Category: Redefining Every Stage Investments (RESI)
The Redefining Every Stage Investments (RESI) Conference is an ongoing conference series that provides an international venue for life science companies across Biotech, Medtech, Diagnostics and Healthcare IT and to source investors from around the globe, create relationships, and eventually, secure funding.
The list below represents the investors who are currently confirmed to attend the RESI @ TMCx conference this June 8th in Houston. This number can be expected to double during the final month leading up to the event. Whether you are just thinking of raising capital in the life science space or have actively begun the process, the RESI conference offers a one-of-a-kind opportunity to get some feedback and build relationships with the investors in your market.
As of April 28, 2015 | Click the image to learn more about the investors
The ROI from attending the RESI conference is pretty dramatic. A fundraising CEO can book up to 16 one-on-one meetings for the day through our partnering software, and more by taking advantage of the networking opportunities that are offered before and during the event. No matter where you are in the fundraising process, RESI @ TMCx is the place to start a dialogue that will hopefully evolve into a compelling relationship and ultimately an allocation.
What makes RESI such a uniquely valuable event for life science entrepreneurs is not only the number of active investors we bring to the table, but also their diversity. RESI has unigue value in that its primary focus is the bringing together 10 categories of investors, including family offices, corporate venture capital, large pharma and biotech, venture capital, and more as depicted in the chart below. This breadth of diverse early stage investor participation makes RESI a great fit for a life science fundraiser seeking any kind of investment, from seed money to series A or B capital to strategic partnership.
Data as of April 28, 2015
Whether your company was just formed or you are looking for capital to fund your next clinical trial, it is never too early to start a relationship with an investor, and the RESI conference will have a strong showing of those with serious interest in the life science space. All of these investors will be profiled in our partnering software, which goes live next week and helps you schedule a meeting based on mutual fit with just a few clicks. Start the fundraising dialogue now. Register here.
Still have questions? Feel free to email or call our conference manager Natasha Eldridge at n.eldridge@lifesciencenation.com or 617-580-5001; she will be happy to address any concerns you have.
It’s been an exciting Q1 for the biotech industry, with the PwC MoneyTree Report recording 193 biotech and medtech venture financing deals. The LSN Company Platform tracks life science financing events more broadly than the MoneyTree Report; in addition to venture financing rounds, the platform also records other forms of financing secured by the 30,000 biotech and medtech companies tracked, including debt financing, research grants, IPOs, and post-IPO offerings. This is useful information if you’re providing services in the life science sector and need to know your customers’ capital landscape. The platform also records the lead investor and any co-investors in each financing event.
It may be months before all the deals that took place in Q1 are formally announced and accounted for, but at present the LSN Company Platform has recorded 229 life science financing events that took place in Q1 2015. These financings raised a total of almost $10 billion, buoyed by huge late stage private rounds and follow-on public offerings. Among the financing events LSN tracked, the median amount raised was $15 million. Figure 1 provides a complete breakdown of the amount raised by the financing events recorded in Q1:
Figure 1 | Source: LSN Company Platform, Data as of March 31, 2015
Q1 saw a healthy crop of small, sub-$5 million rounds, which are typically raised by early stage companies, but also many significantly larger raises, including post-IPO financings in which companies that went public in 2013 and 2014 tapped the markets for additional capital.
While the bulk of the tracked financing events occurred in the U.S., the LSN Company Platform also recorded deals in Canada and throughout Europe, the Middle East, Asia, and Oceania (see Figure 2).
Figure 2 | Source: LSN Company Platform, Data as of March 31, 2015
In 157 cases, the LSN Company Platform recorded the indication areas in which the companies are developing assets (in many cases, the companies were targeting more than one indication area). Figure 3 shows that oncology was the leading field for financing, with 62 oncology companies raising money in Q1; companies in diseases of the nervous system and metabolic diseases rounded out the top 3 indications for life science financing.
Figure 3 | Source: LSN Company Platform, Data as of March 31, 2015
In 125 of the 229 records, the LSN Company Platform was able to track the phase of development of a company’s lead asset. (The rest include companies for which this isn’t relevant or doesn’t fit on the biotech development pathway, such as life science service providers and many medtech or healthcare IT companies, and cases in which the phase of the lead asset is unknown). As Figure 4 shows, the largest number of raises involved companies with a lead asset in Phase II, but LSN tracked financing events for companies as early in the pipeline as the discovery stage:
Figure 4 | Source: LSN Company Platform, Data as of March 31, 2015
This chart demonstrates that it’s never too early to think about financing, even if your company is still at the discovery stage of development. In addition to giving you some vital runway time, talking to investors now can help you plan out your future fundraising path; financing rounds generally take 9 to 18 months to close, and the more interested investors you can be in touch with at the early stage, the easier it will be to bring those later rounds together.
