Serono biotech beyond Kelly BROWN Fehd CHAIRA Camille
Serono biotech & beyond Kelly BROWN Fehd CHAIRA Camille FREYBURGER Fouad ZIANI 1 February the 9 th, 2007
Safe Harbor This is an independent study performed by students from the Faculté des Sciences Pharmaceutiques de Lille The opinions expressed are our own and not necessarily those of Serono 2 February the 9 th, 2007
SUMMARY I. History II. Presentation of the Company III. Products IV. Pipeline of SERONO V. Problems on the horizon VI. Purchase of SERONO 3 February the 9 th, 2007
I. History 4 February the 9 th, 2007
Over a century of activity Key Dates: 1906: Cesare Serono founds the Istituto Farmalogico Serono (IFS) in Rome. 1948: The Vatican obtained control of the Istituto. Day-to-day management was in the hands Pietro Bertarelli 5 February the 9 th, 2007
The beginning of a success story 1949: isolation of the gonadotrophin, basis for Pergonal®. The birth of the world's first test-tube baby drives up sales of Pergonal®. 6 February the 9 th, 2007
New perspectives 1965: Fabio Bertarelli begins to take control after the death of his father. 1971: first international subsidiary in Boston. 1977: The IFS relocates to Switzerland, and becomes Ares-Serono 1989: Serono's first recombinant drug, the growth hormone Saizen®, hits the market. 7 February the 9 th, 2007
Leaving the boat 1996: Ernesto Bertarelli becomes CEO 09 -2006: The German Merck acquires Serono. 8 February the 9 th, 2007
II. Presentation 9 February the 9 th, 2007
SERONO’s importance Number 1 Biotech Company in Europe 3 rd in the world !!! 10 February the 9 th, 2007
SERONO’s importance REGULAR GROWTH OF THE REVENUES AND SALES 11 February the 9 th, 2007
SERONO’s importance 12 February the 9 th, 2007
SERONO’s importance SERONO BIOTECHNOLOGY CENTRE in Corsier-sur-Vevey 4750 around the world Executive headquaters : SERONO INTERNATIONAL SA in Geneva 13 February the 9 th, 2007
SERONO’s objectives To Reinforce its position as biotechnology leader To Focus on diseases which lack treatment To Favour collaboration and partnerships To Grow through acquisitions 14 « Unmet needs met » February the 9 th, 2007
III. Products 15 February the 9 th, 2007
Therapeutic areas & main products serono Neurology Reproductive Health Growth & Metabolism Dermatology Raptiva® Saizen® Serostim® Cetrotide® 16 February the 9 th, 2007
2005 Product sales by therapeutic area $M 17 February the 9 th, 2007
Rebif ® 98. 2 % Neurology 18 Gonal-f ® 82. 6 % Reproductive health Saizen ® 74. 3 % Raptiva ® 100% Growth & metabilsm Dermatology: February the 9 th, 2007
Up to 2010 sales perspectives 19 February the 9 th, 2007
Neurology Driven by Rebif ® with his extending blockbuster status. Multiple sclerosis Interferon Beta 20 February the 9 th, 2007
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Rebif ® blockbuster drug 2005 total revenues 1269, 8 $M 2005: sales increased by 15. 1% 2004: increase of 33. 1% 22 15. 1% February the 9 th, 2007
Neurology perspectives Objective : Improve Serono’s position in this therapeutic area basically by the first MS oral treatment : oral formulation of Cladribine. development of an interferon therapy administered by inhalation. Understanding the genetic basis of MS 2002: Serono aquire Genset and became: Serono Genetics Institute 23 February the 9 th, 2007
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Reproductive Health One of the world leaders with its unique portfolio. Recombinant versions of the three hormones used in the treatment of infertility. Follitropin alfa Choriogonadotropin alfa Lutropin alfa 25 February the 9 th, 2007
Gonal-f r-h FSH market reached $1 bn in 2005 lower market growth in volume & reduced average selling price 26 February the 9 th, 2007
Growth and metabolism Serostim® r-h GH * approved for HIV related unintentional weight loss Saizen® somatropin Revenues 206. 5 $M *recombinant Human Growth Hormone 27 February the 9 th, 2007
Dermatology 2004 Raptiva's approval for the treatment plaque psoriasis 33 $M ? !! 28 February the 9 th, 2007
IV. Pipeline 29 February the 9 th, 2007
R&D Pipeline 30 February the 9 th, 2007
