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1. 2011

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3. The BioWorld® Biotechnology State of the Industry Report 2011
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6. Table of Contents
Analysis 11
Biotech ‘Just Deals With It’ in 2010 13
Biotech’s IPO Rally Counters Tough Markets, R&D Setbacks 18
Uncertainty Clouds Health Care Reform, FDA Approval Process 20
Investments Rebounded, But European Biotechs Still Underfunded 23
The Light Bulb Burns Bright in the Discovery Phase 26
Financial Data 29
Corporate Deals 115
2010 Biotech M&As and Collaborations: ‘No Big Deal’ 117
Biotech Product Development 241
Report Card For Wall Street 299
Stock Performance 311
Restructurings 317
Lawsuits 325
BioWorld® State of the Industry Report 2011 v

7. vi BioWorld® State of the Industry Report 2011

8. List of Tables
Analysis 11
Revenue of the Market-Leading Biotech Drugs in 2010 14
Revenue of the Top Biotech Drugs, 2003-2010 17
Financial Data 29
Biotech Money Raised By Month In 2010: Jan. - Dec. 31
Initial Public Offerings Of Biotechnology In 2010 32
Biotechnology Follow-On Offerings In 2010 35
2010 Initial Public Offerings 44
2010 Follow-on Offerings 44
Gross Proceeds of Biotech Public Stock Offerings 45
Biotech Money Raised: 1997-2010 46
Nasdaq Stock Index 47
BioWorld Stock Index 2010 47
Other Financings Of Public Biotech Companies In 2010 49
Venture Capital And Other Investments In Private 76
Biotechnology Companies In 2010 76
Milestone Payments From Corporate Partners in 2010 94
Grants and Awards Given to Biotech Companies in 2010 101
Corporate Deals 115
2010-2009 M&As 117
2009-2010 Biotech-Pharma Collaborations 117
2009-2010 Biotech-Biotech Collaborations 117
2010 Top 10 M&As 118
2010 Top 10 Biotech-Pharma Collaborations 119
2010 Top 10 Biotech-Biotech Collaborations 121
Biotech Mergers And Acquisitions In 2010 123
Biotechnology Company Deals With Pharmaceutical Companies In 2010 131
Modified Deals Between Biotechs and Pharmas in 2010 159
Terminated Deals Between Biotechs and Pharmas in 2010 167
Manufacturing/Supply/Distribution Deals Between Biotechs and Pharmas in 2010 170
Biotechnology Company Deals With Other Biotechnology Companies In 2010 179
Biotech–Biotech Collaborations: Modified Agreements for 2010 205
Biotech–Biotech Collaborations: Terminated Agreements in 2010 209
Manufacturing, Marketing And Distribution Agreements Between Biotech Companies 211
in 2010
Collaborations Between Biotechnology Companies And Government/Nonprofit 216
Institutions In 2010
Biotech Product Development 241
Biotechnology Products Approved by the FDA in 2010 243
Biotech Products: 1982-2010, A-Z 249
FDA Actions on Pending Applications in 2010 273
Licensing Applications Filed and Pending at FDA in 2010 277
Recommendations by FDA Advisory Panels in 2010 282
Overseas Approvals and Other Regulatory Actions in 2010 285
Orphan Designations Granted in 2010 292
BioWorld® State of the Industry Report 2011 vii

9. Report Card For Wall Street 299
U.S. Public Offering Performance By Underwriter: Jan. 1 - Dec. 31, 2010 301
U.S. Public Offering Performance By Underwriter: Jan. 1 - Dec. 31, 2010 303
Lead Underwriter Performance on All U.S. Offerings: Jan. 1 - Dec. 31, 2010 305
Lead Underwriter Performance on All U.S. Offerings: Jan. 1 - Dec. 31, 2010 306
Underwriters’ Performance on IPOs: Jan. 1 - Dec. 31, 2010 307
Underwriters’ Performance on IPOs: Jan. 1 - Dec. 31, 2010 308
Underwriters’ Performance on IPOs: Jan. 1 - Dec. 31, 2010 309
Stock Performance 311
2010 U.S. Biotechnology Stock Report 313
2010 British Biotechnology Stock Report 315
2010 Canadian Biotechnology Stock Report 316
Restructurings 317
Biotech Restructurings, Scale-Backs, Bankruptcies 319
Lawsuits 325
Biotech Lawsuits: Jan. 1 - Dec. 31, 2010 327
viii BioWorld® State of the Industry Report 2011

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BioWorld® State of the Industry Report 2011 9

11. 10 BioWorld® State of the Industry Report 2011

12. BioWorld®
A N A LY S I S
BioWorld® State of the Industry Report 2011 11

13. 12 BioWorld® State of the Industry Report 2011

14. State of the Industry: Analysis
Biotech ‘Just Deals With It’ in 2010
By Michael J. Harris
Executive Editor, Market Reports
Recession begets lost revenue, begets exit-less strategy, Just as breaking up with a friend is almost painless
begets displeased investors, begets downsizing, begets compared to the consequences of ending a marriage; it’s a
more bad news down the line, until . . . catastrophe! Well, at lot easier to get out of a bad partnership than it is to negate
least in the automobile, housing and financial industries. the adverse cost of an incompatible acquisition.
Some primary metrics in the biotechnology industry, This pharma trend-in-the-making will undoubtedly
particularly number of deals and financing investments, take some steam out of the biotech exit strategy model, but
were officially down – but far from taking the market out of would not appear to have enough sway to critically dampen
balance or significance. down the prospects for biotechnology market growth, nor
Biotechnology, with significant participation from big will it likely diminish biotech’s capacity to attract pharma
pharma, embarked upon a unique biopartnering strategy suitors to contribute money and resources for its innovation
long ago that has endured through everything from biotech’s engine. The less-is-better attitude regarding M&A deals will
industry startup through the 21st century recession. And change the way things are done in the biopharma transaction
even though it may be undergoing a slight retooling in 2011 , milieu, but ultimately, the most practicable scenario that
as pharma vows to rely less on M&A as a coping strategy, that unfolds will that the M&A reticence will kindle and ignite a
business relationship dynamic is still the keystone of both swell of activity in the less risky alternative of engaging in
markets’ stability in the present economic environment. biopartnering transactions.
Biopartnering is less an “I don’t need anyone else” An ongoing trend is observably unfolding in the market,
strategy that is broadly employed in most other major as we have seen the acquisition, on average, of one large cap
markets, and more of a “let’s exploit the sum of our parts” biotech per year over the past few years and that theme has
tactic. Deal-making in biotech remains almost exclusively legs, based on general industry buzz and projections that
uncopied in other markets, based not on competition of infer the futures of just about every biotech frontrunner to
triumph over rivals, but on an undertaking to use the core be under big pharma M&A consideration. Market-leading
strengths of all involved. biotechs such as Biogen Idec Inc., Human Genome Sciences
Have you ever heard of Ford Motor Co. and General Inc., Amgen Inc. and Gilead Sciences Inc. seem to be on
Motors Co. putting their too-big-to-fail heads together and someone’s list of most likely candidates to be acquired in
producing a product to wring market share in a competitive the current market environment. Those companies that
environment? Unlikely, as almost every market outside of are undergoing restructuring measures to identify and
drug development is a go-it-alone universe, rather than the cut back money-leaking aspects of their operations are
elementary sum-of-our-parts model employed by biotech particularly attractive to the big pharmas that are still in the
and pharma. biotechnology shopping mall.
Wal-Mart and Target collaborating to market a better Biotechnology still has that sheen of innovation that
anything? Only in biotech! pharma is, at least, years away from mirroring. Although
That’s how hundreds of the top-selling drugs were biopartnering is down, as shown by the data in the Deals
brought to market, to millions of patients and by the billions chapter, in 2010 and market growth is not breaking records
to investors. It is difficult to find a drug that has no deal in thus far in 2011 , the observable panic verifiably resides in
its history. Looking at the BioWorld Top 25 Biotechnology pharma, not biotech. If biotech feels the need to worry about
Drugs list for 2010, those 25 drugs split $84.292 billion in something, its speculative apprehension should focus on the
profit among partners, up from 2009 total of $76. 168 billion, potential of pharma to overreach in its endeavor to correct its
a 10.7 percent increase. And it is practical to consider that M&A appetite. In an effort to recover from its overindulgence
none of these therapeutics would be approved without the in biotech prix fixes, big pharma could refuse to pull the
intervention of that business expedient. trigger on sound deals that might be advantageous, but
would be considered “too soon” after the fallout from its
M&A binge.
As M&A is Out; Partnering Is in . . . Even More
Even that scenario, which absolutely will not
The new attitude of pharma that is guiding the senior
marginalize the stride of biopartnering, is also not likely
market to stop trying to be biotech and, instead, just try to
to enduringly capsize the biopharma M&A model. That
be like biotech, is news that will reverberate throughout 2011
outlook is attributable to the broad industry professional
and influence industry behavior, activity and performance.
BioWorld® State of the Industry Report 2011 13

