Acceleration2013 Event Recap: Conference Provides Insight Into Challenges and Opportunities for Early Stage Life Science Companies in the Current Funding Environment and Post ACAPrint PDF
Photos L-R: Jonathan Norris, Keynote Speaker, Managing Director, Silicon Valley Bank; Acceleration 2013 speakers: Jonathan Norris, Silicon Valley Bank; Laurel Sweeney, Philips Healthcare; Jeremy Halpern and Michelle Basil, Nutter; Ambar Bhattacharyya, Bessemer Venture Partners; Barbara Fox and Henry Kay, Avaxia Biologics; Michael Powell, Soffinova Ventures; Acceleration 2013 attendees
The Nutter Life Sciences Group hosted Acceleration2013 on December 9, 2013, bringing together investors, entrepreneurs and industry executives to explore trends and developments impacting early stage life sciences companies. During the third annual conference, almost 200 executives and thought leaders from the biotechnology, pharmaceutical, medical device, diagnostic, healthIT and healthcare fields gathered to discuss the changing landscape of value creation in light of the current venture funding environment and the impact of the Affordable Care Act.
“Our goal with Acceleration is to provide attendees who are active in growing life sciences companies with actionable business intelligence and to create a conversation among different constituencies involved in the life sciences industry, a field that is growing more sophisticated in its approach,” said Michelle Basil, chair of Nutter’s Life Sciences Group. “The discussion during this year’s conference built on themes from past years’ events, while offering new insights into trends for 2014, such as the increasing importance of pricing and reimbursement strategies, the shift towards evidence based medicine, the focus of payors and regulators on outcomes not impacts, and the interweaving of non-traditional capital sources with traditional venture capital.”
Keynote by Jonathan Norris
This year’s Acceleration keynote speaker was Silicon Valley Bank Managing Director Jonathan Norris, who presented the latest findings on life science venture investing trends and forecasts for the year ahead. Norris pointed to several current industry challenges for early stage companies seeking venture capital including decreases in fund sizes and total dollars raised, the consolidation of the raw number of venture investors looking for life science deals, the reduction in overall venture investing into new companies, particularly in medical devices, and the “exit bottleneck” overhang of still private companies representing $38 billion in venture funds invested from 2000-2011. The data however did show increasing presence of corporate investors into biotech companies, even as they continue to shy away from medical device investments.
Norris also presented data around the eight-year high in the number of big exits and the increase in total deal exit values in 2011 to 2012. Critically, nearly three quarters of all such deals are now done on a structured and milestone driven basis which has stretched out founder and investor returns and shifted substantial portions of the technical risk back to the sellers. For a copy of Jonathan’s presentation Healthcare Venture: State of the Industry Update, click here.
Panel Discussion on Value and Exits
Following Norris’ presentation was a panel of experts who discussed how the current funding environment and the changing regulatory and reimbursement landscape initiated by the Affordable Care Act have changed the way early stage companies think about value creation and exit opportunities. Moderated by Michelle Basil of Nutter, the panel included Ambar Bhattacharyya, vice president, Bessemer Venture Partners, Michael Powell, general partner, Sofinnova Ventures, and Laurel Sweeney, senior director, Health economics and reimbursement, Philips Healthcare.
The panel began by discussing the current biotech IPO market. There was general agreement that this volume of transactions has been an aberration, and that many of those often-cited IPOs tend to be financing events rather than liquidity transactions for founders and early investors. The result is that while IPO may provide some leverage and optionality for biotechs, acquisitions will continue to be the likely exit mechanism for all sectors of life science companies. Commenting upon Norris’ data in particular, the panel agreed that structured exits rather than cash deals would be the norm, and that therefore specificity around what constitutes milestone achievement was absolutely key to driving founder and investor returns.
The panel then turned to the broader shift in life sciences and healthcare to a population based approach to medicine and away from volume based fee-for-service models. The impact, said the panel, was a massive shift to value based analysis, and that payors, providers, investors and acquirers had differing definitions of value.
There was broad agreement that meeting the value requirements for reimbursement would be key to early stage companies. It was equally clear that mere efficacy would be an insufficient basis as a reimbursement strategy. Rather, the panel said, companies would need to develop evidence based metrics around patient outcomes, and correspondingly finance such assets through such data development. Some of the panelists believed that this created huge opportunities for HealthIT and health services companies to drive value in areas like real time mobile/device monitoring, telemedicine, big data analytics and post-op treatment care plans designed to reduce readmission. Other panelists seemed to indicate while there may be opportunities in such markets, venture investors would continue to favor biotechs in areas like oncology therapeutics.
The session wrapped up with an interview with Barbara Fox, Ph.D., founder and CEO of Avaxia Biologics by investor and Avaxia board member Henry Kay. Dr. Fox described the challenges faced in conceptualizing, funding and growing a cutting-edge biotechnology company. She emphasized the importance to early-stage companies of creating good networks and having strong advocates (knowing someone “in the room”) when presenting your ideas to potential angel investors in particular. Dr. Fox and Kay then discussed the rationale behind seeking corporate investment in an angel backed company, and how and why the company ultimately chose AbbVie as its investment partner. Both panelists described the critical importance of betting on investors and teams made up of A+ human capital.
Acceleration is produced and hosted by the Life Sciences Group of Nutter McClennen & Fish LLP and is co-sponsored by Halloran Consulting Group and Silicon Valley Bank. The conference has grown to become one of the most anticipated events among entrepreneurs, investors, and executives in the innovation economy.
A note from Nutter Life Sciences Group chair Michelle Basil:
We look forward to continuing to advance the conversation on the issues that matter most to life sciences companies through our Acceleration conference. Stay tuned for our next Acceleration event and more from Nutter’s Life Sciences Group.
Did you attend Acceleration 2013? Please email us to share feedback at acceleration.nutter.com.
About the Nutter Life Sciences Group
The Nutter Life Sciences Group is a multidisciplinary legal team representing companies ranging from global corporations to emerging growth companies involved in innovative technologies in the medical device, biotechnology and pharmaceutical industries, as well as renowned medical institutions and research universities, health care payors, benefits managers and plans, and venture capital firms, private equity and entrepreneurs. The group provides expertise and counsel in areas strategically important to life science companies: capital raising and corporate finance; IP strategy, prosecution and litigation; strategic collaborations and licensing; product liability; mergers and acquisitions, joint ventures and strategic alliances; regulatory compliance; government investigations and defense; advice on product distribution issues; and trade secret and non-compete litigation. Learn more at www.nutter.com.