BIO 2006 April 10 th 2006 Biotech 2006

Burrill & Company Exclusive focus on life sciences—human healthcare (Rx and Dx), nutraceuticals/wellness, agbio, industrial, enabling technologies § Venture Capital Group § Venture Capital—investing across the entire spectrum of the life sciences/biotechnology. . . over $625 million for investment, raising $300 -500 million for BLSCF III § Merchant Banking Practice § § Strategic Partnering including licensing, research and other collaborations Strategic Advisory Services including new company formation Merger & Acquisitions across life sciences Spin-outs ranging from products, to research divisions to disease area franchises § Media § § Conferences Publications § Headcount: 50+ professionals and staff § Location: San Francisco 2 © 2004 Burrill & Company. Confidential & Proprietary.

Burrill Venture Capital Funds Under Management ($ millions) § Burrill Life Sciences Capital Fund III (2005) $300 -500 § Funds Under Management: § BLSCF III (First Close) $110 § Burrill Life Sciences Capital Fund II (2002/2003)* $211 § Burrill Life Sciences Capital Fund I $302 § Burrill Biotechnology Capital Fund (1999)* $140 § Burrill Agbio Capital Funds I & II (1998/2001)* $101 § Burrill Nutraceuticals Capital Fund (2000)* $61 §*Including Total Under Management at 12/31/05 $623 substantially invested reserves/commitments for subsequent financings in existing portfolio companies 3 © 2004 Burrill & Company. Confidential & Proprietary.

Merchant Banking Group Services Strategic Development Early Stage Research to Product Development & Commercialization • P&G/Taigen • Wyeth • Viro. Pharma/Schering Plough M&A Transactions across Life Sciences • Purdue/Safeguard • Operon/Quiagen • Viro. Pharma/Schering Plough Spin-Outs & Divestitures Create a new Company or into an established Entity • RJR/Targacept Financing Potential Scope of Merchant Banking Group Client Relationship Advisory/Private Placement • Sang. Stat • Immune Response • Baxter/Vim. RX • Lilly/Ipsen • Danisco/Genencor Advisory Services Strategic Transaction Advice • Sugen/Pharmacia • Acrux/Vivus 4 © 2004 Burrill & Company. Confidential & Proprietary.

Burrill Created/Hosted Industry Events For inquires, contact Thea Schwartz at (415) 591 -5477 or

Publishing § The 2006 Biotech Industry Book § Life Science Indices (monthly) § Personalized Medicine § Stem Cells § Monthly & Quarterly Newsletters – China, India, Canada, Strategic Partnering/M&A § Burrill Website – Online resource for keeping up-to-date information about the biotech industry Burrill & Company is the “go to” firm for industry insight 6 © 2004 Burrill & Company. Confidential & Proprietary.

Industry Reports The seminal industry report for the last 20 years To order most

This presentation is available for download from our website www. burrillandco. com 8 ©

Visit us at BIO Booth #2300 …and purchase our book! 9 © 2004 Burrill

So what’s happened in these 20 years? (By the way…Biotech started over 10 -15 years earlier…late ’ 60 s/early ’ 70 s… so it’s a 35 year old industry now!) 10 © 2004 Burrill & Company. Confidential & Proprietary.

We’re Evolving… 1986/Then 2006/Now • Title: At the Crossroads • Title: A Changing Prescription • Industry size: 700 Companies – 150 public • Industry size: 5000+ companies – 500 public • Market Cap: $15 B • Market Cap: $500 B (US only) • Top 5 Companies – Genentech – Cetus – ALZA – ABI – Centecor • Top 5 US Companies – Genentech – Amgen – Gilead – Genzyme – Biogen 11 © 2004 Burrill & Company. Confidential & Proprietary.

Themes in ’ 86 book …At The Crossroads • Science being converted to business • Products coming to market place • Are product liability, regulatory reform, patent court behavior insurmountable barriers? • Partner or vertically integrate? • Acquisitions by pharma desirable? • How will the industry evolve? 12 © 2004 Burrill & Company. Confidential & Proprietary.

Themes in ’ 06 book …A Changing Prescription • From blockbusters…to niche markets • From genomics, proteomics, and systems biology to personalized, predictive and preventative medicine (3 P’s) • From small molecule drugs to MAbs/proteins/stem cells • From reimbursement to payer issues where CMS becomes the dominant player • From a healthcare dominated industry to agbio being real and industrial biotech hot • From a challenging IPO market to M&A • From the U. S. to “Chindia”, Europe and a global industry 13 © 2004 Burrill & Company. Confidential & Proprietary.

