Exhibit 99.1
Pharsight Corporation Investor Presentation
June 2005
Shawn O’Connor President & CEO
Cynthia Stephens
SVP & Chief Financial Officer
Forward-Looking Statements
This press release 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 developments or performance, expected benefits to customers from the use of 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, 2006. 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, changes in 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 customers’ expectations. 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.
Pharsight is under no obligation whatsoever to release any new versions of its software at any time. Further information on potential factors that could affect actual results is included in Pharsight’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on June 29, 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 Corporation. All rights reserved.
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Profile
Background
– Founded 1995; IPO August 2000
– Headquarters—Mountain View, CA
Satellite office—Cary, North Carolina
– Headcount—approx 90
US, Europe, Australia
– OTCBB: PHST
Recent Financial Turnaround
– 6 consecutive quarters of net income
– First full year of profitability in FY2005
– 2 consecutive years of revenue growth > 25%
– Positive annual cash flow for FY2005
Copyright © 2005 Pharsight Corporation. All rights reserved.
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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
Copyright © 2005 Pharsight Corporation. All rights reserved.
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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 Corporation. 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 – $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 |
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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 $40,000 $30,000 $20,000 $10,000 $0 $ in Millions
2003 2004 2005 2006 2007 2008
Branded Pharma
Generics
Biotech
Development Expenditure by Segment & Product Development Phase: Jefferies & Company—Jefferies Pharmaceutical Services Quarterly Preview – January 19, 2005
Copyright © 2005 Pharsight Corporation. 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
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Return on Investment Example
Sanofi-Aventis
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
Copyright © 2005 Pharsight Corporation. All rights reserved.
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Return on Investment Example
Pfizer
“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. et al,, from the
International Journal of Pharmaceutical Medicine 18 (1): 13-17
Higher productivity Faster cycle times
Copyright © 2005 Pharsight Corporation. All rights reserved.
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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® 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
Copyright © 2005 Pharsight Corporation. All rights reserved.
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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 = $5,000
Copyright © 2005 Pharsight Corporation. All rights reserved.
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Key Software Offerings Trial Simulator™ 2.0 (“TS2™”)
State-of-the-Art Clinical Trial Design & Simulation Software
Market Opportunity
– |
| Total opportunity estimated by Pharsight at approx $29 million |
25% market share = $7 million 50% market share = $15 million 75% market share = $22 million
Key Benefits
– |
| Minimize risk of trial design |
– |
| Formalize assumptions |
– |
| Quantify 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 Corporation. All rights reserved.
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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 Corporation. All rights reserved.
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Key Software Offerings
Pharsight® Knowledgebase Server™ (“PKS™”)
Enterprise Data Management Systems for Secure Storage and Management of PK/PD
Data
Market Opportunity
– |
| Total opportunity estimated by Pharsight at approx $187 million |
25% market share = $47 million 50% market share = $94 million 75% market share = $140 million
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 of 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 = $10,000 per seat
Copyright © 2005 Pharsight Corporation. 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
Market Opportunity
– Total opportunity estimated by Pharsight at approx $33 million
25% market share = $8 million 50% market share = $17 million 75% market share = $25 million
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 Corporation. All rights reserved.
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Software Products Market Acceptance1
Over 1,000 customers as of June 30, 2005
All Top 50 Pharma2 license at least one of our software products
Our software applications are licensed for use on more than 3,500 desktops in industry, more than 3,300 desktops in academia
3 of the Top 50 Pharma2 are DMXTM customers
9 of the Top 50 Pharma2 are PKSTM customers
– 13 active PKSTM customers
– Over 500 active seats
1 As of June 30, 2005
2 Pharma Exec 50: Pharmaceutical Executive, May 2005
Copyright © 2005 Pharsight Corporation. All rights reserved.
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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
Copyright © 2005 Pharsight Corporation. All rights reserved.
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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
Optimize treatment regimens and patient populations for the market and for a trial Compare probable safety and efficacy of new drug to competitors
Trial Models
Match trial design to the purpose of the trial Optimize design via clinical trial simulations
Market Models
Choose the decision path with greatest economic return
– Treatment regimen(s)
– Trial design
– Development program
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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 Corporation. All rights reserved.
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Strategic Consulting Services Market Penetration – Current Clients1
Top 10 Pharma2
50% Market Penetration
Current Clients
Market Opportunity
Top 50 Pharma2
26% Market Penetration
Current Clients
Market Opportunity
1 |
| June 30, 2005 |
2 |
| Pharma Exec 50: Pharmaceutical Executive, May 2004 |
Copyright © 2005 Pharsight Corporation. All rights reserved.
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Strategic Consulting Services Market Acceptance
Over 25 active clients during fiscal year ended March 31, 2005
– 13 of the Top 50 Pharma are active consulting clients as of June 30, 2005
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 $3M1
1 As of March 31, 2005
2 Pharma Exec 50: Pharmaceutical Executive, May 2004
Copyright © 2005 Pharsight Corporation. All rights reserved.
