1. The Academic Contribution to Drug Development
Roger M. Perlmutter
Executive Vice President, Research and Development

2. An Innovation Deficit in Pharmaceuticals?
The number of new chemical entities produced by the top 50 pharmaceutical companies is too small to sustain the healthy growth of this group
New technologies (e.g. genomics, combinatorial chemistry, etc.) do not appear to have had a major impact on the provision of new drugs by the industry so far
Jurgen Drews, DDT 3: 491, 1998
For Internal Use Only. Amgen Confidential.

3. R&D Expenditures in the Biopharmaceutical Industry Have Soared Since 1980. . .
CAGR = 12%
Source: PhRMA Annual Survey 2009

4. . . .and Fewer New Drugs are Emerging: We are Spending More and Achieving Less
Approved Drugs (NMEs) and PhRMA Member R&D Spend
PhRMA R&D spend ($B)
NMEs
Sources: Burrill & Company, Biotech 2008 Life Sciences: A 20/20 Vision to 2020, 22nd Annual Report on the Industry; PhRMA annual membership survey (2009)

5. The Evolving Challenge Profile of the Therapeutics Industry
4/16/2017
Few interesting targets
Room for many drugs
Strong intellectual property
Complexity
Challenge
Pace
Thousands of targets
Declining success rates
Rapid generic penetration
Devastating product failures
1980
1990
2000
2010
2020
For Internal Use Only. Amgen Confidential.
Amgen 2007 D&O Template

6. “Glaxo’s Witty Says Nine Top Drugmakers May Fail”, Times Reports*
Nine of the top 15 drugmakers will “wither” or “get taken out” in the next five years
About half a dozen of the biggest pharmaceutical companies may survive as patents expire and business strategies are “tested to destruction”
*Quoted in Bloomberg News,
October 2, 2010

7. Contemporary Estimates Paint a Grim Picture of Future Industry Profitability
Rx Revenues New Products
R&D Spend
’89-’98
$230B
’97-’04
$387B
’99-’08
$537B
’07-’14
$244B
Total of 15 BioPharmaceutical Companies
Source: Lazard estimates

8. The View from Investment Bankers:
“Pharmaceuticals:
Exit Research and Create Value”
- - Morgan Stanley

9. Since 1980, Biopharmaceutical Companies have Largely Abandoned Discovery Research. . .
Percentage of Total PhRMA R&D Expenditures
Source: PhRMA Industry Profile Reports

10. . . .but are These Companies Capable of Supervising Drug Development?
Most industry investment in R&D appears to be wasted
The vast majority of industry investment is spent on clinical research (i.e. development)
A 30-year perspective suggests that industry is not solving this problem on its own

11. Industry and Academia: Why We May Need Each Other
Academic investigators cannot easily pursue high-quality clinical development
Teamwork is undervalued in universities
Difficulty in maintaining a compliance focus
Careerism undermines development intent
Little penalty for failure
Industry investigators have their own problems
Inherent conservatism - - the penalty of prior success
Priorities set in the context of commercial assessments
High penalty for failure, hence novel programs suffer
No company has proved capable of refilling its pipeline

12. Why Might Academic Organizations Now be Able to Pursue Drug Discovery?
Industry, burdened with P&L considerations, has need to out-license NCEs that do not fit within their central focus
Improved methods of patient stratification offer the promise of increasing efficiency in clinical trials
Skilled contract research organizations can assume the burden of maintaining GCP compliance
But – do university physicians really want to develop drugs?

13. Denosumab Blocks Bone Resorption by Binding to a Pivotal Regulator, RANKL
CFU-M
Denosumab Y
Colony-Forming Unit Macrophage
OPG Y
Pre-Fusion
Osteoclast
RANKL
RANK
Growth Factors Hormones Cytokines Y
Multinucleated
Osteoclast
RANKL Y
Activated
Osteoclast
Osteoblast
Bone
Osteoclast Activated
Osteoclast Formation, Activation, and Survival Inhibited 11

14. Can a university tenure ladder accommodate this sustained commitment?
Development of Denosumab Required 15 Years of Investment
Discovery of target
Selection of a clinical candidate
Clinical exploration
Registration-enabling studies
1995
2010
Can a university tenure ladder accommodate
this sustained commitment?
Can staff members be retained throughout
this period? 13

15. The Evolving Challenge Profile in Drug Development May Favor Academic Researchers
4/16/2017
Complexity
Pace
Expense
Uncertainty
Observational anecdotes
Low efficacy hurdle
Few targets
Little incentive for improvement
Powerful new research technologies
Many, better targets
High-quality clinical data
Evolving focus on personalized medicine
1980
1990
2000
2010
2020 15
Amgen 2007 D&O Template 15

16. The Academic Contribution to Drug Development
Roger M. Perlmutter
Executive Vice President, Research and Development