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WHY VC’S SHOULD CONSIDER

FUNDING START-UP BIOTECHS

A PRESENTATION AT BIOMALAYSIA 2011KUALA LUMPUR

BY

SANJAY K. SEHGAL

MANAGING PARTNER & CEO

EAST WEST CAPITAL PARTNERS

Life Sciences & Healthcare Principal Investments and Corporate Finance AdvisoryNovember 2011


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East West Capital Partners

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Who are East

West Capital

Partners

(“EWCP”)?

Healthcare/Life Sciences Investments and Corporate Finance Advisory

Headquartered out of Singapore; Presence in London, Malaysia, and India

4 Partners with over a 100 years of combined Deep Domain and Global

Operational and Financial Expertise

What is

EWCP’s

Focus andInvestment

Strategy?

FOCUS

oFacilities (hospitals, specialty clinics)

oServices (clinical research organizations, healthcare insurance, IT)

oPharma (specialty drug delivery technologies, manufacturing)

oMedical Technology (e.g. OEM, manufacturing/distribution)

Knowledge transfer and IP development from West to East and East to West

STRATEGY:

We are Engaged hands-on value-add investors

We seek control or effective control investments


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Topic is: Why VCs Should consider funding

start-up Biotechs

Should the Question be the Other Way Around?

that is…

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Why Should VCs consider funding start-up Biotechs?


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The VC Money Cycle – Is It Alive & Well?

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Who are VCs?

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VCs Usually Know What They are

Investing In, right?

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How about Biotech VCs?

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Biotech


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What do VCs Really Want?

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How Long are VCs Prepared to Wait?

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The Essential Nature of Biotech

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What is the Typical Biotech?

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Revenues

Profits/ (Losses)

Or

Investment

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5


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What has Changed so Dramatically for

the Biotech Industry? First…

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“Our portfolio has had seven NDAsubmissions since 2008, with five

approved and two still pending. That

should be a success, except it has taken

twice as long to get there as it used to

five or six years ago. The math with the

FDA just doesn’t work anymore for us

in terms of a venture fund lifecycle…

It’s incredibly frustrating to watch this

happen…”

Quote fromKate Mitchell of Scale Venture Partners

(BofA’s Venture group who stopped

investing in biotech in November 2011)


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What has Changed so Dramatically for

the Biotech Industry? Second…

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Uncertain Exit for Investors


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And so…

Where are the Returns in Biotech?

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The Mis-match Between What VCs Want

and the Fundamental Nature of Biotech

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VCs Biotech

What VCs want:

-Low Risk-Low Investment

-High Return

-Pronto!

What Biotech offers:

-High Risk-High Investment

-Binary outcomes

-Years of Waiting


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Given this Mis-match, Why Do VCs

Invest in Biotech?

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Returns – looking for the next BILLION dollar home-run

Superman syndrome…I believe I can pick the winners

Portfolio – Investors want diversification to spread risk

Doing good – Bringing a benefit to humanity, e.g., stem cells

Bragging rights – Being part of the next Big Thing

Government support and encouragement


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So, Should VCs Invest in Start-up Biotechs?

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H Sh ld Bi t h C i P


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How Should Biotech Companies Prepare

Themselves for this New Paradigm? 1 of 2

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Understand your VC

Try to get funding up to a clear valuation point

– avoid being caught short of cash mid-way

H Sh ld Bi t h C i P


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Be more capital efficient:

Leverage emerging markets

Enter into risk-sharing deals with suppliers

Get Government support / grants Be Virtual

De-risk: Either find a near-term revenuemodel or identify an interested license or joint

venture partner early on

How Should Biotech Companies Prepare

Themselves for this New Paradigm? 2 of 2


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C O N T A C T

Sanjay K. SehgalM A N A G I N G P A R T N E R & C E O

Tel: +65 9675 [email protected]

WHY VC’S SHOULD CONSIDER

FUNDING START-UP BIOTECHS?

A PRESENTATION AT BIOMALAYSIA 2011

KUALA LUMPUR

Life Sciences & Healthcare Principal Investments and Corporate Finance AdvisoryNovember 2011

sanjay sehgal

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