![]() Confidential © Pharsight Corporation Pharsight Corporation Investor Presentation 4th Quarter Fiscal 2007 Update March 31, 2007 Shawn O’Connor President, Chairman and CEO Will Frederick CFO Exhibit 99.1 |
![]() 2 Copyright © 2007 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, 2008. 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 February 12, 2007. 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 © 2007 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 © 2007 Pharsight Corporation. All rights reserved. Pharsight Capabilities Supporting Efficient Drug Development Software Products Enterprise and desktop products for analyzing, presenting and storing drug development data. Improve productivity and compliance Strategic Consulting Services Consulting expertise in model- based drug development and decision-making. Quantify your decision- making Metadata Modeling-ready data sets complied by experts from public source medical & scientific literature. Understand the competitive landscape Reporting and Analysis Services High quality NCA and population PK reporting and analysis. Outsource reporting and analysis Training A variety of courses teaching Pharsight software tools and model-based drug development skills. Build your capabilities |
![]() 5 Copyright © 2007 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 |
![]() ![]() ![]() 6 Copyright © 2007 Pharsight Corporation. All rights reserved. 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 and 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 and 1 is approved by FDA 2 • Avg. cost to develop new drug $802M 2 – $1.7B 3 • Only 3 out of 10 drugs produce revenues that match or exceed R&D costs 2 |
![]() 7 Copyright © 2007 Pharsight Corporation. All rights reserved. Market Opportunity Software Product Diversification • Customers expanding their use of the Pharsight family of products can create $100K to $500K+ in initial revenue and increases of 15x in ongoing maintenance revenue WinNonlin Licenses Before Diversification 4 WNL Pro Users $6K maint. $90K+ maint. 0 1 2 3 4 5 6 7 8 WNL Enterprise WNL Val Suite IVIVC Toolkit AutoPilot PKS PKS Val Suite DMX After Diversification $6K $90K $100K to $500K+ initial purchase |
![]() 8 Copyright © 2007 Pharsight Corporation. All rights reserved. Current Customers Includes All Top 50 Pharma Companies |
![]() Confidential © Pharsight Corporation Software Products |
![]() 10 Copyright © 2007 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 ® ) Software Products Overview |
![]() 11 Copyright © 2007 Pharsight Corporation. All rights reserved. • Over 1,250 active software customers • All Top 50 Pharma 2 license at least one of our software products • Our software applications are licensed for use on more than 6,700 desktops in industry and academia • 13 of the Top 50 Pharma 2 are PKS TM customers – 19 total PKS TM customers – Over 875 seats sold • 7 of the Top 50 Pharma 2 are DMX TM customers – 8 total DMX TM customers – Over 275 seats sold Software Products Market Acceptance 1 1 As of March 31, 2007 2 Pharma Exec 50: Pharmaceutical Executive, May 2006 |
![]() 12 Copyright © 2007 Pharsight Corporation. All rights reserved. Software Products 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 |
![]() 13 Copyright © 2007 Pharsight Corporation. All rights reserved. Software Products WinNonlin ® (“WNL™”) • 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 – Low-cost inside sales force – Distributor in Asia • ASP approx. $5,000 per seat • Strong recurring revenue with >90% renewal Industry Gold-Standard for Pharmacokinetic (“PK”), Pharmacodynamic (“PD”) Modeling, and Non Compartmental Analysis |
![]() 14 Copyright © 2007 Pharsight Corporation. All rights reserved. Software Products 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 • Potential Growth Drivers – Increase interoperability with other Pharsight tools – Provide upgrade path, expanded utility • Sales Model – Subscription license – Low-cost inside sales force – Distributor in Asia • ASP approx. $7,500 per seat • Strong recurring revenue with >95% renewal |
![]() 15 Copyright © 2007 Pharsight Corporation. All rights reserved. State-of-the-Art Clinical Trial Design and Simulation Software • Key Benefits – Minimize risk of trial design – Formalize assumptions – Quantify uncertainty – Reduce cost of clinical trials and drug development time-to-market • Potential Growth Drivers – Increase potential interoperability with other Pharsight tools – Increased emphasis on trial simulation in the FDA critical path initiative • Sales Model – Subscription license – Low-cost inside sales force – Distributor in Asia • ASP approx. $25,000 per seat Software Products Trial Simulator™ |
![]() 16 Copyright © 2007 Pharsight Corporation. All rights reserved. In vivo-in vitro correlations (IVIVC) • Key Benefits – Speed formulation development – Improve success of bioequivalence studies – Reduce expense and time needed for 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 (requires WinNonlin license) Software Products IVIVC Toolkit™ for WinNonlin |