15. acknowledgement and projections citing biotechnology as prognostications are, VCs still prefer biotech above all other
the drug market of the immediate future. markets on a par with the all-the-rage high technology
In gradual-to-overdrive progress since the turn of the market. Biotech’s cup may not be running over and it’s
century, biotech’s rise is slowly wresting revenue market not exactly a glass-half-full/half-empty parable, so let’s
share from pharma’s 100-year grip in the drug development just agree to acknowledge that biotechnology seems to
market, but is taking over the pace of drug development at have weathered the economic storm and is navigating its
a breakneck pace. BioWorld data reveal that biopartnering aftermath competently.
deals are averaging more than one deal per day over most Usually, market leaders of the pack receive
of this 11-year-old century and that by mid-decade, more than acknowledgment, but biotech was founded to go against
half of the top 100 revenue-generating drugs will be biotech the grain of convention and has since been a risky market.
products. That news implicates pharma’s current interest, But if you think about it, there has been nothing in its history
reliance and participation in the biotechnology market, to date – decisions, circumstances, misfortune, competition,
as well as implying the practicality and probability of its etc. – that has appreciably affected the progress of biotech’s
biopartnering involvement going forward. maturation and value. Since 2010 was a flat-to-moderate
Deals may be down, M&As may be in for a respite and growth market year in many essential biotech metrics and
VC financing may be idling at a yellow-light intersection; was far from being the worst year, despite some cause-for-
however, biotechnology drug revenue is on a decade-long concern issues that linger into 2011 , it’s practical to presume
streak of increasing value, the valve on its innovation spigot measured success in 2011 and assume market growth
is stripped open, and no matter how dire the financing dominance beyond that, on schedule.
Revenue of the Market-Leading Biotech Drugs in 2010
Rank Drug name (maker) Indication 2010 Revenue
1 Avastin (Roche) Colorectal cancer, non-small-cell lung cancer $7,212M
2 Rituxan (Roche) Non-Hodgkin’s lymphoma, rheumatoid arthritis $7,077M
3 Humira (Abbott) Rheumatoid arthritis, psoriatic arthritis $6,548M
4 Herceptin (Roche) Breast cancer $6,045M
5 Lantus (Sanofi-Aventis) Types I and II diabetes $4,883M
6 Remicade (J&J) Crohn’s disease, ankylosing spondylitis, arthritis, ulcerative $4,610M
colitis, rheumatoid arthritis, plaque psoriasis
7 Gleevec (Novartis) Chronic myelogenous leukemia, gastrointestinal stromal tumors $4,265M
8 Neulasta (Amgen) Infection associated with chemotherapy-induced neutropenia $3,558M
9 Enbrel (Amgen) Rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis, $3,534M
plaque psoriasis
10 Copaxone (Teva) Multiple sclerosis $3,316M
11 Taxotere (Sanofi-Aventis) Breast cancer, non-small-cell lung cancer, prostate cancer, gastric $2,953M
cancer, squamous cell carcinoma of the head and neck
12 Atripla (Gilead Sci) HIV $2,927M
13 Truvada (Gilead Sci) HIV $2,650M
14 Epogen (Amgen) Anemia $2,524M
15 Avonex (Biogen Idec) Multiple sclerosis $2,518M
16 Aranesp (Amgen) Anemia $2,486M
17 Rebif (Merck Serono) Multiple sclerosis $2,323M
18 Alimta (Lilly) Lung cancer $2,209M
19 Erbitux (Lilly) Colorectal cancer, head and neck cancer $2,192M
20 Humalog (Lilly) Diabetes $2,054M
21 Procrit/Eprex (J&J) Anemia $1,934M
22 Cialis (Lilly) Erectile dysfunction $1,699M
23 Betaseron (Bayer Sch) Multiple sclerosis $1,681M
24 Lucentis (Roche) Wet age-related macular degeneration, macular edema $1,621M
following retinal vein occlusion
25 Tarceva (Roche) Pancreatic cancer, non-small-cell lung cancer $1,473M
Source: BioWorld research.
14 BioWorld® State of the Industry Report 2011

16. Biopartnering’s Impact and Value is Evident in The FDA has finally been given the authority to regulate
Drug Revenues biosimilar versions of biotech brand drugs, but cannot
Innovation may be where the drug development perform its legislated duties until the agency acquires the
cycle begins, but commercialization is where it pays off. know-how to confidently determine just what constitutes
No matter how you look at it, big pharma’s imprint is all a biosimilar. The agency has the green light, but cannot
over the final round of the process, with 18 of the top 25 find the pathway. In drug development, it seems to be
drugs bearing the names of pharma companies as the drug increasingly possible that it could take as long to enact
developer. relative legislation as it takes to develop a drug to market
The drug is still the prize in biotech and the top- stage. Is it practical to think that the approval process for
selling list of drugs in 2010 features 23 of the top revenue- each biosimilar submission will be addressed differently . . .
generating drugs from the 2009 list, with only Roche’s sort of a personalized medicine approach to drug approval?
Tamiflu and Amgen’s Neupogen dropping off and being But this may be rightfully so since biosimilars are slightly
replaced by two other Roche products: Lucentis and modified versions of the drugs they aim to copy, unlike
Tarceva. generics, which are exact duplicates. This difference will
Each of the top four drugs, (Avastin, Rituxan, Humira likely be played out in patent wars as well as regulatory
and Herceptin) increased its revenue by more than $1 billion paths yet to be defined.
over 2009 totals. All but three drugs (Enbrel, Aranesp and
Procrit/Eprex) showed revenue increases compared to From the Bench: The ‘I’ Word Seeks to Offset
their 2009 totals. the ‘P’ Word
Considering its status as a pharmaceutical company, it An examination of the bench stage of R&D indicates
may seem strange that Roche is poised to rule the biotech that the science of discovery is as vigorous as usual.
drug list for the most of the present decade. The owner of Likewise, as usual, is that the bench is miles and years away
Genentech Inc. has five drugs on the top 25 list, including from the market.
the top two, and three of the top four spots, and its Avastin The bench phase in the drug development cycle
is projected to lead the pack through mid-decade on the is fueled by ideas, proof-of-concept and the dreaded
way to becoming biotech’s first-ever $10 billion drug. designation of “potential.” In other words, it is as far from
the market as an investor or R&D program can be . . . and
Washington: Incredibly Busy, but no Finishing typically, much too far from commercialization to even think
Touch about proffering the slightest guarantee of success. No one
Some long-standing, critical things finally got done, is going to be persuaded into buying into a scientific paper
but did not get finalized. Do patent reform, biosimilars with the hope of overnight riches.
and health care reform ring a bell? If not, there’ll be time in The potential of genomics research provided “first-time-
2011(and perhaps beyond) to catch up on the relative, and ever” news of disease marker identification gene function in
enduring, goings-on in those imperative market-bearing vital indication markets such as cancer on a consistent basis,
issues. and even had revolutionary synthetic genomics success in
Government flexed its muscle, flashed its badge and kick-starting the cellular cytoplasm process form man-made
pounded its gavel on some of the industry’s most powerful genomes.
companies on many occasions throughout the past year, The stage of biotechnology science discovery is much
doling out verdicts, rejections, warnings and penalties more than concepts, but it is, even more than that, also
for a host of proceedings, applications, shortcomings a lot less than a product. Although it may represent the
and deceptions in matters involving manufacturing plant hardest sell in the drug development world, innovation at
violations, denial of obesity drug approval applications, the concept stage is, nonetheless, a powerful drug itself to
unscrupulous marketing practices, patent infringement agencies, nonprofits and financiers with a vested interest in
and more. particular disease indications and it even have occasional
It was better to be a brand maker than a biogenerics appeal to patient investors with more altruistic or long-
drugmaker, as 2010 proved to afford another year of market range pecuniary motives. The discovery phase continued
exclusivity, due to the omission of a successful conversion in 2010 to churn out bright ideas, present ground-breaking
of biosimilars law into regulatory implementation. papers and display positive clinical results, not the least
The law was passed, but the formula for biosimilar of which was the big news in CAPRISA 004 that produced
determination remains muddled by matters of bureaucracy the historic evidence of a microbicide that showed efficacy
and uncertainty, while patent-holding drug companies in helping to prevent sexual disease transmission. And not
indefinitely reap market-share-as-usual profits, even just any sexual disease, rather HIV, a disease that has largely
beyond patent expirations in some cases. defied clinical therapeutic containment endeavors.
BioWorld® State of the Industry Report 2011 15

