JULY-SEPTEMBER Image Copyright: REUTERS/Tim Wimborne Spotlight On... Multiple Sclerosis AWARDED TO THOMSON SCIENT FIC LIMITED

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1 AWARDED TO THOMSON SCIENT FIC LIMITED Image Copyright: REUTERS/Tim Wimborne Spotlight On... Multiple Sclerosis A PHARMA MATTERS report. JULY-SEPTEMBER 2010 Expert therapy area review of the key market players and deals highlights for leading areas of industry investment and development. These insightful reviews are based on the strategic data and insights from Thomson Pharma and Thomson Pharma Partnering Forecast. (THE SCIENTIFIC BUS NESS OF THOMSON REUTERS)

2 Abstract Oral drugs will soon revolutionize treatment of multiple sclerosis. Until recently, the only disease-modifying agents available were the interferons, a highly competitive drug class, but with the disadvantage of administration by injection. This report observes how this key drug franchise is evolving, and evaluates the strengths and weaknesses of the current and future players. Development of the deals landscape during this time of change is discussed, highlighting recent activity as industry heavyweights pair up for commercialization of the leading products, but also make significant investments in developmental candidates that show promise. Extracting consensus data from Thomson Pharma Partnering Forecast, the report assesses the present market and reveals the future dynamics and competitive positioning of therapeutics in this exciting therapy area as it diversifies and transforms. Sales figures are correct as of July 16, 2010 For more information on Thomson Pharma and Thomson Pharma Partnering Forecast visit go.thomsonreuters.com/commercial or scientific.lifesciences@thomsonreuters.com

3 SECTION I An evolving multiple sclerosis market: the oral revolution With impending launches of the first oral drugs for multiple sclerosis (MS), the MS market is entering an exciting phase of evolution, which will significantly impact patients lives and transform the competitive landscape of this therapy area. Since 1993, the only disease-modifying options for MS have been a range of interferon-based products, which are administered intravenously, intramuscularly or subcutaneously, typically with considerable discomfort. Competition has been intense between the interferon products, and was compounded by the entry of two new injectable therapies (Copaxone and Tysabri) over the last decade. Competition across the market is now expected to further escalate as the race for the first oral MS drug approval intensifies. According to Thomson Pharma Partnering Forecast, the MS market is set to rise from $8.9 billion in 2008, to $15.6 billion in 2014, based largely on the expected entry of several new oral therapy options, although the beta interferon brands and Tysabri will also see some growth. This rapidly evolving market is also expected to further diversify as companies with no previous involvement enter the sector. The MS market until now has been dominated by an oligopoly; Biogen Idec, Teva, Merck Serono and Bayer Schering have been the leading competitors globally. However, companies like sanofi-aventis, AstraZeneca, Novartis and Glenmark, with some of the most technologically advanced products in their pipeline portfolio, are expected to start to attract the most investor attention as the market begins to change. Indeed, Novartis is employing several strategies to enter the field of MS therapeutics, including in-house development, early- to mid-stage partnering, and development of biosimilars. There has been a significant expansion of the MS market, driven primarily by price increases, new patient diagnoses in the US, and by higher penetration rates in EU markets. MULTIPLE SCLEROSIS WORLDWIDE (US$) 2008 REPORTED SALES Avonex 25% Rebif 22% NATALIZUMAB 9% GLATIRAMER ACETATE 25% Betaseron 19% MULTIPLE SCLEROSIS WORLDWIDE (US$) 2014 CONSENSUS FORECASTS Betaseron 9% Avonex 15% alemtuzumab 2% Rebif 14% NATALIZUMAB 9% GLATIRAMER ACETATE 26% fingolimod 7% FAMPRIDINE (ORAL, sustained release, ms / spinal cord injury, ACORDA/Biogen 6% ExTAvia 2% CLADRIBINE (ORAL, MS), Merck Serono 3% Other 7%

