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Howard Lee Ph.D.李 世 仁 博士

Easy Life Science Management, Inc.July 9, 2011

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財團法人亞太金融研究發展基金會Foundation of Pacific Basin Financial Research and Development

Panel Session XVII.  Capital Planning and Capital Market of Biotech Industry

創投 (VC) 與生技新藥製藥產業的相輔相成共生關係

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SUMMARY

Bioindustry is a globally recognized main stream growing industry

Venture Capital Fund vs. Knowledge Based Industry

Direct Financing Products/Capital Market Analysis

Taiwan Healthcare Industry Opportunity

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Worldwide consensus ：Knowledge-based Industries

US - Barack Obama:

bioindustry 、 new energy 、internet-communication 、 infrastructure

Taiwan - 劉 兆 玄：

bioindustry 、 green energy 、telecommunication 、 infrastructure

Early 2009

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Executive Yuan: six growing focuses in knowledge-based Industry

生技起飛 biotechnology

醫療照護 healthcare

精緻農業 agriculture

綠色能源 green energy

文化創意 culture

觀光拔尖 sightseeing

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Biotechnology Index Chart in past 10 yrs

Source: Yahoo! Inc.EasyLifeEasyLife

*BTK: AMEX Biotech Index, IXIC: NASDAQ Index, NBI: NASDAQ Biotech Index, DJI: Dow Jones Index

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SUMMARY

Bioindustry is a globally recognized main stream growing industry

Venture Capital Fund vs. Knowledge-Based Industry

Direct Financing Products/Capital Market Analysis

Taiwan Healthcare Industry Opportunity

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Innovative Source vs. Biotech Industry

GovernmentUniversity

Research InstituteHospital

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Biotech Industry

Non-profit organizationSupply 85% innovative sourcesCradle of biotech industry

Profit organizationConnection w/ financial industryConnection w/ capital marketConnection w/ global biotech industry cluster

Death of ValleyProfessional supports ： incubation center 、 tech transfer dept. 、 evaluation corp.VC 、 Buyout fund 、 PE fund

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Across Death of Valley

Firms play a key role in creating value from biomedical ideas by finding opportunities for value creation and raising funding based on the promise of value capture

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Venture Capital Fund vs. Knowledge Based Industry

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Venture Capital

Venture capital may be regarded as an equity investment where investors expect significant capital gains in return for accepting the risk they may lose all their equity

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VC Fund vs. Direct Financing

Direct Financing (involve in corp. management)

- Equity Investment

Indirect Financing (NOT involve in corp. management)

- Loan 、 Grant 、 Tax Incentive

UniMedUniMed

Direct Financing vs. Indirect Financing

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SUMMARY

Bioindustry is a globally recognized main stream growing industry

Venture Capital Fund vs. Knowledge-Based Industry

Direct Financing Products/Capital Market Analysis

Taiwan Healthcare Industry Opportunity

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Capital Market and Related Players

Private Market Public Security Market

VC IPO　

Follow-onPIPEsDebt

Public Offering Market

M&A , Consolidation

[VC Fund]

[Investment Bank][Hedge Fund]

[Mutual Fund]

[Buy-out Fund] [Private Equity Fund]

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BIO€ QUITY

Mutual Funds

(Hedge Funds)

Buy-out Funds

VC Funds

Money Distribution in Capital Market

Private Equity Funds

Corp. vs. Capital Market

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Capital Market Status decides Industry Type

Large long term bio fund Drug Industry

Small short term bio fund Medical Device Industry

Small flexible Investment money diversified small and medium enterprise in biotech industry

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Biotech DrugBiotech Drug

DevelopmentDevelopment

Medical Medical DevicesDevices

HIGH

HIGH

LOW

LOWRisk

Total Return

“UnMet Need” Low risk, low return Early liquidity High IRR Early distributions IPO vs. M&A

High risk, high return Need long term money Need large smart money IPO vs. M&A

Drug vs. Medical Device

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Drug Development and Approval Process

•It takes 11 years on average for an experimental drug to travel from lab to medical chest.

