New York Pharma Forum. NIF Ventures. JUNE 23, 2005 Goro Takeda

Transcription

1 New York Pharma Forum NIF Ventures JUNE 23, 2005 Goro Takeda

2 CONFIDENTIAL New York Pharma Forum June 23, 2005 NIF Ventures At a Glance Global VC Firm with Over 20 Years of Operational History Founded in 1982 $1.4B under management NIFVENTURES Offices in Tokyo, Palo Alto, Taipei, & Shanghai Active in life sciences, IT, and business services Financing Life Science Innovations 8 dedicated LS investment professionals 91 investments since 1987, 24 exits via IPO or M&A Venture Investor with Strong Track Record Largest local Biotech IPO market share: recent IPO s include Transgenic (02), Medibic (03), LTT Biiopharma &TakaraBio (04), Medicinova & Effector Cell (05) Maturing US/European portfolio: Cyclacel, AlgoRx & Prestwick have filed S-1 (TolerRx withdrawn) CONFIDENTIAL

3 NIFVENTURES CONFIDENTIAL New York Pharma Forum June 23, 2005 NIF Life Science Portfolio Current active portfolio comprises 47 in Japan, 11 in US and 7 in Europe CONFIDENTIAL

4 CONFIDENTIAL New York Pharma Forum June 23, 2005 Creating Productive Relationship with Pharma NIFVENTURES Sourcing In-licensing Opportunities Out-licensing De-prioritized Assets Continued dialog with 20+ Pharma BD groups Sponsoring business development events Atlas-NIF-Itochu Conference in April US/European Biotech presented 200 BD executives from 70 Japanese Pharma/Biotech attended 150 one-on-one meetings arranged Japanese Pharma actively out-licensing to US Biotech Molecules having failed in certain indications, which may be developed in others, i.e., repositioning Corporate Spin-outs Individual assets: non-core therapeutic area products, under-promoted products Fully operational units/divisions Special purpose R&D vehicles Make a lot of economic sense, at least in theory CONFIDENTIAL

5 CONFIDENTIAL Recently Announced Out-licensing Deals Between Japanese Pharma and Biotech New York Pharma Forum June 23, 2005 Licensor Licensee Compound Date Shionogi Peninsula Doripenem 5/28/03 NIFVENTURES Takeda Peninsula TAK /1/03 Kyowa Hakko Novacardia KW /9/03 Dainippon Sunesis SPC /16/03 Sankyo Cyclacel SC /8/03 Mitsubishi Dynogen MCI /22/03 Otsuka Vela VPI-013 4/2/04 Fujisawa Gloucester FK-228 4/16/04 Nippon Shinyaku Optimer Prulifloxacin 6/29/04 Daiichi-Suntory Replidyne Faropenem Daloxate 8/17/04 Mitsubishi Dynogen Pumosetrag 11/4/04 Mitsubishi Perlegen Sciences MCC-555 4/12/05 Source: NIF Ventures CONFIDENTIAL

6 CONFIDENTIAL New York Pharma Forum June 23, 2005 Current State of Japanese Biotech - Promises NIFVENTURES Large Market & Solid Core Competencies/ Leverageable Business Drastic Changes in Corporate Mentality Favorable IPO Environment Fastest aging population; $66.4 billion Rx market (2003) Global blockbuster drugs discovered in Japan (Pravacol, Precid, Aricept) Academia has increasing interests in start-ups; TLO s becoming more professional and actively involved Highly fragmented businesses, creating significant spin-out opportunities once consolidate (approx. 500 companies) Conglomerates/cross-shareholdings unwinding Emergence of more vocal, foreign institutional shareholders increase market pressure - 7 of top 10 Pharma have >30% foreign shareholders Large Pharma finally consolidating and divesting non-core assets 490 IPO s from 1/01 12/04 in JASDAQ/Mothers/Hercules compared to 443 in NASDAQ, 463 in AIM Total offerings $13.2 billion in 2004, up 220% from $6 billing in 2003 Steady demand for Biotech IPO s - no Window Closing Lower maturity hurdles for IPO access; IPO market still rewarding early stage companies with favorable valuations CONFIDENTIAL

