Achieving Leadership Positions InThe Booming (Bumpy?) BioTech

Sector

Dinesh V. Patel, Ph.D.Vice President, Drug Discovery

Versicor Inc.34790 ArdenTech Court

Fremont, CA 94555

Ph: 510-739-3008Fax: 510-739-3050

E-mail: dpatel@versicor.com

EPPIC Meeting: March 22, 2000

The BioTech Sector

• BioTech vs. Big Pharma• Market Size: $ 280 Billion• Research Expense vs. # of Products

• BioTech vs. The Economy• Food Industry, HealthCare, etc..• Aging Population

The Current BioTech Boom:How Long can this Last?

• Year 2000: $ 13 Billion & Running

12

0

2

4

6

8

10

14

1994 1995 1996 1997 1998 1999 2000

$ Billion

• Today’s valuations do not reflect any change in current fundamentals of the sector. It’s a Bubble.• Markets are catching up to the true value of this cash-starved sector. It’s a long awaited, well deserved Correction.

Managing beyond the Bull• The only sin in Biotech is running out of

Money. S. Panem• The robust strength of current market

provides a unique opportunity to create massive fundamental value that is sustainable.

• Valuation is less important than Value.• Value is created by Products, not

Perception.

BioTechnology Products

• Drugs• Proteins• Antibodies• Gene Therapy• Small Molecules• ICE’s, etc.

• Tools• Combinatorial Chemistry• High Throughput Screening• Genomics• BioInformatics, etc.

BioTechnology Careers

• Research• Chemists• Biologists & MDs• Engineers, etc.

• Management

• Leadership

• On-site• MBA

• ???

Fortunately, it’s not a rigid Paradigm.

From BigPharma to a Public BioTech to a Start-Up Company

• 1985-1993: Bristol-Myers Squibb, Group Leader• 1993: Following the Mentor. Affymax, Asst.

Director• Affy:Brilliant but naive Scientists-Typical ‘93

BioTech• Strategic Inflection Point: Transitioning

Combinatorial Chemistry from ‘Peptides’ to ‘Small Molecules’

• 1994-95: Pioneering the Drug Discovery Revolution.

• March 1995: Fame follows Fortune. GW Merger• Inflection Point: Technology becomes a

commodity.• 1996: What’s next for me? Big Pharma vs.

Start-Up

There is nothing wrong with change, if it is in the right Direction.Winston Churchill

7 Laws of Success in a Public BioTech:

Research & Management Leadership1  Technical: Know-how. Awareness & Respect for other disciplines, e.g. Chemistry vs. Biology

2  Perspiration: If the power to do hard work is not talent, it is the best possible substitute for it - James A. Garfield

3 Result Orientation: Bring things to a closure (quickly)4  Paper-WorK: Publications & Patents are useful.

Reports are a waste of time.5 Sponsorship: both from Superiors & Subordinates.

Talent does you no good unless it’s recognized by someone else - R Half

6 Salesmanship, not just presentation skills.No matter what a man’s vocation may be, the nature of his progress through life is largely dependent on his ability to sell - F Nichol

7 Professional Relationships & Networking: It’s not what you know, but who you know, that matters most.

From BioTech to a Start-Up: Versicor

• April 1996: Abbott vs. Versicor (Senior Director)

• Easy Money: Versicor, a spin-off of Sepracor• Combi-Chem: From Technology to Application.• The ‘Anti-bacterial’ Drug Discovery Focus

• Unmet Need: Emerging resistance to current drugs• Success: 50% of Phase I products become drugs.• Cost-efficient: Well defined clinical end points

• December 1996: Where are the Deals?• The Year of 1997: Proof of Concept vs.

Preclinical Candidates. The Du-Pont Merck Experience.

• December 1997: Meet the VC’s; $ 22M financing.

Reinventing Versicor: Jan ‘98 to Present

• Questions: Expertise, resources, focus, management.

