By Michael Quigley, Director of Research, LSN

As a fundraising entrepreneur, you will likely find yourself engaging in initial face-to-face meetings with investors, whether at a conference, coffee shop, or in an office. Given the time constraints inherent in these kinds of meetings, it is crucial that you have a plan in place in order to get as much as possible out of them. What follows are suggestions for how best to manage one of these conversations.

In terms of what to bring for materials, a simple, cogent pitch deck made up of 10–12 slides can be a fantastic tool. However, before you even begin to present the first slides, you need to validate a fit between the investor and your company. This should be done in two steps:

1. Deliver a three- to five-sentence elevator pitch that addresses who you are, the space you are working in, and what differentiates you from your competitors.

2. Ask the investor to return the favor, so you can gain an understanding of their firm and what they are looking for in potential investments.

With this information both of you will be able to determine whether further dialogue would be of value within the first few minutes of the meeting. Additionally, you will be able to determine what specifically the investor might find interesting about your opportunity, which you can then emphasize later in your conversation.

Once you have both introduced yourselves and your goals (and hopefully identified fit), you can begin to walk the investor through your pitch deck. Particularly in this time-pressed type of scenario, you should keep the slides very simple. View them as a visual prompt for spontaneous conversation, rather than a script to read word for word. Remember that you can always send the investor more information via email, and that if they are interested, they will likely be asking for additional materials.

However, the slides should definitely address:

• The market need for your product
• The technology you are developing, and its origin and differentiating factors (provide a clear description)
• Your strongest supporting data
• The management team
• Current partnerships
• The status of IP
• Financials, including historic spending, current needs, and future use of funds
• Exit environment/strategy

Do not simply rattle off all of these details as the investor stares and nods. It is crucial for you to foster a dialogue to ensure that the investor is able to follow what you are saying and grasp your value proposition. By allowing for back-and-forth communication, you can identify and address any potential objections. Hopefully, if the investor is genuinely interested, they will ask you questions that will help direct the conversation. You should be comfortable enough with your slides that you can jump from one to another as the dialogue branches out.

After you have gone through the basic introductions and elaborated on your opportunity using your pitch deck, you should directly gauge the investor’s interest. The best way to do this is to be up front and ask whether your opportunity is something they would be interested in pursuing further. If the answer is yes, ask about the investor’s process and timeline for moving forward. Determine a firm follow-up date and whether there are any additional materials they would like to receive. If the answer is no, try to understand why. Is it too early in the development process? Perhaps they would be worth contacting later down the line. Aggregating a list of negative and positive responses can help you better understand your company’s inherent strengths and weaknesses and plan for the future.

Ideally you should close the meeting with a reminder of your main differentiating factor: that which makes your opportunity stand out from those of your competitors. Repeating your core value proposition at the end of the dialogue helps to solidify that message with the investor, so that when they think back on the conversation, it is what they will remember. Successfully navigating investor meetings, especially when they are brief or occur spontaneously, may take practice, but if you stay the course and follow these tips, you can become nimble and flexible, and have a higher chance of developing meaningful relationships.

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

The immuno-oncology field is seeing high-profile deals and increasing media attention.  We have therefore used the LSN company database to analyze a sample of biotech companies working in this field. Cancer immunotherapies harness the power of the immune system to target malignant cells. Unlike traditional approaches to cancer such as radiotherapy and chemotherapy, these emerging technologies hold the promise of precise therapeutic effects while leaving the rest of the body unharmed. These products’ clinical benefits are impressive, and so is their financial performance. In 2014 alone, cancer immunotherapy drugs have generated about $41.0 billion in the United States, accounting for nearly 50% of the overall oncology drug market (1).

With more than 30,000 company profiles, LSN’s company platform provides a bird’s eye view of the global early stage biotech and medtech R&D landscape. Our search in the LSN company platform yielded 522 unique companies that are currently developing at least one cancer immunotherapy product. About one-fifth (119) of them are publicly listed, while the rest are private or subsidiary companies. Cancer immunotherapy R&D has become a global phenomenon with the United States as the leader in terms of number of companies, followed by China, Germany, the United Kingdom, and Canada, as shown in Figure 1.

There are three major categories of cancer immunotherapies: cytokines and immunomodulation agents; monoclonal antibodies; and cell-based therapies. We further analyzed our sample of the 522 companies, and the breakdown of their technologies is shown in Figure 2.

