Transcript Document

A Current Update on U.S. Risk Capital Markets
Ivar Sorensen, Managing Partner, The M&A Group, LLC
Total Annual U.S. Venture Capital Investment ($ Millions)
$120,000.0
$100,000.0
$80,000.0
$60,000.0
$40,000.0
$20,000.0
$0.0
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013P
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters
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Annual U.S. VC Investment ($ Millions)
$14,000
$12,000
U.S. VC Average Investment Size ($ Millions)
$12.0
$10.0
$10,000
$8,000
$6,000
$4,000
$8.0
$6.0
$4.0
$2,000
$0
$2.0
$0.0
2002
2004
Seed
Seed
Early Stage
Early Stage
Expansion Stage
Expansion Stage
Later Stage
Later Stage
2006
2008
2010
2012
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters
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Annual U.S. VC Investment ($ Millions)
$30,000.0
U.S. VC Average Investment Size ($ Millions)
$10.0
$9.5
$25,000.0
$9.0
$8.5
$20,000.0
$8.0
$15,000.0
$7.5
$7.0
$10,000.0
$6.5
$6.0
$5,000.0
$5.5
$0.0
$5.0
2002
2004
2006
2008
2010
2012
2002
2004
2006
2008
2010
Total Investment Less Medical Device s & Equipment
Total Investment Less Medical Device s & Equipment
Medical Device s & Equipment
Medical Device s & Equipment
2012
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters
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Total Global VC Funding by Sub Segment ($ Millions)
$1,000
$900
$800
$700
$600
$500
$400
$300
Medical Therapeutics
$200
Medical / Health Products
$100
Medical Diagnostics
$0
2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Source: PricewaterhouseCoopers Capital Crunch May 2013
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VC investments have consistently underperformed most every
other asset class since 2001
250
200
150
100
50
0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2001
2002
2003
PE
2004
2005
VC
2006
S&P 500
2007
2008
Debt
2009
2010
Real Estate
2011
2012
Source: PitchBook
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The performance of VC Funds has consistently lagged other
alternative fund types over the last decade
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
1-year
3-year
All PE Funds
VC Funds
5-year
Debt Funds
10-year
Fund-of-Funds
Source: PitchBook
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More than a quarter of all VC funds raised since 2001 currently
have a negative IRR
20%
15%
10%
5%
0%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
-5%
-10%
-15%
IRR 25th Percentile
IRR Median
IRR 75th Percentile
Source: PitchBook
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• VC investment spending has been fairly consistent since 2003
• Total investments made and average investment size increase as
companies move up the development curve
• Investment in medical devices & equipment, both in total amount
invested and average investment size, mainly track the total VC market
• Global VC funds have underperformed most every other asset classes for
the past decade
• Poor performance = fewer investment dollars
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The best opportunities are still being funded
Critical Unmet
Need
Disruptive
Therapeutic
Technology
Proven
Management
Team
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Target
Buyer
Transaction
Vessix Vascular, Inc., a pre-revenue medical device company, was acquired by Boston
Scientific in November 20012 for $125M plus milestone payments up to $300M by 2017.
Vessix has a catheter based radio frequency device for the treatment of uncontrolled
hypertension. Its device has CE certification, but not FDA approved. Vessix expecting to
commercialize its product in Europe in 2013.
Cameron Health, Inc., an early-stage medical device company, was acquired by Boston
Scientific in June 2012 for an initial price of $150M plus $150M upon FDA approval and
up to an additional $1,050M based on six-year revenue targets. Cameron has a CE
certified (2009) device for a subcutaneous implantable cardioverter defibrillator. The
device is commercially available in Europe and FDA approval is expected in 2013.
Visiogen Inc., an optical device company founded in 2001, raised $40M in April 2009 to
fund a US FDA phase III study for its intraocular lens for use with cataract and refractive
patients and to launch commercial operations in Europe for its CE certified device. The
company was sold five months later for $400M to Abbot Laboratories.
Spinal Modulation, an early-stage neurostimulation medical device company, raised $40
million in June 2013 from St. Jude Medical, Inc. in exchange for an exclusive option to
acquire the company for as much as $300 million plus incentives. Spinal Modulation’s
neurostimulation pain management therapy is CE certified, but not FDA approved.
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Full Cycle Funding Plan
• Open capital structure
• Seek later stage
funding sources day 1
• Engage strategic
partners sooner, not
later
Diagnostics and IT Related
• Less capital needed =
less financial upside
• Alternative capital
sources including:
– Grants
– Angels
– FFFs
– User Groups
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Ivar Sorensen:
p 612.375.1190
[email protected]
Address:
3565 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
www.m-a-group.com
M&A Group, LLC  3565 IDS Center  80 South Eighth Street  Minneapolis, MN 55402  USA
m-a-group.com  Member FINRA and SIPC
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