By Scott Parks, Director of Marketing, LSN 

Welcome to the second installment of the LSN Summer Chapter Series. This week we’ll finish up the legal section of The Life Science Executive’s Fundraising Manifesto by covering the rest of the necessary regulatory underpinnings for your fundraising campaign: how to market your offering and potentially tap the crowd for capital.

Chapter 2, “The Legal Landscape — Crowdfunding and IPOs,” was contributed by Robert H. Cohen, Esq. This chapter provides a comprehensive look at the possibilities created for life science companies by the JOBS Act of 2012, including crowdfunding, publicizing a private offering under Regulation D, and new regulations for IPOs. Cohen takes the reader through the nuances of what is and is not permitted in terms of publicizing your offering, and also explains the different types of securities that might be offered.

Click here to download/print the PDF.

We hope you enjoy this chapter. Next week, join us for “Chapter 3: Going It Alone or Choosing a Fundraising Partner.”

Enjoyed the preview? Buy now from Amazon.com or Barnes & Noble

 

By Lucy Parkinson, Senior Research Manager, LSN 

This week, we are featuring four additional investor mandates, focused on Therapeutics, Medical Device, Diagnostics, and Healthcare IT. LSN Research has seen investors from all across the globe looking for investment opportunities and would like to share more of a sample of the types of information that we gather.

 

1. Therapeutics: US Based Venture Arm of Chinese Family Office Seeking Preclinical Biologic Opportunities

A private investment group that was founded by a single family out of Hong Kong has four operations based in Shanghai, Beijing, Hong Kong and the US. The US-based venture investment arm is actively seeking new investments in the life sciences across the US, and it occasionally invests in companies in Europe. The group focuses on pre-clinical and clinical stage companies. The investment size will vary and typically it ranges from $2 million -$10 million. The group has no set number of allocations over the next 6-9 months.

In the life sciences the firm is looking for new investments primarily in the biotech therapeutics sector. The group will also look at medical devices and diagnostics opportunities, however, which are not their current focuses. For therapeutics, the group is most interested in biologics. The group invests in a variety of therapeutic areas with a focus on oncology. The group generally invests in pre-clinical stage companies without clinical data, and it also syndicates with other investors for clinical-stage investments.

The group invests in privately held life science companies. The group is generally not interested in commercial-stage companies.

If you are interested in more information about this investor and other investors tracked by LSN, please email mandates@lifesciencenation.com

2. Medical Device: Family Office Fund Seeking Early Stage Medical Devices

A family office/venture capital firm based in New York firm manages an evergreen fund that seeks to make seed, venture, and growth equity investments in early to mid-stage medical device companies, but will also consider secured debt to help revenue generating companies with short term cash flow issues. The firm will also consider pre-seed investments. The firm can allocate anywhere from $1M to $10M per company, but generally allocates around $8M. The firm typically does 3 rounds of financing with an initial investment of around $3M. The firm is geographically agnostic, but highly prefers to invest in companies that are based in the US. The firm seeks to make about 3-4 allocations in the next 6-9 months.

The firm is currently looking for medical device companies with a strong emphasis on products with a 510(k) regulatory pathway. In terms of subsectors, the firm is looking for products specifically in the areas of interventional radiology and cardiology, spine/orthopedics and minimally invasive surgery. The firm is generally opportunistic in terms of indication.

The firm is looking to invest in companies with a management team with a track record of success in the healthcare industry. However, the firm is generally flexible and does not require a full management team. The firm can assemble the management team over the course of the investment.

If you are interested in more information about this investor and other investors tracked by LSN, please email mandates@lifesciencenation.com

3. Diagnostics: Global Diagnostics Firm Looking to Make Strategic Investments

A global diagnostics companies is looking to form partnerships and make investments in emerging life science companies. The firm is highly flexible about the structure of its investments, and primarily invests in North America and Europe. The firm looks to act as a long-term, highly activist investor.

The firm primarily invests in the diagnostic imaging sector, including imaging devices and agents, CT and MR technologies, and angiography. The firm prefers to invest in companies at or near the market approval stage but is open to considering investments in earlier-stage companies. In addition to imaging technologies, the firm is also interested in cardiology devices, and other interventional devices including delivery devices.

The firm does not provide passive financing; the firm only invests in companies developing products that the firm would eventually market and sell.

If you are interested in more information about this investor and other investors tracked by LSN, please email mandates@lifesciencenation.com

4. Healthcare IT: VC Arm of Large Conglomerate Seeking HIT and Software Enabled Device Opportunities

The venture and expansion capital arm of a large conglomerate has approximately $270 million in total assets under management. In 2014 the firm closed a fourth venture capital fund at $185 million. The firm is current seeking new opportunities in the life science space. The firm’s initial equity investment range from $3-7 million, but are typically $12-$15 million total through subsequent rounds. The firm will only consider investment into US based firms.

