Exhibit 99.1
Pharsight Corporation
Investor Presentation
June 2005
Shawn O’Connor
President & CEO
Cynthia Stephens
SVP & CFO
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, opportunities to leverage our financial model, our market position, potential increases in our revenue, customer base and market interest in our solutions, expansion of scope and increasing efficiency of consulting engagements, new service offerings, market conditions and future revenue growth and profitability. Actual releases of future versions of our software, including any new features and/or functionality that may be included therein, will be on a when-and-if available basis only, and whether any new version will actually be made available remains at the sole discretion of Pharsight.
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 of the pharmaceutical industry, and the failure of the market for Pharsight’s 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. 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 12, 2005. 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 © 2005 Pharsight. All rights reserved. 2
Pharsight is…
Delivering breakthrough improvement in the clinical drug development process to pharmaceutical companies by…
Accelerating client product time-to-market
Improving client development efficiencies
Copyright © 2005 Pharsight. All rights reserved. 3
Profile
Background
Founded 1995; IPO August 2000
Headquarters - Mountain View, CA
East Coast Office - Cary, NC
Headcount - approx 90
US, Europe, Australia
OTCBB: PHST
Business and Products
Market leading provider of data repository and report automation tools and PK/PD data analysis software
Pharsight® Knowledgebase ServerTM (PKSTM) Suite
WinNonlin®
Opportunity to leverage and accelerate use of scientific methodology through new software application
Drug Model ExplorerTM (“DMXTM”)
Unique provider of strategic scientific consulting and decision analysis delivering significant impact to customers’ drug development process
Recent Financial Performance
Demonstrable progress towards achievement of long-term sustainable, profitable revenue growth, with…
5 consecutive quarters of net income
2 consecutive years of revenue growth > 25%
Copyright © 2005 Pharsight. All rights reserved. 4
Executive Team
Shawn O’Connor President & Chief Executive Officer
QRS, Diasonics Ultrasound, Peat Marwick
Cynthia Stephens SVP & Chief Financial Officer
Rainmaker Systems, Calico, Quiver, Infoseek/
The Walt Disney Company
James Hayden SVP Global Sales
Accelrys, Bio-Rad Laboratories, Raytheon
Mark Hovde SVP Marketing
Hovde Associates, Fast Track Systems, DataEdge
Mona Sowiski SVP Drug Development Consulting Services
Mitchell Madison Consulting, CSC/APM Healthcare, Stanford, Pitt
Daniel Weiner, PhD SVP Software Products
IVAX, Merrell Dow, Syntex, Quintiles
William Gillespie, PhD VP & Lead Scientist, Consulting Services, East Coast
GloboMax, FDA (CDER), Univ. of Texas at
Austin-College of Pharmacy
Greg Lee, PhD VP Research & Development
Sunrise Test Systems, Weitek, Schlumberger
Nancy Risch VP Global Sales
BBN Corporation, Interleaf, GE, Wang
Russ Wada, PhD VP Consulting Services, West Coast and Japan
Stanford, MiniMed Infusion Systems, Hughes Aircraft, TRW
Rene Bruno, PhD Managing Director, Consulting Services, Europe
Genentech, Rhone-Poulenc Rorer, Syntex
Copyright © 2005 Pharsight. All rights reserved. 5
Our Market Opportunity:
Drug Development Cost and Timeline
Clinical Development
$48 Billion1
Research
$25 Billion1
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,
1 is approved by FDA2
Avg cost to develop new drug $802M2 – $1.7B3
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
3 Bain & Co, December 2003
