1. Answers for Cancer SwedenBio 2006 2. 2 What are we: • Incorporated October 2000 – 5½ years • Cancer – small molecules • 8 products in the clinic - Mix of niche and large market products • Fruits of 3½ companies (TT, Prolifix, G2M-Frankfurt) • HDACi, Topoisomerase IIi, mTOR • Inlicensed - diphenal urea-based, oral chloride channel blocker (Endovion – NeuroSearch), and a recombinant antibody (Zemab – Novartis) • 97 people spread over 3 sites • VCs are – BankInvest (Danish), Healthcap (Swedish),) and Deutche VC. • Raised a total €46m of equity capital– up to IPO (Prolifix was a cash purchase) • Pre money value – just under €90m • In IPO raised €35m – (11.5m shares) – 6 times oversubscribed – first IPO for 4 years. • 94% of our shares are currently free to trade. • Took VCs down from 80% to just under 60% • Market cap at date of float €120m. Trading in a range between -5 +10% for 9 months • Since April 65-75% up 3. 6 4. 8 Estimated costs to make a new drug • PhRMA – 800 million $ • Tufts University – 900 million $ • Bain & Company – 1,7 billion $ The upside • US prescription medicine 2003 216 billion $ !! 5. Biotech exists because the capital markets enable it to… Computer/Software — customer decides Biotech — capital market decides 4 6. The Party in 2000 Source: Venture One $35$0 2500 2000 Number of Deals 3000 1500 1000 1994 • 1995 • 1996 • 1997 • 3500 VC$ Invested ($Billions) 1998 • Get Big Fast Concepts Funded Time to IPO Young Entrepreneurs Entrepreneurs Control Valuations 1999 • 7. … And The “Morning After” Hangover Get Profitable Fast Where’s the Business Model? P2P: Path to Profitability Experienced Veterans VC Controls Valuation NASDAQ Closing 3940 4697 4573 3861 3400 3000 3200 3400 3600 3800 4000 4200 4400 4600 4800 J a n-00 F e b-00 M a r-00 A pr-00 M a y-00 8. Revitalization by acquisition 9. 13 Broadly based geographical set-up Copenhagen, Denmark – Headquarters • DNA damage control (topoisomerases) • Medicinal chemistry and cancer models • Clinical, regulatory and data management TopoTarget UK limited, Oxford, UK • Chromatin (HDAC) and cell cycle control • Biochemistry, compound screening TopoTarget Germany AG, Frankfurt, Germany • Chromatin (HDAC) control • Clinical and regulatory management • Laboratory unit, cancer models (Karlsruhe) • 2002 – Acquisition of Prolifix Ltd, now TopoTarget UK Ltd • 2005 – Acquisition of G2M Cancer Drugs, now TopoTarget Germany AG 10. 14 TopoTarget – Strategy Maintain a broad and risk-balanced product pipeline: discover and develop novel small-molecule therapeutics with broad potential acquire cancer product candidates and companies with complementary expertise and products repurpose marketed drugs for new cancer indications Key commercial objectives: market speciality cancer products partly by own sales force market novel cancer therapeutics with broad potential mainly through partners 2006 >2007 >2008 PXD101 Avugane™ Baceca® Topotect Savene™ Savicol® 11. 15 Clinical pipeline: 8 drug candidates, >10 indications Technology Product Indication Topo IIi Topo IIi HDACi HDACi HDACi HDACi Anti-HER2 VRACi Savene™ PXD101 Avugane™ Baceca® Extravasation MM (mono) MM (+ Velcade) T-cell lymphoma Savicol™ Topotect Zemab® Endovion Acne Vulgaris BCC FAP & Colon cancer Brain tumours Breast cancer Cancer mTOR HDACi E2F, HSP90 etc. TOP216 More candidates More candidates Breast and prostate cancer Cancer, malaria psoriasis etc. Cancer e2006 e2008 e2008+ e2008+ e2008+ e2008+ e2008 e2008+ e2008+ e2008+ e2008+ e2008+ Phase I expected in Q1 2007 Non-cancer indications will be out-licensed Ovarian cancer PC Phase I Phase II Phase III Reg. Launch Constant pipeline in-flow of promising new cancer drug candidates Colorectal cancer 12. 16 Savene™ for extravasations (EV) Extravasation - Accidental leaking of chemo to healthy tissue A very serious complication - Affects 1 in 100 cancer patients - Current therapy: surgery + rehabilitation Very costly for both patient and hospital TopoTarget solution: UK: Registration of extravasation cases 14 60 2 37 121 159 182 243 295 367 416 0 50 100 150 200 250 300 350 400 450 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 Source: Extravasation org UK Complicated necrosis Savene™ treatmentCurrent treatment Extra- vasation accident 13. 17 Savene™ - Approaching the market 2000: Pre-clinical P-o-C published 2004/5: Very convincing phase II/III results – 98% success in prevention of necrosis and surgeries – only one patient in the trial had surgery Orphan Drug status in Europe and the US Market launch expected Q4 2006 in Europe and the US — Europe: MAA filed in August 2005 — US: NDA process initiated •n •Surgery •Success •rate 51 1 98% TT01: P value < 0.025 TT02: P value < 0.025 From idea to brand in only 7 years!!1999 First results 2006 14. 