A not-for-profit government organization headquartered in Canada is currently looking for new projects in the life sciences space for their allocation round in the spring of 2013. The organization was granted investment funds through the Canadian government to promote research and advancement in the life science sector. The firm typically allocates from $1 million and into the tens of millions per project. They are looking for large-scale projects in the biotech R&D space that are developing products based on genomics.
Archive | August, 2013
A mezzanine debt fund with offices across the US is currently focused on structured financings of commercialized biopharmaceutical products and medical technologies. The firm’s total AUM is approximately $400 Million. Collectively, the fund has completed more than 50 royalty transactions representing nearly $4 billion in capital over the past 15 years.
A private equity group based in the Eastern US is currently deploying funds from the firm’s fifth fund, which closed at over $500 million. The firm is currently looking for new firms in the life sciences space, and will allocate to around 10 new firms in 2013. The firm provides growth capital to firms, and also executes buyout transactions. Typically, they invest in middle-market companies that have an enterprise value ranging from $10-100, but their preference is firms with values in the $20-80 million range.
Hot Life Science Investor Mandate 3: VC Acquires Participation Rights for University Spinouts
15 AugA venture capital fund that has relationships with nearly 50 university partnerships has around $100M in assets, and acts very opportunistically within the life science space. The firm also acquires participation rights for university spinout companies.
About 70% of the VC’s life sciences investments are in therapeutics, 30% of which are distributed between devices, diagnostics, and discovery platforms. Currently, the firm is most interested in therapeutics, and is avoiding med-tech opportunities due to an internal perspective of unpredictability of the FDA’s activities in the med-tech space.
Though they do not have a strict mandate in terms of subsector or indication, therapeutics for oncology, cardiovascular, anti-inflammatories, and ophthalmology drugs have historically done well, and are favored by, the investment team.
The VC does not have a specific timeline for allocation, and will make investments as opportunities arise. Typically, they will invest $500K – $1.5MM initially and reserve 1-3x initial invested capital for follow-on rounds, however the firm is comfortable investing broadly across stage, from seed to late stage, and will selectively invest $100K – $250K in angel rounds on an opportunistic basis. The firm prefers to be a co-investor alongside other firms or syndicates, and lays significant value on investing alongside notable “top-tier” firms.
What Qualities Investors Look for in Founding CEOs
15 AugBy Danielle Silva, Director of Research and Innovation, LSN
Many entrepreneurs make the assumption that investors are solely looking at their technology when they consider taking a stake in their firm. However, this is typically very far from the truth; at the end of the day most investors are investing in the individual and the management team – not the entrepreneur’s technology. This is why almost all investors require a number of face-to-face meetings prior to making an investment. As traditional sources of capital in the life science space continue to dry up, it is becoming more and more important for CEOs to stand out and show investors both their personality and the qualities that will make them a successful founder.
One of the most important things investors look for is a clearly defined vision. A startup’s CEO needs to not only have knowledge of their target market, but also needs to fully understand the individual customer’s problem and how to tackle it. The biggest turn-off for an investor is the “panacea presentation” that details the 27 indications a pre-clinical asset has the potential to cure. You need to have a targeted and focused concept of exactly where you are headed in the market. This vision is especially important because as the company scales, the founder needs to ensure that the company does not stray away from it’s core competency and mission, and that everyone in the firm is aware of the CEO’s vision. Nobody wants to invest in a schizophrenic business.
Founding CEOs also need to have the ability to surround themselves with strategic partners that are not necessarily investors in the firm. Forming these strategic relationships early on can be invaluable down the road. Founders should, however, also seek advisors that are willing to put skin in the game, because advisors who have a stake in the company will represent a vote of confidence in the eyes of other potential investors. Furthermore, founders need to be able to both find and retain talented individuals to help them build their companies, not only give advice. Networking with talented people that have a passion around your target indication or technology can help CEOs identify senior professionals that they can bring in later in the development of the company to fill roles necessary for growth. This is vital because, at the end of the day, the investor is investing in people.
So what does this all mean for founding CEOs? If you do not possess these qualities, find someone who does! The business side of advancing your technology should be managed by someone who can manage the networking role and show investors a focus on getting to market above all else. You should always embrace the opportunity to meet investors in person, but make sure you are prepared to do so. Also, you will always be more compelling in a one-on-one meeting where you can start a real dialogue, rather than lecturing to a room of potential investors. Speaking with (not at) investors at length about your company and your vision will not only help you demonstrate these qualities to the investors, but will also help you determine if the investor posses traits that will help you both work together in the future.
Investors Seek Cost-Reduction Solutions in Device Space
15 AugBy Max Klietmann, VP of Research, LSN
LSN research spends a lot of time speaking with investors in the life sciences space. As such, I wanted to share some insights gleaned from medical device investors over the past several weeks; specifically, I’d like to highlight two major investor interest trends in the device space that follow a common theme: cost reduction. As medical costs have risen over the past few years, hospitals and care providers are under increased pressure to reduce costs while improving outcomes. This has created a high demand for devices that can not only make an improvement in a patient’s condition, but also make a business case for a hospital’s bottom line. Here are the areas of the highest interest:
Infection Control
Hospital acquired infections (HAI) such as MRSA constitute a major issue for care providers, as these (usually preventable) conditions can massively protract hospital stays and drive up costs, due to complications and the need to treat a secondary indication. Tools and systems that can aid in early detection or prevention of these infections are in high demand, and are a compelling investment opportunity for investors in the space.
