Slide Presentation

EX-99.1 2 dex991.htm SLIDE PRESENTATION Slide Presentation

Confidential ©

Pharsight Corporation

Investor Presentation

June 2006

Shawn O’Connor

President, Chairman and CEO

Will Frederick

CFO

Exhibit 99.1

Forward-Looking Statements

This presentation includes forward-looking statements, including statements regarding our

financial

model,

growth

opportunities

and

strategic

investments,

our

market

position,

the

demand

and

market opportunity for our products and services, financial and product performance, expected benefits

customers

from

the

use

our

products,

our

customer

base

and

our

expectations

for

revenue,

net

cash flow, gross margin and net income for the fiscal year ending March 31, 2007. These forward-

looking statements involve risks and uncertainties, and factors that could cause actual results to differ

materially include the following: uncertainties involved in pharmaceutical drug development, changes in

government

regulation

the

pharmaceutical

industry,

changes

the

demand

for

our

products

and

services, changes in our research and development focus or operating strategies, the failure to develop

new products and services or to keep pace with technological changes, the failure of the market for our

products and services to develop as expected, or for new customers beyond large pharmaceutical

customers, who form a large component of our client base, to adopt our solutions, and the failure of our

products and services to meet customer’s expectations.

Further information on potential factors that could affect actual results is included in

Pharsight’s Quarterly Report on Form 10-Q, as filed with the Securities and Exchange Commission on

February 13, 2006. All forward-looking statements are based on information available to Pharsight as of

the date hereof, and Pharsight assumes no obligation to update such statements, whether as a result of

new developments or otherwise.

Overview

•

Profile

–

Founded in 1995 with IPO in August 2000

–

Offices in Mountain View, CA (HQ) and Cary, NC (R&D)

–

Global headcount approximately 90

–

Stock traded OTCBB: PHST

•

Key Industry Considerations

–

Large Pharmaceutical and Bio-tech marketplace

–

Drug development process re-engineering

–

FDA focus on modeling and simulation for Critical Path Initiative

•

Key Company Considerations

–

Leverageable software and professional service business models

–

Software install base of world’s largest 50 Pharmaceutical

companies

–

Industry leadership in modeling and simulation skills and

experience

Pharsight Enables Strategic Decision

Making in Clinical Drug Development

•

Market-leading software

improves the value and availability

of clinical pharmacology data for PK/PD modeling, analysis and

reporting, PK data repositories, and clinical trial simulation

–

Decisions are faster, more reliable and more robust

•

Strategic consulting

based on quantitative, predictive

models improves the quality, visibility, and therefore the value

of critical drug development decisions

–

Decisions explicitly account for the interaction of treatment, patient

population, endpoint, risk, cost and benefit

–

Decisions can create better trials, better portfolios and ultimately

higher market value

Management Team

Shawn O’Connor

President, Chief Executive Officer and Chairman

QRS, Diasonics Ultrasound, Peat Marwick

Will Frederick

Chief Financial Officer

Versata, Clarent, ACT Networks, Disney

James Hayden

SVP Global Sales

Accelrys, Bio-Rad Laboratories, Raytheon

Mark Hovde

SVP Marketing

Hovde Associates, Fast Track Systems, DataEdge

Daniel Weiner, PhD

SVP Software Products

IVAX, Merrell Dow, Syntex, Quintiles

William Gillespie, PhD

VP & Lead Scientist, Consulting Services

GloboMax, FDA (CDER), Univ. of Texas at Austin-College of Pharmacy

Greg Lee, PhD

VP Research & Development

Sunrise Test Systems, Weitek, Schlumberger

Rene Bruno, PhD

Managing Director, Consulting Services, Europe

Genentech, Rhone-Poulenc Rorer, Syntex

Market Opportunity:

Drug Development Cost and Timeline

2002 Estimated Global Pharma and Biotech R&D Spending by Category: BioPharm International, March 2003

PhRMA 2003 Industry Profile, March 2003

Bain & Co, December 2003

Research

$25 Billion

Significant Productivity

Increase and Investment

Clinical Development

$48 Billion

Productivity Continues

To Decline

•

High throughput screening

•

Combinatorial chemistry

•

Genomics

•

Rational drug design

•

Long, risky and complex

process

•

Of 5,000 screened compounds:

250 enter preclinical testing, 5

enter clinical testing and

1 is approved by FDA

•

Avg. cost to develop new drug

$802M

–

$1.7B

•

Only 3 out of 10 drugs produce

revenues that match or exceed

R&D costs

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

2003

2004

2005

2006

2007

2008

Branded Pharma

Generics

Biotech

Market Opportunity:

