Ophthalmology Innovation Summit Financial Update and Market Trends
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Presentation from OIS@ASCRS 2016 - William J. Link, PhD, Managing Director – Versant Ventures
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Ophthalmology Innovation Summit Financial Update and Market Trends
- 3. SUMMIT KICK OFF WITH OPHTHALMOLOGY INNOVATION CYCLE & FINANCING UPDATE William J. Link, PhD Managing Director Versant Ventures
- 4. Update--- Ophthalmic Innovation Cycle & Financial markets OIS@ASCRS May 5, 2016 William J. Link, PhD Managing Director Versant Ventures
- 5. Welcome!! • Thank you for your commitment to innovation in ophthalmology!!! • Overview of the day…. 5
- 6. Innovation Cycle-Key Constituents 1. Inventor/entrepreneur/team 2. Clinician-early adopter 3. Financial Partner--Venture Capitalist, etc. 4. Industry leaders- commercial team
- 7. OIS@ASCRS 2016 Attendance ~ 500 Innovation Cycle-Key Constituents % Attendance 1. Inventor/entrepreneur/team ~35% 2. Clinician-early adopter ~15% 3. Financial Partner--Venture Capitalist, etc. ~ 5% 4. Industry leaders- commercial team ~25% Note: Press, consultants, service providers ~ 20%
- 8. OIS….quite a journey • Today is our 12th OIS meeting…. 8
- 9. OIS….quite a journey • Today is our 12th OIS meeting…. • Inaugural OIS@AAO meeting 2009 in San Francisco – AAO has been a great partner 9
- 10. Ophthalmology Innovation Summit – 2009 Palace Hotel San Francisco, California
- 11. OPHTHALMOLOGY INNOVATION SUMMIT Advisory Board Emmett T. Cunningham, Jr. MD Partner Clarus Ventures William Link, PhD Managing Director Versant Ventures Anthony Adamis Professor of Ophthalmology & Visual Science University of Illinois Mark S. Blumenkranz, MD Professor & Chairman Dept. of Ophthalmology Stanford University Brook Byers Partner Kleiner Perkins Caufield & Byers Eugene de Juan, Jr., MD Founder & Vice Chairman ForSight Labs, LLC Angela McFarlane President & CEO ForSight Labs, LLC Lutz Giebel, PhD Managing Partner SV Life Sciences David Guyer, MD Partner SV Life Sciences Roman G. Rubio, MD Medical Director, Ophthalmology Genentech Charles Warden Managing Director Versant Ventures Gilbert Kliman, MD General Partner, Life Sciences InterWest Partners Samir Patel, MD President & CEO OphthoTech Scott M. Whitcup, MD EVP, R&D, and Chief Scientific Officer Allergan, Inc.
- 12. OIS….quite a journey • Today is our 12th OIS meeting…. • Inaugural OIS@AAO meeting 2009 in San Francisco – AAO has been a great partner • Inaugural OIS@ASCRS meeting in 2012 in Chicago – ASCRS has been a great partner 12
- 13. 13
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- 15. 15
- 16. OIS….quite a journey • Today is our 12th OIS meeting…. • Inaugural OIS@AAO meeting 2009 in San Francisco – AAO has been a great partner • Inaugural OIS@ASCRS meeting in 2012 in Chicago – ASCRS has been a great partner • Inaugural OIS@ASRS meeting will be this year…August 8th in San Francisco – ASRS will be a great partner 16
- 17. Innovation in Ophthalmology • Innovation Cycle- review of the stages • Principles of Innovation • Constituents involved in (required for) innovation • External environment—impact on innovation 17
- 18. Innovation Cycle – Surgical Ophthalmic Technologies Observation & Invention Product Dev/Pre- Clinical Iterate/ Refine Human Proof of Concept Iterate/ Refine CE Mark/ OUS Market Dev. FDA Approval U.S./Global Market Dev. Source: Market Scope
- 19. Innovation Cycle – Surgical Ophthalmic Technologies 1 2 3 4 5 6 7 8 9 10 11 12 Observation/Invention Years Product Dev/Pre-Clinical Phase – 1-3 yrs Human Proof of Concept – 1-3 yrs FDA Approval / U.S. / Launch Successful Global Commercialization FDA Study - 1-2 yrs 510K, 4-6 yrs PMA Refinement – 1-2 yrs CE Mark/OUS Market Dev ValueCreation
