Overview of the Phase I Market

1. Overview of the Phase I Market Ken Getz Tufts CSDD; CISCRP October, 2010

2. Agenda Overview of the Drug Development Landscape The Phase I Market Key Market Trends Optimization Opportunities

4. Overview of the Drug Development Landscape Commercialization Conditions • Restrictive price controls • Healthcare reform uncertainty and adverse impact • Depressed global markets • High-level of revenue at risk R&D Operating Conditions • Low success rates • Declining levels of innovation • Rapidly rising R&D costs • Regulatory conservatism • Public discontent

5. Declining Rate of Innovation per R&D Dollar R&D Expenditures New Drug Approvals * Trend line is 3-year moving average R&D expenditures adjusted for inflation Source: Tufts CSDD Approved NCE Database, PhRMA, 2008

6. R&D Cost Drivers Chronic and complex indications Clinical trial size Protocol design complexity Patient recruitment/retention High cost discovery/research tools Regulatory demands Market oriented studies Late-stage attrition

7. Downsizing and Consolidation Announced and Planned Layoffs (2008 - 2010) Source: WSJ

8. Outsourcing Demand * ($US Billions) *Note: Does not include pass-through clinical services (e.g., central lab fees, investigator grants) Source: TCSDD

10. Distribution of FDA-Regulated Investigators Percent of Total 1572s Filed 1997 2001 2005 2009 Sources: Tufts CSDD

11. Protocol Complexity Phase I Phase II Phase III Phase IV Unique Procedures (mean) 30.3 29.2 28.4 26.4 Growth in Unique Procedures 35.10% 35.60% 42.1% 63.20% Total Procedures (mean) 221.8 156.3 147.5 93.9 Growth in Total Procedures 13.40% -1.30% 10.9% -2.4% Total Work Burden (mean) 58.4 43.4 43.1 28.4 Growth in Total Work Burden 70.20% 32.80% 59.7% 58.10% Note: Growth rates reflect the change in mean values of protocols in 2000-2003 and 2004-2007. Source: Tufts CSDD

12. Total Global Phase I SpendingUS $ in Billions CAGR 15.6% Source: Parexel Sourcebook

13. Number of Active Phase I Drugs in Development Worldwide CAGR = 10.2% Source: Parexel Sourcebook

14. Clinical Research Phase Comparisons Sources: Parexel International

15. Development Pipeline by Phase Source: Parexel International

16. Active Phase I Drugs by Major TA Source: IMS R&D Focus

17. Distribution of Active Clinical Trials Source:Opperheimer 2008 Analysis of Clinicaltrials.Gov,

18. Market Share in 2009 of Global Phase I Facilities Sources: Tufts CSDD

19. Facility Locations Source: Company Publications

20. Key Trends Shaping the Phase I Market • Heightened safety concerns • Emphasis on hospital and in-patient-like settings • Shift to US and Canada for time and cost advantages post EU Directive • Increasing proportion of patients vs. healthy volunteers • Modified and combination protocol designs • Transfer operating risk to CROs • Growing receptivity and entry by for-profit, community-based investigative sites Source: Tufts CSDD interviews

21. Clinical Personnel Growth Source: PhRMA Industry Profiles

22. Phase I Spending Overall and for Outsourcing(US $ in Billions) Source: Jeffries & Company

23. Total Direct Cost per Patient by Phase(2007-2009) Source:TTC

24. Two Optimization Opportunities

25. Supporting Investigative Sites for Success Sources: TCSDD Survey of 3,516 Sites, 2010

26. 1991 Committee on Competitiveness • Pharmaceutical and Biotechnology industries are national treasures • Most innovative and productive relative to other R&D-intensive industries • Saves lives and lowers the burden of health care costs • Most financially healthy (robust revenue and profit) • Major contributor to the economy

27. Public Confidence and Trust in the CRE Sources: Research!America (JAMA, 2005); Ohmann (2004); HarrisInteractive (2002, 2004, 2007)

28. By Extension… Study Volunteers ‘Who makes a better contribution to mankind?’ • Desperate (~29% believe only seriously-ill participate) • Risk Takers (80% believe participants are ‘gambling’ with their health) • Ambivalently respected (34% ‘Don’t Admire’ study volunteers) Source: CISCRP, 2006; N=900

29. CISCRP: Collective Public and Patient Outreach • CISCRP Membership • Post Trial Communication • Patient Ambassadors • AWARE for All • ‘Medical Heroes’ PSA • Media Outreach • Science Museums • Speakers Bureau • Search Clinical Trials • Legislation • Social Media Outreach • Site/CTSA Support • HC Provider Education • Pharmacy-directed education • ‘Voice of the Patient’ • Medical Community Outreach

30. Impact of Protocol Complexity and Burden(All TAs, All Phases) Source: Tufts CSDD

31. Conclusions • Current drug development landscape necessitating major changes in how global clinical research will be conducted • Phase I market an area of unprecedented change and opportunity to improve drug development performance and efficiency • Volume of activity • Economics • Structure • Opportunities to improve Phase I success • Patient/public outreach and education • Protocol design simplification

32. Ken Getz Senior Research Fellow, Assistant Professor Tufts CSDD, Tufts Medical School 617-636-3487, Kenneth.getz@tufts.edu Founder and Board Chair CISCRP 617-725-2750, kengetz@ciscrp.org THANK YOU!