Life Sciences Outlook 2012 Dutch biotech companies ... - NautaDutilh

2. Investing.
At the point that a scientific discovery or an innovative
idea has been nurtured sufficiently to reach the ‘proof
of concept’ stage, and once a business plan has
been written, a management team assembled and
some initial funding secured, the young company has
in fact only taken its first baby steps. In an age where
the development of a new drug can easily take ten
years and can cost upwards of €1 billion, what lies
ahead is the long march through the proverbial ‘valley
of death’. Many promising biotech companies that
have set out on this journey have not survived, due to
a lack of intermediate funding. The bad news is that
the climate is becoming even harsher than before.
Separating the wheat from the chaff
To find out which biotech start-ups even stand a
chance, we asked respondents what the main criteria
are for venture capital investors when deciding
whether or not to invest in a company (see Figure 2).
There seem to be two ‘schools’ of thought on
investing in biotech. “Do you invest in the science,
or do you invest in the team? That’s a fundamental
difference,” is the way a banker puts it. The former
is seen as ‘European’ (and ranks first in our survey),
the latter as ‘American’. The first school focuses
on the innovative idea on which the business case
rests. Assuming that this idea is novel and promising
enough, and the IP is well protected, the rest follows:
“Above all else we look for breakthrough science.
Figure 2. What are the determining factors for investors when considering
whether to invest in Dutch biotech companies?
Clarity of the business case
Trust in management
Patented technology
Stage reached by the company in the
development pipeline
Clear exit strategy and horizon
Therapeutic or technological field of activity
Number of products in the pipeline
Governmental incentives
Stable regulatory environment
2
6
4
6 3
4
0 20 40 60 80 100 120 140 160
Weighted scores
114
51 46
28
42 34 4
21 36
13
21
8
18
16
28
10
Life Sciences Outlook 2012 Dutch biotech companies: from start-up to exit
■ Most important ■ Important ■ Also Important
19