By Natasha Eldridge, Marketing Manager, Life Science Nation
The healthcare IT sector is booming, with $6.5 billion invested in healthcare IT companies in 2014. As the Texas Medical Center taking a lead on supporting healthcare IT companies in the Southwest, RESI @ TMCx will feature a panel session exploring investment in the sector.
LSN has gathered a group of experienced healthcare IT investors to share their expertise and advice with entrepreneurs. These investors focus on the information technology opportunities that underlie healthcare innovation, from the possibilities created by big data to the digitization of healthcare providers and research labs. Panelists will discuss issues related to funding in healthcare IT, such as: How do you make your company stand out in this crowded marketplace? What do investors see as the most high-potential fields of innovation in healthcare IT? How do you demonstrate to an investor that your product has the potential to succeed?
By Shaoyu Chang, MD, MPH, Senior Research Analyst, LSN
As the pharmaceutical industry is cutting back on R&D, more and more big corporations in the field are searching externally for innovative technologies to replenish their pipelines. For biotech start-ups, partnership with these big players not only offers a source of funding, but also helps them tap into a broader knowledge base of therapeutic sector expertise, drug development, regulatory submission, and commercialization.
Experienced, serial biotech entrepreneurs are well-versed in leveraging big pharma to create value for their ventures; however, many first-time entrepreneurs do not understand how to position themselves and communicate effectively with this segment, therefore they miss out on the opportunity to cultivate big pharma relationships.
“My company has to be impeccable before I can show it to big pharma.”
Often fundraisers hesitate to reach out to big pharma because a technical detail is under development, a certain test is not completed, or the technology is simply “not ready.” As my colleague Michael Quigley has advised[1], outreach should begin as early as a consistent branding and messaging package can be prepared, despite the fact that some data may be pending. The aim with this outreach should be to introduce your company and establish a relationship, rather than to make a direct solicitation for funds.
“Initiating dialogue with big pharma early gives you many advantages,” said a former director of external research at a major pharmaceutical corporation in a recent interview. “You will have a better understanding of what pharma wants and where their interests are. You will also gain insight on where your company stands within the competitive landscape.” With this information, an entrepreneur has a better chance of conducting the right studies that will create value for the company.
“If I am in conversation with one big pharma company, I should focus on that relationship. If they find out that I am speaking to other pharma groups, it may sour our relationship.”
Engaging in a dialogue with a big pharma company is a great milestone. However, upon reaching this point, many entrepreneurs wrap themselves in a false sense of security and stop contacting other potential partners. Compared with traditional VC funds, big pharmaceutical corporations generally take longer to review and reach a decision regarding investment, especially when it comes to preclinical assets. A company may risk running out of cash if their only dialogue does not reach fruition within a critical timeframe.
What is a comfortable number of big pharma groups to talk to simultaneously? “Somewhere between four to twelve,” said a veteran venture capitalist and MIT professor. Entrepreneurs should not worry about irritating potential pharma partners. Big pharma corporations know each other, and collaboration between them is common. Therefore, entrepreneurs should disclose to potential pharma partners that they are in conversation with other parties. Interest from other big pharma companies lends credit to an asset and offers the entrepreneur an opportunity to demonstrate their ability to maintain confidentiality in a professional manner. In some cases, a healthy sense of competition can lead to higher valuation and even a bigger deal size as big pharma corporations try to outbid each other on a hot technology.
“If a pharma does not invest in me, they are not interested. I should look elsewhere.”
You are advised to always do your homework first: figure out what a big pharma partner is looking for, how your technology can complement their existing pipeline, and how to get introduced to the key person who might be interested in your technology.
However, entrepreneurs must remember that making a connection with big pharma does not result from a “hit-or-miss” shot, but from a dialogue, which is an ongoing dance. Many decision makers at pharmaceutical corporations are scientists themselves who are genuinely interested in new technologies. However, they are also worried about risks when making an investment decision. If they think you are too risky for investment now, they can lay out the steps you need to take to make yourself investable in the eyes of the firm.
More and more frequently, big pharma corporations are choosing to enter some form of collaboration with early stage companies on high risk, preclinical technologies. “Instead of licensing, big pharma enters service-based agreements with a small biotech to test their technology by using big pharma’s facility, such as disease models or animal labs, at no cost,” said the former pharmaceutical corporation director interviewed. “In exchange, the biotech shares data with its pharma partner.” Such collaboration serves as an opportunity for a small biotech to gain early validation data and open doors to further cooperation in the future.