7 NIFVENTURES CONFIDENTIAL New York Pharma Forum June 23, 2005 Biotech Stock Performance Post IPO Source: Lehman Brothers 12 companies out of 15 Biotech IPO s trading below their IPO prices Current Biotech stock performance highlights fundamental issues for Japanese Biotech industry. CONFIDENTIAL

8 CONFIDENTIAL New York Pharma Forum June 23, 2005 Current State of Japanese Biotech - Challenges Platform Technology Dominate Will platform companies be able to maintain sustainable growth? Will they be able to transform from platform to product-based company when they need? NIFVENTURES Small Research Coverage Universe Concentration in Retail Investors IPO Overpricing & High Volatility Banks would not support dedicated Biotech analysts unless there is a meaningful number of product-based companies Without Biotech analysts institutional investors are reluctant to take significant position in Biotech papers Most public Biotech companies have >1000 shareholders!! Vs. 20 or so in US Less educated investors unable to appreciate Pharma R&D process Investment time horizon very short - based on earnings 12 companies out of 15 Biotech IPO s have traded down - possibly overpriced Valuation methodologies unclear Extremely high volatility post IPO; tend to overreact to announcements in newspapers and downward fiscal revisions Lack of Managerial Talent Still significant stigma attached to venture or Biotech Lack of late stage companies that could attract experienced Pharma talents Where have the 1000 people gone who left as a result of Yamanouchi/Fujisawa merger? CONFIDENTIAL

9 CONFIDENTIAL New York Pharma Forum June 23, 2005 Concentration in Retail Investors NIFVENTURES Source: Lehman Brothers CONFIDENTIAL

10 CONFIDENTIAL New York Pharma Forum June 23, 2005 Lessons Learned from US Experience Not Yet! NIFVENTURES Product vs Platform Capital Intensity Corporate Spin-outs M&A Market As Route To Exit How do you sustain mid- to long-term growth? History has taught that transforming from platform technology to product-based company is extremely difficult, require different skill sets Will capital intensity be a norm; $20-30M pre-ipo in Japan vs $100M pre-ipo in US? Given limited appetite from pension funds investing in technology focused VC funds, how will we match increased capital requirements? A lot of successful examples in US and Europe: Actelion, Basilea, BioXell (Roche), Seattle Genetics (BMS), Biovitrum (Pharmacia), Affymax (GSK) Will Japanese Pharma be open to spinning-out fully operational units/divisions or a portfolio of assets? A robust US M&A market for early stage Biotech provides alternative route for exits to shareholders Japanese Biotech too immature to be considered a credible acquisition candidate for Pharma To catch up we need to capitalize on US experiences successes and mistakes. CONFIDENTIAL

11 CONFIDENTIAL New York Pharma Forum June 23, 2005 Robust US Private M&A Market Selected M&A Transactions for Development Stage Private Biotech ANNC. DATE 5/12/05 4/19/05 3/9/05 2/24/05 2/7/05 1/20/05 9/28/04 9/1/04 9/1/04 2/23/04 NIFVENTURES TARGET/ ACQUIROR BUSINESS DESCRIPTION TRANSACTION VALUE ($ in MM) Cephalon/ Salmedix Oncology/ Specialty JNJ/ Penninsula Anti-infective/ Specialty JNJ/ Transform Formulation/ Platform Pfizer/ Idun Apoptosis/ Platform Takeda/ Syrrx SBDD/ Platform Pfizer/ Angiosyn Angiogenesis/ Platform Exelixis/ X-Ceptor NHR/ Platform MGI/ Zycos DNA/ Platform MGI/ Aesgen DDS/ Platform $200 $258 $230 $285 $270 $527 $23 $50 $90 $75 Merck/ Aton Oncology/ Platform Upfront $160 $245 $230 $285 $270 $15 $23 $50 $32 small upfront Contingent $40 Cerexa OS $512 $58 # OF COMPOUNDS Marketed Phase III Phase II Phase I Preclinical TOTAL VC$ $143 $93 $60 $156 $135 $1.75 $25 $54 $22 $49 LAST POST $105 $105 NA $71 $228 $4 $30 $33 $36 $52 Source: Lazard CONFIDENTIAL