4 There is a demand for oral therapy given the inconvenience of dosing of existing injectable therapies. multiple sclerosis: the current market The MS market has changed very little over the past 10 years. Four injectable disease-modifying drugs monopolized the landscape, with three formulations of beta interferon (Biogen Idec s Avonex, Merck Serono s Rebif, and Bayer/Novartis Betaseron) and one complex immunomodulatory peptide (Teva s Copaxone). Copaxone became the best selling MS drug in 2008, driven primarily by the drug s tolerability and status as the only non-interferon front-line agent. Copaxone gained its dominant market share largely through data from the REGARD and BEYOND trials, which supported efficacy equal to that of the interferons, without the associated tolerability issues. In July 2008, Momenta/Sandoz and Mylan filed ANDAs for Copaxone, which are currently being litigated and could threaten sales going forward. Copaxone is a mixture of chemically synthesized polypeptides, and although not approved as a biologic, because the multiepitopic sequences in Copaxone are not completely characterized, Teva has argued that biosimilar manufacturers will not be able to demonstrate their drug is a precise copy of Copaxone. Although the FDA considers these contentions unpersuasive, Copaxone is not expected to lose its bestseller position until 2013, even as the market starts to radically diversify with the expected entry of oral therapies in Even in the face of this competition, sales for Copaxone are expected to rise from $2.26 billion in 2008 to $3.872 billion in Avonex had been the best-selling MS drug until 2008, but despite being overtaken by Copaxone, it still remains the top-selling interferon, having performed well in the face of competition from the higher-dose interferons. Steady market share and aggressive US pricing are supporting moderate sales growth, and the product is expected to maintain its number one interferon product status to 2013, with sales rising from $2.03 billion in 2008 to $2.342 in In a further effort to support the franchise, Biogen Idec is also developing PEGylated Avonex, which prolongs the drug s halflife and improves its ease of use to twice-monthly injections; phase III trials are ongoing. Despite Avonex s status as the top interferon, Rebif is the fastest-growing interferon product in the franchise. Sales grew 15% in 2008 to $1.958 billion, although the total was impacted by currency. Rebif has benefited from data from the EVIDENCE trial, which established superiority for high-dose Rebif over Avonex over 12 months. According to Thomson Pharma Partnering Forecast, Rebif will see continued strongest growth within the three interferon products in the period up to 2013, rising to $2.183 billion. REPORTED AND CONSENSUS FORECAST REVENUE (MILLION US$) Copaxone Avonex Rebif Betaseron SALES IN US $ YEAR* REPORTED CONSENSUS * Data is derived from Thomson Pharma Partnering Forecast

5 TYSABRI: gaining market share, but PML risk significant In late 2004, Biogen Idec and partner Elan received first approval for Tysabri in the treatment of MS. Seemingly destined for blockbuster status, the drug s commercialization was halted less than three months into its launch following two cases of severe progressive multifocal leukoencephalopathy (PML) reported in clinical trial patients treated with a combination of Tysabri and Avonex for more than two years. A third confirmed case was then reported in a Crohn s disease patient receiving intermittent Tysabri monotherapy over 18 months. At that time, Biogen Idec and Elan completed a full review of Tysabri s safety throughout its entire clinical trial program and found no additional cases of PML in 3000 patients who had received the drug. Tysabri remained withdrawn from the market until further analyses had been presented to the FDA, at which point a positive FDA panel recommendation led to its relaunch in the US in July 2006, under the TOUCH risk management program. The FDA had reviewed the impressive efficacy data for Tysabri, and concluded the risk/benefit was acceptable when other therapies had failed. The drug s approval was based upon data from the AFFIRM (Tysabri monotherapy versus placebo) and SENTINEL (Tysabri plus Avonex combination versus Avonex) studies. In these trials, Tysabri induced a dramatic reduction in relapse rate versus either placebo or Avonex monotherapy. In AFFIRM, patients experienced a 66% reduction in relapse rates after one year, with annualized relapse rates of 0.25 for Tysabri versus 0.74 on placebo. At two years, AFFIRM demonstrated a 42% reduction in the risk of disability progression for the Tysabri treatment arm versus placebo, eclipsing reported risk reductions for Avonex (37% reduction) and Rebif (30% reduction), while Betaseron and Copaxone have never shown an impact on disease progression. Since its relaunch, Tysabri has steadily gained market share, and the drug surpassed $1 billion in sales for the first time in By June 2010, regulators had linked the drug to 11 deaths and 55 cases of PML since it was reintroduced in 2006, although were still recommending it remain on the market. However, the drug s sales will inevitably be closely linked to its rate of association with PML, and another 12 months of commercial experience may be required before Tysabri s true association with PML becomes clearer, possibly with data from the TYGRIS trial. In the meantime, Biogen Idec is evaluating whether earlier diagnosis followed by plasma exchange might improve patient outcomes, and is also seeking to identify factors that might predispose certain patients to PML. Sales are forecast to rise from $831 million in 2008 to $1.517 billion in 2013, according to Thomson Pharma Partnering Forecast, which could be its peak year of sales. Avonex, with its convenient dosing and lower side effects, may benefit from a large-scale phase III trial examining the combined use of Avonex and Copaxone that is due to complete in July 2012.