Copyright © 2005 Pharsight. All rights reserved. 6
Our Market Opportunity:
Development Expenditure Estimates
2003 – 2008 CAGR
Branded Pharma 8.6%
Generics 22.6%
Biotech 2.7%
Total Pharma 11.0%
$80,000
$70,000
$60,000
$50,000
$ in Millions
$40,000
$30,000
$20,000
$10,000
$0
2007
2006
2005
2004
2003
2008
Biotech
Generics
Branded Pharma
Development Expenditure by Segment & Product Development Phase: Jefferies & Company - - Jefferies Pharmaceutical Services Quarterly Preview – January 19, 2005
Copyright © 2005 Pharsight. All rights reserved. 7
Our Market Opportunity:
Increasing Drug Failure Rates
Decreasing FDA Approval Rates
Chance of drug successfully reaching FDA approval from Phase I has rapidly decreased
Today = 8% approval rate1
25 Years Ago = 14% approval rate1
Impact of Shifting Failure Rates to Earlier Phases
Shifting 5% of failures from Phase III to Phase I = $20M reduction in drug development costs1
Improving ability to predict failure by 10% before beginning clinical trials = $100M reduction in drug development costs1
1 Pacific Research Institute – Peter J. Pitts, Challenges and Opportunities in Health Care, Financial Times Global Pharmaceutical Conference, October 18-19, 2004
Copyright © 2005 Pharsight. All rights reserved. 8
Software Products
Overview of Key Software Offerings
Desktop Software Products
WinNonlin® (“WNL™”)
Industry Standard for Pharmacokinetic (“PK”), Pharmacodynamic (“PD”) Modeling and Non Compartmental Analysis
Trial Simulator™ (“TS2™”)
Computer Assisted Clinical Trial Design & Simulation
WinNonMix® (“WNM™”)
Population Pharmacokinetic Modeling & Simulation
Pharsight® Knowledge 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
Copyright © 2005 Pharsight. All rights reserved. 10
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
Extensive built-in library of PK, PD and PK-PD models
One-button export of results, plots and tables to MS Word
Potential Growth Drivers
Maintain market share under current subscription model via renewals
Provide upgrade path to support incremental new revenue opportunity
WNL 5.0 release announced for early fiscal year 2006
Sales Model
Subscription license model
Low-cost inside sales force
Distributor in Asia
ASP = $5,000
Copyright © 2005 Pharsight. All rights reserved. 11
Key Software Offerings
Trial Simulator™ 2.0 (“TS2™”)
State-of-the-Art Clinical Trial Design & Simulation Software
Key Benefits
Minimize risk of trial design
Intuitive, protocol-based interface for specifying trial designs
Formalize assumptions
Quantify uncertainty
Built-in facility for exploring alternative trial designs and model uncertainty
Reduce cost of clinical trials and drug development time-to-market
Growth Drivers
Increase potential interoperability with other Pharsight tools
Sales Model
Subscription license model
Low-cost inside sales force
Distributor in Asia
ASP = $16,000
Copyright © 2005 Pharsight. All rights reserved. 12
Key Software Offerings
Trial Simulator Market Opportunity $35 $30 $25 $20 $15 $10 $5
2005 2006 2007 2008 2009 2010
75% Market Share 50% Market Share 25% Market Share
2005 market estimate derived by Pharsight based on number of organizations with at least 1 active compound in Preclinical through Phase III1 with an estimate of 3.3 trials per year per compound, plus an additional 0.65 trials per year per each Phase IV compound. It is estimated that 1 seat of Trial Simulator would be acquired for each 10-20 trials.
Total Market Potential - Trail Simulator
($ in Millions)
Growth rates for 2006 - 2010 derived from calculated 3.83% CAGR in number of active compounds per year 2001 - 20042
1 Med Ad News, May 2005
2 Parexel R&D Sourcebook 2004/5, p 39.
Copyright © 2005 Pharsight. All rights reserved.
