Royalty Agreement Hyderabad India - PDF - PDF

					Susquehanna Financial Group
   Healthcare Conference
       March 5, 2008
Forward-Looking Statements


 This presentation may contain projections, estimates and other forward-
 looking statements that involve a number of risks and uncertainties,
 including those discussed in the Company’s filings with the Securities and
 Exchange Commission. While this presentation represents
 management’s current judgment on the future direction of the Company’s
 business, such risks and uncertainties could cause actual results to differ
 materially from any future performance suggested herein. The Company
 undertakes no obligation to release publicly the results of any revisions to
 these forward-looking statements to reflect events or circumstances
 arising after the date hereof.
Company Background

AMRI provides scientific services, products and technologies
that improve quality of life, while delivering excellence, value
and maximum return.

 •   Headquartered in Albany, NY
 •   Founded in 1991
 •   IPO in 1999
 •   Started as chemistry CRO – Diversified business through
     organic growth and acquisitions
 •   Facilities in U.S., Central Europe & Asia
 •   ~ 1,200 employees – 34% outside U.S.
 •   2007 Total Revenues: $193 million
 •   December 2007 Cash = $108 million
What Is AMRI?




                Contract
                Services
                •Fee for Service
                •Strategic Technologies
    Drug Discovery & Development


          Outsourcing Industry Involved Throughout




Discovery Services        Development/Small Scale Mfg.          Large Scale Mfg.
•   Medicinal Chemistry   •   Chemical Process Development      •   Development API
•   HTS                   •   Analytical Development            •   Commercial API
•   In vitro Biology      •   Kilo Scale                        •   Generic API
•   Library Synthesis     •   Phase I GMP                       •   High Value
•   Biocatalysis          •   Fermentation Development              Intermediates
•   Custom Synthesis      •   Salt & Polymorph Investigations
                          •   Formulation Development
 Market Opportunity
 Contract Services
      Historically fragmented market, consolidation underway
      Overall market growing via increased outsourcing by Big
      Pharma and growth in Biotechs/Specialty Pharma
      AMRI ahead of curve by expanding overseas to both increase
      and recapture customer base
 Outsource Market
    Discovery Services              Development/Small Scale             Large Scale
         ~$2 billion                   $1 billion to $2 billion    $20 billion to $30 billion
    10-15% Growth Rate                 8-12% Growth Rate            8-10% Growth Rate

 AMRI
    Discovery Services               Development/Small Scale            Large Scale
  $53 million to $55 million          $49 million to $50 million   $76 million to $77 million
     25% Growth Rate                    10% Growth Rate               1% Growth Rate

AMRI growing through globalization and expansion of capabilities.

Data Sources: Jefferies & Co., Goldman Sachs, Contract Pharma
Moving Forward: Our Strategy

Contract Services

  Globalizing our services platform

  Leveraging integrated contract services

  Expanding Margins

  Capitalizing on R&D skills & technologies
Moving Forward
Globalizing Our Business

Hungary               Hyderabad, India         Aurangabad, India          Singapore
•Discovery Services   •Development and small   •Generic API               •Discovery Services
                      scale manufacturing      manufacturing
•Strong history of                                                        •Services both US and
library development   •GMP analytical          •Source of raw materials   Asian markets
                      services                 and intermediates for
•Seeking to capture                                                       •Expanding services to
                                               other AMRI Facilities
larger share of EU    •Medicinal chemistry                                include in vitro biology
                      support                  •New Commercial

    Integrated Globally to capture additional share of local and global markets
Moving Forward
Leveraging Our Integrated Services


Discovery

• High-Value Chemistry - Problem Solving, Quality
• Bundled service offerings and technologies
• Hybrid offerings
Moving Forward
Leveraging Our Integrated Services

Development/Small Scale
• Growing by adding new services to cross sell to customers
• Growth aided by reputation and marketing
• Feeding business to Large Scale
• Expanding capacity in lower cost environments


    Cross-Sell Services to                     50 customer compounds in Phase I/II
    Captive Customers                          Clinical trials material fueling growth
Large Scale
•    4 new commercial agreements in place
      – 2 customer compounds now FDA approved
•    16 compounds in Phase III, one has royalty agreement
      – 11 transitioned from our Dev/Small Scale business
      – One NDA filed in early 2008
•    3 specialty generics with promise, two have royalty potential
Moving Forward
Diversifying The Large Scale Mix

          2004                                   2008

                                                           12%
           68%                               40%



                 10%                                       36%
                                       12%
        22%



      Contrast       Legacy         New                 Late Stage
      Agents         Commercial     Commercial          Development


           Chemical Development Feeding New Pipeline
Moving Forward
Revenue Growth
Revenue driving margin turnaround

