Category Archives: VC-backed Biotech Returns

There are lots of myths about venture capital and biotech in particular, as noted previously on this blog.  Many of these myths are deeply held beliefs about returns, what works and what doesn’t, and the state of the industry.  Told

Biotech just takes too long, especially when compared to the overnight success of technology ventures, or so the oft-cited criticism of venture-backed biotech’s perceived longer holding period goes. Despite being a well-accepted belief  held by most venture professionals, LP’s, and

Personalized medicine and diagnostics are undoubtedly critical to the delivery of better healthcare in the future: getting the right drug to the right patient at the right time.  In theory, these therapy-guiding diagnostics should reduce the cost of healthcare while

Several preclinical-stage biotechs have opted for the early Pharma structured buyout as their exit path in recent weeks: Resolve Therapeutics with Takeda, Zacharon with Biomarin, RQx Pharma with Genentech, and Lotus Tissue Repair with Shire. Here are the quick takes

The numbers are in on the 2012 Pharma/Biotech M&A performance, at least according to our friends at HBM Partners.  They’ve released another well-annotated deal report and database. The quick summary from a venture-backed biotech perspective: it was a good year

The recycling of equity capital through realized returns is a critically important element of biotech investing.  When public biotech companies get bought, like Genentech by Roche, or smaller deals like Cougar by J&J, a large number of biotech-focused equity funds

Many venture-backed companies assume they can escape the gravity of historic valuation ranges, and an anecdotal few may accomplish the feat.  But figuring out how to live within its probabilistic reality is an important element of successful venture portfolio construction. A thesis

Much of the public dialogue about venture capital returns is based more on myth than fact, which reinforces inappropriately limited views of relative sector attractiveness, underlying risk profiles, and the “business models” that work in venture.  A big part of

Two recent offerings, Kythera and Intercept, both ripped out of the gates with 20% rallies above their offer price last week.  A flood of new S1 filings is to be expected.  With all that inventory out there of emerging private

Correlation Ventures, a new analytics-driven venture firm, just came out with some interesting data on US venture capital returns over the past decade. Instead of taking a “birth” vintage approach to returns, which is the way venture fund vintages and

Earnout deals are back in the news with an interesting report from Shareholder Representative Services, or SRS, a firm who specializes in working for the selling party’s shareholders to follow up post-acquisition to ensure that escrows are paid, diligence is

“Raise all the money you can whenever you can, and then raise some more”.  “The more a company raises, the more successful it is”.  Resumes boasting about how much an executive has raised in their prior companies.  These sentiments are

Three late stage oncology deals have made it through the IPO gauntlet in the past six months: Clovis Oncology in November 2011, Merrimack in March 2012, and just yesterday Tesaro.  Almost all came out of their offerings unscathed, unlike most

Time and again, life sciences VC deals have been outscoring their better-capitalized, super-hyped and oft-praised colleagues who do deals in the tech side of the asset class. – Jonathan Marino in a PE Hub Post titled “Quietly, VCs in Life

“We Have Met the Enemy… And He is Us” is the very fitting title of a recent report on the state of the VC market with a focus on the GP-LP relationship.  This thoughtful and thankfully analytical report highlights a

Twenty years ago the biotech world was in the midst of one of the best IPO windows in its history.  Nearly a hundred biotech companies went public from 1991-1994, including a number of the great companies that have become household

Over the past decade biotech investments made by diversified venture capital firms have outperformed those by healthcare-focused firms.  Its unclear why the difference exists, but the historical data suggest it’s a striking differential. Examining the NVCA Benchmarking Database powered by

Everyone has heard of the monster returns to some venture funds from high-flyng social media and technology companies: Facebook’s potential 800x for Accel, Google’s 350x for KPCB and Sequoia, Zynga’s 100x+ for Union Square, Foundry, and Avalon.  These single big

In recent years, acquisitions of early stage private biotechs have frequently included an upfront value coupled with significant future milestone payments. These earnouts resemble the “biobucks” common to product licensing deals: stretching out over 5-10 years, they get ravaged by

Today Celgene announced the acquisition of Avila Therapeutics for $350M upfront and up to $575M in future milestones.  Congratulations to the Avila team!  For those of us involved in the story, we certainly think Celgene’s got itself a great deal.

It’s certainly not Breaking News that M&A deals are an important source of liquidity in biotech VC today.  But last year did mark an important milestone for biotech over the past few years: in 2011, the capital returned to investors

Last week, late stage biotech Alimera blew up after the FDA sent it a Complete Response Letter (CRL) rejecting its Iluvien product for eye diseases.  The stock is off 80%.  This was supposed to be a derisked, late stage investment

The sky is falling.  The sky is falling.  Seems like every day there’s another piece of news about the drop in Life Science venture capital (and here), with bouts of flagellation around each new quarterly press release from NVCA/PwC MoneyTree, Dow

With lots of venture investors fleeing early stage biotech over the past few years, many have questioned where the next vintage of great startup companies will come from.  This theme was touched on a few weeks ago in my post

Our friends at HBM Partners just published their quarterly Biotech/Pharma M&A report.  Its got some good nuggets of data in it about 1H2011. Although its hard to think about in the midst of the Great August Rollercoaster in the markets,

A few weeks ago I wrote a pair of blogs comparing Tech vs Life Science venture capital backed investments: one was on returns in the 2000′s where LS beat out Tech investing (highlighting a Nature Biotech article Bijan Salehizadeh of Highland Capital

Note to Readers: This blog post was co-written by Bruce Booth and Bijan Salehizadeh, who co-authored an article in the July 2011 issue of Nature Biotechnology, detailing the differences in returns between Life Sciences and Tech investing. Most venture capitalists think that

I heard AVEO Pharmaceuticals’ CEO Tuan Ha-Ngoc speak at Convergence last month and decided AVEO would be a superb company to profile as a way to highlight the triad we all dream of in biotech venture investing: great science, great

We all recognize that realizing value from a biotech company has historically been geared to one of two paths, IPO or M&A, and that they’ve both been getting tougher.  There’s been a number of articles recently about some of the

Understanding the impact of different venture capital deal terms is not well appreciated by most Life Science entrepreneurs, especially in the early stage ecosystem.  Moreover, knowing what the “market rate” for these terms are is rarely data-driven and often more

Everyone knows that the biotech IPO market is and has been challenging.  But one of the most troubling developments, and the least transparent to the outside, has been the increased importance of significant insider participation to get IPO’s priced. In

Several recent stories from WSJ and VentureWire have highlighted the challenging performance of the IPO markets for biotech in 2011.  It has indeed been tough: more shares offered at lower prices = more painful dilution.  From a pricing perspective, the

Our friends at HBM Partners in Switzerland have just published their 2010 Biotech M&A Survey based on a reasonably large set of deals last year.  A few observations I’ve gleaned from their analysis: Acquisitions of VC-backed biotech companies were up

As my first post of real content, I thought I’d tackle the question of what are the actual return distributions of venture capital investments in biotech startups (e.g., how many losers, how many winners) to set some context.  And it