Valuable Model for Life Science Investments: Company Has all it Takes

For the best medical technologies to reach the market, inferior products must be weeded out of the investment pool. Doing so will increase the funding available to better healthcare products and services, thus increasing access to better healthcare. In contrast healthcare costs would decrease if investor risk was reduced allowing for lower repayment terms within exit strategy plans.

Salt Lake City, UT, July 16, 2007 - Whether they realize it or not, patients, hospital administrators, and physicians are ultimately driven by the investment community. They drive not only what products come to market, but what the volume of sales needs to be in order to return the expected five to ten times the original investment amount. Angel investors are typically where early stage biotechnology, pharmaceutical, medical device, and diagnostics begin for initial proof-of-concept funding. Once companies can demonstrate some success in the lab, venture capitalists come in with a largess of money in subsequent “rounds”. Institutional investors, banks, and potentially Initial Public Offerings (IPO) are all a part of moving new medical technologies to a pool of waiting patients. The luckiest of companies can be funded for hundreds of millions of dollars; all need tens of millions to capture the attention of larger industry who might be interested in filling their pipelines with licensing deals. But what happens when four out of five of those products currently fail? And why do they fail?

The life science industry is one of the most regulated and complicated of any. Issues such as clinical development, regulatory approval, manufacturing costs, reimbursement, and human trials can gobble up already stretched budgets. The amount of expertise required to provide excellence in every detail would break even large companies without the support of consultants and external suppliers. According to the 2007 Provitis Risk Barometer Report the top ten risks to organizations are (in order): competition; customer satisfaction; regulatory environment; information technology and security; market evolution; brand image and reputation (tie); financial markets (tie); legal environment; technology innovation; legal; and human resources. Less than half of these issues are evaluated by investment professionals at all. Much of the analysis done uses database searches, interviews with scientists who are, essentially, proving advice to a stranger, and complicated financial modeling.

A new life science due diligence model has been developed by INCITE WORLD, a Utah based company with experts on each coast, which provides a more detailed analysis of life science investments by looking at potential technologies using domain area experts. The model is loosely based on all of the major functional areas required for approval and success. It advances the current system of internal MBAs and market analysts, most of who have never worked within a life science company. The essence of the model pairs an external “virtual company” that evaluates the real world processes required to move particular technologies forward. Unlike the current system of calling therapeutic area specialists, they are the specialists.

“What makes us unique from any company in existence is that our senior level consultants currently work in industry in our Incite Support division,” says Jayme Norrie, Chief Strategic Officer, “This enhances their experience that initiates with a minimum of ten years in a life science industry just to work for us. Additionally, it’s more cost effective. Using a myriad of specialized consultants, and keeping them busy on client projects, INCITE WORLD has greater buying power and loyalty. Investment firms can’t keep what we have on payroll for one tenth of the price. The model is the only one of its kind.”

“So why does our model work so much more effectively?”, asks Sol Epstein, VP, Medical Affairs and well known thought leader, “Because we look at issues such as reimbursement and regulatory path using people who deal with these issues every day. We evaluate real world costs of clinical trials and manufacturing. All of these data and reports are fed into our financial analysis that provides revenues, expenditures, and burn rates as if the company were fully operational for the duration of lab to bedside.”

“Our objective is to become the centrifuge for information on the life science industry for innovators and investors,” says Bill Pagels, Senior Director, New Innovations, “Given our robustness in supporting both the life science company and the investment community, we can greatly improve the chances for product success. And investors and industry business development executives know to turn to us not only for our due diligence work, but to help them access the best technologies worthy of commercialization.”

Improving the success rate of new life science technologies translates into improving quality of life by driving better evaluated new technologies into the market to patients who need them. Although small consultancies are trying to jump on the INCITE WORLD model bandwagon, they’ll have a tough time catching up. This train has long left the station.


###

Contact:

Jayme Norrie
Chief Strategic Officer
801.619.0340

www.inciteworld.com