 

The original pioneers in cancer immunotherapy utilized cytokines such as interleukins and interferons to stimulate immune response against cancer. This is a broad-stroke approach that causes a response that’s often non-specific and therefore frequently leads to dangerous side effects. In recent years, newer, more sophisticated immune stimulation and modulation pathways have been explored, in an attempt to limit these side effects and increase efficacy.

In terms of commercialized products, monoclonal antibodies remain the mainstay of cancer immunotherapy. These biologic drugs can act either as carrier to deliver chemotherapy drugs to targeted sites, as inducer for an immune attack on a tumor, or as inhibitor of key biological pathways in cancer cells. Many major pharmaceutical companies are actively securing a strategic position in this field(2).

Cell-based therapies have attracted the most media attention with a number of highly visible public companies. In general terms, these technologies involve collecting immune cells, such as T cells or dendritic cells, from a patient with cancer. The harvested cells are reprogrammed through genetic engineering or peptide and adjuvant stimulation. Activated immune cells are equipped with the ability to recognize and kill cancer cells and are then reintroduced to the same patient to treat the disease. This approach is highly specific and has platform potential so long as appropriate tumor antigens are available.

Many of the above technologies can be referred to as ‘therapeutic vaccines’—induction or augmentation of immune responses against existing diseases. A significant minority of cancer immunotherapy companies are developing ‘prophylactic vaccines’ that aim to prevent cancers from developing in the first place. Their R&D efforts are concentrated in specific fields such as cervical cancer (HPV), liver cancer (hepatitis viruses), and gastric cancer (H. pylori). Many other cancer immunotherapy companies are exploring various areas including adjuvant technologies, tumor antigen discovery platforms, and nucleic acid-based vaccines.

Public awareness of cancer immunotherapy has increased as it enters regular clinical practice and mainstream news channels. However, we should caution that many of these technologies are still experimental, especially cell-based therapies. It remains to be seen how these therapies will help patients on a large scale. The LSN team will keep you updated as we closely monitor trends in this field.

1. PRNewswire. Global & USA Cancer Immunotherapy Market Analysis to 2020 – Analysis and Forecasts for the $41 Billion Market. Apr 10, 2015.
2. Press Release. Celgene Corporation Enters into Strategic Immuno-Oncology Collaboration with AstraZeneca to Develop PD-L1 Inhibitor Program for Patients with Serious Blood Cancers. MarketWatch. Apr 24, 2015.

By Natasha Eldridge, Marketing Manager, Life Science Nation

Panelists will discuss in-depth the key motivators behind big pharma’s shift towards an early stage strategy as a way to fill the gaps in their pipelines. What indication areas are the most sought after? How does an early stage entrepreneur interface with business development executives from pharmaceutical companies? LSN’s Big Pharma RESI Panelists will shed light on these questions and more.

Moderated by Donnie McGrath, VP, Business Development, Bristol-Myers Squibb this panel will feature:

Mark Ralph, Director, External Partnership Operations,Boehringer Ingelheim

Melinda Richter, Head, Johnson & Johnson Innovation, JLABS

Michael Martin, Senior Investment Director, Takeda Ventures, Inc.

Sylvaine Cases, Head of External Science & Partnering, US West, Sanofi

Hear from big pharma executives as they explain how they engage with early stage startups, and how they like to be contacted. The speakers will help the audience understand their timeline for contact, and give advice on how to create a dialogue that leads to a relationship and an eventual alliance. If you need to understand the timeframe and limitations of how big pharma corporate works, this expert session is crucial for you to attend.

By Lucy Parkinson, Senior Research Manager, LSN 

LSN Research often hears from investors that when choosing a company to invest in, a sound management team is just as important a factor as the quality of that company’s technology. Developing an innovative biotech or medtech product is a lengthy process fraught with risks, and it takes a strong management team to successfully guide a scientific discovery through all the challenging steps. So what are the qualities of the ideal management team, and how will investors judge whether yours has what it takes? Investors have reported the following important attributes:

– A Balance of Expertise

It goes without saying that investors feel most confident working with people who are experts in their fields of technology. However, many investors have told us that they look for management teams with a balance of skills, both in science and in business. While deep expertise in a company’s area of technology is valued, some investors are apprehensive about working with a scientist who has a solely academic background and lacks familiarity with the mechanics of turning IP into a commercial business. For example, an inexperienced manager might not be able to position the company to meet the needs of commercial partners, even if the company’s scientific program is carried out highly effectively.

