![]() Confidential © Pharsight Corporation Pharsight Corporation Investor Presentation 2nd Quarter Fiscal 2007 Update September 30, 2006 Shawn O’Connor President, Chairman and CEO Will Frederick CFO Exhibit 99.1 |
![]() 2 Copyright © 2006 Pharsight Corporation. All rights reserved. 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 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, 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 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. 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 August 14, 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. |
![]() 3 Copyright © 2006 Pharsight Corporation. All rights reserved. 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 biotech marketplace – Outsourcing of development activities escalating – Rising drug development costs driving need for analytical drug development tools – FDA focus on modeling and simulation for Critical Path Initiative • Key Company Considerations – Leading innovator in modeling and simulation – Largest base of modeling and simulation skills and experience – Leverageable software and professional service business models – Industry standard software for PK/PD analysis – FDA Cooperate Research and Development Agreement (CRADA) |
![]() 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. Management Team Shawn M. O’Connor President, Chairman and Chief Executive Officer 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 and Lead Scientist, Consulting Services GloboMax, FDA (CDER), Univ. of Texas at Austin-College of Pharmacy Greg Lee, PhD VP Research and Development Sunrise Test Systems, Weitek, Schlumberger Rene Bruno, PhD Managing Director, Consulting Services, Europe Genentech, Rhone-Poulenc Rorer, Syntex |
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![]() 7 Copyright © 2006 Pharsight Corporation. All rights reserved. Market Opportunity Product Diversification • Customers “crossing the chasm” to full use of the Pharsight family of products can create increases of 60x in initial revenue and 15x in ongoing revenue WinNonlin Licenses Before Diversification 4 WNL Pro Users $6K $360K 0 1 2 3 4 5 6 7 8 WNL Enterprise WNL Val Suite IVIVC Toolkit AutoPilot PKS PKS Val Suite After Diversification $6K $360K |
![]() 8 Copyright © 2006 Pharsight Corporation. All rights reserved. FDA and Pharsight sign CRADA - June 2006 • Pharsight will make available a comprehensive suite of software tools, including: Pharsight ® Knowledgebase Server™ (PKS™), PKS Validation Suite™, WinNonlin ® Validation Suite™, Trial Simulator™ and Drug Model Explorer™ (DMX™). • FDA will use the Pharsight tools to review clinical trial data, especially for clinical pharmacology and clinical safety reviews, and will provide feedback to Pharsight. FDA Unveils Critical Path Opportunities List - March 2006 • #51 Clinical Trial Simulation. Clinical trial simulation can predict efficient designs for development programs that reduce the number of trials and patients, improve decisions on dosing, and increase informativeness. Stakeholders are looking for first steps, such as identification of tools and best practices. FDA Issues Critical Path Paper - June 2004 • The Critical Path Initiative is FDA's effort to stimulate and facilitate a national effort to modernize the scientific process through which a potential human drug, biological product, or medical device is transformed from a discovery or "proof of concept" into a medical product. FDA Influence Driving Market Adoption |
![]() Confidential © Pharsight Corporation Software Products |
![]() 10 Copyright © 2006 Pharsight Corporation. All rights reserved. • Analytics – WinNonlin ® – WinNonMix ® – Trial Simulator™ – IVIVC Toolkit™ for WinNonlin • Data Management & Compliance – Pharsight ® Knowledgebase Server™ – PKS Reporter – WinNonlin AutoPilot™ • Validation – WinNonlin Validation Suite™ – PKS Validation Suite™ • Model Visualization – Drug Model Explorer ® (DMX ® ) Key Software Offerings Overview |
