GTX: An Opportunity Not to be Missed?

Team VeritasReuben Estrada MBA Candidate

Fang Fang PhD Candidate

Stan Guthrie PhD Candidate

Minlee Kim PhD Candidate

Hiromi Yoshida MD/MBA Candidate

Crohn’s Disease• Targets small intestine and colon

• Extensive transmural inflammation and ulceration

• “Skip lesions”

• Abdominal pain, diarrhea, and rectal bleeding

Ulcerative Colitis• Targets colon and rectum

• Inflammation and ulceration in mucosal and submucosal layer of the colon and rectum

• Continuous involvement

• Abdominal pain, diarrhea, and blood stools

Two IBD diseases Symptoms

Ulcerative Colitis (UC)

• Prevalence and incidence peak in the 20-29 year age group • Prevalence highest in the US, and Northern Europe

Crohn’s Disease (CD)

• Prevalence and incidence peak in two groups:15-30 and 55-80 year of age• Prevalence highest in the US and UK

CD

594,300

UC

525,000CD

479,000

UC

525,000

CD

440,700

UC

442,500CD

356,000

UC

442,500

CD

55,770

UC

250,000CD

45,000

UC

250,000

affect many people Market Analysis

Crohn’s Disease Ulcerative Colitis

Primary Goals

• Induce remission of acute flares

• Maintain remission

• Try to substitute steroids

TreatmentProgression

CurrentMarket Share

No TreatmentTopical 5-ASA

5-ASA/SulfasalazineAntibiotics

Oral CorticosteroidsIV Corticosteroids

6-Mercaptopurine/AzathioprineMethotrexate

CyclosporineInfliximab

Experimental Therapies…(20% UC received colectomy)

Severe

Mild

who have some options Market Analysis

Crohn’s Disease

Severity Unmet Need

Mild (46%)Oral agent for maintenance

Moderate (38%)Maintenance drug with better side-

effect profile

Severe (16%)Maintenance drug different from anti-

TNF-α therapy

Remission Maintenance drug

Ulcerative Colitis

Severity Unmet Need

Mild (55%)Current therapies

effective

Moderate (30%)Maintenance drugthat is fast-acting

and safe

Severe (15%)Maintenance drug

with better response rates

Remission Maintenance drug

Maintenance drugMinimal side effectsDifferent from anti-TNF-α therapy

but not many Unmet Needs

• Longer acting

• Convenient delivery mechanism

• Minimal side effects

• Humanized drug

• Excellent value

• Faster onset of action

• Synergy with existing drugs

• Attacks disease through a different pathway

We can address this need Ideal Drug Profile

GTX-001

• Biologic

• IV (6mg/kg) in vivo

• Significantly reduces inflammation with 2mg/kg, every other day, after 4-6 weeks

GTX-002• Immunomodulator

• Oral (50mg/kg) or IV (5mg/kg)

• Liver/kidney toxicities

• Bacterial infection

• Synergistic if combined with 5-ASA/steroid

Inhibits activation of pro-survival pathway and induces T-cell apoptosis

Inhibits leukocyte migration and accumulation in gut mucosa

collagen

VLA-1

MEKK3

IKKs

TNF-α

and have two ways to do it GTX-001 and GTX-002

Phase 1($42MM)

• Initial Safety

• Dosing and delivery

Phase 2($67MM)

• Safety and efficacy

Phase 3($241MM)

• New Drug vs. Existing Drug

Phase 4

• Long-term safety and effectiveness

• Post-marketing surveillance

Clinical R&D ($350MM)Preclinical R&D ($50MM)

• Dosing• Efficacy• Toxicity• Pharmacokinetics• Synergies with existing drugs• Effects on refractory IBD cases• Long-term side effects

The process requires Drug Trials

DISEASE

CD

UC X

• 206,4005ASA

• 40,000Steroid

• 122,000IM

MARKET SIZE PROFITGTX-002

GTX-001

147.36MMX

Annual Figures

UC diseaseSynergies100% of marketPrice of $400

159MM+

10%Sales

DISEASE

CD

UC

MARKET SIZE PROFIT

159MM+

10%Sales

• 32,500Refractory

• ?Biologic

• 20,000Refractory

• ?Biologic

1.522B

Annual Figures

CD and UC diseaseRefractory50% of marketPrice of $21,000

1.21B

making a choice Drug Selection

Revenue 1,522,500,000

Cost of Sales:

Selling, informational and administrative expenses 100,000,000

Acquisition-related in-process R&D charges:

Licensing Fee 833,333

Late stage development costs 25,000,000

R&D Milestone 33,333,333

Royalty Costs 152,250,000

Net Income 1,211,083,334

INCOME STATEMENT:

Phase 1

70%

Phase 2

33%

Phase 3

30%

Growth rate- 3%Discounting rate- 10%Price- $21,00052.5 thousand people13 year period

EXPECTED VALUE

7% - success rate

Total Actual Value: 20.1B Total Actual Value: 1.4BTotal Present Value: 10.5B Total Present Value: 738MMCosts: 710MM Costs: 710MMProject Value: 9.83B Project Value: 28MM

IF SUCCESSFUL ADJUSTING FOR RISK

running with the numbers Calculations

• GTX 001

•Maintenance drug for both CD and UC

Product

• $21,000

Price

• Refractory patients

• Moderate and severe patients

Target Market

• Expansion into international markets

• Development and commercialization for other diseases

• Extension of patent – orphan drug patent

• Re-negotiation of contract

• License exclusivity

• Decrease production costs

Future Direction

and developing a plan Proposal

Acknowledgements

J.A. DiMasi et al. “The Price of Innovation: New Estimates of Drug Development Costs.” Journal of Health Economics 22 (2003): 151-185.

