Archive | July, 2013

Hot Life Science Investor Mandate 1: State Fund Seeks Biotech R&D, Others for Allocations

26 Jul

A fund based in the Central United States, which has around $400 million under management, was set up by its state government in order to attract start up companies, and is currently seeking new investment opportunities in the life sciences space.

The majority of the funds investments (53%) are in the life sciences space, and since 2005, the fund has dedicated around $900 million to the sector. The fund typically invests in 10-20 companies a year, and their allocation size ranges from $250,000 to $5 million. The firm is most interested in the suppliers and engineering space, biotech therapeutics and diagnostics, and biotech R&D services. The firm is specifically interested in the medical devices space within the suppliers and engineering space, and is seeking firms focused on genomics in the biotech R&D space.

In terms of biotech therapeutics and diagnostics firms, the fund is fairly opportunistic in terms of subsector and indication, however does have a special interest in small molecules. The firm will consider pre-revenue firms, as well as firms that have products on the market. With that being said, the firm is agnostic in terms of the product’s development phase.

Hot Life Science Investor Mandate 2: Venture Philanthropy Targets Neuromuscular Diseases

26 Jul

The venture philanthropy arm of a larger organization is currently looking for new companies in the life science space to invest in, and anticipates on investing in at least two new firms this year. The firm has an evergreen structure, meaning that funds come directly from its parent organization, and can be deployed as needed. The fund has over $100 million in total assets currently, and was allotted $4 million in 2013 for new investments, and typically makes equity investments ranging from $500,000 to $3 million.

The venture arm is currently looking for firms in the biotech therapeutics space. They are especially interested in companies that are developing therapeutics that treat diseases that fall within the realm of neuromuscular diseases. There about 40 different diseases within this category, but some of the specific areas of interest for the firm include multiple sclerosis and ALS, but they will consider therapeutics treating any indication within this subsector. They invest internationally, and will consider firms based in the US, as well as those based anywhere else around the world.

Primarily investing in pre-revenue companies, the firm has no criteria in terms of revenue or EBITDA. The firm will invest in firms that have products ranging from proof of concept in phase I to phase III.

Hot Life Science Investor Mandate 3: PE Group with Dry Powder Seeks Wide Range of Life Science Opportunities

26 Jul

A private equity group with offices worldwide is currently deploying assets from its seventh fund, which closed at nearly $400 million, bringing the firm’s total assets under management to over $1 billion. With that being said, the firm has been very actively seeking and investing in new companies in the life sciences space, and still has a great deal of dry powder on hand from its seventh fund. The firm made 3-4 new investments within the last two months, and anticipates that the group will be investing at around the same pace in 2013 if they continue to source compelling opportunities in the space and also expects that their current fund’s portfolio will consist of around 18-20 companies in total. The firm typically allocates around $5-15 million, but has written tickets ranging from $2-40 million in the past.

The firm is interested in biotech firms creating therapeutics, medical technology companies that develop medical devices, as well as specialty pharmaceutical companies. The firm is especially interested in medical device companies that are creating ophthalmology or instrumental neurology products. In the biotech therapeutics and diagnostics space, the firm is opportunistic in terms the indication the product that a firm is targeting, however is especially interested in firms that are developing drugs for the treatment of orphan diseases.

The firm plans to allocate two-thirds of the group’s seventh fund to US based firms and one-third to firms located in China. In China, they provide firms with growth capital while in the US the firm has more of a venture capital approach to investments. Accordingly, the firm invests in earlier stage pre-revenue companies in the US and later stage companies in China that are generating revenue. With that being said, the firm is looking for US biotech companies whose products are in early stage phase II of clinical trials or later, and in the medtech space the firm’s product must be undergoing clinical trials to be considered.

IPO Surge Increasing Private Investor Competition

25 Jul

By Michael Quigley, Research Analyst, LSN

mike-2With the number of Biotech IPOs in 2013 having already doubled the number in 2012, this year is shaping up to be the biggest for biotech in the last decade. These kinds of numbers are leaving many investors and companies alike wondering what exactly is fueling this wildfire. General investor confidence across the market paired with low interest rates could be one answer. However, other industries are not experiencing the same growth that biotech has been seeing as of late. Over the past three years, the NASDAQ biotech index is up 128%, which is leagues above the S&P 500’s return of 52%. (1) These returns are one result of the FDA’s recent increased willingness to approve drugs, paired with an improved understanding of the molecular substructure of diseases, which contributed to drug approvals in reaching their highest levels in over a decade in 2012.