17. Innovation has never been one of biotech’s character many of the previous years, that the biotech market might
flaws. Its Achilles’ heel is strictly on the clout-cash-and- be apt to regain some of its vim. At the least, there were
resources back end of the drug development process. But as enough indicators to show that the market definitely had
long as biotech continues to produce a glut of innovation, as not lost its will to the protracted slump that has suffocated
it did in 2010, something will stick to the wall and attract the many of its constituent companies, damaged its funding
partner with the corresponding interest, the philanthropist capacities and deflated a substantial amount of the
with the apposite passion, the investor with the considered European biotechnology market’s R&D energy.
instinct – and if all else fails – the government agency As more evidence that deals have emerged to be the
charged with funding the most gifted undeveloped distinguishing dynamic that anchors the global market and
research and the most talented researchers with nascent may be even be an intervening factor in the re-emergence
programs. of the European market, the pharma industry is candidly
And a couple of the year’s most prominent story lines – acknowledging the value of biopartnering and adopting
one involving unreliable data from longevity predictor gene the new model of less upfront “signing bonus” risk, with
studies and the other culminating with the implosion of a more deference to the milestone, or back-end-laden, pay-
well-known autism study – reminded that biotechnology for-results deal model. This is a model that would make the
research is also in the invalidation business, in which it European market less of a risk to edgy pharmas that have
identifies and challenges dubious theories and refutable become very judicious in that market. An anticipation of
science, ideally before extensive time and resources are more brisk collaboration activity comes with the optimism
committed to problematic research agendas. that more clinical successes will be the payoff.
Europe has been under-productive in the clinic and
Budget Cuts for Science’s Key Funding underfunded in the market for so long that risk has
Agencies Could’ve Been Worse become the four-letter word no one is willing to chance.
The science R&D/funding arm of the U.S. government As the funding opportunities retract, it stands to reason
did not completely escape the budget-cutting swath of that in-house talent will be downsized and the ability to
federal legislation, walking away with some funding intact. compete for the best available external talent will severely
The past-the-11th-hour budget deal agreement reached compromised. That is one principal consequence working
in April 2011 on Capitol Hill to keep the government from against that market now and looms to be a corollary effect
shutting down included millions of dollars in funding cuts whenever that market would eventually begin to make a
for several major science-funding agencies. However, that profoundly perceptible comeback move.
chagrin is mitigated by the fact that the cuts affecting However, the public acknowledgement of a commitment
health science R&D were not as deep as initially proposed. by pharma to risk-averse biopartnering as the latest go-to
The National Institutes of Health now faces a reduction dynamic that will be pursued to turn things around on the
of $260 million, but that is markedly less than the $1 .6 continent, is at least a tactic that has a chance to provide an
billion figure that was earmarked for slashing in an earlier upside in a stalled market.
bill that was passed by the House of Representatives. The Perhaps the biggest bad news from Europe was the
Department of Energy’s Office of Science will undergo a spate of devastating late-stage clinical failures and new
$20 million budget cut under the latest bill, compared to drug application rejections that hit that market. If that trend
an $866 million reduction in the earlier House version (H.R. continues in 2011 in this already-precarious market, it would
1), while the Centers for Disease Control and Prevention, be a crippling blow to any chance for a timely market-wide
now faces a $730 million cut in funding, instead of the recovery in Europe.
H.R. 1 amount of $1 .4 billion. None of the key agencies Baby steps are usually the first phase in any recovery,
received their traditional budget increases, but the cuts so positive indicators such as Europe’s head start on the
to their budgets that endow research grants and advance U.S. market in stem cell technology, clinical trial potential
innovation started out as a threat of much more austerity. shown in under-addressed disease indications and a focus
on orphan drug R&D opportunities, might not be primed
Is the Sky Still Falling in Europe? to deliver the blockbuster success that the European
Queue the soundbite: “This could be the year that biotechnology market most needs, but they may be
Europe turns the corner, depending on a few factors such sufficient to attract enough funding, pharma deals and
as . . .” clinical trial advances to persuade the chorus of Chicken
For quite a few years, variations on that outlook have Little analysts and expert observers to once again don the
been the most optimistic viewpoint to which most industry rose-colored glasses.
analysts have been guardedly willing to commit. But wait! If You Innovate, They Will Come
In 2010, there were actually indications, as there were in As far the whole market is evaluated, the menacing
16 BioWorld® State of the Industry Report 2011

18. force of recession and its lingering repercussions and market can still lay claim to: having a prolific science
looming ramifications may have sank a number of engine that delivers more innovation than the investment
companies and careers and been a substantial part of or R&D markets can manage; being one of the top two
biotech’s story; however growth, profitability, innovation, or three most attractive destinations for venture capital
new product successes and investor partiality buoyed investment throughout this century; riding a long-term
quite a few more companies through the year than were market growth rate that surpassed pharma’s average
lost to the roughness of the pitching market. growth and achieved overall profitability in 2010; and is
Despite some declining market indicators in 2010 that poised to incrementally dominate the top-selling drug
by and large reflect the economic environment, rather list on its way to becoming the predominant face of drug
than the biotech industry itself, the global biotechnology development in the 21st century.
Revenue of the Top Biotech Drugs, 2003-2010
Rank Drug name (maker) 2010 2009 2008 2007 2006 2005 2004 2003
1 Avastin (Roche) $7,212M $5,832M $4,479M $4,070M $2,380M $1,133M $545M (US)
2 Rituxan (Roche) $7,077M $5,705M $5,082M $5,467M $3,881M $1,831M $1,574M $1,489M
3 Humira (Abbott) $6,548M $5,488M $4,521M $3,064M $2,044M $1,400M $852M $246M
4 Herceptin (Roche) $6,045M $4,936M $4,394M $4,809M $3,150M $2,416M $1,591M $2,064M
5 Lantus (Sanofi-Aventis) $4,883M $3,080M $3,159M $3,160M $2,172M $1,476M $1,025M $400M (US)
6 Remicade (J&J) $4,610M $4,304M $3,748M $3,327M $3,014M $2,535M $2,145M $1,729M
7 Gleevec (Novartis) $4,265M $3,900M $3,700M $3,050M $2,554M $2,170M $1,634M $1,128M
8 Neulasta (Amgen) $3,558M $3,318M $3,000M $2,710M $2,288M $1,700M $1,300M
9 Enbrel (Amgen) $3,534M $3,871M $5,982M $5,275M $4,379M $3,673M $1,900M $1,300M
10 Copaxone (Teva) $3,316M $2,800M $2,262M $1,713M $1,414M $1,176M $936M $720M
11 Taxotere (Sanofi-Aventis) $2,953M $2,177M $2,622M $2,941M $2,284M $1,956M $1,747M $1,577M
12 Atripla (Gilead Sci) $2,927M $2,382M $1,570M $903M $206M
13 Truvada (Gilead Sci) $2,650M $2,490M $2,110M $1,589M $1,190M $568M $68M
14 Epogen (Amgen) $2,524M $2,569M $2,456M $2,489M $2,511M $2,455M $2,600M $2,400M
15 Avonex (Biogen Idec) $2,518M $2,323M $2,203M $1,870M $1,710M $1,540M $1,417M $1,168M
16 Aranesp (Amgen) $2,486M $2,652M $3,137M $3,614M $4,121M $3,273M $2,500M $1,600M
17 Rebif (Merck Serono) $2,323M $2,062M $1,668M $1,912M $1,452M $1,270M $1,091M $819M
18 Alimta (Lilly) $2,209M $1,706M $1,155M $854M $612M $463M
19 Erbitux (Lilly) $2,192M $1,594M $1,457M $1,430M $1,100M $413M $261M
20 Humalog (Lilly) $2,054M $1,959M $1,736M $1,475M $1,300M $1,198M $1,102M $1,021M
21 Procrit/Eprex (J&J) $1,934M $2,245M $2,460M $2,885M $3,180M $3,324M $3,589M $3,984M
22 Cialis (Lilly) $1,699M $1,559M $1,445M $1,144M $971M $747M $552M $203M
23 Betaseron (Bayer Sch) $1,681M $1,647M $1,439M $1,586M $1,311M $1,046M $941M $926M
24 Lucentis (Roche) $1,621M $1,342M $1,076M $1,110M $535M
25 Tarceva (Roche) $1,473M $1,461M $1,361M $1,189M $911M $434M
NOTE: Some figures not originally reported in U.S. dollars. Exchange rates used for conversion were for that year.
SOURCE: BioWorld research from company press releases and SEC filings. Companies and/or drugs not reporting drug sales in SEC documents
may be excluded.
BioWorld® State of the Industry Report 2011 17

