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WHY VCS SHOULD CONSIDER

FUNDING START-UP BIOTECHS


A PRESENTATION AT BIOMALAYSIA 2011
KUALA LUMPUR
BY

SANJAY K. SEHGAL
MANAGING PARTNER & CEO
EAST WEST CAPITAL PARTNERS

Life Sciences & Healthcare Principal Investments and Corporate Finance Advisory
November 2011

East West Capital Partners


Who are East
West Capital
Partners
(EWCP)?

What is
EWCPs
Focus and
Investment
Strategy?

Healthcare/Life Sciences Investments and Corporate Finance Advisory


Headquartered out of Singapore; Presence in London, Malaysia, and India
4 Partners with over a 100 years of combined Deep Domain and Global
Operational and Financial Expertise
FOCUS
o Facilities (hospitals, specialty clinics)
o Services (clinical research organizations, healthcare insurance, IT)
o Pharma (specialty drug delivery technologies, manufacturing)
o Medical Technology (e.g. OEM, manufacturing/distribution)
Knowledge transfer and IP development from West to East and East to West
STRATEGY:
We are Engaged hands-on value-add investors
We seek control or effective control investments

Topic is: Why VCs Should consider funding


start-up Biotechs
Should the Question be the Other Way Around?
that is
Why Should VCs consider funding start-up Biotechs?

The VC Money Cycle Is It Alive & Well?

Who are VCs?

VCs Usually Know What They are


Investing In, right?

How about Biotech VCs?

Biotech
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What do VCs Really Want?

How Long are VCs Prepared to Wait?

The Essential Nature of Biotech

10

What is the Typical Biotech?

Revenues
Yr 1

Yr 2

Yr 3

Yr 4

Yr 5

Profits/ (Losses)
Or
Investment

11

What has Changed so Dramatically for


the Biotech Industry? First
Our portfolio has had seven NDA
submissions since 2008, with five
approved and two still pending. That
should be a success, except it has taken
twice as long to get there as it used to
five or six years ago. The math with the
FDA just doesnt work anymore for us
in terms of a venture fund lifecycle
Its incredibly frustrating to watch this
happen
Quote from
Kate Mitchell of Scale Venture Partners
(BofAs Venture group who stopped
investing in biotech in November 2011)
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What has Changed so Dramatically for


the Biotech Industry? Second

Uncertain Exit for Investors


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And so
Where are the Returns in Biotech?

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The Mis-match Between What VCs Want


and the Fundamental Nature of Biotech
VCs
What VCs want:
-Low Risk
-Low Investment
-High Return
-Pronto!

Biotech
What Biotech offers:
-High Risk
-High Investment
-Binary outcomes
-Years of Waiting

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Given this Mis-match, Why Do VCs


Invest in Biotech?

Returns looking for the next BILLION dollar home-run

Superman syndromeI believe I can pick the winners

Portfolio Investors want diversification to spread risk

Doing good Bringing a benefit to humanity, e.g., stem cells

Bragging rights Being part of the next Big Thing

Government support and encouragement


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So, Should VCs Invest in Start-up Biotechs?

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How Should Biotech Companies Prepare


Themselves for this New Paradigm? 1 of 2

Understand your VC

Try to get funding up to a clear valuation point


avoid being caught short of cash mid-way

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How Should Biotech Companies Prepare


Themselves for this New Paradigm? 2 of 2

Be more capital efficient:


Leverage emerging markets
Enter into risk-sharing deals with suppliers
Get Government support / grants
Be Virtual
De-risk: Either find a near-term revenue
model or identify an interested license or joint
venture partner early on

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CONTACT
Sanjay K. Sehgal
MANAGING PARTNER & CEO
Tel: +65 9675 6436
sanjay@eastwestcap.com
www.eastwestcap.com

WHY VCS SHOULD CONSIDER


FUNDING START-UP BIOTECHS?

A PRESENTATION AT BIOMALAYSIA 2011


KUALA LUMPUR
Life Sciences & Healthcare Principal Investments and Corporate Finance Advisory
November 2011