the state of the massachusetts life science industry - the year in review - june 2, 2011 malsi | ma...
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The State of the Massachusetts Life Science IndustryThe State of the Massachusetts Life Science Industry
- The Year in Review -- The Year in Review -
June 2, 2011
MALSI | MA Life Sciences Innovation DayMALSI | MA Life Sciences Innovation Day
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MA Life Science Venture InvestmentsInvestment by Sector (2008 – present)
(mil
lion
s of
dol
lars
)
• 39 • 31 • 31 • 32 • 21 • 32 • 30 • 32 • 31 • 35 • 35 • 30 • 24
$
Source: PWC Moneytree; Thomson Reuters
289
226
349
253 246
284
261
342 357
345
200
240
223
medical devicebiotechnology
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MA Life Science Venture InvestmentsStage of Investment (Q1 2010 – present)
(per
cent
of
tota
l)$357 mm $345 mm $199 mm $240 mm $223 mm
Start Up
Early Stage
Late Stage
Source: PWC Moneytree; Thomson Reuters
• 31 • 35 • 35 • 30 • 24• No. of financings
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MA Life Science Venture InvestmentsEarly-Stage Investments (Q1 2010 – present)
$210 mm $290 mm $169 mm $178 mm $128 mm
• 19 • 26 • 25 • 21 • 15• No. of financings
• Medical device
• Biotechnology
Source: PWC Moneytree, Thomson Reuters
Note: Includes early-stage and seed/start-up catregories
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MA Life Science Venture InvestmentsSelect Series A Biopharma Investments
Date Company Amount RaisedDescription
• Jan-11 • Civitas Therapeutics
• $20 mm• Parkinson’s lead• Based on A.I.R. pulmonary
delivery technology of Alkermes
• Nov-10 • VeraStem • $16 mm • Cancer stem cell focused
• May-10 • Tesaro • $20 mm • Acquires and develops oncology therapeutics
• Former MGI Pharma management team
• Apr-10 • Catabasis Pharmaceuticals
• $40 mm• Type II diabetes focused• Technology from Joslin Diabetes Center
• Jul-10 • Euthymics • $24 mm • acquisition of DOV Pharma CNS candidate
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Capital Market PerspectivesUS Venture Investments - Biotechnology
Oncology
CNS
Anti-infective
Other
$3.8 billion
Note: Data for the twelve months ended March 31, 2011Source: PWC Moneytree; Thomson Reuters; Johnston Blakely research
Investment by indication(TME 3-31-11)
(per
cent
of
tota
l tra
nsac
tion
s)
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Nu
mb
er
of
issu
es
• % life science issues• 23.5% • 14.9% • 9.7% • 8.8%
All Industries
Life Science Issues
Capital Market PerspectivesAnnual IPO Activity: 2000 – 2010
293
74 72 8069
11 7 7
234
44
• 18.8%
Source: IPOMonitor, Hoover’s IPO Central, Johnston Blakely & Co
100
200
300
400
2000 2001 2002 2003 2004
196
• 12.2%
2005
24
195
27
• 13.8%
2006
210
• 16.6%
2007
31 31
2008
3
• 9.7% • 6.3% • 12.4%
137
17
2010
4
2009
63
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Capital Market PerspectivesBiopharma IPO Activity
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
20002000 20042004
53 25
Preclinical
Phase I
Phase II
Phase III
NDA filed
37.7%
92.0%
Preclinical
Phase II
Phase III
NDA filed
Pe
rce
nt
of
tota
l IP
Os
Source: SEC filings
Note: Includes biopharmaceutical and related issues only. Lead compound in clinical development
• % of total life science IPOs
• 76.8% • 56.8%
100.0%
20072007
Phase I
Phase II
Phase III
NDA filed/approved
• 48.4%
15
100.0%
2009/102009/10
Phase II
Phase III
• 73.3%
11
NDA filed/approved
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Life Science IPO PerformanceAggregate Performance (2000 to 2010)
Per
cen
t of
Agg
reg
ate
Va
lue
• $2,547
Note: Represents value of one common share in 245 life science IPOs from 2000 through Dec 31, 2010. Stock transactions involving mergers of equals or reverse mergers calculated using current share prices.
