Proteus Investor Presentation (2012)
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Proteus Venture PartnersProteus Venture PartnersTransforming Healthcare through Regenerative Transforming Healthcare through Regenerative MedicineMedicine
June 2009
CONFIDENTIAL 2
Fund SummaryFund Summary
Regenerative Medicine Fund
Global reach Stage agnostic Top tier venture returns 1st mover advantage
Technology Focus Cell Therapies Regenerative Compounds Tissue Engineering Tools & Enabling Devices Aesthetic Medicine
Addressing Large Markets
Large unmet medical needs Aging population
World Class Team Core team with complementary skills
Deep domain expertise Outstanding SAB & strategic partners
Industry leadership
Disciplined Investment Approach Proprietary deal flow Rigorous due diligence Build value thru active management
Timely exits
Target Investments Outstanding technology & team Defensible IP Viable business model Near term path to clinic or revenues
The Promise of Regenerative MedicineThe Promise of Regenerative Medicine (Select (Select Examples)Examples)
To Regenerate Heart MuscleTo Grow & Replace Entire Organs
Tissue EngineeredUrinary Bladder CONFIDENTIAL 3
Beating Cardiomyocytes •(double click to
see)
Paralyzed Rat(double click to see
video)
Paralyzed Rat Walks(double click to see
video)
Restricted Glial Cells for Remyelination* Untreated Transplant – 1 Year
Later
*Source: Steve
Goldman, Rochester
To Heal Acute Spinal Cord Injury
Geron receives FDA go ahead to initiate ESC therapy in clinical trials Jan 23, 2009
CONFIDENTIAL 4
Agenda
I. Proteus Team
II.Proteus Coverage of Regenerative Medicine
III.Why Invest in Regenerative Medicine Now?
IV.Proteus Investment Strategy
V. Summary and Next Steps
Proteus Team and Network of Relationships
1. Specialized Set of Skills
2. Industry Leadership
3. Worldwide Network / Discovery Relationships
4. Result: Early Access to Best Innovation, IP & Scientists
Proteus’ Team
Business Team
Greg, JDJeff, MBA
Ward, PhD, MBA
Business Team
Greg, JDJeff, MBA
Ward, PhD, MBAOperationsRegulatory
Science / Technology
Finance
Team Built to Succeed in RM
Finance
Builders of value
Deep knowledge of valuations, business models and deal structures
Structured many successful exits: M&A, IPO, Partnerships
Operations
Extensive Board & management experience
Understand RM commercialization strategies & biz models
Command of IP landscape
Science /
Technology
Broad expertise In RM
Conducted pioneering research
Deep ties to academia
Regulatory
Close and regular ties to regulatory agencies
Thorough knowledge of FDA and EMEA regulations
Nuanced understanding of clinical trial design within the context of RM
Technology Team
Alan, PhDAsma, PhD
Chris, FRCS, PhDDaniel, MDFayad, MD
Leonide, PhDMelissa, PhD
Susan, FRCS, PhD
Technology Team
Alan, PhDAsma, PhD
Chris, FRCS, PhDDaniel, MDFayad, MD
Leonide, PhDMelissa, PhD
Susan, FRCS, PhD
CONFIDENTIAL 8
Proteus Team: Senior Partners
Gregory A. Bonfiglio, Managing Partner
- Early Investor in Regenerative Medicine- Senior Partner at Anthem Venture Partners- Stellar track record: Top 5% Returns - Senior Partner - Morrison & Foerster- Adjunct Professor - Stanford Law School - RM Industry Leader: Frequent Speaker- ISSCR Industry & ISCT Commercialization Committees
- Served on Numerous Boards
Jeffrey S. Karan, Senior Partner
- 25+ yrs building value in companies- 12 years with Morgan Stanley & Goldman Sachs- Managed Over $5B of equity, debt, and M&A deals
- Managing Partner of Woodside Capital Partners- Extensive experience raising capital, aggregating assets, and negotiating partnerships
- Structured numerous IPO and M&A Transactions - Dartmouth, BA; Tuck, MBA, Edward Tuck Scholar
Senior Partners have 50+
years of venture capital,operating and financialadvisory experience
Strong operational andentrepreneurial DNA
Complementary skill sets
Collaborative approach
Long-standing interpersonal relationship
Deep network with RM community, companies and scientists
CONFIDENTIAL 9
Senior Scientific Advisors
Alan J. Russell, Ph.D.