                2007E                                      2008E*
              Revenues (In $mm’s)                           Revenues (In $mm’s)


                  $45                                             $50

          $44                                           $55

                       $76                                          $77



                                                    *Represents upper end of guidance


 Contract and Milestone Revenue 2008E: $178- $182, up to 11% YOY Growth


           Discovery     Development/Small Scale Mfg.      Large Scale Mfg
 Moving Forward
 Margin Expansion
         Gross Margins returning to historical levels through cost reductions,
         lower cost markets, improved execution, increased capacity utilization
         and increase in sales/marketing team



Discovery & Development/Small Scale             Large Scale




                                     35%-
                                     42%
  28%                                                                              24%
                 25%
                           16%
                                                  10%                  13%
                                                             3%
  2007         2005-2006   2004     2000-2003
                                                  2007       2006      2005       2003-2004
Moving Forward
Core Contract Business Increasing Returns
…significant earnings power potential
      $25                                                                                                            35%


                                                                                                                     30%
      $20

                                                                                                                     25%

      $15
                                                                                                                     20%


                                                                                                                     15%
      $10

                                                                                                                     10%

       $5
                                                                                                                     5%


       $0                                                                                                            0%
               2007        2006       2005        2004       2003        2002       2001        2000          1999
                                             EBITDA                                           EBITDA %
 Represents EBITDA (in millions) of contract business, excludes Royalty Revenue, Milestones and R&D Expense
Moving Forward
Capitalizing on R&D Skills & Technologies

Overview


                            •   Unique Technologies
  Contract                  •   Niche Generic API Development
                            •   Internal Pipeline of Drug Candidates
  Services
   •Fee for Service

   Strategic Technologies
Unique Technologies…
 …offer near-term opportunities

•   Unique set of technologies and services that complement our
    core discovery chemistry capabilities
•   Deals provide for upfront access fees and fee-for-service
    revenues; represents 25–30% of Discovery Services revenues
•   Long-term revenue potential through milestones and royalties
•   Services include:
    •   In Vitro Biology
    •   Natural Product Libraries
    •   In Vitro Metabolism
    •   Biocatalysis
    •   Fermentation
•   Four recent contracts surrounding our Natural Products and In
    Vitro Biology capabilities (BMS, Achaogen, Cystic Fibrosis) are
    examples of these capabilities
  Market Opportunity
  Internal Pipeline
     The urgent need for Big Pharma to re-fill pipeline
     is increasing the size of out-license deals.
     Recent deal examples:
                                                 Potential
Companies             Phase          Upfront $                   Indication               Year
                                                 Milestone $’s
Merck – Addex         Pre-Clinical   $22 MM      $455 MM         CNS                       2008
Merck – GTx, Inc.     Phase II       40 MM       422 MM          Muscle Loss               2007
Merck – Ariad         Phase II       75 MM       452 MM          Oncology                  2007
GSK – Targacept       Phase II       20 MM       1.5 BB          CNS                       2007

Kyowa – Arqule        Phase I        30 MM       93 MM           Oncology                  2007

Lilly-OSI             Phase I        25 MM       360 MM          Type 2 Diabetes           2007

AstraZeneca-Argenta   Pre-Clinical   21 MM       500 MM          COPD                      2007

GSK-EPIX              Pre-Clinical   17.5 MM     1.2 BB          Alzheimer’s                   2006

Abbott-Enanta         Pre-Clinical   57 MM*      250 MM          Hep C                     2006
AMRI-Bristol-Myers    Pre-Clinical   $8+ MM      $150 MM         CNS                           2005
                                                                  *Includes equity component
  Market Opportunity
  Internal Pipeline - Promising Programs



  TREATMENT AREA                     EST MKT            EXAMPLES
CNS (e.g. depression)*               $17-20 billion   Cymbalta, Zoloft, Prozac

Cancer (leukemia and solid tumors)   $9-10 billion    Navelbine, Vinblastine, Vincristine,
                                                      Vindesine

Bacterial Infections                 $10-20 billion   Zyvox, Cubicin, Tygocil, Factive, Merrem

Obesity                              $2-3 billion     Acomplia, Xenical, Meridia

IBS, emesis                          $2-3 billion     Emend (emesis), Zofran, Aloxi, Lotronex
                                                      (IBS-d)

Psoriasis, Rheumatoid Arthritis      $1-10 billion    Enbrel, Sandimmune


  *Program licensed to and supported by Bristol-Myers Squibb
R&D Spend = Investment in Future
Allegra – AMRI Patents & Royalties


  AMRI licensed technology to Aventis in ’95
  Royalties through 2015
  ~$367 million cumulative milestone and royalty revenues
  to AMRI
  Allegra in the spotlight due to current patent litigation and
  ‘at risk’ launch by Barr and Teva in Sept. ’05
  Royalty levels stabilized beginning Q4 06 and through
  Q4 07

Patent infringement litigation continues to be vigorously pursued
    Why Invest in AMRI?


