alternative funding for life science companies- webinar slides

Don Stewart, PhD President & CEO PlantForm Corpora4on Toronto, Canada [email protected]

Looking beyond VCs: Alterna5ve funding routes for early-‐stage life

science companies

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PlantForm Summary

•  Canadian private corpora=on established 2008

•  Plant expression technology licensed from the University of Guelph

•  $3.5 million in funding from Founders & Angels

•  $2.0 million in funding from Government •  $2.1 million contract revenue in 2013 •  4 families of patents filed

Innovator of the Year Guelph, Canada, 2010

Mind To Market Finalist Ontario, Canada, 2011

Winner Most Promising Technology 2012 Venture Forum (New York)

Dr. Chris Hall. Co-‐founder & CSO

PlantForm Pipeline

Pipeline Drugs Biosimilar Hercep5n®

Biosimilar Avas5n®

Biosimilar Erbitux®

HIV an5bodies

Butyryl cholinesterase

Poten5al Market Size

$ 7bn

$ 6bn

$ 4bn

Market Entry

2016

2017-‐019

Ongoing revenue stream U.S. Defense Advanced

Research Projects Agency

More that 20 years experience in drug development and approval. Worked with Cangene, which grew from a 10-‐‑person start-‐‑up to an 800-‐‑employee, $250 million biotechnology company. Experience in all aspects of drug development and regulatory approval of parenteral drugs.

Don Stewart PhD President & CEO Co-‐‑founder

Director R&D

President and owner

Consulting company founded in 2007; supporting Biotech and Pharma in translation of parenteral manufacturing processes from the laboratory bench to GMP manufacturing facilities. Opening sales opportunities in Canada for international companies

Presenter

Polling Ques=on #1

Finding Angels §  GUST database (h^p://gust.com)

§  Example — Los Angeles: •  Angel Groups

–  AngelVision Investors –  PCN Los Angeles –  Icon Angels

•  Venture Funds –  Kline Hawkes & Co –  Rivenrock Capital –  Macquarie Allegiance Capital –  Barre^

•  Business Plan Compe==on –  UCLA Knapp Venture Compe==on

•  Your network of other start-‐ups •  Conferences •  Trade commissions •  State agencies

Angel Networking Conferences

–  SoCalBio Investor & Partnership Conference •  6 November, 2013 @ Omni Hotel, LA •  h^p://www.socalbio.org/

–  Keiretsu Forum San Diego •  h^p://www.keiretsuforum.com/global-‐chapters/san-‐diego/

–  Beer & Partners •  Investment Fair, London, UK (Spring and Fall) •  h^p://www.beerandpartners.com/

–  Biotrinity, UK •  May 2014, London, UK •  www.obn.org.uk

–  Bright Buffalo Niagara Venture Forum •  h^ps://gust.com/r/sessions/via_group/25737

Angels: GUST home page

GUST Experience

–  Searchable internet portal to access angels: h^p://gust.com/

– Need to load detailed informa=on –  Video helps –  Business plan helps – Detailed financials help –  Requires effort to be useful –  Entrepreneur needs to drive the process – Not everyone responds – Use by spam organiza=ons to mine for start-‐ups

GUST PlantForm home page

Angel Funding Process

•  Many groups have their own applica=on format in addi=on to GUST – Time consuming

•  Angel groups like to provide mentoring for pitch – Time consuming and not always helpful

•  Angel groups due diligence can involve considerable educa=on on your area – Time consuming

Angels: Third-‐Party Finders Professional finders •  Upfront fees + expenses •  Fees to present at conferences •  Success fee (Cash and Warrants/Op=ons) •  East Coast Group

–  $17,000 fees –  2 Conferences, Stamford and New York, USA

•  No personal commitment •  For PlantForm: No investment Ad hoc finders (investors) •  No upfront fee, pay expenses •  Success fee (5-‐7% Cash, 5-‐7% Op=ons) •  Well-‐connected individuals do groundwork, organize groups in a home or

restaurant •  Prospec=ve investors want to meet CEO •  For PlantForm: 4 events = $500,000 investment

