Your company is growing and seeking funding-you have great science that addresses an unmet need and a compelling value proposition!  Your product is better, faster and cheaper! But is your legal house in order? The McDermott team will discuss how to navigate through the life sciences legal landscape to help you avoid the common pitfalls experienced by too many life sciences entrepreneurs.  From formation and founder issues, to the big three of intellectual property, regulatory and reimbursement, to the complexities of raising capital through crowdfunding and initial public offerings, we will provide you with insights into the latest funding trends and a virtual checklist to assure you are building your company on a firm foundation that will facilitate access to capital and future growth.

SPEAKERS

Robert H. Cohen, Partner, McDermott Will & Emery LLP

Todd Finger, Partner, McDermott Will & Emery LLP

Richard B. Smith, Partner, McDermott Will & Emery LLP

AGENDA

• Formation of a Start-up
• Founders: Good relationships amongst founders tend to drive a company’s success
• Early Stage Financing
• Later Stage Financing/Initial Public Offering
• Non-Traditional Financings
• Intellectual Property Issues
• Regulatory Issues
• Reimbursement Issues
• Resources
  • Legal Documents/Terms
  • Investor Questionnaire/Checklist
  • Life Sciences Entrepreneurs Acceleration Program

By Michael Quigley, Director of Research, LSN

Few people, if any, have stronger motivations for the advancement of innovative and effective new therapies than the affected patients and their families and friends. Patient groups are established as a way for these individuals to band together around a particular indication or branch of medicine to help move science forward. Formed by patients and for patients, these groups are looking to improve the standard of care by pooling their capital, scientific resources, and networks to aid in both academic and commercial-stage research.

The upcoming RESI Conference will host a patients group panel moderated by Steve Perrin of the ALS Therapy Development Institute. The panel will include the following speakers:

Joe Camaratta, Board Member, Founders Affiliate, American Heart Association

Annette Bakker, President & CSO, Children’s Tumor Foundation

Steven Young, President & COO, Addario Lung Cancer Medical Institute

Monica Gow, Executive Director, Wake Up Narcolepsy

How do these organizations help bridge the gap between the early discovery interests of academia and the late-stage clinical development expertise required by the pharmaceutical industry? How do these groups support high-risk programs and, at the same time, de-risk opportunities so that they become tractable commercial assets for partnership? What strategies do these organizations use to finance translational research through IND-enabling studies and POC clinical trials, and what do they expect in return from potential partners downstream?

Learn the answers to these questions and others by attending this panel at the RESI Conference next week.

By Michael Quigley, Director of Research, LSN

In recent years, family offices and private wealth investors have become an increasingly important pool of capital for fundraising entrepreneurs in the life science space. Unlike angels or high-net-worth individuals who generally have up to $100 million in capital and opportunistic investment mandates, family offices and private wealth groups represent families and individuals who have $100 million to $1 billion or more in total assets and who use a more institutional investment approach.

The amount of capital these groups manage enables them to have a dedicated staff for screening, due diligence, deal selection, and portfolio management. Many family offices have taken a keen interest in the financial returns and the potential social impact that investments in the life science sector can bring.

This panel aims to spotlight six family offices and investor groups, many of which have historically remained very quiet about their activity in the space. Moderated by Bill Brah, Founder & Executive Director of UMASS Venture Development Center, the panel includes the following speakers:

John Nelson, Managing Director, Genrich Inc.

Melissa Krauth, Principal, Claria Bioscience

Meredith Fisher, Director and Partner Investments, Private Investment Office

Chris DeSouza, Director, Broadview Ventures

Alejandra Paredones, CEO and Founder, BSI Capital Group

Todd Holmes, Director, Gurnet Point Capital

What are their particular motivations to invest in the space? How are deals generally structured, and how do they differ from terms of other investor classes? What, in addition to capital, can these groups bring to the table for an early stage company? How does an entrepreneur find a family office and get in touch, and what information do they look for in the initial correspondence? All these questions and more will be answered on September 17^th.

By Lucy Parkinson, Senior Research Manager, LSN

At LSN, we meet many life science entrepreneurs seeking capital, and they are generally aware of some of the options they have for funding. In fact, they may already be approaching venture capital firms, the licensing arms of pharmaceutical companies, or nonprofits that give grants in their field. Yet many entrepreneurs are surprised to learn that family offices are investing in the early stage life science space—and in significant numbers.