12 Venture Capital Funding of Biotechnology in the U.S. and Japan 11

13 Arthur Klausner Venture Partner A. M. Pappas & Associates June 23,

14 Overview of A. M. Pappas & Associates Life Sciences Venture Capital Biopharmaceuticals, Medical Technology $200MM Under Management Currently raising Pappas Ventures III ($150MM) U.S. Geographic Focus West Coast, Northeast, Underserved Regions 13

15 Annual VC Investment into U.S. Biopharm Companies (by stage) Later Stage Second Round First Round Seed Round $MMs (Q1) Source: VentureSource 14

16 Biopharmaceuticals Discovery-Based Companies Clinical Stage Companies Sales & Marketing Companies Biotech Specialty Pharma 2000 IPOs 62% 38% 2004 IPOs 8% 92% Source: Kaufman & Co. 15

17 16

18 Number of Bioventure Companies in Japan Change in Number of Japanese Bioventures (Source Japan Bioindustry Association) 17

19 Only 10 Public Bioventures in Japan (at 9/04) Company Date of IPO Intec Web and Genome Informatics December 2000 Precision System Science February 2001 Anges MG September 2002 Transgenic December 2002 Medibic September 2003 Medinet October 2003 Oncotherapy Science December 2003 Soiken December 2003 DNA Chip Institute March 2004 Sosei July 2004 Source: Hiroshi Nakamura, Keio University Business School 18

20 Asset Flow Between the U.S. and Japan Japanese VCs Invest in U.S. Biopharma Companies (but not the reverse) U.S. Biopharmas Out-License Japanese Marketing Rights to Japanese Pharma Companies New U.S. Companies Being Formed Around Japanese Product Assets Peninsula Pharmaceuticals example 19

21 Peninsula Pharmaceuticals Clinical-Stage (niche) Antibiotic from Shionogi + Preclinical-Stage (potential blockbuster) Antibiotic from Takeda + Focused U.S. / European Development Team = Filed for IPO / Bought out by Johnson & Johnson 20

22 How Does A. M. Pappas & Associates Cover Japan? Annual Visits and Outreach Program Informal network of contacts Selected Japan-Based Limited Partners Nikko Capital, ITX Strategic Relationship with Takeda Research Investment, Inc. 21

23 Value Creation through Private Equity Value Creation through Private Equity New York Pharma Forum June 23 rd 2005 Kenji Harada Life Science Investment Dept. Confidential JAFCO CO., Ltd. Confidential The contents of this document are based on materials available at the time of its compilation and no guarantee can be made as to the continued accuracy and reliability of the material. The contents may be changed without advance notification. This document contains forward-looking statements regarding results and projections. However, risks and uncertainties including changes to economic circumstances may cause results and projections to differ materially from those presented in the document. The information in this document is for presentational purposes only and is not an inducement to invest in securities issued by JAFCO 22

24 JAFCO at a Glance -Established in April 1973 Value Creation through Private Equity -Invested in 2,912 companies (The largest VC in Japan) -Covers all investment stages in the PE sector -$3.2 billion under management -734 IPOs (586 in Japan, 148 overseas) -Domestic offices One head quarter in Tokyo, 4 branches Two subsidiaries -Overseas offices Palo Alto, San Diego(Life Science), Singapore, Hong Kong, Beijing, Taiwan, Seoul JAFCO America Ventures, Inc. JAFCO Investment (Asia Pacific) Ltd Confidential as of Mar

25 JAFCO s Full Line Investment Value Creation through Private Equity high Buy out value Venture Investment Capital Development 15 investors 19 investors Incubation Investment 14 investors 93 investors As of April 05 Total 141 investors Confidential seed early middle later IPO stages 24