Polling Ques=on #2

§  Objec=ve: obtain non-‐dilu=ve funding -‐  Pharmaceu=cal, Agricultural and Biotechnology Companies -‐  Government contracts and grants -‐  Founda=ons

§  Core project support -‐  Directly advances companies objec=ves

§  Non-‐core project support -‐  Reduces burn rate -‐  Increases “cri=cal mass” in organiza=on -‐  Can advance IP por4olio

§  Must have demonstrate capability -‐  Lab opera=ons -‐  Equipment -‐  Personnel

Market-‐driven Development Contracts

§  United States •  DARPA, $1.8 million R&D Contract

•  www.so.gov •  h^p://www.darpa.mil/Opportuni=es/Solicita=ons/DARPA_Solicita=ons.aspx

•  h^ps://www.dtrasubmission.net/SignIn.asp •  h^p://www.grants.gov/

•  Gates Founda=on, $750,000 Development Contract •  h^p://www.iavi.org/ •  h^p://www.gatesfounda=on.org/

§  Canada •  Undisclosed >$1 million contract

•  h^p://www.merx.com

PlantForm Development Contracts

§  Government and Founda=on proposal process: -‐  Funding cycle or open =meframes -‐  Specific topics or white paper proposals -‐  General stages of applica=on process:

•  LOI > Summary > Full Proposal

§  Pharma, Ag and Biotech proposal process -‐  Website applica=on, ini=al review of interest

•  Syngenta (www.syngentathoughtseeders.com) -‐  Network Contacts -‐  Industry associa=ons support

•  MaRS, Toronto (www.marsdd.com)

Securing Development Contracts

Conferences: §  Examples

-‐  BIO, San Diego 2014 (conven=on.bio.org) •  One-‐On-‐One Partnering a must

-‐  Bio-‐Europe, Vienna, Nov 2013 (www.ebdgroup.com/bioeurope) -‐  Bio-‐Europe Spring, March 2014, Turin (www.ebdgroup.com/bes) -‐  BioPharm America, Sept 2013, Boston (www.ebdgroup.com/bpa) -‐  Sachs and Associates Forums (www.sachsforum.com) -‐  Conference strategy (advance research/game plan)

§  Approach -‐  Extensive use of partnering systems -‐  Set up other mee=ngs prior to conference -‐  Take advantage of networking events


§  Networking with Contacts §  Trade Commissions §  Industry Associa=ons §  SBIR/STTR (www.sbir.gov)

-‐  SBIR: support Small Businesses to engage in Federal R&D with commercial poten=al

-‐  STTR: support coopera=ve R&D between Small Business and Research Ins=tu=ons for project with commercial poten=al

-‐  Phase I, the startup phase, makes awards of "up to $150,000 for approximately 6 months support for explora=on of the technical merit or feasibility of an idea or technology."

-‐  Phase II awards grants of "up to $1 million, for as many as 2 years in order to facilitate expansion of Phase I results.”



Government support •  Canada

–  h^p://www.tradecommissioner.gc.ca –  (Not the same as US FTC)

•  Cheryl Rogers, San Diego; Chris=ne Sarkisian, Boston •  Benjamin Eliasoph, Technology Partnering Officer, DC

–  Connected PlantForm to partners in Italy, USA, Australia •  USA

–  Organiza=ons such as Interna=onal Trade Center (www.intracen.org) –  Missions

•  States –  Establish a presence in other countries

•  North Carolina Biotechnology Center (www.ncbiotech.org) –  Missions

Development Contract Issues

§  Cau=on §  You are sharing data and ideas with your compe==on

§  Mi=ga=on §  Must have a Non-‐Disclosure Agreements §  Must track and record all informa=on provided