6 Rebif is clinically superior to Avonex after 24 weeks, despite being chemically identical, according to data from the EVIDENCE trial. These data allowed the drug to gain FDA approval, despite Avonex holding Orphan Drug exclusivity. The first oral THERAPIES Despite the relative lack of options for MS over the last decade, significant research is ongoing into newer targeted immune therapies for MS, including the monoclonal antibodies daclizumab, alemtuzumab and ocrelizumab, and the T-cell vaccine Tovaxin. However, it is the success in trials of the oral MS therapies which has created the greatest excitement among investors, and it is these which are the most anticipated new treatment options. Merck Serono s cladribine (Mylinax) and Novartis s fingolimod (FTY- 720), both in regulatory filing, and sanofi-aventis s teriflunomide, Biogen Idec s BG-12, and Active Biotech s laquinimod, all currently in phase III development, are the most keenly watched oral pipeline products. These are at the most advanced stages of development, and have demonstrated induction of remyelination, reduction in lesions and relapses, and reduced side effects. Between the two most advanced drugs, Novartis has edged ahead of Merck Serono in the race to get the first oral MS treatment to market, having now filed for approval of fingolimod in the US and Europe. The FDA will conduct a priority six-month review, which could bring it to market by year-end. Merck Serono filed its US application for cladribine first, in September 2009, but the FDA rejected the filing two months later as incomplete, which means that although the filing was resubmitted in June 2010, Novartis will most likely be the first company to get an oral therapy registered in the US with fingolimod. Fingolimod: strong efficacy but concerning side effects Novartis filed fingolimod for approval at the lowest dose studied in trials (0.5 mg), which had the best benefit-risk profile. Data published from two late-stage trials have showed fingolimod is effective in reducing relapses, disability progression and lesions. In the one-year TRANSFORMS study, involving 1292 patients, the lower dose of fingolimod reduced relapses by more than 50% compared with Avonex. Robust efficacy was also confirmed by the FREEDOMS study, in which fingolimod (1.25 mg) reduced the relapse rate by 60% compared with placebo. However, questions about the tolerability of fingolimod persist. While efficacy appeared impressive in TRANSFORMS, the trial highlighted a potentially concerning side-effect profile. There were two fatal herpes infections, and one death from a progressive neurological condition of unclear etiology. While the lower dose appeared to be associated with less risk of infection, opportunistic infections were still observed in this relatively short-term study. Almost as concerning was that eight patients on fingolimod (six on the low dose, two on the high dose) developed melanoma and two developed breast cancer. Transient reductions in heart rate, increases in blood pressure (1 to 3 mmhg), elevations in liver enzymes, and increased rates of macular edema were also seen in fingolimod-treated patients. As long as these side effects do not worsen with time, it is anticipated that physicians and patients may be willing to accept the risks, given the significant demand for oral dosing, and sales are forecast to ramp quickly upon launch, reaching $853.7 million in Nonetheless, the threat to the existing major players in the franchise may be somewhat tempered by the need for a stringent risk evaluation and mitigation strategies (REMS) program involving a broad group of specialty physicians.

