Achieving Leadership Positions In The Booming (Bumpy?) BioTech Sector

1. Achieving Leadership Positions In The Booming (Bumpy?) BioTech Sector EPPIC Meeting: March 22, 2000 Dinesh V. Patel, Ph.D. Vice President, Drug Discovery Versicor Inc. 34790 ArdenTech Court Fremont, CA 94555 Ph: 510-739-3008 Fax: 510-739-3050 E-mail: dpatel@versicor.com

2. 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

3. 14 $ Billion 12 10 8 6 4 2 0 1994 1995 1996 1997 1998 1999 2000 The Current BioTech Boom: How Long can this Last? • Year 2000: $ 13 Billion & Running • 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.

4. 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.

5. BioTechnology Products • Drugs • Proteins • Antibodies • Gene Therapy • Small Molecules • ICE’s, etc. • Tools • Combinatorial Chemistry • High Throughput Screening • Genomics • BioInformatics, etc.

6. BioTechnology Careers • Research • Chemists • Biologists & MDs • Engineers, etc. • Management • On-site • MBA • Leadership • ??? Fortunately, it’s not a rigid Paradigm.

7. 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

8. 7 Laws of Success in a Public BioTech: Research & Management Leadership 1  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.

9. 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.

10. 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 Expansion There is danger in reckless change, but greater danger in blind conservatism.Henry George

11. Targets Screens Hits Leads Ph I Ph II Ph III Drugs Research & Development Preclinical Candidates Versicor: A Fully-Integrated Infectious Disease Drug Development & Discovery Company 1) LY303366 ECB Antifungal 2) BI-397 GP Antibiotic 3) 2nd Genern OD PNU Collaboration 4) Def Inhibitors Novartis Collaboration 5) BIOCOR: Nat Prod Leads 6) Ligase HTS (Novartis) 7) Small mol leads Genomics

12. How to create the next Amgen? The 5 year, 10X Growth Formula - George Rathmann $ 100 M Venture stage BioTech $ 1 Billion Mid-Cap BioTech $ 10 Billion Large-Cap BioTech $ 100 Billion Big-Pharma Blue Chip

13. 7 Laws of Success for a Start-Up Leadership at a Start-Up: Your Priorities are indistinguishable from the Company’s Priorities. 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 Research 6 Differentiate: Niche Markets, niche Products 7 Customer: is King. Find them & keep them

14. 7 Secrets to Maintaining “Active” Leadership 1 Technical Competence 2 Communicate Clearly 3 Delegate Effectively 4 Reward Results 5 Stay Approachable 6 Take Care of Your People 7 Find a Successor

15. 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.

16. 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.

17. 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.

18. What Really Matters 1 Wealth: A mere score-card 2 Recognition 3 Satisfaction 4 Health 5 Family & Friends