Exhibit 99.1
Pharsight Corporation Investor Presentation
November 2004
Shawn O’Connor President & CEO
Cynthia Stephens SVP & CFO
Copyright © 2004 Pharsight. All rights reserved.
Forward-Looking Statements
This presentation contains forward-looking statements related to future events or our future financial performance, including forward-looking statements regarding our competitive position, trends in customer demand, potential business growth, expansion of scope and increasing efficiency of consulting engagements, new service offerings, market conditions, future revenue growth and profitability, and revenue trends.
Forward-looking statements are inherently speculative, and actual results may differ materially from our expectations due to a variety of factors, including: timing of completion of large software installations and related revenue recognition may cause revenue and net income to fluctuate significantly in individual quarters; unpredictable fluctuations in the valuation of Pharsight’s preferred stock dividends may cause net income attributable to common stockholders in any future period to be significantly less than net income before the effect of the preferred dividend; changing economic conditions may affect the demand Pharsight expects for its products and services and may prevent the company from sustaining positive cash flow; changes in Pharsight research and development focus or operating strategies due to new market opportunities or conditions may delay the company’s growth or ability to sustain profitability or the company’s ability to sustain positive cash flow; we may be unable to sufficiently anticipate market needs and offer products and services that achieve market acceptance, we may have higher than anticipated expenses in future quarters; and other risks disclosed under the caption “Risk Factors” in Pharsight’s Quarterly Report on Form 10-Q, as filed with the Securities and Exchange Commission on November 12, 2004. Although we believe that expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. 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.
Copyright © 2004 Pharsight. All rights reserved.
CONFIDENTIAL
Pharsight® is…
Delivering breakthrough improvement in the clinical drug development process to pharmaceutical companies, by accelerating client product time-to-market and improving client development efficiencies
Copyright © 2004 Pharsight. All rights reserved.
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Our Market Opportunity:
Drug Development Cost and Timeline
Research $25 Billion1
High throughput screening Combinatorial chemistry Genomics Rational drug design
Clinical Development $48 Billion1
Long, risky and complex process Of 5,000 screened compounds, 250 enter preclinical testing, 5 enter clinical testing, 1 is approved by FDA2 Avg cost to develop new drug $802M2 Only 3 out of 10 drugs produce revenues that match or exceed R&D costs2
Significant Productivity Increase and Investment
Productivity Continues To Decline
1 2002 Estimated Global Pharma and Biotech R&D Spending by Category: BioPharm International, March 2003
2 PhRMA 2003 Industry Profile, March 2003
Copyright © 2004 Pharsight. All rights reserved.
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Profile
Background
Founded 1995; IPO August 2000
Headquarters - Mountain View, CA
East Coast Office - Cary, NC
Headcount - approx 80
US, Europe, Australia and Japan
OTCBB: PHST
Business and Products
Unique provider of strategic scientific consulting and decision analysis delivering significant impact to customers’ clinical development process
Market leading provider of data repository and report automation tools (PKSTM Suite) and PK/PD data analysis software (WinNonlin®)
Opportunity to leverage and accelerate use of scientific methodology through new software application—Drug Model ExplorerTM (“DMXTM“)
Copyright © 2004 Pharsight. All rights reserved.
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Executive Team
Shawn O’Connor
Cynthia Stephens
Mark Robillard Mona Sowiski Daniel Weiner, PhD William Gillespie, PhD
Greg Lee, PhD Nancy Risch Russ Wada, PhD Rene Bruno, PhD
President & Chief Executive Officer QRS, Diasonics Ultrasound, Peat Marwick
SVP & Chief Financial Officer Rainmaker Systems, Calico, Quiver, Infoseek/ The Walt Disney Company
SVP Software Products Business Unit EMAX Solutions, VWR Scientific Products
SVP Drug Development Consulting Services Mitchell Madison Consulting, CSC/APM Healthcare, Stanford, Pitt
SVP Business Development
IVAX, Merrell Dow, Syntex, Quintiles
VP & Lead Scientist, Consulting Services, East Coast
GloboMax, FDA (CDER), Univ. of Texas at Austin-College of Pharmacy
VP Research & Development Sunrise Test Systems, Weitek, Schlumberger
VP Global Sales BBN Corporation, Interleaf, GE, Wang
VP Consulting Services, West Coast and Japan Stanford, MiniMed Infusion Systems, Hughes Aircraft, TRW
Managing Director, Consulting Services, Europe Genentech, Rhone-Poulenc Rorer, Syntex
Copyright © 2004 Pharsight. All rights reserved.
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Software Products
Copyright © 2004 Pharsight. All rights reserved.
