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Randall B. Sunberg, Morgan Lewis Denise McGuinn, Centocor/Johnson & Johnson Keith Abrams, Bayer Allan Jarvis, Av

Pharma and Biotech Collaborations. Randall B. Sunberg, Morgan Lewis Denise McGuinn, Centocor/Johnson & Johnson Keith Abrams, Bayer Allan Jarvis, Aventis Pasteur. PA BIOTECH 3 Rivers Venture Fair September 9, 2003. www.morganlewis.com

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Randall B. Sunberg, Morgan Lewis Denise McGuinn, Centocor/Johnson & Johnson Keith Abrams, Bayer Allan Jarvis, Av

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  1. Pharma and Biotech Collaborations Randall B. Sunberg, Morgan Lewis Denise McGuinn, Centocor/Johnson & Johnson Keith Abrams, Bayer Allan Jarvis, Aventis Pasteur PA BIOTECH 3 Rivers Venture Fair September 9, 2003 www.morganlewis.com These confidential materials have been prepared by Morgan, Lewis & Bockius LLP solely for use in this conference.

  2. Pharma and Biotech Collaborations • Introductions and Current Trends • Lifecycle of a Biotech Company • The Deal: Goals and Obstacles • Perspectives of a Big Pharma Partner • Interactive Questions and Discussion

  3. Deal Trends • Pharmaceutical and biotech drivers toward partnering • Biotech research pay-off slower than expected • Biotech shift downstream • Maximizing asset values • Shared expertise, risk and reward

  4. Deal Trends • Current industry environment of pipeline “gaps” and • consolidations • Demand and supply for late-stage products • Innovation gaps • Patent expirations and generic exposure • Independence requires a promising pipeline

  5. Deal Trends • Interdependent relationship of collaboration partners • “Lead partner” status vs. “niche” roles • Exploiting each partner’s core expertise • Allocation of activities • Committees and sharing of information

  6. Deal Trends • Maintaining alignment of interests among partners • Non-competes and exclusivity • Duration of relationship • Ex-program activities • Quids

  7. Deal Trends • Special deal factors and terms driven by current • environment • Low valuations, more demanding partners and • aversion to risk • Reduced buy-in fees, and more (but smaller) • milestones • Reimbursements of fees, and caps on investment • obligations • Termination rights upon changes in assumptions

  8. Deal Trends • Surprises - Good and Bad • Changes-in-control • OTC switches • Patent challenges • There’s no such thing as a “typical” deal

  9. Questions for Discussion • Single vs. Multiple Collaborations: What is the best approach to maximize value, and yet build a successful alliance? • Scope of Collaboration: What are the most important activities for a biotech company to retain in a collaboration, yet still gain the benefit of its big pharma partner’s expertise? • Governance: What are the biggest challenges in managing a collaboration? • Beyond the First Big Deal:After the “company-transforming” deal, what comes next? • Impact of Current Financing Environment: What survival techniques can be used? • Impact of Current M&A Environment: What are the opportunities and pitfalls? • Experiences from the Front: “War stories” that others can learn from...

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