These numbers – however promising – do not tell the whole story on this IPO eruption that we are seeing as of late. The JOBS act of 2012, for instance, plays a part in this development. Included in the act was a clause that allows for companies looking to IPO to speak with investors months before making a public declaration of an IPO, a strategy known as “testing the waters”. This lets investment firms effectively premarket an offering before any SEC filing, which allows them to address the interest of the fund’s own investors in a biotech company’s equity. This streamlining of deal structuring in the space is what has delivered the vast number of successful Biotech IPOs this year –  companies have seen as many as two-thirds of investors participating in their IPOs coming straight from their one-on-one meetings. (2)

A continuation of this IPO trend will push big pharma to invest in earlier stage companies to keep pipelines robust, unless they wish to compete with the prices offered by public markets for mergers and acquisitions. This additional exit option will also put increased pressure on investment firms, as they will no longer be able to offer deals with less-than-favorable terms to companies they look to invest in (for fear of losing them to the public markets). Just as with pharma, this could push these investment firms to look to develop relationships with earlier stage companies in the space long before thoughts of IPO are on the table. The bottom line is, this surge of IPOs is adding a new supply of investment in the biotech space that will increase competitiveness among current investors, causing them to offer better terms – and look to earlier stage companies – for their newest investments.

1. “Strong Biotech Market Fuels IPO Surge.” NVCA Today. William Blair & Company, n.d. Web. 25 July 2013.

2. Herper, Matthew. “Why The JOBS Act Is A Lifesaver For Life Sciences Companies.” Forbes. Forbes Magazine, 19 July 2013. Web. 25 July 2013.

Hot Life Science Investor Mandate 1: Seed Stage VC Seeks Medtechs for Partnerships

25 Jul

A seed stage venture capital firm located in the Eastern United States, which makes equity investments of up to $100,000 into seed stage organizations, is focusing on emerging spinouts from Universities. The firm’s fund has an evergreen structure, and is currently looking to make one additional investment in 2013.

The VC is currently most interested in investing in a therapeutics company, as they have the most experience in that sector. However, the firm would also consider allocating to a company developing a medical technology or diagnostic. Within these sectors, the firm is opportunistic in terms of subsector and indication, and will evaluate these companies on a case-by-case basis.

The firm is always looking to make a strong partnership with their partner’s science teams, so having capable leadership in place that is willing and able to work alongside them is paramount. As they are looking for companies fresh out of the university setting, they exclusively invest in pre-revenue companies.

Hot Life Science Investor Mandate 2: Family Office Seeks Opportunities in Medtech Space

25 Jul
A family office located in the Western US with around $100 million in assets is looking for a compelling opportunity for allocation within the next 6-9 months. The office invested in more than five deals in 2012, typically between $1-5 million per firm.

The foundation is most interested in medical devices, and will look at firms within the full gamut of medtech subsectors. Typically, the office allocates to firms that have at least one product on the market. They have no strict criteria in terms of a firm’s EBITDA or revenue, but require that any firm in which they invest has goals to lower the cost of healthcare.

Hot Life Science Investor Mandate 3: Experienced PE Looking for Medical Device Companies

25 Jul

A private equity company based in the Central United States has invested over $700 million throughout its lifetime, and is currently making investments out of its 12th fund, which raised $100 million. The firm is looking to make a growth equity allocation of around $3-$5 million initially, and up to $10 million over the lifetime of the investment. The firm will consider companies in any location, and is looking to make 4-5 investments over the next 12 months.

The PE invests in approved medical devices, healthcare IT, biotech R&D services and diagnostics. They have experience in delivery devices, implantable devices, and reusable instruments, so companies within these subsectors would be ideal. However, other medical devices may also be considered. The firm also has interest in the biotech R&D services sector, and in subsectors of CRO’s & diagnostic instrumentation.

The firm is looking to invest in a company with approximately $5 million in yearly revenue with a strong management team. They will consider small public or private companies for investment, and seek to acquire an active position on the company’s board.