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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
Q1 FY06 Y/Y revenue growth of 13%
Profitability
Q1 FY06 net income of $0.3 million, or 4% of revenues
Expansion of market footprint
Continued expansion of software and strategic consulting customer base in Q1 FY06
Additional new product development
PKS 3.0 released
WNL 5.0 released
Copyright © 2005 Pharsight Corporation. All rights reserved.
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Summary Statement of Operations—Y/Y Q1 FY2006
(‘000s except per share data)
Q1 FY06 Q1 FY05
Revenues $ 5,694 $ 5,034
Cost of revenues 1,887 1,844
Gross profit 3,807 3,190
Operating expenses 3,520 3,056
Income from operations 287 134
Net income 254 94
Net income (loss) attributable to
common stockholders 109 (81)
EPS (common), basic $ 0.01 $ -
EPS (common), diluted $ - $ -
WASO—basic 19,345 19,058
WASO—diluted 22,043 19,058
Copyright © 2005 Pharsight Corporation. All rights reserved.
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Summary Operating Results – Software Products Q1 FY06
(‘000s)
Q1 FY06 Q1 FY05
OPERATING RESULTS $ % $ %
Revenues
Initial license $ 884 35% $ 894 34%
Renewal license 1,160 47% 1,182 44%
Maintenance 191 8% 43 2%
Services 255 10% 529 20%
Total 2,490 100% 2,648 100%
Gross profit 2,095 84% 2,241 85%
Income (loss) from operations (85) -3% 214 8%
PRODUCT LINE REVENUES $ % $ %
Desktop products $ 1,566 63% $ 1,494 56%
PKS 495 20% 450 17%
DMX 174 7% 175 6%
Services 255 10% 529 21%
Total $ 2,490 100% $ 2,648 100%
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Summary Operating Results – Strategic Consulting Q1 FY06
(‘000s)
Q1 FY06 Q1 FY05
OPERATING RESULTS
Revenues $ 3,204 100% $ 2,386 100%
Gross profit 1,712 53% 949 40%
Income (loss) from operations 372 12% (80) -3%
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Quarterly Revenues
(‘000s) $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0
Q1 FY05 Q2 FY05 Q3 FY05 Q4 FY05 Q1 FY06
Strategic Consulting
Software Products
Copyright © 2005 Pharsight Corporation. All rights reserved.
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Quarterly Gross Profit
(Percentage of Segment Revenues)
90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Q1 FY05 Q2 FY05 Q3 FY05 Q4 FY05 Q1 FY06
Strategic Consulting
Software Products
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Continued Profitability
(‘000s)
Profitability achieved Q4 FY04 $6,500 $6,000 $5,500 $5,000 $4,500 $4,000 $3,500
Q1 FY04 Q2 FY04 Q3 FY04 Q4 FY04 Q1 FY05 Q2 FY05 Q3 FY05 Q4 FY05 Q1 FY06
Revenues
Costs & Expenses
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Quarterly Operating Income
(000s) $1,500 $1,000 $500 $0
Q1 FY05 Q2 FY05 Q3 FY05 Q4 FY05 Q1 FY06
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Quarterly Operating Cash Flow
(‘000s) $2,000 $1,500 $1,000 $500 $0
-$500 $1,000 $1,500
Q1 FY05 Q2 FY05 Q3 FY05 Q4 FY05 Q1 FY06
Copyright © 2005 Pharsight Corporation. All rights reserved.
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Summary Balance Sheet June 30, 2005
(‘000s) June 30, 2005 March 31, 2005
ASSETS
Cash & Cash Equivalents $ 9,035 $ 10,579
Accounts Receivable, Net 4,723 4,809
Total Current Assets 14,397 15,982
Total Assets 15,554 16,822
LIABILITIES & STOCKHOLDERS’ DEFICIT
A/P & Accrued Expenses $ 2,878 $ 3,497
Deferred Revenue—Short Term 6,652 7,178
Notes Payable & Capital Leases 1,975 1,975
Total Current Liabilities 11,505 12,650
Deferred Revenue—Long Term 108 126
Notes Payable—Long Term 167 410
Redeemable Conv Pref Stock 6,266 6,266
Stockholders Deficit (2,492) (2,630)
Total Liabilities & S/H Deficit 15,554 16,822
Copyright © 2005 Pharsight Corporation. All rights reserved.
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Equity Structure
(All share data as of June 30, 2005)
Common Shares O/S: 19.4 million Preferred Shares O/S: 1.9 million
– Series A 1.8 million / Series B 0.1 million
Common Equivalent Shares (as converted): 28.6 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 Corporation. All rights reserved.
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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 Corporation. All rights reserved.
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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 Corporation. All rights reserved.
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