Considerations On Biotech And Medtech Fundraising

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Considerations On Biotech And Medtech Fundraising

  1. 1. Some Considerations on Biotech and Medtech Fundraising
  2. 2. Biomedical Venture Philanthropy: Financing Drug Discovery Basic Target lead/ Discovery Preclinical Clinical Approval and RioRiskRo Research Validation Development Development Marketing Risk Traditional Philanthropy Venture Philanthropy Angels Venture Capital Private Financing Gap Equity/Public Markets Grants Corporate Venture
  3. 3. Trends in Biomed venture investment • More money seeks less exciting opportunities • More money is needed to exit • No more “technology” IPO’s”, just proven businesses • M&A’s of ventures w/o sales / FDA approval – usually at less than $100M • VCs going upstream (seed or even feasibility or trenching)
  4. 4. Some current VC statements • We focus on revolutionary, next- generation technology • Need to look for business not a technology platform • Do fewer deals well – sell one to do one • Experience counts more than brilliance • Focus more energy and capital on the winners • Creative exits
  5. 5. Investment review criteria • Technology / • Data Innovation • Operational plan • Market • Regulatory plan • Team • Exit, valuation, • IP investment model
  6. 6. Technology & Innovation • How creative is your approach – depth • Competitive advantage - barriers • Product vs. technology • Disruptive vs. sustaining technology • Developmentability • Benefit to users • Need for user education
  7. 7. Market • Easy to look around; important to look ahead - Look for needs of growing markets • Big market is a double edge sward but is the opportunity • Be ready to discuss TAM, PAM, RAM • Start with one product in one segment (AKA – focus) • Existing reimbursement practices • Avoid “technology in search of market”
  8. 8. Team – Key positions • Experienced, mixed team, with knowledge, competence & track record • Founder’s role in the company • Team’s level of commitment • Adaptability/flexibility – changing environment • A kingdom vs. completely virtual • Advisors, Investors • Excitement in the eyes
  9. 9. Intellectual property • Strong IP formulation – core claim • FTO analysis • Trade secrets/ know-how • Remaining life of key claim • Ongoing IP development based on a competitive IP map • Geographic scope of filing • IP strategy plan
  10. 10. Data • Does it work? • Proof-of-concept - Feasibility data • Can it be developed at a justifiable cost • Prototype or comparables • Literature review - Reference data • Source when relevant • External review + self criticism
  11. 11. Operational Plan • Legal structure of the company • Goals and objectives - Detailed work plan with clear milestones • Time to first-in-man • Resource plan (people, capital) • Short term detailed budget • 5 year P&L - Cash flow • Scalability considerations
  12. 12. Regulatory plan • Show you understand regulatory requirements • A clear regulatory pathway/strategy • Use predicate information • Use of regulatory consultant with record in the field • Focus on consideration around things never done before when relevant
  13. 13. Valuation – valuating your IP • Should allow future company funding requirements • Should not be a deal breaker • The concept of a Full Diluted Basis • Allocate sufficient amount of ESOP • Find comparables for the above • Prepare IRR analysis • Leave valuation discussion to the end
  14. 14. Key Success Factors 1. Innovative, breakthrough solution – data driven 2. Address real market need 3. Team – experience, knowledge, competence 4. Realistic plan – focus on near term 5. Raise when and as much as you can (min 24 mo) 6. Valuation should be the last of your worries 7. Use grants as much as possible 8. Be ready for due diligence (documents…) 9. Always have “Plan B” 10. Stay optimistic and have fun
  15. 15. Copyright: Kerentech 2009 Contact: Info@kerentech.com www.kerentech.com kerentech.wordpress.com

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