Viropro investor presentation 01_apr11

INVESTOR PRESENTATION

Viropro, Inc.4199 Campus Dr., Suite 550Irvine, CA 92612USA

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BIOTECH CONTRACT DEVELOPMENT AND MANUFACTURING WITH ASIA-BACKED SERVICES

SECTION 1

Why Are Contract Services So Important to this Industry?

• Rising costs• Regulatory

requirements• Growing global

competition• Pace of technology

innovation

Increasing the pressure on product development strategies - from drug discovery through commercial manufacturing

Viropro, Inc. Confidential

Biotech companies need us more than ever to help get their products to market as efficiently and economically as possible!

Mission Statement

“MAKE BIOTECH DRUGS FOR CLIENTS, EFFICIENTLY AND ECONOMICALLY.”

The Business Recipe

To create the correct level of cross-border mix

that will enable us to build a world-class biotech

contract services company, while simultaneously

allowing each entities’ entrepreneurial drive to

flourish (a la a “Protean” corporation).

Bizplan - Confidential

THE CHANGING MARKET DYNAMICSSECTION 2

Does The Service Address A Viable Market?

• Yes, it does. We’re NOT trying to create demand where it hasn’t already been expressed.

• The global trend for the foreseeable future is for a continuing increase in the rate and volume of R&D that is being out-sourced by mid-to-large pharmaceutical companies.

ConfidentialViropro, Inc.

Confidential. For evaluation of investment purposes only. Not to be provided to any third party without the prior consent of Viropro

Biopharmaceutical Contract R&D and Manufacturing Market Overview

Year

2009 market declined

Growth rates moderating: 12% from 15%

2011 market: $4.3 billion

Billi

on o

f Dol

lars

Data Source: Industry ReportsBiopharmaceutical Contract Manufacturing 2009: Expanding Markets, New Capacities and Improved Performance (48 pharmaceutical and biotechnology companies/29 CMOs)


World Outsourced Market Volumes Mammalian Cell Culture Overview

Year

No.

Of K

gs

Contractors Capabilities



In 2005, 53% of respondents would consider using a contractor outside their region

In 2007, 80% of respondents would consider using a contractor outside their region

Significant change in attitudes

Changing Pharma/Biotech Attitudes Towards Asia-backed CDMO Services


Will Consider working

with Asian COM

Will Consider working

with Asian COM

Will Not

Will Not 10%

80%


Pharma/Biotech Advantage to using Asian CMOs

Users look for substantial cost savings when using an Asian CMO

Data Source: Industry Reports

Biopharmaceutical Contract Manufacturing 2009: Expanding Markets, New Capacities and Improved Performance (48 pharmaceutical and biotechnology companies/29 CMOs)


Pharmaceutical and Biotechnology Companies:



Overview of Respondents’ OutsourceStrategies


Biopharmaceutical Contract Development & Manufacturers:



Future Plans:

THE BUSINESS MODEL FOR A GLOBAL FOOTPRINT

SECTION 3

The Global Footprint

Penang, MY

Pune, INIrvine-San Diego

Montreal, CA

Cambridge, UK

Groningen, NL


“String of Pearls”

BPD

Montreal

ESQ

Alpha

Intas

FutureFuture


Prof. Pisano’s Model: Adapted for Viropro

BioprocessingMammCell Mfg.BacCell Mfg. Prot. Analytics

CRO/Other

VIROPRO

Viropro, Inc.

VIROPRO

EXPR.SYSTEMS

(VPI, MONTREAL)

BIOLOGICS PD(BPD, POWAY)

PROTEINANALYTICS

(EUROSEQUENCE)

GMPOPERATIONS(ALPHA BIO)

To be added


New Structure

VPRO

BPD ALPHAESQ

M’real

Poway Camb.

IndiaBac.GMP

Mam.GMP

Future India(51%)

Malaysia(100%)

Holland(76%-100%)

Malaysia100%

Poway/San Diego100%

Center of Excellence forExpression Platforms & Bioprocessing

Center of Excellence forProtein Analytics

Center of Excellence forGMP Biomanufacturing

CAPABILITIES AND CORE STRENGTHS(CREATING A “1 + 1 EQUALS MORE THAN 3” SITUATION!)

SECTION 4


Capability

Cell line development Preclinical material - Toxicology

Cell analysis and Virus studies Clinical Studies Phase I - III Commercial / Phase IV

Cell lineProcess

development Scale up

Production of clinical bulk Validation

Bulk Material is delivered for

fill/finish

Viropro, Inc.

