Pullan's Pieces #129                                     
Pullan's Pieces #129
August 2017
BD News and Analysis for  Biotech and Pharma
Dear --FNAME--,
Wow, we are already looking toward the fall.  Coming up is Biopharm America and BioEurope!  

1.  Problem Statements

2.   Peptide deals

3.  Quick look at Terminations
4.  Concerns on China capital controls

Love to hear from you about what you like or don't.    



Why this one?  Problem Statements, Need Narratives
The most important question a partner or investor wants answered is "Why this one?".  Variations of this question are "What is special about this opportunity" or "What's in it for me?"  
To answer this you must have a clear statement of what problem is being solved.  If they don't see the problem, they won't buy the solution.  The statement of the problem should point to the data you need to prove the value and communicate the key features of your product, the solution.  No fuzzy mission statements.  
In the blog, "The Startup", David Bailey listed these generalized statements.  

For ___[target audience], it’s a constant challenge to ___[general problem]. Every ___[time period], these people ___[perform a key activity] in order to ___[achieve a primary goal]. This is especially true if you’re a [niche].

The main problem they face is ___[primary functional problem relating to activity] which leads to ___[bad/worst case outcomes]. Today, their best option is ___[substitutes], but of course, they ___[the most common complaints of each substitute]. With ___[key trend], the problem will only get worse over time.

If only there was a easier/better/cheaper way to ___[perform a key activity], then customers could ___[quantifiable impact on their primary goal] which would lead to ___[positive outcomes / emotions]. With ___[number of potential customers], there is a clear opportunity to meaningfully impact a huge number of people.
If I think of our industry, maybe the framework for the Problem Statement is:  
WHAT is the impact of the Problem?   mortality, morbidity, inconvenience, time, cost 
WHO is the target Patient population?  
HOW BIG is the Market?
WHY are the Alternatives inadequate? 

But the focus on the impact is key.   I am going to try more work on articulating the problem when we help with partnering and investor decks.  
Infographic:  Peptide Deals
The END?  Quick look at Terminations  
Here is a quick analysis (definitely incomplete) of terminations! 
In the last 5.5 years (2012 thru 1st half of 2017), GlobalData shows 361 terminations of  licensing deals with $39B in disclosed total deal value.  This is a tiny fraction of the 8857 deals signed in the same time, and is probably a big under-representation as many deal terminations are not announced unless they are  material to a publicly traded company. 

Small molecules had 185 terminations, monoclonal antibodies 35 terminations and peptides 22 terminations.  This is roughly proportional to their prevalence in deals signed.  

Similarly, the therapeutic areas of terminated deals is roughly similar to the therapeutic areas for deals signed, with oncology > CNS> Immunology > Infection > metabolic.  

Trevor:  Concerns over China’s capital controls may be misplaced
It’s no secret that capital from China has become an increasingly important source of funding for all manner of industry and our capital-intensive biotechnology sector craves resources.  It only makes sense that the steady march continues apace. 

But... what about these capital controls we continue to hear so much about? You may have seen articles in the news recently…

In the next newsletter, we’ll be talking with experts and cross-border market participants to gain a better understanding of the impact that China’s increased regulatory vigilance will have on our sector. 

The good news for those seeking funding for their innovative biotechnology:
1.  Life Sciences are still a tiny share of China's outward flow.   
Stage of development for VC financings of platform deals
2.  Biotechnology appears to enjoy a “favored-nation” status among China’s foreign direct investment priorities. 

Indeed, it appears that biotechnology fits into the category of “Encouraged Overseas Investments” as outlined in the client memorandum on China’s official foreign direct investment guidelines which the law firm PaulWeiss issued just yesterday. https://www.paulweiss.com/media/3977257/23aug17ndrc.pdf

With the pharmaceutical market expected to explode in China over the next couple decades, it’s safe to assume that biotechnology will enjoy increased flows as compared to other, de-prioritized, sectors of interest.
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