Scale up event November 21, 2017 15/05/2017 Johan Cardoen

Financing life cycle of a biotech company CASH-IN TIME VCs, Acquisitions/Mergers & Strategic Alliances Angels, FFF Seed Capital Early Stage Later Stage Mezzanine 3rd 2nd 1st IPO Public Market Secondary Offerings Public Company Operating Cash Flow Found NewCo Validate concept Complete business plan TT funds Sales POC in place Concept Product support Additional clinical data Prototype/ Research Product development Product introduction

Value creation process in therapeutics Long term, high risk Value creation process in therapeutics Long term, high risk* and capital intensive Value inflection point *overall POS: 8%

Biotech start-ups: business models Platform companies Asset-centric companies Drug Discovery platform: LLC model Combination of assets

Biotech platform companies Discovery/Technology platform is the differentiator and back bone Risk spreading: many shots on goal, suitable for deal making Long timelines towards main value inflection point First platform development and validation Develop proprietary pipeline High capital needs Therapeutics, diagnostics and agbio

Asset-centric Asset is the differentiator and key value driver Single shot on goal Binary: high risk, high gain Less capital intensive – but still long timelines “Build to Buy model”

Company age at time of acquisition per sub-sector Source: Kempen 2017

Biotech in Europe: current financing climate Start-up financing: overall positive Many VC funds raised successfully new funds over the past 3-4 years Many VC funds (also US based) scout actively for dealflow in EU Despite more IPO activity in the US (at higher valuations) – there are several biotech-friendly stock markets in EU (Euronext, LSE, Swiss Exchange, CSE...)

Scale-ups in Biotech: challenges Significant capital required to finance a biotech (therapeutics) company towards a ‘cashflow-positive’ position Biotech investors are mainly VC funds-most closed-end funds (typically 10 yrs) High financing needs push sometimes companies pre-maturely towards exit mainly through a trade sale Biotech-friendly stock market is key for biotech companies to fuel path towards sustainability EU lack growth equity funds compared to the US More and more EU biotech have dual listing

Scale-ups in Biotech: opportunities Availability of growth equity in EU could contribute to move many EU biotech companies towards a sustainable biopharma company (e,g, in US Amgen, Celgene, Gilead, Vertex, Biogen etc...) Increasing liquity on EU stock markets for listed biotech companies prevent the risk of shifting the strategic decision center to the US