BIO Industry Analysis

John Craighead, Ph.D.

Managing Director Investor Relations & Business Development 9th Annual BIO Investor Forum October 5, 2010
This report contains information obtained from publicly available sources and is presented as a fair use of the material, or alternatively, contains information from sources that BIO has obtained permission to use the information. At the time of the presentation or publication, the information is believed to be accurate and reliable. BIO disclaims responsibility or any damages resulting from anyones use or reliance on the information provided. Any further distribution or use of the contents without appropriate attribution and reference to BIO and the source(s) is prohibited.

% return since Oct 9th, 2007

0%

-40% 20% 40%

-20%

-60%
Financials Telecom Energy Industrials Utilities Materials Health Care Technology Cons. Disc. Cons. Staples

(Source: BIO, Factset, Sept. 27th, 2010)

+1.6%

NBI BTK

BIOTECH SECTOR PERFORMANCE SINCE 2007 +38.8%

IPO WINDOW YIELDS POOR RETURNS

Median reduction from amount filed vs raised: -28% Median performance: -20%
8% 20% 10% 0% -8% -16%
-7%

-10% -15% -19% -31% -40% -46% -50% -60% -70% -80% -17% -20% -30% -33% -36%

-55%
2010

TLCR 2009

-67%

IRWD

ANTH

AVEO

ALIM

CDXS

TNGN

GNMK

CRMD

(Source: BIO, Factset, Sept. 22nd, 2010)

OMER

PATH

CPIX

TSRX

FEWER US PUBLIC BIOTECH COMPANIES

4Q 2007
1 IPO

4Q 2008
13 IPO

2Q 2010
25%

29%

45%

394

28 Acquisitions 36 Inactive

330

34 Acquisitions 16 Inactive

294

Less than 1 Year of Cash on Hand

(Source: BIO, Factset, Sept. 14th, 2010)

FATE OF 131 COMPANIES WITH 1 YEAR OF CASH LEFT JAN 2009

Survival Tactics 10 ACQUIRED 19 INACTIVE 102 ACTIVE

Layoffs PIPE FOPO Out-Licensed Debt Issued Sold Assets

41% 40% 39% 29% 11% 7%

(Source: BIO, Factset, Sept. 14th, 2010)

SMALL COMPANIES INCREASING CASH SPEND

$4.0

MEDIAN Quarterly CFO (-$M)

$3.6 $3.5

$3.0
$2.5 $2.4

$2.0 $2.0
$1.5

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

(Source: BIO, Factset, Sept. 14th, 2010)

2Q10

Cumulative Total of US IPOs

10 20 40 50 60

30

70

2009
Cumberland IPO August 2009

2010 US IPO WINDOW

2010 2011 2012 2013

JUL SEP NOV JAN MAR MAY JUL SEP NOV JAN MAR MAY JUL SEP NOV JAN MAR MAY JUL SEP NOV JAN MAR MAY JUL SEP NOV

Cumulative Total of US IPOs

10 20 40 50 60

30

70

HOW IT ENDED LAST TIME:

2003
2004 2005 2006 2007

JUL SEP NOV JAN MAR MAY JUL SEP NOV JAN MAR MAY JUL SEP NOV JAN MAR MAY JUL SEP NOV JAN MAR MAY JUL SEP NOV

THERAPEUTIC BIOTECH LICENSING DEALS NOT FILLING THE GAP

700
# OF THERAPEUTIC DEALS PER YEAR

600

595 540 390

500 400 300 200 100 0 2006 2007 2008 2009 2010*
*YTD, Sept 15th

347 217*

(Source: BIO, Windhover, September, 2010)

M&A NEVER PICKED UP FOR THERAPEUTIC BIOTECH COMPANIES

60
TOTAL # OF THERAPEUTIC ACQUISITIONS

55 46 40
38

50

40 30
20 10

21*

0 2006
(Source: BIO, Windhover, September, 2010)

2007

2008

2009

2010*
*YTD, Sept 15th

MORE LATE-STAGE M&A

40%
% OF TOTAL ACQUISITIONS
35%

2006-2009 2010

38% 32%

30% 25% 20%

15%
15% 14% 13% 19% 16% 24% 24%

10% 5%
0%
5%

PC
(Source: BIO, Windhover, September, 2010)

P1

P2

P3

Competitive Deal Making Environment

20000 18000
16000 14000 12000 10000

17,143

# of 1x1 Partnering Meetings at BIO

43% CAGR

8000 6000 4000

2000 0

TAKE HOME MESSAGES

25% fewer US public companies
Remaining companies have more cash

2010 IPO window is uncertain

Fewer acquisitions and licensing deals

More competitive deal making landscape

Visit us online at insidebioia.com