Biotech Developments & Future Impact

Peter Brenders, President & CEO, BIOTECanada CAPDM, May 10, 2006

• Biotech 101 • State of industry • What to expect…

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About BIOTECanada
• • 170 member funded association representative of all biotech sectors and knowledge and service providers As the national voice for biotechnology, BIOTECanada shall, through its members and staff:
1. 2. 3. 4. 5. Promote public awareness and acceptance Drive capital formation for a sustainable biotech industry Ensure strong intellectual property protection Advocate for appropriate regulatory regimes Support human resource needs

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When you hear the word biotechnology, do you have a positive reaction, a negative reaction, or no reaction at all?

The majority of Canadians (56%) have no reaction at all to the term biotechnology.

Positive 29% Don’t Know 6% Negative 8%

Canadians between 25 and 34 years old are the most likely to have a positive reaction to biotechnology (34%). Canadians who have obtained a post-secondary degree (37% of university graduates and 41% of postgraduates) and who’s household income is higher than $75,000 annually (37%) are the most likely to have a positive reaction to the term biotechnology.

No Reaction 56%

When you hear the word biotechnology, do you have a positive reaction, a negative reaction, or no reaction at all?

What is biotech?
The application of science and technology to living organisms as well as parts, products and models thereof, to alter living or non-living materials for the production of knowledge, goods and services.

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Sepiapternin reductase

Aflatoxin aldehyde reductase

Human cdc2-like kinase

Source: Structural Genomics Consortium

Many Sectors of Biotech
• Human Health
– Diagnostics (e.g., biosensors, immunodiagnostics, gene probes) – Therapeutics (e.g., vaccines, immune stimulants, biopharmaceuticals) – Drug Delivery

• Bioinformatics
– Genomics and Molecular Modelling (e.g., DNA/RNA/protein synthesizing and databases for humans, plants, animals, and micro-organisms) – Gene Therapy (e.g., gene identification, gene constructs, gene delivery)

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more sectors
• Agriculture Biotechnology
– Plant Biotechnology (e.g., tissue culture, embryogenesis, genetic markers, genetic engineering) – Animal Biotechnology (e.g., diagnostics, therapeutics, embryo transplantation, genetic markers, genetic engineering) – Non-food Agriculture (e.g., fuels, lubricants, commodity and fine chemical feedstocks, cosmetics)

• Food Processing
– Bioprocessing (e.g., using enzymes and bacteria cultures) – Functional Foods/Nutraceuticals (e.g., probiotics, unsaturated fatty acids)

• Aquaculture
– Fish health, broodstock genetics, bioextraction

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and still more sectors
• Environment
– Air (e.g., bioremediation, diagnostics, phytoremediation, biofiltration) – Water (e.g., biofiltration, diagnostics, bioremediation, phytoremediation) – Soil (e.g., biofiltration, diagnostics, bioremediation, phytoremediation)

• Natural Resources
– Energy (e.g., microbiologically enhanced petroleum recovery, industrial bioprocessing, biodesulphurization) – Mining (e.g. microbiologically enhanced mineral recovery, industrial bioprocessing, biodesulphurization) – Forest Products (e.g., biopulping, biobleaching, biopesticides, tree biotechnology, industrial bioprocessing)

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Biotechnology in Canada

A quick overview
• • • • • Almost 500 companies (over 1/3rd from spin offs) Revenues of $3.8 billion R&D expenditure nearly $1.5 billion Most companies are SMEs with <50 employees Biotech Human Resources Council estimates biotech activities engage 2500 organizations and over 200,000 jobs • Market cap of Canada’s biotech companies estimated to be over $15 billion (70% represented by ~10 companies)
Source: Statistics Canada, Uses and Development Survey 2003

Biotech companies by sector
3% 4% 8% 3% Human health Agriculture Food processing 53% Environment Natural resources Bioinformatics Aquaculture



Canadian Biotech Performance
1 Biotech revenues in the food
processing & environmental sectors

