generating value from innovation in life sciences · pdf fileactive management with a proven...
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June 2017
Generating Value from Innovation in Life Sciences
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Disclaimer
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Building businesses and valueOverview
Life Science Venture Capital in a publicly-traded company
Active Management with a proven team of company builders
Building a diverse collection of world-class life science businesses
Privileged relationships with Academia and Pharma
Strong presence in Europe and the US
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£113m raised in February 2017IPO on the London Stock Exchange
Building a diverse group of 15-20 life science companies
Highly Innovative early and late stage companies
Bringing life-science VC to public investors
Concept appeals to a broad range of investors- Blue-chip generalist financial institutions- Large pharma- Wealth managers- Retail investors
7 already in place
Target 20% IRR over the long term
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1828 45
2007 2011 2015
Smaller companies driving innovation
1. Source: Company, FDA, HBM analysis 2. Drug originator defined as the company that undertook the first significant development effort for a drug 3. Source: BioCentury. Excludes Venture Debt financings.
Market Opportunity
Innovation driven by smaller companies
Funding environment for healthcare has historically been uncertain and volatile
New molecular entity approvals by the FDA1
Number of drug approvals by originator2 company size
Total capital raised in biopharma IPOs & private rounds (US$bn)3
28 3423
38 45
2011 2012 2013 2014 2015
Top Ten Companies 11-30 Smaller Companies
048
1216
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
YTD
Scientific innovation driving increasing numbers of new therapies and technologies
5
212225
375400
500535558605
9251,200
1,725
121130140144
254324
400478500537
600725
1,250
- 400 800 1,200 1,600 2,000
GlycoVaxyn / GlaxoSmithKlineArresto / Gilead
Oncoethix / Merck & Co.Heptares / Sosei
Amplimmune / AstraZenecaTensha / Roche
Fibrotech / ShirecCAM Biotherapeutics / Merck & Co.
Avila / CelgeneNimbus / GileadSeragon / Roche
ZyStor / BioMarinCallidus / Amicus Therapeutics
Envoy Therapeutics / TakedaZacharon / BioMarin
CoStim / NovartisLotus Tissue Repair / Shire
IOMet / Merck & Co.Taligen / Alexion
SmartCells / Merck & Co.Marcadia / Roche
Padlock / Bristol-Myers SquibbiPierian / Bristol-Myers SquibbFlexus / Bristol-Myers Squibb
Upfront EarnoutSource: Press releases, Pitchbook.Note: Companies acquired while lead asset is in Phase I or preclinical development, for a disclosed value of over US$100m, 2010 to present. This slide is not intended to indicate Arix’s expected returns or strategy in any way but
instead to provide an historical market context for early stage biotech.
Market OpportunityTotal Return Years From Inception
Investment (US$m) Upfront Total To Exit37 21.4x 33.4x 1.376 2.3x 9.5x 4.821 10.8x 28.9x 1.313 21.6x 40.4x 4.812 0.0x 41.9x nm80 1.4x 6.0x 4.514 10.7x 28.7x 5.712 4.2x 27.6x 1.512 21.5x 21.5x 1.84 2.4x 33.9x 4.18 17.7x 17.7x 3.15 3.1x 26.7x 0.67 4.1x 17.6x 5.7
Average 23 9.3x 25.7x 3.3Median 12 4.2x 27.6x 3.6
33 21.8x 52.0x 1.066 6.0x 18.1x 5.151 6.9x 18.2x 5.06 16.3x 104.0x nm8 8.9x 66.1x 5.2
14 8.3x 38.8x 4.318 12.7x 28.3x 7.753 3.4x 7.5x 7.530 3.6x 12.4x 7.029 7.8x 7.8x nm31 6.9x 6.9x 8.6
Average 31 9.3x 32.7x 5.7Median 30 7.8x 18.2x 5.2
Transaction Value (US$m)
Prec
linica
lPh
ase I
Premium Price Paid for Innovation
61. From 9 January 2006 to 8 December 20162. Cambridge Associates; Realised and unrealised returns; includes VC deals with an initial year of investment between 2006-2016 and net of fees
“Innovation” side of the healthcare sector driving investment returnsLife sciences delivering value for shareholders
Market Returns 2006-2016
8.1%
11.8%
22.5%
NASDAQ Index NASDAQ BiotechIndex (NBI)
Biopharma VC1 1 2
Targeting VC-like returns: 20% IRR over the long term
Publicly traded shares versus ten year VC fund
Balanced exposure to diverse group of life science companies
Highly experienced team with a strong track record of building and realising value
Arix Bioscience
71 Market cap is at 29 April 20162 Includes Vectura ($1,779m), Santhera ($457m), ReNeuron ($151m), and Cyclacel ($14m). Vectura is pro forma for acquisition of Skyepharma PLC, expected to close in Q3 2016; assumes 2.7977 Vectura shares issued per Skyepharma share, at a price of $2.52 as
of close on April 29th, 2016. Source: Capital IQ.
