Private Funding Trends Presentation - SVB

Venture Healthcare – Industry UpdateOIS

OCTOBER 2016

Jon Norris, Managing Director, SVB Healthcare [email protected]

Manage West Coast Healthcare Relationships for SVB across the SVB Platform, including

Fund of Funds (Investment as LP) Direct Equity (Co-Investments and Rights to Invest) Commercial Bank (Venture/Mezzanine Debt, Asset-based

Debt, New Fundings) Equity Financing Strategy for Early Stage and Venture-

Backed Companies Industry Thought Leadership

Jon Norris: Managing Director, SVB Capital

Jonathan NorrisManaging Director, HealthcareSilicon Valley Bank

Mobile [email protected]: @jonnysvb

Publications Trends in Healthcare Investments and Exits (2016) A Year of Dazzling Returns: 2015 Healthcare

Investments and Exits (2016) Trends in Healthcare Investments and Exits (2015) Strong Momentum in Healthcare (2013) First Mover Advantage (2012) Continued Rebound (2012) Trends in M&A (2011) Bringing Home the Bacon (2010)

mailto:[email protected]


Healthcare Investment/Total Venture Investment

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1H 2016Total VC Dollars

($B)$105 $41 $22 $20 $23 $23 $28 $32 $30 $20 $24 $30 $28 $30 $51 $60 $28

Biopharma 4% 9% 15% 19% 19% 17% 18% 19% 17% 19% 17% 16% 16% 15% 13% 13% 13%

Device 2% 5% 8% 8% 8% 9% 10% 11% 12% 13% 11% 10% 9% 7% 5% 5% 4%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1H 2016

$0 $5

$10 $15 $20 $25 $30 $35 $40 $45 $50 $55 $60

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%Total VC $ % Biopharma % Device

$ Bi

llion

s

$105

Source: PricewaterhouseCoopers & SVB Proprietary Data


Historical Trend Data for Device 2008 - 2Q 2016

Q1 2008

Q3 2008

Q1 2009

Q3 2009

Q1 2010

Q3 2010

Q1 2011

Q3 2011

Q1 2012

Q3 2012

Q1 2013

Q3 2013

Q1 2014

Q3 2014

Q1 2015

Q3 2015

Q1 2016$

$ 200

$ 400

$ 600

$ 800

$ 1,000

$ 1,200

50

100

150

US$m

investment deals

Source: PricewaterhouseCoopers


Device Investment Into Venture - Consistency since 2009Year Device $ Invested Dollars as % of Total VC2008 $3.6 Billion 11%2009 $2.6 Billion 13%2010 $2.5 Billion 10%2011 $2.9 Billion 10%2012 $2.6 Billion 9%2013 $2.1 Billion 7%2014 $2.7 Billion 5% 2015 $2.8 Billion 5%1H 2016 $1.1 Billion 4%

2016E* $2.2 Billion (Down 22%?)

*Expected 2016E numbers extrapolated from 1H 2016 investment in device. Assumed 2x 1H2016 investments.

Source: PricewaterhouseCoopers


Capital Flow Ratio 127% 368% 207% 189% 175% 149% 141%

HC $ Invested into Companies HC VC $ Fundraised Gap in Funding

2009 2010 2011 2012 2013 2014 20150

1

2

3

4

5

6

7

8

9

10

11$

Billi

ons

$7.5B

$10.5B

US Healthcare: Venture Dollars Invested and Raised

Source: PricewaterhouseCoopers, Thompson Reuters, and SVB proprietary data


Total Series A ($M) $1,107 $862 $1,843 $1,296

CVC Deals % / # 28% / 17 27% / 20 26% / 23 30% / 22

BIOPHARMA

DEVICE

Total Series A ($M) $227 $337 $92 $147CVC Deals % / # 18% / 7 14% / 6 22% / 4 6% / 2

Ophthalmology 3 deals (all Biopharma)

2 deals(1 each in Biopharma

and Device)

4 deals(2 each in

Biopharma and Device)

2 deals (all Biopharma)

US Venture Series A2013 2014 2015 2016

6075 87

74#

of D

eals

38 4218

35# o

f D

eals

Source: SVB proprietary data, VentureSource, Pitchbook. *Q3 data as of 08/31/2016.


Most Active* Venture Investors in Device (2015 – 2Q 2016) Most Active** Venture Investors in Biopharma (2015 – 3Q*

2016)

**Most active defined as top 61 investors based on new investments (duplicate investments removed)

Source: Pitchbook and SVB proprietary data.*Q3 data as of 08/31/2016. 196 deals analyzed.

