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Algeta-Bayer Alliance:Positioning to ensure post - deal success : 

ECCP, Oslo (September 17th, 2010) Algeta-Bayer Alliance:Positioning to ensure post - deal success Karen Denton Director,Alliance Management Bayer Roger Harrison Chief Business Officer Algeta

Agenda : 

Agenda Part 1 - The Biotech Perspective Algeta The product How the deal shapes future alliance needs What biotech looks for in a successful alliance Part 2- The Pharma Perspective Bayer Oncology How Bayer structures for alliance success Key factors in alliance success Launching a successful collaboration with Algeta ECCP, Oslo (September 17th, 2010)

Forward looking statement : 

Forward looking statement THIS PRESENTATION AND ITS ENCLOSURES AND APPENDICES (HEREINAFTER JOINTLY REFERRED TO AS THE “PRESENTATION” HAS BEEN PREPARED BY ALGETA ASA (THE “COMPANY”) EXCLUSIVELY FOR INFORMATION PURPOSES. THIS PRESENTATION HAS NOT BEEN REVIEWED OR REGISTERED WITH ANY PUBLIC AUTHORITY OR STOCK EXCHANGE. THE CONTENTS OF THIS PRESENTATION ARE NOT TO BE CONSTRUED AS LEGAL, BUSINESS, INVESTMENT OR TAX ADVICE. EACH RECIPIENT SHOULD CONSULT WITH ITS OWN LEGAL, BUSINESS, INVESTMENT AND TAX ADVISER AS TO LEGAL, BUSINESS, INVESTMENT AND TAX ADVICE.THERE MAY HAVE BEEN CHANGES IN MATTERS THAT AFFECT THE COMPANY SUBSEQUENT TO THE DATE OF THIS PRESENTATION. NEITHER THE ISSUE NOR DELIVERY OF THIS PRESENTATION SHALL UNDER ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THE AFFAIRS OF THE COMPANY HAVE NOT SINCE CHANGED, AND THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE OR CORRECT ANY INFORMATION INCLUDED IN THIS PRESENTATION.THIS PRESENTATION INCLUDES AND IS BASED ON, AMONG OTHER THINGS, FORWARD-LOOKING INFORMATION AND STATEMENTS. SUCH FORWARD-LOOKING INFORMATION AND STATEMENTS ARE BASED ON THE CURRENT EXPECTATIONS, ESTIMATES AND PROJECTIONS OF THE COMPANY OR ASSUMPTIONS BASED ON INFORMATION AVAILABLE TO THE COMPANY. SUCH FORWARD-LOOKING INFORMATION AND STATEMENTS REFLECT CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS, UNCERTAINTIES AND ASSUMPTIONS. THE COMPANY CANNOT GIVE ANY ASSURANCE AS TO THE CORRECTNESS OF SUCH INFORMATION AND STATEMENTS. AN INVESTMENT IN THE COMPANY INVOLVES RISK, AND SEVERAL FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY STATEMENTS AND INFORMATION IN THIS PRESENTATION, INCLUDING, AMONG OTHERS, RISKS OR UNCERTAINTIES ASSOCIATED WITH THE COMPANY’S BUSINESS, SEGMENTS, DEVELOPMENT, GROWTH MANAGEMENT, FINANCING, MARKET ACCEPTANCE AND RELATIONS WITH CUSTOMERS, AND, MORE GENERALLY, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN DOMESTIC AND FOREIGN LAWS AND REGULATIONS, TAXES, CHANGES IN COMPETITION AND PRICING ENVIRONMENTS, FLUCTUATIONS IN CURRENCY EXCHANGE RATES AND INTEREST RATES AND OTHER FACTORS. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALISE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED IN THIS DOCUMENT. THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE OR CORRECT THE INFORMATION INCLUDED IN THIS PRESENTATION. This Presentation does not constitute an offer or invitation for the sale or purchase of securities or assets in any jurisdiction, and neither this document nor anything contained herein shall form the basis of, or be relied upon in connection with, any contract or commitment whatsoever. The shares have not been registered under the Securities Act of 1933, as amended (the “Act"), or any applicable U.S. state securities laws, and may not be offered, sold or otherwise transferred, pledged or hypothecated unless (i) pursuant to registration under the act or (ii) in compliance with an exemption therefrom. ECCP, Oslo (September 17th, 2010)

Algeta: a unique capability in oncology : 

4 Algeta: a unique capability in oncology Innovative company focused on oncology Unique proprietary platform alpha-pharmaceuticals targeted, highly potent, localized action overcomes major cancer resistance mechanisms Listed on Oslo Stock Exchange in 2007 Backed by leading life-science investors Highly experienced management team Well financed Strong track record of delivering key milestones ECCP, Oslo (September 17th, 2010)

Alpharadin: a highly attractive clinical profile : 