Conclusions 1986/Then • 1986/Then 2006/Now • A time for confidence, not questioning. • …A Changing Prescription (the future will be real different. ) • Biotech companies will survive and prosper as a unique group, not just subsumed into the pharma industry. • 5000+ companies…it’s a worldwide growing “industry” • Some of the companies leading today (‘ 86) will remain industry leaders in the decades ahead. • Amgen/Genentech will continue as leaders, yet new ones have emerged (Gilead, Serono, Biogen Idec). • The industry will become major contributors to the well being and the economy. • It has happened, even more than anticipated, and is becoming increasingly important. 14 © 2004 Burrill & Company. Confidential & Proprietary.

So what are today’s take home messages? • • • The time is now for life sciences Confluence of technologies is changing biotech and the healthcare world Personalized, predictive and preventative medicine is changing healthcare Payor/reimbursement world is changing with Medicare’s power (single payors dominate) Market opportunities are different today (pandemic diseases, memory, obesity, aging, and wellness) • Wellness is a huge growth market • Ag. Bio is back, animal genomics is ready • Industrial biotech’s time has arrived • Chindia is hot • Capital markets worldwide are robust, but expensive 15 © 2004 Burrill & Company. Confidential & Proprietary.

Industry Overview • Industry is 30+ years old, generating over $85 billion in revenues • 5000 companies worldwide, 600 public companies • • • Life sciences has a strong performance record, even in difficult economic and political times; outperformed Dow and NASDAQ Over 100 products on the market (many > $1 billion drugs); 350 biotech drugs are in late stage clinical trials (strong pipeline) Agbio products are now grown on 200 million acres world wide and growing at 20% per year; over 1 billion acres have been planted Patents protect product/technology exclusivity, rewarding innovation and limiting competition Broad applications in healthcare (cure & provention), food and agriculture, industrial (chemicals, fuels & materials) 16 © 2004 Burrill & Company. Confidential & Proprietary.

Biotech’s Globalness Begins Day 1 § § § § Science/technology Intellectual property/patents/FTO People Communications Competition Capital Markets—diseases know no borders Even the smallest biotech is a global player from Day One 17 © 2004 Burrill & Company. Confidential & Proprietary.

Key Industry Stats Biotech 2006 USA Europe Asia/Pacific Canada Sales / Revenue $72 B $12 B $3 B $2 B Annual R&D $19 B $5 B . 3 B $0. 6 B # of Companies 1, 500+ 1, 600+ 700+ 470 # of Employees 146, 100 68, 000 12, 000 7, 440 363 120 ≈ 140 81 $491 B $26 B $15 B $14 B # of Public Cos. Market Capitalization Source: Burrill & Company, Ernst & Young 18 © 2004 Burrill & Company. Confidential & Proprietary.

Pharma vs. Biotech Industry Market Cap ($B) Company 3/31/06 12/31/05 Pfizer 183 12/31/04 12/31/03 9/30/02 12/31/01 12/31/00 12/31/99 172 199 280 192 251 290 124 J&J Merck Eli Lilly BMS 174 186 184 154 112 181 146 129 75 69 69 103 165 133 216 153 61 65 65 77 50 88 105 75 48 46 47 58 65 112 145 125 Pfizer/Merck 258 241 268 383 357 384 506 277 Total US Biotech 494 491 399 342 213 366 425 312 Industry 1. 9 x 2. 0 x 1. 5 x 0. 9 x 0. 6 x 1. 0 x 0. 8 x 1. 1 x 19 © 2004 Burrill & Company. Confidential & Proprietary.

Burrill Select, Amgen, Genentech vs. Pfizer, Merck 1/1/04– 3/31/05 Performance Last 12 Months 20

Historical Biotech Market Cap 2000– 2006 BIO ’ 05 to BIO ‘ 06 +

U. S. Pharma Market Cap (top 5 companies) 2004 vs. 2006 (in billions) 700 $608 600 -25% 500 $458 400 300 200 100 0 2004 Source: FBR, Burrill & Company 3 -31 -2006 Includes: BMY, LLY, MRK, PFE, SGP, WYE 22 © 2004 Burrill & Company. Confidential & Proprietary.

Top 5 US Pharma vs. Biotech Market Cap 23 © 2004 Burrill & Company.

Biotech R&D Spending has Outpaced Pharma as a Function of Market Cap Cowen Top

…so that’s the baseline Now, what’s really happening… 25 © 2004 Burrill & Company.

Today’s medicine challenge: One size doesn’t fit all 26 © 2004 Burrill & Company.

