Versant Ventures "Financing Environment Update: Impact on Innovation in Ophthalmology" Presented by William Link from OIS@ASCRS 2015

1. Financing Environment Update……
Impact on Innovation in Ophthalmology
William J. Link, PhD
Versant Ventures
April 16, 2015

2. Financing Environment
• Public Markets
• Venture Funding
• M&A Activities
• Outlook….
2

3. Public Market Update…..
• Lot’s of activity and momentum
3

4. E
$68.0
$25.0
$25.0
$59.8
$11.7
$23.1
$40.3
$17.8
$5.8
$0.1
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
2013 2014 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Apr. 15
Alibaba IPO
IPO issuance
Strong IPO market…260 IPOs priced since Jan 2014
Source: Dealogic, Bloomberg and FactSet as of 04/02/15. Excludes deals <$50mm. Median Offer/30-day
represents offer/current for those IPOs that have not reached 30 days
1 Excludes Alibaba
2 By number of deals
ProceedsRaised($bn)
# of IPOs 199 237 56 74 47 60 22 1
# of withdrawn IPOs 10 25 5 4 7 9 14 -
$93.0

5. Healthcare represented 14% of the IPO market since
the beginning of 2014
Source: Dealogic, Bloomberg and FactSet as of 04/02/15.
Excludes deals <$50mm. Median Offer/30-day represents
offer/current for those IPOs that have not reached 30 days
1 Excludes Alibaba
2 By number of deals
(By proceeds raised)
2014 – 2015YTD IPO issuance by sector1
Financials
24% (32)
Energy 23%
(32)
Technology
20% (54)
Healthcare
14% (84)
Real Estate
8% (14)
Diversified 7%
(28)
Consumer 4%
(15)

6. Recent ophthalmology IPOs
Source: Company filings, FactSet as of 04/07/2015
Company
Date of
IPO
Amount raised
($mm) Mkt cap at IPO ($mm) Performance to date Current Mkt cap ($mm)
Feb-15 $40 $98 (13%) $85
Jan-15 $42 $134 (22%) $105
Nov-14 $36 $318 40% $446
Jul-14 $117 $429 129% $980
Jul-14 $75 $278 139% $665
Mar-14 $58 $197 76% $347
Feb-14 $58 $181 (18%) $149
Feb-14 $162 $632 (69%) $195
Oct-13 $77 $240 215% $758
Sep-13 $192 $752 112% $1,596
Ophthalmology IPO update ($mm)
5

7. Recent ophthalmology IPOs
Source: Company filings, FactSet as of 04/07/2015
Company
Date of
IPO
Amount raised
($mm) Mkt cap at IPO ($mm) Performance to date Current Mkt cap ($mm)
Feb-15 $40 $98 (13%) $85
Jan-15 $42 $134 (22%) $105
Nov-14 $36 $318 40% $446
Jul-14 $117 $429 129% $980
Jul-14 $75 $278 139% $665
Mar-14 $58 $197 76% $347
Feb-14 $58 $181 (18%) $149
Feb-14 $162 $632 (69%) $195
Oct-13 $77 $240 215% $758
Sep-13 $192 $752 112% $1,596
Which of these companies have been featured at OIS
meeting??
5

8. OIS Impact??
Source: Company filings, FactSet as of 04/07/2015
Company
Date of
IPO
Amount raised
($mm) Mkt cap at IPO ($mm) Performance to date Current Mkt cap ($mm)
Feb-15 $40 $98 (13%) $85
Jan-15 $42 $134 (22%) $105
Nov-14 $36 $318 40% $446
Jul-14 $117 $429 129% $980
Jul-14 $75 $278 139% $665
Mar-14 $58 $197 76% $347
Feb-14 $58 $181 (18%) $149
Feb-14 $162 $632 (69%) $195
Oct-13 $77 $240 215% $758
Sep-13 $192 $752 112% $1,596
Which of these companies have been featured at OIS
meeting??
5

