Presentation on theme: "Presentation Title | 1Overview | 1 Proprietary and Confidential Deal Making in a Risk Adverse Environment – Strategies for Survival and Ultimate Success."— Presentation transcript:
Presentation Title | 1Overview | 1 Proprietary and Confidential Deal Making in a Risk Adverse Environment – Strategies for Survival and Ultimate Success Fintan Walton, Chief Executive of PharmaVentures
Presentation Title | 2Overview | 2 Proprietary and Confidential Presentation Title | (c) PharmaVentures Ltd. Who Are We? Focused on deals and alliances 30+ professionals >600 assignments 65% repeat business 80% clients outside UK Established 1992 Corporate HQ in Oxford, UK Florey House
Presentation Title | 7Overview | 7 Proprietary and Confidential Presentation Title | (c) PharmaVentures Ltd. M&A / Divestiture 20% Strategy 10% Licensing / Brokering 40% Due Diligence / Valuation 30% PharmaVentures have conducted a large number of deal related projects The past 20 years of PharmaVentures (over 600 projects/mandates) All related to achieving maximum value for our clients
Presentation Title | 8Overview | 8 Proprietary and Confidential Transacting assets with a value in excess of $10 billion since 2008.
Presentation Title | 9Overview | 9 Proprietary and Confidential Presentation Title | (c) PharmaVentures Ltd. PharmaDeals The PharmaDeals website is a one-stop portal for all the latest deals and alliance news and analysis in the healthcare industry
Presentation Title | 10Overview | 10 Proprietary and Confidential Deal Making in a Risk Adverse Environment – Strategies for Survival and Ultimate Success
Presentation Title | 11Overview | 11 Proprietary and Confidential Background - The Risk Adverse Environment Financial crisis induces risk adverse behaviour Tougher for VCs to raise new funds So VC’s are even more risk adverse reducing investment in biotech Less VCs investing so sources for funding reduced Patent Cliff reduces revenue for pharma - leads to less R&D spend Fewer Pharma Cos with reduced spend means less potential partners Tougher regulatory and pricing reimbursement environment means more risk adverse pharma So first what is the effect on deal making?
Presentation Title | 12Overview | 12 Proprietary and Confidential Pretty gloomy - huh?!
Presentation Title | 13Overview | 13 Proprietary and Confidential So what is happening to deal making? Copyright: PharmaVentures 2011
Presentation Title | 14Overview | 14 Proprietary and Confidential The level of deal making activity is recovering slightly …..
Presentation Title | 15Overview | 15 Proprietary and Confidential University and Institute Deals
Presentation Title | 16Overview | 16 Proprietary and Confidential Collaborative R&D deals has been declining but 2011 looks more promising…
Presentation Title | 17Overview | 17 Proprietary and Confidential Deal Values of Collaborative R&D deals are up slightly in 2011
Presentation Title | 18Overview | 18 Proprietary and Confidential Big pharma remains interested in innovative early-stage technologies – NZ Advantage? Alliance between Regulus Therapeutics and Sanofi (Deal no ) –to discover and develop microRNA therapeutics, initially for fibrosis –Largest microRNA partnership to date Collaboration between Aileron Therapeutics and Roche (Deal no ) –to discover, develop and commercialise Stapled Peptide Therapeutics against up to five undisclosed targets
Presentation Title | 19Overview | 19 Proprietary and Confidential Licensing in 2010/11 is slightly up over 2009
Presentation Title | 20Overview | 20 Proprietary and Confidential However average deal value of licensing deals are getting lower
Presentation Title | 21Overview | 21 Proprietary and Confidential Upfront payments are variable…..
Presentation Title | 22Overview | 22 Proprietary and Confidential Option-based deals reduce risk for Licensee
Presentation Title | 23Overview | 23 Proprietary and Confidential Option Trends
Presentation Title | 24Overview | 24 Proprietary and Confidential Top Pharma Option Players
Presentation Title | 25Overview | 25 Proprietary and Confidential ~12% of options are exercised within first 2 years Options exercised? Yes No Time to exercise: <1 yr 1-2 yrs >2 yrs Top 20 pharma Most are based on preclinical deals
Presentation Title | 26Overview | 26 Proprietary and Confidential But who feels most confident in negotiation?