2 Biotechnology market capitalization 4 Number of acres of biotech crops

5 Health revenues by country

Biotechnology Products & Processes in the Pipeline
Total: 17,065
Environment 1.3% Natural Resources 0.5% Agriculture 28.2% Human Health 62.7%

Aquaculture 1.4%

Bio-Informatics 2.4% Food Processing 3.6%

Source: Statistics Canada 2003
*some numbers are unreliable

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Scientific excellence
• Leading expertise:
– Vaccines and treatments for infectious diseases – Therapeutics for heart disease, arthritis, rare diseases Alzheimer’s and diabetes treatments – Healthy soybean and canola oils – Drought tolerant crops – HIV and AIDS treatments – Use of biomass to create new materials and biofuels – Cancer therapeutics and vaccines – Stem cell research – Biodiagnostics, bioinformatics, and med-tech

CDN VC Activity 2005
Life Sciences Total investments # financings # companies # investors $ 446.6 million 101 91 328 Biopharma $ 343.8 million 65 58 234
Source: Thompson Macdonald, 2006

2005 Cdn Activity

Source: Burrill Monthly, Dec 2005

"If you knew how much work went into it, you wouldn't call it genius.“ ~Michelangelo

Where to from here?

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Short term
• Look at the US
– Canada is at least 2 years behind

• Products not coming here – special access

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Products in Canada
Drug and biotech products approved in US 2000-2003; Available in Cda as of Mar 2005
140 120 100 80 60 40 20 0 123 81


FDA Approved

HC Approved

Marketed in Cda

Source: Ward Health, HLI Toronto 2006

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Crystal Ball

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“Advances in genetic engineering will not only have dramatic implications for people and society, they will reshape vast sectors of the world economy. The boundaries between many once-distinct businesses, from agribusiness and chemicals to health care and pharmaceuticals to energy and computing will blur, and out of their convergence will emerge what promises to be the largest industry in the world: the life sciences industry.”
Enriquez & Goldberg, HBR March-April 2000

Trends & Priorities
• • • • • Global economy & trade Productivity World population Urban Food safety, environment stability

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“Biotechnology is an industry driven by science” “Biotechnology today is all about money."

Dr. Tony Brooks, Formerly w PricewaterhouseCoopers LLP

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SCENARIO 1: 7 out of 8 products fail
(assume all investment $ are equal)

What % return do you need from the 1 success to average a net 10% annual return after: a) 5 years? 82 % b) 10 years? 39 % SCENARIO 2: Out of 10 candidates, 6 will fail, 2 may breakeven, 2 will be great successes (assume all investment $ are equal) What % return do you need from each of the 2 successes to average a net 10% annual return after: a) 5 years? 59 % b) 10 years? 31 %

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Trends from BIO 2006
1. 2. R&D moving toward personalized or patienttargeted medicine Identification of biomarkers combined with molecular imaging (diagnosis & treatment uses) Application and integration of nanotechnology, advanced materials and computer science Development of vaccines for animal health; broad reactive synthetic vaccines for human health

3. 4.

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5. 6. 7. 8. Nutraceuticals & health benefits from agricultural products Regenerative medicine – disease specific stem cells; precursor cells Convergence – horizontal research & multidisciplinary teams; PMPs Niches

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2 thoughts
• Not every product can, or need, be a first-in-class blockbuster innovation • Companies can only afford to make the risky long-term investment in potentially transformative products if they have the revenue generated by other product sales

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Effect on distribution
• • • • Biotech use of partners e.g., big pharma Cold chain vs heat stable proteins Niche, higher cost products Convergent technologies – drug or device? • Subsequent entry biologics • What is public policy & NPS doing?

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"Today anything can be done — we have the techniques“
Dr. Kiran Mazumdar-Shaw, Chairman & Managing Director Biocon India Ltd

Peter Brenders President & CEO, BIOTECanada +1-613-230-5585
© BIOTECanada 2006