Other specialized service providers may be involved in delivering a complete clone-to-clinic development / manufacturing package for bacterial-, yeast- and mammalian cell culture products.

Market Supply

Combined Customer Base

PROPRIETARY: DO NOT DISTRIBUTE

Over 100 clients, including:Small to Multi-National Pharma/BioPharma Biotech Universities CROs

A small sampling of our combined customer base:Avecia Biologics, Bayer Bioscience, Boehringer-Ingelheim, DSM Research, Ferring, Hal Allergy, Halozyme, Henogan, Genmab, Geron, Intas Biopharmaceuticals Ltd., INSERM, King’s College, Lek Pharmaceuticals, Lonza, Lonza Biologics, Lupin Ltd., Merckle Biotech, Pfizer, Pharming Technologies, Rentschler Biotechnologi, Schering Plough, Serum Institute, UCB . . . .

100’s of successful projects and repeat clients

Senior Management

• Educated at top tier schools across North America, India and Europe:– MIT, UCLA, McGill, Rutgers, Nebraska, IIT-Bombay,

KTH-Stockholm and others– 60-70% with Ph.D. / Post-Doc and M.D. experience

• Collective work experience:– From Fortune 100 pharma companies to publicly-

listed and startup biotech companies• Over 200 man-years of experience spanning

biotechnology to bio-business to raising capital to marketing and sales


Key External Advisory Board Members

• Prof. Gary Pisano (HBS – in process)Harry E. Figgie Jr. Professor of Business Administration and Chair, Technology and Management Program, HBS, Boston, MA

• Prof. Danny Wang (MIT)Institute Professor, Department of Chemical and Biochemical Engineering, MIT, Cambridge, MA

• Dr. Howard LevineBioProcess Technology Consultants, Inc.Massachusetts

• Dr. Pete FernandesBiotechnology ConsultantCalifornia

FINANCE OVERVIEW AND EXIT VALUATION

SECTION 5


Financial Forecast Overview

($ million) 2012 2013 2014 2015 2016 2017Forecast Net Revenue 7.6$ 14.6$ 22.4$ 32.3$ 43.4$ 59.2$

Annual Operating Cost (8.0)$ (12.1)$ (14.6)$ (19.1)$ (22.4)$ (27.3)$ EBITDA (Operating Cash Flow) (0.4)$ 2.5$ 7.8$ 13.3$ 21.0$ 32.0$

Depreciation & Amortization (1.3)$ (3.2)$ (4.6)$ (4.7)$ (4.1)$ (4.2)$ EBIT (Operating Income) (1.7)$ (0.7)$ 3.2$ 8.6$ 16.9$ 27.8$

Interest (1.7)$ (2.0)$ (2.2)$ (1.9)$ (1.4)$ (1.1)$ EBT (3.4)$ (2.8)$ 1.1$ 6.7$ 15.5$ 26.6$

Provision for Income Tax -$ -$ -$ -$ -$ (1.0)$ Profit / (Loss) After Tax (3.4)$ (2.8)$ 1.1$ 6.7$ 15.5$ 25.6$

Net Margin -45% -19% 5% 21% 36% 43%IRR (on Post-Tax Earnings) 46%

VIROPRO, INC.: FINANCIAL FORECAST OVERVIEW (CONSOLIDATED)


Funding Needed & Exit Strategy Viropro requires a grand total of USD 40 million in two major tranches of USD 24 million (in 2011) and USD 16 million (in 2012), respectively, for key acquisitions; for getting GMP accreditation; and working capital for 2 years until we reach a net positive cash flow position

Funding required can be in form of equity/debt, preference share with fixed yield, soft loan or a combination of the above. Exit will depend on the investors’ strategy

The method or vehicle used by the investor to exit will depend on their preference. Exit could be by any of the following methods:

• Exit to the Market• Listing on Singapore / Indian Stock Exchanges• Strategic Trade Sale • Global Integration, Merger or Acquisition

Project Cost & Funding - 1INVESTMENTS REQUIRED: Status/Need $ million

Eurosequence BV (Netherlands):(Protein sequencing & analytics)

Acquisition (100%):Term Sheet (TS) in place

4.0

Biologics Process Development, Inc. (USA, UK):(Process development & Scale-up)

Expansion of capacity to GLSP + Opex (for USA & UK)