Development Expenditure Estimates

2003 –

2008 CAGR

Branded Pharma 8.6%

Generics

22.6%

Biotech

2.7%

Total Pharma 11.0%

Development

Expenditure

Segment

Product

Development

Phase:

Jefferies

Company

Jefferies

Pharmaceutical

Services

Quarterly

Preview

–

January

19,

2005

Market Opportunity:

Understanding PK/PD Data

•

Regulation and new methods for developing drugs are increasing

the importance of understanding and elucidating PK/PD

relationships

–

Pharsight’s software and services are used for analysis, modeling and

simulation, data management, decision support, and consultancy in the PK/PD

domain

PK/PD Data

Pre-Clinical

Early Development

Full Development

Post Marketing

Analysis (WinNonlin

)

Modeling and Simulation (TS2™)

Data Management (PKS™)

Decision Support (DMX

)

Consultancy

$8-10M

$15-30M

$200-240M

$30-70M

$50-70M

$303-420M

Addressable

Market

Return on Investment Example

Aventis turned to a computer model from …

Pharsight. Using its own

animal and human test data, Aventis was able to simulate later-stage

clinical trials. Based on that simulation, “we stopped funding development

of the compound. The ratio between the therapeutic benefit and side effect

demonstrated that this compound was not as beneficial as Evista.”

Douglas estimates that the Pharsight computer model saved Aventis $50M

to $100M, the cost of later-stage clinical trials. “We were able to switch to

another project with a greater chance of success.”

Frank Douglas, former Aventis Chief Scientific Officer and Executive VP of Drug Innovation &

Approval

Forbes ASAP, 10/7/02

Faster failure

Higher productivity

sanofi-aventis

Return on Investment Example

“Within 2 years of (implementing Pharsight’s WinNonlin automation and other

measures) the two people conducting the routine pharmacokinetic studies

had completed 45 studies in 1 year.”

(previous staff of 19 for the same work)

“The cycle time to issue final reports decreased from 16 months on average

to less than 3 months.”

Richard Lalonde, PharmD, Executive Director, Department of Clinical Pharmacokinetics and

Pharmacodynamics,

Pfizer

Global

Research

and

Development,

Ann

Arbor,

Mich.

al,,

from

the

International

Journal

Pharmaceutical

Medicine

(1):

13-17

Higher productivity

Faster cycle times

Pfizer

Confidential ©

Pharsight Corporation

Software Products

•

Desktop Software Products

–

WinNonlin

(“WNL™”)

•

Industry Standard for Pharmacokinetic (“PK”), Pharmacodynamic (“PD”) Modeling and

Non Compartmental Analysis

–

WinNonMix

(“WNM™”)

•

Population Pharmacokinetic Modeling & Simulation

–

Trial Simulator™

(“TS2™”)

•

Computer Assisted Clinical Trial Design & Simulation

•

Pharsight

Knowledgebase Server™

(“PKS™”)

–

Enterprise Data Management Systems for Secure Storage and Management of PK/PD

Data

•

Drug Model Explorer™

(“DMX

”)

–

Software-Based Communication Technology,

Designed to Facilitate Quantitative

Decision-Making in Drug Development

Overview of Key Software Offerings

Key Software Offerings

WinNonlin

(“WNL™”)

Industry Standard for Pharmacokinetic (“PK”), Pharmacodynamic (“PD”)

Modeling and Non Compartmental Analysis

•

Key Benefits

–

Used to simulate effects of different dosing regimens and changes in

pharmacokinetic parameters required in regulatory submissions

–

Increases productivity in modeling, analysis and reporting activities

•

Potential Growth Drivers

–

Maintain market share under current subscription model via renewals

–

Provide upgrade path to support incremental new revenue opportunity

•

Sales Model

–

Subscription license model

–

Low-cost inside sales force

–

Distributor in Asia

•

ASP approx. $5,000 per seat

•

Strong recurring revenue with >90% renewal

Key Software Offerings

WinNonMix

(“WNM™”)

Nonlinear Mixed Effects (Population) Analysis Software Application

•

Key Benefits

–

Extensive built-in library of PK, PD and PK-PD models

–

NONMEM data import wizard

–

Built-in report-ready graphics capability

–

Estimation algorithms for sparse and for rich data sets

–

Maximum likelihood or restricted maximum likelihood

•

Potential Growth Drivers

–

Increase interoperability with other Pharsight tools

–

Provide upgrade path, expanded utility

•

Sales Model

–

Subscription license model

–

Low-cost inside sales force

–

Distributor in Asia

•

ASP approx. $7,500 per seat

•

Strong recurring revenue with >95% renewal

State-of-the-Art Clinical Trial Design & Simulation Software

•

Key Benefits

–

Minimize risk of trial design

–

Formalize assumptions

–

Quantify uncertainty

–

Reduce cost of clinical trials and drug development time-to-market

•

Potential Growth Drivers

–

Increase potential interoperability with other Pharsight tools

•

Sales Model

–

Subscription license model

–

Low-cost inside sales force

–

Distributor in Asia

•

ASP approx. $20,000 per seat

•

Estimated Market Opportunity = $15-30 Million

Key Software Offerings

Trial Simulator™

2.0

(“TS2™”)

