By Jack Fuller, Business Development, LSN

Life Science companies pitching investors have a tough job: It’s not easy to convince people to invest in a capital-intensive industry with a low rate of product commercialization. Then there’s the challenge of conveying an extremely specialized and complex idea to people who want to net out the technology quickly. To be successful, companies must work hard to communicate complex ideas at a level that is easily understood by all potential investors, not just the “science-literate.” As Charles Bukowski once said “Genius could be the ability to say a profound thing in a simple way.”

The first place this needs to be accomplished is in a company’s tagline. Taglines are ubiquitous in the industry, but very rarely does a tagline accurately summarize that “special sauce” that makes a company so exceptional. Prospects should be able to read a tagline and grasp the goal of the company.

Take a look at the taglines below. What do they tell you?

As you can see, taglines run the gamut from completely ambiguous and semi-descriptive  to great ones that communicate a company’s brand and value to potential investors.

The goal of a tagline is not to be clever or cute but to powerfully and succinctly communicate a company’s unique value proposition. There is no one formula for a tagline, as each company needs to distill its entire investor pitch into a crisp statement.

Take a moment to think about your tagline. Crafting a clear one is the first step in the process of creating a cohesive and compelling brand and will form the basis of your outbound campaign.

By Alejandro Zamorano, VP of Business Development, LSN

One of LSN’s Investor Platform clients recently provided some insight on his fundraising campaign. We encourage feedback from our clients as it helps us to validate our methodology and to integrate improvements into our product. Our client is a molecular diagnostics company looking to raise $3 million to $8 million to expand and perform some key clinical studies.

We first met the co-founder a few months before he elected to subscribe to the LSN platform. At first, like many emerging biotech and medtech entrepreneurs, he relied on the executive team’s personal network and referrals to find potential investors. He had a relatively large pre-existing network of almost 72 identified investor targets; thus, he felt that he did not need any additional help. The concept of “fit versus referral” was clear to him, but nevertheless, he felt sufficiently armed to pursue the campaign under his own steam.

In his first few months of fundraising, he reached out to his network and received responses from 36 of his prospects. He was then able to convert 25 of those responses into meetings, of which 11 remained interested in continuing the dialog. Despite his initial success, he soon hit a wall and was left waiting as his investor prospects began discussions internally. Weeks passed and investors delayed their decisions. It became apparent that in order to master the numbers game, he would need more prospects that were strong fits for his particular company. Before long, he resurfaced to LSN and elected to subscribe to the investor platform.

In the first 90 days of using the LSN Investor Platform, LSN was able to help this client identify and reach out to a global target list of 148 potential investors outside of his network. With the help of a clearly defined campaign strategy, and armed with all of the necessary cloud infrastructure to run an effective campaign, he was able to get 38 positive responses from investors he had previously not known about. He was then able to convert 17 of those responses into meetings, of which 9 were interested in continuing the dialog.

By expanding his list of qualified fits, our client was able to triple his meetings and double his investor conversations. He remains in negotiations with 20 investors currently. This is a shining example of why it is important to contact investors outside of your network and not to exclusively rely on referrals. Moreover, it shows that the same result could have been achieved in half the time, had our client started his campaign using the LSN Investor Platform form the outset. It all comes down to finding the maximum number of prospects and tactically working those leads into a handful of relationships that ultimately end in allocations.

By Maximilian Klietmann, VP of Marketing, LSN

LSN regularly speaks with numerous early stage entrepreneurs on the subject of asset focus. All too frequently, scientist entrepreneurs are reluctant to choose a single asset for the focus of their company unwilling to believe that it is in their best interest. Despite the feedback LSN gets from ongoing conversations with life science investors, many emerging biotech entrepreneurs still see this as a debatable point.

The typical arguments that emerging life science CEOs make against a single-asset focus may appear to make sense at first: Investors should prefer multiple shots on the goal or a portfolio of products is worth more than the sum of its parts. However, the key point that is often missed is that multiple assets frequently spell increased risk from an investor’s perspective. Why is this? It can be boiled down to three basic factors.

Capital Efficiency: The process of moving a therapeutic from discovery through the clinical trial process is extremely expensive, and it’s not getting cheaper anytime soon. Many investors tell us that given the inherent risks already present in the development process, they want their capital to be going towards the development of a single product that the whole company is focused on. This is preferable to spreading funds across a number of projects (increased overhead) that will get a portion of everyone’s focus (decreased attention).

Time to Market: The value inflection created by FDA approval is huge. A single asset on the market is almost always more valuable than a handful awaiting approval to move to the next trial phase. Relating to the capital efficiency point above, most investors we speak with would rather see one asset receive all the capital to move it across the finish line faster, regardless of the promise any other drug candidates may have.

Management Focus: This is the big one. Picking a single asset and having a laser-like focus on how to move it through the pipeline and to market shows that the management is dedicated, has clarity of vision, and is aligned with the investor. It exudes a “shortest line to cash” attitude and lets the investor be confident that the entrepreneur is able to lead the company.

By Lucy Parkinson, Research Manager, LSN

We’ve talked about the fact that many venture capital firms have withdrawn from investing in early stage biotech startups, contributing to the so-called “Valley of Death.” However, there are still a number of life science VCs that remain active, so what are they doing with their dry powder now and why?

Talking to VCs recently, we found that the bulk of these funds are diverging in two directions. Some VCs are looking for nascent technological breakthroughs that are, generally, still a long way from becoming biotech startup companies. These VCs are building companies around these breakthroughs, gaining access to new scientific works either by maintaining a network of leading academics or by performing initial research entirely in-house.

