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ZSX Medical Financing ZSX Medical Financing QuestionsQuestions
Given the “total” amount of money ZSX needs to reach FDA clearance, are they best served by:1.Seeking the money as proposed ($1.35MM, then $6MM)?2.Seek a single raise of $7.5MM?3.Seek two raises differently divided?
PCCI Monthly Group Meeting, December 13, 2010Vidal F. de la Cruz, Vice President Business Development, Cytokine PharmaSciences, Inc.
ZSX Medical Financing ZSX Medical Financing QuestionsQuestions
1. Grants2. Private Investors3. Angel Investors 4. Non-profits5. Bank Loans6. Venture Capitalists7. Corporate Venture Capitalists8. Going Public9. Letting a group source funds for you10. Licensing or co-development
Some General Funding Strategies:
ZSX Medical Financing ZSX Medical Financing QuestionsQuestions
Grants:NIH, e.g., SBIR or the Office of Minority Health
SBIR Phase I is for $150k total costs over 6 monthsSBIR Phase II is for up to $1mm over 12 months Can apply for combined Phase 1 with Phase II preapprovedPhase III possible if possible U.S. Government use
ZSX Medical Financing ZSX Medical Financing QuestionsQuestions
Private Investors:Self, Friends & Family; sufficient for first tranche of ~$1mm?
Angel Investors:Too variable to comment on specifics; sufficient for first tranche?
Non-Profits:E.g. Gates Foundation, Genesis Research Foundation, others
Bank loans:An option, if you’re willing to mortgage your home(s)!
ZSX Medical Financing ZSX Medical Financing QuestionsQuestions
VC & Corporate Venture Capital:
VC Corp VC
Fund focused Fund & Pharma Bus. Focused
Financially driven(3-5x+ return, quick exit)
Financially & Strategically focused
Lower risk tolerance Higher risk tolerance
Committed to business ($$) Committed to business and/or assets
Looking to sell Typically looking to buy
ZSX Medical Financing ZSX Medical Financing QuestionsQuestions
Courtesy of Juan Harrison, Takeda Research Institute
ZSX Medical Financing ZSX Medical Financing QuestionsQuestions
Going Public:• Public offerings getting better, but still uncertain:
• Levels in 2010 about half that prior to crisis in 2007 ($1.2 billion versus $2.9 billion). • Early stage financing also off ($4.8 billion/$6.8
billion for 2010YTDNov/2007). • Licensing deals down too, as are M&A deals (302
agreements in 2010 (11YTD) vs 540 in 2007, and M&A 29 deals vs 55 during the fire sales in 2008).• Significant cost to going public.• Costs of operation are very high.
ZSX Medical Financing ZSX Medical Financing QuestionsQuestions
Letting Group Source Funds:• Costly, but will allow you to focus on technology
Licensing:•Will be competing with Pharma. Some mergers, e.g., Merck-Schering, are resulting in the shedding of many programs. •Niche play (seek expansion or broadening of technology)•Fear of change in landscape
ZSX Medical Financing ZSX Medical Financing QuestionsQuestions
Codevelopment:• Seek companies in OB/Gyn space• Don’t focus on their present products; consider their
sales force (pharma company may have better access to OB/Gyn physicians than device/supplies company)
• Consider foreign markets and offering preferred licensing terms for co-development
• Consider services companies
ZSX Medical Financing ZSX Medical Financing QuestionsQuestions
Given the “total” amount of money ZSX needs to reach FDA clearance, Should they:1.Seek the money as proposed ($1.35MM, then $6MM)?2.Seek a single raise of $7.5MM?3.Seek two raises differently divided?