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FORESIGHT VALUATION GROUP
IP & STARTUP VALUATIONSIn Times of Crisis
Efrat Kasznik | August 25th, 2020
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ABOUT ME
Lecturer on IP Management at the Stanford GSB since 2011
Founder and President, Foresight Valuation Group, a Silicon-Valley based IP valuation, strategy and start-up advisory firm
Over 20 years of experience in IP Valuation and Strategy (consulting tocorporations, law firms, universities and startups, across industries)
Chair, High Tech Sector, Licensing Executives Society (LES) USA-Canada
Listed on IAM 300 list of Leading IP strategists (2013-2020)
Co-founder, CFO and adviser to startups, incubators and venture funds in the US, Israel, Europe and Asia.
Conference speaker and regular contributor to IP and business publications and blogs on topics related to IP and startup valuation.
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OUTLINE
Life Sciences Startup Valuations and Exits
Questions?
The Impact of COVID-19 of Life Sciences Startups
IP Rights in Life Sciences Startups
Key Takeaways
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Life Sciences Startup Valuations and Exits
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THE EQUITY FUNDING CYCLE
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THE US VC FUNDING IN 2019 = $133.4 BILLION
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22% OF VC FUNDING INVESTED IN LIFE SCIENCES IN 2019
Combined Life Sciences = $29.5 Billion
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HEALTHCARE LEADS IPO COUNT, TECH LEADS IPO $ RAISED
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LES LIFE SCIENCES ROYALTY AND DEAL STUDY (2018)
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LES SURVEY: 40% OF DEALS DONE IN THE EARLY STAGE
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LES SURVEY: DEAL VALUES BY TYPE OF PAYMENT
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LIFE SCIENCES STARTUPS: TRENDS IN FUNDING AND EXITS
Not as much access to VC capital, as a result … They tend to exit early at lower valuations
(more frequent but smaller IPOs)
Early stage acquisitions, or licensing deals, fill in the gap These deals rely heavily on technology transfer, facilitated
by IP rights Hence, the importance of IP for Life Sciences startups
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IP Rights in Life Sciences Startups
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Patents
Trademarks
MAPPING INTANGIBLE ASSETS TO IP RIGHTS
Copyrights
Trade Secrets
Data
Technology
Brand
Intangible AssetsIntellectual Property Rights
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US Unicorn Distribution by Industry (2015):Over 75% Software-Related, only 7.4% Healthcare
Source: Foresight Valuation Group LLC
Software
Consumer Internet
eCommerce
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US Unicorn IP Distribution Breakdown (2015):Over 60% Have Less Than 10 Patent Assets
Source: Foresight Valuation Group LLC
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IP v. Valuation Distribution by Industry (2015): Proportional Reliance on Patents Higher in Healthcare
Source: Foresight Valuation Group LLC
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TECH V. LIFE SCIENCES: STARTUP VALUATION COMPARISON
Metric Life Sciences Tech
Valuation Driver Developmental milestones
Revenue/User growth
Reliance on Patents High Low
Access to VC capital Limited Unlimited
Avg. IPO Value (2018) $120 mill $360 mill
PresenterPresentation NotesStart at 4:00
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The Impact of COVID-19 on Life Sciences Startups
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In 1H-2020 Life Sciences Startups See Spike in Super Rounds ($100 Million or Higher)
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MODERNA STOCK PRICE: INCREASED OVER 3X
PresenterPresentation Notes$19.23 ON 1/3 TO $64.88 TODAY >> 237% INCREASE
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ARE LIFE SCIENCES PATENTS AT RISK?
(SOURCE: IPWatchdog.com)
PresenterPresentation NotesStart at 4:00
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“COMPULSORY LICENSING”
“Compulsory Licensing” COVID-19 related innovations
has been suggested in the US, Canada and
other countries
Canada and Germany have passed legislation to issue compulsory licenses more easily, while others (Chile and Ecuador) have permitted compulsory licensing of any new COVID-19 related technology.
In the US, 46 members of Congress wrote to President Trump asserting that, “providing exclusive monopoly rights could result in an expensive medicine that is inaccessible, wasting public resources and putting public health at risk.”
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“MARCH-IN RIGHTS”UNDER THE BAYH-
DOLE ACT
In the US, there is friction around the
potential use of Bayh-Dole “march-in-rights”
Bayh-Dole, introduced in 1980, allows technology licensing by universities, but also gives the federal government a mechanism to control drug prices by reclaiming and potentially compelling non-exclusive licensing of IP
This is at a time when University IP is at the forefront of COVID vaccine development; this could negatively impact startups spun-off of universities
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IP PLEDGES AND INDUSTRY
COLLABORATION
The “Open COVID Pledge” initiative,
facilitated by Stanford and others
“a group of scientists, lawyers, entrepreneurs and individuals working to promote the removal of obstacles involving intellectual property in the fight against COVID-19. We are committed to innovative solutions to address this crisis, and urge the adoption of the Open COVID Pledge, Open COVID License, and other similar solutions in support of this goal.”
Amazon, Facebook, HPE, IBM, Microsoft and others have pledged to make their patent portfolios available royalty free, for use in ending and minimizing the effects of the COVID-19 pandemic
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Key Takeaways
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Life Sciences startups have less access to VC growth capital, and tend to go public sooner or rely on IP for licensing / acquisitionsto close the funding gap
IP Rights in Life Sciences may be challenged as a result of COVID-19: this can particularly hurt startup spin-offs from university, but does not seem to impact funding
IP rights are critical to startup valuations in the Life Sciences sector, much more so than they are in the tech/software sector (as seen in Unicorn studies)
Funding stats for 1H- 2020 Market trends are showing an increase in investor confidence in Life Sciences startups and an increase in valuation for those involved in COVID-19 developments
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KEY TAKEAWAYS
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Questions?
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THANK YOU!Twitter.com/ForesightValue
www.ForesightValuation.com
Foresight Valuation Group
Phone: (650) 561-3374
Slide Number 1ABOUT MEoutlineSlide Number 4THE EQUITY FUNDING CYCLETHE US VC FUNDING IN 2019 = $133.4 Billion22% of VC funding Invested in Life sciences in 2019hEALTHCARE LEADS IPO COUNT, TECH LEADS IPO $ RAISEDLES LIFE SCIENCES ROYALTY AND DEAL STUDY (2018)LES SURVEY: 40% OF DEALS DONE IN THE EARLY STAGELES SURVEY: DEAL VALUES BY TYPE OF PAYMENT Life sciences startups: trends in funding and exitsSlide Number 13Mapping Intangible Assets to IP RightsSlide Number 15Slide Number 16Slide Number 17tech v. life sciences: startup valuation comparisonSlide Number 19Slide Number 20MODERNA STOCK PRICE: INCREASED OVER 3XAre life sciences patents at risk?“Compulsory Licensing”“March-In Rights”�UNDER THE BAYH-DOLE ACTIP Pledges and Industry CollaborationSlide Number 26key TAKEAWAYSSlide Number 28Slide Number 29