Life Sciences industry report for the year of 2017. Covers key aspects of the four primary segments of medical technologies, pharmaceuticals, bio-industrial/bio- renewables and agriculture technologies. This report discusses briefly on the market segments' trends, transaction sizes and top companies in capital raised via investment rounds.

1. LIFE SCIENCES
Industry REPORT 2017
By Xeraya Capital

2. Executive Summary
Industry Segments Overview

3. #MedTech
MEDICAL TECHNOLOGIES
US and Europe Med Tech
markets enjoyed a strong year
as both outperformed their
respective broad market
indices.
The US Med Tech market in
particular continued to be buoyed
by; (1) the 2-year moratorium on
the Medical Device Excise Tax
which only ends in December 2017
and, (2) prospect of this tax being
fully repealed.
New innovations continue to come
on stream as the number of devices
receiving FDA 510(k) clearances &
PMA approvals increased year-on-
year.
The M&A landscape was less active
compared to the previous year with
acquirers preferring deals between
USD100M - 499M.

4. #PHARMA
PHARMACEUTICAL INDUSTRY
The US Pharma market was
less impressive –
underperforming broad
market indices as threats over
drug price controls by the
Trump administration casted
a shadow over what looked
like a good year for US stock
markets.
However, this has not stopped new
pipelines from getting the green
light to go into commercial markets
as novel drug approvals by the US
FDA hit a record 21-year high in
2017.

5. #BIOINDUSTRIAL
BIO-RenewAbles & others
The Bioindustrial market was
underwater throughout where
it ended the year worse than it
had started, bucking the
trend as crude oil prices
staged a recovery in the
second half of the year.
The most recent IPO by Avantium
has been disappointing – its share
price never surpassing its offer
price throughout the year. Venture
financing was also scarce with the
exception of investments into the
synthetic biology space.

6. #agtech
AGRO TECHNOLOGIES
The Ag Tech sector was
characterised by few notable
acquisitions in the big data
and robotics space. Gene
editing in agriculture has also
attracted much attention with
the IPO of Calyxt while
venture financing has been
robust with top dollars going
into microbiome technology
and vertical farming systems.
The M&A landscape is expected to
be lukewarm in the near term as
companies in the mega deals of
Dow-DuPont, ChemChina-
Syngenta and Bayer-Monsanto
take time to integrate and
implement its corporate strategies.

7. MEDICAL TECHNOLOGIES
#MEDTECH

8. MEDTECH Markets
STRONG YEAR
The Med Tech sector enjoyed
an excellent run in 2017 with
the US Medical Device Excise
Tax still under moratorium.
New innovations continue drive
growth as 2017 saw an 8%
increase in the number of
devices receiving 510(k)
clearance and 18% increase in
the number of PMA approvals.
2931
3175
2016
2017
510(k) Approvals
39
46
2016
2017
PMA Approvals
Source: US FDA, includes only originals for PMA approvals

9. TRANSACTION SIZE
SWEET SPOT: $100M – 499M
2017 saw a large decrease in
the number of transactions
below the USD100 million mark.
There was also a 50% decrease
in the number of transactions
with sizes between the
USD500-999 million range.
Transactions appeared to be
trending in the USD100-499
million range, which was the
range in which Invendo was
acquired by Ambu A/S.
126
24
8 9
89
26
4
8
< 100M 100M - 499M 500M - 999M 1B or more
Breakdown based on Transaction
Size (USD)
2016 2017
Note: Not all transactions have reported values
Source: Xeraya analysis, Capital IQ
Invendo Exit

10. Usual big three
Surgical, Therapeutic
and Diagnostic
companies attracted
the most capital
throughout 2017,
collectively taking a
huge share of about
78% of the total funds
invested in the Med
Tech sector.
Note: Transactions are from Series A onwards with value of USD5M
& above. Sub-categories are based on PitchBook classification
Source: Xeraya analysis, PitchBook
135
331 333
474
1434
1560
1655
Decision / Risk
Analy@cs
Biotech
Equipment
Monitoring
Equipment
Others Surgical
Devices
Therapeu@c
Devices
Diagnos@c
Equipment
Total Raised according to Category
(USD M)

11. Top 5 Largest Raise
Liquid Biopsy & Robotics
The largest raise in 2017 was
the Series E financing of
Guardant, a liquid biopsy
company focusing on the
oncology sector. The round was
led by SoftBank along with
Temasek, Sequoia and
OrbiMed. Auris came in second
with Coatue Management
leading its Series D round. The
funds will be used to support
development of robots for lung
cancer surgeries.
90
118
150
280
360
HeartFlow
EarLens
Insightec
Auris Surgical
Guardant
Top 5 Largest Raise (USD M)
Note: Transactions are from Series A onwards with value of USD5M
& above. Sub-categories are based on PitchBook classification
Source: Xeraya analysis, PitchBook

12. PHARMACEUTICAL INDUSTRY
#PHARMA

13. PHARMA Markets
TRUMP EFFECT
The US Pharma sector ended
the year with positive gains.
President Trump’s repeated
rhetoric on bringing drugs
prices down however, have
weighed down on shares of US
Pharma companies.
On a more positive note, the US
FDA approved 46 novel drugs
in 2017, the highest in any year
over the past 21 years.
22
46
2016
2017
Novel Drug Approvals
Source: US FDA