Small molecules • Sapropterin dihydrochloride Phenoptin® Phehylalanine ammonia lyase Phenylase® • Oral form: PAH cofactor (BH 4= tetrahydrobiopterin) • Treatment: Phenylketonuria (PKU) rare inherited disorders Orphan drug Fast track designation 31 February the 9 th, 2007
Mecanism of action 32 February the 9 th, 2007
To Enlarge others indications • BH 4 = cofactor for production of NO • Developed with 33 February the 9 th, 2007
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Oncology • Zanolimumab Humax-CD 4® • Fully Human anti-CD 4 monoclonal anti-body • Phase II & Phase III • Cutaneous T-cell lymphoma Mycosis fungoides & Sezary Syndrome • Non-cutaneous T-cell lymphoma • Co-developed with 36 February the 9 th, 2007
Mecanisms of action of Hu. Max-CD 4 Clinical response • Depleting (ADCC) processes • Non-depleting (anti-proliferative) processes 37 February the 9 th, 2007
• • Adecatumumab Fully Human Ig. G 1 antibody Target: Ep. CAM Development Status: – Phase I&II: hormone Refractory and early stage prostate cancer – Phase I&II: metastatic breast cancer • Developed with 38 February the 9 th, 2007 Ep. CAM
TACI-Ig Atacicept ® • Recombinant fusion protein • Binds and neutralize – BLy. S: B-Lymphocyte Stimulator – APRIL: A PRoliferative Inducing Ligand • Developed with 39 February the 9 th, 2007
AI Deases Oncology 40 February the 9 th, 2007
Chemotherapy Patway inhibitor Cellular therapy Chemicals Proteins vaccines 41 February the 9 th, 2007
V. BUT PROBLEMS ARE ON THE HORIZON… 42 February the 9 th, 2007
BIG CHARGES OCTOBER 2005 : 725 m$ ! in the issue of the US Attorney’s Office investigation -105. 3 43 619. 7 February the 9 th, 2007
BIG CHARGES MARCH 2006 : New complaint from GEHA We don’t know the issue yet GOAL : always to increase its sales and benefits 44 February the 9 th, 2007
EXCLUSION the sentence indicates the exclusion of the company from all Health Progams in the US for 5 years That limits the development !!! 45 February the 9 th, 2007
SHARE INFORMATION SERONO violates the rules ! Several cases of infraction concerning the transactions’ publication WARNING from SWX 46 February the 9 th, 2007
BREAKDOWN OF GROWTH SERONO’s R&D takes 20 to 30 % of the revenues Costs for the development and marketing for a new product : 400 m$ PB : 105 m$ of net loss income, so it’s hard to boost research SERONO is losing ground ! 47 February the 9 th, 2007
BREAKDOWN OF GROWTH OCTOBER 3, 2005 poration discontinue a Phase 3 clinical trial of CANVAXIN® 8. 4 m$ write-down of investment TIME FACTOR : generics for Rebif in 2 years Concurrence is coming, 48 so prepare the counter-attack ! February the 9 th, 2007
THE SOLUTIONS 2005: Goldman sachs has been retained to explore various strategic alternatives - Cede activities - Fusion with an other company - Proceed to acquisitions … To put up the company for SALE 49 February the 9 th, 2007
VI. The Purchase 50 February the 9 th, 2007
Merck or Merck 51 February the 9 th, 2007
Merck KGa. A 52 February the 9 th, 2007
Presentation Merck group Two business sectors = five divisions Pharmaceuticals Ethicals Generics Consumer Health Care Chemicals Liquid Crystals Performance & Life Science Chemicals 53 February the 9 th, 2007
Focus on two therapeutic areas Ø Oncology • Erbitux® (cetuximab) • Pipeline Ø Cardiometabolic disorders 54 February the 9 th, 2007
Focus on two therapeutic areas Ø Oncology • Erbitux® (cetuximab) • Pipeline Ø Cardiometabolic disorders • Concor® • Glucophage® • Niaspan® • Euthyrox® • Pipeline 55 February the 9 th, 2007
R&D Pipeline 56 February the 9 th, 2007
Cetuximab Erbitux® Matuzumab EMD 72000 57 February the 9 th, 2007
BPL 25 Liposome vaccine Stimuvax® • Cancer associated marker MUC 1 • Generation of a immune response 58 February the 9 th, 2007
Other R&D developments Failed: Sarizotan = treatment for dyskinesia in Parkinson’s Deases, stopped in phase III 59 February the 9 th, 2007
The main acquisition criteria Criteria Achieve competitive scale in R&D Additional therapeutic areas focused on specialist markets Strengthen Oncology Expanded geographic reach with entry into US market and japan 60 February the 9 th, 2007