Key Software Offerings

Pharsight

Knowledgebase Server™

(“PKS™”)

Enterprise Data Management Systems for Secure Storage and Management

of PK/PD Data

•

Key Benefits

–

Dramatically improves data management and data access

–

Increases productivity in analysis and reporting tasks

–

Supports

compliance

with

FDA

requirements

for

electronic

records

and

signature,

CFR 21 part 11

•

Potential Growth Drivers

–

Installed

base

current

large

pharma

clients

–

expand

seat

count

within

current

clients

–

Optimize adoption pattern of industry

–

Provide upgrade path, expanded utility

•

Sales Model

–

Subscription and perpetual license model

–

Software license plus services

–

Direct sales force

•

ASP approx. $15,000 per seat

•

Estimated Market Opportunity = $200-240 Million

Key Software Offerings

Drug Model Explorer™

(“DMX

”)

Software-Based Communication Technology, Designed to Facilitate

Quantitative Decision-Making in Drug Development

•

Key Benefits

–

Facilitates

efficient

collaboration

within

project

teams

explore

key

drug

attributes, and their respective uncertainties

–

Enables more flexible scenarios & generates views of program data from underlying

model outputs & simulated responses over defined problem-space

•

Potential Growth Drivers

–

Expand client base of early adopters

–

Expand utility and footprint of application

–

Increase interoperability with other

Pharsight tools

–

Bundling with strategic consulting services

•

Sales Model

–

Subscription and perpetual license model

•

ASP approx. $12,000 per seat

•

Estimated Market Opportunity = $30-70 Million

•

Over 800 active software customers

•

All

Top

Pharma

license

least

one

our

software

products

•

Our software applications are licensed for use on more than 4,000

desktops in industry, more than 900 desktops in academia

•

the

Top

Pharma

are

PKS

customers

–

16 total PKS

customers

–

Over 650 seats

•

the

Top

Pharma

are

DMX

customers

As of March 31, 2006

Pharma Exec 50: Pharmaceutical Executive, May 2006

Software Products

Market Acceptance

Confidential ©

Pharsight Corporation

Strategic Consulting Services

Strategic Consulting Services

Formal, quantitative,

model-based decision-making

method

Increases drug development productivity

Decreases late stage attrition

Decreases time-to-market

Reduces financial investment

Improves clinical quality and commercial

performance of final product

Quantitative Modeling Supports Both Trial-

and Program-Level Decisions

Animal

PK Data

Human

PK Data

Treatment,

Exposure

Patient

Endpoints

Trial

Outcomes

Market

Acceptance

Drug and Patient Models

Trial Models

Market Models

•

Optimize treatment

regimens and

patient populations

for the market and

for a trial

•

Compare probable

safety and efficacy

of new drug to

competitors

•

Match trial design to

the purpose of the

trial

•

Optimize design via

clinical trial

simulations

•

Choose the decision

path with greatest

economic return

–

Treatment regimen(s)

–

Trial design

–

Development

program

Strategic Consulting Services

Potential Growth Drivers

•

Industry Factors

–

Increased acceptance of modeling and simulation to achieve

efficient drug development decision making

–

FDA Critical Path Initiative advocates increased use of

modeling and simulation to overcome poor development

productivity

•

Internal Factors

–

Focused effort and investment to diversify client base showing

momentum

–

Expanding scope and increasing efficiency of consulting

engagements

–

Broad therapeutic area expertise

–

Advanced modeling and simulation skills, knowledge and

experience

•

Over

35 active consulting clients during Fiscal Year 2006

–

the

Top

Pharma

are

active

consulting

clients

–

24 new consulting clients

•

Over 100 projects engaged during Fiscal Year 2006

•

Diverse Customer Workplans

–

Hourly engagements to annual engagements

–

Several thousand dollars to multi-million dollars

–

Time-and-material based or milestone based

Strategic Consulting Services

Market Acceptance

As of March 31, 2006

Pharma Exec 50: Pharmaceutical Executive, May 2006

Confidential ©

Pharsight Corporation

Financial Overview

Accomplishments and Guidance

FY06 Accomplishments

•

Revenue growth

•

Y/Y revenue growth of 1%

•

consecutive

year

revenue

growth

•

Gross Margin

•

66% of revenue

•

Profitability

•

Net income of $530,000

•

consecutive

year

profitability

•

Achieved positive annual net cash

flow

FY07 Guidance

•

Continued revenue growth

•

Y/Y revenue growth of approx. 10% to

15%

•

40% -

45% of revenue expected in 1H

of year

•

Gross Margin

•

Approx. 65% to 70% of revenue

•

Continued profitability

•

Net income of approx. 5% -

10% of

revenue

•

Continued positive annual net

cash flow

Summary Income Statements

(in thousands)

Consol.

