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US-Swedish Life Science Relations: Context SettingSwedish-American Life Science SummitStockholm, Sweden
21 August 2008
Beyond Borders2
Financing by type
0
5
10
15
20
25
30
35
40
45
2000 2001 2002 2003 2004 2005 2006 2007 2008 H1
US
$b
Venture IPOs Follow-on and other
Global financing reaches second-highest total on record
Source: Ernst & Young, BioCentury, BioWorld and VentureOne
Beyond Borders3
Financing by geography
0
5
10
15
20
25
30
35
40
45
2000 2001 2002 2003 2004 2005 2006 2007 2008 H1
US
$b
US Europe Canada
Global financing reaches second-highest total on record
Source: Ernst & Young, BioCentury, BioWorld and VentureOne
Beyond Borders4
US financing: regional distribution
Capital raised by leading US regions in 2007
Beyond Borders5
European financing: regional distribution
Capital raised by major European countries in 2007
Beyond Borders6
Behind the numbers: shrinking IPO returns
More money in …
Source: Ernst & Young analysis of company financial statements
0
20
40
60
80
100
120
140
1997 Recovery(2002-2003)
"End of windows"(2004-2007)
US
$mAvg pre-IPO investment
Beyond Borders7
Behind the numbers: shrinking IPO returns
More money in … and relatively less money out
Source: Ernst & Young analysis of company financial statements
0
20
40
60
80
100
120
140
1997 Recovery(2002-2003)
"End of windows"(2004-2007)
US
$mAvg pre-IPO investment Avg pre-money preferred stock
valuation at IPO
Beyond Borders8
Behind the numbers: shrinking IPO returns
More money in … and relatively less money out
Source: Ernst & Young analysis of company financial statements
0
20
40
60
80
100
120
140
1997 Recovery(2002-2003)
"End of windows"(2004-2007)
US
$mAvg pre-IPO investment Avg pre-money preferred stock
valuation at IPO
2.16x
1.60x 1.55x
Beyond Borders9
Behind the numbers: the valuation gap
Company Acquirer Value (US$ million)
Agensys Astellas 537
Adnexus BMS 505
Rinat Pfizer 478
Domantis GSK 454
Illypsa Amgen 420
Glycofi Merck 400
Avidia Amgen 380
Illumigen Cubist 341
Alantos Amgen 300
Average value of “IPO-ready” company acquisitions: $425 millionAverage pre-money IPO valuation: $150-160 million
Selected acquisitions of private “IPO ready” companies, 2006-2007
Source: Ernst & Young
Beyond Borders10
Uncertain public equity markets
IPO only16%
IPO only16%
Dual tracking45%
Dual tracking27%
M&A only40%
M&A only57%
0%
20%
40%
60%
80%
100%
US Europe
Most companies are planning on M&As or dual tracking for exits …
Source: Ernst & Young company survey. Chart does not include companies not planning exits, or planning exits other than IPOs or M&As.
Beyond Borders11
Uncertain public equity markets
24 months39% 24 months
32%
36 months52% 36 months
62%
12 months 6%12 months 9%0%
20%
40%
60%
80%
100%
US Europe
… and those considering IPOs don’t expect the markets improve soon
Source: Ernst & Young company survey. Chart only shows companies that are planning IPOs.
Beyond Borders12
US deals: mergers and acquisitions
0
5
10
15
20
25
30
35
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 H1
US
$b
Pharma-biotech mega deals Pharma-biotech Biotech-biotech Biotech-biotech mega deals
Record-breaking M&As, led by a mega deal
Source: Ernst & Young, BioWorld, Recombinant Capital and Windhover
Beyond Borders13
US deals: mergers and acquisitions adjusted for mega deals
0
5
10
15
20
25
30
35
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 H1
US
$b
Pharma-biotech Biotech-biotech
Record-breaking M&As, led by a mega deal
Source: Ernst & Young, BioWorld, Recombinant Capital and Windhover
Beyond Borders14
European deals: mergers and acquisitions
0
2
4
6
8
10
12
14
16
2005 2006 2007 2008 H1
€b
Biotech-biotech Pharma-biotech Pharma-biotech mega deals
European M&A values scale historic heights
Source: Ernst & Young, Windhover, BioWorld, Recombinant Capital and company news (through Newsanalyzer)
Beyond Borders15
US deals: alliances
0
5
10
15
20
25
30
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 H1
US
$b
Pharma-biotech Biotech-biotech
Strategic alliances boomed in 2007
Source: Ernst & Young, BioWorld, Recombinant Capital and Windhover
Beyond Borders16
European deals: alliances
0
2
4
6
8
10
12
2005 2006 2007 2008 H1
€b
Biotech-biotech Pharma-biotech
European alliances show strong growth
Source: Ernst & Young, Windhover, BioWorld, Recombinant Capital and company news (through Newsanalyzer)
Beyond Borders17
European deals: alliances by country
0
1
2
3
4
UK Belgium Switzer-land
Germany Denmark Austria France Sweden Nether-lands
Biotech-biotech Pharma-biotech
European alliances by country, 2007
Source: Ernst & Young, Windhover, BioWorld, Recombinant Capital and company news (through Newsanalyzer)
0
10
20
30
40
50
60
70
80
90
Number of alliances
Value (€b) Number of alliances