– Ability to Build Value

Investors often stress that a scientific discovery in itself doesn’t make a company valuable. The management team has to build value by developing and positioning the technology for commercialization. They must have a solid plan for how to achieve this, and show that they have the ability to execute on this plan as well as adapt to any changes that occur on the way. A team must also demonstrate that they have the vision to grow a company and will be able to handle difficulties that may arise, such as issues with competitors and regulatory requirements.

– Capacity to Strategically Work with Partners

Developing and commercializing a biotech or medtech asset requires coordination with development and strategic partners. Management teams not only have to identify the right partners for their company, but also must ensure that their work is carried out according to those partners’ requirements. Big pharma scouts are typically very focused on this quality in smaller collaborators; they want a management team that shows awareness of the particular data the partner needs to see, and how to structure a study in order to obtain that data. Working effectively with others may be particularly challenging if the company has multiple partners who have differing goals that they require the management team to meet.

– Ability to Adapt with the Changing Environment

Considering the long development time frame that is required for healthcare products, it’s very likely that a company will be affected by changes in the landscape that occur as they move forward. Certain factors that are favorable today, such as buoyant public markets for biotech companies and an increasing pace of FDA drug approvals, might change in the future. Investors need to rely on the management team to continue to build the company’s value even if the environment becomes more adverse.

– A Solid Track Record

In order to gauge the strength of a team across all of these factors, investors typically study the group’s track record in great depth. Even if you’re not a serial entrepreneur, it’s important to highlight your relevant past experiences, both successful and not. Have you operated in a challenging environment? Have you demonstrated your ability to adapt to changes in your field? As one experienced investor told us recently, there is never a way to guarantee that a management team will be able to succeed, but indications of experience and depth throughout their track record increase the odds.

A great technology can be doomed to failure without the right team and while many investors are willing to tolerate scientific risk, they generally pass whenever they feel this risk extends to management or execution. Keep these variables in mind when you are building your team and identifying your strengths and weaknesses, and your company will have a much higher chance of making it through an investor’s vetting process.

By Mimi Liu, Research Analyst, LSN

As China’s economy has grown over the past 10 years, Chinese investors have begun to allocate their capital to companies overseas, including those in the U.S. life science industry. Figure 1 shows that the annual value of Chinese direct investments in the U.S. biotech industry has increased most rapidly in the past two years.

Of the Greater China-based life science investors interviewed by LSN Research, a staggering 75% are interested in opportunities based in the U.S. [See Figure 2.]

Let’s take a look at the factors that make the U.S. life science industry an attractive opportunity for life science investors based in China.

Rising Chinese Wealth

China now has the world’s second largest millionaire population—over two million millionaires as of 2013.(1) Additionally, many Chinese companies have increased their resources and are interested in investing capital overseas for both financial and strategic purposes. Many of these companies and individuals are particularly interested in investing in the U.S., where patent and legal systems can provide better protection for their investment assets than in China.(2) These investors are often interested in diversifying their investments across U.S. industries, including the life science and healthcare fields.

Strong Life Science Industry and Innovation Ecosystem

The U.S. is the global leader in the life science industry, with a complete value chain from R&D to market and distribution. Some 46% of global life science R&D is carried out in the U.S., which is one of highest shares in any industry.(3) Solid financing supports the research successes in the U.S., with NIH funding supporting life science companies at a variety of stages of development via STTR and SBIR grants.

The U.S. has many other resources for early stage life science companies that are scarce in Greater China, such as incubators that provide financial assistance and expertise to life science start-ups. Since 2012, at least 12 new biotech incubators have been founded in North America to provide support to life science start-ups spinning out of academia.(4) The increasing numbers of biotech incubators launched by academic institutions, laboratories, medical centers, and top pharma companies are well placed to provide space, equipment, services, expertise, and other resources to early stage companies. These companies are developing innovative technologies and are prepared to move to the next stage of their development, and many are therefore attractive investment targets.

Talented Entrepreneurs and Access to Expertise

In the U.S., large bioclusters have formed in cities that boast top universities and research institutions. A large number of talented entrepreneurs have emerged from those universities, which provide access to expert scientific guidance. This talent pool provides early stage life science companies with leadership that supports companies in their development process. Investors generally put great emphasis on the quality and depth of a management team, and companies based in U.S. life science hubs are often able to satisfy this requirement.

Exits

For life science investors, return on investment is key, and exit opportunities are therefore an essential consideration. With the number of IPOs among U.S.-based companies up 66% in 2014 compared to 2013, the market for life science IPOs is hot.(5) The U.S. also sees significant M&A activity in the life science sector, thus providing multiple avenues to exit.