7 Mylinax prolonged lymphopenia MAY be an issue Oral cladribine (Mylinax) is a new formulation of the intravenous chemotherapeutic cladribine, currently approved for the treatment of hairy cell leukemia. Positive data from the phase III CLARITY trial showed a 58% reduction in relapse rate over two years with Mylinax treatment, which while not as great as the reductions seen with Tysabri, place it above the first-line interferons. However, the reduction in disability associated with Mylinax (33%) in CLARITY did not quite match reductions seen with Avonex (37%) and Tysabri (42%+), although reductions in lesion activity were evident. As with fingolimod, the biggest question at this stage is cladribine s safety profile and its potential to cause elevated incidences of infection. The drug works by causing moderate-to-severe prolonged lymphopenia, the longerterm consequences of which are unclear. In addition, CLARITY featured four cases of cancer and one death from tuberculosis possibly related to the drug. There may also be some question over whether the drug is suitable for use in women of childbearing age. On the positive side, cladribine is viewed as easy to use (as few as 10 days dosing per year), relatively well tolerated, and strongly efficacious. Should the clinical sequelae associated with lymphopenia be manageable, oral cladribine could become a first-line drug with strong clinical potential; sales are forecast to reach $358.7million in Tysabri displays very low rates of relapse with radiographic progression in the real-world setting. REPORTED AND CONSENSUS FORECAST REVENUE (MILLION US$) Mylinax Fingolimod SALES IN US $ YEAR* REPORTED SALES * Data is derived from Thomson Pharma Partnering Forecast

8 Fingolimod s oral convenience may be offset by demands for multidisciplinary monitoring, including liver, dermatology and infection screening. Further ALONG the oral pipeline Sanofi-aventis s teriflunomide is a pyrimidine synthesis inhibitor with immunomodulatory properties. Development has been protracted, with the initial phase III trials beginning in September 2004, first as a monotherapy and then in combination with interferon. Phase II data have been positive, with reductions seen in MRI lesions, and a trend towards reduced disability/ number of relapses. However, some degree of immunosuppression was seen in 49% of patients. The first phase III data, from the TEMSO study, are expected in 4Q10. Biogen Idec s oral second-generation fumarate derivative BG-12 has completed a 257-patient European phase II dose-ranging trial; data showed that the drug reduced brain lesion activity at six months versus placebo; the highest dose (720 mg) reduced the mean number of lesions by 69% between weeks 12 and 24 and led to a 48% reduction in newly enlarging T2-hyperintense lesions. There was a trend toward reduction in relapse rate (32% reduction versus placebo), although this was not significant. While liver enzyme elevations were observed in 2 to 8% of patients, no opportunistic infections occurred in patients on BG-12. Two phase III studies, DEFINE and CONFIRM, have completed enrollment. Teva s laquinimod has received fast-track status from the FDA, and the company believes it could enter the market as soon as late However, so far, phase II data have suggested only modest efficacy. Two phase III trials have completed enrollment. Looking to earlier-stage drugs, Tysabri has validated blockade of the alpha4-β 1 integrins as a therapeutic approach for the treatment of MS, and a number of alpha4 integrins are now progressing through trials, including GlaxoSmithKline s firategrast (licensed from Tanabe in December 2000); a Biogen Idec molecule (CDP-323), part of a collaborative global deal with UCB signed in October 2006, with the same mechanism of action was discontinued in 2009 due to lack of efficacy. AdJUNCTIve THERAPY Effective oral disease-modifying agents for MS will address the treatment goal of preventing long-term disability, and their arrival will herald a sea change in treatment of the disease. However, the scope for oral treatment has not stopped there, and effective symptom management for MS may mark another radical change in the dynamics of the market. The first of these treatment options, Acorda Therapeutics sustained-release fampridine (Ampyra), was approved in January 2010 to improve walking ability in patients with MS; launch took place in March Ampyra successfully completed two SPA-supported phase III trials, which included patients with primary-progressive, secondary-progressive, relapsing-remitting and progressive-relapsing disease. The first study yielded results in 2006; data were strong, and Ampyra met all three predefined efficacy hurdles. Compared to placebo, a greater proportion of patients on Ampyra showed a consistent improvement in walking speed and were classified as responders, the study s primary outcome (34.8% versus 8.3%). This effect was maintained throughout the 14-week treatment period, and there was a significant improvement in the 12-Item MS Walking Scale for responders versus non-responders. In June 2008, Acorda reported positive data from a further phase III trial, in which Ampyra demonstrated a consistent increase in walking speed across all types of MS. The trial s primary endpoint was met convincingly, with 42.9% of Ampyra patients responding to therapy versus 9.3% on placebo. The average increase in walking speed over the 8 weeks of treatment compared to baseline was 24.7% for the responders compared to 7.7% for placebo.