Director of the McGowan Institute for Regenerative Medicine, Pittsburgh Professor of Surgery, UPMC Professor Chemical Engineering, Bioengineering, and Rehab Sciences & Technology Executive Director of the Pittsburgh Tissue Engineering Initiative (PTEI) Director of the National Tissue Engineering Center (NTEC) Founder of Agentase LLC
Chris Mason, MBBS, PhD, FRCS
Director, Regenerative Medicine & Stem Cell Bioprocessing Unit, UCL Fellow of the Royal College of Surgeons of England PhD in Stem Cell/Tissue Engineering (University College London) Cofounder of the London Regenerative Medicine Network (LRMN), Editorial Boards of the journals "Regenerative Medicine" and "Tissue Engineering" Founder + Member of the Steering Committee for the UK National Stem Cell Network Founder/Director of Stem Cell Translation Ltd
Senior Scientific Advisors
Melissa Carpenter, PhD,
13+ years developing stem cell therapies
Leadership positions at CytoTherapeutics (StemCells Inc), Geron, and Novocell
Numerous publications and patents in the stem cell field
Experience in translating discovery research into regenerative medicine therapies
Experience in developing preclinical development strategies
Deep knowledge, experience and networks in RM
Created innovative stem cell related IP
Deep ties to academia
Access to early deal flow and technology
Extensive clinical work
United States Venture Partners
Daniel Kraft, MD, Venture Partner
Stanford and UCSF Faculty Member Pioneering Stem Cell Research Multiple publications, inventions & patents
Extensive clinical work with stem cell transplantation
Founder & BOD of StemCor: RM Tools Company
Medical Training at Stanford & Harvard Boarded Certified in Internal Medicine, Pediatrics, and Hematology/Oncology
Kaufman Fellow
Deep knowledge, experience and networks in RM
Founded stem cell based companies
Created innovative stem cell related IP
Deep ties to academia
Access to early deal flow and technology
Extensive clinical work
Operational experience, SAB and BOD roles in RM focused companies
CONFIDENTIAL 12
International Venture Partners
Dr. Susan ML Lim, FRCS, Ph.D. (Singapore)– Chairman, Susan Lim Surgery & Group of Practice, Consultant General Surgeon, Transplant Surgeon– Chairman & CEO, Stem Cell Technologies focused on human adult progenitor cells derived predominantly from adipose tissue– MBBS (Hons 1 Monash University); PhD (Cantab), FRCS (Edinburgh, Gold Medal); FRCS (Glasgow); M.Med Surg (Singapore), FACS,FAMS, HonMD (New Castle), Visiting Professor to the Institute of Cell & Molecular Sciences, Barts & University of London, Queen Mary College
Fayad A. Dandashi, M.D. (Kingdom of Saudi Arabia)– Founder and CEO of FutureMed, a leading Saudi biotechnology company– Formed the first private Umbilical Cord Blood Bank in KSA– Introduced mesenchymal stem cell banking services in Jeddah– Co-founder and Managing Partner of several specialty medical companies, including: MedLab KSA (diagnostic lab), The Eye Center (ophthalmology center), and Mashafi Group (Secondary Care Hospitals)– M.D. by training with strong business and entrepreneurial experience
Asma Ibrahim Al Asad, B.S. (UAE)– Business Development Manager, Dubai Cord Blood & Research Center (DCRC)– Project Manager, Dubai Cord Blood & Research Center (DCRC)– Chief Lab Technologist, Hematology Department, Department of Health & Medical Services– Co-founder of DCRC, the 1st UAE mixed (public & private) cord blood bank , 1st of its kind in the Middle East.– Engaged with Bone Marrow Donor registries worldwide
CONFIDENTIAL 13
Proteus Advisory Board & Key Academic Relationships