![]() 17 Copyright © 2007 Pharsight Corporation. All rights reserved. Software Products 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 |
![]() 18 Copyright © 2007 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) Software Products WinNonlin AutoPilot™ UNDER UNDER DEVELOPMENT DEVELOPMENT |
![]() 19 Copyright © 2007 Pharsight Corporation. All rights reserved. Software Products 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 – Pfizer received Bio-IT World 2005 Best Practices Award for Computational Biology & Informatics with use of DMX to aid decision making 1 • 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 1 Bio-IT World Best Practices 2005: Bio-IT World, August 2005 |
![]() Confidential © Pharsight Corporation Strategic Consulting Services |
![]() 21 Copyright © 2007 Pharsight Corporation. All rights reserved. • World-class experts in clinical pharmacology, PK/PD, decision analysis, and statistics • Rich mix of drug development experience from industry, academic and consulting backgrounds • Consulting engagements completed in all major therapeutic areas and indications • Projects in all phases of the regulatory timeline • Serving all major drug development geographies, including US, EU, and Japan Strategic Consulting Services Overview |
![]() 22 Copyright © 2007 Pharsight Corporation. All rights reserved. • Over 40 active consulting clients in Fiscal 2007 – 19 of the Top 50 Pharma 2 were active consulting clients – 24 new consulting clients • Over 140 projects engaged during Fiscal 2007 • 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 March 31, 2007 2 Pharma Exec 50: Pharmaceutical Executive, May 2006 |
![]() 23 Copyright © 2007 Pharsight Corporation. All rights reserved. Strategic Consulting Services Broad Modeling Capabilities Pre- Clinical Pain Ophthamology Dermatology Anti-infectives Anti-inflammatory Phase II Phase III Phase I Phase IV Genito-urinary Immunomodulation Oncology Respiratory Gastro-intestinal Endocrine Central Nervous System Cardiovascular Therapeutic Area Quantitative decision support provided on multiple projects in all phases of drug development across most major therapeutic areas and for a variety of indications |
![]() 24 Copyright © 2007 Pharsight Corporation. All rights reserved. Strategic Consulting Services Customer Value • A complete analysis of your next decision and a recommendation • Quantification of the size of the risk you take in your next decision • Information on your project of the type increasingly requested by the FDA • Access to some of the world’s leading experts in drug development science If prediction looks like this, Continue Current Phase If prediction looks like this, Stop Development Not Competitive Response at Given Dose Competitive If prediction looks like this, Proceed to Next Phase Standard of Care |
![]() 25 Copyright © 2007 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 – Increased usage of outsourced capabilities • 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 |
![]() 26 Copyright © 2007 Pharsight Corporation. All rights reserved. Strategic Consulting Services Revenue Diversification 1 FY07 52% 48% Top 2 clients Others FY06 62% 38% Top 2 clients Others $10.9M Revenue $9.3M Revenue Successful Diversification Efforts with Reduced Revenue Dependency on “Top 2 Clients” 1 As of March 31, 2007 |
![]() 27 Copyright © 2007 Pharsight Corporation. All rights reserved. Strategic Consulting Services 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 |
![]() Confidential © Pharsight Corporation Reporting and Analysis Services |
![]() 29 Copyright © 2007 Pharsight Corporation. All rights reserved. • Reporting and analysis of early- phase, regulatory- required studies • Complements software and Strategic Consulting Services • New services create deeper relationships with our clients • Leverages value of Pharsight brand in PK/PD • Provides a new source of revenue and margin Reporting and Analysis Services Overview |
![]() 30 Copyright © 2007 Pharsight Corporation. All rights reserved. Reporting and Analysis Services Growth Drivers • Industry Factors – Large, established market – Increased usage of outsourced capabilities – New requirements for analysis-intensive studies – Growing diversification to new delivery platforms • Internal Factors – Existing relationships with software and Strategic Consulting Services customers provide selling synergies for additional services – Opportunity to deliver better and faster using Pharsight software for automated, regulatory-compliant reporting and analysis |
![]() Confidential © Pharsight Corporation Financial Overview |