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 with subscription model
Provide upgrade path to support incremental revenue opportunity
Sales Model
Annual subscription fee
ASP $3,000 - $6,500 per seat
Copyright © 2004 Pharsight. All rights reserved.
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Key Software Offerings
Trial Simulator™ (“TS2™”)
Software-Based Clinical Trial Design & Simulation
Key Benefits
Minimize risk of trial design
Formalize assumptions
Quantify uncertainty & Lower costs of clinical trials
Growth Drivers
Increase interoperability with other Pharsight tools
Sales Model
Annual subscription fee
Copyright © 2004 Pharsight. All rights reserved.
CONFIDENTIAL
Key Software Offerings
Pharsight Knowledge 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
Leverage installed base of clients
Optimize adoption pattern of industry
Expand utility and seat requirements for application
Sales Model
Subscription and perpetual license model
Deployment services, customization/automation
Post-contract maintenance & support
Average contract size $500K
Copyright © 2004 Pharsight. All rights reserved.
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Key Software Offerings
Drug Model Explorer™ (“DMX™”)
Software-Based Communication Technology, Designed to Facilitate Quantitative Decision-Making in Drug Development
Introduced in fiscal 2004 Key Benefits
Facilitates more efficient collaboration within project teams to explore key drug attributes, and their respective uncertainties
Enables more flexible scenarios & generates views of program data from underlying model outputs & simulated responses over defined problem-space
Potential Growth Drivers
Expand client base of early adopters
Expand utility and footprint of application
Sales Model
Annual subscription fee
Copyright © 2004 Pharsight. All rights reserved.
CONFIDENTIAL
Software Products Market Acceptance
Over 900 customers (FY2004)
All top 20 Pharma apply our computer-assisted drug development software products Our software applications are licensed for use on more than 2,900 researcher desktops 3 of the top 10 Pharma are early adopters of our new
DMXTM product
Importance of DMXTM mentioned by 1 large client at recent FDA/DIAS workshop and AAPS
4 of the top 10 Pharma are PKSTM customers
7 of the top 20 Pharma
14 PKSTM customers to-date
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
Drug Development Consulting Services
Copyright © 2004 Pharsight. All rights reserved.
Drug Development Consulting Methodology
A formal, quantitative, model-based decision-making method
Increase drug development productivity
Decrease late stage attrition
Decrease time-to-market
Increase # of drugs reaching market/$ invested
Improve clinical quality and commercial performance of final product
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
Models: The Foundation
The foundation of the Pharsight Integrated Decision Process is science-based modeling
Drug-Disease Models
Trial Models
Predictive Market Models
Dynamic Financial Models
Pharmacological models
Literature Clinical Data
PK/PD Simulation Model
Copyright © 2004 Pharsight. All rights reserved.
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Annual Cash Flow (2001 $M)
900 800 700 600 500 400 300 200 100 0-100
10th-90th %ile range
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Drug Development Consulting Services Offerings
LEVEL OF INTEGRATION AND
POTENTIAL IMPACT
Preclinical
Candidate prioritization, selection & preparation for first-in-man/proof-of-concept
Early Phase
(I/IIa)
Proof-of-concept strategy Dose-finding strategy First-in-man dose Biomarker trial design Dose-ranging trial design
Late Phase
(IIb/III)
Go/no-go decision support Pivotal registration trial design
Post-Approval
Life-cycle management
Phase IIIb/IV strategy Competitive positioning
Label expansion strategy
Scaling (competitors, analogues) Clinical utility index analysis Adaptive trial and program design
Product profile assessment Dose justification and optimization
Support in-licensing and out-licensing decisions
Novel Technology: Drug Model Explorer
(integrated w/services)
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
FORBES ASAP | October 7, 2002
Aventis turned to a computer model from a small company named 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 Aventis Chief Scientific Officer and
Executive VP of Drug Innovation and Approval
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
Drug Development Consulting Services Potential Growth Drivers
Increased acceptance of modeling and simulation as an alternative to clinical trial results in Pharma’s development cycle
Migration from one-off projects to systematic application within portfolio
Expanding scope and increasing efficiency of consulting engagements Broaden services offering
Ability to recruit and retain skilled scientific staff to support client demand
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
Drug Development Consulting Services: Market Acceptance
25 of top 50 Pharma have utilized our strategic consulting services All 5 of the top 5 Pharma have utilized our services
Average duration of client relationships – 4 years
9 of the top 10 Pharma have utilized our services
Average duration of client relationships – 3 years
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
Financial Overview
Copyright © 2004 Pharsight. All rights reserved.
