BioPharma Credit PLC USD · LSE:BPCP
BioPharma Credit PLC USD — BioPharma Credit — Debt Investor Presentation (June 2019)
30 slides from BioPharma Credit PLC USD's debt investor presentation, Jun 12, 2019
Slide 1: Debt Capital for the Life Sciences Industry
Debt Capital for the Life Sciences Industry COMPANY PRESENTATION – June 2019 For additional information please email: ir@bpcruk.com or visit BioPharma Credit’s website at www.bpcruk.com
Slide 2: Disclaimer
Disclaimer . THIS PRESENTATION IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION. THIS PRESENTATION IS NOT FOR PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, INTO OR WITHIN THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDIC
Slide 3: Disclaimer
Disclaimer This presentation was prepared using the financial information available to the Company as at the date of this presentation. Except where otherwise indicated herein, the information provided in this presentation is based on matters as they exist as of the date of preparation and not as of
Slide 4: Experienced Management Team
Experienced Management Team Pharmakon Advisors Pedro Gonzalez de Cosio Martin Friedman Pablo Legorreta Co-Founder and Principal Principal Co-Founder and Principal Co-founded Pharmakon in 2009 Joined Pharmakon in 2011 Co-Founded Pharmakon in 2009 after 17 years in structured after 18 years in he
Slide 5: Major milestones since IPO
Major milestones since IPO1 Total Raised for BPCR2 IPO – $762m gross Placing of Ordinary Issue of C- Placing of Ordinary ~$1,385m gross proceeds including Shares – $154m Shares – Shares – $305m proceeds $339m of seed gross proceeds $163m gross gross proceeds assets proceeds ($1,045m in cash) March 2
Slide 6: Portfolio and Dividends since IPO
Portfolio and Dividends since IPO2 Evolution of the BioPharma Credit portfolio (millions) BPCR Portfolio Composition ($m) $1,600 • ~ $339m or 100% of seed assets $22 Cash (RPS + BP-III) have amortized $1,400 $150 $85 RPS since IPO $64 $64 $150 $1,200 BioPharma III • ~$1,100m deployed across eight $1
Slide 7: Summary of Past Transactions
Summary of Past Transactions 6
Slide 8: New Investment: $25m equity plus up to $80m senior secured loan to BioDelivery Sciences
New Investment: $25m equity plus up to $80m senior secured corporate loan to BioDelivery Sciences BioDelivery Sciences Corporate Overview Description of key products Description: BioDelivery Sciences International, Inc. (”BDSI") is a BELBUCA (buprenorphine buccal film) – approved in October 2015
Slide 9: Investment Opportunity – Summary
Investment Opportunity – Summary The Life Sciences Debt Market is an Underserved, Large and Growing Opportunity Worldwide $1.1tn industry growing at 6% per annum Large capital needs, private companies spent $190bn in R&D during 2014 Industry dynamics create new debt investment opportunities
Slide 10: Life Sciences is a Large, Vital Industry with Strong, Consistent Growth
Life Sciences is a Large, Vital Industry with Strong, Consistent Growth WW Pharmaceutical Industry vs. Other Industries Global Pharmaceutical Sales: Historical & Projected ($, Trn) Est. WW US Sales $1.4trn $1.1trn $727bn $304bn $15bn $1.4 Mkt. Size WW Sales Mult. of 0.8x¹ 1.5x 3.6x 73x Forecast in L
Slide 11: Life Sciences is a Large, Vital Industry with Strong, Consistent Growth
Life Sciences is a Large, Vital Industry with Strong, Consistent Growth WW Pharmaceutical Industry vs. Other Industries Global Pharmaceutical Sales: Historical & Projected ($, Trn) Strong Expected Growth Over Foreseeable Future Fueled by 4 Strong Growth Drivers Growing Demand From R/D/Innovation Cre
Slide 12: Sales of Critical Drugs, Like Those That Treat Cancer, are Uncorrelated and Unaffected by Economic Cycles
Sales of Critical Drugs, Like Those That Treat Cancer, are Uncorrelated and Unaffected by Economic Cycles Annual Chages in Oncology Sales and Major Market Indeces 100% $140 80% $120 60% $100 40% $80 20% Sales of Oncology Drugs $60 have not seen a year-on- 0% year decline since 1990 $40 ‐20% $20 ‐40%
Slide 13: Specialization & Fragmentation of Drug Discovery is Leading to More Lending Opportunities
Specialization & Fragmentation of Drug Discovery is Leading to More Lending Opportunities Worldwide Sales from Top 30 Products >5000 labs • New product approvals result in more companies with attractive collateral for BioPharma Credit. • Trend of Big Pharma selling non-core products to smaller compa
Slide 14: The majority of new drugs approved originated at smaller biopharma companies
The majority of new drugs approved originated at, or were initially developed by, smaller biopharma companies 13 Source: Pharmakon Advisors
Slide 15: Pharmakon Advisors has invested over $3.0 billion since 2009
Pharmakon Advisors has invested over $3.0 billion since 2009 Historical Investment Performance as of 12/31/18 (Private Funds) Private Fund I II III IV Founded in 2009; manager of the BioPharma funds Launch Date June 2009 March 2011 February 2013 December 2015 $3.3bn committed in 33 transactions
