Jeff Behrens Head of Business Operations Biogen Idec Innovation Incubator 10/2/2007 Getting Initial Money to go from Nothing to Something

2 My Background Founder, The Telluride Group, Inc. –Managed IT services for biotech and VC –Sold in 2003 Back to school –Harvard-MIT Biomedical Enterprise Program Consulting work with several venture firms Join Biogen Idec in 2006 to help form BI3 Active with Launchpad Angels, MIT’s Venture Mentoring Service, local Boston entrepreneurial “scene” Board of Finale Restaurants Head of Business Operations for BI3

3 The Telluride Group Story Remotely managed IT outsourcing services = “MSP” Founded ’95; bootstrapped 750k angel funding ’99 Sold in 2003 to mindSHIFT (funded by Fidelity) –35 EEs, ~1700 seats managed, ~40 clients Key lessons –Profitable every year but 1 –Used bank debt and angel –Avoided VC; with VC, exit would have been disappointing –Hard to grow service company fast

4 Telluride, Banks, Angels Banks –Credit cards to no personal guarantee in 5 years –Cycles of lending/excitement and tightening of credit –Always ask and network; better deals are out there –Debt, used carefully, is much cheaper than equity! Angels –Advisors became angels –Ask for advice, get $. (and the reverse!) –Angel groups – good and bad

5 Angel funding is moving away from early- stage companies Whereas the bulk of angel investment in the past was largely in the seed and startup stage, this amount has dropped significantly Source: University of New Hampshire's Center for Venture Research

6 VC activity is also diminishing in early-stage deals Trend towards larger venture funds ($500M+), BUT the number of investments per fund is staying constant due to management bandwidth limitations More capital per deal means partners cannot justify seed (<$1M) or early-stage ($1-$5M) investments –Typically 4-6 new companies are funded per partner per fund <$100M$100M-$500M>$500M Source: Nature Biotechnology Significant trend towards larger funds since 1996

7 Funding alternatives: Other forms of support for early-stage translational medical research SourceDescription Angel Investors Traditionally one of the largest sources of funding for seed-stage ventures of funding for seed-stage ventures Traditional Foundations Provide small amounts of funding to support initial research in the form of reimbursable grants with expectation of royalties on potential sales Venture Philanthropist Organizations (VPOs) Traditional venture capital investment model applied to social entrepreneurship University seed funds University funds applied to increasing the commercial value of university IP and advancing technologies to the market Local/regional seed funds Early-stage funding support for economic development SBIR/STTR DoD grants for early-stage technology R&D projects with commercial applications that also serve a DoD need Corporate partnerships Partnerships between industry and academic or mature companies and startups to support early-stage R&D activities

8 Biogen Idec: A Global Biopharmaceutical Company Formed in 2003 through merger of Biogen Inc. and Idec Pharmaceuticals. 3,700+ employees Headquartered in Cambridge, MA. Research centers in San Diego, CA and Cambridge, MA 2 blockbusters

9 Collaborative Inquiry Grants to academic researchers Early discovery stage Not milestone-driven Typically “no strings attached” No direct impact on pipeline How Biogen Invests Externally New Ventures Investments in biotech opportunities in preclinical or Phase 1 Typically in syndicates with other VCs Strategic investments with indirect impact on pipeline Business Development Focused on Phase 2 and 3 products Immediate contribution to pipeline Lower risk, shorter timelines makes this approach very attractive… …but is also highly competitive SRAs, CI BiologyDrug DiscPreclinicalPh 1Ph 2Ph 3 BDNV

10 Targets innovative lead-stage product candidates with clear path toward R-to-D transition or rapid proof-of-concept in the clinic Provides funding and entrepreneurial environment to efficiently execute aggressive R&D plan Directly contributes to the company’s R&D pipeline Biogen Idec Innovation Incubator (BI3): Biogen’s Newest External Innovation Effort SRAs, CI BiologyDrug DiscPreclinicalPh 1Ph 2Ph 3 BDNV

11 What is bi 3 ? bi 3 ’s goal is to create an environment that allows entrepreneurially minded scientists to convert novel biological insight rapidly into life-saving and life- changing therapeutics To this end, bi 3 provides a unique and comprehensive set of resources We get equity & an option

12 Approaching Larger Companies for Funding/Partnerships Multiple POCs are essential/multiple routes in Try to learn what the larger company cares about/believes (not easy!) Networking within a large company is as much effort as broad networking in general Innovation matters to smart large companies and they are willing to pay for it!

13 Contact Info