summit kick off with ophthalmology innovation cycle & financing update

SUMMIT KICK OFF WITH OPHTHALMOLOGY INNOVATION CYCLE & FINANCING UPDATE

William J. Link, PhDManaging DirectorVersant Ventures

Update--- Ophthalmic Innovation Cycle & Financial markets

OIS@ASCRS May 5, 2016

William J. Link, PhD

Managing Director

Versant Ventures

Welcome!!

• Thank you for your commitment to innovation in ophthalmology!!!

• Overview of the day….

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Innovation Cycle-Key Constituents

1. Inventor/entrepreneur/team

2. Clinician-early adopter

3. Financial Partner--Venture Capitalist, etc.

4. Industry leaders- commercial team

OIS@ASCRS 2016 Attendance ~ 500

Innovation Cycle-Key Constituents % Attendance

1. Inventor/entrepreneur/team ~35%

2. Clinician-early adopter ~15%

3. Financial Partner--Venture Capitalist, etc. ~ 5%

4. Industry leaders- commercial team ~25%

Note: Press, consultants, service providers ~ 20%

OIS….quite a journey

• Today is our 12th OIS meeting….

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• Inaugural OIS@AAO meeting 2009 in San Francisco– AAO has been a great partner

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Ophthalmology Innovation Summit – 2009Palace Hotel

San Francisco, California

OPHTHALMOLOGY INNOVATION SUMMIT Advisory Board

Emmett T. Cunningham, Jr. MD PartnerClarus Ventures

William Link, PhDManaging DirectorVersant Ventures

Anthony AdamisProfessor of Ophthalmology & Visual ScienceUniversity of Illinois

Mark S. Blumenkranz, MDProfessor & ChairmanDept. of OphthalmologyStanford University

Brook ByersPartnerKleiner Perkins Caufield & Byers

Eugene de Juan, Jr., MDFounder & Vice ChairmanForSight Labs, LLC

Angela McFarlanePresident & CEOForSight Labs, LLC

Lutz Giebel, PhDManaging PartnerSV Life Sciences

David Guyer, MDPartnerSV Life Sciences

Roman G. Rubio, MDMedical Director, OphthalmologyGenentech

Charles WardenManaging DirectorVersant Ventures

Gilbert Kliman, MDGeneral Partner, Life SciencesInterWest Partners

Samir Patel, MDPresident & CEOOphthoTech

Scott M. Whitcup, MDEVP, R&D, and Chief Scientific OfficerAllergan, Inc.




• Inaugural OIS@ASCRS meeting in 2012 in Chicago– ASCRS has been a great partner

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• Inaugural OIS@ASCRS meeting in 2012 in Chicago– ASCRS has been a great partner

• Inaugural OIS@ASRS meeting will be this year…August 8th in San Francisco– ASRS will be a great partner

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Innovation in Ophthalmology

• Innovation Cycle- review of the stages

• Principles of Innovation

• Constituents involved in (required for) innovation

• External environment—impact on innovation

17

Innovation Cycle – Surgical Ophthalmic Technologies

Observation &

InventionProduct Dev/Pre-Clinical

Iterate/ Refine

Human Proof of Concept

Iterate/ Refine

CE Mark/ OUS Market

Dev.

FDA Approval

U.S./Global Market Dev.

Source: Market Scope

Innovation Cycle – Surgical Ophthalmic Technologies

1 2 3 4 5 6 7 8 9 10 11 12

Observation/Invention

Years

Product Dev/Pre-Clinical Phase – 1-3 yrs

Human Proof of Concept – 1-3 yrs

FDA Approval / U.S. / Launch

Successful Global Commercialization

FDA Study - 1-2 yrs 510K, 4-6 yrs PMA

Refinement – 1-2 yrs

CE Mark/OUS Market Dev

Va

lue

Cre

ati

on

Lab Research

Pre-clinical In vitro

In vivo

Phase I Clinical Trials

Phase II Clinical Trials

Phase III Clinical Trials

FDA Approval

OUS Regulatory Approvals

Global Market Dev.

Innovation Cycle – Ophthalmic Pharma & Biopharma

Source: Market Scope

Innovation Cycle – Ophthalmic Pharma and Biopharma

1 2 3 4 5 6 7 8 9 10 11 12

Laboratory Research

Years

Pre-clinical In vitro & In vivo – 1-3 yrs

Phase I Clinical Trials – 1-3 yrs

OUS Approval

Global Commercialization

FDA Approval

Phase II Clinical Trials– 1-3 yrs

Phase III Clinical Trials 2-4 yrs

Va

lue

Cre

ati

on

22

Principles of Innovation

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• Focus on important issues (big markets)

24



• Seek the truth

25



• Seek the truth

• Be disciplined

26



• Seek the truth

• Be disciplined

• Try things-when in doubt….try it

27



• Seek the truth

• Be disciplined

• Try things-when in doubt….try it

• Be willing to fail

28



• Seek the truth

• Be disciplined

• Try things—when in doubt….try it


• Don’t be paralyzed by mistakes

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• Seek the truth

• Be disciplined




• Be skilled

30



• Seek the truth

• Be disciplined




• Be skilled

• Be aggressive and assertive, but not arrogant

31



• Seek the truth

• Be disciplined




• Be skilled

• Be aggressive and assertive, but not arrogant

• Professionalism pays off

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• Focus on important issues (big markets)• Seek the truth• Be disciplined• Try things—when in doubt….try it• Be willing to fail• Don’t be paralyzed by mistakes• Be skilled• Be aggressive and assertive, but not arrogant• Professionalism pays off

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Where Does Innovation Happen?