19. Financings: A ‘Year in Transition’
Biotech’s IPO Rally Counters Tough Markets, R&D Setbacks
By Jennifer Boggs
Assistant Managing Editor
With the realization that a rapid and painless economic so few buyers, it’s not really a market at all; it’s more of a club.”
recovery was a mere pipe dream, 2010 brought biotech a In the year ahead, it will come down to whether the
mixed bag. While fundraising was up from 2009 – and the venture community can gain access to new money. Fleming
industry celebrated the creaking open of the initial public isn’t optimistic, but a few funds did manage to scrape
offering (IPO) window – the year also was defined by a together some new cash last year. In fact, 2010 ended with
number of surprising regulatory setbacks. reports that new firm Longwood Founders Management LLC
But first, the good news. managed to raise $85 million in an inaugural fund, with the
Overall, the industry managed to raise a healthy chunk aim of backing early stage innovation.
of capital. BioWorld Insight reported public and private
financings totaling $19.3 billion for the year, up from the
A Small [IPO] Window of Opportunity
$17.6 billion in 2009, though that figure is still a far cry from
Probably the best news of 2010 was the opening of the IPO
the $24.8 billion raised back in the pre-economic-meltdown
window, following nearly two years of no IPO exits for biotech.
year of 2007.
BioWorld Insight reported that 19 biotechs priced on global
“2010 wasn’t a horrible year, in terms of aggregate
markets last year and, altogether, those offerings brought in
dollars,” said Glen Giovannetti, global biotechnology leader
about $1 2 billion and averaged about $64 million per offering.
.
and Ernst & Young LLP. “But the trend continues of investors
The downside was that nearly every company priced below
being very selective.”
its anticipated range and most traded down after hitting the
Private company financings were up slightly in 2010 – $4.5
market. A handful also ended up having to return to public or
billion vs. $4.3 billion in 2009. The largest venture rounds in
private investors later in the year for additional capital, such as
2010 included Reata Pharmaceuticals Inc., which added $78
AVEO Pharmaceuticals Inc., of Cambridge, Mass., which raised a
million in a Series G round aimed at giving the Irving, Texas-
$61 million PIPE less than seven months after pricing an IPO at
based company enough runway to get its chronic kidney
about a 35 percent discount to its target price.
disease drug bardoxolone to the FDA. Redwood City, Calif.-
And the IPO market became more uncertain as the year
based Pearl Therapeutics Inc. also had success reaching out
wore on. Fourth quarter IPOs seemed particularly harsh. Palo
to new investor Vatera Healthcare Partners, which led a $69
Alto, Calif.-based Anacor Pharmaceuticals Inc. slashed its
million Series C round in October.
offering price to $5 (from the hoped-for $16 to $18 range) and
Breaking it down by round showed that 55 firms closed
raised the number of shares from 4.7 million to 12 million. And
designated Series A financings in 2010. Total Series A funding
San Diego-based specialty pharma firm Zogenix Inc. had hoped
reached $774.7 million for the year. (Two companies did
to sell 6 million shares priced between $12 and $14 each, but
not disclose amounts.) BioWorld Snapshots showed that 52
had to settle for pricing 14 million shares at a mere $4 each.
firms raised a total of $1 . 1 billion in Series B rounds, while 30
But the rash of steeply discounted IPOs that ended 2010
companies pulled in about $727.9 million in Series C funding
left Forward Venture’s Fleming to believe that the window
for the year. Eighteen firms closed Series D or later-stage
is closing. “And as the window closes, strong companies
rounds, raising a total of $447. 1 million.
step back. They can afford to wait,” he said. “It’s the weaker
Yet, going forward, industry experts continue to expect
companies that have no choice and end up being very
venture capital to contract, especially as many funds start to
vulnerable to the monopolistic pricing.”
reach – even exceed – their decade marks.
So far in 2011 , similar stories are playing out. Four
Stan Fleming, managing member at Forward Ventures,
biotechs went public on Nasdaq in the first quarter – AcelRx
said he thinks the venture community is in for a tough
Pharmaceuticals Inc., Pacira Pharmaceuticals Inc., Endocyte
2011 . “The overall macroenvironment is showing signs of
Inc. and BG Medicine Inc. – and all slashed their offering
improvement, but biotech is still locked in the depths of the
prices by considerable margins. And Clarus Therapeutics
great recession. And, for the bio venture community, it’s more
Inc. opted to postpone its IPO in February, citing unfavorable
like the great depression,” he said.
market conditions.
There’s less new money in the private market these days,
As of March 31 , 13 firms have pending IPOs, and some
leaving many syndicates to rely on inside rounds. And most of
remain optimistic that the window will remain, though
the venture money remains in the hands of a few. “It’s a pretty
perhaps not widely, open for additional firms to squeak
inefficient market in the first place,” Fleming added. “But with
through.
18 BioWorld® State of the Industry Report 2011

