European Trends in Healthcare Investments and Exits 2018 - Silicon Valley Bank
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European Trends in Healthcare Investments and Exits 2018 ANNUAL REPORT 2018 Nooman Haque Bobby Anderson Vojtech Trebicky Visit svb.com/uk Managing Director Senior Associate Financial Analyst Follow @SVB_UK Life Science & Healthcare Life Science & Healthcare Engage #SVBHealthcare
Table of contents
2017 Key Highlights 3
Healthcare Investments in Europe 5
Biopharma, Devices, and Diagnostics, HIT & Tools 6
Series A 7
Most Active Investors 8
Deal Sizes 9
Geographical Centres 10
Public Investments 11
Early Stage Exits 15
Sources of Funding 16
2018 Predictions 20
Contacts 21
European Trends in Healthcare Investments and Exits 2018 2
2017 Healthcare and Life Science highlights
• Whilst deal volumes continue to fall from the highs of 2015, total funding has increased from 2016
• The early stage ecosystem is incredibly strong with Series A in biopharma, device and digital health all at the
highest levels for the last 5 years
• The increasing importance of digital technologies in healthcare is illustrated by the increase from 2014 when
$13m was invested to over $200m in 2017
• The UK retains its strong lead in terms of value & volume of deals – almost 3 times the value of the number 2
country (Germany)
• IPOs of European companies remains strong by historical standards though a little down (as of writing)
compared to recent years. Perhaps surprisingly was the strong attraction of the Swedish market for life science
companies
• M&A volumes were down globally, but large pharma & biotech have record cash piles and with continuing
declining ROI at those firms, there will be increased pressure to do deals. We expect to see an uptick in M&A in
2018
• For the first time, our European analysis examines the sources of funding. This confirms the anecdotal view
that incubators and angels continue to be an important source of capital for companies. This group
participated in 370 deals with an announced value of $1bn. Almost of half of angel/incubator deals were not
syndicated with any other investor
European Trends in Healthcare Investments and Exits 2018 3
Angel, Seed & VC deals in Europe – all sectors
Capital Invested Deal Count
$25B 9,000
8,000
$20B
7,000
6,000
$15B
5,000
4,000
$10B
3,000
2,000
$5B
1,000
$0M 0
2009 2010 2011 2012 2013 2014 2015 2016 Dec'17
Dollars ($) $5.7B $9.2B $9.0B $11.3B $11.0B $15.3B $19.1B $15.6B $16.9B
Healthcare 37% 24% 23% 28% 28% 31% 21% 22% 21%
Source: PitchBook and SVB proprietary data. European Trends in Healthcare Investments and Exits 2018 4
Healthcare investments
European Trends in Healthcare Investments and Exits 2018 5
Healthcare Angel, Seed, & VC deals in Europe
Over 70% of all deals had at least one European Investor
• 2017 is on pace to surpass 2016 in terms
Capital Invested Deal Count
of total capital invested after a slower
start to the year. We will end the year
below the total number of deals we have
seen over the past two years, near 2013
levels, and see the first substantial
decrease in total deals for the better part
of a decade.
• Larger deal sizes are a result of the
overall generally positive fundraising
environment over the past few years. As a
result, syndication among firms has
grown accordingly.
• Looking backwards, 2015 appears more
like an outlier in terms of deal count.
2009 2010 2011 2012 2013 2014 2015 2016 Dec'17
Dollars ($) $2.1B $2.2B $2.1B $3.1B $3.1B $4.8B $4.0B $3.5B $3.6B
Deals (#) 401 530 585 655 923 1,031 1,294 1,230 891
Source: PitchBook and SVB proprietary data. European Trends in Healthcare Investments and Exits 2018 6
Strong year for Biopharma, Digital Health
$2B Capital Invested Deal Count 150
BIOPHARMA
$2B
100
$1B
50
$500M
$0M 0
2013 2014 2015 2016 Dec'17
$600M Capital Invested Deal Count 80
60
$400M
DEVICE
40
$200M
20
$0M 0
2013 2014 2015 2016 Dec'17
$800M Capital Invested Deal Count 150
DIAGNOSTICS, HIT
$600M
100
& TOOLS
$400M
50
$200M
$0M 0
2013 2014 2015 2016 Dec'17
Source: PitchBook and SVB proprietary data. European Trends in Healthcare Investments and Exits 2018 7
Series A at highest levels over last 5 years
Series A ($) $192M $103M $542M $378M $644M
56 • Even allowing for outliers like
19 GammaDelta Therapeutics raise of
23 $100M, the number of Series A
BIOPHARMA # of Deals biopharma deals illustrates the new
22 ideas springing from innovation centres
18
across Europe.
2013 2014 2015 2016 Dec'17
Series A ($) $47M $72M $9M $168M $151M
19 19 • The large increase in devices is partly
due to a continued convergence with
digital health, as entrepreneurs and
# of Deals
12 investors see a benefit in smart hardware
DEVICE 12 and innovations such as robotic surgery.