![]() 32 Copyright © 2007 Pharsight Corporation. All rights reserved. Accomplishments and Guidance FY07 Accomplishments • Revenue growth – Y/Y revenue growth of 10% – 4 th consecutive year of revenue growth • Gross Margin – 69% of revenue • Profitability – Net income of $2.7M (11% of revenue), excluding SFAS 123R expense – Diluted EPS of $0.05, net of $0.04 for SFAS 123R expense – 3 rd consecutive year of profitability • Positive annual net cash flow – $3.8M increase in cash – 3 rd consecutive year of positive cash flow FY08 Guidance • Continued revenue growth – Y/Y revenue growth of approx. 10% to 15%, or approx. $27.5M - $29M • Gross Margin – Approx. 64% to 68% of revenue • Continued profitability – Net income of approx. 8% - 12% of revenue, excluding SFAS 123R expense – Diluted EPS of $0.03 - $0.07, net of approx. $0.04 for SFAS 123R expense • Continued positive annual net cash flow |
![]() 33 Copyright © 2007 Pharsight Corporation. All rights reserved. Summary Income Statements (in thousands) Consol. SPBU SCS Consol. SPBU SCS Revenue 25,092 14,238 10,854 22,742 13,449 9,293 Y/Y growth 10% 6% 17% 1% 11% -12% Cost of revenue 7,731 1,383 6,348 7,699 1,789 5,910 Gross profit 17,361 12,855 4,506 15,043 11,660 3,383 Gross margin 69% 90% 42% 66% 87% 36% Operating expenses 15,715 10,809 4,906 14,461 9,885 4,556 Operating income 1,646 2,046 (400) 582 1,775 (1,173) Net income 1,871 530 FY07 FY06 Note: FY07 Net income reflects $831 for stock-based compensation expense included in Cost of revenue and Operating expenses |
![]() 34 Copyright © 2007 Pharsight Corporation. All rights reserved. Summary Balance Sheets (in thousands) March 31, 2007 March 31, 2006 Cash & short term investments 14,665 $ 10,832 $ Accounts receivable, net 3,087 4,585 Total current assets 18,275 15,715 Total assets 19,995 $ 17,786 $ LIABILITIES & STOCKHOLDERS' DEFICIT A/P & accrued expenses 4,389 $ 3,981 $ Deferred revenue 8,289 7,605 Notes payable 292 1,519 Total current liabilities 12,970 13,105 Deferred revenue - long term -- 54 Notes payable - long term 100 392 Redeemable conv. pref. stock 7,119 6,641 Stockholders deficit (373) (2,659) Total liabilities & stockholders' deficit 19,995 $ 17,786 $ ASSETS |
![]() 35 Copyright © 2007 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 FY04 FY05 FY06 FY07 FY08 Guidance Software Products Strategic Consulting Guidance ($27.5M - $29M) |
![]() 36 Copyright © 2007 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 $8,000 Q4 FY06 Q1 FY07 Q2 FY07 Q3 FY07 Q4 FY07 Software Products Strategic Consulting |
![]() 37 Copyright © 2007 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 FY03 FY04 FY05 FY06 FY07 |
![]() 38 Copyright © 2007 Pharsight Corporation. All rights reserved. Annual Operating Income (in thousands) -$12,500 -$10,000 -$7,500 -$5,000 -$2,500 $0 $2,500 $5,000 FY03 FY04 FY05 FY06 FY07 Note: FY07 Operating Income reflects $831 for stock-based compensation expense |
![]() 39 Copyright © 2007 Pharsight Corporation. All rights reserved. Annual Operating Cash Flow (in thousands) -$8,000 -$6,000 -$4,000 -$2,000 $0 $2,000 $4,000 $6,000 FY03 FY04 FY05 FY06 FY07 |
![]() 40 Copyright © 2007 Pharsight Corporation. All rights reserved. Equity Overview • Common Shares Outstanding 1 20 million • Preferred Shares Outstanding 1 8 million – 1.8 million Series A and 0.2 million Series B – Conversion ratio to Common at 4:1 • Common Equivalent Shares (as converted) 1 28 million • PIPE Financing 6/02 and 9/02 = $7.5 million – 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 26, 2007 (5 th anniversary of initial issuance) • Price of $4.008 per share 1 As of March 31, 2007 |
![]() 41 Copyright © 2007 Pharsight Corporation. All rights reserved. Significant Shareholders 1 Alloy Entities 16% ownership McKesson Corp. 14% ownership Sprout Entities 9% ownership Weiss Peck & Greer 6% ownership Wellington Management Co. 4% ownership Perritt Capital Management 1% ownership Lewis Asset Management Corp. 1% ownership 1 Excludes Preferred Shares outstanding |
![]() 42 Copyright © 2007 Pharsight Corporation. All rights reserved. Executive 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 Daniel Weiner, PhD Chief Technology Officer IVAX, Merrell Dow, Syntex, Quintiles James Hayden SVP Global Sales Accelrys, Bio-Rad Laboratories, Raytheon Mark Hovde SVP Marketing Hovde Associates, Fast Track Systems, DataEdge |
![]() 43 Copyright © 2007 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 and continuing sustainable revenue growth and profitability |
![]() 44 Copyright © 2007 Pharsight Corporation. All rights reserved. All contents Copyright ©2007 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 ® , WNL TM , WinNonMix ® , WNM TM , Trial Simulator TM , IVIVC Toolkit TM , Pharsight Knowledgebase Server TM , PKS TM , WinNonlin AutoPilot TM , Drug Model Explorer TM , DMX ® , WinNonlin Validation Suite TM , PKS Validation Suite TM and Pharsight ® are trademarks or registered trademarks of Pharsight Corporation. All other brand and product names are trademarks or registered trademarks of their respective holders. Proprietary Notice |
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