Leadership Team
Former Group CFO at Amgen and Novartis Pharma35 years global experience Broad experience in strategy, financeand operationsExtensive M&A experience on both buy- and sell-side>$20bn capital raisedPublic company CEO and Boardmember experienceFormer McKinsey and PwC CorporateFinance Partner
Venture investing: strong track record of generating cash-on-cash returns25 years experience in life science industryFormer Partner at Abingworth: leading VC firmPublic equities: founded and co-managed hedge fund with superior 5 year returnsExtensive active Board-level experience of building life science companiesGlobal Healthcare portfolio manager, First State Investments, Commonwealth Bank of AustraliaPharma analyst at Dresdner Kleinwort BensonHead of Strategy Team at the Wellcome Trust
Over 30 years experience as entrepreneurFounded Chiroscience, Celsis, Merlin Biosciences, ReNeuron, VecturaCreated 11 successful academic spin-outsRaised c.$450m for Merlin Biosciences FundsRaised $2.6bn from disposals, including sale of BioVex to Amgen ($1bn) and Piramed to Roche ($175m)Through Merlin Ventures, co-founded andadvised Biotech Growth Trust plc (current market cap $522m1)Sold Arakis to Sosei ($187m)Founded multiple listed companies with collective market cap of c.$2.4bn at endof April 20162
Complementary combination of experience and expertise
Prof Sir Chris Evans
Deputy Chairman
Entrepreneur
Joe AndersonCEO
VC
Jonathan PeacockChairman
Big Pharma
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Highly experienced Board
British Member of Parliament for 18 years; former Secretary of State for Work and Pensions, Secretary of State for Business and Secretary of State for DefenceAdviser to Bechtel and Lockheed Martin and NED to Circle Holdings Plc and SiriusMinerals PlcChairs the Nuclear Industry Association
Previously Group CFO of Charles Stanley plc,a leading Wealth Manager with over £20bnof client assets under managementFormer Group CFO of Coutts, a global Private Bank & Wealth ManagerFormer CFO of UBS Wealth (UK) before takinga global role in UBS Wealth based in Zurich
Pharmacologist, and leader in drug receptor research, pharma R&D, biotechnology and venture investingLed Zeneca’s global research activities and subsequently SmithKline Beecham’s R&DHas worked to establish the Harrington Project since 2012 and is on the BioMotiv board and is chair of the Advisory Board
Chairman of Innoveas InternationalFormer chairman of Johnson Matthey, Whitbread, Kingfisher, Tarmac, andECI PartnersDirector of Invesco until May 2015
Former Roche Chairman and CEO Chairman of Diageo plc and Non-Executive Director of Citigroup, Chugai Pharma andKite PharmaFormer chairman of INSEAD Board of Directors
Former Group R&D Director at The WellcomeFoundation and a former director of AllerganFormer Director General of the Association of the British Pharmaceutical Industry (ABPI) and served, for 12 years, as a member of the UK Government Medicines CommissionVisiting professor at King’s College, London, and holds honorary degrees and Gold Medals fromsix universities
Dr. Franz HumerLead Independent
DirectorSir John Banham
NEDDavid U’Prichard
PhD, NED
Lord Hutton of FurnessNED
Professor Trevor Jones, PhD, NED
James RawlingsonCFO
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Investment Proposition
Early and late stage
Privileged partnerships and extensive deal sources
Life science specialists
Proactive industry research
Active managers
Transatlantic
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Building a balanced portfolio
Breakthrough treatmentsEarly and late stageGlobalLife sciences
Current portfolio: 7 companies (plus indirect holdings)
Target portfolio: 12 companies by end of FY1720 companies by end of FY18
Target shareholder return: 20% IRR over the long term
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Company Field of Science Geography Board seat Committed£m
Oncology EU 5.1
Oncology EU 10.0
Sequencing EU 1.0
Oncology US 8.6
Anti-infectives EU 8.6
Opthalmology US 0.9
Respiratory EU 3.6
Total committed to Group Businesses 37.8
Inclusive of further £15.7m reserved for Group Businesses 53.1Funds
