Venture Healthcare – Industry Update JLABS Presentation December 2 2015 Jon Norris, Managing Director, SVB

Venture Healthcare – Industry Update

JLABS Presentation

December 2 2015

Jon Norris, Managing Director, SVB

Jon Norris - [email protected] 2

Manage West Coast Healthcare Relationships for SVB across the SVB Platform, including

Fund of Funds (Investment as LP) Direct Equity (Co-Investments and Rights to Invest) Commercial Bank (Venture/Mezzanine Debt, Asset-based Debt,

New Fundings) Equity Financing Strategy for Early Stage and Venture-Backed

Companies Industry Thought Leadership

Jon Norris: Managing Director, SVB Capital

Jonathan NorrisManaging Director, HealthcareSilicon Valley Bank

Mobile [email protected]: @jonnysvb

Publications Trends in Healthcare Investments and Exits (2015) A Year of Dazzling Returns: 2014 Healthcare Investments

and Exits (2015) Trends in Healthcare Investments and Exits (2014) Strong Momentum in Healthcare (2013) First Mover Advantage (2012) Continued Rebound (2012) Trends in M&A (2011) Bringing Home the Bacon (2010)

mailto:[email protected]


What Are We Talking About Today?

1

2

3

4

Venture Capital Financing Overview/Fundraising

Who Are The Most Active Investors in BioPharma Deals?*What Role Have Cross Over Investors Played?

M&A and IPO Trends in Venture Backed BioPharma Companies

What Do We Expect for 2016?


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3Q2015Total VC

Dollars ($B)$99 $38 $21 $19 $22 $23 $27 $31 $30 $20 $23 $28 $27 $30 $50 $47

Biopharma 4% 9% 15% 19% 19% 16% 17% 17% 15% 19% 17% 17% 16% 15% 12% 12%

Device 2% 5% 9% 8% 8% 10% 11% 12% 11% 13% 10% 10% 9% 7% 5% 4%

US Venture Investment (Through 3Q’15)

Source: PricewaterhouseCoopers, and SVB proprietary data

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3Q2015

$0 $5

$10 $15 $20 $25 $30 $35 $40 $45 $50

0%2%4%6%8%10%12%14%16%18%20%

Total VC Dollars ($B) Biopharma Device

$ B

illio

ns

$99


2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

1

2

3

4

5

6

7

8

9

10

0%

100%

200%

300%

400%

500%

Gap in Funding HC $ Fundraised HC $ Invested % Capital Flow Ratio

$ Bi

llion

s

Source: PricewaterhouseCoopers, Thompson Reuters, and SVB proprietary data

US Healthcare: Venture Dollars Invested and Raised2015 HC Fundraising Thru Q3 Almost Exceeds Full 2014 Numbers

$ Invested into Companies will be a new high for HC


0

20

40

60

80

0

500

1000

1500

# of

Dea

ls

$ M

illio

ns

US Venture Series A Financings

Source: SVB proprietary data, VentureSource, Pitchbook and CB Insights

Biopharma

CVC % 22% 30% 28%Median/Avg. Series A

($M) $6 / $10 $10 / $19 $7 / $11

2012 2013 2014

Total Dollars Invested ($M)VC OnlyCorporate VC in Syndicate


Q3 ‘15 Bio Financing Update

Q3 ‘15 Biotech Update: Top 10 VC Equity Rds• 4 Deals raising >$100M rounds in Q3

No deal smaller than $75M • 8/10 Deals w/ Cross Over participation;

8/10 in Q2 too• 4 Series B, 3 Series A, 3 Series C• 5 Oncology, 3 TGP, 2 Rare/Orphan• 4/10 OUS – 2UK, Swiss, NetherlandsWhat is Happening in Q4???


Biopharma Pre Money Valuations in Private Companies 2013 – 3Q 2015

Data Courtesy: SVB Analytics Proprietary Data


Largest Biopharma Series B Venture Rounds and Step-up Trends(Q1 – Q2 2015)

If no Crossover participation,Median Series B step-up is

25%With Crossover participation, median Series B step-up is

78%

with a wide range of 30% to 154%

RA Capital and Wellington were the most active investors in the

largest 2015 Series B rounds,

with 4 investments each

Source: CB Insights and SVB proprietary data

Jon Norris - [email protected] 10IPOs = VC backed IPOs raising > $25M

IPO Performance of Crossover Backed Companies vs. Peers(2013 – 1H 2015)

Median pre-money valuations

were 88% higher

than peer group

Median dollars raised at IPO

were 60% higher

than peer group

Median value, 9 months after IPO, was

15% higher than IPO price;

Average value was 45%* higher

than IPO price

Source: CB Insights and SVB proprietary data

*Calculation excludes one outlier (1,828%)


2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3Q20150

10

20

30

40

50

60

70

80

90

Big Exit M&A VC-Backed IPOs

# of

Big

Exi

tsVC-Backed Healthcare IPOs and Big Exit M&A (2005- Q3 2015)M&A = Pvt. VC Backed M&A >$50M Upfront for Tools/Dx & Device & >$75M Upfront for Bio

