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Introduction Opportunity Market potential of recombinant drugs Problem Lack of manufacturing capacity Solution PharmOut: Contract BioManufacturing Industry $48.5 Billion Projected Biotech Industry Growth $28.3 Billion $16.1 Billion 2001 2005 Year 2010 Expanding Pipeline Pre-Mapping of Human Genome Post-Mapping of Human Genome 500 targets 10,000 targets 175 biotech drugs 3,500 > potential biotech drugs Industry Capacity in Liters (Thousands) Capacity Shortage 1,500 1,000 800,000 L VOID Capacity Demand 500 0 2001 2005 Year Industry Drug Development Timeline 16 YEARS Research and Development Pre-Clinical Testing $500 Million Phase I Phase II Phase III FDA Review & Approval Commercialization 0 4 6 8 10 Year 12 14 16 Marketplace Industry Manufacturing Options Build own plant License technology Outsource production Marketplace Market Conditions Expanding Pipeline Capacity Shortage Solution: Outsourcing Lowers Costs Speeds Time to Market Decreases Risk Services The PharmOut Service Platform BioManufacturing Process Development Support Services Competition Flexibility (High) Future PharmOut Expansion Capacity (Small) Capacity (Large) Other CMO’s Large Pharma In-House Flexibility (Low) Target Customer Small Biotechnology Companies Recently Funded 1,040 Private Biotech Companies Now 140 Target Companies Recombinant Protein Drugs in Development Limited House Resources to Manufacture In- Why PharmOut? Biotech Wants: PharmOut Provides: Minimize Capital Risk Scalable Facilities & Support Services Gain Capacity & Expertise Improved Scheduling & Capacity Utilization Maximize Internal Resources; Saves in CapEx & Bad Batches Improved Manufacturing Process Reduce Time to Market by 12 to 24 months Process & Manufacturing Expertise Service Strategy Outsourced BioManufacturing BioManufacturing Facilities Process Development Support Services Brokerage Services Client/Customer Relationships in Place Improved Manufacturing Processes Leads to Improved Efficiency Value Proposition “Our competency in manufacturing allows clients to focus on their competency, research and development.” Excellence in Process Development and BioManufacturing Regulatory Compliance Expert Staff Strong Relationship Management BioManufacturing Innovation Revenue Model Process Development $300,000 per development PharmOut shares process development rights BioManufacturing $100,000 average per production run Market Possibility Market Potential 140 1 Target Biotech Companies Drug per Company Revenue Generated for Full Services = $1.3 Million Total Market Potential = $182 Million Marketing Strategy Relationship Marketing In-House, Team Expert Sales Force Based Project Management Comprehensive Significant Website Industry Presence Operations Manufacturing Process 1. 2. 3. Fermentation = Recombinant Protein = Bacterial Protein Recovery 4 Main Steps … Purification Packaging Cell Solution Provided 4. Fermentation Recovery Purification Fill Operations Facility Snapshot 20,000 SF Leased Facility ISO9001 and cGMP Validation Equipment 10,000 SF Clean Room Fermenters, centrifuges, homogenizers, protein purification suites and cold rooms Competitive Advantage: Operational Excellence Mnfg. Expertise Flexible Asset Facility Utilization Optimized Process Customized Solutions Maintain Core Comptency Operations Capital Needed $7.8 Million $3.4 Million $2.5 Million 1&2 3 Year 4 Revenue $59.5 Million Pricing Asset Model Utilization $35.5 Million Lease versus Build 43% $16.6 Million 1 2 3 Year 4 5 = Gross Margin Net Earnings $8.5 Million $5.4 Million $8.5 Million in Year 5 14% $1.8 Million 1 2 3 Year 4 5 = Profit Margin Cash Flow $ Millions PP&E Operating CashFlow 10 8 6 4 2 0 -2 -4 -6 Year 1 Year 2 Year 3 Year 4 Year 5 Risks/Financial Plan Risks Biotechs Remedy Produce In-House Government Relationship Marketing Regulation Friendly FDA Attitude Offering Three Rounds of Financing…………. Offering Time Period Round Amount Benchmark Equity IRR Year 1 A $8 M Mnfg. Lease 51% 85% Year 1.5 B $4 M FDA Approval 6% 60% Year 3 C $5 M $16 M in Rev. 5% 50% Management CEO Jennifer Eby COO Douglas Gier VP, Marketing Cecily Ford Maguire CFO Jay Behringer Advisory Board Matt Lombardi, Sr. Project Manager Vicki Jenings, Director of Operations Dr. Steve Orndorff, President Dr. David Drubin, Professor of Genetics Dr. James Powell, Assoc. Director, Mnfg Mike Green, Director, Mnfg HighTech Business Decisions Sandra Fox, President Conclusion Opportunity Market potential of recombinant drugs Problem Lack of manufacturing capacity Solution PharmOut: Contract BioManufacturing Questions?