Financing Environment Update……
Impact on Innovation in Ophthalmology
William J. Link, PhD
Versant Ventures
April 16, 2015
Financing Environment
• Public Markets
• Venture Funding
• M&A Activities
• Outlook….
2
Public Market Update…..
• Lot’s of activity and momentum
3
Strong IPO market…260 IPOs priced since Jan 2014
IPO issuance
$93.0
Alibaba IPO
$90
$25.0
$80
$70
$59.8
Proceeds Raised ($bn)
$60
$50
$40.3
$40
$68.0
$30
$25.0
$23.1
$17.8
$20
$11.7
$10
$5.8
$0.1
$0
2013
# of IPOs
199
# of withdrawn IPOs 10
2014
Q1'14
237
Q2'14
56
25
Q3'14
74
5
47
4
Source: Dealogic, Bloomberg and FactSet as of 04/02/15. Excludes deals <$50mm. Median Offer/30-day
represents offer/current for those IPOs that have not reached 30 days
1 Excludes Alibaba
2 By number of deals
E
Q4'14
Q1'15
60
7
Apr. 15
22
9
1
14
-
Healthcare represented 14% of the IPO market since
the beginning of 2014
2014 – 2015YTD IPO issuance by sector1
(By proceeds raised)
Diversified 7%
(28)
Real Estate
8% (14)
Consumer 4%
(15)
Financials
24% (32)
Healthcare
14% (84)
Technology
20% (54)
Source: Dealogic, Bloomberg and FactSet as of 04/02/15.
Excludes deals <$50mm. Median Offer/30-day represents
offer/current for those IPOs that have not reached 30 days
1 Excludes Alibaba
2 By number of deals
Energy 23%
(32)
Recent ophthalmology IPOs
Ophthalmology IPO update ($mm)
Company
Date of
IPO
Amount raised
($mm)
Mkt cap at IPO ($mm)
Performance to date
Current Mkt cap ($mm)
Feb-15
$40
$98
(13%)
$85
Jan-15
$42
$134
(22%)
$105
Nov-14
$36
$318
40%
$446
Jul-14
$117
$429
129%
$980
Jul-14
$75
$278
139%
$665
Mar-14
$58
$197
76%
$347
Feb-14
$58
$181
(18%)
$149
Feb-14
$162
$632
(69%)
$195
Oct-13
$77
$240
215%
$758
Sep-13
$192
$752
112%
$1,596
Source: Company filings, FactSet as of 04/07/2015
5
Recent ophthalmology IPOs
Which of these companies have been featured at OIS
meeting??
Company
Date of
IPO
Amount raised
($mm)
Mkt cap at IPO ($mm)
Performance to date
Current Mkt cap ($mm)
Feb-15
$40
$98
(13%)
$85
Jan-15
$42
$134
(22%)
$105
Nov-14
$36
$318
40%
$446
Jul-14
$117
$429
129%
$980
Jul-14
$75
$278
139%
$665
Mar-14
$58
$197
76%
$347
Feb-14
$58
$181
(18%)
$149
Feb-14
$162
$632
(69%)
$195
Oct-13
$77
$240
215%
$758
Sep-13
$192
$752
112%
$1,596
Source: Company filings, FactSet as of 04/07/2015
5
OIS Impact??
Which of these companies have been featured at OIS
meeting??
Company
Date of
IPO
Amount raised
($mm)
Mkt cap at IPO ($mm)
Performance to date
Current Mkt cap ($mm)
Feb-15
$40
$98
(13%)
$85
Jan-15
$42
$134
(22%)
$105
Nov-14
$36
$318
40%
$446
Jul-14
$117
$429
129%
$980
Jul-14
$75
$278
139%
$665
Mar-14
$58
$197
76%
$347
Feb-14
$58
$181
(18%)
$149
Feb-14
$162
$632
(69%)
$195
Oct-13
$77
$240
215%
$758
Sep-13
$192
$752
112%
$1,596
Source: Company filings, FactSet as of 04/07/2015
5
Financing Environment….