Presentation Title | 27Overview | 27 Proprietary and Confidential The Royalty Rate Report 2011 PharmaVentures ISBN ‘In my view the current market for deals favours...’ Survey of Pharma and Biotech Companies 2011
Presentation Title | 28Overview | 28 Proprietary and Confidential M&A
Presentation Title | 29Overview | 29 Proprietary and Confidential M&A involving start-up or emerging companies
Presentation Title | 30Overview | 30 Proprietary and Confidential In M&A what are Contingent Value Rights (CVRs)? A type of right given to shareholders of an acquired company that ensures they receive additional benefit if a specified event occurs. A contingent value right is similar to an option because it often has an expiration date that relates to the time the contingent event must occur.
Presentation Title | 31Overview | 31 Proprietary and Confidential M&A transaction structures becoming more complex with Contingent Value Rights (CVRs) becoming popular Staggered, contingent payments –Acquisition of SmartCells by Merck & Co. (Deal no ) Upfront cash payment Clinical development and regulatory milestones of up to US$500 M Sales-based payments –Acquisition of FoldRx Pharmaceuticals by Pfizer (Deal no ) Upfront payment and contingent payments if milestones are achieved
Presentation Title | 32Overview | 32 Proprietary and Confidential M&A transaction structures becoming more complex Longer term contracting back of services: –Acquisition of Sanofi R&D sites by Covance Upfront cash payment Contracting back of clinical development services for up to 10 years Up to $2.2bn in value –Acquisition of UCB manufacturing sites by Aesica Upfront cash payment Contracting back of manufacturing services ******PharmaVentures acted as advisor and broker to Sanofi and UCB
Presentation Title | 33Overview | 33 Proprietary and Confidential The risk game - lessons Pharma reduced risk by in-licensing R&D 30 years ago Deal values appear to recovering but ….. Options within licenses and CVRs reduces risk further for licensee/buyer Pharma will generally only in-license quality assets at POC Quality assets always command highest prices/values Value is also determined by negotiating power of the parties The risk adverse state of VC funding has effected negotiating power Pharma is trying to adapt to a more risk adverse VC environment through corporate venture funds but also to remain competitive Pharma are looking to increase university collaborations
Presentation Title | 34Overview | 34 Proprietary and Confidential “You have to start with the customers experience and work backwards to the technology – you can’t start with the technology” - Steve Jobs, 1997 How to survive!
Presentation Title | 35Overview | 35 Proprietary and Confidential How to survive (1) – your company - your IP Develop technology/drugs that are truly disruptive and to future pharma needs Carefully consider pricing and re-imbursement issues Fund using grants and other sources of non-dilutive capital Only bring in well networked committed VCs who can sustain multiple rounds of financing Quality assets always command highest prices/values Value is also determined by your negotiating power – strong backers Go early to talk to pharma to establish issues
Presentation Title | 36Overview | 36 Proprietary and Confidential How to survive (2) – big pharma Technology is always sexy but truly understand what pharma really want Pharma are your customers – so get to know them After all Pharma are likely to be your licensees or buyers Pharma like options within licenses as they reduce risk further Pharma prefer to in-license quality assets at POC And quality assets always command highest prices/values Pharma is trying to adapt to a more risk adverse VC environment through corporate ventures but also to remain competitive
Presentation Title | 37Overview | 37 Proprietary and Confidential How to survive (3) – The Exit Plan your exit from the beginning Forget IPO for the time being unless you are profitable! Trade sale most likely, so get to know your potential buyers What do your buyers want? “You have to start with the customers experience and work backwards to the technology – you can’t start with the technology” - Steve Jobs
Presentation Title | 38Overview | 38 Proprietary and Confidential What Pharma Execs said to me on PharmaTelevision - an NZ Opportunity? “We are interested in innovation and in new ideas as they come out of universities” - James Sabry, Vice President of Partnering Genentech, Inc “The goal is to put our R&D organization closer to academia, closer to where the science is happening” – Doug Giordano, Vice President, Worldwide Business Development Group, Pfizer, Inc “There is an ever increasing awareness that the majority of science is out there and we need to interact with academia” – David Nicholson, Senior Vice President Worldwide Licensing and Knowledge Management, Merck & Co, Inc “We've been much more aggressive now and going and cutting partnerships with academia, foundations, institutions, non-profit organizations” - Rob Wills, Vice President, Alliance Management, Johnson & Johnson
Presentation Title | 39Overview | 39 Proprietary and Confidential NBI has out performed Nasdaq Index
Presentation Title | 40Overview | 40 Proprietary and Confidential Not too bad after all!!
Presentation Title | 41Overview | 41 Proprietary and Confidential New Challenges – New Opportunities!!!