Kinect Point, LLC
Maximize the value of innovation
Creating Success in the
“New” Biotech Marketplace
US Healthcare Today
1. Greater scientific understanding and development technology is moving us
toward “Individualized” treatments
2. Development science is progressing faster than Regulatory capacity
3. Increased medical technology and longer time lines continue to increase
the cost of pharmaceutical products and overall healthcare
4. Government participation and private insurance have attempted to facilitate
access to healthcare, but as costs have outpaced insurance coverage,
consumers now bear an increasing portion of the healthcare bill resulting in
an increase in un- and under-insured
Result*: “The United States spends twice as much for each person on
healthcare as most industrialized countries. But has fallen to
dead last in preventing death through use of timely and effective
medical care”
* Report by the Commonwealth Fund, July 2008
The 1980’s
Physician
Patient
Pharmacy
Payer
Today
Patient
• Limited choices
(networks)
• Referral requirements
• Formularies
• Assembly line patient
care
• On-line references
Physician
Pharmacy
• Formularies
• Preferred medication
lists
• Test / procedure limits
• “Step-therapy”
requirements
• Reimbursement limits
•
•
•
•
•
•
Benefit maximums
Tiered co-pays
Formularies
Preference for generics
Cost-mgt. vs. care-mgt
Plan “hopping”
Payer
Impact on the Pharmaceutical Industry
1. Increased development costs necessitated greater and more timely
pay-back from marketed products, driving more intense market
competition


Cost synergies and development efficiencies form industry consolidation
have largely been unrealized
Increased promotional spend through traditional channels has produced
declining returns
2. Increased individual contribution to the cost and lack of access to
adequate healthcare have resulted an increased susceptibility to
economic fluctuations


Physician visits are declining, even among those diagnosed with chronic
illness
Annual prescription growth is at the lowest level since the 1960’s
The economic situation has exposed a pharmaceutical
industry model that is “broken”
Pharmaceutical companies are developing and
promoting products largely in the same way
that they did in the 1980’s, even though the
environment has changed dramatically.
As a result . . . .
. . .R&D spending continues to rise, but the yield in
new product approvals has declined
60
$70
$60
50
$50
$40
30
$30
20
$20
10
$10
0
$1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Product Approvals
R & D Spend
Billions
40
And, US prescription sales growth has fallen to its
lowest level since the 1960’s
Year over Year % Growth
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
2000
Source: IMS Health
2001
2002
2003
2004
2005
2006
2007
What Is Changing?
Key Change Drivers
 Greater scientific
understanding and
development technology is
moving us toward
“Individualized” treatments
 These newer, more
sophisticated products will
continue to drive treatment
costs and increased consumer
participation
 Scientific, treatment and
economic factors will be
considered for product
approvals
Continuing Current Trends
•
Blockbuster products with $multi-billion annual
sales all but disappear
•
Higher science continues to drive development
costs
•
Comparative studies become part of the
development process
•
Biosimilars and generics continue to expand
•
Increased public awareness and outcry over
healthcare costs
•
Increased management and regulation of the
marketplace
•
Companies look toward globalization to expand
markets
Key Success Factors
1. R&D must be effective and efficient


Market analytics will need to play a greater role in product
development
Improved Regulatory Agency involvement
2. Establishing “treatment value” becomes paramount


Operational efficiencies will contribute more to success
Pricing that accurately reflects these efficiencies can create
increased customer value
3. Commercial strategies and structures need to become more
individualized


Greater importance in identifying and leveraging unique market
segments
Greater need to integrate physician, payer and patient promotion
4. Customer contact ethics need to be addressed
The Path to Success
Pharma Companies
Redesign and implement critical
business processes and
infrastructure



Business - Identify and align
to innovative segments for
increased commercial efficiency
R&D - Implement a marketbased development strategy
and structure; prioritize value
Operations - Design
customer-centric business
procedures; emphasize crossfunctional teams
Biotech Companies
Design and implement critical
business processes and
infrastructure



Business - Create long-range
strategic plan; include
incremental milestones and
metrics
R&D - Implement a marketbased development strategy
and structure; prioritize value
Operations - Ensure
appropriate funding, systems
and talent to meet short- and
long-range goals
Biotech Companies
To effectively compete in a market where Regulators, Payers and
Consumers will demand innovative efficacious, safe and economical
therapies, biotech companies need to:





Push the boundaries of innovation
Focus on efficient, market-focused product development
Attract top-flight scientific and business talent
Build effective systems, processes and infrastructure to
complete development and regulatory phases
Ensure adequate funding to complete development and
regulatory phases
Capital Availability and Sources
90%
80%
Grants
Angels
70%
Partners
Private
Offers
VCs
60%
Banks
Public
Offers
50%
Launch
40%
Reg.
30%
P III
20%
P II
10%
PI
0%
Preclinical Development
Clinical Development
Investor Recommendations
on Raising Capital

Fully explain your proposition (technology) and how it is possible
to extract the commercial value