# o

f Dea

ls

OrbiMed

Advisor

s

Pfizer

Ventur

e Inve

stmen

ts

New En

terpri

se Asso

ciates Novo

ARCH Ventur

e Part

ners

Frazie

r Hea

lthcar

e

Sofin

nova

Ventur

es

Novartis

Ventur

e Fun

ds

Celgen

e0

5

10

15

20

25

3027

1815 14 14

10 10 10 10


Oncolog

y

Orphan/Rare

Disease

Platfo

rm

Anti-Infe

ctive

Neurol

ogy

Metabolic

Auto-Im

mune

Cardiov

ascular

Gastroi

ntestin

al

Ophthalmolo

gy

Respira

tory

01020304050607080

45

17 14 17 12 7 4 5 4 4 3

10

3 3 1 5 1 1 1 1

12

3 4 3 22

Early Stage Late Stage Undesignated

72%

14%

14%

Early StageLate StageUndesignated

Most Active* Venture Investments in Device by Indication (2015-1H 2016) Most Active* Venture Investments in Biopharma by Indication

(2015 - 3Q 2016)


# o

f Dea

ls

: Oncology, Orphan / Rare : CardiovascularTrends:*Most active defined as top 61 investors based on new investments


7 5 4 3

Most Active* Venture Investors in Device (2015 – 2Q 2016) Most Active** Venture Investors in Device (2015 – 3Q* 2016)

**Most active defined as top investors based on new investments (duplicate investments removed)


# of Deals


0

5

10

15

20

25

30

35

40

45

17 18 17

610 8

3 4 61 4 2 4

7 86

54

4

24 2 1

43 5 1

15 9

4

12 4

102 5 5 3 5 2

2

Early Stage Late Stage Undesignated

Most Active* Venture Investments in Device by Indication (2015-1H 2016)

: NIM, Cardiovascular, Surgical : Asthetics / DermTrends:

# o

f Dea

lsMost Venture Investments in Device by Indication (2015 - 3Q 2016)

43%

24%

33%Early StageLate StageUndes-ignated



Top 15 Crossover Investors:Investments in Biopharma Decline Rapidly

2013 2014 Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016 Total

PRIVATE INVESTMENTS 15 68 27 46 68 22 16 13 275

MOST ACTIVE CROSSOVER INVESTORS 1H 2016

INVESTOR DEALS

Deerfield Management 7

Fidelity Investments 4

Cormorant Asset Management 4

Sectoral Asset Management 3

Top 15 Crossover Investors: Adage Capital Management, Casdin Capital, Cormorant Asset Management, Deerfield Management, EcoR1 Capital, Fidelity Investments, Foresite Capital Management, Jennison Associates, Perceptive Advisors, RA Capital Management, Redmile Group, Rock Springs Capital, Sectoral Asset Management, Wellington Management, Woodford Investment Management

Source: Pitchbook, press releases and SVB proprietary data.


2009 2010 2011 2012 2013 2014 2015 201602468

1012141618202224

$4.5 $4.1$6.6

$4.3 $5.4$8.0

$10.0$7.9

$0.9 $1.1

$1.0$1.8 $0.8

$1.0

$2.2

$2.4

$0.1 $1.5

$1.2$2.1

$8.8

$12.1

$11.6

$3.2

Big Exit Upfront Payments Big Exit Milestones to be Earned

Tota

l Val

ue ($

Billi

onis)

2016: Projected numbers will likely not keep pace with 2015

*Potential distribution calculated as 75% of Upfront Payments, 25% of Milestones, and 75% of Pre-Money IPO Value

Source: Pitchbook, VentureSource, press releases, discussions with life sciences professionals and SVB proprietary data.*Q3 data as of 08/31/2016.

Potential Distributions* From VC-Backed IPOs and M&A(2009 – Q3 2016)


VC-Backed Biopharma Exits by Quarter 2013 – 3Q 2016

Q1 Q2 Q3 Q4 Total

2013 IPO 3 10 13 8 34

M&A 3 3 3 3 12

2014 IPO 24 12 17 13 66

M&A 3 4 6 1 14

2015 IPO 11 12 9 10 42

M&A 7 4 6 4 21

2016 IPO 7 8 5 20

M&A 5 5 2 12

Source: Pitchbook, press releases, and SVB proprietary data.*Q3 data as of 08/31/2016.


