Biomanufacturing in Canada Opportunity for Development? Bernard Massie General Manager (acting) Human Health Therapeutics February 23 th 2017

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1 Biomanufacturing in Canada Opportunity for Development? Bernard Massie General Manager (acting) Human Health Therapeutics February 23 th 2017

2 Biologics market: Double-digit growth! Canadian biologics market 2015 >$5B growing at 11% 4YR CAGR Biologics market share grew from 11% (2008) to 24% (2015) WW biologics are 8 of top 10 and 47 of top 100 pharmaceuticals Annual Sales (CAN$B) $7 $6 $5 $4 $3 $2 $1 $- 187 biologics f f Source: IMS, PMPRB Annual Report 2014, Biologic Therapeutic Drugs-BCC Research, Outsourcing-DataMonitor2013, EvaluatePharma.

3 Small molecules vs. Biologics Chemical synthesis Small molecules Aspirin 0.18kDa - 1x Production in living organism (cell, bacteria, yeast, plant, egg) Biologics Antibody 150kDa - 850x

4 CANADIAN BIOMANUFACTURING INITIATIVE AT NRC THREE R&D PROGRAMS FOCUSED ON BIOLOGICS AND VACCINES

5 Canadian Biomanufacturing Initiative

6 Complexity of Biomanufacturing Small molecules Biologics Production complexity Characterization Relocating production

7 Complexity of Biomanufacturing Small molecules Biologics Production complexity Low Characterization Relocating production

8 Complexity of Biomanufacturing Small molecules Biologics Production complexity Low Characterization Extensive Relocating production

9 Complexity of Biomanufacturing Small molecules Biologics Production complexity Low Characterization Extensive Relocating production Easy

10 Complexity of Biomanufacturing Small molecules Biologics Production complexity Low High Characterization Extensive Relocating production Easy

11 Complexity of Biomanufacturing Small molecules Biologics Production complexity Low High Characterization Extensive Limited Relocating production Easy

12 Complexity of Biomanufacturing Small molecules Biologics Production complexity Low High Characterization Extensive Limited Relocating production Easy Difficult

13 Complexity of Biomanufacturing Stickiness Small molecules Biologics Production complexity Low High Characterization Extensive Limited Relocating production Easy Difficult

14 Worldwide Investment in Biomanufacturing Sept 2016 Oct 2015 $11B Global investment in biomanufacturing facilities

15 Worldwide Investment in Mammalian Cell Biomanufacturing Oct 2015 * Sept 2016 * * * * * >90% Investment in facilities with mammalian cell capacity * * * * * * * Monoclonal antibody production

16 Biomanufacturing capacity is controlled by product companies Only 21% of biomanufacturing capacity is accessible for contract Product Companies 79% of capacity 11yr CAGR 17% CMOs 21% of capacity 11yr CAGR 15% Source: BioPlan estimates ; Ransohoff, T. Bioprocess Technology Consultants, data

17 3 CMOs Control Mammalian Cell Biomanufacturing Offer Canadian biotechs have limited access to large integrated CMOs. 27% 16% 24% Lonza Boehringer Ingelheim Celltrion 33% Others Eric S. Langer, th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production, BioPlan Associates, Inc. April Outsourcing, DataMonitor 2013

18 Globally, there exists a shortage of [CMOs] to support the development and manufacture of biologic drugs... - Branch et al., American Pharmaceutical Review, September 2015

19 WHY INVEST IN BIOMANUFACTURING?

20 High quality job creation Fill gap in pharma ecosystem National biosecurity Retain economic impact Increase access to therapeutics Reduce cost of therapeutics Support local biotechs Pharmaceutical import/export balance Strengthen pharmaceutical value-chain

21 CAN OUR LOCAL PIPELINE SUPPORT LOCAL BIOMANUFACTURING?

22 Competitive Canadian Biologics Pipeline institutions developing a combined pipeline of biologics 72% Discovery + Pre-clinical Stage 55% Produced in Mammalian Cells Source: MedTrack, company websites, Industry Canada and NRC (and partners)

23 LOCAL BIOMANUFACTURING?

24 Gaps in Canadian Biomanufacturing Capabilities? PRODUCT COMPANIES CMOs Company Location / Type Capacity GMP Clinical Commercial Medicago QC plant plants PlantForm QC plant plants Apotex ON microbial 3X 14kL, 2X 30kL X X Emergent MB microbial 2kL X Eleven Bio MB microbial 1.5kL X PnuVax QC microbial 0.5kL, 2kL X Bio Vectra PEI microbial 2X 17kL, 15kL X X Biodextris QC microbial n/a KABS QC microbial 4kL X Therapure ON mammalian 0.5kL X With 55% of the Canadian pipeline requiring production in mammalian cells, is our capacity sufficient? IDLE PnuVax QC mammalian 0.5kL, 2kL Ex-Bioniche ON microbial 5kL Biomanufacturing facilites in academia, hospitals or research institutions are not included

25 Canadian investments in the last 2 years?????? Medicago BioVectra Green Cross Therapure Sterinova $245M plant-based production in Quebec with $68M from Qc $30M to expand microbial plant $315M plasma plant in Montréal with $8M from Qc $20M contribution from FedDev for expansion of plasma plant $20M for fill & finish facility $0 in mammalian cell facilities

26 IS BIOMANUFACTURING A CORNERSTONE OF THE ECOSYSTEM?

27 Biologics Development Value Chain Is Biomanufacturing a Cornerstone of the Ecosystem? Preclinical R&D CTA Clinical Development NDS Approval Commercialization NOC $2-13M $1-5M $50-350M $5-50M $10M Up to $100M/yr $2M/yr LICENSE+ CONTRACT SERVICES CMO CONTRACT SERVICES CMO CONTRACT SERVICES CMO CONTRACT SERVICES??? 14% OF AVG WW SALES $714M/Y CMOs = contract manufacturing organizations Average cost of developing a new drug. Tufts CSDD 2014 Amgen Annual Report 2014, Cost of sales / Net Sales = 23%; Novo Nordisk ( ) = 16% to 17%; W. Nicholson, Boston Law Review 2014 = 14%

28 Market Potential for Mammalian Systems in Canada $1.6B 5Y CMO revenue (cumulative) 111 biologics Preclinical Phase 1 Phase 2 Phase 3 R+M $600M/Y Annual commercial CMO revenues 6Y+ In the absence of local CMOs, this market potential will be captured abroad

29 CMOs Key to Retaining Value of Biologics $5B/y Biologics sales in Canada $1.6B Potential 5Y revenue from Canadian mammalian cell pipeline 55% Canadian pipeline in mammalian cells $0 Supporting large scale mammalian cell biomanufacturing in Canada

30 Canadian Biomanufacturing Opportunity Sustained growth trends of biologics sales Complexity of biomanufacturing stickiness factor for local production Major worldwide investment in mammalian cell biomanufacturing, yet shortage of CMO offer Gap in mammalian cell biomanufacturing offer in Canada Is there a case for investing in mammalian cells CMO offer in Canada?

31 Every biologic developed in Canada will be manufactured in Canada.

32 Acknowledgments - Team work Alex Serrano, Technology Business Analyst Eileen Raymond, Portfolio Business Advisor Frank van Lier, Director R&D - HHT Thomas Loisel, Section Head - HHT Guy Le Houillier, Client Relationship Leader Vivian Woo, Knowledge Management Consulting: Gérald André, VieTech Terrence Cochrane, BioProcessing Alliance Inc.