What Do Investors Want from Cell & Gene Therapy Companies?

This excerpt is from our latest report:

Over the last five years, the Nasdaq and Amex (NBI and BTK) five year performance (2011-2015) rose dramatically, and this has driven investment into the pharma/biotech sector. However, at the start of 2016, biotechnology investment took a fall – for the first nine months of 2016 $68.8 billion was raised through capital financing, compared to $93.1 billion for the previous fiscal period in 2015. The majority of investment goes to tissue engineering. Within the cell and gene therapy space, CAR-T and gene therapy investment hit a high in 2015, whereas investment into regenerative medicine lagged behind.

Ten years ago, cell and gene therapy companies were looking for venture fund investment, however many did not get finance as it was too early, and there were too many unknowns. In the last couple of years venture funds were more confident of the technology, and clinical and regulatory paths, and so funding hit an all-time high. If a pitch company has a major player such as Pfizer on board, investors may take note depending on the type of product on offer. With regards private funding, it may not be as much of an issue in the cell/gene space because knowledge in these areas are cutting edge – i.e., small biotechs could have the same level of expertise as big pharma. In some scenarios, involvement of big pharma could cap the upside of the market value. Some investors aim to co-invest with strategic pharma partners. So, what do investors want from potential companies?

  • Financial return
  • Strategic investing
  • Intellectual property
  • Proven technology
  • Streamlined regulation
  • Clinical strategy VC’s are also open to proactive companies pitching their new product. Networking events, conferences and workshops are important meeting points where personal access to investors is enabled. Referrals from banks and legal councils are other portals that can be considered. The following investment companies are specifically interested in the Cell and Gene market.
  • Venrock
  • GE Ventures
  • Soffinova Ventures
  • Telegraph Hill Partners
  • EcoR1 Capital
  • F Prime Capital
  • Versant Ventures

Venrock for example invested in Regenix, Juno, Audentes over the last couple of years. They are now taking in any pitfalls or challenges they came across and use this information to base their investment choices in the future. Characteristics of Venrock investment includes playing on the private side early on, so seed and series A investing. Its public fund tackles later stage financing. One of its main characteristics is investing in first time CEO’s, indicative of its need to invest early in a disruptive technology/therapeutic. Examples of this include John Stuelpnagel of Illumina and Jonathan Bush of Athenahealth.

Any comments/questions? let me know at deirdre@kellysci.com