Fully explain your plan to scale up the business to accommodate
growth

Put in place a strong Executive Management Team with industry
experience

Avoid lofty financial projections. Investors are more likely to
invest in the idea, the people and the ability to deliver
Investor Panel:
A. Sofat, Addidi Business Angels; S. Wasmund, Smarta.com; J. Gibbons, Accel Partners;
A. Cockerton, Mudhut; J. Meyer, Ariadne Capital; B. Morrow, Angels Den
Key Entity Valuation Attributes
Relative Value
Company
Value
Yr 1
Yr 2
Yr 3
Yr 4
Science
For illustrative purposes
Yr 5
Managem ent
Yr 6
Yr 7
Planning / Execution
Yr 8
Yr 9
Yr 10
Key Entity Valuation Attributes
Scientist’s View
Yr 1
Yr 2
Yr 3
Yr 4
Yr 5
Yr 6
Yr 7
Yr 8
Science Management Planning / Execution
For illustrative purposes
Science Only Investment
Yr 9
Yr 10
Yr 1
Yr 2
Yr 3
Yr 4
Yr 5
Yr 6
Yr 7
Yr 8
Science Management Planning / Execution
Yr 9
Yr 10
Kinect Point Builds a Bridge
• Strategic planning
• Business process
Early-stage BioTech
“I have a differentiated
• Management expertise
technology, I need funding”
Investor
“I have money, I need to see
a successful business”
• Priority opportunities
• Executive oversight
• Risk management
Our Role in Adding Value
Kinect Point Services

Establish and implement a Strategic Planning Process

Identify and quantify markets and market dynamics for pipeline compounds

Identify and model financial variables

Design and/or redesign business operations, systems requirements and
optimal structure to maximize growth

Identify potential sources of capital investment and provide decision criteria
and counsel in choosing the optimal vehicle

Establish appropriate and effective financial and corporate governance to
support growth

Provide key ad hoc company management services

Identify and implement optimal commercial strategies and structures
Timeline
Product Development Plan
• Clinical strategy
• Patent / legal strategy
• Risk assessment
Strategic Plan *
• Product development plan
• Operations / infrastructure / funding plans
• Personnel plan (Exec. Mgt. and BOD)
Pre-clinical
Year 1
Advisory
Board
Year 2
Phase I
Year 3
Consulting
• Clinical
Year 4
Phase II
Year 5
Year 6
Phase III
Year 7
• Patent / legal
Year 10 Year 11 Year 12
• Internal Executive Management
Out-sourced Management Team
Fund Raise? /
Transaction?
Year 9
Complete Operational Infrastructure
Limited operations
• Finance / reporting
• Commercial
Year 8
Launch
• Internal BOD
• Internal Risk Management
Fund Raise? /
Transaction?
Fund Raise? /
Transaction?
* Strategic Plan plans a 3 – 5 year horizon, updated on an annual basis
Fund Raise? /
Transaction?
The Way it Works
BioTech 1
BioTech 2
BioTech 3
BioTech 4
BioTech 5
CEO/CSO/COO/CFO
CEO/CSO/COO/CFO
CEO/CSO/COO/CFO
CEO/CSO/COO/CFO
CEO/CSO/COO/CFO
Approx $1MM
Approx $1MM
Approx $1MM
Approx $1MM
Approx $1MM
Kinect Point
CEO/CSO
CEO/CSO
CEO/CSO
CEO/CSO
CEO/CSO
COO / CFO
Operational costs approx $1MM
Kinect Point Expertise
Kinect Point, LLC provides strategic consulting services concentrating in the
Biotechnology and Biopharmaceutical industries, assisting client companies in both
designing and redesigning corporate operations, systems and infrastructures to
establish and improve business performance that will maximize the value of the
scientific technology. Critical areas of focus include, strategic planning, corporate
design and governance, commercial design and financial operations and systems.
Providing avenues for raising capital to support and grow the business is also a key
competency of Kinect Point. Specific areas of expertise are:







Strategic planning
Commercial and corporate
operations design / implementation
Organizational design and dynamics
Financial modeling and valuation
Talent identification
Market identification and definition
Competitive assessment






Liaison between company and
sources of capital
Product development planning
Systems development
Corporate and financial governance
International and domestic business
development
Investor relations
Kinect Point Experience
Mariam Morris Bio
Ms. Morris has over 10 experience in the BioPharma Industry in addition to
over 5+ years in public accounting. Prior to forming Kinect Point, Ms. Morris
served as the Chief Financial Officer for Sucampo Pharmaceuticals, Inc. In
that role, she was responsible for the building and implementing the
Company's financial operations, human resources, and investor relations
departments and processes. In collaboration with other members of the
executive management team, she led strategic planning sessions on an
annual basis to position the Company during its IPO and throughout her
tenure until 2008. She was involved in private financing throughout
Sucampo’s early state of growth.
Ms Morris is also a certified public accountant and began her career at
Pricewaterhouse Coopers. Ms. Morris holds a Masters from Old Dominion
University, a BBA in Accounting from Texas Tech University, and is a certified
public accountant.
Kinect Point Experience
Brad Fackler Bio
Brad Fackler has over 30 years of commercial and corporate experience in
the pharmaceutical industry. Prior to forming Kinect Point, he served as
Executive Vice President, Commercial Operations at Sucampo
Pharmaceuticals, Inc. In that role he was responsible for creating and
operating the marketing and sales functions for the company. In addition,
he shared responsibility with Ms. Morris for completing an IPO in 2007 and
building the operations to support the newly public company.
He has also held executive management positions in 25 years at Novartis
Pharmaceuticals. Key among these roles, he built and managed a series of
specialty commercial teams, served in an international marketing capacity
and had responsibility for the overall integration of operations for the Sandoz
/ CIBAGeigy merger.
Mr. Fackler holds a Bachelors degree in Life Science from Otterbein College
and an M.B.A. degree from New York University, Leonard Stern School of
Business.
Kinect Point, LLC
Maximize the value of innovation
Creating Success in the
“New” Biotech Marketplace