• Venture financing in healthcare had been on a downward
trend
9
Initial investment in healthcare companies declined
substantially in the 5 years from ‘07-’12
Med device
Initial venture investment in companies
$Millions
Number of initial venture deals
Deals
1,857
271
Biotech
257
1,641
787
124
691
1,135
921
304
1,070
200
7
840
200
8
600
200
9
201
0
Source: PWC / NVCA Moneytree Report, Q4 2012
10
69
76
181
68
664
922
617
188
171
212
240
950
-64%
109
226
201
2
135
62
147
148
95
438
201
1
-50%
200
7
200
8
200
9
119
113
73
201
0
201
1
201
2
Total Venture Investing on an Upward Trend
$50
$99
$45
$40
$ Billions
$35
$30
$25
$20
$15
$10
$5
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Total VC $
Source: PricewaterhouseCoopers, SVB proprietary data
11
Healthcare Venture Investment Trends
10
9
8
$ Billions
7
6
Device
Biotech
Total
5
4
3
2
1
0
2007
12
2008
2009
2010
2011
2012
2013
2014
Most Active New VC Investors in Biopharma (2013-2014)
12%
24
20
# of Deals
16
12
8
4
0
Early (Seed-Series B)
Source: CB Insights and SVB proprietary data.
Late (Series C+)
13
Most Active New VC Investors’ Biopharma Deals by Indication (2013-2014)
50
10%
45
40
35
90%
30
25
20
15
10
5
0
:
Early (Seed-Series B)
**Target Generating Platform.
Source: CB Insights and SVB proprietary data.
:
Late (Series
C+)
14
Most Active New VC Investors in Device (2013-2014)
10
9
8
7
6
5
4
3
2
1
0
Early (Seed-Series B)
Source: CB Insights and SVB proprietary data
Late (Series C+)
15
Most Active New VC Investors in Device (2013-2014)
10
9
8
7
6
5
4
3
2
1
0
Early (Seed-Series B)
Source: CB Insights and SVB proprietary data
Late (Series C+)
16
Most Active New VC Investors’ Device Deals by Indication (2013-2014)
16
14
12
10
8
6
4
2
0
:
Early (Seed-Series B)
Source: CB Insights and SVB proprietary data
:
Late (Series C+)
17
Most Active Corporate Biopharma Investors 2013-2014
14
12
Late (Series C+)12%
Early (Seed-Series B)
88%
10
8
6
4
2
0
Includes new investments by the top 60 active healthcare investors. Both US and OUS companies are included.
Sources: CB Insights, PitchBook, VentureSource, and SVB proprietary data.
18
Most Active Biopharma Investments by Location 2013-2014
55
55
# of Companies
50
Overall Investments
50
45
45
40
40
35
35
30
30
25
25
20
20
15
15
10
10
5
Seed - Series A Investments
5
0
0
Top 5 OUS Countries: UK, France, Germany, Switzerland, Israel
Includes new investments by the top 60 active healthcare investors. Both US and OUS companies are included.
Sources: CB Insights, PitchBook, VentureSource, and SVB proprietary data.
Most Active Device Investments by Location 2013-2014
35
30
35
Overall Investments
30
Seed - Series A Investments
25
25
20
15
20
10
15
10
5
5
0
0
Includes new investments by the top 60 active healthcare investors. Both US and OUS companies are included.
Sources: CB Insights, PitchBook, VentureSource, and SVB proprietary data.
20
J.
Top Non-VC Lead Investors in 2013-2014
14
12
Tools/Dx
Medical Device
10
BioPharma
8
6
4
2
0
Includes new investments by the top 14 active non-VC healthcare investors. Both US and OUS companies are included.
Sources: CB Insights, PitchBook, VentureSource, and SVB proprietary data.
M & A…….
22
Major M&A in ophthalmology-pharmaceuticals
Close
date
Mar-15
Oct-14
Upfront
($mm)
65,900
65
Mileston
es
($mm)
55
Total
($mm)
65,900
120
Undisc.
600
Target
Allergan
Aciex
Acquiror
Actavis
NicOx
May-14
Merck’s porftolio (Japan, Europe,
Apac)
Santen
600
May-13
Bausch & Lomb
Valeant
8,700
Mar-13
SARCode
Shire
160
undisc.
