Vital Signs Full Data Deck

8/3/2019 Vital Signs Full Data Deck

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The Crisis in Investment in U.S. Medical

Innovation and the Imperative of FDA Reform

Vital Signs

Survey Findings

October 2011

NVCA MedIC Vital Signs Report, October 2011

Confidential: Do Not Distribute Prior to October 6, 2011


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Table of Contents

Summary and Methodology

Survey Results

Demographics of Survey Respondents



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We must act now or lose our leadership position inmedical innovation, job creation

and access to life-saving treatments in the United States.

Decrease their investmentin biotechnology and medical devicestart-ups

Reduce their concentrationin critical therapeutic areas, and

Shift focus awayfrom the United States towards Europe andAsia

A 2011 study found that U.S. venture capitalists have been andwill continue to:

Summary

FDA regulatory challenges were identified as having the highestimpact on these investment decisions.

NVCA MedIC Vital Si ns Re ort October 2011


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Study Methodology

Online survey conducted JulySeptember 2011

Sent to 259 NVCA member firms investing in the healthcaresectors

156 firm responses = 60% response rate = 92% of NVCAinvested capital (2008-2010)

Survey respondents accounted for $10 billion of VCinvestment in healthcare companies in the past 3 years.



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Survey Results

Overall Investment Trends



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-50%

-25%

0%

25%

50%

Decreased Increased

39% of VC firms reported decreases in theirhealthcare investment in the past 3 years.

Past 3 Years - Change in Healthcare Investments

39%

17%

% of Respondents



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Nearly twice as many VC firms expect to decreasetheir healthcare investment in the next 3 years.

-50%

-25%

0%

25%

50%

Decrease Increase

Next 3 Years - Expected Change in Healthcare Investments

39%

21%

% of Respondents



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FDA regulatory challenges are having the greatestimpact on VC investment decisions.

*Unrelated to Regulatory Challenges

Factors Cited as Having the Highest Impact on VC Investment

% of Respondents

RegulatoryChallenges

(FDA)

FinancialMarkets /

Availability ofCapital to Invest

CapitalRequirements

ClinicalTrial

Issues*

Firm / LPChanges orRequests

Lack of TaxIncentives

ReimbursementConcerns



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VC investment in Biopharma and Medical Devicesis expected to continue to suffer.

40%

15%

42%

24%

21%

30%

9%

26%

9%

42%

8%

54%

-60%

-40%

-20%

0%

20%

40%

60%

80%

Next 3 Years - Expected Change in Investments in Healthcare Sectors

% of Respondents

Biopharma Diagnostics Life ScienceTools /

Equipment

HealthcareServices /Consumer

Health

HealthcareIT

MedicalDevices

Increase Decrease

High FDA Regulation Low FDA Regulation



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Survey Results

Therapeutic Area Trends



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Significantdecrease in VC investments expected inhighly prevalent diseases.

Source: CDC; NIH; American Heart Association; American Diabetes Association; Surgeon General; American Academy ofNeurology; American Lung Association; US Health & Human Services; National Cancer Institute

35%

33%

26%

36%

36%

38%

39%

53%

54%

60%

0% 20% 40% 60% 80% 100%

Next 3 Years - Investments in Therapeutic Areas Expected to Change

% of Respondents [Expected Decrease]

Diabetes /Endocrinology

Obesity / MetabolicDisease

CardiovascularDisease

Prevalence(millions)

Psychiatry /Psychology

Obstetrics /Gynecology

Bone Disorders

Respiratory /Pulmonology

GastrointestinalDisorders

Neurology

Cancer


>50

23

72

12

12

7

30

6

35

>60


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Orphan Diseases is one of few therapeutic areas inwhich VC firms are expected to increase investment.

* In U.S., orphan or rare diseases is defined as a disease or condition that affects less than 200,000 people. ** Office / Hospital visits.Source: CDC; NIH; American Academy of Dermatology; American College of Rheumatology; WHO; National Sleep Foundation.

46%

31%

23%

21%

21%

10%

28%

0% 20% 40% 60% 80% 100%

Next 3 Years - Investments in Therapeutic Areas Expected to Change

% of Respondents [Expected Decrease/Increase]

Dental

Immunology

Sleep Disorders

Prevalence(millions)

40

>100

23

50

>100

>28**


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Survey Results

Global Investment Trends



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Today, 42% of VC firms surveyed invest in healthcarecompanies outside the U.S.

15

Current Investment in Life Sciences Companies Outside U.S.

% of Respondents

42%

58%



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VCs expect to decrease healthcare investment inthe U.S. in favor of Asia and Europe.

31%

13%

0%

44%

7%

36%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Next 3 Years - Expected Change in Healthcare Investment by Region

% of Respondents

Asia /

Pacific

EuropeNorth

America

Increase Decrease



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VC-backed companies are expected to increaseoperations outside the U.S.

80%

86%

85%

0% 20% 40% 60% 80% 100%

Next 3 Years - Likelihood of Portfolio Company Decisions to ShiftOutside of U.S.

% of Respondents

CommercializeProducts Outside the

U.S. First

Set Up AdditionalCompany Operations

Outside the U.S.

Seek RegulatoryApproval Outside

the U.S. First

Increased Likelihood



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Survey Results

The Need for Reform



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Meaningful FDA reform is critical to reversingthese trends.

Expected Impact on Investments from Changes at FDA

% of Respondents

58% 25%

64% 22%

68% 17%

69% 17%

71% 14%

0% 20% 40% 60% 80% 100%

Increased Efficiency /Speed with Decisions

Rebalancing Risk /Benefit Requirements

Increased Predictabilityof Decisions

High Impact Moderate Impact

Expanded AcceleratedApproval Pathways

Improved Transparencyof Communication



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Implications

Many promising medical therapies and technologies willnot be funded and therefore will not reach the patients that

need them.

Those that are funded may not be brought to market in theUnited States first, or at all.

An estimated funding loss of half a billion dollars over thenext three years will cost America jobs at a time when wedesperately need employment growth.

The U.S. leadership position in medical innovation will beplaced in further danger and economic growth with suffer.

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If the current situation is left unaddressed, the implications toU.S. patients and the economy are significant:


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Call To Action

Rebalancing benefit-risk assessments in the drug and deviceapproval processes to appropriately reflect the value of newtherapies to patients in need;

Expanding the accelerated approval pathway into a progressiveapproval system for drugs, diagnostics and medical devices;

Ensuring conflict-of-interest policies are not hindering patientaccess to new treatments; and

Ensuring FDA is well resourced and endowed with state-of-the-artscientific tools, clinical input, processes and procedures

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MedIC priorities include the following:


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Survey Respondent Demographics



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13%

19%

17%

19%

19%

13%

Survey respondents represent cross-sectionof VC firms by capital under management

Total Committed Capital Under Management

% of Respondents



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VC firms surveyed nearly even by sector focus:life sciences only vs. diversified firms

Sector Focus

% of Respondents

42%

58%



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Majority of firms are private VC partnerships

Type of Firm

% of Respondents

6%

86%

8%



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Most VC firms surveyed have between 10-29 activeportfolio companies in healthcare

10%

29%7%

19%

5%

Number of Active Portfolio Companies in Healthcare

% of Respondents

29%



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VC firms surveyed allocate most of their capital toBiopharma and Medical Devices

Average Allocation of Capital Within Healthcare

% of Respondents

4%

10%32%

11%

3%29%

11%

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