OPERATIONS

Finance / Legal

Clinical Development

Marketing Manufacturing Regulatory

Product Product Product Product

TRx TRx TRx

Function Function

CEO

Preside nt

• A balanced JSC can elevate decision making
• Needs to be a clear decision maker / process (involvement of senior people)
• Regular meetings avoid sudden “killer issues” (in-person when possible)
• Increases probability of obtaining a license and further control
• Non-negotiable: IP and regulatory – must be decided locally
• Opportunity: Equity participation by Shionogi
• Keeps everyone “in-the-game” and elevates corporate interest

Joint Steering Committee

• Confidential -

The Payoff

• The Peninsula / Shionogi Joint Steering Committee:

– Encouraged an investment from Shionogi in Series C financing ($25M) – Enabled data sharing for Shionogi’s MHLW licensing process – Minimized any wasteful overlap (Pre-clinical, manufacturing) – Was paramount to the JNJ acquisition allow clear line-of-sight communication between the relevant individuals – Allowed coordination of global publication and marketing efforts

• A well established JSC in any license can provide benefits:

Expansion of doripenem Shareholder return Visibility on value Financial return “Leverageable” capabilities Clear alignment

Executing with Lessons Learned

• Confidential -

Leveraging Lessons Learned

• Lessons from Lilly and Peninsula helped deliver success in a

highly complicated three-way transaction

– sPLA2 collaboration discontinued – No clear out-licensing plan or leader – Partners needed to be convinced to “spend the time on a deal”

• Both Lilly and Shionogi:

– Constructively participated in negotiation of the key contracts – Assisted in technology transfer (a lot of data) and enabled Anthera – Provided on-going support including regulatory/manufacturing – Became “Large” shareholders

sPLA2 Products and Technology

• Confidential -

$

Financing / Operating History

2007

A-002 Phase II PLASMA: Coronary Artery Disease A-001 Phase II IMPACTS: Acute Chest Syndrome in sickle cell patients A-002 Phase II Start: PLASMA2 QD

2006

IP License from Lilly $29M Series B ► VantagePoint ► Sofinnova ► Pappas ► Lilly ► Shionogi

2008

A-002 Phase II Results: PLASMA2 QD A-002 Completed SPA with FDA and EMEA advice process A-002 Phase IIb/III Start - FRANCIS A-623 Phase II IND $19M Follow-on Financing ►Caxton ►HBM

2009

A-623 Initiate Phase II (Q3) Strategic Financing for A002 (Q3 / Q4) A-001 IMPACTS RESULTS (Q1) A-002 FRANCIS 8 week and 6 month RESULTS (Q1 /Q2) Initiate Phase III LDL extension (Q2) Initiate Phase III ACS Study N=5000 (SPA) (Q4)

• Confidential -

Summary

• Dealing with international licensing requires specialized skills

– In Japan, build confidence, trust and respect early – Focus on capabilities and matching with partner needs

• True collaboration must be aligned

– A JSC can ensure key decisions are handled appropriately – Alignment has significant upside when “it counts most”

• Brining together the fundamentals can help even in complex

transactions

– Guiding principles help steer the way – Even when managing complex three-way negotiations

Sofinnova Ventures

Venture Capital for Pharmaceutical and Biotechnology Spin Outs

Updated on August 2008

Presentation to New York Pharma Forum November 3, 2008 David S. Kabakoff

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Sofinnova At a Glance

– Leading US VC firm with over $1B under management ($375M Fund VII) – Firm founded in 1974; core team investing together for 10+ years – Offices in San Francisco, San Diego, Tokyo – Close relationship with Sofinnova Partners (Paris) – 3 investors, 3 EIR’s, 1 Strategic Advisor, 2 Asia-focused BD professionals – Back high quality, clinical stage therapeutic assets – Invest behind proven management teams – Deploy $15 – 25M over the life of a company (syndicate rounds of any size) for 20% ownership – Take an active role in the company at the board level – Back as long term partners; always support the company and the program

Investment Strategy Organizational Snapshot

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Sofinnova Life Sciences Team

Investment Professionals

Mike Powell, PhD Jim Healy, MD, PhD Anand Mehra, MD

Executives in Residence Business Development, Asia

Keiko Mitsunobu Goro Takeda

Cytel Corp Syntex Lab

Lars Ekman, MD, PhD David Kabakoff, PhD

NSDQ: DURA

Jay Shepard, PhD

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Life Science Portfolio

= IPO, Acquired or S-1 Filed

Partnering Platform Product Sales Company Stage Drug Discovery Clinical Development Commercial Business Model

Anza

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Sofinnova’s Core Spin-out Expertise

Pharmaceuticals Biotechnology Sofinnova’s Competitive Advantages



Extensive Spinout Experience of SVP’s Partners



Knowledge of Deal Structuring and Incentives for Parent Companies



Track Record of Building Companies around Top Talent

Spin-outs

Acquiring a Division or Mature Product from Established Company

Subhead Placeholder



Significant R&D Investment by Established Company



Mature Product/IP



Faster Path to Approval/Liquidity

Benefits

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Sofinnova’s Track Record of Spin-Out and Licensing

Corporate Spin-Out

Genentech and Connetics Roche Bristol Myers Squibb Medicis Janssen Ipsen

Product Licensing

Shionogi and Lilly Kureha Dong A Roche and Schering AG Baxter Amgen

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Licenses from Japanese Pharma to VC backed Biotechs

21

Sofinnova Spin-outs from Asia

Shionogi / Eli Lilly Kureha Dong-A(Korea）



Focus and Speed in Development



Number 1 priority in product pipelines



Quick decision making and aggressive timeline to meet development milestones



High Quality of Management Team



Experienced teams built specifically around in-licensed technology



Strong network among clinical / regulatory experts and KOLs



Strong Alliance Partnerships with Licensor



Flexible deal structure to achieve mutual goals (win-win)



Strong personal relationships based on trust and cultural respect

Keys for Success

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Spin-out Deal Flow: Example - Trius.