Life Sciences US Advisory Board Up to £20m
Life Sciences EU Manager Receive fees
Interests in Group Businesses held on the Arix balance sheetCurrent Portfolio
12Source: Company, BioMotiv
BioMotiv, a US research accelerator, and ALS, a regional fund managerInterests in FundsInterest Company Description Direct Board
Seat
BioMotivholdingsin the US
Allinaire Antibody therapy for respiratory diseases including chronic obstructive pulmonary disease ADual Developing a novel small molecule for the treatment of solid and haematological tumours A
Antibody against a novel immunology target in development for atopic dermatitis, inflammatory bowel disease and colorectal cancer ANYNEX Pharmaceutical agent targeted against deubiquitinase UPS9X for the treatment of various forms of cancers A
Small molecule modulator of well-validated nuclear receptor in development for autoimmunity and immuno-oncology ASAPVAX Developing peptide-based, self-adjuvanting cancer vaccines, comprising synthetic long peptide antigens linked to a TLR2 agonist A
Antibody inhibitor of leukocyte infiltration to sites of inflammation, under development for various autoimmune disorders AChaperone to increase intracellular zinc concentration in development for various solid and haematological tumours A
ArthurianLifeSciences managed portfolio
Novel therapeutics for autoimmune and allergic diseases BDelivery systems for type II diabetes BMinimally invasive interventional and surgical procedures -
Medaphor Advanced ultrasound education and training simulators -
Orion Full-service CRO focused on the most challenging therapeutic areas BProton Proton Beam Therapy for cancer BReneuron Clinical-stage stem cell therapy for stroke-related disabilities BSimbec CRO specialising in early clinical development BSphere Markets Proxima – a platform for measuring blood gases, electrolytes and metabolites B
Respiratory-focused clinical stage biotechnology company with a “first-in-class” drug for chronic obstructive pulmonary disease -
A = Board Representation through BioMotiv B = Board Representation through ALS
Direct Board Seat
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Unmet Need
Many cancers still poorly treated
New approaches involve engineering patients’ immune cells to recognise and kill cancer cells
Many blood cancer patients have shown complete remission with CAR-T
Innovation
Exciting science from University College, London
Extends potential of Chimeric Antigen Receptor CAR-T-cell therapy
Promise of improved targeting and control of patients’ killer cells
Impact
Potential for safer, more effective treatment, as well as moving into solid tumours
Clinical trials starting in 2017
Potential market over $5bn
Next Generation Cancer-targeting CAR-T cell therapyAutolus
Proven Leadership Team
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Unmet Need
Many cancers still poorly treated
Tumour cells known to be poor at repairing DNA damage and various chemo and radio-therapies exploit this
But efficacy is limited by unwanted effects on healthy cells
Innovation
Inhibiting “DNA Damage Response” (DDR) of cancer cells proven
Artios founders involved in successful development of first generation DDR (PARP inhibitor)
New DDR pathways discovered by scientists at CRUK
Impact
Following success of AstraZeneca's Lynparza™ (olaparib), now opportunities to target new DDR pathways
Artios aiming for a pipeline of multiple programmes and new targets
A novel class of DNA damage response (DDR) inhibitorsArtios
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Unmet Need
Drug resistant bacteria on the rise
> 2m US citizens get resistant infections, leading to 23,000 deaths each year
The CDC & Infectious Disease Society of America call for an urgent need for new drugs
Innovation
Sulopenem, a novel oral and intravenous antibiotic for multi-drug resistant infections
Shown broad-spectrum coverage and potent in-vitro activity against E. coli & K. pneumonia
Proven leadership (involved in development of Dalbavancin)
Impact
Cost of antibiotic resistance $20bn in the US
Arix led $65m Series B for key clinical trials in urinary tract and abdominal infections
