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Financing of Biotech Companies Inception to Exit: Tailoring Financial Products For The Biotech Industry <ul><li>Moderator:...
Panelists <ul><li>Mr. Derrik Khoo, CEO ACGT </li></ul><ul><li>Dr. David Fischhoff, VP Technology Strategy & Dev, Monsanto ...
Financial Crisis Impact (on Biotech) <ul><li>Biotech: 30+ years access to relatively cheap capital… </li></ul><ul><li>Capi...
US IPOs – Not What They Used To Be Source: Burrill & Company Biotech IPOs Completed 1996-2009
Coupled With Underperformance *  Includes over-allotments  ** As of 7/31/09 Source: Burrill & Company Number  of IPOs Posi...
Growing Influence of Partnering Source: Burrill & Company US Biotech Financings ($m) 2004-2009   2004 2005 2006 2007 2008 ...
Significant Biopharma Partnering Deals 2009 Pharma/Biotech Roche/PTC Therapeutics $ 1.9 billion Sanofi/Exelixis $ 1.0 bill...
Venture Capital – Lifeblood of the Biotech Industry THE SPECTRUM OF PRIVATE (RISK) EQUITY CAPITAL Expansion Financing stag...
Biotech Financing Models  “ Reasonable” Scenario (“In The Old Days”) Round  Pre-money $ In Post-value Source Seed $1M $1M ...
Which Required Multiple Financing Rounds & Multiple VCs Seed Series-A Series-B Series-C Angel/VC 1 VC 2 VC 3 VC 4 Exit (IP...
Changing Face of Syndication Seed Series-A Series-B Series-C VC 1 VC 2 VC 3 VC 4 Exit (IPO/Trade sale) Years 1 2 3 4
Changing Business Models FIPCO  (Fully Integrated Pharma Co.) Research Technology Manufacturing Clinical & Regulatory Sale...
BioGreenTech Opportunity <ul><li>A sector driven by long-term global megatrends </li></ul><ul><ul><li>Food Security  – How...
Example: Industrial Biotech Solutions for Energy and Materials <ul><li>The opportunity – multibillion dollars, rural econo...
Biomass Feedstock is Key <ul><li>Investment Opportunities </li></ul><ul><ul><li>Increased productivity </li></ul></ul><ul>...
Global Biotech Financing: Economic Stimulus (Partial List) Country Biotech Economic Stimulus Malaysia $21.5 B for R&D US C...
Regional Issues <ul><li>Capital providers: local & global </li></ul><ul><ul><li>VCs  </li></ul></ul><ul><ul><li>Partnering...
Panelists <ul><li>Mr. Derrik Khoo, CEO ACGT </li></ul><ul><li>Dr. David Fischhoff, VP Technology Strategy & Dev, Monsanto ...
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09 CeoMeeting- Session 5- Abunda

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Session 5: Financing of Biotech Companies

Title : Inception to Exit Financing for Biotech

Dr. Waddington

Published in: Economy & Finance, Business
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  • VCs typically invest post proof-of-concept In bad times VCs tend to fund later-stage deals as reduced time to exit + lower risk + lower valuations
  • Transcript of "09 CeoMeeting- Session 5- Abunda"

