The Booming Business of Biotechnology Barbara Lano Rummel Lindquist & Vennum PLLP ©2006 Lindquist & Vennum

2 Biotechnology “Biotechnology could have more impact on the world economy than information technology.” “Biosciences are going to change our lives in the next 20 years the same way computer sciences changed our lives in the past 20 years.”

3 Our Program Barbara Rummel What Is Biotechnology and Why Is It so Important? Simon Smith An Overview of Biotechnology in Europe and Elsewhere Kevin Cunningham Biologics in the Pharmaceutical Industry and Legal Work for Biologics TAGLaw Life Sciences Specialty Group

4 Biotechnology The science of developing and manufacturing new products by manipulating living organisms or parts of living organisms (e.g., cells, genes or proteins) for the purpose of modifying human health, food supplies or the environment

5 Biotechnology—History Bacteria long used to process cheese and beer 1940s—penicillin made from living organisms Dramatic increase in past 10 to 20 years

6 Types of Biotechnology Agri-biotech seeks to develop crops that are resistant to insects and drought, have extended shelf lives and offer increased nutritional value Industrial/environmental biotech includes bioremediation (cleanup of hazardous waste) and energy production (biofuels)

7 Types of Biotechnology We will focus on pharmaceutical applications –Industry looking to biologics for predictable and preventative treatments at lower cost and to counter threat of bioterrorism and pandemics

8 The Booming Part Industry, academia and government are all chasing the action Industry players –Companies range from small startups to multibillion-dollar firms –Over 5,000 companies globally –S&P reports 350 biotech companies listed on major U.S. stock exchanges

9 Industry, Academia and Government Universities –Seeking revolutionary advances –Abundant NIH funding for sponsored research

10 Industry, Academia and Government State, local governments hope to create high-paying jobs, promote economic development –In 2005, 41 states reported biotech as target industry –Widespread state funding to develop bioscience development zones –Need venture capital support

11 Industry, Academia and Government Industry –R&D spending in biotech is among highest of U.S. industry groups (Amgen– $2.2 billion in 2005) –Global revenues/spending estimated at: $80 billion in revenues in 2005 $160 billion invested between 2000 and 2005 $34 billion in U.S. financing/partnering among firms in 2005

12 Trends Fueling the Boom Demographics and disease trends –Longer life spans –Higher percent of elderly –Growing populations in developing nations Top four causes of death are disease- related Large pharmaceutical companies looking for biologics to replace block- buster drugs with expiring patents

13 Trends Fueling the Boom In 2004, PhRMA reported 800 experimental meds in R&D for application in elderly U.S. awarded $1 billion in flu-vaccine contracts to five companies to develop cell-based vaccine technologies for seasonal and pandemic influenza viruses

14 A brief introduction to biologics Traditional “drugs” are typically small molecules developed in a chemical process Biologics are large molecules developed from manipulating a natural source such as a cell, protein or gene –E.g., therapeutic proteins, monoclonal antibodies –Far less predictable than chemical means Pharmaceutical Biotech

15 Legal Services Development, manufacture, sale of biologics involves myriad legal services –IP and patents just the beginning –Longer, less productive R&D requires more funding; extensive licensing, partnerships and M&A between small biotech companies and large pharma

16 Legal Services (cont.) –Global industry heavily regulated by FDA and foreign authorities; complex reimbursement issues –High failure rates: disputes, workouts and bankruptcies

17 Life Sciences Specialty Group Life Sciences Specialty Group Member list Firm experience