9 However, despite favorable efficacy data, prescriptions may be limited by price concerns, given that the drug is likely to be prescribed alongside the high-cost disease-modifying agents. Additionally, a dose-related risk of seizures was observed in trials, which could further temper sales. Ampyra addresses an important need in terms of reducing symptoms and consequently the drug is expected to reach sales of $639.6 million in SECTION II deals Highlights The impact of the economic downturn has dramatically influenced the focus and needs of pharmaceutical companies in recent months. As the financial markets show early signs of a slow recovery, licensing activity between companies has been unpredictable but still prevalent and in some cases, profitable. It is clear that the emphasis on ensuring a signed deal sustains longevity is rooted at the relationship between companies. The increased attendance at annual partnering conferences has been a well-observed trend. Thus, confirming that business development representatives understand the need to identify potential partners with expertise and knowledge within a niche field and/or territory, in order to achieve the ideal partnering model of sustainable agreements and pioneer novel therapeutics. The major companies in the MS market that have emerged as prominent deal-making figures include Biogen Idec, Merck Serono and Teva Pharmaceutical. It is important to note that the concurrent licensing activity conducted by these parties also emphasizes the competitive need to maintain partnered agreements. Biogen Idec: a favored partner for multiple SCLEROSIS THERAPEUTICS Biogen Idec became the exclusive non-us partner for the development of Acorda Therapeutics Ampyra in July 2009 (see Table 1). This late-stage deal exemplifies a company realizing the commercialization capabilities of an established major player in the worldwide MS therapy market. While the drug is not expected to achieve blockbuster status, its significant potential was realized by Biogen. As such, the parties agreed to a cost-sharing arrangement, with Biogen committing a large upfront payment of $110 million, regulatory and sales-based milestone payments of up to $400 million and double-digit royalties on ex-us sales to Acorda. By December 2009, Biogen expected to receive an additional payment of $45 million in expenses. Incidentally, Acorda will grant a proportion (7%) of those payments to the drug s originator, Elan. This was significant, considering that during 3Q09, Elan and Biogen were locked in a separate legal dispute regarding blockbuster drug Tysabri. Elan and Biogen had been collaborating on the program (originally developed by Elan) since August 2000, as part of a deal worth over $125 million (see Table 1). However, Biogen claimed Elan had breached contract by signing a Strategic Financing and Collaboration Agreement related to the drug with a Johnson & Johnson (J&J) affiliate. In September 2009, the United States District Court for the Southern District of New York ruled in favor of Biogen s claim and Elan terminated the relevant portion of its transaction with J&J. Despite this unintentional breach, it was clear that the market clout of Biogen proved to be too valuable an asset to lose. The companies continue to collaborate under a cost/profit-sharing arrangement, with no additional milestone payments required; for the year ending December 31, 2009, $215.9 million was reflected in the two collaborators recorded profit-sharing line for Tysabri. We believe that Biogen Idec s international expertise in MS and neurology also will help us optimize future development of Ampyra and maximize its value in markets outside the US. Ron Cohen, MD, President and CEO of Acorda