    1. 1. Financing of Biotech Companies Inception to Exit: Tailoring Financial Products For The Biotech Industry <ul><li>Moderator: Dr. Simon D. Waddington </li></ul><ul><ul><li>President & CEO, Abunda Corporation </li></ul></ul><ul><ul><li>Entrepreneur-in-Residence, Burrill & Company </li></ul></ul>
    2. 2. Panelists <ul><li>Mr. Derrik Khoo, CEO ACGT </li></ul><ul><li>Dr. David Fischhoff, VP Technology Strategy & Dev, Monsanto   </li></ul><ul><li>Mr. Fares Zahir, Director & Head of Research, Khazanah </li></ul><ul><li>Dr. Pat Gruber, CEO Gevo  </li></ul><ul><li>Mr. David Fong, Chairman Malaysian Venture Capital & Private Equity Association </li></ul>
    3. 3. Financial Crisis Impact (on Biotech) <ul><li>Biotech: 30+ years access to relatively cheap capital… </li></ul><ul><li>Capital markets have been restructured: </li></ul><ul><ul><li>Resources for small-cap stocks (<$1B) dramatically decreased </li></ul></ul><ul><ul><li>Buy-side interest/resources reduced (many hedge funds gone, biotech marginalized) </li></ul></ul><ul><ul><ul><li>VC/private investors - no IPOs for exits </li></ul></ul></ul><ul><ul><li>Sell-side (investment banks) permanently restructured </li></ul></ul><ul><ul><li>Capital more difficult to find (more expensive) </li></ul></ul>
    4. 4. US IPOs – Not What They Used To Be Source: Burrill & Company Biotech IPOs Completed 1996-2009
    5. 5. Coupled With Underperformance * Includes over-allotments ** As of 7/31/09 Source: Burrill & Company Number of IPOs Positive since IPO Negative since IPO Acquired or delisted Amount Raised* ($ Million) Average ∆ % change Since IPO** 2003 7 0 0 7 438 (100%) 2004 29 4 14 11 1,628 (11%) 2005 17 2 7 8 819 (43%) 2006 19 7 6 6 920 1% 2007 28 3 22 3 2,071 (36%) 2008 1 0 0 1 6 (100%) Total 101 16 49 36 5,852 (48%)
    6. 6. Growing Influence of Partnering Source: Burrill & Company US Biotech Financings ($m) 2004-2009   2004 2005 2006 2007 2008 1H 2009 Public IPO $1,701 $819 $920 $2,041 $6 $0 Follow-ons $3,388 $4,194 $5,766 $6,311 $1,726 $2,043 PIPEs $2,417 $2,376 $2,027 $1,818 $1,078 $733 Debt $8,418 $5,565 $13,978 $6,569 $2,824 $4,156 Private VC $3,733 $3,518 $4,236 $4,445 $4,175 $2,335 Other $269 $1,114 $425 $611 $294 $56   Public+Priv $19,927 $17,586 $27,352 $21,975 $10,103 $9,321   Partnering $10,933 $17,268 $19,796 $23,365 $20,023 $12,779   Total $30,860 $34,854 $47,148 $45,340 $30,126 $22,100
    7. 7. Significant Biopharma Partnering Deals 2009 Pharma/Biotech Roche/PTC Therapeutics $ 1.9 billion Sanofi/Exelixis $ 1.0 billion Merck/Cardiome Pharma $ 700 million BMS/ZymoGenetics $ 1.1 billion Forest Labs/Nycomed $ 600 million Novartis/Portola Pharmaceuticals $ 575 million Wyeth/Catalyst Biosciences $ 500 million Biotech/Biotech Amgen/Cytokinetics $ 650 million Onyx Pharma/S*BIO Pte $ 550 million Celgene/GlobeImmune $ 500 million Biogen/Acorda Therapeutics $ 510 million Cephalon/Immunopharma $ 500 million Glaxo/Concert Pharmaceuticals $ 1.0 billion Glaxo/Chroma Therapeutics $ 1.0 billion Wyeth/Santaris Pharmaceuticals $ 847 million GSK/Idenix Pharmaceuticals $ 450 million Biovail/Acadia Pharmaceuticals $ 395 million Bayer/Ardea Biosciences $ 407 million Source: Burrill & Company
    8. 8. Venture Capital – Lifeblood of the Biotech Industry THE SPECTRUM OF PRIVATE (RISK) EQUITY CAPITAL Expansion Financing stage Seed Start-up Early stage Buy-outs, buy-ins Pre-seed Price Risk Idea, concept Proof-of-Concept Market estab-lished Clinical Studies Trade sale, IPO Venture capital M&A Incubators Business angels “ Triple F” (Family, friends & fools) Private equity
    9. 9. Biotech Financing Models “ Reasonable” Scenario (“In The Old Days”) Round Pre-money $ In Post-value Source Seed $1M $1M $2M Angels A $4M $6M $10M VCs B $20M $20M $40M VCs Mezz $80M $50M $130M VCs/Mezz IPO $250M $80M $340M Market & 2-3 Corporate Deals ($10-50+M)