3
2013 2014 2015 2016 Dec'17
Series A ($) $33M $13M $75M $145M $211M
38 • It has been a banner year for digital
18 health. Companies like Ieso, BioSerenity,
and Ada Health show investors have
# of Deals
Diagnostics, interest in larger Series A investments
7
HIT & Tools after early traction from previous
14
10 investment. The hope of advancing
innovation through artificial intelligence
2013 2014 2015 2016 Dec'17 has driven a sizeable increase in this
area.
Source: PitchBook and SVB proprietary data. European Trends in Healthcare Investments and Exits 2018 8
Investors continue to support healthcare
Most Active VC, Corporate VC, and PE Investors in European Healthcare – as at Dec’17
# of Deals # of Deals above $2 Million
Source: PitchBook and SVB proprietary data. European Trends in Healthcare Investments and Exits 2018 9
Avg. deal sizes for life sciences
Biopharma $28.5
• Biopharma average deal size declined
Avg. Deal Size ($M)
$16.4 from 2015 and 2016 levels but still
$11.5 significantly higher than 2014 levels.
$8.7 This can be contributed to a higher
$5.7
amount of Angel and Seed rounds being
completed in 2017 than in years prior.
2013 2014 2015 2016 Dec'17
Device $8.8M
$7.9M • Device deal size dropped slightly in 2017
Avg. Deal Size ($M)
$6.0M but, like Series A funding in Device, is
expected to remain constant.
$3.9M
$3.0M
2013 2014 2015 2016 Dec'17
Diagnostics, HIT & Tools
• Much like Biopharma, a large number of
Avg. Deal Size ($M)
$10.7M
$8.0M Angel and Seed rounds have pulled down
$5.5M the overall average for Diagnostics, HIT &
Tools. We find a tepid connection
$2.3M
$1.3M between the new investors and the
reduction in average deal size but more
2013 2014 2015 2016 Dec'17 so that HIT requires less initial funding
than traditional Diagnostics and Tools
companies.
Source: PitchBook and SVB proprietary data. European Trends in Healthcare Investments and Exits 2018 10European centres of activity
UK maintains its strong position
Healthcare Angel, Seed & VC deals in Europe – as at Dec’17
Nordics
$263M
UK & Ireland
$1.4B
Benelux
$170M
Germany
France $543M
$471M
Switzerland
$506M
Source: PitchBook and SVB proprietary data. European Trends in Healthcare Investments and Exits 2018 11Public investments & exits
European Trends in Healthcare Investments and Exits 2018 12IPO activity in European life sciences
$4B
• With 28 IPOs as of December, 2017 is 6
deals behind on 2016. Despite large deal
sizes in first half of the year, the full year
average is down $12M compare to 2016
to $84M. This is driven by second half of
2017, especially Q3 where the average
$3B deal size was $34M. The largest IPO of
this year still remains as Idorsia
Pharmaceuticals, which spun out of
Actelion Pharmaceuticals and received
$1.2B in public capital on SIX Swiss
Exchange.
$2B • Sweden continues to be the most
common market to go public. It has seen
$320M raised across 14 deals. In spite of
being home only to one deal this year,
Switzerland retains its first place in total
capital raised thanks to Idorsia’s IPO.
France and US had both 4 deals and there
$1B were 2 IPOs in the UK. Canada, Norway
and Poland each had one European
healthcare company float.
• Secondary Offerings have reached an all-
time high with $840M raised in 2017.
$0M This is driven by three large deals; Zur
Rose Group ($228M), Cosmo
2009 2010 2011 2012 2013 2014 2015 2016 Dec'17
Pharmaceuticals ($215M) and Prothena
($155M).
IPO
Source: PitchBook and SVB proprietary data. European Trends in Healthcare Investments and Exits 2018 13Public deals in European life sciences
Deals over $50M
Source: PitchBook and SVB proprietary data. European Trends in Healthcare Investments and Exits 2018 14Public deals in European life sciences
Deals below $50M
Source: PitchBook and SVB proprietary data. European Trends in Healthcare Investments and Exits 2018 15Early stage exits in European life sciences
• Several interesting exits in 2017 deserve attention. Ziarco was acquired by Novartis for an estimated value of $1B, Ogeda was taken
over by Astellas Pharma for €800M expanding Astellas' late stage pipeline and contributing to its long term growth and Rigontec was
bought by Merck & Co for €464M. There were 19 additional, relevant deals with undisclosed amounts, not shown.
Source: PitchBook and SVB proprietary data. European Trends in Healthcare Investments and Exits 2018 16Sources of funding
European Trends in Healthcare Investments and Exits 2018 17Sources of funding in 2017 • Investors listed in the table on the left
Healthcare Angel, Seed, & VC deals in Europe jointly participated in 679 deals, which
account for 76% of all healthcare
Total Investments transactions in Europe and 92% of total
capital invested.
Investor Types # Deals $ Invested
• Venture Capital funds remain a major
source of funding for healthcare. They
VC 523 $3.24B
have been involved in the largest amount
of deals and capital deployed* though,
Angels/Incubators 370 $987.0M naturally, growth focused funds have
invested in de-risked later stage
PE 255 $2.52B businesses.
