![]() Confidential © Pharsight Corporation Pharsight Corporation Investor Presentation February 2006 Shawn O’Connor President & CEO Exhibit 99.1 |
![]() 2 Copyright © 2006 Pharsight Corporation. All rights reserved. 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 customer’s 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 Quarterly Report on Form 10-Q, as filed with the Securities and Exchange Commission on November 14, 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. |
![]() 3 Copyright © 2006 Pharsight Corporation. All rights reserved. Profile • Background – Founded 1995; IPO August 2000 – Headquarters - Mountain View, CA • Satellite office - Cary, North Carolina – Headcount - approx 90 • US, Europe, Australia – OTCBB: PHST • Key Considerations – Large Pharma drug development marketplace – Modeling & simulation moving beyond first adopter environment – Leverageable software and professional service business models |
![]() 4 Copyright © 2006 Pharsight Corporation. All rights reserved. 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 |
![]() 5 Copyright © 2006 Pharsight Corporation. All rights reserved. Executive Team Shawn O’Connor President & Chief Executive Officer QRS, Diasonics Ultrasound, Peat Marwick TBH Chief Financial Officer 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 |
![]() ![]() ![]() 6 Copyright © 2006 Pharsight Corporation. All rights reserved. Our Market Opportunity: Drug Development Cost and Timeline 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 Research $25 Billion 1 Significant Productivity Increase and Investment Clinical Development $48 Billion 1 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, 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 |
![]() 7 Copyright © 2006 Pharsight Corporation. All rights reserved. Our Market Opportunity: Development Expenditure Estimates $0 $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 2003 – 2008 CAGR Branded Pharma 8.6% Generics 22.6% Biotech 2.7% Total Pharma 11.0% Development Expenditure by Segment & Product Development Phase: Jefferies & Company - Jefferies Pharmaceutical Services Quarterly Preview – January 19, 2005 |
![]() 8 Copyright © 2006 Pharsight Corporation. All rights reserved. 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 |
![]() 9 Copyright © 2006 Pharsight Corporation. All rights reserved. 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 |
![]() 10 Copyright © 2006 Pharsight Corporation. All rights reserved. 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. et al,, from the International Journal of Pharmaceutical Medicine 18 (1): 13-17 Higher productivity Faster cycle times Pfizer |
![]() Confidential © Pharsight, Inc. Software Products |
![]() 12 Copyright © 2006 Pharsight Corporation. All rights reserved. • 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 Overview of Key Software Offerings |
![]() 13 Copyright © 2006 Pharsight Corporation. 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 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 |
![]() 14 Copyright © 2006 Pharsight Corporation. All rights reserved. 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 Key Software Offerings Key Software Offerings Trial Simulator™ 2.0 (“TS2™”) |
![]() 15 Copyright © 2006 Pharsight Corporation. All rights reserved. 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 |
![]() 16 Copyright © 2006 Pharsight Corporation. All rights reserved. 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 |
![]() 17 Copyright © 2006 Pharsight Corporation. All rights reserved. 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 |