2012 2013 2014 2015 20160

2

4

6

8

10

12

14

16

18

20

1 1

57

3

42

3

4

635

4

9

21 2

162

1

1

# o

f Big

Exi

tsVC-Backed Biopharma Exits by Stage since 2012

Source: Pitchbook, press releases, and SVB proprietary data. 2015 deals excludes one deal falling under the ‘Non-approved’ life stage category*Q3 data as of 08/31/2016.


Year 2012 2013 2014 2015 3Q 2016 Total

Pre-Clinical 1 1 9 9 3 23

Phase I 0 8 20 9 8 45

Phase II 3 13 26 17 2 61

Phase III 6 8 6 6 5 31

Dev Stage - Veterinarian 0 2 0 0 0 2

Commercial 0 2 5 1 2 9

Total 10 34 66 42 20

43% of early stage IPOs in 2015 were Pre-Clinical or Phase I

55% of early stage IPOs in1Q-3Q 2016 were Pre-Clinical or Phase I


VC-Backed Biopharma IPO’s by Stage (2012 – 3Q 2016)


VC-Backed Biopharma IPOs: Median Pre-Money and Dollars Raised (2012 – 3Q 2015)

2012 2013 2014 2015 3Q 2016 # of IPOs Raised Over $100MM 1 8 44 13 1 % of IPOs Raised over $100MM 10% 24% 67% 31% 5%

2012 2013 2014 2015 3Q 2016$0.0

$50.0

$100.0

$150.0

$200.0

$250.0

$61

$113

$91$126

$54

$202$182

$140

$193 $181

Median $ amount (millions)

Biopharma IPO $ Raised Biopharma Pre-money



2008 2009 2010 2011 2012 2013 2014 2015Q3

2016Upfront $: Median ($M) 200 200 148 190 125 213 225 200 133

Total Deal $: Median 285 403 325 338 375 452 413 580 600

VC-Backed Biopharma Private M&A since 2008

2008 2009 2010 2011 2012 2013 2014 2015 201602468

1012141618202224

3

11 1013 13

9 912

7

6

2 42 2

35

9

5

# o

f Big

Exi

ts



2011-Q3’16 Number of ExitsStage:

Pre-clinical / Phase I / II / III / Commercial

Median Years to Exit

Oncology 23 8 / 6 / 7 / 1 / 1 4.7

Neurology 14 4 / 1 / 5 / 1 / 3 4.2

Respiratory 8 - / 2 / 4 / 1 / 1 5.0

Aesthetics / Derm. 8 - / 2 / 4 / - / 2 3.2

Cardiovascular 7 1 / 2 / 1 / - / 3 5.9

Auto-Immune 5 2 / 2 / 1 / - / - 3.7

Anti-Infective 5 1 / 3 / 1 / - / - 5.6

Orphan / Rare 4 1 / 1 / 2 / - / - 1.4

Ophthalmology 3 - / - / 2 / 1 / - 4.1

VC-Backed Biopharma M&A >$50M since 2011

Pitchbook, Venture Source, press releases & SVB Proprietary Data.Median Multiple calculated at 85% of value divided by venture equity.*Q3 data as of 08/31/2016.


VC - Backed Device M&A >$50MVC-Backed Biopharma M&A >$50M

2011-Q3’16Median $ Invested

($M)

Median $ Up-Front($M)

Median $ Up-Front

Multiple* on VC$

Median $ Total Deal ($M)

Median Total Deal Multiple*

on VC$

Oncology $41.0 $225 5.8x $600 10.6x

Neurology $50.4 $183 3.0x $555 7.2x

Respiratory $35.6 $147 3.5x $453 6.1x

Aesthetics / Derm. $27.7 $90 3.2x $320 12.7x

Cardiovascular $63.0 $200 4.4x $700 24.6x

Auto-Immune $27.0 $225 3.5x $325 10.2x

Anti-Infective $40.0 $325 9.4x $464 9.4x

Orphan / Rare $43.0 $128 2.9x $253 6.6x

Ophthalmology $42.0 $160 1.9x $300 6.8x

Pitchbook, Venture Source, press releases & SVB Proprietary Data.Median Multiple calculated at 85% of value divided by venture equity.*Q3 data as of 08/31/2016.


