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Raising Money for Life Sciences and
Healthcare
SPONSORED BY BAKER HOSTETLER
FEBRUARY 23, 2015
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The Current Fundraising Environment:
A Perfect Storm
NASDAQ Biotech Index up 177% in past 36 mo
45 2013 IPOs, 74 in 2014, 2015 tracking higher
2014 VC Life Science funding highest since ‘07
2014 VC =$8.6 billion in 789 deals
Most Pharma/Biotech collaborative deals
Earlier stage Pharma/Biotech deals
Pharma incubators – Merck, J&J, Pfizer, others
2014 FDA drug approvals at 20 yr. high - 35
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How am I (funder) going to make
money?
Removing risk and adding value by achieving milestones
◦ Technology risk
◦ IP/Competitive risk
◦ Regulatory risk
◦ Market risk
The exit can occur anywhere along the path
The path and exit is different for devices, drugs, and biologics (and distinctions are
blurred)
However, there has to be a way eventually, for someone to make money
Know the commercial environment (different in US than Europe, ROW)
U.S. since Affordable Care Act, etc.
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De-risking and increasing value
by hitting milestones
VALUE
RISK
MILESTONES
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How am I (funder) going to make
money?
Removing risk and adding value by achieving milestones
◦ Technology risk
◦ IP/Competitive risk
◦ Regulatory risk
◦ Market risk
The exit can occur anywhere along the path
The path and exit is different for devices, drugs, and biologics (and distinctions are
blurred)
However, there has to be a way eventually, for someone to make money
Know the commercial environment (different in US than Europe, ROW)
U.S. since Affordable Care Act, etc.
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Exit strategies
Sale to strategic buyer
Initial public offering
Sale to private equity group
Others
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How am I (funder) going to make
money?
Removing risk and adding value by achieving milestones
◦ Technology risk
◦ IP/Competitive risk
◦ Regulatory risk
◦ Market risk
The exit can occur anywhere along the path
The path and exit is different for devices, drugs, and biologics (and distinctions are
blurred)
However, there has to be a way, eventually, for someone to make money
Know the commercial environment (different in US than Europe, ROW)
U.S. since Affordable Care Act, etc.
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A New Era
in Medical Technology Adoption
Source: Joe Camarrata jcamarrata@gmail.com
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Funding Timeline
Recall:
Removing risk and adding value by achieving
milestones
The path is different for devices, drugs, and
biologics (and distinctions are blurred)
Typical milestones:
Initial determination of market, need,
solution, competition, and adoption (value
proposition)
Advisory board / KOPs
License agreement
Utility patent filed
Team/Board of Directors
FDA meeting
FDA/CE Mark approval (510(k) or PMA)
CPT Code by CMS / Private plan approvals
Utility patent issued
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Sample: Funding, Operations & Financial Results
2011 2012 2013
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Funding (All money in to date $6.5m)
Product 1
Product 2
Product 3
Product 4
Product 5
Product 6
Revenues
EBIT
Diagnostic Products
Therapeutic Products
$2.5m $4m $6m $5m
$105,000 $7,682,700 $26,059,500
($4,596,368) ($1,142,632)
FUNDING, PRODUCT ROLLOUT, AND FINANCIAL RESULTS - YEARS 1-3
7,906,344
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Bake the Cake – Matters You Must Address
[Title/Intro]
Market Opportunity
◦ Problem/Opportunity (Unmet Need)
◦ Market Size
Product/Service Description
Competition / Competitive Advantage
IP/Regulatory/Reimbursement/
Adoption
Go-to-Market Strategy / Operations
Plan / Time to Market / Price; Cost to
Manufacture
Financial Projections / Funding Plan
Management Team / Advisory /
Professional
Ask & Use of Funds
Exit Strategy / Return on Investment
[Summary]
[Contact]
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Key Factors Affecting Investment
Management and advisors
Market size and access
Choice of target and time to market
◦ Size, cost and timing of trials
◦ Time to proof of concept in humans
◦ Partnership availability in geography of prevalence
◦ Timing on partnership or collaboration
◦ Partner strategic plan which matches
Manufacturability and cost
Regulatory pathway and similar approval history
Disruptive nature of target or pathway
Valuation
Funding needs to each value enhancing
milestone
Funding history from start date
Funds needed now and needed in total
Use of funds with a focus on G&A
References
Competitive environment
◦ Penetration of drugs used now for same indication
Workflow as compared with standard of care
Exit strategy and timing
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Formats
Elevator Pitch (Stand up, intro)
One-Pager (Venture Fair Format)
Slide Deck
◦ 10-Slide Summary (to be emailed)
◦ 12 Minute (Venture Fair – designed to “get the meeting”)
◦ 30 Minutes (for in-depth meeting at VC’s office)
Business Plan – Executive Summary (3 pages), Full Plan (50 pp.)