The firm is most interested in the medtech, diagnostics, and information providers spaces. The firm is specifically looking for healthcare IT firms within the information providers space. Medical Devices with a significant software component are also of high interest. The firm is very opportunistic within the areas of diagnostics and medtech, and with that being said the firm would be willing to look at firms that fall within the full gamut of medtech and diagnostics subsectors.

The firm is most interested in early to growth stage companies generally investing in series A and B rounds. For HCIT businesses, the firm typically looks for companies with $3 million or more of revenue. For med tech the firm generally invests in businesses post design freeze and typically does not take product development risk.

If you are interested in more information about this investor and other investors tracked by LSN, please email mandates@lifesciencenation.com

By Michael Quigley, Director of Research, LSN

In order to provide our readers with a glimpse into the big pharma internal review process for collaborations and in-licensing, I recently sat down with an ex-sourcing executive from such a group. He stated that the process generally takes from 6 to 9 months from the initial contact, but can last longer as the company goes through a series of both internal meetings as well as meetings with the external innovators. The primary sources for innovation include both partnering and scientific conferences, (particularly for early stage technologies) as well as investors and bankers (particularly for later stage technologies that have already garnered some clinical data). It is generally members of both the scientific or technical review and business development teams who attend these events, speak directly with external partners, and are responsible for identifying these new opportunities.

Once an initial contact is made, if there is interest on the pharma company’s end, they will ask to review the pitch deck and executive summary, which should provide a clear description of the technology. This process of review is led by the business development team, and they manage the technical team that actually reviews the scientific merit of the innovation. Also during this time, there often is another scientific management team that is reviewing the strategic value that the innovation holds, given the pharma company’s current pipeline and strategy. Late stage assets generally get into this process sooner and involve a bigger team on behalf of the pharma company than preclinical opportunities, but that timeline can also be a function of the pharma’s interest in the technology.

If sufficient interest is garnered at this stage, the review will also include legal teams looking into the IP of the technology, regulatory teams evaluating clinical challenges and advantages, as well as a commercial viability team looking into commercial market factors. A solid pitch deck should provide information relevant to all of these teams who might be a part of this process. From here the pharma company will schedule a call (generally led by the business development team along with a technical scientist or others) to plug any holes that the pitch deck may have. If all goes well in this call, a face-to-face meeting will be arranged as a next step. These often take place at conferences where both parties are in attendance or mutually agreed-upon locations.

This face-to-face meeting will serve to answer any additional questions either party may have, as well as to give the big pharma company a stronger feel for the management team, especially in cases when a collaboration is being considered. At this point, at least several weeks from the initial contact, the pharma company may look to set up a data room and, if necessary, sign a CDA for the opportunity. By having a data room already set up with the relevant materials, you can help to expedite this process. Due to the number of opportunities that a pharma group may review in a given year, they often are not willing to sign a CDA until they have achieved this level of interest, to avoid excessive legal liability.

From here the internal review team will pull together a formal report on the opportunity to present to upper management, who will ultimately be making the final decision. The drafting and review of this report can be laborious, further lengthening the time required to finalize a deal. Often, in reviewing the strategic relevance of the opportunity, upper management will ask their internal review team to gather more information from the company, adding more weeks to the process. Once upper management has given the green light, lawyers from both sides will begin drafting the contract, a document that can be hundreds of pages in length and can take weeks or months to finalize.

If there is one key takeaway from this piece, it should be that the time this process requires is lengthy, so patience is necessary. This also speaks to the importance of entrepreneurs starting dialogues with potential investors early. As there is a very real possibility that, even toward the last phases of the process, the deal will fall through, it is an astute business practice to engage with multiple potential pharma partners simultaneously.

The more you can understand the internal process a pharma company maintains to review technologies, the better your chances of success. I hope this article was able to provide you with some new insights into that process, and I wish you the best of luck in your endeavor!

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

LSN is pleased to announce its inaugural RESI @ TMCx Conference on June 8th, in Houston at the Texas Medical Center, the leader in collaborative medicine.

LSN is bringing more than 300 emerging life science entrepreneurs together with nearly 120 early stage investors from around the world for a full day of panels, workshops and partnering.

Through an expansive series of investor panels, RESI @ TMCx will present current topics covering investment mandates and procedures for identifying and qualifying candidates.  Additionally, RESI’s workshops will provide more in-depth advice on every aspect of the fundraising process.  The RESI Partnering Forum will allow fundraising executives to identify and book up to 16 meetings with life science investors who fit their company’s technology sector and stage of development.

Check out the RESI Program Guide to learn more! We hope to see you in 10 days at the largest medical complex.

 

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.