9. Financing Environment….
• Venture financing in healthcare had been on a downward
trend
9

10. Initial investment in healthcare companies declined
substantially in the 5 years from ‘07-’12
10
Source: PWC / NVCA Moneytree Report, Q4 2012
200
7
200
8
200
9
787
1,070
1,857
691
950
1,641
304
617
921
201
0
201
1
201
2
240
600
840
212
922
1,135
226
438
664
-64%
Med device Biotech
124 109
76
69 68
62
95
200
9
171
201
0
188
119
135
-50%
201
2
73
201
1
181
113
200
8
257
148
200
7
271
147
Initial venture investment in companies
$Millions
Number of initial venture deals
Deals

11. 11
Total Venture Investing on an Upward Trend
Source: PricewaterhouseCoopers, SVB proprietary data
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
$Billions
Total VC $
$99

12. Healthcare Venture Investment Trends
0
1
2
3
4
5
6
7
8
9
10
2007 2008 2009 2010 2011 2012 2013 2014
Device
Biotech
Total
12
$Billions

13. 0
4
8
12
16
20
24
#ofDeals
Early (Seed-Series B) Late (Series C+)
13
Most Active New VC Investors in Biopharma (2013-2014)
Source: CB Insights and SVB proprietary data.
12%

14. 0
5
10
15
20
25
30
35
40
45
50
Early (Seed-Series B) Late (Series C+)
10%
90%
14
Most Active New VC Investors’ Biopharma Deals by Indication (2013-2014)
::
**Target Generating Platform.
Source: CB Insights and SVB proprietary data.

15. 0
1
2
3
4
5
6
7
8
9
10
Early (Seed-Series B) Late (Series C+)
15
Most Active New VC Investors in Device (2013-2014)
Source: CB Insights and SVB proprietary data

16. 0
1
2
3
4
5
6
7
8
9
10
Early (Seed-Series B) Late (Series C+)
16
Most Active New VC Investors in Device (2013-2014)
Source: CB Insights and SVB proprietary data

17. 0
2
4
6
8
10
12
14
16
Early (Seed-Series B) Late (Series C+)
17
Most Active New VC Investors’ Device Deals by Indication (2013-2014)
: :
Source: CB Insights and SVB proprietary data

18. 14
12
10
8
6
4
2
0
Late (Series C+)12%
Early (Seed-Series B)
88%
Includes new investments by the top 60 active healthcare investors. Both US and OUS companies are included.
Sources: CB Insights, PitchBook, VentureSource, and SVB proprietary data.
18
Most Active Corporate Biopharma Investors 2013-2014

19. 55
50
45
40
35
30
25
20
15
10
5
0
Most Active Biopharma Investments by Location 2013-2014
55
50
45
40
35
30
25
20
15
10
5
0
#ofCompanies
Includes new investments by the top 60 active healthcare investors. Both US and OUS companies are included.
Sources: CB Insights, PitchBook, VentureSource, and SVB proprietary data.
Overall Investments Seed - Series A Investments
Top 5 OUS Countries: UK, France, Germany, Switzerland, Israel

20. Most Active Device Investments by Location 2013-2014
5
0
35
30
25
20
15
10
0
5
10
15
20
30
25
35
Seed - Series A Investments
Includes new investments by the top 60 active healthcare investors. Both US and OUS companies are included.
Sources: CB Insights, PitchBook, VentureSource, and SVB proprietary data.
J.
20
Overall Investments

21. Top Non-VC Lead Investors in 2013-2014
BioPharma
8
6
4
2
0
Sources: CB Insights, PitchBook, VentureSource, and SVB proprietary data.
10
12
14
Tools/Dx
Medical Device
Includes new investments by the top 14 active non-VC healthcare investors. Both US and OUS companies are included.

