Archive | November, 2013

Understanding your Therapeutic Asset’s Landscape

20 Nov

By Alejandro Zamorano, VP of Business Development, LSN

Most early stage biotech assets have the potential to target several disease areas. However, it is critical for entrepreneurs to maintain focus in a specific area – this helps to efficiently bring a product to market, and to show investors a firm commitment to a specific goal. But how do you choose which indication to pursue? Of course, there are advantages surrounding orphan drug regulation, hot disease areas, and other major factors. However, one area that many entrepreneurs do not investigate thoroughly is the early stage competitive landscape in their target indication area. This should, however, be a consideration in any entrepreneur’s mind.

This article seeks to offer a 30,000-foot view of the therapeutic landscape, based on a sample of over 14,000 therapeutic assets. As demonstrated by the graphic below, there is a dense concentration of therapeutic assets in a select few disease areas. In fact, the top 3 main indications represent over 50% of all therapeutic assets currently being developed. This high concentration means that differentiating your asset will potentially be more challenging.

Number of Therapeutic Assets by Disease Area

Screen shot 2013-11-20 at 12.51.39 PM (2)Click to enlarge

Competition will surface not only in the form of showing clinical significance, but also in the fundraising process. However, on a positive note, the clinical path for development should be much clearer, as companies have most likely traversed the same regulatory path your therapeutic is now embarking on. Learning from your competitors always pays dividends.

At the end of the day, you know your asset best, and how you fit into the competitive landscape. What is true for one company may not be true for another, but it is undeniable that every company looking to commercialize an asset needs to understand the therapeutic landscape and how to maneuver it most effectively.

LSN Announces RESI II

20 Nov

By Max Klietmann, Conference Co-Chair and VP of Marketing, LSN

The LSN team is very pleased to announce the second Redefining Early Stage Investments conference, to be held Monday, March 24, 2014 in Boston. This event is the next in LSN’s ongoing conference series focused on creating a dialogue between emerging life science companies and active early stage investors from ten categories around the world. LSN is committed to maintaining its mission of moving science forward by creating a forum for early stage innovation and capital to meet, and we are building on last September’s success. We’ve made some exciting changes for the March event – Here are some highlights:

Full Day Partnering – RESI will have partnering meetings available for the full duration of the day.

More Investor Panels – We’ve increased the number and variety of investor panels available to conference participants, based on cutting-edge content derived from our constant research of the industry.

Free Workshops – RESI will host a series of in-depth workshops in the areas of outbound fundraising, valuation, and the legal landscape.

Disruptive Technology Horizon – RESI will host a half-day session on the emerging disruptive technologies that have the potential to redefine the industry in the future.

New Company Presentation Format – RESI is offering innovative life science companies the opportunity to showcase their technologies to investors via poster displays throughout the (expanded) exhibit hall, giving them full-day exposure to investors and other conference participants.

If you haven’t attended RESI yet, here is a quick overview of attendance distribution from last year:

  • Over 300 attendees last year (targeted 200), estimating 500 this year
  • Over 115 early stage investors from around the world
  • 43% International / 57% Domestic
  • Attendee profile split per the chart below:

RESI Attendance BreakdownSpecial reduced earlybird registration rates for attending and exhibiting are available for a limited time only, so be sure to register now!

Special sponsorship opportunities are also available now.

We look forward to seeing you in March. Stay tuned for more RESI II conference updates.

A Word on Emerging Clusters

20 Nov

By Jack Fuller, Business Development, LSN

As a Boston-based company, Life Science Nation is by all accounts located in one of the greatest life science hubs in the world. An emerging company that can claim residence in Kendall Square somehow finds a certain level of implied acumen simply by virtue of being there. Investors also tend to gravitate toward the east and west coast “superclusters” when setting up offices. So how do companies outside of these geographic areas find and engage potential investors, given this apparent disadvantage?

Emerging Bioclusters such as St. Louis, Chicago, Colorado, and Florida – to name a few – have been growing through a combination of university, government, and private initiatives. Each cluster brings a unique dynamic of infrastructure and resources that have allowed the formation of innovative companies. I have spoken with several individuals at regional investment organizations who suggest that these are vibrant, growing communities of first class entrepreneurs and scientists.

As important as a regional network may be, an executive in an emerging cluster must maintain a global perspective. Any person looking to raise capital in today’s life science industry needs to think and act globally. Local investors and clusters are excellent at taking the first step, and have great experience in new company formation. Typically, good science and a solid management team are able to seed a company. However, in an emerging cluster, the funding gap between seed and a substantial series A tends to be larger than on the coasts.

Companies in emerging clusters have a few interesting value propositions they can distinctly take advantage of. First, many clusters are established around high-quality research institutions that provide a steady supply of qualified talent and innovation. Similarly, other clusters are home to major players in non-traditional “biotech” spaces such as AgBio and healthcare IT that can be taken advantage of when establishing local infrastructure and expertise.

One of the most important factors to an investor is the return per dollar invested.  There is a significant reduction in the cost of running a biotech company outside of Boston or the Bay area. When done correctly, a company can stretch $3-4M in the Midwest, to the equivalent of $6-7M on the coast. This decrease in operating costs means bigger returns for the investor. Investment in emerging clusters has been underfocused, and a savvy entrepreneur needs to leverage the regional momentum and resources available to become even more attractive than a similar company based in a major cluster.

When targeting global investors, the capital efficiency and strength of the management team become key factors in attracting significant interest. The question many investors will ask is: is this team going to be able to execute? The history of success stories, while present in emerging clusters, is still an area of concern to an investor.

