Kevin Johnson

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Building Life Science Companies in Europe
Kevin Johnson
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Synopsis

• Technology-based business Cambridge Antibody
• Venture Capital perspective Index Ventures
• Product-based business PanGenetics
• Summary

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Monoclonal Abs become more human
1970s
1980s
2000
1990s
Chimaeric
Mouse
Human
CDR-grafted (Humanised)
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Human Antibodies in a Test Tube
Antibody Display
Selection and design
Human antibody genes
Human mAb
Infection / Vaccination
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1990 The First Year

• 750k cash available (Peptech)
• office in David Chiswells house
• lab is John McCaffertys tray in Greg Winters
  lab
• Moved to 600sq ft at Babraham in May
• 4 people
• Filed key patent application July 1990
• Published in Nature December 1990

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Deals
Pharmacia 1991 validation, short term
cash BASF 1993 drug development, validation,
cash Drug Royalty 1994 cash Genentech 1995 short
term cash, validation Pfizer 1995 short term
cash, validation Lilly 1996 short term cash,
validation Telios Integra 1996 rights to targets
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Equity Raised

• Year Amount Share Price
• 1990 0.75m 0.12
• 1993 3.0m 3.00 (notional)
• 1995/6 12.75m 2.50 - 3.00
• 1997 41.0m (IPO) 5.00
• 2000 93m 18.50

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Stock Market Listing

• London Stock Exchange - main market
• 25 March 1997
• Net raised - 41 million
• Explicitly to build a therapeutic product
  pipeline
• Market cap 100M (_at_ 5 per share, March 1997)

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Outside Influences

• London Stock Exchange open to Biotech in 1997
• LSE closed to biotech from May 1997- early 2000
• Antibodies beginning comeback in late 90s
• Genomics revolution gt unprecedented number of
  targets
• Significant US competition
• Shift in potential partner perception (antibodies
  started to make money as drugs from 1995)

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Human mAbs in Clinical Development 2003
N/A
N/A
N/A
Abgenix/Amgen
Phase I
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Human mAbs in Clinical Development 2008
N/A
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Lessons learned

• A focus on technology does work
• Be ahead of the herd, but not too far ahead
• Greatest value from technology platforms comes
  from therapeutic products
• 1-2 products monetises the platform
• Strength of science and scientists in company
• Cash is a strategic issue

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Supporting Pioneering Companies
Numerical Technologies
92-98
98-00
00-02
02-04
04-06
06-08
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Investing in Life Science

• Invest 1 to generate 3-4 value
• Very capital intensive (cf software)
• Most biotechs fail to do this
• Attrition in small/early companies high

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How a VC works

• Investors (LLPs) subscribe to a fund
• Fund life 10-12 years
• VC invests money, gets management fee
• Return fund, retain ca. 20 of balance (carried
  interest)
• VC partners get of carried interest

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Company A

• Unique angle for creating Mabs
• POP in oncology
• A management team
• 60 people, cash burn 8m pa
• Raising 30m on 50m valuation
• Money will fund phase II POC for lead, develop
  others

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Company B

• 3 humanised antibodies
• POP in inflammation
• No management team, no people, no cash burn
• Raising 7m on 1m valuation
• Money will fund phase IIa for lead, mfr 1 other

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Company A versus Company B
Company A
Company B

• Post money 80m
• 3yrs ve phII- 80-150m
• 3yrs -ve phII- 10-20m
• Cash burn 8m pa
• 30m buys 30-60m

• Post money 8m
• 3yrs ve phII- 70-140m
• 3yrs -ve phII- 1-2m
• Cash burn lt1m
• 7m buys 58-116m

great looking companies great investments
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VC perspective

• Big VCs see 1000 business plans per year
• No shortage of ideas
• No shortage of money (access strings another
  matter..)
• Good quality assets in short supply
• Main bottleneck is management teams
• Its the hot companies that get funded

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Does the world need another Mab company?

• Fastest growing pharmaceutical sector (CAGR 14)
• Big transactions around Mab and Mab-like
  companies
• Need for pipeline products amongst bigger
  companies
• Supply of antibody candidates exceeds expertise
• Huge opportunity to build a pipeline
• Antibody development the definitive outsourcing
  model

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Pangenetics BV- Business/investment Model
100
Arbitrage
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Program Value m
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Discovery (Buyers market)
Clinical POC (Sellers market)
10 -12m direct costs/program ? 2-3 years
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Corporate Summary
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Financial Progress

• Series A in 2005 1.3m
• Series B in March 2006 13m
• Series C 2008 23m

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Summary

• Capital is the fuel of the industry
• Innovation without execution is hot air
• Entrepreneurs need to understand investors
• Holy trinity is management team, products cash

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Building Life Science Companies in Europe
Kevin Johnson