Slide 16: The right structure / LTV helps generate attractive returns on debt irrespective of equity performance
The right structure / LTV helps generate attractive returns on debt irrespective of equity performance Life Sciences Debt Investments are less risky and are exposed to less volatility than the corresponding equity investments ■ The chart below shows the cash on cash returns of all past Pharmakon inv
Slide 17: Major Investments
BIOPHARMA CREDIT PLC Major Investments 16
Slide 18: $500m senior secured corporate loan to Tesaro
$500m senior secured corporate loan to Tesaro Tesaro Corporate Overview Key terms of Loan Description: TESARO, Inc. (TSRO) is an oncology-focused Size of facility: $500m to be funded in two tranches biopharmaceutical company focused on in-licensing and developing Tranche A: $300m at closing (B
Slide 19: BioPharma Credit realized a gain of $83.3 million in the Tesaro transaction resulting in a 28.8% IRR
BioPharma Credit realized a gain of $83.3 million in the Tesaro transaction resulting in a 28.8% IRR Timeline 6 December 2017 BPCR funds $222.0m of the $300.0m Tranche A by investing $217.6m net of the 2.0% upfront fee 28 June 2018 BPCR funds $100.0m of the $200.0m Tranche B by investing $98.0m net
Slide 20: $150m senior secured corporate loan to Amicus Therapeutics
$150m senior secured corporate loan to Amicus Therapeutics Amicus Corporate Overview Key Products Description: Amicus Therapeutics, Inc. (FOLD) is a biopharmaceutical Fabry disease is a rare, progressive genetic disorder characterized by a company focused on orphan diseases. Amicus markets Galaf
Slide 21: $316m senior secured corporate loan to help finance Sebela's acquisition of Braintree Laboratories
$316m senior secured corporate loan to help finance Sebela’s acquisition of Braintree Laboratories Sebela Corporate Overview Key Products Description: Sebela Pharmaceuticals is a privately-held US Suprep – osmotic laxative indicated for cleansing of the colon focused specialty pharmaceutical com
Slide 22: $150m senior secured corporate loan to Novocure
$150m senior secured corporate loan to Novocure Novocure Corporate Overview Key Products Description: Novocure is a commercial stage oncology company Optune System – a cancer treatment centered on a proprietary developing a profoundly different cancer treatment utilizing a therapy called TTField
Slide 23: $150m senior secured loan to Lexicon
$150m senior secured loan to Lexicon Lexicon Corporate Overview Key Products Description: Lexicon Pharmaceuticals, Inc. (LXRX) is a XERMELO (telotristat ethyl) - an oral treatment that works with biopharmaceutical company focused on developing drugs for cancer, somatostatin analog (SSA) therapy
Slide 24: Appendix
BIOPHARMA CREDIT PLC Appendix 23
Slide 25: Rigorous Screening and Evaluation of Opportunities
Rigorous Screening and Evaluation of Opportunities 2018 Pharmakon Opportunities Filters Screened 195 opportunities. Initial screen focused on: 1 Viable, marketed product 195 Opportunities Counterparty with financing need 2 64 opportunities met initial requirements. Performed initial 64 diligence
Slide 26: The Investment Process / Assessing Risks
The Investment Process / Assessing Risks Sizing a Loan Pharmakon’s Investment Process is Product Centric Upside Debt Service vs. Projected Cash Flows Case ■ The expected future cash flows from the underlying product(s) need to exceed the cost of servicing the loan ■ This should also be the case for
Slide 27: Main risk factors are determined by the particular stage in a product's life
Main risk factors are determined by the particular stage in a product’s life Top 500 Drugs Based on WW Sales Since 1986 – Average Annual WW Sales Since Year Of Launch $1,422 $1,438 Loss of IP Drug Regulatory $1,384 Exclusivity $1,342 $1,375 Approval $ millions Discovery $1,267 +3% +1% $1,258 post PT
Slide 28: M&A take-out value of oncology and specialty product companies illustrate the potential collateral value
M&A take-out value of oncology and specialty product companies illustrate the potential collateral value of these products Best-in-class specialty therapeutic companies are purchased for as much as 5 to 7 times peak sales * Normalized for 100% ownership Source: Bloomberg, company filings 27
Slide 29: M&A take-out value of oncology and specialty product companies illustrate the potential collateral value
M&A take-out value of oncology and specialty product companies illustrate the potential collateral value of these products Best-in-class specialty therapeutic companies are purchased for as much as 5 to 7 times peak sales * Normalized for 100% ownership Source: Bloomberg, company filings 28
Slide 30: Example of a Royalty Loan: $150m loan from BioPharma-IV to Halozyme Secured by Royalties
Example of a Royalty Loan: $150m loan from BioPharma-IV to Halozyme Secured by Royalties Background Transaction Structure Halozyme developed ENHANZE™ technology that allows for intra- venous (IV) infused drugs to be reformulated and delivered via more Initial Flows convenient Sub-Q injection $150m
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