Scrip's Introduction to Financing Biotechnology Companies

Scrip's Introduction to Financing Biotechnology Companies

This report will enable you to understand how a biotechnology company can finance and manage itself so it becomes profitable. It is an authoritative insight into the global biotechnology industry and an invaluable reference source for everyone interested in biotechnology financing issues.

Scrip's Introduction to Financing Biotechnology provides you with inside information on how to: source finance and support; approach potential investors; maintain and manage finances; seek pharmaceutical and academic alliances; value biotechnology companies and build an investment portfolio.

Written by an experienced biotechnology finance director and reviewed by the former finance director of the most successfully financed biotechnology company in Europe, this report enables you to learn first hand the criteria for achieving financial success in the biotechnology sector.

This report includes case studies of successfully financed biotechnology companies

TABLE OF CONTENTS
LIST OF TABLES
LIST OF FIGURES
FOREWORD
ABOUT THE AUTHOR
EXECUTIVE SUMMARY
ABBREVIATIONS
ACKNOWLEDGEMENTS

CHAPTER 1 INTRODUCTION

CHAPTER 2 CRITERIA FOR SUCCESS IN FINANCING
2.1 Introduction
2.2 Criteria for investment
2.2.1 A mature and experienced management team
2.2.2 A technology platform capable of producing a number of important products
2.2.3 Intellectual property rights to the technology
2.2.4 A credible business plan which demonstrates a focused strategy
2.2.5 Achievable milestones
2.2.6 Impressive scientific credentials

CHAPTER 3 SOURCES OF FINANCE AND SUPPORT - NON-EQUITY
3.1 Grants and government assistance
3.2 The schemes available
3.2.1 Business Link
3.2.2 Small Firms Loan Guarantee Scheme
3.2.3 Small Firms Merit Award for Research and Technology
3.2.4 LINC
3.2.5 Regional grants
3.2.6 Business and Innovation Centres (BICs)
3.2.7 The Biotechnology and Biological Sciences Research Council
3.2.8 The BMB Challenge
3.2.9 LINK
3.2.10 The Teaching Company Scheme
3.2.11 EUREKA
3.2.12 European Union grants
3.2.13 CRADA

CHAPTER 4 SOURCES OF PRIVATE FINANCE - EQUITY
4.1 Business angels
4.2 Specialised seed capital funds
4.3 Enterprise Investment Scheme
4.4 Venture capital funds
4.5 Venture capital trusts

CHAPTER 5 INVESTORS
5.1 Approaching potential investors
5.2 Due diligence process
5.3 Relations with shareholders
5.4 Investor relations
5.5 The importance of meeting milestones
5.6 Further rounds of finance
5.7 Dilution on management and existing investors
5.8 Cash reserves
5.9 Profile of shareholder base

CHAPTER 6 PHARMACEUTICAL ALLIANCES - THE HOLY ALLIANCE
6.1 Reasons for entering a pharmaceutical collaboration
6.2 When to collaborate
6.3 Types of collaboration
6.4 Time to negotiate
6.5 How to make contact
6.6 Structure of the deal
6.6.1 Up-front payments
6.6.2 Work payments
6.6.3 Milestone payments
6.6.4 Royalties
6.6.5 Value Added Tax
6.6.6 Equity
6.6.7 Options
6.6.8 Territorial rights or rights to an indication
6.6.9 Intellectual property rights
6.6.10 Japan
6.6.11 Termination
6.7 Issues of control or 'dancing with the bear'
6.8 The holy alliance

CHAPTER 7 ACADEMIC ALLIANCES
7.1 Introduction
7.2 Why academic alliances are important
7.3 The management of academic alliances
7.4 The university's perspective
7.4.1 Liabilities
7.4.2 Overheads
7.4.3 Confidentiality
7.4.4 Intellectual property rights
7.5 The virtuous circle

CHAPTER 8 MANAGING FINANCES BEFORE PRODUCTS ARE ON THE MARKET
8.1 Introduction
8.2 Cash spending priorities
8.3 The financial calendar
8.3.1 Strategic review
8.3.2 Budget
8.3.3 Management accounts
8.3.4 Forecasts
8.4 Structure of the accounts
8.5 Financial controls
8.6 Research and development costs
8.7 Keeping creative juices flowing