IPO = VC Backed IPO raising >$25M

Source: Investment bank reports, VentureSource, PitchBook, press releases, and discussions with life science professionals

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3Q2015

Big Exit M&A 19 20 24 17 22 28 35 36 27 43 35

VC-Backed

IPOs32 29 21 2 3 12 7 11 37 83 48


2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3Q20150

2

4

6

8

10

12

14

16

18

20

22

Big Exit Upfront Payments Big Exit Milestones to be Earned Pre-Money IPO Value

Tota

l Val

ue ($

Bill

ions

)

*Potential distribution calculated as 75% of Upfront Payments, 25% of Milestones, and 75% of Pre-Money IPO Value

Potential Distributions* From VC-Backed IPOs and M&A(2005 – Q3 2015)

Source: Investment bank reports, VentureSource, press releases, CB Insights, and discussions with life science professionals

2015: Projected numbers outpace 2013and approach last year’s record returns

Frazier Life Sciences Retreat

Biopharma VC backed Exits by Quarter 2013- Q32015

Q1 Q2 Q3 Q4 Total

2013 IPO 3 10 11 8 32

M&A 3 3 4 4 14

2014 IPO 24 12 17 13 66

M&A 3 4 6 1 14

2015 IPO 11 13 9 33

M&A 7 4 6 17

• Q3: another 6 M&A to exceed 2014 full year numbers – now at 20 in Q4• 9 VC backed IPOs so far in Q4 – discounted IPO new norm?

Source: CB Insights, press releases, and SVB proprietary data 13

14Jon Norris - [email protected]

Biopharma VC-Backed IPOs by Stage (2012 – 3Q 2015)

Year 2012 2013 2014 Thru 3Q 2015 Total

Pre-Clinical1 1 9 6 17

Phase I0 8 20 7 35

Phase II3 12 26 15 56

Phase III6 8 6 4 24

Dev Stage - Veterinarian 0 2 0 0 2

Commercial0 1 5 1 7

Total 10 32 66 33

Source: CB Insights, press releases, and SVB proprietary data

2.1x

3.2x

44% of early stage IPOs in 2014 were Pre-Clinical or Phase I

39% of early stage IPOs thru 3Q 2015 were Pre-Clinical or Phase I


VC-Backed Biopharma IPOs: Median Pre-Money and $s Raised (2012 – 3Q 2015)

Source: CB Insights, press releases, and SVB proprietary data

2013 2014 Thru 3Q 2015

# of IPOs Raised Over $100MM 8 12 11

% of IPOs Raised over $100MM 25% 18% 33%

2012 2013 2014 1H 2015 3Q 2015$0

$50

$100

$150

$200

$250

$61 $72

$62 $63 $67

$202 $174

$141

$139

$158

BioPharma IPO $ Raised BioPharma Pre-Money

Med

ian

Val

ue ($

Mill

ions

)

16Jon Norris - [email protected]

VC-Backed Biopharma Big Exit M&A

Source: Investment bank reports, press releases, and discussions with life science professionals

2008 2009 2010 2011 2012 2013 2014 3Q 20150

4

8

12

16

0

200

400

600

# of Structured Deals Total # of ExitsAverage Upfront Value ($M) Average Total Deal Value ($M)

# of

Big

Exi

ts

Deal

Siz

e ($

M)

# of All-In Deals

2008 2009 2010 2011 2012 2013 2014Thru Q3

2015Upfront $: Median ($M) 200 200 158 208 155 200 225 200

Total Deal $: Median 285 403 380 407 350 440 413 485


2009 2010 2011 2012 2013 2014 3Q 20150

2

4

6

8

10

12

14

16

18

Pre-Clinical Phase I Phase II Phase III Commercial

# of

Com

pani

esVC-Backed Biopharma Big Exit M&A by Stage

2009 Thru 3Q 2015

Source: Investment bank reports, press releases, CB Insights, and discussions with life science professionals


2013 2014 3Q 20150

1

2

3

4

5

CNS

1

3

6

1

3

3

2013 2014 3Q 20150

1

2

3

4

5Cardiovascular

2

1 21

1

1

2013 2014 3Q 20150

1

2

3

4

5Respiratory

1 12013 2014 3Q 2015

0

1

2

3

4

5

Anti-Infectives

21

1

221

111

VC-Backed Biopharma IPOs and Big Exit M&A by Top Indication (2013 – 3Q 2015)

Source: Investment bank reports, press releases, CB Insights, and discussions with life science professionals

Represents # of IPOs Represents Big Exit

2013 2014 3Q 20150

1

2

3

4

5Oncology

# of

Big

Exi

ts

4

6

1 4

6

1

1

1

2

3

Pre-Clinical Phase I Phase II Phase III Commercial

Thank you!!!

Documents

Venture Healthcare – Industry Update JLABS Presentation December 2 2015 Jon Norris, Managing Director, SVB