1. The San Diego Life Science Cluster: A Regional Model for Global Success Genome BC/BC Biotech Presentation April 29, 2003

3. San Diego’s Economy in Summary* Per capita income in 2000 was $31,500 – 15 th of 20 largest metropolitan areas. Unemployment in 2000 was 3.0% (peak was in 1993 at 7.7%). Median home price in January 2003 was $340,000. Fewer than 50% of residents own their homes. * Source: SD Association of Governments

4. The Pre-Life Science Economy in San Diego Pre-1990: San Diego economy was primarily tourism and defense based. Early 1990s: Severe economic impacts caused by defense cutbacks affecting aerospace, space, shipbuilding and other military-driven industries. By 1993 San Diego lost 58,000 jobs, 60% in high-wage manufacturing sectors.

5. Life Science and San Diego’s New Economy Diversity in 4 major clusters that are now converging: life science, electronics, telecom, and software. From 1990 to 1998 high tech and life science added over 46,000 jobs to the region – all but replacing the defense contracting loss. The success of the region is due to multiple factors, but the physical environment plays a significant role.

6. Contributors to the Emergence of San Diego’s Life Science Cluster UCSD and private research institutes. BIOCOM/san diego, UCSD-CONNECT, San Diego Regional EDC and other associations. Availability of a skilled workforce. Local and state government collaboration. Angel investment and venture capital firms.

7. The Emergence of Life Science – The Role of UCSD UC San Diego emerged in the 1980s as a biological research powerhouse. UCSD supported development of biotech start-ups through an aggressive tech transfer program. UC San Diego’s contribution: - 3 rd in U.S. in federal research grants with $351 million in 2000. - 150 companies formed out of UCSD research.

8. The San Diego Life Science Community Today 377 companies – 38 publicly traded. 216 life science drug/therapy companies; 161 med device companies. Market capitalization $23.7 billion. 9% of all drug revenues with product sales of $866 million in 2000. Currently 14 million square feet of laboratory space is occupied by life science region-wide.

9. San Diego’s New Economy IPOs increased from 1 in 1990 to 11 in 2000; proceeds in 2000 were $981 million. Exports were $9 billion in 1999 – a 7.4% per year growth rate since 1993. Venture capital investments in 2002 were $2.185 billion, a 15-fold increase from 1990.

10. Life Science Job Growth From 1990 to 2000 industry employment in San Diego grew by almost 100%, from 18,000 to 35,000 jobs. In the same time period, salaries on average rose from $39,000/year to $70,000/year. Currently, life science products comprise about 7% of employment in the region. Life science job growth is forecasted to grow by 40% from 2000-2010.

11. Life Science Company Size 57% of San Diego companies have between1-50 employees. 31% of San Diego companies have between 51- 250 employees. 12% of San Diego companies have more than 250 employees.

12. The San Diego Life Science Workforce Today Total life sciences payroll in 2000 in SD was $2 billion. Approximately 7% of the workforce is on H1-B work visas, primarily scientists. $682 million in NIH grants awarded in 2000 – more per capita (scientist) than any other region.

13. Intellectual Property is a Key Asset for the Industry 650 U.S. and 750 foreign patent applications filed in 2000. 100 U.S. and 300 foreign patents approved in 2000. 800 U.S. and 900 foreign patents pending as of 2000.

14. Disease Targets of San Diego Life Science Companies Cancer treatment: 26% Immune disorders: 26% Cardiovascular diseases: 15% Neurological disorders/diseases: 14% HIV/AIDS: 6% Other: 13%

15. What is the Status of Product Development? 13% in Phase III 13% in Phase II 11% in Phase I 4% IND 24% in preclinical testing 35% in research lab.

16. An Industry Delivering on the Promise of Products 1995 - 100 products in clinical trials 1996 - 150 products in clinical trials 1997 - 160 products in clinical trials 1998 - 300 products in clinical trials San Diego-based companies surveyed by BIOCOM currently have more than 25 commercial products and 86 products in late- phase clinical trials.