Challenges

For foreign investors seeking opportunities in the U.S., barriers and challenges are unavoidable. The time difference might make it difficult to set up a meeting, and cultural differences might cause misunderstandings between investors and entrepreneurs. Also, Chinese investors may not have expertise navigating the U.S. regulatory system, whether for financing or clinical development. All parties must be prepared to address these unique difficulties.

Over time, we have come across several China-based investors employing creative methods to overcome these challenges. A few larger institutions have set up outposts in major biotech hubs such as San Francisco and Boston. These overseas offices act either as scouts for new technologies or as bridges to expand the parent company’s business operations. A considerable number of consulting and broker agencies are emerging to provide services to China-based investors who are looking to increase exposure to U.S.-based companies.

However, as this article has outlined, there are compelling reasons that Chinese investors are interested in U.S. start-ups, and LSN Research has contacted many investors in that region who have expressed such interest. We expect that increased connections and communications will pull Chinese investors and U.S. companies more closely together in the future.

1. http://blogs.wsj.com/chinarealtime/2014/06/10/china-now-has-more-millionaires-than-any-country-but-the-u-s/
2. http://www.us-china-cerc.org/pdfs/Analysis_of_IPPolicy_WANGHANPO_ENGLISH.pdf
3. http://www.rdmag.com/articles/2013/12/industry-breakout-life-sciences
4. http://www.the-scientist.com/?articles.view/articleNo/39245/title/Incubator-Boom/
5. https://www.fenwick.com/publications/pages/technology-and-life-sciences-ipo-survey-2014-full-year.aspx

By Natasha Eldridge, Marketing Manager, Life Science Nation

The RESI Innovation Challenge is taking place in a new home in Houston Texas on June 8th at TMCx and will feature 30 handpicked early stage biotech, medtech, diagnostic and healthcare IT innovators from around the country. These entrepreneurs have been selected by LSN’s scientific validation team to receive a presentation space in the exhibit hall for the full day of the conference to showcase their innovations to investors and fellow entrepreneurs. LSN has found repeatedly that companies presenting in this venue interact with more investors—and with more meaningful dialogues—throughout the course of the day than would be possible in a traditional 15-minute pitch contest.

To add some friendly competition to the mix, the RESI Innovation Challenge invites all attendees to participate in a virtual investment contest. At the start of the day, each attendee will receive “RESI Cash” to allocate to the entrepreneurs whose technologies they expect will be most influential. The capital that was invested will be tallied up and the top three winners will be featured in our RESI newsletter recap that will go out to LSN’s 20,000 newsletter readership.

• First prize winner of the RESI Innovation Challenge will receive complimentary subscription to the LSN Investor Platform for a year.
• Second prize winner will receive two complimentary RESI tickets, to be used within 12 months.
• Third prize winner will receive one complimentary RESI ticket, to be used within 12 months.

Whether you are an investor, an entrepreneur, or a service provider, make sure you check out the exhibit hall to meet with some of the top innovators in the field and invest your “RESI Cash.” We will see you there!

By Michael Quigley, Director of Research, LSN

Developing and commercializing a product in the life science space is notoriously capital intensive and usually involves a high level of risk. To assist with this difficult development process, many organizations have formed that are designing and utilizing new approaches to help move science forward in the early stages of development and clinical research. These include Studios, Incubators, Accelerators, and Funds that aim to create more financially efficient and de-risked models of engagement for companies and investors. The RESI conference will bring together some of the best and brightest of these groups to discuss how they are creating, coaching, and funding life science companies in a more productive manner.

During this panel, moderated by Dennis Ford, CEO & founder of Life Science Nation, the audience will hear from:

• Melinda Richter, Head, Johnson & Johnson Innovation, JLABS
• Bill McKeon, EVP, CSO, & COO, Texas Medical Center
• Lisa Rhoads, Managing Director, Easton Capital
• David Lucchino, Entrepreneur In Residence, Puretech
• Leo Linbeck, III, Chairman & Founder, Fannin Innovation Studio

Although the forming of virtual companies has shown great promise in reducing costs and keeping companies nimble, along the product development pathway, many inefficiencies remain. This panel will discuss what some of the most cutting-edge groups in the space are doing to tackle these challenges. Conference attendees are sure to gain insight from these individuals who are working to make the life science product development process more streamlined.