18 PXD101: unique HDAC inhibitor profile – highly potent prevents cancer cell growth – broad ranged potential against several tumours – Reduces cancer cell chemo resistance Highly promising clinical results — Tumour reduction seen in a number of patients — Stable disease registered in cancer patients — no significant bone marrow toxicity highly promising for use of PXD101 in combination therapy Substantial clinical trial programme - 2 Phase II trials; multiple myeloma (MM) and T-cell lymphoma - 3 Phase Ib/II combination trials in ovarian and colon cancer + MM - NCI will initiate and finance 9-11 PhI or II trials; first trial initiated PXD101 – Promising HDAC inhibitor First Proof-of-concept data anticipated Q3 2006 (MM Phase II trial) 15. 19 BCC is the most common of all cancers – 5m patients annually and incidence is growing – usually treated by surgical procedures TopoTarget solution: Baceca® – Patent protected use of valproic acid (VPA), a mild HDAC inhibitor – Potential as first effective topical treatment – 100% response in clinical efficacy study (pilot) Two Phase IIb trials started in Q4 2005 – Treatment: Retinoid (Vitamin A) +/- Baceca® – placebo-controlled, randomised (basis for registration filing) Commercial strategy – Baceca® will be partnered (dermatology player) Baceca® for basal cell carcinoma (BCC) •n •Full response •Partial response •4 •No response •0 Clinical efficacy data Pictures shown for illustrative purposes 6 weeks BACECA® & retinoid Before treatment •10 •6 16. 20 Avugane™ for acne vulgaris Large clinical need – ineffective therapies and adverse effects Avugane™ – reformulation of the HDAC inhibitor valproic acid (VPA) – targets crucial causes of acne via inhibition of HDACs – provides an effective topical treatment – utilises synergistic activity of HDAC inhibition and retinoid function Promising results from randomised Phase II trial - comparable efficacy compared to standard retinoid treatment - advantageous tolerability compared to standard retinoid treatment - indications of accelerated clinical response Commercial strategy – to be out-licensed to experienced dermatology player Approval expected in > 2008 17. 21 Patient 1-3 AVUGANE treated Patient 4-5 Isotretinoin treated Avugane™: Phase II trial data / efficacy 18. 22 Savicol™ for FAP and colon cancer Clinical problem: FAP leads to colon cancer – FAP (Familial Adenomatous Polyposis) is a niche indication – Current therapy: removal of the colon TopoTarget solution – Savicol™ is a new formulation of VPA (HDACi) – Prevents polyp growth Orphan Drug status in Europe and the US Pivotal Phase II trial initiated in FAB in Feb06 – 66 patients approved by EMEA Commercial strategy – Sell in Europe through own sales force – Out-licence to partner in the US – Successful Savicol™ treatment can be applied to colon cancer FAP colonic polyps FAP disease model 19. 23 Strong news flow since IPO IPO with DKK 259m raised in new capital June Closing of Savene™ (extravasation) multi-centre phase II/III trial June FDA grants Orphan Drug Designation for Savicol™ against FAP July Start Phase II PXD101 monotherapy trials in multiple myeloma in the US August Submission of Savene™ (extravasation) registration file to EMEA August Licensing agreement with NeuroSearch regarding NSD-551 against cancer August Start of phase Ib PXD101 combination study against ovarian cancer Sept Start of phase Ib PXD101 combination trial in colorectal cancer in the US Sept Start of randomized, blinded proof-of-concept Baceca® phase II study in BCC October Presentation at AACR-EORTC of phase I and pre-clinical results on PXD101 November Presentation at American Society of Hematology Annual Meeting: PXD101 demonstrates promising safety profile and potential anti-tumour effect December Pipeline expansion: Acquisition of promising mTOR drug programme December Savene™ promotion agreement covering Eastern Europe and Austria December Start of randomized, pivotal Savicol™ phase II study in FAP February Start of phase II with PXD101 for t-cell lymphomas February Start Phase Ib/II PXD101 and Velcade combination trials in multiple myeloma March Start of first NCI sponsored PXD101 clinical trial April Completion of Phase II of Avugane™ in acne vulgaris April FDA grants priority review status to Savene™ April • Event Timing 20. 24 2006 – A continuously strong news flow Savene™ for Extravasation: Marketing approval in Europe Marketing approval in the US Launch in both Europe and the US PXD101 for cancer: Preliminary proof-of-concept data from first phase II trial in MM Results from phase Ib combination trial in ovarian cancer Results from phase Ib combination trial in colorectal cancer Start randomized phase II trials in multiple myeloma Start of several phase I or II trials under the NCI deal Baceca® for BCC: Completion of phase II trials Avugane™ for acne vulgaris: Final phase II proof-of-concept data Topotect for BM: Completion of phase I/II etoposide combination trial Initiation of further phase I and of phase II trials Savicol™ for FAP: Completion of first phase II trial Zemab® for breast cancer: Initiation of phase II trial Event 21. 