Next Phase Newsletter

By Lucy Parkinson, Director of Research, LSN

To raise capital for an early stage biotech or medtech venture, you’re going to need a pitch deck.  But it’s very hard to make an engaging pitch deck.  At LSN we see a lot of pitch decks from our clients and RESI Innovation Challenge applicants, and as we engage with investors every day, we’ve found out a lot about what works and what doesn’t.

The goal of the pitch deck is to get the first meeting

It’s very important to bear in mind that the pitch deck is not, in and of itself, going to sell your round.  You, the CEO, are going to sell your round.  The deck’s purpose is to pique the investor’s interest for a deeper conversation with you.  You can’t go into depth on the company’s value proposition in 12 slides but what you can do is create an interest in learning more.

The hardest part is making it short enough

Investors receive dozens of pitches per day.  The easier and faster it is for them to digest your company’s pitch, the more likely you are to hear back from them.  A pitch deck should generally be 10-12 slides long.  Many life science companies use much longer decks in the hope of explaining their scientific or business case in full; unfortunately, we’ve seen many that are 30 pages or even longer.  A long deck is likely to put a hurdle in the investor’s path to your door, because you’re asking for a lot of assessment time before your relationship with them can even begin.

Showcase management achievements

Entrepreneurs with a scientific background may be tempted to believe that the investor will simply be on the lookout for solid, innovative science with proof of concept data.  Nothing could be further from the truth.  Many investors focus primarily on the strength of the team and the successes they’ve achieved in the past.  It’s important that when you profile your management team, you demonstrate their achievements as well as their scientific pedigree, particularly if they’ve been involved in a successful startup in the past.  If the company’s founders are new to industry, having experienced and reputable advisors can round out your team a lot.

Make the business case

A novel scientific discovery may have immense scientifc value but that doesn’t necessarily mean it’s investible.  Building a business involves more than building a product.  Investors will want to see that you’ve thought about the potential market, current incumbents, competitor products in the pipeline, and when and how to exit.

The latter is often the most important factor; many investors will be looking out for opportunities that can potentially generate large exits in as little as 2-3 years.  It may be useful to include a timeline that shows how much capital will be needed for the company to reach key inflection points.

Include the ask

Your deck needs to clearly show how much money you’re aiming to raise, and what you intend to do with the money.  It helps to center this aspect of the deck on inflection points; perhaps you are aiming to use the round to file an IND, or to obtain data that will create a value inflection or exit opportunity.

For a later-stage company, investors will also want to know who invested in the earlier financing rounds and how much money has been invested in total.  Investors are also often interested to see how much non-dilutive financing has been raised for the product.

Use your data – but sparingly

As I mentioned above, it’s very hard to make your deck short enough.  It’s natural to want to cover all the scientific evidence that supports your company’s product.  It’s vital to show that your company is based on solid scientific work; however in order to make this case fit on a few slides, you’ll need to prioritize the most important data points and save the rest for the meeting.  LSN has heard from investors that one of the most vital points is the safety data.  While it’s tempting to use your limited space to show the proof of efficacy, make sure you also cover the safety studies.

It’s a work in progress

LSN’s clients very often polish up their pitch decks and head out to meet investors, only to hear some unexpected pushback on a point that they had thought was too simple or obvious to be worth mentioning.  They then go back and add that information to the deck.  While it’s important to not let the pitch deck get overloaded with addressing every single objection that the company has heard, after a few meetings with investors it’s often clear what extra points need to be addressed.

Shaoyu Chang, MD, MPH, Director of Research & Asia Business Development Liaison

With the rapid growth of Asia’s biotech sector, cross-border activities are on the rise. Previously, we discussed how Greater China investors are now looking for opportunities beyond their geography. We’d like to use this posting to examine Korea’s biotech and how a regional player can take a significant part on the global stage.

Fueled by growing economy and strong government will, Korea is estimated to become the world’s 5^th biggest spender of bio-related R&D. From 2006 to 2015, the 50-million population country has the largest number of total drug trials in Asia. We searched LSN Company Database and found more than Korean 450 entities in biopharma, medtech, healthtech, R&D service, and suppliers. The quantity and diversity of organizations indicate a fledging ecosystem.