Pharmacogenomics shapes the healthcare business in 2000+ 27 © 2004 Burrill & Company. Confidential

140 Years of Drug Discovery Technology 28 © 2004 Burrill & Company. Confidential &

Confluence of Technology/Tools/Knowledge Systems biology (tools, techniques from sequencing to systems) EVO Devo Improving Power Supply/ constant monitoring Genomics/Proteomics/ Biomarkers Redefining Healthcare (Rx/Dx/Device combinations) (Products/Services/patient care/outcomes) Telemetry/ Communications/ Telemedicine IT/digital information EHR Imaging/Visualization Nanotechnology 29 © 2004 Burrill & Company. Confidential & Proprietary.

Innovation Gap Getting Wider 30 © 2004 Burrill & Company. Confidential & Proprietary.

Drug Development Costs Escalate Costs are becoming prohibitive Source: Windhover’s In Vivo. The Business & Medicine Report. Bain drug economics model, 2003 31 © 2004 Burrill & Company. Confidential & Proprietary.

A systems biology approach- follow the pathways 32 © 2004 Burrill & Company. Confidential

Analyzing The Molecular Profiles (Biosignatures) of Body Functions in Health and Disease The Molecular Basis of Biological Processes The Molecular Heterogeneity of Disease Alterations in Disease Subtypes New Targets for Dx, Rx, Vx Right Rx for Disease Individual Genetic Variation Pharmacogenetics Disease Predisposition New Targets for Dx, Rx, Vx PDx PRx 33 © 2004 Burrill & Company. Confidential & Proprietary.

MDx is at the Center of the New Dx World 34 © 2004 Burrill

Selected Targeted Treatments § Personalized cancer vaccines § Favrille – Fav. Id for non-Hodgkin's lymphoma § Genitope – My. Vax for non-Hodgkin's lymphoma § Gleevec (Novartis) - p. H+ CML kinase inhibitor § Iressa (Astra. Zeneca) – EGFR tyrosine kinase inhibitor § Tarceva (Genentech/OSI) – HER 1/EGFR inhibitor § Erbitux (Im. Clone/BMS) – HER 1/EGFR inhibitor § Avastin (Genentech) – VEGF/VEGFR inhibitor § Herceptin (Genentech) – HER 2 inhibitor § Bil. Dil (Nitro. Med) - heart failure in African American patients Other “Semi Targeted” Treatments (approved or late stage trials) § Nexavar (Bayer/Onyx) – multikinase inhibitor § Tykerb (GSK) - Erb. B-2/EGFR inhibitor § Enzastaurin (Lilly) - PKC-Beta, AKT/P 13 inhibitor 35 © 2004 Burrill & Company. Confidential & Proprietary.

Obesity Related Diseases • Diabetes – Costs $98 billion – – 90% of Type II diabetics are obese 70% of those at risk are obese • Heart Disease – Costs $8. 8 billion • Stroke • Hypertension - $4. 1 billion – Doubles incidence of hypertension • Gall bladder disease – $3. 4 Billion • Osteoarthritis - $21 billion • Sleep apnea – more prevalent then diabetes ! • Some forms of cancer 36 © 2004 Burrill & Company. Confidential & Proprietary.

Aging. . . Is it a disease? § About 1. 4 million Americans are in their 90 s, and another 64, 000 are 100 years old or older § Baby boomers represent 30% of the total US population § Per person, seniors consume about five times the drugs of their working-age counterparts By 2030, 20% of US population will be over 65 years of age 37 © 2004 Burrill & Company. Confidential & Proprietary.

Medicines in Development for Older Americans* *some medicines are listed in more than one

Chronic Disease § 125 million Americans have 1 or more chronic conditions (e. g. congestive heart failure, diabetes) § Chronic diseases account for 75% of all health care expenditures § Current costs for chronic diseases is approaching $1 trillion § These expenditures are not delivering what is possible 39 © 2004 Burrill & Company. Confidential & Proprietary.

Stratifying into risk categories Diabetes type 1: What’s becoming possible? Predictive/Preventative (Wellness) Personalized Medicine

What is Driving Personalized Medicine? § Convergence in technology…scientific advances and new technology § Patient care and rising consumerism § Payors (of all types) have economic incentive Government health policy an global spending (e. g. : CMS) 41 © 2004 Burrill & Company. Confidential & Proprietary.