20. “I think we’ll see a similar number of companies [price a positive recommendation by the European Committee for
IPOs in 2011], but stronger companies,” said Jack Florio, an Medicinal Products for Human Use. InterMune’s stock price
investment banker at Brinson Patrick Securities. increased 179 percent over 2009.
E&Y’s Giovannetti agreed. “It’s not going to be a bull rush,” Others weren’t so lucky. Another FDA surprise, the
he noted, but for companies in Phase II- or Phase III-stage rejection of once-weekly GLP-1 drug Bydureon (exenatide),
development, with validating partnerships and a solid R&D sent shares of partners Amylin Pharmaceuticals Inc. and
plan, the IPO will remain a possible exit. Alkermes Inc. falling. And the long-awaited obesity drugs
For companies already established on the public markets, failed to get past the agency. Arena Pharmaceuticals Inc.,
most were able to go to investors when they needed in 2010, which boasted only an early stage pipeline beyond obesity
with 72 follow-on offerings last year vs. 54 offerings in 2009. candidate lorcaserin, was one of the biggest decliners of the
But the amounts were more conservative. In 2010, follow-ons year, sinking about 52 percent.
raised $5.6 billion and averaged $78. 1 million each, while Other decliners included Affymax Inc., which fell 73
fewer offering in 2009 brought in $6.5 billion and averaged percent for the year, primarily due to disappointing safety
$120.5 million each. data in its top-line results for anemia candidate Hematide,
But in 2010, biotech also began embracing some of the the drug it was hoping to position against Thousand Oaks,
financing vehicles that have been used for years in other Calif.-based Amgen’s Aranesp (darbepoetin alfa). RNAi firm
industries, Florio said. Brinson Patrick recorded 25 at-the- Alnylam Pharmaceuticals Inc. also declined last year – by 44
market financings in 2010 compared to only nine the year percent – after Novartis AG declined a $100 million option to
before. And equity credit lines continued to be a popular all of Alnylam’s targets under the firms’ collaboration, and
flexible financing tool, with about a dozen of those in 2010. partner Roche AG announced in November that it planned to
discontinue efforts in RNAi. Cambridge, Mass.-based Alnylam
Biotech and Wall Street in 2010 also cut its staff by 25 percent in September.
Stock activity in the always-volatile biotech industry had
its ups and downs in 2010. As a whole, the industry held its Industry Remains in Cost-Cutting Mode
own. The AMEX Biotech Index jumped 37.7 percent over 2009, As in 2009, last year saw more than its share of dramatic
while the Nasdaq Biotech Index gained 15 percent. Biotech restructurings, and those cuts left firms leaner and forced
heavyweights Celgene Corp. and Amgen Inc. remained fairly many to cut programs that either weren’t producing or were
steady, up 6 percent and down 3 percent, respectively. too long term.
Gilead Sciences Inc. dropped 16 percent in 2010, while Basel, Switzerland-based Roche’s RNAi exit, which
Biogen Idec Inc.’s stock gained 25 percent over 2009. Genzyme resulted in a 6 percent workforce reduction – about 4,800
Corp., coming off a disastrous 2009 on manufacturing employees – represented more than half of the roughly
troubles related to its leading enzyme replacement therapies, 7,600 jobs lost in 2010, according to BioWorld Snapshots. That
rebounded in 2010, jumping 45 percent for the year due to figure compares to about 5, 100 jobs cut in 2009. While fewer
Sanofi-Aventis SA’s buyout bid. Cambridge, Mass.-based companies reported cutbacks in 2010 – 33 vs. 85 – biotech
Genzyme and Paris-based Sanofi finally reached a $20. 1 executives still faced realizations that they would need to
billion deal, plus contingent value rights largely connected to concentrate resources on only the most advanced promising
the success of multiple sclerosis candidate alemtuzumab, in candidates.
February. South San Francisco-based Exelixis Inc., for instance,
Unlike 2009, the big stock winners of 2010 weren’t easy dropped work on all of its internal programs except for XL184,
to spot. In 2009, the industry had Human Genome Sciences a dual MET/VEGFR inhibitor that yielded stellar Phase II data.
Inc., which saw its stock surge more than 1 ,000 percent on And Biogen Idec Inc., of Cambridge, Mass. said in November
positive late-stage data for now-approved lupus drug Benlysta that it was moving out of the cardiovascular and oncology
(belimumab), and Dendreon Corp., which soared following arenas to focus more efforts on its more lucrative franchises,
approval of the first cancer vaccine Provenge (sipuleucel-T). including multiple sclerosis.
Regulatory triumphs were harder to come by in 2010. Companies could continue to make cutbacks in 2011 ,
In fact, drug approvals were down – 21 biologics license but it’s unlikely the wave of restructurings that plagued the
application and new molecular entity approvals last year vs. industry over the past two years will continue. If 2010 taught
26 in 2009 – though part of that was due to fewer companies the sector anything, it’s that capital efficiency should be a
filing for approval in 2010. long-term strategy rather than a short-term solution.
But the FDA stunned Wall Street in May by rejecting “It was a year in transition,” said Brinson Patrick’s Florio.
InterMune Inc.’s idiopathic pulmonary fibrosis drug “In 2009, folks were scrambling to survive and just waiting
pirfenidone, though the Brisbane, Calif.-based firm ended up for everything to get back to normal, but this is the new
as one of the sector’s biggest gainers for the year, thanks to normal.”
BioWorld® State of the Industry Report 2011 19

21. The View from Washington
Uncertainty Clouds Health Care Reform, FDA Approval Process
By Mari Serebrov
Washington Editor
From beginning to end, 2010 was riddled with uncertainty, and restrict substitution, which would set up a system
especially in Washington, D.C. encouraging multiple competing brand biologics with no
Take the Affordable Care Act (ACA), the health care reform competition from biogenerics.
legislation passed last spring amid much fanfare among the Because of the iffyness of this regulatory latitude, some
Democrats in the 111th Congress. The law promised biotechs companies have continued following the old route, pursuing
a biosimilar pathway with 12 years of exclusivity, a share of biologic license applications (BLAs) for their biosimilars,
$1 billion in R&D tax credits and grants, and a bigger market rather than chasing down the new 351(k) pathway. Teva
due to expanded health insurance coverage. Pharmaceuticals, for instance, filed traditional BLAs for
In exchange, biotechs would have to be more upfront two biosimilars, its granulocyte-colony stimulating factor
about conflicts of interest and cough up some of the $90 product and its Neupoval version of Amgen Inc.’s Neupogen.
billion in taxes that would be levied against pharmaceutical Merck scrapped plans for MK-2578, a biosimilar to
companies over a 10-year period. Amgen’s Aranesp, after the FDA said it would require trials
From the outset, the voluminous law was punctuated evaluating the cardiovascular effects of the drug. But Merck,
with question marks. Namely, could it survive a court battle? hoping the agency would be less rigorous in what it requires
Today, several states are challenging the constitutionality of from other biosimilar candidates, said it expected the new
mandating health care coverage, the linchpin of the act, all abbreviated pathway to help it get its remaining portfolio of
the way to the Supreme Court. If that part falls, the entire law biosimilars to market.
could be rendered void because Congress didn’t include a The fact that Sandoz had to sue to get the agency to act on
severability clause. (Such a clause permits a part of a law, if its biosimilar growth hormone Omnitrope and considering
deemed unconstitutional, to be removed while keeping all that the Office of Generic Drugs sat on abbreviated new drug
other provisions intact.) applications (NDAs) for three generic versions of Sanofi-
Regardless of what happens in the courts, the 112th Aventis SA’s blood thinner Lovenox (enoxaparin) for more
Congress, which has more of a Republican complexion, than five years, had industry experts predicting it would be
is trying to undo various parts of the bill. Even President a long time before the FDA establishes a reliable, predictable
Barack Obama has some changes he wants to make. In 351(k) pathway that applicants can use with some confidence.
his 2012 budget request in February, the president called Last year, the FDA finally approved Momenta
for cutting the exclusivity period for biosimilars to seven Pharmaceuticals Inc.’s generic Lovenox, which it developed
years and prohibiting “evergreening,” a process that would in partnership with Sandoz, the generic unit of Novartis
allow brandmakers to tweak their products and receive AG. The agency said the approval process took so long
an additional 12 years of exclusivity. Rep. Henry Waxman because it had to determine whether it had the authority to
(D-Calif.) also has renewed his fight for shorter exclusivity. review a complex generic drug like Lovenox. It also had to
develop criteria to demonstrate the generic’s “sameness” to
the brand product, and it had to address potential heparin
Biosimilars put into law, but not into practice
contamination issues, after tainted products from China
While the future of the 12-year exclusivity may be
caused several deaths.
in doubt, the entire approval pathway for biosimilars is
shrouded in uncertainty as industry waits to see how the FDA
will implement it. The problem is that the ACA doesn’t clearly ACA Raised More Issues than it Resolved in 2010
map out a pathway; rather, it gives the FDA a destination and Meanwhile, other provisions of the ACA, should it survive
says, “Go find it.” the court challenges, could remain up in the air because of
Thus, the agency is theoretically left with the discretion pressure to curb spiraling federal deficits. In the midterm
to approve a biosimilar without any sort of clinical testing elections in November, Republicans swept the House and
outside of basic pharmacokinetic/pharmacodynamic gained seats in the Senate on a pledge to cut government
studies and declare it interchangeable with the reference spending.
drug – even if it has undefined “minor differences” from the That pledge clouds the chances for getting programs
original. such as the Cures Acceleration Network (CAN) funded.
However, it also could require strenuous clinical trials The ACA included $500 million in funding for the network,
20 BioWorld® State of the Industry Report 2011

