Venture Capital and financing of healthcare companies

Josep Ll. Sanfeliu Managing Partner

2 Venture Capital and financing of healthcare companies J.Sanfeliu

Ysios Capital Partners

Venture Capital / “Capital Riesgo” concept

3 Venture Capital and financing of healthcare companies J.Sanfeliu

Glossary

Investment stages - Venture Capital / Private Equity

4 Venture Capital and financing of healthcare companies J.Sanfeliu

Ysios Capital Partners

Venture Capital model

5 Venture Capital and financing of healthcare companies J.Sanfeliu

Ysios Capital Partners

Legal VC Structure

Management Fee

Ysios BioFund I (FCR)

Investors

Ysios Capital Partners S.G.E.C.R,S.A

Ysios Capital Partners SGECR SA

Ysios Partners

Supervisory Board

Comité Asesor (Ciencia, medicina, Desarrollo de negocio)

Comité de Inversiones

PORTFOLIO

Carried Interest

….

6 Venture Capital and financing of healthcare companies J.Sanfeliu

Ysios Capital Partners

In a nutshell

Fund – Ysios BioFund I: € 69 million (2008) – Ysios BioFund II in fund raising: € 100 million (2014)

Objectives Ysios BioFund I

– Invest in 10-12 companies in Human Healthcare Life Sciences (Tx, Dx, Medtech)

– Balanced portfolio in terms of business areas and development phases – Special focus on Spain and based in Barcelona

Management Team – Partners: Joël Jean-Mairet, Julia Salaverría, Josep Ll. Sanfeliu – Team of 6 investment professionals

Co-investors

Portfolio companies

7 Venture Capital and financing of healthcare companies J.Sanfeliu

Ysios Capital Partners

…a changing ecosystem

TRENDS NEEDS

Innovation convergence

Access to new synergic knowledge

Market Access pressures

Value-added innovations / real benefits/savings to system

Innovation GAP and patent expirations

Access to “outside” core know-how

Unproductive acc. wealth

Activate financial resources

ESTABLISHED COMPANIES EMERGING COMPANIES NEW ECOSYSTEM

NEEDS TRENDS

Multiangle perspective and market validation

High complex innovation and R&D

Strong excellence network (“outsourcing”)

Capital efficiency in asset management

Supportive solid financing

Long-term value driven financing

Cross discipline expertise (clinical, regulatory, etc)

Hard Market-Access environment

P A R T N E R S H I P S EXIT &

RETURNS

8 Venture Capital and financing of healthcare companies J.Sanfeliu

Ysios Capital Partners

Venture Capital model in Healthcare (Life Sciences)

The Economist – Sept. 2008

McKinsey Quarterly December 2011

9 Venture Capital and financing of healthcare companies J.Sanfeliu

Seed Capital & Business Angels

Venture Capital

Value enhancing partnerships

Ris

k

Valu

e

Time

• Management Team • Intellectual Property • Clinical Validation • Health economics • Market Access

Exit for investors

Ysios Capital Partners

Value reflects scientific and clinical risk (products)

10 Venture Capital and financing of healthcare companies J.Sanfeliu

Ysios Capital Partners

Portfolio Strategy Ysios Biofund I

Risk

Innovation

Therapeutics

Medtech

Diagnostic

BioVex

AM-Pharma

Stat-Diagnostica

Endosense

Cardoz

MedLumics

SabirMedical

Tigenix

Inbiomotion

CVRx Medical

11 Venture Capital and financing of healthcare companies J.Sanfeliu

Ysios Capital Partners

Investment Criteria to choose and focus on returns

Management team Track record and relevant industrial experience, key people in the field

Product(s) Attractive market and sustainable competitive advantage, indications

Milestones Product development milestones and/or realistic commercial validation (≤ 3 yrs)

Organization Simple and flexible, minimizing non-value adding overhead costs

Strong entry barriers Solid intellectual property with freedom-to-operate

Exit Realistic exits (M&A or IPO) within 4-6 years from investment

Leadership in investments

Lead or co-lead investor in first rounds of financing

Valuation Reasonable pre-money in relation to degree of maturity, risk, and additional financing needs until divestment

Investment agreement Milestone-driven investments, ratchets

Corporate governance Favorable structure

Syndication Syndicates in large rounds of financing shall include top-tier biotech VCs

12 Venture Capital and financing of healthcare companies J.Sanfeliu

Ysios Capital Partners

Valuation?

Valuation methodology:

– NPV Based on DCF: • Discounted cash flows for NPV • Risk Adjusted NPV (rNPV)

o TA o R&D stage

– Ratios • Comparable companies ratios: • Employees • R&D Budget to pricE

– Comparable transactions

– Venture capital – Exit in 3-5 years – R&D Budget required

Venture Capital and financing of healthcare companies

Thank you. Josep Ll. Sanfeliu Managing Partner Jsanfeliu@ysioscapital.com