Next Phase Newsletter

By Lucy Parkinson, Research Analyst

It’s been three months since the decision came down on Association for Molecular Pathology v Myriad Genetics, the Supreme Court case that determined that naturally occurring genes cannot be patented. As one could have predicted, this subject was heavily discussed among investor panels and company presentations. The ruling reflects a paradigm shift, and from watching biotech presentations at the Redefining Early Stage Investments Conference, it was evident that the result of this case has had a significant effect on the business plans of companies, especially in the genomics space.

The decision has produced winners and losers. Myriad Genetics, the main player in the supreme court case can look forward to much more competition; formerly, the company had a 75% monopoly on tests for genes that predispose women to ovarian and breast cancer. (1) Since the decision came down, Myriad’s shares have fallen from $32.50 to $25.23 today. (2) Among other companies, there are fewer clean-cut winners and losers, but there was some consensus among both investors and company CEOs on what the implications were for the industry. Here are a few of the primary points we heard about at RESI:

There has been an “IP re-shuffle.” Cash has been sunk on IP protection or on licensing DNA owned by others. These are asset investments that are now rendered valueless. This has important points of impact – mainly, established players in the market have lost their competitive advantage to more nimble emerging players (who are now attractive investment targets).

Secondly, this IP is no longer an expense for many companies that licensed gene IP in the past, meaning a massive improvement in cost-efficiency. This also means that companies can’t simply rest after patenting genetic IP, they need to maintain a competitive value position, which means more innovation and better drugs coming to market. At RESI CEOs were generally excited about the ruling, and investors were excited about the wealth of new opportunities that are now attractive propositions.

Strong product lines are reaping rewards. This is so often the case in life science; a solid pipeline wins out over one good asset. The Supreme Court’s decision means that companies have to do more than own a DNA IP asset.  The real value has migrated to innovative genomics technologies, and the pitch has changed accordingly. Rather than offering sole access to a gene test, companies now aim to offer faster, more accurate tests than their competitors. In presentations at RESI, speakers stressed the value of assets they’ve developed that are covered by IP protection, such as the sequencing algorithms that read RNA; those assets put these companies in a better position than competitors whose future revenues had relied on the IP value of DNA.

Some companies now have a better product. Companies that offer genetic tests can now broaden their product lines without having to worry about licensing individual genes, and this opportunity to build value should be a significant attraction for investors.

And going forward, the biggest winners will be patients, who can look forward to cheaper, better diagnostics unhindered by litigious DNA IP holders.

There is no doubt that this ruling will have a resounding industry impact and cause a profound shift in how investors view this area. Lower cost entrants into the marketplace are poised to garner significantly more interest from investors, but only if they have a sound strategy for maintaining a market position. Brace for impact!

1. Fidler, Ben. “RainDance Secures $20M, and a Believer in Myriad Genetics.” Xconomy RSS. Xconomy, 29 Apr. 2013. Web. 20 Sept. 2013.

2. http://www.marketwatch.com/investing/stock/mygn

Tags: biotech, biotechnology, CMO, consulting, CRO, family offices, Fundraising, investor, Investors, issue, letter, life, Life Science, life science nation, medicine, nation, news, newsletter, pharma, Pharmaceutical, private equity, research & development, science, startup, venture capital

By Max Klietmann, VP of Marketing, LSN

September marks the beginning of the life science industry conference season. Conferences can be a phenomenal way to generate customer leads, source investor prospects, and discover strategic partners. However, oftentimes these events are heavily underutilized from a marketer’s perspective, minimizing the potential value of participating.  This article is intended to serve as a primer, highlighting some strategies that will increase the value to be drawn from the conference and make these events worth your while.

Do your homework – It is never wise to go in blind – Weeks in advance, you should invest some time and energy in finding out exactly who is going to be attending the event and identifying your top targets. This will help you navigate networking sessions more effectively, and will help you cut through the noise.

Begin your networking before the conference – A well-executed outbound marketing campaign in the weeks leading up to the event will allow you to start a dialogue and “come in warm.” Follow up with your hottest prospects on the phone as well, so that they already know you when you see them at the event. This is especially true for partnering conferences, where your meetings are under time pressure. Having started a dialogue beforehand allows the meeting to start with “As we discussed last time…” rather than “Hello, allow me to introduce my firm…”

Stay organized – Collect as many business cards as possible and take diligent notes. Things will begin to blur in your mind around meeting 25, but being able to recall that your meeting partner’s kids just started second grade in your follow-up emails and calls will keep you personable and will help to build a relationship quickly. Make sure you have a quality CRM to get this information logged as soon as you are back in the office.

Follow-up – The end of the conference marks the beginning of the most important task – follow-up, follow-up, follow-up. No matter how well you did your legwork or how many meetings you scheduled, it is all for naught unless you invest in diligent follow-up. An excellent dialogue can go cold quickly if it isn’t maintained. The most important question to ask at the end of every conversation is “what’s the next step & how do we get there fastest?”

These guidelines should help you be more productive in your conferences this season, and increase the value-per-dollar of participating in these events. Remember, a one day conference requires three weeks of pre-planning and over a month of follow-up, so plan accordingly. Now get out there!

