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[Music]
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um so here is a really Revenue chart uh
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so the blue part is dollar revenues uh
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for Genentech where you can see uh in
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1990 when that initial state was taken
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uh Genentech had about $400 million in
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revenues uh and then by 2008 uh uh when
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the deal happened uh those revenues had
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gone up to$ 13.4 billion and um you know
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I mean I there's also some other BD
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people in the room and uh I've been
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looking at a lot of business plans uh uh
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in my prior job and um uh and the famous
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Haus stick when you start speaking to uh
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uh Entre rurs and and VCS and such uh is
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uh is something that I'm sure many of
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you recognize and uh uh the when you see
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that hockey stick of course the the
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first gut feel is it's a hockey stick uh
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and it's never going to happen uh but
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but here's a hockey stick that did
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happen and uh it's tremendous success
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and I think probably not too many
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companies uh uh not only in the US but
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worldwide that can really show something
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like this it's it's really just a
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fabulous success uh and uh based on some
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truly uh Innovative and uh outstanding
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medicines that that have changed lives
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for for a lot of people around the world
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and so um so that's the development and
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and uh I uh don't want to imply that
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it's all about the dollars uh but I
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think it's quite interesting to to see
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that development and then you can just
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think about what that means in terms of
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uh Genentech uh and how Genentech did
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change uh over those years uh in terms
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of people hired in terms of you know
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where uh what are the dominating
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activities uh you know in the 1990s it
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was all about the R&D and and more than
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half of uh genetic employees at that
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time were in
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R&D by the end of that Journey uh uh you
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know 75% of gentic employees were in
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manufacturing or commercial or admin or
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other things that are very important
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don't get me wrong you know I'm one of
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them I guess but um so hopefully there's
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a need but but you know it is it is very
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different right and so so uh that uh is
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U uh the journey that gench undertook
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and that had a few uh uh you know
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impacted our partnership uh in in many
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ways and um so so here um I just uh I
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have two slides on that uh impact
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where um I think the first is really
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that Genentech developed from a truly
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from a biotech uh focused only on
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research and and um becoming fully
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integrated uh I call it here by
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pharmaceutical company I guess some
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people could take issue with that but
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biotech whatever you want to call it but
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fully integrated in the value chain is
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is really the key Point uh lot of
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manufacturing capacity uh I didn't put
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up the cash flow uh uh chart uh and uh
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and certainly not the one looking out 10
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years but uh that was a key driver in in
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this analysis and and uh the cash
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generation that these kind of revenues
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uh bring is um uh is quite impressive
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when you have 40% plus margins and so uh
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you sit then as a majority shareholder
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and look at that and say okay good um uh
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I don't have access to that
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cash what are they going to do with it
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and so uh you know and we're not talking
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about uh we're talking about double
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digit billion dollars uh so that Focus
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some mines on on the r side um project
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complexity you know the the other part
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of them becoming fully integrated and
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and um you know when you try to grow
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from $13 billion in size it's a very
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different proposition than growing from
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400 million and so um we found ourselves
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competing uh a lot more and uh we have
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uh representatives from the BD group uh
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where you know looking looking for the
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same deals uh uh you know we we were uh
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close to a situation where gantic en
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roll should be direct competitors in the
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US uh rheumatoid arthritis Market uh
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with rxan uh being on the market for ra
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and with u um a true guy uh atra uh
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coming on uh on the market uh from the
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rush group and so uh head-to-head and
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that when you sit as a majority
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shareholder and you face the the the
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prospect of competing with your daughter
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company this is not a good good thing uh
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neither on the market nor in the
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pipeline uh or Partnerships and then the
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pipeline I didn't mention but that is
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also important because uh there was a
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lot of overlap in the in the programs in
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the targets and the pathways that were
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studied and and put money behind uh and
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so so as as Genentech and that's kind of
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that is a function of Genentech success
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uh on the uh 21st of uh July uh the
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intent to acquire all the minority
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shares uh was announced and and uh at a
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price of
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$89 uh and that was a uh unilateral
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announcement I mean literally the way
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that happened is that U uh art levenson
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got a call on Sat Sunday afternoon uh by