This Confluence of Healthcare Technology is bringing us… • Targeted therapies (mutation specific), personalized medicine • Drug/device combinations (drug eluding stents) • Molecular diagnostics/Algorithm based diagnostics • Non-invasiveness • • Non-hospital based with constant monitoring… Increased predictions and prevention 42 © 2004 Burrill & Company. Confidential & Proprietary.

…that’s changing the healthcare economy • Better outcomes/patients living longer • Costs going up/more patients treatable… • • …But, US system leaves 25 -45 m uninsured/underinsured Consumer healthcare is here to stay (copays ), individuals empowered and informed 43 © 2004 Burrill & Company. Confidential & Proprietary.

Healthcare costs have been raising for a long time 44 © 2004 Burrill &

US Healthcare Expenditures vs. Drug Costs Source: US National Health Statistics 45 © 2004

Healthcare costs are growing much faster than productivity (revenue per employee) CAGR=3% GM Cannot Compete Healthcare costs per car are $1700 CAGR=10% more then Toyota Source: Hewitt Health Value Initiative; United States Census; Bureau of Labor Statistics (2002 Productivity estimated based on first 3 Quarters) 46 © 2004 Burrill & Company. Confidential & Proprietary.

…So, healthcare cost increases are on everyone’s agenda • Politicians/Congress/White House • Payors/Reimbursors/Insurers • Physicians/Providers • Patients/Consumers …and patients are empowered, have economic costs, and really want to stay well! 47 © 2004 Burrill & Company. Confidential & Proprietary.

CMS Becomes Dominate Customer (40% of market in 2008) 2002 Rx Payment Sources (bil) Total = $162. 4 2008 Projected (bil) Total = $260 Source: 2002 data: Health Affairs Volume 23, Number 1; January 2004. 2008 data: Tag & Associates estimate. 48 © 2004 Burrill & Company. Confidential & Proprietary.

. . . and what’s happening to big pharma? Putting Biotech into Context 49

Worldwide Global Pharmaceutical Sales 50 © 2004 Burrill & Company. Confidential & Proprietary.

…by the way, the Global Nutraceuticals Industry is $196 Billion Source: Nutrition Business Journal/Burrill

Despite All Efforts, Total Shareholder Returns Have Fallen by 26 Percentage Points Since 1998

Looking Forward, Patent Exposure is Set to Increase Significantly 53 © 2004 Burrill &

Biogeneric Status of Biotech Drugs 54 © 2004 Burrill & Company. Confidential & Proprietary.

Manufacturer Reported Serious Adverse Events Per Fiscal Year 55 © 2004 Burrill & Company.

Pulled from the Market Date Approved Drug Name Use Risks 2004 2001 Tysabri Bextra Multiple Sclerosis Pain reliever Rare, frequently fatal demyleinating disease of CNS Heart attack/stroke; fatal skin reactions 2005 Vioxx Pain reliever Heart attack/stroke 2004 Baycol Cholesterol Severe damage to muscle, that is sometimes fatal 2001 Raplon Anesthesia An inability to breathe normally 2001 Propulsid Heartburn Fatal heart rhythm abnormalities 2000 Rezulin Type 2 diabetes Severe liver toxicity 2000 Hismanal Antihistamine Fatal heart rhythm abnormalities 1999 Raxar Antibiotic Fatal heart rhythm abnormalities 1999 Posicor High blood pressure Dangerous interactions with other drugs 1998 1997 Duract Pain reliever Severe liver damage 1998 1985 Seldane Antihistamine Fatal heart rhythm abnormalities 1998 1973 Pondimin Obesity Heart valve abnormalities 1997 1996 Redux Obesity Heart valve abnormalities 1997 1999 1993 1997 1988 1997 e h t m o r f d e l n l r u e p c n s o g c u r s r d o r t e s v u n i b k e Bloc ket gav r a m Date Withdrawn 56 © 2004 Burrill & Company. Confidential & Proprietary.

Number of New Biotech — Big Pharma Collaborations 1993 -2005 502 425 450 411 373 400 517 384 350 300 250 200 165 150 100 228 224 229 1997 1998 1999 180 117 69 50 0 1993 1994 1995 1996 2000 2001 2002 2003 2004 2005 Source: Bio. World Financial Watch, American Health Consultants, Bio. Century 57 © 2004 Burrill & Company. Confidential & Proprietary.