13
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
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 = $7,000
Copyright © 2005 Pharsight. All rights reserved. 14
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
Reduces long data preparation cycle for PK analysis
Supports compliance with FDA requirements for electronic records and signature, CFR 21 part 11
Potential Growth Drivers
Installed base of current large pharma clients – expand seat count within current clients
Optimize adoption pattern of industry – expand client-base beyond largest pharma into mid-size pharma and biotech
Tendency to follow the large-pharma leaders
Provide upgrade path, expanded utility
PKS 3.0 release announced for early fiscal year 2006
Sales Model
Subscription and perpetual license model
Software license plus services
Direct sales force
ASP = $10,000 per seat
Copyright © 2005 Pharsight. All rights reserved. 15
Key Software Offerings
PKSTM Market Opportunity
$250
$200
75% Market Share
$150
Total Market Potential - PKS Software
($ in Millions)
50% Market Share
$100
25% Market Share
$50
$0
2009
2008
2007
2006
2005
2010
2005 market estimate derived by Pharsight based on number of organizations with at least 1 active compound in Preclinical or Phase I1 with a potential average PKS license sale of approx $200K per customer.
Growth rates for 2006 – 2010 derived from calculated 3.83% CAGR in number of active compounds per year 2001 – 20042
1 Med Ad News, May 2005
2 Parexel R&D Sourcebook 2004/5, p 39.
Copyright © 2005 Pharsight. All rights reserved. 16
Key Software Offerings
Drug Model Explorer™ (“DMX™”)
Software-Based Communication Technology, Designed to Facilitate Quantitative Decision-Making in Drug Development
Recently Released to Market
Desktop application introduced in FY2004
Web-server application released Q3 FY2005
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
Increase interoperability with other Pharsight tools
Bundling with strategic consulting services
Sales Model
Subscription and perpetual license model
Copyright © 2005 Pharsight. All rights reserved. 17
Software Products
Market Acceptance1
Over 1,000 customers as of March 31, 2005
All Top 50 Pharma2 license at least one of our software products
Our software applications are licensed for use on more than 3,700 researcher desktops
2 of the Top 20 Pharma2 are DMXTM customers
9 of the Top 50 Pharma2 are PKSTM customers
13 active PKSTM customers
440 active seats
1 As of March 31, 2005
2 Pharma Exec 50: Pharmaceutical Executive, May 2004
Copyright © 2005 Pharsight. All rights reserved. 18
Strategic Consulting Services
Strategic Consulting Services
Methodology
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
Copyright © 2005 Pharsight. All rights reserved. 20
Strategic Consulting Services Offerings
Early Phase
(I/IIa)
Late Phase
(IIb/III)
Post-Approval
Preclinical
Candidate prioritization, selection & preparation for first-in-man/ proof-of-concept
Life-cycle management
Phase IIIb/IV strategy
Competitive positioning
Label expansion strategy
Go/no-go decision support
Pivotal registration trial design
Proof-of-concept strategy
Dose-finding strategy
First-in-man dose
Biomarker trial design
Dose-ranging trial design
Scaling (competitors, analogues)
Clinical utility index analysis
Adaptive trial and program design
LEVEL OF INTEGRATION
Product profile assessment
Dose justification and optimization
Support in-licensing and out-licensing decisions
Strategic consulting services combined with DMXTM
Copyright © 2005 Pharsight. All rights reserved. 21