160
Sep-12
QLT - Visudyne
Valeant
133
375
133
Mar-12
ISTA Pharmaceuticals
Bausch & Lomb
488
439
488
Feb-12
Anabasis
Dompé Farmaceutici
228
May-11
Molecular Partners
Allergan
Apr-11
Inspire Pharmaceuticals
Merck
450
450
Jun-10
Aton Pharmaceuticals
Valeant
318
318
Oct-09
Fovea
Sanofi-Aventis
538
538
Sep-09
ESBATech
Alcon
150
Nov-05
Eyetech
OSI
997
997
Oct-05
Control Delivery Systems
Psivida
105
105
Jul-05
Angiosyn
Pfizer
NA
527
Nov-03
Oculex
Allergan
230
230
Source: CapitalIQ, JP Morgan
45
8,700
228
375
439
420
589
Major M&A in ophthalmology-devices
Close
date
Target
Acquiror
Upfront
($mm)
Feb151
Aug14
Aug14
Optos
Nikon
410
410
WaveTec
Alcon
350
350
Sauflon
Cooper
1,200
1,200
Dec-13
Transitions Optical (51% stake)
Essilor
1,730
125
1,855
Aug-13
OptiMedica
Abbott
250
150
400
Jan-13
Technolas
Bausch & Lomb
290
121
411
Oct-11
Reichert
Ametek
Apr-11
Alcon2
Novartis
Mar-11
Medicel AG
Halma
75
33
108
Aug-10
LensX Lasers, Inc.
Alcon
362
383
150
Jan-10
Optonol
Alcon
180
180
Oct-09
Visiogen, Inc.
Abbott
400
400
Feb-09
Advanced Medical Optics
Abbott
2,770
Feb-08
eyeonics, Inc.
Bausch & Lomb
Nov-07
WaveLight AG
Alcon
Oct-07
Bausch & Lomb Inc.
Warburg Pincus
Oct-07
Forsight NewCo II
QLT Inc
Apr-07
IntraLase
Advanced Medical Optics
817
817
Jan-07
Corneal Laboratories SA
Allergan
216
216
Jul-06
IOLTECH SA
Carl Zeiss
165
165
May-05
VISX Inc.
Advanced Medical Optics
1,539
1,539
Jan-05
Ocular Sciences Inc.
The Cooper Companies
1,261
1,261
450
450
Source:Jun-04
CapitalIQ, JP Pfizer,
Morgan Surgical Ophtha
1 Pending; 2 Acquired in 3 stages beginning in July 2008
Advanced Medical Optics
Milestones
($mm)
Total
($mm)
150
150
51,315
51,315
300
2,770
540
840
133
133
4,470
4,470
41
60
101
Financing Environment--Summary
25
BioPharma, Device, and Dx/Tools Big Exits M&A and IPOs 2005-2014
90
80
70
Big Exits
60
VC-Backed IPOs
# of Big Exits
50
40
30
20
10
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Big Exits
VC-Backed
IPOs
19
32
20
29
24
21
17
2
22
3
28
12
35
7
Big Exits: 2005-Present. Private Biotech M&A Up-Front >$75M, Med Device M&A Up Front>$50M. “Up-Front”: Up-Front defined as payments in a
structured deal not including milestones. “Up-Front w/ Milestones”: defined as payments in a structured deal including
milestones. “All-In”: Deals where the total value is paid at the close of the transaction. IPOs include Venture Capital-backed IPOs
only. Sources: Investment Bank Reports, VentureSource, Press Releases, and discussions with Life Science
professionals.
