Category Archives: Capital Market

Chinese Investors in Life Science

GoodLuckMany US-based life science companies react to investment interest from China with trepidation.

Many US executives have heard horror stories of endless delays, outright fraud or patent infringement involving Chinese investors.

Whether there’s a kernel of truth in these stories or they’re simply urban legend, the fear prevents some potentially productive investment deals.

We’d like to report on one deal involving a former client, which has gone well for both the US-based life science company and the Chinese venture capital firm.

The US-based life science company is Cerevast, a private company based in the Pacific Northwest, which is in its pivotal clinical trial for a stroke treatment device.  The company hopes to show in this clinical trial that its device enhances the effectiveness of tPA, a drug which is widely administered by hospital emergency rooms to stroke patients.

Cerevast was completing its Series C round of financing when Haiyin Venture Partners expressed interest in the company.

In contrast to common notions among US life science companies, Cerevast and Haiyin proceeded to rapidly strike a deal which enabled Cerevast to raise capital that was important for its trial.

For Haiyin, the Chinese market presents a large potential market where incidence of stroke is common.

The horror stories about Chinese investment in US life science companies get most of the attention but this example reveals that there are good experiences as well.

Forbes Magazine Asia recently ran a story about the Cerevast and Haiyin deal and the potential for more of these cross border investments in the future (click here).

Please contact us to discuss raising capital or pursuing any other capital market transaction for your company.

Family Office Funding

threadingneedleFamily offices have substantial capital to invest and have become a popular buzzword among company executives and investment bankers. I’ve found, however, that there are many misperceptions among these executives and bankers about family office investing.  Here’re my observations.

1. This is not “dumb money”.  Any dumb money was wiped out in the great recession.

2. Preservation of capital is key.  Many times, social goals are important.  Earning a financial return is in the top five goals.

3. Investment focus is often “nichey” or very narrowly focused and tied to special knowledge of the investment team or its advisers.

4. Because of #3, family offices prefer to keep a low profile to avoid being deluged with proposals outside the investment focus.

5. Because of the above points, raising capital from family offices is a challenging task.

These have been my observations. The article linked to this post efficiently highlights five key points about family office investing.  I highly recommend that you read ” Five Reasons Why Family Offices Invest in Life Science Companies by  Lucy Parkinson, Senior Research Manager of Life Science Nation.  From my experience, Lucy is “spot on”.

Keys to Product Development Alliances

BrownRudnickLogoProduct development alliances have become more common.  My colleagues and I regularly encourage our clients to consider some form of alliance among the capital market options pursued.

Forces driving large life science companies to partner include:

  • Need to enhance product development pipelines;
  • Availability and low cost of investment cash for product development; and
  • Reduced evidence of “not invented here” mentality.

The primary force driving smaller companies to seek out partners is the scarcity of development-stage investment capital from venture capital, angels, etc..

Given the different goals and cultures of the large and small firms in these alliances, care should be taken to structure and manage the relationship.

Rob Funsten, co-chair of Brown Rudnick’s global life science group, provides us with a useful summary of preparations and practices to a successful alliance.

Click here for the article in “Corporate Counsel” magazine (free registration required).

stickfigure

Congressional Inquiry Pressuring Stock Price?

USHsEnrgyCommCommOn March 20, 2014, Democratic members of the US House Energy and Commerce Committee sent to Gilead Science’s CEO a request for a briefing on pricing of the company’s new Hepatitis C drug, Sovaldi.

The letter states, ” Our concern is that a treatment will not cure patients if they cannot afford it.  Reports indicate that Gilead intends to sell Sovaldi at $84,000 per treatment.  In cases where Sovaldi is prescribed with other treatments the costs could be even higher.  According to a recent Reuters report, “many doctors are requesting a $150,000 combination of Sovaldi … and Olysio.” (Click here for full letter.)

The stock prices of Gilead and Arrowhead, another Hepatitis drug company, lost value in the days after the release of the letter.

This may be another example of the battle between necessary cost control and drug companies’ need for profit to fund expensive pipeline products

Gilead

Arrowhead

Life Science Week in SF – Jan. 13-15

IMG-20140112-00098Life Science Week in San Francisco 2014 proved to be every bit the major industry event, well bigger than the original JPMorgan Conference which initiated the week.IMG-20140112-00096

 

Life science companies of all sizes, sectors and nationalities descended on San Francisco as did investors, IR professionals, attorneys, bankers, consultants and advisers.

 

IMG-20140112-00087It was a great opportunity to see old friends and colleagues as well as to make new acquaintances.IMG-20140112-00095

2013 was a good year for many life science companies despite the changes triggered by the new healthcare laws and regulations.

From the attendance in San Francisco, 2014 should start off the way 2013 ended.

We thank those company executives who took time to meet with us and share or update their stories.   Also, we’d like to thank the law firms which hosted great evening networking receptions.

IMG-20140112-00094If we can be helpful to you and your company, please contact us. IMG-20140112-00093

 

 

 

 

 

Dennis McCarthyDennis McCarthy – dennis@mbsecurities.com

 

 

 

RogerB&W

Roger Zickfeld – rzickfeld@cca-cca.com

Life Sciences IPOs Surge

FistfullCashThere were 8 life science IPOs reported in May this year, according to “The Deal” and my colleague, David Feldman of Richardson & Patel.

We’ve just completed the best quarter for IPOs since 2000, reports these sources.

If your company is considering raising capital, now may be the time.

Public companies may find my Public Equity Series of videos helpful in learning the options available to them and the pro’s and con’s of each alternative.

Click here to go to David Feldman’s blog.
  By Dennis McCarthy
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