Tony Atala, MD Tissue Engineering; Director RM Inst, Wake Forest Jacqui Brandwynne, MBA Aesthetic Medicine; Yardley; Citicorp; Neutrogena Gordon Keller, PhD ESC Biology & In Vitro Tools; Dir of RM, Univ. of Toronto Arnold Kriegstein, MD, PhD Neural Stem Cells: Dir. UCSF Dev Bio & Stem Cell Program Robert Lanza, MD ESC Biology & Therapy; VP. R&D of ACT Michael Longaker, MD, MBA RM; Director- Stanford Institute of Regenerative Med Malcolm Moore, PhD Cell Therapy; Memorial Sloan Kettering, Inventor of Neupogen
Gail Naughton, PhD, MBA Business; Dean San Diego State B-School; Founder of ATS
Julia Polak, MD, DSc Tissue Engineering; Imperial College London Brock Reeve, MBA Executive Director, Harvard Stem Cell Institute Wolf Reik, PhD Epigenetics & Tools; Babraham Institute, UK Myron Spector, PhD Tissue Engineering; Orthopedics Research, Brigham &
Women's Hospital; Prof. at Harvard Medical School & MIT
Key Academic Relationships:Harvard, Stanford, MIT, University of Wisconsin, UCSF, UPMC, Wake Forest, Columbia, Univ. of Toronto, Burnham Institute, U Washington, MD Anderson, UCL, Oxford, Imperial College, King’s College London, Cambridge (England), Singapore MIT Alliance
Proteus’ Coverage of RM
1. All Major RM Platforms
2. Across Medical Indications
3. Access Best Teams, IP & Innovations at Earliest Stage from around the World
CONFIDENTIAL 15
Regenerative Medicine is Transforming Healthcare
CONFIDENTIAL 15
CONFIDENTIAL 16
RM Is A Broad Field: 5 Key Sectors (Selected Applications)
Aesthetic Medicine Dermal Fillers Hair Restoration Anti-Aging/Anti-WrinkleTooth Regeneration
Cell Therapies Heart Disease Diabetes Vision Disorders Neurological Disorders
Tissue Engineering Organ Replacement Tissue Regrowth Bone & Cartilage Wound Healing
Regenerative Compounds Compounds that triggerendogenous regeneration Anemia Advanced Wound Healing Advanced Fracture Healing
Tools & Devices Delivery Devices Cells Assays for DD&D Predictive Toxicology Bioinformatics
Breadth of RM Products In DevelopmentBreadth of RM Products In Development
CONFIDENTIAL 17
Cancer8%
Cardiac12%
Diabetes10%
Eye2%
Gastrointestinal1%
Liver3%
Muscle1%
Orthopedic23%
Periodontal1%
Respiratory1%
Skin17%
Vascular3%
Urinary2%
Wound3%
Blood3%
Neural10%
Proteus’ database covers 700+ RM products in development
RM treatments cover large
markets of unmet medical needs with aim of curing vs. treating diseases
Cardiovascular diseases ex: Theregen (cell based patch to promote small blood vessels in heart muscle), Cytograft (dialysis shunt / coronary artery bypass graft), Cytori (adipose stem cells)
Cancer and Hematologic diseases
ex: Cellerant – Neutrapenia; Fate Therapeutics – first products likely to be in cancer; G-CSF (Neupogen and the newer Neulasta)
Central Nervous SystemEx: Geron – spinal cord; Q-Therapeutics - demyelinating diseases; California Stem Cell – motor neuronal diseases; ACT - macular degeneration
Orthopedic diseasesex: BMP – Infuse; CellCoTec (autologous cartilage), Genzyme - Carticel™ for cartilage repair; Tigenix (biopsy & implant); ISTO - cells & scaffold
Diabetes ex: Novocell- encapsulated islet cells; BetaCell – encapsulated xenograft; diabetic complications: Stratatech for diabetic foot ulcers
Applications of Regenerative Medicine
Regenerative Compounds: already 50% of Biotech Sales
Cytokines (Some Interferons and Interleukins (Avonex, Rebit, Betaseron)
9%Human Growth Hormones
(Except insulin)2%
Tissue Growth Factors (BMPs mostly,
neurotrophic GF, wound healing GF)
2%
Blood Growth Factors (led by CSF, EPO, derivatives)
35%
Other Biotech (monoclonal antibodies, insulin, other)
52%
Biotech Sales (2006) – Regenerative
Compounds on Right Half
$3.4b
$21b$14.1b
$0.8b
$0.8b
Expected CAGR: 15-20%
Source: Frost & Sullivan and Aggarwal, Nature 2007
Why Invest in Regenerative Medicine Now?