§  Use secure data rooms on internet §  Control who views §  Record of what was viewed §  Use to gauge interest level

Development Contract Issues

§  Pros –  Provide non-‐dilu=ve funding –  Advance companies products or core technology

§  Cons –  Not necessarily aligned with primary corporate direc=on –  Requires significant use of resources – May require addi=onal non-‐core hires (project or customer rela=onship management)

Partnerships to advance business development/financing: §  Objec=ve: Secure $7 million project cost to next significant

financing milestone §  Summary diagram

Crea=ve Financing Partnerships

Cash investment

Contract manufacturing

Preclinical services

Clinical Services

Government Grants

Government Loans

$7 million project cost §  Equity

–  $2,000,000 from Angels and/or Service Providers §  Upstream Greenhouse services

–  50% of cost (not disclosed) –  Business synergy

§  Downstream Purifica=on services –  50% of cost (not disclosed) –  Business synergy

§  Preclinical –  100% as equity, Technomark Lifesciences –  www.technomarkls.com

§  Phase I clinical –  20% as equity, Cato Bioventures –  www.catobioventures.com


Blended Funding Model Project Poten5al External Funding

Ac5vity Cost Source %age Amount Manufacturing Process Scale-‐up $696,051 Service providers 50% $348,025 Manufacturing 3x GLP Processes $1,392,102 Service providers 50% $696,051 Manufacturing 1x GMP Process $696,051 Service providers 50% $348,025 GLP Mouse Efficacy Study $139,210 GLP Pk Study $69,605 Technomark, Equity 100% $69,605 Safety and Toxicity Rodent Study $278,420 Technomark, Equity 100% $278,420 Safety and Toxicity Monkey Study $1,113,682 Technomark, Equity 100% $1,113,682

Safety and Toxicity Other Studies $139,210 Technomark, Equity 100% $139,210 Characteriza=on Studies $500,000 Ontario program, Loan 100% $500,000 Stability Study $250,000 Ontario program, Loan 100% $250,000 IND Submission $100,000 Ontario program, Loan 100% $100,000 (Grant) $0 Ontario Program, Loan 100% $650,000 Phase I Clinical Trial $1,392,102 Cato Bioventures, Equity 20% $278,420 TOTAL PROJECT COST $6,766,433 SUB-‐TOTAL EXTERNAL $4,771,440 EQUITY RAISE $2,000,000

Summary of issues •  Pros

–  Access to investment in a =ght money market –  No change in control of the Company

•  Cons –  Hard to find opportuni=es –  Large amount of due diligence –  Difficult to bring different par=es together at the same =me


Polling Ques=on #3

Financing from the Middle East

Financing from the Middle East §  Sources

-‐  Sovereign Funds •  >$500 million

-‐  Investment Funds •  >$100 million

-‐  Private Funds •  >$10 million

-‐  Zakat Funds •  >$10 million

-‐  Strategic Investors •  $10-‐30 million

-‐  Private Banking •  $4-‐6 million and $1 million

§  Total ask and tranches larger than in USA -‐  ENBD minimum $30 mm for Series A


Issues §  Funds for financing are available

-‐  Abu Dhabi GDP $248 billion in 2012, largely from oil -‐  Qatar GDP $189 billion in 2012, largely from natural gas

•  Abu Dhabi Investment Authority, ADIA (www.adia.ae) •  Abu Dhabi Investment Council, ADIC(www.adcouncil.ae) •  Qatar Investment Authority, QIA (www.qia.qa) •  Ras Al Khaimah Investment Authority, RAKIA (www.rak-‐ia.com)

§  Sophis=cated investors with general knowledge base §  Commitment to partnerships §  Interest in investments that commit to local ac=vi=es

-‐  Job crea=on -‐  Facility builds

§  Tawazun Holding, an offsets program which can be used to assist with financing (www.tawazun.ae)


Issues §  Synergy with Government objec=ves in diversifica=on

-‐  United Arab Emirates Vision 2021 •  (www.vision2021.ae) •  “UAE drives toward economic diversifica=on less reliant on oil. Expanding new strategic sectors to build long-‐term compe==ve advantages.”

