Perspectives on investing in regenerative medicine – Results of TERMIS survey

by Alexey Bersenev on August 16, 2012 · 0 comments

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Tissue Engineering and Regenerative Medicine International Society (TERMIS) is a world’s leading professional organization for tissue engineers.The TERMIS North America (NA) Industry Committee was established in 2009 as an attempt to identify hurdles in commercialization of tissue engimeering and regenerative medicine products. Recently, TERMIS NA Industry Committee has released results of the 2010 survey of investors – TERMIS-NA members. This report is very interesting and could guide investors and product developers in the future.

The survey, composed of 15 questions, was developed and provided to 37 investment organizations in one of 3 sectors (governmental, private, and public investors). The survey was anonymous and confidential with sector designation the only identifying feature of each respondent’s organization.

Roughly half of respondents from each group have current investment in regenerative medicine or had it in the past. There is a trend for increasing of investment attractiveness for public and private sectors from 2000 – 2005 period to 2005 – 2011. The interest from government investors remained flat.

Most of regenerative medicine companies are looking for financial support from government. More than 10 companies have approached 40% of government respondents, 25% of private respondents and none of public investors. The government sector is heavily investing in regenerative medicine commercialization. More than 85% of government respondents were investing >$2MM (57% – >$5MM). About 70-75% of private and public investors are willing to spend about $500K and more.

Two most important factors in decision to invest were indicated by all respondents: (i) regulatory pathway and (ii) clinical validation. On of the most interesting questions was: “What stage of a company’s life-cycle influences your investment?”

In general, Government respondents would invest in a technology or company at a much earlier stage of the technology’s life-cycle , while the Private and Public respondents have an overwhelming preference for clinical-stage-development opportunities.
All sectors indicated a limited interest in early stage start-up companies potentially explaining why Start-up companies have struggled to access to capital and investors based their investment on the stage of a company’s life-cycle reflecting each sector’s risk tolerance, exit strategy, time of holding an investment and investment strategy priorities.

What are the therapeutic indications with the most interest from investors? The leading area is musculoskeletal disorders. The next most attractive therapeutic area for investors is cardiovascular diseases.

As the greatest risk for future investment, most respondents from government (44%) and private (57%) sectors indicated uncertainty about prices and reimbursement. The greatest risk for public sector investors is changes in governmental policy (44%).

Notably all sectors considered regenerative medical technology as difficult to evaluate. They also highlighted regulatory pathway uncertainty and poorly established clinical applications as barriers to making capital investments. Finally, the survey results indicate that under the current financial environment many regenerative medical companies must consider co-development or even mergers and acquisitions as non-dilutive means of raising capital.

Given changes in the industry over the past 12 months, including the rise and fall of various companies (10) survey results show that the Financial industry and Governmental sponsors, are looking for evidence of clinical impact from regenerative medical technologies.

It was a snapshot of TERMIS 2010 commercialization survey. I’d like to encourage you to read whole report.

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