The Development of an Seed Investment Fund in New Zealand Jerry Balter Ulysses Advisory Group

Ulysses Advisory Group The Ulysses Group (predecessor to Ulysses Advisory Group )(“UAG”)) In 1999 we founded and ran the New Zealand Seed Fund $13.5 Million fund Formed 4 companies: Neuren – neuro drugs and devices mainly developed from growth factors – IGF and HGH Pacific Edge Biotechnology – diagnostics and drugs focused on cancers of the GI tract EndocrinZ – drugs for metabolic disease, merged with Neuren Esphion – Anti- virus software. Sold to Israeli software company Neuren and Pacific Edge Biotechnology remain the 2 largest publicly traded biomedical companies developed from NZ science and technology

The Development of a Seed Fund Ulysses began working with the MRC Collaborative Center in 1992 The MRC (Medical Research Council) is the equivalent of the US NIH. In 1994 Ulysses formed Obesys, based on MRC technology From 1995 to 1997, Ulysses advised the MRC on the development of a venture capital fund whose primary objective was to invest in technologies developed from MRC science Medical Ventures Management was formed in 1997 with approximately $70 million of available capital MVM has raised several additional funds since that time and decreased its dependence on MRC science

The Development of a Seed Fund In 1994, Ulysses formed Physiome Sciences Physiome was the combination of cardio-physiology development at Oxford University, Johns Hopkins University and the University of Auckland Company was focused on software to develop better electrophysiology drugs and devices Raised $3 million in 1996 and a total for $120 Million from 1998-2001 JB of Ulysses was initial CEO Merged with a biotech company, Predix, in 2003

The Development of a Seed Fund in NZ In 1998, NZ had a small venture capital community focused on retailing and software, only one real success At that time NZ had virtually no life sciences business outside of Ag bio – generally focused on fattening lambs and milk production University of Auckland had specific expertise in cardiac mapping(Physiome) and growth factors through j-v’s with large companies in the US and Europe( Genentech, Chiron and Pharmacia) Otago University had broad experience in gene markers focused on cancers of the GI tract.

The Development of a Seed Fund in NZ Ulysses began working with the University of Auckland in 1998 to expand its opportunities with researchers working on conditions to treat stroke and brain trauma In 1999, U of A and several high net worth individuals asked Ulysses to develop a “US-type” seed investment fund to capitalize on developing technologies in NZ Ulysses expanded its efforts to include the other research centers in NZ Early in 2000 the NZ Seed Fund was launched with capital of $13.5 million invested by NZ individuals and several institutional investors

The Success of a Seed Fund Ulysses as the manager of the Seed Fund financed 4 new companies We recruited experienced managers for all, generally experienced in the life sciences in other places around the world who had some connection to NZ Often these companies in-licensed or formed J-V’s with complimentary technologies from research institutes outside of NZ to broaden the platform Generally brought in other sources of capital to provide greater financial flexibility for the companies Ulysses principals remained active in the management of the companies

The Success of a Seed Fund Neuren: Capitalized with $7.5 million from Seed Fund, and other investors from the US, Australia and NZ Recruited CEO from large US pharmaceutical company IPO in 2005 on ASX Currently 2nd largest NZ non-Ag life sciences company by market cap – traded on the Australian Stock Exchange

The Success of a Seed Fund Esphion Capitalized with $2.5 million from the Seed Fund Software to prevent denial of services attacks Recruited CEO and board of directors with experience in the space Sold in 2003 to an Israeli software company

The Success of a Seed Fund Pacific Edge Biotechnology Capitalized with $5 million in 2001 from the Seed Fund and NZ individuals DF served as CEO for first 3 years of Company and then we recruited an experienced manager who wanted to move back to NZ Went public in 2004 on the NZ stock exhange Largest life sciences public company in NZ

The Success of a Seed Fund Endocrinz Capitalized with $7 million in 2002 Joint development between Seed Fund, Pfizer and NZ institutional investors JB initial CEO Merged with Neuren in 2004

Conclusions The most advanced VC markets for life sciences and software remain the US, Israel and Switzerland Many researchers with novel products have emigrated to these markets to take advantage of capital and the environment encouraging start-ups UK and Germany have had concerted efforts over the last 2 decades and have begun to rival the top 3 markets NZ did not really build on the success of the NZ Seed Fund and has reverted back to small NZ-focused VC investment

Conclusions The development of a vibrant venture capital/start-up environment is dependent on: Innovation & IP Protection Management & Know-How International Regulatory Compliance Money, Money and More Money

What about Turkey? Has a tremendous amount of engineering related innovation Should be the gateway of innovation into the Middle East, Eastern Europe, North Africa and Central Asia Only a modest amount of capital focused on tech innovation With more capital and more development should be able to recruit Turks with managerial experience elsewhere to return home and to develop a vibrant medical technology business sector