Life Science Financing Survey - Full Year 2012

In this Survey:

- Overview of Fenwick & West Results

- Analysis of Industry Data

- Detailed Fenwick & West Results: Valuation

- Detailed Fenwick & West Results: Financing Terms

- Detailed Fenwick & West Results: Regional and Industry Variations

- Exerpt from Overview of Fenwick & West Results:

Valuations for life science companies receiving venture capital financing during 2012 continued to trend modestly upward from 2011 levels. However, total investment into venture-backed life science companies declined during 2012,and our analysis of fundraising trends indicates that fundraising by life science venture capitalists has continued to decline as well.

Key observations and highlights from our survey include the following:

- Up rounds outpaced down rounds 52% to 17% during 2012. This represents an improvement over results from 2011, which averaged 47% up rounds and 25% down rounds.

- The average round-to-round price increase for 2012, as measured by the Fenwick & West Life Science Venture Capital Barometer™, increased to 23%. For comparison, Barometer results for 2011 were 14%.

- Within life science industry sub-sectors, Barometer results for biopharmaceutical companies remained in line with 2011, averaging 16% for both 2011 and 2012. In contrast, Barometer results for medical device companies moved up from an average of 12% during 2011 to an average of 30% during 2012.

- Fundraising by life science venture capitalists, which fell off markedly following the 2008 recession, has continued to decline during 2012. We estimate that the percentage of VC fundraising allocable to life sciences has declined from 19% of funds raised in 2009 to 12.5% of funds raised in 2012. In absolute dollar terms, we estimate that fundraising has fallen from an average of $7.8 billion/year in 2007 and 2008 to $2.5 billion in 2012.

- Senior and participating liquidation preferences remained a common feature of 2012 life science venture financings, appearing in 51% (for senior preferences) and 66% (for participating preferences) of the financings we reviewed, which is in line with results observed during 2011.

Please see full survey below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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