Archive | December, 2013

Announcement: LSN Company Database Updates

19 Dec

By Alejandro Zamorano, VP of Business Development, LSN

LSN’s ongoing commitment to provide the highest quality offering to our clients, we are excited to launch a new software release for the LSN Company Database and the Licensing Deals Database! Here is a brief overview of the new functionalities that have been implemented based on feedback we’ve gotten from our users:

  • Save Search + Bookmarks – Allows you to receive targeted alerts about your bookmarked companies, technologies, and products.
  • Enhanced interface for Licensing Deals – Allows for more intuitive navigation of search results and includes new filters such as the ability to search deals across specific territories
  • Enhanced interface for bookmarking – provides you with the ability to search within your book marked companies, and products
  • Direct links to each bookmark section on the toolbar – Allows for quicker navigation

LSN continues to carefully evaluate all of our clients’ comments and suggestions to make our products more powerful. Stay tuned for more new features to help you and your organization operate smarter and more efficiently!

The Market Strata for Early Stage Innovation

18 Dec

By Dennis Ford, CEO, LSN

Understanding where emerging life science companies fit into the competitive landscape and how to position them in front of an investor audience are two of LSN’s guiding mantras. It is critical to take the time to understand where your firm fits and to develop a cogent, lucid and compelling brand and message. This helps investors understand the bet they are making. Understanding the “technology impact” of your product or service and its relationship with the general marketplace is crucial.

Personally, I parse technology according to my own rule of three.  Is the product disruptive, breakthrough or iterative?  Answering the question allows me to map the technology against the universe of investors that are a good fit.  After all, context is really what you are trying to achieve when meeting with an investor. Being able to quickly get the investor to understand where your technology sits in the overall scheme of things counts a lot. I spend lots of my time with life science entrepreneurs and I will share some of my insights regarding the few categories.

Life science companies with “disruptive” technologies have the potential to change the world in a big way. The word “disruptive” is often overused in the life science industry, so let’s take a moment to discuss exactly what it means: These are technologies that literally disrupt the industry – This is the rare, once in a blue moon, technology that literally changes the game (However, in the “golden age” of life science, these disruptive technologies may be on the rise.) This could be a cure for diabetes, an AIDS vaccine, or something similarly groundbreaking on a huge scale. These disruptive technologies are the holy grail that all investors are looking for and when identified are quickly shepherded to the A-list VCs. That is all well and good except that it’s 20 or so high flying VCs and 30-40 chosen companies (anyone’s guess). So what about the rest of the marketplace?

The “breakthrough” technology companies have significant technology solutions for major medical needs. These can be viewed as “leapfrog technologies” that change treatment paradigms or improve outcomes in a big way. These are not necessarily “disruptive,” but they are undoubtedly valuable innovations that impact patients in a very major way. Let’s just say for arguments sake that these breakthroughs companies number in the hundreds, and they are tasked with marketing themselves to the right investors, because the shrinking VC population isn’t necessarily accessible or the best route for them. The breakthrough companies need to be educated on the new categories of  investors are filling the void left by the VCs.

The “iterative” technologies are next generation innovations. This can be distilled down to a better, faster, cheaper, or otherwise improved next generation of existing technologies. These are easy to understand, because the previous version exists, so investors can easily grasp the value. However, these companies number in the thousands, and they have a challenge getting on any investor radar screens.  These companies are tasked with having to really dig deep in terms of finding the right investor fit and translating that into a cogent, targeted marketing campaign.

I started Life Science Nation (LSN) to track the other 10 categories of life science investor that are filling the VC void. LSN researchers create profiles through one-on-one personal interviews regarding their particular interest in life science investment. These investors are family offices (single and multi), venture philanthropy/patient groups, virtual pharma, mid-level PE, angel syndicates, hedge funds, foundations, endowments, pensions and corporate venture. At the end of the day LSN’s job is do the research, find investors, interview them, write up their profiles and investment mandates and get that data into the marketplace. Understanding how your technology fits into the marketplace allows you to understand which investors you should be targeting.

Corporate Venture & Foundations Investing Early

18 Dec

By Lucy Parkinson, Research Analyst, LSN

When the LSN research team gathers mandates from investors, we’re taking the pulse of the future; we ask about what the investor is seeking going forward, what areas of their portfolio they want to build up, and which new breakthrough technologies they want to be a part of.  This has allowed LSN to identify a few trends that 2014 may hold for life science investment.  Today, I took a deep dive into what our mandate data says about who is seeking to invest at which stage in a product’s development. Here’s what I discovered:

Venture capital is going later.  Traditionally, venture capital firms were seen as the go-to for a new life science company in need of capital to fuel their earliest trials.  But of the active venture capital firms LSN has spoken to, 15% say they refuse to consider investing in preclinical projects at all. The bulk of VCs (about 50%) now declare that they’re agnostic about developmental phase, and will invest at any point through to Phase III.  About 25% consider investments in therapeutic companies that have a product on the market and are generating revenues – a realm of investment that was traditionally reserved for private equity funds.  Among medtech investors, very early-stage companies may have an even tougher time with VCs; a third of VCs that invest in medtech don’t consider opportunities in companies that have no in-human data.