Selected Biotech Partnering Last 12 Months • • • • • Biogen/Protein Design Labs Alnylam/Novartis Medarex/BMS Pfizer/Coley Shire/New River Plexxikon/Wyeth Nastech/Merck Avanir/Astra Zeneca Cilag/Basilea Pharmasset/Roche Cancer. Vax/Serono Astex/Astra. Zeneca GSK/Theravance Sirna/Allergan Gen. Mab/Serono Sucampo/Takeda Novartis/Avanir n i s eal D n o i l l i B 7 $1 ! 5 0 20 $800 M $700 M $530 M $505 M $500 M $372 M $341 M $340 M $308 M $300 M $278 M $275 M $252 M $250 M $215 M $210 M 58 © 2004 Burrill & Company. Confidential & Proprietary.

2005 Partnering Highlights § Partnering continues to play an important role in our industry – over $17 B in transaction values in 2005 § Significant jump in average total Phase I deal values § § From $57 M in 2004 to $82 M in 2005 Big Pharma continues to partner early to access key technologies, targets and products 59 © 2004 Burrill & Company. Confidential & Proprietary.

Selected Biotech M&A Last 12 Months § Medicis/Inamed $2. 8 B § Solvay/Fourier Pharma $2. 1 B § Pfizer/Vicuron $1. 7 B § Shire/TKT $1. 6 B § GSK/ID Biomedical § Meda/Viatris § OSI/Eyetech § Genzyme/Bone. Care t t e ab h t $1. 4 B s stor e v n or i f t i x er e § A & M Danisco/Genencor s O P I n e $1. 0 B $0. 9 B $0. 6 B § Pfizer/Angiosyn $0. 5 B § Protein Design Labs/ESP Pharma $0. 5 B § GSK/Corixa $0. 4 B 60 © 2004 Burrill & Company. Confidential & Proprietary.

2005 M&A Highlights § Continued generic consolidation § § Sandoz-Hexal/Eon; Teva-Ivax Japanese big pharma acquisitions § Sankyo-Daiichi; Takeda-Syrrx; Sosei-Arakis § With the 2005 IPO window tight, M&A became an increasingly attractive “exit” mechanism § Big Pharma acquired for single products (J&J-Peninsula) and strategic technologies (Roche-Gly. Cart) § Amgen remained acquisitive with Abgenix transaction 61 © 2004 Burrill & Company. Confidential & Proprietary.

Selected Significant Mergers Involving Biotechs- 1990 -2006 Companies Year Value ($M) Novartis/Chiron Amgen/Abgenix UCB/Celltech Amgen/Tularik Amgen/Immunex Millennium/Cor Therapeutics 2006 2005 2004 2001 $5. 4 B $2. 2 $2. 7 $1. 3 $16. 0 Med. Immune/Aviron Shire Pharma/Biochem Pharma Invitrogen/Life Technologies Ciba-Geigy/Chiron Roche/Genentech (60%) 2001 2000 1994 1990 2001 $2. 0 $1. 5 $4. 0 $1. 5 $2. 1 62 © 2004 Burrill & Company. Confidential & Proprietary.

So what does Big Pharma do better than anyone else? • Discovery? • Development? • Manufacturing? • Distribution? • Disease Management? Answer: ? ? ? 63 © 2004 Burrill & Company. Confidential & Proprietary.

Wellness: Its time has come • Rising healthcare costs are impacting individuals • Rising incidence of chronic disease • Recognition of the importance of genetic variation • • Scientific knowledge base for: – Personalization – Cost effective technologies Financial markets beginning to recognize opportunity 64 © 2004 Burrill & Company. Confidential & Proprietary.

Food and Lifestyle can Influence our Genes and How they Work • • Diet

What you eat – “or what your mother ate” can determine your health! Genetically identical mice from genetically identical mothers were fed different amounts of specific nutrients during pregnancy 66 © 2004 Burrill & Company. Confidential & Proprietary.

Sc ien bio ce ac Ba tiv sed es The Emerging Health & Wellness Market Genotyping ring Biomarker monito Prognosis of Predisposition Diet Functional Foods Medical Foods Drugs Health & Wellness management against a set of personalized biomarkers Personalized nutrition 67 © 2004 Burrill & Company. Confidential & Proprietary.

