Communicating Project and Portfolio Risks and Rewards 8th Annual Project & Portfolio Management, Nov 2012 Debiopharm SA C. Deuschel V.P. Project and Portfolio Management © Debiopharm Group 2012 Drug development efficiency! Cost per New molecular Entity PCAST, Report to the President, Sept. 2012 2 11.01.2017 © Debiopharm Group 2012 R&D Model to successfully discover and develop a single new molecular entity Target to hit Hit to lead Lead optimization Preclinal Phase I Phase II Phase III Submission to launch Launch Probability of successful transition from one stage to the next 80% 75% 85% 69% 54% 34% 70% 91% 24.3 19.4 14.6 12.4 8.6 4.6 1.6 1.1 1 Number of molecules per phase for one launch  Capitalized cost for one NME launched: $ 1.8 billion Source: Nature Review_Drug discovery_Volume 9_March 2010 : How to improve R&D Productivity: the pharmaceutical industry’s grand challenge? 3 11.01.2017 © Debiopharm Group 2012 Attrition rates: Main reasons  Reason why compounds undergo attrition and how this has changed over time Source: Nature Reviews Drug Discovery 3, 711-716 (August 2004)) Can the pharmaceutical industry reduce attrition rates? Copyright Nature 4 11.01.2017 © Debiopharm Group 2012 Drug development challenges  Drug development is about the acquisition of information to reduce the risks and increase the value of the compound  Studies/experiments are designed to answer questions related to the compound efficacy/safety.  There is a risk that any experiment will fail.  One of the main challenges of drug development is to reduce the risk of failures   Or to shift attrition to cheaper phases Risk management is key to identify critical information Value COST RISKS 5 11.01.2017 POS © Debiopharm Group 2012 Debiopharm Group™  Over 30 year of experience in drug development in collaboration with pharma  Two major marketed products  6  Eloxatin ® Gold standard & blockbuster  Decapetyl ® sustained release formulation (1, 3, 6 months) About us  Based in Switzerland  Family owned  Financial independent  Team: staff over 300  Extensive international network of partners: over 400 11.01.2017 © Debiopharm Group 2012 Business model: a bridge to develop therapies Discovery Academic institutions Biotech Start-up Pharma Inlicensing 7 11.01.2017 DEBIOPHARM GROUP™ Market Fully funded development of therapies Pharma Outlicensing © Debiopharm Group 2012 Our core business: Opportunity & risk management 7.5% Target to hit Cummulative probability of success up to launch Hit to lead Lead optimization preclinal Phase I Phase II Phase III Submission Launch from molecule 8 11.01.2017 to drug approval © Debiopharm Group 2012 Key Expertise from Search to Registration 9 11.01.2017 © Debiopharm Group 2012 Debiopharm Group’s achievements  10 Two development programmes have led to… …Five products currently commercialised internationally:  Eloxatin® / Elplat® / Dacotin® / Dacplat®  Decapeptyl® / Trelstar® / Pamorelin® 1-month  Decapeptyl® / Trelstar® / Pamorelin® 3-month  Decapeptyl® / Trelstar® / Pamorelin ® 6-month  Moapar® / Salvacyl® 3-month 11.01.2017 © Debiopharm Group 2012 Marketed Phase III Phase II Phase I Preclinical Debiopharm Group™: marketed & late clinical Eloxatin® / Elplat® / Dacotin® / Dacplat® - Colorectal cancer Decapeptyl® / Trelstar® / Pamorelin® (1, 3, 6M) - GnRH agonist, Prostate cancer Moapar® / Salvacyl® - GnRH agonist, severe sexual deviation G-SOX (oxaliplatin) - Advanced metastatic gastric cancer (Yakult, Japan) Debio 025 - HCV,Cyclophilin inhibitor (worldwide licence to Novartis except Japan) Debio 8206 CPP - GnRH agonist, Central Precocious Puberty Debio 8206 SC - GnRH agonist, Prostate cancer 11 11.01.2017 © Debiopharm Group 2012 Marketed Phase III Phase II Phase I Preclinical Debiopharm Group™ Pipeline: Early development Debio 025 - HCV , Cyclophilin inhibitor (Japan) Debio 1143 - Oncology, SMAC mimetic (pro-apoptotic) Debio 0932 - Oncology, Hsp90 inhibitor Debio 1036 - Autoimmune diseases, undisclosed target Debio 1144 - Oncology, tyrosine kinases inhibitor Debio 0617 - Oncology, undisclosed target Debio 0930 - Metabolic diseases, AMPK activator Debio 0929 - Oncology, undisclosed target Debio 0826 - Oncology, undisclosed target Debio 1141 - Urothelial carcinoma, siRNA Debio 1142 - Oncology, undisclosed target 12 11.01.2017 © Debiopharm Group 2012 