This document discusses considerations for biotech and medtech fundraising. It outlines the stages of risk in biomedical ventures and sources of financing at each stage, from traditional philanthropy to venture capital and public markets. It provides guidance on criteria that investors evaluate, such as technology/innovation, market opportunity, team experience, intellectual property, data, operational plans, regulatory pathways, valuation, and key success factors. The document emphasizes the importance of addressing real market needs with innovative solutions, having an experienced team and realistic operational plans, and securing funding well in advance of needs to support development programs.

1. Some Considerations
on Biotech and
Medtech Fundraising

2. Biomedical Venture Philanthropy:
Financing Drug Discovery
Basic Target lead/ Discovery Preclinical Clinical Approval and
RioRiskRo
Research Validation Development Development Marketing
Risk
Traditional
Philanthropy
Venture Philanthropy
Angels
Venture
Capital
Private
Financing Gap Equity/Public
Markets
Grants
Corporate
Venture

3. Trends in Biomed venture
investment
• More money seeks less exciting opportunities
• More money is needed to exit
• No more “technology” IPO’s”, just proven
businesses
• M&A’s of ventures w/o sales / FDA approval –
usually at less than $100M
• VCs going upstream (seed or even feasibility
or trenching)

4. Some current VC statements
• We focus on revolutionary, next-
generation technology
• Need to look for business not a
technology platform
• Do fewer deals well – sell one to do one
• Experience counts more than brilliance
• Focus more energy and capital on the
winners
• Creative exits

5. Investment review criteria
• Technology / • Data
Innovation • Operational plan
• Market • Regulatory plan
• Team • Exit, valuation,
• IP investment model

6. Technology & Innovation
• How creative is your approach – depth
• Competitive advantage - barriers
• Product vs. technology
• Disruptive vs. sustaining technology
• Developmentability
• Benefit to users
• Need for user education

7. Market
• Easy to look around; important to look
ahead - Look for needs of growing
markets
• Big market is a double edge sward but is
the opportunity
• Be ready to discuss TAM, PAM, RAM
• Start with one product in one segment
(AKA – focus)
• Existing reimbursement practices
• Avoid “technology in search of market”

8. Team – Key positions
• Experienced, mixed team, with
knowledge, competence & track record
• Founder’s role in the company
• Team’s level of commitment
• Adaptability/flexibility – changing
environment
• A kingdom vs. completely virtual
• Advisors, Investors
• Excitement in the eyes

9. Intellectual property
• Strong IP formulation – core claim
• FTO analysis
• Trade secrets/ know-how
• Remaining life of key claim
• Ongoing IP development based on a
competitive IP map
• Geographic scope of filing
• IP strategy plan

10. Data
• Does it work?
• Proof-of-concept - Feasibility data
• Can it be developed at a justifiable cost
• Prototype or comparables
• Literature review - Reference data
• Source when relevant
• External review + self criticism

11. Operational Plan
• Legal structure of the company
• Goals and objectives - Detailed work
plan with clear milestones
• Time to first-in-man
• Resource plan (people, capital)
• Short term detailed budget
• 5 year P&L - Cash flow
• Scalability considerations

12. Regulatory plan
• Show you understand regulatory
requirements
• A clear regulatory pathway/strategy
• Use predicate information
• Use of regulatory consultant with
record in the field
• Focus on consideration around things
never done before when relevant

13. Valuation – valuating your IP
• Should allow future company funding
requirements
• Should not be a deal breaker
• The concept of a Full Diluted Basis
• Allocate sufficient amount of ESOP
• Find comparables for the above
• Prepare IRR analysis
• Leave valuation discussion to the end

14. Key Success Factors
1. Innovative, breakthrough solution – data driven
2. Address real market need
3. Team – experience, knowledge, competence
4. Realistic plan – focus on near term
5. Raise when and as much as you can (min 24 mo)
6. Valuation should be the last of your worries
7. Use grants as much as possible
8. Be ready for due diligence (documents…)
9. Always have “Plan B”
10. Stay optimistic and have fun

15. Copyright: Kerentech 2009
Contact: Info@kerentech.com
www.kerentech.com kerentech.wordpress.com