VC-Backed Device Exits by Quarter 2013 – 3Q 2016

• Since Q2 ‘15, there have been at least 3 or more M&A device big exits every quarter

Q1 Q2 Q3 Q4 Total

2013 IPO 0 0 0 2 2 M&A 1 2 6 2 122014 IPO 1 5 1 3 10

M&A 2 9 5 2 182015 IPO 3 4 3 1 11

M&A 0 4 9 4 172016 IPO 0 0 0 0

M&A 5 4 3 12



VC-Backed Device Exits by Stage (2012 – 3Q 2016)

Source: Press releases and SVB proprietary data. 2014 data for big exits excludes one Canada Commercial deal.*Q3 data as of 08/31/2016.

Non-Approved CE Mark U.S. Commercial

Represents # of IPOs Represents Big Exits

2012 2013 2014 2015 20160

2

4

6

8

10

12

14

16

18

31 1

52

3

31

6

3

8

815

6

7

# o

f Big

Exi

ts

1 2

7

1

2

8

1

2


VC-Backed Device Exits by Indication (2012 – 3Q 2016)

Source: Press releases and SVB proprietary data.*Q3 data as of 08/31/2016.

Cardiov

ascula

r

Surgi

cal

Vascula

r Acce

ss

Orthop

edic

Ophtha

lmolo

gy

Neurol

ogy

Respira

tory

Gastroi

ntestin

al

Oncolog

y02468

1012141618

61 1 2 1

4

2 3 3 31

7

10 7

82

21 1

# of deals

Non-Approved CE Mark U.S. Commercial


2011-Q3’16 Number of Exits Stage:Dev/CE/US

Median Years to Exit

Cardiovascular 19 6/6/7 6.3

Surgical 18 1/2/15 7.2

Vascular 15 1/4/10 6.4

Orthopedics 9 0/0/9 9.2

Ophthalmology 7 2/3/2 8.2

Neuro 5 2/3/0 5.6

Imaging 4 0/0/4 11.0

Aesthetics 4 0/0/4 4.0

VC-Backed Device M&A >$50M

Pitchbook, Venture Source & SVB Proprietary Data.Median Multiple calculated at 85% of value divided by venture equity.*Q3 data as of 08/31/2016.


VC - Backed Device M&A >$50MVC-Backed Device M&A >$50M

2011-Q3’16Median $ Invested

($M)

Median $ Up-Front($M)

Median $ Up-Front

Multiple* on VC$

Median $ Total Deal ($M)

Median Total Deal Multiple*

on VC$

Cardiovascular $36.5 $124 2.6x $250 5.7x

Surgical $36.3 $117 3.4x $180 3.7x

Vascular $33.5 $135 3.2x $220 7.3x

Orthopedics $53.1 $120 1.8x $130 2.1x

Ophthalmology $61.8 $240 2.7x $400 4.8x

Neuro $42.0 $175 2.6x $200 2.6x

Imaging $68.2 $111 1.3x $111 1.3x

Aesthetics $6.5 $338 14.5x $338 14.5x

Pitchbook, Venture Source & SVB Proprietary Data.Median Multiple calculated at 85% of value divided by venture equity.*Q3 data as of 08/31/2016.


Ophthalmology #4 Indication in Device and Biopharma Exits since 2013

Source: CB Insights, PitchBook, press releases and SVB proprietary data*Through August 31, 2016

In venture-backed Big Exit M&A and IPOs, Ophthalmology is in the top 5 in IPOs and M&AOverall (M&A + IPO), Ophthalmology is the #4 indication with 21 exits

VC-backed Big Exit M&A and IPO by Indication 2013 – 3Q* 2016

IPO Big Exit M&AOncology 36 Cardiovascular

18Neurology 24 Oncology

15Orphan/Rare 16 Neurology 12Anti-Infective 12 Ophthalmology 10Ophthalmology 11 Surgical 10Cardiovascular 11 Vascular 10


Most Active* Venture Investors in Device (2015 – 2Q 2016) Predictions in 2016 into 2017

• Investment into venture backed healthcare companies will be close to record 2016 numbers, with Biotech leading the charge.

• Fundraising down in 2016, but significant fundraising from 2014-15 means that healthcare venture industry is well funded.

• Series A investment is up in all sectors.

• Biotech M&A and IPOs continue to be early stage, though M&A numbers and up front dollars are slightly down.

• Device M&A numbers continue to be remarkably consistent.

• IPOs Market Stays Open in Biotech but Not at 2015 Pace – Potential for some Device IPOs in Q4.

Thank you.


Health & Medicine

Private Funding Trends Presentation - SVB