Global development plan  Risks and opportunity management shall be fully integrated in the global development plan Target Product Profile Risks Cost 13 11.01.2017 Time © Debiopharm Group 2012 Opportunity Management  Risk assessment tools Culture Value creation Assess all the key assumptions made for the drug development Keep the risk assessment “emotion free” 14 11.01.2017 © Debiopharm Group 2012 Project risk management approach and tools Strategic Decisions Decision Tree Probability of Success meetings Preclinical Phase I Phase II Phase III Filing Market Risk management action plan and monitoring Risk landscape Impact /Probability Mitigation /Contingency Systematic Risk approach “RADAR” Operational Decisions 15 11.01.2017 © Debiopharm Group 2012 Risk assessment tool: Risks Landscape  GOAL  Identify relevant risks of a project  Assess impact and probability  Establish Mitigations plan (if necessary)  Neutralized examples  Risk # 1 Clinical: slow patient inclusion will dramatically delay human POC  Mitigation: increase trial centers  Risk#2 Business: Fierce competition at the same level of development  Mitigation: monitor advancement of competition and verify competitive advantage (USP) Mitigation Plan 16 11.01.2017 © Debiopharm Group 2012 Risk assessment tool: Consistent and Systematic approach RADAR Science Radar A systematic approach: project risks are categorized into individual criteria which are scored Radar example: categories for preclinical project: Science  All regulatory requirements are covered in a questionnaire (Pharmacodynamics, toxicology, reprotoxicity,…) API 100.00% Kinetics Process Chemistry 50.00% Metabolism API supply  Additional crucial criterias for the project development were added (formulation, API supply, …) 0.00% Reprotoxicity Formulation 5   All these data provide a factual analysis of the strength and weakness of the product 17 11.01.2017 Safety Pharmaco Pharmacodynamics Genetic tox General Toxicology Science © Debiopharm Group 2012 Systematic approach RADAR allows follow up of project API API 100.00% 100.00% Kinetics Process Chemistry Kinetics 50.00% Metabolism Metabolism API supply Process Chemistry 50.00% 0.00% 0.00% Reprotoxicity Reprotoxicity Formulation Formulation 5 5 Safety Pharmaco Safety Pharmaco Pharmacodynamics Genetic tox API supply Pharmacodynamics Genetic tox General Toxicology General Toxicology Situation February 2012 Situation February 2011 API 100.00% Kinetics Process Chemistry 50.00% Metabolism API supply 0.00% Reprotoxicity Formulation 5 Safety Pharmaco Pharmacodynamics Genetic tox General Toxicology Evolution 2011/2012 18 11.01.2017 © Debiopharm Group 2012 Systematic approach RADAR Economy Competition 10.0 Example of RADAR categories for preclinical project: Economy 8.0 COGs This questionnaire cover all topics impacting the economical viability of the project: • Competition • Market • Development cost • IP protection (when launched) •… 11.01.2017 Market. 4.0 2.0 0.0 IP Economy 19 6.0 Dev. Cost Est. Sales © Debiopharm Group 2012 Risks analysis: Systematic approach RADAR: Economy Competition Competition 10.0 10.0 8.0 8.0 COGs 6.0 COGs Market. 6.0 Market. 4.0 4.0 2.0 2.0 0.0 0.0 IP IP Dev. Cost Dev. Cost Est. Sales Est. Sales Situation February 2012 Situation February 2011 Competition 10.0 8.0 COGs 6.0 Market. 4.0 2.0 0.0 IP Dev. Cost Est. Sales 20 11.01.2017 Evolution 2011/2012 © Debiopharm Group 2012 Risk assessment tool: Decision tree Attrition rates Phase I to market approval 30.00%  Probability of Success  Decision tree meetings are performed at each project gate (Go/NoGo next project gate)  Outside expertise to ensure objectivity  Comparison with benchmark  There is no unique benchmark! 25.00%  20.00% 15.00% 10.00% Is the PoS of the project higher or lower than the benchmark? If yes, why? 5.00% 0.00% 2002 (Buchanan 2002) 21 11.01.2017 period 81-86 period 87(DiM asi 92 (DiM asi 2001) 2001) period 9304 (Parexel 2011/2012 p221) period 9304 (Parexel 2011/2012, p270) 2004 (Tufts oct 2010, vol12, n° 5) 2004 (Kola 2011 (Parexel period 95-10 et al 2004) 2011/2012, (Paul et al, p265) 2010) average © Debiopharm Group 2012 Risks Analysis Overview per project API 100.00% Kinetics Process Chemistry 50.00% Metabolism API supply 0.00% Reprotoxicity Formulation 5 Safety Pharmaco Pharmacodynamics Genetic tox General Toxicology Science Competition 10.0 8.0 COGs 6.0 Market. 