26 Overseas investment in Life Science Sector US and Europe -JAFCO has begun overseas biotech investment since investments to date, 32 made IPO, 15 M&A as exits. Vintage Yr Exits out of 24 Investments IRR: 15% Exits out of 25 Investments IRR: 28% Value Creation through Private Equity Medical Device 17% Diagnosis 6% Agribio 1% Platform techs 18% Biopharmaceuticals 58% Early 1990s Late 1990s 2000 ~ Platform technology 58% Biopharmaceutical Sepracor CombiChem Dynavax Technologies Cephalon Aurora Biosciences Targacept ISIS Pharmaceuticals Kinetix Pharmaceuticals Hypnion Ribozyme Genset Medicinova Confidential PPL Therapeutics Oxford GlycoSciences Predix Pharmaceuticals 25

27 Domestic Investment in Life Science Sector Value Creation through Private Equity -Life Science Division newly formed in April dedicated investment professionals cover investments in both the US and Japan -Accelerated to make investments in Japan More then 50 investments (13 investments in FY2003, 25 investments in FY2004) 3 of 13 (FY2003) made IPO in 2004, Sosei, LTT Biopharma and TakaraBio Confidential as of Mar

28 JAFCO Bio Conference Value Creation through Private Equity JAFCO holds Bio Conference every year to make business opportunities for both US and Japanese biotech companies 11 Nov.2003 We had 11 US biotech companies as presenters. 29 Japanese major pharmaceutical companies attended. 16 Nov We had 9 from US and 4 from Japan as presenters 24 Japanese major pharmaceutical companies attended Confidential 27

29 Value Creation through Private Equity Biotech Companies in Japan Confidential 28

30 Number of Academia originated company is rising Value Creation through Private Equity No. of companies Mar- 05 Confidential 29

31 Biotechs are predominant in Academia originated companies Value Creation through Private Equity Biotech 38.1% IT(Software) 11.0% IT(Hardware) 30.0% Materials Machines Environment 11.3% 8.9% 15.7% Energy Education Others 3.4% 3.2% 18.9% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Confidential Some companies are double counted 30

32 Expansion of Biotech Industry Value Creation through Private Equity Number of biotech companies in Japan Source: JBA 2004 Total number of biotech company is increasing. Many of them are academia oriented. Confidential 31

33 Few of biotech companies have products in clinical phases Value Creation through Private Equity Drug discovery & Healthcare % % Ph 3 / NDA: Ph 1 / Ph 2: 3 companies 4 companies Others Only 7 companies have product or product candidates. Confidential 32

34 Amount raised in VC-round Value Creation through Private Equity Nano Carrier DNAvec M's Science Y s Therapeutics Japan Tissue Engineering BioOne US$17.2M US$19.0M US$20.8M US$23.7M US$25.0M US$35.7M (Jan. 2004) JAFCO lead (Sep. 2004) (Nov. 2004) JAFCO lead (Feb. 2004) (Aug. 2004) JAFCO co-lead (Jul. 2004) JAFCO co-lead The size of financing depends on their clinical stage. Confidential 33

35 Biotech companies raised capital in Japan Value Creation through Private Equity Largest financing of private companies in Bio One $35MM -J-TEC $25MM -Y s therapeutics $23MM -M s Science $20MM -DNAvec $19MM Raising capitals with IPO -OTS 03/12 $ 80MM -Sosei 04/07 $112MM -TAKARA bio 04/12 $ 80MM -MediciNova 05/02 $120MM Confidential 34

36 Analysis of listed biotech companies Value Creation through Private Equity 16 Biotechnology/medical companies listed on the stock market in Japan JAPAN US Q Average of amount raised IPO $41M IPO $39M Average of amount raised Secondary $29M Secondary $69M Average of market cap $311M $290M $489M N=16 N=5 N=17 Drug discovery Others Deficit Average of amount raised IPO $61M IPO $28M IPO$ 45M Average of market cap $305M $315M $303M N= 6 N=10 N= 5 Confidential 35

37 Human resources are major issues for Biotech companies What is necessary? 1.Research people? 2.Financing? 3.Marketing? Confidential Value Creation through Private Equity Biotech companies are looking for human resources. Compared with other private companies Biotech All Research & Development 79% 67% Finance 52% 46% Manager 49% 43% Business & Sales 49% 47% Production & Manufacturing 37% 32% Patent 36% 29% Planning 34% 30% Marketing 28% 27% Others 11% 18% From questionnaires of METI 36