5 Alpharadin: a highly attractive clinical profile First-in-class targeted therapy for bone metastases in cancer Excellent and extensive clinical data: increased survival in CRPC (prostate ca.) in randomised phase II benign safety profile Convenient and easy to use Median survival increase of 4.5 months Simple, monthly iv injection “If it really prolongs survival with this safety profile, it’s a homerun.” - US Physician “The morbidity and mortality associated with prostate cancer can almost universally be attributed to the consequences of metastases to the bone” R L Vassella 1999 ECCP, Oslo (September 17th, 2010)

Financials* : 

6 Financials* Total deal value of $ 800 million $ 61 million on signature Up to $720 million linked to development / production / commercialisation $ 220 million by first launch Tiered, double digit royalties on sales Bayer pay substantial majority of development expense from start 2010 Full funding of any additional late stage trials Cost share / profit share in US if Algeta exercises co-promotion right * Deal negotiated in Euro, expressed in $ using the exchange rate current at time of signature. ECCP, Oslo (September 17th, 2010)

Market approves Algeta’s choice of Bayer as partner : 

7 Market approves Algeta’s choice of Bayer as partner “Bayer is a good and supportive partner for product and firm’’ “[Algeta shares] surged 61%” “Investors clearly impressed by ..choice of partner and size of deal” “Impressive deal terms - industry’s largest in two years for a phase 3 oncology product” “[Algeta has] delivered on its partnering promise” “Sensationally good licensing deal” “... twice as high as the best deal ever signed in the HRPC segment” “Bayer is one of the best partners for Algeta” ABG Sundal Collier DnBNOR EP Vantage ECCP, Oslo (September 17th, 2010)

Algeta partnering strategy : 

8 Algeta partnering strategy Broad aims: sign first-rate partner with commitment and established oncology franchise retain upside from major geography (regional vs global deals) attractive financial terms – good mix of short and long term rewards on-going hands-on involvement to leverage in-house product knowledge Partner from position of equality: successful private placement ($37 m) in Feb 2009 to provide run-way parallel licence discussions to retain flexibility extensive market / reimbursement research to confirm value proposition ECCP, Oslo (September 17th, 2010)

Strong strategic alignment between the parties : 

9 Strong strategic alignment between the parties Deal created need for active alliance management, particularly in Production and distribution Management of development Commercialisation J F M A M J J A S O Deal closed First Contact First Presentation Diligence Offer letter Contract Negotiation ECCP, Oslo (September 17th, 2010)

Production and distribution : 

10 Production and distribution Negotiation aims Bayer required assurance of supply and meet regulatory requirements Algeta had expertise for Alpharadin manufacturing, needed synergies for other products Outcome Joint Manufacturing Committee (JMC) governs the manufacturing decisions Algeta responsible for manufacturing and implementing JMC decisions Bayer makes payments for success at predefined manufacturing milestones Supply agreement provides for terms of commercial supply A win-win solution - leverages respective strengths of both companies Alliance management need Effective formal JMC procedures Extremely close operational alignment of production and logistics staff ECCP, Oslo (September 17th, 2010)

Managing development : 

11 Managing development Negotiating aims Algeta maintain clinical momentum and maximise potential across clinical indications assure major on-going role for Algeta clinical team managing global PIII Bayer assure effective development capturing strength of Bayer clinical team Outcome Joint Development Committee (JDC) established to oversee development Co-chairs, equal representation, structured to facilitate consensus Algeta provides day-to-day management of on-going studies under auspices of JDC with close collaboration at operational level A win-win - leverage each company’s strength for benefit of product Alliance management need Effective formal JDC procedures Extremely close operational alignment of clinical and regulatory staff ECCP, Oslo (September 17th, 2010)

Commercialization : 

12 Commercialization Negotiation aims Bayer Sought global commercialization of Alpharadin Algeta Needed to build US presence with Alpharadin Outcome Bayer has worldwide licence, Algeta has an option to co-promote in the US Upon exercising the option Algeta participates in US commercialization A win-win solution Provides Bayer a global presence with the product Provides Algeta with an entry into commercialization in the US market Alliance management need Strong commercial alignment generally – particularly on option exercise Exceptionally close co-ordination required by just-in-time production ECCP, Oslo (September 17th, 2010)

What biotech looks for in a successful alliance : 

What biotech looks for in a successful alliance Commitment at all levels Excellent communication – both formal and informal A consistent voice Appropriate involvement in decision making Prompt decision making Prioritisation for their product Alignment of risk profiles between the parties Understanding of their internal resource limitations (no ‘swamping’) ECCP, Oslo (September 17th, 2010)

Algeta-Bayer Alliance:Positioning to ensure post - deal success : 

ECCP, Oslo (September 17th, 2010) Algeta-Bayer Alliance:Positioning to ensure post - deal success Karen Denton Director,Alliance Management Bayer Roger Harrison Chief Business Officer Algeta

Forward-looking Statements : 

This presentation may contain forward-looking statements based on current assumptions and forecasts made by Bayer Group or subgroup management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in Bayer’s public reports which are available on the Bayer website at www.bayer.com. The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.. Forward-looking Statements 2 ECCP, Oslo (September 17th, 2010)

Bayer Oncology is the right Partner for oncology : 