- 20. Lab Research Pre-clinical In vitro In vivo Phase I Clinical Trials Phase II Clinical Trials Phase III Clinical Trials FDA Approval OUS Regulatory Approvals Global Market Dev. Innovation Cycle – Ophthalmic Pharma & Biopharma Source: Market Scope
- 21. Innovation Cycle – Ophthalmic Pharma and Biopharma 1 2 3 4 5 6 7 8 9 10 11 12 Laboratory Research Years Pre-clinical In vitro & In vivo – 1-3 yrs Phase I Clinical Trials – 1-3 yrs OUS Approval Global Commercialization FDA Approval Phase II Clinical Trials– 1-3 yrs Phase III Clinical Trials 2-4 yrs ValueCreation
- 23. 23 Principles of Innovation • Focus on important issues (big markets)
- 24. 24 Principles of Innovation • Focus on important issues (big markets) • Seek the truth
- 25. 25 Principles of Innovation • Focus on important issues (big markets) • Seek the truth • Be disciplined
- 26. 26 Principles of Innovation • Focus on important issues (big markets) • Seek the truth • Be disciplined • Try things-when in doubt….try it
- 27. 27 Principles of Innovation • Focus on important issues (big markets) • Seek the truth • Be disciplined • Try things-when in doubt….try it • Be willing to fail
- 28. 28 Principles of Innovation • Focus on important issues (big markets) • Seek the truth • Be disciplined • Try things—when in doubt….try it • Be willing to fail • Don’t be paralyzed by mistakes
- 29. 29 Principles of Innovation • Focus on important issues (big markets) • Seek the truth • Be disciplined • Try things—when in doubt….try it • Be willing to fail • Don’t be paralyzed by mistakes • Be skilled
- 30. 30 Principles of Innovation • Focus on important issues (big markets) • Seek the truth • Be disciplined • Try things—when in doubt….try it • Be willing to fail • Don’t be paralyzed by mistakes • Be skilled • Be aggressive and assertive, but not arrogant
- 31. 31 Principles of Innovation • Focus on important issues (big markets) • Seek the truth • Be disciplined • Try things—when in doubt….try it • Be willing to fail • Don’t be paralyzed by mistakes • Be skilled • Be aggressive and assertive, but not arrogant • Professionalism pays off
- 32. 32 Principles of Innovation • Focus on important issues (big markets) • Seek the truth • Be disciplined • Try things—when in doubt….try it • Be willing to fail • Don’t be paralyzed by mistakes • Be skilled • Be aggressive and assertive, but not arrogant • Professionalism pays off
- 33. 33 Where Does Innovation Happen? • Wherever the innovators are….and where the culture fosters innovation • Corporate Culture of Innovation – Knows that innovation drives value – Does not punish mistakes – Knows it is NOT all about My ideas…others’ ideas have merit – Balances internal with external innovation – “Not invented here” attitude stifles innovation
- 34. Innovation Cycle-Key Contributors 1. Inventor/entrepreneur/team 2. Clinicians-early adopters 3. Financial Partners--Venture Capitalist, etc. 4. Industry leaders- commercial team
- 35. External Environment—Impact on Life Cycle • Public Markets • Venture Funding • M&A Activities • Outlook…. 35
- 36. Trends in Healthcare Investments and Exits 2016 Investor Confidence and Innovation Drive Healthcare Venture to New Heights Written by Jonathan Norris Managing Director Silicon Valley Bank M 650.575.1377 jnorris@svb.com @jonnysvb Paul Schuber Valuations Associate SVB Analytics Caitlin Tolman Senior Associate Silicon Valley Bank
- 37. 37 2015: Another Banner Year for Healthcare At the start of 2015, it was hard to imagine that we would have another year as successful as 2014. And yet, by most measures, 2015 came very close. . Despite the slowdown in Q4, the healthcare industry is poised for a strong 2016, though activity likely will not match 2015.
