Next Phase Newsletter

By Shaoyu Chang, MD, MPH,  Senior Research Analyst, LSN

There’s no shortage of competitions for life science entrepreneurs to enter. Whether it is a grant submission on a website, a display in an exhibition hall, or a 10-minute pitch on stage, there will be opportunities to use your branding and messaging collateral to reach an audience. However, it takes a well-organized package of information to win access to these opportunities.

While screening applicants to the RESI Innovation Challenge, I’ve observed that many companies make similar mistakes. In this article, I’d like to offer some tips for making the most of these opportunities while avoiding common pitfalls.

Explain science in simple, clear language

What factors will make your new product stand out from other “exciting one-of-a-kind therapies”? Entrepreneurs may have the most cutting-edge, complex technology, but many of them fail to describe their science in plain, understandable English. You description should be clear and concise while providing your unique value proposition. Do not be afraid to take a deeper dive in the mechanism behind your invention, what cellular pathway does your compound affect? How does your device work on the target organ? Remember how you deliver your message and explain what you do shows how what a good investment candidate you are.

Instead of making a nonspecific claim, such as “our device has convincing validation,” applicants can make a stronger case by providing supporting facts, such as “our non-invasive device can measure blood pressure within ±3 mmHg error margin” or “data from our small mammal studies has been published in peer-reviewed journals.” Keeping in mind, there should be a balance between being specific and being overwhelmingly technical. It is not easy to fit your full scientific discovery story into the 500-word limit; however that is precisely the challenge you face when you enter the sales and marketing domain and want to raise capital.

Stand out from the crowd

In the early stage life science investment world, many potential scientific breakthroughs are competing for the same pool of funding. It’s important to put yourself in the investor’s position and think about the factors that make your company a unique opportunity to deploy capital.

What factors will make your new product stand out among 20 other “exciting one-of-a-kind therapies”? It could be that the product serves a large patient base with a significant unmet medical need. Or perhaps it’s a solution for a niche population that would qualify for orphan status and potentially accelerate your path to market. Other factors that LSN has seen raised by strong contenders in the RESI Innovation Challenge include good patent coverage, cost-saving propositions for healthcare providers, and the potential to save the lives of patients in need. Be sure to state the reasons why your opportunity is outstanding.

Explain the timeline to market

Many entrepreneurs fail to provide a detailed, realistic development timeline. This is a critical element as investors use it to assess entrepreneurs’ understanding of the R&D process in their technology sector and their ability to allocate funding properly.

Highlight your business successes

When providing management team bios, most scientist-entrepreneurs have little difficulty in describing academic credentials, from faculty positions to publication records. However, applicants often neglect the business aspect. Investors want to see a team that is able to work together, negotiate with external partners and next-round investors, and bring the product through the regulatory process. Entrepreneurs should highlight expertise in such areas or set up plans to recruit these experts.

Similarly, collaborative relationships with prestigious research centers, pharmaceutical corporations, or strategic partners act as indicators of endorsement and validation. Don’t forget to highlight these markers of your business acumen.

Make sure your marketing collateral is clear and available

Furthermore, our scientific team looks at the clarity of the application material and also the availability of supporting publications, including on your company’s website, because these materials reflect the overall quality of an entrepreneur’s presentation. Many investors in the life sciences sector are well versed in the industry, and have extensive background knowledge and research skills. A company unable to provide supporting materials online is at risk of being screened out by an investor in the initial stages of the investment process.

Past winners of the RESI Innovation Challenge have demonstrated that a good branding and messaging strategy not only helps entrepreneurs excel in start-up competitions, but also opens doors to partnerships and investments critical to their businesses. If you are interested in showcasing your innovation at RESI, please submit your application here.

By Lucy Parkinson, Senior Research Manager, LSN

At RESI @ TMCx, LSN turned the spotlight on corporate venture capital for an hour-long panel session. Six experienced corporate venture capitalists explored key issues that they face when engaging with startups. Panelists were asked if their firms invested with the intent to own a company, and what term sheet provisions might make it impossible for a corporate VC to invest. The panel also tackled the thorny question of valuation, and of how early it was possible for them to invest in a biotech company. Finally, the investors spelt out their internal processes and areas of focus, and the means by which they uncover opportunities. If you’re interested in meeting with a corporate VC, be sure to watch this RESI @ TMCx panel video first.

