the state of the massachusetts life science industry - the year in review - june 2, 2011 malsi | ma...

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J ohnst on Bl akel y

& CompanyJ ohnst on Bl akel y


& Company


& Company, LLCJ ohnst on Bl akel y

& Company




& Company


& Company, LLC

The State of the Massachusetts Life Science IndustryThe State of the Massachusetts Life Science Industry

- The Year in Review -- The Year in Review -

June 2, 2011

MALSI | MA Life Sciences Innovation DayMALSI | MA Life Sciences Innovation Day

Copyright © 2011 All Rights Reserved





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MA Life Science Venture InvestmentsInvestment by Sector (2008 – present)

(mil

lion

s of

dol

lars

)

• 39 • 31 • 31 • 32 • 21 • 32 • 30 • 32 • 31 • 35 • 35 • 30 • 24

$

Source: PWC Moneytree; Thomson Reuters

289

226

349

253 246

284

261

342 357

345

200

240

223

medical devicebiotechnology












MA Life Science Venture InvestmentsStage of Investment (Q1 2010 – present)

(per

cent

of

tota

l)$357 mm $345 mm $199 mm $240 mm $223 mm

Start Up

Early Stage

Late Stage

Source: PWC Moneytree; Thomson Reuters

• 31 • 35 • 35 • 30 • 24• No. of financings












MA Life Science Venture InvestmentsEarly-Stage Investments (Q1 2010 – present)

$210 mm $290 mm $169 mm $178 mm $128 mm

• 19 • 26 • 25 • 21 • 15• No. of financings

• Medical device

• Biotechnology

Source: PWC Moneytree, Thomson Reuters

Note: Includes early-stage and seed/start-up catregories












MA Life Science Venture InvestmentsSelect Series A Biopharma Investments

Date Company Amount RaisedDescription

• Jan-11 • Civitas Therapeutics

• $20 mm• Parkinson’s lead• Based on A.I.R. pulmonary

delivery technology of Alkermes

• Nov-10 • VeraStem • $16 mm • Cancer stem cell focused

• May-10 • Tesaro • $20 mm • Acquires and develops oncology therapeutics

• Former MGI Pharma management team

• Apr-10 • Catabasis Pharmaceuticals

• $40 mm• Type II diabetes focused• Technology from Joslin Diabetes Center

• Jul-10 • Euthymics • $24 mm • acquisition of DOV Pharma CNS candidate












Capital Market PerspectivesUS Venture Investments - Biotechnology

Oncology

CNS

Anti-infective

Other

$3.8 billion

Note: Data for the twelve months ended March 31, 2011Source: PWC Moneytree; Thomson Reuters; Johnston Blakely research

Investment by indication(TME 3-31-11)

(per

cent

of

tota

l tra

nsac

tion

s)












Nu

mb

er

of

issu

es

• % life science issues• 23.5% • 14.9% • 9.7% • 8.8%

All Industries

Life Science Issues

Capital Market PerspectivesAnnual IPO Activity: 2000 – 2010

293

74 72 8069

11 7 7

234

44

• 18.8%

Source: IPOMonitor, Hoover’s IPO Central, Johnston Blakely & Co

100

200

300

400

2000 2001 2002 2003 2004

196

• 12.2%

2005

24

195

27

• 13.8%

2006

210

• 16.6%

2007

31 31

2008

3

• 9.7% • 6.3% • 12.4%

137

17

2010

4

2009

63












Capital Market PerspectivesBiopharma IPO Activity

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

20002000 20042004

53 25

Preclinical

Phase I

Phase II

Phase III

NDA filed

37.7%

92.0%

Preclinical

Phase II

Phase III

NDA filed

Pe

rce

nt

of

tota

l IP

Os

Source: SEC filings

Note: Includes biopharmaceutical and related issues only. Lead compound in clinical development

• % of total life science IPOs

• 76.8% • 56.8%

100.0%

20072007

Phase I

Phase II

Phase III

NDA filed/approved

• 48.4%

15

100.0%

2009/102009/10

Phase II

Phase III

• 73.3%

11

NDA filed/approved












Life Science IPO PerformanceAggregate Performance (2000 to 2010)

Per

cen

t of

Agg

reg

ate

Va

lue

• $2,547

Note: Represents value of one common share in 245 life science IPOs from 2000 through Dec 31, 2010. Stock transactions involving mergers of equals or reverse mergers calculated using current share prices.

