From Brewer's Yeast to Personalised Medicine The Financing... · Source: NVCA 2014 Yearbook (by Thomson Reuters) *) Wells Fargo has more than $600 billion in assets . Source: NVCA

The Financing Perspective

Jack Bech Nielsen

Danish-UK Chamber of Commerce

23-April 2015

From Brewer's Yeast to Personalised Medicine

Public

The Novo Group

> 25% ownership > 70% share of votes

> 25% ownership > 70% share of votes

100% ownership

Large Investments Novo Seeds Novo Ventures Novo Finance

Novo Ventures

Novo Ventures is part of Novo A/S, which is the “asset manager” for Novo Nordisk Foundation

NV makes venture capital investments in life science companies for financial return

Evergreen open fund

Annual investments of $150-200 million, one of the largest global biotech VC’s

12 professionals in Copenhagen, London, San Francisco,

and Boston

15 years, 110 investments, 44 active portfolio companies

Novo Ventures - Active Portfolio 2015

Denmark

Orphazyme Switzerland Anokion Delenex ObsEva

USA – West coast

Alder Allakos AnaptysBio ApoE Asante Cardeas Ceterix Cianna Corvus HTG Inogen Intersect iRhythm Nevro Nora Otonomy SI-BONE Thesan Tobira Unchained Labs

USA – East coast

Akebia Apollo CoLucid Flexion Ophthotech PanOptica Reata Spinifex Tarsa Tetraphase Tokai ZS Pharma

New portfolio companies in 2015

UK

Acacia

Adaptimmune

Epsilon-3

KalVista

Karus

NeRRe

Vantia

Novo Ventures – Exits 2014

Denmark

Santaris - Roche $250 M

USA – West coast

Alios Biopharma – JNJ $1750 M ProteinSimple - BioTechne $300 M IPO’s Alder $80 M Inogen $70 M Nevro $126 M Otonomy $100 M

USA – East coast

IPO’s Akebia $107 M Flexion $65 M ZS Pharma $107 M

Pharma partnership

SBIR, grants

Crowd funding?

Where can you get capital to get you to the next stage?

Friends & Family

$0.1M $1.0M $5M $20M $50M $150M $500M

Business Angels

Venture Debt

Proceeds

Sophistication of domain expertise

Venture Capital

Royalty financing

IPO

Biotech Financing Options

Where Does the VC Money Come From?

Pension funds

Academic institutions

Public funds

Insurance companies

Banks, Capital markets

High Net Worth Individuals, Family offices

Strategic investors

Government agencies

Soveregin funds (Oil-exporting countries, China…)

Evergreen funds like Novo A/S is a rare exception

Some Key Numbers for Venture Capital Industry

$200 billion under VC management in US, 874 VC firms *)

20-25% goes to Healthcare, 179 active life science VC firms

$4.0-4.5 billion Venture Capital to US Biotechnology/year

Median life span of life science VC firm is 16 years vs 14 years for IT

EU biotechnology is app 20% of US market

Source: NVCA 2014 Yearbook (by Thomson Reuters) *) Wells Fargo has more than $600 billion in assets

Source: NVCA 2014 Yearbook (by Thomson Reuters)

VC Capital Commitment per Year in US

2014: $29.8 billion

2013 Venture Investments in US

Source: NVCA 2014 Yearbook (by Thomson Reuters)

Advance program in clinical development in order to increase likelihood of approval and identify clinical drivers for commercial success

Derisk program enough that someone else will pay a multiple on your investment to take residual development/commercial risk

Pharma or larger biotech via M&A

Public investors via IPO

Value Creation - Derisking

Where can you derisk most capital efficient?

Rawlins, M. D., Nature Reviews Drug Discovery 3: 360-4 (2004)

This depends upon the specific program and require careful anlysis

Drug Discovery to Launch

Basic Research

Lead Discovery

Preclinical Development

Phase II

Phase III

Regulatory Filing

Launch

Phase I

2-4 years; $1-10 million

1-2 years; $3-10 million

1-2 years; $2-20 million

1-3 years; $5-50 million

2-5 years; $15-500 million

1-2 years; $5-15 million

Typical exit windows for biotech companies

Drug re-profiling

Time and Cost to Market

Success Rate vs Clinical Stage

Tufts Center for the Study of Drug Development 2014

Success Rate vs Disease Area

Nature Biotechnology 32, 40–51 (2014) The bars represent phase 2 and phase 3 success rates and the line represents Likelihood of Approval from phase 1

Valley of

Death

Pharma partnership

SBIR, grants

Crowd funding?

Biotech Financing Options

Friends & Family

$0.1M $1.0M $5M $20M $50M $150M $500M

Business Angels

Venture Capital

Venture Debt

Royalty financing

IPO

Proceeds

Preclinical Phase 1 - 2a

Phase 2b - 3

Changes in due diligence since 2000 for NV

We have more focus these days on:

─ Great Management

─ Clear differentiation

─ Breakthrough treatments

─ Reimbursement risk

─ Syndication risk

─ Licensing/deal structures that enable trade sale

We obviously still need:

─ Solid IP

─ Significant market size

─ Reasonable clinical development costs to an M&A window

─ Multiple potential buyers

─ An exit horizon in our life-time