By Michael Quigley, Director of Research, LSN

It is no secret that 2015 has been a highly active year for deal-making in the life science space.  However, what is often overlooked is exactly where in the space those deals are taking place. Life Science Nation’s financing rounds database contains detailed information on over 250 of these rounds that have taken place since January 1 of 2015. We track this data from a variety of sources however as many companies and investors chose not to disclose this information this should be viewed as a sample of the entire data set of financings. With this article will highlight what our data tells us about the rounds that have taken place thus far in 2015 for therapeutics companies around the globe.

The first cut worth examining is the types of technologies that received funding.

Figure 1 | Source: LSN Financing Rounds Dataset | Data as of July 22, 2015

As this chart represents the funding of all stages of development, it should again come as no surprise that small molecules are the most popular technology type receiving funding. Things get more interesting when we take a deeper look here at the types of technologies in the preclinical and Phase I of development that received funding.

Figure 2 | Source: LSN Financing Rounds Dataset | Data as of July 22, 2015

While small molecules are still receiving the highest number of individual financings, in the early stage (preclinical and Phase I) they are ahead by a significantly smaller margin. Also, at this early stage we see gene therapy taking the number two spot, receiving 33% more financial rounds than antibodies. These companies include those working toward single gene mutation orphan diseases whose expedited regulatory approval process attracts investors, as well as those utilizing recent advancements in gene therapy to develop novel treatments for various cancers, diseases of the eye, and HIV/AIDS.

Another interesting perspective on the financing rounds data comes from looking the indication areas that received investments. (As many companies target multiple indications, a significant number of the rounds that are tracked count toward more than one indication.)

Figure 3 | Source: LSN Financing Rounds Dataset | Data as of July 22, 2015

This chart should come as no surprise to anyone who has been in the industry for the past few years. Oncology is the clear leader, securing the largest number of individual financing rounds, followed by diseases of the nervous system fueled by a number of investments in Alzheimer’s disease, Parkinson’s, and ALS. Endocrine, nutritional, and metabolic diseases take the third spot, driven by a high level of investor interest in the expedited regulatory pathways for the numerous orphan indications that fall into this category, paired with the massive and growing market opportunity represented by diabetes.

A third angle that provides interesting insight into therapeutic financing rounds for 2015 is looking at the phase of development of the lead asset for companies that have received financing.

Figure 4 | Source: LSN Financing Rounds Dataset | Data as of July 22, 2015

At first glance this seems like a great sign for preclinical stage companies, which thus far in 2015 have been able to secure the second highest number of financings. Now while this is definitely an indicator of investor interest in the early stages of product development, a few things must be considered to understand fully the current competitive landscape. First, there are significantly more companies competing for those preclinical financing rounds than those looking for financing for Phase II assets. In our company platform, we have identified north of 650 companies with a lead asset in Phase II and nearly twice that number with lead assets in the preclinical stage. It should be noted that preclinical companies are often low profile entities and are difficult to track, so these figures do not reflect 100% of companies developing a preclinical lead asset. The key takeaway here is that investors are indeed making allocations to preclinical stage companies and at a significant pace; however, the competition for those dollars remains high.

2015 has been a banner year for therapeutics investment so far, and we are excited to see what the rest of the year will bring. Based on the conversations we’ve had with over 800 investors in the space, we see no signs of a slowdown in deals getting made. If you are out there fundraising, competition is tough without question, but money is moving and it is largely a matter of finding the right investors at the right time.

By Nono Hu, Senior Manager, Branding & Messaging, LSN

On June 8, 2015, the Redefining Early Stage Investments (RESI) Conference came to Texas Medical Center (TMC), the largest medical complex in the world. In order to fill in those that missed out, LSN has released a recap video which captures the happenings and buzz at TMC’s 100,000+ ft² accelerator space.

More than 300 fundraising life science executives and over 120 early stage investors booked RESI Partnering meetings to capacity. 21 panels and workshops provided firsthand knowhow regarding the early stage life science investment landscape. LSN would like to thank you for joining us at RESI @ TMCx – you made the event a huge success, and we look forward to seeing you again at RESI Boston on September 16th 2015.

By Michael Quigley, Director of Research, LSN

The Large Pharma Panel at RESI is always one of the most popular and RESI@TMCx was no exception. This panel featuring representatives from Johnson and Johnson, Boehringer Ingelheim, Bristol Myers Squibb, Takeda Ventures, and Sanofi discusses the specific areas where these groups are looking to make allocations and how companies should go about getting on their radar. Other topics addressed include why big pharma is looking early stage and how big pharma looks to partner with big medtech and foundations/venture philanthropy groups to move science forward.

To hear firsthand big pharma’s opinion on these topics, watch this RESI video recap.