Tags: biotech, biotechnology, CMO, consulting, CRO, family offices, Fundraising, investor, Investors, issue, letter, life, Life Science, life science nation, medicine, nation, news, newsletter, pharma, Pharmaceutical, private equity, research & development, science, startup, venture capital

By Dennis Ford, CEO, LSN

LSN is counting down the last few days to our first investor conference, and I am delighted to report that it looks like it may be a great success. Attendance is 275 and climbing, over 25 sponsors/exhibitors, the who’s who of early stage investors under one roof, and the leading biotech and medtech innovators from around the globe. I always preach about the problem in Life Science is “which map are you using to navigate the changing landscape? The old outdated one or the new current accurate up-to-date-one. Please click the link below to see the new life science map that we have used to create the content for the conference.

Redefining Early Stage Investments Conference

I also thought it fitting to share with the LSN readership some musings about the trials, tribulations and lessons learned in composing this next-generation investor conference.

The Idea for the RESI conference was sparked by LSN’s experience attending the full global life science investor conference circuit, which frankly was universally disappointing. These conferences reflected an obsolete perspective of the industry, were defined by an outdated roadmap of the fundraising landscape, and (most frustratingly) didn’t have any investors! I mean imagine the shock: barely an investor to be found at an investor conference!

LSN is a research and data company that tracks life science investment, so we knew they were out there.  Specifically, LSN is specialized in tracking direct investment activity in the life sciences space as a neutral third party, and it was immediately apparent that the typical life science investor conference yielded minimal, if any, value. So earlier this year, being the guerilla marketers that we are, LSN embarked on a mission to deliver the message of the new investor landscape to the masses.

First, LSN tried to partner locally with some of the leading research universities in Boston. All agreed with the premise and called the idea a noble effort, but all we were able to achieve was some enthusiastic discussion. These organizations simply didn’t have the flexibility and impetus to create a what LSN deemed would be a “disruptive” conference around the new categories of investors in the life sciences. Next, LSN was invited to run some sessions surrounding the new investor landscape at a few of the side conferences revolving around JP Morgan’s San Francisco, event – the sessions had an impressive attendance and validated the demand for this type of tactical investor insight. It was at this point that LSN decided to launch into creating a full-force investor conference. After all, if you want it done right, you’ve got to do it yourself.

LSN approached a number of potential partners; regional bioclusters, life science information publishers, you name it – However, it was impossible to find any large players willing to risk endeavoring in a first-time conference focused on a concept that many industry incumbents just are not current with – no matter how real. So LSN began marketing the event on a grass-roots basis to customers, friends of the firm, and network connections until a certain level of momentum had been generated. That’s when the fire started to spread and really got the RESI conference started. The RESI conference has at this point generated a lot of industry buzz and that attention doubled anticipated attendance. The venue providers have had to adjust twice already to facilitate the approximately 300 investors and biotech/medtech CEOs confirmed forecast to attend.

The lesson learned here is that you need to be able to see what the industry needs and what the existing players aren’t providing. LSN saw that investor conferences don’t work today, because the traditional roadmap is no longer accurate. This gap is where the opportunity for disruption exists. RESI is poised to be the most disruptive event in early stage life sciences this year – a glance at the attendee list is an endorsement in itself. So what are you waiting for? Come join the revolution!

Tags: biotech, biotechnology, CMO, consulting, CRO, family offices, Fundraising, investor, Investors, issue, letter, life, Life Science, life science nation, medicine, nation, news, newsletter, pharma, Pharmaceutical, private equity, research & development, science, startup, venture capital

By Michael Quigley, Research Manager, LSN

The Medtech space has had a painfully slow start to 2013. With venture financing remaining scarce, a serious dip in FDA approvals, and the value of M&A activity at pace to be at a 10-year low, slow may be an understatement. Many of the larger companies in the space have been shedding segments of their business in order to specialize and become more efficient. The implementation of this slimming down will undoubtedly have a negative impact in the number of smaller device company acquisitions by Big Pharma. The drivers of this lackluster performance include the 2.3% medical device tax implemented in the beginning of 2013 by the JOBS act, heightened criteria used by the FDA to gain pre-market approval, downward pricing pressures on devices, and the underlying general economic uncertainty around the globe.

            While the FDA has long been attempting to increase its efficiency in getting good products on the market, I wouldn’t expect anything more than a slight relaxation of criteria for approval in the 2^nd half of 2013. As capital continues to pour overseas and the bottleneck in the FDA gets larger and larger, a more serious change in the approval process may be needed for American device manufacturers to compete. On the bright side, as time goes by, and more investors become accustomed to the impact that the medical device tax has on their potential investments, I see investment interest in all stages having at least a slight rebound in the near future.

What early stage companies need to do to succeed in this kind of capital-dry and regulation-burdened system is twofold. First is to make innovation and comparative advantage ingrained in the company’s brand. Investors aren’t interested in minor tweaks of existing technologies anymore because the FDA has raised the bar. For years, medtech companies have been able to realize large revenue streams from incremental innovation, but over the years, those returns have been diminishing. Whenever dealing with potential sources of funding, having the advantage that your product holds over the current market needs to be paramount.

Secondly, companies need to look to alternative sources of funding (as well as traditional ones) to develop a target list of potential investors. Building a list and establishing relationships and meetings with a myriad of potential partners is crucial in this type of investment environment, regardless of your company’s stage of development and level of innovation. Forming these bonds early and continuing to build on them going forward is seemingly the only way to get though the extremely capital-intensive process of getting a device on the market.

Tags: biotech, biotechnology, CMO, consulting, CRO, family offices, Fundraising, investor, Investors, issue, letter, life, Life Science, life science nation, medicine, nation, news, newsletter, pharma, Pharmaceutical, private equity, research & development, science, startup, venture capital