There are some clear benefits to VCs taking this approach. Firstly, they can acquire assets for very low prices, before any of the classic value-inflection points. Secondly, the VCs can control a company’s direction from start to finish; they can select a management team and make strategic decisions, without a scientist entrepreneur getting in their way.

However, this strategy requires that VCs have a lot of connections and expertise. Scientists must be willing to hand their work over to the VCs, and the VCs must be capable of selecting and developing the most promising of these risky, very early stage assets. These VCs can cherry-pick the most compelling breakthrough ideas and build companies in-house, from the ground up, around these new assets. This then leaves real biotech startups—companies with pipelines and management teams—out in the cold (as far as VC investment goes). As a representative anecdote, an investment partner at a VC firm told us that in the past year, the firm reviewed 982 outside plans and invested in none of them. Another partner at the same firm later told us that it would consider investing in an external biotech startup but only in opportunities that were about three years pre-IND.

Other VCs have abandoned their appetite for technological risk and are instead focused on finding promising late-stage assets that they shepherd towards a rapid exit. These VCs typically look for investments that can be realized (often via a sale to big pharma) in a timeframe of 18 months to 3 years. Some have adopted a virtual pharma model and are focused solely on investing in assets rather than companies, either by in-licensing or simply acquiring late-stage product candidates and then managing the entire development of the asset until the exit point. Others do make equity investments in biotech companies, but some of these investors nevertheless see the company’s existing management as an optional add-on; one partner at a late-stage VC firm told us, “The development team is not necessarily the commercialization team.”

So what’s the takeaway? If you’re a late preclinical or early clinical-stage biotech company with a fully-formed team and a long development path ahead of you, this may actually be good news. More non-traditional investors will likely continue to move into this piece of the market to take advantage of the opportunity left by the VCs. The turbulence in the VC arena is far from over, however, and LSN will continue to monitor the latest trends in the investor space as the sands continue to shift.

By Michael Quigley, Research Manager, LSN

Earlier this week, the FDA announced a new program that intended to provide earlier access to unapproved medical devices for certain patients. The EAP (Expedited Access Premarket Approval Application) program will allow companies to directly engage with the FDA sooner to collaboratively develop a plan for collecting scientific and clinical data in order to get patients safer and more effective devices sooner. The basic objective of the program is to diagnose and treat patients who are suffering from serious conditions and have medical needs that are unmet by current technology.

So, which companies are allowed to apply for the program? According to the FDA, a company is eligible for participation in the program as long as the medical device in question meets these standards:

• It is intended to treat or diagnose a life-threatening or irreversibly debilitating disease or condition.

• It is able to meet at least one of the following criteria:

1. The device targets an indication where no approved alternative treatment/diagnostic exists.

2. The device is technology that provides a “clinically meaningful” advantage over existing technology and/or approved alternatives.

3. Availability must be in the patient’s best interest (as determined by the FDA).

• The device has an acceptable data-development plan that has been approved by the FDA.

So what does the EAP program mean for the industry as a whole? One obvious foreseeable impact is the attraction of more direct investment into early stage devices.  This is great news, especially since early stage devices have had a tough time raising capital in recent times.  Moreover, early collaboration with the FDA means more guidance in setting clear clinical endpoints and having a better definition of what data is required to move forward. This increased regulatory transparency will hopefully increase the odds of approval (another checkbox for more risk-averse investors). At this point, the FDA has only released preliminary information on the program, but device companies and investors should keep an ear to the ground, as the details of the new program are released over the coming weeks.

Source: http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm394294.htm

By Maximilian Klietmann, VP of Marketing, LSN

One of the LSN’s Research Team’s key points of focus is on investors filling the void left by Venture Capital in the life sciences space. Today, we’ll take a look at the non-VC early stage (discovery-ph. III) investors in biotech therapeutics. Let’s take a look below:

As far as indication interests go, CNS leads the way, with over 400 non-VC’s seeking opportunities in this indication area. This is followed closely by cardiovascular and infectious diseases. Endocrine and Immune disorders are also close behind. All disease areas in the top 5 have over 300 active early stage investors seeking opportunities.

So what is the takeaway? Well, for one thing, this is clear validation that non-VC investors are active in early stage biotech. Moreover, if you are raising money for an asset in one of these indication areas, but you aren’t looking at non-traditional investors, you are missing out on 300-400 potential investor fits. Keep following LSN for updates on where early stage investor interest is moving as the landscape continues to shift!

By Patrik Frei, CEO, Venture Valuation

The recent acquisition of Forest Laboratories Inc. by Actavis for 25 billion USD shows the trend of generic producers moving into the innovative drug space; with fewer blockbusters on the market, companies focused on generics will need to move into innovative therapeutics.

The acquisition of Forest Laboratories Inc. by Actavis is indicative of where we may see much future growth of generic companies – namely, patented innovation. Such projects can either be generated in-house or through licensing / M&A of innovative emerging biotech companies. Through the extension of the business model of generic companies, they will be able to control the whole life cycle of drugs from the patent protection into the generic phase. Novartis actually implemented this approach many years ago with the purchase of Hexal and Eon Labs, which later became Sandoz. However, it is now evident that generic companies are going the opposite direction from generic to innovation. This makes sense, as generic companies are in an increasingly attractive market position, and have the revenues to support significant licensing activities.

The same trend is not limited to the US and EU. It is also visible in Asia where many generic companies are based. Based on our own analysis, the demand in Asia is led by China, followed by South Korea. About a third of the companies that are seeking in-licensing opportunities in Asia focus on oncology followed by metabolic diseases. In terms of stage, over half are looking for pre-clinical products and about a quarter for clinical stage products. LSN and Venture Valuation track this activity on a global basis, and as this trend develops, we will keep you up to date on how this emerging category is changing the landscape for emerging biotechs around the world.