Transcript PowerPoint

BED/CIC Square One
Funding from Beginning to End…
Genes
Time
Function
Protein
Target
Lead
PreClinical
Phase I
Phase II
Phase III
NDA
Product
Harry Arader Biography
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BA - SUNY Purchase (Anthropology, ‘76)
MBA - The Wharton School (Marketing & Strat. Planning, ‘83)
Merck & Co. (83 - 86) Marketing and Sales
Searle Pharma (86 - 95)
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Director, New Products - North America
Product Director - US Anti-Inflammatory Products
Director, North American Business Planning
Executive Director Strategic Planning
VP International Marketing
Managing Director Searle China
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Raised $60 million in successful IPO
Developed/managed strategic realignment into SBUs
Led a $90 million acquisition (ChemGenics)
Ran Finance, Strategic Planning and Facilities
Company grew from 40 employees to over 700 people
• CFO - Millennium Pharmaceuticals Inc. (95 - 97)
• Founder – The Centromere Group LLC (97 – Ongoing)
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Square One
Harry Arader Biography
• Consultant to technology driven organizations
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Unimed Pharmaceuticals
• Led to successful acquisition in 2001 - 6X appreciation in share value
eXegenics Inc.
• Negotiated and closed $20 million drug discovery alliance with major European Pharma Co.
State of Illinois
• Created and led “Illinois Strategic Plan for the Biotechnlogy Sector.
Illinois Ventures
• Led design team for creation of $25 million seed stage venture fund
The 21st Century Fund
• Juror / technology and business consultant to Indiana’s “21st Century Fund”
• Successful Life-Sciences Entrepreneur
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CEO – BioDisplay
• Sold to Abbott after 3 years of operation – 150X ROI
Business Advisor Stratatech Corp.
• Raised $3.7 million in non-dilutive financing
CBO / BD Advisor - Orion Genomics
• “Gene Methylation” strategy led to sustained profits
Co-Founder Nanodisc Inc. (Champaign/Urbana)
• Raised $1.3 million.
Independent Director – Midway Pharmaceuticals Inc.
Founder, President and CEO – Midway Animal Health, Inc.
• Raised $300K to date – BioGenerator led “Seed” round.
CEO – Apse Inc.
• Raised $1M to date – Signed revenue bearing partnership in May, ‘14
• Senior Entrepreneurial Advisor at BioGenerator (Sept. 2011 – July 2013)
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Square One
“Post – Genomics
Pharma Pipeline”
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Gene – A stretch of DNA which expresses a protein
Functional Gene – a Gene with known function
Protein – a large, organic molecule with a specific biological purpose
Target – a physiological phenomenon implicated in disease
Lead – a substance which up or down regulates a target
Preclinical Studies
– In Vivo Screening – does it work in animals?
– In Vivo Pharm./Tox. – is it safe in animals at effective dose?
• Clinical Trials
– Phase I – Does it hurt healthy people?
– Phase II – Does it seem to help sick people without major toxicity?
– Phase III – Does it have statistically demonstrable efficacy within acceptable
safety parameters?
• Regulatory Approval – Do regulatory agencies find data compelling?
• Marketing – Will it succeed in the market place?
Before the
“Wave”
Before genomics, “Big Pharma”
had “Big Problems”
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10000
5000
Scant knowledge
of “molecular
medicine” required
many leads per
target
1000
Too Much
Toxicity…Too
Little Efficacy
100
Low “R” productivity
meant weak “D” pipeline
100
Too Few
Novel
Targets…
…Too Many
“Me Too”
Drugs
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20
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Genes
Function
Protein
Target
Lead
Pre-Clinical
Phase I
Phase II
Phase III
NDA
Product
Impact of the The post-genomic era is fundamentally
altering industry economics
“Wave”
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Genes are
important,
but only
the start of
discovery
Genes express
proteins which
will frequently
be good drug
targets
Post Genomics
Pre Genomics
Leads will be
“smarter”
More robust product pipeline
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Many more
promising
targets
Gene function is
the necessary
next step
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Genes
Function
Protein
Target
Lead
Pre-Clinical
Phase I
Phase II
Phase III
NDA
Product
The “Bootstrapping” Opportunity
Riding the Genomics Wave
 But fewer than hoped
for drug leads
 There is an urgent
demand for lead drug
compounds
 The genome
project has
created a plethora
of drug targets
Genes
Function
Protein
Drug
Target
 Pharmaceutical and Biotech firms are
paying for breakthrough services
 Bootstrap Opportunity for companies
with technologies that accelerate
drug discovery from target to lead.