SPBU

SCS

Consol.

SPBU

SCS

Revenues

22,742

13,449

9,293

22,593

12,078

10,515

Y/Y growth

11%

-12%

27%

25%

31%

Cost of revenues

7,699

1,790

5,909

7,761

1,976

5,785

Gross profit

15,043

11,659

3,384

14,832

10,102

4,730

Gross margin

66%

87%

36%

66%

84%

45%

Operating expenses

14,461

9,885

4,557

11,841

7,890

3,836

Operating income

582

1,774

(1,173)

2,991

2,212

894

Net income

530

2,733

FY06

FY05

Annual Revenue by Business Unit

(in thousands)

$5,000

$10,000

$15,000

$20,000

$25,000

FY03

FY04

FY05

FY06

Software Products

Strategic Consulting

LTM Qtrly. Revenue by Business Unit

(in thousands)

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Q1 FY06

Q2 FY06

Q3 FY06

Q4 FY06

Software Products

Strategic Consulting

Annual Gross Profit

(in thousands)

$2,500

$5,000

$7,500

$10,000

$12,500

$15,000

$17,500

FY02

FY03

FY04

FY05

FY06

Annual Operating Income

(in thousands)

-$20,000

-$17,500

-$15,000

-$12,500

-$10,000

-$7,500

-$5,000

-$2,500

$2,500

$5,000

FY02

FY03

FY04

FY05

FY06

Annual Operating Cash Flow

(in thousands)

-$8,000

-$6,000

-$4,000

-$2,000

$2,000

$4,000

FY02

FY03

FY04

FY05

FY06

Summary Balance Sheets

(in thousands)

March 31,

2006

March 31,

2005

Cash & Cash Equivalents

10,832

10,579

Accounts Receivable, Net

4,585

4,809

Total Current Assets

15,715

15,982

Total Assets

17,786

16,822

LIABILITIES & STOCKHOLDERS' DEFICIT

A/P & Accrued Expenses

3,981

3,497

Deferred Revenue

7,605

7,178

Notes Payable

1,519

1,975

Total Current Liabilities

13,105

12,650

Deferred Revenue - Long Term

126

Notes Payable - Long Term

392

410

Redeemable Conv Pref Stock

6,641

6,266

Stockholders Deficit

(2,659)

(2,630)

Total Liabilities & S/H Deficit

17,786

16,822

ASSETS

Equity Overview

•

Common

Outstanding

19.6M

•

Preferred

Outstanding

1.9M

–

1.8 million Series A and 0.1 million Series B

–

Conversion ratio to Common at 4:1

•

Common

Equivalent

(as

converted)

27.3M

•

PIPE Financing 6/02 and 9/02 = $7.5M

–

1.8 million Units = 1 share Series A redeemable convertible stock + 1 warrant

–

Warrants exercisable for 1 common share @ $1.15

–

Preferred dividend rights of 2% quarterly in cash or Series B shares

–

Conversion:

•

Upon consent of at least 75% of preferred holders, or

•

Upon close of public offering of at least $3.006 per share and proceeds of $40M

–

Redemption:

•

Upon

election

least

75%

preferred

holders,

Pharsight’s

option,

after

June

2007 (5

anniversary of initial issuance)

•

Price of $4.008 per share

As of March 31, 2006

Summary

•

Current Pharma Market Trends Look Favorable…

•

Increasing Mindshare for Quantitative-Based Modeling &

Simulation…

•

FDA's call for more modeling and simulation in the Critical Path

Initiative…

•

Financially Stable & Healthy Business Model…

All Support Our Drive Towards Expanding Pharsight’s

Market Footprint to Achieve Sustainable Revenue

Growth and Profitability

Proprietary Notice

The copyright for this document is owned by Pharsight Corporation.

part

this

document

may

reproduced

transmitted

any

form

by any means, electronic or mechanical, including photocopying, for any

purpose, without the express written permission of Pharsight Corporation.

WinNonlin

WNL

WinNonMix

WNM

Trial

Simulator

TS2

Pharsight

Knowledgebase

Server

PKS

Drug

Model

Explorer

DMX

and

Pharsight

are

trademarks

registered

trademarks

Pharsight

Corporation.

All other brand and product names are trademarks or registered trademarks

of their respective holders.

Notices