As Korea’s biotech strides into an innovation-oriented model, it has generated a considerable amount of early stage assets. We searched in the LSN company Database and found 730 assets ranging from preclinical stage to NDA, with oncology drugs being the largest group among all indications. While many of these assets are in the preclinical stage, a significant number of them have reached late-stage clinical development or even NDA. Eighty-nine percent of these assets are available or will possibility be available for out-licensing.

In terms of licensing deals, Hanmi Pharmaceutical clearly leads the race with mega-deals with Roche, Eli Lilly, Boehringer Ingelheim, Sanofi, and Janssen. The company’s success stems from a strong focus on collaboration with global partners on various co-development and business opportunities to achieve synergy effect.

Many small- and medium-sized Korean biopharmaceutical companies are following Hanmi’s steps to go outbound. The LSN team has interacted with many Korean entrepreneurs in various occasions in North America and Europe. Many choose to keep most activities at home and just send out their business development staff to conferences.

More creative arrangements have been tested. A two-step model seems to be working, at least among the entrepreneurs we have interacted with– first, startups emerge from an open innovation collaboration of academic research institute and biotech venture capital in Korea. Second, the startup set up R&D centers and BD team in major life science hubs such as Boston, San Francisco, and San Diego. This way, the startup can generate innovation while gain exposure to top-tier sector expertise and strategic partners at a very early stage.

The global biomedical field is becoming flatter. Instead of being limited by the size of their domestic market, Korean biopharma businesses are maintaining their advantage by actively connecting with the world’s key industry hubs. As the healthcare demand in Asia continues to expand, we expect to see more Asian biomedical startups on the horizon that connects innovations and markets.

By Dennis Ford, Founder & CEO, LSN

In the last decade there has been an enormous shift in the drug discovery and development landscape. None of the following diatribe will be news to the life science mavens who get this…but I do want to set up for the thesis at the end of the article. Whereas R&D was previously limited mainly to a handful of pharmaceutical companies, new R&D paradigms have evolved that embrace collaborative partnerships amongst various stakeholders in the life science sectors: pharma, biotech, academic/research centers, government, and donor-backed foundations.

Lower productivity, as measured by the number of technology assets that make it to the patient coupled with increasing drug development costs, as well as higher attrition rates at all phases of the discovery and development process, have forced pharmaceutical companies to significantly pare down their internal R&D infrastructures and to increasingly focus on drug development, particularly post proof-of-concept. Thus, early-stage drug discovery is increasingly occurring outside of pharma for all but the ‘big’ diseases. This is the major change that has been driving the biotech investment environment. As the reader probably knows LSN’s arena is matching up buyers and sellers in early stage drugs, devices, diagnostics and healthcare IT.

VC funding for early-stage drug research in the biotech space has become limited because of the high risk and extended timing to exit. This has resulted in disease-focused healthcare foundations frequently left to play a leading role in driving the earliest phases of drug discovery and development—particularly for rare diseases and less prevalent indications. While disease-focused foundations collectively put billions of dollars into life science research, these groups are often dependent on donors and face yearly uncertainty over funds. In addition, their non-profit status limits their ability to take an equity stake in any technology, where a financial gain could then be used to reinvest into the foundations mission. It’s therefore difficult for most disease-focused foundations to implement an investment model that will lead to a tangible impact. Overall this dynamic has impeded the delivery of cures that could address the unmet need that exists for many diseases.

My own observation from living in the space has been that a lot of players that could make early stage investments are reluctant to make early-stage investments. The few that are willing to do so, will generally invest only if something potentially breakthrough or disruptive appears on the radar screen. However, what typically happens is that they will place a large bet on advancing a single opportunity or platform only to move down a dead-end path, at which point they just say ‘never mind’. I would argue that that this places a lot of capital at unnecessary risk. There is a better strategy for making early stage investments. I have come to the conclusion that, yes, the opportunity is there in early stage; but I would want to place my bet on funding multiple early stage technologies rather than just one. For example, it would be a mistake to bet heavily on one small molecule program and leave out the promises of gene therapy, therapeutic proteins, cell therapy etc. especially where there is an unmet medical need and no cure or treatment which is the case with many rare diseases. I think the near future will hold an opportunity for those diseases with no cure in sight by discovering and combining diverse technology assets to help move the needle.