• Cumulative value of one share/IPO

• $2.727

(6.6%)












2010 Biotechnology IPOs IPO Pricing vs. Expected Range

IPO

pric

e p

er

sha

re

Note: % change from expected range calculated using the midpoint of the expected range.Source: SEC filings

• % PPS priced below expected PPS • 25.0% • 50.0% • 37.5% • 7.1% • 44.4% • 31.3% • 33.3% • 36.7% • 69.2% • 70.6% • 7.7%• 61.5%

Expected price per share

Realized price per shareIndicates Massachusetts Company

+ + + + + +• Current PPS vs IPO PPS

- - - - - -












Nu

mb

er

of

anno

unce

d tr

an

sact

ion

s

Source: Johnston Blakely & Co. research

56

68

40

53

57

4240 40

57

50

70

29

Merger & Acquisition ActivityLife Science Sector (Q3 2007 – Q4 2010)

67

6063












Pre/non clinical %: 51.0% 44.0% 39.0% 32.0% 25.9% 25.7% 27.2%

Pe

rce

nt

of

tota

l R&

D e

xpen

ditu

res

Pharma R&D Expenditures1989 - 2008 (by function)

• Pre/non clinical

• Ph I – III clinicals

• Post-approval studies

• Regulatory/other

Source: PhRMA,Note: Pre/non-clinical category includes process development, QC and formulation related expenditures.

32.5% 31.9% 27.3% 27.0%

$29.2 B $32.4 B $36.1 B $37.0 B $38.7 B $42.0 B $43.8 B $46.2 B $49.6 B $47.2 B

Pharmaceutical InnovationRelative New Therapeutic Contributions (1997 – 2009)

Per

cent

of a

nnua

l new

dru

g ap

prov

al

21 3949 40 43 38 33 31 41 45

Bio/Specialty Pharma:Large Pharma:

66.7%33.3%

74.4%25.6%

40.8%59.2%

42.5%57.5%

51.2%48.8%

57.9%42.1%

39.4%60.6%

48.4%51.6%

70.7%29.3%

84.4%15.6%

Source: PhRMA, BIO, FDALarge Pharma Bio/specialty pharma

13Copyright © 2011 All Rights Reserved











35 4335

80.0%20.0%

76.7%23.3%

60.0%40.0%












14

• Productivity in the pharmaceutical industry continues to worsen.

• Royalty stacking negatively impacts already reduced profit margins.

• Promise of the genomics revolution to date unfulfilled.

The dependence of the pharmaceutical industry on biotechnology has never been more acute.

R&D ProductivityCurrent M&A Influences

Pipeline pressures significantly influencing M&A activity.Pipeline pressures significantly influencing M&A activity.

• Patent expirations weigh heavily on top and bottom lines.












The Financing DivideTraditional Investment Model

IND

NDA

Discovery Development Phase I Phase II Phase III Approval

Pre clinical Candidate Clinical Development Marketed Product

Go publicVenture funding

• traditional investment model

Follow on offerings

Private Institutional Investors Public Markets












The Financing DivideShifting Investment Dynamics

IND

NDA

Discovery Development Phase I Phase II Phase III Approval

Pre clinical Candidate Clinical Development Market


• traditional investment model


• current investment model

Follow on offerings

Private Institutional Investors Public Markets

Private Institutional InvestorsThe Financial Abyss?












+ +

The Life Sciences in MassachusettsThe Life Sciences in Massachusetts

Centers of Academic Excellence

Centers of Academic Excellence

Storied Medical Institutions

Storied Medical Institutions

Access to Investment Capital

Access to Investment Capital

Massachusetts Life Science Industry

Massachusetts Life Science Industry

All of the Ingredients are Here
















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Benjamin Conway978-526-4014

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The State of the Massachusetts Life Science IndustryThe State of the Massachusetts Life Science Industry

- The Year in Review -- The Year in Review -

MALSI | MA Life Sciences Innovation DayMALSI | MA Life Sciences Innovation Day

the state of the massachusetts life science industry - the year in review - june 2, 2011 malsi | ma...

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