22. M & A…….
22

23. Major M&A in ophthalmology-pharmaceuticals
Source: CapitalIQ, JP Morgan
Close
date Target Acquiror
Upfront
($mm)
Mileston
es
($mm)
Total
($mm)
Mar-15 Allergan Actavis 65,900 65,900
Oct-14 Aciex NicOx 65 55 120
May-14 Merck’s porftolio (Japan, Europe,
Apac)
Santen 600 Undisc. 600
May-13 Bausch & Lomb Valeant 8,700 8,700
Mar-13 SARCode Shire 160 undisc. 160
Sep-12 QLT - Visudyne Valeant 133 375 133
Mar-12 ISTA Pharmaceuticals Bausch & Lomb 488 439 488
Feb-12 Anabasis Dompé Farmaceutici 228 228
May-11 Molecular Partners Allergan 45 375 420
Apr-11 Inspire Pharmaceuticals Merck 450 450
Jun-10 Aton Pharmaceuticals Valeant 318 318
Oct-09 Fovea Sanofi-Aventis 538 538
Sep-09 ESBATech Alcon 150 439 589
Nov-05 Eyetech OSI 997 997
Oct-05 Control Delivery Systems Psivida 105 105
Jul-05 Angiosyn Pfizer NA 527
Nov-03 Oculex Allergan 230 230

24. Major M&A in ophthalmology-devices
Source: CapitalIQ, JP Morgan
1 Pending; 2 Acquired in 3 stages beginning in July 2008
Close
date Target Acquiror
Upfront
($mm)
Milestones
($mm)
Total
($mm)
Feb-
151
Optos Nikon 410 410
Aug-
14
WaveTec Alcon 350 350
Aug-
14
Sauflon Cooper 1,200 1,200
Dec-13 Transitions Optical (51% stake) Essilor 1,730 125 1,855
Aug-13 OptiMedica Abbott 250 150 400
Jan-13 Technolas Bausch & Lomb 290 121 411
Oct-11 Reichert Ametek 150 150
Apr-11 Alcon2
Novartis 51,315 51,315
Mar-11 Medicel AG Halma 75 33 108
Aug-10 LensX Lasers, Inc. Alcon 362 383 150
Jan-10 Optonol Alcon 180 180
Oct-09 Visiogen, Inc. Abbott 400 400
Feb-09 Advanced Medical Optics Abbott 2,770 2,770
Feb-08 eyeonics, Inc. Bausch & Lomb 300 540 840
Nov-07 WaveLight AG Alcon 133 133
Oct-07 Bausch & Lomb Inc. Warburg Pincus 4,470 4,470
Oct-07 Forsight NewCo II QLT Inc 41 60 101
Apr-07 IntraLase Advanced Medical Optics 817 817
Jan-07 Corneal Laboratories SA Allergan 216 216
Jul-06 IOLTECH SA Carl Zeiss 165 165
May-05 VISX Inc. Advanced Medical Optics 1,539 1,539
Jan-05 Ocular Sciences Inc. The Cooper Companies 1,261 1,261
Jun-04 Pfizer, Surgical Ophtha Advanced Medical Optics 450 450

25. Financing Environment--Summary
25

26. 90
80
70
60
50
40
30
20
10
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
#ofBigExits
Big Exits
VC-Backed IPOs
only. Sources: Investment Bank Reports, VentureSource, Press Releases, and discussions with Life Science
professionals.
BioPharma, Device, and Dx/Tools Big Exits M&A and IPOs 2005-2014
Big Exits: 2005-Present. Private Biotech M&A Up-Front >$75M, Med Device M&A Up Front>$50M. “Up-Front”: Up-Front defined as payments in a
structured deal not including milestones. “Up-Front w/ Milestones”: defined as payments in a structured deal including
milestones. “All-In”: Deals where the total value is paid at the close of the transaction. IPOs include Venture Capital-backed IPOs
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Big Exits 19 20 24 17 22 28 35 35 27 41
VC-Backed
IPOs
32 29 21 2 3 12 7 13 37 83

27. 22
20
18
16
14
12
10
8
6
4
TotalValue($Billion)
Pre-Money Valuation Pre-IPO
Big Exit Milestone to be Earned
Big Exit Up-Front Payments
2014 Was a Year of Strong Returns!
Potential Distributions from Big Exit M&A and IPOs*
*Discounts taken: 75% Up-Front M&A; 25% M&A Milestones; 75% of Last Private Valuation
Big Exits: 2005-Present. Private Biotech M&A Up-Front >$75M, Med Device M&A Up Front>$50M. “Up-Front”: Up-Front defined as
payments in a structured deal not including milestones. “Up-Front w/ Milestones”: defined as payments in a structured deal
including
milestones. “All-In”: Deals where the total value is paid at the close of the transaction. IPOs include Venture Capital-backed IPOs
only. Sources: Investment Bank Reports, VentureSource, Press Releases, and discussions with Life Science
professionals.