35
13
27
37
41
83
2014 Was a Year of Strong Returns!
Potential Distributions from Big Exit M&A and IPOs*
22
20
Pre-Money Valuation Pre-IPO
18
16
Total Value ($ Billion)
14
Big Exit Milestone to be Earned
Big Exit Up-Front Payments
12
10
8
6
4
*Discounts taken: 75% Up-Front M&A; 25% M&A Milestones; 75% of Last Private Valuation
Big Exits: 2005-Present. Private Biotech M&A Up-Front >$75M, Med Device M&A Up Front>$50M. “Up-Front”: Up-Front defined as
payments in a structured deal not including milestones. “Up-Front w/ Milestones”: defined as payments in a structured deal
including
milestones. “All-In”: Deals where the total value is paid at the close of the transaction. IPOs include Venture Capital-backed IPOs
only. Sources: Investment Bank Reports, VentureSource, Press Releases, and discussions with Life Science
professionals.
2014 Was a Year of Strong Returns!
Potential Distributions from Big Exit M&A and IPOs*
22
20
Pre-Money Valuation Pre-IPO
18
16
Total Value ($ Billion)
14
Big Exit Milestone to be Earned
Big Exit Up-Front Payments
12
10
8
6
4
*Discounts taken: 75% Up-Front M&A; 25% M&A Milestones; 75% of Last Private Valuation
Big Exits: 2005-Present. Private Biotech M&A Up-Front >$75M, Med Device M&A Up Front>$50M. “Up-Front”: Up-Front defined as
payments in a structured deal not including milestones. “Up-Front w/ Milestones”: defined as payments in a structured deal
including
milestones. “All-In”: Deals where the total value is paid at the close of the transaction. IPOs include Venture Capital-backed IPOs
only. Sources: Investment Bank Reports, VentureSource, Press Releases, and discussions with Life Science
professionals.
2014 Was a Year of Strong Returns!
Potential Distributions from Big Exit M&A and IPOs*
22
20
Pre-Money Valuation Pre-IPO
18
16
Total Value ($ Billion)
14
Big Exit Milestone to be Earned
Big Exit Up-Front Payments
12
10
8
6
4
*Discounts taken: 75% Up-Front M&A; 25% M&A Milestones; 75% of Last Private Valuation
Big Exits: 2005-Present. Private Biotech M&A Up-Front >$75M, Med Device M&A Up Front>$50M. “Up-Front”: Up-Front defined as
payments in a structured deal not including milestones. “Up-Front w/ Milestones”: defined as payments in a structured deal
including
milestones. “All-In”: Deals where the total value is paid at the close of the transaction. IPOs include Venture Capital-backed IPOs
only. Sources: Investment Bank Reports, VentureSource, Press Releases, and discussions with Life Science
professionals.
Innovation in Ophthalmology….Outlook
30
Innovation in Ophthalmology….Outlook
• Venture financing in healthcare had been on a downward
trend through 2012….has regained momentum…will it
continue??
31
Innovation in Ophthalmology….Outlook
• Venture financing in healthcare had been on a downward
trend through 2012….has regained momentum…will it
continue??
• IPO activity picked up in 2013 and 2014….outlook for
2015?
32
Innovation in Ophthalmology….Outlook
• Venture financing in healthcare had been on a downward
trend through 2012….has regained momentum…will it
continue??
• IPO activity picked up in 2013 and 2014….outlook for
2015?
• M&A activity reasonably strong….impact of industry
changes/consolidation?
33
Innovation in Ophthalmology….Outlook
• Venture financing in healthcare had been on a downward
trend through 2012….has regained momentum…will it
continue??
• IPO activity picked up in 2013 and 2014….outlook for
2015?
• M&A activity reasonably strong….impact of industry
changes/consolidation?
• Relative Attractiveness of the Ophthalmic Sector is
solid….which disease categories are most attractive
34
Innovation in Ophthalmology….Outlook
• Venture financing in healthcare had been on a downward
trend through 2012….has regained momentum…will it
continue??
• IPO activity picked up in 2013 and 2014….outlook for
2015?
• M&A activity reasonably strong….impact of industry
changes/consolidation?
• Relative Attractiveness of the Ophthalmic Sector is
solid….which disease categories are most attractive
• Other factors impacting innovation…such as long
timelines, capital intensity, FDA path, competition, etc.
35
Innovation in Ophthalmology….Outlook
• As we know innovation resources are focused where
they are rewarded…
• How does ophthalmology stack up?
• Let’s hear from the panel…..
36
Thank you….