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FORESIGHT VALUATION GROUP

IP & STARTUP VALUATIONSIn Times of Crisis

Efrat Kasznik | August 25th, 2020

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ABOUT ME

Lecturer on IP Management at the Stanford GSB since 2011

Founder and President, Foresight Valuation Group, a Silicon-Valley based IP valuation, strategy and start-up advisory firm

Over 20 years of experience in IP Valuation and Strategy (consulting tocorporations, law firms, universities and startups, across industries)

Chair, High Tech Sector, Licensing Executives Society (LES) USA-Canada

Listed on IAM 300 list of Leading IP strategists (2013-2020)

Co-founder, CFO and adviser to startups, incubators and venture funds in the US, Israel, Europe and Asia.

Conference speaker and regular contributor to IP and business publications and blogs on topics related to IP and startup valuation.

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OUTLINE

Life Sciences Startup Valuations and Exits

Questions?

The Impact of COVID-19 of Life Sciences Startups

IP Rights in Life Sciences Startups

Key Takeaways

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Life Sciences Startup Valuations and Exits

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THE EQUITY FUNDING CYCLE

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THE US VC FUNDING IN 2019 = $133.4 BILLION

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22% OF VC FUNDING INVESTED IN LIFE SCIENCES IN 2019

Combined Life Sciences = $29.5 Billion

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HEALTHCARE LEADS IPO COUNT, TECH LEADS IPO $ RAISED

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LES LIFE SCIENCES ROYALTY AND DEAL STUDY (2018)

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LES SURVEY: 40% OF DEALS DONE IN THE EARLY STAGE

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LES SURVEY: DEAL VALUES BY TYPE OF PAYMENT

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LIFE SCIENCES STARTUPS: TRENDS IN FUNDING AND EXITS

Not as much access to VC capital, as a result … They tend to exit early at lower valuations

(more frequent but smaller IPOs)

Early stage acquisitions, or licensing deals, fill in the gap These deals rely heavily on technology transfer, facilitated

by IP rights Hence, the importance of IP for Life Sciences startups

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IP Rights in Life Sciences Startups

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Patents

Trademarks

MAPPING INTANGIBLE ASSETS TO IP RIGHTS

Copyrights

Trade Secrets

Data

Technology

Brand

Intangible AssetsIntellectual Property Rights

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US Unicorn Distribution by Industry (2015):Over 75% Software-Related, only 7.4% Healthcare

Source: Foresight Valuation Group LLC

Software

Consumer Internet

eCommerce

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US Unicorn IP Distribution Breakdown (2015):Over 60% Have Less Than 10 Patent Assets

Source: Foresight Valuation Group LLC

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IP v. Valuation Distribution by Industry (2015): Proportional Reliance on Patents Higher in Healthcare

Source: Foresight Valuation Group LLC

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TECH V. LIFE SCIENCES: STARTUP VALUATION COMPARISON

Metric Life Sciences Tech

Valuation Driver Developmental milestones

Revenue/User growth

Reliance on Patents High Low

Access to VC capital Limited Unlimited

Avg. IPO Value (2018) $120 mill $360 mill

PresenterPresentation NotesStart at 4:00

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The Impact of COVID-19 on Life Sciences Startups

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In 1H-2020 Life Sciences Startups See Spike in Super Rounds ($100 Million or Higher)

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MODERNA STOCK PRICE: INCREASED OVER 3X

PresenterPresentation Notes$19.23 ON 1/3 TO $64.88 TODAY >> 237% INCREASE

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ARE LIFE SCIENCES PATENTS AT RISK?

(SOURCE: IPWatchdog.com)

PresenterPresentation NotesStart at 4:00

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“COMPULSORY LICENSING”

“Compulsory Licensing” COVID-19 related innovations

has been suggested in the US, Canada and

other countries

Canada and Germany have passed legislation to issue compulsory licenses more easily, while others (Chile and Ecuador) have permitted compulsory licensing of any new COVID-19 related technology.

In the US, 46 members of Congress wrote to President Trump asserting that, “providing exclusive monopoly rights could result in an expensive medicine that is inaccessible, wasting public resources and putting public health at risk.”

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“MARCH-IN RIGHTS”UNDER THE BAYH-

DOLE ACT

In the US, there is friction around the

potential use of Bayh-Dole “march-in-rights”

Bayh-Dole, introduced in 1980, allows technology licensing by universities, but also gives the federal government a mechanism to control drug prices by reclaiming and potentially compelling non-exclusive licensing of IP

This is at a time when University IP is at the forefront of COVID vaccine development; this could negatively impact startups spun-off of universities

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IP PLEDGES AND INDUSTRY

COLLABORATION

The “Open COVID Pledge” initiative,

facilitated by Stanford and others

“a group of scientists, lawyers, entrepreneurs and individuals working to promote the removal of obstacles involving intellectual property in the fight against COVID-19. We are committed to innovative solutions to address this crisis, and urge the adoption of the Open COVID Pledge, Open COVID License, and other similar solutions in support of this goal.”

Amazon, Facebook, HPE, IBM, Microsoft and others have pledged to make their patent portfolios available royalty free, for use in ending and minimizing the effects of the COVID-19 pandemic

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Key Takeaways

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Life Sciences startups have less access to VC growth capital, and tend to go public sooner or rely on IP for licensing / acquisitionsto close the funding gap

IP Rights in Life Sciences may be challenged as a result of COVID-19: this can particularly hurt startup spin-offs from university, but does not seem to impact funding

IP rights are critical to startup valuations in the Life Sciences sector, much more so than they are in the tech/software sector (as seen in Unicorn studies)

Funding stats for 1H- 2020 Market trends are showing an increase in investor confidence in Life Sciences startups and an increase in valuation for those involved in COVID-19 developments

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KEY TAKEAWAYS

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Questions?

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THANK YOU!Twitter.com/ForesightValue

www.ForesightValuation.com

Foresight Valuation Group

Phone: (650) 561-3374

ekasznik@foresightvaluation.com

Slide Number 1ABOUT MEoutlineSlide Number 4THE EQUITY FUNDING CYCLETHE US VC FUNDING IN 2019 = $133.4 Billion22% of VC funding Invested in Life sciences in 2019hEALTHCARE LEADS IPO COUNT, TECH LEADS IPO $ RAISEDLES LIFE SCIENCES ROYALTY AND DEAL STUDY (2018)LES SURVEY: 40% OF DEALS DONE IN THE EARLY STAGELES SURVEY: DEAL VALUES BY TYPE OF PAYMENT Life sciences startups: trends in funding and exitsSlide Number 13Mapping Intangible Assets to IP RightsSlide Number 15Slide Number 16Slide Number 17tech v. life sciences: startup valuation comparisonSlide Number 19Slide Number 20MODERNA STOCK PRICE: INCREASED OVER 3XAre life sciences patents at risk?“Compulsory Licensing”“March-In Rights”�UNDER THE BAYH-DOLE ACTIP Pledges and Industry CollaborationSlide Number 26key TAKEAWAYSSlide Number 28Slide Number 29