So which new investor categories are most aggressively targeting early-stage therapeutics?  Here are a few of the trends that could forecast the coming year’s activity: Foundations are backing commercial work.  Of the foundations we’ve spoken to who are interested in making research grants to for-profit companies in 2014 as well as to academics and non-profit institutions, almost 50% will only consider funding preclinical and Phase I work.  These groups often tell us that this strategy is designed to make their research dollars go further, and to de-risk projects that they see as important.  If a foundation thinks your research work is important, they may be able to offer you a $100,000 grant to conduct some risky preclinical research; if that trial produces a solid result, another investor with deeper pockets is likely to step in, make an investment and advance the product to market – and getting new treatments to patients is what a foundation cares most about.

Another notable player at this stage is corporate venture capital; unlike VCs, almost all corporate VCs are looking to invest in preclinical work in 2014. Also, they have deep pockets and a declared need to uncover innovative science, so these may be some of the leading players when it comes to capital allocations in the coming year.

So what factor do corporate VCs and research foundations have in common that enables them to put money into breakthrough preclinical work?  Judging from the conversations we’ve had with them, the common factor is scientific expertise.  These groups are notably more specific than VCs; many foundations are pursuing a cure for a specific disease, and corporate VCs usually have specific strategic interests dictated by their parent companies.  About two thirds of venture capital firms are opportunistic generalists when it comes to choosing which indications to pursue; under half of corporate VCs are opportunistic in this regard.  As foundations and corporate VCs have specific focus areas, they’ll also have deep understanding of these areas and that means they’ll have more faith in their ability to pick outstanding preclinical projects to support.  If your company is at an early stage, reaching out to these fellow experts in your field could be much more beneficial to your search for funding than approaching a venture capital firm.

Hot Life Science Investor Mandate 1: Private Investment Firm Invests in Wide Range of Assets with Proof of Concept

18 Dec

A private investment firm based in the Western US invests in seed and early-stage health technology companies. The typical investment size for start-ups ranges from $500K to $750K (usually in equity or convertible notes). For early-stage companies, the firm typically co-invests with other VC firms in Series A and B financing and the investment size will depend on the company’s financial needs. The firm is geographically agnostic but prefers start-ups to be based on the West Coast. The firm is actively seeking new investment opportunities.

The firm invests in novel therapeutics, medical devices, and informatics. Generally, the firm focuses on opportunities that avoid or mitigate FDA regulatory risks. The firm is agnostic in terms of subsectors and indications, but does not consider orphan indications. The firm will only consider technologies with proof of concept. Historically, the firm has invested in therapeutics that address oncology, infectious diseases, cardiovascular, and metabolic disorders; drug delivery; orthopedic devices; genomics.

Hot Life Science Investor Mandate 2: Family Office Allocates Based on Financial Needs of Company

18 Dec

A group of accredited investors based in the Eastern US is made up of healthcare professionals seeking to invest in technologies that significantly advance the standard of care. The group considers companies from seed to later stage and is geographically agnostic. Since the members are investing their own capital, the investment size and capital structure are highly flexible and will depend on the financial needs of the company. The group is actively seeking new investment opportunities.    

The office is interested in therapeutics, diagnostics, and medical devices. Currently, the group is interested in cell therapy and oncology but is generally agnostic in terms of subsectors and indications. The group is not interested in dermatology. The group will only consider products that have shown clinical efficacy.  Therefore, the group prefers therapeutic products in phase II. The group may consider phase I if it is evidently supported by human efficacy data.

Hot Life Science Investor Mandate 3: VC is Interested in Single Use Devices, Several Indications

18 Dec

A venture capital company based in the Western US has raised 2 funds to date, and is currently investing out of its 2nd $15 million dollar fund. The firm makes primarily equity investments ranging from $50,000 to $5 million over the lifetime of the investment. The firm is looking for companies located within the United States and plans to make approximately 2 new investments over the next 6-9 months.

The VC is looking for seed and venture stage medical and diagnostic device companies. In these areas the firm is most interested in single use devices capable of delivering a therapy, and in indications such as cancer, cardiovascular and neurological diseases, orthopedic problems, respiratory conditions, and gastrointestinal disorders. While this is the firms primary focus, they remain open minded to other types of devices and indications as well.

The VC looks for professionalism in a firms management teams and is willing to work with firms that do not yet have a complete management team in place.

Investors Building Life Science Companies from the Ground Up

12 Dec

By Alejandro Zamorano, VP of Business Development, LSN

LSN tracks ten categories of life science investors around the globe. Recently, we have begun to follow and emerging trend of established investors creating and launching their own companies. These investors are cognizant of the critical importance of good management when it comes to asset commercialization. The school of thought behind this innovate approach is that emerging technologies stand more of a chance when strong leadership and organization is put around an asset from the get-go. So, why is this occurring and how exactly is this being executed?

From the firms LSN has spoken with, this approach is essentially an fusing two key elements – Access to capital and access to a network of experts, both of which help to make leaner, faster, and more efficient companies. It all starts with sourcing novel science from a translational researcher, and building a business structure around it.

Since the investor is starting the company, it is possible to structure the “perfect” company from the ground up. This goes beyond investor fit – it’s a custom tailored company to fill a portfolio need. This can create significant advantages early on in the company’s life cycle, as fundraising seed capital isn’t a problem. By avoiding this part of the process, the company can focus on moving the science forward. Moreover, the company can structure the management strategically from the get-go, by having a business-savvy CEO in place who has the sales experience required to turn innovative science into a company.

Add to this that the investor can shepherd multiple assets through the pipeline by outsourcing work to CROs, and you have a great lean model for building a portfolio of companies. This model is gaining traction, so stay tuned as LSN tracks this evolving trend.