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![]() 14 Copyright © 2006 Pharsight Corporation. All rights reserved. In vivo-in vitro correlations (IVIVC) • Key Benefits – Speed formulation development – Improve success of bioequivalence studies – Avoid expense and time of unnecessary in vivo studies • Potential Growth Drivers – Increase interoperability with other Pharsight tools – Enlarge the WinNonlin user base and expand PKS demand • Sales Model – Subscription license – Low-cost inside sales force – Distributor in Asia • ASP approx. $3,000 per seat Key Software Offerings IVIVC Toolkit™ for WinNonlin UNDER UNDER DEVELOPMENT DEVELOPMENT |
![]() 15 Copyright © 2006 Pharsight Corporation. All rights reserved. Key Software Offerings Pharsight ® Knowledgebase Server™ (“PKS™”) • 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 – Software license plus services – Direct sales force – Distributor in Asia • ASP approx. $15,000 per seat Enterprise Data Management Systems for Secure Storage and Management of PK/PD Data |
![]() 16 Copyright © 2006 Pharsight Corporation. All rights reserved. Streamlining Routine Clinical PK Analyses and Reporting • Key Benefits – Capture and implement best practices and business rules within a department and across sites. – Standardize content and formatting of analyses and reports to reduce authoring/review effort and improve consistency and quality. – Automate analyses with computer-based scripts to ensure repeatability and traceability. – Decrease reporting backlog and submission delays, and increase ability to respond to requests for interim analyses. – Free-up PK scientific resources to focus on trial simulation, population PK modeling and model-based drug profile exploration. – Extend PK automation gains to regulatory-compliant workflows and report generation through integration with PKS and PKS Reporter. • Potential Growth Drivers – Extend AutoPilot to preclinical analysis and reporting • Sales Model – Subscription and perpetual license – Software license plus services – Direct sales force – Distributor in Asia • ASP approx. $35,000 per seat (five seat purchaser) Key Software Offerings WinNonlin AutoPilot™ UNDER UNDER DEVELOPMENT DEVELOPMENT |
![]() 17 Copyright © 2006 Pharsight Corporation. All rights reserved. Key Software Offerings Drug Model Explorer™ (“DMX ® ”) • Key Benefits – Facilitates more efficient collaboration within project teams to explore key drug attributes, and their respective uncertainties – Enables more flexible scenarios and generates views of program data from underlying model outputs and 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. $10,000 per seat Software-Based Communication Technology, Designed to Facilitate Quantitative Decision-Making in Drug Development |
![]() 18 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, 2004 Higher productivity Faster cycle times Pfizer |
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![]() Confidential © Pharsight Corporation Strategic Consulting Services |
![]() 21 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 |
![]() 22 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 |
![]() 23 Copyright © 2006 Pharsight Corporation. All rights reserved. • World-class experts in clinical pharmacology, PK/PD, decision analysis, and statistics • Senior scientific leadership with extensive drug development experience • Seasoned practitioners from industry, academia, and consulting • Serving all major drug development geographies, including US, EU, and Japan Overview of Consulting Services |
![]() 24 Copyright © 2006 Pharsight Corporation. All rights reserved. Strategic Consulting Services 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 |
![]() 25 Copyright © 2006 Pharsight Corporation. All rights reserved. Strategic Consulting Services Revenue Diversification Q2 FY07 50% 50% Top 2 clients Others Q2 FY06 81% 19% Top 2 clients Others $2.7M Revenue $1.9M Revenue Successful Diversification Efforts with Reduced Revenue Dependency on “Top 2 Clients” |
![]() 26 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 and Approval Forbes ASAP, 10/7/02 Faster failure Higher productivity sanofi-aventis |
![]() 27 Copyright © 2006 Pharsight Corporation. All rights reserved. • Over 35 active consulting clients YTD Fiscal Year 2007 – 21 of the Top 50 Pharma are active consulting clients – 9 new consulting clients • Over 100 projects engaged during Fiscal Year 2006 – 24 new consulting clients • 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 1 1 As of September 30, 2006 2 Pharma Exec 50: Pharmaceutical Executive, May 2006 2 |