• June 1998: Executive Director• August 1998: Parting of Mentor; VP, Drug-

Discovery• The New regime & The New Company Mission

• Less Projects, more focus• Need vs.Expertise. Customer 1st; your Talent 2nd• Less Spending; Minimal ExpansionThere is danger in reckless change, but greater danger

in blind conservatism. Henry George

Versicor: A Fully-Integrated Infectious Disease Drug Development & Discovery

Company

6) Ligase HTS (Novartis)

7) Small mol leads Genomics

5) BIOCOR: Nat Prod Leads

3) 2nd Genern ODPNU Collaboration

4) Def InhibitorsNovartis Collaboration

1) LY303366ECB Antifungal

2) BI-397GP Antibiotic

Screens Hits LeadsPreclinicalCandidates

Ph I DrugsPh II Ph IIITargets

Research

&

Development

How to create the next Amgen?

$ 100 M Venture stage BioTech

The 5 year, 10X Growth Formula - George Rathmann

$ 1 Billion Mid-Cap BioTech

$ 10 Billion Large-Cap BioTech

$ 100 Billion Big-Pharma Blue Chip

7 Laws of Success for a Start-Up

1 Employees: Hire the best people. 2 Teams vs. Individuals:

• Matrix Orgnzn• Team-work vs. individual recognition

3 Paranoia: Andy Groove Philospohy; avoid comfort zones

4 Reinvention: More powerful than Invention 5 Product: Applied vs. Basic Research6 Differentiate: Niche Markets, niche Products7 Customer: is King. Find them & keep them

Leadership at a Start-Up: Your Priorities are indistinguishable from the Company’s Priorities.

7 Secrets to Maintaining “Active” Leadership

1 Technical Competence2 Communicate Clearly3 Delegate Effectively4 Reward Results5 Stay Approachable6 Take Care of Your

People7 Find a Successor

The 1st Generation Immigrant Perspective

• It’s a Blessing, not a Curse. • Your Self-Confidence & Performance should

overshadow any Racial Disadvantages.• Don’t forget your Roots. • Always Communicate in English at Work.• Avoid being too Emotional at Work.• Don’t Pretend what you’re not.• Keep the Big Picture in Mind. Don’t get too

hung up on a Promotion or Salary Raise.• Take Management Courses. Experiment with

New Hobbies. Read books on Diverse Subjects.

My Favorite Reading List• How to become a CEO - Jeffrey J. Fox• Power of Positive Thinking - Norman Vincent

Peale• 7 Spiritual Laws of Success - Deepak Chopra• 7 habits of highly effective people - Stephen

Covey• Buffet, making of an American Capitalist -

Roger Lowenstein• Direct from Dell - Michael Dell• A Bend in the River - V Naipul• Iacocca, An Autobiography - Lee Iacocca• Forbes Book for Business Quotations - Ted

Goodman• Scientific Journals: J Med Chem, J Org Chem,

Tet Lett, BMCL, etc.

How to become a CEO (Leader) : J. Fox

• Get & Keep Customers• Arrive 45 minutes early and leave 15 minutes late.• Never Panic….or Lose your Temper.• Don’t have a drink with the Gang; avoid Office Parties. • Don’t get Buddy-Buddy with your Superiors.• Stay out of Office Politics.• Never surprise your Boss. Make your Boss look Good.• Overinvest in People. Overpay your People.• Learn to Speak and Write in Plain English.• Put the importance on the bright idea, not the source

of idea.• Concept doesn’t have to be Perfect; but it’s Execution

does.• Be a Credit Maker, not a Credit Taker.• Don’t hide an Elephant.• Be a Flag-Waving Company Patriot.• Add one big new thing to your life each year.• Keep Physically Fit. Do something hard and lonely.• Treat your Family as your #1 Client.

What Really Matters

1 Wealth: A mere score-

card

2 Recognition

3 Satisfaction

4 Health

5 Family & Friends