The main acquisition criteria Criteria Achieve competitive scale in R&D Additional therapeutic areas focused on specialist markets Strengthen Oncology Serono’s contribution Adds R&D resources to get to EUR 1 bn target Expanded geographic reach with entry into US market ans japan 61 February the 9 th, 2007
The main acquisition criteria Criteria Achieve competitive scale in R&D Additional therapeutic areas focused on specialist markets Strengthen Oncology Serono’s contribution Adds R&D resources to get to EUR 1 bn target Strong MS franchise and leading position in Reproductive Health Expanded geographic reach with entry into US market ans japan 62 February the 9 th, 2007
The main acquisition criteria Criteria Achieve competitive scale in R&D Additional therapeutic areas focused on specialist markets Strengthen Oncology Expanded geographic reach with entry into US market ans japan 63 Serono’s contribution Adds R&D resources to get to EUR 1 bn target Strong MS franchise and leading position in Reproductive Health Expertise in biologic process development and innovative biologic research pipeline February the 9 th, 2007
The main acquisition criteria Criteria Achieve competitive scale in R&D Additional therapeutic areas focused on specialist markets Strengthen Oncology Expanded geographic reach with entry into US market ans japan 64 Serono’s contribution Adds R&D resources to get to EUR 1 bn target Strong MS franchise and leading position in Reproductive Health Expertise in biologic process development and innovative biologic research pipeline Significant commercial presence in the US with sales of USD 767 mio in 2005 February the 9 th, 2007
The main acquisition criteria Criteria Achieve competitive scale in R&D Additional therapeutic areas focused on specialist markets Strengthen Oncology Expanded geographic reach with entry into US market ans japan 65 Serono’s contribution Adds R&D resources to get to EUR 1 bn target Strong MS franchise and leading position in Reproductive Health Expertise in biologic process development and innovative biologic research pipeline Significant commercial presence in the US with sales of USD 767 mio in 2005 February the 9 th, 2007
Competitive scale in R & D R&D Investment (2005) € 442 m € 471 m € 931 m Compounds in R & D 12 66 16 28 February the 9 th, 2007
Additional therapeutic areas & Strengthen Oncology Merck Serono Neurologie Oncology Diabetes 67 Neurologie Autoimmune Repro. health Oncology Autoimmune Repro. Diabetes health February the 9 th, 2007
Entry into US market Merck Ethicals (2%) Merck Serono (20%) 68 Serono (36%) February the 9 th, 2007
The New Merck Serono SA 69 February the 9 th, 2007
The Transaction The begining Bertarelli family: 64. 5% of the capital and 75. 5% of the voting rights The pricipale source of serono’s earnings is Rebif Any new drug in the market between 2007 and 2009 70 February the 9 th, 2007
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The Transaction Merck Announces the acquisition 09/2006 CHF 1, 100 per share in cash Public tender offer at the same price to follow Acquisition price values Serono at CHF 16. 6 bn (€ 10. 6 bn) value 73 February the 9 th, 2007
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The Transaction Funding the acquisition 09/2006 Merck KGa. A mandated as Mandated Lead Arrangers for the € 10. 6 bn Syndicated multicurrency loen. 01/2007 Merck raises the capital more than 2 billion euros 13. 28 million new shares at 78. 00 euros each Merck seeks buyer for its generics division 75 February the 9 th, 2007
The Transaction Official launch of 01/2007 Official launch of Merck Serono S. A. & integration process begins: 25 integration teams consisting of about 170 integration managers Erbitux® production to be consolidated in Corsier-sur-Vevey 76 February the 9 th, 2007
Conclusion • Elmar Schnee : “Love wedding” • Bertarelli : Winner of a Big transaction • Merck have to realize its ambitions to ensure its future. 77 February the 9 th, 2007
Have you got any questions 78 February the 9 th, 2007
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