22. designed to speed development of therapies that might in a way that is efficient, predictable and well-coordinated
not otherwise be funded by the marketplace. The big within FDA,” PhRMA said.
question now is whether the network will be funded by the Regulatory uncertainty also was reflected in the drug
government. candidates the FDA rejected. Three widely anticipated
Unable to pass a budget for fiscal 2011 , which started new weight loss therapies – Vivus Inc.’s Qnexa, Arena
last October, Congress has kept the government afloat for Pharmaceuticals Inc.’s Lorcaserin and Orexigen Therapeutics
more than half a year on continuing resolutions (CRs) tied Inc.’s Contrave – were not approved. Instead, the agency
to 2010 spending levels. The CRs don’t include funding for issued complete response letters for Qnexa and Lorcaserin,
new programs such as CAN. If the network eventually gets neither of which got the support of the Endocrinologic and
budgeted this year, the National Institutes of Health plans Metabolic Drugs Advisory Committee.
to roll it into its National Center for Advancing Translational More questions were raised when some notable drugs
Sciences that’s set to open Oct. 1 . were pulled from the market or had their availability severely
Another ACA provision that could be undermined restricted: the weight loss drug Meridia, the diabetes drug
because of funding is the Patient-Centered Outcomes Avandia and the painkillers Darvon and Darvocet.
Research Institute, a nonprofit corporation tasked with The future of accelerated approvals also became
identifying priorities for comparative-effectiveness research dubious as the FDA hardened its stance on the approvals
(CER).The health care act mandated that $10 million be set in an effort to avoid potential future problems. The agency
aside in fiscal 2010 to fund the institute, $50 million in fiscal revisited several past accelerated approvals– Roche AG’s
2011 and $150 million next year. Avastin for breast cancer, Pfizer Inc.’s Mylotarg for acute
The institute became a reality in September when 19 myeloid leukemia and Shire plc’s ProAmatine for orthostatic
board members were named to serve staggered terms. But hypotension.
continued funding remains an issue for the corporation In addition, it refused to consider Roche and Immunogen
charged with carrying out CER – one of the most contentious Inc.’s trastuzumab-DM1 for accelerated approval, despite
measures for industry in the health care reform law. the fact that it has shown activity in HER-2 positive breast
Fearing that “comparative effectiveness” would cancer patients who have failed multiple courses of prior
translate to “cost effectiveness,” the Biotechnology Industry therapy.
Organization fought hard to ensure the act specifically One of the issues the FDA cited with accelerated
prohibited the government from denying coverage solely on approvals was getting companies to come up with the
the basis of CER data. However, the trade group remained follow-up data to support the approval in a timely manner.
concerned about how CER would be implemented over time. For instance, Mylotarg was approved in 2000, but Pfizer
Some experts worried that CER would create a barrier (then Wyeth) didn’t start the confirmatory studies until 2004.
that makes existing products in the marketplace far more In the case of Avastin, the FDA yanked the HER2-
competitive while holding newer, more innovative products negative metastatic breast cancer indication because
to tougher approval standards. four follow-up studies failed to demonstrate that the drug
prolonged overall survival in breast cancer. They also didn’t
FDA’s Half-Empty/Half-Full Performance confirm the magnitude of benefit originally observed in the
Even without CER fully in force, the FDA’s approval randomized, multicenter, open-labeled E2100trial, which
process was unpredictable in 2010. Citing a drop in the showed a 52 percent increase in progression-free survival
number of applications, the agency approved 21 new in patients treated with Avastin.
molecular entities last year, down from 25 in 2009 and 24 The FDA’s Risk Evaluation and Mitigation Strategy
in 2008. Although the agency hit or surpassed its 90 percent (REMS) authority is one way the agency could force
PDUFA goal for timely reviews of standard NDAs/BLAs last companies to go to market with plans already in hand
year, only 78 percent of priority NDAs/BLAs with 2010 PDUFA for following up on accelerated approvals. But with no
dates were reviewed within six months. final REMS guidance from the FDA, and what appear to be
That’s worrisome for the pharmaceutical industry, inconsistencies between the 2009 draft guidance and the
which started negotiating the reauthorization of PDUFA law establishing REMS, drugmakers have been left without
with the FDA last year. Before the negotiations began on much clarity.
new user fees and performance requirements for the FDA, The ambiguities increased as the FDA moved toward
the Pharmaceutical Research and Manufacturers of America requiring REMS for classes of drugs last year. In addition to
(PhRMA) identified timely review of new applications as a the growing number of REMS, numerous public comments
critical issue. on the draft guidance raised concerns about the costs and
“It is essential that new drug reviews be accomplished time-consuming burdens for drugmakers, prescribers and
pharmacies involved in implementing the programs.
BioWorld® State of the Industry Report 2011 21

23. Law & Order: Washington - Government Gets An Impending Court Ruling and a Looming Pat-
Tough on Drugs ent Reform Bill Have Blockbuster Implications
REMS implementation also raised another question: How As if fears of criminal prosecutions, hefty fines and
would monetary fines be imposed for noncompliance?For debarment from federal programs and increased FDA
instance, if a pharmacy or prescriber failed to give a patient authority weren’t enough to worry about, industry also
the required medication guide, could the drugmaker be fined saw the underlying foundation for several key biotech
$250,000 for “every single” medication dispensed without patents seriously threatened in 2010.
the guide? In a sweeping summary judgment against Myriad
Aside from possible REMS penalties, biopharmaceuticals Genetics Inc., Judge Robert Sweet of the U.S. District Court
faced a growing danger of criminal prosecution in 2010 as the for the Southern District of New York in Manhattan ruled that
Department of Justice (DOJ) stepped up investigations into off- the U.S. Patent and Trademark Office (PTO) had improperly
label violations and fraud allegations. Drugmakers, including granted seven BRCA gene patents to Myriad because they
Allergan Inc., Novartis AG and AstraZeneca plc, were involved involved a law of nature. If allowed to stand, the decision
in eight of 10 of DOJ’s fraud-related settlements last year. could eliminate the validity of all gene patents.
In addition, the government collected about $3. 1 billion Myriad appealed the case, brought in May 2009 by the
under the False Claims Act in fiscal 2010, with about 80 American Civil Liberties Union and a coalition of patients,
percent of that coming from health care companies. Many of pathologists, genetic researchers and other scientists that
the cases resulted from whistle-blower suits. argued gene patents stifle research and competition and
To curb off-label promotion and kickbacks, government limit options for medical care.
officials proposed using a statute that permits prosecutors The U.S. Court of Appeals for the Federal Circuit is
to charge executives with a misdemeanor offense of not expected to rule on the appeal by early fall. But ultimately,
acting as a responsible corporate officer if a company fails the issue appears to be destined for the U.S. Supreme
to comply with misbranding rules. Court.
To strengthen that club, the Department of Health and The ruling came as industry faced a steep patent cliff
Human Services’ Office of Inspector General proposed as patents on several blockbuster drugs began to expire.
excluding culpable individuals from future participation Amid pipeline worries, drugmakers had to continue to
in Medicare and Medicaid if their company violates off- contend with a long wait to get new patents through the
label promotion rules. Such exclusion could effectively ban PTO, which struggled with a historic logjam created, in
company officials or staff from the health care industry. part, by Congress raiding patent fees for other purposes.
Assigning responsibilities to corporate board members As it had in the past, Congress failed to deliver on its
in corporate integrity agreements could be another remedy. promise of patent reform. However, 2011 could be the year
Along with the stepped-up investigations, a rash of the job gets done. The Senate overwhelmingly passed a
drug safety issues and manufacturing problems, which led bill that would provide the first substantial reform to the
to major recalls, especially at Johnson & Johnson subsidiary patent system in 60 years. Not only does it safeguard the
McNeil Consumer Healthcare, had some members of PTO’s funding, it also would switch the U.S. to a first-to-file
Congress calling for increased authority for the FDA. system, putting it in step with the rest of the world.
As chairman of the House Oversight and Government A similar bill, with a few key differences, was introduced
Reform Committee last year, Rep. Edolphus Towns (D-N.Y.) in the House, but it remains to be seen whether the two
insisted the FDA should have the authority to automatically chambers will work out their differences. In other words,
recall suspect products, rather than having to persuade a the uncertainty continues.
drugmaker to do a recall.
22 BioWorld® State of the Industry Report 2011