- 38. 38 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 $55 $60 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3Q'15 $Billions U.S. Healthcare Venture Investment Hits 15-Year High Healthcare as Percentage of Total Venture Investment Venture investments in healthcare were projected to reach $9.4 billion in 2015, the highest level since 2000. Biopharma venture investments reached a record $7 billion, and device remained steady at $2.4 billion. $105 Total VC$ % Biopharma % Device *Projected total for 2015 Source: PricewaterhouseCoopers, Thomson Reuters and SVB proprietary data Thomson Reuters data includes life science and dx/tools in biopharma and device categories. 2015*
- 39. 39 46 45 45 17 0 40 80 120 #ofDeals Biopharma Series A Investment Dollars Surge while Device and Dx/Tools Struggle Source: VentureSource, PitchBook, CB Insights and SVB proprietary data 76 59 81 97 0 40 80 120 2012 2013 2014 2015#ofDeals Total Series A ($M) $776 $1,102 $823 $1,871 CVC Deals % / # 22% / 17 29% / 17 27% / 22 29% / 28 BIOPHARMA 35 34 39 22 0 40 80 120 #ofDeals Total Series A ($M) $212 $215 $327 $96 CVC Deals % / # 9% / 3 18% / 6 15% / 6 32% / 7 DEVICE Total Series A ($M) $331 $257 $354 $165 CVC Deals % / # 4% / 2 11% / 5 9% / 4 24% / 4 DX/TOOLS U.S. Company Formation: Deals and Investments in Series A
- 40. 40 Healthcare Venture Exits: M&A Climate Improves as IPOs Slow
- 41. 41 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 22.0 24.0 2009 2010 2011 2012 2013 2014 2015 TotalValue($Billions) 2015 Sets Record for Healthcare Investment Returns Pre-Money IPO Value ($B) $0.1 $1.8 $1.2 $2.1 $8.8 $12.1 $11.6 Big Exit Upfront Payments ($B) $4.5 $4.1 $6.6 $4.3 $5.4 $8.0 $9.9 Big Exit Milestones ($B) $0.9 $1.1 $1.0 $1.8 $0.8 $1.0 $2.2 Pre-Money IPO Value Big Exit Milestones to be Earned Big Exit Upfront Payments Source: Investment bank research, VentureSource press releases, CB Insights, and discussions with life science professionals Potential Distributions from VC-Backed IPOs and Big Exit M&A 2009-15
- 42. 42 2016 Outlook: 2015 Will Be a Hard Act to Follow As 2015 closed, we saw some decline in exit activity and investor interest that indicate things are slowing. Here are our predictions for 2016: • The biopharma IPO window should remain open, but there will be fewer IPOs, • M&A will continue on pace as acquirers seek biopharma companies to replenish their pipeline • Device IPO activity will decline, M&A activity will likely remain stable. We believe this will lead to increased deal values and returns to investors. • We anticipate continued acquisition flurries, similar to Q3 2015, as acquirers are pressured to innovate.
- 43. Innovation in Ophthalmology --Financial Outlook 43
- 44. Innovation in Ophthalmology --Financial Outlook • Venture financing in healthcare has regained momentum… 44
- 45. Innovation in Ophthalmology --Financial Outlook • Venture financing in healthcare has regained momentum… • IPO activity picked up in 2013 and 2014….remained strong in 2015…will be more moderate in 2016 45
- 46. Innovation in Ophthalmology --Financial Outlook • Venture financing in healthcare has regained momentum… • IPO activity picked up in 2013 and 2014….remained strong in 2015…will be more moderate in 2016 • M&A activity remains strong, but is impacted by industry changes/consolidation 46
- 47. Innovation in Ophthalmology --Financial Outlook • Venture financing in healthcare has regained momentum… • IPO activity picked up in 2013 and 2014….remained strong in 2015…will be more moderate in 2016 • M&A activity remains strong, but is impacted by industry changes/consolidation • Relative Attractiveness of the Ophthalmic Sector is solid…. 47
- 48. Innovation in Ophthalmology --Financial Outlook • Venture financing in healthcare has regained momentum… • IPO activity picked up in 2013 and 2014….remained strong in 2015…will be more moderate in 2016 • M&A activity remains strong, but is impacted by industry changes/consolidation • Relative Attractiveness of the Ophthalmic Sector is solid…. 48
- 50. Innovation in Ophthalmology • Still immense unmet needs
- 51. Innovation in Ophthalmology • Still immense unmet needs • Innovation resources focused where they are rewarded
- 52. Innovation in Ophthalmology • Still immense unmet needs • Innovation resources focused where they are rewarded • Key Constituents….entrepreneurs; clinicians; VCs and Industry…..strong and more connected than ever
- 53. Innovation in Ophthalmology • Still immense unmet needs • Innovation resources focused where they are rewarded • Key Constituents….entrepreneurs; clinicians; VCs and Industry…..strong and more connected than ever • Innovation in the ophthalmic sector is gaining, not losing momentum
- 54. Innovation in Ophthalmology • Still immense unmet needs • Innovation resources focused where they are rewarded • Key Constituents….entrepreneurs; clinicians; VCs and Industry…..strong and more connected than ever • Innovation in the ophthalmic sector is gaining, not losing momentum • Thanks to all who are committed….because when we do well, many people benefit!!
- 55. Thank you….