Why have so many family offices moved into this space? There are many motivations, but in talking to family offices, we’ve found that the following five reasons are the most common:

• Sophisticated Investment Strategies. As institutional investors with significant assets under management, family offices use a variety of strategies to conserve and grow their wealth. The risks and rewards of early stage life science investments can contribute to a balanced, diversified portfolio of family assets. In some cases, these investors were formerly limited partners in venture capital funds but returned to managing their own investments because they received poor returns in spite of paying high management fees to VCs. These family offices typically have a similar buy low, sell high approach to private equity funds.

• Impact Investing. Traditionally, family offices have a philanthropic mandate in addition to an investment mandate; wealthy families often care about having a positive social impact. But philanthropy has itself been evolving. In recent years, the concept of impact investing has become more popular; family offices can put their long-term investment capital towards goals they care about, such as improving public health or advancing science, and achieve something meaningful in addition to ROI.

• A Personal Connection. This is a more close-to-home variant on the reason above. Some family investment funds are focused on investing in a specific indication area that has affected the family. Perhaps a family member has a serious disease, and the family hopes to get a new drug to market as fast as possible. Or, perhaps the family founder died of a certain disease and the rest of the family has decided to devote part of their wealth towards treating that disease. The family may also have come into contact with top researchers because of their personal interest and may have access to scientific advisors who can help them target their investments wisely.

• Expertise and Resources. The founders of family offices made their wealth in many industries. In some cases, that wealth was earned from entrepreneurial success in the healthcare sector. Warren Buffett once said, “Never invest in a business you cannot understand.” These families agree. They have a great deal of expertise and many personal connections in the healthcare field and are confident that they can find the best opportunities. In some cases, these families still have ownership in a healthcare or life science business and are therefore also interested in strategic synergies with their existing holdings.

• Truly Patient Capital. Investors often tell us how long they intend to remain invested in a company after making an initial commitment: 24 months is common; a forward-thinking venture fund may plan to stay invested for three to five years. Recently, a family office investor told me that he had been backing a life science company in his portfolio since 2003. Because a family office’s investment horizons can run into the decades, family offices have to be aware of long-term trends that are going to affect their wealth, including demographic and social changes.  It makes sense for them to place some long-term strategic bets on trends favorable to the healthcare industry, such as aging populations and rising rates of chronic disease.

For all these reasons and more, life science entrepreneurs may find that their interests align with family offices. Although these investors are typically more under the radar than others, building a relationship with them isn’t a hugely dissimilar process. If you have reason to believe you’re a good fit for the mandate of a family office, the process starts with you sending your pitch and following up with a phone call.

 

By Jack Fuller, Director of Business Development, LSN

LSN has developed the Life Science Fundraising Boot Camp, a training workshop that we present around the world. I recently had the opportunity to travel to a number of life science organizations throughout the southern and western U.S. to teach entrepreneurs about the changing investor landscape. After traveling to four cities in as many days, and presenting to companies with assets and technologies in various stages from discovery through clinical, I was struck by the deep need for information about tactical skills for fundraising. A VC can pontificate about the current regulatory environment and speak in broad terms about developing a strategic plan for a company; however, virtually no one is willing to tell the life science community that fundraising can require making up to 30 phone calls a day for 9 to 18 months.

If you’re looking at that number in disbelief, ask the most successful fundraising executive you know what it took to get funding. On every team there is a person, be it the CEO or an intern, who has to make the calls and send the emails to build the relationships that will eventually lead to allocations.

By demonstrating the power of a sophisticated outbound investor campaign to companies, LSN is working to bring a professional fundraising approach to a segment of the community comprised of mainly scientist-entrepreneurs. These folks are often new to the experience of raising financing or out of touch with current best practices and, therefore, unaware of the enormous power of outbound marketing and canvassing to build relationships with potential investors.