3.0

Viropro International, Inc. (Montreal, Canada):(Expression/Cloning Platforms)

Expansion of capabilities + Opex 1.0

Viropro, Inc. (USA) Core Employees & Corporate 2.8

Intas CRAMS (India):1. Buy-out of share holding & IP Assets2. Buy-out of all contracts/business

1. Term Sheet in place2. Estimated price

2.7 5.5

GMP Clinical & Manufacturing Facilities:1. Mammalian Cell Facility (Penang, Malaysia):

1. Capitalization of asset ($21 m) in Viropro:2. Wkg. Cap. requirement to profitability:

2. Bacterial Facility ($16 m for JV in India)

Acquisition / Equity Stake:1. Asset Capitalization:

1. Acquisition completed2. For EU/EMEA approval

2. Deferred to Year 2 5.0

--

Total of Investments 24.0


Project Cost & Funding - 2FUNDING: Status $ million

Additional Equity To be raised 15.0

Balance as LT Debt (D/E ratio = 0.6) To be raised 9.0

Total of Funding 24.0

Equity Investment by Intas Invested to date ~3.0


TRANCHES: Timing $ million

Tranche 1: Alpha ($5m); ESQ ($2.1m); Intas CRAMS Buy-out ($1.6m); BPD ($0.5); Other ($0.8m)

Immediate, at funding 10.0

Tranche 2: BPD ($2.5m); VPRO INTL ($1m); Intas IP Assets ($1.1m); Other ($0.5m)

2 months 5.1

Tranche 3: Intas CRAMS Business ($5.5m); Other ($1.5m)

4 months 7.0

Tranche 4: ESQ balance ($1.9m) 6 months 1.9

Total 24.0

Exit Valuation

Valuation

FY6 FY7 Multiple FY6 FY7 FY6 FY7

On Post-Tax Earnings $ m 25.6 26.0 15.0x 383.9 390.6 46% 33%9.7x 9.8x

On Free Cash Flow $ m 27.5 26.9 15.0x 412.2 403.8 48% 34%10.4x 10.2x

$ m 25.6 26.0 15.0x 383.9 390.6 76% 50%17.1x 17.4x

On Equity Subscribed(based on post-tax earnings)

VALUATION:Value Valuation IRR

Investment Return (x)


Investment MeritsThe contract services business for biopharmaceutical products is poised for an incremental growth in Asia due to significant cost advantages and limited competition.

Viropro has three Term Sheets in place to acquire key technical-, intellectual- and physical assets, and to capitalize the Alpha Biologics’ world class facility/asset in Penang, Malaysia, thereby providing the foundation for its global footprint.

The investments required by Viropro is for the above acquisitions and for working capital to prepare Alpha Biologics for its GMP accreditation and to going commercial.

Viropro has an experienced management and technical team.

An investment return of ~10X and an IRR of ~46% on post-tax earnings, in the 5th year of full GMP operation, is predicated on the basis of a robust financial model.

APPENDIXSECTION 4


Penang Science ParkMalaysia

Babraham Research ParkBabraham, Cambridgeshire

Capitalization of Alpha Biologics into Viropro


Alpha Biologics Summary -1/2

Alpha Biologics is a bio-manufacturing organisation offering US FDA and European EMEA current Good Manufacturing Practices (cGMP) compliant services to the worldwide pharmaceutical and biotechnology industry

A new FDA design-reviewed 5,000m2 plant on the Penang Science Park for the manufacture of biologics drugs (including bio-similar) for pre-clinical and Phase I, II and III clinical trials

State-of-the-art bespoke manufacturing equipment designed, built and validated by industry experts in Europe

Process development laboratories located in the biotech hub of Cambridge UK, lead by highly experienced industry experts


Alpha Biologics Summary – 2/2

The facility will focus on the provision of mammalian cell culture services for the production of monoclonal antibodies and recombinant proteins

Future expansion could be envisaged in two stages – the first, a ‘fill/finish’ operation; the second, a microbial cell facility

Managed by a team of professionals with cGMP facility design and operation, and manufacturing experience in the US and Europe, Alpha will ensure the highest standards of production and regulatory compliance

Most, if not all, of the major contract manufacturing competitors are located in the US and Europe and costs associated with these facilities, due to their locations and size are much higher than Alpha. Thus Alpha will be able to compete aggressively on pricing while still achieving the gross and net margins required

Viropro investor presentation 01_apr11

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Transcript of Viropro investor presentation 01_apr11