CREATIVE DEALMAKING:

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• CREATIVE DEALMAKING
• partnering trends in 2005

BioPartnering North AmericaFebruary 7,
2005James Hatton
FARRIS
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Top Ten Publicly Available Deals of 2004

• Aventis Regeneron 09/03 510M
• CancerVax Serono 12/04 290M
• Corgentech BMS 09/03 250M
• Forest Labs Cypress 01/04 205M
• Kos Aventis Acquisition 03/04 200M
• Indevus Pliva 04/04 195M

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Top Ten Publicly Available Deals of 2004
Contd

• Lexicon BMS 12/03 192M
• Curis Wyeth 01/04 170
• Theravance GSK 03/04 129
• Guilford Merck 09/03 84M
• PPD Lilly 12/03 65M
• Roche Genentech 04/04 ???

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Drivers

• Pipeline pressure on big pharma
• FDA risk
• Maturing biotechs
• Some biotechs less flush with cash

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Consequences

• Deal volume and velocity up
• More early stage partnering
• More downstream activities (for the flush
  biotechs)
• More equity
• Deal terms tilting towards biotechs

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Deal terms tilting towards biotechs

• Milestones, especially late stage and sales
  milestones, up
• More tiered, rising royalty rates
• Step in rights
• Termination rights
• More "little wins"

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Joint Development and Co-Promotion

• Equal share of costs and profits (CancerVax,
  Regeneron, Corgentech )
• Option to co-promote up to 25 of calls (Cypress)
• US only - royalties ROW
• Recovery of 50 of development costs from profits
  only (Regeneron)
• Recovery of co-promotion loan from royalties only
  (Cypress)

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Scope of Collaboration opting in

• indications outside the collaboration can be
  opted in (Regeneron, Lexicon, Curis)
• internal candidates must be offered to the
  collaboration
• initial indication agreement on pursuit of other
  indications or licensing out
• option rights to reserved rights or compounds
  (Lexicon, Curis)

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Theravance GSK

• Theravance pays to discovery GSK for rest of
  development
• option on all current and future development
  candidates to 2007
• option to raise ownership to 60 in 2007
• if ownership gt50 in 2007, exclusivity on
  programs for another five years

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Genentech Roche

• multiple opt in/opt out points
• five marketing scenarios
• profit sharing or royalties based on stage of
  development when a party opted out

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• For an electronic copy of todays presentation
  and the background licenses, please contact James
  Hatton at
• FARRIS2500, 700 West GeorgiaVancouver, British
  ColumbiaV7Y 1B3 Canada604.661.9324jhatton_at_farr
  is.com

FARRIS VAUGHAN WILLS MURPHY