-‐  Abu Dhabi Economic Vision 2030 •  (gsec.abudhabi.ae/Sites/GSEC/Naviga=on/EN/publica=ons,did=131400) •  “Comprehensive plan for the diversifica=on of the Emirate’s economy and a significant increase in the non-‐oil sector’s contribu=on to GDP by the year 2030.


§  Man on the ground -‐  Important to have a knowledgable and locally experienced contact -‐  PlantForms contact is a Canadian who operates a management

consul=ng business in Dubai §  C-‐level presence on the ground

-‐  CEO must be on the ground, supported by CFO and other C-‐level staff -‐  PlantForm aims to be in the region every month -‐  This takes =me and resources away from other ac=vi=es

§  Embassy/Trade commission support -‐  Useful for general connec=ons and trade missions -‐  Embassy of Canada to United Arab Emirates

•  h^p://www.canadainterna=onal.gc.ca/uae-‐eau -‐  Embassy of the United States to United Arab Emirates

•  abudhabi.usembassy.gov

Polling Ques=on #4

PlantForm Timeline in the Middle East

Year Month Ac5vity

2011 October Healthcare conference in Abu Dhabi

November 3 mee=ngs with investment group

2012 January Term Sheet presented by Investor ($10 mm)

February – March Due Diligence and discussion

April Investor withdraws (lost $170 mm on another deal in USA)

May Investor introduces Company to Emirates NBD Bank, Dubai

June – October 3 Dubai visits with ENBD, developing understanding at bank, securing posi=ve opinion from risk group

November Mee=ngs with 10 poten=al investor groups, Abu Dhabi, Dubai, Qatar to test waters

December Execute Mandate agreement with ENBD

Con=nued….


Year Month Ac5vity

2013 January Mee=ngs in Dubai

Selec=on of lawyers, Dubai

Due diligence by ENBD and Lawyers

February Mee=ngs in Dubai

Company posi=on papers wri^en

Market evalua=on by consultant

March Mee=ngs in Dubai

Consultant review of drug product

Consultant reviews (2) of animal studies

Presenta=on materials dra~ed

April Mee=ngs in Dubai

Final Offering Memorandum and Term Sheet

Final Presenta=ons (15 and 80 slide versions)

Con=nued….


Year Month Ac5vity

2013 May Introduc=on of project to marke=ng to ENDB Investment Banking

Investment Banking ini=ate marke=ng

June Mee=ngs in Dubai

Introduc=on of project to marke=ng to ENBD Private Banking Rela=onship Managers

Private Banking ini=ate marke=ng

Mee=ngs with Investors in Abu Dhabi, Dubai, Ras Al Khaimah & London UK

July Ongoing marke=ng


Summary of issues •  Posi=ves

–  Financing available –  Tranches much larger than in US –  English language in the business and social environments –  UK law for business

•  Issues to address –  Time required on the ground to generate and advance leads

–  Need to understand local business culture –  Need to be flexible and use locally accepted business prac=ces

Which Road to Travel

Where would PlantForm focus for early financing knowing what we now know….. 1.  Founda=ons and Family Offices ($500-‐$2,000,000)

1.  Project financing 2.  Milestone driven 3.  Do not want control

2.  Individual Angels ($25-‐100,000) 1.  Day to day funding 2.  Steady influx of capital 3.  Can make a special drive for an intermediate milestone

3.  Middle East ($10 million plus) 1.  Significant capital depth 2.  Increasing interest in diversifying investment por4olios 3.  Board presence/shareholder control but opera=onal control remains with

Company

Discussion

Don Stewart, PhD President & CEO

PlantForm Corpora4on Toronto, Canada

[email protected]