Marianne Moody Jennings. Business Ethics: Case Studies and Selected Readings. Mason: South-Western CengageLearning. 2009.

P.M. Matthews. “The Long, Sometimes Bumpy Road of Drug Development.” The Dana Foundation. 2006. <http://www.dana.org/news/cerebrum/detail.aspx?id=5486&p=2>.

John Hopkins Medicine Gastroenterology & Hepatology<http://www.hopkins-gi.org/>

Additional Information References

Current Treatment

Crohn’s Disease Ulcerative Colitis

Goals- Induce remission of acute flares - Maintain remission -Try to substitute steroid

Market ShareUS EU US EU

5-ASA- Pros: Oral; Cheap

- Cons: Few have robust efficacy data

- Pros: Oral; Cheap; Lower dosing; Well developed

- Cons: Ineffective for severe form; Poor retention

Steroids- Pros: Effective; Rapid-acting for acute flares

- Cons: Long-term side effects

- Pros: Oral; Effective induction; Rapid onset

- Cons: Long-term side effects; Infection;

Immuno-

modulator

- Pros: Oral; Effective for severe condition;

Cheaper than biologic

- Cons: Harmful when combine with TNF-

- Pros: Oral; Highly effective

- Cons: Toxic; Potential tremors/infections;

Slow onset; Not for pregnant women

Biologic

- Pros: Robust clinical data (eg. Infliximab)

Higher comfort level; Possibility of SC

Choice of non-anti-TNF- approach

-Cons: IV; Not fully humanized; Infections

- Pros: Effective; Reduce surgery

-Cons: IV; Can’t stop once started; Infection

Long-term safety

Others No treatment or Refractory 20% undergoes Colectomy

8.78%

20.34%

20.99%

21.41%

19.27%9.21%

No Treatment

ATA

ATA+Steroid

Steroid+IM

Biologic

Refractory

3.77%

12.81%

18.83%16.01%

42% 6.59%

6.65%

13.85%

40.72%

15.24%

14.4%

9.14%

4.77%

7.4%

36.75%

11.93%

30.79%8.35%

Population Predictions

CD

Population

US EU

Prevalence Incidence Biologic Refractory Other Treat Prevalence Incidence Biologic Refractory Other Treat

2007 479,000 20,212 101,540 43,831 307,864 355,200 14,988 51,271 24,618 260,464

2008 481,526 20,327 102,077 44,063 309,493 357,074 15,073 51,542 24,748 261,842

2017 505,873 21,246 107,216 46,281 325,074 375,127 15,754 54,137 25,994 275,024

2020 516,897 21,590 109,528 47,279 332,085 383,303 16,010 55,305 26,554 280,956

2021 520,802 21,705 110,346 47,632 334,564 386,198 16,095 55,718 26,752 283,053

2022 524,821 21,820 111,187 47,995 337,114 389,179 16,180 56,142 26,956 285,211

2023 528,956 21,935 112,051 48,368 339,734 392,244 16,265 56,579 27,166 287,427

2024 533,205 22,049 112,939 48,751 342,425 395,395 16,351 57,027 27,381 289,704

2025 537,569 22,164 113,850 49,145 345,187 398,631 16,436 57,487 27,602 292,041

2026 542,047 22,279 114,784 49,548 348,020 401,953 16,521 57,959 27,828 294,438

2027 546,641 22,394 115,742 49,961 350,924 405,359 16,606 58,442 28,061 296,895

2028 551,350 22,509 116,723 50,385 353,898 408,850 16,691 58,938 28,299 299,411

2029 556,173 22,624 117,727 50,818 356,944 412,427 16,776 59,445 28,542 301,988

2030 561,111 22,738 118,755 51,262 360,060 416,089 16,862 59,964 28,791 304,624

2031 566,164 22,853 119,806 51,716 363,247 419,836 16,947 60,494 29,046 307,320

2032 571,332 22,968 120,881 52,180 366,505 423,668 17,032 61,037 29,307 310,077

UC Prevalence Incidence Biologic Refractory Other Treat Prevalence Incidence Biologic Refractory Other Treat

Every year 525,000 21,000 67,253 19,793 403,410 442,500 17,700 32,745 21,107 248,154

- For CD, prevalence and incidence increase linearly every year.- For UC, prevalence remain stable through out the whole period;

incidence and death rate balance out.

Assumptions:-Consider a 4% constant death rate.- using the market segment provided predict each medicine sector.