17. Commercial Products are Becoming a Reality Viracept® by Agouron/Pfizer is the leading HIV drug in the world with 50% of the market. Rituxan® and Zevalin™ by IDEC are the first monoclonal antibody and first radioimmunotherapy for treatment of non- Hodgekin’s lymphoma to be approved by the FDA. Targretin® by Ligand treats cutaneous manifestations of cutaneous T-cell lymphoma. Rapid, sensitive early detection assays developed by Gen-Probe are used by the Red Cross to screen donor blood for HIV and Hepatitis C

18. When Will New Products Reach the Market? 5% are more than 5 years away from commercialization. 4% are from 3-5 years away. 24% are from 1-3 years away. 8% are from 6 months - 1 year away.

19. The Emergence of Life Science – The Role of Associations Cooperation and collaboration are characteristic of San Diego as a region. BIOCOM, SD Regional EDC, the SD Chamber of Commerce and UCSD-CONNECT work together on biotech and general economic issues. Each association takes the lead in the area in its area of strength.

20. The Role of BIOCOM BIOCOM was formed in 1995 through the merger of the SD Biocommerce Association and the BIC. BIOCOM membership consists of 450 life sciences and service companies and institutions. BIOCOM and the greater SD community represent a system of members that drive success of the industry.

21. The BIOCOM Mission To position the greater San Diego life science community to achieve individual and collective success on the world stage of scientific and technological innovation, and in the development of products that improve global health and quality of life.

22. The BIOCOM Mission To achieve its mission, BIOCOM focuses on creating an environment where legislative policy, regulatory actions, resources, economic conditions and public awareness positively influence the growth of the industry.

23. The BIOCOM Vision To be recognized by each of our members as the most valued organization in strengthening and enhancing their potential for success.

24. The Strength of Membership Membership consists of numerous sectors including: Biotech, large pharma and biomed devices Tech service Patient care Education and academia Financial ventures

25. The BIOCOM Leadership Agenda BIOCOM has adopted a six point Leadership Agenda: 1.Advocate responsible legislative policy. 2.Promote an effective and responsive regulatory climate. 3.Enhance public perceptions and patient awareness. 4.Attract and educate sources of financial capital. 5.Foster expedited scientific development and technology transfer. 6.Attract and develop critical human resources.

26. BIOCOM Leadership Structure Board of Directors - max. 50 members. Executive Committee - Officers and 6 at large members. Board Committees: Member Services; Capital Development; Public Policy & Regulatory Action; Science and Technology; Workforce and Capability Development.

27. Regional Coalition Partners San Diego Regional Chamber of Commerce American Electronics Association San Diego Workforce Partnership World Trade Association UCSD-CONNECT

28. The Future of Life Science in San Diego Fully integrated life science companies will increase. Increased collaboration/merger to build product base. Growing presence of “Big Pharma”, e.g. Pfizer, Merck, Becton-Dickenson, Elan, Johnson & Johnson and Bristol-Meyers-Squibb. Growth of platform technologies and bioinformatics contributing to accelerated drug discovery. San Diego will move to manufacturing products, e.g. IDEC’s new planned 400,000 square ft. plant.

29. Conclusions Having moved from non-existence to it’s current level of economic significance in San Diego, the life science cluster is fulfilling it’s economic promise. The future economic potential of life science in San Diego is significant due to the presence of other contributing clusters. Partnerships between industry, government and academia have played and will continue to play a major role in the growth of San Diego’s life science industry.

30. Conclusions BIOCOM has been a primary reason for the SD life science industry’s success to date. The SD life science community has critical needs that must be met for future success, including capital, workforce and regulatory challenges. San Diego’s life science community must create a more prominent position for itself on the world stage – BIOCOM will take on this responsibility in the future as a regional association with a global presence.