![]() 18 Copyright © 2006 Pharsight Corporation. All rights reserved. • Over 1,000 customers as of December 31, 2005 • All Top 50 Pharma² license at least one of our software products • Our software applications are licensed for use on more than 3,500 desktops in industry, more than 3,300 desktops in academia • 4 of the Top 50 Pharma² are DMX TM customers • 9 of the Top 50 Pharma² are PKS TM customers – 14 active PKS™ customers – Over 500 active seats Software Products Market Acceptance¹ 1 As of December 31, 2005 2 Pharma Exec 50: Pharmaceutical Executive, May 2005 |
![]() Confidential © Pharsight, Corporation Strategic Consulting Services |
![]() 20 Copyright © 2006 Pharsight Corporation. All rights reserved. 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 |
![]() 21 Copyright © 2006 Pharsight Corporation. All rights reserved. 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 |
![]() 22 Copyright © 2006 Pharsight Corporation. All rights reserved. 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 |
![]() 23 Copyright © 2006 Pharsight Corporation. All rights reserved. Strategic Consulting Services Market Penetration – Current Clients 1 Current Clients Market Opportunity Current Clients Market Opportunity Top 10 Pharma² 60% Market Penetration Top 50 Pharma² 34% Market Penetration 1 December 31, 2005 2 Pharma Exec 50: Pharmaceutical Executive, May 2004 |
![]() 24 Copyright © 2006 Pharsight Corporation. All rights reserved. • Over 30 active clients during Fiscal Year 2006 to date – 17 of the Top 50 Pharma are active consulting clients • Over 119 projects engaged during Fiscal Year 2005 • Over 85 projects engaged during Fiscal Year 2006 to date • Typical workplans range from several hours of consulting time to annual engagements, and vary in size from $3,500 to over $3M² Strategic Consulting Services Market Acceptance 1 Pharma Exec 50: Pharmaceutical Executive, May 2004 2 As of Fiscal Year 2006 to date |
![]() Confidential © Pharsight, Inc. Financial Overview |
![]() 26 Copyright © 2006 Pharsight Corporation. All rights reserved. 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 • YTD FY06 Y/Y revenue growth of 5% • Profitability • Q3 FY06 net income of $0.1 million, or 1% of revenues. • Eight consecutive quarters of net income • Expansion of market footprint • Continued expansion of software and strategic consulting customer base in Q3 FY06 • Additional new product development • PKS 3.0 released • WNL 5.0.1 released • WNL & PKS Validation Suites |
![]() 27 Copyright © 2006 Pharsight Corporation. All rights reserved. Summary Statement of Operations - Y/Y Q3 FY06 and YTD FY06 ('000s except per share data) Q3 Q3 YTD YTD FY06 FY05 FY06 FY05 Revenues 5,757 $ 6,462 $ 17,371 $ 16,568 $ Cost of revenues 1,829 1,948 5,770 5,606 Gross profit 3,928 4,514 11,601 10,962 Operating expenses 3,636 3,024 10,741 8,851 Income from operations 292 1,490 860 2,111 Net income 274 1,411 791 1,926 Net income attributable to common stockholders 84 1,266 242 1,461 EPS (common), basic - $ 0.07 $ 0.01 $ 0.08 $ EPS (common), diluted - $ 0.05 $ 0.01 $ 0.07 $ WASO - basic 19,445 19,117 19,393 19,088 WASO - diluted 21,967 28,195 22,120 22,282 |
![]() 28 Copyright © 2006 Pharsight Corporation. All rights reserved. Summary Operating Results – Software Products Q3 FY06 and YTD FY 06 ('000s) OPERATING RESULTS $ % $ % $ % $ % Revenues Initial license 1,672 $ 41% 2,391 $ 58% 3,793 $ 35% 4,425 $ 48% Renewal license 1,258 31% 1,127 27% 3,639 34% 3,387 44% Maintenance 272 7% 53 1% 768 7% 139 1% Services 868 21% 582 14% 2,365 22% 1,358 15% Total 4,070 100% 4,153 100% 10,565 100% 9,309 100% Gross profit 3,593 88% 3,597 87% 9,029 85% 7,907 85% Income (loss) from operations 894 22% 1,397 34% 1,619 15% 1,899 20% PRODUCT LINE REVENUE $ % $ % $ % $ % Desktop products 1,993 $ 49% 1,565 $ 38% 5,056 $ 48% 4,548 $ 49% PKS 527 13% 1,838 44% 1,523 14% 2,885 31% DMX 682 17% 168 6% 1,621 15% 518 6% Services 868 21% 582 15% 2,365 22% 1,358 16% Total 4,070 $ 100% 4,153 $ 100% 10,565 $ 100% 9,309 $ 100% YTD YTD FY06 FY05 FY06 FY05 Q3 Q3 |