Strategic Consulting Services Customer Testimonial
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
FORBES ASAP | October 7, 2002
Copyright © 2005 Pharsight. All rights reserved. 22
Strategic Consulting Services Potential Growth Drivers
Industry Factors
Increased acceptance of modeling and simulation as alternative to clinical trial results in Pharma’s development cycle
FDA Critical Path Initiative
Internal Factors
Expanding scope and increasing efficiency of consulting engagements
Expanded service offering
Continuing recruitment of best & brightest in the scientific community
Copyright © 2005 Pharsight. All rights reserved. 23
Strategic Consulting Services Market Penetration – Current Clients1
Top 10 Pharma2
40% Market Penetration
Current Clients
Market Opportunity
Top 50 Pharma2
30% Market Penetration
Current Clients
Market Opportunity
1 As of March 31, 2005
2 Pharma Exec 50: Pharmaceutical Executive, May 2004
Copyright © 2005 Pharsight. All rights reserved. 24
Strategic Consulting Services Market Acceptance1
Over 25 active clients during fiscal year ended March 31, 2005
13 of the Top 50 Pharma are active consulting clients
Over 119 projects engaged during Fiscal Year 2005
Typical workplans range from several weeks to annual engagements, and vary in size from $12K to over $3M
1 As of March 31, 2005
2 Pharma Exec 50: Pharmaceutical Executive, May 2004
Copyright © 2005 Pharsight. All rights reserved. 25
Financial Overview
FY05 Accomplishments
FY06 Objectives
Fiscal Year 2005 Results
Continued revenue growth
Y-Y revenue growth of 27%
2nd consecutive year of 25%+ growth
Profitability
Net income of $2.7 million, or 12% of revenues
Profitability in both business units
Achieved positive annual net cash flow
Additional new product development
DMX Web Server
Trial Simulator upgrade
Fiscal Year 2006 Objectives
Continued revenue growth
Profitability
Expansion of market footprint
Additional new product development
Copyright © 2005 Pharsight. All rights reserved. 27
Summary Statement of Operations - Y/Y Q4 & FY2005
(‘000s except per share data)
Q4
Q4
FY05
FY04
FY05
FY04
$17,730
$22,593
$5,403
$6,025
Revenues
7,793
7,761
2,158
2,155
Cost of revenues
9,937
14,832
3,245
3,870
Gross profit
11,673
11,841
2,891
2,990
Operating expenses
(1,736)
2,991
354
880
Income (loss) from operations
(1,997)
2,733
308
807
Net income (loss)
Net income (loss) attributable to
(2,990)
2,123
90
662
common stockholders
$(0.16)
$ 0.11
$ -
$ 0.03
EPS (common), basic
$ (0.16)
$ 0.10
$ -
$ 0.03
EPS (common), diluted
19,051
19,122
19,055
19,226
WASO - basic
21,125
28,434
19,051
WASO - diluted
28,953
Copyright © 2005 Pharsight. All rights reserved. 28
Summary Operating Results – Software Products
Q4 & FY2005
Q4
Q4
FY05
FY04
FY05
FY04
%
$
%
$
%
$
%
$
OPERATING RESULTS
Revenues
$
3,835
40%
$
4,875
39%
$
1,329
16%
$
450
Initial license
40%
4,182
38%
4,617
38%
1,290
44%
1,230
Renewal license
43%
129
2%
298
1%
43
6%
159
Maintenance
1%
1,530
19%
2,288
22%
769
34%
930
Services
16%
100%
9,676
100%
12,078
100%
3,431
100%
2,769
Total
7,057
84%
10,102
72%
2,465
79%
2,195
Gross profit
73%
(459)
18%
2,213
15%
522
11%
314
Income (loss) from operations
-5%
%
$
%
$
%
$
%
$
PRODUCT LINE REVENUES
$
5,610
49%
$
5,904
50%
$
1,718
49%
$
1,357
Desktop products
58%
2,388
28%
3,334
23%
802
16%
448
PKS
24%
148
4%
552
4%
142
1%
33
DMX
2%
1,530
19%
2,288
23%
769
34%
931
Services
16%
100%
$
9,676
100%
$
12,078
100%
$
3,431
100%
$
2,769
Total
Copyright © 2005 Pharsight. All rights reserved. 29