All life science companies face the same challenges when raising capital. However, companies in an emerging cluster now have an opportunity to take the leap to the global stage. Take the question of execution out of the picture, and highlight the significant upside of investing in a company based in your region.

Hot Life Science Investor Mandate 1: PE Debt Provider Specializes in Healthcare, will Invest as Early as Phase II

20 Nov

A firm that provides debt financing to companies in the life science and healthcare sectors is based in the Eastern US, and offers financing in the forms of senior secured term loans, cash flow loans, revolving lines of credit, real estate and equipment loans. Loans may vary in size from $500,000 to $40m, with ranges and payment terms varying according to the type of loan provided.

The PE typically issues about $400-500m in debt per year. Debt is provided to companies for working capital, growth, expansions, recapitalizations, product licensing or acquisitions, or to purchase equipment or real estate. The firm considers opportunities in the USA, Canada, Europe and Oceania.

In the life science sector, the PE invests in companies developing therapeutics and medical devices.  The firm considers lending to therapeutic companies with a product in the Phase II development stage or later, or to devices in the clinical development stage or later.  They invest opportunistically, but typically avoid the diagnostics and the ophthalmology subsectors (particularly when considering single-asset companies). The firm seeks to invest in differentiated technologies, not products that will bring marginal increases in standards of care.

The organization invests in both post-revenue and pre-revenue companies.  In pre-revenue companies, capital-intensive projects are avoided; they typically deploy capital to bring a company to the next inflection point (such as the break-even point, or an acquisition). The firm prefers to lend to companies that have already received the backing of a number of institutional investors such as VCs, and the ability of these investors to provide follow-on financing if necessary is a key part of their evaluation of an opportunity.  When considering management teams, the PE prefers those who have prior experience in industry and have learned from their past successes or past failures.

Hot Life Science Investor Mandate 2: Foundation Allocates to Companies Working to Cure Retinal Diseases

20 Nov

A foundation based in the Eastern US typically makes allocations to companies in the range of $1-$8 million, and is capable of providing $10-$15 million over the investments lifetime. The firm primarily funds companies located in the United States but will consider opportunities located globally as well. The firm provides equity capital, and does look for a return, though percentages taken are generally less than more financially-motivated investors, and all profits are reinvested back into the fund. Ideally, the firm would like to allocate to 3-4 companies over the next 6-9 months.

The foundation’s mission is to fund research that will provide preventions, treatments and cures for the entire spectrum of retinal degenerative diseases. Currently, they are looking to fund companies in the therapeutics sector, and will consider companies working in areas of Small Molecules, Biologics, Gene Therapy, and Regenerative Medicine that target those indications. The firm primarily funds companies that are just preparing to enter the IND enabling stage, but they will consider companies in all stages of clinical trials.

The foundation often invests into companies that do not have complete management teams, and looks to utilize the foundations expertise and network in the retinal disease space to help companies grow. The foundation has many experts in the field that will help aid companies as well as a registry of potential patients for clinical trials.

Hot Life Science Investor Mandate 3: VC Looks to Companies in Pre-Clinical Trials

20 Nov

A venture capital firm based in the Central US manages 2 funds for a combined total of more than $250 million in assets under management. The firm generally invests between $2-$6 million of equity capital per round, and up to $10 million over the life of the investment. The firm plans to invest in 2-5 companies over the next 6-9 months, and will consider firms located throughout the United States. The VC looks to syndicate with other venture firms, and often acts as the lead investor.

Currently, this organization is looking for companies developing Medical Devices, Therapeutics, Diagnostics and Healthcare IT products. For medical devices and therapeutics, the firm is open to the full spectrum of subsector and indication, and will consider companies developing orphan indications. They are interested in seed and venture stage companies, generally looking to invest in companies with a lead asset in pre-clinical trials. Only in certain cases of reformulation and repurposing would the firm consider investment into a company with a product in clinical trials. They are also willing to consider companies targeting orphan indications. In the Healthcare IT space, the firm has stated interest in areas of clinical sequencing and diagnostic platforms but will also consider other companies that fall into the Healthcare IT space as well with the exception of tradition EMR companies.

As such an early stage investor, they invest almost exclusively in pre-revenue companies. The firm also looks for experienced management teams and generally takes a seat on the company’s board.

Hot Life Science Investor Mandate 1: Corporate Venture Capital Arm Seeks Therapeutics Companies

13 Nov

The corporate venture capital fund of a larger firm based in the Western US is currently investing from its second fund of $100M. The arm invests in early-stage biotechnology companies focusing on discovering and developing human therapeutics primarily in the areas of the current therapeutic interest to its parent company. The firm typically invests (equity) $2M to $3M per round with $10M reserved for follow-on investments. The firm seeks companies that are based in the US and Europe. They also seek to make 2 or 3 allocations in the next 6-9 months.

The venture arm seeks early-stage companies developing human therapeutics. The firm is seeking companies with products in pre-clinical to phase IIa. The firm’s therapeutic areas of focus are: Cardiovascular (Acute Coronary Syndromes, Dyslipidemia, Heart Failure); Hematology (Anemia, Neutropenia, Stem Cell Mobilization); Inflammation (Asthma, Bowel Disease, Multiple Sclerosis, Osteoarthritis, Psoriasis, Rheumatoid arthritis, Systemic Lupus Erythematosus); Metabolic Disorders (Diabetes, Osteoporosis); Nephrology (Hyperparathyroidism, Renal Failure); Neuroscience (Alzheimer’s Disease, Cognition, Pain-Neuropathic & Inflammatory, Parkinson’s Disease, Schizophrenia); and Oncology. The firm is also interested in drug delivery therapeutics.

The firm seeks a company with a strong and experienced management team or technical experts in the relevant technology.