10 Biogen demonstrated its aptitude in the MS arena after acquiring BG-12 (dimethyl fumarate) from Swiss firm Fumapharm in October 2003 (see Table 1); the company was acquired by Biogen in July The drug was originally developed for the potential treatment of psoriasis, reaching phase III of development. However, the partners had agreed to withdraw a marketing authorization application for psoriasis in Germany by September Given the strength of BG-12 s anti-autoimmune activity, Biogen continued to pursue the program for MS and rheumatoid arthritis (RA). Enrollment of a phase III trial involving 1237 patients was completed in March DRUG fampridine (Ampyra) natalizumab (Tysabri) dimethyl fumarate (BG-12) PARTNER COMPANY Acorda Therapeutics DEAL START DATE July 2009 DEAL VALUE (US $)* 510 million (plus royalties) Elan August million (plus royalties) Fumapharm October 2003 Undisclosed Table 1: Summary of Biogen Idec s MS-related development and COMMERCIALIZATION AGREEMENTS * Approximate values based on the achievement of all milestones for the principal components included in the deal. Biogen finds marketing partners for Avonex Biogen has a widely recognized marketing and distribution network for its recombinant interferon β-1a based program Avonex, including Latin American, Australian, Indian and Nepal, Spain and Nordic regions. The drug, originally formulated using Inhance drug delivery technology licensed from Nektar Therapeutics, is marketed by Abbott Laboratories in Latin American countries, CSL in Australia, Piramal Healthcare in India and Nepal, and distributed by AstraZeneca in Nordic regions and Schering- Plough in Spain (see Table 2). PARTNER COMPANY DEAL START DATE TERRITORIES COVERED Abbott Laboratories February 1998 Latin America CSL June 1999 Australia Piramal Healthcare December 2003 India and Nepal AstraZeneca August 1996 Nordic region (distribution only) Schering-Plough (distribution only) August 1996 Spain Table 2: Summary of Biogen Idec s marketing and distribution DEALS for Avonex Merck Serono develops competitor product TO Avonex Merck KGaA s subsidiary Merck Serono has developed Rebif, another recombinant interferon β-1a, which was launched in the US in March 2002 after demonstrating superiority to Avonex. Both were designated Orphan Drug Status for fast-track approval. However, at the time, the FDA informed Biogen that the drug s approval letter specifically prohibited labeling with broad claims of clinical superiority. Merck Serono originally licensed rights to the drug from the Weizmann Institute of Science (see Table 3). Following its US launch, Merck Serono enlisted the commercial weight of pharma giant Pfizer to copromote Rebif. The drug is also comarketed in Italy with Italfarmaco, under an agreement signed in 1992 with Ares-Serono (see Table 3).

