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.

By Tom Crosby, RESI Conference Manager, LSN

Institutional Strategic Investors: Point-of-Care Institution Panel

The lack of capital available for early stage life science companies has brought many different groups with strategic interests to the table. This panel aims to shed light on the institutional strategic companies that are now funding early stage commercial research in the space, many of whom have a primary goal of lowering the cost of care. Moderated by Monique Yoakim-Turk, Partner at the Technology Development Fund of Boston Children’s Hospital, the audience will hear from:

• Barbara Gamez Sims, Technology Licensing Manager, Mayo Clinic Ventures
• Manu Nair, Vice President, Technology Licensing Manager, Oklahoma Medical Research Foundation
• Chris Coburn, VP, Innovation, Partners HealthCare
• Kanad Das, Program Manager, Stanford SPARK

Groups including hospitals and healthcare providers will discuss their differentiating investment models and structures, as well as what they can provide beyond just capital. What types of technological innovations are these groups most interested in? How do they go about sourcing new opportunities? At what stage of development do they tend to get involved, what do they look for in early communications, and what is their role with a company’s development following investment?

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I-Banks, 3PMs & Consultants: Fundraising Partners Panel

As early stage fundraising has been challenged of late, many emerging companies elect to use a fundraising partner — such as an investment bank, independent advisor or consultant — to take the lead on capital raising activity. The question is, can an investment bank make a random process more efficient?

Moderated by Colin Widen, CEO of Boston Innovation Capital, the audience will hear from:

• Paul Papi, Director, Investment Banking, Freedom Investors Corporation
• Dan Ross, CEO, IMS Health Capital
• John Cullity, Partner, Torreya Partners
• Adam Cutler, Managing Director, Trout Group

The core of the discussion will focus on weighing the pros and cons of outsourcing your fundraising efforts. Panelists will discuss the unique characteristics among new entrants to the life science investor pool, and more importantly, how to access these entrants. What changes with your approach depending on the type of investor you’re dealing with? What are the different levels of time to participate among these investors? How does the picture change when working with for-profit vs. philanthropic players? The role of data as a fundraising tool will also be highlighted throughout the session.

By Alejandro Zamorano, VP of Business Development, LSN

LSN is proud to announce the RESI Partnering Platform. The goal is to have a dynamic partnering platform to match biotech and medtech companies with the investors that are a fit and provide an opportunity to create a compelling dialogue that fosters a long-term relationship. LSN designed the RESI Partnering Platform from the ground up by leveraging an innovative partnering portal provider called Meeting Mojo. Click the video below to see how the RESI Partnering Platform can help your partnering efforts.

Considering the sheer quantity and diversity of investors attending RESI, paired with the power of the RESI Partnering Platform, the RESI conference is the right place for early stage life science companies to meet investors that are a fit. We hope to see you there.

By Michael Quigley, Director of Research, LSN

Just over a year ago I published an article discussing how the growth rate of seed and startup stage life science financing rounds was substantially smaller than all other financing rounds. More recent data pulled from the LSN’s Company Platform further validates that claim. Exhibit 1 compares the number of seed and startup stage financing rounds to the total number of financings in the US life science space over the past 9 years.

 

Exhibit 1 demonstrates that, as said by Alexis Borisy (a partner with life science VC firm Third Rock Ventures), “In the overall numbers, early stage life science investment isn’t growing compared to later stage investments.” The disparity in growth between these two variables presents a serious threat to large pharma companies, and provides savvy investors with an opportunity for strong returns. If this trend continues over time, the demand for later stage and more developed technologies will grow to be significantly greater than the supply. Large pharma companies are constantly looking to in-license and acquire technologies for their pipelines in order to protect future revenue streams as patents expire and better treatments become available, threatening their market share. However if there are not enough of these early stage companies getting funded today, then down the road pipelines will go dry.

By investing in early stage research today, investors could position themselves to have great exit potential to large pharma companies who, if this gap goes unfilled, will be suffering from painfully dry pipelines. Interestingly enough, large pharma companies seem to be well aware of this threat and have become a major funding source for early stage companies through the establishment of corporate venture capital arms. Many of these companies are also now investing in entirely separate venture capital and private equity funds with hopes that they will yield financial returns as well as funding the development of strategically relevant technologies. Other types of investors are also gaining interest in early stage life science companies as well, though their motivations vary across the spectrum from philanthropic to financial.