Iterum plans to file with the FDA for approval in 2019
New anti-infective combatting drug-resistant pathogensIterum Therapeutics
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Unmet Need
Human T-cells are designed to kill abnormal or cancerous cells
But cancer cells can evade detection by T-cells, allowing uncontrolled growth of a tumour
Using antibodies to “engage” T-cells with tumours an approach in its infancy
Innovation
Harpoon’s founders were involved in the development of Blincyto® a “bispecific” engager for leukaemia
Harpoon is now developing a next generation “trispecific” engager, TriTAC™
This has the potential for greater efficacy and potency than earlier T-Cell engagers
Impact
Arix co-led Series B financing to advance TriTAC™ to Phase 1 clinical trials
First clinical trial, in metastatic prostate cancer, expected in 2018
Further trials being planned
Unleashing a patient’s immune system to kill cancersHarpoon Therapeutics
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Sourcing Ideas
Arix Group Balance Sheet
Rich, renewable pipeline of opportunitiesExpect over 1,000 deal ideas annually*
Deep exposure to Europe and US
Source: Company*587 deals reviewed in first year of operation
Privileged relationships
Academia Research Accelerator Fund Manager Industry Partnerships and Direct NetworksUniversities Research
Accelerators Fund Manager Industry Partnerships
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Extensive relationships in the industry and VC community
Dealflow supported by team at Arix HQ in London
UK: “First Look” Agreements with 6 leading universities
Germany: “First Look” Agreement with the Max Planck LDC
Max Planck Society operates c.100 research institutions in GermanyEmploys > 15,000 people and receives funding of €1.7bn p.a.
Deep VC Networks and agreements with leading research centresEurope: Sourcing Innovation
19Source: Company, BioMotiv
Deep VC Networks and investment in a Research AcceleratorUS: Sourcing Innovation
Extensive relationships in the industry and VC community in the US
Dealflow and US Group Companies supported by a team in NYC
Innovative science also sourced through BioMotiv with links to the Harrington Scholars program
Arix is a BioMotiv shareholder and has committed $25m
Arix can invest in businesses via BioMotiv, alongside BioMotiv, or independently of BioMotiv
Opportunities pre-qualified at point of review by BioMotiv following Harrington screening process
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Harrington Scholars Programme
Source: BioMotiv
Extensive Reach into US academic centres
Albert Einstein College of Medicine
Rutgers
Columbia University
University of North Carolina
Duke University
Emory University
University of Kentucky
Indiana University
Washington University in
St. Louis
University of Colorado
University ofSouthern California
University of California,
San Francisco
Mayo Clinic
The Ohio State University
Case Western Reserve University
Harvard University
Sickle Cell disease
Hypoxemia & Cardiac Arrest
Myocardial Infarction
Diabetes and AtherosclerosisMacular Degeneration
Cancer
Breast & Ovarian CancerProstate Cancer
HTN & AtherosclerosisBacterial Drug Resistance
Type I Diabetes
Diabetes CancerRetinitis Pigmentosa
BlindnessOsteoporosisAlzheimer’s DiseaseAge Related Macular
DegenerationCOPD
Obesity & Diabetes
Ischemic Retinal Diseases
Wound HealingBasal Cell Carcinoma
Huntington’s Disease and Neurodegenerative Disorders: Psoriasis
Type I Diabetes
Neonatal Brain Injury & Stroke
RetinitisPigmentosa Heart Failure
Tuberculosis Alzheimer’s
Disease
Alzheimer’s Stroke and Cancer
Acute Myeloid LeukaemiaBacterial Drug Resistance
Blood Cancers Respiratory Stimulant
Inflammation
Alzheimer’s DiseaseNiemann-Pick C Disease
BioAtlaAutoimmune
Retinal DegenerationCancer
Rheumatoid ArthritisLa Jolla Institute
University of California, San Diego
Pain ControlNervous System
Movement DisordersOsteoporosis
Alzheimer’s Disease
Alzheimer’sDiseaseDiabetes
Vanderbilt University
Lung Transplant Rejection
Non-alcoholic
Fatty Liver Disease and
Diabetes
Yale University
Pain Management
CancerMt.