Summary Operating Results – Strategic Consulting Q4 & FY2005
(‘000s)
Q4
Q4
FY05
FY04
FY05
FY04
STRATEGIC CONSULTING SERVICES
$
8,054
100%
$
10,515
100%
$
1,972
100%
$
3,256
Revenues
100%
2,880
45%
4,730
40%
780
51%
1,675
Gross profit
36%
-13%
Income (loss) from operations
587
18%
(128)
-6%
893
8%
(1,007)
Copyright © 2005 Pharsight. All rights reserved.30
Quarterly Revenues
(‘000s)
Software Products
$7,000
Strategic Consulting
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
Q4 FY04
Q1 FY05
Q2 FY05
Q3 FY05
Q4 FY05
Q1 FY04
Q2 FY04
Q3 FY04
Copyright © 2005 Pharsight. All rights reserved. 31
Quarterly Gross Profit
(Percentage of Segment Revenues)
Strategic Consulting
90%
Software Products
80%
70%
60%
50%
40%
30%
20%
10%
0%
Q4 FY05
Q1 FY04
Q2 FY04
Q3 FY04
Q4 FY04
Q1 FY05
Q2 FY05
Q3 FY05
Copyright © 2005 Pharsight. All rights reserved. 32
Sequential Profitability
(‘000s)
Profitability achieved Q4 FY04
$6,500
$6,000
$5,500
$5,000
Revenues
Costs & Expenses
$4,500
$4,000
$3,500
Q3 FY04
Q2 FY04
Q1 FY04
Q4 FY05
Q1 FY05
Q2 FY05
Q3 FY05
Q4 FY04
Copyright © 2005 Pharsight. All rights reserved. 33
Quarterly Operating Income Growth
(000s)
$1,500
$1,000
$500
$0
-$500
-$1,000
-$1,500
-$2,000
Q4 FY04
Q1 FY05
Q2 FY05
Q3 FY05
Q4 FY05
Q1 FY04
Q2 FY04
Q3 FY04
Copyright © 2005 Pharsight. All rights reserved. 34
Quarterly Operating Cash Flow
(‘000s)
$2,000
$1,500
$1,000
$500
$0
-$500
-$1,000
-$1,500
Q4 FY04
Q1 FY05
Q2 FY05
Q3 FY05
Q4 FY05
Q1 FY04
Q2 FY04
Q3 FY04
Copyright © 2005 Pharsight. All rights reserved. 35
Summary Balance Sheet March 31, 2005
March 31,
March 31,
2005
(‘000s)
2004
ASSETS
$ 10,027
$ 10,579
Cash & Cash Equivalents
3,770
4,809
Accounts Receivable, Net
14,517
15,982
Total Current Assets
15,294
16,822
Total Assets
LIABILITIES & STOCKHOLDERS’ DEFICIT
$ 2,518
$ 3,497
A/P & Accrued Expenses
7,987
7,178
Deferred Revenue - Short Term
1,930
1,975
Notes Payable & Capital Leases
12,435
12,650
Total Current Liabilities
516
126
Deferred Revenue - Long Term
1,094
410
Notes Payable - Long Term
6,164
6,266
Redeemable Conv Pref Stock
(4,915)
(2,630)
Stockholders Deficit
16,822
15,294
Total Liabilities & S/H Deficit
Copyright © 2005 Pharsight. All rights reserved. 36
Equity Structure
(All share data as of March 31, 2005)
Common Shares O/S: 19.2 million
Preferred Shares O/S: 1.9 million
Series A 1.8 million / Series B 0.1 million
Common Equivalent Shares (as converted): 28.4 million
PIPE Financing 6/02 and 9/02 = $7.5M
1.8 million Units = 1 share Series A redeemable convertible stock + 1 warrant
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 (June 2007)
Copyright © 2005 Pharsight. All rights reserved. 37
Summary
Current Pharma Market Trends Look Favorable…
Increasing Mindshare for Quantitative-Based Modeling & Simulation…
Continuing Pharsight Investment in Sales, Marketing & Product Development…
Financially Stable & Healthy Business Model…
All Support Our Drive Towards Expansion of Pharsight’s Market Footprint & Sustainable Growth and Profitability
Copyright © 2005 Pharsight. All rights reserved. 38
Notices
Proprietary Notice
All contents Copyright ©2005 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®, WinNonMix® and Pharsight® are registered trademarks of Pharsight Corporation. Pharsight Knowledgebase ServerTM, PKSTM, PKS ReporterTM, Drug Model ExplorerTM, DMXTM, Trial SimulatorTM and TS2TM are trademarks of Pharsight Corporation.
All other brand and product names are trademarks or registered trademarks of their respective holders.
Copyright © 2005 Pharsight. All rights reserved. 39
Pharsight