“Build a better mousetrap and the world will beat a path to your door.”

• Jeff Stein is a Venture Partner at Sofinnova.
• Together we founded Trius Therapeutics.
• Trius licensed TR701 from Dong A Pharma
• Raised $50M Sofinnova, Versant, Interwest, Prism, Kleiner

VC Deal Flow: Example: Trius Therapeutics Conventional Wisdom: If you build it, they will come

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Spin-out Example: Trius Therapeutics

Oral / IV Oxazolidinone licensed by SV venture partner IND filed in the US, potential for $150M in non-dilutive Funding Recruit experienced Team

• f Big Pharma

Developers and Scientists Potential for liquidity, significant value created for licensor Data from Phase II front-loaded development plan, differentiate from Zyvox

22 Months from License and Series A Close Subhead Placeholder



Jeff Stein, PhD, CEO; David Kabakoff, PhD, Executive Chair



Ken Bartizal, PhD, CDO

– 30 years of ID development experience – 20 years at Merck, former Head ID Research, Multiple NDA’s (Invanz / Cancidas) 

Phillipe Prockimer, MD, CSO

– 20 years of ID clinical development experience – VP, Antiinfectives Research, J&J; VP, Antiinfectives Clinical Research, Aventis – 5 NDA’s, 4 MAA’s for NCE’s (doripenem, synercid, zagam, biaxin)

The Trius Team

24

Spin-out Example: Anza Therapeutics

 Cerus is a public company in Concord, CA which develops and

markets systems for purification of blood and components using proprietary viral inactivation technology

 Cerus launched an immunotherapy R&D program as a new

application of it’s core technology in 2003

 In 2007, the IT program was spun out and Anza was born with:

– 20 Employees and management – Facilities/equipment from Cerus – 2 clinical stage products – cancer and HCV

 Anza was financed with a $ 20 Million Series A from Sofinnova,

Versant and Kleiner Perkins

 Cerus received equity in Anza and is eligible for milestones on first

two products and royalties on licensed products

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Spin-Out Venture Business Model

New Co. Experienced Team Pharmaceutical / Biotechnology Company Venture Capitals (Sofinnova, Co-investors) Partnering / M&A / IPO

Maximize Compound Value Compound(s) License, HR Investment

Upfront/ Milestone Royalty Equity Management team, Advisors, Board Equity

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Filing a Corporation Proposal on Development Plans Technical Discussions among Experts Project Kick-off Flexible Deal Structure

New Co. Start-up Process

Scientific Evaluation Development Strategy Due-Diligence Term Sheet LA Execution

Seed Financing Series A Financing

Opportunity Identification

Milestone Based Financing

Strategic Investment and Operational Support from VC Syndicate

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Advantages to VCs of Spin-outs based on Pharma Assets

 Quality and completeness of data packages  “Pre-formed teams” with project expertise, history and

passion

 “Arbitrage” – VC investment at fraction of prior investment  Collaboration opportunity with Pharma partner in territorial

deals

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Advantages to Parent of Asset Spin-outs to VC backed Newco

 Committed Capital for Licensed Assets  Management/Organizational Focus  Nimbleness, agility of small teams  Greater Flexibility on deal terms with Newcos than with

pharma

 Equity Upside

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Challenges to Building a new-co around licensed assets

 Assembling the “right” team and “technology transfer”  Gaining “ownership” for an asset licensed into an existing

• rganization

 Mis-alignment between “parent” and VC or newco business

• bjectives

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Key Business Issues in VC Backed Spin-out Deals

 Financial Consideration

– Cash Payments – milestones, royalties, upfront – Equity (minority interest)

 Scope of Licenses

– Geography – Exclusivity – Non-competition – Supply

 Negotiation Rights in Favor of Parent

– Marketing – Manufacturing – “Pre-negotiated” versus “market” terms

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Success Factors in VC Backed Spin-outs

 Competitive Product Asset which attracts experienced

talent

 Deal Terms which enable Newco to grow and chart it’s

destiny

 Core leadership team willing to “spin-out” with product  Pharma management clarity of strategy and support for

deal completion

San Francisco Office

140 Geary Street, 10th Floor San Francisco, CA, 94108 Ph: 415 228 3380

Menlo Park Office

850 Oak Grove Drive Menlo Park, CA, 94025 Ph: 415 228 3380

San Diego Office

BIOCOM VC Suites 4510 Executive Drive, Suite 206 San Diego, CA 92121 Ph: 858 550 0959

Tokyo Office

4-1-28 Toranomon Towers Office 19F Toranomon, Minatoku, Tokyo Office: +81 (0)3 5733 2036

www.sofinnova.com

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