1. Technology is Maturing After 30 Years of Development
2. Addressable Market is Enormous and Growing
3. Big Pharma is Very Active
CONFIDENTIAL 21
Why the Time to Invest is Now
400+ Companies Research programs proliferating: 80+
Technology maturing
Clinical activity accelerating (800+ FDA trials)
Increased Government Funding
Demographics: aging populations
Large unmet medical needs
Pharma pipeline diminishing
Public markets receptive
The Market is at a Crucial Inflection Point
Technology Push Market Pull
Healthcare Spend is 17% of US GDP Heading Towards 23%
RM is Maturing after 40 Years of Development
CONFIDENTIAL 22
Development of Regenerative Medicine
1968 – ALL patient irradiated, infused with identical twin BMT
1968 – ALL patient irradiated, infused with identical twin BMT
1973 – First unrelated bone marrow transplant
1973 – First unrelated bone marrow transplant
2001 – RhBMP-7 approved
2001 – RhBMP-7 approved
Dermagraft - FDA Approval 2001Dermagraft - FDA Approval 2001
1997 – Dolly the Sheep clonedLate 1990’s – Multiple FDA Approvals
Carticel (1997)
Apligraf (1999)
1997 – Dolly the Sheep clonedLate 1990’s – Multiple FDA Approvals
Carticel (1997)
Apligraf (1999)
1960s 1990s1970s 1980s 2000s
Source: Company websites, NIH, Pubmed
2005 Use of unrelated cord blood in BMT
2005 Use of unrelated cord blood in BMT
1963 – Mouse ASCs isolated1963 – Mouse ASCs isolated
1981 – Mouse ESCs isolated1981 – Mouse ESCs isolated
1986 – First Mouse Cloned1986 – First Mouse Cloned
1998 – Human ESCs isolated
1998 – Human ESCs isolated
2006 – hESCs produced w/out harming the embryo
2006 – hESCs produced w/out harming the embryo
Current technologies build on 40 years of research
1993 – ViaCell Begins Banking Cord Blood
1993 – ViaCell Begins Banking Cord Blood
1990 – Geron Founded1990 – Geron Founded
Technology Push: Beginning the 2nd Half of the Gartner Curve
CONFIDENTIAL 23
Stage of Development
Visibility
Technology Trigger
Peak of Inflated Expectations
Trough of Disillusionment
Slope of Enlightment
Plateau of Productivity
1980 Early TE research (MIT)
1985 Term “TE” coined1986 ATS & Organogenesis founded
1988 SyStemix founded
1992 Geronfounded
1997 First cell therapyFDA approved (Carticel)
1997 Dolly the sheep
1998 Human ESCs first derived
1998 Plan to build human heart in 10 years
1999 First TE product FDA approved (Apligraf)
1999 TE bladders in clinic
1999 Intercytex founded
2000 Time Magazine:TE No. 1 job
2001 Bush “partial ban” on HESCs
2001 Dermagraft FDA approved2001 TE blood vessel enters clinic
2001 Ortec FDA approved
2001: 3300 jobs, 73 firms, mkt cap > $2.5B
2002 ISSCR founded
2002 ATS + Organogenesis file Chapter 11
2003 UK Stem Cell Bank set up2005 CIRM founded2006 Carticel - 10,000 patients2006 hESCs derived without harming embryo2006 Batten’s Disease trial2006 Reneuron file IND for stroke trial2007 Apligraf - 200,000 patient therapies2007 Human iPSCs Derived2007 Intercytex start Phase 3 ICX-PRO2007 1.2M+ Patients Treated 2007 $1.5B RM Product Revenues2007 800 FDA Clinical Trials Ongoing 2007 50 Public Companies: $4.7B Mrkt Cap