As a life science entrepreneur, it is important to understand what the long-term strategic opportunities for your assets will look like. While the recent IPO window has shown significant exit potential via public market interest in the life science space, there is significant uncertainty surrounding how long it will remain a viable option. However, the seemingly insufficient investment in early stage rounds for life science companies today could make the future exit possibilities for your asset very attractive to potential investors.

By Tom Crosby, RESI Conference Manager, LSN

A New Model for Foundations: Non-Profit to For-Profit Panel

In the past, non-profit organizations dedicated to research in specific disease areas were typically unable to take advantage of the upside of any significant discoveries that were funded through their organization. Recently, a new trend has emerged: non-profit organizations investing in early stage biotech/medtech companies in return for equity. This new way of investing provides the foundation the ability to reinvest their profits, providing additional capital to fund future research.

 Moderated by David Sandak, Vice President, Research at Accelerate Brain Cancer Cure, the audience will hear from:

• Howard Fillit, Executive Director and Chief Science Officer, Alzheimer’s Drug Discovery Fund
• Benjamin Seckler, Founder and President, Charley’s Fund
• Salvatore La Rosa, President & CSO, Children’s Tumor Foundation
• Keting Chu, VP, Research TAP, Leukemia & Lymphoma Society (LLS)

Panelists will speak to their experience with the new model. What’s different about vetting a company with returns in mind? How has for-profit investing changed their non-profit model? What are the best practices for a fundraising executive approaching a foundation with an investment opportunity? Panelists will discuss these topics and more as they shed light on the inner workings of receiving capital placements from foundations.

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Investing in Emerging Life Sciences: CRO Direct Investment Panel

This panel features CROs that are leveraging their internal expertise to make investments into emerging biotech and medical device companies, either in the form of cash or service-for-equity agreements.

Moderated by Peter Lee-Armandt of Sathguru Management Consultants, the audience will hear from:

• Michael Recny, CEO, Calvert Holdings, Inc.
• David Gee, Vice President, Business Development, Cato BioVentures
• Krishna Kodukula, Executive Director, Strategic Development, Biosciences Divison, SRI International
• Joe Vacca, Senior Vice President, Early Success Sharing Partnerships, WuXi AppTec

This new form of investor is becoming more common place in the life science as CROs continue to mature and play a growing role in the industry. In this session, hear from firms that are on the leading edge of innovation talk about how they structure service for equity agreements. What kind of risk they are willing to take? What phase of development do they like to participate in? How do they vet potential companies, and how do they work with existing investors? What do they see as the future of their hybrid investment arm?

By Michael Quigley, Director of Research, LSN

On Monday, August 18, LSN’s partnering system for our Redefining Early Stage Investments (RESI) Conference will go live. The purpose of the system is to help scientist-entrepreneurs and funding executives connect at the conference with potential investors.

Using the LSN’s partnering system is fairly straightforward. Registered scientists and executives enter information about their company’s research—including technology type, indication, and phase of development—and the system identifies registered investors who may be a fit. Then scientists and executives use the system to book meetings—as many as 16 per attendee—with those investors.

What are the interests of these investors? This conference is designed to attract investors looking to allocate to early stage companies. Exhibit 1 shows that that largest number of attending biotech investors are interested in technologies in the preclinical and phase I stages. Exhibit 2 shows that the largest number of attending medtech investors are interested in technologies that are in development and the clinical stage. Keep in mind these are just the confirmed investors are attending thus far, so expect these number to increase come September 17^th.

We are able to attract a large pool of early stage investors because we target ten categories of investors. Many of these investors are relatively new to the space; a lack of capital and a glut of compelling science have attracted newcomers in recent years.

By drilling down into the data set, we are able to determine the indications of interest for registered investors. Exhibit 3 shows the number of investors interested in a given indication.

Neoplasms/Cancer/Oncology leads the pack, garnering the most interest from investors. In what may be surprising to many, diseases of the nervous system comes in at number two. This level of interest in technologies for the central nervous system is in part the result of the many specialized foundations and venture philanthropy organizations that will attend. The interest in numerous indications is another reason why this conference is of tremendous value to fundraising entrepreneurs.

Connecting with investors is only half of the value that the RESI conference offers, though. Scientists and executives also have the opportunity to attend our panels and hear representatives from all ten investor categories have in-depth discussions on a variety of topics. We hope to see you there.