CHAPTER 9 EXIT ROUTES
9.1 Introduction
9.2 The three basic exit routes
9.2.1 Acquisition
9.2.2 Merger
9.2.3 Public listing
9.3 When to go public
9.4 Markets
9.5 Description of main markets
9.5.1 NASDAQ
9.5.2 EASDAQ
9.5.3 London Stock Exchange
9.5.4 Alternative Investment Market
9.6 Investment windows
9.7 Criteria for listing
9.8 Which market?
9.9 Basic description of the process
9.10 How long will it take?
9.11 Choosing advisors
9.11.1 Accountants
9.11.2 Lawyers
9.11.3 Brokers
9.11.4 Bankers
9.12 What will it cost?

CHAPTER 10 INVESTING IN BIOTECHNOLOGY
10.1 Introduction
10.2 Fundamental analysis
10.3 Valuation
10.4 Earnings model
10.5 Building a portfolio
10.6 Trading in biotechnology stocks

CHAPTER 11 STRATEGIC ISSUES FOR CONSIDERATION
11.1 Introduction
11.2 Strengths and weaknesses
11.2.1 Science
11.2.2 Environment
11.2.3 Human resources
11.2.4 Management team
11.2.4.1 Patenting strategy
11.2.5 Competition
11.2.6 Culture
11.3 Strategic issues in developing a business model

CHAPTER 12 CASE STUDIES
12.1 Cytocell Ltd
12.2 British Biotech plc

CHAPTER 13 CONCLUSION

APPENDIX I ACCOUNTANCY FIRMS
APPENDIX II EC BIOTECHNOLOGY PROGRAMME
APPENDIX III GRANTS, LOANS AND AWARDS
APPENDIX IV USEFUL SOURCES OF INFORMATION
APPENDIX V EUROPEAN PRIVATE FINANCING OF BIOTECHNOLOGY COMPANIES DURING 1997
APPENDIX VI A SELECTION OF EUROPEAN BIOSCIENCE DEALS 1996/1997
APPENDIX VII MANAGEMENT ACCOUNTS
APPENDIX VIII SUMMARY LISTING REQUIREMENTS
APPENDIX IX PUBLIC LISTINGS OF EUROPEAN BIOTECHNOLOGY COMPANIES 1996/1997

REFERENCES

LIST OF TABLES
Table 1.1 Total European biotechnology industry by business focus
Table 1.2 Number of biotechnology companies by geographical spread
Table 4.1 European Venture Capital Association member companies by country
Table 4.2 Activity of selected European venture capital funds, 1996
Table 5.1 Contents of a typical due diligence file
Table 8.1 Proposed financial calendar
Table 9.1 European and US stock markets
Table 10.1 Imaginary portfolio of biotechnology companies quoted on the London Stock Exchange Official List as at 30 January 1998
Table 10.2 Some examples of negative events and one-day price drops (US biotechnology ompanies)
Table 12.1 Comparison of criteria for raising finance and Cytocell's position in 1991
Table 12.2 British Biotech's product pipeline
Table 12.3 British Biotech's alliances
Table 12.4 British Biotech's financing summary, 1993-1995 (£ million)
Table 12.5 Brief fund raising history of British Biotech, 1986-1996
Table A.1 European private financings of biotechnology companies during 1997
Table A.2 A selection European bioscience deals 1996/1997
Table A.3 Summary listing requirements under Chapter 20 London Stock Exchange Listing ules, the Alternative Investment Market (AIM), and EASDAQ
Table A.4 Public Listings of European Biotechnology Companies 1996/1997

LIST OF FIGURES
Figure 10.1 Share price history of Celltech plc
Figure 10.2 Current valuation continuum for a typical biotechnology company
Figure 12.1 British Biotech's share price history

PUBLISHED: MARCH 1998
REF: BS936E
PAGES: 153
PRICE: £370/$780/¥89,000