Bayer Oncology is the right Partner for oncology We are present and trusted in the US & worldwide Strong organization with track record of success We focus on our Oncology assets and leverage intimate Oncology expertise & relationships to build brands We see good fit with our portfolio and strategic direction We have strengthened the portfolio through strategic partnerships We maintain strong partnerships ECCP, Oslo (September 17th, 2010)

An Innovative Oncology Portfolio: Bayer 2010 Programs* : 

PI3K Inhibitor (CRC, NSCLC) MEK Inhibitor (HCC, PaC, CRC) Phase I Phase II Sorafenib (NSCLC 3rd/4th line) Sorafenib (OvC & Breast Cancer) Phase III Sorafenib (RCC, HCC, adjuvant) Sorafenib (HCC, Tarceva comb.) Sorafenib (Thyroid Cancer) First in class compounds MN-IC (CA9-ADC) (NSCLC, Gastric Cancer) CDK1/2 Inhibitor (SCLC, Breast Cancer) Regorafenib (GIST, 3rd/4th line) L19 SIP (Brain Met.) Sorafenib (NCSLC, 2nd line) Regorafenib (CRC, 3rd/4th line) Alpharadin (CRPC bone mets) An Innovative Oncology Portfolio: Bayer 2010 Programs* Alpharadin (Breast Cancer) ECCP, Oslo (September 17th, 2010) Alpharadin (CRPC bone mets docetaxel) Sorafenib (CRC) Bonefos (Malignant) L19 TNF (Autologous NHL vaccine) L19 SIP (NSCLC) (* as listed on clintrials.gov)

Good Partnerships affect Outcomes : 

Good Partnerships affect Outcomes After Technical Failure (> 50%) Relationship Failure is Leading Cause of Alliance Failure in Companies with >20 Alliances Why Relationships Fail Breakdowns in trust Build up of negative, partisan perceptions Questioning one another’s motives Festering conflict Little joint problem solving Feelings of disrespect/coercion Source: Vantage Partners ECCP, Oslo (September 17th, 2010)

Top 10 Capabilities for Partnering Success : 

Top 10 Capabilities for Partnering Success 1. Building and maintaining internal alignment 2. Evaluating and considering relationship fit with potential partners 3. Building a strong working relationship while negotiating an optimal deal 4. Establishing common ground rules for working together 5. Having dedicated alliance managers 6. Having collaborative skills in alliance employees 7. Having a collaborative corporate mindset 8. Managing multiple relationships with the same partner 9. Auditing alliance relationships 10. Managing changes that affect alliances Guiding Principle Alliance Management involvement and activities start before the deal is done

Bayer’s Alliance Management Function : 

Bayer’s Alliance Management Function Bayer Partnering Goals Improve effectiveness of current alliances Improve our reputation as trusted partner Alliance Management Function Direct support for key strategic alliances Launch new alliances, establish governance and maintain collaboration Facilitate alignment and/or issues resolution (internally and with partner) Build corporate-wide capabilities Provide training, coaching and mentoring for organization-wide capability building Jens Thiedemann SM, GM Alliance Management Laura Pierce Assistant Laura Willey Karen Denton GM, SM Jeremy Booth ECCP, Oslo (September 17th, 2010)

Key Principles in Managing Alliances- TRUST : 

Transparency: Establish the appropriate governance structure with individuals authorized to act. Decisions and key events are important. Strive to keep partners aware of our internal processes and decision making. Resolve issues jointly: Open approach, sharing all information relevant to find solutions. Understand the importance of people: Expertise from both partners will achieve alliance goals. Build relationships throughout the partnership. Speak with one voice: Strive for alignment, consistent message within BSP and with the partner. Treat the collaborative like it matters; take commitments seriously: Give the collaboration the same focus/effort as internal projects. BSP is a partner which delivers on its commitments. Key Principles in Managing Alliances- TRUST ECCP, Oslo (September 17th, 2010)

What biotech looks for in a successful alliance : 

What biotech looks for in a successful alliance Commitment at all levels Excellent communication – both formal and informal A consistent voice Appropriate involvement in decision making Prompt decision making Prioritisation for their product Alignment of risk profiles between the parties Understanding of their internal resource limitations (no ‘swamping’) ECCP, Oslo (September 17th, 2010)

Launching a Successful Collaboration with Algeta : 

Launching a Successful Collaboration with Algeta Getting people and teams organized Bayer Team mobilized immediately Joint Governance structure established with early face to face meetings including senior management Face to Face kick-off meeting, subsequent meetings hosted by both companies Meeting dates for first 12 months Facilitate clear and transparent communications between partners Contact lists and communication protocols tailored for needs of this alliance E-room established to speed transition of information Setting Goals Capture and agree the goals by company, by team, by function Clarification of roles and responsibilities Understand decision making process for collaboration and each company’s internal governance Align and document important processes between companies E.g. Public/Investor relations activities, Pharmacovigilance Monitoring our alliance using a health check survey ECCP, Oslo (September 17th, 2010)

Thank You : 

Thank You roger.harrison@algeta.com karen.denton@bayer.com

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