Sinai
The Rockefeller UniversityMyocardial Infarction
Memorial Sloan Kettering Cancer
Center
Brigham and Womens Hospital
Heart Rhythm Disorder
Psoriasis, Diabetes,Rheumatoid Arthritis and
Alzheimer's Disease
HDI
Sickle Cell anaemia and Beta-Thalassemia
BostonUniversity
University of Pittsburgh
New York University
University of Pennsylvania
Johns Hopkins University
Massachusetts General Hospital
Inherited Heart Rhythm
Disorders
GeiselMRSA
University of TexasCancer
U. ofMarylandDepression
University of Michigan
Melanoma
University of Arizona
Stanford University
Cancer
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Detailed diligence approach
Science • Breakthrough science & unmet medical need• Validating preclinical or clinical data
• Capability of management and R&D teams• Opportunity to add significant operational value
• Cash runway• Deal structuring• Agree clear value inflection points
• Regulatory pathway• Market analysis• Intellectual Property
Commercial
Operations
Finance
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White papers drive rigorous understanding of a sectorProactive sector research
Objective: Rigorous sector evaluation to develop a detailed understanding of a sectorContents: Memorialise findings that becomes a “living document”
Market opportunity / unmet needCurrent competition / standard of careClinical development approachesRegulatory environmentPipeline / new technologiesCommercialisation (pricing, reimbursement)Strategic interest / valuations
Results: List of companies / technologies worth immediate diligence or longer-term monitoring
Recent Focus Areas: Anti-Infectives, Oncology and Gene Therapy
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Two-way flow of information on business opportunities, covering:SourcingScreeningDue diligenceJoint business building
Benefits for Arix:
Access to deep scientific knowledge and R&D capabilitiesMarket intelligence and commercial assessment
Strategic investments at IPO: 5% holding from Takeda, 4% from UCB Pharma
Pharmaceutical partnershipsTakeda and UCB Pharma
24Source: Company, company websites
Regulated Fund Manager Acquired by ArixFund Management
Wholly-owned subsidiary of ArixFirst mandate: The Wales Life Sciences Investment Fund£50m in funding2.5% management fee and 20% carried interest
Minimally invasive interventional andsurgical procedures
Full-service CRO focused on the mostchallenging therapeutic areas
CRO specialising in early clinical development Clinical-stage stem cell therapy forstroke-related disabilities
AIM:RENE
Novel therapeutics for autoimmune andallergic diseases
Chronic respiratory and inflammatory diseasesAIM: VRP
Advanced ultrasound education andtraining simulators
AIM: MED
Proton beam therapy for cancerMarkets Proxima – a platform for measuring blood gases, electrolytes and metabolites
AIM: SPHR
Delivery systems for type II diabetes
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Life Science Venture Capital in a Public CompanyConclusion
Deep pipeline of new opportunities
Key relationships with Big Pharma
Ambitious portfolio of 7 companies already in place
Bringing life-science VC to Public market investors
Adding a further 8-10 companies with IPO Proceeds