1. Overview of the Phase I Market Ken Getz Tufts CSDD; CISCRP October, 2010

2. Agenda Overview of the Drug Development Landscape The Phase I Market Key Market Trends Optimization Opportunities 2

4. Commercialization Conditions Restrictive price controls Healthcare reform uncertainty and adverse impact Depressed global markets High-level of revenue at risk R&D Operating Conditions Low success rates Declining levels of innovation Rapidly rising R&D costs Regulatory conservatism Public discontent Overview of the Drug Development Landscape

5. Declining Rate of Innovation per R&D Dollar Source: Tufts CSDD Approved NCE Database, PhRMA, 2008 R&D expenditures adjusted for inflation R&D Expenditures New Drug Approvals * Trend line is 3-year moving average

6. R&D Cost Drivers Chronic and complex indications Clinical trial size Protocol design complexity Patient recruitment/retention High cost discovery/research tools Regulatory demands Market oriented studies Late-stage attrition

7. Downsizing and Consolidation Source: WSJ Announced and Planned Layoffs (2008 - 2010)

8. 20012003200520072009Annualized Growth Total Global Development Spending $27.3$33.6$41.5$49.6$54.89.1% Total Spending on Contract Clinical Services* $3.7$4.9$6.4$8.5$10.113.4% Outsourcing Demand * ($US Billions) *Note: Does not include pass-through clinical services (e.g., central lab fees, investigator grants) Source: TCSDD

10. Distribution of FDA-Regulated Investigators Percent of Total 1572s Filed Sources: Tufts CSDD 20011997 2005 2009

11. Protocol Complexity 11 Phase I Phase II Phase III Phase IV Unique Procedures (mean) 30.3 29.2 28.4 26.4 Growth in Unique Procedures 35.10% 35.60% 42.1% 63.20% Total Procedures (mean) 221.8 156.3 147.5 93.9 Growth in Total Procedures 13.40% -1.30% 10.9% -2.4% Total Work Burden (mean) 58.4 43.4 43.1 28.4 Growth in Total Work Burden 70.20% 32.80% 59.7% 58.10% Note: Growth rates reflect the change in mean values of protocols in 2000-2003 and 2004-2007. Source: Tufts CSDD

12. US $ in Billions Total Global Phase I Spending US $ in Billions Source: Parexel Sourcebook CAGR 15.6%

13. Number of Active Phase I Drugs in Development Worldwide CAGR = 10.2% Source: Parexel Sourcebook

14. Clinical Research Phase Comparisons 5 Year Annual Growth Rates (2005 to 2010) Products in Development Development Spending Phase I10.2%15.6% Phase II8.0%8.3% Phase III5.9%11.5% Sources: Parexel International

15. Development Pipeline by Phase Source: Parexel International

16. Active Phase I Drugs by Major TA Therapeutic Area200320072010 Oncology204340386 Immunologics45112162 Digestive System Drugs65120147 Endocrine System Drugs5793115 Anti-Infectives7596112 Vaccines & Antidotes70122105 Cardiovascular System Drugs456783 Analgesics & Anti-Inflammatory Agents479982 Bone, Cartilage, Connective Tissue System Drugs496974 Psychotropics & Neuroleptics366760 Respiratory System Drugs286657 Dermatomucosal System Drugs124445 Motor System Drugs182928 Source: IMS R&D Focus

17. Distribution of Active Clinical Trials Phase I Phase II Phase III Phase IV N. America76%64%38%47% WEurope14%22%32%31% EEurope5%6%10%7% Asia4%5%11% SC America1%3%9%4% Source: Opperheimer 2008 Analysis of Clinicaltrials.Gov,

18. Market Share in 2009 of Global Phase I Facilities Sources: Tufts CSDD

19. Facility Locations Source: Company PublicationsLocation Average Number of Beds n Africa892 Asia549 Canada1547 Europe5918 US8923 Middle East271 Worldwide8160

20. Key Trends Shaping the Phase I Market Heightened safety concerns Emphasis on hospital and in-patient-like settings Shift to US and Canada for time and cost advantages post EU Directive Increasing proportion of patients vs. healthy volunteers Modified and combination protocol designs Transfer operating risk to CROs Growing receptivity and entry by for-profit, community-based investigative sites Source: Tufts CSDD interviews

21. Source: PhRMA Industry Profiles Clinical Personnel Growth

22. Phase I Spending Overall and for Outsourcing (US $ in Billions) Source: Jeffries & Company

23. Total Direct Cost per Patient by Phase (2007-2009) Source:TTC

24. Two Optimization Opportunities

25. Supporting Investigative Sites for Success 25 Sources: TCSDD Survey of 3,516 Sites, 2010

26. 1991 Committee on Competitiveness o Pharmaceutical and Biotechnology industries are national treasures o Most innovative and productive relative to other R&D-intensive industries o Saves lives and lowers the burden of health care costs o Most financially healthy (robust revenue and profit) o Major contributor to the economy

27. Public Confidence and Trust in the CRE General Public Attitudes Perceptions of Clinical Research Professionals 70%-83% of Americans believe clinical research is ‘very important’ or ‘essential’ to advancing public health 65% of Europeans believe that clinical research plays an important role in advancing public health 42% of Americans and 36% of Europeans distrust biopharmaceutical companies 31% of Americans believe the FDA is effective at ensuring public/patient safety 25% of Americans and 17% of Europeans believe that PIs and study staff are primarily motivated by greed Sources: Research!America (JAMA, 2005); Ohmann (2004); HarrisInteractive (2002, 2004, 2007)

28. By Extension… Study Volunteers ‘Who makes a better contribution to mankind?’ Source: CISCRP, 2006; N=900 Desperate (~29% believe only seriously-ill participate) Risk Takers (80% believe participants are ‘gambling’ with their health) Ambivalently respected (34% ‘Don’t Admire’ study volunteers)

29. CISCRP: Collective Public and Patient Outreach SUSTAIN (Community of Participants and Ambassadors) ENHANCE (General Education and Awareness) RECRUIT & RETAIN ENABLE (Support Network and Tools) AWARE for All ‘Medical Heroes’ PSA Media Outreach Science Museums Speakers Bureau Search Clinical Trials Legislation Social Media Outreach CISCRP Membership Post Trial Communication Patient Ambassadors Site/CTSA Support HC Provider Education Pharmacy-directed education ‘Voice of the Patient’ Medical Community Outreach

30. Impact of Protocol Complexity and Burden (All TAs, All Phases) Less Complex Protocols More Complex Protocols Difference Number of case report form pages per protocol (median) 55180+38% Study volunteer enrollment rates75%59%-21% Study volunteer retention rates69%48%-30% Time from Protocol Ready to last patient last visit (LPLV) 413 weeks714 weeks+72% Number of Amendments1.93.2+68% Source: Tufts CSDD

31. Conclusions Current drug development landscape necessitating major changes in how global clinical research will be conducted Phase I market an area of unprecedented change and opportunity to improve drug development performance and efficiency – Volume of activity – Economics – Structure Opportunities to improve Phase I success – Patient/public outreach and education – Protocol design simplification 31

32. Ken Getz Senior Research Fellow, Assistant Professor Tufts CSDD, Tufts Medical School 617-636-3487, Kenneth.getz@tufts.eduKenneth.getz@tufts.edu Founder and Board Chair CISCRP 617-725-2750, kengetz@ciscrp.orgkengetz@ciscrp.org THANK YOU!