Time
Public Markets Are Rewarding Clinical Progress
CONFIDENTIAL 24
Company Product / Stage
Market Revenue Mkt Cap (as of 12/31/07) / M&A
AnorMED Mozobil, Phase III Hematopoietic stem cell transplantation
< $1M Acquisition by Genzyme: $580M
(10/2006)
Cell Genesys(CEGE:NASDAQ)
GVAX Cancer Immunotherapy / Phase III
LeukemiaPancreatic CancerProstate Cancer
$1M $190M
Dendreon(DNDN:NASDAQ)
Provenge;:FDA review (prostrate cancer)Neuvenge: Ph I (breast, ovarian, colon cancer)
Cellular immunotherapy, monoclonal antibody, and small molecule product candidates to treat various cancers
< $1M $530M
Geron(GERN:NASDAQ)
Filing IND for spinal cord early 2008
treatment of cancer,spinal cord injury, heart failure, diabetes, and HIV/AIDS
< $4M $440M
Intercytex(ICX.L:LSE/AIM)
ICX-PRO, Ph III – in Ph III for VLUs & Ph II for DFUsVAVELTA®, Ph IIICX-TRC, Ph II
Stimulate active repair in chronic woundsFacial rejuvenationHair regeneration
< $1M $75M
LifeCell (LIFC:NASDAQ)
AlloDerm ; GraftJacket; AlloCraft
Tissue-based prods for reconstructive, orthopedic, and urogynecologic surgical procedures
$166M $1.4B
Osiris (OSIR:NASDAQ) Prochymal, Ph III & II Provacel, a phase I
GVHD & Crohn’s DiseaseAcute MI
$10M $410M
ViaCell UC storagePre-clinical work in cancer, cardiac & diabetes
Collecting and preserving stem cells from umbilical cord blood
$59M Acquisition by Perkin Elmer
$300M 10/07 – 52% premium)
Brand Name Company Generic Name Indication
Patent Expiratio
nFDA
ApprovalSales 3Q 2007 ($MM)
Actos Eli Lilly / Takeda Pioglitazone Type 2 diabetes 2011 1999 $180
Advair/Seretide GlaxoSmithKline Fluticasone Asthma 2010
1998/1999 $1,721
Aprovel Sanofi-Aventis / Bristol-Myers Squibb Irbesartan Hypertension 2011 1998 $392
Aricept Pfizer / Eisai Donepezil HCI Alzheimer’s 2010 1996 $100
Avandia GlaxoSmithKline Rosiglitazone Type 2 diabetes 2012 1999 $463
Cozaar Merck Losartan Hypertension 2010 1995 $814
Crestor AstraZeneca Rosuvastatin Cholesterol 2012 2003 $691
Diovan/Co-Diovan Novartis
Valsartan+hydrochlorothiazide
Hypertension (high blood pressure) 2012 1996 $1,267
Levaquin Johnson & Johnson Levofloxacin Antibiotic 2010 1996 $366
Lipitor Pfizer Atorvastatin Cholesterol 2011* 1996 $3,170
Plavix Sanofi-Aventis / Bristol-Myers Squibb Clopidogrel Anticoagulant 2011 1998 $1,250
Seroquel AstraZeneca Quetiapine Antipsychotic 2011 1997 $1,055
Singulair Merck Montelukast Asthma 2012 1998 $1,018
Symbicort AstraZeneca Budesonide /Formoterol Asthma 2012 2000 $371
Taxotere Sanofi-Aventis Docetaxel Cancer 2010 1995 $694
Xalatan Pfizer Latanaprost Glaucoma 2011 1995 $402
Zometa Novartis Zoledronic acid Cancer 2012 2001 $318
Big Pharma Faces Tidal Wave of Patent Expirations
* Estimate – Sources: Datamonitor; Dolphin; WSJ.com research