Strategic Acquires 94 $979.1M • Universities were involved in 11 deals
less than record levels of 2016.
CVC 64 $730.0M
• Family Offices are down 3 deals this year,
however deal size totals $100M more
Universities 17 $96M than 2016. 2017 is 1 deal up on 2015 and
6 deals on 2014.
Family Offices 10 $361M
Source: PitchBook and SVB proprietary data.
* $ invested/capital deployed refers to a sum of deal sizes that the investor participated on European Trends in Healthcare Investments and Exits 2018 18VCs co-invest mostly with PE funds & Angels
• Venture Capital funds have completed
523 deals this year, by far the highest
amount of transactions compared to
other capital sources.
Investor Types # Deals $ Invested
1 2 Overlap
• Private Equity investors were involved in
255 deals which were all shared with one
VC CVC 62 $728.2M or more VC investor. Private Equity
investors are the most common co-
VC PE 255 $2.52B investor for Venture Capital funds,
Angels / participating in 49% of all VC deals
VC 226 $3.90B
Incubators though these deals are later stage given
PE involvement.
• Angels/Incubators are the second most
common to invest alongside VCs and
participate on 43% of all VC deals.
• Corporate VCs work closely with PE and
VC funds. Less than 3% of all CVC deals
didn’t involve a PE or VC investor. The
Investor Types # Deals $ Invested increase of CVCs, especially at the Series
A stage, has become a familiar pattern in
1 2 Overlap
recent years.
Strategic
VC 82 $965.4M
Acquires • Both Family Offices and Universities
Family work closely with VC funds and share
VC 10 $360.9M
Offices
100% and 88% of deals with them,
VC Universities 15 $96.0M respectively. However, Family Offices
tend not to get involved in any deals
involving universities, which is a long
term trend.
Source: PitchBook and SVB proprietary data.
* $ invested/capital deployed refers to a sum of deal sizes that the investor participated on European Trends in Healthcare Investments and Exits 2018 192018 Outlook
• We will see continued flow of non-traditional healthcare investors and entrepreneurs entering the healthcare market, specifically
within digital health
• The recent successes in Q4 2017 of UK companies listing on Nasdaq will lead to an increase in European companies looking to go
down this route, at the expense of European exchanges
• European Biopharma investors will maintain their deal pace, unlike their US counterparts
• Globally, biopharma M&A deals will reach 20-plus big exits based on available acquirer cash and the need to replenish pipelines
• A market driven by a steady pipeline of crossover investor-backed oncology companies should achieve between 28 and 32 US
IPOs. There were 31 US IPOs in 2017
• Due to a steady M&A market and quick exits in PMA/De Novo 510(k) companies, investments in medical device will increase.
Traditional venture investors will lead this upswing
• Early stage device M&A will continue. Neuro and drug delivery companies may join cardiovascular companies to spur the next
flurry of early-stage device acquisitions
• European Dx/Tools investments in 2018 will decline marginally in 2018, but the pace will depend on the degree of convergence
with digital health
• We anticipate more investments in the Dx Analytics subsector as companies develop AI-assisted technologies. Increasingly, these
companies will receive backing by tech-focused investors. We will also see R&D Tools companies spin off Dx Test and Dx Analytics
companies, as their research technologies develop into clinically relevant approaches
• Liquid biopsy investments will slow, as current companies will look to validate their technologies
• Despite no Dx/Tools M&A activity in 2017, we anticipate a few exits in R&D tools companies. Tech giants may make move from
investing to acquiring promising Dx Analytics companies
European Trends in Healthcare Investments and Exits 2018 20UK Healthcare and Life Science team
NOOMAN IAN BOBBY PAULA
HAQUE MURCHIE ANDERSON BURKE
Managing Director Vice President Senior Associate Senior Associate
nhaque@svb.com imuchie@svb.com banderson2@svb.com pburke@svb.com
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FRASER PAREKH SANDFORD
Relationship Advisor Senior FX Trader Global Treasury Advisor
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European Trends in Healthcare Investments and Exits 2018 21We would be delighted to discuss how SVB could help you grow. Please contact Nooman Haque at NHaque@svb.com www.svb.com/uk @SVB_UK #SVBHealthcare Silicon Valley Bank is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. FC029579. Silicon Valley Bank is authorised and regulated by the California Department of Business Oversight and the United States Federal Reserve Bank; authorised by the Prudential Regulation Authority with number 577295; and subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. Silicon Valley Bank is a subsidiary of SVB Financial Group, a Delaware corporation and is an affiliate of SVB Financial Group UK Limited. SVB Financial Group UK Ltd is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. 5572575 and is authorised and regulated by the Financial Conduct Authority, with reference number 446159. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB). SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license. Data as at December 2017. This material, including without limitation to the statistical information contained within it, is provided for informational purposes only. The material is based in part on information from third-party sources that we believe to be reliable, but which have not been independently verified by us and for this reason we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decision or construed as investment research. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation, offer or recommendation to acquire or dispose of any investment or to engage in any other transaction.
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