• Cumulative value of one share/IPO
• $2.727
(6.6%)
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2010 Biotechnology IPOs IPO Pricing vs. Expected Range
IPO
pric
e p
er
sha
re
Note: % change from expected range calculated using the midpoint of the expected range.Source: SEC filings
• % PPS priced below expected PPS • 25.0% • 50.0% • 37.5% • 7.1% • 44.4% • 31.3% • 33.3% • 36.7% • 69.2% • 70.6% • 7.7%• 61.5%
Expected price per share
Realized price per shareIndicates Massachusetts Company
+ + + + + +• Current PPS vs IPO PPS
- - - - - -
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Nu
mb
er
of
anno
unce
d tr
an
sact
ion
s
Source: Johnston Blakely & Co. research
56
68
40
53
57
4240 40
57
50
70
29
Merger & Acquisition ActivityLife Science Sector (Q3 2007 – Q4 2010)
67
6063
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Pre/non clinical %: 51.0% 44.0% 39.0% 32.0% 25.9% 25.7% 27.2%
Pe
rce
nt
of
tota
l R&
D e
xpen
ditu
res
Pharma R&D Expenditures1989 - 2008 (by function)
• Pre/non clinical
• Ph I – III clinicals
• Post-approval studies
• Regulatory/other
Source: PhRMA,Note: Pre/non-clinical category includes process development, QC and formulation related expenditures.
32.5% 31.9% 27.3% 27.0%
$29.2 B $32.4 B $36.1 B $37.0 B $38.7 B $42.0 B $43.8 B $46.2 B $49.6 B $47.2 B
Pharmaceutical InnovationRelative New Therapeutic Contributions (1997 – 2009)
Per
cent
of a
nnua
l new
dru
g ap
prov
al
21 3949 40 43 38 33 31 41 45
Bio/Specialty Pharma:Large Pharma:
66.7%33.3%
74.4%25.6%
40.8%59.2%
42.5%57.5%
51.2%48.8%
57.9%42.1%
39.4%60.6%
48.4%51.6%
70.7%29.3%
84.4%15.6%
Source: PhRMA, BIO, FDALarge Pharma Bio/specialty pharma
13Copyright © 2011 All Rights Reserved
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35 4335
80.0%20.0%
76.7%23.3%
60.0%40.0%
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• Productivity in the pharmaceutical industry continues to worsen.
• Royalty stacking negatively impacts already reduced profit margins.
• Promise of the genomics revolution to date unfulfilled.
The dependence of the pharmaceutical industry on biotechnology has never been more acute.
R&D ProductivityCurrent M&A Influences
Pipeline pressures significantly influencing M&A activity.Pipeline pressures significantly influencing M&A activity.
• Patent expirations weigh heavily on top and bottom lines.
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The Financing DivideTraditional Investment Model
IND
NDA
Discovery Development Phase I Phase II Phase III Approval
Pre clinical Candidate Clinical Development Marketed Product
Go publicVenture funding
• traditional investment model
Follow on offerings
Private Institutional Investors Public Markets
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The Financing DivideShifting Investment Dynamics
IND
NDA
Discovery Development Phase I Phase II Phase III Approval
Pre clinical Candidate Clinical Development Market
Go publicVenture funding
• traditional investment model
Go publicVenture funding
• current investment model
Follow on offerings
Private Institutional Investors Public Markets
Private Institutional InvestorsThe Financial Abyss?
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+ +
The Life Sciences in MassachusettsThe Life Sciences in Massachusetts
Centers of Academic Excellence
Centers of Academic Excellence
Storied Medical Institutions
Storied Medical Institutions
Access to Investment Capital
Access to Investment Capital
Massachusetts Life Science Industry
Massachusetts Life Science Industry
All of the Ingredients are Here
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Benjamin Conway978-526-4014
The State of the Massachusetts Life Science IndustryThe State of the Massachusetts Life Science Industry
- The Year in Review -- The Year in Review -
MALSI | MA Life Sciences Innovation DayMALSI | MA Life Sciences Innovation Day