The Fundraising Boot Camp breaks the fundraising process into six major components:

• Differentiating between the historic and the current investor landscape and players
• Debunking the major myths around fundraising (see “The Top 10 Most Common Fundraising Misconceptions), understanding the difference between a “referral” and a “fit,” and realizing that fundraising is a numbers game
• Breaking down the various types and components of investor mandates
• Positioning and creating marketing collateral
• Creating a global target list (GTL) of interested investors
• Organizing and executing an outbound fundraising campaign

With additional material from LSN’s new book, The Life Science Executive’s Fundraising Manifesto, and from our CEO Dennis Ford’s graduate-level course at UMass Boston on Entrepreneurship Sales and Marketing, LSN’s Fundraising Boot Camp teaches life science entrepreneurs the tactical fundraising skills required to raise capital for early stage companies.

By Dennis Ford, Founder & CEO, LSN

As the early stage life science landscape continues to shift and investors are raising new funds, altering their mandates or shifting into or out of the sector completely, it’s increasingly challenging to stay on top of what life science investors are looking for. If you read this newsletter you know that LSN’s philosophy is to find investors that are a fit for your technology and stage of development. This is much more efficient than reaching out blindly using a ‘shotgun approach’ to approach any investor that has ever been involved in life sciences. Raising capital is all about efficiencies. Remember, it’s a numbers game – an executive fundraiser will do infinitely better when reaching out to investors that you know are a fit for your firm. Vetting and regularly adding new investors to your target list is a necessary part of this process.

This is why the LSN Investor Platform added a new feature this week; Save Search, which allows users to save their global targeted lists of potential investors and receive email alerts daily, weekly, or monthly when LSN uncovers new investors that match these criteria, or if changes are made to the profiles or mandates on your list.

LSN’s profiling and matching technology allows you to filter for investors that are interested in your technology. You can search the LSN Investor Platform to find all the investors that have self-declared an interest in companies in your field through a one on one phone conversation with LSN’s researchers. You can now start the process of qualifying and contacting hundreds of potential investors, with live support from LSN’s Save Search feature to alert you to the newest investors in your field. You come into work on a Monday morning and new investor alerts are sitting in your email box.

 

When fundraising, it is critical to leave no stone unturned and to move quickly and efficiently. With this feature in place, entrepreneurs will be able to receive a constant flow of information on relevant investors, and can use these updates to get their technology in front of every potential partner LSN identifies, quickly.  Considering that the research team has been bringing in 20+ new and updated mandates per week, this allows for users to be able to get the maximum value of the platform by assuring that no potential investor falls through the cracks.

 

By Lucy Parkinson, Senior Research Manager, LSN

If you’re a regular attendee of life science investment conferences, you’ll have found that most of these conferences offer 15-minute presentation slots as a means of attracting scientist-entrepreneurs to the event. An exclusive speaking spot in which to tell the whole crowd about the breakthrough technology your company is working on can certainly sound like an attractive offering. But in reality, LSN has found that the 15-minute model offers very poor value to entrepreneurs.

Many presenters arrive at the event anticipating this chance to speak about their technology to a large audience of interested investors; however, entrepreneurs will invariably find that these 15-minute presentations are only attended by other CEOs looking to garner IP and positioning, and vendors hoping to sell their services to the presenters, while the attending investors are busy networking or taking partnering meetings elsewhere. Investors have limited interest in watching these public pitches and therefore these presentation opportunities provide low value to an entrepreneur seeking investment. Rather, the best way to share your presentation with an investor is through one-on-one meetings where you will have the investor’s full attention and can engage in a back and forth discussion about your opportunity. Receiving an investment requires building a relationship with an investor; it’s much easier to begin that relationship with a personal meeting rather than a public pitch._­­

This is why, after experimenting with the 15-minute model at our first ever RESI event and discovering up close how flawed it is, LSN turned our back on the public pitch approach. Instead, we doubled the number of partnering slots available at RESI and created a new form of presentation that provides much more value; the RESI Innovation Challenge. Rather than limiting their presence to only 15 minutes, we showcase our innovators on the exhibition floor for the entire duration of the event. RESI Innovators are provided with an easel to display a poster board marketing presentation, and each attendee is given ‘RESI Cash’ to ‘invest’ in the innovators in a virtual challenge, with winners announced and prizes awarded at the end of the day. While our available slots for the Innovation Challenge have sold out, our partnering software is already live and there are still hundreds of meeting slots available.

The opportunity for both marketing and personal engagement provided by the RESI presentation and partnering model has been praised by both investors and innovators. If you’d like to see how it works for yourself, please join us at Fenway Park on September 17th.