1. Making Sense Out of the Genomics Sector Prepared by Texas Biotechnology for the Houston Technology Center Advisory Board April 13, 2000

2. Texas Biotechnology Genomics: A Marriage Between Biology and Computers nAs way of context - Watson and Crick “discovered” the structure of DNA 47 years ago. nDivining the order of these base chemicals requires significant software and hardware power. nThe Human Genome Project has identified the 3 billion letters (base pairs of nucleolides) that make up the human genome. nYes, genomics will uncover many therapeutic opportunities however, this is a complex market in terms of the biology, the technology and the patent risk.

3. Texas Biotechnology A Basic Primer: Genes, Proteins and Drugs nGenes reside on chromosomes of DNA. nEach human chromosome is a single DNA molecule 100 million bases in length. nThe code for chromosome (22) represents almost 950 printed pages of various combinations of the four base chemicals: u adenosine u cytosine u guanine u thymine

4. Texas Biotechnology A Basic Primer: Genes, Proteins and Drugs nThe gene is biology’s version of an information network using the four-letter alphabet - ACTG. nAny three DNA letters code for one of 20 amino acids that form proteins. nProteins interact with other molecules to form pathways that occupy cells…cells then cluster to form organs. nSimply put, a protein is the molecular equivalent of a messenger or worker.

5. Texas Biotechnology Proteins Are the Primary Points of Potential Therapeutic Intervention nLong before a patient goes to a doctor, a gene misfired and messed up the code of instructions and a cell started making abnormal proteins or abnormal amounts of proteins. nThese “messed up” proteins then interact with other proteins and can cause disease. nExamples of protein drugs* u erythropoetin (Epogen®) rG-GSF u Rituxan® - IDEC Pharmaceuticals u Herceptin® - Genentech u Enbrel® - Immunex *over $9 billion in sales

6. Texas Biotechnology The Players n The genomics industry can be divided into five groups: 1 the tool or equipment companies who focus on gene discovery: (PE Biosystems, Hyseq, Affymetrix, Lark) 2 those who use the tools to build data bases and sell “library subscriptions” to other companies: (Celera, Incyte) 3 those who use the tools to perform high throughput target screening: (Cubist, Aurora Biosystems, Lexicon) 4 those who use the tools to build data bases as well as develop new drugs or gene therapies: (Human Genome Sciences, Millenium) 5 those who are simply bioinformatics companies: (SBI)

7. Texas Biotechnology A Sample Representation of the Genomics Industry

8. Texas Biotechnology Biotech and Big Pharma Investment in Genomics

9. Texas Biotechnology The Risks nGenomics therapy companies are years away from product sales and profitability. nThe tool and service companies will make money in the short-term - some will profit from royalties, also many years out. nThe patent risk is high for this group - as recently displayed by President Clinton and Tony Blair. nThe push to patent anything and everything associated with the discovery process may prove expensive.

10. Texas Biotechnology Top Holders of Gene-Related Patents Issued by the U.S. Patent Office, Year-End 1999

11. Texas Biotechnology Technology Sector is Influencing Biotech Valuations nIn early 1999, the entire genomic industry had a market cap of $5 billion. nToday Millennium Pharmaceuticals, Celera, Incyte, Affymetrix, and Human Genome each have valuations close to $5 billion. nThese valuations are probably an overreaction by technology investors and may “correct” over time. nAt the same time, both biotech and big pharma companies are major investors in genomics companies as these companies will ultimately bring gene therapies to market.

12. Texas Biotechnology TBC is Focusing on Computerized Drug Design for Targets within the Vascular System Vascular Proliferation Inflammation Angiogenesis Apoptosis Vasoconstriction Thrombosis

13. Texas Biotechnology Product Pipeline with Significant Commercial Value Estimated U.S. patients Targeted disease TBC product NOVASTAN® TBC3486 HIT Syndrome PTCA Hemodialysis Stroke 400,000 660,000 250,000 600,000 Pulmonary hypertension Chronic heart failure 100,000+ 5 million Asthma Psoriasis 14 million 4 million Rheumatoid arthritis Asthma 2 million 14 million TBC11251 TBC1269

14. Texas Biotechnology Texas Biotechnology: Investment Rationale nNOVASTAN u approval letter imminent u strong commercial partner in SmithKline Beecham nTwo novel drug candidates in Phase II clinical trials: u Sitaxsentan u TBC1269 nDeep R&D pipeline of small molecule therapeutics focused on therapeutic areas with significant unmet medical needs

15. Making Sense Out of the Genomics Sector Prepared by Texas Biotechnology for the Houston Technology Center Advisory Board April 13, 2000