4.0 2.0 0.0 IP Risks Landscape • Risk 1: • Mitigation • Risk 2: • Mitigation 22 11.01.2017 Probability of Success Reflecting current development stage Dev. Cost Est. Sales Economy Radar • Science • Economy © Debiopharm Group 2012 Opportunity Management Risk assessment tools Assess all the key assumptions made for the drug development Keep the risk assessment emotional free 23 11.01.2017 Culture Value creation Give confidence to everyone to ask right questions Strong involvement of project team Integrate opportunity and risk management into project lifecycle © Debiopharm Group 2012 Drug development Stage Gate methodology Preclinical Phase Phase 1 Phase 2 Phase 3 Go TOX GoFIM Go POC GoPIII Decision to initiate development project Decision to proceed in man Decision to enter efficacy trials Decision to enter pivotal trials Go Filing Decision to register Level 1 (L1) project gate milestones 24 11.01.2017 © Debiopharm Group 2012 Differentiation of the level of responsabilities L1 Project Gate risks L1: Top management needs a clear overview on the value creation milestones L2 Critical risks network activities L2: Project team is responsible for reaching the objectives/deliverables associated with the critical activities L3 risks 25 Detailed tasks L3: Team members are accountable for the detailed tasks to complete the critical network activities Risk assessment Relevant Go/NoGo and “what if scenarios” are discussed at each level© Debiopharm Group 2012 11.01.2017 Opportunity Management Risk assessment tools Assess all the key assumptions made for the drug development Keep the risk assessment emotional free 26 11.01.2017 Culture Give confidence to everyone to ask right questions Integrate opportunity and risk management into project lifecycle Value creation Report the relevant questions to the top management Ensure approximately right decisions rather than precisely wrong decisions © Debiopharm Group 2012 Project Review Committee 27 11.01.2017 Project Review Committee Decision/feedback Reporting and escalation  Top Management Project Team Project Review committee responsabilities  Go/No Go for next phase  Decisions on Portfolio composition and prioritization  Risk management is key to identify critical information © Debiopharm Group 2012 Preparation for the Project review Committee Critical information for each L1 gate Early Project •… •… •… GoTox. •… •… •… GoFIM •… •… •… GoPOC •… •… •… Clear decision criteria Risk analysis of Go/NoGo criteria for decision making Recommendation of the project team 28 11.01.2017 Project review committee © Debiopharm Group 2012 PoS of projects within the portfolio  Portfolio analysis --- prioritization… Debiopharm Portfolio NCE-Neutralized 80% Probability of Success (POS) % 70% 60% Debio XXXX 50% 2028 40% Debio XXXX 30% 2028 Debio XXXX Debio XXXX Debio XXXX 2028 20% 2029 10% 2029 0% -9 -7 -5 -3 -1 1 3 5 7 9 11 Time to market and Data exclusivity 29  External diameter represents the estimated peak sales  Internal diameter represents the cost of development 11.01.2017 © Debiopharm Group 2012 Value creation 30  Project risks are categorized into individual criterias which are scored  Project and portfolio metrics are based on risk and opportunity management  3 level of responsibilities (L1, L2, L3) are established to optimize project monitoring and management  Opportunity and risk management needs to be integrated into project lifecycle  Transparent view of risks and opportunities is shared through the whole organization  Focus on relevant risks which are escaladed to the top management  Check that the warning about the relevant risks and their associated opportunities are well understood by the top management 11.01.2017 © Debiopharm Group 2012 Change behavior toward risk : Look for opportunities Risk Management (Anticipation) Issue Management (Firefighting) Today Tomorrow Risk Management (Anticipation) 31 Issue Management (Firefighting) Improve profit expectation  More anticipation… less problem resolution  Be opportunistic focus by taking more acceptable risks to improve profit expectation 11.01.2017 Effort/ Cost © Debiopharm Group 2012 32 11.01.2017 © Debiopharm Group 2012 Special thanks to  33 Pierre Daram - Project Manager 11.01.2017 © Debiopharm Group 2012