11 Merck Serono and Teva join forces AGAINST MULTIPLE sclerosis Merck Serono is also developing Mylinax (oral cladribine), licensed on a worldwide basis from IVAX in October 2002 (see Table 3). Following Teva s acquisition of IVAX in January 2006, Teva decided to discontinue its developmental involvement but continue to offer financial support to the Merck Serono-led program. IVAX exclusively licensed oral and intravenous formulations of the drug from Scripps Research Institute in December 2000, following Scripps demonstration of the candidate s ability to eliminate brain lesions normally associated with MS observed from patient magnetic resonance imaging (MRI) scans. DRUG Recombinant interferon β-1a (Rebif) Recombinant interferon β-1a (Rebif) Recombinant interferon β-1a (Rebif) cladribine (oral; Mylinax) PARTNER COMPANY Weizmann Institute of Science Pfizer Italfarmaco Teva Pharmaceutical TYPE OF DEAL Development/ commercialization worldwide Copromotion in the US Comarketing in Italy Development/ commercialization worldwide DEAL START DATE By December 1992 July 2002 By December 1992 October 2002 DEAL VALUE (US $)* Undisclosed Undisclosed Undisclosed Undisclosed milestone and royalty payments Table 3: Summary of Merck Serono s major MS-related AGREEMENTS * Approximate values based on the achievement of all milestones for the principal components included in the deal. Teva s major multiple sclerosis deals Teva s non-interferon-based MS therapy Copaxone has been launched in the US since The active compound was discovered at the Weizmann Institute of Science and subsequently licensed to Teva for commercial development. While Teva retained the majority of MS development rights, the company was comarketing the drug in the US with Marion Merrell Dow (MMD), through the joint venture Teva Marion Partners. In December 1995, Teva outlicensed worldwide (excluding the US) marketing rights to French conglomerate sanofi-aventis. Teva acquired sanofi-aventis stake in the joint venture in February 2001; sanofi-aventis continued to receive revenues from North American sales until March 2008, when Teva reacquired North American distribution rights. Currently, Teva and sanofi-aventis continue to jointly commercialize the drug in major European markets. The two parties copromote the drug in Germany, UK, France, Spain, Netherlands and Belgium. sanofi-aventis has sole marketing rights in other European markets, as well as Australia and New Zealand (see Table 4). It was reported that Teva is in the process of reacquiring rights to all territories by the first quarter of 2012, effectively terminating the agreement; sanofi-aventis would be eligible to receive predetermined termination payments in the meantime. Finally, one of Teva s most lucrative licensing agreements in the MS arena stems from its June 2004 deal with Swedish firm Active Biotech for its phase III autoimmune suppressant laquinimod. The original deal, in which After working with Teva since 2004 on developing laquinimod we believe that Teva is the optimal marketing and distribution partner in our territory. Tomas Leanderson, President & CEO, Active Biotech

12 Active Biotech could earn up to $97 million in upfront and milestone payments plus royalties, granted Teva exclusive rights to develop, register and commercialize the candidate worldwide (excluding Nordic and Baltic regions). These terms were amended in February of this year, granting Teva Nordic and Baltic territory rights. Active Biotech agreed to receive a higher royalty rate on eventual sales of the drug (see Table 4). DRUG glatiramer acetate (Copaxone) laquinimod (SAIK-MS) PARTNER COMPANY sanofiaventis Active Biotech TYPE OF DEAL Comarketing in Europe Marketing in Australia/ New Zealand Development/ commercialization worldwide DEAL START DATE January 1996 June 2004 DEAL VALUE (US $)* Undisclosed 97 million (plus royalties) Table 4: Summary of Teva Pharmaceutical s major MS-related AGREEMENTS * Approximate values based on the achievement of all milestones for the principal components included in the deal. Summary While the ultimate goal of neuroprotection and repair of damaged areas of the nervous system remains distant, the addition of new agents to an interferon or Copaxone backbone may enhance efficacy. However, the true blockbuster potential lies with a safe and effective oral agent, which will constitute a new platform therapy. The avoidance of injections and potentially greater tolerability may also lead to significant increases in the number of patients with MS who begin and remain on treatment, thus expanding the market. So far, licensing activity surrounding MS therapeutics with promising scientific backing has borne several deals individually worth more than $100 million, and the future also appears solid. At the R&D end of the spectrum, novel animal disease models are being evaluated and companies are collaborating on the development of several promising next-generation candidates: Merck Serono is investigating orally active tetracycline derivatives, as part of a development deal with Paratek, and Teva has partnered with Vaccinex on the development of the human monoclonal antibody vx-15, which Teva is investigating for MS. Lastly, using Dyax s proprietary phage display technology, a demyelinating disease program targeting the Nogo-66 receptor/p75 signaling complex was discovered from a long-standing collaboration between Biogen and Dyax. The strategic partnering activity in the market also indicates that not all pharma companies are collaborating with the well-known major players. Instead, some firms are actively seeking partners with specific experience and an established commercial strength. The prospect of potentially novel oral MS therapeutics also heightens the necessity to utilize companies specific formulation expertise. These first oral therapies are likely to be offered in the very near future, although physicians will begin to use these without long-term plans for their use, and careful monitoring of the longer-term effects of more effective immunomodulation will be required. However, in a decade from now, there could be ten or more oral therapeutic options for MS, and the revolution in the treatment of this enigmatic disease may be complete.

13 NOTES

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