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France humer to inform him that um this
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letter is is going to be made public in
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a few hours and um here's a heads up and
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also try to explain in a nice way why
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the heads up is only a few hours which I
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explained to you guys earlier uh but
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Art's a terrific and smart guy so he
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understands that but um and then to uh
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Charlie Sanders on the board and and uh
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uh only those two actually yeah only
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those two so those were made the offer
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came out and then the share price went
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up from uh uh the low 80s to uh uh what
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was it 93 $94 approximately uh upon the
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announcement and then you see uh that
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the share price really trickled up a
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little bit here uh uh all the way up to
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$98 uh after and that's that's not
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completely uh uh unusual that in fact
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usually happens that you see a bit of a
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trickle uh after such an
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announcement um a lot of uh uh
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uh arbitragers and so on go into the
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stock and and want to try and try and
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make something out of it and uh so uh it
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hit the $98 uh a couple weeks later or
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perhaps six seven days later and um and
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then it sort of uh went flat for a
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little while uh until uh the um uh uh
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feedback from the
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jantech uh independent directors the
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So-Cal special committee I'll say a few
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words about that uh came came came back
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and uh basically said we we don't like
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this price come back with a higher
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priz um which you know I mean we could
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have I could have written that letter
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myself I you know this this is pretty
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standard there was nothing in there that
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uh that uh we didn't expect this was
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very down the middle and and uh totally
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sort of playing by the book and so um uh
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so that that rejection came out uh and
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uh but then um then the world started
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changing and and uh just a few weeks
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later you know uh Leman Brothers went
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bankrupt and uh that was not great
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timing uh so
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we having done all this analysis on uh
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the balance sheet and you know it's
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looking pretty good uh suddenly we're
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thinking okay uh these banks are going
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bankrupt uh so so this is not this is
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not the promising in terms of raising
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the funds and then on the basis of that
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uh external environment the share price
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basically uh started going down and and
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uh and hitting uh the the low low 70s uh
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into October uh then into October and
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and these financial problems just
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continued uh and uh not a lot of
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interaction so we uh started then uh uh
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you know making some proactive calls
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into to the advisers and saying um uh
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time to stop sleeping now you know let's
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let's get together and uh so uh that
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finally led to uh a meeting into end of
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November so it took about five months to
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to uh come up with a number uh which uh
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is a little on the long end to be honest
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uh it was already clear to me at that
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point that um uh uh janch independent
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committee was walking in the middle uh
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what I mean by that is uh not saying no
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and all saying yes he walk in the middle
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and uh so so that was that was pretty
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clear and and to be fair um with some
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good reason I mean you know you look at
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that uh Financial environment and and
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Banks collapsing and uh you look at the
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rush balance sheet and uh it's a very
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fair question you know can you guys
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Finance this
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deal uh and that question did come in
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that in that November meeting we also
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got a price uh on the table $112 to
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$115 per share was the uh the counter
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bit so we had 89 and and and the counter
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bit came in at uh uh 112 to 15 uh at the
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same time as the share price was in the
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70s so um uh that sent another signal uh
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to us uh and then
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if you if you uh let let me ask you how
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many Bankers are in this room if you
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could put
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your not too many good
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okay okay so uh I was asked to say a few
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words about the financing and such but
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um you know so so uh the bankers
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uh when the financial system is about
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you this almost an Armageddon out there
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uh and and banks are going bankrupt and
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uh and bankers are you know more worried
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about do I have a job which I understand
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uh than you know doing what they're
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supposed to do and and uh keeping a
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finger on the pulse and understanding
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the market um so so we we concluded that
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the bankers just simply had no idea uh
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uh about the state of the market and and
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whether I mean no idea as to our ability
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sorry to raise this Capital uh and uh uh
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you know uh
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the the commitments in terms of a bridge
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financing were coming down down down
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down down the prices up up up up up and
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it didn't help us that fiser uh did this
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W deal and then uh put in place a
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financing that we looked at those
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numbers and we we
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thought hang on I mean these kind of
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fees and these kind of rates is just
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outrageous for