Home Care/Remote
Getting patients out of the hospital as quickly as possible is a primary way of reducing hospital cost. One way to safely accomplish this is via remote monitoring and other ways to allow a patient to continue receiving medical care from home earlier than usual. Furthermore, the less time spent in a hospital, the lower the risk of secondary complications such as HAI, further reducing the risk of incremental cost. Finally, remote monitoring often pairs existing technologies (heart monitors and wifi, for example), and can have a relatively inexpensive R&D process – all good things for an investor seeking fast time to market and proven demand.
Though these concepts may be intuitive at first glance, most entrepreneurs in the device space are too heavily focused on an improvement in patient outcomes at any cost. However, at the end of the day the improvement needs to make sense from the standpoint of a hospital’s investment and the likelihood of insurance reimbursement. Device entrepreneurs should consider how strong their business case is to the end-user, and in doing so, can be better aligned with investors’ critical need for return.
The Last Three Feet: Vetting and Grooming Scientists for Success
15 AugBy Dennis Ford, CEO, LSN
I spend a lot of time observing and analyzing early stage investment trends in the life science industry. The product of this research has led me to identify the biggest trend in recent years: that new categories of investors are surfacing to fill in the void left by the lack of VC funding.
Part and parcel to the new investor group’s trend is a bevy of new entities that are spending time and money vetting and grooming biotech and medtech start-ups. They range from world renowned hospitals, research clinics, academic tech transfer offices, patient groups, foundations, both private and public sector initiatives all morphing into different forms of life science incubators pushing scientists and their innovative technologies to commercialization. The essential idea is that there is enough general domain knowledge to pick the likely candidates for success based on their own sector or indication expertise. This is a great concept and is still getting off the ground. However, what most of these initiatives fail to grok is that “the last three feet” of the fundraising/commercialization is the actual going out into the market and finding the channel partner or investor and getting a deal done!
I have met and interviewed countless graduates and winners from these entrepreneurial programs. They graduate with eager smiles and hearts full of enthusiasm, take a deep breath, and then say…now what?
It was Edward R. Murrow who said, “It has always seemed to me the real art is not so much moving information or guidance or policy 5 or 10,000 miles. The real art is to move it the last three feet in face to face conversation.” Although he was speaking about international exchange, I think the quote is wholly applicable to the life sciences.
This last three feet is exactly where LSN staff spends most of their time. At the end of the day, where the real failure lies for many of these initiatives is in that scientist-entrepreneurs remain unprepared for the reality of how difficult the process is for connecting with a partner in the market place. Everybody understands their marching orders, but hardly anybody has been given the training and tools to carry out the mission.
What I am talking about specifically is the basic, tactical sales and marketing 101 skillset (the training) to go out and fundamentally execute a partnering campaign. This has to do with using databases to gather and vet lists of targets to go after, and identifying the low-cost, cloud infrastructure applications (the tools) that will enable and support the endeavor. For example, once you have gathered together the targets that are a good fit for your partnering initiative, you have a list – and the associated tasks – that you will have to manage. Most scientists will go right after the color-coded Excel spreadsheet to do this, which may as well be the kiss of death.
Cloud applications like SalesForce.com can provide you with a fabulous automated list, as well as task-management capability for a small monthly fee. Email applications such as iContact are a necessary tool for your outbound partnering campaigns, and you get a lot of compelling reporting for a low-cost monthly fee that will provide insight into who is clicking and interacting with your emails and outbound marketing. Newsletters, blogging and whitepapers are another excellent way to reach out to targets to either start a dialogue (or continue a dialogue) with multiple clients. These Cloud apps have created an affordable, easy-to-use campaign management infrastructure that just wasn’t here a few years ago. These applications are the picks and shovels for the gold the entrepreneur is trying to mine.
My point here is that there is not a lot going on tactically in teaching the last three feet – how to find and start a dialogue with investors, how to arrange a meeting, schedule a roadshow, run a meeting, and nurture & cultivate an ongoing relationship with your prospective partners. All the aforementioned criteria are critical in finishing what has been started with the scientist-entrepreneurs. After all the pie-in-the-sky strategy and perfect pitch role-playing is done, you still have to go that last three feet, stick out your hand and introduce yourself.
Hot Life Science Investor Mandate 1: Mezzanine Debt Fund Looking to Invest Directly in Healthcare, Research Institutions
9 AugThe fund is heavily invested in healthcare investing that focuses on IP investments in FDA-approved biopharmaceutical assets through royalty bonds, structured debt, revenue interests and traditional royalty monetization. Typically, they target investments between $20 and $200 million and work directly with leading healthcare companies and research institutions.
Typical financings are intended to healthcare organizations fund pipeline development, make acquisitions, and expand into new markets—all with an adaptable source of capital. The firm’s primary source of collateral is derived from commercialized products.
Hot Life Science Investor Mandate 2: Eastern US-Based PE Interested in Deploying Funds to CROs, CMOs
9 AugThe firm is most interested in biotech companies in the R&D services space, and is most interested in contract manufacturing organizations (CMOs), as well as contract research organizations (CROs). The PE is also seeking firms in the suppliers and engineering space and is looking for firms that are producing reagents.
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