Financial Projections (Financial plan)
Gantt Charts (Ops plan)
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Funding Plan
Equity Funding Path:
Founder, Friends & Family
Angel Investors
Organized Angels/Seed Stage VCs
Early Stage VCs
Series A VCs/Industry Partners
Series B, etc. VCs/Industry Partners
Non-Dilutive Funding:
SBIR Grants, NIH Grants
Foundations
Keystone Industrial Zones
Industry Partnerships
Revenue
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Resources
Biostrategy Partners
University City Science Center – QED
Program
Wharton Small Business Development
Center
Dream It Ventures
University City Keystone Industrial
Zone
PACT Conferences
Pa Bio Conferences
Pharmaceutical Consulting Consortium
International
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Example:
IPart & SBIR/STTR Funding Workshop
When: March 5, 2015 @ 8AM-11:30AM
Where: Ben Franklin Headquarters, 4801 South Broad Street, Suite 200, Philadelphia, PA 19112
Cost: Free. Refreshments will be provided.
Kelly S. Wylam along with Christopher J. Laing will provide an overview of the funding landscape and
discuss the Commonwealth of Pennsylvania's IPART program and how it can help therapeutic, diagnostic
and device researchers and companies with SBIR/STTR applications. After the presentations, attendees
will have opportunity to meet with the presenters.
The Innovation Partnership (IPart) is a consortium of economic development and business assistance
organizations located throughout the Commonwealth of Pennsylvania.
Questions?
Call 215-972-6700 x3223
or email sri@sep.benfranklin.org
http://www.sep.benfranklin.org/events/march-5-ipart-sbirsttr-funding-workshop/
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Processes
Ben Franklin Technology Partners
BioAdvance
Organized Angel Groups
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Forums
Mid-Atlantic Diamond Ventures (Temple/Fox Innovation & Entrepreneurship
Institute)
Angel Venture Fair
PACT Annual Conference
New Jersey Technology Council Annual Conference
Funding Post, etc.
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Networks
Philadelphia Alliance for Capital and Technology (PACT)
New Jersey Technology Council (NJTC)
Mid-Atlantic Venture Association
Pennsylvania Bio / Bio New Jersey (annual Biotech conference)
Philly Startup Leaders
Philly BioBreak
Biobreakfast
Other Regions – Pittsburgh, Boston, etc.
National Association of Seed and Venture Funds (NASVF)
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Presenters
Bernard Rudnick
Founder & Managing Partner
CapGenic Advisors, LLC
brudnick@comcast.net
Jeffrey Rosedale, Ph.D.
Partner
BakerHostetler
jrosedale@bakerlaw.com
James A. Stuber
EVP, NuVue Therapeutics, Inc.
Principal, Stuber & Associates
jstuber@stuberassoc.com
Steve Bowman
MITEF Phila. Prog. Co-Chair;
Principal, BizClarity
steve@bizclarity.com
www.mitefphiladelphia.org
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