Much Ado About Nano: The Inve $ tment Climate for Nano-MedTech Ventures

1. Much Ado About Nano:The Inve$tment Climate for Nano-MedTech Ventures Omar Amirana, MD Oxford Bioscience Partners MassMEDIC April 10, 2007 OAmirana@oxbio.com

2. What is nanotechnology? • Nanotechnology is the understanding and control of matter • at dimensions of roughly 1 to 100 nanometers • Unique phenomena enable novel applications • Nanotechnology involves imaging, measuring, modeling, and manipulating matter at this scale • A nanometer is one-billionth of a meter. • Typical C-C bond lengths are in the range .12-.15 nm • DNA double-helix has a diameter around 2 nm • The smallest cellular life forms, the bacteria of the genus Mycoplasma, are around 200 nm in length. Unique behavior: physical, chemical, and biological properties of nanoscale materials can be exploited for a large variety of applications Source: www.nano.gov

3. Source: www.nano.gov

4. Longer term, nanomedical opportunities are mystifying and intoxicating…

5. Respirocytes

6. Implantable Nano Power Sources Nanowires convert mechanical energy into current. They could be implanted in the body, and, driven by muscle contractions, blood flow, or external vibrations transmitted through tissue. They could power implantable sensors.

7. Vascular System and Hematology Police

8. USPTO & Nano: A lot of coolstuff looking to solve problems Results of Search in US Patent Collection db for: nano: 12473 patents. Hits 1 through 15 out of 12473

9. Nano = King of Cool Recommended photo gallery: M. Meyyappan Director, Center for Nanotechnology NASA Ames Research Center Moffett Field, CA 94035 meyya@orbit.arc.nasa.gov web: http://www.ipt.arc.nasa.gov

10. National Nanotechnology Initiative (NNI; founded 2001) = main source of R&D dollars but VC $ is significant Nanotech is still in its infancy – But the investment sector is real Source(s): www.nano.gov, Thomson VentureSource

11. Venture capitalists have funded <150“nano” companies in the last 10 years Source: Thomson VentureSource

12. Exits in nanotech have been scarce Source: Thomson VentureSource

13. Boxed companies have valuations > $100M Life science provided majority of exits (13 of 20); 6 known exits > $100M Nanotech Exits Accent Optical Technologies – Acquired for $45M Acusphere – IPO at $226M Angstron Systems – Acquired at undisclosed price Applied Optronics – Acquired at undisclosed price Aprio Technologies – Acquired at undisclosed price Arryx – Acquired at $32M BioForce Nanosciences – Acquired at undisclosed price Clinical Micro Sensors – Acquired at $280M Iomai – IPO at $132M MicroE Systems – Acquired for $55M Molecular Insight Pharmaceuticals – IPO at $381M Nanogen – IPO at $217M Nanogram Devices – Acquired for $45M Nanophase Technologies – IPO at $59M Nanotronics – Acquired at undisclosed price NimbleGen Systems – Filed for IPO 3/07 Protometrix – Acquired at undisclosed price Quantum Dot – Acquired at undisclosed price Tailored Materials – Acquired at undisclosed price Third Wave Technologies – IPO at $457M Source: Thomson VentureSource

14. Post-IPO performance has been disappointing

15. Biotech/Pharma companies are partnering instead of acquiring nanotech companies • Oxonica licensed nanoparticle tagging technology to Becton Dickinson to create clinical diagnostics (2007) • Nanosyn signed agreements with Amphora, Arqule, and Euroscreen to provide medicial chemistry services using its nanoscale technology (2005-2006) • Psivida, which develops drug delivery products, signed an exclusive research and license agreement for its technology with Pfizer Inc primarily for ophthalmology and oncology. It will receive up to $155 million in development and sales-related milestone payments.

16. MedTech companies are not acquiring nano companies either; and can provide barriers • Larger MedTech companies: • do not want to acknowledge flaws in their products. • have no real need to improve unless threatened. • view nanotech as an expensive incremental improvement / alternative • do not want to negatively impact ASP or margin • Biophan developed coatings for pacemaker and ICD leads to improve MRI compatibility.

17. The ultimate example: Drug Delivery Needle Injection is: Traumatic Painful Ineffective / Imprecise Dangerous at times Decades old Accepted But… EASY INEXPENSIVE

18. Other $B franchises that might benefit from nanotech where adoption has lagged

19. Success stories include Advanced Magnetics (AMAG)… Ferumoxytol, the primary value driver for Advanced Magnetics, is currently in four Phase III multi-center clinical trials for use as an iron replacement therapeutic in chronic kidney disease (CKD) patients. Combidexis an investigational functional molecular imaging agent consisting of iron oxide nanoparticles for use in conjunction with magnetic resonance imaging, also known as MRI, to aid in the differentiation of cancerous from normal lymph nodes.

20. …but they are rare, recent, and often ‘repurposed’ Even AGAM needed time to reach success

21. Awareness, investments and spending should continue to increase… Nanotechnology related goods and services – by 2010-2015 USD trillions • Other • Conservative case • Materials • Aerospace • Chemical Manufacturing • NSF Estimate • Pharmaceuticals • Aggressive case • Electronics

22. …as the “nano” brand gets diluted and continues to be used for marketing

23. The Next Big Thing is Really Small:How Nanotechnology Will Change the Future of Your Businessby Jack Uldrich

24. Recent nano applications/ innovations are not “typical” for typical VCs... • Step assists on vans • Bumpers on cars • Paints, Ink and coatings • Automobile catalytic converters • Metal-cutting tools • Stain-free clothing and mattresses • Dental-bonding agent • Sunscreens and cosmetics • Longer-lasting tennis balls • Longer and straighter flying golf balls • Light-weight, stronger tennis racquets • Burn and wound dressings Source: www.nano.gov

25. …but the future of nanotechnology in medicine could be a VC sweet spot • Advanced drug delivery systems, including implantable devices that automatically administer drugs and sensor drug levels • Medical diagnostic tools, such as cancer tagging mechanisms, lab-on-a-chip, real time diagnostics, or Sensors for airborne chemicals or other toxins • Cooling chips or wafers to replace compressors in cars, refrigerators, air conditioners and multiple other devices, utilizing no chemicals or moving parts • Photovoltaic (solar) cells, fuel cells and portable power to provide inexpensive, clean energy • New high-performance materials • THM: Find a specific problem that NEEDS to be solved.

26. Predictions and Probabilities • Nanotech will grow through corporate partnerships • Large companies will drive nanotech adoption in various areas, avoid adoption in others • VC Investments will be selective (later stage/proven?) • VCs will need to set aside plenty of reserves • More IPOs; VCs will likely invest in more PIPEs • There will be some big winners and many losers

27. Certainty: Things will not stay the same. Thanks to Pei Ho, Oxford Bioscience Partners