Drug
Lead
Pre-Clinical Phase I
Phase II
Phase III
NDA
Product
Sources of
Investment Capital
• Friends and Family: Usually invest for reasons other than economic
returns. Typically make investments in the low thousands of dollars.
• Angel Investor: typically a non-professional investor who invests for
reasons in addition to seeking an economic return. Will make investments
in the low tens to low hundreds of thousands.
• Private Equity Investor: a professional investor who invests solely for an
economic return.
– Venture Capitalist: will make investments in early stage companies ranging
from low single to low double digit millions.
– LBO or other private equity: will make investments in going concerns, usually
small profitable firms or divisions of larger firms. Investments usually in the
tens to hundreds of millions.
Bio-Financing “Life Cycle”
• Stages in the “Natural Evolution” of a
Company
– Organizational Stage
– Seed Funding Stage
– “A” round
– “B” round
– Exit Stage
• Each stage comes with special challenges
Organizational Stage
• Challenges
– Learn the commercialization process.
• Industry trade group meetings
• Exemplars/Mentors
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Secure IP (patents) or other barriers to competitive entry.
“Pressure Test” with knowledgeable people.
Decide what role you personally want to play – NOT CEO!!!
Find an experienced “start up artist” to be your partner (let’s talk!)
Create a company, and secure ownership (or license) to tech/IP.
• Financing needed: < $5K (plus IP costs of $15K – 20K)
• Financing Sources: Self, friends and family (Tech. Transfer
organization for IP costs?)
Seed funding Stage
($500K to $1M)
• Create a “Business Plan”
– Brief Tech Description. (did I mention Brief?!??)
– Large, Unmet Market Need.
– Competitive Advantages
– Clear path to market
– Explain how investors will make money.
• Find sources of seed stage financing
– STTR/SBIR grants
– Angel Investors (N.B. use a VC - experienced attorney!!!)
– Seed Stage VC fund (An increasingly rare breed!)
– University affiliated funds may fill this gap.
• Use of funds:
– in-vitro proofs of principle
– Gain expert testimonials (usually through board or SAB)
Working with VCs
• Capital Investment can take two forms:
– Debt: a loan which must be repaid at a pre-determined
rate of interest.
– Equity: an ownership percentage given in return for
investment of capital.
• “Convertible Debt”
– Is frequently used in seed stage where it is difficult to
arrive at mutually agreed valuation.
– A loan (typically interest bearing) which converts into
equity (usually into preferred stock) at some future date.
“Serious” Venture Rounds
• “A” round (Usually $1 M to $5M)
– “World Class” CEO, ideally with start-up experience.
– Convincing demonstrations of product concept(s)
– Use of funds:
• Complete pre-clinical testing through to approved “New Drug
Application” (NDA).
• Begin Business Development activities.
• “B” round ($15 – 20 million)
– Management team now includes, CSO plus BD person (can be
CFO, CBO, VP BD, etc.)
– Use of funds:
• Complete human clinical trials at least through Phase I
• Identify and hopefully sign a product development and marketing
agreement with a major commercialization partner.
Venture Funds
• Usually specialize:
– By industry type
– By stage of investment opportunity
• Seed
• Growth (“A”, “B” and sometimes “C” rounds)
• Mezzanine (last investment prior to going public
– By geographical area
• Frequently “hunt in packs” (i.e. syndicate with
other funds on a regular basis, share info.)
Venture Funds
• Candidate opportunities must offer a 6X or greater ROI to be
considered. Aim for 20X!
• There is huge pressure to invest quickly.
• Funds therefore typically develop “investment themes” and
will not consider anything outside the theme.
• Even fast investments take many months to screen, evaluate
and close. Therefore, usually only consider opportunities they
can “exit” in 3 – 5 years.
• In Biotech, exit (also called liquidity event) is either by:
– Initial Public Offering (IPO)
– Merger and Acquisition (M&A)
Thank You!
Genes
Function
Protein
Target
Lead
PreClinical
Phase I
Phase II
Phase III
NDA
Product