    10. 10. Which Required Multiple Financing Rounds & Multiple VCs Seed Series-A Series-B Series-C Angel/VC 1 VC 2 VC 3 VC 4 Exit (IPO/Trade sale) Years 1 2 3 4
    11. 11. Changing Face of Syndication Seed Series-A Series-B Series-C VC 1 VC 2 VC 3 VC 4 Exit (IPO/Trade sale) Years 1 2 3 4
    12. 12. Changing Business Models FIPCO (Fully Integrated Pharma Co.) Research Technology Manufacturing Clinical & Regulatory Sales & Distribution CSO CMO CROs Partnerships Academia, Scientific, Institutions R&D Preclinical Support Clinical Development Manufacturing Sales & Distribution Preclinical CRO VIPCO (Virtually Integrated Pharma Co.)
    13. 13. BioGreenTech Opportunity <ul><li>A sector driven by long-term global megatrends </li></ul><ul><ul><li>Food Security – How provide a growing population with low cost, nutritious, stable food supply on limited land and water </li></ul></ul><ul><ul><li>Energy Security – Secure supply of energy at economically sustainable prices </li></ul></ul><ul><ul><li>Global Climate Change – Reducing GHG emissions generated by human activity </li></ul></ul><ul><ul><li>Sustainability – Reduce environmental impact, ensure social equity, and economic fairness in the production of food, feed, fiber, and fuel. Renewables </li></ul></ul>…and biotech can tackle all of them
    14. 14. Example: Industrial Biotech Solutions for Energy and Materials <ul><li>The opportunity – multibillion dollars, rural economic growth </li></ul> Attracting new kinds of investors (Oil & Gas, Utilities, Local Regions etc) Oxygenates Petrol Diesel Electricity Biomass Bio-monomers Biopolymers Specialty Chemicals
    15. 15. Biomass Feedstock is Key <ul><li>Investment Opportunities </li></ul><ul><ul><li>Increased productivity </li></ul></ul><ul><ul><li>New Energy Crops </li></ul></ul><ul><ul><li>Conversion technologies </li></ul></ul><ul><ul><li>Fermentation Products </li></ul></ul><ul><ul><li>Carbon sequestration </li></ul></ul><ul><ul><li>Technology integration & adaption </li></ul></ul>Food Feed Renewable Feedstocks Enhanced Yields Lower Inputs Energy Crops Conversion
    16. 16. Global Biotech Financing: Economic Stimulus (Partial List) Country Biotech Economic Stimulus Malaysia $21.5 B for R&D US China $4.81 B in 2009, $4.4B in 2010 for “11 technology projects” $129 B in healthcare infrastructure Norway $2.87 B for biotech industry Taiwan $1.83 B to biotech VC fund UK $1.5 B “fund of funds” Canada $200 M for science and technology RM182m in Second Stimulus Package
    17. 17. Regional Issues <ul><li>Capital providers: local & global </li></ul><ul><ul><li>VCs </li></ul></ul><ul><ul><li>Partnering with corporates </li></ul></ul><ul><ul><li>Public (governments, regions) etc </li></ul></ul><ul><li>What kinds of things are they looking for? </li></ul><ul><ul><ul><li>Sectors of interest </li></ul></ul></ul><ul><ul><ul><li>Financial return vs. “strategic” (differences in “perceived” value creation) </li></ul></ul></ul><ul><ul><ul><li>Softer factors: disciplined approach to value creation; financing to milestones; etc </li></ul></ul></ul><ul><li>Role of emerging players (oil & gas, utilities etc) </li></ul><ul><li>What is working/not working? </li></ul>
    18. 18. Panelists <ul><li>Mr. Derrik Khoo, CEO ACGT </li></ul><ul><li>Dr. David Fischhoff, VP Technology Strategy & Dev, Monsanto   </li></ul><ul><li>Mr. Fares Zahir, Director & Head of Research, Khazanah </li></ul><ul><li>Dr. Pat Gruber, CEO Gevo  </li></ul><ul><li>Mr. David Fong, Chairman Malaysian Venture Capital & Private Equity Association </li></ul>

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