Big Pharma is Actively Engaged
CONFIDENTIAL 26
• GSK & HSCI: $25M Deal
•Merck, Pfizer & Lily Launch Enlight BioScience
•Pfizer Forms Regenerative Medicine Division
•GSK, AZN & Roche Help Launch Stem Cells for Safer Medicine in UK
•Johnson & Johnson Invests in Tengion & NovoCell
Proteus’ Investment Strategy
1. Substantial Proprietary Deal Flow2. Rigorous Due Diligence Process3. Build Value through Active Management4. Timely Exits
CONFIDENTIAL 28
2. Due Diligence and Deal Structuring
3. Build Company Value and Maximize Exits
1. Proprietary Deal Flow
Proteus’ systematic approach leads to…
…greater value for our portfolio companies and higher returns for our LPs
Proteus Value Add
Industry Leadership,Extensive Network
ProprietaryDatabases
Identify Best Opportunities
Initial Screen &Primary DueDiligence
Deep DueDiligence
Structure Deal toMaximize Returns& Minimize Risk
Build Team &Construct Optimal
Biz Model
Drive Execution &Manage Risk
Structure Exitto Maximize Value
Investment Process Overview
Proteus Investment Approach: Deal Flow Due Diligence
Build Value
CONFIDENTIAL 29
Top DownStrategy
Bottom Up
Strategy
EXTERNAL ECOSYSTEM ANALYSIS
OPTIONS TO ENHANCE VALUE
INTERNAL COMPANY ANALYSIS
DRIVERS OF VALUE
BUILDCOMPANYVALUE!
Proprietary Data Bases
Company Selection
Size of Market
Competitive Land- scape
CONFIDENTIAL 30
Optimal Exit At Phase II On Risk Adjusted NPV
FM
V /
Co
st o
f T
ota
l C
om
po
un
ds
in P
has
e
Source: ADIS, Pharma Projects, Fortis Bank, Paraexel, Jagle, Lehman Brothers, Journal of Health Economics 22:151-185 (2003), TFG Estimates
FMV = ~5x peak year revenues of $500M discounted by probability of launching
1,399
4,453
12,214
18,700
520 865 738 9882,458
-2,000
2,000
6,000
10,000
14,000
18,000
22,000
Entering Late-StagePre-Clinical
Entering Phase I Entering Phase II Entering Phase III Entering Launch
FMV of Compounds
Total Cost of Development($M)
57100
31
39% 180% 208%Cumulative ROI**: 19%
Phase of Development
Ind. Period ROI*: 23% 112% 25%19%
11
7
No. of Compounds:
22 months
18 months
31 months
26 months
PHASE II EXIT STRATEGY
Summary of Proteus Value Proposition
RM Technologies Are Transforming Healthcare Science moving at an extraordinarily rapid pace Technologies at a key inflection point Large and growing markets driven by demographics
Only VC Firm Built From Ground Up To Focus Exclusively On RM Complementary skills address all the major challenges to commercialization Unparalleled domain expertise Proven records of success Established RM industry leadership Fund already has a robust pipeline 1st mover advantage (critical for IP, Freedom to Operate, knowledge base, best teams & deals)
Superior Investment Strategy
Substantial Proprietary Deal Flow Rigorous, Comprehensive Due Diligence Process Build Value thru Active Management Develop Big Pharma Relationships from the Earliest Stages Timely Exits
CONFIDENTIAL 31
Proteus Team & Friends