In 2014, big pharma struck 559 licensing deals, with an average total deal size of $280 million.[2] The same year also saw $234 billion in merger and acquisition (M&A) activity in the pharmaceutical sector.[3] For many entrepreneurs, collaboration with the right big pharma partners can provide invaluable access to technical guidance, market intelligence, and funding. You must be mindful as you proceed in your outreach, but it is never too early to start!
As family offices have been increasing their exposure to direct private investments, the ability to contact these groups is benefitting fundraising entrepreneurs in a number of industries, including the life sciences. LSN’s research team has been building and maintaining dialogues with these groups for nearly three years and in doing so we have identified five strong channels for finding family offices.
1. Web/LinkedIn Search
Having recently discussed how the LSN Research Team uses advanced search techniques to uncover investors, I won’t go into too much detail here. Suffice it to say, many family offices, particularly those that are highly active in the life science space, have a significant web presence and can be identified by using Boolean Operators to target both Google and LinkedIn searches. As these groups have established these communication channels with the intent to be found, they also tend to be more open to outreach and the discussion of new opportunities.
2. Legal Firms
Family offices usually have legal representation that is often outsourced to a legal firm. These groups can provide a solid, trusted reference for young companies. If you have a relationship with a lawyer or legal firm, it is definitely worthwhile to ask if they are currently working with any family offices or high-net-worth clients interested in direct transactions in your space. Being referred by these groups can help your company bypass the fear that a family office might have of being scammed or duped.
3. Foundations
Family offices often contribute a portion of their assets to philanthropic organizations, including disease foundations, which can often foster introductions. Many foundations list major contributors on their websites and in press releases so that is a great place to start your research. These family offices often have direct ties with the disease the foundation is working with making them more likely to have interest in your opportunity. Being introduced through the foundation may be especially helpful if the organization has significant scientific expertise in the disease area and is able to validate your opportunity to the family office.
4. Academic Institutions:
Family offices, also often with a philanthropic motive, make significant contributions to academic institutions and frequently serve on the schools board. These Institutions often list board member and significant donors on their website, so those can both be great places to look. Additionally contacting the school or their tech transfer office can also lead you up the stream to who is funding them (pending they are willing to tell you). Family offices funding Academic Institutions do so in many cases to leave a lasting legacy and have a positive impact in the world, this desire to make impact can make them good targets for funding life science companies looking to impact healthcare.
5. Conferences
There exist a number of family office conferences that take place all around the globe. However, if you plan on going to a general family office conference without a direct investment focus, there will only be a small fraction of those in attendance that will be interested in your opportunity. Not all family offices go direct and not all of those that do invest in the life sciences. Also, many planners of these events are loose in their application of the label “family office,” so, if possible, it is important to conduct some due diligence on the attendees before signing up. In our experience a company has a greater chance of finding a fit with a family office when they attend a conference focused on an area that is connected with their technology.
These five channels have been valuable resources for LSN Research in the past and have led to a number of the relationships we currently have with family offices. However, as with any potential investor pool, you should not spend your time trying to contact and follow up with every family office you can find. While these groups can be more flexible with their investments and their level of risk tolerance than more traditional capital sources, not all of them are making direct investments into life science companies. You should be sure to research previous deals a family office has been involved with, perhaps by speaking with a mutual third party; this will let you know whether reaching out would make sense. If you are able to target them properly, family offices represent a significant source of financing for life science companies.
When LSN began the Redefining Early Stage Investments conference series, one of our primary goals was to hear from new voices in the life science sector that were rarely heard at other events. Family Offices now represent an important source of capital in the life science field, and LSN has contacted numerous family offices that are seeking dealflow in the medical technology field. In January, RESI hosted a panel devoted to Medtech Family Offices for the first time; as this panel was hugely popular, RESI @ TMCx will once again feature a panel of speakers from the medtech family office world.
These investors will explain to the audience why they seek direct investments in medical technology, how their investment process works, and what they look for in an early-stage medtech opportunity. If you’re developing a medtech product and want to hear how family offices engage with your sector, join us at RESI @ TMCx.
By Shaoyu Chang, MD, MPH, Senior Research Analyst, LSN
Mimi Liu, Research Analyst, LSN
As the world’s second largest pharmaceutical market with an estimated annual growth rate of 10%–13% through 2018[1], China continues to attract growth-seeking life science companies and investors from across the globe. What are the opportunities and challenges in entering in this market? This article provides an in-depth view by dissecting information gleaned from LSN’s company platform and the interviews we have conducted with investors based in Greater China.