• Wherever the innovators are….and where the culture fosters innovation

• Corporate Culture of Innovation– Knows that innovation drives value

– Does not punish mistakes

– Knows it is NOT all about My ideas…others’ ideas have merit

– Balances internal with external innovation

– “Not invented here” attitude stifles innovation

Innovation Cycle-Key Contributors

1. Inventor/entrepreneur/team

2. Clinicians-early adopters

3. Financial Partners--Venture Capitalist, etc.

4. Industry leaders- commercial team

External Environment—Impact on Life Cycle

• Public Markets

• Venture Funding

• M&A Activities

• Outlook….

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Trends in HealthcareInvestments and Exits 2016Investor Confidence and Innovation Drive Healthcare Venture to New Heights

Written by

Jonathan NorrisManaging DirectorSilicon Valley BankM [email protected]@jonnysvb

Paul SchuberValuations AssociateSVB Analytics

Caitlin TolmanSenior AssociateSilicon Valley Bank

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2015: Another Banner Year for Healthcare

At the start of 2015, it was hard to imagine that we would have another year as successful as 2014. And yet, by most measures, 2015 came very close.

.

Despite the slowdown in Q4, the healthcare industry is poised for a strong 2016, though activity likely will not match 2015.

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3Q'15$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

$55

$60

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

$ B

illio

nsU.S. Healthcare Venture Investment Hits 15-Year High Healthcare as Percentage of Total Venture Investment

Venture investments in healthcare were projected to reach $9.4 billion in 2015, the highest level since 2000.

Biopharma venture investments reached a record $7 billion, and device remained steady at $2.4 billion .

$105

Total VC$ % Biopharma % Device

*Projected total for 2015Source: PricewaterhouseCoopers, Thomson Reuters and SVB proprietary dataThomson Reuters data includes life science and dx/tools in biopharma and device categories.

2015*

39

0

40

80

120

46 45 4517

# of

Dea

ls

Biopharma Series A Investment Dollars Surge while Device and Dx/Tools Struggle

Source: VentureSource, PitchBook, CB Insights and SVB proprietary data

2012 2013 2014 2015

0

40

80

12076

5981 97

# of

Dea

ls

Total Series A ($M) $776 $1,102 $823 $1,871

CVC Deals % / # 22% / 17 29% / 17 27% / 22 29% / 28

BIOPHARMA

0

40

80

120

35 34 3922

# of

Dea

ls

Total Series A ($M) $212 $215 $327 $96

CVC Deals % / # 9% / 3 18% / 6 15% / 6 32% / 7

DEVICE

Total Series A ($M) $331 $257 $354 $165

CVC Deals % / # 4% / 2 11% / 5 9% / 4 24% / 4

DX/TOOLS

U.S. Company Formation: Deals and Investments in Series A

40

Healthcare Venture Exits:M&A Climate Improves as IPOs Slow

41

2009 2010 2011 2012 2013 2014 20150.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

22.0

24.0

Tota

l Val

ue ($

Bill

ions

)2015 Sets Record for Healthcare Investment Returns

Pre-MoneyIPO Value ($B) $0.1 $1.8 $1.2 $2.1 $8.8 $12.1 $11.6

Big Exit Upfront

Payments ($B)$4.5 $4.1 $6.6 $4.3 $5.4 $8.0 $9.9

Big Exit Milestones

($B)$0.9 $1.1 $1.0 $1.8 $0.8 $1.0 $2.2

Pre-Money IPO Value

Big Exit Milestones to be Earned

Big Exit Upfront Payments

Source: Investment bank research, VentureSource press releases, CB Insights, and discussions with life science professionals

Potential Distributions from VC-Backed IPOs and Big Exit M&A 2009-15

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2016 Outlook: 2015 Will Be a Hard Act to Follow

As 2015 closed, we saw some decline in exit activity and investor interest that indicate things are slowing. Here are our predictions for 2016:

• The biopharma IPO window should remain open, but there will be fewer IPOs,

• M&A will continue on pace as acquirers seek biopharma companies to replenish their pipeline

• Device IPO activity will decline, M&A activity will likely remain stable. We believe this will lead to increased deal values and returns to investors.

• We anticipate continued acquisition flurries, similar to Q3 2015, as acquirers are pressured to innovate.

Innovation in Ophthalmology--Financial Outlook

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• Venture financing in healthcare has regained momentum…

44



• IPO activity picked up in 2013 and 2014….remained strong in 2015…will be more moderate in 2016

45




• M&A activity remains strong, but is impacted by industry changes/consolidation

46





• Relative Attractiveness of the Ophthalmic Sector is solid….

47





• Relative Attractiveness of the Ophthalmic Sector is solid….

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• Still immense unmet needs



• Innovation resources focused where they are rewarded




• Key Constituents….entrepreneurs; clinicians; VCs and Industry…..strong and more connected than ever





• Innovation in the ophthalmic sector is gaining, not losing momentum





• Innovation in the ophthalmic sector is gaining, not losing momentum

• Thanks to all who are committed….because when we do well, many people benefit!!

Thank you….