![]() Confidential © Pharsight Corporation Financial Overview |
![]() 29 Copyright © 2006 Pharsight Corporation. All rights reserved. Accomplishments and Guidance FY06 Accomplishments • Revenue growth – Y/Y revenue growth of 1% – 3 consecutive year of revenue growth • Gross Margin – 66% of revenue • Profitability – Net income of $530,000 – 2 consecutive year of profitability • Achieved positive annual net cash flow FY07 Guidance • Continued revenue growth – Y/Y revenue growth of approx. 10% to 15%, or approx. $25M - $26M • Gross Margin – Approx. 65% to 70% of revenue • Continued profitability – Net income of approx. 5% - 10% of revenue – Diluted EPS of $0.01 - $0.06 • Continued positive annual net cash flow rd nd |
![]() 30 Copyright © 2006 Pharsight Corporation. All rights reserved. Summary Income Statements (in thousands) Consol. SPBU SCS Consol. SPBU SCS Revenue 6,284 3,553 2,731 5,920 4,005 1,915 Y/Y growth 6% -11% 43% 17% 60% -25% Cost of revenue 1,817 353 1,464 2,054 664 1,390 Gross profit 4,467 3,200 1,267 3,866 3,341 525 Gross margin 71% 90% 46% 65% 83% 27% Operating expenses 3,753 2,609 1,144 3,585 2,531 1,053 Operating income 714 591 123 281 810 (528) Net income 713 263 Q2 FY07 Q2 FY06 Note: Q2 FY07 Net income reflects $216 for stock-based compensation expense included in Cost of revenue and Operating expenses |
![]() 31 Copyright © 2006 Pharsight Corporation. All rights reserved. Summary Balance Sheets (in thousands) Sep. 30, 2006 March 31, 2006 Cash & cash equivalents 6,438 $ 10,832 $ Short-term investments 4,749 -- Accounts receivable, net 3,397 4,585 Total current assets 15,170 15,715 Total assets 16,998 $ 17,786 $ LIABILITIES & STOCKHOLDERS' DEFICIT A/P & accrued expenses 3,612 $ 3,981 $ Deferred revenue 6,816 7,605 Notes payable 1,300 1,519 Total current liabilities 11,728 13,105 Deferred revenue - long term 18 54 Notes payable - long term 242 392 Redeemable conv. pref. stock 6,858 6,641 Stockholders deficit (2,064) (2,659) Total liabilities & stockholders' deficit 16,998 $ 17,786 $ ASSETS |
![]() 32 Copyright © 2006 Pharsight Corporation. All rights reserved. Annual Revenue by Business Unit (in thousands) $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 FY03 FY04 FY05 FY06 FY07 Guidance Software Products Strategic Consulting Guidance ($25M - $26M) |
![]() 33 Copyright © 2006 Pharsight Corporation. All rights reserved. Quarterly Revenue by Business Unit (in thousands) $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 Q2 FY06 Q3 FY06 Q4 FY06 Q1 FY07 Q2 FY07 Software Products Strategic Consulting |
![]() 34 Copyright © 2006 Pharsight Corporation. All rights reserved. Annual Gross Profit (in thousands) $0 $2,500 $5,000 $7,500 $10,000 $12,500 $15,000 $17,500 FY02 FY03 FY04 FY05 FY06 |
![]() 35 Copyright © 2006 Pharsight Corporation. All rights reserved. Annual Operating Income (in thousands) -$20,000 -$17,500 -$15,000 -$12,500 -$10,000 -$7,500 -$5,000 -$2,500 $0 $2,500 $5,000 FY02 FY03 FY04 FY05 FY06 |
![]() 36 Copyright © 2006 Pharsight Corporation. All rights reserved. Annual Operating Cash Flow (in thousands) -$8,000 -$6,000 -$4,000 -$2,000 $0 $2,000 $4,000 FY02 FY03 FY04 FY05 FY06 |
![]() 37 Copyright © 2006 Pharsight Corporation. All rights reserved. Equity Overview • Common Shares Outstanding¹ 19.7M • Preferred Shares Outstanding¹ 2.0M – 1.8 million Series A and 0.2 million Series B – Conversion ratio to Common at 4:1 • Common Equivalent Shares (as converted) ¹ 27.5M • 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 of at least 75% of preferred holders, or at Pharsight’s option, after June 2007 (5 anniversary of initial issuance) • Price of $4.008 per share 1 As of September 30, 2006 th |
![]() ![]() ![]() ![]() 38 Copyright © 2006 Pharsight Corporation. All rights reserved. Summary • Current pharmaceutical market trends look favorable… • Increasing mindshare for quantitative-based modeling and simulation… • FDA's call for more modeling and simulation in the Critical Path Initiative… • Financially stable and leveragable business model… All support our drive towards expanding Pharsight’s market footprint to achieve sustainable revenue growth and profitability |
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