Many New Players in an Emerging Market al F Ph oo arm ds Co ac mp eut an ica ies l dic Dietary supplements Me oo ds s nal F an ie Fu n ctio Co mp Fo od hs tec cs mi are al C son ucts d Per Pro s e ie um an ns mp Co Co Health and Wellness Market Bioactives no rs Ge marke s Bio arget T Agriculture Companies Alternative Health DS Companies 68 © 2004 Burrill & Company. Confidential & Proprietary. 79

Dec-98 Feb-99 Apr-99 Jun-99 Aug-99 Oct-99 Dec-99 Feb-00 Apr-00 Jun-00 Aug-00 Oct-00 Dec-00 Feb-01 Apr-01 Jun-01 Aug-01 Oct-01 Dec-01 Feb-02 Apr-02 Jun-02 Aug-02 Oct-02 Dec-02 Feb-03 Apr-03 Jun-03 Aug-03 Oct-03 Dec-03 Feb-04 Apr-04 Jun-04 Aug-04 Oct-04 Dec-04 Feb-05 Apr-05 Jun-05 Aug-05 Oct-05 Performance of the Healthy Living and Obesity Indices vs. the S&P 500 & Russell 2000 640 600 Healthy Living Obesity 520 440 400 © 2004 Burrill & Company. Confidential & Proprietary. S&P 500 Russell 2000 560 Obesity 480 Healthy Living 360 320 280 240 200 160 120 80 40 69

Whole Foods Market (WFMI) Stock Performance 70 © 2004 Burrill & Company. Confidential &

…And what about the regulators? § Leadership changes § Phase III/IV (Pharmacovigilance) § Drug Safety Review Board (Vioxx, Tysabri) § GMP—Chiron vaccine problems, others § Generics § Theranostics (Rx/Dx)…critical path initiative 71 © 2004 Burrill & Company. Confidential & Proprietary.

Number of Products Approved — 1980– 2005 72 © 2004 Burrill & Company. Confidential

Biotech’s Big Drugs 73 © 2004 Burrill & Company. Confidential & Proprietary.

Biotechnology Drugs in Clinical Development 74 © 2004 Burrill & Company. Confidential & Proprietary.

. . . and the marketplace is changing too 75 © 2004 Burrill &

Big “new” markets § Obesity/diabetes/metabolic disease § Alzheimer's/memory § Anti-aging § Anti infectives (antibiotic resistance) § Wellness (preventative/predictive cure) 76 © 2004 Burrill & Company. Confidential & Proprietary.

Is the blockbuster Model Really Dead? “From a strategic standpoint, of meeting the needs of our customers, the current blockbuster model doesn’t work. ” Sidney Taurel, Chairman & CEO, Eli Lilly & Co. Drugs Get Smart, Business Week, September 5, 2005 77 © 2004 Burrill & Company. Confidential & Proprietary.

The Personalized Medicine Model The right drug for the right patient at the right time • • Utilizes pharmacogenomics, which benefits from the recent advances of genomics/proteomics technology Reduced development cost; shorter development time from discovery to launch • Smaller clinical trials required to prove efficacy in target population • Greater probability of clinical compounds reaching market • Better safety profile • • Treat specific populations based on biomarkers or molecular diagnostics/imaging results Product focus: personalized medicines (nichebusters) that do not require blockbuster-sized sales to generate attractive returns 78 © 2004 Burrill & Company. Confidential & Proprietary.

Market Trends and Drivers: Revolutionary Technologies and Evolutionary Practices 79 © 2004 Burrill &

Who cares and who will drive change? • Individuals – – – • • • Bearing more of the burden Already spend almost 30% of drug spend Role of Self Care & consumer-driven health care HMOs Re-insurers Corporations Baby boomers – aging activists! Governments (CMS in the US) 80 © 2004 Burrill & Company. Confidential & Proprietary.

Ag-Biotechnology Outlook for the Future 81 © 2004 Burrill & Company. Confidential & Proprietary.

The Demands for Agriculture Stay the Same More food on less land with half

Market Overview – Agriculture 83 © 2004 Burrill & Company. Confidential & Proprietary.

Global Area of Biotech Crops 1996 to 2005 by Crop 84 © 2004 Burrill

GM Acreage Continues to Grow Mostly in the Developing World Countries India Spain Brazil China S. Africa Canada Argentina USA % Increase 2003 -2004 400 80 66 32 25 23 17 11 Source: Bio 2005 85 © 2004 Burrill & Company. Confidential & Proprietary.

Monsanto Relative Performance vs. Merck & Pfizer Merck 86 © 2004 Burrill & Company.

Animal genomics: Its time has finally come • Chicken, Cow sequenced with pig in progress • Marker assisted breeding now possible • Traceability and animal sorting creating value • Comparative genomics brings validity and funding • Major opportunity in emerging infectious diseases – SARS, BSE, Avian Flu 87 © 2004 Burrill & Company. Confidential & Proprietary.

Industrial Bio is here, finally… 2005 was the Year of the Tipping Point • Robust technology • Broad applications • EU has led ‘White Biotech’ • Waiting for market pull • Concerns over energy “addiction” 88 © 2004 Burrill & Company. Confidential & Proprietary.

