Financing Marine Biotech Projects - what s the attraction? October 2016

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Gilbert Robinson
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1 Financing Marine Biotech Projects - what s the attraction? October 2016 How do early stage investors think? Øivind Enger, Sarsia Seed Management

companies 14 of 22 companies still very active Procured 150m Potential

2 Sarsia Seed Fund I Life Sciences and Energy Established in 2006 with horizon until 2018 (2021) 500+ companies evaluated Invested 30m in 22 companies 14 of 22 companies still very active Procured 150m Potential proceeds of 200m 100m procured 13 Life Science companies (bio/farma/ medtech/dx) 2

3 Return Risk Stages of Growth for an Entrepreneurial Company Size and expected return for investors Start-up / Seed Early Expansion Expansion Stage Later Stage +30x TTO-Univ.- FF Angel Investors / IP 10x Venture Funds / Industry 5x Private Equity / Buy-Out Funds 2x IPO Equity Markets Credit Line / Commercial Banks Avg. raising 0,1k 0,2k 0,3k 0,5k 1m 2m 3m 10m 15m 40m 100m Grønn Kapital

4 What are early phase investors looking for? Technology Founded in good science Something new or much better Protectable (IPR) Team, management, founders Must know their technology Experience from industry, sale Trustworthy Coachable, ability to handle change Market Ability to grow big fast Big and growing market Scalability Unicorn potential Business model and Return on Investment Scalable businessmodel Low risk / Low retun (2x 0,7 probability of success) Medium risk / medium risk (5x 0,3 probability of success) High risk/ high return (10x 0,1 probability of success) Sarsia Seed Management

5 What are early phase investors looking for? Technology Founded in good science Something new or much better Protectable (IPR) Team, management, founders Must know their technology Experience from industry, sale Trustworthy Coachable, ability to handle change Market Ability to grow big fast Big and growing market Scalability Unicorn potential Business model and Return on Investment Scalable businessmodel Low risk / Low retun (2x 0,7 probability of success) Medium risk / medium risk (5x 0,3 probability of success) High risk/ high return (10x 0,1 probability of success) Sarsia Seed Management

6 Historically, early phase also means very high risk Probability of success = 0,1 9 ot of 10 will fail 6

7 Asymmetrical Risk Distribution X 2 mill -> 25 mill 7

Typical scenario I A research group has found 1-3 «marine» enzymes that may be of interest to industry - no company established - TTO plans for lisence

8 Typical scenario I A research group has found 1-3 «marine» enzymes that may be of interest to industry - no company established - TTO plans for lisence approach - market size unknown - no substantial industrial interest can be documented - difficult IPR situation due to unknown industrial application 8

of money for construction of expencive production facility - don t know exactely what the

9 Typical scenario II A company has been established to grow microalgae and cyanobacteria for production of high value fine chemicals - production-based not technology based - needs a lot of money for construction of expencive production facility - don t know exactely what the products will be - don t know who is going to buy the product - don t know the size of the market 9

Typical scenario III A new company has been established on the basis of identification of a marine bacterium with interesting antibacterial properties

10 Typical scenario III A new company has been established on the basis of identification of a marine bacterium with interesting antibacterial properties against eg. MRSA - active molecule not identified - active molecule probably not a protein - bacterial production not upscaled - no IP since compound is unknown 10

11 What we like to see? Companies based on technologies coming out of consortia between industry and research produts to serve great unmet industrial need confirmed by the industrial contribution - industry delivers problems and substrates - research isolates, characerizes and clones enzymes - research applies substrates from industry - industry contributes with partial funding - soft money available provided venture/seed -funding 11

Example W oods of Norway The Norwegian University of Life Sciences University of

to ofserve biology great unmet industrial need University of Bergen, - industry

Sintef Materialer og kjemi University of Tromsø, NorStruct, Borregaard AS

industry contributes with partial funding - soft money available provided

12 Example W oods of Norway The Norwegian University of Life Sciences University of Bergen produts Bergen, Dept. to ofserve biology great unmet industrial need University of Bergen, - industry Uni Research, delivers Centre for Applied problems Biotechnology and substrates Sintef Materialer og kjemi University of Tromsø, NorStruct, Borregaard AS Biomega AS Norilia Alkymar - research applies substrates from industry - industry contributes with partial funding - soft money available provided venture-funding Enzyme development for Norwegian biomass - mining Norwegian biodiversity for seizing Norwegian opportunities in the bio-based economy 12

13 What we like to see? Companies with technological solutions to solve major problems in high volume food production sustainable non-antibiotic disease and pest control - increased shelf life - better exploitation of residual raw materials 13

14 Examples (outcome from NorZymeD) Use of enzymes from marine microorganisms for hydrolysis of fish residual raw materials into peptides which are palatably suitable for human consumption 14

Kilograms Metric tons Example Salmon production Antibiotics 6,5 b W oods of Norway produts to serve great unmet industrial need - industry delivers

15 Kilograms Metric tons Example Salmon production Antibiotics 6,5 b W oods of Norway produts to serve great unmet industrial need - industry delivers problems and substrates - research applies substrates from industry - industry contributes with partial funding - soft money available provided venture-funding 15

Example W oods of Norway Fish vaccines are always based on biotechnologically manipulated marine pathogenic microorganisms - whole cells/viruses - surface proteins - DNA produts to serve great unmet

16 Example W oods of Norway Fish vaccines are always based on biotechnologically manipulated marine pathogenic microorganisms - whole cells/viruses - surface proteins - DNA produts to serve great unmet industrial need - industry delivers problems and substrates - research applies substrates from industry - industry contributes with partial funding - soft money available provided venture-funding 16

17 What we like to see? Companies with characterized molecules (small molecules or macromolecules) with proven therapeutic activity in animal models major medical indications (infection, cancer, metabolic syndrome) - orphan indications - molecules with chaperon activity 17

18 Sarsia s marine biotech portfolio Marine spermine for treatment of psoriasis Formulated feed for shrimp larvae Salmon heparin for application as anticoagulant in human medicine Magic ingredient in fish feed pellets allowing addition of water to achieve moist feed properties Water- soluble Omega-3 18

19 Sarsia s marine biotech portfolio Marine spermine for treatment of psoriasis Formulated feed for shrimp larvae Salmon heparin for application as anticoagulant in human medicine Magic ingredient in fish feed pellets allowing addition of water to achieve moist feed properties Water- soluble Omega-3 19

20 Sarsia s marine biotech portfolio Marine spermine for treatment of psoriasis Formulated feed for shrimp larvae Salmon heparin for application as anticoagulant in human medicine Magic ingredient in fish feed pellets allowing addition of water to achieve moist feed properties Water- soluble Omega-3 20

as anticoagulant in human medicine Magic ingredient in fish feed pellets

21 Sarsia s marine biotech portfolio Marine spermine for treatment of psoriasis Formulated feed for shrimp larvae Salmon heparin for application as anticoagulant in human medicine Magic ingredient in fish feed pellets allowing addition of water to achieve moist feed properties Water- soluble Omega-3 21

Development of a value chain from microalgae to aquafeed

Development of a value chain from microalgae to aquafeed NO DK Workshop, Kalundborg 26-27 Nov 2014 Hans Kleivdal Research Head, Uni Research Adj Prof, Univ of Bergen Uni Research Centre for Applied Biotechnology