•    Expanding Contract Revenues
•    Strong focus on improving Gross Margins
•    Globalizing ahead of the curve
•    R&D Investments offer significant upside potential
•    Strong Balance Sheet with significant Cash
•    Share repurchase program in place reflecting confidence
     in future long term valuation

     Turn-around story for investors
     seeking Long Term Growth At a
     Reasonable Price
APPENDIX
Contract & Milestone Revenue 2000-2007

                                                               $178-$182
                                                     R
$200
                                                C AG
                                            %
                                          11                $165
                                                   $153
$150                        $145
                                           $137
                                   $122

$100
                     $72
              $60
 $50   $40


  $0
       2000   2001   2002   2003   2004    2005      2006   2007E   2008

              Contract Revenues    Revenue from Acquisition
Condensed Balance Sheet

(In $MM’s)                                  Dec 07   Dec 06
Assets
Cash and Investments                        $107.6   $107.2
Accounts Receivable                          28.4     34.8
Royalty Receivable                           6.1      6.2
Inventory                                    22.6     22.6
Net PP&E                                    158.0    154.7
                     Total Assets           $381.5   $370.8
Liabilities and Equity
Accounts Payable & Accrued Expenses         $17.9    $17.2
Deferred Revenue                             6.9      8.3
Debt                                         14.0     18.5
Stockholders’ Equity                        334.7    318.5
             Total Liabilities and Equity   $381.5   $370.8
AMRI & BMS Agreements

•   Licensed preclinical lead compounds (Oct. 2005). Biogenic amine
    reuptake inhibitors for depression and other CNS disorders
•   $8 million upfront; $10 million in research funding over three years
•   Opportunity for multiple drug candidates
•   Milestones up to $66 million per compound for first two compounds
    and up to $22 million per compound on subsequent compounds
•   Royalties on worldwide sales of commercialized compounds
•   Second agreement (Dec. 2006). A natural products R&D
    collaboration on multiple targets. Upfront, FTE fees plus milestones
    and royalties.
             AMRI tubulin inhibitor - xenografts

                                                    NSCLC                                                                                                        PROSTATE
median tumor volume, mm3




                           2500                                                                                            1200




                                                                                                       median tumor volume, mm3
                                                                                                                           1000             Vehicle
                           2000
                                                                                                                                            Vinorelbine (6mpk)
                                                                                                                                  800
                           1500                                                                                                             AMR-VIN-8 (4mpk)

                                                                                                                                  600
                           1000
                                                                           Vehicle                                                400

                            500                                            vinorelbine (3mpk)
                                                                                                                                  200
                                                                           ALB 109564 (6mpk)
                                 0                                                                                                 0
                                     0   5    10    15          20        25          30        35                                      0         10                  20   Day   30             40         50
                                                          Day

                                                   COLON                                                                                                              LUNG
                                                                                                      Median Tumor Volume, mm3
                      1200                                                                                                   1200
Median Tumor Volume, mm3




                      1000                                                                                                   1000

                           800                                                                                                    800

                           600                                                                                                    600

                           400
                                                                           Vehicle                                                400
                                                                                                                                                                                      Vehicle
                                                                           Vinorelbine (4mpk)
                           200
                                                                           ALB 109564 (6mpk)                                      200                                                 Vinorelbine (4mpk)
                                                                                                                                                                                      ALB 109564 (6mpk)
                            0                                                                                                       0
                                 0       10    20        30          40              50         60
                                                         Day
                                                                                                                                        0       10               20         30         40            50
                                                                                                     26                                                                    Day        CONFIDENTIAL
Anticancer Program (Tubulin Inhibitor)


 •   Novel variants in a proven class of anti-cancer agents
 •   Potency and breadth of tumor activity superior to marketed
     members of the class
 •   Significant tumor growth delay in animal cancer models
 •   Candidate Compound Nominated (October 2006)
 •   IND-enabling toxicology studies completed
 •   IND filing expected by Q3 2008
 Major Competitors

             Discovery      Development/Small Scale      Large Scale
US                         Cambrex                    Cambrex
                           Cambridge Major            Johnson Matthey
                           Irix                       SAFC
                           SAFC
Europe   Chem Div          Aptuit                     Evonik
         Evotec            Hovione                    DSM
         Galapagos                                    Hovione
                                                      Lonza
Asia     WuXi              GVK Bio                    Dishman
         GVK Bio           Jubilant                   Jubilant
         Shanghai Chem     WuXi                       Nicholas Piramal
         Partner                                      Orchid
                                                      Shasun



          AMRI only company which competes across all segments

				
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