28. 22
20
18
16
14
12
10
8
6
4
TotalValue($Billion)
Pre-Money Valuation Pre-IPO
Big Exit Milestone to be Earned
Big Exit Up-Front Payments
2014 Was a Year of Strong Returns!
Potential Distributions from Big Exit M&A and IPOs*
*Discounts taken: 75% Up-Front M&A; 25% M&A Milestones; 75% of Last Private Valuation
Big Exits: 2005-Present. Private Biotech M&A Up-Front >$75M, Med Device M&A Up Front>$50M. “Up-Front”: Up-Front defined as
payments in a structured deal not including milestones. “Up-Front w/ Milestones”: defined as payments in a structured deal
including
milestones. “All-In”: Deals where the total value is paid at the close of the transaction. IPOs include Venture Capital-backed IPOs
only. Sources: Investment Bank Reports, VentureSource, Press Releases, and discussions with Life Science
professionals.

29. 22
20
18
16
14
12
10
8
6
4
TotalValue($Billion)
Pre-Money Valuation Pre-IPO
Big Exit Milestone to be Earned
Big Exit Up-Front Payments
2014 Was a Year of Strong Returns!
Potential Distributions from Big Exit M&A and IPOs*
*Discounts taken: 75% Up-Front M&A; 25% M&A Milestones; 75% of Last Private Valuation
Big Exits: 2005-Present. Private Biotech M&A Up-Front >$75M, Med Device M&A Up Front>$50M. “Up-Front”: Up-Front defined as
payments in a structured deal not including milestones. “Up-Front w/ Milestones”: defined as payments in a structured deal
including
milestones. “All-In”: Deals where the total value is paid at the close of the transaction. IPOs include Venture Capital-backed IPOs
only. Sources: Investment Bank Reports, VentureSource, Press Releases, and discussions with Life Science
professionals.

30. Innovation in Ophthalmology….Outlook
30

31. Innovation in Ophthalmology….Outlook
• Venture financing in healthcare had been on a downward
trend through 2012….has regained momentum…will it
continue??
31

32. Innovation in Ophthalmology….Outlook
• Venture financing in healthcare had been on a downward
trend through 2012….has regained momentum…will it
continue??
• IPO activity picked up in 2013 and 2014….outlook for
2015?
32

33. Innovation in Ophthalmology….Outlook
• Venture financing in healthcare had been on a downward
trend through 2012….has regained momentum…will it
continue??
• IPO activity picked up in 2013 and 2014….outlook for
2015?
• M&A activity reasonably strong….impact of industry
changes/consolidation?
33

34. Innovation in Ophthalmology….Outlook
• Venture financing in healthcare had been on a downward
trend through 2012….has regained momentum…will it
continue??
• IPO activity picked up in 2013 and 2014….outlook for
2015?
• M&A activity reasonably strong….impact of industry
changes/consolidation?
• Relative Attractiveness of the Ophthalmic Sector is
solid….which disease categories are most attractive
34

35. Innovation in Ophthalmology….Outlook
• Venture financing in healthcare had been on a downward
trend through 2012….has regained momentum…will it
continue??
• IPO activity picked up in 2013 and 2014….outlook for
2015?
• M&A activity reasonably strong….impact of industry
changes/consolidation?
• Relative Attractiveness of the Ophthalmic Sector is
solid….which disease categories are most attractive
• Other factors impacting innovation…such as long
timelines, capital intensity, FDA path, competition, etc.
35

36. Innovation in Ophthalmology….Outlook
• As we know innovation resources are focused where
they are rewarded…
• How does ophthalmology stack up?
• Let’s hear from the panel…..
36

37. Thank you….