24. The View from Europe
Investments Rebounded, But European Biotechs
Still Underfunded
By Nuala Moran
BioWorld International Correspondent
After the capital-starved privations of the financial biotech (and the only one in the global top 10) into a distracting
crisis, the only way was up for the European biotechnology and very public conflict with the activist investor Elliott
sector in 2010. Investment did rebound – venture capital Advisors. The bad news on almorexant followed the failure
investment in France rose by 56 percent to �148 million four months earlier of clazosentan in a Phase III pivotal trial
(US$208.5 million), for example, and there were seven initial in stroke, and the missing of the primary endpoint in a trial
public offerings (IPO), compared to a mere one in 2009. designed to widen the label of Tracleer (bosentan) beyond
But venture capital funding remains lower than before pulmonary arterial hypertension to idiopathic pulmonary
the credit crunch, and with the exception of Zealand Pharma fibrosis in March 2010.
A/S, which raised $67.9 million, IPOs were for small amounts It’s clear at this point that the company will be likely
and did not represent exits for the investors. In other words, restructure and rethink its portfolio.
the numbers flatter to deceive, with the sector as a whole Similarly, in Denmark the Phase III failure of zalutumumab
remaining dramatically underfunded. forced the resignation of one of Europe’s most high profile
Yet rising public investment in R&D – in many cases as biotech CEOs, Lisa Drakeman, with the inevitable corporate
part of government economic stimulus packages – means remodeling following in her wake. Santhera AS too, was
Europe’s science base is as strong and superior as ever. hit with a 43 percent fall in its share price when idebenone
The most significant advance in 2010 was that the flopped in a Phase III study in Friedrich’s ataxia. And there
pharma industry openly acknowledged that flexible, was a first set back for the Austrian vaccines company
nimble and innovative biotech companies provide it with Intercell AG, when its Traveler’s diarrhea vaccine failed to
the best route to tapping this resource. The result was yet show significant effect in Phase III. That led to a reduction
another redrawing of biotech business models, to structure in headcount and a 40 percent cut in R&D funding at the
companies for long-term collaborations with pharma, with Vienna-based company.
the aim of an eventual trade sale. These examples highlight the all-or-nothing, binary
nature of the whole biotech enterprise and underline that
to date few European biotechs have built broad enough
Trial Failures Rock the Sector pipelines, or have deep enough pockets, to withstand a
Overhanging this shift is the sector’s endless tango with product flop.
risk. The CEO of Zealand Pharma, David Solomon, admitted
the IPO in November 2010 was “tricky” even though the
company was presenting a relatively low-risk portfolio, with Success in the Clinic Builds Value
lixisenatide, its GLP-1 agonist, having reported success in With very few marketed products, success in the clinic
three Phase III trials in Type II diabetes and partnered with is by far the most important source of value, as evidenced
Sanofi-Aventis Group. by Zealand’s Pharma’s success in going public on the back
The toll that risk takes was underlined by a number of of positive results in the lixisenatide Phase III studies.
late-stage failures. In the UK these eviscerated the sector, Thrombogenics NV too, was boosted by two successful
with three of the best-funded public companies putting up Phase III trials of microplasmin in treating vitreomacular
for sale signs as a result. adhesion, allowing it to raise �56 million in a placing to fund
The gene therapy specialist Ark Therapeutics plc has the US and European launch of the product.
regrouped and downsized following the European Medicines There were also earlier-stage advances in the clinic for
Agency’s rejection of its glioma treatment Cerepro. But companies that are staking ground in new types of therapy,
when Antisoma plc’s lead product AS1413 for treating acute such as stem cells. So, for example, after managing to stay
myeloid leukemia and Renovo plc’s anti-scarring treatment afloat over five long years of negotiations with regulators on
Juvista, failed in Phase III, both companies decided to call it a both sides of the Atlantic and dealing with repeated requests
day in March 2011 . for more preclinical data, ReNeuron plc finally got approval
Another high-profile Phase III failure, of the insomnia for the first regulated trial of a fetal stem cell product. ReN001 ,
treatment almorexant, has drawn Actelion, Europe’s largest a neuronal cell line, is currently being tested in a Phase I/II
BioWorld® State of the Industry Report 2011 23

25. trial in stroke at Glasgow University Hospital in the UK. – reminiscent perhaps of waiting for VCs to hand out the
Another example of European biotechs applying next tranche of cash in the old days.
advances in molecular biology to get a handle on previously In the absence of other funding sources, European
untreatable diseases include Prosensa Therapeutics BV, biotechs have no alternative but to go along with this.
which advanced its exon skipping treatment for Duchenne’s As a result, they remain exposed to those convulsions of
muscular dystrophy (DMD) into Phase III. Also, Trophos SA partnering – the big pharma pipeline review, or one pharma
moved a novel construct it has christened a ‘mitochondrial company being taken over by another – that are impossible
pore modulator’ into a pivotal trial in spinal muscular to plan for, and which make it more difficult for biotechs to
atrophy. become self sustaining.
So for example, when Roche gave back rights to the
Orphan Drugs Increase in Strategic Importance cervical cancer vaccine TG4001 to Transgene in February
European biotechs are increasingly looking to orphan 2011 , its share price fell from �15 to �12 – even though the
drugs as a lower-risk route through development. The Strasbourg-based company was getting the product back
significance of this was underlined in a review of the state with full rights and a Phase IIb trial, paid for by Roche, fully
of play 10 years after the enactment of the European Union’s recruited and yet to report.
orphan drugs legislation, which showed R&D relating to There was greater calamity in store for Italian biotech
rare diseases increasing as a proportion of total research Philogen SpA in March 2011 , when a sudden change of heart
funding. Orphan drugs also are proving an important route by Bayer Schering Pharma over two antibody programs,
for biotechs to tap into a new, non-dilutive source of funding forced the Milan-based biotech to pull a proposed IPO.
from medical charities that exist to promote research into
the diseases they represent. Some Inspiration and Cheer for Investors
But more potently, the move into rare diseases has Whatever the vagaries of pharma partners and the
put European biotechs in a prime position to benefit from reverses of clinical development, a number of companies
pharma’s newly kindled interest in the field, which has raised follow-on funding, either as a result of validation
seen companies including Pfizer Inc., Novartis AG and of a technology elsewhere, or on the back of their own
GlaxoSmithKline plc form dedicated rare diseases units. progress. The most notable example of reflected glory was
As a result, orphan drugs have formed the basis of more Transgene’s $181 million June 2010 fundraising, which was
out-licensing and collaboration deals, with Prosensa NV’s inspired by the FDA’s approval of Dendreon Corp’s Provenge
$678 million agreement with GlaxoSmithKline for its exon- prostate cancer vaccine.
skipping DMD treatment being a prime example. On the back of strong Phase IIb data Karo Bio AB was
able to raise $80 million for the Phase III development of
A New Partnering Model eprotirome in familial hypercholesterolemia, while Ablynx
While pharma has long recognized the contribution NV raised $68.3 million as it advanced its nanobody
biotech can make to its pipelines, in 2010 pharmaceutical antibody constructs further into the clinic. And Agennix AG
executives finally came up with a partnering model with took in $105 million for an all-or-nothing bet on its immune
which they are comfortable. These new model deals modulator talactoferrin, a recombinant version of lactoferrin,
typically come with small up-front payments or an equity in treating non-small cell lung cancer.
investment, R&D funding for the biotech to carry on doing There were two remarkable financing rounds for private
the work, milestones, and an option for the pharma partner biotechs, with Symphogen AS raising $131 million in January
to in-license products at a later date. 2011 , while in March 2010 Archimedes Pharma Ltd. raised
Underlying these deals is the fact that pharma is finally $96.9 million to pay for the commercialization of PecFent, a
confronting and dealing with the diseconomies of scale in its nasally-administered version of fentanyl for treating cancer
research and development. It no longer wants to go out and breakthrough pain.
buy another company or product and bring it in house. The biggest source of inspiration for investors was
This led to high value deals – Galapagos NV’s $374 Johnson & Johnson’s $2.4 billion purchase of Dutch vaccines
million osteoarthritis pact with Servier, or its chronic company Crucell NV. Another big ticket acquisition was
obstructive pulmonary disease deal with Roche at $400 Shire’s purchase of gastrointestinal diseases specialist
million; Orexo AB and Johnson & Johnson’s $585 million Movetis NV for $565 million.
collaboration on preclinical modulators; the Cellzome/GSK There was little hard cash changing hands for biotech/
$655 million agreement in inflammatory diseases; or NicOx biotech M&A. BTG plc acquired Biocompatibles plc in an all-
SA and Bausch and Lomb’s $179.5 million deal in glaucoma. share deal valued at $284.5 million. Biotie Therapies Corp.’s
But despite the numbers, such deals can still leave all-share merger with Synosia Therapeutics Holding AG was
biotech partners hanging on for the next milestone payment tagged at $120 million and Wilex AG picked up Heidelberg
24 BioWorld® State of the Industry Report 2011