In 2005 Many of the Drivers Aligned Cost of crude oil escalated dramatically !

Loss of Energy Security • • Geopolitical unrest wherever oil is produced Extreme weather

Growing Worldwide Demand for Energy • • • Finite reserves will cost more to extract Demand is growing rapidly, much in Pac Rim countries, especially China & India 420 x 1015 currently going to 650 x 1015 btu by 2030 91 © 2004 Burrill & Company. Confidential & Proprietary.

All This Accelerated Policy Changes Worldwide • Just a few examples – – • US Farm and Energy bill EU – Biodiesel subsidies China – Sustainable energy Malaysia – Biodiesel In 2004 – 2005 things began to move quickly 92 © 2004 Burrill & Company. Confidential & Proprietary.

The Biorefinery Platform Using Agricultural Feed Stocks 93 © 2004 Burrill & Company. Confidential

Industrial Biotech is hot… • The limitless potential of IB was there • The fundamental technology was in place – • • • Sure it will improve and even enable exotic solutions But the economics, markets and policies were not in alignment In 2005 demands for energy pushed IB over the tipping point More to come - quickly 94 © 2004 Burrill & Company. Confidential & Proprietary.

(China/India) What’s happening? » Impact » 95 © 2004 Burrill & Company. Confidential &

China Has A Large And Rapidly Growing Economy Real GDP in US$ billions (Based on Purchasing Power Parity) 2004 2010 U. S. 10, 332 7, 334 China Japan India Germany 2, 274 3, 291 2, 392 India 2, 790 Japan 4, 509 2, 719 U. K. 1, 736 France 1, 725 Italy 1, 620 Italy 1, 869 Brazil 1, 462 Brazil 1, 821 Russia 1, 449 Russia 1, 721 Source: CIA world Fact book France 44 10, 529 China U. K. 19 13, 783 U. S. Germany Projected Accumulative GDP Growth (2004 -2010) % 1, 984 1, 980 10 37 14 14 15 15 25 19 Average 17% 96 © 2004 Burrill & Company. Confidential & Proprietary.

Unprecedented Growth in China Life Sciences Markets Total Health Care Spending Total Biotechnology Market (US Billion Dollars) 150 CAGR 16% 34 2000 CAGR 19% 70 2. 2 2005 2010 2000 8. 8 4. 5 2005 2010 Total Pharmaceutical Market Total Medical Devices Market (US Billion Dollars) CAGR 17% 18 2000 70 32 2005 CAGR 19% 3. 2 2010 2000 14. 8 • 5 th largest pharmaceutical market by 2010 (Boston Consulting Group) • 3 rd largest medical devices market by 2010 (Goldman Sachs) • Excellent investment and merchant banking opportunities 6. 3 2005 2010 Source: IMS; Frost & Sullivan; E&Y; literatures search, World Bank; Burrill Analysis, Goldman Sachs, BCG 97 © 2004 Burrill & Company. Confidential & Proprietary.

China Life Sciences Strengths § Low costs in drug R&D and manufacturing § High growth potential in domestic market driven by aging population and improved personal income § Large researcher talent pool with technology and industry knowledge and skills § Strong central and local government support, with favorable tax policies and grants § Special strengths: Gene therapy, stem cell research, Traditional Chinese Medicine (TCM), chemistry services Sources: *IMS Global Health 98 © 2004 Burrill & Company. Confidential & Proprietary.

China’s Pharma Market To Become #5 World Wide by 2010 China’s market size for ethical & OTC drugs in USD$Billion 2002 Top 10 USA 196 Japan 53 Germany 20 France 19 UK 14 Italy 13 Spain 9 Canada 8 Mexico 8 China 6 Total 346 2005 Top 10 USA 262 Japan 65 Germany 24 France 21 UK 16 Italy 15 China 14 Brazil 10 Canada 10 Spain 10 Total 447 2010 Top 10 USA 466 Japan 81 Germany 37 France 28 China 24 UK 24 Italy 23 Canada 17 Spain 16 Brazil 15 Total 731 Source: Boston Consulting Group 99 © 2004 Burrill & Company. Confidential & Proprietary.

China Biopharmaceutical Roadmap High Margin Proprietary/ Innovation We are here Commodity/ “Copies” Low Margin Time Services and Commodity based businesses Technology Transfer Co-development Proprietary Pipeline 100 © 2004 Burrill & Company. Confidential & Proprietary.

