Swiss Biotechnology Venture Capital

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Ethan Waters
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1 TINSSA Swiss Biotechnology Venture Capital Patrik Frei Johannesburg, October 2005

2 Agenda Venture Valuation Valuation Swiss Biotechnology Venture Capital in Switzerland

3 Venture Valuation Valuation Services Independent, third party Valuations Experts Finance / Industry Not a venture capitalist International experience (North America, Europe and Israel) Systematic / Validated Approach Track record of over 90 valued companies

4 Why Valuations? Multiple purposes Buy or sale (acquisition) or merger Extraction of key value drivers Needed for investment Basis for investment negotiations 0.5 m 25% 1.5 m 75% Pre-money value Investment

5 Price # Value Value: implies the inherent worth of a specific thing Price: depending on the market (supply / demand); whatever somebody is prepared to pay Price is what you pay. Value is what you get. By Warren Buffett

6 Valuation Issues Complex technology and IP situations Illiquidity of unquoted companies Long investment cycle Traditional valuation methods unsuited Industry lacks transparency Risk / Return

Factors to influence value Soft factors are essential... Management Market Science & Technology Qualitative Analysis (Softfactors) Management Market Science & Technology.

7 Factors to influence value Soft factors are essential... Management Market Science & Technology Qualitative Analysis (Softfactors) Management Market Science & Technology... and the company/product stage discount rate Cash Flow Adjustment Value Added Liquidity Premium systematic risk premium risk free base rate Company Stage Risk Analysis Seed Start-up First Stage Expansion Stage IPO Valuation Quantitative Analysis to define the risk profile of company

8 Biotechgate: a European Biotech Database A European Biotech ( database, fed by country Databases

9 Biotechnology in selected EU countries Overview of some key figures Biotech Industry Overview Biotech Companies Austria 61 France 210 Italy 198 Switzerland 294 Core Biotech Companies New Comp. ( ) University spin-off 66% 81% 52% 59% Up to 20 employee 58% 62% 58% 52% # of clinical products Comments: Based on information available on

10 Biotechnology in Switzerland Biotech Industry In Switzerland Swiss Biotech Companies ((year founded) Breakdown by Main Categories H Biotechnology Biotechnology Biotechnology Instrumentation & Services Biotechnology related related Source: Comments: Total 81 foundations between

11 Biotechnology in Switzerland Biotech Industry In Switzerland Swiss Biotech Companies - Breakdown by Subcategories Genomics and Proteomics 6% Therapeutics 8% Diagnostics and Analytical Services 16% Bioinformatics and Bioelectronics 2% Contract Research and Manufacturing 12% Other Services and Suppliers 14% Drug Delivery 3% Pharmaceuticals and Chemicals 6% Environment, AgroBio, Food 16% Reagents and Compounds 17% Source: Comments: Based on the categorization of Swiss Life Sciences Database; Total of 288 companies.

12 Medtech in Switzerland Medtech Industry In Switzerland Swiss Medtech Companies - Breakdown by Subcategories Other: 8% Anaesthetic and respiratory devices: 2% Active implantable devices: 5% Technical aids for disabled persons: 12% Single use devices: 11% Diagnostic and Dental devices: therapeutic 7% radiation devices: 3% Reusable instruments: 13% Ophthalmic and optical devices: 5% Electro mechanical medical devices: 12% Hospital Hardware: 7% In vitro diagnostic devices: 4% Non-active implantable devices: 11% Source: Comments: Based on the categorization of Swiss Life Sciences Database; Total of 327 companies.

13 Medtech in Switzerland Medtech Industry In Switzerland Swiss Medtech Companies (year founded) Source: w w w.sw isslifesciences.com Comments: Based on the categorization of Swiss Life Sciences Database; Total of 64 companies.

14 Medtech in Switzerland Medtech Industry In Switzerland Source of Foundation of Medtech Companies Merger 14% Company Spinoff 14% Subsidiary 34% MBO 7% University Spinoff 31% Source: Comments: Based on the categorization of Swiss Life Sciences Database; Total of 29 companies.

15 Swiss Biotech and clusters

16 SPI industry breakdown 2005 Breakdown as of September 2005 Cyclicals Goods & Services 3.9% Chemicals 3.3% Industrial Goods & Services Other 7.0% 6.3% > USD 240 bn Insurances 7.6% Healthcare 33.9% Food & Beverage 16.8% Banks 21.4% Source: SWX Swiss Exchange

17 Major European exchanges Market Cap. of Healthcare Companies 250' ' ' '000 50'000 (Approximated by DJ STOXX TMI Companies applying ICB classification) 0 EUR m. SWX Group London Euronext Deutsche Börse Copenhagen OMX (Stockholm & Helsinki) Spanish Exchanges (BME) Borsa Italiana Status: July 2005 Source: FESE

Financial centre Switzerland International investor base and leading position in cross-border private banking: Assets managed in Switzerland: CHF 3,459 bn* Proportion owned by foreign clients: 57%*

18 Financial centre Switzerland International investor base and leading position in cross-border private banking: Assets managed in Switzerland: CHF 3,459 bn* Proportion owned by foreign clients: 57%* Worldwide share of total assets managed abroad: 27%** One of Europe s leading financial centres for equity-investing institutions High placing power High visibility of listed companies Further advantages of location: High level of education Some of the most liberal labour laws in the world Very favourable tax law (private and corporate) Political stability * Source: Eidg. Finanzdepartement EFD, 2005 / ** Source: Geld, Bank- und Finanzmarkt- Lexika der Schweiz, 2002

19 Relocation - preferred headquarters location Switzerland is the most attractive place for global/regional headquarters location Growth of headquarters transfers to Switzerland as % of total number of transfers 70% 60% 50% 40% 30% 20% 10% 0% Destination of global headquarters that moved outside their country of origin as % of all global headquartes that moved 80% 60% 40% 20% 0% CH UK B NL D F Source: Arthur D. Little

20 Recent Exits stories IPO of Arpida (market cap. EUR 190 m) Sale of Glycard to Roche (EUR 160 m) IPO of Speedel (market cap. EUR 600 m) IPO of Ypsomed (market cap. EUR m)

Venture Capital Funds Adamant Biomedical www.adamantinvest.com Aravis www.aravis.ch Aventic AG www.aventic.com BB Biotech Ventures www.bbbiotechventures.com HBM Partners AG www.

21 Venture Capital Funds Adamant Biomedical Aravis Aventic AG BB Biotech Ventures HBM Partners AG Global Life Science Nextech Venture Ltd. New Venturetec Novartis Venture Fund

22 Thank you Slides available on your valuation expert...and how do you value your projects?

Biotech / Life Science Sector

Trends in the Canadian and UK Biotech / Life Science Sector Dr. Patrik Frei December 2012 London Venture Valuation Mission Independent assessment and valuation of technology driven companies / products