FY04 Accomplishments FY05 Objectives
Fiscal Year 2004 Results
Positive revenue momentum
Y-Y revenue growth of 27%
Effected operating efficiencies
Y-Y reductions in operating loss of 84%
Achieved profitability in Q4
Achieved positive annual operating cash flow
Introduced new product offering (DMX)
Fiscal Year 2005 Objectives
Continued revenue growth of
27%-30% Y/Y
Profitability
Full year net income (5-10% of revenue)
Excluding impact of preferred stock dividends
Expansion of DMX capabilities
Additional new product development
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
First Half (1H) FY05 Accomplishments
Progress against FY05 Objectives
Continued revenue growth of 27%-30% Y/Y
Q2 FY05 26% Y/Y Growth
1H FY05 31% Y/Y Growth
Profitability
1H FY05 profitability
Expansion of DMX capabilities
Expansion by Top 5 Pharma of DMX across multiple therapeutic areas
Continuing focus on new product development
Return of Daniel Weiner, PhD as SVP of Business Development, focusing on product and services strategy and planning
Addition of Robert Leary, PhD as Principal Software Engineer, focusing on modeling and simulation engine development
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
Summary Statement of Operations - Y/Y Q2 & 1H FY2005
(‘000s except per share data)
Q2 FY05
Q2 FY04
1H FY05
1H FY04
Revenues $ 5,072 $ 4,017 $ 10,106 $ 7,744 Cost of revenues 1,814 1,714 3,658 3,552 Gross profit 3,258 2,303 6,448 4,192 Operating expenses 2,771 2,799 5,827 6,010
Income (loss) from operations 487 (496) 621 (1,818)
Net income (loss) 421 (595) 515 (1,978)
Net income (loss) attributable to common stockholders 276 (984) 195 (2,608)
EPS (common), basic & diluted $ 0.01 $ (0.05) $ 0.01 $ (0.14)
WASO—basic 19,087 19,050 19,073 19,048
WASO—diluted 20,674 19,050 20,914 19,048
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Summary Operating Results by Segment – Y/Y Q2 & 1H FY2005
(‘000s)
Q2 FY05
Q2 FY04
1H FY05
1H FY04
SOFTWARE PRODUCTS $ % $ % $ % $ % Revenues $2,508 100% $2,180 100% $5,156 100% $3,961 100% Cost of revenues 439 18% 465 21% 846 16% 944 24% Gross profit 2,069 82% 1,715 79% 4,310 84% 3,017 76%
Income (loss) from operations 251 10% (129) -6% 502 10% (825) -21%
STRATEGIC CONSULTING SERVICES
Revenues $2,564 100% $1,837 100% $4,950 100% $3,783 100% Cost of revenues 1,375 54% 1,249 68% 2,812 57% 2,608 69% Gross profit 1,189 46% 588 32% 2,138 43% 1,175 31%
Income (loss) from operations 236 9% (311) -17% 119 2% (821) -22%
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
Summary Balance Sheet September 30, 2004
March 31, 2004
June 30, 2004
Sept 30, 2004
(‘000s)
ASSETS
Cash & Cash Equivalents $ 10,027 $ 8,463 $ 7,780 Accounts Receivable, Net 3,770 4,376 4,806 Total Current Assets 14,517 13,437 13,358 Total Assets 15,294 14,099 13,915
LIABILITIES & STOCKHOLDERS’ DEFICIT
A/P & Accrued Expenses $ 1,957 $ 2,518 $ 2,483 Deferred Revenue—Short Term 7,987 7,905 7,170 Notes Payable & Capital Leases 1,930 1,912 1,875 Total Current Liabilities 12,435 11,774 11,528
Deferred Revenue—Long Term 516 180 163 Notes Payable—Long Term 1,094 875 656
Redeemable Conv Pref Stock 6,164 6,266 6,266 Stockholders Deficit (4,915) (4,996) (4,698) Total Liabilities & S/H Deficit 15,294 14,099 13,915
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
Equity Structure
(All share data as of September 30, 2004)
Common Shares O/S: 19,103,957 Preferred Shares O/S: 1,869,085
Series A 1,814,662 / Series B 54,423
Common Equivalent Shares (as converted): 26,580,297 PIPE Financing 6/02 and 9/02 = $7.5M
1,814,662 Units Series A redeemable convertible stock + warrants
Preferred conversion ratio 1:4
Warrants exercisable for 1 share common @ $1.15
Dividend rights: 8%/annum cash or Series B shares
Conversion:
Automatically upon consent of 75% of preferred holders, or
Upon close of public offering of at least $3.006 per share and proceeds of $40M
Redemption:
At election of at least 75% of preferred holders (or at Pharsight’s option) after 5th anniversary of initial issuance at $4.008 per share
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
Quarterly Revenues
(‘000s)
Software Products Strategic Consulting $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0
Q1 FY04 Q2 FY04 Q3 FY04 Q4 FY04 Q1 FY05 Q2 FY05
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
First Half Annual Revenue Trend
(‘000s)
Software Products Strategic Consulting $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0
1H FY03 1H FY04 1H FY05
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
Quarterly Gross Profit
(Percentage of Segment Revenues)
Strategic Consulting Software Products
90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Q1 FY04 Q2 FY04 Q3 FY04 Q4 FY04 Q1 FY05 Q2 FY05
