The annual DNB Healthcare Conference is a joint venture between DNB Markets and Oslo Medtech, and includes a venture session where startups and early phase companies are given the opportunity to present their cases to investors, and a separate session for listed life science companies. The conference present networking opportunities including Q&A sessions and possibilities to meet management in one-to-one and/or small group meetings.
The list of the 20 presenting companies at the venture session conference include 14 medtech companies and 6 biotech companies. Looking at 2-page drafts for their presentations, where their capital needs are presented, the 20 companies will pitch investors for seed funding and venture capital in the range of NOK 360 to 430 million. Some companies also estimate future or next phase capital requirements, but that is not included in the NOK 360 to 430 million range. The size of estimated capital needs varies a lot, ranging from NOK 800.000 to NOK 60 to 120 million.
The financial requirements will cover the whole range from proof-of-concept to international marked introduction.
A similar event in 2013 showed 19 companies asking for around NOK 400 million.
The worldwide venture capital (vc) funding of life science companies has rebounded this year, after a boom in IP0s (initial public offering) of both biotech and medtech companies last year. The Healthcare ICT (HIT) sector has raised USD 3,6 billion year-year-to-date, while biotech and medtech both impressively raised over USD 7 billion and over USD 4 billion respectively.
– The strong vc-market is thought to be linked to the fact that many vc-investors finally got their exits on previous investments via the IPO-market last year, and then were able to raise fresh capital for new funds. So I would say the investor sentiment is good. We have seen an impressive amount of capital raised for the Oncology companies in Norway, while the rest of the sector is awaiting the traction from investors says Masha Strømme, advisor at Oslo Medtech.
Strømme has a D.Phil. in genetics from Oxford and experience from the finance sector. She joined Investment Banking at Morgan Stanley in London in 1998, focusing on the healthcare sector and biotechnology and she covered biotech and medtech stocks as a research analyst at Altium Capital (Apax, London) for UK and Europe.
A positive trend in Norway is that more investors are putting time and resources in getting better expertise and deeper knowledge about the life science sector.
– We definitely have to work even harder to spread more information and knowledge about the medtech sector to potential investors, because the focus so far has been on biotech and cancer, Strømme says.
Extracting soft money
As expected, a majority of the companies have received various amounts of soft funding from government agencies like Innovation Norway and The Research Council of Norway. 13 companies have been granted in excess of NOK 200 million in soft money, according to the presentations.
Raising capital for projects and startup companies in Norway can be a challenging task, as the lack of early stage risk capital has been well documented over the last years. Various interest groups and experts have proposed measures aimed to increase this flow of risk capital, including tax incentives for investors and Oslo Medtech, Oslo Cancer Cluster and Nansen Neuro Science initiative “Helsemyggordning”, but so far without strong response from the government except for the launch of new public-private seed funds. Last fall, the government launched two seed funds, each at NOK 500 million and aimed at ICT, oil & gas and renewables. The government’s 2015 budget includes NOK 255 to new seed funds, to be matched by a similar amount of private capital.
The venture capital segment has shown signs of improvement this year after some lackluster years. In the first half of this year, a total of NOK 641 million was invested in Norway (by the members in European Private Equity and Venture Capital Association), which is double the amount invested in the second half of last year.
In the life science sector, cases like Algeta which eventually was sold to Bayer for near NOK 18 billion, has contributed to renewed interest among investors. But companies seeking risk capital will likely have to compete hard to attract investors’ interest, as a string of biotech companies are expected to launch initiatives to raise more capital within the next 6 to 12 months.
Oslo Stock Exchange opens the doors for life science companies
Oslo Stock Exchange will make it easier for companies in a pre-commercial phase to obtain listing on the main list at the exchange. This will be particular relevant for companies within the life science sector.
The general rule today is that companies should not be admitted to trading on the main list (Oslo Børs) if they are in a so-called "pre-commercial phase." The stock exchange has the opportunity to grant exemptions, which has hardly been used. So companies without solid and sustained revenues have had little incentives to apply for listing on the main list.
Many life science companies have high market values and a substantial amount of shareholders, but are still defined as pre-commercial according to the current stock exchange regulation. Thus, they have not been able to list their shares on the main list (Oslo Børs) but have been referred to Oslo Axess.