26. Pharma AG for $27 million in stock. The European Commission also is very sympathetic
There was a rare – old fashioned cash exit for VC to biotechs, offering R&D funding through its Framework
investors in RespiVert Ltd., which was acquired by Centocor Research program. However, the commission has struggled
Ortho Biotech Inc. The terms were not disclosed, but to bring about promised regulatory reforms that are
Imperial Innovations plc, the technology transfer arm of important to the industry, such as improving the current
Imperial College London realized $13.8 million from the sale costly and bureaucratic system for getting approvals for
of its 13.4 percent stake in the company, for an investment clinical trials, and creating a single European patent.
of $3.2 million. The other venture capital investors to cash Critically though, public investment in the science base,
in were SV Life Sciences, Fidelity Biosciences and the largest and a desire to see this spawn companies, means that Europe
shareholder, Advent Venture. continues to have good flow of start-ups. In 2010 some of
these were able to put together impressive first rounds.
Governments Maintain Support Syntaxin Ltd, for example, raised $28.6 million, and antibody
Europe’s governments remain keen to nurture their start-up Crescendo Ltd. raised $7. 1 million.
biotech sectors, and while supportive policies cannot The desired end of all this activity is of course, new
make up for a dearth of private investment for clinical therapies, and 2010 saw approval for three products. These
development, they continue to be important in promoting are Archimedes Pharma’s PecFent , Pharming Group NV’s
the formation and development of new companies. Rhucin, a version of human C1 inhibitor produced in the milk
This is best exemplified by France, where the government of transgenic rabbits for treating hereditary angioedema
sold off shares in the state owned electricity company and and GW Pharma plc’s cannabis-based Sativex, for treating
is investing the money in science-based start-ups. Amongst spasticity caused by multiple sclerosis.
other measures, it has set up a combined grant and loan These are all important products serving unmet medical
scheme that allows companies to raise significant sums needs. But they also serve as an important reminder that
against predetermined milestones. One beneficiary is NeoVacs at the end of the development pipeline one thing will give
SA, which has a $11 .2 million award for the development of an European biotech solidity and assurance, and that is having
antibody for treating rheumatoid arthritis in patients who marketed products.
have become resistant to TNF-alpha products.
BioWorld® State of the Industry Report 2011 25

27. The View from the Bench
The Light Bulb Burns Bright in the Discovery Phase
By Anette Breindl
Science Editor
With the number of scientific papers continuing to rise proteins, and that those proteins could substitute for
at dizzying rates, a stab at a comprehensive update of the naturally occurring ones and carry out metabolic functions
year’s most important biomedical discoveries would fill in bacteria. The work received less press attention than
its own annual report. Selecting from the bounty, we have the synthetic genome. But in its attempt to create proteins
included some of the most important advances. not found in nature may ultimately have farther-reaching
The most notable of these is the successful CAPRISA implications.
trial of a microbicide that can, finally, protect against HIV
infection.
Stem Cells: Everybody’s Different
Most of our highlights, however, are in areas where
Stem cell research continued to enable insight into more
progress was made on a broad front. The simultaneous
diseases than we can list. But among the most important
progress of large-scale genome-wide association studies
research of the year were several studies about stem cells
(GWAS) and personalized genomics, and the many resistance
themselves, and how different types of stem cells differ
tricks of cancer cells that researchers are bringing to light,
from each other.
are examples of such fields that had general momentum in
The iPS cells of different species can differ in important
2010.
ways: scientists discovered that female human iPS cells
do not reactivate their silenced X chromosome during
Genome Research reprogramming, while mouse iPS cells do. The authors were
Genomics continues to forge ahead, with researchers sanguine about their discovery, noting that it enables the
identifying ever-new disease risk factors. The exact number generation of cells that are genetically identical except for
of human genomes that has been sequenced is difficult to the inactivated X chromosome – an ability that could be a
pin down at any given time. But in October 2010, Nature boon for studying X-linked diseases.
estimated that 180 complete genomes had been sequenced Less encouraging was a report last February that iPS cells
– and that that number would rise tenfold by the end of are prone to premature aging, and were far less able then
2011 . Larger-scale genome projects, such as the Thousand embryonic stem cells to go through repeated cell division
Genomes Project (which, in a fabulous example of inflation, cycles while keeping their stem-like properties.
is sequencing the genomes of about 2,500 individuals) and A report last May showed that iPS cells and embryonic
The Cancer Genome Project both reported advances in 2010. stem cells differed in their expression of FMR protein, which
The larger the number of genomes, the better the chances of is the critical protein in Fragile X syndrome. By March of 2011 ,
finding rare variants; in a October, 2010 update on the 1000 a trifecta of studies had shown that induced pluripotent cells
Genomes Project, scientists reported they had seen about 15 differ from embryonic stem cells, and from the skin cells that
million SNPs, 1 million short insertion/deletion changes and are used to make them, in three predictable ways. Induced
more than 20,000 structural variations in their pilot data, pluripotent stem cells had a mutation rate ten times higher
and that fully half of those variations were new. than that of their parent cells. They also have differences in
At the other end of the scale, scientists are also plugging copy number variations, and epigenetic abnormalities, that
away at the Personal Genome Project, which combines set them apart.
genetic and environmental information about (anonymous) Another study also showed that embryonic cells and iPS
individuals to learn how genetics and environmental factors cells differ in their metabolic pathways, which may reflect
interact to produce traits. their different environments; in fact, many of the observed
And in May, researchers reported long sought-after differences may be due to the conditions under which cells
success in yet another aspect of genomics: they succeeded are cultured.
in “booting up” one cell’s cytoplasm with the artificially
reconstructed genome of another cell. The work marked the Cancer Resistance
culmination of 15 years of effort by genomics pioneer J. Craig Like stem cell research, the field of cancer research is
Venter and his team. too broad to list every advance that is worthy of attention
In another attempt at artificial life, a separate team over the course of a year. What stood out over the past year,
reported in January 2011 that it had managed to create amino however, was the critical mass of papers that reported on
acid sequences from scratch that folded into functional mechanisms of tumor resistance to a wide variety of drugs
26 BioWorld® State of the Industry Report 2011