By Dennis Ford, Founder & CEO, LSN

As the creator of the RESI conference series I am constantly getting and gathering both solicited and unsolicited feedback on how well the RESI Partnering apparatus is working. At RESI Boston we had 1400 meetings between investors and fundraising executives in one day. Make no mistake about it, people get funded through using RESI as a vehicle to get in front of the right investors that are a fit for their development stage and product or service offering.

I hear people tell me how great RESI is and how they met a bevy of investors and wound up getting funded. I also hear from some frustrated scientist entrepreneurs who catch up with me and complain they can’t get enough meetings or they wanted more. I usually reply “Send me a copy of the email you sent out – and tell me how many times you tried to connect with the investors you wanted to meet with.” When you have entered the fundraising arena you have officially entered the sales and marketing world. That means your personal view of what works can collide and not cross over into your new reality of sales and marketing.

Partnering is the backbone of RESI and of many other investment conferences. That means that in order to get the most out of attending these events, you need to figure out how best to get meetings with the investors who are a fit for your business. Here is the first fact of the sales and marketing universe: Fundraising is a numbers game. To prove this, we took a look at all our RESI Partnering data to find out how many requests it takes to get a meeting.

Here’s what we found: If your meeting requests are in the single-digits, odds are you will only get in front of one or two investors, if any. On the other end of the spectrum, companies who were able to connect with investors can have up to 16 meetings or more in a single day. What’s the trick to getting a lot of meetings? Companies that got 14, 15 or 16 meetings at RESI all sent out 40-60 invites. It’s a numbers game. Just take a look at the chart below.

Many individuals fell in the middle, somewhere in the teens. There were indeed some premier companies who got a high hit rate with only a few requests, and of course a few less fortunate companies that did the work without seeing their desired yield. The positive relationship between request numbers and meetings, however, is clear. Just in case you were wondering, the median number of requests sent by fundraising entrepreneurs was 15, a number that might typically yield 3-6 meetings. There was one outlying individual who sent out a whopping 114 requests as well, and wasn’t counted in the final numbers. If that individual is reading this – kudos, I think you may have set a new RESI record…you get it!

Now, this is not to say sheer numbers are the end-all-be-all. The importance of branding, messaging, and especially your intro email/ partnering message cannot be understated. In my book the Life Science Executives Fundraising Manifesto click here for a free PDF ebook Fundraising Manifesto we have this table that we compiled from our sales and research departments totaling around 15 professionals who make 20-40 calls a day attempting to reach out to our target clients and investors. Here are the facts of how many phone attempts it takes to get hold of someone. Many other studies have found similar results. This is the harsh reality of the sales and marketing world.

Getting investor meetings is hard, tedious work and a lot of the work can be for naught. The rules of sales and marketing dictate higher yields of meetings when you go after investors who are a good fit for your company, and if you exercise persistence until you get a yes or a no.

By Lucy Parkinson, Director of Research, LSN

The LSN Licensing Deals data platform logs all pharma licensing deals provided that financial information regarding on the deal has been announced. Taking a quick look at 2016’s announced deals thus far, we found that while many new technologies are making waves through pharma – such as T-cell technologies and RNA therapies – antibodies are currently the most wanted technology in pharma.

As over a quarter of the licensing deals logged in 2016 involve antibodies, we decided to take a look into the LSN Company Platform to find out what antibodies are currently being used for. For this article, we look at a sample of development-stage antibody products, ranging from preclinical-Phase III. We found that an overwhelming number – over half – of development-stage antibody drugs are in the oncology space. Other top indications for antibodies include infectious disease, musculoskeletal diseases and immune diseases, but oncological use of antibodies dwarfs all these.

Within cancer, many of the antibodies in development are targeting a specific type of the disease. Here’s a closer look at which areas of cancer are seeing the most antibody innovation at present:

As is typical in drug development, we find that a plurality of the development-stage antibodies are still in the pre-clinical phase of development, with a drop-off occurring at each stage.

While there’s a lot of excitement about new drug technologies such as gene and cell therapies, antibodies are still highly sought after by big pharma in 2016 and much innovation is taking place within the world of bispecific and monoclonal antibody development. The LSN Company Platform is keeping both LSN and our clients abreast of the latest new technologies out there, and how big pharma is driving demand.