India – Innovation is Increasing • State of Innovation: – – Innovation historically has been in process improvement However, there a growing number of patents and publications from government and academic labs -Nature Magazine 101 © 2004 Burrill & Company. Confidential & Proprietary.

Findings – Innovation stems from both Govt. Labs and Industry – – The Government of India (GOI) has doubled biotech research spending from $175 million from 1997 -2002 to $350 million from 2002 2007 R&D investments of the top 5 pharma companies had crossed $270 million mark in 2004 102 © 2004 Burrill & Company. Confidential & Proprietary.

Selected FDA Approved Plants Outside the U. S. 61 60 25 22 9 5

Capital Markets 104 © 2004 Burrill & Company. Confidential & Proprietary.

US Biotech Industry Fundraising ($ in Millions) Public 1999 2000 2001 2002 2003 2004 2005 Q 106 IPO $670 $6, 490 $445 $456 $1, 701 $819 $303 Follow-on 5, 805 12, 651 2, 540 979 3, 536 3, 388 4, 194 1, 522 PIPEs 1, 433 4, 061 1, 741 1, 007 2, 051 2, 417 2, 376 1, 042 Debt 1, 520 5, 728 4, 848 5, 251 7, 170 8, 418 5, 565 5, 421 $1, 084 $2, 872 $2, 397 $2, 688 $2, 841 $3, 733 $3, 518 $734 $9 $178 $294 $269 $1, 114 $115 Private VC Other $237 $203 Total Financing $10, 749 $32, 005 $11, 976 $10, 548 $16, 348 $19, 927 $17, 586 $9, 137 Partnering $5, 844 $6, 901 $7, 486 $7, 496 $8, 933 $10, 933 $17, 268 $6, 436 Total $16, 593 $38, 906 $19, 462 $18, 044 $25, 281 $30, 860 $34, 854 $15, 573 Source: Burrill & Company 105 © 2004 Burrill & Company. Confidential & Proprietary.

US Biotech Industry Fundraising ($ in Millions) Bio ’ 05 to Bio ‘ 06 Public IPO Q 305 Follow-on PIPEs Debt Q 405 Q 106 Total $168 $303 $757 $1, 217 1, 522 4, 076 $858 $533 1, 042 2, 433 $2, 508 $247 5, 421 7, 726 $845 $955 $734 $2, 534 $176 $524 $115 $815 $286 $1, 337 Private VC Other Total Financing Partnering Total $6, 010 $3, 644 $9, 137 $18, 791 $3, 279 $7, 745 $6, 436 $17, 460 $9, 289 $11, 389 $15, 573 $36, 251 Source: Burrill & Company 106 © 2004 Burrill & Company. Confidential & Proprietary.

Capital Raised 1980 -2005 107 © 2004 Burrill & Company. Confidential & Proprietary.

Biotech’s Five Cycles Length of Rallies/Droughts in Months Droughts Rallies 108 © 2004 Burrill

2005 US Biotech IPOs 17 Companies 109 © 2004 Burrill & Company. Confidential &

2006 US Biotech IPOs 6 Companies 110 © 2004 Burrill & Company. Confidential &

IPO Window Summary 2003 -2006 (as of 3/31/06) # of IPOs Amount Raised * Perf. since IPO Ups / Downs 2/5 2003 7 $438 M -6% 2004 29 $1, 628 M +30% 2005 17 $819 M +21% 10 / 7 2006 6 $303 M +18% 4/2 TOTAL 60 $2, 892 M +16% 14 / 14/ 1 acq. 30 / 29 / 1 acq. * Includes over-allotments 111 © 2004 Burrill & Company. Confidential & Proprietary.

IPO Valuations 112 © 2004 Burrill & Company. Confidential & Proprietary.

IPO Market Capitalization History 2003 -2006 113 © 2004 Burrill & Company. Confidential &

DJIA, NASDAQ and Burrill Select 2005 -Early 2006 114 © 2004 Burrill & Company.

Burrill Large-, Mid- and Small-Cap 2005 -Early 2006 115 © 2004 Burrill & Company.

Biotech 2006 • • The time is now for life sciences Confluence of technologies is changing biotech and the healthcare world Personalized, predictive and preventative medicine is changing healthcare Payor/reimbursement world is changing with Medicare’s power Market opportunities are different today (pandemic diseases, memory, obesity, aging, and wellness) Wellness is a huge growth market Ag. Bio is back, animal genomics is ready Industrial biotech’s time has arrived Capital markets worldwide are robust, but expensive Biotech is a global business Be aggressive, be bold…the competition is • 116 © 2004 Burrill & Company. Confidential & Proprietary.