![]() 29 Copyright © 2006 Pharsight Corporation. All rights reserved. Summary Operating Results – Strategic Consulting Q3 FY06 and YTD FY 06 ('000s) OPERATING RESULTS Revenues 1,687 $ 100% 2,309 $ 100% 6,806 $ 100% 7,259 $ 100% Gross profit 335 20% 917 40% 2,572 38% 3,055 42% Income (loss) from operations (599) -36% 187 8% (755) -11% 306 4% FY06 FY05 Q3 Q3 YTD YTD FY06 FY05 |
![]() 30 Copyright © 2006 Pharsight Corporation. All rights reserved. Quarterly Revenues (‘000s) $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 Q1 FY05 Q2 FY05 Q3 FY05 Q4 FY05 Q1 FY06 Q2 FY06 Q3 FY06 Strategic Consulting Software Products |
![]() 31 Copyright © 2006 Pharsight Corporation. All rights reserved. Quarterly Gross Profit (Percentage of Segment Revenues) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Q1 FY05 Q2 FY05 Q3 FY05 Q4 FY05 Q1 FY06 Q2 FY06 Q3 FY06 Strategic Consulting Software Products |
![]() 32 Copyright © 2006 Pharsight Corporation. All rights reserved. Continued Profitability (‘000s) Q1 FY04 Q2 FY04 Q3 FY04 Q4 FY04 Q1 FY05 Q2 FY05 Q3 FY05 Q4 FY05 Q1 FY06 Q2 FY06 Q3 FY06 $3,500 $4,000 $4,500 $5,000 $5,500 $6,000 $6,500 Revenues Costs & Expenses Profitability achieved Q4 FY04 |
![]() 33 Copyright © 2006 Pharsight Corporation. All rights reserved. Quarterly Operating Income (000s) $0 $500 $1,000 $1,500 Q1 FY05 Q2 FY05 Q3 FY05 Q4 FY05 Q1 FY06 Q2 FY06 Q3 FY06 |
![]() 34 Copyright © 2006 Pharsight Corporation. All rights reserved. Quarterly Operating Cash Flow (‘000s) -$500 $0 $500 $1,000 $1,500 $2,000 $2,500 Q1 FY05 Q2 FY05 Q3 FY05 Q4 FY05 Q1 FY06 Q2 FY06 Q3 FY06 |
![]() 35 Copyright © 2006 Pharsight Corporation. All rights reserved. Summary Balance Sheet December 31, 2005 ('000s) December 31, 2005 March 31, 2005 Cash & Cash Equivalents 9,974 $ 10,579 $ Accounts Receivable, Net 5,130 4,809 Total Current Assets 15,492 15,982 Total Assets 17,649 16,822 LIABILITIES & STOCKHOLDERS' DEFICIT A/P & Accrued Expenses 3,585 $ 3,497 $ Deferred Revenue - Short Term 7,301 7,178 Notes Payable & Capital Leases 1,737 1,975 Total Current Liabilities 12,623 12,650 Deferred Revenue - Long Term 72 126 Notes Payable - Long Term 467 410 Redeemable Conv Pref Stock 6,525 6,266 Stockholders Deficit (2,310) (2,630) Total Liabilities & S/H Deficit 17,649 16,822 ASSETS |
![]() 36 Copyright © 2006 Pharsight Corporation. All rights reserved. Equity Structure (All share data as of December 31, 2005) • Common Shares O/S: 19.5 million • Preferred Shares O/S: 1.9 million – Series A 1.8 million / Series B 0.1 million • Common Equivalent Shares (as converted): 29.7 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 5 th anniversary of initial issuance at $4.008 per share (June 2007) |
![]() ![]() ![]() ![]() 37 Copyright © 2006 Pharsight Corporation. All rights reserved. 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 |
![]() 38 Copyright © 2006 Pharsight Corporation. All rights reserved. Proprietary Notice All contents Copyright ©2006 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 Server TM, PKS , PKS Reporter , Drug Model Explorer , DMX , Trial Simulator and TS2 are trademarks of Pharsight Corporation. All other brand and product names are trademarks or registered trademarks of their respective holders. Notices |
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