25 What do you need • Capable management – can stand up to close scrutiny • Low risk - product close to market • Large market product – blue sky on horizon – opportunity for high reward to compensate for high risk. • Science validated through partnering deals. • A full pipeline – constant stream of news. • A pre-money value approaching €100m – critical mass • Capability to replenish the pipeline • Cash in the bank – pre-IPO round – convince them that you don’t need them. • Not too many hurdles. (Product supply sourced) • Economic cycle in right phase (growth) – high beta stock do better in early stage of economic cycle. Ramp up existing biotechs, become too expensive will look at new biotechs. • If not buying shares in proven biotechs, even less chance will buy in unproven. • List on right market - have Bankers appropriate to that market (Alfred Berg, Danske Bank and Handelbanken). Local Hero. • Good team of auditors and lawyers, public relations firm. (Deloitte, Price Waterhouse, Mazanti, Davis Polke – 144A compliance) • Don’t listen to market tittle tattle • Get offer price right – don’t be too greedy. 22. 26 Pro’s – Better access to capital – Allows M&A strategy using shares as a currency – Profile helps keep and attract best employees – Eases collaboration especially abroad – Success story to get through the eye of the needle – Strengthens project and financial revision – Increases focus on goals and P2P – Exit opportunity for our VC’s and a healthy evolution out of VC era – Trade sale at a good price only for “first mover” platform-or single project companies 23. 27 Con’s The IPO Process • Takes time – very time consuming and eats management resources • Dangerous for the day to day business • Challenging Logistics • Expensive • May fail Post-IPO • No control of ownership – risk of hostile takeover – especially if traded below real value • Focus on long term value creation hampered by impatient market • Resource demanding • A challenge to secure correct interpretation of company messages – and control anticipation • New routes of communication, width and exposure • Stock exchange and market demands on visibility in strategy and projects may be a competitive disadvantage 24. 28 Relationships: Reputation www.whateveryoudodontbuyacompaq.com 25. 29 Disclose “Returns to transparency . . . exceed returns to secrecy.” To Tell the Truth: Consider adding an “intangibles audit” to your annual report. The audit can spell out your thinking about intangibles, communicate your goals, and assess your performance. The Shell Report 26. 31 Share information IPO price (10 June 2005): DKK 22.50 RIC: TOPO.CO No. of shares (29 May 2006) : 40,674,207 Price (29 May 2006): DKK 40,20 Market Cap: DKK 1,635 million IPO lock-up period for VC investors expired 10 Dec 2005 Main investors > 5%: BankInvest HealthCap AntiAnthra Free float: > 94% 27. 32 TopoTarget – Answers for Cancers Early cash-flow from niche products Long-term growth from blockbuster products A leading European oncology company Answers for Cancer Technology Product Indication Topo IIi Topo IIi HDACi HDACi HDACi HDACi Anti-HER2 VRACi Savene™ PXD101 Avugane™ Baceca® Extravasation MM (mono) MM (+ Velcade) T-cell lymphoma Savicol™ Topotect Zemab® Endovion Acne Vulgaris BCC FAP & Colon cancer Brain tumours Breast cancer Cancer mTOR HDACi E2F, HSP90 etc. TOP216 More candidates More candidates Breast and prostate cancer Cancer, malaria psoriasis etc. Cancer e2006 e2008 e2008+ e2008+ e2008+ e2008+ e2008 e2008+ e2008+ e2008+ e2008+ e2008+ Phase I expected in Q1 2007 Non-cancer indications will be out-licensed Ovarian cancer PC Phase I Phase II Phase III Reg. Launch Constant pipeline in-flow of promising new cancer drug candidates Colorectal cancer Technology Product Indication Topo IIi Topo IIi HDACi HDACi HDACi HDACi Anti-HER2 VRACi Savene™ PXD101 Avugane™ Baceca® Extravasation MM (mono) MM (+ Velcade) T-cell lymphoma Savicol™ Topotect Zemab® Endovion Acne Vulgaris BCC FAP & Colon cancer Brain tumours Breast cancer Cancer mTOR HDACi E2F, HSP90 etc. TOP216 More candidates More candidates Breast and prostate cancer Cancer, malaria psoriasis etc. Cancer e2006 e2008 e2008+ e2008+ e2008+ e2008+ e2008 e2008+ e2008+ e2008+ e2008+ e2008+ Phase I expected in Q1 2007 Non-cancer indications will be out-licensed Ovarian cancer PC Phase I Phase II Phase III Reg. Launch Constant pipeline in-flow of promising new cancer drug candidates Colorectal cancer 28. “It’s not enough that we succeed. Cats must also fail.” MOTIVATION