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
Sequential Profitability
(‘000s) $5,500 $5,300 $5,100 $4,900 $4,700 $4,500 $4,300 $4,100 $3,900 $3,700 $3,500
Q1 FY04 Q2 FY04 Q3 FY04 Q4 FY04 Q1 FY05 Q2 FY05
Profitability achieved Q4 FY04
Revenues Costs & Expenses
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
Summary
Current Pharma Market Trends… Continuing Pharsight Investment in Revenue Optimization & Product Development… Increased Financial Stability Achieved in FY04…
And Continued Positive Momentum Demonstrated in 1H FY05…
All Support Our Drive Towards
Sustainable Growth and Profitability in FY05 We Reiterate Our FY05 Guidance
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
Appendix:
Drug Development Consulting Services—Case Studies
Copyright © 2004 Pharsight. All rights reserved.
Drug Development Consulting Services
Case Study: Trial Design Optimization/Label Expansion Strategy
Critical Business Issue
Exploration of new indication for flagship product franchise
Approach & Technologies Utilized
Predictive modeling of key clinical measures using literature, public data and customer study data
Optimized trial design using Trial Simulator
Results
Optimized study design (dose-arms, trial duration) based on predicted likelihood of positive result
Impact
Estimated savings of 25% in direct clinical costs on multi-million dollar trial, plus substantial time-to-market savings
Trial was success as predicted; FDA Advisory Committee recommended approval for new indication
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
Drug Development Consulting Services
Case Study: Trial Design Optimization/Phase II Go/No-Go Decision
Critical Business Issue
Optimal Phase II proof-of-concept trial design for novel treatment
Approach & Technologies Utilized
Drug-disease models developed from available Phase I data and public literature for competing treatments
Alternate trial designs explored via simulation to predict significant drug effect; optimal design selected and success criteria defined for making conclusive ‘go/no go’ decision
Results
Trial conducted based on smaller, more efficient design
Results failed to meet success criteria; development was terminated early
Impact
Early attrition: $1.4-$3.8 million estimated savings in direct trial costs, plus earlier redeployment of project team to new programs
Novel design yielded no go decision 8-12 months earlier than traditional development strategy
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
Drug Development Consulting Services
Case Study: Use of Drug Model Explorer (DMX) to Support Program Strategy & Decision Making
Critical Business Issue
For new compound in core franchise, evaluation of product attributes and positioning as mono/combination-therapy
Approach & Technologies Utilized
Modeled dose-response for multiple endpoints, evaluated safety and efficacy tradeoffs in competitive landscape
Model insights made available via DMX; predictive models and DMX were rapidly updated to incorporate new clinical study results
Results
DMX used in ‘real-time’ decision-making environment to build team consensus, rapidly answer what-if questions, and support dose selection
Impact
Supported critical question of product viability and competitive positioning through optimal dose selection balancing safety and efficacy
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
Drug Development Consulting Services
Case Study: Go/No-Go Decision
Critical Business Issue
Product positioning vs. first-generation competitor
Approach & Technologies Utilized
Predictive treatment response-models linked with quantitative framework (Clinical Utility Index) to provide integrated metric of clinical benefit vs. competitor on key safety/efficacy attributes
Results
Failure to demonstrate equivalent clinical utility vs. competitor at all doses examined
Impact
Further development was halted, saving an estimated $50M-$100M in development costs
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL
Notices
Proprietary Notice
All contents Copyright ©2004 Pharsight Corporation. All rights reserved. The copyright for this document is owned by Pharsight Corporation.
No part of this document may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, for any purpose, without the express written permission of Pharsight Corporation. WinNonLin® and Pharsight® are registered trademarks of Pharsight Corporation. Pharsight Knowledgebase ServerTM, PKSTM, PKSTM Reporter, Drug Model Explorer, DMXTM, Trial SimulatorTM and TSTM are trademarks of Pharsight Corporation.
All other brand and product names are trademarks or registered trademarks of their respective holders.
Copyright © 2004 Pharsight. All rights reserved. CONFIDENTIAL