The growth of China’s pharmaceutical market is driven by a large and aging population, increased access to healthcare, and nationwide policy reform. Over the past five years, the generic drug market has been growing steadily, while branded drugs have gained greater protection, due to the improvement of regulations and laws by the China Food and Drug Administration. Market demand has shifted from antibiotics to specialized drugs, with many therapeutics companies starting to focus on oncology, cardiovascular conditions, blood diseases, and supplements.[2]
We examined a sample of 553 innovative companies located in Mainland China, Taiwan, and Hong Kong that are developing biopharmaceutical assets from the preclinical through phase 2 trial phases (see Figure 1). Neoplasm and “lifestyle diseases,” including metabolic and cardiovascular diseases, have attracted the most number of biopharmaceutical innovators. These therapeutic indications are of high demand domestically with the potential of expansion into overseas markets. A significant number of innovative companies are working on infectious diseases that are endemic to the region, such as hepatitis, tuberculosis, and HIV. However, there seem to be fewer innovations in diseases of the nervous, digestive, and respiratory systems, despite their high health burden.
Figure 1 | Source: LSN Company Platform, Data as of April 15, 2015
The development of China’s biotechnology sector is fueled by R&D centers set up by big pharmaceutical companies as well as the recruitment of Chinese expatriate talents, or “Haigui.” State-backed bioclusters are emerging in Beijing, Shanghai, Jiangsu, Shenzhen, Hong Kong, and Taiwan. Over half of the innovators in the region are developing therapeutics, including small molecules, antibodies, proteins, peptides, and nucleic acid drugs, as shown in Figure 2. There is also a significant interest in generics and biosimilars that addresses the strong demand for high-quality, low-cost products for the vast population.
Figure 2 | Source: LSN Company Platform, Data as of April 15, 2015
Medical device sales in China reached US$32 billion in 2013, making the country the second-largest market in the world[3]. Domestic manufacturers traditionally dominate the hospital equipment market, including medical carts, operation room and ICU equipment, and autoclave sterilizers. Devices for surgical, orthopedic, and dental use are also an arena saturated with locally based companies. According to BMI Espicom, China still has a high demand for imports, especially in the diagnostic imaging sector[4]. With the rise of cross-border partnership with international device manufacturers such as Johnson & Johnson, original equipment manufacturing (OEM) and original design manufacturing (ODM) have become important business units for medical technology companies in the region.
“Medical technology has been part of China’s national development strategy with increasing importance,” said Dr. Fan Yubo, president of the Chinese Society of Biomedical Engineering, at a recent medical device industry summit. “China’s upcoming 13th Five-Year Plan will focus on digitalized diagnostics, tissue repair and regenerative materials, molecular diagnostic tools and reagents, artificial organs and life support equipment, and health monitoring devices.”[5]
Let us take a look at the life science investment landscape in the region. To date, the LSN research team has spoken to over 50 life science investors who are based in Mainland China, Hong Kong, and Taiwan. While large pharmaceutical companies and venture capital funds are traditionally major players in this field, we have seen a growing trend of private equity funds, state-backed funds, and family offices showing an interest in life science investments, as shown in Figure 3.
Figure 3 | Source: LSN Investor Platform, Data as of April 15, 2015
We found that the investors who exclusively focus on China or Asia are typically interested in companies in clinical phase 2 or later of their development pipeline. On the other hand, about two-thirds of Greater China-based investors would like to look at new opportunities across the globe, with a specific focus on North America and Western Europe. These investors are generally stage agnostic, and many have a mandate to introduce cutting-edge technology back to the Chinese market.
During our conversations with those investors, the majority showed high interest in diabetes, cardiovascular, cancer, respiratory, digestive system, and nutrition fields, which are of great significance to the region. For example, China bears the highest burden of diabetics in the world, with an estimated 100 million people living with the disease[6]. One in five adults in China suffers from cardiovascular disease, which accounts for 40% of all deaths[7]. Moreover, the incidence of lung cancer in China has grown exponentially since the 1970s, due to smoking and air pollution. The disease is now the number-one cancer killer in the country, with over 487,000 new victims in 2010[8].
China represents immense opportunities for development of novel therapeutics and medical devices due to factors such as rapid market growth, the concentration of an educated workforce, and improving intellectual property protection and regulatory environment. In the medtech sector, state-led initiatives have identified high-end digitalized diagnostics, imaging devices, molecular diagnostic tools, and health monitoring devices as key strategic fields of development. Disease areas of the nervous, digestive, and respiratory systems present with high disease burden and relatively fewer innovations. Innovative biotech and medtech entrepreneurs should be able to find plenty of potential investors, as well as cross-border cooperation in R&D and manufacturing.
[5] Chinese Society of Biomedical Engineering. “Fan Yubo: Initial View on the Medical Device Strategies in the Thirteenth Five-Year Plan”. Chinese Society of Biomedical Engineering Website. 2015. Accessed from http://www.csbme.org/csbme/ch/showNewsDetail.asp?nsId=231
[6] Veronica Hackethal. “Diabetes Is a Major Public-Health Crisis in China”. Medscape. 2014.