14. TRANSACTION SIZE
‘Unicorn’ DEALS
The Pharma sector seemed to
have a higher propensity
toward ‘unicorn’ deals (more
than USD 1 billion compared to
their Med Tech peers.
However, as a whole the
market appeared to be
trending more toward
companies in the USD 100-499
million range.
194
37
15 15
137
41
10 11
< 100M 100M - 499M 500M - 999M 1B or more
Breakdown based on Transaction
Size (USD)
2016 2017
Note: Not all transactions have reported values
Source: Xeraya analysis, Capital IQ

15. Big biotech focus
VC funds were funneled into
Pharma Biotech companies in
2017, comprising about 65% of
the total funds invested in the
Pharma sector.
Note: Transactions are from Series A onwards with value of USD5M
& above. Sub-categories are based on PitchBook classification
Source: Xeraya analysis, PitchBook
620 773
4114
10418
Drug Delivery Pharmaceu@cals Drug Discovery Pharma Biotech
Total Raised according to
Category (USD M)

16. Top 5 Largest Raise
the holy grail
Grail had the largest raise in
2017: USD 1.2 billion to develop
early cancer detection tests. Its
Series B round was co-led by
ARCH Venture Partners and
Johnson & Johnson Innovation.
23andMe was also back in the
market with Sequoia Capital
leading its USD 250 million
raise; commendable
considering the company came
under FDA scrutiny back in
2013.
200
250
270
615
1212
ADC Therapeu@cs
23andMe
Harmony Biosciences
Intarcia
Grail
Top 5 Largest Raise (USD M)
Note: Transactions are from Series A onwards with value of USD5M
& above. Sub-categories are based on PitchBook classification
Source: Xeraya analysis, PitchBook

17. Bio-Renewables & others
#bioindustrial

18. bioindustrial Markets
Sector still underwater
The Bioindustrial sector ended
the year worse than it had
started. Despite crude oil
prices trending upwards from
the second half of 2017, there
was no respite as the sector
continue to grapple with scale-
up challenges and continuous
losses.

19. jury still out
Avantium went public on the
Euronext Amsterdam and
Bruxelles, raising EUR103M but
has since underperformed its
IPO price. Terravia (formerly
known as Solazyme), the latest
protagonist from the 2010/11
bioindustrial heydays filed for
bankruptcy despite shiling its
business model toward the
high value food and nutrition
space.

20. Dry season
With the exception of the
synthetic biology sector,
companies in the chemicals
and materials sector did not
attract much VC capital given
the bearish outlook on the
industry.
Note: Transactions are from Series A onwards with value of USD5M
& above. Sub-categories are based on PitchBook classification
Source: Xeraya analysis, PitchBook
8
33
63
275
Materials Industrial
Chemicals / Fuels
Specialty Chemicals Synthe@c Biology
Total Raised according to
Category (USD M)

21. Top 5 Largest Raise
synthetic biology
Ginkgo Bioworks made
headlines and the latest was a
sizable USD 275 million Series
D raise, taking its total raise to
more than USD 400 million
over a span of just two years
and earning itself a place in the
‘unicorn’ club*. Ginkgo had
also managed to attract Bayer
to work on plant microbiome
technology.
10
11
16
29
275
Green Biologics
Silk Technologies
LiquiGlide
Monolith
Ginkgo Bioworks
Top 5 Largest Raise (USD M)
Note: Transactions are from Series A onwards with value of USD5M
& above. Sub-categories are based on PitchBook classification
Source: Xeraya analysis, PitchBook

22. Agro Technologies
#agtech

23. agtech Markets
Challenging market
The agriculture sector did not
perform well throughout 2017
(as seen from the S&P GSCI
Agriculture Index) and this may
have some spill over effects on
Ag Tech companies which offer
a myriad of products in the
crop protection and crop
enhancement space.

24. TRANSACTION SIZE
SWEET SPOT: $100M – 499M
Acquisitions over the past
seven years appeared to be
trending in the USD 100 – 499
million range. The only
‘unicorn’ deal was the
acquisition of Becker
Underwood by BASF for USD 1
billion. Coming in second was
the widely-known deal in which
Monsanto paid USD 930 million
for The Climate Corporation.
4
7
2
1
< 100M 100M - 499M 500M - 999M 1B or more
Breakdown based on Transaction
Size (USD) 2011-2017
2016
Note: Not all transactions have reported values
Source: Xeraya analysis, Capital IQ

25. Big data catching up
Ag Biotech companies such as
those focusing on crop
protection and enhancement
attracted the bulk of the funds
in 2017. With the advent of big
data and artificial intelligence,
capital had also found its ways
to companies developing
diagnostics and analytical tools
for the agriculture industry.
Note: Transactions are from Series A onwards with value of USD5M
& above. Sub-categories are based on PitchBook classification
Source: Xeraya analysis, PitchBook
91
286
405
Equipment/Robo@cs Diagnos@cs/Data Analy@cs Ag Biotech
Total Raised according to
Category (USD M)

26. Top 5 Largest Raise
plenty of microbiome
Indigo, one of the leading
companies in the plant
microbiome space seemed to
have further consolidated its
position with its Series D raise.
Plenty was not too far behind
when it came under the
SoftBank umbrella. Vertical
farming is gaining increasing
spotlight amid changes in
consumer behaviour and
resource scarcity.
30
30
50
200
203
New Leaf Symbio@cs
CiBO Technologies
Pro@x
Plenty
Indigo
Top 5 Largest Raise (USD M)
Note: Transactions are from Series A onwards with value of USD5M
& above. Sub-categories are based on PitchBook classification
Source: Xeraya analysis, PitchBook