Innovation and Investment Landscape in the European Therapeutic Sector

9 Apr

By Michael Quigley, Director of Research, LSN

mike-2Over the past few months, we have examined the innovation landscape of early stage life science companies and investors across the Northeast, Southwest, and West Coast regions of the United States. This week we aim to shed light on life science investment and innovation in the European Therapeutic sector.

Using both the LSN Investor and Company Platforms, we have been able to identify over 350 investors and nearly 5000 therapeutic assets—from over 1000 companies—that have yet to reach commercialization. Figures 1 and 2 below show the number of European therapeutic assets LSN tracks by country of origin as well as the location of those European investors to whom LSN’s research team has spoken.

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Figure 1 | Source: LSN Company Platform, Data as of April 7, 2015

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Figure 2 | Source: LSN Investor Platform, Data as of April 7, 2015

The United Kingdom is a clear leader in both the number of unique assets and investors who call the island home. This might be attributed to a combination of the significant large pharma presence in the country and the growing number of government initiatives and regional funding groups that operate there. Germany comes in as a close second for therapeutic assets, again fueled by a significant presence of large pharma. However, despite being number two on the list for investors based there as well, Germany along with the rest of the European countries fall significantly lower in terms of the number of investors based there than in the UK. While this may be partially due to the language barrier between the research team at LSN and non-English speaking countries, the difference appears too significant to be attributed to that alone.

Figures 3 and 4 respectively show the current phases of development of the European therapeutic assets, and the overall level of interest investors in this region have in each stage of the pipeline.

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Figure 3 | Source: LSN Company Platform, Data as of April 7, 2015

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Figure 4 | Source: LSN Investor Platform, Data as of April 7, 2015

It is in the preclinical phase of development that most European therapeutic assets currently fall, however, much to the bane of fundraising entrepreneurs, it is the second least popular stage for investors. Fundraising at this point in the development cycle can be an uphill battle, though once a company begins to generate in-human data in phase I, supply and demand appears to tip more in favor of the entrepreneurs.

As the life science fundraising arena is a highly competitive space, particularly for early stage companies, it is vital that an entrepreneur identifies and then contacts all the different types of investors and capital providers that are a fit for the company’s investment profile. In Europe, just as in the U.S., there is a growing diversity of life science investors, and to focus your efforts on only one or a few of them does a great disservice to your campaign. Figure 5 below shows the diversity of European investors by class that LSN’s research team has uncovered and spoken with.

Figure 5 | Source: LSN Investor Platform, Data as of April 7, 2015

 

While venture capital and private equity lead the charge when it comes to investor types, the other categories also represent a significant percentage of total investors in the region and a very significant amount of capital. Since fundraising is a numbers game and the odds are often stacked again the entrepreneur, it is crucial to be able to identify and attract as many firms as possible that could be value-adding investors in your opportunity. Join us again next week for a comparative dive into the European medical device innovation and investment landscape.

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