•Only 5 in 5,000 compounds screened in preclinical testing make it to human testing.

•1 of these 5 tested in people is approved.

PreclinicalTesting

Phase I Phase II Phase III FDA ApprovalPhase IV

Years 3.5 1 2 3 1 Total = 10.5Test

PopulationLaboratoryand Animal

Studies

20 to 80Healthy Volunteers

100 to 300Patient Volunteers

1,000 to 3,000Patient Volunteers

Post-marketingsafety monitoring

Large-scalemanufacturing

Distribution

Purpose Access safetyand biological

activityFILE

IND

Determinesafety and

dosage

Evaluateeffectiveness.Look for side

effects

Verify effectiveness,monitor adversereactons fromlong-term use

FILE

NDA

ReviewProcess

Education

% of allnew drugsthat pass

70%of INDs

33%of INDs

27%of INDs

20%of INDs

Expedited review: Phase II and III combined to shorten approval

process on new medicines for serious

and life-threatening diseases.

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Taiwan Biotech Industry : small & medium enterprise with flexibility

生技服務業13%

生物製劑36%

農業生技13%

食品生技27%

環境生技5%

特化生技6%

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2009 Taiwan Biotech Corp. AllotmentSource ： MOEA 經濟部生物技術與醫藥工業發展推動小組 2010

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Taiwan TSE 「 Biotech Healthcare 」 Sector-18 Listed

Pharma ：中化製藥 ( 資本額 NT$29.81 億元 ) 、永信藥品( 資本額 NT$25.37 億元 ) 、生達製藥、杏輝藥品、旭富、懷特新藥 ( 資本額 NT$9.42 億元 ) 、台耀、中化生技

Reagent ：亞諾法 Drug Store Channel ：美吾華 Functional Food ：葡萄王、景岳 Medical Device/Channel ：五鼎、東貿、雃博、華廣 Exercise Instrument ：必翔、喬山* Daily Trading Volume ： 200k~4,000k shares

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Taiwan OTC 「 Biotech sector 」 - 33 Listed

Pharma/Functional Food ：東洋藥品、濟生、晟德、南光、中天、天良、健喬信元、生泰、永日、杏昌、德英

Healthcare Service ：盛弘、大學光學、訊聯、 KY 馬光 CRO/Reagent ：進階、聯上 Marketing Channel/Functional Food ：弘如洋、友華、加捷、天騵

Medial Device/Channel ：精華、寶利徠、合世、百略 、紅電、邦拓、聯合骨科、晶宇、太醫、優盛、泰博、曜亞

* Daily trading volume ： 50k~4,000k shares

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SUMMARY

Bioindustry is a globally recognized main stream growing industry

Venture Capital Fund vs. Knowledge Based Industry

Direct Financing Products/Capital Market Analysis

Taiwan Healthcare Industry Opportunity

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台灣生技起飛鑽石行動方案Taiwan Bioindustry Take-off Action Plan

SIC

BVC

資料來源：行政院科技顧問組

Executive Yuan approved on 10/7/2009

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台灣生技起飛鑽石行動方案 Taiwan Bioindustry Take-off Action Plan

Direct and Proactive - BVC ( 生技創投基金 )

Indirect and Passive - TFDA - SIC ( 生技整合育成中心 ) - Integration of research Institutions ( 經濟部產業化研發中心 )

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Global Pharmaceutical Market Forecast

* Russia 2013 estimate based on September 2008 forecast

Source: IMS Health, Market Prognosis

EmergingMarkets13%

Europe27%

NorthAmerica41%

Rest of World8%

Japan11%

Sales

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Taiwan Bioindustry Opportunity

US

JapanChinaTaiwan

Taiwan is in critical position in between three largest markets in the world

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Howard Lee, Ph.D.howardlee@silverbm.com

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