Market Health Access to finance; for life science and healthcare SMEs. Christian Suojanen Co-Founder/Chairman TTS Global Initiative Health2Market Final Conference Brussels, 1 July 2015

This project has received funding from the European Union’s Seventh Framework Programme for research, technological development and demonstration under grant agreement No Market Health Sources of Funding  For life sciences start-ups & SMEs, the financing challenge is at least as crucial as the scientific, translational, development, & regulatory challenges. Many potentially good companies have failed for lack of finance:  Sources:  Non-dilutive grants (gov’t, foundations, charities)  Angel investors (Friends, Family, Fools)  Venture Capital  Corporate Venture  Other Equity Investors (Patient Organizations, Family Offices, PE)  IPO

This project has received funding from the European Union’s Seventh Framework Programme for research, technological development and demonstration under grant agreement No Market Health Non-Dilutive Grants  Non-Dilutive grants can be absolutely essential for any start-up or SME.  Key points to bear in mind:  Positives :  By definition non-dilutive; you are not giving up equity (shares or options).  No loss of control or dilution of decision-making authority/board of directors.  Can efficiently finance your programmes through to important inflection points.  Negatives:  Coordination, Management & Reporting can be a substantial burden.  Potential for major distraction from key value drivers when not fully aligned with business objectives.  Not always available.  Take Away Messages: Grants can be incredibly useful, but no start-up or SME should ever take a grant that is not laser focused in alignment with their core business objectives and meeting the milestones & inflection points needed to move forward.

This project has received funding from the European Union’s Seventh Framework Programme for research, technological development and demonstration under grant agreement No Market Health Angel Investors  Angel Investors:  Traditionally wealthy individuals or successful entrepreneurs  And of course, Friends, Fools & Family  Currently, mostly done via organized “angel groups” with established pipeline review mechanisms. Quite formalized.  Positives:  Good angels can add insight, experience, expertise & on top of cash.  They can invest early.  Can serve as “champions” for your company.  Negatives:  Not all angels are smart (dumb money can be painful).  Often seek control  Rarely add value outside of own areas of expertise.  Take Aways: “Fit” is crucial, and expertise and understanding of your technology & business model is fundamental. If that isn’t in place, walk away.

This project has received funding from the European Union’s Seventh Framework Programme for research, technological development and demonstration under grant agreement No Market Health Venture Capital  VC: “General Partners” (VCs) are the fund managers for “Limited Partners” (Institutional Investors, Sovereign funds, Endowments, Corporate Investors, Family Offices…)  The job of VCs is to provide a return to their own LP investors.  Life Science VCs are highly selective.  Most of the investments (70-80%) will fail or yield insufficient returns.  On average 10-20% of their portfolio investments will succeed. The success needs to be sufficient to pay for all of the failures and still generate attractive returns on a fund basis.  VCs therefore focus on potential major successes.

This project has received funding from the European Union’s Seventh Framework Programme for research, technological development and demonstration under grant agreement No Market Health Venture Capital  To attract VC, you must have:  World-class science or innovation (may be incremental)  A real market need – who is the customer & do they actually want what you are developing?  A viable business model  Clear regulatory path  Manageable financing risk  A qualified management team  Clear understanding of the development path & major hurdles  Potential for a major success and exceptional ROI for the GP.

This project has received funding from the European Union’s Seventh Framework Programme for research, technological development and demonstration under grant agreement No Market Health Venture Capital – Key European LS Funds  After your tech transfer &/or seed round, think globally, but start with relevant EU life science investors. Some notable funds include: Sofinnova (FR) Index Ventures (CH) HBM (CH) Aravis (CH) CAPE (FR) E. de Rothschild (FR) GIMV (BE) GILDE (NL) Forbion (NL) AESCAP (NL) TVM (DE/US) Sunstone (DK) SVLS (UK/US) Apposite (UK) Abingworth (UK) Syncona (UK) Novartis Venture Fund* SR One* Boehringer- Ingelheim* Roche* Novo Nordisk Ventures* MorphSys Ventures*

This project has received funding from the European Union’s Seventh Framework Programme for research, technological development and demonstration under grant agreement No Market Health Corporate Venture  Corporate Venture funds: Unlike LP funds, they have a single investor, the corporate entity to which they belong. In life sciences, generally a big pharma or large biotech.  Similar to VC, but responsible only to one LP.  Core objectives may be identical to LP funds (financial IRR), or may be strategic.  Strategic investors: Invest to strengthen (or balance) their core business objectives.  There is a spectrum of Corporate Venture funds ranging from purely financial to purely strategic. Understand which you are dealing with.

This project has received funding from the European Union’s Seventh Framework Programme for research, technological development and demonstration under grant agreement No Market Health Do your homework  Make sure to only contact funds that:  Are relevant investors for your stage (seed, series A, B, C), sector (DD/D, Medtech, Devices, Diagnostics, Digital Health, Healthcare services…), Geography, etc. Make sure you are in their “sweet spot.”  Understand your market & your customer: Is there a demand/need? Is the regulatory path clear & achievable? Is it financeable? Key risks? Competition & alternatives? Realistic business model? Team?  Investors are long term partners. They will usually take an active role on the board, and as shareholders will have a strong interest (and say) in the strategy and decision making of the company.  So, do your due diligence. Get to know them. Talk to people who know them. Understand their track record. And their objectives (financial, strategic?). Most importantly, understand what value (beyond financing) they can add (if any). Expertise, Network, follow on funding/Syndication partners, business development, etc.  Why & when to raise venture capital?

This project has received funding from the European Union’s Seventh Framework Programme for research, technological development and demonstration under grant agreement No Market Health Patient Organizations  Patient Organizations, Foundations & Charities are now playing increasingly crucial roles in healthcare innovation.  Traditional important partners in:  Understanding market & patient need  Forming advisory boards  Recruiting for clinical Trials  Engagement with the regulatory authorities  Now serving as increasingly important sources of funding for medical innovation:  Grants  Equity Investments

This project has received funding from the European Union’s Seventh Framework Programme for research, technological development and demonstration under grant agreement No Market Health Conclusions  There are multiple sources of funding available  It is important to find the right ones, at the right time  Generally, starting with non-dilutive grants is ideal, so long as they fund work that is fully aligned with your business objectives (becomes progressively more important with maturity).  Regional national funds often provide “softer” capital as they generally have mixed objectives (returns + development), but may offer less value add.  Understand your own market, and your financing needs.  Do your due diligence & select sources of funding that  1. That understand & can add value to the company’s development  2. You will be comfortable working with  Ensure possible follow on financings (alone or in syndication) and/or understanding of and access to the market.  Take the process seriously & invest accordingly.

This project has received funding from the European Union’s Seventh Framework Programme for research, technological development and demonstration under grant agreement No Market Health Thank you Christian J. Suojanen Co-Founder/Chairman TTS Global Initiative