Entrepreneurship in Biotechnology Columbia University Graduate School of

Entrepreneurship in Biotechnology Columbia University Graduate School of Arts and Sciences BIOT 4180 Columbia University GSAS BIOT 4180

Week 11 Partnering, Mergers and Acquisitions and Exits Columbia University GSAS BIOT 4180

Small Company Perspective • • • Late clinical and regulatory experience Risk mitigation Orphan drug sales force: 15+ Blockbuster drug sales force: 3000+ Cost of sales person: $300, 000 - 400, 000 Minimal overlap in skill sets between development, regulatory and sales Columbia University GSAS BIOT 4180

Large Company Perspective • • • Cash flow Product(s) Pipeline Platform Leverage existing assets (sales force eg) Columbia University GSAS BIOT 4180

Good and Bad Deals • Roche acquiring Genentech • Pfizer acquires Esperion – Nothing for 1. 3 B – Herceptin, Avastin, Lucentis • Pfizer acquires Warner Lambert – Lipitor Columbia University GSAS BIOT 4180

• 2003: Medivation inlicenses Dimebon • Sep 2006: Dimebon meets 5/5 endpoints at 6 months Columbia University GSAS BIOT 4180

• June 2007: Dimebon benefits last 12 months Columbia University GSAS BIOT 4180

• July 2008: Dimebon data published in Lancet • Sep 2008: Pfizer deal announced Columbia University GSAS BIOT 4180

Deal variables • • • Upfront payment Milestone payments Royalties Costs and profits Manufacturing Geography Co-promotion Options Contingent variable rights / other indications Columbia University GSAS BIOT 4180

Dimebon licensing deal • 225 M upfront payment • 500 M on approval • 60: 40 costs and profit split Columbia University GSAS BIOT 4180

• Mar 2010 Dimebon fails pivotal trial Columbia University GSAS BIOT 4180

Stock vs Cash • Stock as currency: implicit admission that the stock is over-valued • Cash: straight-forward DCF calculation w/o need to include a “stock price currency exchange”

Columbia University GSAS BIOT 4180

Columbia University GSAS BIOT 4180

Negotiation • • • Dealing from strength Multiple buyer dynamic Never have no options Walking away Most programs / companies are bought, not sold